Inotiv (NOTV) DEFM14AProxy related to merger

We will be mailing a copy of this proxy statement and the accompanying form of proxy to shareholders on or about October 8, 2021.

On September 21, 2021, Inotiv, Dolphin MergeCo, Inc., a Delaware corporation and a wholly owned subsidiary of Inotiv (“Merger Sub”), Dolphin Merger Sub, LLC, an Indiana limited liability company and a wholly owned subsidiary of Inotiv (“Merger Sub LLC” and together with Merger Sub, “Merger Subs”), Envigo RMS Holding Corp., a Delaware corporation (“Envigo”), and Shareholder Representative Services LLC, solely in its capacity as the securityholder representative, agent and attorney-in-fact of the Securityholders (together with Envigo, the “Envigo Parties”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides for the merger of Merger Sub with and into Envigo (the “Merger”), with Envigo continuing as the surviving corporation of the Merger, followed by the merger of the surviving corporation of the Merger with and into Merger Sub LLC (the “Second Merger” and, together with the Merger, the “Mergers”), with Merger Sub LLC continuing as the surviving entity of the Second Merger. As a result of the Merger, the outstanding shares of Envigo will be converted into the right to receive, in the aggregate and following an adjustment to the mix of consideration as a result of the exercise by the initial purchaser in the Company’s recent offering of 3.25% Convertible Senior Notes due 2027 of its option to purchase additional notes, $210.0 million in cash subject to adjustment as provided in the Merger Agreement, (the “Cash Consideration”) and approximately 9,036,571 Inotiv Common Shares subject to adjustment as provided in the Merger Agreement (the “Share Consideration”), which Common Shares had an aggregate market value of approximately $275.0 million based on the volume weighted average sales prices of the Common Shares as reported on the NASDAQ Capital Market (“NASDAQ”) calculated for the 20-trading-day period ending on September 20, 2021.

At the Special Meeting, you will be asked to consider and vote upon (i) a proposal to approve an amendment to the Second Amended and 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 (such amendment, the “Articles Amendment,” and such proposal, the “Authorized Share Increase Proposal”); (ii) a proposal to approve the issuance of the Common Shares to be issued pursuant to the Merger Agreement (the “Merger Share Issuance Proposal”), pursuant to NASDAQ Rule 5635(a); (iii) a proposal to approve an amendment to the 2018 Equity Incentive Plan to increase the number of Common Shares available for awards thereunder by 1,500,000 shares and to make corresponding changes to certain limitations in the Plan (the “EIP Amendment Proposal”); (iv) a proposal to approve the issuance of Common Shares issuable upon conversion of the 3.25% Convertible Senior Notes due 2027 (the “Notes Share Issuance Proposal”), pursuant to NASDAQ Rule 5635(a); and (v) a proposal to approve one or more adjournments of the Special Meeting, if necessary or appropriate, to permit solicitation of additional votes if there are insufficient votes to approve the Authorized Share Increase Proposal or the Merger Share Issuance Proposal (the “Adjournment Proposal”).

A shareholder signing and returning a proxy may revoke it at any time before it is exercised by delivering written notice to the Secretary of the Company, by filing a properly executed proxy bearing a later date or by attending the Special Meeting and voting in person. The signing of a proxy does not preclude a shareholder from attending the Special Meeting in person. All proxies returned prior to the Special Meeting, and not

This summary term sheet, together with the section entitled “Summary of the Proxy Statement,” summarizes certain information contained in this proxy statement, but does not contain all of the information that is important to you. You should carefully read this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the Special Meeting.

The consummation of the Merger is conditioned upon the approval by the Inotiv shareholders of the Authorized Share Increase Proposal and the Merger Share Issuance Proposal. This proxy statement and its Annexes contain important information about the proposed Merger and the other matters to be acted upon at the Special Meeting. You should read this proxy statement and its Annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its Annexes.

If a quorum is present at the Special Meeting, each proposal presented to the Special Meeting will be approved if the number of votes cast for approval of the proposal exceeds the number of votes cast against approval of the proposal at the Special Meeting. Abstentions and broker non-votes are not votes cast in favor of or against approval of a proposal and, therefore, are not counted for purposes of determining whether a proposal has been approved. Additionally, if a holder of Common Shares instructs its bank, broker or other nominee regarding one or more, but not all, of the proposals to be considered at the Special Meeting, except with respect to “routine” matters on which brokers are permitted to vote by the rules of the New York Stock Exchange, the broker non-vote on the proposals for which direction is not given will not be counted for purposes of determining whether such proposals are approved. The Authorized Share Increase Proposal is considered a “routine” matter; the Merger Share Issuance Proposal, the EIP Amendment Proposal, the Notes Share Issuance Proposal and the Adjournment Proposal are considered “non-routine” matters. The failure to instruct your bank, broker or other nominee how you wish to vote your shares with respect to the Authorized Share Increase Proposal will permit such bank, broker or other nominee to exercise its authority to vote in its discretion on that proposal. The failure to instruct your bank, broker or other nominee how you wish to vote your shares with respect to the Merger Share Issuance Proposal, the EIP Amendment Proposal, the Notes Share Issuance Proposal or the Adjournment Proposal will result in the bank, broker or other nominee being unable to vote your shares on those proposals, and your shares will not count as having been voted on those proposals.

Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner of shares held in “street name.” The proxy materials were forwarded to you by your bank or broker, who is considered the shareholder of record for purposes of voting at the Special Meeting. As a beneficial owner, you have the right to direct your bank or broker on how to vote the shares held in your account for the shares to be voted at the Special Meeting.

Step 1: To vote for a proposal, check the box marked “FOR.” If you are opposed to a proposal, check the box, “AGAINST.” If you do not wish to vote, mark the box “ABSTAIN.”

Step 3: Mail your proxy card in the pre-addressed, postage-paid envelope.

If your shares are held by a bank, broker or other holder of record in “street name,” you should receive a a voting instruction form (“VIF”), along with a copy of this proxy statement.

other nominee how you wish to vote your shares in accordance with the procedures provided by your bank, broker or other nominee regarding the voting of your shares.

The effect of not instructing your bank, broker or other nominee how you wish to vote your shares with respect to the Authorized Share Increase Proposal will permit such bank, broker or other nominee to exercise its authority to vote in its discretion on the Authorized Share Increase Proposal. Failing to instruct your bank, broker or other nominee how you wish to vote your shares with respect to the Merger Share Issuance Proposal, the EIP Amendment Proposal, the Notes Share Issuance Proposal and the Adjournment Proposal will result in your shares not being counted in the determination of whether any of these proposals is approved.

You are encouraged to have all accounts registered in the same name and address whenever possible. You can do this by contacting Computershare at P.O. Box 505000, Louisville, Kentucky 40233, at its toll-free number (1-800-446-2617) or on its website at http://www.computershare.com/investor. If you receive more than one VIF, please contact the bank, broker or other holder of record holding your shares to determine whether you can consolidate your accounts.

If a shareholder of record residing at a household to which Inotiv sent only one copy of this proxy statement wishes to receive separate documents in the future, he or she may discontinue householding by contacting Computershare at P.O. Box 505000, Louisville, Kentucky 40233, at its toll-free number (1-800-446-2617) or on its website at http://www.computershare.com/investor.

To obtain timely delivery, Inotiv shareholders must request the materials no later than five business days prior to the Special Meeting.

The SEC has an informational website that provides shareholders with general information about how to cast their vote and why voting should be an important consideration for shareholders. You may access that information at www.sec.gov/spotlight/proxymatters.shtml or at www.investor.gov.

On September 21, 2021, we entered into the Merger Agreement pursuant to which we agreed, subject to certain closing conditions, to acquire Envigo RMS Holding Corp. by merger of Envigo with a newly formed, wholly owned subsidiary of ours.

Under the terms and conditions of the Merger Agreement, the aggregate consideration to be paid to the holders of outstanding equity interests in Envigo in the Merger will consist of cash consideration of $210.0 million, subject to adjustment as set forth in the Merger Agreement, and approximately 9,036,571 Inotiv Common Shares, subject to adjustment as set forth in the Merger Agreement, which shares had an aggregate market value of approximately $275.0 million based on the volume weighted average sales price of such shares as traded on the NASDAQ Capital Market calculated for the 20-trading day period ending on September 20, 2021. The cash and Inotiv Common Shares to be paid by Inotiv in the Merger are collectively referred to as the “Merger Consideration.” It is anticipated that, upon completion of the Envigo Acquisition, our current shareholders will own approximately 64% of our outstanding common shares and the former stockholders of Envigo will own, in the aggregate, approximately 36% of our outstanding common shares.

Consummation of the Envigo Acquisition is subject to certain conditions set forth in the Merger Agreement, including the approval of the Merger Agreement and the Merger by the Envigo stockholders (which was obtained on September 21. 2021), certain approvals by our shareholders, as described in this proxy statement, performance by the parties of their material covenants under the Merger Agreement, accuracy of representations and warranties set forth in the Merger Agreement (subject to certain materiality provisions), the absence of a material adverse effect (as defined in the Merger Agreement) with respect to either party, the expiration of applicable waiting periods under applicable antitrust laws, and other customary closing conditions. Because the number of common shares to be issued in the Envigo Acquisition would exceed 20% of our outstanding common shares, NASDAQ Listing Standard 5635(a) requires that we obtain shareholder approval prior to issuing the shares in the Merger. In addition, the number of shares to be issued in the Envigo Acquisition would exceed the number of authorized shares we have available for issuance under our articles of incorporation. The Merger Agreement requires us to call a special meeting of our shareholders and to submit to our shareholders at the special meeting proposals to (i) amend our articles of incorporation to increase the number of our authorized shares to an amount that would be sufficient to allow the consummation of the Merger and (ii) approve the issuance of the common shares to be issued pursuant to the Merger Agreement. The consummation of the Merger is conditioned on the approval of both of these proposals by our shareholders.

The Merger Agreement may be terminated prior to the consummation of the Envigo Acquisition by mutual agreement of the parties, by either party if the other party breaches its obligations under the Merger Agreement, or by either party if the transaction has not been consummated on or prior to March 31, 2022 (which date is subject to extension to June 30, 2022, as provided in the Merger Agreement), or any governmental authority has issued an order making the transaction illegal or otherwise prohibiting its consummation.

We have received commitments from a group of lenders and from Jefferies LLC to provide $275.0 million of secured and unsecured financing to pay the cash portion of the Merger consideration and related transaction expenses and to provide us with additional liquidity following the completion of the Envigo Acquisition. The commitments are subject to certain conditions set forth therein, including the accuracy of certain representations and warranties made by Envigo in the Merger Agreement and to be made by us in the documents governing the financing, the execution of definitive agreements, consummation of the Envigo Acquisition, delivery of customary closing documents and the absence of any material adverse effect (as defined in the Merger Agreement).

On the date we signed the Merger Agreement, we entered into a commitment letter (the “Senior Debt Commitment Letter”) with certain financial institutions, arranged by Jefferies Finance LLC. The commitment we received is for a new senior secured term loan facility in an aggregate principal amount of $165.0 million (the “Senior Term Loan”), a senior secured delayed draw term loan facility in an aggregate principal amount of $35.0 million and a senior secured revolving credit facility in an aggregate principal amount of $15.0 million, which is to be provided on the terms and subject to the conditions set forth in the senior debt commitment letter. We refer to the credit facilities to be provided pursuant to the senior debt commitment letter as the “Senior Credit Facility.” On the same date, we entered into a commitment letter with Jefferies LLC (the “Notes Commitment Letter”), to purchase $110.0 million of our unsecured Convertible notes on the terms and subject to the conditions set forth in the Notes Commitment Letter. On September 27, 2021, we issued $140.0 million aggregate principal amount of 3.25% Convertible Senior Notes due 2027 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.We intend to use borrowings under the Senior Term Loan and the net proceeds from the offering of the Convertible Notes to pay the cash portion of the Merger Consideration and fees, commissions and expenses related to the Envigo acquisition and these financings.

The consummation of the Merger is conditioned upon our entering into a shareholders agreement with certain stockholders of Envigo, including the Nominating Holders. The Nominating Holders own, in the aggregate, approximately 72.6% of the outstanding voting stock of Envigo. The shareholders agreement provides that, at the effective time of the Merger, our Board will consist of our CEO, our Chief Strategy Officer, two of our current independent directors, one person to be designated by Jermyn Street, one person to be designated by Savanna Holdings and one person designated by our Nominating and Corporate Governance Committee and approved by the Nominating Holders (the “Approved Director”). After the consummation of the Merger 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 Merger, subject to certain exceptions set forth in the shareholders agreement, for a period of 180 days after the effective time of the Merger. The shareholders agreement also restricts each Nominating Holder, until such Nominating Holder no longer holds 5% or more of our outstanding common shares, a change of control transaction, a material breach of the shareholders agreement by us, or any winding up, dissolution or liquidation or bankruptcy (subject to certain permitted exceptions) from (i) transferring shares to our competitors or to persons who, after the transfer, would

The shareholders agreement requires the shareholders who are parties thereto to cause all voting securities owned by them to be present at any annual or special meeting at which directors are to be elected, to vote such securities either as recommended by our board, or in the same proportions as votes cast by other voting securities with respect to director nominees or other nominees and in favor of any director nominee of the Nominating Holders, and not to vote in favor of a change of control transaction pursuant to which the Nominating Holders would receive consideration that is different in amount or form from other shareholders unless approved by our Board.

The shareholders agreement requires us to file with the SEC, and use our commercially reasonable efforts to cause to become effective no later than 180 days after the effective time of the Merger, a registration statement to register for resale the common shares received in the Merger by the shareholders who are party to the shareholders agreement in the Merger and any other securities issued by or issuable with respect to such common shares by way of a stock split, stock dividend, reclassification, subdivision or reorganization, recapitalization or similar event. The shareholders agreement also entitles the shareholders who are party to the shareholders agreement to require us to file additional registration statements after we become eligible to use Form S-3 for such registrations. The shareholders agreement sets forth certain customary procedures to be followed and provides for customary rights and obligations of us and the holders in connection with the registration of the shareholders’ shares and provides that we may delay filing of such registration statements in certain circumstances set forth in the shareholders agreement.

We are asking you to vote on a proposal to amend our 2018 Equity Incentive Plan to increase the number of authorized Common Shares under the Plan by 1,500,000 and to make corresponding changes to

The Special Meeting will be held at Courtyard Marriott Lafayette, 150 Fairington Avenue, Lafayette, IN 47905 on November 4, 2021 at 10:00 a.m. Eastern Time, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

Only holders of Common Shares of record at the close of business on October 4, 2021, the record date for the Special Meeting, will be entitled to vote at the Special Meeting. You are entitled to one vote for each Common Share that you owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your bank, broker or other holder of record to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 15,988,919 Common Shares outstanding and entitled to vote.

The Merger will be accounted for using the acquisition method of accounting for business combinations. The allocation of the preliminary estimated merger consideration will be based upon management’s estimates of and assumptions related to the fair value of assets to be acquired and liabilities to be assumed. We expect to finalize the allocation of the merger consideration as soon as practicable after completion of the Merger, but we are not required to finalize such allocation for one year from the closing date of the Merger.

We are soliciting proxies on behalf of the Board. This proxy solicitation is being made by mail, but also may be made by phone or in person. Inotiv and its directors, officers and employees may also solicit proxies in person. Inotiv will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions.

Inotiv will bear the entire cost of the proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Inotiv will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding the proxy materials to Inotiv’s shareholders. Directors, officers and employees of Inotiv who solicit proxies will not be paid any additional compensation for soliciting proxies.

A quorum of Inotiv’s shareholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority of the outstanding shares entitled to vote as of the close of business on the record date are present in person or represented by proxy at the Special Meeting. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will be counted for the purposes of determining the existence of a quorum at the Special Meeting if a shareholder instructs its bank, broker or other nominee to vote its shares on any proposal. If a shareholder fails to instruct its bank, broker or nominee to vote its shares on any proposal, and such bank, broker or nominee exercises its authority to vote in its discretion on the Authorized Share Increase Proposal, then the shares voted by such bank, broker or nominee on the Authorized Share Increase Proposal will be counted for the purposes of determining the existence of a quorum at the Special Meeting.

If a quorum is present at the Special Meeting, each proposal presented to the Special Meeting will be approved if the number of votes cast for approval of the proposal exceeds the number of votes cast against approval of the proposal at the Special Meeting. Abstentions and broker non-votes are not votes cast in favor of or against approval of a proposal and, therefore, are not counted for purposes of determining whether a proposal has been approved. Additionally, if a holder of Common Shares instructs its bank, broker or other nominee regarding one or more, but not all, of the proposals to be considered at the Special Meeting, except with respect to “routine” matters on which brokers are permitted to vote by the rules of the New York Stock Exchange, the broker non-vote on the proposals for which direction is not given will not be counted for purposes of determining whether such proposals are approved. The Authorized Share Increase Proposal is considered a “routine” matter; the Merger Share Issuance Proposal, the EIP Amendment Proposal, the Notes Share Issuance Proposal and the Adjournment Proposal are considered “non-routine” matters. The failure to instruct your bank, broker or other nominee how you wish to vote your shares with respect to the Authorized Share Increase Proposal will permit such bank, broker or other nominee to exercise its

The Merger is conditioned upon, among other things, the approval of the Authorized Share Increase Proposal and the Merger Share Issuance Proposal at the Special Meeting. The Merger is not conditioned on the approval of the other proposals to be considered at the Special Meeting.

It is important for you to note that, in the event that both the Authorized Share Increase Proposal and the Merger Share Issuance Proposal do not receive the requisite vote for approval, Inotiv will not consummate the Merger.

Inotiv retained Jefferies LLC (“Jefferies”) as its financial advisor in connection with a possible acquisition of Envigo. In connection with this engagement, the Board requested that Jefferies evaluate the fairness, from a financial point of view, to Inotiv of the Merger Consideration (which for purposes of Jefferies’ financial analysis and opinion means $200.0 million in cash and 9,365,173 Inotiv Common Shares) to be paid by Inotiv in the Merger pursuant to the Merger Agreement. At a meeting of the Board held on September 21, 2021, Jefferies rendered its opinion to the Board to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be paid by Inotiv in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to Inotiv.

Although Inotiv expects to complete the Merger by the end of the fourth quarter of 2021, there can be no assurances as to the exact timing of completion of the Merger or that the Merger will be completed at all. The completion of the Merger is subject to numerous conditions, including, among others:

There can be no assurance that the conditions required to complete the Merger, some of which are beyond the control of Inotiv and Envigo, will be satisfied or waived on the anticipated schedule, or at all.

Additionally, the Merger Agreement also provides for certain termination rights for both Inotiv and Envigo, including if the Merger is not consummated on or before March 31, 2022, subject to extension to June 30, 2022, as provided in the Merger Agreement, if our shareholders fail to approve the Authorized Share Increase Proposal or the Merger Share Issuance Proposal or by either party if the other party breaches the Merger Agreement, subject to the cure rights set forth in the Merger Agreement.

The Merger is subject to a number of conditions to closing as specified in the Merger Agreement. These closing conditions include, among others, obtaining shareholder approval of the Authorized Share Increase Proposal and the Merger Share Issuance Proposal, the listing on the NASDAQ Capital Market of the Common Shares issuable in accordance with the Merger Agreement, the expiration of applicable waiting period under U.S. and applicable foreign antitrust and competition laws and receipt of consents or approvals under applicable foreign direct investment laws, and the absence of governmental restraints or prohibitions preventing the consummation of the Merger. The obligation of each of Inotiv and Envigo to consummate the Merger is also conditioned on, among other things, (i) the accuracy of the representations and warranties as set forth by the other party in the Merger Agreement, (ii) the performance by the other party, in all material respects, of its obligations under the Merger Agreement required to be performed at or prior to the Effective Time and (iii) the delivery by the other party of a certificate of an authorized officer certifying that the required conditions have been satisfied. The required shareholder consents and approvals may not be obtained and the required conditions to closing may not be satisfied, and, if all required consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms,

From time to time, political and public sentiment in connection with the proposed Merger and in connection with other matters could result in a significant amount of adverse press coverage and other adverse public statements affecting Inotiv. Adverse press coverage and other adverse statements, whether or not driven by political or public sentiment, may also result in investigations by regulators, legislators and law enforcement officials or in legal claims. Responding to these investigations and lawsuits, regardless of the ultimate outcome of the proceeding, can divert the time and effort of senior management from the management of Inotiv’s and Envigo’s respective businesses. Addressing any adverse publicity, governmental scrutiny or enforcement or other legal proceedings is time consuming and expensive and, regardless of the factual basis for the assertions being made, can have a negative impact on the reputation of Inotiv and Envigo, on the morale and performance of their employees and on their relationships with their respective regulators. It may also have a negative impact on their ability to take timely advantage of various business and market opportunities. The direct and indirect effects of negative publicity, and the demands of responding to and addressing it, may have a material adverse effect on Inotiv’s and Envigo’s respective businesses, financial condition, results of operations and cash flows.

Completion of the Merger is subject to a number of conditions, including, among other things, obtaining the approval of the Authorized Share Increase Proposal and the Merger Share Issuance Proposal and the expiration of the applicable waiting period under the HSR Act. Such conditions, some of which are beyond Inotiv’s control, may not be satisfied or waived in a timely manner or at all and therefore make the completion and timing of the completion of the Merger uncertain. In addition, the Merger Agreement contains certain termination rights for both Inotiv and Envigo, which if exercised, will also result in the Merger not being consummated. Furthermore, the governmental authorities from which the regulatory approvals are required may impose conditions on the completion of the Merger or require changes to the terms thereof. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the transactions or of imposing additional costs or limitations on Inotiv or Envigo following completion of the Merger, any of which might have an adverse effect on Inotiv following completion of the Merger.

In addition, if the Merger is not completed prior to March 31, 2022, Inotiv would be required to redeem the Convertible Notes at a cash redemption price equal to 101% of the principal amount thereof, plus a make-whole premium, plus accrued and unpaid interest, or negotiate a waiver or amendment of the provisions of its existing credit facility that require it to do so.

In addition to the above risks, if the Merger Agreement is terminated and the Board seeks another acquisition, Inotiv’s shareholders cannot be certain that Inotiv will be able to find a party willing to enter into a transaction as attractive to Inotiv as Envigo.

Inotiv may determine to waive, in whole or part, one or more of the conditions to closing the Merger prior to Inotiv being obligated to consummate the Merger. Inotiv currently expects to evaluate the materiality of any waiver and its effect on Inotiv shareholders in light of the facts and circumstances at the time, to determine whether any amendment of this proxy statement or any re-solicitation of proxies is required in light of such waiver. Any determination whether to waive any condition to the Merger or to re-solicit shareholder approval or amending or supplementing this proxy statement as a result of a waiver will be made by Inotiv at the time of such waiver based on the facts and circumstances as they exist at that time.

In connection with the pendency of the Merger, it is possible that certain persons with whom Inotiv or Envigo have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with Inotiv or Envigo, as the case may be, as a result of the Merger, which could negatively affect Inotiv’s or Envigo’s revenues, earnings and cash flows as well as the market price of the Common Stock, regardless of whether the Merger is completed. Also, Inotiv’s and Envigo’s ability to attract, retain and motivate employees may be impaired until the Merger is completed, and Inotiv’s ability to do so may be impaired for a period of time thereafter, as current and prospective employees may experience uncertainty about their roles within Inotiv following the Merger.

Under the terms of the Merger Agreement, Inotiv and Envigo are subject to certain restrictions on the conduct of business prior to the consummation of the Merger, which may adversely affect Inotiv’s and Envigo’s ability to execute certain of Inotiv’s and Envigo’s business strategies, including the ability in certain cases to modify or enter into certain contracts, acquire or dispose of certain assets, incur or prepay certain indebtedness, incur encumbrances, make capital expenditures or settle claims. Such limitations could negatively affect Inotiv’s and Envigo’s businesses and operations prior to the completion of the Merger.

Inotiv has incurred and is expected to continue to incur a number of non-recurring costs associated with the Merger, combining the operations of Envigo with Inotiv’s and achieving desired synergies. These costs have been, and will continue to be, substantial and, in many cases, will be borne by Inotiv whether or not the Merger is completed. A substantial majority of non-recurring expenses will consist of transaction costs and include, among others, fees paid to financial, legal, accounting and other advisors and employee retention, severance, and benefit costs. Inotiv will also incur costs related to formulating and implementing integration

Lawsuits that may be brought against Inotiv, Envigo or Inotiv’s or Envigo’s directors could also seek, among other things, injunctive relief or other equitable relief, including a request to enjoin Inotiv from consummating the Merger. One of the conditions to the closing of the Merger is that no injunction by any court or other tribunal of competent jurisdiction has been entered and continues to be in effect and no law has been adopted or is effective, in either case that prohibits or makes illegal the closing of the Merger. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, that injunction may delay or prevent the Merger from being completed within the expected timeframe or at all, which may adversely affect Inotiv’s business, financial position and results of operation.

Under the acquisition method of accounting, the total purchase price will be allocated to Envigo’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the Merger. The excess of the purchase price over those fair values, if any, will be recorded as goodwill. To the extent the value of goodwill or intangibles, if any, becomes impaired in the future, Inotiv may be required to incur material non-cash charges relating to such impairment. Inotiv’s operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.

On September 21, 2021, Inotiv filed certain unaudited pro forma condensed combined financial information with the SEC as Exhibit 99.4 to a Current Report on Form 8-K, which information is incorporated by reference into this proxy statement. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of what Inotiv’s actual financial position or results of operations would have been had the Merger been completed on the dates indicated. Further, Inotiv’s actual results and financial position after the Merger may differ materially and adversely from the pro forma information that is incorporated by reference in this proxy statement.

The unaudited pro forma condensed combined financial information has been prepared with the assumption that Inotiv will be identified as the acquirer under GAAP and reflects adjustments based upon preliminary estimates of the fair value of assets to be acquired and liabilities to be assumed.

The success of the Merger will depend, in part, on Inotiv’s ability to realize the anticipated benefits and cost savings from combining Inotiv’s and Envigo’s businesses, and there can be no assurance that Inotiv will be able to successfully integrate or otherwise realize the anticipated benefits of the Merger. Difficulties in integrating Inotiv and Envigo may result in Inotiv performing differently than expected, in operational challenges, or in the failure to realize anticipated expense-related efficiencies. Potential difficulties that may be encountered in the integration process include, among others:

Inotiv may not be able to accomplish this integration process successfully.

Following completion of the Merger, the size of Inotiv’s business will increase significantly beyond its current size. Inotiv’s future success will depend, in part, on Inotiv’s ability to manage this expanded business, which poses numerous risks and uncertainties, including the need to integrate the operations and business of Envigo into Inotiv’s existing business in an efficient and timely manner, to combine systems and management controls and to integrate relationships with customers, vendors and business partners.

Based on the number of outstanding Common Shares as of October 4, 2021, immediately after the Merger is completed, it is expected that Inotiv’s current shareholders will collectively own approximately 64% and the former Envigo shareholders will own, in the aggregate, approximately 36% of the outstanding Common Shares. As a result of the Merger, Inotiv’s current shareholders will own a smaller percentage of Inotiv than they currently own, and as a result will have less influence on Inotiv’s management and policies.

Certain Common Shares that are issued to the Envigo Holders in the Merger will become freely tradable once registered pursuant to the Shareholders Agreement or sold in compliance with Rule 144 promulgated under the Securities Act. The Envigo holders may wish to dispose of some or all of their interests in Inotiv, and as a result may seek to sell their Common Shares. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of Common Shares, may affect the market for, and the market price of, the Common Shares in an adverse manner.

If the Merger is completed and Inotiv’s shareholders, including the Envigo holders, sell substantial amounts of Common Shares in the public market following the closing of the Merger, the market price of the Common Shares may decrease. These sales might also make it more difficult for Inotiv to raise capital by selling equity or equity-related securities at a time and price that it otherwise would deem appropriate.

The trading price and volume of Inotiv’s Common Shares may be volatile following completion of the Merger. The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the Common Stock. As a result, you may suffer a loss on your investment.

The market for the Common Shares will depend on a number of conditions, most of which Inotiv cannot control, including:

shortfalls in the combined company’s operating results from levels forecasted by securities analysts;

investor sentiment toward the stock of animal breeding companies;

changes in revenue or earnings estimates, or changes in recommendations by equity research analysts;

failure of Inotiv to achieve the perceived benefits of the Merger, including financial results and anticipated synergies, as rapidly as or to the extent anticipated by financial or industry analysts;

speculation in the press or investment community;

the failure of research analysts to cover Inotiv’s Common Shares;

sales of the Common Shares by Inotiv, large shareholders or management, or the perception that such sales may occur;

changes in accounting principles, policies, guidance, interpretations or standards;

announcements concerning Inotiv or its competitors;

public reaction to Inotiv’s press releases, other public announcements and filings with the SEC;

strategic actions taken by competitors;

actions taken by Inotiv’s shareholders;

additions or departures of key management personnel;

maintenance of acceptable credit ratings or credit quality;

the general state of the securities markets; and

the risk factors described in this proxy statement and the documents incorporated by reference into this proxy statement.

These and other factors may impair the market for the Common Shares and the ability of investors to sell shares at an attractive price. These factors also could cause the market price and demand for the Common Shares to fluctuate substantially, which may negatively affect the price and liquidity of the Common Shares. Many of these factors and conditions are beyond the control of Inotiv or its shareholders.

Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against Inotiv, could result in very substantial costs, divert management’s attention and resources and harm Inotiv’s business, operating results and financial condition.

You should read and consider risk factors specific to Inotiv’s business that will continue to apply to Inotiv after the completion of the Merger. These risks are described in Inotiv’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 filed with the SEC on December 22, 2020, Inotiv’s most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 filed with the SEC on August 13, 2021, and in Exhibit 99.5 to Inotiv’s Current Report on Form 8-K filed with the SEC on September 21, 2021, which are incorporated by reference herein.

Envigo’s business depends greatly on the expenditures made by the biopharmaceutical industry in research and development, either directly or indirectly via their outsourcing development to CROs. During

Envigo depends on a limited international source of supply for certain products, such as non-human primates, which we sometimes call “NHPs.” Disruptions to their continued supply may arise from health problems, export or import laws/restrictions or embargoes, international trade regulations, foreign government or economic instability, severe weather conditions, increased competition amongst suppliers for models, disruptions to the air travel system, commercial disputes, supplier insolvency, activist intervention, or other normal-course or unanticipated events. Any disruption of supply could harm our business if we cannot address the disruption or are unable to secure an alternative or secondary supply source on comparable commercial terms.

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in Wuhan, Hubei Province, China. We receive a portion of our NHPs from China. Due to restrictions enacted in China to mitigate the transmission of COVID-19, our supply of these NHPs was and continues to be disrupted. While we have been able to secure NHPs from other sources in Asia and Africa, the prolonged disruption has impacted our ability to fill our customer’s orders. Envigo may be able to substitute another NHP, but not in all cases. This disruption has had an adverse effect on our financial results, which is expected to continue during 2021. We will continue to seek alternative NHP sourcing options to meet our customer’s needs.

Our ability to continue to grow and win new business is dependent in large part upon the ability and willingness of the biopharmaceutical industry to continue to spend on compounds in the non-clinical phase of research and development. Fluctuations in the expenditure amounts in each phase of the research and development (“R&D”) budgets of these industries could have a significant effect on the demand for our products and services. R&D budgets fluctuate due to changes in available resources, mergers of biopharmaceutical companies, spending priorities, general economic conditions and budgetary policies. Our business could be adversely affected by any significant decrease in non-clinical research and development expenditures by biopharmaceutical companies.

The RMS industry is highly competitive. Competition ranges from academics and large biopharmaceutical companies, that derive and maintain their own rodent colonies, to commercial competitors that may offer a similar or overlapping range of products and/or services. Some of these competitors have greater capital, technical and other resources than we have, while other competitors that are smaller specialized companies might compete effectively against us based on price and their concentrated size and focus.

Providers of outsourced research models and services compete on the basis of many factors, including the following:

geographic proximity to customer;

price; and

financial stability.

For many years, groups within the scientific and research communities have attempted to develop models, methods and systems that would replace or supplement the use of living animals as test subjects in biomedical research. In addition, technological improvements to existing or new processes, such as imaging and biomarker technology, could result in a refinement in the number of animal research models necessary to conduct the required research. Alternative research methods could decrease the need for research models, and we may not be able to develop new products effectively or in a timely manner to replace any lost sales. In addition, other companies or entities may develop research models with characteristics different than the ones that we produce, and which may be viewed as more desirable by our customers.

It is industry policy to adopt and implement the 3R’s of Replacement, Reduction and Refinement, which could decrease the number of animals used in biomedical research.

The outbreak of COVID-19 is a global pandemic that is significantly affecting our employees, communities and business operations, as well as the U.S. economy and financial markets. As the COVID-19 pandemic continues, our results of operations, financial condition and cash flows have been materially adversely affected. We saw a significant negative impact on our business in the second quarter of 2020 with a lesser impact on the third and fourth quarters of 2020. We also experienced some level of negative impact to continue during the first half of 2021.

From an operational perspective, Envigo is focused on providing the safest possible environment for our employees and our animals. Although we implemented considerable safety measures, as a front-line provider to the life sciences sector, we are deeply exposed to the health and economic effects of COVID-19, many of which could have a material adverse impact on our employees, as well as our business, results of operations, financial condition and cash flows that we are not currently able to fully quantify. Throughout 2020 and the first half of 2021, we did not have to furlough employees as production activities have continued. Although the prospect of furloughs will remain under review during the duration of the COVID-19 pandemic, we do not currently anticipate furloughing any employees for the remainder of 2021.

Broad economic factors resulting from the current COVID-19 pandemic impacting our customers, could also affect our revenue mix and volumes, as well as our ability to collect outstanding receivables. Any increase in the amount or deterioration in the collectability of accounts receivable will adversely affect our results of operations, financial condition and cash flows, requiring an increased level of working capital. If general economic conditions continue to deteriorate or remain uncertain for an extended period of time, our business, results of operations, financial condition and cash flows will be adversely affected.

In addition, our results of operations, financial position and cash flows have been adversely affected by federal or state laws, regulations, orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic or the U.S. healthcare system, which have resulted in direct and indirect restrictions to our business. While we have taken COVID-19 specific safety precautions to provide safe work conditions for our employees and visitors to our facilities, with the exception of Michigan and Indiana there are currently no liability protections afforded the company for employees exposed within our facilities. Therefore, we may be subject to lawsuits from employees and others exposed to COVID-19 at our facilities. Such actions may involve large demands, as well as substantial defense costs, though there is no certainty at this time whether any such lawsuits will be filed or the outcome of such lawsuits if filed. Our professional and general liability insurance may not cover all claims against us.

The foregoing and other continued disruptions to our business as a result of COVID-19 could result in a material adverse effect on our business, results of operations, financial condition and cash flows. Furthermore, the COVID-19 pandemic could heighten the risks in certain of the other risk factors described herein.

In general, our customers order research models and laboratory animals on an as-needed basis. The size and frequency of these orders may be reduced or eliminated with little or no notice. Customer orders may be impacted for various reasons, including:

The loss, reduction in scope or delay of customer orders could materially adversely affect our business.

As discussed above, the COVID-19 pandemic, while resulting in increased demand for NHPs, has also resulted in the delay or termination of customer study’s or orders. Certain of our customers due to government mandated lockdown and restrictions have had to temporarily suspend or scale back research activities at times during the pandemic.

We operate large and complex computer systems that contain confidential customer information. Our information technology systems also contain proprietary and other confidential information related to our business, such as business plans and employee information.

We maintain insurance coverage that covers certain cyber risks. Nevertheless, this insurance coverage is subject to a retention amount and, depending on the incident, the insurance coverage may not be sufficient to cover all of our losses beyond any retention.

We take measures to protect the data on our computer systems from unauthorized access or intrusion, including through our information technology systems, and where we consider it to be appropriate, through the implementation of security measures at our research facilities and by entering into confidentiality agreements with employees and consultants. However, any systems and processes that are designed to protect confidential information and prevent data loss and other security attacks cannot provide absolute security. Our computer systems have been subject to cyber-attacks in the past and may be subject to such attacks in the future. Failure to prevent or mitigate data loss or future security incidents could expose us or our customers to a risk of loss or misuse of such information, cause customers to lose confidence in our data protection measures, damage our reputation, adversely affect our operating results or result in litigation or potential liability. While we continue to monitor, and to improve and enhance where appropriate, our systems in this regard, in the event that our efforts are unsuccessful and the confidentiality of any information is compromised, we could suffer significant harm. In addition, as with all information technology, our systems could become vulnerable to potential damage or interruptions from fires, blackouts, telecommunications failures and other unexpected events, as well as to break-ins, sabotage or intentional acts of vandalism.

Any substantial disruption or resulting loss of data that is not avoided or corrected by backup measures could adversely affect our business and operations.

It is important that our animal production facilities be free of diseases, including infectious diseases, and remain free of contamination. The presence of diseases or infectious agents has the potential to cause substantial loss of animals in our inventory, to result in harm to humans or the public if the disease cannot be contained to animals in inventory and/or to negatively impact the quality of our customers’ research results. These risks may differ substantially according to species. In rodents, most infections are without any apparent clinical signs and therefore pose a risk to the scientific quality of the research performed on the animals rather than to humans. We seek to minimize the risk of these species being infected by stringent biohazard management protocols and health monitoring programs in place in our RMS facilities. The same applies to primates, where all animals are serologically tested for specific diseases in our facilities and at our suppliers. The main concern in this species is the potential for zoonotic infectious disease causing harm to humans. Diseases in dogs bear less risk to us as efficient vaccination programs are available and followed in this species. Nevertheless, we have in the past suffered disease in our animal population and may suffer outbreaks in the future. Any significant disease outbreak at Envigo has the potential to harm our reputation or have a material adverse effect on our financial condition, results of operations, and cash flows. There is also the risk that disease from research models we produce may affect our customers’ facilities.

If disease or contamination occurs in our animal population, it typically requires remediation and cleanup activities that could be costly and time consuming. In certain circumstances, it can require the temporary or permanent closure of an affected facility. We have experienced such closures in the past. The possibility for genetic mutations also exists and may adversely affect our relationship with customers affected by such mutations and may result in an affected customer requesting compensation for damages.

While we endeavor to include provisions in our contracts which entitle us to be indemnified or entitle us to a limitation of liability, these provisions do not uniformly protect us against liability arising from certain of our own actions, such as negligence or misconduct. Moreover, in certain circumstances, we may agree to use contracts drafted by our customers, which may not contain clauses that indemnify us or limit our liability. We could be materially adversely affected if we were required to pay damages or bear the costs of defending any claim which is not covered by a contractual indemnification provision or in the event that a party who must indemnify us does not fulfill our indemnification obligations or which is beyond the level of our insurance coverage or for which insurance coverage is not available. There can be no assurance that we will be able to maintain such insurance coverage on terms acceptable to us.

We may seek to expand our business through acquisitions. However, business and technologies may not be available on terms and conditions we find acceptable. Our credit agreement may impose restrictions on our ability to make acquisitions. We may devote time and resources investigating and negotiating with potential acquisition or alliance partners, but not consummate the transactions. Even if consummated, factors which may affect our ability to grow successfully through acquisitions include:

In the event that an acquired business or technology does not meet our expectations, our results of operations may be adversely affected.

In 2020, 25% of our net revenues from continuing operations were generated by our facilities outside the United States. As a result of these foreign sales and facilities, our operations are subject to a variety of risks unique to international operations, including the following:

We operate on a worldwide basis and generally invoice our customers in the currency of the country in which the customer operates. Management does not hedge against this exposure. While exposure to exchange rate fluctuations may be limited since our sales are generally denominated in the same currency as our costs, trading exposures to currency fluctuations may nonetheless occur as a result of certain revenues being denominated in a currency different from the production site’s currency. There can be no assurance we will not suffer adverse impacts from currency fluctuations in the future. Moreover, since we operate on an international basis, movements in exchange rates can have an impact on our price competitiveness. Exchange rate fluctuations against the British pound have shown increased volatility since Brexit. Our indebtedness is in U.S. dollars whereas we earn significant revenues (approximately 25% of total net revenues from continuing operations in 2020) in other currencies. This may adversely impact our ability to meet our debt obligations.

Unfavorable global economic conditions could negatively affect our business. While it is difficult for us to predict the impact of general economic conditions on our business, these conditions could reduce customer demand for some of our services, which could cause our revenue to decline.

We rely on our facilities. In particular, our facilities are highly specialized and would be difficult to replace in a short period of time. Any event that causes a disruption of the operation of these facilities might impact our ability to provide products to our customers and therefore could have a material adverse effect on our financial condition, results of operations and cash flows.

A significant portion of sales in our RMS business are derived from customers at academic institutions and research laboratories whose funding is partially dependent on funding from government sources, including the U.S. National Institutes of Health (“NIH”) and U.K./EU equivalents. Such funding can be difficult to forecast as it may be subject to the political process. Our sales may be adversely affected if our customers delay purchases as a result of uncertainties surrounding the approval of government budget proposals. A reduction in government funding for the NIH or other government research agencies could adversely affect our business and our financial results. There can be no certainty that government research funding will be directed towards projects and studies that require use of our products and services.

Our RMS business provides animal research models to our customers. Such activities are required for the registration of products under regulatory regimes in the United States, Europe and other countries. Many CROs, biopharmaceutical companies and other research organizations have been targeted by animal rights activists who oppose all testing on animals, for whatever purpose, including the animal testing activities in support of safety and efficacy testing for drug development. These groups, which include groups directed at the industry and us, have publicly stated that the goal of their campaign is to stop animal testing. Acts of vandalism and other acts by animal rights activists who object to the use of animals in product development could have a material adverse effect on our business. These groups have historically targeted CROs, academic institutions and biopharmaceutical companies, but also third parties that do business with CROs, academic institutions and biopharmaceutical companies, including customers, suppliers, advisors, financial advisors, lenders and investors.

Envigo is subject to a variety of governmental regulations, particularly in the United States, Europe, and the United Kingdom, relating to animal welfare and the conduct of our business, including the U.K. Animals (Scientific Procedures) Act 1986 Amendment Regulations 2012 and U.S. USDA Animal Welfare Regulations. Our facilities are therefore subject to routine formal inspections by regulatory and supervisory authorities, including the U.S. FDA, the U.S. USDA and the U.K. Home Office, as well as by representatives from customer companies.

Envigo expends significant resources on compliance efforts. Regulations and guidance worldwide concerning the production and use of laboratory animals for research purposes continue to be updated. For example, the European Directive 2010/63/EU established new standards for animal housing and accommodations that required implementation by 2017; we previously incurred significant capital expenditure to comply with the Directive. Similarly, guidance has been and continues to be developed for other areas that impact the biomedical research community on both a national and international basis, including transportation, import and export requirements of biological materials, and animal housing and welfare. Certain of our customers may require us to comply with any new guidance in advance of our implementation as a condition to being awarded contracts. Conforming to new guidelines may result in increased costs attributable to adding or upgrading facilities, the addition of personnel to address new processes and increased administrative burden.

Envigo is subject to a variety of federal, state, local and foreign environmental laws, regulations, initiatives and permits that govern, among other things: the emission and discharge of materials, including greenhouse gases, in air, land and water; the remediation of soil, surface water and groundwater contamination; the generation, storage, handling, use, disposal and transportation of regulated materials and wastes, including biomedical and radioactive wastes; and health and safety. Failure to comply with these laws, regulations or permits could result in fines or sanctions, obligations to investigate or remediate

Environmental laws, regulations and permits, and the enforcement thereof, change frequently and have tended to become more stringent over time. Compliance with the requirements of laws and regulations may increase capital costs and operating expenses, or necessitate changes to our production processes.

We endeavor to conduct our operations according to all legal requirements, but we may not be in complete compliance with such laws and regulations at all times. We use, and in the past have used, hazardous materials and generate, and in the past have generated, hazardous wastes. We cannot eliminate the risk of accidental contamination or injury from these materials. In the event of such an accident, we could be held liable for any resulting damages and incur liabilities which could exceed our resources. Our costs, liabilities and obligations relating to environmental matters may have a material adverse effect on our business, financial condition, prospects, results of operations and cash flows.

Envigo may seek to develop and market new products and services that complement or expand our existing business or expand our offerings through acquisition. If we are unable to develop new products and services and/or create demand for those newly developed products and services, or expand our offerings through acquisition, our future business, results of operations, prospects, financial condition, and cash flows could be adversely affected.

Envigo believes its success depends on the continued availability of our senior management team, including Dr. Adrian Hardy (CEO) and Stephen Symonds (CFO). If one or more members of the senior management team were unable or unwilling to continue in their present positions, those persons would likely be difficult to replace and our business would likely be harmed. If any of our key employees were to join a competitor or to form a competing company, some of our customers might choose to use the services of that competitor or new company instead of us. Furthermore, customers or other companies seeking to develop in-house capabilities may hire away some of our senior management or key employees. The loss of one or more of these key employees could adversely affect our business.

Because of the specialized scientific nature of our business, we are highly dependent upon qualified scientific, technical and managerial personnel. There is intense competition for qualified personnel in the biopharmaceutical field. The shortage of qualified scientific, technical and managerial personnel, or other factors, might lead to increased recruiting, relocation and compensation costs for these professionals. These increased costs might reduce our profit margins or make hiring new personnel impracticable. In the future, we may not be able to attract and retain the qualified personnel necessary for the conduct and further development of our business. The loss of the services of existing personnel, as well as the failure to recruit additional key scientific, technical and managerial personnel in a timely manner, could have a material adverse effect on our ability to expand our businesses and remain competitive in the segments in which it participates.

Envigo is the defendant in a class action complaint by a former Envigo employee alleging various California Labor Code violations as well as a count of a violation of the Fair Credit Reporting Act (“FCRA”). The plaintiff’s allegations include an alleged failure to pay minimum wage for all hours

As of June 30, 2021, Envigo had $134,650 of indebtedness, net of unamortized financing costs. Envigo’s gross indebtedness is comprised of a $68,866 Seller Note due 2022, a $50,756 Main Street Lending Plan Term Loan, $11,026 of Paycheck Protection Plan (“PPP”) Loans (which was subsequently forgiven), and a $6,423 Second Lien Credit Agreement Note. In addition, our consolidated VIE has an Economic Income Disaster Loan of $141. The PPP Loan of $346 of our consolidated VIE was forgiven on March 5, 2021. In letters dated August 18, 2021 and September 10, 2021, Envigo was notified by the lender of the $2,924 EGSI PPP Loan and the $8,102 Envigo RMS PPP loan, respectively, that the loans had been forgiven by the SBA.

Our indebtedness could have other important consequences to you and significant effects on our business, including:

Our liquidity needs could vary significantly and may be affected by general economic conditions, industry trends, performance and many other factors not within our control. If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to refinance all or a portion of our existing debt. However, we may not be able to refinance our debt or obtain any new or additional debt on favorable terms or at all.

Envigo’s debt agreements contain, and future debt agreements may contain, various covenants that limit its ability to engage in specified types of transactions. These covenants limit Envigo’s ability to, among other things:

Envigo is exposed to changes in interest rates while conducting normal business operations as a result of ongoing financing activities. The majority of Envigo’s debt, as of June 30, 2021, is comprised of floating interest rate borrowings linked to London Interbank Offered Rate (“LIBOR”). As of June 30, 2021, a 100-basis point increase in LIBOR would increase our annual pre-tax interest expense by approximately $1,200.

In 2017, the Financial Conduct Authority (FCA) in the United Kingdom announced that it would phase out LIBOR as a benchmark by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021, or whether different benchmark rates used to price indebtedness will develop. If LIBOR ceases to exist, the method and rate used to calculate our interest rates and/or payments on our debt in the future may result in interest rates and/or payments that are higher than, or that do not otherwise correlate over time with, the interest rates and/or payments that would have been applicable to our obligations if LIBOR was available in its current form, which could have a material adverse effect on our financial position, results of operations and liquidity. In addition, the overall financial market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market could also have a material adverse effect on our financial position, results of operations and liquidity.

We provide defined benefit plans for certain of our past or current U.K. employees. While these plans have been closed to future participants, the plans are underfunded as of June 30, 2021 by $3,055 to meet prospective obligations to plan participants. Obligations under these plans reflect certain actuarial and other assumptions. The funding requirements and cost of these plans are dependent upon these assumptions and various other factors, including the actual return on plan assets, discount rates, participant demographics and changes in pension regulations. Our future costs and funding obligations can increase or decrease significantly depending upon these factors.

Envigo has intangible assets, including goodwill on its balance sheet due to acquisitions of businesses. The initial identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition involve use of management judgment and estimates. The estimates are based on input from accredited valuation consultants and reviews of projected future income cash flows. The use of alternative estimates and assumptions might have increased or decreased the estimated fair value of our intangible assets. If the future growth and operating results of the business are not as strong as anticipated this could impact the assumptions in calculating the fair value of intangible assets. To the extent that intangible assets are impaired, their carrying value will be written down to their implied fair value and a charge made to the income from continuing operations that could materially affect our operating results. During 2020, in large part due to the impact of COVID-19 on our business and results of operations, we recorded an impairment charge of $39,679, which fully impaired our goodwill. In addition, impairment tests

This proxy statement is being provided to Inotiv’s shareholders as part of a solicitation of proxies by the Board for use at the Special Meeting to be held on November 4, 2021, and at any adjournment or postponement thereof. This proxy statement contains important information regarding the Special Meeting, the proposals on which you are being asked to vote and information you may find useful in determining how to vote and voting procedures.

This proxy statement is being first mailed on or about October 8, 2021 to all shareholders of record of Inotiv as of October 4, 2021, the record date for the Special Meeting. Shareholders of record who owned Common Stock at the close of business on the record date are entitled to receive notice of, attend and vote at the Special Meeting. On the record date, there were 15,988,919 Common Shares outstanding.

The Special Meeting will be held at Courthard Marriott Lafayette, 150 Fairington Avenue, Lafayette, Indiana 47905, on November 4, 2021 at 10:00 a.m. Eastern time, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

Only holders of Common Shares of record at the close of business on October 4, 2021, the record date for the Special Meeting, will be entitled to vote at the Special Meeting. You are entitled to one vote for each Common Share that you owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your bank, broker or other holder of record to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 15,988,919 Common Shares outstanding and entitled to vote.

A quorum of Inotiv’s shareholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if the holders of a majority of the outstanding shares entitled to vote as of the close of business on the record date are present in person or represented by proxy at the Special Meeting. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will be counted for the purposes of determining the existence of a quorum at the Special Meeting if a shareholder instructs its bank, broker or other nominee to vote its shares on any proposal. If a shareholder fails to instruct its bank, broker or nominee to vote its shares on any proposal, and such bank, broker or nominee exercises its authority to vote in its discretion on the Authorized Share Increase Proposal, then the shares voted by such bank, broker, or nominee on the Authorized Share Increase Proposal will be counted for the purposes of determining the existence of a quorum at the Special Meeting.

If a quorum is present at the Special Meeting, each proposal presented to the Special Meeting will be approved if the number of votes cast for approval of the proposal exceeds the number of votes cast against approval of the proposal at the Special Meeting. Abstentions and broker non-votes are not votes cast in favor of or against approval of a proposal and, therefore, are not counted for purposes of determining whether a proposal has been approved. Additionally, if a holder of Common Shares instructs its bank, broker or other nominee regarding one or more, but not all, of the proposals to be considered at the Special Meeting, except with respect to “routine” matters on which brokers are permitted to vote by the rules of the New York Stock Exchange, the broker non-vote on the proposals for which direction is not given will not be counted for purposes of determining whether such proposals are approved. The Authorized Share Increase Proposal is considered a “routine” matter; the Merger Share Issuance Proposal, the EIP Amendment Proposal, the Notes Share Issuance Proposal and the Adjournment Proposal are considered “non-routine” matters. The failure to instruct your bank, broker or other nominee how you wish to vote your shares with respect to the Authorized Share Increase Proposal will permit such bank, broker or other nominee to exercise its authority to vote in its discretion on that proposal. The failure to instruct your bank, broker or other nominee how you wish to vote your shares with respect to the Merger Share Issuance Proposal, the EIP Amendment Proposal or the Notes Share Issuance Proposal or the Adjournment Proposal will result in the bank, broker or other nominee being unable to vote your shares on those proposals, and your shares will not count as having been voted on those proposals.

The Merger is conditioned on, among other things, the approval of the Authorized Share Increase Proposal and the Merger Share Issuance Proposal at the Special Meeting. The Merger is not conditioned on the approval of the EIP Amendment Proposal or the Notes Share Issuance Proposal.

It is important for you to note that, in the event that either the Authorized Share Increase Proposal or the Merger Share Issuance Proposal does not receive the requisite vote for approval, Inotiv will not be able to consummate the Merger.

The Board believes that each of the Authorized Share Increase Proposal, the Merger Share Issuance Proposal, the EIP Amendment Proposal, the Notes Share Issuance Proposal and the Adjournment Proposal to be presented at the Special Meeting is in the best interests of Inotiv and Inotiv’s shareholders and unanimously recommends that its shareholders vote “FOR” the Authorized Share Increase Proposal, “FOR” the Merger Share Issuance Proposal, “FOR” the EIP Amendment Proposal, “FOR” the Notes Share Issuance Proposal and “FOR” the Adjournment Proposal.

If you are a holder of Common Shares of record, you may vote by mail, in person at the Special Meeting, by phone using the toll-free phone number on your proxy card or through the Internet using the instructions described on the proxy card. Each share of Common Stock that you own in your name as of the record date entitles you to one vote on each of the proposals for the Special Meeting. Your one or more proxy cards show the number of Common Shares that you own.

You can change or revoke your proxy at any time before the final vote at the Special Meeting. If you are the shareholder of record of your shares, you may revoke your proxy by:

The Special Meeting has been called only to consider the approval of the Authorized Share Increase Proposal, the Merger Share Issuance Proposal, the EIP Amendment Proposal, the Notes Share Issuance Proposal, and the Adjournment Proposal. Under the Second Amended and Restated Bylaws of Inotiv (the “Bylaws”), other than procedural matters incident to the conduct of the Special Meeting, no other matters may be considered at the Special Meeting if they are not included in this proxy statement, which serves as the notice of the Special Meeting.

Inotiv is soliciting proxies on behalf of its Board. This proxy solicitation is being made by mail, but also may be made by phone or in person. Inotiv and its directors, officers and employees may also solicit proxies in person. Inotiv will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions.

Inotiv will bear the entire cost of the proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Inotiv will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding the proxy materials to the Inotiv shareholders. Directors, officers and employees of Inotiv who solicit proxies will not be paid any additional compensation for soliciting proxies.

On September 21, 2021, we and two of our newly formed, wholly owned subsidiaries entered into the Merger Agreement with Envigo and Shareholder Representative Services LLC, pursuant to which we agreed to acquire Envigo through the merger of one of our newly formed subsidiaries with and into Envigo, with Envigo continuing as the surviving corporation of the Merger The Merger Consideration to be paid by us pursuant to the Merger Agreement consists of $210.0.0 million in cash, subject to adjustment as set forth in the Merger Agreement, and approximately 9,036,571 of our Common Shares, subject to adjustment as set forth in the Merger Agreement, which shares had an aggregate market value of approximately $275.0 million based on the volume weighted average sales price of such shares as traded on the NASDAQ Capital Market calculated for the 20-trading day period ending on September 20, 2021. It is anticipated that, upon completion of the Merger, our current shareholders will own approximately 64% of our outstanding common shares and the former stockholders and option holders of Envigo will own or have the right to acquire, in the aggregate, approximately 36% of our outstanding Common Shares.

On the date we signed the Merger Agreement, we entered into a commitment letter(the “Senior Debt Commitment Letter”) with financial institutions, arranged by Jefferies Finance LLC. The commitment we received is for a new senior secured term loan facility in an aggregate principal amount of $165.0 million, which (“Senior Term Loan”), a senior secured delayed draw term loan facility in an aggregate principal amount of $35.0 million and a senior secured revolving credit facility in an aggregate principal amount of $15.0 million, which is to be provided on the terms and subject to the conditions set forth in the Senior Debt Commitment Letter. We refer to the credit facilities to be provided pursuant to the Senior Debt Commitment Letter as the “Senior Credit Facility”. On the same date, we entered into a commitment letter with Jefferies LLC to purchase $110.0 million of our unsecured Convertible Notes on the terms and subject to the conditions set forth in the commitment letter (the “Notes Commitment Letter”). We intend to use borrowings under the Senior Term Loan and the net proceeds from this offering to pay the cash portion of the merger consideration and fees, commissions and expenses related to the Envigo acquisition and these financings.

Envigo is primarily a products business that provides research-quality animals for use in laboratory tests, as well as standard and custom laboratory animal diets and bedding and other associated services for contract research organizations, biopharmaceutical companies, universities, governments and other research organizations. It provides customers with laboratory animals used in basic research and product development and non-clinical testing of compounds to support the development and approval of new medicines. Utilizing its portfolio of products, Envigo enables its customers to create a more flexible product development model and reduce their costs, enhance their productivity, and increase speed to market.

Envigo is a leading commercial provider of RMS products and services globally and has been supplying research models since 1931. With over 130 different strains, Envigo is a global leader in the production and sale of the most widely used rodent research model strains, and is able to offer a broad range of species in its sector. Envigo also manufactures and sells premium Teklad brand diets for laboratory animals and provides a variety of related services that are designed to assist clients in the use of animal models in research and development. Envigo maintains production centers, including barrier and isolator facilities, in the U.S., U.K., mainland Europe, and Israel.

Envigo’s RMS business is comprised of (1) Research Models, (2) Diets and Bedding, and (3) Research Model Services.

Research Models. The research models business is comprised of the commercial production and sale of laboratory animals and research models, principally purpose-bred rats and mice and large animal models (NHPs, canines and rabbits) for use by researchers. Envigo provides models to numerous customers around the world, including many academic institutions, government agencies, biopharmaceutical companies, and contract research organizations. Envigo has a global footprint with production facilities strategically located in six countries. Its operations are located in close proximity to its customers, enabling Envigo to provide consistent customer service with a high degree of focus on animal welfare.

Envigo’s research models include standard stocks and strains, immunocompromised models (which are useful for oncology research), disease models (which are in demand as early-stage research tools) and genetically-engineered models (“GEMs”, which are often created for specific research projects). The FDA and other regulatory agencies require that the safety and efficacy of new drug candidates be tested on research models like ours prior to product registration. As a result, Envigo’s research models are an essential part of the drug research and development process.

Small Animal Research Models. Envigo’s rodent species have been, and continue to be, some of the most extensively used research models in the world, largely as a result of Envigo’s geographic footprint and commitment to quality and customer service. Envigo’s products create high customer loyalty, due to the strong preference of customers to avoid variability in their data and to work with an industry founder with more than 85 years of experience. Envigo’s small animal research models are bred and maintained in controlled environments, which are designed to ensure that the models are free of specific viral and bacterial agents, and other contaminants that can disrupt research operations and distort research results. With Envigo’s production capabilities, we strive to consistently deliver high-quality research models worldwide.

Certain of Envigo’s models are proprietary, disease-specific rodent models used to research treatments for diseases such as diabetes, obesity, cardiovascular and kidney disease.

Large Research Models. Envigo’s large animal portfolio includes non-human primates, which we call “NHPs”, canines and rabbits. NHPs are generally imported into the U.S. from Asia and Africa, with very limited breeding in the U.S. Envigo operates a large quarantine facility in the U.S. to house and clear these imported animals, ensuring they have high health status before onward shipment to customers. NHPs are used by Envigo’s customers primarily for the safety testing of new biological therapies. Canines are purpose-bred in the U.S. and used primarily for the safety testing of new chemical therapies. Rabbits are bred in both the U.K. and U.S. and utilized primarily for the reproductive safety testing of potential new therapies.

Teklad has been manufacturing animal diets for over 40 years and offers a full line of off-the-shelf formulations as well as custom diets to meet our customers’ specific research needs. A team of nutritionists, including several PhD’s, works with customers to determine the best diet for their research objectives. If a custom diet is required, Envigo’s nutritionists define the appropriate formula and its custom diet manufacturing line produces the feed. Envigo’s manufacturing facilities are ISO 9001:200.08 certified.

Teklad diets are manufactured from natural ingredients and use fixed formulas. In conjunction with strict quality standards for raw materials, this approach ensures quality and consistency by minimizing variability of both nutrients and certain natural chemicals in the diet which might affect a research study. Teklad offers a variety of bedding and enrichment products to support model breeding, weaning, and holding.

Research Model Services. Envigo also offers a variety of services designed to support our customers’ use of research models in basic research and product development. These services include specialized surgical modifications such as cannulation, implants, and the creation of surgically derived disease state models. Envigo also provides contract breeding, contract colony management, health monitoring, quarantine, cryopreservation, rederivation and revitalization services, as well as antibody development and production. In addition, Envigo offers care and boarding services for customer-owned animals at its facilities. Lastly, through the GEMS business, Envigo is able to offer the creation of new transgenic research models specific to individual customers’ needs.

Envigo RMS Holding Corp. (the “Parent”) was formed on April 9, 2019 as a wholly owned subsidiary of Envigo Holdings, Inc. (“Holdings”) for the sole purpose of owning Holdings’ research models and services businesses (“RMS”) and certain other assets. On June 3, 2019, in anticipation of the acquisition of the majority of Holdings’ contract research services (“CRS”) operating segment by Laboratory Corporation of America Holdings’ (“LabCorp”) Covance Drug Development segment (“Covance”), Holdings executed a group restructuring and spin-off whereby Holdings’ RMS operating subsidiaries were contributed to the Parent. The group restructuring was completed by entities under common control with the shareholder group of the Parent remaining substantially the same. Concurrent with the spin-off, Envigo RMS LLC, a wholly owned subsidiary of the Parent, acquired Covance Research Products, Inc. (“CRP”) (later renamed Envigo Global Services Inc. or “EGSI”). The sale of the CRS business to LabCorp and the purchase of the EGSI business from LabCorp are referred to collectively as the LabCorp Transaction. Envigo RMS Holding Corp.’s principal offices are located at 8520 Allison Pointe, Suite 400, Indianapolis, IN 46250. Envigo’s telephone number is (317) 806-6080.

The statement of operations information presented for the year ended December 31, 2020 and the period June 3, 2019 to December 31, 2019 are derived from Envigo’s audited financial statements for the year ended December 31, 2020 which are filed as Exhibit 99.2 to the Current Report on Form 8-K filed by Inotiv on September 21, 2021. The direct revenue and direct expenses for the period January 1, 2019 to June 2, 2019 and for the year ended December 31, 2018 are derived from the unaudited Special Purpose Combined Financial Statements provided in Annex D of this proxy statement. The unaudited Special Purposes

Cost of sales for the year ended December 31, 2020 were $192.4 million (78.1% of net revenue), an increase of 21.0% from cost of sales of $159.0 million (77.0% of net revenue) for Combined 2019. The increase was primarily driven by a full year of costs in 2020 for the EGSI business acquired in June 2019 and the GEMS business acquired in December 2019. Cost category increases included $13.2 million in direct costs primarily driven by EGSI transportation and direct material costs, $8.0 million in inventory costs (in line with the volume impacts discussed in revenue above), $6.4 million in higher compensation and benefit costs driven by a full year of EGSI, $4.1 million in other costs including EGSI related boarding and insurance costs and $2.1 million in higher facility costs related to higher rent, utilities and depreciation from the EGSI sites acquired in June 2019.

SG&A for the year ended December 31, 2020 was $40.6 million (16.5% of net revenue), an increase of 36.2% compared to $29.8 million (14.4% of net revenue) during Combined 2019. SG&A for the year ended December 2020 was higher due to 2020 include a full year of the EGSI business in 2020. Year ended December 31, 2020 saw increases in employee compensation and benefit costs, higher professional fees and higher IT equipment costs. These increases were primarily driven by a full year of costs incurred by Envigo that were recorded at the parent company level prior to the LabCorp Transaction in June 2019.

Amortization of intangible assets was $2.5 million during the year ended December 31, 2020 compared to $2.2 million for Combined 2019. The increase is primarily due to a full year of amortization of the EGSI intangibles in the year ended December 31, 2020 and reduction of useful lives in 2020, partially offset by amortization reductions from the impairment of certain intangibles in 2020.

During the year ended December 31, 2020, we recorded impairment losses of $39.7 million and $9.8 million on our goodwill and intellectual property intangible assets, respectively. During 2020, due to the negative impact that COVID-19 was having on our business, we performed quantitative impairment tests using a discounted cash flow model to compare the fair value of our goodwill and customer relationships and intellectual property intangible assets to their carrying values. The analysis resulted in the full impairment of our goodwill and impairment of certain intellectual property intangible assets. In addition, we recorded an impairment of $0.3 million on the land at our Haslett facility in conjunction with a plan to close and relocate the Haslett operations into existing sites.

During the year ended December 31, 2020, we recorded a gain of $12.4 million on the sale of our Indian Origin Rhesus colony.

Other operating expense for the year ended December 31, 2020 was $5.4 million including $2.8 million for restructuring activities, $2.3 million for costs incurred related to the integration of EGSI into the Envigo systems and processes and $0.3 million for COVID-19 related costs. The restructuring expenses include $0.9 million for costs associated with the closure and relocation of the Bresso, Italy facility to existing locations, $0.9 million for audit, tax and consulting costs with accounting for the LabCorp transaction and tax compliance filings, $0.4 million for employee related cost incurred as we continue the transition of our North America transportation service to our consolidated VIE, and $0.3 million in costs associated with legal entity restructuring and spin-off just prior to the LabCorp Transaction.

Other operating expense for Combined 2019 (related to the period June 3, 2019 to December 31, 2019) was $11.3 million including $6.0 million for costs associated with the LabCorp Transaction, $3.4 million for costs incurred related to the integration of EGSI into Envigo and $1.8 million for restructuring activities. The restructuring expenses represent severance and other costs associated with reorganizing Envigo post the LabCorp Transaction.

Net interest expense (including related party interest) was $9.4 million for the year ended December 31, 2020. Interest expense includes $8.4 million in interest and debt issuance cost amortization associated with the Seller Note, $0.7 million for the financing component of certain product revenue transactions, $0.2 million in interest and debt issuance cost and original issuance discount amortization associated with the Main Street Term Loan, and $0.1 million in interest and debt issuance cost and original issuance discount amortization associated with the Second Lien Loan.

Net interest expense (including related party interest) for Combined 2019 (related to the period June 3, 2019 to December 31, 2019) was $6.2 million related to interest and debt issuance cost amortization on the Seller Note issued as part of the LabCorp Transaction.

Gain on bargain purchase of business of $2.1 million in Combined 2019 (related to the period June 3, 2019 to December 31, 2019) represents the gain on the bargain purchase of the Envigo GEMS business from Horizon Discovery Group plc for one dollar.

Gain on the extinguishment of debt for the year ended December 31, 2020 of $0.6 million represents the write-off of accrued interest and unamortized debt issuance costs related to the voluntary prepayment of $40.0 million of the outstanding balance of the Seller Note.

Foreign exchange losses for the year ended December 31, 2020 of $1.6 million represent realized and unrealized foreign exchange losses primarily associated with the remeasurement of intercompany loans.

Foreign exchange gains for Combined 2019 (related to the period June 3, 2019 to December 31, 2019) of $0.4 million represent realized and unrealized foreign exchange gains primarily associated with the remeasurement of intercompany loans.

Cost of sales for Combined 2019 were $159.0 million (77.0% of net revenue), an increase of 38.0% from cost of sales of $115.2 million (73.0% of net revenue) for the year ended December 31, 2018. The increase was primarily driven by a full year of costs in 2020 for the EGSI business acquired in June 2019 and the GEMS business acquired in December 2019. Cost category increases included $22.5 million in inventory costs (in line with the volume impacts discussed in revenue above), $7.1 million in higher compensation and benefit costs, $6.9 million in direct costs driven by higher transportation and direct material costs, $2.7 million in higher facility costs driven by higher rent and depreciation from the EGSI sites acquired in June 2019, $1.7 million for inventory step-up cost amortization from the acquisition of the EGSI business and $1.7 million in other costs primarily related to boarding costs.

SG&A for Combined 2019 was $29.8 million (14.4% of net revenue), an increase of 84.4% compared to $16.2 million (10.3% of net revenue) during the year ended December 31, 2018. The period June 3, 2019 to December 31, 2019 included in Combined 2019 includes corporate costs excluded by definition from direct expenses. Combined 2019 saw higher employee compensation and benefit costs driven by staffing needs post LabCorp Transaction, higher professional fees incurred at Envigo that were previously carried at the parent level prior to LabCorp Transaction and higher IT equipment costs now incurred by Envigo previous posted at the parent level prior to the LabCorp Transaction.

Amortization of intangible assets was $2.2 million during Combined 2019 compared to $1.8 million for the year ended December 31, 2018. The increase is primarily due to amortization of the intangibles associated with the EGSI business acquired in June 2019, offset in part by impairment of the customer relationship intangible of our Italian subsidiary.

Other operating expense for Combined 2019 (related to the period June 3, 2019 to December 31, 2019) was $11.3 million including $6.0 million for costs associated with the LabCorp Transaction, $3.4 million for costs incurred related to the integration of EGSI into the Envigo and $1.8 million for other restructuring activities. The restructuring expenses represent severance and other costs associated with reorganizing Envigo post the LabCorp Transaction.

Net interest expense for Combined 2019 (related to the period June 3, 2019 to December 31, 2019) was $6.2 million related to interest and debt issuance cost amortization on the Seller Note issued as part of the LabCorp Transaction.

The increase includes a $13.8 million increase in product revenues and an increase of $3.1 million in services revenue. The increase in products revenue was primarily driven by volume increases across all product lines, as volumes in the three months ended June 30, 2020 were negatively impacted by the global shutdowns as a result of COVID-19. The increase in services revenue is driven by higher boarding revenue from additional animal colonies including the animal colony sold in December 2020.

Cost of sales for the three months ended June 30, 2021 were $53.8 million (75.3% of net revenue), an increase of 14.4% from cost of sales of $47.0 million (86.4% of net revenue) for the three months ended June 30, 2020.

The increase was driven by $3.5 million in higher direct costs due to $3.5 million in higher transportation costs, $1.0 million in higher direct material costs, partially offset by $1.0 million in lower boarding costs, $1.0 million in higher inventory costs (in line with the volume impacts discussed in revenue above), $0.9 million in higher compensation and benefit costs, $0.8 million in higher facility costs and $0.3 million in higher sales tax and $0.1 million in higher travel costs.

SG&A for the three months ended June 30, 2021 was $11.2 million (15.6% of net revenue), an increase of 9.1% compared to $10.2 million (18.8% of net revenue) during the three months ended June 30, 2020.

The main variances were $0.8 million in higher compensation and benefit costs and $0.4 million in loss on disposal of fixed assets, partially offset by $0.1 million in lower depreciation expense.

Amortization of intangible assets was $0.7 million during both the three months ended June 30, 2021 and 2020.

Other operating expense of $1.4 million for the three months ended June 30, 2021 includes $0.8 million for the ERP system upgrade, $0.5 million for restructuring activities and $0.1 million related to the Company’s response to the coronavirus pandemic. The ERP system upgrade expenses include $0.6 million for IT service contracts and licenses and $0.2 million for external labor and consulting fees incurred as we prepare the system for upgrade, which is expected to take place during the third quarter of 2021. The restructuring expenses include $0.4 million for employee related cost incurred as we continue the transition of our North America transportation service to our consolidated VIE, along with costs associated with the closure and relocation of the Bresso, Italy facility to an existing locations, and the relocation of our small animals operations from our Haslett, Michigan site to other U.S. sites. Other operating expense of $1.1 million for the three months ended June 30, 2020 includes $0.6 million related to costs incurred to integrate EGSI into the Envigo systems and processes, $0.4 million in restructuring costs primarily related to the professional fees

Net interest expense (including related party interest) was $2.0 million for the three months ended June 30, 2021 compared to $2.4 million for the three months ended June 30, 2020. The decrease of $0.4 million was primarily due to the lower interest rate on the Main Street Term Loan, the proceeds of which were used to reduce the higher interest rate bearing Seller Note, partially offset by increased debt levels under the Main Street Loan, higher rate borrowings under the Second Lien Loan and higher debt issuance cost and original issuance discount amortization.

Foreign exchange losses for the three months ended June 30, 2021 were $0.3 million compared to foreign exchange losses for the three months ended June 30, 2020 of $0.1 million.

During the three months ended June 30, 2021, we recorded income tax expense of $0.6 million (or 25.7%) on net income from continuing operations before income taxes of $2.3 million. The tax rate differs from the federal statutory rate primarily due to the mix of income before income taxes between the U.S. and foreign countries and the valuation allowance recorded on the Company’s net deferred tax assets.

During the three months ended June 30, 2020, the Company recorded income tax benefit of $271 (or 3.9%) on net losses from continuing operations of $6,948. The tax rate differs from the federal statutory rate primarily due to cumulative impact of the adjustment of the full-year forecasted tax rate, partially offset by benefit from a carryback refund of $809.

During the three months ended June 30, 2021 loss from discontinued operations was $0.1 million from our CRS Israel business compared to loss from discontinued operations of less than $0.1 million during the three months ended June 30, 2020.

The increase includes a $20.9 million increase in product revenues and an increase of $4.9 million in services revenue. The increase in products revenue was primarily driven by volume increases across all product lines, as volumes in the six months ended June 30, 2020 were negatively impacted by the global shutdowns as a result of COVID-19. The increase in services revenue is driven by higher boarding revenue from additional animal colonies including the animal colony sold in December 2020.

Cost of sales for the six months ended June 30, 2021 were $105.8 million (75.0% of net revenue), an increase of 12.0% from cost of sales of $94.4 million (81.9% of net revenue) for the six months ended June 30, 2020.

SG&A for the six months ended June 30, 2021 was $22.8 million (16.2% of net revenue), an increase of 10.3% compared to $20.7 million (18.0% of net revenue) during the six months ended June 30, 2020.

Foreign exchange gains for the six months ended June 30, 2021 were $0.5 million compared to foreign exchange losses for the six months ended June 30, 2020 of $1.9 million.

During the six months ended June 30, 2021, we recorded income tax expense of $1.5 million (or 25.2%) on net income from continuing operations before income taxes of $6.0 million. The tax rate differs from the federal statutory rate primarily due to the mix of income before income taxes between the U.S. and foreign countries and the valuation allowance recorded on the Company’s net deferred tax assets.

During the six months ended June 30, 2020, we recorded income tax benefit of $5,326 (or 8.9%) on net losses from continuing operations of $60,038. The tax rate differs from the federal statutory rate primarily due to the tax impact of non-deductible goodwill impairment, valuation allowance against the ability to realize net operating losses in certain of our foreign operations, foreign tax-rate differentials, partially offset by benefit from a carryback refund of $809 and state income taxes.

During the six months ended June 30, 2021, income from discontinued operations was less than $0.1 million from our CRS Israel business, compared to losses from discontinued operations of less than $0.1 million during the six months ended June 30, 2020.

On September 21, 2021, we entered into the Merger Agreement with Envigo pursuant to which we agreed, subject to certain conditions, to acquire Envigo through the merger of Envigo with a newly formed, wholly owned subsidiary of ours.

Under the terms and conditions of the Merger Agreement, the aggregate consideration to be paid to the holders of outstanding equity interests in Envigo in the Merger will consist of cash consideration of $210.0 million, subject to adjustment as set forth in the Merger Agreement, and approximately 9,036,571 Inotiv common shares, subject to adjustment as set forth in the Merger Agreement, which shares had an aggregate market value of approximately $275.0 million based on the volume weighted average sales price of such shares as traded on the NASDAQ Capital Market calculated for the 20-trading day period ending on September 20, 2021. It is anticipated that, upon completion of the Envigo Acquisition, our current shareholders will own approximately 64% of our outstanding common shares and the former equity holders of Envigo will own, in the aggregate, approximately 36% of our outstanding common shares.

Consummation of the Merger is subject to certain conditions set forth in the Merger Agreement, including the approval of the Merger Agreement and the Merger by the Envigo stockholders (which approval was obtained on September 21, 2021), the approval by our shareholders of proposals to increase the number of our authorized shares to an amount that will allow us to satisfy our obligation to issue the Common Shares required by the Merger Agreement and to approve the issuance of the Common Shares to be issued upon consummation of the Merger as required by applicable NASDAQ rules, the expiration of any applicable waiting period under U.S. and applicable foreign antitrust, competition and foreign direct investment laws, performance by the parties of their material covenants under the Merger Agreement, accuracy of representations and warranties set forth in the Merger Agreement, the absence of a material adverse effect (as defined in the Merger Agreement) with respect to either party, and other customary closing conditions. Because the number of common shares to be issued in the Merger would exceed 20% of our outstanding common shares, NASDAQ Listing Standard 5635(a) requires that we obtain shareholder approval prior to issuing the shares in the Merger. In addition, the number of shares to be issued in the Merger would exceed the number of authorized shares we have available for issuance under our articles of incorporation. The Merger Agreement requires us to call a special meeting of our shareholders and to submit to our shareholders at the special meeting proposals to (i) amend our articles of incorporation to increase the number of our authorized shares to an amount that would be sufficient to allow the consummation of the Merger and (ii) approve the issuance of the common shares to be issued pursuant to

The Merger Agreement may be terminated prior to the consummation of the Envigo Acquisition by mutual agreement of the parties, by either party if the other party breaches its obligations under the Merger Agreement, or by either party if the transaction has not been consummated on or prior to the end date set forth in the Merger Agreement (which date is subject to extension as described therein), or any governmental authority has issued an order making the transaction illegal or otherwise prohibiting its consummation.

We have received commitments from a group of lenders and from Jefferies to provide $275.0 million of secured and unsecured financing to pay cash portion of the merger consideration and related transaction expenses and to provide us with additional liquidity following the completion of the Merger Acquisition. The commitments are subject to certain conditions set forth therein, including the accuracy of certain representations and warranties made by Envigo in the Merger Agreement and to be made by us in the documents governing the financing, the execution of definitive agreements, consummation of the Merger, delivery of customary closing documents and the absence of any material adverse effect (as defined in the Merger Agreement).

The consummation of the merger is conditioned upon our entering into a shareholders agreement (the “Shareholders Agreement”) with certain stockholders of Envigo, including Jermyn Street and Savanna Holdings, who we sometimes refer to collectively as the “Nominating Holders”. The Nominating Holders own, in the aggregate, approximately 72.6% of the outstanding voting stock of Envigo. The Shareholders Agreement provides that, at the effective time of the Merger, our Board will consist of our CEO, our Chief Strategy Officer, two of our current independent directors, one person to be designated by Jermyn Street, one person to be designated by Savanna Holdings and one person designated by our nominating committee and approved by the Nominating Holders (the “Approved Director”). After the consummation of the Merger 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

The Shareholders Agreement requires the shareholders who are parties thereto to refrain from selling or otherwise transferring the shares they receive in the Merger, subject to certain exceptions set forth in the Shareholders Agreement, for a period of 180 days after the effective time of the Merger. The Shareholders Agreement also restricts each Nominating Holder, until such Nominating Holder no longer holds 5% or more of our outstanding Common Shares, a change of control transaction, a material breach of the Shareholders Agreement by us, or any winding up, dissolution or liquidation or bankruptcy (subject to certain permitted exceptions) from (i) transferring shares to our competitors or to persons who, after the transfer, would own more than 10% of our outstanding common shares, subject to certain permitted exceptions; (ii) making any public announcement, proposal or offer, with respect to (a) acquisitions of additional Common Shares, (b) any restructuring, recapitalization, liquidation or similar transaction, (c) the election of directors other than the Nominating Holders’ designees or (d) changes to our Board and calling of special meetings; (iii) publicly seeking a change in the composition or size of our Board; (iv) acquiring beneficial ownership of additional voting securities of ours; (v) calling for, initiating, proposing or requisitioning a call for any general or special meeting of our shareholders, (vi) publicly stating an intention, planning or arranging to do any of the foregoing or assisting, instigating, encouraging or facilitating any third party to do any of the foregoing.

The Shareholders Agreement requires the shareholders who are parties thereto to cause all voting securities owned by them to be present at any annual or special meeting at which directors are to be elected, to vote such securities either as recommended by our Board, or in the same proportions as votes cast by other voting securities with respect to director nominees or other nominees and in favor of any director nominee of the Nominating Holders, and not to vote in favor of a change of control transaction pursuant to which the Nominating Holders would receive consideration that is different in amount or form from other shareholders unless approved by our Board.

The Shareholders Agreement requires us to file with the SEC, and use our commercially reasonable efforts to cause to become effective no later than 180 days after the effective time of the Merger, a registration statement to register for resale the common shares received by the shareholders in the Merger and any other securities issued by or issuable with respect to such common shares by way of a stock split, stock dividend, reclassification, subdivision or reorganization, recapitalization or similar event. The Shareholders Agreement also entitles the shareholders to require us to file additional registration statements after we become eligible to use Form S-3 for such registrations. The Shareholders Agreement sets forth certain customary procedures to be followed and provides for customary rights and obligations of us and the holders in connection with the registration of the shareholders’ shares and provides that we may delay filing of such registration statements in certain circumstances set forth in the Shareholders Agreement.

On September 21, 2021, we announced that we had entered into the Merger Agreement and would acquire Envigo. The proposed Envigo acquisition was the result of the ongoing and disciplined execution by our executive team to continue its expansion of services and further vertical integration of the Pre-clinical CRO services and products business. The Envigo acquisition is in line with our framework for evaluating potential strategic combinations considering current and expected business and economic conditions, developments in the discovery and development of drugs and medical devices, and our position in the industry. Among other things, the framework focuses on generating long-term value by looking for accretive opportunities, adding and capturing the benefits of scale to create efficiencies, to grow free cash flow and to maintain strength of the balance sheet, and ultimately, create a preferred destination for people to advance their careers, provide the best service and value for our clients, and provide a meaningful return to shareholders. With the assistance of our legal and financial advisors, our management conducted its evaluation of Envigo.

Management is continually engaged in discussions with other companies to identify potential business combinations, joint ventures, and other transactions that meet Inotiv’s strategic framework, further its strategic objectives and enhance shareholder value. Senior management regularly briefs the Board on these discussions.

On November 19, 2019, Robert Leasure, Jr., Inotiv’s President and CEO, first met Scott Cragg of Jermyn Street Associates, and a Director of Envigo, at Mr. Cragg’s office in New York City as part of an ongoing effort to meet leaders in the industry and ongoing efforts to evaluate strategic opportunities.

On April 23, 2021, Mr. Leasure received an email (on which Mr. Cragg was copied) from a representative of Bank of America Securities, who offered to set up a phone call between Mr. Cragg and Mr. Leasure to discuss each other’s business and determine ways in which the two companies could potentially work together.

On April 28, 2021, the representative from Bank of America, Mr. Cragg and Mr. Leasure had a conference call and re-introduction and discussed current potential strategic business combination benefits.

On April 30, 2021, Mr. Cragg made an e-mail introduction for Mr. Leasure to Adrian Hardy, the CEO of Envigo.

On May 5, 2021, Mr. Leasure and Mr. Hardy had a phone call to discuss business opportunities related to combining the Companies.

On May 16, 2021, Mr. Leasure and Mr. Cragg had a telephone call with a representative of Bank of America Securities to review discussion materials which outlined preliminary considerations for a business combination between Inotiv and Envigo.

On May 21, 2021, Envigo and Inotiv entered into a Mutual Non-Disclosure Agreement.

On May 24, 2021, Mr. Leasure received an Envigo Corporate Overview from Mr. Hardy which provided more details about the Envigo business.

During June, July, August and September, Mr. Cragg and Mr. Hardy and other members of the Envigo Management team had consistent calls every week and followed up regarding business matters, due diligence, agreements, closing issues and post-closing operations.

During June, July and August, Mr. Leasure had calls with Bank of America Securities to discuss the potential engagement of the firm and financing structures for the proposed transaction.

On June 15, 2021, Mr. Leasure received a “Combination Analysis” from Bank of America Securities.

On June 16, 2021, Mr. Leasure received an updated “Combination Analysis” from Bank of America Securities. This presentation was shared with Board members.

On June 17, 2021, Mr. Cragg, Mr. Hardy, Jim Harkness, Envigos’s Chief Operating Officer, Mr. Leasure and John Sagartz (Inotiv’s Chief Strategy Officer) met in New York City to discuss Inotiv’s strategic vision, Envigo revenue and growth opportunities, and the logic for combining the two companies. Messrs. Cragg, Hardy and Harkness provided a corporate overview of Envigo that covered multiple aspects of Envigo, including assets, strategy, operations, financial position, marketing and business development, and commercial agreements. Mr. Leasure and Dr. Sagartz provided a similar overview of Inotiv based on publicly available information. At this meeting, Mr. Cragg and Mr. Leasure discussed a range of valuations and potential deal structures.

On June 27 and 28, 2021, the senior executives from both Inotiv and Envigo, including Mr. Leasure and, Mr. Hardy met in Indianapolis to review business opportunities, organization opportunities, outline strategic opportunities and synergies for a combined company. The Inotiv team left the meeting with additional due diligence related follow-up questions.

On July 2, 2021, Mr. Leasure updated Board members on status of due diligence and potential deal structure for Envigo.

On or about July 2, 2021, Inotiv contacted its regular outside counsel, Ice Miller LLP, to represent Inotiv in connection with the potential combination between Inotiv and Envigo.

On Jul 3, 2021, Mr. Leasure received an email from Bank of America Securities with some due diligence recommendations.

On July 7, 2021, Inotiv held a Board call in which Mr. Leasure updated the Board members on recent mergers and acquisition discussions and strategy, including developments in the discussions with Envigo.

On July 7, 2021, Mr. Leasure received a draft agreement from Bank of America Securities with proposed engagement terms, but without a fee proposal or financing proposal.

On July 8, 2021, Mr. Leasure and Beth Taylor, Vice President of Finance and Chief Financial Officer of Inotiv, met with representatives of Colliers Securities in Indianapolis to discuss the potential acquisition of Envigo and potential transaction structures and financing opportunities with Colliers. After this meeting, Colliers Securities responded with thoughts on financings and structure but did not submit any proposals.

On July 10, 2021, Mr. Leasure provided the Board members with an update on the discussions with Envigo and the interactions with the investment banks.

On July 12, 2021, Mr. Leasure emailed an initial non-binding indication of interest letter and a draft of a proposed exclusivity agreement to Mr. Cragg. The non-binding indication of interest proposed a transaction in which Inotiv would acquire Envigo in a merger transaction with a proposed purchase price of $485.0 million, consisting of $225.0 million in cash, subject to a working capital adjustment, and $260.0 million in Inotiv Common Shares. The letter also proposed that each of the two largest shareholders of Envigo would have the right to appoint one person for election to the Inotiv Board and to approve one additional member nominated by Inotiv for as long as it held at least 10% of Inotiv’s fully diluted shares. The letter included a financing contingency and included a description of certain assumptions and conditions related to the proposal.

On July 13, 2021, Mr. Leasure received a revised draft engagement letter from Bank of America for financial advisory services which included fee proposals, but no financing proposal. Mr. Leasure shared the indication of interest letter and exclusivity agreement that had been sent to Envigo with Bank of America Securities.

On July 14, 2021, Mr. Leasure received an email from Bank of America Securities with comments on the indication of interest letter.

On July 14, 2021, Mr. Leasure met with Mr. Cragg and Mr. Hardy in New York to discuss strategic issues related to the proposed transaction, organizational issues, additional due diligence issues, and further deal structuring issues.

On July 16, 2021, Mr. Leasure discussed the potential acquisition and potential proposal for financial advisory services, and advice on potential transaction structures for financing the transaction with a representative of Jefferies.

On July 18, 2021, Mr. Leasure received comments on the indication of interest letter and exclusivity agreement from Mr. Cragg. The revised letter proposed a purchase price of $500.0 million, consisting of $240.0 million in cash and $260.0 million in Inotiv Common Shares, proposed to eliminate the working capital adjustment, proposed to reduce the ownership threshold for maintaining board nomination rights from 10% to 5% of the fully diluted shares and added a second test based on an undefined percentage of the shares acquired in the proposed transaction, included a requirement for committed financing at the time of signing a definitive agreement, and proposed the deletion of certain conditions specified by Inotiv in the original letter. The response also included significant comments on the exclusivity agreement.

On July 19, 2021, Mr. Leasure provided Board members with another update on the status of the Company’s mergers and acquisitions activities, including the proposed Envigo transaction, and provided the Board members with the comments on the draft indication of interest and exclusivity agreement received from Envigo.

On July 20, 2021, Mr. Leasure, Dr. Sagartz, Mr. Harkness, and Carmen Wilborn, Envigo’s Vice President of North American Operations, began a due diligence tour to visit multiple Inotiv and Envigo sites. In addition, during this time, Mr. Leasure began talking to Michael Garret, Envigo’s Senior Vice President, Commercial, and members of Inotiv senior management met in Indianapolis with members of Envigo’s senior management to continue discussions with counterparts.

On July 26, representatives of Jefferies delivered draft engagement letters for financial advisory and financing services to Inotiv. Mr. Leasure provided copies of these materials to certain Board members and to Ice Miller.

On July 28, 2021, after working with representatives of Jefferies and Ice Miller on a response to Envigo’s proposed terms, Mr. Leasure sent revised drafts of the indication of interest and exclusivity agreement to Envigo. These drafts proposed a purchase price of $500.0 million consisting of between $190.0 million and $210.0 million in cash and between $290.0 million and $310.0 million in Common Shares, re-inserted the working capital adjustment, increased the threshold to retain nominating rights to 10% from 5% or 50% of the shares acquired by the Nominating Holder in the proposed transaction and agreed to providing committed capital at the signing of the definitive agreement.

On July 30, 2021, Envigo responded with its comments to the July 28, 2021 draft Indication of Interest and Exclusivity Agreement.

On August 1, 2021, Mr. Leasure provided Board members with another update.

On August 2, 2021, Mr. Cragg and Mr. Leasure had further discussions regarding the indication of interest and exclusivity agreement and the proposed terms for the transaction.

On August 2, 2021, Inotiv further amended the non-binding indication of interest and exclusivity agreement and shared it with the Board members. The Board members approved the non-binding terms of the indication of interest and exclusivity agreement. Mr. Leasure sent the revised non-binding executed indication of interest and exclusivity agreement to Mr. Cragg. The price outlined in the indication of interest consisted of an aggregate price of $500.0 million, consisting of (i) cash to be paid at closing in an amount between the range of $200.0 million and $230.0 million; and (ii) a number of Inotiv common shares to be delivered at closing, having a value between the range of $270.0 million and $300.0 million, and calculated based on the volume weighted average price (“vwap”) of Inotiv common shares as reported by NASDAQ for a time period (to be mutually agreed) ending prior to signing of a definitive agreement. The exact amount of cash to be paid at closing and the value of the Inotiv shares were to be determined as Inotiv finalized its financing arrangements.

On August 4, 2021, Inotiv, Envigo and their respective advisors began their respective due diligence investigations, which continued until the signing of the Merger Agreement.

On August 11, 2021, the Board members discussed the alternative discussions and proposals for investment banking services reviewed by management, the proposed transaction structure, the timing of a transaction and the status of the financing contingencies as part of the transaction, and the related fees and pricing, as well as the terms of Jefferies’ proposed engagement. At the end of the meeting, the Board unanimously approved moving forward with the proposed transaction and proceeding with the engagement of Jefferies to provide financial advisory and financing services to Inotiv.

On August 16, 2021, Inotiv received the counter signed/executed Exclusivity Agreement from Envigo.

On August 17, 20021, Inotiv engaged Allen & Overy LLP as its counsel in connection with European and United Kingdom issues, including transaction advice and due diligence with respect to Envigo’s European and United Kingdom operations.

On August 20, 2021, Mr. Leasure and Mr. Sagartz completed the initial due diligence site tour, having visited 17 of 22 Envigo locations.

On August 20, 2021, Mr. Leasure updated the Board members regarding the status of the transaction and due diligence.

On August 22, 2021, Inotiv entered into an engagement letter with Jefferies to provide financial advisory services.

On August 24, 2021, Ice Miller delivered a draft Agreement and Plan of Merger to Envigo’s counsel.

On September 3, 2021, the Board had a telephonic meeting at which representatives from Ice Miller were in attendance to discuss status of the Merger Agreement, due diligence and other merger and acquisition activity along with other matters.

After the Board meeting on September 3, 2021, Envigo’s counsel delivered a revised draft of the Agreement and Plan of Merger to Ice Miller. Ice Miller delivered the revised draft to the Company and Jefferies. Over the ensuing 18 days, the parties exchanged revised drafts of the Merger Agreement and negotiated the terms of the agreement and the Merger.

On September 10, 2021, the Board had a telephonic meeting, which also included representatives from Ice Miller and Jefferies, to outline the status of the transaction and financing and further updates on due diligence. At this meeting, Ice Miller explained the terms of the transaction and discussed key negotiating points with the Board and provided a presentation to the Board regarding the duties of directors in Indiana corporations.

On September 12, 2021, the independent directors of Inotiv met without management to discuss the terms and conditions of the Merger Agreement and the proposed Merger, as well as the proposed financing for the cash portion of the proposed Merger Consideration. Later that week, the independent directors met with Mr. Leasure to discuss their outstanding questions and the proposed structure and terms of the transaction.

On September 17, 2021, Inotiv had a board call which included representatives from Ice Miller and Jefferies in order to review the transaction. Management updated the Board on the due diligence conducted to date, as well as the status of the negotiations with Envigo. Inotiv management and the representatives of Ice Miller and Jefferies answered questions from the Board about various legal, financial, technical and operational issues related to the potential transaction.

On September 17, 2020, Mr. Leasure and Mr. Cragg had a discussion regarding remaining open business issues related to the merger agreement and discussed a proposal to reduce the aggregate purchase price from $500.0 million to $475.0 million and the elimination of the buyer’s representation and warranty insurance policy as a pre-condition to the signing of the definitive agreement. Through subsequent discussions and negotiations, the parties proposed to reduce the aggregate purchase price from $500.0 million to $485.0 million and to eliminate the representation and warranty condition to signing the definitive agreement, subject to their respective boards’ approval.

On September 17, 2021, the Board met with management and representatives of Jefferies and Ice Miller to discuss the proposed resolution of open business issues., including the proposed purchase price reduction and elimination of the representation and warranty insurance policy condition. After the Board meeting, Mr. Leasure and Mr. Cragg completed the negotiation of the open business issues, subject to their respective boards’ approval.

On September 19, 2021, Ice Miller provided the Board with written due diligence reports prepared by Ice Miller and Allen & Overy related to their respective due diligence investigations.

On September 20, 2021 at approximately 12:00 p.m. EDT, the Board met with management and representatives of Ice Miller to discuss the information in the due diligence reports and the due diligence process generally.

On September 20, 2021 at approximately 4:45 p.m. EDT, the Board met with management and representatives of Ice Miller and Jefferies to discuss the terms of the transaction documents and the status of the negotiations with Envigo and its counsel. At this meeting, representatives of Jefferies reviewed with the Board the proposed financing and Jefferies’ preliminary financial analysis of the Merger Consideration.

On September 21, 2021 at approximately 7:00 a.m. EDT, the Board held a special meeting to consider the Merger, with representatives of Ice Miller and Jefferies in attendance. Representatives of Jefferies reviewed with the Board Jefferies’ financial analysis of the Merger Consideration. After discussion of the financial analysis among members of the Board and representatives of Jefferies, Jefferies rendered its opinion to the Board to the effect that, as of September 21, 2021 and based on and subject to various assumptions made,

Following the Board meeting on September 21, 2021, the parties finalized (1) the Merger Agreement, (2) the disclosure schedules to the Merger Agreement, (3) the Shareholders Agreement, and (4) other ancillary documents to the Merger Agreement, and Inotiv and Envigo executed the Merger Agreement.

On the morning of September 21, 2021, Inotiv issued a press release announcing the transactions contemplated by the Merger Agreement, and Inotiv hosted a telephonic conference meeting of the investor community to explain additional details and the strategic importance of the transaction.

The Board also considered potential risks and potentially negative factors concerning the Merger in connection with its deliberations of the proposed transaction, including:

Inotiv retained Jefferies as its financial advisor in connection with a possible acquisition of Envigo. In connection with this engagement, the Board requested that Jefferies evaluate the fairness, from a financial point of view, to Inotiv of the Merger Consideration (which for purposes of Jefferies’ financial analysis and opinion means $200.0 million in cash and 9,365,173 Inotiv Common Shares) to be paid by Inotiv in the Merger pursuant to the Merger Agreement. At a meeting of the Board held on September 21, 2021, Jefferies rendered its opinion to the Board to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be paid by Inotiv in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to Inotiv.

In arriving at its opinion, Jefferies, among other things:

In its review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available to Jefferies by Envigo or Inotiv or that was publicly available to Jefferies (including, without limitation, the information described above) or that was otherwise reviewed by Jefferies. Jefferies relied on assurances of the management and other representatives of Inotiv that they were not aware of any facts or circumstances that would make such information incomplete, inaccurate or misleading. In Jefferies review, it did not obtain any independent evaluation or appraisal of any of the assets or liabilities (contingent, accrued, derivative, off-balance sheet or otherwise), nor did it conduct a physical inspection of any of the properties or facilities, of Envigo, Inotiv or any other entity, and Jefferies was not furnished with, and assumed no responsibility to obtain, any such evaluations, appraisals or physical inspections. Jefferies did not evaluate the solvency or fair value of Envigo, Inotiv or any other entity under any laws relating to bankruptcy, insolvency or similar matters.

With respect to the Forecasts provided to and reviewed by Jefferies, Jefferies noted that projecting future results of any company is inherently subject to uncertainty. However, Jefferies was advised, and

Jefferies relied upon the assessments of the management of Inotiv as to, among other things, Envigo’s existing and future agreements and other arrangements involving, and ability to attract, retain and/or replace, key employees, customers, service providers and other commercial relationships. Jefferies assumed that there would not be any developments with respect to any such matters that would be material in any respect to its analyses or opinion.

Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date thereof. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which Jefferies became aware after the date thereof.

Jefferies made no independent investigation of, and expressed no view or opinion as to, any legal, regulatory, accounting or tax matters affecting or relating to Envigo, Inotiv or the Mergers and Jefferies assumed the correctness of all legal, regulatory, accounting and tax advice given to Inotiv and/or the Board, including, without limitation, with respect to changes in, or the impact of, accounting standards or tax and other laws, regulations and governmental and legislative policies affecting Envigo, Inotiv or the Mergers and legal, regulatory, accounting and tax consequences to Inotiv of the terms of, and transactions contemplated by, the Merger Agreement and related documents. Jefferies was advised that the parties intend that the Mergers will qualify as a tax-free reorganization for federal income tax purposes. Jefferies assumed that the Mergers would be consummated in accordance with its terms without waiver, modification or amendment of any material term, condition or agreement and in compliance with all applicable laws, documents and other requirements and that the final form of the Merger Agreement would be substantially similar to the last draft reviewed by Jefferies. Jefferies also assumed that, in the course of obtaining the necessary governmental, regulatory or third-party approvals, consents, waivers and releases for the Mergers or otherwise, including with respect to any divestitures or other requirements, no delay, limitation, restriction or condition would be imposed or occur that would have an adverse effect on Envigo, Inotiv or the contemplated benefits of the Mergers or that otherwise would be material in any respect to Jefferies’ analyses or opinion.

Jefferies’ opinion did not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Inotiv, nor did it address the underlying business decision by Inotiv to engage in the Mergers or the terms of the Merger Agreement (including, without limitation, any adjustments to the Merger Consideration under the Merger Agreement) or the documents referred to therein, including the form or structure of the Mergers or any term, aspect or implication of any agreements, arrangements or understandings entered into in connection with, or contemplated by or resulting from, the Mergers or otherwise. Jefferies’ opinion did not constitute a recommendation as to how any holder of Inotiv Common Shares should vote on the Mergers or any matter related thereto. Jefferies’ opinion was limited to the fairness, from a financial point of view, of the Merger Consideration to be paid by Inotiv in the Merger pursuant to the Merger Agreement (to the extent expressly specified herein). Jefferies was not asked to, and its opinion did not, address the fairness, financial or otherwise, of any consideration to the holders of any class of securities, creditors or other constituencies of Inotiv or any other party. Jefferies expressed no view or opinion as to the price at which shares of Inotiv Common Shares may trade or otherwise be transferable at any time. Furthermore, Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation or other consideration payable to or to be received by any of the officers, directors or employees of any party, or any class of such persons, in connection with the Mergers relative to the Merger Consideration or otherwise. The issuance of Jefferies’ opinion was authorized by the fairness committee of Jefferies LLC.

In connection with rendering its opinion to the Board, Jefferies performed certain financial and comparative analyses, including those described below. The following summary is not a complete description of all analyses performed and factors considered by Jefferies in connection with its opinion. The preparation of a financial opinion is a complex process involving subjective judgments and is not necessarily susceptible

Jefferies believes that its analyses and the summary below must be considered as a whole and in context and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Jefferies’ analyses and opinion. Jefferies did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.

The estimates of the future performance of Inotiv and Envigo in or underlying Jefferies’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analyses, Jefferies considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Inotiv and Envigo. Estimates of the financial value of companies or businesses do not purport to be appraisals or necessarily reflect the prices at which companies, businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the implied reference ranges resulting from, any particular analysis described below are inherently subject to substantial uncertainty and should not be taken as Jefferies’ view of the actual value of Inotiv, Envigo or their respective businesses or securities.

The terms of the Mergers were determined through negotiations between Inotiv and Envigo, and the decision by Inotiv to enter into the Merger Agreement was solely that of the Board. Jefferies’ opinion and financial analyses were only one of many factors considered by the Board in its evaluation of the Merger Consideration and should not be viewed as determinative of the views of the Board or Inotiv management with respect to the Mergers or the Merger Consideration payable in the Mergers.

The summary of the financial analyses described in this section is a summary of the material financial analyses reviewed with the Board and performed by Jefferies in connection with its analyses and opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies’ financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies’ financial analyses. The order in which the financial analyses summarized below appear does not necessarily reflect the relative importance or weight given to such analyses. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before September 20, 2021 and is not necessarily indicative of current or future market conditions. As noted above, the term Merger Consideration for purposes of Jefferies’ financial analysis and opinion means $200.0 million in cash and 9,365,173 Inotiv Common Shares to be paid by Inotiv in the Merger pursuant to the Merger Agreement. Jefferies’ financial analysis summarized below and its opinion did not reflect or take into consideration the adjustments to the Cash Consideration and to the Stock Consideration resulting from the issuance of the Convertible Notes, which occurred after Jefferies presented its financial analysis and rendered its opinion to the Board on September 21, 2021.

For purposes of the financial analyses described below, the term “implied value of the Merger Consideration” means the aggregate consideration paid by Inotiv in the Merger of $485 million, consisting of (i) cash consideration of $200.0 million, and (ii) stock consideration valued at $285.0 million, consisting of 9,365,173 Inotiv Common Shares valued at $30.43 per share, based on the 20-trading day volume weighted average price, or VWAP, of Inotiv Common Shares as of September 20, 2021.

The selected public companies reviewed included the following:

Jefferies reviewed, among other information and to the extent publicly available, enterprise values of the Envigo selected companies, calculated as fully diluted equity values based on closing stock prices on September 20, 2021, plus total debt, preferred equity and non-controlling interests, minus cash and cash equivalents, as a multiple of such company’s estimated adjusted earnings before interest, taxes, depreciation and amortization, and, where applicable, stock-based compensation expense and non-recurring charges (“Adjusted EBITDA”), for calendar years 2022 and 2023, which we refer to as CY 2022E and CY 2023E, respectively. Financial data of the Envigo selected companies (including Inotiv) were based on publicly available research analysts’ estimates, public filings and other publicly available information, and financial data of Envigo were based on the Inotiv Envigo Forecast.

The mean and median multiples for the Envigo selected companies were as follows: