As filed with the United States Securities and Exchange Commission on February 14, 2022

Registration No: 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

CHP Merger Corp.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		6770		84-2590924
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

25 Deforest Avenue, Suite 108

Summit, NJ 07901

Telephone: (212) 508-7090

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

James Olsen

Chief Executive Officer

CHP Merger Corp.

25 Deforest Avenue, Suite 108

Summit, NJ 07901

Telephone: (212) 508-7090

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Carl P. Marcellino, Esq.		Gregory P. Patti Jr., Esq.		Christopher Walsh
Paul D. Tropp, Esq.		Joanna Valentine, Esq.		Chief Executive Officer
Christopher J. Capuzzi, Esq.		Cadwalader, Wickersham & Taft LLP		Integrity Implants Inc. (d/b/a Accelus)
Ropes & Gray LLP		200 Liberty Street		354 Hiatt Drive, Suite 100
1211 Avenue of the Americas		New York, New York 10281		Palm Beach Gardens, Florida 33418
New York, New York 10036		(212) 504-6000		(561) 529-3861
(212) 596-9000

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the transactions contemplated by the Business Combination Agreement described in the included proxy statement/prospectus have been satisfied or waived.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

☐		Large accelerated filer		☐		Accelerated filer
☒		Non-accelerated filer		☒		Smaller reporting company
				☒		Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

☐		Exchange Act Rule 13e-4(i)		☐		Exchange Act Rule 14d-1(d)
		(Cross-Border Issuer Tender Offer)				(Cross-Border Third-Party Tender Offer)

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Amount to be Registered		Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price		Amount of Registration Fee
Common stock, par value $0.0001 per share		42,445,648(1)		$10.68(2)		$453,319,531(2)		$42,023
Total						$453,319,531		$42,023

(1)

Based on the maximum number of shares of Class A common stock, par value $0.0001 per share, of the registrant (“CHP Class A common stock” or “New Accelus common stock”) estimated to be issued in connection with the business combination described herein (the “Business Combination”), assuming a closing date of April 25, 2022. Such maximum number of shares of New Accelus common stock is based on 42,442,162 shares of New Accelus common stock to be issued (i) to the holders of Integrity Implants Inc. d/b/a Accelus (“Accelus”) common stock, par value $0.0001 per share inclusive of shares to be issued in exchange for (a) Accelus’ preferred stock, par value $0.00001 per share, on a one-for-one basis and (b) Accelus’ outstanding warrants, converted in accordance with their terms, (ii) to the holders of shares of Accelus common stock issuable upon exercise of outstanding options to purchase shares of Accelus common stock that may be exercised prior to the closing of the Business Combination, and (iii) to the Extension Premium Funders (as defined herein) pursuant to the Investment Agreement (as defined herein).

(2)

Pursuant to Rules 457(c) and 457(f)(1) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is calculated as the product of (i) 42,445,648 shares of CHP Class A common stock and (ii) $10.68, the average of the high and low trading prices of CHP Class A common stock on February 9, 2022 (within five business days prior to the date of this registration statement).

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus statement/prospectus is not an offer to sell these securities and does not constitute the solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY — SUBJECT TO COMPLETION DATED FEBRUARY 14, 2022

PROXY STATEMENT OF

CHP MERGER CORP.

PROSPECTUS FOR

42,445,648 SHARES OF CLASS A COMMON STOCK

OF

CHP MERGER CORP. (WHICH WILL BE RENAMED ACCELUS, INC.)

On November 14, 2021, the board of directors of CHP Merger Corp., a Delaware corporation (“CHP,” “we,” “us” or “our”), unanimously approved a business combination agreement, dated November 14, 2021, by and among CHP, Accelerate Merger Sub, Inc., a wholly owned subsidiary of CHP (“Merger Sub”), and Integrity Implants Inc. d/b/a Accelus (“Accelus”) (as amended on November 30, 2021 and December 23, 2021 as disclosed in CHP’s Current Reports on Form 8-K filed on December 6, 2021 and December 30, 2021, respectively, and as it may be further amended and/or restated from time to time, the “Business Combination Agreement”). If the Business Combination Agreement is approved by CHP’s stockholders and the transactions under the Business Combination Agreement are consummated, Merger Sub will merge with and into Accelus (the “Merger”), with Accelus surviving the Merger as a wholly owned subsidiary of CHP. In addition, upon the effectiveness of the Proposed Charter (as defined below), CHP will be renamed “Accelus, Inc.” and is referred to herein as “New Accelus” following the consummation (the “Closing”) of the transactions described below (collectively, the “Business Combination”).

As described in this proxy statement/prospectus, CHP’s stockholders are being asked to consider and vote upon the Business Combination and the other proposals set forth herein.

As a consequence of the Business Combination, each of the holders of CHP Class B common stock that is issued and outstanding as of immediately prior to the effective time of the merger (the “Effective Time”) will automatically convert, on a one-for-one basis, into shares of CHP Class A common stock in accordance with the terms of CHP’s current charter. The CHP Class A common stock that is issued and outstanding as of immediately prior to the Effective Time, including the CHP Class B common stock that converts into CHP Class A common stock, will be reclassified into New Accelus common stock.

As a consequence of the Merger, on the closing date, immediately prior to the Effective Time, each share of Accelus preferred stock issued and outstanding at the Effective Time will convert into one share of Accelus common stock. As a consequence of the Merger, at the Effective Time, (i) each share of Accelus common stock issued and outstanding as of immediately prior to the Effective Time will become the right to receive a number of shares of New Accelus common stock calculated by dividing (x) the number resulting from calculating (A) 41,100,000 minus (B) the Net Debt Figure (as defined in the Business Combination Agreement), which may be positive or negative by (y) the Closing Accelus Share Number (the “Exchange Ratio”); (ii) each unexercised Accelus warrant to purchase shares of Accelus common stock, excluding the then unexercisable Accelus warrants granted or to be granted to Eastward Fund Management, LLC (“Eastward”) in connection with Eastward’s loan and security agreement and related warrant agreement, will be automatically canceled and extinguished for no consideration, and each holder thereof will cease to have any rights with respect to such warrants or any agreement related thereto, and (iii) each option to purchase shares of Accelus common stock, whether vested or unvested, that is outstanding and unexercised as of immediately prior to the Effective Time will be assumed by New Accelus and will automatically become an option (vested or unvested, as applicable) to purchase a number of shares of New Accelus common stock equal to the number of shares of Accelus common stock subject to such option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded

down to the nearest whole number of shares, at an exercise price per share equal to the exercise price per share of such option immediately prior to the Effective Time divided by the Exchange Ratio and rounded up to the nearest whole cent.

In addition, CHP will file the proposed amended and restated certificate of incorporation to be adopted by CHP pursuant to the proposals set forth herein (the “Proposed Charter”) with the Secretary of State of the State of Delaware, such Proposed Charter to be effective simultaneous with the Effective Time.

CHP’s units, Class A common stock and public warrants are publicly traded on the Nasdaq Stock Market LLC (the “Nasdaq”) under the symbols “CHPMU” “CHPM” and “CHPMW,” respectively. CHP intends to apply to list the New Accelus common stock and public warrants on the Nasdaq under the symbols “ACCL” and “ACCLW,” respectively, upon the Closing. New Accelus will not have units traded following the Closing.

CHP will hold a special meeting of stockholders (the “Special Meeting”) to consider matters relating to the Business Combination. This meeting will also serve as CHP’s annual meeting of stockholders. CHP cannot complete the Business Combination unless CHP’s stockholders consent to the approval of the Business Combination Agreement and the transactions contemplated thereby. CHP is sending you this proxy statement/prospectus to ask you to vote in favor of these and the other matters described in this proxy statement/prospectus.

In connection with our initial public offering, our initial stockholders at the time of our initial public offering entered into a letter agreement to vote their shares in favor of the Business Combination Proposal and the other Transaction Proposals (as defined herein) being presented at the Special Meeting, all of which are unanimously recommended by the CHP Board. The shares held by CHP Acquisition LLC (the “Sponsor”), and our other initial stockholders that are obligated to vote in favor of the Business Combination represent approximately 28.7% of the voting power of CHP. Accordingly, if all of our outstanding shares were to be voted, we would only need the additional affirmative vote of shares representing approximately 21.4% of the outstanding shares in order to approve the Business Combination.

Unless adjourned, the Special Meeting of the stockholders of CHP will be held at                 a.m. New York City time, on                 , 2022, in virtual format.

This proxy statement/prospectus provides you with detailed information about the Business Combination. It also contains or references information about CHP and New Accelus and certain related matters. You are encouraged to read this proxy statement/prospectus carefully. In particular, you should read the section titled “Risk Factors” beginning on page 47 for a discussion of the risks you should consider in evaluating the Business Combination and how it will affect you.

If you have any questions or need assistance voting your common stock, please contact Morrow Sodali LLC, our proxy solicitor (“Morrow”), by calling toll-free at (800) 662-5200. Banks and brokers can call at (203) 658-9400, or by emailing CHPM@info.morrowsodali.com. This notice of Special Meeting is and the proxy statement/prospectus relating to the Business Combination will be available at                 .

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Business Combination or the other transactions contemplated thereby, as described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated                     , 2022 and is first being mailed to stockholders of CHP on or about                     , 2022.

CHP MERGER CORP.

25 Deforest Avenue, Suite 108

Summit, New Jersey 07901

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON             , 2022

TO THE STOCKHOLDERS OF CHP MERGER CORP.:

NOTICE IS HEREBY GIVEN that a special meeting (the “Special Meeting”) of the stockholders of CHP Merger Corp., a Delaware corporation (“CHP,” “we,” “us” or “our”), will be held at                 a.m. New York City time, on                , 2022, in virtual format. You are cordially invited to attend the Special Meeting, which will be held for the following purposes:

 

(a)

Proposal No. 1 — The Business Combination Proposal — to consider and vote upon a proposal to approve the business combination agreement, dated as of November 14, 2021 (as amended on November 30, 2021, as disclosed in our Current Report on Form 8-K filed on December 6, 2021, and as it may be further amended and/or restated from time to time, the “Business Combination Agreement”), by and among CHP, Accelerate Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of CHP (“Merger Sub”), and Integrity Implants Inc., a Delaware corporation d/b/a Accelus (“Accelus”), and the transactions contemplated thereby, pursuant to which Merger Sub will merge with and into Accelus (the “Merger”) with Accelus surviving the Merger as a wholly owned subsidiary of CHP (the transactions contemplated by the Business Combination Agreement, the “Business Combination” and such proposal, the “Business Combination Proposal”);

 

(b)

Proposal No. 2 — The Charter Amendment Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the proposed amended and restated certificate of incorporation of CHP (the “Proposed Charter”), which will replace CHP’s amended and restated certificate of incorporation, dated November 21, 2019, as amended on November 24, 2021 (the “Current Charter”), and which will be in effect as of the Effective Time (we refer to such proposal as the “Charter Amendment Proposal”);

 

(c)

Proposal No. 3 — The Nasdaq Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal and the Charter Amendment Proposal are approved and adopted, for the purposes of complying with the applicable listing rules of the Nasdaq Stock Market LLC (the “Nasdaq”), the issuance of an aggregate of 42,445,648 shares of New Accelus capital stock to existing Accelus shareholders pursuant to the terms of the Business Combination Agreement and to the Extension Premium Funders (as defined below) pursuant to the Investment Agreement (as defined below), in each case assuming a Closing Date of April 25, 2022 (we refer to this proposal as the “Nasdaq Proposal”);

 

(d)

Proposal No. 4 — The Director Election Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Charter Amendment Proposal, and the Nasdaq Proposal are approved and adopted, the election of seven (7) directors who, upon consummation of the Business Combination, will become the directors of New Accelus until their respective successors are duly elected and qualified pursuant to the terms of the Proposed Charter (we refer to this proposal as the “Director Election Proposal”);

 

(e)

Proposal No. 5 — The Equity Incentive Plan Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Charter Amendment Proposal and the Nasdaq Proposal are approved and adopted, the Accelus 2022 Equity Incentive Plan (the “New Accelus Equity Incentive Plan”), a copy of which is attached to this proxy statement/prospectus as Annex D, including the authorization of the initial share reserve under the New Accelus Equity Incentive Plan (the “Equity Incentive Plan Proposal”), including with respect to the number of shares that may be issued pursuant to the exercise of incentive stock options granted;

(f)

Proposal No. 6 — The Employee Stock Purchase Plan Proposal — to consider and vote upon a proposal to approve, assuming the Equity Incentive Plan Proposal is approved and adopted, the Accelus 2022 Employee Stock Purchase Plan (the “New Accelus Employee Stock Purchase Plan”), a copy of which is attached to this proxy statement/prospectus as Annex E, including the authorization of the initial share reserve under the New Accelus Employee Stock Purchase Plan (the “Employee Stock Purchase Plan Proposal”), including with respect to the number of shares that may be issued pursuant to the exercise of stock options granted;

 

(g)

Proposal No. 7 — The Adjournment Proposal — to consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, any of the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, and the Equity Incentive Plan Proposal (collectively, the “Required Transaction Proposals”) would not be duly approved and adopted by our stockholders or we determine that one or more of the closing conditions under the Business Combination Agreement is not satisfied or waived (we refer to this proposal as the “Adjournment Proposal” and the Director Election Proposal and the Adjournment Proposal, collectively with the Required Transaction Proposals, the “Transaction Proposals”).

Only holders of record of CHP common stock at the close of business on                 , 2022 are entitled to notice of and to vote and have their votes counted at the Special Meeting and any further adjournments or postponements of the Special Meeting.

We will provide you with the proxy statement/prospectus and a proxy card in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournment or postponement of the Special Meeting. Whether or not you plan to attend the Special Meeting, we urge you to read, when available, the proxy statement/prospectus (and any documents incorporated into the proxy statement/prospectus by reference) carefully. Please pay particular attention to the section titled “Risk Factors.”

After careful consideration, the CHP Board has determined that each of the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Director Election Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal are in the best interests of CHP and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of CHP’s directors or officers may result in a conflict of interest on the part of one or more of the directors or officers between what they may believe is in the best interests of CHP and its stockholders and what they may believe is best for himself or themselves in determining to recommend that stockholders vote for the proposals. See the section titled “The Business Combination Proposal — Interests of CHP’s Directors and Officers in the Business Combination” in the proxy statement/prospectus for a further discussion.

Under the Business Combination Agreement, the approval of the Required Transaction Proposals presented at the Special Meeting is a condition to the Closing. The adoption of each Required Transaction Proposal is conditioned on the approval of all of the Required Transaction Proposals. If our stockholders do not approve each of the Required Transaction Proposals, the Business Combination may not be consummated. The Director Election Proposal and the Adjournment Proposal are not conditioned on the approval of any other proposal.

In connection with our initial public offering, our initial stockholders (consisting of CHP Acquisition Holdings, LLC, a Delaware limited liability company (our “Sponsor”) and our independent directors) at the time of our initial public offering entered into a letter agreement to vote their shares of CHP Class B common stock purchased prior to our initial public offering (the “founder shares”), as well as any shares of CHP Class A common stock sold as part of the units by us in our initial public offering (the “public shares”) purchased by them during or after our initial public offering, in favor of the Business Combination Proposal and the other Transaction Proposals being presented at the Special Meeting, all of which are unanimously recommended by the CHP Board. As of the date hereof, our initial stockholders own approximately 28.7% of our total outstanding common stock.

Pursuant to the Current Charter, a holder of public shares (a “public stockholder”) may request that CHP redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a public stockholder, and assuming the Business Combination is consummated, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

(i)

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

(ii)

prior to                      a.m. New York City time, on                    , 2022, (a) submit a written request, including the legal name, telephone number and address of the beneficial owner of the shares for which redemption is requested, to Continental Stock Transfer & Trust Company, CHP’s transfer agent (the “Transfer Agent”), that CHP redeem your public shares for cash and (b) deliver your public shares to the Transfer Agent, physically or electronically through The Depository Trust Company (“DTC”).

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the Transfer Agent directly and instruct it to do so. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. If the Business Combination is not consummated, the public shares will not be redeemed for cash. If the Business Combination is consummated and a public stockholder properly exercises its right to redeem its public shares and timely delivers its shares to the Transfer Agent, we will redeem each public share for a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account established in connection with our initial public offering (the “Trust Account”), calculated as of two business days prior to the Closing, including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares.

Initially, we were required to complete our initial business combination transaction by November 26, 2021, which was 24 months from the closing of our initial public offering. On November 24, 2021, at a special meeting of our stockholders (the “Extension Meeting”), our stockholders approved a proposal to amend our amended and restated certificate of incorporation to extend the date by which we have to consummate our initial business combination from November 26, 2021 to May 26, 2022 (the “Extension”). In connection with such proposal, our public stockholders had the right to redeem their shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account as of two days prior to such stockholder vote. Our public stockholders holding 11,388,997 shares of the CHP Class A common stock (out of a total of 30,000,000 shares of CHP Class A common stock) exercised their right to redeem such shares at a redemption price of approximately $10.06 per share. Approximately $114.5 million in cash was removed from the Trust Account to pay such stockholders and, accordingly, after giving effect to such redemptions, the balance in the Trust Account was approximately $187.1 million.

Also in connection with the Extension, CHP and Accelus agreed subject to certain conditions to deposit into the Trust Account $0.0333 per share for each month of the Extension period (the “Monthly Contribution”), pro-rated for partial months during the Extension period, resulting in a maximum contribution of $0.20 per share of CHP Class A common stock that was not redeemed in connection with the Extension Meeting, or an aggregate of $3,722,200.60 (the “Maximum Contribution”).

After giving effect to these redemptions and, based on the fair value of cash and marketable securities held in the Trust Account as of November 24, 2021 of approximately $187.1 million, assuming CHP and Accelus make the Maximum Contribution, the estimated per share redemption price would be approximately $10.22. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for submitting redemption requests and thereafter, with our consent, until the consummation of the Business Combination (the “Closing”). If a holder of a public share delivers its shares in

connection with an election to redeem and subsequently decides prior to the deadline for submitting redemption requests not to elect to exercise such rights, it may simply request that CHP instruct the Transfer Agent to return the shares (physically or electronically). The holder can make such request by contacting the Transfer Agent at the address or email address listed in this proxy statement/ prospectus. See “The Special Meeting — Redemption Rights” in the proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash.

Prior to the Closing, Accelus will be continuing its ongoing Series D funding round of up to a maximum of $20 million in the aggregate incurred after the date of the Business Combination Agreement (including the amount raised from the Extension Premium Funders as disclosed below), such fundraising being offered on the same terms and conditions as in effect prior to the date of the Business Combination Agreement, and as were previously disclosed to CHP.

In connection with the Extension, CHP, Merger Sub and Accelus entered into a First Amendment to the Business Combination Agreement (the “First Business Combination Agreement Amendment”) to reflect an Investment Agreement, dated as of November 30, 2021, between Accelus, CHP Acquisition Holdings, LLC (the “Sponsor”), and certain individual CHP investors (the “Investment Agreement”), pursuant to which the Sponsor and such CHP investors have committed to invest in certain convertible notes of Accelus (the “Convertible Notes”) or to source additional funding from individuals or entities not affiliated with CHP (such individuals or entities taken together with the individual CHP investors, the “Extension Premium Funders”) to purchase Accelus Series D preferred stock, and Accelus has agreed to use the proceeds of the Convertible Notes and Accelus Series D preferred stock so issued to, among other things, fund the Monthly Contributions in connection with the Extension. Such Convertible Notes will convert to Accelus Series D preferred stock in the event that the Business Combination Agreement is terminated, and upon the Closing convert to an amount of New Accelus common stock calculated by dividing the amount outstanding under such Convertible Note by $10.00. In connection with the foregoing, the First Business Combination Agreement Amendment (i) amended certain covenants to allow for the issuance of the Convertible Notes, (ii) added a condition to closing that no breach has occurred under the A&R Sponsor Letter Agreement (as defined below) and (iii) added a termination right in the event that the Sponsor or CHP Investors fail to fund any Monthly Contribution pursuant to the Investment Agreement and the amount to be released from the Trust Account at the Closing falls below $60,000,000 as a result of stockholder redemptions.

On December 23, 2021, CHP, Merger Sub and Accelus entered into a Second Amendment to the Business Combination Agreement (the “Second Business Combination Agreement Amendment”) which allows CHP to incur up to $500,000 in debt pursuant to note(s) issued to directors and officers of CHP and/or Merger Sub in connection with funding premiums for D&O insurance, which note(s) will be repaid in full to such applicable directors or officers at and contingent upon the closing of the Business Combination.

Upon the Closing, all stockholders of New Accelus will hold only shares of New Accelus common stock.

The total maximum number of shares of New Accelus common stock expected to be outstanding immediately following the Closing is approximately 66,381,651, assuming minimum redemptions, comprising (i) 41,648,556 shares of New Accelus common stock issued to Accelus stockholders, (ii) 7,200,000 shares of New Accelus common stock issued to holders of shares of CHP Class B common stock outstanding at the Effective Time, provided, that 1,875,000 of such shares shall be subject to the vesting limitations set forth in the A&R Sponsor Letter Agreement (as defined below), (iii) 18,611,003 shares of New Accelus common stock issued to holders of shares of CHP Class A common stock outstanding at the Effective Time and (iv) 797,082 shares of New Accelus common stock issued to the Extension Premium Funders pursuant to the Investment

Agreement, in each case based on an assumed Closing Date of April 25, 2022 and an assumed transfer of 300,000 shares of New Accelus common stock transferred from the Sponsor to Accelus in order to make Accelus whole for the dilution incurred as a result of the Monthly Contribution by Accelus pursuant to the Investment Agreement.

All CHP stockholders are cordially invited to attend the Special Meeting, which will be held in virtual format. You will not be able to physically attend the Special Meeting. To ensure your representation at the Special Meeting, however, you are urged to complete, sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible or submit your proxy by following the instructions contained on your proxy card. If you are a stockholder of record holding shares of CHP Class A common stock or CHP Class B common stock, you may also cast your vote at the Special Meeting electronically by visiting                 . If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the Special Meeting and vote electronically, obtain a proxy from your broker or bank. The Charter Amendment Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of CHP common stock entitled to vote thereon, voting together as a single class. Accordingly, if you do not vote or do not instruct your broker or bank how to vote, it will have the same effect as a vote against the Charter Amendment Proposal. With the exception of the Director Election Proposal, the approval of each of the other proposals requires the affirmative vote of (i) at least a majority of the outstanding shares of CHP Class B common stock, voting separately as a single class, and (ii) a majority of the votes cast by CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. If you do not vote or do not instruct your broker or bank how to vote, it will have no effect on the Business Combination Proposal or the Adjournment Proposal. The approval of the election of each director nominee pursuant to the Director Election Proposal requires the affirmative vote of a plurality of the votes cast by the CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon.

CHP has discussed the Business Combination with the AHA, and the AHA has indicated its support for the transaction by investing $1,000,000 in the Sponsor in return for a pro rata interest in the Sponsor’s founder shares. Additionally, the AHA has supported the Business Combination by investing $4,000,000 in the Accelus Series D Capital Raise in consideration for shares of Accelus Series D preferred stock. The AHA expects to leverage its marketing capabilities, thought leadership and network of relationships to fast-track Accelus’ growth and accelerate its market adoption. The aforementioned AHA hospitals, health care systems, networks, and other providers of care such as Ambulatory Surgery Centers represent Accelus’ target customers. Pursuant to the Investment Agreement, Accelus has agreed to use a portion of such proceeds to fund the Monthly Contributions in connection with the Extension.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the proxy card accompanying the proxy statement/ prospectus as soon as possible in the envelope provided or submit your proxy by following the instructions contained on your proxy card. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

If you have any questions or need assistance voting your common stock, please contact Morrow, our proxy solicitor, by calling toll-free at (800) 662-5200. Banks and brokers can call collect at (203) 658-9400, or by emailing CHPM@info.morrowsodali.com. This notice of Special Meeting is and the proxy statement/prospectus relating to the Business Combination will be available at                 .

Thank you for your participation. We look forward to your continued support.

                    , 2022

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD SHARES OF CHP CLASS

A COMMON STOCK THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING SHARES OF CHP CLASS A COMMON STOCK AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (II) SUBMIT A WRITTEN REQUEST, INCLUDING THE LEGAL NAME, TELEPHONE NUMBER AND ADDRESS OF THE BENEFICIAL OWNER OF THE SHARES FOR WHICH REDEMPTION IS REQUESTED, TO THE TRANSFER AGENT THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH AND (III) DELIVER YOUR SHARES OF CHP CLASS A COMMON STOCK TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DTC’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE, IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “THE SPECIAL MEETING — REDEMPTION RIGHTS” IN THIS PROXY STATEMENT/PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.

ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission (“SEC”) by CHP, constitutes a prospectus of CHP under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of common stock of CHP to be issued to Accelus’ stockholders under the Business Combination Agreement. This document also constitutes a proxy statement of CHP under Section 14(a) of the Exchange Act.

You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither the mailing of this proxy statement/prospectus to CHP stockholders nor the issuance by CHP of its common stock in connection with the Business Combination will create any implication to the contrary.

Information contained in this proxy statement/prospectus regarding CHP has been provided by CHP and information contained in this proxy statement/prospectus regarding Accelus has been provided by Accelus.

This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

MARKET AND INDUSTRY DATA

We are responsible for the disclosure contained in this proxy statement/prospectus. However, this proxy statement/prospectus includes market and industry data and forecasts that Accelus has derived from publicly available information, various industry publications, other published industry sources and internal data and estimates. Industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which Accelus operates and Accelus’ and our management’s understanding of industry conditions. Although we believe that such information is reliable, we have not had this information verified by any independent sources. Any estimates underlying such market-derived information and other factors could cause actual results to differ materially from those expressed in the independent parties’ estimates and in our estimates.

 

i

TABLE OF CONTENTS

 

ABOUT THIS DOCUMENT			i
MARKET AND INDUSTRY DATA			i
ADDITIONAL INFORMATION			iv
TRADEMARKS			iv
CERTAIN DEFINED TERMS			1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			6
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING			8
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS			23
SUMMARY HISTORICAL FINANCIAL INFORMATION OF CHP			39
SUMMARY HISTORICAL FINANCIAL INFORMATION OF ACCELUS			41
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			43
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA COMBINED PER SHARE FINANCIAL INFORMATION			45
MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION			47
RISK FACTORS			48
INFORMATION ABOUT THE PARTIES TO THE BUSINESS COMBINATION			100
THE SPECIAL MEETING			101
THE BUSINESS COMBINATION PROPOSAL			109
THE BUSINESS COMBINATION AGREEMENT			122
RELATED AGREEMENTS			144
THE CHARTER AMENDMENT PROPOSAL			146
THE NASDAQ PROPOSAL			148
THE DIRECTOR ELECTION PROPOSAL			150
THE EQUITY INCENTIVE PLAN PROPOSAL			151
THE EMPLOYEE STOCK PURCHASE PLAN PROPOSAL			159
THE ADJOURNMENT PROPOSAL			164
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			165
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA COMBINED PER SHARE FINANCIAL INFORMATION			181
OTHER INFORMATION RELATED TO CHP			183
SELECTED HISTORICAL FINANCIAL INFORMATION OF CHP			192
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CHP			194
BUSINESS OF NEW ACCELUS			198
SELECTED HISTORICAL FINANCIAL INFORMATION OF ACCELUS			227

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF INTEGRITY IMPLANTS INC.			228
DESCRIPTION OF NEW ACCELUS SECURITIES			248
SECURITIES ACT RESTRICTIONS ON RESALE OF COMMON STOCK			260
COMPARISON OF STOCKHOLDER RIGHTS			262
BENEFICIAL OWNERSHIP OF SECURITIES			272
MANAGEMENT OF NEW ACCELUS FOLLOWING THE BUSINESS COMBINATION			274
ACCELUS’ EXECUTIVE AND DIRECTOR COMPENSATION			281
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			288
LEGAL MATTERS			292
EXPERTS			292
DELIVERY OF DOCUMENTS TO STOCKHOLDERS			292
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS			293
STOCKHOLDER PROPOSALS AND NOMINATIONS			299
STOCKHOLDER COMMUNICATIONS			301
WHERE YOU CAN FIND MORE INFORMATION			302
INDEX TO FINANCIAL STATEMENTS			F-1
ANNEX A-I BUSINESS COMBINATION AGREEMENT			A-I-1
ANNEX A-II AMENDMENT NO. 1 TO BUSINESS COMBINATION AGREEMENT			A-II-1
ANNEX A-III AMENDMENT NO. 2 TO BUSINESS COMBINATION AGREEMENT			A-III-1
ANNEX B FORM OF NEW ACCELUS CHARTER			B-1
ANNEX C FORM OF NEW ACCELUS BYLAWS			C-1
ANNEX F CONSULTING AGREEMENT ENTERED INTO BY AND BETWEEN INTEGRITY IMPLANTS INC. AND ALEX LUKIANOV, DATED AS OF JULY 6, 2021			F-1
ANNEX G ADDENDUM NUMBER ONE TO CONSULTING AGREEMENT BETWEEN INTEGRITY IMPLANTS INC. AND ALEX LUKIANOV, DATED AS OF AUGUST 6, 2021			G-1
PART II INFORMATION NOT REQUIRED IN PROSPECTUS			II-1

 

iii

ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about CHP from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available for you to review through the SEC’s website at www.sec.gov. You can also obtain the documents incorporated by reference into this proxy statement/prospectus free of charge by requesting them in writing or by telephone from the appropriate company at the following address and telephone number:

CHP Merger Corp.

25 Deforest Avenue, Suite 108

Summit, NJ 07901

Telephone: (212) 508-7090

Attention: Corporate Secretary

or

Morrow Sodali LLC

509 Madison Avenue

New York, NY 10022

Telephone: (800) 662-5200

(banks and brokers can call collect at (203) 658-9400)

Email: CHPM@info.morrowsodali.com

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

You also may obtain additional proxy cards and other information related to the proxy solicitation by contacting the appropriate contact listed above. You will not be charged for any of these documents that you request.

For a more detailed description of the information incorporated by reference in this proxy statement/prospectus and how you may obtain it, see the section titled “Where You Can Find More Information.”

TRADEMARKS

This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ^® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

iv

CERTAIN DEFINED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our” and “CHP” refer to CHP Merger Corp., and the terms “New Accelus,” “combined company” and “post-combination company” refer to Accelus, Inc. and its subsidiaries following the consummation of the Business Combination.

In this document:

“2016 Incentive Plan” means the Accelus 2016 Amended and Restated Equity Incentive Plan.

“A&R Sponsor Letter Agreement” means the amended and restated sponsor letter agreement, dated November 30, 2021, between CHP, Accelus and the Sponsor.

“Accelus” means Integrity Implants Inc. d/b/a Accelus, a Delaware corporation.

“Accelus Board” means the board of directors of Accelus.

“Accelus capital stock” means the shares of Accelus capital stock outstanding prior to the Business Combination, comprising the Accelus common stock, the Accelus Series A preferred stock, the Accelus Series B preferred stock, the Accelus Series C preferred stock, the Accelus Series D preferred stock and each other class or series of capital stock of Accelus (including preferred stock).

“Accelus common stock” means the common stock, par value $0.00001 per share, of Accelus.

“Accelus preferred stock” means, collectively the Accelus Series A preferred stock, Accelus Series B preferred stock, Accelus Series C preferred stock and Accelus Series D preferred stock.

“Accelus Series A preferred stock” means the Series A preferred stock, par value $0.00001 per share, of Accelus.

“Accelus Series B preferred stock” means the Series B preferred stock, par value $0.00001 per share, of Accelus.

“Accelus Series C preferred stock” means the Series C preferred stock, par value $0.00001 per share, of Accelus.

“Accelus Series D preferred stock” means the Series D preferred stock, par value $0.00001 per share, of Accelus.

“Accelus option” means each option to purchase shares of Accelus common stock granted to an Accelus employee, director or consultant.

“Accelus stockholder” means each holder of Accelus capital stock as of any determination time prior to the Effective Time.

“Accelus Transaction Support Agreement” means the Transaction Support Agreement, dated as of November 14, 2021, by and among CHP and certain stockholders of Accelus.

“Aggregate Transaction Proceeds” means the aggregate cash proceeds available for release to any CHP Party from the Trust Account in connection with the transactions contemplated by the Business Combination Agreement (after payment of certain expenses) plus the aggregate amount invested by the Extension Premium Funders in Accelus’ ongoing Series D funding round, if any, minus the aggregate amount of Monthly Contributions paid by Accelus in connection with the Extension.

 

1

“Aggregate Transaction Proceeds Condition” means the minimum aggregate cash amount that CHP must have available from the Aggregate Transaction Proceeds, which amount will not be less than $50,000,000.

“AHA” means the American Hospital Association.

“Business Combination” means the transactions contemplated by the Business Combination Agreement, including the merger of Merger Sub with and into Accelus, pursuant to which (i) Accelus survives the Merger as a wholly owned subsidiary of New Accelus, (ii) each share of Accelus common stock issued and outstanding as of immediately prior to the Effective Time will become the right to receive a number of shares of New Accelus common stock calculated by dividing (x) the number resulting from calculating (A) 41,100,000 minus (B) the Net Debt Figure (as defined in the Business Combination Agreement), which may be positive or negative by (y) the Closing Accelus Share Number (the “Exchange Ratio”); (iii) each unexercised Accelus warrant to purchase shares of Accelus common stock, excluding the then unexercisable Accelus warrants granted or to be granted to Eastward Fund Management, LLC (“Eastward”) in connection with Eastward’s loan and security agreement and related warrant agreement, will be automatically canceled and extinguished for no consideration, and each holder thereof will cease to have any rights with respect to such warrants or any agreement related thereto, and (iv) each option to purchase shares of Accelus common stock, whether vested or unvested, that is outstanding and unexercised as of immediately prior to the Effective Time will be assumed by New Accelus and will automatically become an option (vested or unvested, as applicable) to purchase a number of shares of New Accelus common stock equal to the number of shares of Accelus common stock subject to such option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares, at an exercise price per share equal to the exercise price per share of such option immediately prior to the Effective Time divided by the Exchange Ratio and rounded up to the nearest whole cent.

“Business Combination Agreement” means that Business Combination Agreement, dated as of November 14, 2021, by and among CHP, Merger Sub and Accelus (as amended on November 30, 2021, as disclosed in CHP’s Current Report on Form 8-K filed on December 6, 2021, as further amended on December 23, 2021, as disclosed in CHP’s Current Report on Form 8-K filed on December 30, 2021 and as it may be further amended and/or restated from time to time).

“CHP” means CHP Merger Corp., a Delaware corporation (which, as a consequence of the adoption of the Proposed Charter, will be renamed Accelus, Inc.).

“CHP Board” means the board of directors of CHP.

“CHP Class A common stock” means the shares of Class A common stock, par value $0.0001 per share, of CHP.

“CHP Class B common stock” means the shares of Class B common stock, par value $0.0001 per share, of CHP.

“CHP common stock” means, collectively, the CHP Class A common stock and the CHP Class B common stock.

“CHP Investors” means the Sponsor, AHA and any Affiliate of the foregoing, together with any investor who is a Permitted Person (as defined in the Business Combination Agreement) and enters the Investment Agreement as an investing party thereunder from time to time prior to Closing.

“CHP Parties” means, together, CHP and Merger Sub.

“CHP Party” means CHP or Merger Sub.

 

2

“Closing” means the consummation of the Business Combination.

“Closing Accelus Share Number” means the number resulting from the following calculation made as of the Closing Date immediately prior to the Effective Time (i) the number of shares of Accelus common stock outstanding plus (ii) the number of shares of Accelus common stock not yet issued and outstanding but which any holder is entitled to receive at such time as a result of (x) the conversion of the Accelus preferred stock pursuant to Section 2.1(b) of the Business Combination Agreement, or (y) their exercise, effective on or before Closing, of any Accelus warrant or Accelus option (on a net basis, if such Accelus warrant or Accelus option is exercised on a cashless basis) plus (iii) 50% of the number of shares of Accelus common stock not yet issued and outstanding but issuable upon the vesting and exercise (on a net basis, if exercised on a cashless basis) of any outstanding unvested Accelus options as of the date hereof; minus (iv) the number of shares of Accelus common stock underlying the Accelus preferred stock issued to CHP Investors.

“Closing Date” means the closing date of the Business Combination.

“Code” means the Internal Revenue Code of 1986, as amended.

“Current Charter” means CHP’s amended and restated certificate of incorporation, dated November 21, 2019, as amended on November 24, 2021.

“DGCL” means the General Corporation Law of the State of Delaware.

“DTC” means The Depository Trust Company.

“Effective Time” means, with respect to the Merger, the time on the Closing Date at which the Merger becomes effective.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Ratio” means the ratio representing the number of New Accelus common stock shares per each one share of Accelus common stock that holders of Accelus common stock have the right to receive upon consummation of the Business Combination. The terms of the Business Combination Agreement calculate this ration by dividing (x) the number resulting from calculating (A) 41,100,000 minus (B) the Net Debt Figure, which may be positive or negative by (y) the Closing Accelus Share Number.

“Extension Premium Funders” means the Sponsor, AHA and any Affiliate of the foregoing, together with any investor who is a Permitted Person (as defined in the Business Combination Agreement) and enters the Investment Agreement as an investing party thereunder from time to time prior to the Closing.

“FASB” means the Financial Accounting Standards Board.

“FDA” means the United States Food and Drug Administration.

“GAAP” means United States generally accepted accounting principles.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“Initial stockholders” means the Sponsor, Joseph Swedish, James Olsen, James A. Deal, Ken Goulet and Jack Krouskup.

 

3

“Investment Agreement” means the Investment Agreement, dated as of November 30, 2021, between Accelus, the Sponsor, and certain individual CHP investors, including the AHA.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Initial public offering” means CHP’s initial public offering, consummated on November 26, 2019, through the sale of 30,000,000 units on November 26, 2019.

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

“Merger” means the merger of Merger Sub with and into Accelus.

“Merger Sub” means Accelerate Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of CHP.

“Morrow” means Morrow Sodali LLC, proxy solicitor to CHP.

“Nasdaq” means the Nasdaq Capital Market.

“New Accelus” means Accelus, Inc., a Delaware corporation (which, prior to the Closing, was known as CHP Merger Corp.).

“New Accelus Board” means the board of directors of New Accelus.

“New Accelus Bylaws” means the bylaws of New Accelus to be adopted pursuant to the Business Combination Agreement.

“New Accelus common stock” means, collectively, the New Accelus common stock.

“New Accelus Employee Stock Purchase Plan” means the New Accelus 2022 Employee Stock Purchase Plan, to be approved and adopted by the CHP stockholders pursuant to the Employee Stock Purchase Plan Proposal at the Special Meeting.

“New Accelus Equity Incentive Plan” means the New Accelus 2022 Equity Incentive Plan, to be approved and adopted by the CHP stockholders pursuant to the Equity Incentive Plan Proposal at the Special Meeting.

“New Accelus Management” means the management of New Accelus following the Closing.

“Private placement warrants” means the 8,000,000 warrants issued to our Sponsor concurrently with CHP’s initial public offering, each of which is exercisable for one share of CHP Class A common stock.

“Proposed Charter” means the proposed amended and restated certificate of incorporation to be adopted by CHP pursuant to the Charter Amendment Proposal (which, as of and after the Effective Time, will operate as the amended and restated certificate of incorporation of New Accelus), a copy of which is attached as Annex B to this proxy statement/prospectus.

“Public shares” means shares of CHP Class A common stock included in the units issued in CHP’s initial public offering.

“Public stockholders” means the holders of public shares.

“Public warrants” means the warrants included in the units issued in the initial public offering, each of which is exercisable for one share of CHP Class A common stock, in accordance with its terms.

 

4

“Registration Rights Agreement” means the amended and restated registration rights agreement to be entered into as of the Closing by and among New Accelus, the Sponsor, certain affiliates of the Sponsor, and certain stockholders of Accelus.

“Required Transaction Proposals” mean, collectively, the Business Combination Proposal, the Nasdaq Proposal, the Equity Incentive Plan Proposal and the Governing Document Proposals.

“Rollover Equity” means the equity securities of New Accelus that will be held by the Accelus stockholders following the Business Combination.

“Rollover Option” means an option to purchase a number of shares of New Accelus common stock under the New Accelus Equity Incentive Plan.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Series D Capital Raise” means Accelus’ ongoing funding round (including the amount raised from CHP Investors) up to a maximum of $20 million in the aggregate.

“Sponsor” means CHP Acquisition Holdings, LLC, a Delaware limited liability company.

“Sponsor Letter Agreement” means the Sponsor Letter Agreement, dated as of November 14, 2021, by and among the Sponsor, CHP, Accelus, and certain stockholders of CHP.

“Special Meeting” means the special meeting of the CHP stockholders to consider matters relating to the Business Combination, to be held at                 a.m. New York City time, on                 , 2022, in virtual format.

“Surviving Company” means the surviving corporation, Accelus, resulting from the Merger.

“Termination Date” means May 26, 2022.

“Transactions” means the Business Combination and the filing and effectiveness of the Proposed Charter.

“Transaction Proposals” mean, collectively with the Required Transaction Proposals and the Directors Proposal.

“Transfer Agent” means Continental Stock Transfer & Trust Company.

“Trust Account” means the Trust Account of CHP that holds the proceeds from CHP’s initial public offering and the private placement of the private placement warrants.

“Trust Agreement” means that certain Investment Management Trust Agreement, dated as of November 21, 2019, between CHP and the Trustee.

“Trustee” means Continental Stock Transfer & Trust Company.

“Units” means the units of CHP, each consisting of one share of CHP Class A common stock and one-half (1/2) of one public warrant of CHP.

 

5

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of CHP and Accelus. These statements are based on the beliefs and assumptions of the respective management teams of CHP and Accelus. Although CHP and Accelus believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither CHP nor Accelus can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions. You should not place undue reliance on these forward-looking statements in deciding how your vote should be cast or in voting your shares on the proposals set out in this proxy statement/prospectus. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, our actual results or performance may be different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

 

•

the ability of CHP and Accelus to meet the closing conditions in the Business Combination Agreement, including the receipt of approval by the stockholders of CHP of the Required Transaction Proposals and the availability of an aggregate cash amount of at least $50 million available at Closing from the Trust Account;

 

•

the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against CHP and Accelus following the announcement of the Business Combination Agreement and the transactions contemplated therein, that could give rise to the termination of the Business Combination Agreement or could otherwise cause the transactions contemplated therein to fail to close;

 

•

the ability to obtain or maintain the listing of New Accelus common stock on the Nasdaq, as applicable, following the Business Combination;

 

•

the risk that the proposed Business Combination disrupts current plans and operations of Accelus as a result of the announcement and consummation of the Business Combination;

 

•

the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of New Accelus to grow and manage growth profitably and retain its key employees;

 

•

costs related to the proposed Business Combination;

 

•

changes in applicable laws or regulations;

 

•

the market acceptance of Accelus’ minimally invasive, robotic-assisted, and other spine surgery procedures;

 

•

Accelus’ and New Accelus’ ability to establish new relationships with surgeons, hospitals, ambulatory surgical centers (“ASC”) and distributors, which may have existing relationships with other medical device companies;

 

•

Accelus’ and New Accelus’ ability to manage the development and growth of its products and technologies;

 

•

Accelus’ and New Accelus’ ability to obtain and maintain regulatory approval for Accelus’ or New Accelus’ products, and any related restrictions and limitations of any approved product;

 

•

Accelus’ and New Accelus’ ability to identify, in-license or acquire additional technology;

 

6

•

Accelus’ and New Accelus’ ability to maintain Accelus’ existing license, manufacturing and supply agreements;

 

•

Accelus’ and New Accelus’ ability to compete in the development of robotic-assisted surgical devises, which is costly and requires continual technological change;

 

•

the size and growth potential of the markets for Accelus’ and New Accelus’ products and services, and the ability of each to serve those markets, either alone or in partnership with others;

 

•

the pricing of Accelus’ and New Accelus’ products and services and reimbursement for medical procedures conducted using Accelus’ and New Accelus’ products and services;

 

•

Accelus’ and New Accelus’ ability to attract, recruit, train, retain, motivate, and integrate key personnel;

 

•

Accelus’ and New Accelus’ ability to maintain adequate marketing and sales capabilities or enter into and maintain new arrangements with third parties to sell and market their products and technologies;

 

•

The risk of product recalls and safety alerts;

 

•

The risk of changes in government regulation affecting Accelus’ and New Accelus’ business;

 

•

the impact of the COVID-19 pandemic on Accelus’ and New Accelus’ business, including on the ability of CHP and Accelus to consummate the Business Combination; and

 

•

other factors detailed under the section titled “Risk Factors.”

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this proxy statement/prospectus are more fully described under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus. The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this proxy statement/prospectus describe additional factors that could adversely affect the business, financial condition or results of operations of CHP and Accelus prior to the Business Combination, and New Accelus following the Business Combination. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can CHP or Accelus assess the impact of all such risk factors on the business of CHP and Accelus prior to the Business Combination, and New Accelus following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to CHP or Accelus or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. CHP and Accelus prior to the Business Combination, and New Accelus following the Business Combination, undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

7

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING

The following are answers to certain questions that you may have regarding the Business Combination and the Special Meeting. CHP urges you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this proxy statement/prospectus.

 

Q:	Why am I receiving this proxy statement/prospectus?

 

A:

CHP is proposing to consummate the Business Combination with Accelus. CHP, Merger Sub and Accelus have entered into the Business Combination Agreement, the terms of which are described in this proxy statement/prospectus. A copy of the Business Combination Agreement is attached hereto as Annex A. CHP urges its stockholders to read the Business Combination Agreement in its entirety.

The Business Combination Agreement must be approved by the CHP stockholders in accordance with the DGCL and the Current Charter. CHP is holding a Special Meeting to obtain that approval. CHP stockholders will also be asked to vote on certain other matters described in this proxy statement/prospectus at the Special Meeting and to approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Special Meeting to approve the Business Combination Agreement and thereby approve the Business Combination. This meeting will also serve as CHP’s annual meeting of stockholders.

THE VOTE OF CHP STOCKHOLDERS IS IMPORTANT. CHP STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS AND CAREFULLY CONSIDERING EACH OF THE PROPOSALS BEING PRESENTED AT THE MEETING.

 

Q:	Why is CHP proposing the Business Combination?

 

A:	CHP was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination.

Based on its due diligence investigations of Accelus and the industries in which it operates, including the financial and other information provided by Accelus in the course of CHP’s due diligence investigations, the CHP Board believes that the Business Combination with Accelus is in the best interests of CHP and its stockholders and presents an opportunity to increase stockholder value. However, there can be no assurances of this.

Although the CHP Board believes that the Business Combination with Accelus presents a unique business combination opportunity and is in the best interests of CHP and its stockholders, the CHP Board did consider certain potentially material negative factors in arriving at that conclusion. See “The Business Combination Proposal — CHP’s Board of Directors’ Reasons for the Approval of the Business Combination” for a discussion of the factors considered by the CHP Board in making its decision.

 

Q:	When and where will the Special Meeting take place?

 

A:

The Special Meeting will be held on                 , 2022, at                 a.m. local time, via live webcast at the following address:                 , or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals. To participate in the Special Meeting, a CHP stockholder of record will need the 16-digit control number included on their proxy card or instructions that accompanied their proxy materials, if applicable, or to obtain a proxy form from their broker, bank or other nominee. The CHP Special Meeting webcast will begin promptly at                 a.m. New York City time. CHP stockholders are encouraged to access the CHP Special Meeting prior to the start time. If you

 

8

encounter any difficulties accessing the virtual meeting or during the meeting time, please call the technical support number that will be posted on the virtual meeting login page.

 

Q:	What matters will be considered at the Special Meeting?

 

A:	The CHP stockholders will be asked to consider and vote on the following proposals:

 

•

The Business Combination Proposal, which is a proposal to approve the Business Combination Agreement and approve the Business Combination;

 

•

The Charter Amendment Proposal, which is a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the Proposed Charter, which will replace the Current Charter;

 

•

The Nasdaq Proposal, which is a proposal to approve, assuming the Business Combination Proposal and the Charter Amendment Proposal are approved and adopted, for the purposes of complying with the applicable listing rules of the Nasdaq, the issuance of an aggregate of 42,445,648 shares of New Accelus common stock pursuant to the terms of the Business Combination Agreement and the Investment Agreement, in each case assuming a Closing Date of April 25, 2022;

 

•

The Director Election Proposal, which is a proposal to approve, assuming the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal and the Equity Incentive Plan Proposal are approved and adopted, the election of seven (7) directors who, upon consummation of the Business Combination, will become the directors of New Accelus until their respective successors are duly elected and qualified pursuant to the terms of the Proposed Charter;

 

•

The Equity Incentive Plan Proposal, which is a proposal to approve, assuming the Business Combination Proposal, the Charter Amendment Proposal and the Nasdaq Proposal are approved and adopted, the New Accelus Equity Incentive Plan; and

 

•

The Employee Stock Purchase Proposal, which is a proposal to approve, assuming the Equity Incentive Plan Proposal is approved and adopted, the New Accelus Employee Stock Purchase Plan;

 

•

The Adjournment Proposal, which is a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, any of the Required Transaction Proposals would not be duly approved and adopted by our stockholders or we determine that one or more of the closing conditions under the Business Combination Agreement is not satisfied or waived.

 

Q:	Is my vote important?

 

A:

Yes. The Business Combination cannot be completed unless the Business Combination Proposal receives the affirmative vote of a majority of the votes cast by CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon and the other Required Transaction Proposals achieve the necessary vote outlined below. Only CHP stockholders as of the close of business on                 , 2022, the record date for the Special Meeting, are entitled to vote at the Special Meeting. The CHP Board unanimously recommends that such CHP stockholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Charter Amendment Proposal, “FOR” the approval of the Nasdaq Proposal, “FOR” the election of each of the director nominees in the Director Election Proposal, “FOR” the approval of the Equity Incentive Plan Proposal, “FOR” the approval of the Employee Stock Purchase Plan Proposal and “FOR” the approval of the Adjournment Proposal.

 

Q:	If my shares are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote those shares for me?

 

A:	No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this

 

9

proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you also have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting. If you decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or other nominee. Alternatively, you may vote by telephone or over the Internet as instructed by your broker, bank or other nominee. “Street name” stockholders who wish to vote at the Special Meeting will need the 16-digit meeting control number included on the instructions that accompanied your proxy materials, if applicable, or to obtain a proxy form from your broker, bank or other nominee.

 

Q:	What CHP stockholder vote is required for the approval of each proposal brought before the Special Meeting? What will happen if I fail to vote or abstain from voting on each proposal?

 

A:

The Business Combination Proposal. Approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. In connection with our initial public offering, our initial stockholders at the time of our initial public offering entered into a letter agreement to vote their founder shares and any public shares acquired by them during or after the initial public offering in favor of the Business Combination Proposal and the other Transaction Proposals being presented at the Special Meeting, all of which are unanimously recommended by the CHP Board. The shares held by CHP Acquisition Holdings LLC and our other initial stockholders that are obligated to vote in favor of the Business Combination represent approximately 28.7% of the voting power of CHP. Because the Business Combination only requires a majority of the votes cast at the Special Meeting in order to be approved and because a quorum will exist at the Special Meeting if the holders of shares of outstanding capital stock of CHP representing a majority of the voting power of all outstanding shares of capital stock of CHP entitled to vote at the Special Meeting as of the record date are present, the Business Combination could be approved by the additional affirmative vote of shares representing as little as 21.4% of the outstanding shares. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the special meeting, and otherwise will have no effect on the outcome of the proposal.

The Charter Amendment Proposal. Approval of the Charter Amendment Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of CHP common stock entitled to vote thereon, voting together as a single class. Abstentions and broker non-votes will be treated as votes against this proposal.

The Nasdaq Proposal. Approval of the Nasdaq Proposal requires the affirmative vote of a majority of the votes cast by CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote and broker non-votes have no effect on the outcome of the proposal.

The Director Election Proposal. The approval of the election of each director nominee pursuant to the Director Election Proposal requires the affirmative vote of a plurality of the votes cast by CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a failure to submit a vote or a broker non-vote) will not be counted in the nominee’s favor and will have no effect on the Director Election Proposal.

The Equity Incentive Plan Proposal. Approval of the Equity Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by CHP stockholders present in person (which would include

 

10

presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote and broker non-votes have no effect on the outcome of the proposal.

The Employee Stock Purchase Plan Proposal. Approval of the Employee Stock Purchase Plan Proposal requires the affirmative vote of a majority of the votes cast by CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote and broker non-votes have no effect on the outcome of the proposal.

The Adjournment Proposal. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by CHP stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

 

Q:	What will Accelus’ equity holders receive in connection with the Business Combination?

 

A:

As a consequence of the Merger, at the Effective Time, (i) each share of Accelus capital stock (as defined herein) that is issued and outstanding immediately prior to the Effective Time (including shares of Accelus capital stock issued upon the conversion of shares of Accelus preferred stock immediately prior to the Effective Time) will become the right to receive a number of shares of New Accelus common stock calculated by dividing (x) the number resulting from calculating (A) 41,100,000 minus (B) the Net Debt Figure (as defined in the Business Combination Agreement), which may be positive or negative by (y) the Closing Accelus Share Number (as defined in the Business Combination Agreement) (the “Exchange Ratio”); (ii) each unexercised Accelus warrant to purchase shares of Accelus common stock, excluding the then unexercisable Accelus warrants granted or to be granted to Eastward Fund Management, LLC (“Eastward”) in connection with Eastward’s loan and security agreement and related warrant agreement, will be automatically canceled and extinguished for no consideration, and each holder thereof will cease to have any rights with respect to such warrants or any agreement related thereto, and (iii) each option to purchase shares of Accelus common stock, whether vested or unvested, that is outstanding and unexercised as of immediately prior to the Effective Time will be assumed by New Accelus and will automatically become an option (vested or unvested, as applicable) to purchase a number of shares of New Accelus common stock equal to the number of shares of Accelus common stock subject to such option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares, at an exercise price per share equal to the exercise price per share of such option immediately prior to the Effective Time divided by the Exchange Ratio and rounded up to the nearest whole cent.

 

Q:	What equity stake will current CHP stockholders and Accelus stockholders hold in New Accelus immediately after the consummation of the Business Combination?

 

A:	It is anticipated that, upon completion of the Business Combination, based on an assumed Closing Date of April 25, 2022, the ownership interests in New Accelus will be as set forth in the table below:

 

		Assuming Minimum Redemptions								Assuming Maximum Redemptions
		Shares				%				Shares				%
CHP Class A common stockholders (public shareholders)			18,611,003				28	%			7,085,613				13	%
CHP Class B common stockholders (sponsor)1,2			5,325,000				8	%			3,262,500				6	%
Extension Premium Funders3			797,082				1	%			797,082				2	%
Former Accelus stockholders2			41,648,566				63	%			41,648,566				79	%
Shares outstanding at Closing			66,381,651				100	%			52,793,761				100	%

 

(1)

This presentation does not account for 1,875,000 shares that are subject to certain performance vesting terms (i.e., stock price appreciation levels) pursuant to a the A&R Sponsor Letter Agreement.

 

11

(2)

This presentation assumes 300,000 shares are transferred from the Sponsor to Accelus in order to make Accelus whole for the dilution incurred as a result of the Monthly Contributions made by Accelus pursuant to the Investment Agreement. The final number of shares to be transferred has yet to be determined.

(3)

Includes shares granted, and expected to be granted, to the Extension Premium Funders resulting from investments in convertible notes and the ongoing Series D Capital Raise pursuant to the Investment Agreement.

The ownership percentages set forth above are not indicative of voting percentages and do not take into account (a) public warrants and private placement warrants that will remain outstanding immediately following the Business Combination and may be exercised thereafter (commencing 30 days after the Closing of the Business Combination), (b) the issuance of any shares upon completion of the Business Combination under the New Accelus Equity Incentive Plan, a copy of which is attached to this proxy statement/prospectus as Annex D or (c) the issuance of any shares upon completion of the Business Combination under the New Accelus Employee Stock Purchase Plan, a copy of which is attached to this proxy statement/prospectus as Annex E. If the actual facts are different than the assumptions set forth above, the percentage ownership numbers set forth above will be different.

For more information, please see the section titled “Unaudited Pro Forma Condensed Combined Financial Information.”

In addition, there are currently outstanding an aggregate of 23,000,000 warrants to acquire shares of CHP Class A common stock, which comprise 8,000,000 private placement warrants held by CHP Acquisition Holdings LLC and 15,000,000 public warrants. Each of our outstanding whole warrants is exercisable commencing 30 days following the Closing, for one share of CHP Class A common stock and, following the consummation of the Business Combination, will entitle the holder thereof to purchase one share of New Accelus common stock in accordance with its terms. The terms of the warrants provide that if the number of outstanding shares of CHP Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of CHP Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of CHP Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of CHP Class A common stock. In addition, in certain circumstances, if at any time while the warrants are outstanding and unexpired, we pay a dividend or make a distribution in cash, securities or other assets to all or substantially all of the holders of CHP Class A common stock on account of such shares of Class A common stock (or other shares of our capital stock into which the warrants are convertible) then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of CHP Class A common stock in respect of such event. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised for cash and one share of New Accelus common stock is issued as a result of such exercise, with payment to New Accelus of the exercise price of $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of 23,000,000 shares, with approximately $264,500,000 paid to exercise the warrants.

 

Q:	What happens to the funds deposited in the Trust Account after consummation of the Business Combination?

 

A:

A total of $300,000,000, including approximately $10,500,000 million of underwriters’ deferred discount, of the proceeds of the sale of the private placement warrants, was placed in the Trust Account and is maintained by Continental Stock Transfer & Trust Company, acting as trustee. As of                , 2022, there were investments and cash held in the Trust Account of $                . These funds will not be released until the earlier of Closing or the redemption of our public shares if we are unable to complete an initial business combination by May 26, 2022, although we may withdraw the interest earned on the funds held in the Trust

 

12

Account to pay franchise and income taxes. Upon the Closing of the Business Combination, the funds remaining in the Trust Account will be released and will remain on the balance sheet of New Accelus.

 

Q:	What happens if a substantial number of the public stockholders vote in favor of the Business Combination Proposal and exercise their redemption right?

 

A:

CHP stockholders who vote in favor of the Business Combination may also nevertheless exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of public stockholders are reduced as a result of redemptions by public stockholders. The consummation of the Business Combination is conditioned upon, among other things, CHP having an aggregate cash amount of at least $50,000,000 (after deduction of certain expenses) available at Closing from the Trust Account (including the aggregate amount invested by the Extension Premium Funders in Accelus’ ongoing Series D funding round, if any, minus the aggregate amount of Monthly Contributions paid by Accelus in connection with the Extension) (the “Aggregate Transaction Proceeds,” and such condition to the consummation of the Business Combination, the “Aggregate Transaction Proceeds Condition” (though this condition may be waived by Accelus)). In addition, with fewer public shares and public stockholders, the trading market for New Accelus common stock may be less liquid than the trading market for CHP Class A common stock was prior to consummation of the Business Combination and New Accelus may not be able to meet the listing standards for the Nasdaq or another national securities exchange. In addition, with less funds available from the Trust Account, the working capital infusion from the Trust Account into New Accelus’ business will be reduced. As a result, the proceeds will be greater in the event that no public stockholders exercise redemption rights with respect to their public shares for a pro rata portion of the Trust Account as opposed to the scenario in which CHP’s public stockholders exercise the maximum allowed redemption rights.

 

Q.	What amendments will be made to the Current Charter?

 

A:

We are asking CHP stockholders to approve the Proposed Charter that will be effective upon the consummation of the Business Combination. The Proposed Charter provides for various changes that the CHP Board believes are necessary to address the needs of the post-combination company, including, among other things: (i) the change of CHP’s name to “Accelus, Inc.”; and (ii) that, while the total number of authorized shares of all classes of capital stock, par value of $0.0001 per share, will remain at 221,000,000, under the Proposed Charter, the 221,000,000 shares, will consist of                shares of common stock, par value $0.0001 per share, and                shares of preferred stock, par value $0.0001 per share (under the Current Charter the 221,000,000 consists of 200,000,000 shares of Class A common stock, 20,000,000 shares of Class B common stock and 1,000,000 shares of preferred stock).

Pursuant to Delaware law and the Current Charter, CHP is required to submit the Charter Amendment Proposal to CHP’s stockholders for approval. For additional information, see the section titled “The Charter Amendment Proposal.”

 

Q:	What material negative factors did the CHP Board consider in connection with the Business Combination?

 

A:

Although the CHP Board believes that the acquisition of Accelus will provide CHP’s stockholders with an opportunity to participate in a business combination with Accelus, an innovative commercial-stage medical technology company dedicated to advancing surgical treatment options for patients suffering from spine disorders, based on its novel technology and with significant growth potential, the CHP Board did consider certain potentially material negative factors in arriving at that conclusion, such as the risk that Accelus would not be able to achieve its growth projections, that CHP stockholders would not approve the Business Combination and the risk that significant numbers of CHP stockholders would exercise their redemption rights. In addition, during the course of CHP management’s evaluation of Accelus’ operating business and

 

13

its public company potential, management conducted detailed due diligence on certain potential challenges. Some factors that both CHP management and the CHP Board considered were (i) historical business financial performance and results of operations, (ii) current and forecast projections, (iii) the value of technology of opportunities in the market and (iv) strong management team, Board representation and CHP healthcare industry relationships. These factors are discussed in greater detail in the section titled “The Business Combination Proposal — CHP’s Board of Directors’ Reasons for the Approval of the Business Combination,” as well as in the section titled “Risk Factors — Risk Factors Relating to CHP and the Business Combination.”

 

Q:	Do I have redemption rights?

 

A:

If you are a public stockholder, you have the right to request that CHP redeem all or a portion of your public shares for cash, provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus under the heading “The Special Meeting — Redemption Rights.” Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. We sometimes refer to these rights to elect to redeem all or a portion of the public shares into a pro rata portion of the cash held in the Trust Account as “redemption rights.” If you wish to exercise your redemption rights, please see the answer to the question: “How do I exercise my redemption rights?”

Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash.

 

Q:	How do I exercise my redemption rights?

 

A:	If you are a public stockholder and wish to exercise your right to redeem your public shares, you must:

 

(i)

(a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

(ii)

prior to                 , New York City time, on                 , 2022, (a) submit a written request to Continental Stock Transfer & Trust Company, CHP’s transfer agent (the “Transfer Agent”) that CHP redeem your public shares for cash and (b) deliver your public shares to the Transfer Agent, physically or electronically through The Depository Trust Company (“DTC”).

The address of the Transfer Agent is listed under the question “Whom do I call if I have questions about the Special Meeting or the Business Combination?” below.

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the Transfer Agent directly and instruct them to do so.

Any public stockholder will be entitled to request that their public shares be redeemed for a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares. For illustrative purposes, as of September 30, 2021, this would have amounted to approximately $10.05 per public share. However, the proceeds deposited in the Trust Account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders, regardless of whether such public

 

14

stockholders vote for or against the Business Combination Proposal. Therefore, the per share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the Business Combination Proposal will have no impact on the amount you will receive upon exercise of your redemption rights. It is anticipated that the funds to be distributed to public stockholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

If you are a holder of public shares, you may exercise your redemption rights by submitting your request in writing to the Transfer Agent at the address listed under the question “Whom do I call if I have questions about the Special Meeting or the Business Combination?” below.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the deadline for submitting redemption requests, which is                  on                 , 2022 (two business days prior to the date of the Special Meeting), and thereafter, with our consent, until the Closing. If you deliver your shares for redemption to the Transfer Agent and later decide prior to the deadline for submitting redemption requests not to elect redemption, you may request that CHP instruct the Transfer Agent to return the shares to you (physically or electronically). You may make such request by contacting the Transfer Agent at the telephone number or address listed at the end of this section.

Any corrected or changed written exercise of redemption rights must be received by CHP’s Corporate Secretary prior to the deadline for submitting redemption requests. No request for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the Transfer Agent by                 , New York City time, on                 , 2022.

If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any CHP warrants that you may hold.

 

Q:	If I am a holder of units, can I exercise redemption rights with respect to my units?

 

A:

No. Holders of outstanding units must first elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact the Transfer Agent directly and instruct them to do so. If you fail to cause your units to be separated and delivered to the Transfer Agent by                , New York city time, on                , 2022, you will not be able to exercise your redemption rights with respect to your public shares.

 

Q:	What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

The U.S. federal income tax consequences of exercising your redemption rights depend on your particular facts and circumstances. It is possible that you may be treated as selling your public shares for cash and, as a result, recognize capital gain or capital loss. It is also possible that the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of public shares that you own or are deemed to own (including through the ownership of New Accelus warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “Certain Material U.S. Federal Income Tax Considerations.”

THE TAX CONSEQUENCES OF EXERCISING YOUR REDEMPTION RIGHTS WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE EXERCISE OF REDEMPTION RIGHTS TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.

 

15

Q:	How does the CHP Board recommend that I vote?

 

A:

The CHP Board recommends that the CHP stockholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Charter Amendment Proposal, “FOR” the approval of the Nasdaq Proposal, “FOR” the election of each of the director nominees in the Director Election Proposal, “FOR” the approval of the Equity Incentive Plan Proposal, “FOR” the approval of the Employee Stock Purchase Plan Proposal and “FOR” the approval of the Adjournment Proposal. For more information regarding how the CHP Board recommends that CHP stockholders vote, see the section titled “The Business Combination Proposal — CHP’s Board of Directors’ Reasons for the Approval of the Business Combination.”

 

Q:	How do CHP Acquisition Holdings LLC and the other initial stockholders intend to vote their shares?

 

A:

In connection with our initial public offering, our initial stockholders entered into a letter agreement to vote their founder shares, as well as any public shares purchased by them during or after our initial public offering, in favor of the Business Combination Proposal and the other Transaction Proposals, all of which are unanimously recommended by the CHP Board, being presented at the Special Meeting. These stockholders collectively own approximately 28.7% of our issued and outstanding shares of common stock. Accordingly, if all of our outstanding shares were to be voted, we would need the affirmative vote of an additional approximately 21.4% of our outstanding shares to approve the Business Combination.

 

Q:	May CHP Acquisition Holdings LLC and the other initial stockholders purchase public shares or warrants prior to the Special Meeting?

 

A:

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding CHP or its securities, the initial stockholders, Accelus and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of the Business Combination Proposal or not redeem their public shares. Furthermore, the Series D Capital Raise includes amounts so raised by Accelus through current and future CHP investors. The purpose of any such transaction could be to (i) vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination, (ii) increase the likelihood that the Aggregate Transaction Proceeds Condition is satisfied, or (iii) reduce the number of public warrants outstanding. Any such stock purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the Business Combination. This may result in the completion of the Business Combination in a way that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by CHP’s initial stockholders for nominal value.

Entering into any such arrangements may have a depressive effect on public shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Special Meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of public shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved.

 

Q:	Who is entitled to vote at the Special Meeting?

 

A:	The CHP Board has fixed                 , 2022 as the record date for the Special Meeting. All holders of record of CHP common stock as of the close of business on the record date are entitled to receive notice of, and to

 

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vote at, the Special Meeting, provided that those shares remain outstanding on the date of the Special Meeting. Physical attendance at the Special Meeting is not required to vote. See the question “How can I vote my shares without attending the Special Meeting?” below for instructions on how to vote your CHP common stock without attending the Special Meeting.

 

Q:	How many votes do I have?

 

A:

Each CHP stockholder of record is entitled to one vote for each share of CHP common stock held by such holder as of the close of business on the record date. As of the close of business on                 , 2022, the record date for the Special Meeting, there were 26,111,003 outstanding shares of CHP common stock, of which 18,611,003 are shares of CHP Class A common stock, and 7,500,000 are shares of CHP Class B common stock held by CHP Acquisition Holdings LLC and the other initial stockholders.

 

Q:	What constitutes a quorum for the Special Meeting?

 

A:	A quorum is the minimum number of stockholders necessary to hold a valid meeting.

A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of shares of outstanding CHP common stock representing a majority of the voting power of all outstanding shares of capital stock of CHP entitled to vote at the Special Meeting as of the record date are present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting. All shares represented by proxy are counted as present for purposes of establishing a quorum.

 

Q:	What is Accelus?

 

A:

Accelus is a medical technology company dedicated to advancing spinal surgery treatment options by developing and commercializing an ecosystem of enabling technologies, including a proprietary surgical robotic targeting and navigation platform and differentiated implant systems. Accelus offers an innovative portfolio of implants, instruments, biologics and technologies that address the clinical challenges associated with spine surgery, with a focus on minimally invasive surgery (“MIS”) techniques and solutions. Their first-of-its-kind FlareHawk Interbody Fusion System (“FlareHawk”) features proprietary multidirectional expansion technology, designed for minimal disruption to the patient’s anatomy during insertion and natural load distribution and support. They also offer a revolutionary Robotic Enabled Minimally Invasive (“Remi”) robotic targeting and navigation platform which provides an efficient and economically accessible solution to a broad array of spine surgeons. The novel portfolio of implants and instruments, paired with the revolutionary robotic targeting and navigation platform, is designed to address the limitations associated with MIS procedures while providing broader access to enabling technologies for alternative facilities, such as ambulatory surgery centers (“ASC”).

 

Q:	What will happen to my shares of CHP common stock as a result of the Business Combination?

 

A:

If the Business Combination is completed, each share of CHP Class B common stock that is issued and outstanding as of immediately prior to the Effective Time will be converted, on a one-for-one basis, into a share of CHP Class A common stock. CHP Class A common stock will be reclassified after closing into New Accelus common stock and trade on the Nasdaq under the ticker symbol “ACCL”. See the section titled “The Business Combination Proposal — Consideration to the Accelus Stockholders.”

 

Q:	Where will the New Accelus common stock that CHP stockholders receive in the Business Combination be publicly traded?

 

A:	Assuming the Business Combination is completed, the shares of New Accelus common stock (including the shares of New Accelus common stock issued in connection with the Business Combination) will be listed

 

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and traded on the Nasdaq under the ticker symbol “ACCL” and the public warrants will be listed and traded on the Nasdaq under the ticker symbol “ACCLW.”

 

Q:	What happens if the Business Combination is not completed?

 

A:

If we do not consummate an initial business combination by May 26, 2022, we will cease all operations except for the purpose of winding up and redeem our public shares and liquidate the Trust Account, in which case our public stockholders may only receive approximately $                per share and our warrants will expire worthless.

 

Q:	How can I attend and vote my shares at the Special Meeting?

 

A:

Shares of CHP common stock held directly in your name as the stockholder of record of such shares as of the close of business on                 , 2022, the record date, may be voted electronically at the Special Meeting. If you choose to attend the Special Meeting, you will need to visit                 , and enter the control number found on your proxy card, voting instruction form or notice you previously received. You may vote during the Special Meeting by following instructions available on the meeting website during the meeting. The Special Meeting starts at                 a.m. New York City time. We encourage you to allow ample time for online check- in, which will open at                 a.m. New York City time. Please have your 16-digit control number to join the Special Meeting webcast. Instructions on who can attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com.

 

Q:	How can I vote my shares without attending the Special Meeting?

 

A:	If you are a stockholder of record of CHP as of the close of business on                 , 2022, the record date, you may submit your proxy before the Special Meeting in any of the following ways, if available:

 

•

Vote by Mail: by signing, dating and returning the enclosed proxy card;

 

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Vote by Internet: visit http://www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. New York City time on                 , 2022 (have your proxy card in hand when you visit the website);

 

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Vote by Phone: by calling toll-free (within the U.S. or Canada)                 , until 11:59 p.m. New York City time on                 , 2022 (have your proxy card in hand when you call); or

 

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Vote at the Special Meeting: by casting your vote at the Special Meeting via the Special Meeting website. Any stockholder of record as of the close of business on                 , 2022, the record date, can attend the Special Meeting webcast by visiting                 , where such stockholders may vote during the Special Meeting. The Special Meeting starts at                 , New York City time. We encourage you to allow ample time for online check-in, which will open at                 , New York City time. Please have your 16-digit control number to join the Special Meeting webcast.

If your shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares.

Simply complete, sign and date your voting instruction card and return it in the postage-paid envelope provided to ensure that your vote is counted. Alternatively, you may vote by telephone or over the Internet as instructed by your broker, bank or other nominee. “Street name” stockholders who wish to vote at the Special Meeting will need the 16-digit control number included on the instructions that accompanied your proxy materials, if applicable, or to obtain a proxy form from your broker, bank or other nominee.

 

Q:	What is a proxy?

 

A:	A proxy is a legal designation of another person to vote the stock you own. If you are a stockholder of record of CHP common stock as of the close of business on the record date, and you vote by telephone, by

 

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Internet or by signing, dating and returning your proxy card in the enclosed postage-paid envelope, you designate two of CHP’s officers as your proxies at the Special Meeting, each with full power to act without the other and with full power of substitution. These two officers are Joseph R. Swedish and James T. Olsen.

 

Q:	What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:

If your shares of CHP common stock are registered directly in your name with the Transfer Agent, you are considered the stockholder of record with respect to those shares, and access to proxy materials is being provided directly to you. If your shares are held in a stock brokerage account or by a bank or other nominee, then you are considered the beneficial owner of those shares, which are considered to be held in street name. Access to proxy materials is being provided to you by your broker, bank or other nominee who is considered the stockholder of record with respect to those shares.

Direct holders (stockholders of record). For shares of CHP common stock held directly by you, please complete, sign, date and return each proxy card (or cast your vote by telephone or Internet as provided on each proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your shares of CHP common stock are voted.

Shares in “street name.” For CHP common stock held in “street name” through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your shares.

 

Q:	If a CHP stockholder gives a proxy, how will the CHP common stock covered by the proxy be voted?

 

A:

If you provide a proxy by returning the applicable enclosed proxy card, the individuals named on the enclosed proxy card will vote your CHP common stock in the way that you indicate when providing your proxy in respect of the CHP common stock you hold. When completing the proxy card, you may specify whether your CHP common stock should be voted FOR or AGAINST, or should be abstained from voting on, all, some or none of the specific items of business to come before the Special Meeting.

 

Q:	How will my CHP common stock be voted if I return a blank proxy?

 

A:

If you sign, date and return your proxy and do not indicate how you want your CHP common stock to be voted, then your CHP common stock will be voted “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Charter Amendment Proposal, “FOR” the approval of the Nasdaq Proposal, “FOR” the election of each of the director nominees in the Director Election Proposal, “FOR” the approval of the Equity Incentive Plan Proposal, “FOR” the approval of the Employee Stock Purchase Plan Proposal and “FOR” the approval of the Adjournment Proposal.

 

Q:	Can I change my vote after I have submitted my proxy?

 

A:	Yes. If you are a stockholder of record of CHP common stock as of the close of business on the record date, you can change or revoke your proxy before it is voted at the meeting in one of the following ways:

 

•

submit a new proxy card bearing a later date;

 

•

give written notice of your revocation to CHP’s Corporate Secretary, which notice must be received by CHP’s Corporate Secretary prior to the vote at the Special Meeting; or

 

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vote electronically at the Special Meeting by visiting                  and entering the control number found on your proxy card, voting instruction form or notice you previously received. Please note that your attendance at the Special Meeting will not alone serve to revoke your proxy.

Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than 11:59 p.m. New York City time on                 , 2022. If your shares are held in

 

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“street name” by your broker, bank or another nominee as of the close of business on the record date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.

 

Q:	Where can I find the voting results of the Special Meeting?

 

A:	The preliminary voting results are expected to be announced at the Special Meeting. In addition, within four business days following certification of the final voting results, CHP will file the final voting results of its Special Meeting with the SEC in a Current Report on Form 8-K.

 

Q:	Are CHP stockholders able to exercise dissenters’ rights or appraisal rights with respect to the matters being voted upon at the Special Meeting?

 

A:

No. CHP stockholders are not entitled to exercise dissenters’ rights or appraisal rights under Delaware law in connection with the Business Combination. Dissenters’ rights or appraisal rights are unavailable under Delaware law in connection with the Business Combination to holders of CHP Class A common stock because it is currently listed on a national securities exchange and such holders are not required to receive any consideration (other than continuing to hold their shares of CHP Class A common stock). Holders of CHP Class A common stock may vote against the Business Combination Proposal or redeem their shares of CHP Class A common stock if they are not in favor of the approval of the Business Combination Agreement or the Business Combination. Dissenters’ rights or appraisal rights are unavailable under Delaware law in connection with the Business Combination to holders of CHP Class B common stock because they have agreed to vote in favor of the Business Combination.

 

Q:	Are there any risks that I should consider as a CHP stockholder in deciding how to vote or whether to exercise my redemption rights?

 

A:	Yes. You should read and carefully consider the risk factors set forth in the section titled “Risk Factors” in this proxy statement/prospectus. You also should read and carefully consider the risk factors of CHP and Accelus contained in the documents that are incorporated by reference herein.

 

Q:	What happens if I sell my CHP common stock before the Special Meeting?

 

A:

The record date for CHP stockholders entitled to vote at the Special Meeting is earlier than the date of the Special Meeting. If you transfer your shares of CHP common stock before the record date, you will not be entitled to vote at the Special Meeting. If you transfer your shares of CHP common stock after the record date but before the Special Meeting, you will, unless special arrangements are made, retain your right to vote at the Special Meeting but will transfer the right to hold New Accelus shares to the person to whom you transfer your CHP common stock.

 

Q:	When is the Business Combination expected to be completed?

 

A:

Subject to the satisfaction or waiver of the Closing conditions described in the section titled “The Business Combination Agreement — Conditions to Closing of the Business Combination,” including the approval of the Business Combination Agreement by the CHP stockholders at the Special Meeting, the Business Combination is expected to close in the second quarter of 2022. However, it is possible that factors outside the control of both CHP and Accelus could result in the Business Combination being completed at a later time, or not being completed at all.

 

Q:	Who will solicit and pay the cost of soliciting proxies?

 

A:	CHP has engaged a professional proxy solicitation firm, Morrow Sodali LLC, to assist in soliciting proxies for the Special Meeting. CHP has agreed to pay Morrow a fee plus additional amounts for disbursements.

 

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CHP will reimburse Morrow for reasonable out-of-pocket expenses and will indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. CHP will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of our common stock for their expenses in forwarding soliciting materials to beneficial owners of our common stock and in obtaining voting instructions from those owners. CHP’s management team may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:	What are the conditions to completion of the Business Combination?

 

A:

The Closing is subject to certain conditions, including, among other things, (i) the approval by our stockholders of the Required Transaction Proposals being obtained; (ii) the applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; (iii) after giving effect to the Transactions, CHP having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining immediately after the Effective Time; (iv) satisfaction of the Aggregate Transaction Proceeds Condition; (v) this proxy statement/prospectus becoming effective in accordance with the provisions of the Securities Act, no stop order being issued or remaining in effect with respect to it, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending; (vi) the approval of Accelus’ stockholders of the Business Combination Agreement; and (vii) no order or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by the Business Combination Agreement. Unless waived, if any of these conditions are not satisfied, the Business Combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See the section titled “The Business Combination Proposal.”

 

Q:	What should I do if I receive more than one set of voting materials?

 

A:

Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares of CHP common stock.

 

Q:	Whom do I call if I have questions about the Special Meeting or the Business Combination?

 

A:	If you have questions about the Special Meeting or the Business Combination, or desire additional copies of this proxy statement/prospectus or additional proxies, you may contact:

Morrow Sodali LLC

509 Madison Avenue

New York, NY 10022

Telephone: (800) 662-5200

(banks and brokers can call collect at (203) 658-9400)

Email: CHPM@info.morrowsodali.com

You also may obtain additional information about CHP from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your public shares (either physically or electronically) to Continental Stock Transfer & Trust Company, CHP’s Transfer Agent, at the

 

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address below prior to                 , New York City time, on                 , 2022. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Mark Zimkind

Continental Stock Transfer & Trust Company

1 State Street Plaza, 30^th Floor

New York, New York 10004

E-mail: mzimkind@continentalstock.com

 

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RISK FACTORS

We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. The risks described below are not the only risks we face. Additional risks not presently known to us or that we currently believe are not material may also significantly affect our business, financial condition or results of operations. Our business could be harmed by any of these risks. In assessing these risks, you should also refer to the other information contained in this proxy statement/prospectus, including our consolidated financial statements and related notes.

Unless the context otherwise requires, all references in this subsection to the “Company,” “Accelus,” “we,” “us” or “our” refer to the business of Integrity Implants Inc., (d/b/a Accelus) prior to the consummation of the business combination, which will be the business of Accelus, Inc. following the consummation of the business combination.

Risk Factors Relating to CHP and the Business Combination

Directors and officers of CHP have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Business Combination and approval of the other proposals described in this proxy statement/prospectus.

When considering the recommendation of the CHP Board that the CHP stockholders vote in favor of approval of the Business Combination, CHP stockholders should be aware that CHP’s initial stockholders, including its directors and officers, have interests in the Business Combination that may be different from, or in addition to, the interests of CHP stockholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

•

If we are unable to complete our initial business combination by May 26, 2022, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and the CHP Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

 

•

There will be no liquidating distributions from the Trust Account with respect to our founder shares held by our initial stockholders, officers and directors if we fail to complete our initial business combination by May 26, 2022. CHP Acquisition Holdings LLC purchased the founder shares prior to our initial public offering for an aggregate purchase price of $25,000, or approximately $0.004 per share and in October 2019, transferred 25,000 founder shares to each of James A. Deal, Ken Goulet, and Jack Krouskup (for a total of 75,000). Upon the Closing, such founder shares will remain outstanding.

 

•

In connection with the closing of our initial public offering, we consummated the sale of 8,000,000 private placement warrants at a price of $1.00 per warrant in a private placement to CHP Acquisition Holdings LLC. The warrants are each exercisable commencing 30 days following the Closing, for one share of CHP Class A common stock and, following the consummation of the Business Combination, will entitle the holder thereof to purchase one share of New Accelus common stock in accordance with its terms. The terms of the warrants provide that if the number of outstanding shares of CHP Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of CHP Class A common stock or other similar event, then, on the effective date of such

 

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consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of CHP Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of CHP Class A common stock. In addition, in certain circumstances, if at any time while the warrants are outstanding and unexpired, we pay a dividend or make a distribution in cash, securities or other assets to all or substantially all of the holders of CHP Class A common stock on account of such shares of Class A common stock (or other shares of our capital stock into which the warrants are convertible) then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of CHP Class A common stock in respect of such event. Therefore, the public warrants would be exercisable for 15,000,000 shares of common stock and the private placement warrants would be exercisable for 8,000,000 shares of common stock at an exercise price of $11.50. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised for cash and one share of New Accelus common stock is issued as a result of such exercise, with payment to New Accelus of the exercise price of $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of 23,000,000 shares, with approximately $264.5 million paid to exercise the warrants. If we do not consummate a business combination transaction by May 26, 2022, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public stockholders and the warrants held by CHP Acquisition Holdings LLC will be worthless. The warrants held by CHP Acquisition Holdings LLC had an aggregate market value of approximately $                 based upon the closing price of $                 per warrant on the Nasdaq on                 , 2022.

 

•

Our initial stockholders, officers and directors will lose their entire investment in us if we do not complete an initial business combination by May 26, 2022, including their initial investment in the founder shares and their at-risk capital, for which CHP Acquisition Holdings LLC received 8,000,000 private placement warrants at a price of $1.00 per warrant.

 

•

Pursuant to the Investment Agreement, certain directors and officers of CHP and the AHA purchased the Convertible Notes and Accelus Series D preferred stock, respectively, each such purchase being made with the hope that the Business Combination will be consummated and that such investment will increase in value. In the event the Business Combination is not consummated, the Convertible Notes will automatically convert into Accelus Series D preferred stock.

 

•

Certain of our officers and directors may continue to serve as directors of New Accelus after the Closing. As such, in the future they may receive any cash fees, stock options or stock awards that the New Accelus Board determines to pay to its directors.

 

•

In order to protect the amounts held in the Trust Account, CHP Acquisition Holdings LLC has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per public share or (2) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters in our initial public offering against certain liabilities, including liabilities under the Securities Act.

 

•

Following the consummation of the Business Combination, we will continue to indemnify our existing directors and officers and will maintain a directors’ and officers’ liability insurance policy.

 

•

Upon the Closing, subject to the terms and conditions of the Business Combination Agreement, CHP Acquisition Holdings LLC, our officers and directors and any of their respective affiliates may be entitled to reimbursement for any out-of-pocket expenses related to identifying, investigating,

 

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negotiating and completing an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by CHP from time to time, made by CHP Acquisition Holdings LLC or an affiliate of CHP Acquisition Holdings LLC or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination.

The existence of financial and personal interests of the CHP officers or directors and entities affiliated with them may have influenced their decision to approve the Business Combination. You should consider these interests when evaluating the Business Combination and the recommendation of the CHP Board to vote in favor of the Business Combination Proposal and other proposals to be presented to the stockholders.

Certain officers and directors of CHP also participate in arrangements that may provide them with other interests in the Business Combination that are different from yours including, for example, investments in the Accelus Series D Capital Raise.

Certain officers and directors of CHP also participate in arrangements that may provide them with other interests in the Business Combination that are different from yours. CHP’s officers, directors and other CHP Investors collectively have made an aggregate average investment per sponsor share of $0.004. In addition, certain directors hold private placement warrants, which they purchased for $1.00 per share, which will be exercisable according to their terms to purchase one share of New Accelus common stock at an exercise price of $11.50 per share. Our officers and directors will lose their entire investment in our securities if a business combination is not approved during the period provided in our amended and restated certificate of incorporation. Separately, pursuant to the Investment Agreement, certain of CHP’s officers and directors have purchased approximately $1 million of Convertible Notes of Accelus as part of the Series D Capital Raise in order to induce Accelus to fund the Monthly Contributions in connection with the Extension. Additionally, such officers and directors have committed to purchasing an additional approximately $4.4 million of Convertible Notes in the future in order to fund the Monthly Contribution if they cannot find additional outside investors to invest in the Series D Capital Raise. The officers’ and directors’ significantly lower investment per share in their sponsors shares and, in some cases, private placement warrants, and the significant investment made by certain officers and directors in the Series D Capital Raise, may result in a difference between a transaction that increases the value of the officers’ and directors’ investment and a transaction that increases the value of the public stockholders’ investment. In addition, a transaction that increases the value of the public stockholders’ investment will increase the investments of our officers and directors because of the comparatively low purchase price at which their initial investment was made.

CHP’s initial stockholders at the time of its initial public offering agreed to vote in favor of the Business Combination, regardless of how our public stockholders vote.

Our initial stockholders at the time of our initial public offering agreed, pursuant to the terms of a letter agreement entered into with us, to vote their founder shares and any public shares held by them in favor of the Business Combination Proposal and the other Transaction Proposals being presented at the Special Meeting, all of which are unanimously recommended by the CHP Board. As of the date of this proxy statement/prospectus, our initial stockholders own approximately 28.7% of our issued and outstanding shares. Accordingly, it is more likely that the necessary stockholder approval for the Business Combination will be received than would be the case if our initial stockholders had agreed to vote their shares in accordance with the majority of the votes cast by our public stockholders.

Neither the CHP Board nor any committee thereof obtained a third-party valuation in determining whether or not to pursue the Business Combination.

Neither the CHP Board nor any committee thereof is required to obtain an opinion from an independent investment bank that is a member of the Financial Industry Regulatory Authority, Inc. or from an independent accounting firm that the price that CHP is paying for Accelus is fair to CHP from a financial point of view.

 

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Neither the CHP Board nor any committee thereof obtained a third-party valuation in connection with the Business Combination. In analyzing the Business Combination, the CHP Board and management conducted due diligence on Accelus and researched the industry in which Accelus operates. The CHP Board reviewed, among other things, financial due diligence materials prepared by CHP management and professional advisors, including trading multiples and other valuation metrics for comparable companies, market opportunity studies conducted by an independent consulting firm engaged to assess the size and scope of the market for Accelus’ products, Accelus’ financial projections and the various factors that may cause the company to miss or exceed its projections and the financial terms set forth in the Business Combination Agreement, and concluded that the Business Combination was in the best interest of its stockholders. Accordingly, investors will be relying solely on the judgment of the CHP Board and management in valuing Accelus, and the CHP Board and management may not have properly valued Accelus’ business. The lack of a third-party valuation may also lead an increased number of stockholders to vote against the Business Combination or demand redemption of their shares, which could potentially impact our ability to consummate the Business Combination.

CHP’s initial stockholders, directors, officers, advisors and their affiliates may elect to purchase shares or public warrants from public stockholders, which may influence a vote on the Business Combination and reduce the public “float” of our common stock.

CHP’s initial stockholders, directors, officers, advisors or any of their affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of the Business Combination Proposal or not redeem their public shares. The purpose of any such transaction could be to (i) vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination, (ii) increase the likelihood that the Aggregate Transaction Proceeds Condition is satisfied, or (iii) reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with the Business Combination. Any such stock purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the Business Combination. This may result in the completion of the Business Combination in a way that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by CHP’s initial stockholders for nominal value. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase shares or public warrants in such transactions.

Entering into any such arrangements may have a depressive effect on public shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Special Meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of public shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. In addition, if such purchases are made, the public “float” of our common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

 

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New Accelus’ securities may not be listed on a national securities exchange after the Business Combination, which could limit investors’ ability to make transactions in New Accelus’ securities and subject New Accelus to additional trading restrictions.

CHP intends to apply to have the New Accelus common stock listed on the Nasdaq after the Closing of the Business Combination. New Accelus will be required to meet the initial listing requirements to be listed, including having a minimum number of public stockholders. New Accelus may not be able to meet those initial listing requirements. Even if New Accelus’ securities are so listed, New Accelus may be unable to maintain the listing of its securities in the future. If New Accelus fails to meet the initial listing requirements and the Nasdaq does not list its securities and the related closing condition is waived by the parties, New Accelus could face significant material adverse consequences, including:

 

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a limited availability of market quotations for its securities;

 

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a limited amount of news and analyst coverage for the company; and

 

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a decreased ability to issue additional securities or obtain additional financing in the future.

In addition, even if New Accelus’ securities are listed as of the Closing of the Business Combination, New Accelus may be unable to maintain the listing of its securities in the future.

CHP’s outstanding warrants will become exercisable for New Accelus common stock on the 30th day following the Business Combination. The exercise of these outstanding warrants will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

Following the Business Combination, there will be 15,000,000 outstanding public warrants to purchase 15,000,000 shares of New Accelus common stock at an exercise price of $11.50 per share, which warrants will become exercisable commencing 30 days following the Closing. In addition, there will be 8,000,000 private placement warrants outstanding exercisable for 8,000,000 shares of New Accelus common stock at an exercise price of $11.50 per share. In certain circumstances, the public warrants and private placement warrants may be exercised on a cashless basis. To the extent such warrants are exercised, additional shares of New Accelus common stock will be issued, which will result in dilution to the holders of New Accelus common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of New Accelus common stock, the impact of which is increased as the value of our stock price increases.

Even if we consummate the Business Combination, there can be no assurance that the warrants will be in the money at the time they become exercisable, which is the 30th day following the Closing of the Business Combination, and they may expire worthless.

The exercise price for the outstanding warrants is $11.50 per share of New Accelus common stock. There can be no assurance that the warrants will be in the money following the time they become exercisable, which is the 30th day following the Closing of the Business Combination, and prior to their expiration, and as such, the warrants may expire worthless.

CHP has identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect CHP’s ability to report its results of operations and financial condition accurately and in a timely manner.

CHP’s management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. CHP’s management is likewise required, on a quarterly basis, to evaluate the effectiveness of its internal controls and to disclose any

 

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changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As described in CHP’s Quarterly Report on Form 10-Q, filed with the SEC on November 15, 2021, and in CHP’s amended Quarterly Report on Form 10-Q/A, filed with the SEC on January 6, 2022, CHP identified a material weakness in its internal control over financial reporting related to complex financial instruments. In light of this material weakness, CHP performed additional analysis as deemed necessary to ensure that its unaudited interim financial statements were prepared in accordance with U.S generally accepted accounting principles. Accordingly, management believes that the financial statements included in its Quarterly Report on Form 10-Q filed with the SEC on November 15, 2021 present fairly in all material respects the financial position, results of operations and cash flows for the period presented.

Any failure to maintain internal control over our financial reporting could adversely impact CHP’s ability to report its financial position and results from operations on a timely and accurate basis, which could delay or disrupt our efforts to consummate the Business Combination. If CHP’s financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if CHP’s financial statements are not filed on a timely basis, it or we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our ability to consummate an initial business combination.

We can give no assurance as to our ability to timely remediate the material weakness identified, if at all, or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls.

Our stockholders will experience immediate dilution as a consequence of the issuance of shares of New Accelus common stock in the Transactions. Having a minority share position may reduce the influence that our current stockholders have on the management of New Accelus.

Assuming that no public stockholders exercise their redemption rights in connection with the Business Combination, immediately after the consummation of the Business Combination based on an assumed Closing Date of April 25, 2022, CHP’s public stockholders will hold 18,611,003 shares of New Accelus common stock, or approximately 28% of the outstanding New Accelus common stock representing 28% of the voting power following the Business Combination.

There are currently outstanding an aggregate of 23,000,000 warrants to acquire shares of CHP Class A common stock, which comprise 8,000,000 private placement warrants held by CHP’s initial stockholders at the time of CHP’s initial public offering and 15,000,000 public warrants. Each of CHP’s outstanding whole warrants is exercisable commencing 30 days following the Closing, for one share of CHP Class A common stock and, following the consummation of the Business Combination, will entitle the holder thereof to purchase one share of New Accelus common stock in accordance with its terms. The terms of the warrants provide that if the number of outstanding shares of CHP Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of CHP Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of CHP Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of CHP Class A common stock. In addition, in certain circumstances, if at any time while the warrants are outstanding and unexpired, we pay a dividend or make a distribution in cash, securities or other assets to all or substantially all of the holders of CHP Class A common stock on account of such shares of Class A common stock (or other shares of our capital stock into which the warrants are convertible) then the warrant exercise price will be decreased, effective immediately after the effective date of

 

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such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of CHP Class A common stock in respect of such event. Therefore, the public warrants would be exercisable for 15,000,000 shares of common stock and the private placement warrants would be exercisable for 8,000,000 shares of common stock at an exercise price of $11.50. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised for cash and one share of New Accelus common stock is issued as a result of such exercise, with payment to New Accelus of the exercise price of $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of 23,000,000 shares, with approximately $264,500,000 paid to exercise the warrants.

Subsequent to the consummation of the Business Combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

Although CHP has conducted due diligence on Accelus and New Accelus, CHP cannot assure you that this diligence revealed all material issues that may be present in its business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of CHP’s or New Accelus’ control will not later arise. As a result, New Accelus may incur additional costs and expenses and may be forced to later write-down or write-off assets, restructure its operations or incur impairment or other charges that could result in losses. Even if the due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that New Accelus reports charges of this nature could contribute to negative market perceptions about New Accelus or its securities. In addition, charges of this nature may cause New Accelus to violate net worth or other covenants to which it may be subject. Accordingly, any CHP stockholders or warrant holders could suffer a reduction in the value of their securities.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of our securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of CHP’s securities prior to the Closing may decline. The market values of CHP’s securities at the time of the Business Combination may vary significantly from their prices on the date the Business Combination Agreement was executed, the date of this proxy statement/prospectus, or the date on which CHP stockholders vote on the Business Combination. The number of shares to be issued pursuant to the Business Combination Agreement is based on the Exchange Ratio and will not be adjusted to reflect any changes in the market price of CHP Class A common stock.

In addition, following the release of cash from the Trust Account in connection with the Closing, fluctuations in the price of New Accelus’ securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for the stock of Accelus and trading in the shares of CHP Class A common stock has not been active. Accordingly, the valuation ascribed to Accelus in the Business Combination may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for our securities develops and continues, the trading price of New Accelus securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and New Accelus securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and the Nasdaq specifically, have experienced extreme

 

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volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your securities at or above the price at which it was acquired. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to New Accelus could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

CHP may be the target of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Business Combination from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into business combination agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on CHP’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Business Combination, then that injunction may delay or prevent the Business Combination from being completed, which may adversely affect CHP or Accelus or, if the Business Combination is completed but delayed, New Accelus’ business, financial position and results of operations.

As of the date of this proxy statement/prospectus, no lawsuits have been filed in connection with the Business Combination, but we cannot predict whether any lawsuits will be filed in the future. For additional information, see “Other Information Related to CHP — Legal Proceedings.”

Following the Closing of the Business Combination, CHP will not have any right to make damage claims against Accelus or Accelus’ stockholders for the breach of any representation, warranty or covenant made by Accelus in the Business Combination Agreement.

The Business Combination Agreement provides that the representations, warranties and covenants of the parties contained therein terminate at the Effective Time, except for those covenants that by their terms expressly contemplate performance after the Effective Time as well as the representations and warranties of Accelus and CHP regarding investigation and exclusivity of representations and warranties. Accordingly, no claim for breach of any such representation, warranty, agreement or covenant, detrimental reliance or other right or remedy may be brought with respect thereto after the Effective Time, except for covenants to be performed in whole or in part after the Effective Time. As a result, CHP will have no remedy available to it if the Business Combination is consummated and it is later revealed that, at the time of the Business Combination, there was a breach of any of the representations, warranties and covenants made by Accelus prior to the Effective Time.

Our ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of key personnel of New Accelus, some of whom may be from CHP and Accelus, and some of whom may join New Accelus following the Business Combination. The loss of key personnel or the hiring of ineffective personnel after the Business Combination could negatively impact the operations and profitability of New Accelus.

Our ability to successfully effect the Business Combination and be successful thereafter will be dependent upon the efforts of our key personnel. Although some of CHP’s key personnel may remain with New Accelus in advisory positions following the Business Combination, we expect New Accelus’ current management to remain in place. We cannot assure you that we will be successful in integrating and retaining such key personnel, or in identifying and recruiting additional key individuals we determine may be necessary following the Business Combination.

 

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New Accelus’ actual financial position and results of operations may differ materially from the unaudited pro forma financial information included in this proxy statement/prospectus.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what New Accelus’ actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. Accordingly, such pro forma financial information may not be indicative of New Accelus’ future operating or financial performance and New Accelus’ actual financial condition and results of operations may vary materially from our pro forma results of operations and balance sheet contained elsewhere in this proxy statement/prospectus, including as a result of such assumptions not being accurate. Additionally, the final acquisition accounting adjustments could differ materially from the unaudited pro forma adjustments presented in this proxy statement/prospectus. Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also change the portion of the purchase consideration allocable to goodwill and could impact the operating results of New Accelus following the Business Combination due to differences in the allocation of the purchase consideration, depreciation and amortization related to some of these assets and liabilities. The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies or cost savings that may be associated with the Business Combination. See “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the last day of such fiscal year. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company that is not an emerging growth company or is an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

 

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Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates is greater than or equal to $250 million as of the end of that fiscal year’s second fiscal quarter, and (ii) our annual revenues are greater than or equal to $100 million during the last completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that fiscal year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.

There can be no assurance that the New Accelus common stock issued in connection with the Business Combination will be approved for listing on the Nasdaq, or that we will be able to comply with the continued listing standards of the Nasdaq.

New Accelus common stock and warrants are expected to be listed on the Nasdaq following the Business Combination. New Accelus’ continued eligibility for listing may depend on the number of our shares that are redeemed. If, after the Business Combination, the Nasdaq delists New Accelus common stock from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse consequences including:

 

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a limited availability of market quotations for our securities;

 

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a determination that New Accelus common stock is a “penny stock,” which will require brokers trading in New Accelus common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for New Accelus common stock;

 

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a limited amount of analyst coverage; and

 

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a decreased ability to issue additional securities or obtain additional financing in the future.

If New Accelus fails to maintain an effective system of internal control over financial reporting, New Accelus may not be able to accurately report its financial results or prevent fraud. As a result, New Accelus stockholders could lose confidence in New Accelus’ financial and other public reporting, which would harm its business and the trading price of the New Accelus common stock.

Effective internal control over financial reporting is necessary for New Accelus to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause New Accelus to fail to meet its reporting obligations. In addition, any testing by New Accelus, as and when required, conducted in connection with Section 404 of the Sarbanes-Oxley Act (“Section 404”) or any subsequent testing by New Accelus’ independent registered public accounting firm, as and when required, may reveal deficiencies in New Accelus’ internal control over financial reporting that are deemed to be significant deficiencies or material weaknesses or that may require prospective or retroactive changes to its financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in the New Accelus’ reported financial information, which could have a negative effect on the trading price of the New Accelus common stock.

Pursuant to Section 404, New Accelus will be required to furnish a report by its management on New Accelus’ internal control over financial reporting. However, while New Accelus remains an emerging growth company, New Accelus will not be required to include an attestation report on internal control over financial reporting issued by its independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, New Accelus will be engaged in a process to document and evaluate its internal control over financial reporting, which is both costly and challenging. In this regard, New Accelus will need to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and

 

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document the adequacy of internal control over financial reporting, take steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite its efforts, there is a risk that neither New Accelus, nor New Accelus’ independent registered public accounting firm once New Accelus is required to obtain an attestation report on internal control over financial reporting from such firm, will be able to conclude within the prescribed timeframe that New Accelus’ internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of the New Accelus’ financial statements.

If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share (which was the offering price in our initial public offering).

Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we are unable to complete the Business Combination within the prescribed time frame, or upon the exercise of a redemption right in connection with the Business Combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per share redemption amount received by public stockholders could be less than the $10.00 per share initially held in the Trust Account, due to claims of such creditors. We have not independently verified whether CHP Acquisition Holdings LLC has sufficient funds to satisfy its indemnity obligations to us and believe that the CHP Acquisition Holdings LLC’s only assets are securities of CHP and, therefore, CHP Acquisition Holdings LLC may not be able to satisfy those obligations. We have not asked CHP Acquisition Holdings LLC to reserve for such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for the Business Combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete the Business Combination, and you would receive such lesser amount per public share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

 

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Our directors may decide not to enforce the indemnification obligations of our CHP Acquisition Holdings LLC, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public stockholders.

CHP Acquisition Holdings LLC has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share and (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, CHP Acquisition Holdings LLC will not be responsible to the extent of any liability for such third party claims. While we currently expect that our independent directors would take legal action on our behalf against CHP Acquisition Holdings LLC to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in certain instances. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public stockholders may be reduced below $10.00 per share.

If, before distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per share amount that would otherwise be received by our stockholders in connection with our liquidation would be reduced.

If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of the CHP Board may be viewed as having breached their fiduciary duties to our creditors, thereby exposing members of the CHP Board and us to claims of punitive damages.

The Current Charter states that we must complete our initial business combination by May 26, 2022. If we have not completed an initial business combination by then (or such later date as our stockholders may approve in accordance with the Current Charter), we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and the CHP Board, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless.

 

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If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, the CHP Board may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public stockholders from the Trust Account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.

Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.

Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares. Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by May 26, 2022 may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following May 26, 2022 in the event we do not complete our initial business combination and, therefore, we do not intend to comply with those procedures.

Because we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations are limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, consultants, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution.

We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by May 26, 2022 is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.

If our stockholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their shares of CHP Class A common stock for a pro rata portion of the Trust Account.

Holders of public shares are not required to affirmatively vote against the Business Combination Proposal in order to exercise their rights to redeem their shares for a pro rata portion of the Trust Account. In order to exercise their redemption rights, they are required to submit a request in writing and deliver their stock (either

 

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physically or electronically) to the Transfer Agent by                 , New York City time, on                 , 2022. Stockholders electing to redeem their shares will receive their pro rata portion of the funds held in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes, calculated as of two business days prior to the anticipated consummation of the Business Combination.

The ability of CHP stockholders to exercise redemption rights with respect to a large number of shares could increase the probability that the Business Combination would be unsuccessful and that stockholders would have to wait for liquidation in order to redeem their stock.

At the time we entered into the Business Combination Agreement and related agreements for the Business Combination, we did not know how many stockholders would exercise their redemption rights, and therefore we structured the Business Combination based on our expectations as to the number of shares that will be submitted for redemption. The Business Combination Agreement requires us to have at least $50,000,000 of cash available from the Aggregate Transaction Proceeds, which is made up of the amount available from the Trust (after giving effect to any redemptions of public shares, if any, and the payment of certain expenses), plus the aggregate amount invested by the Extension Premium Funders in Accelus’ ongoing Series D funding round, if any, minus the aggregate amount of Monthly Contributions paid by Accelus in connection with the Extension. The above considerations may limit our ability to complete the Business Combination or optimize our capital structure.

If you or a “group” of stockholders of which you are a part are deemed to hold in excess of 20% of the CHP Class A common stock, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 20% of CHP Class A common stock.

A public stockholder, together with any of his, her or its affiliates or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the CHP Class A common stock, or the “Excess Shares,” without CHP’s prior consent. However, the stockholders’ ability to vote all of their shares (including Excess Shares) for or against the Business Combination will not be restricted. Your inability to redeem the Excess Shares will reduce your influence over CHP’s ability to consummate the Business Combination and you could suffer a material loss on your investment in CHP if you sell such Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to such Excess Shares if CHP consummates the Business Combination. As a result, you will continue to hold that number of shares exceeding 20% of the Class A common stock and, in order to dispose of such Excess Shares, would be required to sell your stock in open market transactions, potentially at a loss.

CHP does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete the Business Combination even if a substantial majority of CHP’s stockholders do not agree.

CHP’s existing governance documents do not provide a specified maximum redemption threshold, except that CHP will only redeem public shares so long as, after payment of the deferred underwriting commissions and after such redemptions, CHP’s net tangible assets will be at least $5,000,001 after giving effect to the Transactions (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act).

As a result, CHP may be able to complete the Business Combination even though a substantial majority of public stockholders do not agree with the transaction and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to CHP Acquisition Holdings LLC, officers, directors, advisors or any of their affiliates. CHP will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the Special Meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned

 

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persons. In the event the aggregate cash consideration we would be required to pay for all shares of CHP common stock that are validly submitted for redemption plus any amount required to satisfy the Aggregate Transaction Proceeds Condition pursuant to the terms of the Business Combination Agreement exceeds the aggregate amount of cash available to us, we will not complete the Business Combination or redeem any shares, all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.

The Business Combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.

The completion of the Business Combination is subject to a number of conditions. The completion of the Business Combination is not assured and is subject to risks, including the risk that approval of the Business Combination by CHP stockholders is not obtained or that there are not sufficient funds in the Trust Account, in each case subject to certain terms specified in the Business Combination Agreement (as described under “The Business Combination Agreement — Conditions to Closing”), or that other Closing conditions are not satisfied. If CHP does not complete the Business Combination, CHP could be subject to several risks, including:

 

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the parties may be liable for damages to one another under the terms and conditions of the Business Combination Agreement;

 

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negative reactions from the financial markets, including declines in the price of CHP Class A common stock due to the fact that current prices may reflect a market assumption that the Business Combination will be completed; and

 

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the attention of our management will have been diverted to the Business Combination rather than the pursuit of other opportunities in respect of an initial business combination.

The exercise of CHP’s directors’ and executive officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in CHP’s stockholders’ best interest.

In the period leading up to the Closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require CHP to agree to amend the Business Combination Agreement, to consent to certain actions taken by Accelus or to waive rights that CHP is entitled to under the Business Combination Agreement. Such events could arise because of changes in the course of Accelus’ business, a request by Accelus to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would entitle CHP to terminate the Business Combination Agreement. In any of such circumstances, it would be at CHP’s discretion, acting through the CHP Board, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors or officers described in the preceding risk factors may result in a conflict of interest on the part of such director(s) or officer(s) between what he or they may believe is best for CHP and its stockholders and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. For example, members of the CHP Board each hold sponsors shares, which were transferred to them by CHP Acquisition Holdings LLC in October 2019 and which CHP Acquisition Holdings LLC purchased for approximately $0.004 per share prior to our initial public offering. In the event we are unable to consummate the Business Combination or to complete an initial business combination by May 26, 2022, CHP Acquisition Holdings LLC will lose all of its investment in CHP. For additional information see “Certain Relationships and Related Party Transactions — CHP.” As of the date of this proxy statement/prospectus, CHP does not believe there will be any changes or waivers that CHP’s directors and executive officers would be likely to make after stockholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further stockholder approval, CHP will circulate a new or amended proxy statement/prospectus and resolicit CHP’s stockholders if changes to the terms of the transaction that would have a material impact on its stockholders are required prior to the vote on the Business Combination Proposal.

 

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CHP may waive one or more of the conditions to the consummation of the Transactions without stockholder approval.

CHP may determine to waive, in whole or in part, one or more of the conditions to its obligations to consummate the Transactions, to the extent permitted by applicable law. If CHP waives the satisfaction of a material condition to the consummation of the Transactions, CHP will evaluate the appropriate facts and circumstances at that time and re-solicit stockholder approvals of the Business Combination Proposal if required to do so by applicable law or the rules of the Nasdaq. In some cases, if the CHP Board determines that such waiver or its effect on CHP’s stockholders does not rise to the level of materiality that would require re-solicitation of proxies pursuant to applicable law or the rules of the Nasdaq, the consequence of such waiver would be that CHP would complete the Transactions without seeking further stockholder approval.

For example, it is a condition to CHP’s obligations to close the Business Combination that Accelus will have performed and complied in all material respects with the covenants and agreements required to be performed or complied with by Accelus under the Business Combination Agreement. However, if the CHP Board determines that a given breach by Accelus of this obligation does not rise to the level of materiality that would require re-solicitation of proxies, then the CHP Board may elect to waive that condition and close the Business Combination. Any determination to waive any condition to its obligations to consummate the Transactions or as to re-soliciting CHP stockholder approval or amending the proxy statement/prospectus as a result of a waiver will be made by the CHP Board at the time of such waiver based on the facts and circumstances as they exist at that time.

Risks Related to Accelus

Our success depends upon market acceptance of our minimally invasive, robotic-assisted, and other spine surgery procedures.

We have developed our minimally invasive surgery solutions for spine surgery procedures. Achieving surgeon, patient and third-party payor acceptance of our minimally invasive and robotic-assisted, spine surgery procedures as a preferred method of performing spine surgery is crucial to our long-term success. We are faced with the risk that the marketplace will not be receptive to our product offerings over competing ones, including traditional and existing robotic-assisted surgical procedures used in hospitals and ambulatory surgical centers (“ASC”), and that might mean that we will be unable to compete effectively. Factors that could affect our ability to successfully commercialize our solutions for minimally invasive spine surgery and to commercialize any potential future products and technologies include (i) dependence upon acceptance by hospitals, ASCs, surgeons and other healthcare practitioners; and (ii) challenges of developing or acquiring externally developed technology solutions that are adequate and competitive in meeting the requirements of next-generation design challenges. Even if we can prove the safety and effectiveness of our products and technologies, hospitals, ASCs or surgeons may still elect not to use them. In addition, hospitals, ASCs and surgeons may be slow to adopt our solutions because of the perceived liability risks arising from the use of new products and the uncertainty of reimbursement from third-party payors, particularly in light of ongoing healthcare reform initiatives and the evolving healthcare environment. Broad use of our products and technologies requires continuous training of surgical teams. We may not be able to continue to rapidly train surgical teams in numbers sufficient to generate adequate demand for our products and technologies. We cannot assure that our current offerings or any future products and technologies will gain broad market acceptance. If the market fails to develop or develops more slowly than expected, or we do not achieve or sustain broad market acceptance, our business, financial condition or results of operations could be adversely affected.

Surgeons, hospitals, ASCs and distributors may have existing relationships with other medical device companies that make it difficult for us to establish new relationships with them, and, as a result, we may not be able to sell and market our products and technologies effectively.

We believe that to sell and market our products and technologies effectively we must establish relationships, and maintain existing ones, with key surgeons, hospitals, ASCs and distributors in the field of spine surgery.

 

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Many of these key surgeons, hospitals, ASCs and distributors already have long-standing relationships with large, well-known companies that dominate the healthcare industry through collaborative research programs and other relationships. Because of these existing relationships, some of which may be contractually enforced, surgeons, hospitals, ASCs and distributors may be reluctant to adopt our products and technologies, particularly if they compete with or have the potential to compete with products and technologies supported by these existing relationships or through their own collaborative research programs. Even if these surgeons, hospitals, ASCs and distributors purchase or promote our products and technologies, they may be unwilling to enter into collaborative relationships with us or to provide us with clinical and financial data and this could adversely affect our business, financial condition or results of operations.

If we fail to maintain existing strategic relationships or are unable to identify distributors of our implants, our revenues may decrease.

We currently derive a significant amount of our revenues through distributors. Variations in the timing and volume of orders by our distributors, particularly those who distribute a significant amount of our implants, may have a material effect upon our revenues. Further, if our relationships with our distributors are terminated or impaired for any reason and we are unable to replace these relationships with other means of distribution, we could suffer a material decrease in revenues.

We may need, or decide it is otherwise advantageous to us, to obtain the assistance of additional distributors to market and distribute our new implants and technologies, as well as to market and distribute our existing implants and technologies, to existing or new markets or geographical areas. We may not be able to find additional distributors who will agree to and are able to successfully market and distribute our implants and technologies on commercially reasonable terms, if at all. If we are unable to establish additional distribution relationships on favorable terms, our revenues may decline. In addition, our distributors may choose to favor the products of our competitors over ours and give preference to them.

Also, our financial results are dependent upon the service efforts of our distributors. If our distributors are unsuccessful in adequately servicing our products, our sales could significantly decrease and our business, financial condition or results of operations may be adversely impacted.

If we, our suppliers or parties who manufacture our products fail to maintain the high quality standards that implants require, if we are unable to procure processing capacity as required, or if the parties who manufacture our products experience disruptions in their ability to procure materials to manufacture our products, our commercial opportunity will be reduced or eliminated.

Implants require careful calibration and precise, high-quality processing and manufacturing, and we rely on a small number of suppliers for the manufacturing of our implants. Achieving precision and quality control requires skill and diligence by our suppliers. If we or our suppliers fail to achieve and maintain these high standards, or fail to avoid or otherwise detect processing and manufacturing errors, we could be forced to recall, withdraw or suspend distribution of our implants; our implants and technologies could fail quality assurance and performance tests; production and deliveries of our implants could be delayed or cancelled; and our processing and manufacturing costs could increase. For example, a significant historical manufacturer of pedicle screws for our LineSider Spinal System (“LineSider”) is in the process of conducting an internal quality review and opened a formal investigation of failure complaints that may involve a potential weld issue. In connection with a voluntary recall being conducted as a result of this issue, we are asking our customers and distributors to return any inventory of the impacted lots and are confirming and investigating the scope of the recall. This notification was provided to the field as a Voluntary Recall Notification, where facilities and sales representatives were instructed to return any impacted devices in their possession. We expect to incur a charge of approximately $1.2 million in the first quarter of 2022 as a result of our write-off of related inventory. Should the scope of the recall expand for any reason, that amount could potentially increase. A key design change to the relevant product was implemented in September 2021, and all LineSider screws produced since this change have been inspected and released with no reported complaints to date. We are actively engaged with this third-party manufacturer to

 

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conduct and aid in a comprehensive and thorough review and root cause analysis. A prolonged suspension of our distribution as a result of an inability for this manufacturer to fully resume production or our failure to source and secure alternative third-party contract manufacturer alternatives could adversely affect our business, financial condition or results of operations. At this time, with respect to screws encompassed by the voluntary recall, we have confirmed two post-operative revision surgeries have been performed with appropriate medical device reporting (“MDR”) notifications filed. Patients are being monitored with no reports of significant injury or concerns.

There can be no assurance that we will not receive claims with respect to any such alleged injuries in the future for which we may have liability, whether arising from existing or future recalls, and which could adversely affect our business, financial condition or results of operations. In general, the reporting of possible product defects or voluntary recalls to the FDA or analogous regulatory bodies outside the United States, including the foregoing LineSider recall, which was reported to the FDA on February 3, 2022, could result in manufacturing audits, increased inspections and broader recalls or other disruptions to our and/or our suppliers’ businesses. This and future recalls could result in significant costs to us and significant adverse publicity, which could harm our ability to market our products in the future or adversely affect our business, financial condition or results of operations. In addition, since we rely on a small number of parties to manufacture our products, any interruption or cancellation in a limited or sole-sourced component or raw material for such parties could materially harm their ability to manufacture our products until a new source of supply, if any, could be found, which would have an adverse effect on our business, financial condition or results of operations. Additionally, a change in parties who manufacture our products will require qualification of the new party to ensure they comply with our quality standards and those mandated by relevant regulation. Delays in qualifying a new party could have an adverse effect on our business, financial condition or results of operations.

Any failure in our efforts to train surgeons, distributors, hospital and ASC staff could result in lower-than-expected product sales and potential liabilities.

A critical component of our sales and marketing efforts is the training of a sufficient number of surgeons, distributors, hospital and ASC staff to properly use our products and technologies. We rely on surgeons, distributors and hospital and ASC staff to devote adequate time to learn how to properly and effectively use our products and technologies. Convincing surgeons, distributors, hospital and ASC staff to dedicate the time and resources necessary for adequate training is challenging, and we cannot assure you that we will be successful in these efforts. If surgeons, distributors, hospital and ASC staff are not properly trained, they may misuse or ineffectively use our products and technologies. Insufficient training may result in unsatisfactory patient outcomes, patient injury and related liability or negative publicity, which could have an adverse effect on our turnover or create substantial potential liabilities and this could adversely affect our business, financial condition or results of operations.

The market for and the use of minimally invasive and robotic-assisted surgical technology is rapidly evolving, and increasingly competitive, as the healthcare industry is undergoing significant structural change, which makes it difficult to forecast demand for our products and technologies.

The market for our product offerings and the use of minimally invasive and robotic-assisted surgical technology is rapidly evolving, and it is uncertain whether we will achieve and sustain high levels of demand and market adoption. Our future financial performance will depend in part on growth in this market and on our ability to adapt to the changing demands of customers. It is difficult to predict the future growth rate and size of our target market. Negative publicity concerning our products and technologies could limit market acceptance. If our customers do not perceive the benefits of our product offerings, or if we do not attract new customers, then our market may not develop at all, or it may develop more slowly than we expect. Our success will depend to a substantial extent on the willingness of healthcare organizations to increase their use of our products and technologies and on our ability to demonstrate the value of our product offerings relative to competing ones to existing and potential customers. If healthcare organizations do not recognize or acknowledge the benefits of our product offerings or if we are unable to reduce healthcare costs or drive positive health outcomes, then the

 

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market for our solutions might not develop at all, or it might develop more slowly than we expect and this may adversely affect our business, financial condition or results of operations.

The development of robotic-assisted surgical devices is costly and involves continual technological change, which may render our product offerings obsolete.

The market for robotic-assisted surgical devices is characterized by rapid technological change, medical advances and evolving industry standards. Any one of these factors could reduce the demand for our product offerings or require substantial resources and expenditures for research, design and development to avoid technological or market obsolescence. Our success will depend on our ability to enhance our current technology, services and systems in order to develop or acquire and market new technologies to keep pace with technological developments and evolving industry standards, while responding to changes in customer needs. We might have insufficient financial resources to improve existing devices, advance technologies and develop new devices at competitive prices. Technological advances by one or more competitors or future entrants into the field may result in our products and technologies becoming non-competitive or obsolete, which may decrease revenues. We may encounter significant competition across our existing and future planned products and technologies and in each market in which we sell or plan to sell them from various companies, many of which have greater financial and marketing resources than ours. Our primary competitors include Medtronic and Globus, which are currently the top manufacturers of robotic-assisted surgical technology in the spine market. In addition, our primary competitors, which are well-established medical device manufacturers with significant resources, may engage in aggressive marketing tactics. Competitors may also possess the ability to commercialize additional lines of products, bundle products or offer higher discounts and incentives to customers in order to gain a competitive advantage. If the prices of competing products are lowered as a result, we may not be able to compete effectively. Any of the foregoing could adversely affect our business, financial condition or results of operations.

We may not successfully manage the development and growth of our products and technologies.

Our current proprietary products and technologies are for use in lumbar spine procedures, but we aim to later expand their use to other surgical procedures, including cervical spine and potentially other general surgery uses. We face risks associated with developing and growing our product offerings for other non-lumbar-spine surgical applications. If we encounter development or manufacturing challenges or discover errors during the development cycle, the implementation of the new surgical applications may be delayed, which will cause delays in our ability to achieve the forecasted results. The expenses or losses associated with unsuccessful product development or launch activities or lack of market acceptance of our products and technologies could adversely affect our business, financial condition or results of operations.

We may not grow at the rates we historically have achieved or at all, even if one or more key metrics may indicate growth.

We have experienced significant growth in the last several years, and therefore our recent revenues growth rate and financial performance should not be considered indicative of our future performance. Our revenues for the fiscal years ended December 31, 2020 and 2021 were $16.9 million and $                million, respectively, representing a                % growth rate. The circumstances that have accelerated the growth of our business may not continue in the future, and future revenues may not grow at these same rates or may decline. You should not rely on our revenues or key business metrics for any previous quarterly or annual period as any indication of our revenues, revenues growth, key business metrics or key business metrics growth in future periods. In particular, our revenues growth rate has fluctuated in prior periods. Our future growth will depend, in part, on our ability to grow our revenues from existing clients, to acquire potential future clients, to launch new product lines, to expand our sales team, to accelerate adoption of our products and technologies in ASCs and to expand internationally. We can provide no assurances that we will be successful in executing on these growth strategies or that, even if our key metrics would indicate future growth, we will continue to grow our revenues or to generate net income. Our ability to execute on our existing sales pipeline, create additional sales pipelines, and

 

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expand our client base depends on, among other things, market acceptance of our products and technologies for spine procedures, the attractiveness of our products and technologies relative to those offered by our competitors, our ability to demonstrate the value of our existing and future offerings, and our ability to attract and retain a sufficient number of qualified sales and marketing leadership and support personnel. In addition, our existing clients may be slower to adopt our services than we currently anticipate, which could adversely affect our business, financial condition or results of operations.

Our limited operating history makes evaluating our business and future prospects difficult.

We have a limited operating history on which to base an evaluation of our business, financial condition or results of operations. It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. In the event that actual results differ from our estimates or we adjust our estimates in future periods, our business, financial condition or results of operations could be adversely affected. The projected financial information appearing elsewhere in this proxy statement/prospectus has been prepared with assistance from our management and reflects current estimates of future performance. The projected results depend on the successful implementation of our management’s growth strategies and are based on assumptions and events over which we have only partial or no control. The assumptions underlying such projected information require the exercise of judgment and may not occur, and the projections are subject to uncertainty due to the effects of economic, business, competitive, regulatory, legislative, political and other changes, which could adversely affect our business, financial condition or results of operations.

We may need to raise additional capital in the future in order to execute our business plans, which may not be available on terms acceptable to us, or at all.

We have experienced recurring losses from operations, and negative cash flows at operations, and we expect our operating expenses will increase in the foreseeable future. We do not expect that our cash and cash equivalents on hand and cash we expect to obtain from the business combination and the Series D Capital Raise, together with cash we expect to generate from future operations, will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months. As a result, we may require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and we may determine to engage in equity or debt financings or enter into credit facilities for other reasons. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If we raise additional funds through the issuance of equity or convertible debt, or other equity-linked securities, our existing stockholders could experience significant dilution. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited and this could adversely affect our business, financial condition or results of operations.

We are highly dependent upon the continued contributions of our key members of management. The loss of their services could harm our business, and if we are unable to attract, recruit, train, retain, motivate and integrate key personnel, we may not achieve our goals.

We are highly dependent upon the continued contributions of our Chief Executive Officer, Christopher Walsh and our Chief Technology Officer, Brad Clayton, as well as our management team. If Accelus were to lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled personnel in addition to Messrs. Walsh and Clayton and our current management team, this could adversely affect the development and implementation of our plans and thus adversely affect our business, financial condition or results of operations. Moreover, we rely upon technical and scientific employees or

 

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third-party contractors to effectively establish, manage and grow our business. Consequently, we believe that our future viability will depend largely on our ability to attract and retain highly skilled robotics engineers, software engineers and mechanical engineers, as well as other managerial, sales, scientific and technical personnel. In order to effectively recruit these personnel, we may need to pay higher compensation or fees to our employees or consultants than we currently expect. Competition for experienced, high-quality personnel is intense, and we cannot assure that we will be able to recruit and retain such personnel. Our growth depends, in particular, on attracting and retaining highly trained sales personnel with the necessary technical background and ability to understand our products and technologies at a technical level to effectively identify and sell to potential new customers. Because of the technical and complex nature of our product offerings, in the context of the dynamic market in which we operate, any failure to attract, recruit, train, retain, motivate and integrate such qualified personnel could adversely affect our business, financial condition or results of operations.

We may experience difficulties in recruiting and retaining needed additional employees while managing our growth.

We expect to experience significant growth in the scope of our operations. Rapid growth in our business may place a strain on our human and capital resources as will need additional managerial, operational, sales, marketing, financial, legal and other resources. The competition for qualified personnel in the healthcare industry is intense. Due to this intense competition, we may be unable to attract and retain the qualified personnel necessary for the development of our business or to recruit suitable replacement personnel. Accelus’ management may need to divert a disproportionate amount of its attention away from day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenues could be reduced and we may not be able to implement our business strategy, and this could adversely affect our business, financial condition or results of operations.

We may be unable to maintain adequate sales and marketing capabilities or enter into and maintain new arrangements with third parties to sell and market our products and technologies.

We cannot guarantee that we will be able to maintain an adequate volume of sales in the future. To the extent that Accelus enters into additional arrangements with third parties to perform sales or marketing services, Accelus’ operating margins could be lower than current ones. To the extent that Accelus enters into co-promotion or other marketing and sales arrangements with other companies, any revenues received will depend on the skills and efforts of others, and we cannot predict whether these efforts will be successful. In addition, the growth of market acceptance of our products and technologies by healthcare practitioners will largely depend on our ability to continue to demonstrate their relative safety, effectiveness, reliability, cost-effectiveness and ease of use. If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, independently or with others, our future revenues may be reduced and this could adversely affect our business, financial condition or results of operations.

We may experience decreasing prices for our products and technologies and be unable to reduce our expenses, including the per unit cost of production.

We may experience decreasing prices for our products and technologies due to pricing pressure from hospitals, ASCs, managed care organizations and other third-party payors and suppliers, increased market power of our payors as the healthcare industry consolidates, and increased competition among suppliers, including manufacturing services providers. If the prices for our products and technologies decrease and we are unable to reduce our expenses, including the cost of sourcing materials, logistics and the cost of manufacture, our business, financial condition or results of operations may be adversely affected. Further, to the extent we engage in sales to large hospital networks, we may be subject to procurement discounts, which could have a negative impact on the prices of our products and technologies.

 

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We may experience manufacturing problems or delays that could limit the growth of our revenues or increase our losses.

We may encounter unforeseen situations outside of our control that would result in delays or shortfalls in our production as well as delays or shortfalls caused by our outsourced manufacturing suppliers and by other third-party suppliers who manufacture components for our products and technologies. The FDA has established comprehensive and prescriptive regulations for manufacturers of finished medical devices and device components, which require them to establish and maintain processes and procedures to adequately control device manufacturing operations and environmental conditions that could adversely affect product quality and impact patient safety. Clean room standards are an example of these requirements. Failure of Accelus or its third-party component manufacturers or suppliers to comply with applicable standards and regulatory requirements could require that manufacturing activities be ceased until such requirements are satisfied, or could otherwise delay our operations. Accelus or its third-party component manufacturers or suppliers may encounter difficulties in scaling up or maintaining production relating to our products and technologies, including:

 

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increases in costs (including those related to labor, components, materials and production as a whole);

 

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problems involving production yields;

 

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quality control and assurance;

 

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component or material supply shortages;

 

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import or export restrictions on components, materials or technology;

 

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shortages of qualified personnel; and

 

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compliance with state and federal regulations.

If we are unable to keep up with demand for our products and technologies, our future revenues could be impaired, market acceptance could be adversely affected and our customers might instead purchase our competitors’ offerings. Our inability to successfully manufacture our products and technologies may adversely affect our business, financial condition or results of operations.

We rely on limited or sole suppliers for some of the materials and components used in our products and technologies, and may not be able to find replacements or immediately transition to alternative suppliers.

We rely on limited or sole suppliers for certain materials and components that are used in our products and technologies. While we periodically forecast our needs for such materials and enter into standard purchase orders with them, Accelus does not have long-term contracts with some of these suppliers. If we were to lose such suppliers, or if such suppliers were unable to fulfill our orders, meet our specifications, or continue to ensure compliance with applicable state and federal regulations, there can be no assurance that Accelus will be able to identify or enter into agreements with alternative suppliers on a timely basis or on acceptable terms, if at all. Furthermore, if we are required to change the supplier or manufacturer of a key component of our products and technologies, we would be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines, and we may be required to redesign aspects of our solutions to accommodate the new component, which would result in significant delays and additional costs. An interruption in Accelus’ operations could occur if we encounter delays or difficulties in redesigning our solutions, or securing these materials and components, or if the quality of the materials and components supplied do not meet Accelus’ requirements, or if Accelus cannot then obtain an acceptable substitute. The time and effort required to redesign our products, or to qualify a new supplier and ensure that the new materials and components provide the same or better results, could result in significant additional costs. Any such interruption could also impact Accelus’ reputation, which could in turn adversely affect our business, financial condition or results of operations. While we believe that our supplies of components and materials are currently sufficient for Accelus to continue the development of its solutions without a disruption to its business, in the event that it must replace one of its suppliers, there can be no assurance that Accelus can maintain this level of inventory in the future.

 

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We may not be able to develop and release new surgical applications, successful enhancements, new features and modifications or to achieve adequate clinical utility.

The markets in which we operate are characterized by rapid technological change, frequent new product and service introductions and enhancements, changing customer demands, and evolving industry standards. The introduction of products embodying new technologies can quickly make existing products obsolete and unmarketable. Additionally, changes in laws and regulations could impact the usefulness of our products and technologies and could necessitate changes or modifications to them to accommodate such changes. We invest substantial resources in research and development in order to enhance the overall quality of our solutions by incorporating additional features, improving functionality, and adding other improvements to meet customers’ evolving needs. The success of any enhancements, improvements or any new features depends on several factors, including timely completion, competitive pricing, adequate quality testing, integration with new and existing technologies and third-party partners’ technologies and overall market acceptance. We may not succeed in developing, marketing and delivering on a timely and cost-effective basis enhancements or improvements to any of our products and technologies that respond to continued changes in market demands or new customer requirements, and any enhancements or improvements to any of our solutions may not achieve market acceptance or authorization. Since developing our solutions is complex, the timetable for the release of new enhancements is difficult to predict, and Accelus may not offer new updates as rapidly as its customers require or expect. Any new products and technologies that we develop may not be introduced in a timely or cost-effective manner, may contain errors or defects, or may not achieve the broad market acceptance necessary to generate sufficient revenues. Moreover, even if we introduce new product offerings, we may experience a decline in revenues from our current products and technologies that is not offset by revenues from the new product offerings. The introduction of new products and solutions by competitors, the development of entirely new technologies to replace existing product offerings or shifts in healthcare benefits trends could make Accelus’ future commercial products and technologies obsolete. We may experience difficulties with industry standards, design or marketing that could delay or prevent the development, introduction or implementation of new products and technologies, enhancements, additional features or capabilities. If we do not accurately anticipate customer demand or if we are unable to develop, license or acquire new features and capabilities on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, it could result in adverse publicity, loss of revenues or market acceptance, or claims by customers brought against Accelus, each of which could adversely affect our business, financial condition or results of operations.

We may be exposed to compliance obligations and risks under anti-corruption, export control and economic sanctions laws and regulations of the United States and applicable non-U.S. jurisdictions.

Expansion of our operations into markets outside the United States is one of our strategies for the future growth of our business. In connection with those plans, we may be or may become subject to compliance obligations under anti-corruption laws and regulations imposed by governmental authorities around the world with jurisdiction over our operations, which may include the U.S. Foreign Corrupt Practices Act (“FCPA”), as well as the anti-corruption laws and regulations of other jurisdictions where we may conduct business. These laws and regulations apply to companies, directors, officers, employees and agents, and may impact the way we conduct our operations, trade practices, investment decisions and partnering activities. Where it applies, the FCPA prohibits us and our officers, directors and employees, as well as any third parties acting on our behalf, including joint venture partners and agents, from corruptly offering, promising, authorizing or providing anything of value to public officials or other persons for the purpose of influencing official decisions or obtaining or retaining business or otherwise obtaining an improper business benefit. As part of our business, we may in the future deal with non-U.S. governments and state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. In connection with our planned expansion of our international operations, we will become subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring our personnel and agents into contact with public officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations. Our business also will need to be conducted in compliance with applicable export controls and

 

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economic sanctions laws and regulations, including those of the U.S. government, the governments of other countries in which we operate or plan to operate in or conduct business and various multilateral organizations. Such laws and regulations include, without limitation, those administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. Our provision of services to persons located outside the United States may be subject to certain regulatory prohibitions, restrictions or other requirements, including certain licensing or reporting requirements pursuant to export controls and economic sanctions laws and regulations. Our provision of services outside of the United States exposes us to the risk of violating, or being accused of violating, anti-corruption, exports controls and economic sanctions laws and regulations. Violations of anti-corruption, exports controls or economic sanctions laws and regulations may expose us to reputational harm, as well as significant civil and criminal penalties, including monetary fines, imprisonment, disgorgement of profits, injunctions, suspension or debarment from government contracts, and other remedial measures. Investigations of alleged violations can be expensive and disruptive to our operations. Any of the foregoing could adversely affect our business, financial condition or results of operations.

We are subject to extensive government regulation, which could restrict the development, marketing, sale and distribution of our products and technologies and could cause us to incur significant costs.

Our products are regulated as medical devices. As such, we are subject to extensive pre-market and post-market regulation by the FDA and various other federal, state, local and foreign government authorities. These authorities regulate, among other things, the development, approval, classification, testing, manufacturing, distributing, labeling, marketing, sale, and post-market surveillance of medical devices. Likewise, our use and disclosure of certain categories of health information may be subject to federal and state laws, implemented and enforced by governmental authorities that protect health information privacy and security. See “Business – Government Regulation” herein for a summary of certain regulations to which we are subject. Further, we cannot predict whether, in the future, the U.S. or foreign governments may impose new regulations that have a material adverse effect on our business, financial condition, results of operations and prospects. The approval or clearance by governmental authorities, including the FDA in the United States, is generally required before any medical devices may be marketed in the United States or other countries. The process of obtaining FDA clearance and approvals to develop and market a medical device can be costly, time-consuming and subject to the risk that such clearances or approvals will not be granted on a timely basis, if at all. The regulatory process may delay or prohibit the marketing of new products and impose substantial additional costs if the FDA lengthens review times for new devices. In addition, we may be subject to compliance actions, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or off-label uses, or if the FDA challenges one or more of our determinations that a product modification did not require new approval or clearance by the FDA. Device manufacturers are permitted to promote products solely for the uses and indications set forth in the approved product labeling. A number of enforcement actions have been taken against manufacturers that promote products for “off-label” uses, including actions alleging that federal health care program reimbursement of products promoted for “off-label” uses are false and fraudulent claims to the government. The failure to comply with “off-label” promotion restrictions can result in significant administrative obligations and costs, and potential penalties from, and/or agreements with, the federal government.

The FDA and its foreign counterparts enforce these regulatory requirements through, among other means, periodic inspections, and we and certain of our suppliers are subject to such announced and unannounced inspections by the FDA and other international notified bodies to determine our compliance with FDA’s Quality System Regulations (21 CFR Part 820) (“QSR”) and other regulations. We cannot assure that the FDA or other regulatory authorities will not discover evidence of noncompliance at our facilities or the facilities of our third-party manufacturers or suppliers during a future quality system inspection. Accordingly, Accelus and its contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control. If the FDA were to find that we or certain of our suppliers have failed to comply with applicable regulations, the agency could institute a wide variety of

 

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enforcement actions such as: public warning letters ; fines and civil penalties against us, our officers, our employees, or our suppliers; delays in clearing or approving, or refusal to clear or approve, our products; withdrawal or suspension of approval of our products or those of our third-party suppliers by the FDA or other regulatory bodies; product recall or seizure; termination of distribution; total or partial suspension of production; operating restrictions; injunctions; and criminal prosecution. The FDA also has the authority to request repair, replacement, or refund of the cost of any medical device manufactured or distributed by us. Any of the foregoing actions could have a material adverse effect on our development of new laboratory tests or business strategy and on our business, financial condition, results of operations and cash flows.

We are also subject to state laws and regulations, including state manufacturer and distributor licensure and registration requirements. Many state laws require medical device distributors to be licensed as a resident or non-resident wholesaler to distribute prescription medical devices in the state, or as a “virtual manufacturer,” for entities that own the unique device identification number for a device but are not involved in physical manufacturing but contract with a manufacturer within the state. We do not currently hold any state distributer licenses, and we have not received any communications from states regarding licensure, but if we are found not to comply with state manufacturing or distribution laws and regulations, we could be required to cease operations, pay fines or become subject to burdensome restrictions and limitations on our business. A finding of noncompliance by one state regulator could also result in required disclosures to other state regulators.

Moreover, governmental authorities outside the United States have become increasingly stringent in their regulation of medical devices, and our products may become subject to more rigorous regulation by non-U.S. governmental authorities in the future. U.S. or non-U.S. government regulations may be imposed in the future that may have a material adverse effect on our business, financial condition and results of operations.

Government regulation of medical devices is meant to assure their safety and effectiveness, and includes requirements for, among other things:

 

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design, development and manufacturing processes;

 

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labeling, content and language of instructions for use and storage;

 

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product testing, pre-clinical studies and clinical trials;

 

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regulatory authorization, including but not limited to pre-market clearance or pre-market approval;

 

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establishment registration, device listing and ongoing compliance with the FDA’s QSR requirements;

 

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advertising and promotion;

 

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marketing, sales and distribution;

 

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conformity assessment procedures;

 

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product traceability and record-keeping procedures;

 

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review of product complaints, complaint reporting, recalls and field safety corrective actions;

 

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post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury;

 

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post-market studies; and

 

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product import and export.

If we fail to obtain, or experience significant delays in obtaining, FDA clearances or approvals for our future products or modifications to our products, our ability to commercially distribute and market our products could suffer.

Our products are subject to extensive regulation by the FDA and numerous other federal, state and foreign governmental authorities. In particular, the FDA permits commercial distribution of most new medical devices

 

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only after the devices have received clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act (“510(k)”) or are the subject of an approved premarket approval application (“PMA”). The process of obtaining FDA clearances and approvals to develop and market a medical device can be costly, time-consuming and subject to the risk that such clearances or approvals will not be granted on a timely basis, if at all.

Most of our spinal implant products, fall into an FDA classification that requires the submission of a 510(k) application. In the 510(k) clearance process, before a device may be marketed, the FDA must determine that a proposed device is “substantially equivalent” to a legally-marketed “predicate” device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device that was originally on the U.S. market pursuant to an approved PMA and later down-classified, or a 510(k)-exempt device. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support substantial equivalence. Before we can market the new device, we must receive an order from the FDA finding substantial equivalence and clearing the new device for commercial distribution in the United States.

The 510(k) process generally takes three to twelve months, but can take significantly longer, especially if the FDA requires a clinical trial to support the 510(k) application. Currently, we do not know whether the FDA will require clinical data in support of any 510(k) applications that we intend to submit for other products in our pipeline. In addition, the FDA continues to re-examine its 510(k) clearance process for medical devices and published several draft guidance documents that could change that process. Any changes that make the process more restrictive could increase the time it takes for us to obtain clearances or could make the 510(k) process unavailable for certain of our products.

A PMA must be submitted to the FDA if the device cannot be cleared through the 510(k) process or is not exempt from premarket review by the FDA. A PMA must be supported by extensive data, including results of preclinical studies and clinical trials, manufacturing and control data and proposed labeling, to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device for its intended use. The PMA process is more costly and uncertain than the 510(k) clearance process, and generally takes between one and three years, if not longer.

In addition, any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design or manufacture, requires a new 510(k) clearance or, possibly, a PMA. The FDA requires every manufacturer to make this determination in the first instance, but the FDA may review any manufacturer’s decision. The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary. If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or PMA applications for modifications to our previously cleared products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties. If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, product introductions or modifications could be delayed or canceled, which could adversely affect our ability to grow our business. Additionally, modifications to products that are approved through a PMA application generally need FDA approval. Our commercial distribution and marketing of any products or product modifications that we develop will be delayed until regulatory clearance or approval is obtained. The FDA can delay, limit or deny clearance or approval of a device for many reasons, including:

 

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our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our products are safe or effective for their intended uses;

 

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the disagreement of the FDA or the applicable foreign regulatory body with the design or implementation of our clinical trials or the interpretation of data from pre-clinical studies or clinical trials;

 

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serious and unexpected adverse device effects experienced by participants in our clinical trials;

 

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the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required;

 

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our inability to demonstrate that the clinical and other benefits of the device outweigh the risks;

 

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the manufacturing process or facilities we use may not meet applicable requirements; or

 

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the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our performance testing and clinical data or regulatory filings insufficient for clearance or approval.

Delays in obtaining regulatory clearances and approvals may:

 

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delay or prevent commercialization of products we develop;

 

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require us to perform costly tests or studies;

 

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diminish any competitive advantages that we might otherwise have obtained; and

 

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reduce our ability to collect revenues.

The FDA may require clinical data in support of any future 510(k) applications or PMAs that we intend to submit for products in our pipeline. We have limited experience in performing clinical trials that might be required for a 510(k) clearance or PMA approval. If any of our products require clinical trials, the commercialization of such products could be delayed which could have a material adverse effect on our business, financial condition, results of operations and prospects.

In order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness of a medical device, if necessary, for a PMA application, 510(k) premarket notification or de novo classification request, a company must, among other things, apply for and obtain institutional review board (“IRB”) approval of the proposed investigation. In addition, if the clinical study involves a “significant risk” (as defined by the FDA) to human health, the sponsor of the investigation must also submit and obtain FDA approval of an investigational device exemption (“IDE”) application and follow applicable IDE regulations. Unless IDE-exempt, non-significant risk devices are still subject to certain abbreviated IDE requirements; however, an IDE application is not required if such abbreviated requirements are met. We may not be able to obtain the necessary FDA and/or IRB approvals to undertake clinical trials in the United States for future products and technologies developed and intended to market in the United States. If we do obtain such approvals, the FDA may find that Accelus’ studies do not comply with the IDE or other regulations governing clinical investigations or the data from any such trials may not support marketing authorization of the investigational device. Moreover, certainty that clinical trials will meet desired endpoints, produce meaningful or useful data and be free of unexpected adverse effects, or that the FDA will accept the validity of foreign clinical study data (if applicable), cannot be assured, and such uncertainty could preclude or delay marketing authorization resulting in significant financial costs and reduced revenues.

There is no guarantee that the FDA will grant marketing authorization for any of our future products and technologies.

Any of our new or modified products and technologies may require FDA marketing authorization before they may be marketed in the United States. The FDA may refuse Accelus’ requests for pre-market review of new products and technologies or may not grant marketing authorization for these solutions for the indications that are necessary or desirable for successful commercialization. Early-stage review may also result in delays or other issues. For example, the FDA has issued guidance intended to explain the procedures and criteria used in assessing whether pre-market review submissions may be accepted for substantive review. Under the “Refuse to Accept” guidance, the FDA conducts an early review against specific acceptance criteria to notify applicants

 

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