ITEM 8.01 - OTHER EVENTS
This
Current Report on Form 8-K is filed by Cellular Biomedicine Group,
Inc. (the “Company” or “CBMG”), in
connection with the matters described herein.
As
previously disclosed, on August 11, 2020, the Company entered into
a definitive merger agreement (the “Merger Agreement”)
with CBMG Holdings, an exempt company with limited liability
incorporated under the laws of the Cayman Islands
(“Parent”), and CBMG Merger Sub Inc., a Delaware
corporation and a wholly-owned subsidiary of the Parent
(“Merger Sub”), pursuant to which Merger Sub will be
merged with and into the Company (the “Merger”), with
the Company surviving the Merger as a wholly owned subsidiary of
Parent.
SUPPLEMENTAL DISCLOSURES IN CONNECTION WITH TRANSACTION
LITIGATION
Following the
filing of the Company’s definitive proxy statement (the
“Proxy Statement”) associated with the Merger with the
Securities and Exchange Commission (the “SEC”) on
December 29, 2020, two complaints relating to the Merger consisting
of (i) a complaint, dated January 15, 2021, filed in the United
States District Court for the Southern District of New York,
captioned James Parshall v.
Cellular Biomedicine Group, Inc., et al., Case No.
1:21-cv-00377, and (ii) a complaint, dated January 16, 2021, filed
in the United States District Court for the Southern District of
New York, captioned Marc Waterman
v. Cellular Biomedicine Group, Inc., et al., Case No.
1:21-cv-00405. A third complaint relating to the Merger, captioned
Steven Benson v. Cellular
Biomedicine Group, Inc., et al., Case No. 20-cv-06527,
was filed on December 25, 2020 in the United States District Court
for the Eastern District of New York challenging the
Company’s preliminary proxy statement that was filed with the
SEC on December 8, 2020. The Parshall, Waterman and Benson
complaints shall be collectively referred to as the “Merger
Litigation.” The Company and the Company’s directors
Tony (Bizuo) Liu, Terry A. Belmont, Steve (Wentao) Liu, Edward
Schafer, Hansheng Zhou, Chun Kwok Alan Au, Jacky (Gang) Ji and
Darren O’Brien are named as defendants in each of the
actions. The plaintiffs allege that the Proxy Statement omits
material information concerning the Merger rendering the Proxy
Statement false and misleading in violation of federal securities
laws. The complaints seek, among other things, injunctive relief
preventing the consummation of the Merger, rescission of the Merger
if consummated or an award of rescissory damages, and an award of
plaintiffs’ expenses and attorneys’ fees.
The
Company believes that the claims asserted in the Merger Litigation
are without merit and no supplemental disclosure is required under
applicable law. However, in order to avoid the risk of the Merger
Litigation delaying or adversely affecting the Merger and to
minimize the costs, risks and uncertainties inherent in litigation,
and without admitting any liability or wrongdoing, the Company has
determined to voluntarily supplement the Proxy Statement as
described in this Current Report on Form 8-K. Nothing in this
Current Report on Form 8-K shall be deemed an admission of the
legal necessity or materiality under applicable laws of any of the
disclosures set forth herein. To the contrary, the Company
specifically denies all allegations in the Merger Litigation that
any additional disclosure was or is required.
These
supplemental disclosures will not affect the merger consideration
to be paid to CBMG stockholders in connection with the Merger or
the timing of the special meeting of CBMG stockholders to be held
at 9605 Medical Center Drive, Suite 100, 1st floor, Rockville,
Maryland 20850, on February 8, 2021 at 9:00 a.m., Eastern Time.
The board of directors of the
Company continues to recommend that you vote “FOR” the
adoption of the Merger Agreement and “FOR” the other
proposals being considered at the special
meeting.
SUPPLEMENTS TO THE PROXY STATEMENT
The
following disclosures in this Current Report on Form 8-K supplement
the disclosures contained in the Proxy Statement and should be read
in conjunction with the disclosures contained in the Proxy
Statement, which in turn should be read in its entirety. To the
extent the information in this Current Report on Form 8-K differs
from or updates information contained in the Proxy Statement, the
information in this Current Report on Form 8-K shall supersede or
supplement the information in the Proxy Statement. All page
references are to the Proxy Statement and terms used below, unless
otherwise defined, shall have the meanings ascribed to such terms
in the Proxy Statement.
The disclosure in the section entitled “Special
Factors—Background of the Merger”, beginning on page 34
of the Proxy Statement, is hereby amended by:
Replacing the second and third sentences of the second full
paragraph on page 38 with the following (with new text
underlined):
Following public
announcement of the November 11 Proposal, no inbound indications of
interest from third parties relating to strategic alternatives were
received by the Company. However, following such public
announcement, certain stockholders of the Company, consisting of
Viktor Pan, Zheng Zhou, Wealth Map Holdings Limited (“Wealth
Map”), Earls Mill Limited (“Earls Mill”), OPEA
SRL, Maplebrook Limited (“Maplebrook”) and Full Moon
Resources Limited (“Full Moon”), each communicated with
Mr. Liu to inquire about the proposed transaction and the basis on which those
stockholders might participate in it.
Replacing the carryover paragraph on pages 37-38 with the paragraph
below (with new text underlined and deleted text struck
out):
Following
discussion of the November 11 Proposal, at this meeting, the Board
unanimously resolved to establish the Special Committee consisting
of Chun Kwok Alan Au, Edward Schafer, Terry A. Belmont and Dr.
Steve (Wentao) Liu, each having been determined by the Board to be
disinterested and independent for all purposes under Delaware law
with respect to the November 11 Proposal. The Company’s remaining
independent director, Jacky (Gang) Ji, elected not to serve as a
member of the Special Committee due to his other professional
commitments at that time. The Board delegated to the Special
Committee the full power and authority of the Board to take all
actions the Special Committee considers necessary, desirable or
convenient in connection with the identification, evaluation and
negotiation of, and the making of recommendations to the Board
regarding, the November 11 Proposal and any alternatives thereto,
including the express power and authority to review and to evaluate
the terms and conditions, and determine the advisability, of the
November 11 Proposal and any alternatives thereto, to negotiate
with any party the Special Committee deems appropriate with respect
to the terms and conditions of the November 11 Proposal or any
alternatives thereto, to determine whether the November 11 Proposal
or any alternatives thereto is beneficial to the Company and its
stockholders and on arm’s-length terms and conditions, to
recommend to the Board what actions, if any, should be taken by the
Board with respect to
the November 11 Proposal and any alternatives thereto,
including, without limitation, to approve or elect not to pursue
the November 11 Proposal and any alternatives thereto, to act on
behalf of the Company in connection with any matters ancillary or
related to the November 11 Proposal and any alternatives thereto
(including, without limitation, the ability to authorize and enter
into contracts of any nature, commence litigation and adopt
defensive measures), and to retain such legal counsel, financial
advisors and other outside professionals, consultants and agents,
each to perform such services and render such advice or opinions,
as the Special Committee may deem necessary, desirable or
convenient to assist it in connection with the discharge of its
duties. The Board also resolved that it would not approve or
recommend to the stockholders of the Company the November 11
Proposal or any alternatives thereto without the prior favorable
recommendation of the Special Committee. Mr. Au was designated as
the Chair of the Special Committee. As Chair, Mr. Au was consulted
regularly by the Special Committee’s advisors and would
inform the other members of the Special Committee of developments
with respect to the proposed transaction when a meeting was not
held.
Replacing the third full paragraph on page 38 with the paragraph
below (with new text underlined):
On
November 12, 2019, Mr. Liu, in his capacity as Chief Executive
Officer and in furtherance of the Company’s obligations under
the Collaboration Agreement, contacted representatives of
Novartis to discuss the November 11 Proposal and to provide
additional information regarding the members of the Buyer
Consortium. During these discussions, Mr. Liu informed Novartis of
what he believed to be various benefits to the Company in moving
forward with a “going private transaction” as
contemplated by the November 11 Proposal, including the potential
financial and competitive benefits to the Company, and expressed
his desire to continue the Company’s business collaboration
with Novartis and its affiliates regardless of whether any
potential transaction was consummated.
Replacing the second full paragraph on page 52 with the paragraph
below (with new text underlined):
On July
7, 2020, the Special Committee held a telephonic meeting to discuss
recent updates with respect to the proposed transaction. At the
invitation of the Special Committee, representatives of White &
Case and Jefferies also attended this meeting. Representatives of
White & Case reviewed with the Special Committee the recent
discussions among White & Case, O’Melveny and Gibson Dunn
regarding CFIUS matters, including Yunfeng Capital’s
intention (as communicated by representatives of O’Melveny on
July 1, 2020) to formally clear the transaction with CFIUS prior to
consummation of the merger. The Special Committee discussed the
timing of a proposed transaction, including potential SEC and CFIUS
review, and the impact of such timing on the Company’s
liquidity position, which could result in the Company not having
sufficient capital to fund its ongoing operations given that the
first tranche of the TF Bridge Loan would mature on October 30,
2020 (or upon the occurrence of an earlier event of default).
In light of the maturity
date of the TF Bridge Loan, Mr. Belmont advised the Special
Committee that the Company could be out of cash within 3
months. The Special Committee also continued discussions
regarding recent clinical results relating to one of the
Company’s products and the potential impact of such results
on the Company. Following discussion of potential means to address
the Company’s liquidity position prior to consummation of the
proposed transaction, the consensus of the Special Committee was
that the Special Committee would discuss with Mr. Liu the impact of
the recent clinical results relating to such product on the March
Management Forecasts and the need to secure short-term liquidity
support. Following this meeting, Mr. Belmont contacted Mr. Liu to
arrange a discussion with Mr. Liu and other members of Company
management to review all ongoing projects relating to the
Company’s products.
Replacing the carryover paragraph on pages 60-61 with the paragraph
below (with new text underlined):
The
Merger Agreement permits the Company (at the direction of the
Special Committee) to actively solicit and negotiate Acquisition
Proposals from third parties during the Go-Shop Period (as
described in the section entitled “The Merger Agreement—Go-Shop Period;
Solicitation of Acquisition Proposals” beginning on
page 143). During the Go-Shop Period, Jefferies, under the
direction of the Special Committee, contacted again the potential
acquirors that were part of the initial outreach from February 13,
2020 through March 12, 2020 (other than parties that later became
Participants). As of the No-Shop Period Start Date, nine of such
parties declined to evaluate a business combination with the
Company, and the remaining parties had not responded in any
meaningful manner. As a result, as of the No-Shop Period Start
Date, there were no Excluded Parties. Furthermore, throughout the sale
process, including the Go-Shop Period, there were no inbound
expressions of interest from parties interested in acquiring the
Company other than from certain stockholders of the Company who
inquired about the proposed transaction and the basis on which
those stockholders might participate in it.
The disclosure in the section entitled “Special
Factors—Certain Company Forecasts”, beginning on page
75 of Proxy Statement, is hereby amended by:
Replacing the carryover paragraph on pages 75-76 with the paragraph
below (with new text underlined):
The
Company does not as a matter of course make public forecasts as to
future performance, earnings or other results due to the
unpredictability of the underlying assumptions and estimates.
However, in connection with the Special Committee’s
evaluation of a potential transaction involving the Buyer
Consortium, in March 2020, Company management presented to and
discussed with the Special Committee certain unaudited prospective
financial information prepared by Company management for fiscal
years 2020 through 2030 comprising the March Management Forecasts
and certain assumptions underlying the March Management Forecasts,
including assumptions with respect to the probability of success of
certain products under development. The March Management Forecasts
also were provided to Jefferies. In July 2020, Company management
presented to and discussed with the Special Committee the July
Management Forecasts, which reflected certain updates to the March
Management Forecasts prepared by Company management with respect to
the Company’s individual products. In particular, the July
Management Forecasts reflected an improved probability of success
with respect to the Company’s Anti-19/20 BiCar product from
5% to 20% as a result of continuing patient enrollment in the
ongoing clinical trial, the initial clinical safety readout, and
early efficacy signals in evaluable participants in the ongoing
clinical trial. In addition, as a result of the COVID-19 pandemic,
the Company experienced delays in the recruitment of patients for
its Phase II clinical trial for its Rejoin® product, and the assumptions
underlying the July Management Forecasts reflect a resulting
delayed launch of that product by one year. The assumptions
underlying the July Management Forecasts also reflect that the
Company’s potential revenue would be delayed by one year
as a result
of clinical development delays caused by the
COVID-19 pandemic. As a result, earnings before interest, taxes,
depreciation and amortization (“EBITDA”) reflected in
the July Management Forecasts were lower than EBITDA reflected in
the March Management Forecasts for fiscal years 2021 through 2025,
but higher for fiscal years 2026 through 2030. The July Management
Forecasts were otherwise substantially similar to the March
Management Forecasts. The July Management Forecasts superseded the
March Management Forecasts in all respects. The July Management
Forecasts also were provided to Jefferies for its use and reliance
in connection with its opinion and related financial analyses, as
described in the section entitled “—Opinion of Jefferies LLC”
beginning on page 69. The summary below of the July Management
Forecasts is not being included in this proxy statement to
influence a stockholder’s decision whether to adopt the
Merger Agreement and thereby approve the Merger, but is being
included to provide the Company’s stockholders with certain
unaudited prospective financial information that was made available
to the Special Committee, the Board and Jefferies. The summary below of the March
Management Forecasts is not being included in this proxy statement
to influence a stockholder’s decision whether to adopt the
Merger Agreement and thereby approve the Merger, but is being
included to provide the Company’s stockholders with
additional unaudited prospective financial information that was
made available to the Special Committee, the Board and Jefferies,
but that was superseded in all respects by the July Management
Forecasts as discussed above.
Replacing footnote 1 to the table on page 78 with the text below
(with new text underlined):
(1)
Free Cash Flow, which is
used interchangeably with Unlevered Free Cash Flow, was
calculated by Jefferies for fiscal years 2020 through 2030, based
on figures provided by the Company’s management in the July
Management Forecasts, as NOPAT, plus Depreciation &
Amortization, minus Capital Expenditures, minus Change in Working
Capital. Free Cash Flow for the second half of fiscal year 2020 in
the amount of approximately ($39) million was calculated by
Jefferies based on figures provided by the Company’s
management in the July Management Forecasts for fiscal year 2020
and the historical financial information of the Company for the
six-month period ended June 30, 2020.
Amending the disclosure in the section “—July
Management Forecasts” on page 79 by inserting the following
text and immediately thereafter, the following section entitled
"—March Management Forecasts" "between the bullet points
carrying over from page 78 and the paragraph commencing
“Certain of the financial projections above were not prepared
in accordance with GAAP, including . . .”:
As of
August 10, 2020, the number of fully-diluted common shares of the
Company was approximately 20,633,000, calculated using the treasury
stock method, including 19,432,979 shares of common stock
outstanding, 1,694,119 options to purchase common shares at a
weighted average exercise price of $12.21, 146,300 time-based
restricted stock units, and, per the terms of the TF Bridge Loan
Agreement, the first $7 million to be converted into equity at
the lower of $19.50 per share or a 15% discount to the 30-day VWAP
(as defined in the section entitled “—Interests of Certain Persons in the
Merger—Treatment of Company Equity
Awards”).
March Management Forecasts
The March Management Forecasts were not relied
on by the Special Committee in connection with its consideration of
the Merger. Holders of Common Stock are cautioned not to place any
reliance on the March Management Forecasts, which the Company
believes are unreliable, stale and not material to any Company
stockholder decision. The March Management Forecasts are being
included solely for informational purposes so that holders of
Common Stock can understand various changes to the predictions of
the Company’s future financial performance following
developments in the operations of the Company’s business over
the normal passage of time and the Special Committee’s
continued inquiry into the considerations underlying the
Company’s management’s projections during this
period. For a detailed description of the reasons for these
various changes, please see the section entitled
“—Background of the
Merger” beginning on page 34.
The
following is a summary of the March Management
Forecasts:
|
|
2020E
|
2021E
|
2022E
|
2023E
|
2024E
|
2025E
|
2026E
|
2027E
|
2028E
|
2029E
|
2030E
|
|
|
($ in
millions)
|
|
Revenue
|
—
|
$2
|
$20
|
$44
|
$69
|
$143
|
$212
|
$294
|
$396
|
$478
|
$606
|
|
COGS
|
—
|
$2
|
$16
|
$32
|
$49
|
$86
|
$107
|
$131
|
$162
|
$197
|
$240
|
|
Gross
Profit
|
—
|
$0
|
$5
|
$12
|
$20
|
$57
|
$105
|
$163
|
$233
|
$281
|
$367
|
|
Operating
Expenses
|
$66
|
$74
|
$76
|
$79
|
$48
|
$46
|
$52
|
$70
|
$91
|
$108
|
$133
|
|
Operating Income
(EBIT)
|
$(66)
|
$(73)
|
$(72)
|
$(67)
|
$(28)
|
$11
|
$54
|
$93
|
$142
|
$173
|
$234
|
|
EBITDA
|
$(58)
|
$(62)
|
$(59)
|
$(52)
|
$(11)
|
$22
|
$65
|
$105
|
$155
|
$186
|
$247
|
|
Stock-based
Compensation
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
$(4)
|
|
NOPBT
|
$(70)
|
$(77)
|
$(76)
|
$(71)
|
$(32)
|
$7
|
$49
|
$89
|
$138
|
$169
|
$230
|
|
NOPAT
|
$(70)
|
$(77)
|
$(76)
|
$(71)
|
$(32)
|
$6
|
$42
|
$76
|
$117
|
$144
|
$195
|
|
Depreciation &
Amortization
|
$8
|
$11
|
$13
|
$15
|
$17
|
$11
|
$11
|
$12
|
$12
|
$13
|
$14
|
|
Capital
Expenditures
|
$(5)
|
$(10)
|
$(11)
|
$(11)
|
$(12)
|
$(12)
|
$(13)
|
$(13)
|
$(14)
|
$(15)
|
$(16)
|
|
Change in Working
Capital
|
$0
|
$(0)
|
$(3)
|
$(4)
|
$(4)
|
$(11)
|
$(10)
|
$(12)
|
$(15)
|
$(12)
|
$(19)
|
|
Free Cash Flow
(1)
|
$(67)
|
$(77)
|
$(76)
|
$(70)
|
$(30)
|
$(6)
|
$30
|
$62
|
$101
|
$130
|
$174
|
Note:
The
March Management Forecasts are adjusted for probability of success
assumptions per Company management.
(1)
Free
Cash Flow, which is used interchangeably with Unlevered Free Cash
Flow, was calculated by Jefferies for the fiscal years 2020 through
2030, based on figures provided by the Company’s management
in the March Management Forecasts, as NOPAT, plus Depreciation
& Amortization, minus Capital Expenditures, minus Change in
Working Capital.
The
March Management Forecasts are based on various assumptions,
including the following:
●
certain
assumptions relating to the probability of success of certain
products being developed by the Company, including:
●
with
respect to the C-CAR088 product, a probability of success of
40%;
●
with
respect to the Anti-CD19/20 BiCar product, a probability of success
of 5%;
●
with
respect to the TIL product, a probability of success of
35%;
●
with
respect to the AFP TCR-T product, a probability of success of
10%;
●
with
respect to the AlloJoin® product, a probability of success of
40%; and
●
with
respect to the ReJoin® product, a probability of success of
40%;
●
research
and development and general and administrative expenses are based
on 2020 budgeted amounts;
●
research
and development expenses for pipeline products are adjusted to
reflect probability of success based on the development phase of
the applicable product;
●
unallocated
research and development expenses are adjusted to reflect
probability of success with reference to approximately 30% blended
probability of success from and after 2025;
●
sales
and marketing expenses assumed as 20% of total revenue adjusted by
probability of success;
●
sales
tax refers to the city construction tax and education surcharges
associated with value added tax;
●
depreciation
and amortization expenses are embedded in research and development
and general and administrative expenses;
●
stock-based
compensation is assumed to be flat;
●
EBITDA
is determined before stock-based compensation
expenses;
●
15% tax
rate is assumed applicable upon positive net operating profit
before tax from and after 2025;
●
no tax
credits assumed;
●
change
in working capital is 15% of the annual change in
sales;
●
capital
expenditures are assumed to have a five-year life with no residual
value and straight-line depreciation; and
●
product
commercialization in the United States is not taken into
account.
- END OF SUPPLEMENT TO PROXY STATEMENT -
Forward Looking Statements
Statements
in this communication relating to plans, strategies, specific
activities, and other statements that are not descriptions of
historical facts, including our statements regarding the completion
of the Merger and targeted timing, or the Merger Litigation,
including the potential impacts of such litigation on completion of
the Merger, are forward-looking statements. Forward-looking
information is inherently subject to risks and uncertainties, and
actual results could differ materially from those currently
anticipated due to a number of factors, which include any risks
detailed from time to time in CBMG’s reports filed with the
Securities and Exchange Commission, Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
including risks relating to the impact of the COVID-19 pandemic on
our operations, including risks associated with the evolving
COVID-19 pandemic and actions taken in response to it. Such
statements are based on the current beliefs and expectations of the
management of CBMG and are subject to significant risks and
uncertainties outside of CBMG’s control. These risks and
uncertainties include the possibility that the anticipated benefits
from the proposed transaction will not be realized, or will not be
realized within the expected time periods; the occurrence of any
event, change or other circumstances that could give rise to
termination of the Merger Agreement; the failure of CBMG’s
stockholders to adopt the Merger Agreement; operating costs,
customer loss and business disruption (including, without
limitation, difficulties in maintaining relationships with
employees, customers, clients or suppliers) may be greater than
expected following the announcement of the proposed transaction;
the retention of certain key employees at CBMG; risks associated
with the disruption of management’s attention from ongoing
business operations due to the proposed transaction; the risk that
a condition to closing the transaction may not be satisfied on a
timely basis or at all; the risk that the proposed transaction
fails to close for any other reason; the outcome of any legal
proceedings related to the proposed transaction; the parties’
ability to meet expectations regarding the timing and completion of
the proposed transaction; the impact of the proposed transaction on
the Company’s credit rating; and other risks described in
CBMG’s Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, and Current Reports on Form 8-K filed with the SEC. Given
these uncertainties, you should not place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Except as otherwise required by law, CBMG does not undertake any
obligation, and expressly disclaims any obligation, to update,
alter or otherwise revise any forward-looking statements, whether
written or oral, that may be made from time to time, whether as a
result of new information, future events or otherwise.
Additional Information and Where to Find It
This
communication may be deemed to be solicitation material in respect
of the proposed acquisition of CBMG. In connection with the
proposed transaction, CBMG has filed relevant materials with the
SEC, including a proxy statement in preliminary and definitive
form, in connection with the solicitation of proxies from
CBMG’s stockholders for the proposed transaction, and CBMG
and certain other persons, including Parent, have filed a Schedule
13E-3 transaction statement with the SEC. The Company first mailed
the definitive proxy statement to stockholders entitled to vote at
the special meeting on or about December 31, 2020. BEFORE MAKING A
VOTING DECISION, STOCKHOLDERS OF CBMG ARE URGED TO READ THE PROXY
STATEMENT AND OTHER RELEVANT DOCUMENTS, CAREFULLY AND IN THEIR
ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT CBMG, THE
PROPOSED TRANSACTION AND RELATED MATTERS. Stockholders may
obtain free copies of the proxy statement and other documents that
CBMG files with the SEC through the website maintained by the SEC
at www.sec.gov. Copies of the documents filed with the SEC by
CBMG are also available free of charge on CBMG’s website at
https://www.cellbiomedgroup.com or by directing a request to
Cellular Biomedicine Group, Inc., Attn: Sarah Kelly, Investor
Relations or by calling (301) 825 5320.
Participants in the Solicitation
CBMG
and certain of its directors, executive officers and employees may
be deemed to be participants in the solicitation of proxies from
CBMG’s stockholders in connection with the proposed
transaction. Information regarding the ownership of CBMG securities
by CBMG’s directors and executive officers is included in
their SEC filings on Forms 3, 4 and 5, and additional information
about CBMG’s directors and executive officers is also
available in CBMG’s proxy statement for its 2020 annual
meeting of stockholders filed with the SEC on April 29, 2020
and is supplemented by other filings made, and to be made, with the
SEC by CBMG. Additional information regarding persons who may be
deemed participants in the solicitation of proxies from
CBMG’s stockholders in connection with the proposed
transaction, including a description of their respective direct or
indirect interests, by security holdings or otherwise, has been
included in the proxy statement described above. These documents
are or will be available free of charge as described
above.