SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
CHEYENNE SOFTWARE, INC.
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(Name of Subject Company)
TSE-TSEHESE-STAESTSE, INC.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
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(Bidder)
COMMON STOCK, $.01 PAR VALUE PER SHARE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS
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(Title of Class of Securities)
166888107
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(CUSIP Number of Class of Securities)
SANJAY KUMAR
TSE-TSEHESE-STAESTSE, INC.
C/O COMPUTER ASSOCIATES INTERNATIONAL, INC.
ONE COMPUTER ASSOCIATES PLAZA
ISLANDIA, NEW YORK 11788-7000
(516) 342-5224
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPIES TO:
SCOTT F. SMITH, ESQ.
HOWARD, DARBY & LEVIN
1330 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 841-1000
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October 11, 1996
(Date Tender Offer First Published,
Sent or Given to Security Holders)
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Page 1 of 4 Pages
Exhibit Index begins on Page 4
<PAGE> 2
Computer Associates International, Inc. and its wholly owned
subsidiary, Tse-tsehese-staestse, Inc., hereby amend and supplement their
Tender Offer Statement on Schedule 14D-1 (the "Statement"), originally filed
on October 11, 1996, with respect to an offer to purchase all outstanding
shares of Common Stock, par value $.01 per share, including associated
Preferred Share Purchase Rights, of Cheyenne Software, Inc. (the "Company")
as set forth in this Amendment No. 1. Capitalized terms not defined in this
Amendment No.1 have the meanings assigned to them in the Statement.
Item 9. Financial Statements of Certain Bidders.
The response to Item 9 is hereby supplemented as follows:
On October 16, 1996, Computer Associates issued the press release
attached hereto as Exhibit (a)(9). The information set forth in the press
release is incorporated herein by reference.
Item 10. Additional Information.
The response to Item 10(e) is hereby amended in its entirety to
read as follows:
On October 18, 1996, an amendment was filed in the Court of
Chancery of the State of Delaware to a purported class action complaint
against the Company and members of the Company's board of directors which had
been filed in April 1996. The original complaint had alleged substantially,
among other things, that the Company's directors had breached their fiduciary
duties by rejecting an earlier request of McAfee Associates, Inc. ("McAfee")
to negotiate a merger of the Company and McAfee. The amended complaint
alleges that the Company's directors breached their fiduciary duties by
agreeing to the proposed transaction with Computer Associates pursuant to the
Merger Agreement, allegedly in breach of their duties of care, loyalty and
disclosure. The amended class action complaint also adds Computer Associates
as a defendant and alleges that Computer Associates aided and abetted such
alleged breaches by the Company's directors of their fiduciary duties. The
plaintiffs seek, among other things, a preliminary and permanent injunction
against the consummation of the proposed transaction with Computer
Associates. The amended complaint is attached hereto as Exhibit (a)(10) and
is incorporated herein by reference; the foregoing description is qualified
in its entirety by reference to such Exhibit. On October 22, 1996, the Court
of Chancery granted plantiffs' motion for expedited discovery and application
for a preliminary injunction hearing. The hearing is scheduled for
Wednesday, November 6, 1996, at 10:00 A.M. in Wilmington, Delaware.
Item 11. Material to be Filed as Exhibits.
(a)(9) Text of press release issued by Computer Associates dated
October 16, 1996.
(a)(10) Amended Class Action Complaint in Lia Moskowitz v. ReiJane
Huai, et al. and in Miles Tepper v. ReiJane Huai et al.
filed in the Court of Chancery of the State of Delaware.
<PAGE> 3
SIGNATURE
After due inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: October 22, 1996
TSE-TSEHESE-STAESTSE, INC.
By/s/ Peter Schwartz
----------------------------------
Name: Peter Schwartz
Title: Vice President and Treasurer
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By/s/ Peter Schwartz
----------------------------------
Name: Peter Schwartz
Title: Senior Vice President and
Chief Financial Officer
<PAGE> 4
EXHIBIT INDEX
Exhibit
Number Exhibit Name
- ------- ------------
(a)(9) Text of press release issued by Computer Associates
dated October 16, 1996.
(a)(10) Amended Class Action Complaint in Lia Moskowitz v.
ReiJane Huai, et al. and in Miles Tepper v. ReiJane
Huai et al. filed in the Court of Chancery of the
State of Delaware.
Exhibit 99 (a)(9)
Contact: Doug Robinson-Investor Relations Bob Gordon-Public Relations
(516) 342-2745 (516) 342-2391
[email protected] [email protected]
COMPUTER ASSOCIATES POSTS 20TH CONSECUTIVE QUARTER OF DOUBLE DIGIT
REVENUE GROWTH
Reports 22% Revenue Growth and 31% EPS Growth
Midrange Revenue up 56%
ISLANDIA, NY, October 16, 1996 - Computer Associates International, Inc.
(NYSE:CA) reported record results for its second fiscal quarter. It was the
20th consecutive quarter of double digit revenue growth and the 19th
consecutive quarter of double digit growth in net income. "We have posted
another solid financial quarter, fueled in part by particularly strong market
demand for our client/server platform products," said Charles B. Wang, CA
Chairman and Chief Executive Officer. "This demand was evident in the
enthusiasm shown by over 18,000 clients and information technology vendors
present at our August user conference, CA-World '96. Virtually all
significant industry platform vendors joined CA in a week filled with
educational sessions and demonstrations of our new technology. The
anticipated consummation of the Cheyenne acquisition will significantly
expand our product offerings in the areas of storage management and
anti-virus."
For the quarter ended September 30, 1996, CA's revenue was $990,124,000, an
increase of 22% over the $812,316,000 reported in the previous year's second
quarter. Net income was $223,407,000, an increase of 31% over last year's
$170,854,000 which excluded the charge associated with the acquisition of
Legent Corporation. Second quarter income per share increased 31%, to $.59,
compared to $.45 a year ago, excluding the acquisition charge.
For the six months ended September 30, 1996, revenue was $1,782,223,000, an
increase of 28% over the $1,389,768,000 reported in the previous year. Net
income and income per share were $343,194,000 and $.90, an increase of 32%
over the $259,403,000 and $.68 for the prior fiscal period, excluding last
year's charge associated with the acquisition of Legent Corporation. All per
share amounts are adjusted for the Company's three-for-two stock splits
effective August 21, 1995 and June 19, 1996.
"We are pleased that once again the CA team came through with an
exceptionally strong quarter," said Sanjay Kumar, CA President and Chief
Operating Officer. "We have capitalized on new opportunities in the
client/server marketplace through our new Emerald sales division, formed in
April to service non-mainframe accounts. The Emerald Division continued its
strong penetration of that market with over 115 new contracts signed in the
quarter. In addition, the number of competitive wins for CA-Unicenter
against other proprietary platform providers was at an all-time high. We
remain committed to providing platform independent mission-critical solutions
that meet the needs of our loyal clients."
-- more --
<PAGE> 2
Highlights of the quarter include:
Over 18,000 people attended CA-World '96, CA's week long annual user
convention that was held in New Orleans in August. Featured keynote
speakers included Charles B. Wang, CA's Chairman and CEO, Retired
General Colin L. Powell and Bill Gates, Chairman and CEO of Microsoft.
Microsoft and CA announced joint support for the Internet/Intranet
standards, ActiveX, HMMS, and HMMP, which will create a mission-
critical infrastructure for managing enterprise applications.
Intel and CA announced the creation of the first integrated solution
that provides Pentium Pro based server control through CA-Unicenter
TNG's end-to-end management capabilities.
Tandem and CA joined forces to develop a fault-tolerant version of CA-
Unicenter.
Vanstar signed up as a CA-Unicenter for Windows NT reseller and
service provider in the largest Windows NT software deal ever.
CA launched its new Internet Division, NetHaven, which will provide
World Wide Web design, development and deployment services.
CA released the second software developers toolkit (SDK II) for its
new pure object oriented database product, Jasmine.
CA's independent business unit, The MK Group, introduced eMK, a single
integrated package for mid-sized manufacturing companies that provides
manufacturing applications, systems management and database
functionality on Windows NT and UNIX platforms.
CA announced the Open Desktop Management Initiative (ODMI), a multi-
faceted program that centers on CA's new open desktop management
interface, the industry's first fully bi-directional approach to
managing desktop information.
CA commenced a tender offer for Cheyenne Software, Inc., the
recognized leader in storage management solutions for the Windows NT
and Novell NetWare environments.
Computer Associates International, Inc. (NYSE: CA), with headquarters
in Islandia, NY, is the world leader in mission-critical business software.
The company develops, licenses and supports more than 500 integrated products
that include enterprise computing and information management, application
development, manufacturing and financial applications. CA has 9,000 people
in 130 offices in 40 countries and had revenue of $3.5 billion in fiscal year
1996. CA can be reached by visiting http://www.cai.com on the World Wide
Web, emailing [email protected] or calling 1-516-342-5224.
All referenced product names are trademarks of their respective companies.
-- more --
<PAGE> 3
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995:
Statements in this release concerning the company's future
prospects are "forward-looking statements" under the federal securities laws.
There can be no assurances that future results will be achieved and actual
results could differ materially from forecasts and estimates. Important
factors that could cause actual results to differ materially include: the
significant percentage of CA's quarterly sales recorded in the last week of
the quarter, making financial predictions especially difficult and raising
a substantial risk of variance of actual results; the emergence of new
competitive products resulting from rapid technological advances; the risks
associated with new product introductions and the uncertainty of customer
acceptance of new or enhanced products from either CA or its competition;
unanticipated delays in product availability due to development difficulties;
business conditions in the client/server and mainframe markets; possible
disruptions resulting from organizational changes and/or integration of new
personnel joining the company through acquisition; and other risks described
in filings with the Securities and Exchange Commission.
-- more --
<PAGE> 4
<TABLE>
COMPUTER ASSOCIATES INTERNATIONAL, INC.
Earnings Before Last Year's Charges
table in thousands, except per share data
(Unaudited)
<CAPTION>
Three Months Six Months
Ended September 30, Ended September 30,
------------------- -------------------
1996 1995(A,B) 1996 1995(A,C)
<S> <C> <C> <C> <C>
Revenue $990,124 $812,316 $1,782,223 $1,389,768
Income before taxes 354,614 273,367 544,752 413,921
Net Income 223,407 170,854 343,194 259,403
Net Income per
Common Share(C) $ .59 $ .45 $ .90 $ .68
Shares used in
computation(C) 379,798 379,523 379,421 379,272
<FN>
(A) Earnings per share and common share amounts have been adjusted to
reflect the three-for-two stock splits effective August 21, 1995 and June 19,
1996.
<FN>
(B) Excludes the write-off of $1,303,280,000 (pre-tax) for purchased
research and development associated with the acquisition of Legent
Corporation. With this charge, loss before taxes for the three months would
be $1,029,913,000, net loss would be $637,180,000, and net loss per share
would have been $1.76 (see table below).
<FN>
(C) Excludes the write-off of $1,303,280,000 (pre-tax) for purchased
research and development associated with the acquisition of Legent
Corporation. With this charge, loss before taxes for the six months would
be $889,359,000, net loss would be $548,631,000, and net loss per share would
have been $1.52 (see table below).
</TABLE>
<TABLE>
Condensed Consolidated Income Statement
table in thousands, except per share data
(Unaudited)
<CAPTION>
Three Months Six Months
Ended September 30, Ended September 30,
------------------- -------------------
1996 1995(A) 1996 1995(A)
<S> <C> <C> <C> <C>
Revenue $990,124 $812,316 $1,782,223 $1,389,768
Income before taxes 354,614 (1,029,913) 544,752 (889,359)
Net Income 223,407 (637,180) 343,194 (548,631)
Net Income per
Common Share(C) $ .59 $ (1.76) $ .90 $ (1.52)
Shares used in
computation(C) 379,798 362,069 379,421 361,631
</TABLE>
Exhibit 99 (a)(10)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ------------------------------------x
LIA MOSKOWITZ, :
:
Plaintiff, :
:
- against - : Civil Action No. 14941
:
REIJANE HUAI, RINO BERGONZI, :
RICHARD F. KRAMER, BERNARD RUBIEN, :
GINETTE WACHTEL, CHEYENNE :
SOFTWARE, INC. and COMPUTER :
ASSOCIATES INTERNATIONAL, INC., :
:
Defendants. :
- ------------------------------------x
MILES TEPPER, :
:
Plaintiff, :
:
- against - : Civil Action No. 14942
:
REIJANE HUAI, RINO BERGONZI, :
RICHARD F. KRAMER, BERNARD RUBIEN, :
GINETTE WACHTEL, CHEYENNE :
SOFTWARE, INC. and COMPUTER :
ASSOCIATES INTERNATIONAL, INC., :
:
Defendants. :
- ------------------------------------x
AMENDED CLASS ACTION COMPLAINT
Plaintiffs, by their attorneys, allege upon information and belief,
except for paragraph 5 hereof which is alleged upon knowledge, as follows:
1. Plaintiffs bring this action on their own behalf and on behalf
of all other public stockholders of Cheyenne Software, Inc. ("Cheyenne" or
the "Company") seeking, inter alia, to enjoin the proposed acquisition of
all of the outstanding shares of Cheyenne common stock by defendant Computer
Associates International, Inc. ("Computer
Associates") for $30.50 cash per share. The individual defendants,
constituting the Board of Directors of Cheyenne, have breached their
fiduciary duties of loyalty, candor and care in connection with the proposed
acquisition of Cheyenne, and Computer Associates has aided and abetted such
breaches.
<PAGE> 2
2. As set forth below, the individual defendants have placed their
own interests above those of the public shareholders of Cheyenne by agreeing
to the proposed transaction by reason of Computer Associates' special
relationship with Cheyenne's senior management and assurances that Computer
Associates would maintain Cheyenne's current management after the transaction
is consummated. The Cheyenne Board recently rebuffed a financially superior
unsolicited proposal to acquire Cheyenne where such personal relationships
and assurances were not present, to the detriment of Cheyenne's public
stockholders.
3. The individual defendants have agreed to the sale of Cheyenne
without having taken any affirmative steps to maximize shareholder value,
having conducted no auction or market-check, having failed to contact any
potential bidders, and even having failed to pursue discussions with parties
who expressed interest in acquiring Cheyenne. In order to discourage any
third party from interfering with the individual defendants' friendly deal
with Computer Associates, the individual defendants have caused Cheyenne to
agree to pay a termination fee plus expenses to Computer Associates of $42.5
million in case any third party tries to acquire Cheyenne in a superior
transaction.
4. In an effort to obtain shareholder approval of the merger and/or
to effectively absolve themselves of their breaches of fiduciary duty, the
individual defendants have sought to portray the transaction as "fair" to
Cheyenne shareholders while withholding vital information needed by the
shareholders to properly assess and consider the transaction. Specifically,
the individual defendants have withheld essential information concerning
contacts by other potential acquirors which Cheyenne received over the last
several months and which the individual defendants intentionally failed to
pursue. Further, the individual defendants have withheld entirely the bases
for the so-called "fairness opinion" obtained by Cheyenne from an investment
banker to induce Cheyenne shareholders to accept the Computer Associates
proposal. The public shareholders, therefore, will be forced, without full
or accurate disclosure by the individual defendants, who are themselves
receiving favored treatment from Computer Associates, to make material,
irrevocable decisions regarding their investment in Cheyenne to their
detriment.
<PAGE> 3
PARTIES
5. Plaintiffs have owned shares of the common stock of the Company
since prior to the transaction herein complained of and continuously to date.
6. Defendant Cheyenne is a corporation duly organized and existing
under the laws of the State of Delaware. The Company develops and sells
software for use in micro-computers and computer systems.
7. Defendant Computer Associates is a corporation duly organized and
existing under the laws of the State of Delaware. Computer Associates
designs and markets standardized computer software products for mainframe,
midrange and desktop computers.
8. The individual defendants constitute the entire Board of
Directors of Cheyenne. In addition, defendant Reijane Huai is Chairman of
the Board, President and Chief Executive Officer.
9. The individual defendants are in a fiduciary relationship with
plaintiffs and the other public stockholders of Cheyenne and owe them the
highest obligations of good faith, due care, candor and fair dealing.
CLASS ACTION ALLEGATIONS
10. Plaintiffs bring this action on their own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf
of all holders of common stock of the Company (except the defendants herein
and any person, firm, trust, corporation, or other entity related to or
affiliated with any of the defendants) and their successors in interest, who
are or will be threatened with injury arising from defendants' actions as
more fully described herein.
<PAGE> 4
11. This action is properly maintainable as a class action because.
(a) The class is so numerous that joinder of all members is
impracticable. There are approximately 37,538,688 shares of Cheyenne common
stock outstanding, owned by over 870 record shareholders scattered throughout
the country.
(b) There are questions of law and fact which are common to the class
including, inter alia, the following: (i) whether the individual defendants
have breached their fiduciary and other common law duties owed by them to
plaintiff and the members of the class; (ii) whether the individual
defendants have failed to maintain a level playing field and to maximize
shareholder value in a sale of the Company; and (iii) whether the class is
entitled to injunctive relief as a result of the individual defendants'
wrongful conduct, aided and abetted by Computer Associates.
(c) Plaintiffs are committed to prosecuting this action and have
retained competent counsel experienced in litigation of this nature.
Plaintiffs' claims are typical of the claims of other members of the class
and plaintiffs have the same interests as the other members of the class.
Plaintiffs will fairly and adequately represent the class.
(d) The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the Class which would as a practical matter be
dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect
their interests.
(e) Defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary
and final injunctive relief on behalf of the Class as a whole is appropriate.
<PAGE> 5
A. Cheyenne Thwarts McAfee's
Unsolicited Proposal
12. On April 15, 1996, Cheyenne announced that it had rejected an
unsolicited offer from McAfee Associates, Inc. ("McAfee") to merge with
Cheyenne in a stock-for-stock business combination. Under the terms of the
transaction as then proposed, Cheyenne shareholders would have received
approximately $27.50 in McAfee common stock for each share of Cheyenne common
stock. This consideration represented a premium of approximately 75% over
the April 12, 1996 closing price of Cheyenne common stock.
13. In response to McAfee's unsolicited merger proposal, Cheyenne
adopted a shareholder rights plan to thwart any takeover attempt unfavored
by the individual defendants. The plan provided, among other things, for an
amendment to the by-laws governing consent solicitations to make an
unsolicited merger more difficult to accomplish.
14. On April 16, 1996, McAfee confirmed that it had made a bid for
Cheyenne. McAfee also stated that it had been in talks with Cheyenne since
November 1995, talks it characterized as "previously friendly merger
discussions." McAfee also said that it had made a similar proposal to
Cheyenne in February 1996.
15. On April 16, 1996, the Wall Street Journal reported that McAfee
had stated it intended to marshall shareholder pressure to force Cheyenne to
accept its takeover offer. The news story also reported Cheyenne's response:
"We're not for sale," said Reijane Huai, Cheyenne's president and chief
executive officer. Besides, he said, "McAfee's offer is `absolutely
inadequate from a valuations point of view, from the point of view of
strategic business.'"
<PAGE> 6
16. Additionally, the Wall Street Journal reported on April 18, 1996
that Cheyenne was refusing to negotiate or to even talk to McAfee's president
and chief executive officer Bill Larson. The news story stated:
Mr. Larson said he asked Mr. Huai Monday night if he should still
fly to New York to meet Mr. Huai yesterday. Mr. Huai said he would
call back by Tuesday but didn't, according to Mr. Larson.
Yesterday, Mr. Larson called two outside Cheyenne board members,
Richard F. Kramer, CEO of FAXplus Inc., and Rino Bergonzi, an
information-systems executive at AT&T Corp. Mr. Larson claims these
members were "shocked that Rei wasn't returning my calls," and would
instruct him to do so....
Mr. Larson maintains that he is still open to doing a friendly deal
with Cheyenne. "We're serious about bagging this bear," he said.
17. Besides refusing to negotiate, Cheyenne also took active measures
to scuttle McAfee's offer. On April 18, 1996, Cheyenne filed suit against
McAfee and Larson for securities fraud. An April 19, 1996 Wall Street
Journal article reporting on Cheyenne's lawsuit against McAfee stated that
Cheyenne's chairman and chief executive officer Haui denied that he had
spoken with Larson at any time during the year and indicated that Larson's
statements that the two companies had been in merger negotiations since
November 1995 were a "`systematic and cynical campaign' to promote the
company's unsolicited bid." Cheyenne's lawsuit sought to enjoin McAfee from
"making further false and misleading public statements concerning Cheyenne
and from soliciting proxies from shareholders."
18. On or about May 1, 1996, McAfee announced that it was withdrawing
its proposal for the acquisition of Cheyenne. In a May 2, 1996 article, the
New York Times reported that Larson stated that "`[t]he Cheyenne board's
continuing refusal to discuss our merger proposal has made the combination
impossible to effect on a friendly basis." However, the news story
continued, "Mr. Larson said he would still consider a `friendly business
combination' between the two companies." (emphasis added).
B. Cheyenne Agrees To Merge With
Computer Associates Without
Seeking Any Alternatives To
Maximize Shareholder Value
<PAGE> 7
19. On or about October 7, 1996, Cheyenne announced that it had
entered into a merger agreement with Computer Associates for Computer
Associates to acquire Cheyenne through a cash tender offer followed by a
merger for untendered shares, both steps at a price of $30.50 per share. The
merger was unanimously approved by the Boards of Directors of both Cheyenne
and Computer Associates.
20. The transaction also provides for payment to Computer Associates
of a $37.5 million termination fee and up to $5 million in expenses if the
transaction is not consummated because the Company is acquired by another
party. These actions were taken to discourage any competing bidders,
particularly McAfee, who might otherwise seek to acquire Cheyenne at a better
price and upon better terms.
21. Additionally, on October 8, 1996, the Wall Street Journal
commented on Computer Associates' agreement to acquire Cheyenne. The news
story noted that "since early May, McAfee stock is up nearly 80%, while
Cheyenne's stock has languished until recently," causing some analysts to
"wonder if McAfee's overture was a missed opportunity for Cheyenne." Indeed,
Melissa Eisenstat, an investment analyst at Oppenheimer & Co. stated
"[t]here's no question that this was the wrong decision from a financial
standpoint."
22. In breach of their fiduciary duties to the public stockholders
of Cheyenne, all of Cheyenne's directors have voted in favor of the merger.
This was done by the individual defendants primarily to protect the
compensation and positions of Cheyenne's senior management, including
director Huai, for, as reported by the Business Wire on October 7, 1996, all
of Cheyenne's management and employees will be retained by Computer
Associates. Charles B. Wang, Computer Associates' chairman and chief
executive, said that "Cheyenne's employees are an integral part of the value
in this acquisition. In recognition of their skills and talents, CA intends
to retain all of Cheyenne's employees." Cheyenne's president Huai also
stated: "Equally exciting is the fact that all of us at Cheyenne will have
the opportunity to participate in the next chapter of Cheyenne's growth."
23. Additionally, an October 8, 1996, a Wall Street Journal article
noted further conflicts between the individual defendants and the interests
of Cheyenne's public shareholders. The news story stated: "Mr. Wang also
took pains yesterday to clarify the friendly nature of the deal --a sharp
contrast to the acrimonious feud between Cheyenne and McAfee --and called
Reijane. Huai, Cheyenne's Chairman and CEO, a "dear friend" (emphasis
added). The news story also stated that: "Cheyenne said it didn't contact
McAfee to see if it would beat Computer Associates offer," (emphasis added)
despite the fact that McAfee had earlier indicated that it would be
interested in a "friendly business combination." It is clear that the
individual defendants have allowed the friendship between Wang and Huai to
supersede the interests of the public shareholders of Cheyenne.
24. The individual defendants have agreed to the sale of Cheyenne
without having fulfilled their Revlon obligations to seek to maximize
shareholder value.
<PAGE> 8
25. Specifically, despite the expressed interest of McAfee in
pursuing a friendly merger transaction with Cheyenne, the individual
defendants caused Cheyenne to enter into the merger agreement with Computer
Associates without having even responded to McAfee's continuing expression
of interest.
26. Indeed, the individual defendants failed to take any affirmative
steps to seek to maximize shareholder value through any sort of auction or
market-check, in addition to failing and/or refusing to respond to parties
who expressed interest in acquiring Cheyenne.
27. The consideration to be paid to Class members in the proposed
acquisition is unfair and grossly inadequate because, among other things:
a. The intrinsic value of Cheyenne's common stock is materially
in excess of the amount offered for those securities in the acquisition,
giving due consideration to the anticipated operating results, net asset
value, cash flow, and profitability of the Company; and
b. the consideration to be paid to Class members is not the
result of an appropriate consideration of the value of Cheyenne because the
Cheyenne Board approved the proposed transaction without undertaking steps
to reliably ascertain Cheyenne's value through open bidding or at least a
"market check" mechanism. Indeed, the Cheyenne Board has failed to even
solicit an offer from McAfee, which has publicly expressed its interest in
acquiring Cheyenne.
C. Cheyenne's Public Shareholders Are Misled
28. On or about October 11, 1996, Cheyenne mailed a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") to its shareholders recommending and seeking shareholder acceptance
of the transaction.
<PAGE> 9
29. The Schedule 14D-9, in violation of the individual defendants'
disclosure obligations and duty of candor, misrepresents and/or omits to
state material information necessary for shareholders to make an informed
decision. Specifically, the Schedule 14D-9 states that Cheyenne did not
receive "any substantial expressions of interest from any [other] parties"
about a possible acquisition of the Company at or about the time of the
McAfee proposal, but fails to disclose what expressions of interest,
substantial or otherwise, were made, or, what efforts, if any, were made to
encourage or stimulate an "insubstantial" expression of interest so that it
might become "substantial" in the context of a sale of the Company which
obligates fiduciaries to maximize value.
30. Moreover, the Schedule 14D-9 "discloses" by obvious omission that
defendants failed to conduct any sort of auction or market-check before
agreeing to sell the Company. The Schedule 14D-9 fails to disclose, however,
that McAfee, at the time of withdrawing its April 1996 offer, openly stated
that it remained willing to consider an acquisition on a friendly basis.
31. The Schedule 14D-9 also fails to disclose that Computer
Associates repeatedly emphasized during its negotiations with Cheyenne that
Computer Associates intended that a merger of the companies would involve no
fundamental change in Cheyenne's management and that all of Cheyenne's
employees would be maintained (though this is disclosed by Computer
Associates in its Offer To Purchase, addressed to Cheyenne shareholders,
dated October 11, 1996).
32. In order to induce Cheyenne shareholders to accept the terms of
the transaction, the individual defendants caused Cheyenne to retain an
investment banker, Lazard Freres & Co. LLC ("Lazard Freres") to render a
fairness opinion. The Schedule 14D-9 prominently emphasizes that Lazard
Freres determined that the proposed merger consideration is fair from a
financial point of view. The Schedule 14D-9 fails to disclose, however, any
specific information about how Lazard Freres made its determination. Thus,
completely lacking from the Schedule 14D-9 is any disclosure whatsoever of
the criteria, methodology or results of Lazard Freres' work, including a
complete failure to disclose what range of values Lazard Freres calculated
for Cheyenne.
33. The individual defendants' failure to disclose the above
described information denies Cheyenne's shareholders critical information
necessary to make an informed evaluation of the fairness opinion and of the
fairness of the proposed merger in its entirety.
34. Computer Associates knowingly aided and abetted the breaches of
fiduciary duty committed by the individual defendants. Indeed, the proposed
transaction could not take place without the knowing participation of
Computer Associates.
<PAGE> 10
35. Plaintiffs have no adequate remedy at law.
WHEREFORE, plaintiffs demand judgment as follows:
A. declaring this to be a proper class action;
B. enjoining, preliminarily and permanently, the proposed transaction
complained of herein;
C. requiring the individual defendants to make full and fair
disclosure of all material facts to the Class;
D. to the extent, if any, that the transaction complained of is
consummated prior to the entry of this Court's final judgment, rescinding the
same or awarding rescissory damages to the Class;
E. directing that defendants account to plaintiffs and the Class for
all damages caused to them and account for all profits and any special
benefits obtained by defendants as a result of their unlawful conduct;
F. awarding to plaintiffs the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiffs'
attorneys and experts; and
G. granting such other and further relief as the Court deems
appropriate.
<PAGE> 11
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:_________________________
P.O. Box 1070
Suite 1401, Mellon Bank Center
Wilmington, Delaware 19801
Attorneys for Plaintiffs
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ
274 Madison Avenue
New York, New York 10016
(212) 779-1414
GOODKIND LABATON RUDOFF
& SUCHAROW, LLP
100 Park Avenue
New York, NY 10017
(212) 907-0700
<PAGE>
CERTIFICATE OF SERVICE
I, JOSEPH A. ROSENTHAL, hereby certify that on October 18, 1996,
I caused copies of the foregoing Notice of Filing Amended Class Action
Complaint to be served by hand delivery on:
Kenneth J. Nachbar, Esquire
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street
Wilmington, DE 19801
_________________________
Joseph A. Rosenthal
