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Frequently Asked Questions

1.What Is This Lawsuit About?
2.Why Is This A Class Action?
3.Why Is There A Settlement With Defendants?
4.How Do I Know If I Am Part Of The Settlement?
5.Who Is Excluded?
6.What Does The Settlement Provide?
7.How Much Will My Payment Be?
8.How Will I Get A Payment?
9.When Will I Get My Payment?
10.Do I Have A Lawyer In This Case?
11.How Will The Lawyers Be Paid?
12.How Do I Tell The Court That I Don't Like The Settlement?
13.What's The Difference Between Objecting And Excluding?
14.When And Where Will The Court Decide Whether To Approve The Settlement?
15.Do I Have To Come To The Hearing?
16.May I Speak At The Hearing?
17.What Happens If I Do Nothing At All?
18.Are There More Details About The Settlement?
19.How Do I Get More Information?

1. What Is This Lawsuit About?
 

This case was brought as a class action alleging that Defendants violated the securities laws by making materially false and misleading statements and omissions regarding EDS's revenues and profitability during the period from February 7, 2001 through and including September 18, 2002. Defendants have denied that they did anything wrong.

To access the Amended Consolidated Class Action Complaint, filed on July 7, 2003 (the "Amended Complaint"), which is the operative complaint in the Action, please click here. You can access the Notice of Proposed Settlement of Class Action, which contains a description of the history of the Action by clicking here.



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2. Why Is This A Class Action?
 

In a class action, one or more people called class representatives (in this case the Court-appointed Lead Plaintiff New Jersey) sue on behalf of people who have similar claims. All these people are called a Class or Class Members. One court resolves the issues for all Class Members, except for those who exclude themselves from the Class. Judge Leonard Davis is in charge of this class action.



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3. Why Is There A Settlement With Defendants?
 

The Court did not decide in favor of Lead Plaintiff or Defendants. Instead, these parties agreed to a settlement. That way, they avoid the cost and risks of a trial, and eligible Class Members who make a valid claim will get compensation. The Lead Plaintiff and its attorneys think the Settlement is best for all Class Members.



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4. How Do I Know If I Am Part Of The Settlement?
 

The Class includes all persons or entities who purchased or acquired EDS securities between February 7, 2001 through and including September 18, 2002, and who were damaged thereby, except those persons and entities that are excluded, as described below.



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5. Who Is Excluded?
 

You are not a Class Member if you are EDS; Richard H. Brown; James E. Daley; a member of the families of Brown or Daley; any parent, subsidiary, affiliate, partner, officer, executive, or director of any Defendant; any entity in which any such excluded person has a controlling interest; or the legal representative, heir, successor, or assign of any such excluded person or entity. You are also not a Class Member if you validly excluded yourself from the Class by June 28, 2005.

If you sold EDS securities between February 7, 2001 and September 18, 2002, or if you owned EDS securities between February 7, 2001 and September 18, 2002 which were purchased or acquired before February 7, 2001, that alone does not make you a Class Member. You are a Class Member only if you purchased or acquired EDS securities between February 7, 2001 and September 18, 2002, and were damaged by such purchase(s) or acquisition(s).

If you are still not sure whether you are included, you can ask for free help. You can call or e-mail Poorman-Douglas Corporation at (888) 230-9850 (toll free) or edssecuritieslitigation@poorman-douglas.com. Or you can fill out and return the claim form to see if you qualify.



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6. What Does The Settlement Provide?
 

Defendants have agreed to pay $137.5 million in cash to be divided among all eligible Class Members who send in valid claim forms, after payment of Court-approved attorneys' fees and expenses, taxes and the cost of preparation of tax returns, and the costs of claims administration, including the costs of printing and mailing the Notice of Proposed Settlement of Class Action and the cost of publishing notice (the "Net Settlement Fund").


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7. How Much Will My Payment Be?
 

Your share of the fund will depend on the number of valid claim forms that Class Members send in and the amount of EDS securities you purchased or acquired during the Class Period and when you purchased or acquired and sold them. For purposes of allocating the Net Settlement Fund, Lead Plaintiff will ask the Judge to approve a plan of allocation of the settlement proceeds. The Judge may adopt Lead Plaintiff's plan or adopt a different plan of allocation without further notice. You may object to Lead Plaintiff's proposed plan of allocation. The plan of allocation Lead Plaintiff will propose is as follows:

  1. To receive any money from the Net Settlement Fund, you must show that you are a Member of the Class and timely submit a valid Claim Form and all required documentation to the Claims Administrator so that it is postmarked no later than April 19, 2006.

  2. The Claims Administrator will determine each Authorized Claimant's pro rata share of the Net Settlement Fund based upon each Authorized Claimant's "Recognized Loss." Recognized Losses are based on the amount of inflation in the price of EDS's securities at the time of purchase due to Defendants' false statements or omissions, as calculated by Lead Plaintiff's damages expert. Lead Plaintiff's damages expert determined that disclosure of the truth as alleged in this lawsuit caused a drop in the prices of the following EDS securities: EDS common stock, EDS's FELINE PRIDES, and call options on EDS common stock (the "Eligible Securities").

  3. Lead Plaintiff's damages expert determined the percentages by which the Eligible Securities were inflated during the Class Period as a result of the alleged wrongdoing and applied those percentages to the closing price for each day during the Class Period to calculate the dollar amount of inflation for the common stock and FELINE PRIDES, and with respect to call options, calculated the dollar amount of daily inflation based on inflation in the stock and the Black-Scholes options pricing model.

  4. The Recognized Loss per share of common stock purchased or acquired during the Class Period and held at the close of the Class Period shall be equal to the dollar amount of inflation per share specified on the Inflation Table for Common Stock (Notice of Proposed Settlement).

  5. The Recognized Loss per FELINE PRIDE purchased or acquired during the Class Period and held at the close of the Class Period shall be equal to the dollar amount of inflation per FELINE PRIDE specified on the Inflation Table for FELINE PRIDES (Notice of Proposed Settlement).

  6. The Recognized Loss per EDS Call Option on EDS common stock purchased or acquired during the Class Period and held at the close of the Class Period, and which did not expire prior to the close of trading on September 18, 2002, shall be equal to the dollar amount of inflation per option specified on the Inflation Table for Options for that option series on the purchase date (Inflation Table for Options).

  7. Eligible Securities that were purchased or acquired during the Class Period but were sold before the close of the Class Period are not eligible for payment.

  8. You will be required to provide documentation with respect to your transactions in EDS common stock, FELINE PRIDES and call options during the Class Period as well as any ownership you had of these securities at the beginning and the end of the Class Period.

  9. In calculating the Recognized Loss, a sale of an Eligible Security will be matched first against the holdings in the respective Eligible Securities in the opening position, and then matched chronologically against each purchase made during the Class Period. If you made multiple purchases of any or all of the Eligible Securities during the Class Period, the earliest subsequent sale will be matched first against the holdings of the respective securities on the first day of the Class Period, and then matched chronologically thereafter against each purchase made during the Class Period.

  10. Your total Recognized Loss as to each Eligible Security will be calculated by accumulating, for each respective transaction, the product of the Recognized Loss Amounts per share, PRIDE or option by the respective number of shares, PRIDES or options purchased by the Class Member during the Class Period, as set forth above.

  11. PLEASE NOTE: To the extent you had a gain from your overall transactions in the Eligible Securities during the Class Period, the value of your Recognized Loss will be zero. To the extent that you suffered an overall loss on your overall transactions in the Eligible Securities during the Class Period, but that loss was less than the total Recognized Loss calculated pursuant to the provisions above, then your Recognized Loss will be limited to the amount of the overall loss.

  12. For purposes of determining whether you had a gain from your overall transactions in the Eligible Securities during the Class Period or suffered a loss, the Claims Administrator will: (i) total the amount paid for each Eligible Security purchased during the Class Period by you (the "Total Purchase Amount Per Eligible Security"); (ii) match any sales of the respective Eligible Security during the Class Period first against your opening position in the security (the proceeds of those sales will not be considered for purposes of calculating gains or losses); (iii) total the amount received for sales of the remaining Eligible Security sold during the Class Period (the "Sales Proceeds Per Eligible Security"); and (iv) ascribe a holding value equal to the closing price of each Eligible Security on September 19, 2002, times the number of shares, PRIDES or call options purchased during the Class Period and still held at the end of the Class Period ("Holding Value"). The Claims Administrator will then total the Total Purchase Amounts Per Eligible Security ("Global Total Purchase Amount") and will also total the sum of the Sales Proceeds and Holding Value Per Eligible Security ("Global Sales Proceeds and Holding Values"). The difference between (i) the Global Total Purchase Amount and (ii) the Global Sales Proceeds and Holding Value, will be deemed your gain or loss on your overall transactions in the Eligible Securities during the Class Period.

  13. f you acquired by means of a gift, inheritance or operation of law, any Eligible Security during the Class Period that was purchased prior to commencement of the Class Period such acquisitions do not qualify as purchases on the dates of acquisition unless the transfer resulted in a taxable event or other change in the cost basis of the security. To the extent that there was no such taxable event or change in cost basis at the time of transfer, the Recognized Loss for that acquisition will be zero. If, however, your transferred Eligible Security was purchased during the Class Period by the donor, decedent or transferor, then, unless the donor estate or transferor submits a Proof of Claim with respect to the Eligible Security, your claim will be computed with respect to that Eligible Security by using the price of such Eligible Security on the date of purchase and not the date of transfer.

  14. A payment to any Authorized Claimant of less than $10.00 in total will not be included in the calculation and will not be distributed.

  15. Distribution to Authorized Claimants from the Net Settlement Fund will be made after all claims have been processed. If any funds remain in the Net Settlement Fund by reason of un-cashed checks or otherwise, then, after the Claims Administrator has made reasonable and diligent efforts to have Class Members who are entitled to participate in the distribution of the Net Settlement Fund cash their distribution checks, any cash balance remaining in the Net Settlement Fund one (1) year after the initial distribution of such funds shall be re-distributed after payment from this balance of any unpaid costs or fees incurred in administering the Net Settlement Fund for such re-distribution to Class Members who have cashed their checks and who would receive at least $10.00 from such re-distribution. If after six months after such re-distribution any funds shall remain in the Net Settlement Fund, then such balance shall be contributed to non-sectarian, not-for-profit, 501(c)(3) organization(s) designated by Lead Counsel.

  16. Each Claimant shall be deemed to have submitted to the jurisdiction of the United States District Court for the Eastern District of Texas, Tyler Division with respect to his, her or its Proof of Claim.

The payment you get will reflect your pro rata share after deduction of Court-approved fees and expenses. Depending on the number of eligible securities that participate in this Settlement and when those securities were acquired and sold, the estimated average payment will be approximately: (i) $0.42 for each share of common stock; (ii) $0.18 for each call option; and (iii) $0.40 for each FELINE PRIDE, before deduction of Court-approved fees and expenses. The number of claimants who send in claims varies widely from case to case. If fewer than anticipated Class Members send in a claim form, you could get more money. Conversely, if more claims are submitted than currently anticipated, you could get less money.



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8. How Will I Get A Payment?
 

To qualify for payment, you must be an eligible Class Member and you must submit a claim form. Read and follow the instructions carefully, fill out the form completely, and include all the documents the form asks for. The completed claim form must be postmarked no later than April 19, 2006.



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9. When Will I Get My Payment?
 

The Court has scheduled a hearing to be held on March 7, 2006 at 10:00 a.m., to decide whether to approve the Settlement, the fee and expense application(s) and the plan of allocation. The Court may reschedule the hearing without further notice. If Judge Davis approves the Settlement, there may be appeals. It is always uncertain whether these appeals can be resolved, and resolving them can take time, perhaps several years. Everyone who sends in a claim form will be informed of the determination with respect to their claim. Please be patient.



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10. Do I Have A Lawyer In This Case?
 

The Court approved the law firms of Bernstein Litowitz Berger & Grossmann LLP and Lowenstein Sandler PC to represent you and other Class Members. These lawyers are called Lead Counsel. You will not personally be charged for these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.



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11. How Will The Lawyers Be Paid?
 

Lead Counsel will ask the Court for attorneys' fees not to exceed 19.45% of the settlement fund (an estimated average of approximately $0.082 per share of common stock, $0.036 per call option, and $0.078 per FELINE PRIDE) and for reimbursement of Lead Counsel's and Lead Plaintiff's out-of-pocket expenses as authorized by law up to $5.5 million (an estimated average of approximately $0.017 per share of common stock, $0.007 per call option, and $0.016 per FELINE PRIDE). Such sums as may be approved by the Court will be paid from the Settlement Amount of $137.5 million. Class Members are not personally liable for any such fees or expenses.

The attorneys' fees and expenses requested will be the only payment to Lead Counsel for their efforts in achieving this Settlement and for their risk in undertaking this representation on a wholly contingent basis. You may object to the request(s) for attorneys' fees and reimbursement of expenses. To date, Lead Counsel have not been paid for their services for conducting this litigation on behalf of the Lead Plaintiff and the Class nor for their substantial out-of-pocket expenses, which included hiring experts, preparing for trial, and reviewing and analyzing over 10 million pages of documents produced by Defendants and third-parties. The fee requested will compensate Lead Counsel for their work to date in achieving the Settlement and for pursuing this litigation on behalf of the Class, and is within the range of fees awarded to class counsel under similar circumstances in other cases of this type. The Court may award less than this amount.



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12. How Do I Tell The Court That I Don't Like The Settlement?
 

If you are a Class Member, you can object to the Settlement, the fee and expense application(s), and the plan of allocation if you don't like any part of them. You can give reasons why you think the Court should not approve it. The Court will consider your views. To object, you must send a letter saying that you object to the Settlement in In re Electronic Data Systems Corporation Securities Litigation, Lead Case 6:03-CV-110 ("SECURITIES"). Be sure to include your name, address, telephone number, your signature, the number and type of EDS securities you purchased or acquired and sold between February 7, 2001 and September 18, 2002, and the reasons you object to the Settlement. Any objection to the Settlement must be mailed or delivered such that it is received by each of the following no later than February 21, 2006:

Court: Counsel for Defendants:
Clerk of the Court Patricia J. Villareal
UNITED STATES DISTRICT COURT James P. Karen
EASTERN DISTRICT OF TEXAS JONES DAY
TYLER DIVISION 2727 North Harwood Street
211 W. Ferguson Dallas, TX 75201-1515
Tyler, TX 75702

Lead Counsel for Plaintiff:

Alan Schulman Michael B. Himmel
Robert S. Gans Robert J. Kipnees
Niki L. Mendoza LOWENSTEIN SANDLER PC
BERNSTEIN LITOWITZ BERGER 65 Livingston Avenue
& GROSSMANN LLP Roseland, NJ 07068
12481 High Bluff Drive, Third Floor
San Diego, CA 92130


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13 What's The Difference Between Objecting And Excluding?
 

Objecting is simply telling the Court that you don't like something about the Settlement. If you object, you can still file a Proof of Claim. If you excluded yourself from the Class by June 28, 2005, you cannot object and you cannot file a Proof of Claim.



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14. When And Where Will The Court Decide Whether To Approve The Settlement?
 

The Court will hold a fairness hearing at 10:00 a.m., on March 7, 2006, at the United States Courthouse, 211 W. Ferguson, Tyler, TX 75702. At this hearing the Court will consider whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. Judge Davis will listen to people who have asked to speak at the hearing. The Court will also consider how much to pay to Lead Counsel and whether to approve the plan of allocation. The Court may decide these issues at the hearing or take them under consideration. The Court may approve the Settlement without approving the fee and expense requests, and/or without approving of Lead Plaintiff's proposed plan of allocation. We do not know how long these decisions will take.



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15. Do I Have To Come To The Hearing?
 

No. Lead Counsel will answer questions Judge Davis may have. But, you are welcome to come at your own expense. If you send an objection, you don't have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it is not necessary.



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16. May I Speak At The Hearing?
 

You may ask the Court for permission to speak at the fairness hearing. To do so, you must send a letter saying that it is your intention to appear in In re Electronic Data Systems Corporation Securities Litigation, Case No. 6:03-MD-1512; Lead Case 6:03-CV-110 ("SECURITIES"). Be sure to include your name, address, telephone number, your signature, and the number and type of EDS securities you purchased or acquired between February 7, 2001 and September 18, 2002. Your notice of intention to appear must be postmarked no later than February 21, 2006, and be sent to the Clerk of the Court, Lead Counsel, and Defendants' counsel, at the addresses listed in question 12. You cannot speak at the hearing if you excluded yourself from the Class.



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17. What Happens If I Do Nothing At All?
 

If you do nothing, you'll get no money from this Settlement. But, unless you timely and validly excluded yourself, you won't be able to start a lawsuit, continue with a lawsuit, or be part of any other lawsuit against Defendants about the same issues in this case.



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18. Are There More Details About The Settlement?
 

This Notice of Proposed Settlement of Class Action summarizes the proposed settlement. More details are in the Stipulation of Settlement and attachments thereto, dated as of November 22, 2005. You can examine a copy of this stipulation at the Clerk's office of the United States District Court for the Eastern District of Texas, 211 W. Ferguson, Tyler, TX 75702, during regular business hours.



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19. How Do I Get More Information?
 

You can: (1) call Poorman-Douglas Corporation, the Claims Administrator, at 1-888-230-9850; (2) call (858) 793-0070 or write to Niki L. Mendoza, Bernstein Litowitz Berger & Grossmann LLP, 12481 High Bluff Drive, Third Floor, San Diego, CA 92130; or (3) email edssecuritieslitigation@poorman-douglas.com.



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DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE