American Stock Transfer & Trust Company

Dividend Reinvestment and Direct Stock Purchase and Sale Plan

for

Electronic Data Systems Corporation

Common Stock

 

To the shareholders of EDS:

American Stock Transfer & Trust Company, the transfer agent for EDS common stock, offers this Dividend Reinvestment and Direct Stock Purchase and Sale Plan for the shares of EDS common stock. The Plan provides both registered stockholders and interested first-time investors an affordable alternative for buying and selling EDS shares.

The Plan allows you to:

• Buy shares conveniently and economically either by direct debit to your bank account or by check.

• Invest amounts as low as $25 each month through automatic bank deductions.

Automatically apply your cash dividends toward the purchase of additional shares of EDS Common Stock. Alternatively, if you elect not to have your dividends reinvested, you may have them deposited directly into your personal bank account.

• Sell or transfer shares of EDS common stock held in your account.

• Deposit some or all of the shares of EDS common stock currently held by you in stock certificate form into your Plan account for safekeeping.

• Withdraw some or all of your shares and receive a certificate at any time.

• Complete all of these share transactions on the Internet.

This booklet provides you the complete details of the Plan. If you have additional questions after reading through the material, please contact the Plan Administrator:

American Stock Transfer & Trust Company

Dividend Reinvestment Department

40 Wall Street, 46th Floor

New York, NY 10005

Tel: (877) 253-6851

This Plan is sponsored and administered by American Stock Transfer & Trust Company, not by Electronic Data Systems Corporation. Shares held in this Plan are not subject to protection under the Securities Investor Protection Act of 1970. American Stock Transfer & Trust Company and Electronic Data Systems Corporation provide no advice and make no recommendations with respect to any security. Any decision to purchase or sell must be made by each individual Plan participant based on his or her own research and judgment.

 

Plan Purpose

The Plan offers an affordable alternative for buying and selling EDS shares and reinvesting cash dividends in additional EDS shares. American Stock Transfer & Trust Company will administer the Plan, purchase and hold shares acquired for you under the Plan, keep records, send statements of account activity and perform other duties related to the Plan.

Enrollment

To invest online, log on to www.InvestPower.com, click on "All Online Plans" and select the EDS Plan from among the plans listed there. Click "Invest Now" and follow the directions of the enrollment wizard that will guide you through the six-step process. You will be prompted to provide certain information including your bank account number and the bank’s ABA number. Your initial investment must be at least $250 and cannot exceed $10,000. There is a transaction fee of $2.50 for the initial transaction and a per share commission fee of $.10. Upon completion you will receive an e-mail confirming receipt of your transaction, as well as an e-mail within two business days confirming the number of shares purchased and their price.

If you wish to invest by mail, simply fill out an Enrollment Application, which can be obtained by calling (877) 253-6851 (toll free). You must complete, sign and return the Enrollment Application along with a check or money order of not less than $250 and not more than $10,000. There is a transaction fee of $2.50 for each purchase and a $.10 per share brokerage commission.

Any shares purchased through the Direct Stock Purchase Plan will automatically be enrolled in the dividend reinvestment program unless you request otherwise. If you are an existing shareholder and do not wish to purchase stock, but do wish to be enrolled in the dividend reinvestment program, you may do so either by logging into the InvestPower site or by contacting the Plan Administrator.

Purchasing Additional Shares

You may purchase additional shares by submitting an optional cash payment. Your optional cash payment, less a $2.50 transaction fee and a $.10 per share brokerage commission, will be used to purchase shares of EDS common stock for your account. You may purchase from $25 up to $10,000 of stock per transaction, and as often as daily. Purchases will be made daily in the open market. No interest will be paid on cash payments held by the Plan Administrator pending investment.

Optional cash payments may be transacted online by logging on to www.InvestPower.com and choosing "InvestPower Account Holders." Enter your ten-digit account number (provided to you in your account statement, as well as in the second confirmation e-mail) and the last four digits of your social security number. You may then complete your optional cash investment in just two simple steps. If you wish instead to purchase additional shares by mail, your optional cash payment should be mailed with the tear-off portion of your account statement that is mailed to you upon completion of each purchase.

You may authorize the Plan Administrator (either through the InvestPower website or the enrollment application) to make automatic monthly purchases of a specified dollar amount, paid for by automatic withdrawal from your bank account. Funds will be withdrawn from your bank account on the 10th day of each month (or the following business day if the 10th is not a business day). To terminate monthly purchases by automatic withdrawal, you must send the Plan Administrator written, signed instructions.

Please note that if a check or an electronic debit submitted is returned to the Plan Administrator as "unpaid", the Plan Administrator will resell the shares just purchased and liquidate additional shares, if necessary, to reimburse itself for any fees or loss incurred when reselling the shares from your account.

 

Dividend Payments

As outlined above under "Enrollment", any shares purchased through this plan are automatically enrolled in the dividend reinvestment program. Additionally, existing shareholders may enroll their holdings in the dividend reinvestment program either through the InvestPower website or by contacting the Plan Administrator. Shareholders may elect to reinvest all dividends or any portion thereof. The fee for dividend reinvestment is 2% of the dividend up to a maximum of $1.50. Additionally, a $.10 per share brokerage commission will be deducted from the account upon the purchase of the additional shares.

Shareholders wishing to receive their cash dividends may elect to have them deposited directly into their personal bank account. To take advantage of this option, the shareholder’s bank or financial institution must be a member of the Automated Clearing House ("ACH") system. Interested shareholders should call the Plan Administrator and request the "Direct Deposit of Dividends" form.

The Share Purchase Process

The Plan Administrator will combine payments from all participants and commingle them to purchase shares in the open market. Purchases are made daily with all sums received or submitted prior to 4 p.m., Eastern time, the previous day. The Plan Administrator will apply the total available funds toward the purchase of shares (if applicable, fractional shares will be credited to your Plan account, up to three decimals).

The price per share cannot be determined prior to purchase. Because the Plan Administrator buys the shares in the open market throughout the course of the day, the share price is the average price of all shares purchased under the Plan that day. The same share price is allocated to initial purchases, subsequent optional cash submissions and dividend reinvestments. Participants should be aware that the price might fluctuate during the period between submission of a purchase order and the ultimate purchase on the open market. Instructions sent to the Plan Administrator may not be rescinded.

Certificate Sales and Safekeeping

If you already own shares of EDS common stock in stock certificate form, you may elect to deposit these shares into your Plan account for safekeeping. The Plan Administrator will credit these shares to your account in book-entry form. You may, at any point, request re-issuance of a certificate without additional charge. If you are not already in the Plan, complete and sign an Enrollment Application to accompany the certificates designated for safekeeping.

To deposit shares with the Plan Administrator, send the stock certificates via registered mail (insured for 2% of the total value of the shares to protect against loss in transit). You must include a check for $7.50 payable to American Stock Transfer & Trust Company each time you send shares for deposit. The fee for the safekeeping service will be waived if you have elected to deposit your shares and sell them at the same time through the Plan. In such a case, the standard sales fee will be applied (see below).

Withdrawal of Stock

You may request that the Plan Administrator issue a certificate for some or all of the shares held in your account. There is no charge for this service. You may use the form on your quarterly statement, utilize the Plan Administrator’s automated telephone system, or access the InvestPower website. The Plan Administrator will issue a certificate in the exact registration shown on your Plan statement, unless instructed otherwise in writing. In this case, all individuals in the current Plan account must sign the written instructions. The signatures must be guaranteed by a bank, brokerage firm or financial institution that is a member of the Signature Guarantee Medallion Program.

Certificates are sent by first class mail, generally within a few days after receipt of the request.

 

 

 

Transfer of shares to another person

Transfers may be made in book-entry form (to existing or future Plan participants) or a certificate may be issued and sent to the new owner via first class mail. If you wish to set up a new Plan account for a transferee, simply call the Plan Administrator to request a Plan brochure and Enrollment Application. Complete the form, providing the full registration name, address and social security number of the new participant. The completed Enrollment Application should be sent along with a written request indicating the number of shares (full and fractional if any) which should be transferred to the new participant.

All individuals in the current Plan account must sign the written instructions. The signatures must be guaranteed by a bank, brokerage firm or financial institution that is a member of the Signature Guarantee Medallion Program.

Sale of Shares

You may instruct the Plan Administrator to sell any or all shares held in your Plan account. Simply go to www.InvestPower.com and log into your account to sell your shares in two simple steps. You may also call (877) 253-6851 to access the Administrator’s automated telephone system. Alternatively, you may complete and sign the tear-off portion of your account statement or purchase confirmation and mail it to the Plan Administrator. If there is more than one individual owner on the Plan account, all participants must sign the sales order.

As with purchases, the Plan Administrator aggregates all sale requests and sells the total share amount through a broker on the open market. Sales will in most circumstances be made daily, but in all cases will be made within one week of the request. The selling price will not be known until the sale is completed. The proceeds of the sale, less an administrative fee of $7.50 and brokerage commission of $.10 per share, will be sent to you by check within four days following the sale. You should be aware that the price might fluctuate during the period between a request for sale and the ultimate sale on the open market. Instructions sent to the Plan Administrator may not be rescinded.

Account Termination

You may withdraw from the Plan at any time using the tear-off stub at the bottom of your statement or purchase confirmation. Upon termination, a certificate for the full number shares held in your account will be issued and any fractional share held in the account will be sold. You will receive a check for the proceeds of any fractional share sale, less a service fee of $7.50 and a $.10 per share brokerage commission, along with a Form 1099B for income tax purposes. If such proceeds are insufficient to cover the processing fee, a check will not be issued nor will you be billed for any additional fees. Alternatively, you may direct the Plan Administrator to sell any or all of the shares in your account via the standard sales procedure outlined above.

Please note that if a request to terminate participation is received after the record date for a current dividend, the account will not be terminated until the completion of the dividend reinvestment for that particular dividend. Despite this restriction, shares may still be sold or withdrawn during this period.

If, at any point, the total number of shares in your account is less than one share, any remaining fraction may be sold and the account closed.

After your account is closed, dividends and/or any shares held in certificate form will be sent to the address that you provide or, for dividends, automatically deposited in your bank account if you so request.

 

Account History

Shortly after the end of each calendar quarter, the Plan Administrator will send you a statement reflecting all transactions for the current calendar year. In addition, whenever you complete a purchase, you will receive a confirmation that will serve as verification of purchase. If the purchase was transacted online, your confirmation will be sent by e-mail. Please keep these statements for your records.

You may view your transaction history online by logging into your InvestPower account. Details available online include share price, commission paid, and the transaction type and date. Additionally, you may call the Plan Administrator (877) 253-6851) to access their automated telephone system. During normal business hours (Eastern Time), a representative will be available to answer your questions.

Miscellaneous Information

Plan participants will vote all shares (full and fractional) held in their Plan account. Each participant will receive a Notice of Annual Meeting, a Proxy Statement and a proxy-voting card along with EDS' Annual Report. Shares of stock will not be voted if a properly executed proxy-voting card is not returned. Any stock dividends, distributions or stock split shares distributed on stock held by the Plan Administrator for a participant will be credited directly into the participant's account.

Neither EDS nor the Plan Administrator will be liable for any act performed in good faith or for any good faith omission to act, including, without limitation, any claim of liability arising out of or with respect to (i) failure to terminate a participant's account, sell stock held in the Plan or invest optional cash payments without receipt of proper documentation and instructions; (ii) the prices at which stock is purchased or sold for the participant's account and the time such purchases or sales are made, including price fluctuations in market value after purchases or sales.

The Plan Administrator reserves the right to modify the Plan, including the right to terminate the Plan upon notice to Plan participants. In addition, EDS may request the Plan Administrator to terminate the Plan at any time. The Plan Administrator shall interpret and regulate the Plan as it deems necessary or desirable in connection with its operation. A supplemental or revised prospectus will be mailed to you before any material changes in the Plan are effective.

The Plan is not for use by institutional investors or financial intermediaries. The Plan shall be governed by and construed in accordance with the laws of the State of New York. The signing and mailing of the Enrollment Application (or the equivalent action in the online enrollment process) shall constitute an offer by the participant to establish an agency relationship with the Plan Administrator and be governed by the terms and conditions of the Program.

The common stock of EDS trades on the New York Stock Exchange under the symbol - EDS. The principal executive offices of EDS are located at 5400 Legacy Drive, Plano, Texas 75024.