SWG SubCapacity License Offering Update Passport Advantage SubCapacity

SWG Sub-Capacity License Offering - Update Passport Advantage Sub-Capacity Conversion Process CONVERSION – PA/PAE CUSTOMERS § Conditions for Conversion 1) 2) 3) 4) 5) § IIPAA Attachment for Sub. Capacity Terms and Enrollment Forms: IBM reps: Xtreme Leverage; BPs: www. ibm. com/software/passpor tadvantage and select “Passport Advantage Program Page” from right navigation bar § Check customer’s enrollment status or ILMT status by calling your CF/CSO contact § Sub-Capacity Conversion Form: § 1) 2) 3) 4) 5) 1 Customers who wish to convert existing full capacity license entitlements to sub-capacity terms must meet the following conditions: Agree to IBM International Passport Advantage Agreement Attachment for Sub-Capacity Terms (Z 125 -7174), and comply with eligible products and technologies Complete hardcopy enrollment forms and IBM Sales or BP must submit to CF/CSO by fax. Be current on Software Subscription & Support for full cap entitlements being converted to sub-cap Customers who have been notified of or are actively involved in an IBM compliance audit are not eligible for conversion No refunds, rebates, or credits for full capacity licenses that are not deployed after conversion are allowed Ordering Resources Process Steps for Conversion IBM Sales or BP completes Sub-Capacity Conversion Form and submits to SWG WW Pricing for approval (via Sub-capacity Licensing/Somers/IBM@IBMUS or subcap@us. ibm. com) SWG Pricing submits approved form to CF/CSO will convert products to sub-capacity part numbers CF/CSO will issue new Proof of Entitlements to customer for reduction in full capacity entitlements and increase in subcapacity entitlements For customer’s initial sub-capacity order, IBM Sales or BP places order for ILMT (D 561 HLL) IBM Confidential until Announcement © 2003 IBM Corporation

SWG Sub-Capacity License Offering - Update Seller Considerations for Sub-Cap Conversions Conversion is not a customer entitlement… § July 1, 2008 announcement retracted previously announced conversion policy, to allow IBM sellers to set appropriate expectations with the customer § Software sellers no longer have the delegation but still need to consider circumstances for which original full cap license entitlements were sold before submitting conversion request/form, for example: – Conversion could result in excess entitlements, impacting future sales • • Original deal sold as full cap with deeper discount because customer really only needed sub-cap i. e. customer needed four cores worth of PVUs on their 8 -way server but we sold them eight @ 50% discount to avoid sub-cap terms and/or the prior tool (ITLCM) – S&S renewal discounts should be reduced in recognition of higher value of sub-cap flexibility, especially if original discounts were inflated to avoid sub-cap – Customers using full cap license entitlements in sub-cap environments without sub-cap terms are out of compliance § AYCE true-ups should be based on PVUs deployed in sub-cap environment – Ideally, original contract should have been based on Sub-Capacity offering terms, however… – If not, do not over-entitle by giving customer full cap entitlement at true-up -- instead leverage subcap terms 2 IBM Confidential until Announcement © 2003 IBM Corporation