Passport Advantage Sub-Capacity Conversion Process

1. Passport Advantage Sub-Capacity Conversion Process Ordering Resources • IIPAA Attachment for Sub-Capacity Terms and Enrollment Forms: IBM reps: Xtreme Leverage; BPs: www.ibm.com/software/passportadvantage 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: CONVERSION – PA/PAE CUSTOMERS • Conditions for Conversion 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 (Z125-7174), 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 • 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 • 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 sub-capacity entitlements • For customer’s initial sub-capacity order, IBM Sales or BP places order for ILMT (D561HLL) IBM Confidential until Announcement

2. 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 sub-cap terms IBM Confidential until Announcement