Seattle SpinCo, Inc. EIN: 38-4013741 Attachment to Form 8937 Part II Line 14 Effective September 1, 2017, pursuant to the Agreement and Plan of Merger, dated September 7, 2016, among Hewlett Packard Enterprise Company ( HPE ), Micro Focus International plc ( Micro Focus ), Seattle SpinCo, Inc. ( Seattle ), Seattle Holdings, Inc. ( Seattle Holdings ), and Seattle MergerSub, Inc. ( Seattle Mergersub ), Seattle Mergersub merged with and into Seattle (the Merger ), with Seattle surviving the Merger as a direct, wholly owned subsidiary of Seattle Holdings (and as an indirect, wholly owned subsidiary of Micro Focus). Pursuant to the Merger, holders of Seattle Class A common stock ( Seattle Shares ) received 0.13732611 American Depositary Shares of Micro Focus ( Micro Focus ADSs ) for each Seattle Share held as of September 1, 2017. Such Seattle Shares were received based on a shareholder s common shares of HPE held as of August 21, 2017. Each Micro Focus ADS represents one Micro Focus ordinary share. Immediately following the Merger, former Seattle shareholders held Micro Focus ADSs representing approximately 222 million Micro Focus shares, which represented 50.1% of Micro Focus ordinary shares on a fully diluted basis. No fractional Micro Focus ADSs were issued in the Merger. Instead, all fractional Micro Focus ADSs were aggregated and sold on behalf of the former Seattle shareholders on September 6, 2017. Cash in lieu of such fractional Micro Focus ADSs was remitted to such affected Seattle shareholders. Line 15 The Merger was intended to be treated as an exchange of existing Seattle Shares for Micro Focus ADSs in a reorganization under the Internal Revenue Code of 1986, as amended (the Code ), section 368(a)(1)(B). In general, under Code section 358(a), a U.S. shareholder of Seattle Shares will have an aggregate adjusted basis in the Micro Focus ADSs received in the exchange (including any fractional Micro Focus ADS that were deemed received and then sold as described herein) equal to such shareholder s aggregate adjusted basis in the Seattle Shares surrendered in the Merger, subject to the gain recognition provisions discussed below. The resulting basis of the Micro Focus ADSs held by a U.S. shareholder of Seattle Shares (excluding any fractional Micro Focus ADSs that were deemed received and then sold as described herein) does not include any adjusted basis allocable to any such fractional Micro Focus ADSs. Pursuant to certain rules contained in Code section 367(a), a U.S. shareholder will generally recognize gain, if any, but not loss, on the exchange of Seattle Shares for Micro Focus ADSs pursuant to the Merger in an amount equal to the excess of the fair market value of the Micro Focus ADSs received by the shareholder (including any fractional Micro Focus ADSs that were deemed received and then sold as described herein) over such shareholder s adjusted basis in the
Seattle Shares exchanged therefor. For this purpose, gain or loss on Seattle Shares must be determined on a share-by-share basis, and netting of gain and loss shares is not permitted. Accordingly, a U.S. shareholder that recognizes gain upon the Merger will have an aggregate adjusted tax basis in the applicable Micro Focus ADSs received in exchange for such gain shares (including any fractional Micro Focus ADS that were deemed received and then sold as described herein) equal to the fair market value of such Micro Focus ADSs. A U.S. shareholder that realizes (but, as noted above, does not recognize) a loss upon the Merger will have an aggregate adjusted basis in the applicable Micro Focus ADSs received in exchange (including any fractional Micro Focus ADS that were deemed received and then sold as described herein) for such loss shares equal to such stockholder s aggregate adjusted tax basis in such loss shares. A U.S. shareholder that received cash in lieu of a fractional Micro Focus ADS in the Merger will be treated as though such shareholder received such fractional Micro Focus ADS in the Merger, with an adjusted basis in such fractional Micro Focus ADS as determined in the manner described above (and as discussed in more detail below on Line 16), and then sold such fractional Micro Focus ADS for the amount of cash received in lieu thereof. The amount of cash received for this purpose should be based on a value of USD 31.53686 for one full Micro Focus ADS. Each shareholder that received cash in lieu of a fractional Micro Focus ADS will recognize gain or loss in an amount equal to the amount of cash received minus such shareholder s adjusted tax basis in the fractional Micro Focus ADS that the shareholder otherwise would have received. Shareholders should consult with a qualified tax advisor regarding their specific U.S. federal income tax consequences of the Merger (including, but not limited to, the computation of gain and tax basis). Line 16 A U.S. holder of Seattle Shares will have an aggregate adjusted basis in the Micro Focus ADSs received in the Merger (including any fractional Micro Focus ADSs that were deemed received and then sold as described herein) equal to such shareholder s aggregate adjusted basis in the Seattle Shares surrendered therefor, increased by any gain recognized under Code section 367(a). Any gain recognized under Code section 367(a) is calculated by reference to the fair market value of the Micro Focus ADSs. The U.S. federal income tax rules do not provide clear guidance on how to determine the fair market value of Micro Focus ADSs for this purpose. One approach to determine the fair market value of each Micro Focus ADS received in the Merger is to calculate the average of the opening and closing quoted selling prices of the Micro Focus ADSs on September 1, 2017 (USD 29.52 and USD 29.15, respectively, or USD 29.34). A U.S. holder of Seattle Shares that received Micro Focus ADSs in exchange for Seattle Shares that are treated as having been acquired at different times or for different prices should allocate the aggregate adjusted tax basis in his or her Seattle Shares (as adjusted for any gain recognized under Code section 367(a)) to the Micro Focus ADSs received in a manner that reflects, to the greatest extent possible, that a Micro Focus ADS was received in exchange for blocks of Seattle
Shares that were deemed to be acquired on the same date and at the same price. To the extent this is not possible, the basis of Seattle Shares surrendered must be allocated to the Micro Focus ADSs received (or allocable portions thereof) in a manner that minimizes the disparity in the holding periods of the surrendered Seattle Shares whose basis is allocated to any particular Micro Focus ADS received. This may result in the Micro Focus ADSs having split basis and holding period segments. For this purpose, Seattle Shares are treated as having been acquired at different times or for different prices by reference to the HPE common stock upon which the Seattle Shares were distributed on a one-for-one basis immediately prior to the Merger on September 1, 2017 (the Distribution ). Additional information on the Distribution may be found on a separate Form 8937 prepared by HPE (location link: http://investors.hpe.com/~/media/files/h/hp-enterprise-ir/documents/seattle-6045b-statement- 26092017.pdf). Shareholders should consult with a qualified tax advisor regarding their specific U.S. income tax consequences of the Merger (including, but not limited to, the computation of gain and tax basis). Line 17 See Code sections 354(a), 358(a), 367(a), 368(a), and 1001. Line 18 No U.S. holder of Seattle Shares may recognize a loss as a result of the Merger (other than with respect to any cash received in lieu of a fractional Micro Focus ADS). Line 19 The U.S. federal income tax consequences of the Merger are taken into account in the tax year of each U.S. holder of Seattle Shares that includes September 1, 2017.