SUBSEQUENT EVENT

12 Months Ended

Feb. 29, 2012

19. SUBSEQUENT EVENT

On August 16, 2011, SMSC entered into an Assignment and Assumption of Lease Agreement (the “Agreement”) with Rep 80 Arkay Drive, LLC (“Rep 80”), pursuant to which SMSC will assign its interest in its corporate headquarters at 80 Arkay Drive, Hauppauge New York 11788 (“the Premises”) to Rep 80 pursuant to a sale/leaseback transaction (the “Transaction”). The Transaction closed on March 14, 2012. The Transaction does not qualify for sale treatment and will be accounted for utilizing the deposit method.

At the closing of the Transaction, SMSC assigned its interest in the Premises to Rep 80 for $18,000,000. In connection with the Transaction, SMSC provided purchase money financing to Rep 80 (the “Loan”). The Loan is evidenced by a note from Rep 80 for the benefit of SMSC in the principal amount of $16,200,000 payable in five years at 5% interest on a monthly basis. As security for the note, Rep 80 delivered to SMSC a mortgage in the principal amount of $16,200,000 encumbering the Premises. Rep 80 also delivered an assignment of leases and rents with respect to all leases and rents at the Premises. As further security for the note, three principals of Rep 80 each executed a limited guaranty in favor of SMSC.

At Closing SMSC entered into three leases with Rep 80:

A six month triple net lease for approximately 78,000 square feet of the Premises,

A fifteen year triple net lease for approximately 112,000 square feet of the Premises, and

A fifteen year gross lease for approximately 10,000 square feet of the Premises.

The Agreement and Leases contains customary representations, warranties and covenants of Rep 80 and SMSC.