Exhibit 10.7

 

MEDLEY CAPITAL HOLDINGS LLC
375 Park Avenue, Suite 3304
New York, NY 10152

 

October 27, 2010

 

Windsor Advisors LLC

T3 Group LLC

c/o Medley Capital Holdings LLC

375 Park Avenue, Suite 3304

New York, NY 10152

 

Dear Sirs:

 

Reference is made to that certain Limited Liability Company Agreement effective
as of October 27, 2010 (as amended, restated, supplemented or otherwise modified
from time to time, the “Operating Agreement”) of Medley Capital Holdings LLC, a
Delaware limited liability company (the “Company”), by and among the members
party thereto. Capitalized terms used herein but not otherwise defined herein
shall have the meanings assigned to such terms in the Operating Agreement.

 

The Company hereby agrees that, effective as of October 27, 2010, as monthly
compensation to each of the Principals, on the first day of each month, the
Company shall make a distribution on account of the Class B Units owned directly
or indirectly by each Principal from Distributable Cash (calculated before
reduction for the guaranteed payments provided hereby) in the form of guaranteed
payments (which shall be “guaranteed payments” under Code §707(c)). The
guaranteed payments on account of the Class B Units owned directly or indirectly
by each Principal shall be conditioned on the Principal who is the direct or
indirect owner of such Class B Units complying with the Minimum Commitment. The
Board of Managers shall determine the amount of the guaranteed payment with
respect to each such Principal and the amount of the guaranteed payment with
respect to each such Principal need not be the same as that determined for any
of the other Principals. The maximum guaranteed payment per each such Principal
shall be:

 

(a)        $750,000 per annum (paid monthly) while the Company's total assets
under management (on which Management Fees are collected) across all of the
Funds are less than $1 billion.

 

(b)        $1,000,000 per annum (paid monthly) while the Company's total assets
under management (on which Management Fees are collected) across all of the
Funds are equal to or greater than $1 billion, but less than $1.5 billion.

 

(c)        $1,500,000 per annum (paid monthly) while the Company's total assets
under management (on which Management Fees are collected) across all of the
Funds are equal to or greater than $1.5 billion, but less than $2.0 billion.

 

 

 

  

(d)        $2,500,000 per annum (paid monthly) while the Company's total assets
under management (on which Management Fees are collected) across all of the
Funds are equal to or greater than $2.0 billion.

 

Subject to Section 14.1(a)(ix) of the Operating Agreement, the maximum
guaranteed payments may be modified as determined by the Board of Managers from
time to time. With respect to The guaranteed payment with respect to any such
Principal who fails to provide the Minimum Commitment shall be ratably adjusted.
In addition, all Principals shall be entitled to reimbursement by the Company of
out-of-pocket expenses reasonably incurred in connection with meetings of the
Board of Managers or other activities requested or approved by a Majority of the
Board of Managers. The guaranteed payments shall be paid from Management Fees
and Incentive Fees received by the Company from the Funds after the satisfaction
of operating expenses of the Company. To the extent that there are insufficient
funds to pay the full amount of guaranteed payments set forth in this letter
agreement after the satisfaction of operating expenses of the Company, the
guaranteed payments shall be paid to the extent of any such available funds and
any deficiency will be accrued and paid to on account of the Class B Units owned
directly or indirectly by such Principals when there are available funds from
Management Fees and Incentive Fees received from the Funds in excess of
operating expenses of the Company.

 

This letter agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, excluding any conflict of laws rule or principle
that may refer the governance, construction or interpretation of this letter
agreement to the laws of another state.

 

In accordance with Section 14.1(a)(ix) of the Operating Agreement, this letter
agreement may not be amended without the consent of all of the Class A Members,
and any amendment hereto in violation thereof shall not be valid or effective
against the Company.

 

[Intentionally Left Blank]

 

 

 

  

If the foregoing accurately reflects the agreement between us, please
countersign the enclosed copy of this letter and return it to us.

 

  Very truly yours,       MEDLEY CAPITAL HOLDINGS LLC       By: /s/ Brook Taube
  Name: Brook Taube   Title: Manager

 

AGREED TO AND ACCEPTED:

 

PRINCIPALS: SOLE CLASS A MEMBER:     By: /s/ Andrew Fentress   SMH PARTNERS, LLC
  Andrew Fentress           By: /s/ Bernard L. Schwartz By: /s/ Seth Taube  
Name: Bernard L. Schwartz   Seth Taube   Title: Authorized Person           By:
/s/ Brook Taube         Brook Taube                 CLASS B MEMBERS:          
Windsor Advisors LLC               BY: /s/ Andrew Fentress       Its Authorized
Representative           T3 Group LLC           BY: Brook Taube       Its
Authorized Representative