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