Lehman CEI/Kensington CorrespondenceLEHMAN HOUSING TAX CREDIT FUND VII L.P.
LEHMAN TAX CREDIT ADVISOR INC.
1271 Avenue of the Americas, 46th Fl.
New York, New York 10020
VIA UPS OVERNIGHT DELIVERY
AND FACSIMILE (972) 733 -1864
Colonial Equities, Inc.
17103 Preston Road — Suite 250
Dallas, TX 75248 -1375
Attn: Mr. Richard Shaw
Ladies and Gentlemen:
March 15, 2009
RFC-FTN /ED
MAR 3 0 1009
7�0
-�
DEPT
Reference is made to the amended and restated agreement of limited partnership (the "Partnership
Agreement "), dated as of December 1, 1997, of CEI/KENSINGTON, LTD. (the "Partnership "), by and
among Lehman Housing Tax Credit Fund VII L.P., Colonial Equities, Inc. and Lehman Tax Credit
Advisor Inc. Terms defined in the Partnership Agreement and used herein have the same meaning herein
as therein.
Notice is hereby given that the following breaches and defaults (collectively, the "Partnership
Breaches ") have occurred:
1) pursuant to Section 4.02
(a)(iv) in that best efforts have not been made to achieve compliance with the
Mortgage Loan, Taxable Mortgage Loan, and the Replacement Reserve Agreement;
(d) in that the General Partner has failed to exercise good faith when permitting
Partnership distributions in violation of Section 11.01;
(i) in that the General Partner has failed to comply and to cause the Partnership to
comply with the governmental and contractual obligations of the Collier County
impact fee deferral agreement;
(1) in that the General Partner failed to immediately notify the Special Limited
Partner of the Partnership's failure to comply with respect to contractual or
governmental obligations;
(m) in that General Partner has failed to cause the Partnership to pay the Collier
County impact fee on or before the date when first due; and
(n) in that General Partner has not caused the Partnership to discharge Chadwell
Supply, hic.'s mechanics lien within forty-five (45) days.
2) pursuant to Section 8.02
(a)(ii) in that the General Partner performed acts in violation of the Loan Agreement
and other Project Documents; and
(b)(iv) in that the General Partner constricted replacement capital improvements
which are in excess of $10,000 without the consent of the Special Limited Partner.
80444772.7
Richard Shaw
March 15, 2009
Page 2
3) pursuant to Section 8.09
(a)(ii) in that the General Partner has failed to pay all Excess Development Costs;
(c) in that the General Partner has failed to cause the repayment and performance of
obligations under the Interim Loan; and
(d) in that the General Partner has failed to make payments to the Partnership's
Reserve Fund for Replacements;
4) pursuant to Section 8.21 in that the General Partner has failed to cause the Partnership to
purchase a Guaranteed Income Contract;
5) pursuant to Section 8.23 in that the General Partner has failed to cause the Partnership to fund
the Cash Reserve; and
6) pursuant to Section 11.01 in that the General Partner has failed to pay the full amount of the
Administrative Expense Reimbursement.
On behalf of the Investment Partnership and the Special Limited Partner, pursuant to
Section 8.14(b) of the Partnership Agreement, notice is hereby given that the Partnership Breaches
constitute a breach of Project Documents as described in Section 8.14(a)(ii)(A) and a violation of material
provisions of the Partnership Agreement under Section 8.14(a)(ii)(B), and that on such basis the Special
Limited Partner has determined that the General Partner shall be removed.
Pursuant to Section 8.14(b) of the Partnership Agreement, the General Partner has thirty (30) days
from the date on which this Notice is given to cure the Partnership Breaches.
Please note in this regard the provisions of Sections 4.02(k), 501(c)(ii)(F), 5.03, 8.12, and 8.16 of
the Partnership Agreement.
All rights of the Investment Partnership and the Special Limited Partner are expressly reserved.
Without limiting the generality of the foregoing, the Special Limited Partner reasserts its demands set
forth in its September 6, 2007 letter to the General Partner.
cc:
Lehman Housing Lending Corp.
1271 Avenue of the America
New York, NY 10020
80444772.7
Very truly yours,
LEHMAN HOUSING TAX CREDIT FUND VII L.P.
By: LI ICI �Uera .
By: i
LEHMAN T CREDIT ADVISOR 1NC.
r
By:
Gerald D. Pietroforte
Richard Shaw
March 15, 2009
Page 3
Texas Commerce Bank National Association
Attn: Registered Bond Events
1201 Main Street, 18 "h Floor
Dallas, TX 75202
Ausing Finance Authority of Collier County, FL
c/o Clerk of Courts
Attn: Clerk to Board
Collier County Courthouse
3301 Tamiami Trial East
Naples, FL 34112
The Bank of New York Mellor. Trust Company, N.A.
601 Travis Street, 18`h Floor
Houston, TX 77002
Attn: Rebecca A. Newman — Vice President
80444772.7