The Dream Factory Mill Renovation

High Falls Dream Factory LLC The Dream Factory Mill Renovation

A Real Estate Development Opportunity

Hannah Kirby – [email protected] Dean Jones – [email protected] Brad Mills – [email protected] Mac Jordan – [email protected]

High Falls Dream Factory

1. Executive Summary

The High Falls Dream Factory project is the adaptive reuse of a former cotton mill in Burlington, North Carolina. Development of the site will add entertainment and hospitality venues designed to create a family entertainment destination located on a spectacular stretch of the Haw River just north of the city of Burlington, NC.

The development includes:  Nine sound stages, administrative offices, studio support services managed by Atlantic & Pacific Studios.  Water sports complex including kayaking, paddle boats, docks, and riverbank boardwalk.  70mm, 1000 seat Movie Theater with a live performance stage.  35,000 square feet of performing arts and event space  Restaurants, cafes, pop-up retail, and public space The former mill consists of 30 parcels on 20 acres and is located on the convergence of Stoney Creek with the Haw River. The Stoney Creek reservoir is the smallest of the reservoirs that supply water to the city of Burlington. The site also provides access to the Haw River Trail which provides over 20 miles of hiking trails as well as paddling through Alamance County, North Carolina.

High Falls Dream Factory LLC was created, in part, to bring investment capital, jobs, and development to an underserved area of Burlington, NC. The company believes that creating a long term venture that encompasses multiple entertainment, trade, service, and technical skill sets, to east Burlington will enhance the community and provide avenues for further economic growth and quality of life for the residents.

The 2017 Tax Cuts and Jobs Act established the Opportunity Zone tax incentive program. Under the program, a Qualified Opportunity Fund (QOF) is certified as an investment vehicle, structured as a corporation or a partnership which is organized for the purpose of investing in qualified Opportunity Zone Property. The program provides powerful tax incentives to channel investment in low-income communities, thus spurring job creation and economic development. High Falls Dream Factory, in conjunction with Atlantic & Pacific Studios, plans to collaborate with Alamance Community College to enhance that facility’s vocational training in film and television as well as the skills that support the entertainment industry. As part of the program, Atlantic & Pacific Studio will provide on-site training during the active, shooting and editing of motion pictures and television projects in that company’s pipeline. It is estimated that the studio, dining, event and entertainment center – The Dream Factory – will generate over 200 full time jobs and another 250 production specific jobs.

The Dream Factory Mill Renovation

High Falls Dream Factory mill renovation is fostered, in part, by the success of another mill development project located about an hour south in the Town of Saxapahaw, NC. The adage of “build it and they will come” has never been truer than with the transformation of this obscure little town into a thriving center for food, live entertainment, the arts, and quality of life residences. Nearly 48% of North Carolinians participate in outdoor recreation and rank opportunities for hospitality such as restaurants and live entertainment important to the leisure time experience. The following is an estimated timeline for completing the renovations to the mill and stabilizing rents.

Lease / Purchase Option Execution 08/15/2019 Rough Site Plan 10/15/2019 Finalize Contractor Bids 10/30/2019 Secure Permits 12/01/2019 Complete Renovation minimal build out 03/01/2020 Stabilize Leases 08/15/2021

The High Falls Dream Factory project brings together seasoned professionals with the skills to bring the project to fruition and success.

Jordan Properties – Mac Jordan

Jordan Properties started managing and developing real estate in 1978 with the development of the historic mill village of Saxapahaw, N.C. Experienced in every aspect of design, development, management, sales and construction, Mac has successfully completed over 200 residential, land, and commercial projects Studio Operations – Dean Jones

Dean Jones is a North Carolina native with over thirty years of experience in film and television. Jones has worked on more than ninety (90) feature films and more than one hundred (100) television episodes. Dean’s inspiration comes from his own artistic and entrepreneurial vision as well as being ignited by the many Oscar award-winning Directors he has worked with over the years. For his work on “Star Trek – Deep Space Nine,” Jones won two Emmy’s and earned seven nominations.

Physical Operations – Brad Mills

Hannah Kirby defines her career by one simple principle - anything that can be conceived, can be achieved. HHKirby Real Estate Ventures specializes in structuring investment strategies for real estate development and, very recently, Opportunity Zone projects throughout the North Carolina Piedmont region. With a background in technology, finance, and real estate, Ms. Kirby has been

The Dream Factory Mill Renovation

recognized by the Council of Economic Advisors, Executive Office of the President, as an expert on Opportunity Zone and Opportunity Fund investment. Financials Current project estimates for the renovation of the mill are $14,870,000. That budget will provide for over 300,000 square feet of leasable studio, event, dining, theatrical, classroom, and office space with a stabilized NOI of $1,800,000 after 4 years. The capital stack is expected to include $5,000,000 in leverage, or 30% of the costs and results in an IRR of 19.7% after 10 years. Equity Investment High Falls Dream Factory plans to raise equity capital through a Joint Venture Agreement with Carolina Opportunity Fund II. The qualified Opportunity Fund has been created specifically for investment in the High Falls Dream Factory project.

The Joint Venture Agreement between High Falls Dream Factory and Carolina Opportunity Fund II outlines provisions for the disposition of the asset.

2. Business Objective

2.1. Project Overview

The High Falls Dream Factory project is the adaptive reuse of a former cotton mill in Burlington, North Carolina. Unlike many projects of this nature, the former Copland Fabrics ceased operating in 2018 making this site one of the best preserved old mills in the region. The plan for the mill involves turning over 500,000 sf of former factory and corporate offices into film and television sound stages and studio support services. Development of the site will add entertainment and hospitality venues designed to create a family entertainment destination located on a spectacular stretch of the Haw River just

The Dream Factory Mill Renovation

north of the city of Burlington, NC. High Falls Dream Factory and Atlantic & Pacific Studios have executed a co-management agreement in which A&P will manage the studio space and Dream Factory will renovate, develop and manage the entertainment and hospitality venues. The development includes:  Nine sound stages, administrative offices, studio support services managed by Atlantic & Pacific Studios.  Water sports complex including kayaking, paddle boats, docks, and riverbank boardwalk.  70mm, 1000 seat Movie Theater with a live performance stage.  35,000 square feet of performing arts and event space  Restaurants, cafes, pop-up retail, and public space 2.2 Site Plan Overview The former mill consists of 30 parcels on 20 acres and is located on the convergence of Stoney Creek with the Haw River. The Stoney Creek reservoir is the smallest of the reservoirs that supply water to the city of Burlington. The site also provides access to the Haw River Trail which provides over 20 miles of hiking trails as well as paddling through Alamance County, North Carolina. The southernmost mill building rises nearly 60 feet above the river convergence with spectacular views of the river. The lower mill buildings run northwest to southeast along the banks of the Haw River which provides amble opportunities for outdoor space including kayak and paddle boat launch docks, a boardwalk, cafes and pubs. The northwest entrance to the lower mill space will also serve as the marquee entrance to Atlantic & Pacific Studios. The upper mill also runs northwest to southeast with frontage on two sides on Carolina Mills Road and Carolina Road. With over 150,000 sf of space, the upper mill is leasable “as is” for film, television, music, and/or video production.

3. Business Premise

3.1. Opportunity Zones

The Dream Factory Mill Renovation

https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions

3.2. Key Drivers

One of the major drivers in any real estate development project is the demographics of the region. Burlington is centrally located between Raleigh and Greensboro. The Burlington Metropolitan Statistical Area changed from 151,581 in 2010 to 156,357 in 2015, a change of 6,695 (4.4%). This metro is projected to have a total population in 2020 of 167,549. The projected population change from 2010 to 2020 is 15,998 (10.6%). The city is within the larger Combined MSA encompassing Greensboro, Winston-Salem, High Point which has over 1.6 Million people and within one hour of the Raleigh, Durham, Chapel Hill MSA of 2.1 Million people. Burlington is home to LabCorp and Honda Aero which are the city’s largest private employers. The area is also home to Elon University, ranked number one in 2019 by Regional Universities South. The region has generated nearly $1 Billion in distribution center business creating over 2000 new jobs. Workforce Development Among the most significant questions a company new to North Carolina or expanding in the state must address is how to attract and retain a qualified workforce. No state has greater long- term experience with successful workforce solutions than North Carolina. Its world-class educational system of colleges and universities ensures a robust pipeline of candidates in fields ranging from finance to nanotechnology. Its award-winning community college system provides state-of-the-art training customized to meet an employer’s specific needs. North Carolina’s workforce development system—one of the most comprehensive in the nation—brings employer and employees together by managing recruiting, screening and other necessary pre- employment assessments. High Falls Dream Factory, in conjunction with Atlantic & Pacific Studios, plans to collaborate with Alamance Community College to enhance that facility’s vocational training in film and television as well as the skills that support the entertainment industry. As part of the program, Atlantic &

The Dream Factory Mill Renovation

Pacific Studio will provide on-site training during the active, shooting and editing of motion pictures and television projects in that company’s pipeline.

North Carolina’s Piedmont - Endless Opportunities North Carolina's Business Friendly Climate boasts the lowest corporate tax rate (3%) in the country

Colleges & Professional Fortune 500 Universities Athletics Companies Infrastructure

UNC - Greensboro FOOTBALL The region is Known as North headquarters to these Carolina's High Point University Carolina Panthers Fortune 500 companies: Transportation Corridor, UNC - School of the BASKETBALL Interstate's 40 & VF Corporation Arts 85 move Charlotte Hornets Laboratory Corp. of billions of dollars’ worth NC A&T University HOCKEY America of goods from the region Wake Forest University and through the region Carolina Hurricanes BB&T Corp each year Elon University School GOLF Hanes Brands of Law Wyndham Lowes Home to Piedmont Triad Winston Salem State Championship International Airport and The Piedmont is also Guilford College within an hour of MINOR LEAGUE home to these Raleigh/Durham An hour or less from BASEBALL businesses: or Charlotte UNC - Chapel Hill Durham Bulls Lincoln Financial Duke University Greensboro Honda Aero High Speed Rail Grasshoppers Corridor Highly educated Prescient between Washington workforce punctuated Walmart Distribution DC by comprehensive And Don't Even Get Us Center and Atlanta workforce development Started About LIDL Distribution Collegiate Sports Fiber Optic Spine FedEx Mid Atlantic Hub between Washington Amazon Fulfillment DC and Atlanta

Job Creation It is estimated that the studio, dining, event and entertainment center – The Dream Factory – will generate over 200 full time jobs and another 250 production specific jobs. Recent estimate indicate that for every skilled job created within a community, 5 additional service levels jobs

The Dream Factory Mill Renovation

are generated. Given the multiplier effect of job creation, High Falls Dream Factory can and will make a difference for the Opportunity Zone encompassing eastern Burlington.

Family Entertainment High Falls Dream Factory mill renovation is fostered, in part, by the success of another mill development project located about an hour south in the Town of Saxapahaw, NC. The adage of “build it and they will come” has never been truer than with the transformation of this obscure

little town into a thriving center for food, live entertainment, the arts, and quality of life residences. Nearly 48% of North Carolinians participate in outdoor recreation and rank opportunities for hospitality such as restaurants and live entertainment important to the leisure time experience.

https://www.nytimes.com/2012/01/22/travel/saxapahaw-nc-middle-of-somewhere-becomes-a- draw.html https://www.sissipahawlofts.com/gallery

Studio Drivers  Soundstage occupancy in LA is at 96% and the high cost of development coupled with the lack of available sites has hampered the ability of the major studios to increase capacity.  The State of Georgia had 455 movie and television projects in 2018 and is at capacity with over 1.1 M sf of purpose built soundstages and 1.2 M sf of buildings retrofitted as soundstages  The city of Toronto is also out of space with its 900,000 sf of soundstage at capacity.

The Dream Factory Mill Renovation

4. Target Assets

4.1. Acquisition Strategy

High Falls Dream Factory is currently pursuing a Commercial Lease with an Option to Purchase the former Copland Mill for $3,500,000. The option will be exercised within the next 12 months. The company will finalize the Lease in August of 2019.

4.2. Preliminary Planning

Pre-planning involved two distinct action plans for maximizing revenue generation of the asset; the studio and office facility which is leasable as is and the entertainment, dining, and event facilities which require renovation and build out. Planning process is as follows:

Production Ready – can lease today • Office / Classroom space w/ conference • Multiple warehouses for production, set building, lighting and services • Space for simultaneous production and classroom activities

Planning

• Partition warehouses to contain ancillary production facilities (wardrobe, dressing rooms, makeup) • Determine space / cost requirements for Services Rentals (lighting, props, rigging, grips, set building, cameras) • Determine space / cost requirements for facility enhancements (standing sets, green / white cyclorama walls, editing suites, post production) • Determine budget for wide scale advertising

Implementation

• Build out Services Rentals facilities • Build out Facilities Enhancements • Determine space / costs for Outdoor amphitheater and park Landscaping Back lot capability

Facility Potential

• Prepare site analysis to determine best use • Identify site locations for: Restaurant and Catering Facilities Large Scale Event Center Performing Arts Center Large Screen Movie Theatre

The Dream Factory Mill Renovation

Pre Development

• Determine corporate structure to take full advantage of O Zone business, O Zone funding, and Historic Tax Credits • Determine renovation scope and timeline • Prepare Proforma for renovation / build out of spaces • Secure zoning and permits • Develop pre-leasing options

Phase One

• Determine project management team • Determine budget for wide scale advertising campaign • Bring in third party theater operator • Bring in third party restaurant / catering operator

4.3. Implementation / Stabilization

The following is an estimated timeline for completing the renovations to the mill and stabilizing rents.

5. Management Team

The High Falls Dream Factory project brings together seasoned professionals with the skills to bring the project to fruition and success.

Jordan Properties – Mac Jordan

Jordan Properties started managing and developing real estate in 1978 with the development of the historic mill village of Saxapahaw, N.C. In 1983 John M. “Mac” Jordan Jr. joined the firm and has worked has a licensed real estate agent, property manager, licensed general contractor, and developer for over thirty years. A graduate of Duke University and North Carolina State, Mac concentrated his studies in historic preservation and community revitalization receiving a B.A. degree in public

The Dream Factory Mill Renovation

policy and a Master’s degree in architecture. Experienced in every aspect of design, development, management, sales and construction, Mac has successfully completed over 200 residential, land, and commercial projects including:

 Renovation and redevelopment of the textile mill villages of Saxapahaw (Alamance Co.) and Cedar Falls (Randolph Co.), NC.  Redevelopment of the former Dixie Yarns Dye Plant into Rivermill Village, a multi-use complex featuring an event center, coffee shop, charter school, café, retail strip and 29 high end residential lofts in Saxapahaw, N.C.  Adaptive reuse of the Historic Saxapahaw Cotton Mill into Rivermill Apartments.  Renovations of the James Pharmacy and 115 Churton Office Buildings in historic downtown Hillsborough, NC.  Conversion of Fowlers Store into Fowlers Bend Mountain Retreat, Hot Springs, NC.  Renovation of Webbwood Apartments, a married student housing building in Montreat, NC,

https://www.rivermillvillage.com

Studio Operations – Dean Jones

Dean Jones is a North Carolina native with over thirty years of experience in film and television. Director David Lynch first discovered Jones while creating makeup effects on the Oscar Nominated film “Blue Velvet”. Jones has since worked on more than ninety (90) feature films and more than one hundred (100) television episodes. Dean’s inspiration comes from his own artistic and entrepreneurial vision as well as being ignited by the many Oscar award-winning Directors he has worked with over the years. For his work on “Star Trek – Deep Space Nine,” Jones won two Emmy’s and earned seven nominations. Jones is a graduate from UNC Greensboro with a BFA in Acting and Directing. Staying true to his North Carolina roots, he is a local Rotary Club member, a member of the Boy Scouts of America Eagle Scout Association, Brotherhood member of the “Order of The Arrow”, Lodge 70 and committee member for Boy Scout troop 411 in Snow Camp, NC. Dean and his brother, Starr Jones produce the annual North Carolina “Original Hollywood Horror Show” now in its 29th season and remains one of the largest haunted attractions in the United States. Atlantic & Pacific Studios and Global Genesis Group have entered into an agreement to produce and distribute 8 films over the next two years. Subsequently, Atlantic & Pacific Studios will become the first tenant for The Dream Factory and has committed to 10,000 sf of studio office space in 2019. Through their professional reach, A&P plans to actively market the facility to studio support services such as camera, lighting and grip companies.

The Dream Factory Mill Renovation

Physical Operations – Brad Mills

Brad Mills is a native of Graham, NC, along with his wife of over twenty-five years, Karen, and their two teenage children. Brad joined his family’s business, United Sprinkler Company, Inc. in 1983. United Sprinkler Company was established in 1967 and has designed and installed Automatic Fire Protection Systems throughout the eastern seaboard for over 50 years. Brad has been involved in commercial construction for over 35 years. Brad holds multiple industry licenses which include an Unlimited Commercial General Contractor’s license and an Automatic Fire Sprinkler Contractors license and is a certified tester of Water Back Flow Preventer assemblies. He is the Founder and President of Supreme Contractors, Inc. and Vice President of United Sprinkler, Co. Inc. Brad has extensive experience in all facets of commercial construction including State, Federal and Private Contracts for Clearing and Grading, Water and Sewer, Paving, Heavy Highway, International Airport Runways and Taxiways, Demolition, Commercial, Industrial, Retail, and Institutional construction. Brad’s community service includes ten years with Alamance County Rescue Unit as a Certified IV Technician and over fifteen years as a Sworn Law Enforcement Officer. Brad received the Paul Harris Fellow award as a Member of Rotary International and is a 32nd degree Master Mason in the Masonic Lodge. HHKirby Real Estate Ventures – Hannah Kirby

Hannah Kirby defines her career by one simple principle - anything that can be conceived, can be achieved. HHKirby Real Estate Ventures is located in Hillsborough North Carolina. The firm specializes in structuring investment strategies for real estate development and, very recently, Opportunity Zone projects throughout the North Carolina Piedmont region. With a background in technology, finance, and real estate, Ms. Kirby has been recognized by the Council of Economic Advisors, Executive Office of the President, as an expert on Opportunity Zone and Opportunity Fund investment. As such, Hannah Kirby serves as a User Advocate with The Opportunity Project - tackling the issue of better utilizing and consolidating public and non-public data to help investors, entrepreneurs, and community leaders discover opportunities for economic

development in Opportunity Zones. Historic preservation, adaptive reuse, and urban infill projects provide a natural extension to management and financial skills that Hannah has refined over the forty- year span of her career. Driven by Fintech financial specialization, HHKirby Real Estate Ventures is able to take on complex commercial projects without the burden of a large bureaucratic structure. While traditional mechanisms still exist, communicating the significance of technological advances in capital structuring provides value to builders and commercial buyers through alternatives that streamline process, balance risk, and clarify exit strategies. Hannah is an active equestrian and together with her Andalusian partner, competes in Dressage shows throughout the southeast. She is also an avid golfer, but often wishes that she was a better avid golfer. Hannah volunteers her time with the First Tee of the Triangle, an organization that teaches life skills through golf. Down time is spent with her best friend and husband, Jamey, and their two incredibly spoiled dogs, Lily and Marty. https://www.carolinaopportunityzones.com

The Dream Factory Mill Renovation

6. Financial Projections

6.1. Development Costs Costs include the renovation costs for the proposed leasable space to be completed for Implementation / Stabilization in 2021.

Square Reno Cost / Renovation Building Name Footage Sq Ft Costs

Office Complex 20000 20 $ 400,000 Sound Stage 120000 7 $ 840,000 Complex

Outdoor Complex 20000 75 $1,500,000

Theater Complex 38000 75 $4,500,000

Event Complex 34000 55 $1,870,000

Renovation Costs $9,110,000

Property Costs $3,000,000

Soft Costs

Architect & Design Fees $200,000

Site Improvements $1,000,000

Inspections / Permits $100,000

Entitlement $180,000

Equipment $80,000

Legal & Accounting Fees $80,000

Project Management $200,000

Insurance / Bonds $100,000

Advertising / Sales $200,000 Survey, Environmental, Geotechnical $120,000

Total Soft Costs $2,260,000

Total Development Costs = $14,470,000

The Dream Factory Mill Renovation

The following table outlines the planned leasable space available. Note that the $3.00/sf rate is being estimating for Atlantic & Pacific Studios who is also an owner of the project.

Description Leasable SF $/SF/Year Annual Rent Office 1994 Addition Second Floor 3,360 18.00 60,480 Office 1948 Second Floor 2,280 18.00 41,040 Office - 3 small combined Second Floor 2,109 18.00 37,962 Office Addition - 2 small combined Second Floor 1,416 18.00 25,488 Office 1994 Addition Studio Ofcs 3,360 3.00 10,080 Office 1948 Studio Ofcs 2,280 3.00 6,840 Office - 3 small combined Studio Ofcs 2,109 3.00 6,327 Office Addition - 2 small combined Studio Ofcs 1,416 3.00 4,248 Camera / Lighting / Grip & Electric 5,514 3.00 16,542 Special Effects / Machine Shop 9,504 3.00 28,512 Rehearsal Hall Second Floor 28,327 3.00 84,981 Cast Dressing Rooms Second Floor 9,504 3.00 28,512 Movie Theatre Entertainment 21,853 15.00 327,795 Medical & Rescue Studio Svcs 1,960 3.00 5,880 Commissary & Catering Studio Svcs 8,085 15.00 121,275 Restaurant Entertainment 12,720 15.00 190,800 Shops Retail 5,280 21.00 110,880 Event Center 33,600 12.00 403,200 Stage One 9,139 20.00 182,780 Stage Two 19188 20.00 190,080 Stage Three 9504 20.00 566,540 Stage Four 20704 20.00 190,080 Stage Five 10351 20.00 437,060 Stage Six 16632 20.00 39,200 Stage Seven 11680 20.00 161,700 Stage Eight 8613 20.00 254,400 Stage Nine 10900 20.00 105,600

6.2. Unlevered / Levered Pre-tax Cash Flow See Microsoft Excel Addendum HFDF Cash Flow.xlsx

6.3. Unlevered / Levered Returns The following table demonstrates the project return differences of borrowing a portion of the capital stack vs financing entirely with equity.

The Dream Factory Mill Renovation

Unlevered Levered Lease Rate (Blended Average) $19.00sf $19.00sf Stabilized NOI $1.8M $1.8M Total Equity $15M $10M Yield on Cost 12% 18% Sale Cap Rate 8% 8% Gross Sale Proceeds @ Cap Rate $30.5M $30.5M Net Return on Equity $15.5M $21.5M Equity Multiple 2.0x 3.2x Project IRR 15.2% 19.7%

7. Investor Participation High Falls Dream Factory plans to raise equity capital through a Joint Venture Agreement with Carolina Opportunity Fund II. The qualified Opportunity Fund has been created specifically for investment in the High Falls Dream Factory project.

Carolina Opportunity Fund II, LLC (the “Fund”) is the corporate name of the Fund. The Fund is organized as a North Carolina Limited Liability Company organized in accordance with the North Carolina Limited Liability Company Act (the “North Carolina Act”). Class B Units in the Fund will be offered by means of a Confidential Private Placement Memorandum (“PPM”). The operation and management of the Fund will be governed by a Limited Liability Company Operating Agreement (the “Operating Agreement”) and the North Carolina Act. The principal place of business of the Fund will initially be located at 111.5 N Churton St., Hillsborough, NC 27278 and its telephone number is 919- 448-7752. The Fund is intended to qualify as Qualified Opportunity Fund for the purpose of providing equity funding to a selected Opportunity Zone projects. The Fund will be treated as a closed end Qualified Opportunity Fund under guidelines created by the Tax Cuts and Jobs Act of 2017 and will file Form 8996 to certify that it is organized to invest in Qualified Opportunity Zone property. The Fund shall be owned by investors purchasing equity interests or membership shares (“Class B Membership Units” or “Class B Units”) in the Fund, and who shall be called “Investor Members.” Investor Members shall own 100% of the Class B Units in the Fund, each in a percentage equal to their outstanding Class B Units divided by the total Class B Units outstanding (the “Ownership Interest”). The Manager will be issued all of the Class A Units of the Fund.

The targeted annualized returns to Members will be between 12% and 18%. The Manager has done extensive financial modeling based on what it believes are reasonable assumptions and projections.

The Preferred Return is 8%. Subject to the performance of the Fund and after paying Fund Expenses and the Management Fee to the Manager, Members will receive a Preferred Return of 8%, paid at intervals determined by the Manager and the receipt of operating or capital proceeds from the real estate projects invested in by the Fund. The Preferred Return shall be cumulative and any shortfall will carry forward to the next distribution interval (further defined in the PPM).

While the Fund’s objective is between 12% and 18%, an investment in the Fund is inherently

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speculative and no specific return on invested capital or even return of invested capital is promised or guaranteed. The Fund will seek to raise the Maximum Offering of up to $9,000,000 in equity capital. The Manager may or may not raise the full amount during the life of the Fund. The price of each Unit shall be $50,000. Each member in the Fund agrees to purchase Five (5) Class B Units of the Fund totaling at least $250,000 per unique Investor, which amount may be adjusted in the sole discretion of the Manager. Once the Fund has received a minimum of $5,000,000, raised capital will be released to the Fund’s operating account and will be permitted to make investments with said capital, including release funds to the developer/sponsor of the Project identified below.

See Dream Factory Term Sheet for more information on Carolina Opportunity Fund II

8. Disposition / Exit Strategy

Under the guidelines for Qualified Opportunity Fund investment, equity investors in Carolina Opportunity Fund II will be required to hold their equity stake in High Falls Dream Factory in order to receive exclusion from capital gains taxes resulting in the disposition of the asset.

The Joint Venture Agreement between High Falls Dream Factory and Carolina Opportunity Fund II outlines provisions for the disposition of the asset.

This Brochure, Business Plan or Presentation (“Business Plan”) is not intended to be relied upon as the basis for any investment decision, and is not, and should not be assumed to be, complete. The contents herein are not to be construed as legal, business, or tax advice and each party that receives this Business Plan should consult its own attorney, business advisor, and tax advisor as to legal, business, and tax advice. Certain information contained in this presentation is still in draft form and the contents of this Business Plan have not been legally verified. In particular, it should be noted that the financial information (if any) contained herein has not been audited. This Business Plan is qualified in its entirety by the more complete information appearing in the PPM, and is subject to the detailed provisions of the Operating Agreement to be attached thereto as Exhibit A and the Subscription Agreement and Signature Page from the Subscription Booklet accompanying the PPM. This offering is subject to modification and withdrawal. Any capitalized terms not defined herein have the meanings ascribed to them in the PPM. In considering any performance information contained herein, parties should bear in mind that past performance is not necessarily indicative of future results. Information contained herein may include information respecting prior investment performance of one or more Carolina Opportunity Funds (“COF”) strategies. Information respecting prior performance, while a useful tool in evaluating an investment, is not necessarily indicative of actual results to be achieved for unrealized investments, the realization of which is dependent upon many factors, many of which are beyond the control of COF. No representation or warranty, express or implied, is given by or on behalf of COF, its affiliates or any of such persons' directors, officers or employees or any other person as to (a) the accuracy or completeness of the information or (b) the opinions contained in this document and no liability is accepted for any such information or opinions. The information and opinions contained in this Summary are provided as at the date of this document and are subject to change without notice. This Business Plan does not constitute an offer or solicitation to subscribe for or purchase any security. Recipients of this Business Plan agree that COF, its affiliates and their respective partners, members, employees, officers, directors, agents, and representatives shall have no liability for any misstatement or omission of fact or any opinion expressed herein. The Business Plan is not intended for any general distribution or publication and is strictly confidential. This Business Plan and the information

The Dream Factory Mill Renovation contained herein consist of confidential proprietary information and is the sole property of COF. Each recipient further agrees that it will (i) not copy, reproduce, or distribute this Summary, in whole or in part, to any person or party (including any employee of the recipient other than an employee directly involved in evaluating an investment in the Fund) without the prior written consent of COF; and (ii) keep permanently confidential all information contained herein that is not already public.