ex10-1.htm


    

      Exhibit
        10.1

       

      WAIVER
        OF SPECIFIC COVENANT DEFAULTS

       

       

      October
        23 2007

       

      


      Cavalier
        Homes, Inc.

      Cavalier
        Properties, Inc.

      Cavalier
        Home Builders, LLC

      Cavalier
        Real Estate Co., Inc.

      Quality
        Housing Supply, LLC

      CIS
        Financial Services, Inc.

      BRC
        Components, Inc.

      The
        Home
        Place, LLC

      Ridge
        Point Manufacturing, LLC

      32
        Wilson
        Blvd., Suite 100

      Addison,
        Alabama 35540

       

      
        	
              	
                Re:

              	
                Loan
                  and Security Agreement dated as of March 31, 2000, as amended,
                  between
                  First Commercial Bank, as Lender, and Cavalier Homes, Inc., Cavalier
                  Properties, Inc., Cavalier Home Builders, LLC, Cavalier Real Estate
                  Co.,
                  Inc., Quality Housing Supply, LLC, CIS Financial Services, Inc.,
                  BRC
                  Components, Inc., The Home Place, LLC, and Ridge Point Manufacturing,
                  LLC,
                  as Borrowers (the “Loan Agreement”)

              


      

       

      Ladies
        and Gentlemen:

       

      Please
        be
        informed that First Commercial Bank (“Lender”) agrees to waive noncompliance by
        the above-referenced Borrower of the Event of Default caused or to be caused
        by
        noncompliance by Borrower with the covenant contained in Section 7.3(A)(4)
        of
        the Loan Agreement, which requires Borrower to maintain a minimum ratio of
        Consolidated Cash Flow to Debt Service.  This waiver is effective for
        the fiscal period ending December 31, 2007.

       

      Our
        waiver applies only to the specific section set forth above for the point
        in
        time specified and shall be strictly construed.  No waiver of any
        future or additional noncompliance should be implied by this action, nor
        shall
        this action waive any other financial or other covenant contained in the
        Loan
        Agreement.  This waiver shall not act to alter or amend the current
        Loan Termination Date, which is set for April 15, 2008.

       

      If
        you
        have questions regarding these matters, please do not hesitate to contact
        the
        undersigned.  Please execute below to confirm your acceptance of the
        terms on which this waiver is made.

       

      
        	 	Yours
                very truly,
	 	 
	 	
                FIRST
                  COMMERCIAL BANK

              
	 	 	 
	 	
                By:

              	
                /s/
                  JAMES W. BRUNSTAD

              
	 	
                Title:

              	
                Senior
                  Vice President

              


      

      


      


      
        	
                ACKNOWLEDGED
                  AND AGREED TO:

              
	 	 
	
                CAVALIER
                  HOMES, INC., a Delaware corporation

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                Vice
                  President

              
	 	 
	 	 
	
                CAVALIER
                  PROPERTIES, INC., a Delaware corporation

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                President

              
	 	 
	 	 
	
                CAVALIER
                  HOME BUILDERS, LLC, a Delaware limited liability
                  company

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                President

              
	 	 
	 	 
	
                CAVALIER
                  REAL ESTATE CO., INC., a Delaware corporation

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                President

              
	 	 
	 	 
	
                QUALITY
                  HOUSING SUPPLY, LLC, a Delaware limited liability
                  company

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                Vice
                  President

              
	 	 
	 	 
	
                CIS
                  FINANCIAL SERVICES, INC., an Alabama corporation

              
	 	 
	
                By:

              	
                /s/
                  HEATHER L. YORK

              
	
                Print
                  Name:

              	
                Heather
                  L. York

              
	
                Title:

              	
                Secretary

              
	 	 
	 	 
	
                BRC
                  COMPONENTS, INC., an Alabama corporation

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                Secretary

              
	 	 
	 	 
	
                THE
                  HOME PLACE, LLC, an Alabama limited liability company

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                Vice
                  President

              
	 	 
	 	 
	
                RIDGE
                  POINTE MANUFACTURING, LLC, an Alabama limited liability
                  company

              
	 	 
	
                By:

              	
                /s/
                  MICHAEL R. MURPHY

              
	
                Print
                  Name:

              	
                Michael
                  R. Murphy

              
	
                Title:

              	
                Managing
                  Member