Exhibit 10(u)



                              COMMERCIAL SUB-LEASE

         The  Commercial  Sub-Lease  and  Agreement  made as of the  ____ day of
_________,  1996,  between  Jerry F.  Wilson,  John W Lowe,  and  Robert  Lowell
Burdick,  (all of whom are hereinafter  collectively referred to as "Landlord"),
whose address is c/o Jerry F. Wilson, Route 6, Box 238, Hamilton, Alabama 35570,
and  Cavalier  Homes of  Alabama,  Inc.,  an Alabama  Corporation,  (hereinafter
referred to as "Tenant") whose address is P. O. Box 300, Addison, Alabama 35540.
         Whereas,  Landlord  has certain  buildings,  fixtures,  equipment,  and
property located at or near Addison,  Winston County, Alabama,  wherein Landlord
is the  Lessee  under a  Lease  Agreement  with  Option  to  Purchase  with  The
Industrial Development Board of the Town of Addison; and,
         Whereas,  Landlord  and Tenant (who will be a  sub-lessee  of Landlord)
wish to enter  into a  Commercial  Sub-Lease  for a period of  twenty-four  (24)
months with an option to renew for an additional  thirty-six (36) months, on the
terms and conditions hereinafter set forth:


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         1.  DESCRIPTION  OF PROPERTY:  That  Landlord has and does hereby lease
(and/or  sub-lease)  unto the said  Tenant  equipment,  personal  property,  and
fixtures described in Schedule "A" attached hereto,  (hereinafter referred to as
"Equipment"),  and does further lease (and/or sub-lease) the following described
real estate,  both of which are situated in or near the Town of Addison,  County
of Winston, and State of Alabama, (hereinafter referred to as the "Premises"):

         (See Attached Schedule "B" for description of the real estate)
         TO HAVE AND TO HOLD the Premises  unto the Tenant for an original  term
of twenty-four (24) months commencing as stated in paragraph 3(b) herein.

     2. RENEWAL TERM. (a) (First Option To Renew). Landlord covenants and agrees
that  Tenant  shall  have the  automatic  option  of  extending  this  lease for
thirty-six  (36) months on the same terms and conditions as the original  lease,
except as hereinafter stated in paragraph 3.1, provided that unless Tenant fails
to give Landlord thirty (30) days written notice prior to the termination of the
original  lease term of its intent not to renew the first  option in this lease,
the lease shall automatically renew, provided that at the beginning of the first
option  period the Tenant is not in default in the  payment of rent or any other
provisions in this lease.

     3. RENT.  Tenant  hereby  covenants and agrees to pay Landlord rent for the
Premises as follows:


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         (i)  Tenant  covenants  and  agrees  to pay  Landlord  as rent for said
Equipment  and  Premises  the sum of Three  Hundred  Sixty  Thousand  and No/100
($360,000.00) Dollars for said term. The first rental payment will be due as set
forth in paragraph 3(b) and on the 6th day of each month  thereafter  payable in
twenty-four (24) consecutive monthly installments,  in advance, of rent being in
the sum of Fifteen Thousand and No/100 ($15,000.00) Dollars per month.

         (b) The first rental  payment due under the original term of this lease
shall be due and payable as of the 6th day of September,1996.

         3.1.  OPTION TO RENEW (RENT).  In the event Tenant renews this lease at
the end of its  original  term (first  option to renew),  Tenant  covenants  and
agrees  to pay  Landlord  as rent  for the  Equipment  and  Premises  the sum of
Eighteen Thousand and No/100 ($18,000.00) Dollars per month for the renewal term
to be payable in consecutive monthly  installments on the 6th day of each month,
and all other terms and conditions of this lease will remain the same.


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         4. OPTION TO PURCHASE. (a) Tenant is hereby granted an exclusive option
to purchase the  Equipment and Premises by giving ninety (90) days prior written
notice of the exercise of such option to Landlord  during the  original  term of
this lease or during any renewal thereof. (Said option to purchase the Equipment
and Premises being hereinafter referred to as the "Option").  The purchase price
to be paid by Tenant  to  Landlord  at the  closing  in the event the  Option is
exercised  and the sale of the Equipment  and Premises is  consummated  pursuant
thereto,  shall be the sum of  $2,100,000,  payable in cash at the closing  (the
"Closing")  of such  sale,  and shall be in  addition  to any rent or other sums
theretofore  paid or payable by Tenant to Landlord  under this lease through the
period ending on the date of the Closing (the "Closing Date").



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         (b) In the event Tenant gives notice to Landlord of the exercise of the
Option,  Landlord  agrees  to use its  best  efforts  to  acquire  title  to the
Equipment and the  Premises,  which shall be fee simple title in the case of the
Premises,  from  the  Industrial  Development  Board  of the  Town  of  Addison,
including,  without  limitation,  curing any defaults  under that certain  lease
agreement  by and  between the Board and the  Landlord  dated as of June 1, 1984
(the "Prime Lease"),  thereafter exercising its option to purchase the Equipment
and the Premises under Section 9.4 of the Prime Lease and  terminating the Prime
Lease,  and otherwise taking such actions as may be necessary to provide for the
redemption of the Bond,  the release of the mortgage on the Mortgaged  Realty by
the Trustee,  and the discharge of the Indenture.  Landlord shall be entitled to
make its  obligations to acquire such title  contingent  upon a  contemporaneous
closing of the purchase of the Equipment and Premises pursuant to the Option. In
the event Landlord exercises its best efforts as aforesaid,  such acquisition of
title  shall be a  condition  precedent  to the  enforceability  against  either
Landlord or Tenant of the Option granted hereunder or the exercise thereof.

         (c) Tenant shall have the right,  at its expense (except as provided in
subsection (d) hereof),  to conduct an  examination  of Landlord's  title to the
Equipment and Premises  and, in the judgment of Tenant,  exercised in good faith
and based upon such examination, if such title is not at any time in a condition
satisfactory  to Tenant,  Tenant shall have the right to elect not to consummate
the  purchase  of the  Equipment  and the  Premises by written  notice  given to
Landlord at any time prior to the  consummation of said purchase.  Tenant agrees
to give Landlord prompt notice in the event it obtains  knowledge of any fact or
matter  constituting a defect in Landlord's title, and in the event the title is
defective,  Landlord  agrees to use its best  efforts to promptly  correct  said
defect.  Tenant's  election not to consummate  the purchase of the Equipment and
the Premises as herein provided shall not affect this lease nor in any way limit
or affect Tenant's right to exercise the Option at



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a later time during the term of this lease or any renewal thereof as provided in
subsection (a) of this Section 4.



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         (d) The Closing of the purchase of the Equipment and Premises  provided
for in this  Section 4 shall take place at the end of the ninety (90) day notice
period  provided  for herein,  or at such other time as the parties may mutually
agree  upon in  writing.  Conveyance  of the  Premises  shall be made by general
warranty  deed  with  full  covenants  and  warranties  of  title,  free  of all
encumbrances  except  those  as  may be  approved  in  writing  by  Tenant,  and
conveyance of the Equipment shall be made by a bill of sale providing for a sale
in "As Is" condition but free and clear of all liens, against payment in full in
cash of the purchase price provided for herein.  Possession  shall be given upon
delivery  of the deed and bill of sale.  Landlord  shall  furnish to Tenant,  at
Tenant's expense,  a current,  standard form title insurance binder with respect
to the Premises issued by a reputable  title insurance  company in the amount of
the purchase  price.  The title  insurance  binder shall show  merchantable  fee
simple  title to the  Premises  in the  Landlord,  free and clear of all  liens,
encumbrances  and exceptions,  except as may be otherwise  approved by Tenant in
writing prior to the consummation of the sale.  Tenant shall bear all charges of
the title company for the title premium for the issuance of the title  insurance
policy.  Landlord further shall furnish,  at Tenant's  expense,  such reasonable
surveys of the Premises as may be reasonably requested by the Tenant.

         (e) The right to exercise the Option  shall expire upon the  expiration
or earlier  termination of the original term of this lease if not renewed,  and,
if renewed,  upon the  expiration or earlier  termination of the renewal term of
this lease.


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         (f) In  the  alternative  to  exercising  the  Option  provided  for in
subparagraphs (a) through (e) hereof,  Tenant shall have the exclusive right and
option  (the  "Leasehold  Option")  herein  granted by the  Landlord to acquire,
subject to the terms and  conditions  of  Section  6.1 of the Prime  Lease,  the
leasehold  interest of the Landlord in the Prime Lease  (including the option to
purchase) on any  installment  payment date,  as defined in the Prime Lease.  To
exercise the  Leasehold  Option,  the Tenant  shall give  written  notice of the
Landlord not more than ninety (90) days nor less than forty-five (45) days prior
to such  installment  payment date.  The purchase price payable by the Tenant in
the event of the  exercise of the  Leasehold  Option,  which shall be payable in
cash  at the  Closing,  shall  be  $2,100,000.  Upon  the  consummation  of such
purchase,  the Landlord will assign to Tenant all its right,  title and interest
in the Prime Lease,  and the Tenant will assume all the  obligations of Landlord
under the Prime Lease that accrue after the  Closing.  Tenant  further  shall be
entitled to the benefit of the title matters set forth in  subparagraph  (c) and
(d) hereof.  In the  alternative  to an assignment  and  assumption of the Prime
Lease, the Landlord and the Tenant recognize and agree that upon the purchase of
the  right,  title,  and  interest  of the  Landlord  in and to the Prime  Lease
pursuant  to the  provisions  of this  subparagraph,  the  Tenant  may  elect to
exercise the option to purchase the Project  granted in Section 9.4 of the Prime
Lease.

         (g) The right to exercise  the  Leasehold  Option shall expire upon the
expiration  or earlier  termination  of the  original  term of this lease if not
renewed,  and, if renewed,  upon the  expiration or earlier  termination  of the
renewal term of this lease.
         5. TENANT'S PROPERTY. All furniture,  machinery, and equipment of every
kind and nature  installed  or placed upon the leased  Premises by Tenant  shall
remain  the  property  of Tenant and may be removed by Tenant at or prior to the
expiration or termination of this lease  agreement,  provided that all terms and
conditions  of this lease  agreement  have been  complied  with by  Tenant,  and
provided further, that Tenant repair any damage to the leased building caused by
such removal and shall not permit any damage or  weakening  of  the   structural
integrity of said building to occur by such removal.



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         Notwithstanding the foregoing, in the event that Tenant shall hereafter
make  any   structural   changes,   additions,   improvements,   alterations  or
replacements  to the  Premises  that  do  not  constitute  furniture,  fixtures,
machinery  or  equipment,  or in the event  Tenant  makes any  substitutions  or
replacements of the Equipment, such structural changes, additions, improvements,
alterations  or  replacements  shall  be  deemed  to  constitute  a part  of the
Equipment  and  Premises,  subject to being  delivered  to Landlord  pursuant to
Section  20 hereof or to  repossession  and  reletting  pursuant  to  Section 23
hereof.  Tenant  agrees to identify by labeling or other  conspicuous  means any
furniture, machinery, or equipment which belongs to it and does not constitute a
fixture and a part of the Equipment or Premises.

     6. LANDLORD'S LIEN. A lien is expressly reserved by Landlord and granted by
Tenant, upon all equipment,  building material, inventory,  improvements,  store
fixtures, water fixtures, gas fixtures, and all other fixtures erected or put in
place upon the Premises by or through Tenant or other  occupants for the payment
of rent and also for the satisfaction of any causes of



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actions which may accrue to the Landlord by the provisions of this lease, except
as may be waived in writing by the Landlord.

     7. WAIVER OF  SUBROGATION.  Landlord and Tenant mutually agree to waive any
right of  subrogation  which they may have against the other for any losses paid
to them on  insurance  policy or policies  carried on the property to the extent
permitted by the terms of said policy or policies.

     8.  PROOF OF  PAYMENT.  The  burden of proof of  payment of rent in case of
controversy shall be upon Tenant.

     9. INTERRUPTED  POSSESSION.  Landlord hereby covenants that if Tenant shall
keep and perform all of the  covenants of this lease on the part of Tenant to be
performed,  Landlord will guarantee to Tenant the quite,  peaceful,  interrupted
possession of the Premises.

         10.      Tenant hereby covenants:

         (a) USE FOR LAWFUL  PURPOSES.  That the  Equipment and Premises and all
buildings and  improvements  thereon shall during the term of this lease be used
only and exclusively for lawful and moral purposes,  and no part of the Premises
or improvements  thereon shall be used in any manner  whatsoever for any purpose
in  violation  of the laws of the United  States,  the State of Alabama,  or the
ordinances and laws of the City of Addison, and County of Winston;


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         (b)  O.S.H.A.,  etc.  To save  and  hold  Landlord  harmless  from  any
violations  on the  Equipment  and  Premises  of the laws of the  United  States
including  but not limited to  requirements  of  Occupational  Safety and Health
Association, of the State of Alabama, and the ordinances and laws of the City of
Addison and County of Winston;

     (c) NUISANCE. Not to create or allow any nuisance to exist on the Equipment
and  Premises,  and to abate any  nuisance  that may arise  promptly and free of
expenses to Landlord;

         (d) Not to suffer  anything to be or remain upon or about the Equipment
and Premises which will  invalidate  any policy of insurance  which Landlord may
nor or hereafter have upon the building or the Equipment and Premises;

         (e)  INCREASE OF  INSURANCE.  Not to suffer  anything to remain upon or
about the  Equipment and Premises nor permit upon the Equipment and Premises any
trade or occupation  or cause to be done anything  which may render an increased
or extra premium  payable for the insurance on the Equipment and Premises or the
building thereon against fire,  theft, and extended coverage unless consented to
in  writing  by the  Landlord  and if so  consented  to,  Tenant  shall pay such
increased  or extra  premium  within ten (10) days after  Tenant shall have been
advised of the amount thereof;


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         (f) HOLD  HARMLESS.  To hold  Landlord  harmless  against all  damages,
accidents and injuries to persons or property caused by or resulting from, or in
connection with any equipment, power plant, machinery, elevator, elevator shaft,
stairway,  signs, awnings, glass, brick, and other building material,  hatch, or
other  openings,  flagpole,  or any other things in or  pertaining  to any other
parts of any building or buildings on the Premises or things in or pertaining to
or upon the said  buildings  or Equipment  and Premises  during the term of this
lease or while Tenant is occupying the Equipment and Premises;

         (g)  INSOLVENCY  OR  BANKRUPTCY.   That,   notwithstanding   any  other
provisions  in this  lease,  in the event of the  insolvency  or  bankruptcy  of
Tenant, or in the event of a partial or general  assignment for the benefit of a
creditor,  at any time thereafter Landlord shall have the right to terminate the
lease immediately.


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         11.  CONDITION  AT OCCUPANCY  AND REPAIRS  AND/OR  REPLACEMENT.  Tenant
acknowledges that all the Equipment,  appliances,  plumbing, electrical, heating
and cooling apparatus, and fixtures, to be in good order by the act of occupancy
and use of the Equipment and Premises,  and does hereby  covenant and agree that
during the term of this  lease the same  shall be  maintained  and  replaced  if
deemed  necessary by Landlord and kept in good order and condition,  at Tenant's
expense, and, at the expiration of this lease, to make good all damages to same,
if deemed necessary by the Landlord,  either during the term of this lease or at
the  expiration  thereof.  Tenant further  agrees,  that in the event it deems a
piece  of  Equipment  owned  by  Landlord  to be worn  out or  obsolete  for its
manufacturing purposes, it will replace the worn out Equipment or substitute new
modern  Equipment at its sole expense and the new or replacement  Equipment will
immediately become the property of the Landlord.

         12.  REPAIRS  AND  MAINTENANCE.  In  addition  to those  provisions  in
paragraph 11 herein,  Tenant further agrees that it shall be responsible for all
repairs and  replacement to the Equipment,  buildings,  parking lots,  plumbing,
heating and air conditioning systems,  electrical, and to the Premises including
but not limited to maintaining the roof on the buildings on the Premises in good
order  and to  maintain  a water  tight  seal and  replace  the  roof if  deemed
necessary by the Landlord, and Tenant shall be responsible for any damage to the
Equipment,  buildings,  or the  Premises  which may be caused by a defect in the
roof.


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         13.  ENVIRONMENTAL  MATTERS AND COMPLIANCE.  (i) Tenant  represents and
warrants   that  the  Tenant's  use  of  the  Premises   will  not  violate  any
environmental laws and that no substance,  chemical,  material, or substance the
exposure to which is  prohibited,  limited or regulated  by any Federal,  State,
County,  Regional, or Local Authority,  or which, even if not so regulated,  may
pose a hazard to the health and safety to the  occupants  of the Premises or the
owners of property adjacent thereto. Tenant further represents and warrants that
there are no areas on the Premises where hazardous substances have been disposed
of, or released by Tenant,  and Tenant shall give  Landlord  immediate  oral and
written notice of its receipt of any notice of a violation of any law,  standard
or regulation covered by this paragraph.

         (ii) Tenant hereby agrees to indemnify and hold Landlord  harmless from
all loss,  cost,  damage,  claim, and expense incurred by Landlord on account of
the violation of any  representations or warranties set forth in this paragraph,
or of  Tenant's  failure to perform any  obligations  of this  paragraph,  or of
Tenant's  failure  to comply  fully  with all  environmental  laws,  rules,  and
regulations.


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         (iii)  Tenant  shall  comply with all  applicable,  present and future,
local,  state,  and federal  environmental  laws and  regulations.  Tenant shall
notify Landlord immediately if any, hazardous substance,  (as defined in CERCLA)
is released,  discharged, or disposed of, stored, or discovered on the Premises.
Tenant shall notify  Landlord in writing  within three (3) days after  receiving
written  notice from any  governmental  authority  or any  individual  or entity
claiming violation of any environmental  protection law or regulation related to
the Premises, or demanding compliance within any environmental protection law or
regulation,   or  demanding   payment,   indemnity,   or  contribution  for  any
environmental damage or injury to any natural resources or the Premises.



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         (iv) At its  sole  cost  and  expense,  Tenant  shall  comply  with all
Federal,  State,  and Local Laws,  Regulations  and Orders  with  respect to the
discharge and removal of hazardous  substances or toxic waste,  pay  immediately
when due the cost of removal of any such waste,  and keep the  Premises  free of
any lien  imposed  pursuant to such laws,  rules,  regulations,  and orders.  In
addition,  Tenant shall not install or permit to be  installed in the  Premises,
any substance  containing anything deemed hazardous by Federal,  State, or Local
laws,  rules,  regulations,  or orders  respecting  such material.  In the event
Tenant fails to comply herewith,  then after notice to Tenant and the expiration
of the early of (a) thirty  (30) days  after  written  notice,  or (b) the cure,
permitted  under the applicable  law,  rule,  regulation,  or order,  Lessee may
either  declare this lease to be in default and terminate the lease or cause the
Premises to be freed from the hazardous waste, and contaminates, and the cost of
the removal shall be so much  additional  indebtedness  charged to the Tenant as
rent which shall become immediately due and payable without notice.

         (v)  For  purposes  of  this  entire  paragraph   thirteen   "hazardous
substances"  shall  mean and  include  those  elements  or  compounds  which are
contained  in the list of  hazardous  substances  adopted by the  United  States
Environmental Protection Agency (EPA) or the list of toxic pollutants designated
by  Congress or the EPA or any  flammable  substances,  explosives,  radioactive
materials, hazardous materials,  hazardous waste, toxic substances,  pollutants,
pollution,  or related  materials which are covered by, or regulated  under, any
other Federal, State, or Local Statute, Law, Ordinance,  Code, Rule, Regulation,
Order, or Decree regulating,  relating to, or imposing liability or standards of
conduct  concerning,  any hazardous,  toxic or dangerous  waste,  substance,  or
material,  as  now or at any  time  hereafter  in  effect  (herein  collectively
referred to as the "Environmental Laws").

     14. DRAINAGE. Tenant agrees to keep all ditches in good repair and maintain
good drainage  around the buildings and to be responsible  for any surface water
damage to the buildings, Equipment, parking lots, and Premises.


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     15. SEWER SYSTEM.  Tenant  expressly  agrees to accept the sewage and water
systems in good order and to be responsible for any expense to maintain, repair,
replace, or improve said systems.

     16.  UTILITY  CHARGES.  Tenant  agrees  to pay any and  all  bills  for its
utilities,  such as electricity,  gas, water, telephone, and trash removal, used
by Tenant  during the term of this lease and Landlord  shall have no  obligation
therefor.

         17.  LIABILITY  INSURANCE.  That Tenant shall,  during the term of this
lease, keep in full force and effect a policy of public liability insurance with
respect to the  Equipment  and  Premises and the  business  operated  thereon by
Tenant,  in which the limits of liability shall not be less than Two Million and
No/100   ($5,000,000.00)   Dollars  per  person  and  Five  Million  and  No/100
($2,000,000.00)  Dollars for each accident or  occurrence  for bodily injury and
the same for property damage.  Should Landlord ever desire this limit increased,
Tenant will pay the increased premium, and Tenant shall cause the Landlord to be
a named insured on said policy "as its interest may appear" and furnish Landlord
with a copy thereof and any renewals thereto.


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         18.  FIRE  INSURANCE.  Tenant  agrees  to  maintain  fire  and all risk
extended  coverage  insurance  on the ISO special  forms,  including  earthquake
coverage,  on the buildings  equal to one hundred  (100%) percent of replacement
cost,  during the term of this lease, or any renewal thereof;  and Tenant agrees
to maintain fire,  theft,  and all risk extended  coverage  insurance as the ISO
special  forms,  including  earthquake  coverage,  on the Equipment in an amount
equal to one hundred (100%) percent of its replacement  cost, during the term of
this  lease.  Landlord  shall be the named  insured on said  insurance  policies
covering  the  buildings  and  Equipment  and be  provided  with  a copy  of the
policies.  Tenant  agrees to pay any increase in said premium after the original
policy term, if any.

         19. PROPERTY  TAXES.  Tenant shall pay the ad valorem taxes on the real
estate and  Equipment  listed in this lease during the lease term or any renewal
thereof.  And,  Tenant shall pay all ad valorem taxes  assessed on any equipment
placed on the Premises by it and on any inventory or other items subject to said
tax and shall hold the Landlord harmless therefrom.


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         20. VACATE  PREMISES AT END OF TERM. If at the expiration of this lease
or any renewal thereof, the Option to purchase the Equipment and Premises herein
granted  to  Tenant  has not been  exercised,  Tenant  agrees to  deliver  up to
Landlord, or Landlord's agents or assigns, the Equipment and the Premises at the
expiration  of this  lease in good  order  and  condition,  and to make good all
damage to the Equipment  and buildings and the Premises,  ordinary wear and tear
excepted. The said delivery to be made on the day immediately following the last
day of this lease or any renewal thereof,  and in the event of failure of Tenant
to deliver the  Equipment and Premises on the  termination  of this lease or any
renewal thereof, Landlord may hold Tenant for any damages that Landlord may have
sustained due to the failure of Tenant to make delivery of the Equipment and the
Premises,  until all the Equipment and Premises,  with the keys to same, cleared
of all persons and property not belonging to same,  be returned to Landlord,  or
Landlord's  successors or assigns. No demand or notice of such delivery shall be
necessary.



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         21. INSPECTION AND RIGHT TO REPAIR.  Landlord reserves the right during
the term of this lease or any renewal to enter the Premises at reasonable  hours
to show the same to other persons who may be interested in renting or buying the
property,  and for the purposes of inspecting  the  Equipment  and Premises,  in
order to request  Tenant to make such repairs as the Landlord may deem necessary
for the  protection  and  preservation  of the  Equipment  and  Premises and the
buildings  thereon;  but  Landlord  is not bound to inspect or make any  repairs
whatever,  not to be held liable for any damages in consequences of the stoppage
of water,  sewer, gas or drain pipes by reason of freezing or any other cause of
obstructions, nor for any other defects about the Equipment and Premises and the
buildings  thereon,   Tenant  having  examined  the  same  and  being  satisfied
therewith,  but should such obstruction,  freezing,  stoppages, or other defects
about the Premises and the buildings thereon occur during the term of this lease
or any renewal,  or while Tenant is occupying  the  Premises,  then Tenant shall
remedy  the same  promptly  at  Tenant's  expense  unless  Landlord  by  written
agreement undertakes to do the same.



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         22. DESTRUCTION OF BUILDING.  In the event of the total destruction of,
or partial damage to, the buildings  upon the demised  Premises by fire or other
casualty,  Landlord  shall proceed with due diligence and dispatch to repair and
restore the buildings to the conditions to which they existed  immediately prior
to the occurrence of such  casualty,  at Landlord's  cost and expense,  provided
such cost does not exceed the proceeds of insurance  collected on the buildings,
by reason of such casualty,  the application of which insurance proceeds are not
prohibited, by reason of any mortgage provision, from being used toward the cost
of restoration and repairing the same; provided,  further, that if the unexpired
portion of the term of this lease or any extension thereof shall be one (1) year
or less on the date of such  casualty or the cost of repair or  restoration,  as
estimated  by two or more  contractors,  exceeds  the  replacement  value of the
Equipment and buildings  immediately  prior to the  occurrence of such casualty,
then Landlord may by written notice to the Tenant,  within sixty (60) days after
the occurrence of such casualty, terminate this lease. If the insurance proceeds
are insufficient to effect such  restoration or repairs,  Landlord at its option
may cancel this lease by written  notice to Tenant  within sixty (60) days after
the occurrence of such casualty.

         In the event the repairing  and  restoring of the  buildings  cannot be
completed  within six (6) months after the date of occurrence of such  casualty,
as estimated  by two or more  reputable  contractors,  the Tenant shall have the
right to  terminate  this lease upon giving  written  notice to Landlord  within
thirty (30) days from the date of occurrence of said casualty.  From the date of
such damage or destruction until said buildings have been substantially repaired
or restored, an equitable abatement of rent shall be allowed the Tenant.


<PAGE>






         23. DEFAULT.  If Tenant fails to pay any installment of rent within ten
(10) days of the date it is due, Landlord may, after notifying Tenant in writing
of such  default  in the  payment  of rent  (unless  within  five (5) days after
receipt of such  notice  Tenant  cures such  default)  declare the lease and any
renewal thereof  cancelled and terminated.  If Tenant defaults in the payment of
any moneys  required  herein to be paid by Tenant  other  than  rent,  or in the
performance of any Tenant's  other  obligations  hereunder,  Landlord may, after
once notifying Tenant in writing of such default (unless within thirty (30) days
after such notice  Tenant cures such default if the same involves the payment of
money other than rent  required  herein to be paid by Tenant,  or in the case of
default  other than in the payment of money.  Tenant  commences  and  diligently
prosecutes the curing of such default) declare the lease and any renewal thereof
cancelled and terminated and the remainder of the rent due under the lease shall
be due and payable  immediately.  If the lease shall  terminate  as aforesaid or
should  Landlord  elect not to terminate  this lease,  in either event  Landlord
shall have the  immediate  right to re-enter and  repossess  the  Equipment  and
Premises and the remainder of the rent due under the lease term shall be due and
payable  immediately.  Landlord  shall have the further  right (but shall not be
obligated to do so) to relet the  Equipment  and  Premises and the  improvements
thereon,  if the Landlord elects not to terminate this lease. If Landlord relets
for an amount less than the rental and other  charges  required by this lease to
be paid by Tenant,  then Landlord  shall notify Tenant of this  deficiency  each
month and Tenant  shall  either  receive  credit for any amounts paid or pay the
deficiency to Landlord  within  fifteen (15) days of receipt of such notice.  No
entry by Landlord under the provisions of this section shall bar the recovery of
rent or damages for breach or any of the covenants,  agreements or conditions on
the part of the Tenant  herein  contained.  The receipt of rent after  breach or
condition  broken,  or  delay on the  part of  Landlord  to  enforce  any  right
hereunder  shall not be deemed a waiver or  forfeiture of Landlord of any of the
rights or remedies provided for herein. The exercise by Landlord of any right or
remedy or of any  alternative  rights or  remedies,  granted  herein to Landlord
shall not affect or prejudice any other rights or remedies  afforded Landlord by
law.  Any  failure of Landlord  promptly  to  exercise  the rights or pursue the
remedies accruing hereunder by reason of any breach or default shall not operate
as a waiver but the right and  remedies  shall be  available  to Landlord at any
time or times.  Nothing  contained  in this Section 23 shall limit or affect the
rights granted Landlord by Section 10(g) of this lease.

     24. WAIVER OF TERMINATION  NOTICE. Both Landlord and Tenant waive notice of
the  termination  of this lease at the end of the lease period  specified or any
renewal thereof.


<PAGE>



     25. WAIVER OF BREACH.  It is hereby covenanted and agreed that no waiver of
a breach of any of the  covenants  of this lease shall not be  construed to be a
waiver of any succeeding breach of the same or any other covenant.

         26. SUCCESSORS AND ASSIGNS.  It is hereby covenanted and agreed between
the parties hereto that all covenants, conditions, agreements, and undertakings,
contained in this lease or any renewal thereof shall extend to and be binding on
the respective heirs, executors,  administrators,  successors and assigns of the
respective parties hereto.

         27. BUSINESS ON PREMISES.  Unless written consent is otherwise given by
Landlord,  the business to be conducted on the Premises throughout the full term
of this lease is the manufacture of mobile homes and manufactured housing and at
no time will the  premises  be  unoccupied  or vacant as that term is defined in
Landlord's fire insurance policies.

     28.  ASSIGNMENT.  Tenant  shall not have the  right to assign  the lease or
sub-let all or a portion of the Premises and Equipment without the prior written
consent of Landlord which shall not be unreasonably withheld.


<PAGE>



         29. EMINENT DOMAIN. If at any time during the term of this lease or any
renewal  thereof,  the entire Premises or such portion thereof as shall make the
Premises  unusable  for Tenant's  business,  shall be taken or  appropriated  by
virtue of eminent domain or other similar  proceedings,  or be condemned for any
public or quasi  public  use,  Tenant  shall  have the right  and  privilege  of
terminating  the lease,  by written  notice to Landlord  within thirty (30) days
after  such  condemnation  or  appropriation.  All rents and other  charges  and
payments  provided for herein shall be permanently  abated from the time of such
taking, appropriation,  or injury resulting in the termination of this lease. It
is  understood  and agreed that in the event of such  termination,  Landlord and
Tenant will prosecute at their option their respective claims against the public
or private body, herein  designated as the taking  authority,  on the account of
any taking,  appropriation,  or injury of or to the Premises,  and neither party
hereto shall be liable to the other for any recovery to be obtained or recovered
from the taking authority.

         30.  ATTORNEY  FEES.  Tenant  agrees  to pay all  costs of  collection,
including a twenty-five (25%) percent attorney's fees, if all or any part of the
rent reserved  herein is collected  after maturity with the aid of any attorney;
also to pay reasonable attorney's fees in the event it becomes necessary for the
Landlord  to  employ an  attorney  to force  Tenant  to  comply  with any of the
covenants,  obligations,  or  conditions  imposed by this  lease or any  renewal
thereof.


<PAGE>



     31. LAW  GOVERNING.  This lease has been entered into under the laws of the
State of Alabama and the rights and  obligations of the parties  hereunder shall
be governed and determined according to such laws.

     32. ENTIRE AGREEMENT.  This lease contains the entire agreement between the
parties with respect to the Equipment and Premises and cannot be changed  unless
such  change,  modification,  or  amendment  is in writing  and  executed by all
parties to this lease.

     33.  COUNTERPARTS.  This lease may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall  constitute one
and the same instrument.

     34. NOTICE.  Any notice provided to be given by the parties hereto shall be
in  writing,  each to the other,  as the case may be,  and  mailed by  Certified
United States Mail,  postage  prepaid,  and directed to Landlord at Route 6, Box
238, Hamilton,  Alabama 35570, and to Tenant at P. O. Box 300, Addison,  Alabama
35540, or by delivery of any such written notice to the other.

     35.  HEADINGS.  Headings of sections and subsections  have been inserted in
this  agreement as a matter of  convenience  and it is agreed that such headings
are not a part of this agreement and will not be used in the  interpretation  of
any provision hereof.


<PAGE>



         IN TESTIMONY WHEREOF, the above named Landlord and Tenant have executed
this and two other original  instruments of identical tenor and date, on the day
and year set forth in the first paragraph of this lease.


                                    LANDLORD:
_________________________  _____________________________(L.S.)
Witness                                     Jerry F. Wilson

_________________________  _____________________________(L.S.)
Witness                                     John W Lowe

_________________________  _____________________________(L.S.)
Witness                                     Robert Lowell Burdick

                                     TENANT:

ATTEST:                                     CAVALIER HOMES OF ALABAMA, INC.,

_________________________  By____________________________(L.S.)
David Roberson, Secretary           James Caldwell, President