EXHIBIT 10.1
    

    
      SEVERANCE AGREEMENT AND RELEASE
    

    
                THIS SEVERANCE AGREEMENT AND RELEASE (this “Agreement”)
      is made and entered into by and between Cavalier Homes, Inc., a Delaware
      corporation (the “Company”), and the undersigned employee
      of the Company, David A. Roberson (the “Employee”) (each a “Party,”
      and collectively, the “Parties”), and for the benefit of
      the Company and its subsidiaries, related or affiliated companies, and
      each of their respective partners, shareholders, representatives,
      officers, directors, subsidiaries, employees, members, managers,
      supervisors, advisors, attorneys, insurers, affiliates, executors,
      administrators, and other agents, successors and assigns (collectively,
      the “Released Parties”).  In consideration of the premises,
      promises and other items contained herein, the receipt and sufficiency
      of which are hereby acknowledged, Employee and Company agree as follows:
    

    
      1.  Employee has been employed by Company and is hereby resigning his
      employment effective as of August 15, 2008.  Employee also has served
      and is currently serving as a director of the Company, and is hereby
      resigning as a director of the Company effective as of August 15,
      2008.  In addition to his resignation of his employment with the
      Company, Employee also hereby resigns from any and all fiduciary
      positions, committees and any other offices or agencies which Employee
      holds with the Company.
    

    
      2.  The Company now wishes to offer, and Employee wishes to accept, a
      severance package as outlined herein below.  Employee agrees that this
      Agreement shall be in lieu of any other severance, compensation or
      benefits of any type to which Employee might be or have been entitled
      under any severance or compensation arrangement or benefit arrangement
      under any employment policy, contract, agreement or otherwise, and that
      this Agreement shall terminate, replace and supersede any other
      contract, agreement, arrangement or policy of any sort between Employee
      and the Released Parties relating to severance, compensation or benefits.
    

    
      3.  As a material part of this Agreement, Employee and the Company
      desire to settle and resolve any and all claims that relate to or in any
      way arise out of Employee’s employment and affiliation with the Company
      and/or the cessation/termination of said employment.
    

    
      4.  In consideration of Employee’s acceptance of this Agreement, the
      Company agrees to the following: the Company agrees to pay Employee a
      gross amount of $475,000 to be payable in 26 gross installments of
      $18,269.23 each, and those payments will be subject to applicable tax
      withholdings.  The first payment will occur on August 29, 2008.  The
      successive bi-monthly payments under this Paragraph will occur on the
      next regular pay dates.  In addition, Employee agrees to cooperate and
      consult in ongoing Company litigation, for which the Company will pay to
      Employee a per diem rate of $2,000, plus reasonable travel expenses
      incident thereto.  In connection with any such Company litigation, the
      Company’s legal counsel, at the Company’s expense, shall furnish
      Employee with any trial preparation, deposition preparation or other
      assistance that Company’s legal counsel deems reasonably necessary to
      prepare Employee for such litigation.  
    

    
      5.  The Company will take the appropriate steps to cause the immediate
      vesting of any and all unvested shares of restricted stock previously
      awarded to Employee.  Additionally, the Company will take appropriate
      steps to amend the exercise term of any and all stock options previously
      granted to Employee to the greater of 12 months after the date hereof or
      the original
    

    
      
        

        

      

      
        
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      exercise period under such options.  At the option of the Employee, the
      Company will transfer any or all term life insurance policies on the
      life of the Employee at the next renewal date.  The Company will provide
      Employee reasonable notice of the renewal date.
    

    
      6.  The Company agrees that, upon presentation by Employee to the
      Company’s transfer agent of common stock of the Company owned by the
      Employee, the Company shall not delay or otherwise impede any action
      required to be taken by the Company under federal securities laws to
      allow such shares of common stock to be transferred.  The Company will
      facilitate the transfer of record of approximately 500 shares of common
      stock (which the Company’s prior transfer agent had inadvertently
      recorded in Employee’s name rather than the estate planning entity
      intended as the record holder) into the Roberson Investment Partnership
      LP.
    

    
      7.  The Company will take appropriate steps to maintain for 12 months
      Employee’s health insurance coverage (including dental coverage and
      other insurance coverage and benefits generally available to company
      employees) under the Company’s insurance policy and pay the employer’s
      portion of such coverage; provided, further, that Employee shall have
      the right to elect COBRA health insurance coverage at the end of the 12
      month period.  
    

    
      8.  Any reimbursable business expenses accrued prior to the
      cessation/termination of Employee’s employment and due to Employee must
      be submitted to the Company for approval for reimbursement no later than
      September 30, 2008.  Employee will promptly return the automobile which
      has been provided by the Company for Employee’s use, including all sets
      of keys for such automobile, and all other sets of keys and access
      devices in Employee’s possession for the various offices and facilities
      of the Company. The Company will make reimbursement for approved
      expenses as soon as commercially reasonable, but no later than 30 days
      after their acceptance.
    

    
      9.  The Company will take appropriate steps to provide Employee with
      insurance coverage as a retired director of the Company, in amounts and
      for a time period consistent with the coverage the Company recently
      authorized for retired directors of the Company.
    

    
      10.  The Company confirms that Employee, as a former director and
      executive officer, will be entitled to indemnification by the Company in
      the manner and to the extent provided for under the Company’s
      Certificate of Incorporation and the Company’s Amended and Restated
      By-Laws, each as amended through the date hereof.  In addition, and not
      as a limitation or qualification of the foregoing, the Company will
      indemnify, defend and hold harmless Employee with respect to any matter
      arising from any meetings or other actions taken by the Company’s board
      of directors without knowledge of the Employee prior to the date of this
      Agreement.
    

    
      11.  Employee agrees to deliver promptly to the Company all proprietary
      information of the Company, all tangible things that contain proprietary
      information or from which proprietary information of the Company may
      become known or knowable, including, but not limited to, all forms of
      electronic media, including computer programs, compact discs, DVDs,
      computers, source code listings, notebooks, manuals, models, drawings,
      reports, laboratory and other records, notes, contracts, lists,
      blueprints, and other documents and all personal property furnished to
      or prepared by Employee in the course of, as a result of, or incident to
      Employee’s employment with the Company.  Without limiting the foregoing,
      Employee agrees that he will
    

    
      
        

        

      

      
        
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      return all Company owned or licensed computers and software that
      Employee has used during the term of his employment or over which
      Employee has control or custody, and that he will inspect his personal
      computers for Proprietary Information and will provide all such
      information to the Company and then delete all copies from his personal
      computers.  Employee will cooperate with the Company by providing access
      to all Company owned or licensed computers and software, including, but
      not limited to providing passwords and other assistance as may be
      requested.  Employee agrees not to retain any written or other tangible
      material containing any proprietary information of the Company.
    

    
      12.  Except as provided in Paragraphs 4 through 10, inclusive, above,
      Employee acknowledges and agrees that he will neither receive nor be
      entitled to any other compensation, payments, salary or benefits from
      Company under this Agreement or otherwise.  Nothing herein, however,
      shall abrogate or in any manner impair the rights, if any, Employee may
      have to benefits provided by an employee benefits plan that might have
      already vested in the ordinary course.
    

    
      13.  Employee acknowledges that during the course of his employment, he
      has had access to the Company’s confidential information.  Employee
      agrees not to use or disclose to any third party or entity, at any time,
      any confidential information of the Company without first obtaining the
      Company’s written consent; provided, however, that Employee may utilize
      any such confidential information that is not trademarked, patented or
      otherwise legally reserved for use by the Company under federal or state
      law in any business in which Employee is directly engaged as an owner,
      director or officer following expiration of the one year period
      beginning on the execution date of this Agreement stated below and
      ending at 12:01 A.M., EST time, on the first anniversary of the
      execution date of this Agreement or in preparation or anticipation of
      engaging in business following the expiration of the one year
      period.  Nothing herein shall restrict Employee’s ability to use at any
      time any confidential information, that’s not trademarked, patented or
      otherwise legally reserved for us by the Company under federal or state
      law so long as such use does not violate Paragraph 14.  The term
      “confidential information” means (a) All marketing techniques,
      practices, methods, plans, systems, databases, processes, financial
      information, and other materials or information relating to the manner
      in which the Company and its affiliates conduct business; (b) All
      information relating to current and prospective clients of the Company
      and its affiliates, including without limitation, all client contact,
      financial, and investment-related information; (c) All proprietary
      information and trade secrets of the Company and its affiliates; (d) All
      other materials or information related to the business or activities of
      Company or its affiliates which are not generally known to others
      engaged in similar businesses or activities; and (e) All inventions and
      ideas which are derived from or relate to the Employee's access to or
      knowledge of any of the above enumerated materials and information.
      Confidential Information shall not include any materials or information
      to the extent they are publicly known or generally utilized by others
      engaged in the same business or activities.  Employee furthermore agrees
      that nothing in this Agreement is intended to supersede or nullify any
      agreement Employee has with the Company regarding confidentiality and
      non-solicitation.  Employee acknowledges the continued validity, if any,
      of those obligations to the Company.
    

    
      14.  Employee acknowledges that in his position as a high-level
      executive with the Company he has had access to confidential and
      proprietary information of the Company and that he has developed
      contacts and goodwill with the Company’s customers and employees on
      behalf of the Company.  He agrees, for a period of one year beginning on
      the execution date of this
    

    
      
        

        

      

      
        
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      Agreement stated below and ending at 12:01 A.M., EST time, on the first
      anniversary of the execution date of this Agreement, that he will not,
      directly or indirectly, in any capacity, either for himself or on behalf
      of any other person or entity, do any of the following in the Territory
      as herein defined:
    

    
      (a)    Offer, induce, recruit, solicit, influence, or attempt to
      influence any employee of the Company or any affiliate or subsidiary of
      the Company to terminate his or her employment with the Company or any
      affiliate or subsidiary of the Company for the purpose of working for
      Employee or any other person or entity, whether or not a competitor of
      the Company or any affiliate or subsidiary of the Company;
    

    
      (b)    Engage in business with, perform services for or with, seek,
      solicit or accept,  business from, divert, or solicit any person or
      entity who is an existing customer of Company or any affiliate or
      subsidiary of the Company or has been a customer of Company or any
      affiliate or subsidiary of the Company at any time within the
      preceding year for the purpose of engaging in any Business competitive
      with the Company;
    

    
      (c)    Offer, induce, influence, persuade or attempt to persuade any
      agent, vendor, supplier, customer, contractor, consultant, independent
      contractor, or other person who has a business relationship with Company
      or any affiliate or subsidiary of the Company to cease to do business
      with Company or any affiliate or subsidiary of the Company, to reduce
      the amount of business that it historically has done with Company or any
      affiliate or subsidiary of the Company, or otherwise adversely alter its
      business relationship with Company or any affiliate or subsidiary of the
      Company;
    

    
      (d)    Discuss or disclose Company customers or prospects with any
      agent, employee or representative of any competitor of the Company or
      refer such customers to any competitors of the Company;
    

    
      (e)    Directly or indirectly, own, manage, operate, join, control or
      engage or participate in, assist or be employed by or give consultation
      or advice to or extend credit to or otherwise be connected in any
      manner, directly or indirectly, with any business, firm, person, sole
      proprietorship, partnership, corporation, company or other entity that
      competes with the Business (defined below) of the Company in the
      Territory (defined below); provided, however, that nothing in this
      Subsection shall prohibit Employee from owning less than one percent
      (1%) of the outstanding shares of any company whose common stock is
      publicly traded on any national securities exchange;
    

    
      (f)   Take any action or engage in any practice the purpose of which is
      to disparage the Company or any affiliate or subsidiary of the Company,
      or their products or employees and which would impair the relationships
      of the Company or any affiliate or subsidiary of the Company, with any
      customers, potential customers, vendors, employees or other persons
      having any business dealings or relationships with the Company or any
      affiliate or subsidiary of the Company;
    

    
      
        

        

      

      
        
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      (g)     Take any action, directly or indirectly, alone or with any other
      person or group to acquire or offer, propose or agree to acquire, by
      purchase or otherwise, any voting securities of the Company for the
      purpose of acquiring control of the Company, make or in any way
      participate in, any solicitation of proxies with respect to any voting
      securities of the Company, become a participant in any election contest
      with respect to the Company, or seek or offer to control or influence in
      any manner, the management, board of directors or policies of the
      Company.
    

    
               Nothing in the foregoing covenants shall preclude the Employee
      from taking any action, either alone or with any other person or group,
      in preparation or anticipation of engaging in business that may be
      competitive with the Business (as defined below) of the Company
      following the expiration of the one year term set forth in this
      Paragraph 14, provided that Employee shall not use another group or
      person to engage in actions or activities that if Employee were to
      engage in such actions directly would breach Paragraphs 13 or
      14.  Notwithstanding any of the foregoing restrictions, it is explicitly
      understood and agreed that Employee shall have the right and ability to
      accept employment or provide consulting or similar services to any
      manufactured housing company, or company engaged in the manufactured
      housing industry, that is not a direct competitor of the Company in the
      Territory during the one year term set forth in this Paragraph 14.  As
      used in this Agreement, the term Business shall mean the design,
      manufacture, production, sale and financing of manufactured homes, and
      the term Territory shall mean the states of Alabama, Arkansas, Florida,
      Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina,
      Oklahoma, South Carolina, Tennessee and Texas.
    

    
      15.  Employee hereby represents to the Company that, to the best of his
      knowledge, Employee has not, directly or indirectly, incurred or caused
      to be incurred any liability or obligation for which the Company is
      liable that is not clearly reflected in the Company’s books and records.
    

    
      16.  The Employee acknowledges that the restrictions contained in
      Paragraphs 13 and 14 of this Agreement will not prevent him from
      obtaining other gainful employment or cause him any undue hardship and
      are reasonable and necessary in order to protect the legitimate
      interests of Company
    

    
      17.  In consideration of the above described promises and payments,
      Employee agrees on behalf of Employee and all persons who may claim
      through or under Employee to irrevocably and unconditionally release,
      acquit and forever discharge the Released Parties from any and all
      complaints, claims, liabilities, agreements, controversies, damages,
      causes of actions, suits, demands, costs, wages and salary, benefits,
      compensation, debts or expenses of any kind whatsoever, known or
      unknown, suspected or unsuspected, except for the claims, rights and
      agreements created expressly under this Agreement, (hereafter “Claims”)
      which Employee now has or which Employee at any time heretofore had, or
      may have in the future, arising out of or relating to any act or
      omission occurring prior to Employee’s execution of this Agreement,
      including but not limited to, arising out of or relating to Employee’s
      employment with Company and/or the termination thereof or
      otherwise.  Without limiting the foregoing, the Claims released by
      Employee include, but are not limited to, all Claims based on alleged or
      actual rights arising under federal, state, or local laws prohibiting
      race, sex, age, ethnicity, national origin, religion, disability, or
      other forms of discrimination or retaliation, or any other federal,
      state or local laws
    

    
      
        

        

      

      
        
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      relating to or otherwise regulating Employee’s employment with Company
      (these claims include, but are not limited to, claims arising under the
      Alabama Age Discrimination Act, the federal Age Discrimination in
      Employment Act, ERISA, COBRA, the Americans with Disabilities Act and
      Title VII of the Civil Rights Act of 1964, all as amended), any Claims
      of any nature based on or arising out of Employee’s employment with
      Company, the termination of that employment, any Claims based on
      contract, tort, negligence, recklessness or intent of any nature
      whatsoever and any and all Claims of unlawful retaliation or
      interference associated with or related to these federal statutes or any
      other federal, state or local law.  Employee expressly waives and
      releases and promises never to assert any such Claims, even if he does
      not believe that he has such Claims.  
    

    
      18.  The release in this Agreement is given by Employee in consideration
      of the promises and undertakings contained herein and Employee hereby
      acknowledges and agrees that such consideration is being paid or
      performed on behalf of each of the persons and entities within the
      definition of Company and the Released Parties, as set forth herein
      above, and that this release shall run in favor of and fully release
      each such person and entity and that this Agreement constitutes a
      complete and general release of all claims.  This release is not to be
      construed as barring Employee from filing charges with the Equal
      Employment Opportunity Commission or any other agency pertaining to any
      matter covered by this release and within the jurisdiction of the
      agency, nor shall this release be construed as interfering with
      Employee's right to testify, assist or participate in an administrative
      hearing or proceeding in connection with the subject matters covered by
      this release.  However, Employee agrees that Employee will not accept
      any monetary or non-monetary benefit (excepting standard witness fees
      and mileage), including but not limited to, back pay, front pay,
      benefits, damages, punitive damages, attorney fees, reinstatement or any
      other type of equitable or legal relief, as a result of any such charge,
      lawsuit or claim.  Employee further acknowledges that the severance
      and/or benefits provided to Employee pursuant to this Agreement
      represents full and complete satisfaction of any and all monetary and
      non-monetary claims Employee has or might have against the Released
      Parties.
    

    
      19.  With this Settlement Agreement, Employee knowingly and voluntarily
      is waiving and generally releasing all rights and claims that Employee
      has or might have against the Released Parties. In exchange for this
      general release, (a) Employee acknowledges that Employee has received
      separate consideration beyond that which Employee is otherwise entitled
      to under Employer’s policy or applicable law; (b) Employee is releasing,
      among other rights, all claims and rights under the Age Discrimination
      in Employment Act (“ADEA”), the Alabama Age Discrimination Act and the
      Older Workers' Benefit Protection Act (“OWBPA”), 29 U.S.C. §621, et
      seq.; (c) Employee possesses sufficient education and experience
      to fully understand the terms of this Agreement as it has been written,
      the legal and binding effect of the Agreement, and the exchange of
      benefits and promises herein; (d) Employee understands and agrees that
      the Company’s obligation to perform under this Agreement is conditioned
      upon the Employee’s performance of all agreements, releases and
      covenants to the Company; (e) Employee has read this Agreement fully and
      completely and Employee understands its significance; (f) Employee
      enters into this Agreement knowingly and voluntarily and on Employee’s
      own free will and choice; and (g) Employee has been encouraged and given
      opportunity to consult with an attorney of Employee’s choice.
    

    
      
        

        

      

      
        
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      20.  Notwithstanding anything herein to the contrary, this Agreement is
      not intended to, and does not, release the Released Parties of and from
      any right or claim which Employee may have, as a shareholder or
      otherwise, which arises after the date of this Agreement.
    

    
      21.  Employee and the Company agree to handle Employee’s separation from
      the Company in a professional and friendly manner.  Employee agrees to
      depart from the Company’s business premises following his resignation in
      a peaceful and professional manner.  The Company agrees to characterize
      the separation of Employee as a resignation in all public statements,
      including, without limitation, the Company’s Current Report on Form 8-K.
    

    
      22.  This Agreement is not and cannot be construed as an admission by
      Employee or the Company that either has acted wrongfully with respect to
      the other or that either of them has any claim whatsoever against the
      other.  Furthermore, nothing herein shall be construed as an
      acknowledgement that Company or Employee are covered by any particular
      law or statute.  This Agreement is governed by and is to be construed in
      accordance with the laws of the State of Alabama.  The language of all
      parts of this Agreement shall in all cases be construed as a whole,
      according to its fair meaning, and not strictly for or against either
      Employee or any or all of the Released Parties. The provisions of this
      Agreement are severable and, if any part of it is found to be
      unenforceable, the other paragraphs and or provisions shall remain fully
      valid and enforceable.  
    

    
      23.  Each and all of the obligations of the Parties are expressly
      contingent upon compliance with the terms of this Agreement by the other
      Party, including, but not limited to, the payments provided for in
      Paragraph 4, the provisions regarding confidentiality, non-solicitation
      and non-competition, and cooperation and consultation with the
      Company.  In the event that either Party (as determined by the court)
      should bring any action in any court to enforce this Agreement or any
      provision thereof, it is agreed that the courts located in Alabama will
      have exclusive jurisdiction of such action.  The successful Party in any
      such action shall be entitled to reimbursement from the other Party for
      any and all costs and expenses, including reasonable attorneys’ fees,
      incurred in enforcing or defending the rights and obligations hereunder.
    

    
      24.  THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
      ANY RIGHT THAT ANY PARTY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
      PROCEEDING, LITIGATION OR COUNTERCLAIM BASED ON, OR ARISING OUT OF,
      UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT,
      COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
      ANY PARTY. IF THE SUBJECT Matter OF ANY LAWSUIT IS ONE IN WHICH THE
      WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY TO THIS AGREEMENT SHALL
      PRESENT AS A NONCOMPULSORY COUNTERCLAIM IN ANY SUCH LAWSUIT ANY CLAIM
      BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.
      FURTHERMORE, NO PARTY TO THIS AGREEMENT SHALL SEEK TO CONSOLIDATE ANY
      SUCH ACTION IN WHICH A JURY TRIAL CANNOT BE WAIVED
    

    
      25.  Employee represents, acknowledges and agrees that, in executing
      this Agreement, Employee does not rely and has not relied upon any
      representation or statement not set forth herein made by the Company or
      any of its respective agents or representatives with regard to the
      subject matter, basis or effect of this Agreement or otherwise and
      Employee further represents,
    

    
      
        

        

      

      
        
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      acknowledges and agrees that there have been no such representations,
      promises, or statements made by the Company or its respective agents or
      representatives, except as specifically set forth in this Agreement.
    

    
      26.  Employee further represents and warrants that Employee has not
      heretofore assigned to any other person or entity all or any portion of
      any claim whatsoever that Employee may have or may have had or may have
      in the future against the Released Parties.  Employee further agrees
      that Employee’s heirs, administrators, executors, successors and assigns
      shall be fully bound by each and every provision of this Agreement, just
      as Employee is bound.  Employee also agrees that each and every
      provision of this Agreement inures to the benefit of the Released
      Parties and their heirs, administrators, executors, successors and
      assigns.
    

    
      27.  Except as expressly provided in this Agreement, this Agreement
      constitutes and contains the entire understanding of the Parties with
      respect to the subject matter of this Agreement, and supersedes any
      prior or contemporaneous negotiations, representations, agreements, and
      understanding of the Parties with respect to such matters, whether
      written or oral.  The Parties declare and represent that they have not
      relied on any promise, representation or warranty, express or implied,
      not contained in this Agreement.  No amendment or modification of this
      Agreement shall be of any force or effect unless in writing and signed
      by the Party or Parties hereto against whom such amendment or
      modification is sought to be enforced.
    

    
      28.  Neither this Agreement nor any uncertainty or ambiguity herein
      shall be construed or resolved against either of the Parties, whether
      under any rule of construction or otherwise.  Neither of the Parties to
      this Agreement shall be considered the draftsman.  The Parties
      acknowledge and agree that this Agreement has been reviewed, negotiated
      and accepted by all Parties and their attorneys and shall be construed
      and interpreted according to the ordinary meeting of the words used so
      as fairly to accomplish the purposes and intentions of the Parties.
    

    
      Agreed to and executed this 15th day of August, 2008.
    

    
    	

        	
           
        	

        	

        
	

        	

        	

        	
           
        
	
          
            /s/ David A. Roberson
          

        	

        	
          
             
          

        	

        
	
          David A. Roberson, Employee
        	

        	
          Cavalier Homes, Inc., Company
        	

        
	

        	

        	
           
        
	
          
            /s/ Shirley Barnett
          

        	

        	

        	

        	

        
	
          Witness
        	

        	
          By:
        	
          
            /s/ Michael R. Murphy
          

        	

        
	

        	

        	
          Its:
        	
          
            V.P.
          

        	

        


    

    

    

    

    

    
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