ex10-1.htm


    

      LIMITED WAIVER OF FINANCIAL
COVENANT

       

       

      November
18, 2008

       

      


      Cavalier
Homes, Inc.

      Cavalier
Home Builders, LLC

      Cavalier
Real Estate Co., Inc.

      Quality
Housing Supply, LLC

      CIS
Financial Services, Inc.

      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:

       

      The
above-referenced Loan Agreement restricts the ability of Borrower to redeem,
purchase or retire any of its capital stock which exceed, in the aggregate for
all such payments, fifty percent (50%) of the average of its consolidated net
income for the two most recent fiscal years.  You have requested that
we temporarily waive this restriction in order to purchase the repurchase by
Cavalier Homes, Inc., of up to $2,000,000 in principal amount of its
shares.  Lender is willing to consent to your request based on the
following:

       

      1.           We
agree to a one-time waiver of the restriction on your ability to purchase common
shares of stock of Cavalier Homes, Inc., so as to permit the repurchase of said
shares in an aggregate principal amount not to exceed $2,000,000.

       

      2.           The
repurchase may occur at any time between the date of this letter and April 15,
2009.

       

      3.           The
waiver shall extend only to the repurchase of shares and shall not be deemed to
permit the payment of any dividends of the making of any other payments or
distributions on account of your capital stock.

       

      4.           The
repurchase must not result in breach or violation of any of the provisions of
the Loan Agreement, other than the provisions of Section 7.2(I) waived above,
and you must be in strict compliance with all covenants in the Loan Agreement,
including financial covenants, after the repurchase.

       


      
        
          
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      5.           This
waiver shall be strictly limited to the provision referenced above and shall be
strictly construed.  No waiver of any covenant should be implied by
this action, nor shall this action waive any other financial or other covenant
contained in the Loan Agreement.

       

      Please
execute below to confirm your acceptance of the terms on which this waiver is
made and your commitment to meet the specified conditions.  This
waiver shall not be effective until executed by Borrower.

       

      
        	 
      	
                Yours
      very truly,

              
	 
      	 
      
	 
      	
                FIRST
      COMMERCIAL BANK

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/
      JAMES W. BRUNSTAD

              
	 
      	
                Print
      Name:

              	
                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
      HOME BUILDERS, LLC,

                a
      Delaware limited liability company

              	 
      
	 
      	 
      	 
      
	
                By:

              	
                /s/
      MICHAEL R. MURPHY

              	 
      
	
                Print
      Name:

              	
                Michael
      R. Murphy

              	 
      
	
                Title:

              	
                President

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      


      

      



      
        
          
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                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/
      JEFF SKELTON

              	 
      
	
                Print
      Name:

              	
                Jeff
      Skelton

              	 
      
	
                Title:

              	
                Secretary

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                RIDGE
      POINTE MANUFACTURING, LLC,

                an
      Alabama limited liability company

              	 
      
	 
      	 
      	 
      
	
                By:

              	
                /s/
      MICHAEL R. MURPHY

              	 
      
	
                Print
      Name:

              	
                Michael
      R. Murphy

              	 
      
	
                Title:

              	
                Managing
      Member

              	 
      
	 
      	 
      	 
      


      

      



      
        
          
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