As filed with the Securities and Exchange Commission on December 22, 1995
Registration No. 33 - 62487
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
---------------
CAVALIER HOMES, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-0949734
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
---------------
Highway 41 North and Cavalier Road
Addison, Alabama 35540
(205) 747-1575
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
---------------
Barry B. Donnell
719 Scott Avenue, Suite 600
Wichita Falls, Texas 76307
(817) 723-5523
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
Copies to:
B. G. Minisman, Jr., Esq.
BERKOWITZ, LEFKOVITS, ISOM & KUSHNER
A Professional Corporation
1600 SouthTrust Tower
Birmingham, Alabama 35203
(205) 328-0480
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Page 1 of 55 Pages
<PAGE>
CAVALIER HOMES, INC.
CROSS REFERENCE SHEET PURSUANT TO
ITEM 501(b) OF REGULATION S-K
Item Location in Prospectus
1. Forepart of the Registration Forepart of the Registration
Statement and Outside Front Cover Statement and outside
Page of Prospectus front cover page of Prospectus
2. Inside Front and Outside Back Cover Available Information; Incorporation
Pages of Prospectus of Certain Documents by Reference;
Outside back cover page of
Prospectus
3. Summary Information, Risk Factors The Company; Risk Factors;
and Ratio of Earnings to Fixed Charges Outside back cover page of
Prospectus
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Outside front cover page of
Prospectus; Plan of
Distribution
9. Description of Securities to be Incorporation of Certain
Registered Documents by Reference;
Description of the Plan;
Appendix A; Appendix C
10. Interests of Named Experts and Counsel Not Applicable
11. Material Changes The Company
12. Incorporation of Certain Information Incorporation of Certain
by Reference Documents by Reference
13. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
<PAGE>
Cavalier Homes, Inc.
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Exclusive Dealer
Stock Option Program
<PAGE>
PROSPECTUS
CAVALIER HOMES, INC.
300,000 Shares of Common Stock Issuable Upon
Exercise of Stock Options Granted Under the
Dealership Stock Option Plan of
Cavalier Homes, Inc.
and the
Grants of Related Stock Options
Cavalier Homes, Inc., a Delaware corporation (the "Company"), desires,
through the grant by the Company of nonqualified stock options (the "Options"),
to provide an incentive to manufactured housing dealerships to sell only
manufactured homes which are produced by the Company and to sell the consumer
finance contracts resulting from the sale of new manufactured homes to the
Company's wholly owned finance subsidiary. Grants of such Options are to be made
automatically to participating dealerships on the basis of the number of such
contracts sold to such finance subsidiary. See "Description of the Plan." On
September 6, 1995, the Company's Board of Directors adopted the Dealership Stock
Option Plan of Cavalier Homes, Inc. (the "Plan") to provide for such grants.
This Prospectus relates to the 300,000 shares (the "Shares") of common
stock, par value $0.10 per share (the "Common Stock"), of the Company that will
be issued upon exercise of Options to be granted under the Plan to the Company's
Eligible Dealerships (as defined). This Prospectus also relates to the 300,000
Options to be granted under the Plan. The Options are to be granted, and the
Shares are to be issued, directly by the Company. One or more officers,
directors and employees of the Company will offer participation in the Plan to
Eligible Dealerships in those states in which such officers, directors and
employees are permitted to make such offers. In other states, offers to
participate in the Plan must be made through brokers, dealers or other persons
licensed to do so by the securities regulatory authorities of such states. In
such jurisdictions, participation in the Plan will be offered through such
persons, including employees of the Company who have been so licensed. Neither
the Company nor any of its officers, directors or employees will receive any
commissions or other remuneration in connection with the offer and sale of any
Shares. See "Plan of Distribution."
See "Risk Factors" for certain factors that should be considered by purchasers
of the Shares offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December [ ], 1995
Each Option will have an exercise price equal to the Fair Market Value
(as defined) of a share of Common Stock on the date of grant and will expire no
later than the third anniversary of the date of grant. Except as otherwise
required by law, Options may not be transferred, assigned or hypothecated and
any attempt to transfer, assign or hypothecate an Option shall cause such Option
to become null and void. See "Description of the Plan."
Generally, the Shares received upon the exercise of Options may be
resold under the Securities Act of 1933, as amended (the "Securities Act"),
without limitation as to either the quantity sold or the period during which
such Shares were held, provided that such Shares are acquired upon exercise of
Options while the registration statement of which this Prospectus is a part
remains in effect under the Securities Act. See "Restrictions on Resale."
The grant of an Option to an Eligible Dealership or its designee will
not be taxable to such person. Upon the exercise of an Option, the Optionee (as
defined) will recognize ordinary compensation income at the time of the exercise
in an amount equal to the excess of the then fair market value of the shares of
Common Stock received over the exercise price. Because Optionees will not be
employees of the Company, there will be no withholding by the Company with
respect to such compensation. See "Federal Income Tax Consequences."
The Common Stock is listed on the New York Stock Exchange, Inc. (the
"NYSE") under the symbol CAV. On December 21, 1995, the last sale price reported
by the NYSE for the Common Stock was $21.00 per share.
Grants of Options under the Plan and sales of Shares pursuant to the
exercise of such Options are limited to participating Eligible Dealerships (as
defined) of the Company or their designees. See "Description of the Plan."
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
any offer to sell or sale of the securities with respect to which this
Prospectus is issued and, if given or made, such information or representation
must not be relied upon as having been authorized. The delivery of this
Prospectus at any time does not imply that the information herein is correct as
of any time subsequent to its date. This Prospectus does not constitute an offer
to sell to or a solicitation of an offer to buy from any person in any state or
under any circumstances in which any such offer or solicitation would be
unlawful.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at the following addresses: Midwest Regional Office, Northwestern Atrium Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511; and Northeast
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Common Stock is listed on the NYSE and reports, proxy
statements and other information regarding the Company can also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the Options and Shares offered hereby. This Prospectus constitutes a part of the
Registration Statement and does not contain all of the information and
undertakings set forth in the Registration Statement and the exhibits thereto.
Statements contained in this Prospectus as to the contents of any document are
not necessarily complete, and, in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement or
incorporated therein by reference. Each such statement is qualified in its
entirety by such reference. For further information, reference is hereby made to
the Registration Statement and the exhibits thereto. The Registration Statement
and exhibits thereto may be inspected without charge at the Commission's office
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies thereof
may be obtained from the Public Reference Section of the Commission at such
address at prescribed rates.
This Prospectus consists of the sections and Appendices included
herewith. In addition to the sections contained in the body of the Prospectus,
prospective purchasers of the Shares should review (i) the terms and conditions
of the Plan (Appendix A), (ii) the Dealer Participation Letter (Appendix B) and
(iii) the document entitled "Questions and Answers" (Appendix C), each of which
is included herewith as part of this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission (Commission File No. 1-9792) are incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the year ended December
31, 1994;
(ii) The Company's Quarterly Reports on Form 10-Q for the Quarters ended
March 31, 1995, June 30, 1995 and September 29, 1995; and
(iii) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the Commission under the Exchange
Act on December 9, 1987, as amended by the Company's Form 8 dated December 16,
1987, and as updated (A) in the Registration Statement on Form S-3, effective
June 23, 1993 (Commission File No. 33-63060), to reflect the increase of the
number of shares of authorized Common Stock from 5,000,000 shares to 15,000,000
shares and (B) by the Registration Statement on Form 8-A filed with the
Commission under the Exchange Act on December 2, 1994, reflecting the listing of
the Common Stock on the NYSE.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the Shares offered hereby shall be deemed to
be incorporated by reference and to be a part of the Prospectus from the date of
the filing of such documents. Any statement contained in a document incorporated
by reference herein or contained herein shall be deemed to be modified or
superseded to the extent that a statement herein or in a document subsequently
incorporated by reference herein shall modify or supersede such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide, without charge to each person
(including any beneficial owner) to whom this Prospectus is delivered, and upon
written or oral request of such person, a copy of any and all of the information
that has been incorporated by reference in this Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Such a request is to be directed to Mr. Mike
Brinkley, Cavalier Homes, Inc., 719 Scott Avenue, Suite 600, P. 0. Box 5003,
Wichita Falls, Texas 76307 (telephone number: (817) 723-5523).
THE COMPANY
General Description
The Company is a Delaware corporation incorporated in 1985, with its
principal executive offices located at Highway 41 North and Cavalier Road,
Addison, Alabama 35540 (telephone number: (205) 747-1575). The Company also
maintains administrative offices at 719 Scott Avenue, Suite 600, Wichita Falls,
Texas 76301 (telephone number: (817) 723-5523). Unless otherwise indicated by
the context, references to the "Company" or to "Cavalier" include Cavalier
Homes, Inc., its subsidiaries and their respective predecessors, if any.
The Company designs and manufactures a wide range of high quality
manufactured homes and markets its homes primarily in the southeastern United
States, with a focus on serving the low-to medium-price manufactured housing
market. During 1994, approximately 78% of the Company's revenues were generated
from sales in its core markets of Alabama, North Carolina, Mississippi, South
Carolina, Texas, Georgia, Louisiana and Tennessee. The Company, through seven
wholly owned subsidiaries, currently operates 11 manufacturing facilities, six
of which are located in Alabama, two in North Carolina, and one each in Georgia,
Texas and Pennsylvania. The Company's facilities have an aggregate capacity to
produce approximately 22,000 floor sections per year.
The Company's homes are sold under the Cavalier, Pacesetter, Brigadier,
Knox, Buccaneer, Challenger, Parkwood, Mansion, Olympic, Plantation, Town and
Country, Astro and various other brand names. As of December 31, 1994, the
Company's homes were sold through approximately 500 independent dealers
(including 73 independent exclusive dealers) operating approximately 625 retail
sales centers located in 32 states. The Company's homes normally include
furniture and appliances and are comprised of one or more floor sections.
Single-section homes range in size from 546 to 1,216 square feet and are sold at
retail prices ranging from approximately $13,000 to $35,000. Multi-section homes
range in size from 880 to 2,394 square feet and are sold at retail prices
ranging from approximately $20,000 to $60,000.
In 1991, the Company implemented its exclusive dealer program under
which participating independent dealers sell only the Company's homes. The
Company makes installment sale financing available to the retail customers of
such exclusive dealers and provides such dealers with other services and
support. Any corporation, partnership, proprietorship, company, firm or other
business entity which (i) is engaged in the business of selling manufactured
homes to the general public, (ii) sells only manufactured homes produced by the
Company or an affiliate and (iii) is a party to, and is not in breach of, a
Qualifying Non-Recourse Time Sales Agreement with the Company or an affiliate is
referred to herein as an "Eligible Dealership."
The Company began offering retail installment sale financing in March
1992 through Cavalier Acceptance Corporation ("CAC"), the Company's wholly owned
finance subsidiary, for homes sold to qualifying retail customers of the
Company's independent exclusive dealers. The Company believes that it is the one
of the few major manufactured home producers in the United States offering
retail consumer financing through independent dealers. Consumer installment
sales contracts that are originated by the Company's independent exclusive
dealers and conform to the Company's credit policies (the "Contracts") are
purchased by CAC without recourse to the dealership. CAC currently offers four
conventional loan programs for use by dealerships, which programs require a down
payment by the consumer ranging from 0 to 20% of the purchase price in cash,
trade-in value of a previously owned manufactured home or appraised value of
equity in any real property pledged as collateral. Repayment terms range from 84
to 240 months, depending upon the amount financed, the amount of the down
payment and the customer's creditworthiness. The loans typically are secured by
a purchase money security interest in the manufactured home and, in certain
instances, a mortgage on real property pledged as additional collateral. Loans
purchased by CAC generally provide a fixed rate of interest with equal monthly
payments. CAC currently operates in 13 states and serves all of the Company's
Eligible Dealerships.
For a more detailed description of the Company, including audited and
unaudited financial information, reference is made to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 and the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30,
1995, and September 29, 1995, which are incorporated herein by reference.
Recent Developments
In December 1995, the Company received and accepted a written commitment
from its primary lender to increase the amount of the Company's credit facility
under a Revolving, Warehouse and Term Loan Agreement from $13 million to $23
million with a reduction in the interest rate applicable to the term loan
portion of such credit facility. The term of such credit facility would also be
extended to December 31, 1996. The commitment is subject to the execution and
delivery of definitive documents and to other closing conditions, and there can
be no assurance that such changes will be effected.
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully by prospective purchasers of the Common
Stock offered hereby.
Manufactured Housing Industry
The manufactured housing industry historically has been cyclical and
seasonal and has experienced wide fluctuations in aggregate sales in the past,
resulting in the failure of many manufacturing concerns. The market for
manufactured homes is affected by many of the same national and regional
economic and demographic factors that affect the broader housing industry. Sales
in the manufactured housing industry are seasonal in nature, with sales of homes
traditionally being weaker in the winter months. Historically, most sectors of
the housing industry, including the manufactured housing industry, have been
affected by, among other things, changes in general economic conditions,
inflation, levels of consumer confidence, employment and income levels, housing
demand, availability of alternative forms of housing, availability of financing
and the level and stability of interest rates. The Manufactured Housing
Institute ("MHI") reported that during the period from 1983 to 1991, aggregate
domestic shipments of manufactured homes declined 42.1% from 295,079 homes to
170,713 homes. The Company believes that the factors responsible for the decline
nationally during this period included, among other things, the economic
weakness and resulting unemployment in the oil, manufacturing and mining
industries, the high levels of repossessed inventory of manufactured homes, the
availability of apartment and other rental housing and the severe contraction in
availability of retail financing caused by the decline of the savings and loan
industry. According to industry statistics, after a ten-year low in shipments of
homes in 1991, the industry has recovered significantly, posting increases in
shipments of 24%, 21% and 20% for 1992, 1993 and 1994, respectively, as compared
to the prior year. Industry statistics for the first three quarters of 1995
indicate a continued trend in the increase of shipments, although at a slower
pace than previous years. The Company attributes the upturn in the industry to
increased consumer confidence, wider acceptance of manufactured housing, a
reduction in the availability of alternative housing, increased availability of
consumer financing and an improvement in the overall economy. However, there can
be no assurance that the manufactured housing industry will continue its upward
growth trend or that it will not experience future declines. There also can be
no assurance that the Company will be able to sustain past levels of sales or to
continue its recent sales growth or profitability.
Availability of Consumer and Dealer Financing
Consumer and dealer financing for manufactured home purchases is
generally provided by third-party lenders. The availability and cost of
financing for manufactured home purchasers and dealers is important to the
Company's sales and is dependent on financial institutions' lending practices,
the strength of the credit markets generally, governmental policies and other
conditions, all of which are beyond the Company's control. In addition, in most
states, manufactured homes are classified legally and by taxing authorities as
personal property rather than real estate. As a result, financing for the
purchase of manufactured homes is characterized by shorter loan maturities and
higher interest rates, and in certain periods such financing is more difficult
to obtain than conventional home mortgages. Although the Company believes that
the business of CAC ultimately may lessen the impact of these factors on the
Company's business, there can be no assurance to this effect, and unfavorable
changes in these factors may have a material adverse effect on the Company's
results of operations or financial condition.
Finance Subsidiary's Limited Operating History
CAC funded its first loan in March 1992. CAC purchased approximately
$7.3 million of Contracts covering the Company's homes during 1994, and
approximately $600,000 and $2.6 million of Contracts covering the Company's
homes in 1992 and 1993, respectively. The Company establishes a reserve for
losses on Contracts; however, the establishment of appropriate reserves is an
inherently uncertain process, and there can be no assurance that the ultimate
losses realized by CAC will not exceed the Company's loss reserves and have a
material adverse effect on the Company's results of operations or financial
condition. Further, an expansion of the business and operations of CAC will
increase the working capital requirements of the Company. In addition, although
the Company will attempt to match liabilities and assets of CAC both as to term
and rate to reduce loss exposure from interest rate fluctuations, there can be
no assurance that interest rate fluctuations will not have a material adverse
effect upon the Company's results of operations or financial condition.
CAC's prospects for success must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered in the
establishment of a new business in the highly competitive retail consumer
finance industry. The success of CAC's operations will also depend to a great
extent on its management. Although the Company plans to expand the operations of
CAC, due to CAC's limited operating history and the cyclical nature of the
manufactured housing industry, CAC's specific business plans are subject to
change and refinement as the circumstances require. There can be no assurance
that CAC will continue to generate sufficient revenues to maintain profitable
operations. The Company cannot predict whether CAC will be able to expand
successfully, or to what extent and when, if at all, CAC will be able to develop
a sizeable portfolio of high quality loans.
Availability and Pricing of Raw Materials
The Company's operating costs may be significantly affected by the
availability and pricing of certain raw materials, particularly lumber, gypsum,
particle board and insulation. Sudden increases in demand for these construction
materials caused by natural disasters or other market forces can greatly
increase the costs of materials or limit the availability of such materials.
Increases in such costs cannot always be reflected immediately in the Company's
prices and, consequently, may adversely impact the Company's profitability.
Further, a reduction in the availability of raw materials also may affect the
Company's ability to meet or maintain production requirements.
Growth Strategy
The Company's growth strategies are to (i) expand the financing
activities of CAC, (ii) develop the Company's network of Eligible Dealerships,
(iii) expand its geographic presence and increase its manufacturing capacity and
(iv) develop the production and distribution of component parts for manufactured
homes. Since 1991, the Company has expanded manufacturing capacity to meet the
increase in demand for its homes. If the manufactured housing industry suffers a
downturn, or the Company otherwise experiences a decline in the demand or growth
in demand for its homes, such a downturn or decline could result in the Company
having significant excess manufacturing capacity and could have a material
adverse effect on the Company's results of operations or financial condition.
The Company's ability to execute its growth strategies will depend on a number
of factors, including general economic and industry conditions, the ability to
sell to additional independent dealers, the availability of semi-skilled workers
in the areas in which the Company's manufacturing facilities are located, the
ability of CAC to be competitive and other factors, many of which are beyond the
control of the Company. There can be no assurance that the Company's growth
strategies will be successful. Further, if the Company's growth strategies are
unsuccessful, there can be no assurance that such lack of success will not have
a material adverse effect on the Company's results of operations or financial
condition.
Contingent Repurchase Obligations
In accordance with customary practice in the manufactured housing industry,
the Company has entered into repurchase and other recourse agreements with
various financial institutions and other credit sources pursuant to which the
Company has agreed, under certain circumstances, to repurchase homes sold to
independent dealers in the event of a default by a dealer in its obligation to
such credit sources. The risk of loss under repurchase agreements is mitigated
by the fact that (i) sales of manufactured homes are spread over a relatively
large number of independent dealers, (ii) the repurchase obligation expires on
individual homes after a reasonable period of time (generally 12 to 18 months
from invoice date) and also declines during such period based on predetermined
amounts and (iii) the Company has been able in most cases to sell homes
repurchased from credit sources in the ordinary course of business without
incurring significant losses. As of September 29, 1995, the Company's contingent
liability under these arrangements was an amount estimated to be approximately
$64 million, based on historical dealer turnover of inventory. Although the
Company has established, based on prior experience and current market
conditions, a reserve for possible repurchase losses of $650,000 as of September
29, 1995, there can be no assurance that the ultimate losses realized by the
Company will not exceed the Company's loss reserve and have a material adverse
effect on the Company's results of operations or financial condition.
Competition
The manufactured housing industry is highly competitive and
characterized by low barriers to entry and severe price competition. Competition
is based primarily on price, product features and quality, reputation for
quality and service, depth of field inventory, delivery capabilities, warranty
repair service, dealer promotions, merchandising and terms of dealer and retail
consumer financing. In addition, the Company competes with other manufacturers,
some of which maintain their own retail sales centers, for quality independent
dealers. According to MHI, as of September 30, 1995 there were 96 companies in
the United States producing manufactured homes from 283 facilities. There are
numerous manufacturers that compete directly with the Company in the states
where the Company's homes are sold. A number of these firms have been operating
longer and have substantially greater financial resources than the Company. In
addition, manufactured homes compete with other forms of low-cost housing,
including site-built, prefabricated and modular homes, apartments, townhouses
and condominiums. As a result of these competitive conditions, the Company may
not be able to sustain past levels of sales or to continue its recent sales
growth or profitability.
Reliance on Key Personnel
The success of the Company's business is highly dependent upon the
personal efforts and abilities of its current executive officers and other key
personnel. The loss of the services of one or more of these individuals could
have a material adverse effect upon the Company's business. The Company does not
have employment or non-competition agreements with any of its executive
officers. In addition, the Company's continued growth, including the expansion
of CAC's business, will depend upon its ability to attract and retain additional
experienced management personnel.
Dependence on Independent Dealers
The Company depends on independent dealers for substantially all retail
sales of its manufactured homes. Typically only one dealer within a given market
area distributes a particular product line of the Company. While the Company
believes that its relations with its independent dealers are generally good and
that its network of Eligible Dealerships has contributed to the Company's recent
performance, there can be no assurance that the Company will be able to maintain
these relations, that these dealers will continue to sell the Company's homes or
that the Company will be able to attract and retain quality independent dealers.
Potential Environmental Liability and Compliance with Regulations
The Company's operations are subject to federal, state and local laws
and regulations relating to the generation, storage, handling, emission,
transportation, disposal and discharge of materials into the environment.
Governmental authorities have the power to enforce compliance with their
regulations, and violations may result in the payment of fines or the entry of
injunctions, or both. Furthermore, the requirements of such environmental laws
and enforcement policies have generally become stricter in recent years. The
Company currently does not believe it will be required under existing
environmental laws and enforcement policies to expend amounts which will have a
material adverse effect on its results of operations or financial condition.
However, the Company is unable to make any assurance that the ultimate cost of
compliance with environmental laws and enforcement policies will not have a
material adverse effect on the Company's results of operation or financial
condition.
Regulation
The Company is subject to a variety of federal, state and local laws
and regulations affecting the production, sale and financing of manufactured
housing. The National Manufactured Home Construction and Safety Standards Act of
1974, and regulations promulgated by the U.S. Department of Housing and Urban
Development ("HUD") thereunder, impose comprehensive national construction
standards for manufactured homes and preempt conflicting state and local
regulations. Failure by the Company to comply with such regulations could expose
the Company to a wide variety of sanctions, including closing one or more of the
Company's manufacturing facilities. Certain HUD regulations with respect to
structural design specifications relating to wind load capacities of
manufactured housing located or sold in areas prone to hurricane-force winds
became effective in July 1994. These regulations require homes sold in
hurricane-prone areas to be able to withstand 110 miles per hour winds. The
Company currently sells homes in locations that are subject to the HUD wind load
regulations. Additional HUD regulations, which became effective in October 1994,
require manufactured homes to meet certain insulation requirements related to
energy efficiency levels. The Company does not believe that the increased cost
associated with these regulations has had a material effect on the Company's
operations to date; however, there can be no assurance that such cost will not
increase significantly in the future. HUD is also reviewing the existing wind
load capacity regulations for all other areas of the United States, and the
Company cannot predict if additional regulations will be adopted or the effect
such regulations would have on the Company or the manufactured housing industry
as a whole. In addition, certain components of manufactured homes are subject to
regulation by the U.S. Consumer Product Safety Commission. Further, a variety of
other federal, state and local laws and regulations apply to the Company,
including, but not limited to, laws and regulations relating to
truth-in-lending, disclosure requirements for consumers, zoning and housing,
non-discrimination, warranties and warranty claims, the protection of human
health and safety and the environment and debt collection techniques, as well as
laws and regulations governing credit transactions in general. There can be no
assurance that the Company will not be adversely affected by a failure to comply
with any laws or regulations applicable to or affecting the Company. Volatility
of Stock Price
The Company's Common Stock is traded on the NYSE. The market price of
the Common Stock may be subject to significant fluctuations in response to
variations in the Company's operating results and other factors affecting the
Company specifically and the stock market and the manufactured housing industry
generally.
No Market for Options
The Plan provides that, except as otherwise required by law, Options
may not be transferred, assigned or hypothecated after their grant and any
attempt to transfer, assign or hypothecate will cause the Options to become null
and void. Options may be exercised only by the Optionee (or, in certain limited
circumstances, his representative) in accordance with the terms and conditions
of the Plan. See "Description of the Plan." Accordingly, there will be no
trading market for the Options.
DESCRIPTION OF THE PLAN
General
The Company desires, through the grant of Options, to provide an
incentive to Eligible Dealerships to sell Contracts to CAC. Competition for the
purchase of Contracts from manufactured housing dealerships among finance
companies and banks is intense. Through the implementation of the Plan, the
Company is seeking to provide an additional incentive for an Eligible Dealership
to refer business to the Company in the form of Contracts sold to CAC. The
Company believes that by providing Eligible Dealerships an opportunity to
participate in the possible success and growth of the Company through the
ownership of Shares acquired upon the exercise of Options, the Eligible
Dealerships will possibly have an added incentive to sell Contracts to CAC.
Further, the Eligible Dealerships' interests will, by virtue of the ownership of
Options and Shares, be more closely aligned with the interests of the Company
and its shareholders. However, because the Options will have an exercise price
equal to the Fair Market Value (as defined) of the Common Stock, there can be no
assurance that the holders of Options will realize any benefits from the
ownership of the Options.
The statements in this Prospectus concerning the terms and provisions
of the Plan are summaries and do not purport to be complete. All such statements
are qualified in their entirety by reference to the full text of the Plan which
is included herewith as Appendix A. Reference is also made to the Dealer
Participation Letter, included herewith as Appendix B, and to "Questions and
Answers," included herewith as Appendix C.
The Plan is not a qualified deferred compensation plan under section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and is
exempt from the provisions of the Employee Retirement Income Security Act of
1974, as amended.
Participants under the Plan may obtain additional information regarding
the Plan and its administration from Mr. Mike Brinkley, Cavalier Homes, Inc.,
719 Scott Avenue, Suite 600, P. 0. Box 5003, Wichita Falls, Texas 76307
(telephone number: (817) 723-5523).
Purpose of the Plan
The purpose of the Plan is to provide an incentive to manufactured
housing dealerships to become Eligible Dealerships and to sell Contracts to CAC.
In furtherance of this purpose, the Plan authorizes the granting of Options to
participating Eligible Dealerships or their designees, based upon the number of
Contracts sold by such Eligible Dealerships to CAC.
Number of Shares Subject to the Plan
Subject to adjustments as described elsewhere herein, a maximum of
300,000 Shares are subject to the Plan and such number of Shares has been
reserved by the Company for such purpose. The Shares subject to the Plan may
consist of unissued Shares or previously issued Shares reacquired and held by
the Company as treasury shares. Should any Option expire, terminate or be
canceled or surrendered prior to its exercise, the Share subject to such Option
may again be the subject of an Option granted under the Plan.
Adjustments
In the event of any stock dividend, stock split-up, combination or
exchange of shares of Common Stock, appropriate adjustments shall be made to (i)
the number of Shares reserved under the Plan; (ii) the number of outstanding
Options; and (iii) the exercise price of each outstanding Option; provided,
however, that the number of Options to be granted for each Contract sold to CAC
pursuant to Section 5(a) of the Plan is not subject to any such adjustment. No
adjustment is to be made upon the issuance of shares of the Company's capital
stock, or securities convertible into the Company's capital stock, either in
connection with a direct sale or upon the exercise of rights to subscribe
therefor or upon the conversion of shares or obligations of the Company
convertible into such shares or other securities.
In the event of a merger, consolidation or other reorganization of the
Company under the terms of which the Company is not the surviving corporation,
but the surviving corporation elects to assume an Option, the respective
Agreement (as defined) and the Plan, each Optionee will be entitled to receive,
upon the exercise of such Option, with respect to each Share issuable upon
exercise of such Option, the number of shares of stock of the surviving
corporation (or equity interest in any other entity) and any other notes,
evidences of indebtedness or other property that the Optionee would have
received in connection with such merger, consolidation or other reorganization
had the Option been exercised with respect to such Share immediately prior to
the merger, consolidation or other reorganization.
Eligibility
Any corporation, partnership, proprietorship, company, limited
liability company, firm or other business entity which (i) is engaged in the
business of selling manufactured homes to the general public, (ii) sells only
manufactured homes produced by the Company or an affiliate and (ii) is a party
to, and is not in breach of, a Qualifying Non-Recourse Time Sales Agreement with
the Company or an affiliate, is an Eligible Dealership under the Plan.
Administration
The Plan is to be administered by an officer of the Company (the "Plan
Administrator") who is designated as such by the Board of Directors of the
Company. The Plan Administrator has the authority, in his sole and absolute
discretion, to (i) adopt, amend and rescind administrative and interpretive
rules and regulations relating to the Plan, (ii) determine the terms and
provisions of the respective Agreements which need not be identical but which
are not to be inconsistent with the Plan, (iii) construe the terms of any
written agreement between the Company and an Optionee which evidences Options
granted under the Plan (an "Agreement"), (iv) as provided in the Plan, upon
certain events to make appropriate adjustments to the exercise price of each
Option, the number of outstanding Options and the number of Shares reserved
under the Plan and (v) make all other determinations and perform all other acts
necessary or advisable for administering the Plan including the delegation of
such ministerial acts and responsibilities as the Plan Administrator deems
appropriate. The Plan Administrator may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Agreement in the
manner and to the extent he deems expedient to carry it into effect. The Plan
Administrator is to be the sole and final judge of such expediency. The Plan
Administrator is to have full discretion to make all determinations on the
matters referred to above and such determinations are to be final, binding and
conclusive.
Grant of Options
Subject to Section 5(d) of the Plan, on the last day of each calendar
quarter, the Company is to grant to each party which was a participating
Eligible Dealership on such day one hundred (100) Options for each Contract
which such Eligible Dealership sold to CAC during such calendar quarter.
Notwithstanding the foregoing, all or any number of the Options which would
otherwise be granted to the Eligible Dealership will be granted to persons
designated by such Eligible Dealership as reflected in its most recent Dealer
Participation Letter then on file with the Company on such day. Reference is
made to the Dealer Participation Letter, the form of which is included herewith
as Appendix B. A party to whom or which an Option is to be granted pursuant to
the Plan shall not be deemed to have become an Optionee and shall have no rights
with respect to such Options unless and until such party has executed and
delivered an Agreement to the Plan Administrator.
The Plan provides that the term "calendar quarter" means the period
from September 11, 1995 to December 31, 1995 or the effective date of the
Registration Statement, whichever is later, and each period of time ending on
each March 31, June 30, September 30 and December 31 thereafter.
For purposes of grants under the Plan, a Contract will be deemed to
have been sold by an Eligible Dealership to CAC on the date on which CAC pays
the Eligible Dealership all or a portion of the price of the manufactured home
which is the subject of the Contract. In the event of any dispute concerning the
date on which a Contract is sold by the Eligible Dealership to CAC, the same
shall be determined by CAC in its sole discretion.
It should be noted that nothing contained in the Plan obligates CAC to
purchase any Contracts from any Eligible Dealership or interferes with the
Company's right to terminate the Qualifying Non-Recourse Time Sales Agreement
between the Company and an Eligible Dealership regardless of the effect of such
termination upon the Options held by such Eligible Dealership or the Optionees
designated by such Eligible Dealership.
If the aggregate number of Options which are to be granted on the last
day of a calendar quarter exceeds the number of Shares then available for grants
under the Plan, then the number of Options which are to be granted to each
Optionee who or which is to be granted Options on such day shall be the product
of (i) the number of Shares then available and (ii) a fraction, the numerator of
which shall be the number of Options which would otherwise be granted to such
Optionee under the Plan and the denominator of which shall be the aggregate
number of Options which would otherwise be granted to all Optionees under the
Plan.
Type of Options
All Options granted under the Plan will be nonqualified stock options
and will not be entitled to the tax treatment of incentive stock options as
defined in Section 422 of the Code.
Agreements
Each Option is to be evidenced by an Agreement that is to contain such
terms as determined by the Plan Administrator and that are not inconsistent with
the Plan or applicable law. A form of Agreement is contained as an exhibit in
the Registration Statement on Form S-3 (which includes this Prospectus) filed
with the Commission under the Securities Act.
Exercise Price
The exercise price per Share of any Option is the Fair Market Value of
the Share as of the date on which such Option was granted or, if such date is
not a business day, on the business day immediately preceding such date. "Fair
Market Value" means, with respect to a Share as of any date, (i) if the Shares
are listed on a national securities exchange on such date, the closing sales
price of a Share on such exchange on such date or, if no Shares are traded on
such date, the closing sales price of a Share on the most recent date on which
any Shares were traded; or (ii) if the Shares are not so listed on such date,
the value of a Share on such date determined pursuant to any fair and reasonable
means prescribed by the Plan Administrator.
Exercise of Options and Payment
Subject to the provisions of the Plan, an Optionee may exercise his
Options only upon the terms set forth in the Agreement pursuant to which such
Options were granted to him. An Option may be exercised only (i) by the Optionee
to whom it was granted; (ii) during the 90-day period following the death of an
Optionee, by the legal representative of his estate; or (iii) in the event of
the termination of an Eligible Dealership by reason of the permanent and total
disability of an Optionee, during the 90-day period following the determination
of such disability, by such Optionee or his legal representative.
An Option shall be deemed to have been exercised when the Optionee has
(i) delivered written notice of such exercise to the Company in accordance with
the applicable provisions of the Agreement and (ii) paid the full amount of the
exercise price of the Option to the Company. The exercise price of each Option
is to be paid in cash, by certified or cashier's check or money order or, in the
discretion of the Plan Administrator, by personal check. The exercise price may
be paid directly by the Optionee or his personal representative or by a
registered broker-dealer for the account of an Optionee. See the "Questions and
Answers" included herewith as Appendix C for a description of such a transaction
involving a registered broker-dealer.
In order to assure compliance with the securities laws, during any time
that the Registration Statement is not effective, the Plan Administrator may
require such evidence as he may deem necessary to establish that the Shares are
being purchased for investment and not with a view to, or for sale in connection
with, a distribution (as that term is defined under the Securities Act). If this
Prospectus is not then part of an effective registration statement, the Plan
Administrator may further require legends on the certificates representing the
Shares, which legends will reflect the fact that the Shares cannot be sold or
transferred absent an effective registration statement or an exemption from such
registration.
As a condition to the transfer of a certificate representing Shares,
the Plan Administrator may obtain such agreements or undertakings, if any, as he
may deem necessary or advisable to assure compliance with any provision of the
Plan or any law or regulation.
An Optionee will not become, nor have any of the rights or privileges
of, a shareholder of the Company with respect to any Shares purchasable upon the
exercise of any Options unless and until a certificate representing such Shares
has been issued by the Company to the Optionee.
Termination or Cancellation of Options
All Options granted under the Plan will terminate automatically on the
third anniversary of the date on which such Options were granted. In addition,
Options will terminate on the date on which the Optionee (or the Eligible
Dealership which designated the Optionee pursuant to its Dealer Participation
Letter) ceases to be an Eligible Dealership for any reason whatsoever.
The Plan Administrator, in his sole discretion, may, by giving written
notice to an Optionee, terminate any Option which remains unexercised on the
date (the "Termination Date") of the consummation of any of the following
transactions: (i) any transaction (including a series of transactions occurring
within 60 days or occurring pursuant to a plan) that results in the shareholders
of the Company immediately before such transaction owning less than 51% of (x)
the voting stock of the Company or (y) any entity that results from the
participation of the Company in a reorganization, consolidation, merger,
liquidation or any other form of corporate transaction; (ii) a merger,
consolidation, reorganization, liquidation or dissolution which the Company does
not survive; or (iii) a sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company. Such notice is to be
given to an Optionee at least 30 days prior to the Termination Date; however, if
such transaction is not consummated, any such notice given with respect to such
transaction will be of no effect.
Transferability
Options may not be transferred, assigned or hypothecated after their
grant, except as otherwise required by law, and any attempt to transfer, assign
or hypothecate will cause the Option to become null and void.
Term of the Plan
The Plan became effective on the date on which it was adopted by the
Board of Directors and shall terminate on the tenth anniversary of such
effective date.
Amendment or Termination
The Company's Board of Directors may amend, modify or terminate the
Plan at any time and in any respect. Except with regard to the cancellation of
an Option upon the consummation of a Termination Event where the Optionee's
consent is not required, the Board of Directors may not amend, modify or
terminate an outstanding Option without the Optionee's consent if such
amendment, modification or termination materially impairs such outstanding
Option.
Indemnification
The Plan provides that neither the members of the Board of Directors of
the Company nor any Plan Administrator is to be liable for any act, omission, or
determination taken or made in good faith with respect to the Plan or any Option
granted under it. The members of the Board of Directors and the Plan
Administrator are entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage, or expense (including attorneys' fees,
the costs of settling any suit (provided such settlement is approved by
independent legal counsel selected by the Company) and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith)
arising from such claim, loss, damage, or expense to the full extent permitted
by law and under any directors, and officers, liability or similar insurance
coverage that may from time to time be in effect.
Relationship With Dealers
Neither the existence of the Plan nor the grant of Options pursuant
thereto or the issuance of Shares pursuant to the exercise of such Options will
constitute any Eligible Dealership or Optionee as an agent or employee of the
Company or CAC. Nothing contained in the Plan is intended to confer upon any
Eligible Dealership the right to represent itself as the agent of the Company or
CAC for any purpose whatsoever.
Listing
The Company will apply for, and expects to obtain, listing of the Shares on
the NYSE.
FEDERAL INCOME TAX CONSEQUENCES
General
The federal tax information set forth below is based upon present federal
income tax laws and thus is subject to change when such laws change. Moreover,
this summary of tax consequences, which is not based upon an opinion of legal
counsel, attempts to paraphrase only the general rules and is not intended to be
a complete description of all tax effects resulting from participation in the
Plan.
Grant of Options
The grant of an Option will not be taxable to the Optionee.
Exercise of Option
Generally, upon the exercise of an Option, an Optionee will recognize
ordinary compensation income at the time of the exercise in an amount equal to
the excess of the then fair market value of the Share received over the exercise
price. Since Optionees will not be employees of the Company, there will be no
withholding by the Company with respect to such amount.
Sale of Shares After Exercise
When Shares received upon the exercise of Options are subsequently sold
or exchanged in a taxable transaction, the Optionee generally will recognize
capital gain (or loss) in the amount by which the amount realized exceeds (or is
less than) the fair market value of the Shares on the date the Options were
exercised. Such capital gain or loss will be long-term or short-term depending
upon the Optionee's holding period following the exercise of the Options.
Tax Consequences to the Company
The Company will not be entitled to a deduction for federal income tax
purposes for the granting of any Option. The Company will generally be entitled
to a deduction for federal income tax purposes when an Optionee exercises an
Option, with such deduction being in the same amount as the ordinary income
realized by the Optionee.
Individual Tax Consultation
In addition to the federal income tax consequences described above, the
acquisition, ownership or disposition of an Option or a Share acquired upon the
exercise of an Option may have tax consequences under various state or foreign
laws that may be applicable to certain Optionees. Since these tax consequences,
as well as the federal income tax consequences described above, may vary from
Optionee to Optionee depending upon the particular facts and circumstances
involved, each Optionee should consult its own tax advisor with respect to the
federal income tax consequences of the grant or exercise of an Option, and also
with respect to any tax consequences under applicable state or foreign law.
USE OF PROCEEDS
The Company intends to use the proceeds from the sale of Shares to be
issued upon the exercise of Options for general corporate purposes.
PLAN OF DISTRIBUTION
The Options are to be granted and the Shares are to be sold upon the
exercise thereof by the Company in its capacity as the issuer thereof. One or
more officers, directors and employees of the Company will offer participation
in the Plan to Eligible Dealerships in those states in which such officers,
directors and employees are permitted to make such offers. In other states,
offers to participate in the Plan must be made through brokers, dealers or other
persons licensed to do so by the securities regulatory authorities of such
states. In such jurisdictions, participation in the Plan will be offered through
such persons, including employees of the Company who have been so licensed.
Neither the Company nor any of its officers, directors or employees will receive
any commissions or other remuneration in connection with the offer and sale of
any Shares.
Each Eligible Dealership which receives a copy of this Prospectus, and
which desires to participate in the Plan, will be asked to complete and execute
the Dealer Participation Letter, included herewith as Appendix B. Only those
Eligible Dealerships which return properly completed and executed Dealer
Participation Letters will be eligible for grants of Options. Dealer
Participation Letters will not be accepted, however, prior to the effective date
of the Registration Statement. Pursuant to the Dealer Participation Letter, each
such Eligible Dealership will, among other things, (i) acknowledge receipt of
the Prospectus, (ii) agree to be bound by all of the terms and conditions of the
Plan and (iii) designate one or more persons (if any) to receive grants of all
or a portion of the Options to be granted to the Eligible Dealership, if the
Eligible Dealership itself is not to be the Optionee. Any Options to be granted
under the Plan will be granted in the name of the Eligible Dealership unless a
different Option recipient is designated pursuant to the Dealer Participation
Letter.
RESTRICTIONS ON RESALE
Shares acquired upon exercise of Options may be sold only in compliance
with the registration requirements of the Securities Act and applicable state
securities laws or exemptions therefrom. The Company has filed with the
Commission the Registration Statement registering under the Securities Act the
issuance of the Options and the sale of the Shares issuable upon the exercise of
Options. Consequently, under the federal securities laws, persons not deemed to
be affiliates of the Company within the meaning of the Securities Act and
applicable regulations promulgated thereunder by the Commission may exercise
Options and resell Shares under the Securities Act without limitation as to
either the quantity sold or the period during which such Shares were held,
provided such Shares are acquired upon exercise of an Option while the
Registration Statement is in effect.
Persons who are "affiliates" of the Company may resell Shares under the
Securities Act only (i) in accordance with the provisions of Rule 144 of the
Securities Act promulgated by the Commission (exclusive of the two-year holding
period if such Shares are acquired upon exercise of an Option while the
Registration Statement covering the issuance of such Shares is in effect) or
some other exemption from registration under the Securities Act, or (ii)
pursuant to an applicable current and effective registration statement under the
Securities Act. As of the date of this Prospectus, there is no registration
statement that registers sales of Shares by affiliates of the Company.
An affiliate of the Company, as defined in Rule 405 promulgated by the
Commission, is a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Company. The determination of whether a person is an affiliate of the
Company is primarily a factual one based upon whether he possesses, directly or
indirectly, individually or in concert with others, the power to direct or cause
the direction of the management or policies of the Company, whether through the
ownership of voting stock, by executive position, by membership on the Company's
Board of Directors, by contract or otherwise. Therefore, each Optionee should
consult its legal counsel concerning whether it is an affiliate of the Company
and the attendant restrictions on the resale of Shares under the Securities Act.
<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been
passed upon by Berkowitz, Lefkovits, Isom & Kushner, A Professional Corporation,
1600 SouthTrust Tower, Birmingham, Alabama 35203.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
<PAGE>
APPENDIX A
DEALERSHIP STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
SECTION 1 PURPOSE A-3
SECTION 2 DEFINITIONS A-3
SECTION 3 SHARES SUBJECT TO PLAN A-4
SECTION 4 ADMINISTRATION OF PLAN A-4
SECTION 5 GRANT OF OPTIONS A-5
SECTION 6 EXERCISE OF OPTIONS A-6
SECTION 7 TERMINATION OF OPTIONS A-7
SECTION 8 ADJUSTMENTS A-8
SECTION 9 AMENDMENT OR TERMINATION OF PLAN A-9
SECTION 10 MISCELLANEOUS A-9
SECTION 11 EFFECTIVE DATE AND TERMINATION DATE A-11
<PAGE>
DEALERSHIP STOCK OPTION PLAN
OF
CAVALIER HOMES, INC.
SECTION 1 - PURPOSE.
The purpose of the Dealership Stock Option Plan of Cavalier Homes, Inc. (the
"Plan") is to provide an incentive to manufactured housing dealerships to agree
to sell only manufactured homes which are produced by the Company and to sell
the Contracts resulting from such sales to CAC.
SECTION 2 - DEFINITIONS.
As used herein, the following terms shall have the following meanings:
(a) "Agreement": The written agreement between the Company and an Optionee which
evidences Options granted to the Optionee pursuant to this Plan.
(b) "Business Day": If the Shares are traded on a national securities exchange,
any day on which such exchange is open or, if the Shares are not traded on a
national securities exchange, any day on which commercial banks in the City of
New York are open.
(c) "Board": The Board of Directors of the Company.
(d) "CAC": Cavalier Acceptance Corporation, an Alabama corporation.
(e) "Calendar Quarters": The period of time beginning on September 11, 1995 and
ending on December 31, 1995 or the effective date of the registration statement
relating to the Options and Shares hereunder, whichever is later, and each
period of time ending on each March 31, June 30, September 30 and December 31
thereafter.
(f) "Company": Cavalier Homes, Inc., a Delaware corporation.
(g) "Eligible Dealership": Any corporation, partnership, proprietorship,
company, limited liability company, firm or other business entity which (1) is
engaged in the business of selling manufactured homes to the general public, (2)
sells only manufactured homes produced by the Company or an affiliate and (3) is
a party to, and is not in breach of, a Qualifying Non-Recourse Time Sales
Agreement with the Company or an affiliate.
(h) "Exercise Price": The price for which one Share may be purchased from the
Company upon the exercise of an Option which shall be the Fair Market Value of
the Share as of the date on which such Option was granted or, if such date is
not a Business Day, on the Business Day immediately preceding such date.
(i) "Fair Market Value": With respect to a Share as of any date:
(1) if the Shares are listed on a national securities exchange on such
date, the closing sales price of a Share on such exchange on such date, or, if
no Shares are traded on such date, the closing sales price of a Share on the
most recent date on which any Shares were traded; or
(2) if the Shares are not so listed on such date, the value of a Share
on such date determined pursuant to any fair and reasonable means prescribed by
the Plan Administrator.
(j) "Option": The right to purchase one Share from the Company for a price equal
to the Fair Market Value of such Share on the date such Option is granted and
upon the terms and conditions of this Plan and the Agreement pursuant to which
such Option is granted.
(k) "Optionees": The parties to whom Options have been granted under this Plan.
(l) "Plan Administrator": The person or persons administering this Plan as
determined pursuant to Section 4(a).
(m) "Shares": The shares of the ten cent ($0.10) par value common stock of the
Company.
SECTION 3 - SHARES SUBJECT TO PLAN.
Subject to adjustments as provided in Section 9 hereof, a maximum of three
hundred thousand (300,000) Shares shall be subject to this Plan. The Shares
subject to this Plan shall consist of unissued Shares or previously issued
Shares reacquired and held by the Company. Should any Option expire, terminate
or be canceled or surrendered prior to its exercise, the Share subject to such
Option may again be the subject of an Option granted under this Plan.
SECTION 4 - ADMINISTRATION OF PLAN.
(a) Designation. This Plan shall be administered by any officer of the Company
designated by the Board.
(b) Authority. The Plan Administrator shall have the authority, in his sole and
absolute discretion, to (1) adopt, amend and rescind administrative and
interpretive rules and regulations relating to this Plan, (2) determine the
terms and provisions of the respective Agreements which need not be identical
but which shall not be inconsistent with this Plan, (3) construe the terms of
any Agreement and this Plan, (4) as provided in Section 8, upon certain events
to make appropriate adjustments to the Exercise Price of each Option, the number
of outstanding Options and the number of Shares subject to this Plan and (5)
make all other determinations and perform all other acts necessary or advisable
for administering this Plan including the delegation of such ministerial acts
and responsibilities as the Plan Administrator deems appropriate. The Plan
Administrator may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Agreement in the manner and to the extent
he shall deem expedient to carry it into effect and shall be the sole and final
judge of such expediency. The Plan Administrator shall have full discretion to
make all determinations on the matters referred to in this subsection and such
determinations shall be final, binding and conclusive.
SECTION 5 - GRANT OF OPTIONS.
(a) Number of Options Based on Contracts Sold. Subject to Section 5(d), on the
last day of each Calendar Quarter, the Company shall grant to each party which
was an Eligible Dealership on such day one hundred (100) Options for each
Contract (as defined below) which such Eligible Dealership sold to CAC after the
effective date of this Plan described in Section 11 and during such Calendar
Quarter. Notwithstanding the foregoing, however, all or any number of the
Options which would otherwise be granted to an Eligible Dealership on the last
day of a Calendar Quarter shall be granted to one or more other parties
designated by such Eligible Dealership on the most recent form provided by the
Plan Administrator for such purpose and on file with the Company on such day.
Notwithstanding anything to the contrary contained herein, a party to whom or
which an Option is to be granted pursuant to this Plan shall not be deemed to
have become an Optionee and shall have no rights with respect to such Options
unless and until such party shall have executed and delivered an Agreement to
the Plan Administrator. (b) Definition of Contract. For purposes of this
Section, the term "Contract" shall mean a written agreement between an Eligible
Dealership and another party which evidences an installment sale by such
Eligible Dealership to such other party of a new manufactured home which was
produced by the Company.
(c) Determination of Date of Sale of Contract. For purposes of this Section, a
Contract shall be deemed to have been sold by an Eligible Dealership to CAC on
the date on which Acceptance pays the Eligible Dealership all or a portion of
the price of the manufactured home which is the subject of the Contract. In the
event of any dispute concerning the date on which a Contract is sold by the
Eligible Dealership to CAC, the same shall be determined by CAC in its sole
discretion.
(d) Insufficient Shares. If the aggregate number of Options which, pursuant to
Section 5(a), are to be granted on the last day of a Calendar Quarter exceed the
number of Shares then available pursuant to Section 3, then, notwithstanding the
provisions of Section 5(a), the number of Options which shall be granted to each
Optionee who or which is to be granted Options on such day shall be the product
of:
(1) the number of Shares then available pursuant to Section 3; and
(2) a fraction, the numerator of which shall be the number of Options
which would otherwise be granted to such Optionee pursuant to Section 5(a) and
the denominator of which shall be the aggregate number of Options which would
otherwise be granted to all of such Optionees pursuant to Section 5(a).
(e) Nonqualified Options. All Options granted under the Plan shall be
nonqualified stock options and none of such options shall be incentive stock
options as defined in section 422 of the Internal Revenue Code of 1986, as
amended.
(f) Nonassignability. Except as otherwise required by law, an Optionee may not
transfer, assign or hypothecate any of his or its Options and any attempt to
transfer, assign or hypothecate any such Option shall cause such Option to
become null and void.
SECTION 6 - EXERCISE OF OPTIONS
(a) Terms of Exercise. Subject to the provisions of this Plan, an Optionee may
exercise his Options only upon the terms determined by the Plan Administrator
and set forth in the Agreement which evidences such Options. An Option may be
exercised only (i) by the Optionee to whom it was granted; (ii) during the
ninety (90) day period following the death of an Optionee, by the legal
representative of his estate; or (iii) in the event of the termination of an
Eligible Dealership by reason of the permanent and total disability of an
Optionee, during the ninety (90) day period following the determination of such
disability, by such Optionee or his legal representative.
(b) Date of Exercise. An Option may be exercised at any time on or after the
date on which it is granted and prior to the date on which it is terminated
pursuant to Section 7. An Option shall be deemed to have been exercised when the
Optionee has:
(1) delivered written notice of such exercise to the Company in
accordance with the applicable provisions of the Agreement between the Company
and the Optionee; and
(2) paid the full amount of the Exercise Price of the Option to the
Company.
(c) Payment of Exercise Price. The Exercise Price of each Option shall be paid
in cash, by certified or cashier's check or money order or, in the discretion of
the Plan Administrator, by personal check. The Exercise Price may be paid
directly by the Optionee or his representative, or by a registered broker-dealer
for the account of the Optionee.
(d) Required Representations from Optionee. As a condition to the issuance of
Shares upon the exercise of Options, the Plan Administrator may require the
Optionee to make any agreement which the Plan Administrator may deem necessary
or advisable to assure compliance with the provisions of this Plan and any law
or regulation including, but not limited to, a representation and warranty by
the Optionee to the Company that:
(1) at the time his Options are exercised, he is acquiring the Shares
to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(2) the Optionee shall be bound by any legends which, in the opinion of
the Plan Administrator, are necessary or appropriate to comply with the
provisions of any securities law deemed by the Plan Administrator to be
applicable to the issuance of the Shares and are endorsed upon the certificates
representing the Shares.
(e) Effect of Exercise of Options. An Optionee shall not be, nor have any of the
rights or privileges of, a shareholder of the Company with respect to any Share
purchasable upon the exercise of any Option unless and until a certificate
representing such Share shall have been issued by the Company to the Optionee.
SECTION 7 - TERMINATION OF OPTIONS.
(a) Automatic Termination. An Option shall terminate on the third (3rd)
anniversary of the date on which
such Option was granted.
(b) Termination Upon Cessation of Eligible Dealership Status. An Option shall
terminate on the date on which the Optionee (or the Eligible Dealership which
designated the Optionee) ceases to be an Eligible Dealership for any reason
whatsoever.
(c) Termination Upon Occurrence of Certain Events. The Plan Administrator, in
its sole discretion, may, by giving written notice to an Optionee, terminate any
Option which remains unexercised on the date (the "Termination Date") of the
consummation of any of the following transactions:
(1) any transaction (including a series of transactions occurring
within 60 days or occurring pursuant to a plan) the result of which is that the
shareholders of the Company immediately before such transaction cease to own at
least 51% of (x) the voting stock of the Company or (y) any entity that results
from the participation of the Company in a reorganization, consolidation,
merger, liquidation or any other form of corporate transaction;
(2) a merger , consolidation, reorganization, liquidation or
dissolution which the Company does not survive; or
(3) a sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company.
Such notice shall be given to an Optionee at least thirty (30) days prior to the
Termination Date; provided, however, that if such transaction is not
consummated, any such notice given with respect to such transaction shall be of
no effect.
SECTION 8 - ADJUSTMENTS.
(a) Adjustments by Plan Administrator. If at any time there shall be an increase
or decrease in the number of issued and outstanding Shares, through the
declaration of a stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of Shares, then appropriate proportional
adjustments shall be made to (1) the number of outstanding Options, (2) the
Exercise Price of the outstanding Options and (3) the number of Shares subject
to this Plan; provided, however, that no adjustment shall be made to the number
of Options to be granted under Section 5(a) hereof. In the event of a dispute
concerning such adjustment, the Plan Administrator has full discretion to
determine the resolution of such dispute. Such determination shall be final,
binding and conclusive.
(b) Assumption by Successor. In the event of a merger, consolidation or other
reorganization of the Company under the terms of which the Company is not the
surviving corporation, but the surviving corporation elects to assume an Option,
the respective Agreement and this Plan, the Optionee shall be entitled to
receive, upon the exercise of such Option, with respect to each Share issuable
upon exercise of such Option, the number of shares of stock of the surviving
corporation (or equity interest in any other entity) and any other notes,
evidences of indebtedness or other property that Optionee would have received in
connection with such merger, consolidation or other reorganization had it
exercised the Option with respect to such Share immediately prior to such
merger, consolidation or other reorganization.
(c) Effect of Issuance of Securities. Except as otherwise expressly provided
herein, the issuance by the Company of shares of its capital stock of any class,
or securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of or the
outstanding Options granted under this Plan.
(d) No Restrictions on Company. Without limiting the generality of the
foregoing, the existence of outstanding Options shall not affect in any manner
the right or power of the Company to make, authorize or consummate (1) any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, (2) any merger or consolidation of
the Company, (3) any issuance by the Company of debt securities or preferred or
preference stock that would rank above the Shares subject to outstanding
Options, (4) the dissolution or liquidation of the Company (5) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (6) any other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 9 - AMENDMENT OR TERMINATION OF PLAN.
The Board may amend or terminate this Plan at any time and in any respect.
SECTION 10 - MISCELLANEOUS.
(a) Effect of Applicable Laws, Etc. This Plan, the granting and exercise of
Options hereunder and the obligation of the Company to sell and deliver Shares
under such Options, shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
(b) Indemnification. Neither the members of the Board nor any Plan Administrator
shall be liable for any act, omission, or determination taken or made in good
faith with respect to this Plan or any Option granted under it. The members of
the Board and the Plan Administrator shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage, or expense
(including attorneys' fees, the costs of settling any suit (provided such
settlement is approved by independent legal counsel selected by the Company) and
amounts paid in satisfaction of a judgment, except a judgment based on a finding
of bad faith) arising from such claim, loss, damage, or expense to the full
extent permitted by law and under any directors, and officers, liability or
similar insurance coverage that may from time to time be in effect.
(c) Effect of Payment or Issuance. Any issuance or transfer of Shares to an
Optionee in accordance with the provisions of this Plan shall, to the extent
thereof, be in full satisfaction of all claims of such person under this Plan.
The Plan Administrator may require any Optionee, as a condition precedent to
such issuance or transfer of Shares, to execute a release and receipt for such
issuance or transfer of Shares in such form as it shall determine.
(d) Company Records and Information. The records of the Company shall be
conclusive for all purposes under the Plan, unless determined by the Plan
Administrator to be incorrect. The Company shall, upon request or as may be
specifically required under this Plan, furnish or cause to be furnished all of
the information or documentation that is necessary or required by the Plan
Administrator to perform its duties and functions under this Plan.
(e) Action of Company. Any action required of the Company relating to this Plan
shall be by resolution of the Board or act of the Plan Administrator.
(f) Severability. If any provision of this Plan is held to be illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
provisions of this Plan, but such provision shall be fully severable, and this
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included in this Plan.
(g) Notice. Whenever any notice is required or permitted under this Plan, such
notice must be in writing and personally delivered or sent by mail or next day
delivery by a nationally recognized courier service. Any notice required or
permitted to be delivered under this Plan shall be deemed to be delivered on the
date on which it is personally delivered, or, if mailed, whether actually
received or not, on the third Business Day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has previously specified
by written notice delivered in accordance with this subsection or, if by
courier, twenty-four (24) hours after it is sent, addressed as described in this
subsection. The Company or an Optionee may change, at any time and from time to
time, by written notice to the other, the address which it or he had previously
specified for receiving notices. Until changed in accordance with the Plan, the
Company and each Optionee shall specify as its and his address for receiving
notices the address set forth in the Agreement pertaining to the Shares to which
such notice relates. Any person entitled to notice under this Plan may waive
such notice.
(h) Binding Effect. The Plan shall be binding upon the Optionees, their
successors and permitted assigns and upon the Company, its successors and
assigns.
(i) Section Headings. The headings of the Sections of this Plan are included for
convenience of reference only and are not to be considered in construction of
the provisions of this Plan.
(j) Governing Law. All questions arising with respect to the provisions of the
Plan shall be determined by application of the laws of the State of Alabama
except to the extent Alabama law is preempted by federal law or the corporate
law of the state of the Company's incorporation. Questions arising with respect
to the provisions of an Agreement that are matters of contract law shall be
governed by the laws of the state specified in the Agreement, except to the
extent preempted by federal law and except to the extent that the corporate law
where the Company is incorporated conflicts with the contract law of such state,
in which event such corporate law shall govern. The obligation of the Company to
sell and deliver Shares under this Plan is subject to applicable laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Shares.
(k) Number and Gender. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.
(l) Relationship with Dealers. Neither the existence of this Plan, the grant of
Options pursuant hereto nor the issuance of Shares pursuant to the exercise of
such Options shall constitute any Eligible Dealership or Optionee as an agent of
the Company or CAC. Nothing contained herein shall confer upon any Eligible
Dealership the right to represent itself as the agent of the Company or CAC for
any purpose whatsoever. Nothing contained herein shall obligate CAC to purchase
any Contracts from any Eligible Dealership or interfere with the Company's right
to terminate the Qualifying Non-Recourse Time Sales Agreement between the
Company and an Eligible Dealership regardless of the effect of such termination
upon the Options held by such Eligible Dealership or the Optionees designated by
such Eligible Dealership.
SECTION 11 - EFFECTIVE DATE AND TERMINATION DATE.
This Plan shall become effective on the date on which it is approved by the
Board and shall terminate on the tenth (10th) anniversary of said effective
date.
<PAGE>
APPENDIX B
DEALER PARTICIPATION LETTER
<PAGE>
DEALER PARTICIPATION LETTER
The undersigned, individually and on behalf of the dealership(s) listed
below, acknowledges and agrees that the undersigned has received a Prospectus
related to the Exclusive Dealer Stock Option Program of Cavalier Homes, Inc.,
that the undersigned has reviewed the copies of the Prospectus and understands
all provisions therein and agrees to be bound by all terms and conditions of the
Program. After reviewing the Prospectus, the undersigned desires that his/her
dealership be eligible for options to be granted pursuant to the terms of the
Program. This Program does not constitute or designate any Eligible Dealer as an
agent of the Company or CAC, and nothing herein shall be interpreted to confer
upon any Eligible Dealer the right to hold himself as an agent of the Company or
CAC for any purpose whatsoever. The undersigned also agrees that any options
issued under the Program will be issued to the name of the dealership as
optionee unless a different option recipient is designated below.
The undersigned represents that he/she has full authority to execute
this Dealer Participation Letter, either as an agent of the dealership or dealer
principal(s) or otherwise, and that he/she has full authority to designate the
person(s) or entity(ies) to receive option grants under the Program. The
undersigned acknowledges and agrees that Cavalier Homes, Inc. may verify the
information contained herein, including the representations contained in the
immediately preceding sentence.
Signature:_________________________________ Date:___________________________
Print Name:_______________________________ Title:___________________________
Title:____________________________________ Phone:__________________________
Dealership(s) Participating in the Exclusive Dealer Stock Option Program of
Cavalier Homes, Inc.:
- ------------------------------------ -------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
(If more than one dealership are under common control and ownership, all such
dealerships may be aggregated for purposes of participating in the Program.)
<PAGE>
Designation of Option Recipient(s) ( if other than Dealership):
Please provide name, title, address, social security number (or federal tax ID)
and percentage of option grants to be received by each recipient (the total must
equal 100%). Each option recipient designated below, if any, must have received
a copy of the Prospectus prior to receiving option grants under the Program.
Recipient No. 1;
Name:________________________________________________________________________
Address:_____________________________________________________________________
=====================================================================
Title:_______________________________________________________________________
S.S. # or Federal Tax ID #:__________________________________________________
Percentage of Options Granted to be received by this Recipient:______________
<PAGE>
Recipient No. 2;
Name:_______________________________________________________________________
Address:____________________________________________________________________
=====================================================================
Title:_______________________________________________________________________
S.S.# or Federal Tax ID#:___________________________________________________
Percentage of Options Granted to be received by this Recipient:______________
<PAGE>
Recipient No. 3;
Name:_______________________________________________________________________
Address:____________________________________________________________________
=====================================================================
Title:_______________________________________________________________________
S.S.# or Federal Tax ID#:___________________________________________________
Percentage of Options Granted to be received by this Recipient:______________
<PAGE>
Note: The designation of the option recipient(s) may be changed at any time by
providing Cavalier Homes, Inc. with a supplemental Dealer Participation Letter
Completed, dated and signed by an authorized representative of the dealership
and/or the dealer principal(s). Option Grants, if any, will be made to the
recipient(s) as indicated on the last Dealer Participation Letter received by
Cavalier Homes, Inc. before the date of grant or, if no designation has been
received by Cavalier, options will have no vested right to receive option grants
until such time as the options are actually granted pursuant to the terms of the
Program.
<PAGE>
APPENDIX C
QUESTIONS AND ANSWERS
<PAGE>
Taking Stock
Cavalier has launched a new era in dealer principal relations ... and a new
opportunity for you to build your personal net worth. Our new Exclusive Dealer
Stock Option Program awards you options to acquire Cavalier Homes, Inc. stock in
years to come, but at today's prices. The options cost you nothing, and you are
not required to exercise them.
You simply earn stock options based on your quarterly contract volume. Most
importantly, these options are offered in addition to profits already earned on
the sale of the home. This program ensures that every home you deliver, delivers
for you when CAC provides the financing.
Questions and Answers
<PAGE>
Q. How do I become eligible to participate in this Program?
A. Any dealership that has been approved by Cavalier Acceptance Corporation
with the execution of the Qualifying Non-Recourse Time Sales Agreement is
eligible to participate in the Program. Your local Cavalier Sales Manager can
furnish you with additional information on this Program and get you started.
Q. Does it cost anything to participate?
A. There is no cost for you to participate in the Program. We are offering
the Program to provide an additional incentive for you to sell us Contracts. The
benefits that you can derive from the Program are in addition to the normal
terms under which we would otherwise purchase Contracts from you.
Q. What are stock options?
A. The stock options granted under this Program give you the right to buy a
specified number of shares of Cavalier Homes, Inc. at a fixed price. This fixed
price is set on the day the option is granted to you and does not change
throughout the term of your option.
The stock options involve no risk and no financial obligation for you. You
can make money on your stock options if the price of Cavalier's stock increases
while you hold your options. If the price of Cavalier's stock does not increase,
you do not have to exercise your options, and they will simply expire.
Let's go through an example. Under the Program, let's assume that you are
granted options to buy 1,000 shares of Cavalier stock at $14 per share. If the
price of Cavalier stock later increases to $20, you would have a gain of $6,000.
If the price of Cavalier stock does not increase, your options would have no
value, and you would not exercise them.
<PAGE>
[GRAPHIC OMITTED]
You can easily track the value of the stock options you receive. Cavalier
is traded on the New York Stock Exchange under the symbol "CAV." Most local
newspapers provide daily prices for New York Stock Exchange listed companies,
including Cavalier Homes, Inc.
Q. When will I get my stock options?
A. Stock options will be awarded to participating dealerships in a stock
option grant at the end of each calendar quarter in which you sell us Contracts.
Q. How many stock options will I receive?
A. The amount of grants will be determined at the end of each calendar
quarter according to the number of Contracts that you sell us in such quarter.
Q. How do I exercise my option?
[GRAPHIC OMITTED]
A. You may exercise your stock options at any time up to three years after
the original date of grant. If you do not exercise an option within three years
after the date of the grant, it will expire. To exercise an option, you must
provide us written notice accompanied by full payment of the exercise price for
the Cavalier Homes, Inc. stock which you will obtain in exchange for surrender
of the option. You will then be issued a stock certificate representing your
ownership of Cavalier Homes, Inc. stock. You may hold those shares of stock for
as long as you wish.
[GRAPHIC OMITTED]
If you do not want to pay the exercise price in cash and hold your Cavalier
Homes, Inc. stock as described above, many brokerage firms have available
"cashless" exercise programs. Under such programs, these firms will tender the
cash exercise price for your options directly to us on your behalf, immediately
sell the Cavalier stock obtained upon exercise of your options, and then pay to
you the difference between the sales price of the stock and the exercise price
of your options, less any commissions and other transaction costs.
Example of Cashless Stock Exercise
If you were previously granted options for 1,000 shares with an exercise price
of $14 and Cavalier stock was currently selling at $20, you could profit through
a cashless exercise program as follows:
Broker sells Cavalier stock obtained from
option exercise (1,000 x $20.00) $20,000
Broker pays exercise price to us (1,000 x $14.00) (14,000)
--------
Cash to you from Broker. excluding transaction costs $ 6,000
========
Cavalier would be pleased to provide you with referrals to stock brokerage firms
having cashless exercise programs.
Q. How many options will I receive?
A. The amount of grants will be determined at the end of each calendar
quarter according to the number of Contracts that you sell us in such quarter.
Q. What could my stock options be worth?
A. Cavalier hopes that your stock options will be worth a lot of money to
you in the future. If the price of Cavalier's common stock increases, you will
realize a profit along with Cavalier's shareholders, management and employees.
We all have the same interest in Cavalier's success.
Q. What would make the price of Cavalier stock increase?
A. There are numerous factors which determine the price for Cavalier's
stock. Many of these factors such as the condition of the general economy, are
outside our control. Other factors, including the level of our profitability can
be influenced by Cavalier's management, employees, dealership network, and
customers.
As part of the Cavalier dealership network, you can enhance our
profitability as well as yours by selling us more contracts. We hope that
increased profitability will lead to a higher stock price for Cavalier in the
future.
Below is a chart illustrating how much money your stock options could be
worth. The chart assumes that you were awarded options with an exercise price of
$14.00 and Cavalier's stock increased in value at rates ranging from 25% to 100%
over the three-year term of the options.
Number Value if Cavalier Homes, Inc. Stock Increases
of Options 25% 50% 75% 100%
1,000 $ 3,500 $ 7,000 $ 10,500 $ 14,000
2,000 $ 7,000 $14,000 $ 21,000 $ 28,000
5,000 $17,500 $35,000 $ 52,500 $ 70,000
10,000 $35,000 $70,000 $ 105,000 $140,000
Since we cannot predict the future, we have used projected values which may
or may not resemble future results. Remember, however, that you have not assumed
any risk or financial obligations. If the price of Cavalier stock does not
increase, the stock options will have no value and they will expire.
Q. What are the Federal Income Tax consequences of the Plan?
A. The grant of a stock option will not be taxable to you for Federal
Income Tax purposes.
When you exercise a stock option, you will recognize ordinary income at the
time of exercise in an amount equal to the difference between the then current
price of the shares you obtain and the exercise price of such shares.
If you subsequently sell any shares of Cavalier common stock which you
received upon exercise of options, you will recognize a capital gain or loss in
an amount equal to the difference between the amount you realize upon sale of
such stock and the price of the shares at the time of exercise.
You should consult with your tax advisor regarding the specific tax
consequences of this Program since the particular facts and circumstances may
vary by individual.
Q. Who gets the stock option in my Dealership?
A. You may designate any entity or individual to receive the stock option.
You may also allocate an award between several entities or individuals. Options
may be received by you, your dealership, your general manager, your salesman or
others. It is your decision. You designate in writing the name in which Cavalier
should grant the options. You may change this designation any time as to future
grants. However, once granted, options are not transferable or assignable.
Q. What if I have more than one dealership?
A. All of the Contracts that you sell us from dealerships that you have in
a calendar quarter can be aggregated for purposes of applying the formula for
determining the number of stock options to be awarded. At the present time,
Cavalier is not licensed in all 50 states. In order for a contract to be
eligible, we must be properly licensed to do business within the state.
Q. Can Cavalier take my options away?
A. Options previously granted generally cannot be cancelled. However, they
are cancelable upon cessation of being an exclusive Cavalier dealer. There are
no credit performance requirements or other conditions associated with an option
grant. You will normally have the right to exercise the stock option at any time
prior to its expiration after three years.
We do reserve the right to cancel this Program at any time as to future grants.
Q. How do I keep track of my options?
A. We will provide you an Option Agreement evidencing the terms and
conditions of the stock options within a reasonable period of time following the
date of the grant.
Shortly after the end of each calendar quarter, we will also send you a
Participant Statement which will summarize the number and terms of your current
stock option holdings.
<PAGE>
NOTICE
In certain states, Cavalier Homes, Inc. is not legally authorized to
solicit or accept offers of participation in the Exclusive Dealer Stock Option
Program. In those states, solicitation of offers to participate in this Program
will be made by and through a broker-dealer licensed to engage in such
solicitations.
This brochure contains highlights of the Exclusive Dealer Stock Option
Program of Cavalier Homes, Inc. and does not purport to be complete. For a
complete description of the Program, please review the accompanying Prospectus
covering the Program and the Dealership Stock Options. A copy of the Program is
also available and should be reviewed. In the event of any discrepancy between
this information and the information contained in the official Program
documents, the official Program documents shall govern in all cases.
This Program does not constitute or designate any Eligible Dealer as an
agent of the Company or CAC, and nothing herein shall be interpreted to confer
upon any Eligible Dealer the right to hold himself as an agent of the Company or
CAC for any purpose
<PAGE>
YOUR INVITATION TO SHARED SUCCESS
Cavalier's Independent Exclusive Dealers are invited to participate in
a unique stock option program. Growing Our Business Together has always been the
foremost goal of Cavalier and its Exclusive Dealer Network.
Have you ever asked yourself, "How can I make more profit from the same
sale?" If you have, we think we have the answer for you.
For every contract purchasing a new Cavalier home which is funded by
Cavalier Acceptance Corporation "CAC", you (or your designee) will receive an
option to purchase 100 shares of Cavalier Homes, Inc., good for three years.
The number of contacts purchased from your exclusive dealership by CAC
will be totalled at the end of each calendar quarter. The number of shares you
(or your designee) will receive an option to purchase will equal the number of
contracts purchased by CAC times 100. The price will be the closing price on the
last trading day of the calendar quarter and you may exercise your options at
any time during the next three years!
Our founders bring to Cavalier the tradition and heritage of not only
manufactured home sales, but also manufactured home financing. We at Cavalier
have a common bond with our independent exclusive dealers. To ensure that we
share today's rewards and survive tomorrow's challenges, we offer the innovative
concept of Growing Our Business Together, a concept coupling the strength of
relationship marketing and the realities of today's highly competitive financial
environment.
Our Stock Option Program awards our exclusive dealers options to
acquire stock in Cavalier Homes, Inc., at prices set the day the options are
granted. Now it is possible for you to actually earn money without having any
money invested. Each contract CAC purchases helps the selling dealer qualify for
Cavalier stock options, extending the dealer's potential earnings well into the
future. This program should establish stronger dealerships and reward special
financial partner relationships. We know CAC offers the best
SERVICE
* Immediate response time
* Buyer accessibility
* Willingness to Negotiate
* Expedient funding checks
PRICING
* Consistent competitive pricing
* Competitive dealer advance checks
QUALITY
* Consistency in credit decisions
* Good industry reputation
* Strong administrative office support
PROGRAMS
*0% down payment $50,000 max. loan 12 years
*5% or more down payment $75,000 max. loan 25 years
*Land-in-Lieu $75,000 max. loan 25 years
*Seven year $75,000 max. loan lower interest rate
HERE'S WHAT CAC OFFERS
SERVICE
As soon as your customer's application arrives at CAC, we become your
partner in special financing. We immediately begin working on the deal.
Decisions come back to you quickly, often within just a few hours. Our credit
buyers are always available to answer questions or negotiate with you to close
the deal quickly and smoothly.
PRICING
CAC offers competitive financing programs, individualized for various
levels of credit risk. For the dealer, CAC offers more than competitive pricing,
CAC benefits include speedy process and our unique Exclusive Dealer Stock Option
Program. Our common stock is traded on the New York Stock Exchange (Symbol CAV).
QUALITY
To initiate a transaction, simply fax a completed application to CAC.
Your fax is delivered to the credit buyer, and with state-of-the-art data
processing, we provide rapid responses to your applications. Our systems capture
the key information needed to make quick decisions on the credit worthiness of
your applicant. We fax credit decisions right to your office and are available
to discuss our response and to close the deal. Most of the time decisions are
made within four hours or less, but always within a 24-hour period.
PROGRAMS
Programs are the product of a joint effort in which all elements of
consumer finance--from capital formation to consumer credit approval--link
together in one continuum. We operate this way to provide consistency in our
programs and our financing criteria.
<PAGE>
TAKING THE PARTNERSHIP ONE STEP FURTHER
We at Cavalier continually monitor our business and any changing
patterns in manufactured housing sales and the financing industry, allowing us
to remain competitive and profitable for our shareholders and our dealers.
Our Exclusive Dealer Stock Option Program is a bonus--our way of saying
"thank you" for your business and to encourage you to send even more. It is a
way of sharing the success you help to create.
This program does not constitute or designate any Eligible Dealer as an
agent of the Company or CAC, and nothing herein shall be interpreted to confer
upon any Eligible Dealer the right to hold himself as an agent of the Company or
CAC for any purpose whatsoever.
To receive more information about our Exclusive Dealer Stock Option
Program, contact CAC at 1-800-844-4845.
SHARED SUCCESS:
THE EXCLUSIVE DEALER STOCK OPTION PROGRAM
Dealers simply earn stock options based on the volume of contracts sold
to CAC. Most importantly, these options are offered in addition to the profits
already earned through CAC! When CAC provides the financing, every deal your
dealership delivers returns potential future income to the dealer.
The options may be granted to the dealership, to one or more dealer
principals, dealership employees or to other persons designated by dealer
principals.
To learn more, simply contact CAC at 1-800-844-4845.
DISCOVER
HOW TO BUY CAVALIER STOCK
<PAGE>
TOMORROW AT TODAY'S PRICES
Cavalier's Exclusive Dealer Stock Option Program awards options to dealers
to acquire Cavalier Homes, Inc. stock in the future, but at prices set on the
date the options are granted.
* Options cost nothing. No requirement to exercise them.
* Options based on quarterly contract volume.
* Options offered in addition to profits already earned on the sale of the
home.
* Every CAC deal means potential future income to the exclusive dealer.
* Options may be granted to the dealership, the dealer principal or employees
of the dealership.
For more details on this innovative program, simply call CAC at 1-800-844-4845.
<PAGE>
No dealer, salesman or any other person has been
authorized to give any information or to make any
representations , other than those contained in
this Prospectus, and, if given or made, such other
information or representations must not be relied
upon as having been authorized by the Company.
This Prospectus does not constitute an offer or
solicitation (i) by anyone in any state in which
such offer or solicitation is not authorized, or
in which the person making the offer or
solicitation is not qualified to do so, or (ii) to
any person to whom it is unlawful to make such
offer or solicitation. The delivery of this
Prospectus at any time does not imply that the
information herein is correct as of any time
subsequent to its date.
CAVALIER HOMES, INC.
Common Stock Issuable Upon
Exercise of Stock Options
Granted Under the Dealership
Stock Option Plan of Cavalier
Homes, Inc.
and the
Grant of Related Stock Options
-----------------
TABLE OF CONTENTS 300,000 Shares
Page
$0.10 Par Value
Available Information 2 -----------------
Incorporation of Certain
Documents by Reference 3
The Company 4
Risk Factors 5
Description of the Plan 9
Federal Income Tax Consequences 14
Use of Proceeds 15
Plan of Distribution 15 PROSPECTUS
Restrictions on Resale 16
Legal Matters 17 December [ ], 1995
Experts 17
Appendices
A. Dealership Stock Option Plan A-1
B. Dealer Participation Letter B-1
C. Questions and Answers C-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses, all of which will
be borne by the Company, in connection with the distribution of the securities
being registered. All amounts shown are estimates except the Commission
registration fee.
Item Amount
SEC Registration fee $ 1,561
Printing expenses 1,000
Legal fees and expenses 12,500
Accounting fees and expenses 1,000
Blue Sky fees and expenses 2,500
Miscellaneous 1,439
------
Total $20,000
======
Item 15. Indemnification of Directors and Officers
(a) Article VII of the By-laws of the Registrant provides for
indemnification of directors and officers, in certain instances. The provisions
of said Article are as follows:
SECTION 1. Indemnification in Actions Arising Out of Capacity as
Officer, Director, Employee or Agent. The corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. Indemnification in Actions by or in Right of Corporation.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Delaware Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
SECTION 3. Indemnification When Successful on Merits or Otherwise. To
the extent that a director, officer, employee or agent of the corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article VII, or in defense of
any claim issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
SECTION 4. Determination of Meeting Applicable Standard. Any
indemnification under Sections I and 2 of this Article VII (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections I and 2 of this Article VII. Such determination
shall be made (a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
SECTION 5. Payment of Expenses in Advance of Disposition of Action.
Expenses incurred by an officer or director in defending a civil or criminal
action, suit, or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit, or proceeding as authorized by the board
of directors in the specific case upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this Article VII. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
SECTION 6. Nonexclusivity of Article. The indemnification provided by
this Article VII shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. The indemnification provided by
this Article VII shall not be exclusive of any powers, rights, agreements or
undertakings which may be legally permissible or authorized by or under any
applicable law but, notwithstanding any other provisions of this Article VII,
the indemnification authorized and provided by this Article VII shall be
applicable only to the extent that such indemnification shall not duplicate
indemnity or reimbursement which such person has received or shall receive
otherwise than under this Article VII.
SECTION 7. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article VII or otherwise.
SECTION 8. Constituent Corporations. For purposes of this Article VII,
references to "the corporation" shall include, in addition to this corporation,
any constituent corporation (including any constituent of a constituent)
absorbed by this corporation in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article VII with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
SECTION 9. Definitions. For purposes of this Article VII, the phrases
"other enterprises," "fines," "serving at the request of the corporation" and
"not opposed to the best interests of the corporation" shall, in addition to the
normal meanings of said phrases, be deemed to include the meanings ascribed to
said phrases in Section 145(i) of the General Corporation Law of the State of
Delaware or any successor provision thereto.
(b) In addition to the foregoing provisions of the Registrant's
By-laws, directors, officers and controlling persons of the Registrant may be
indemnified by the Registrant pursuant to the provisions of Section 145 of the
Delaware General Corporation Law.
(c) The Registrant maintains officers' and directors' liability
insurance.
Item 16. Exhibits
The following is a list of all exhibits filed as a part of this
Registration Statement, including those which are incorporated herein by
reference.
Exhibit Description
4(a) Articles four, six, seven and eight of the Registrant's
Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(a) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993)*
4(b) Article II, Sections 1 through 11; Article III, Sections I and
2; Article IV, Sections 1 and 2; Article VI, Sections 1
through 6; Article VIII, Sections 1 through 3; Article IX,
Section I of the Registrant's By-Laws (incorporated by
reference to Exhibit 3(b) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993)*
4(c) Dealership Stock Option Plan of Cavalier Homes, Inc.***
4(d) Form of Dealership Stock Option Agreement***
4(e) Form of Dealer Participation Letter***
5 Opinion of Berkowitz, Lefkovits,Isom & Kushner, A Professional
Corporation**
23(a) Consent of Deloitte & Touche LLP **
23(b) Consent of Berkowitz, Lefkovits, Isom & Kushner, A
Professional Corporation (included in Exhibit 5)**
* Incorporated herein by reference as indicated.
** Filed herewith.
*** Previously filed.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;provided,
however, that paragraphs (i) and (ii) above shall not apply if the information
required to be included in a post-effective amendment by such paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the undersigned Registrant pursuant to the foregoing provisions, or
otherwise, the undersigned Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Addison, State of Alabama, on December 22, 1995.
CAVALIER HOMES, INC.
By: /s/ Jerry F. Wilson
--------------------------
Jerry F. Wilson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-3 has been signed below by the following
persons, in the capacities and on the dates indicated.
Name Title Date
/s/ Barry B. Donnell
- --------------------- Chairman of the Board December 22, 1995
Barry B. Donnell and Director
/s/ Jerry F. Wilson
- --------------------- President, Chief Executive December 22, 1995
Jerry F. Wilson Officer and Director
(Principal executive officer)
/s/ David A. Roberson
- --------------------- Secretary-Treasurer and Chief December 22, 1995
David A. Roberson Financial Officer
(Principal financial and
accounting officer)
/s/ Thomas A. Broughton, III
- --------------------- Director December 22, 1995
Thomas A. Broughton, III
/s/ John W Lowe
- --------------------- Director December 22, 1995
John W Lowe
/s/ Lee Roy Jordan
- --------------------- Director December 22, 1995
Lee Roy Jordan
EXHIBIT INDEX
Exhibit Description Page
5 Opinion of Berkowitz, Lefkovits, Isom & Kushner,
A Professional Corporation
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Berkowitz, Lefkovits, Isom & Kushner,
A Professional Corporation (included in Exhibit 5)
<PAGE>
EXHIBIT 5
<PAGE>
BERKOWITZ, LEFKOVITS, ISOM & KUSHNER
A Professional Corporation
1600 SouthTrust Tower Birmingham, Alabama 35203
(205) 328-0480
December 22, 1995
Board of Directors
Cavalier Homes, Inc.
Highway 41 North and Cavalier Road
Addison, Alabama 35540
Gentlemen:
We have acted as counsel to Cavalier Homes, Inc., a Delaware corporation (the
"Company"), in connection with the registration by the Company of 300,000 shares
of Common Stock, par value $0.10 per share (the "Common Stock"), pursuant to a
Registration Statement on Form S-3 filed by the Company with the Securities and
Exchange Commission (the "Commission"). This opinion is being delivered to you
pursuant to item 601(b)(5) of Regulation S-K promulgated by the Commission. In
so acting, we have examined the above-referenced Registration Statement,
together with originals or copies of such corporate records, agreements,
documents and other instruments, and of certificates or comparable documents of
public officials and of officers or other representatives of the Company, and we
have made such inquiry of such officers and representatives, as we have deemed
relevant and necessary for the purposes of the opinion set forth herein.
Based upon the foregoing, we are of the opinion that the shares of Common Stock
to be offered and sold pursuant to the Registration Statement have been duly
authorized and upon the issuance and sale thereof, will be validly issued, fully
paid and non-assessable shares of Common Stock of the Company.
We hereby consent to the use of this opinion as an exhibit to the
above-referenced Registration Statement, and to the reference to our firm under
the caption "Legal Matters" in the Prospectus which constitutes a part of such
Registration Statement.
This opinion is being rendered solely for the purpose described above and is not
to be used or relied upon by any other person and, except as provided in the
preceding paragraph, may not be disclosed, quoted, filed with any governmental
agency or otherwise referred to without our written consent.
Very truly yours,
Berkowitz, Lefkovits, Isom & Kushner
<PAGE>
EXHIBIT 23(a)
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cavalier Homes, Inc. on Form S-3 of our report dated March 3, 1995, appearing in
the Annual Report on Form 10-K of Cavalier Homes, Inc. for the year ended
December 31, 1994, and to the reference to us under the heading "Experts" in the
Prospectus, which is a part of this Registration Statement.
/s/Deloitte & Touche LLP
Birmingham, Alabama
December 22, 1995
