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As filed with the Securities and Exchange Commission on June 18, 1998
Registration No. 33-62487
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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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)
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Highway 41 North and Cavalier Road
Addison, Alabama 35540
(205) 747-0044
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices)
---------------
David A. Roberson
Highway 41 North and Cavalier Road
Addison, AL 35540
(205) 747-0044
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
John B. Grenier, Esq.
BRADLEY ARANT ROSE & WHITE LLP
2001 Park Place, Suite 1400
Birmingham, Alabama 35203
(205) 521-8000
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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. [ ]
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CALCULATION OF REGISTRATION FEE
NOTE: The 562,500 shares included in this Registration Statement as
filed with the commission on June 18, 1998, have been adjusted to 562,500 shares
in order to reflect a 3-for-2 stock split effected as a 50% stock dividend on
February 15, 1996 and a 5-for-4 stock split effected as a 25% stock dividend on
November 15, 1996. The registration fee, which was paid at the time of the
filing of the Registration Statement on September 8, 1995, was calculated on the
basis of the average of the high and low prices reported on September 8, 1995 on
the New York Stock Exchange, which price was $14.125 per share.
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PROSPECTUS
CAVALIER HOMES, INC.
562,500 SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF STOCK OPTIONS GRANTED UNDER THE
AMENDED AND RESTATED 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 annual sales
volume 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. to provide for such grants
and on April 21, 1998, the Company's Board of Directors adopted certain
amendments to the said Plan (as amended, the "Plan").
This Prospectus relates to the 562,500 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 562,500
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" AT PAGE 4 OF THIS PROSPECTUS FOR CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PURCHASERS
OF THE COMMON STOCK 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 , 1998.
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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 unless the Option is deemed to have a readily
ascertainable fair market value. The Company does not believe that the Options
will have a readily ascertainable fair market value. 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 June 16, 1998, the last sale price reported by
the NYSE for the Common Stock was $11 11/16 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 or incorporated by reference 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 or that there has been
no change in the business or affairs of the Company since such 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 information 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"). The reports, proxy and information
statements and other information filed by the Company with the Commission can be
inspected and copied at the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 13th Floor, 7 World Trade
Center, New York, New York 10048, and at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of the material can be obtained from the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a Web site at http:/ /www.sec.gov that contains reports, proxy
and information statements and other information regarding issuers of securities
which file electronically with the Commission. The Company's Common Stock is
listed on the NYSE. The reports, proxy and information statements and other
information can also be inspected at the offices of the NYSE, 20 Broad Street,
New York, New York 10005.
The Company has filed with the Commission a Registration Statement (of
which this Prospectus is a part) on Form S-3 under the Securities Act with
respect to the securities offered hereby (the "Registration Statement"). This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. Statements contained in this Prospectus as to
the content of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of the contract or other document
filed as an exhibit to the Registration Statement, each statement being
qualified in all respects by that reference and the exhibits to the Registration
Statement. For further information regarding the Company and the Common Stock
offered hereby, reference is hereby made to the Registration Statement
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and the exhibits to the Registration Statement which may be obtained from the
Commission at its principal office in Washington, D.C., upon payment of fees
prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
(Commission File No. 1-9792) are incorporated herein by reference:
1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (including the portions of the
Company's Proxy Statement for its Annual Meeting of
Stockholders held May 20, 1998 that are incorporated by
reference therein) (File No. 1-9792).
2) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 27, 1998 (File No. 1-9792).
3) The Company's Current Report on Form 8-K dated January 15,
1998 (as amended by Form 8-K/A dated March 16, 1998 and Form
8-K/A dated March 17, 1998) (File No. 1-9792).
4) 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-A dated December 16, 1987, and as updated (A)
in the Registration Statement on Form S-3, effective June 23,
1993 (File No. 1-9792), to reflect the increase of the number
of shares of authorized common stock from 5,000,000 shares to
15,000,000 shares, (B) by the Registration Statement on Form
8-A filed with the Commission under the Exchange Act on
December 2, 1994 (File No. 1-9792), reflecting the listing of
the Common Stock on the NYSE, (C) under the caption "Proposed
Amendment to Certificate of Incorporation" in the Company's
Proxy Statement dated March 25, 1997 (File No. 1-9792) to
reflect the increase of the number of shares of authorized
common stock from 15,000,000 to 50,000,000, and (D) under the
caption "Description of Cavalier Capital Stock" in the
Company's Registration Statement on Form S-4, filed with the
Commission on December 2, 1997 (Reg. No. 333-41319).
5) The description of the Preferred Stock Purchase Rights
contained in the Company's Registration Statement on Form 8-A
filed with the Commission under the Exchange Act on October
29, 1996 (File No. 1-9792), and as amended by the Company's
Form 8-A filed on November 11, 1996 (File No. 1- 9792).
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 Common Stock 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 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. Michael R. Murphy, Cavalier Homes, Inc.,
Highway 41 North and Cavalier Road, Addison, Alabama 35540 (telephone number:
(205) 747-0044).
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RISK FACTORS
In addition to the other information contained herein, persons
interested in making an investment in the Company should carefully consider the
following factors concerning the Company and its business:
UNCERTAINTIES IN INTEGRATING BUSINESS OPERATIONS AND ACHIEVING BENEFITS OF THE
BELMONT MERGER
On December 31, 1997, Crimson Acquisition Corp., a Mississippi
corporation and a wholly owned subsidiary of the Company, merged with and into
Belmont Homes, Inc., a Mississippi corporation and also a producer of
manufactured housing ("Belmont"), and Belmont became a wholly owned subsidiary
of the Company. For a more detailed description of Belmont and this transaction,
reference is made to the Company's Current Reports on Form 8-K dated August 20,
1997, December 11, 1997 and January 15, 1998 (as amended by Form 8-K/A dated
March 16, 1998 and Form 8-K/A dated March 17, 1998), and the Company's
Registration Statement on Form S-4 filed with the Commission on December 2, 1997
(Reg. No. 333-41319). The acquisition of Belmont will require the consolidation
of functions and the integration of departments, systems and procedures, which
will present significant management challenges. There can be no assurance that
such actions will be successfully accomplished as rapidly as currently expected,
if at all. Moreover, although the primary purpose of such actions will be to
realize direct cost savings and other operating efficiencies, synergies and
benefits, there can be no assurance of the extent to which or whether such cost
savings, efficiencies, synergies or benefits will be achieved.
CYCLICAL AND SEASONAL NATURE OF THE MANUFACTURED HOUSING INDUSTRY
The manufactured housing industry is cyclical and seasonal and has
experienced wide fluctuations in aggregate sales in the past, resulting in the
failure of many manufacturing concerns. Consequently, the Company can give no
assurance that the industry will not have a change in its cycle, which could
have a material adverse effect on the Company's results of operations or
financial condition. 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. Historically, most sectors of the home building
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% from 295,079 homes to 170,713 homes. According to industry
statistics, after a twenty-eight-year low in shipments of homes in 1991, the
industry recovered significantly, posting increases in shipments of 24%, 21%,
20%, 12% and 7% for 1992, 1993, 1994, 1995 and 1996, respectively. However,
industry statistics reflect a decrease in home shipments of approximately 3% for
1997 when compared to 1996. The manufactured housing industry has, over the past
several years, experienced increases in both the number of retail dealers and
manufacturing capacity, which the Company believes is currently resulting in
slower retail turnover, higher dealer inventories and increased price
competition. The duration and extent of this tightening of competitive
conditions, and their corresponding impact on the future results of operations
and financial condition of the Company, is uncertain at this time. As a whole,
the industry appears to have improved year-to-date through March 1998, with MHI
reporting that industry shipments increased over the same period in 1997 by
approximately 5%.
Sales in the manufactured housing industry are also seasonal in nature,
with sales of homes traditionally being stronger in April through October and
weaker during the first and last part of the calendar year. While seasonality
was not a significant factor in the Company's business during the period of 1992
through 1996 when industry shipments were steadily increasing, the decline in
shipments in 1997 and the tightening of competitive conditions may signal a
return to the industry's more traditional seasonal patterns.
LIMITATIONS ON ABILITY TO PURSUE GROWTH STRATEGY
The Company's growth strategies are to (i) expand its financial
services activities, (ii) expand the production and distribution of component
parts for manufactured housing, (iii) expanded its independent dealer network,
and (iv) pursue additional acquisitions. The Company may also pursue the
acquisition or establishment of retail sales centers as well as manufactured
housing community development.
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Since 1991, the Company has expanded manufacturing capacity to meet the increase
in demand for its manufactured homes. Downturns in shipments in the manufactured
housing industry, or a decline in the demand or growth in demand for the
Company's homes, could have a material adverse effect on the Company. The
Company's ability to execute its strategy will depend on a number of factors,
including general economic and industry conditions, its 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 the Company's finance subsidiary, Cavalier Acceptance Corporation ("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 strategy will be
successful. Further, if the Company's growth strategy is unsuccessful, there can
be no assurance that such lack of success will not have a material adverse
effect upon the Company's results of operations or financial condition.
UNCERTAINTIES REGARDING RETAIL FINANCING ACTIVITIES
The Company engages in the business of purchasing retail installment
finance loans that have been originated by the Company's independent exclusive
dealers. The Company maintains a reserve for estimated credit losses on
installment sale contracts owned by CAC to provide for future losses based on
the Company's historical loss experience, current economic conditions and
portfolio performance. 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 and financial
condition. There also can be no assurance that volatility or a significant
change in interest rates will not materially affect CAC's and the Company's
business, results of operations or financial condition.
The Company's strategy currently includes the continued expansion of
the financial services segment of its business. Accordingly, the Company may
incur additional debt, or other forms of financing, in order to continue to fund
such growth. The Company may also engage in other transactions, such as selling
or securitizing portions of its installment loan portfolio, that are designed to
facilitate the ability of CAC to purchase and/or originate an increased volume
of loans and to reduce the Company's exposure to interest rate fluctuations and
installment loan losses. The Company has recently entered into such a
transaction pursuant to an agreement with another lender providing for the
periodic resale of a portion of CAC's loans that meet established criteria, and
on March 13, 1998, CAC sold approximately $25,000,000 of its loans pursuant to
this agreement. No assurance can be given that additional sales will indeed be
made under this agreement, however, or that CAC and the Company will be able to
realize the expected benefits from the agreement. Further, there can be no
assurance that possible additional financing, or the aforementioned transactions
involving the Company's installment loan portfolio, will be available on terms
acceptable to the Company. If they are not, the Company may be forced to curtail
the expansion of its financial services business and to alter its strategies.
LIMITATIONS ON AVAILABILITY OF CONSUMER AND DEALER FINANCING
Consumer 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. Unfavorable changes in these factors
may have a material adverse effect on the Company's results of operations or
financial condition.
POTENTIAL UNAVAILABILITY AND INCREASES IN PRICES 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 costs cannot always be reflected immediately in prices and,
consequently, may adversely impact profitability. Further, a reduction in the
availability of raw materials also may affect a company's ability to meet or
maintain production requirements.
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CONTINGENT REPURCHASE AND GUARANTY OBLIGATIONS
It is a customary practice in the manufactured housing industry to
enter into repurchase and other recourse agreements with lending institutions
which have provided wholesale floor plan financing to dealers. Substantially all
of the Company's sales are made to dealers located primarily in the southeast,
southwest and midwest regions of the United States pursuant to repurchase
agreements with lending institutions. These agreements generally provide for
repurchase of the Company's products from the lending institutions for the
balance due them in the event of repossession upon a dealer's default. 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 price the Company is obligated to pay under such repurchase
agreements generally declines over the period of the agreement and also declines
during such period based on predetermined amounts; and (iii) the Company has
been in many cases able to resell homes repurchased from credit sources in the
ordinary course of business without incurring significant losses. While the
Company has established a reserve for possible repurchase losses, there can be
no assurance that the Company will not incur material losses in excess of such
reserves in the future.
COMPETITIVE NATURE OF THE INDUSTRY
The production and sale of manufactured homes is a highly competitive
industry, characterized by low barriers to entry and severe price competition.
Competition is based primarily on price, product features and quality,
reputation for service and quality, 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. In addition, manufactured homes compete with
other forms of low-cost housing, including site-built, prefabricated and modular
homes, apartments, townhouses and condominiums. The Company faces direct
competition from numerous manufacturers, many of which possess greater
financial, manufacturing, distribution and marketing resources. As a result of
these competitive conditions, the Company may not be able to sustain past levels
of sales or profitability.
RELIANCE ON EXECUTIVE OFFICERS
The success of the Company's business is highly dependent upon the
personal efforts and abilities of the current executive officers of the Company.
Specifically, the success of the Company is highly dependent on the efforts of
its Chairman of the Board, Barry B. Donnell, its President and Chief Executive
Officer, David A. Roberson, and its Vice President, Chief Financial Officer and
Secretary-Treasurer, Michael R. Murphy. 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. 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. The industry has
recently been experiencing a trend of increasing competition for quality
independent dealers, and many manufacturers, some of which had previously not
owned their own retail sales centers, have begun aggressive programs to purchase
independent dealers, including some of the Company's independent dealers and/or
establishing their own retail sales center. While the Company believes that its
relations with its independent dealers are generally good, the Company's
relationships with its dealers are cancelable on short notice by either party,
and 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 ADVERSE EFFECTS OF REGULATIONS
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, as amended, 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 to comply with such regulations could expose the
Company to a wide
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variety of sanctions, including closing one or more manufacturing facilities.
HUD has promulgated regulations with respect to structural design and wind loads
and energy conservation. The Company's operations were not materially affected
by the regulations; however, HUD has these matters under continuous review and
it cannot be predicted what effect (if any) additional regulations promulgated
by HUD 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. The Company's
manufactured homes are also subject to local zoning and housing regulations. A
number of states require manufactured home producers to post bonds to ensure the
satisfaction of consumer warranty claims. A number of states have adopted
procedures governing the installation of manufactured homes. Utility connections
are subject to state and local regulation.
The Company is also subject to the Magnuson-Moss Warranty Federal Trade
Commission Improvement Act, which regulates the descriptions of warranties on
products. The description and substance of the Company's warranties are also
subject to a variety of state laws and regulations.
A variety of federal laws affect the financing of manufactured homes,
including the financing activities conducted by CAC. The Consumer Credit
Protection Act (Truth-in-Lending) and Regulation Z promulgated thereunder
require substantial disclosures to be made in writing to a consumer with regard
to various aspects of the particular transaction, including the amount financed,
the annual percentage rate, the total finance charge, itemization of the amount
financed and other matters and also set forth certain substantive limitations on
permissible contract terms. The Equal Credit Opportunity Act and Regulation B
promulgated thereunder prohibit credit discrimination against any credit
applicant based on certain prohibited bases, and also require that certain
specified notices be sent to credit applicants whose applications are denied.
The Federal Trade Commission has adopted or proposed various trade regulation
rules to specify and prohibit certain unfair credit and collection practices and
also to preserve consumers' claims and defenses. The Government National
Mortgage Association ("GNMA") specifies certain credit underwriting requirements
in order for installment manufactured home sale contracts to be eligible for
inclusion in a GNMA program. HUD also has promulgated substantial disclosure and
substantive regulations and requirements in order for a manufactured home
installment sale contract to qualify for insurance under the Federal Housing
Authority ("FHA") program, and the failure to comply with such requirements and
procedures can result in loss of the FHA guaranty protection. In addition, the
financing activities of CAC may also become subject to the disclosure
requirements of the Home Mortgage Disclosure Act. In addition to the extensive
federal regulation of consumer credit matters, many states have also adopted
consumer credit protection requirements that may impose significant requirements
for consumer credit lenders. For example, many states require that a consumer
credit finance company such as CAC obtain certain regulatory licenses or permits
in order to engage in such business in that state, and many states also set
forth a number of substantive contractual limitations regarding provisions that
permissibly may be included in a consumer contract, as well as limitations upon
the permissible interest rates, fees and other charges that may be imposed upon
a consumer. Failure by the Company or CAC to comply with the requirements of
federal or state law pertaining to consumer credit could result in the
unenforceability of the particular contract for the affected consumer, civil
liability to the affected customers, criminal liability and other adverse
results.
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.
COMPLIANCE WITH ENVIRONMENTAL LAWS
The Company's operations are subject to federal, state and local laws
and regulations relating to the generation, storage, handling, emission,
transportation and discharge of materials into the environment. In addition,
third parties and governmental agencies in some cases have the power under such
laws and regulations to require remediation of environmental conditions and, in
the case of governmental agencies and entities, to impose fines and penalties.
The requirements of such laws and enforcement policies have generally become
more strict in recent years. Accordingly, the Company can give no assurance that
it will not be required to incur response costs, remediation expenses, fines,
penalties or other similar damages, expenses or liabilities, or to incur
operational shut-downs, business interruptions or similar losses, associated
with compliance with environmental laws and enforcement policies that either
individually or in the aggregate would have a material adverse effect on the
Company's results of operations or financial condition.
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LITIGATION
The Company and its subsidiaries are engaged in various legal
proceedings that are incidental to and arise in the course of its business.
Certain of the cases filed against the Company and its subsidiaries and
companies engaged in businesses similar to it allege, among other things, breach
of contract and warranty, product liability, personal injury and fraudulent,
deceptive or collusive practices in connection with their businesses. These
kinds of suits are typical of suits that have been filed in recent years, and
they sometimes seek certification as class actions, the imposition of large
amounts of compensatory and punitive damages and trials by jury. Courts have
certified several of these types of cases as class actions recently, and many of
these types of cases have resulted in large damage awards, especially large
punitive damage awards. The outcome of many of the cases in which the Company is
involved or may in the future become involved cannot be predicted with any
degree of reliability, and the potential exists for unanticipated material
adverse judgments against the Company and its respective subsidiaries.
In addition, a suit has been filed by three former shareholders (the
"Plaintiffs") of Belmont Homes, Inc., an Alabama corporation which originally
owned the initial Belmont manufacturing facility ("BHIA"), against BHIA, Belmont
(as a successor in interest of BHIA), certain other corporate entities
(collectively, the "Other Corporations"), the Estate of Jerold Kennedy (the
former President and Chief Executive Officer of Belmont), J. M. Page, and
certain other unnamed and unidentified individual officers, employees, agents
and directors of BHIA, Belmont and the Other Corporations, alleging breach of
fiduciary duties, misrepresentation, deceit, suppression and civil conspiracy.
The suit, which was originally filed in the Circuit Court of Madison County,
Alabama (Case Number CV 97-2297), was transferred to the Circuit Court of
Franklin County, Alabama on May 6, 1998. The Plaintiffs state that they owned a
majority of the stock in BHIA and sold such stock in February of 1989. In
addition to certain other allegations, the Plaintiffs claim that Mr. Kennedy,
along with others who allegedly conspired with him, misrepresented and omitted
certain facts to them regarding his attempts to hire a production manager, that
Belmont later hired the production manager, and that the Plaintiffs would not
have sold their stock in BHIA in the absence of these alleged misrepresentations
and omissions. In their complaint, the Plaintiffs request an unspecified amount
of compensatory and punitive damages and/or equitable relief, including a
constructive trust. The Company is aware that these same plaintiffs have also
filed a separate claim against the Estate of Mr. Kennedy in the probate court of
Franklin County, Alabama (Case Number 97-051), alleging essentially the same
facts and seeking substantial compensatory damages and punitive damages and a
constructive trust over the stock in the various Belmont entities owned by Mr.
Kennedy's estate. The Company believes that the Plaintiffs' claims against
Belmont are without merit and intends to vigorously contest such claims. The
outcome of this litigation and its effect on the Company cannot presently be
determined, however, and the possibility exists for an adverse resolution of the
litigation which could have a material adverse effect on the results of
operations and financial condition of the Company in the quarter and year in
which any such adverse resolution occurs.
VOLATILITY OF STOCK PRICE
The Company's Common Stock is traded on the NYSE. The market price of
the Company's 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.
THE COMPANY
GENERAL DESCRIPTION
The Company, through its wholly owned subsidiaries and their respective
divisions, designs, produces and sells manufactured homes and markets its homes
in over 30 states through more than 800 independent dealers operating over 1,000
sales centers, including 170 independent exclusive dealer locations as of May
29, 1998 . The Company currently operates 22 manufacturing facilities. Through
CAC, the Company also makes installment sale financing available to qualifying
retail customers of its exclusive dealers. The principal executive offices of
the Company are located at Highway 41 North and Cavalier Road, Addison, Alabama
35540, and its telephone number is (205) 747-0044.
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, 1997, the Company's Current
Report on Form 8-K dated January 15, 1998 (as amended by Form 8-K/A dated March
16, 1998
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and Form 8-K/A dated March 17, 1998), and the Company's Quarterly Report on Form
10-Q for the quarter ended March 27, 1998 and subsequent reports filed by the
Company pursuant to Section 13(a) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Common Stock
offered hereby, which are incorporated herein by reference.
DESCRIPTION OF THE PLAN
GENERAL
The Company desires, through the grant of Options, to provide an
incentive to Eligible Dealerships to sell installment sale contracts
("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 entities to become Eligible Dealerships and to sell
Contracts 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. Michael R. Murphy, Cavalier Homes,
Inc., Highway 41 North and Cavalier Road, Addison, Alabama 35540 (telephone
number: (205) 747-0044).
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 annual
sales volume of Contracts generated at each individual Dealer Location and sold
by Eligible Dealerships to CAC.
NUMBER OF SHARES SUBJECT TO THE PLAN
Subject to adjustments as described elsewhere herein, a maximum of
562,500 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 Shares subject to such Option
may again be the subject of an Option granted under the Plan. As of June 10,
1998, 121,033 Options had been granted to Eligible Dealerships 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 the volume of Contracts
sold to CAC pursuant to Section 5(a) of the Plan is not subject to any
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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 (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 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, and the who serves at the pleasure
of, 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(e) of the Plan, on the twenty-fifth (25th) day
following the close of each fiscal quarter, the Company is to grant to each
party which is a participating Eligible Dealership on the date that the grant of
Options is to be made, Options based upon the achievement of annual goals for
sales of Contracts from individual Dealer Locations to CAC.
Upon the sale by the Eligible Dealership of $1 million of Contracts
generated by any individual Dealer Location to CAC during the calendar year, the
Company is to grant one thousand (1,000) Options to the Eligible Dealership on
the twenty-fifth (25th) day following the close of the fiscal quarter in which
the sales goal was achieved. Upon the sale by the Eligible Dealership of $2
million of Contracts generated by any individual Dealer Location to CAC during
the calendar year, the Company is to grant an additional one thousand five
hundred (1,500) Options to the Eligible Dealership, and upon the sale of $3
million of such Contracts the Company is to grant an additional two thousand
five hundred (2,500) Options to the Eligible Dealership. During the period
beginning March 28, 1998 and ending December 31, 1998, the individual Dealer
Location sales goals are reduced to $750,000, $1.5 million and $2.25 million,
respectively. The Plan also provides that the Company will award one hundred
(100) Options for each Contract sold by an Eligible Dealership to CAC during the
period beginning March 28, 1998 and ending June 26, 1998. Additionally, the
individual Dealer Location sales goals for a Newly Eligible Dealership (as that
term is defined in the Plan) are prorated during the calendar year the Newly
Eligible Dealership becomes eligible to participate in the Plan. Grants are to
be determined and Options awarded based upon sales of Contracts to CAC on an
individual Dealer Location basis and not upon aggregated sales of Contracts by
an Eligible Dealership. The maximum
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award of Options in any calendar year under this provision of the Plan is five
thousand (5,000) Options per Dealer Location.
In addition, the Company is to grant to the Eligible Dealership having
the individual Dealer Location that has the highest dollar amount of annual
sales of Contracts to CAC in the calendar year, five thousand (5,000) Options on
or before the twenty-fifth (25th) day following the last day of the calendar
year to which the Option grant applies. Thus, it is possible that the individual
Dealer Location that has the highest dollar amount of annual sales of Contracts
to CAC during a calendar year could be awarded up to ten thousand (10,000)
Options for such calendar year. The first grant pursuant to this provision will
be made on or before July 31, 1998 to the Eligible Dealership that had the
individual Dealer Location that had the highest dollar amount of annual sales of
Contracts to CAC in the calendar year ended December 31, 1997.
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 the day of grant.
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 "fiscal quarter" means each three month
period of time ending on the final day of each fiscal quarter of the Company,
and a calendar year means the period of time beginning on January 1 and ending
on December 31 of each year. The term "Dealer Location" means each individual
location at which an Eligible Dealership is engaged in the business of selling
only manufactured homes produced by the Company or an affiliate of the Company
to the general public.
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
twenty-fifth (25th) day following the last day of a fiscal quarter or on or
before the twenty-fifth (25th) day following the last day of a calendar year
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.
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
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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. Brokerage commissions and other
transaction costs may be incurred in connection with a cashless stock exercise.
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). Under
the terms of the Plan, Optionees are bound by any legends which, in the opinion
of the Plan Administrator, are necessary or appropriate to comply with the
provisions of any securities laws deemed by the Plan Administrator to be
applicable to the issuance of the Shares and are endorsed upon the certificates
represented by the Shares.
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.
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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 September 6, 2005.
AMENDMENT OR TERMINATION
The Company's Board of Directors may amend, modify or terminate the
Plan at any time and in any respect.
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.
RESOLUTION OF DISPUTES UNDER THE PLAN
The Plan provides that any dispute, controversy or claim arising under
the Plan shall be resolved by binding arbitration and that the Company, CAC, any
Eligible Dealership and any Optionee waives the right to trial by jury.
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 unless it is
deemed to have a readily ascertainable fair market value. The Company does not
believe that the Options will have a readily ascertainable fair market value.
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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 Shares 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, mid-term or short-term
depending upon the Optionee's holding period following the exercise of the
Options (i.e., long-term, if the holding period is greater than 18 months,
mid-term, if the holding period is more than 12 months but not more than 18
months and short-term, if the holding period is 12 months or less).
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. Under applicable regulations issued by the United
States Department of the Treasury, the Company's deduction is conditioned upon
its reporting such income to the Optionee on Form W-2 (for employees) and Form
1099 (for non-employees).
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
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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 one-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.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Bradley Arant Rose & White LLP, Birmingham,
Alabama.
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, 1997, 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.
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APPENDIX A
CAVALIER HOMES, INC.
AMENDED AND RESTATED DEALERSHIP STOCK OPTION PLAN
A-1
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
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-4
SECTION 6. EXERCISE OF OPTIONS...........................................................................A-7
SECTION 7. TERMINATION OF OPTIONS........................................................................A-8
SECTION 8. ADJUSTMENTS...................................................................................A-8
SECTION 9. AMENDMENT OR TERMINATION OF PLAN..............................................................A-9
SECTION 10. ARBITRATION AND WAIVER OF JURY TRIAL..........................................................A-9
SECTION 11. MISCELLANEOUS.................................................................................A-9
SECTION 12. EFFECTIVE DATE AND TERMINATION DATE..........................................................A-11
</TABLE>
A-2
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AMENDED AND RESTATED
DEALERSHIP STOCK OPTION PLAN
OF
CAVALIER HOMES, INC.
SECTION 1. PURPOSE.
The purpose of the Amended and Restated 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 Year": The period of time beginning on
January 1 and ending on December 31 of each year.
(f) "Company": Cavalier Homes, Inc., a Delaware corporation,
and its successors and assigns.
(g) "Dealer Location": Each individual location at which an
Eligible Dealership is engaged in the business of selling only manufactured
homes produced by the Company or an affiliate of the Company to the general
public.
(h) "Eligible Dealership": Any corporation, partnership,
proprietorship, company, limited liability company, firm or other business
entity, other than an entity which is a Company retail sales center, 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 of the
Company 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 of the
Company.
(i) "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.
(j) "Fair Market Value":With respect to a Share as of any
date:
a) 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
b) 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.
(k) "Fiscal Quarters": The approximately three-month period of
time ending on the final day of each period designated as a fiscal quarter by
the Company.
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(l) "Newly Eligible Dealership": An Eligible Dealership the
eligibility of which becomes effective on or after April 1, 1998; provided,
however, a corporation, partnership, proprietorship, company, limited liability
company, firm or other business entity that was an Eligible Dealership prior to
April 1, 1998 cannot become a Newly Eligible Dealership, and a corporation,
partnership, proprietorship, company, limited liability company, firm or other
business entity can be considered a Newly Eligible Dealership only one time.
(m) "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.
(n) "Optionees": The parties to whom Options have been granted
under this Plan.
(o) "Plan Administrator": The person or persons administering
this Plan as determined pursuant to Section 4(a).
(p) "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 five hundred sixty-two thousand five hundred (562,500) 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. The Plan Administrator shall
serve at the pleasure of 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.
(i) Subject to Section 5(e), the Company shall
grant to each party which is an Eligible Dealership on the date that the grant
of Options is to be made, Options in the amounts and based upon the achievement
of annual sales of Contracts (as defined below) to CAC, as follows:
1) Upon the sale by the Eligible Dealership
of One Million Dollars ($1,000,000) of Contracts generated by
any individual Dealer Location to CAC during the Calendar
Year, the Company shall grant on the twenty-fifth (25th) day
following the close of the Calendar Quarter in which such
sales level was achieved, one thousand (1,000) Options;
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2) Upon the sale by the Eligible Dealership
of Two Million Dollars ($2,000,000) of Contracts generated by
any individual Dealer Location to CAC during the Calendar
Year, the Company shall grant on the twenty-fifth (25th) day
following the close of the Calendar Quarter in which such
sales level was achieved, an additional one thousand five
hundred (1,500) Options; and
3) Upon the sale by the Eligible Dealership
of Three Million Dollars ($3,000,000) of Contracts generated
by any individual Dealer Location to CAC during the Calendar
Year, the Company shall grant on the twenty-fifth (25th) day
following the close of the Calendar Quarter in which such
sales level was achieved, an additional two thousand five
hundred (2,500) Options.
Grants will be determined and Options awarded based upon sales of Contracts to
CAC on an individual Dealer Location basis and not based upon aggregated sales
of Contracts by an Eligible Dealership. The maximum award of Options in any
Calendar Year under this Section 5(a)(i) shall be five thousand (5,000) Options
per Dealer Location.
(ii) In addition to the Options which may be awarded
pursuant to subsection (i) above, the Company shall grant to the Eligible
Dealership having the individual Dealer Location that has the highest dollar
value annual sales of Contracts to CAC in the Calendar Year, five thousand
(5,000) Options. Such Option shall be granted on or before the twenty-fifth
(25th) day following the last day of the Calendar Year to which the Option grant
applies. The first grant pursuant to this subsection (ii) shall be made on or
before July 31, 1998 to the Eligible Dealership that had the individual Dealer
Location that sold the greatest number of Contracts to CAC in the Calendar Year
ended December 31, 1997.
(iii) With respect to Calendar Year ending December
31, 1998, awards of Options to be made under subsection (i) above shall be
determined based upon annual sales of Contracts to CAC on an individual Dealer
Location basis beginning on March 28, 1998. For Calendar Year ending December
31, 1998 only, the individual Dealer Location Contract sales requirements shall
be reduced from those set forth in subsection (i) above as follows:
1) Required sales of Contracts to CAC from
individual Dealer Location of Seven Hundred Fifty Thousand
Dollars ($750,000) to receive one thousand (1,000) Options;
2) Required sales of Contracts to CAC from
individual Dealer Location of One Million Five Hundred
Thousand Dollars ($1,500,000) to receive additional one
thousand five hundred (1,500) Options; and
3) Required sales of Contracts to CAC from
individual Dealer Location of Two Million Two Hundred Fifty
Thousand Dollars ($2,250,000) to receive additional two
thousand five hundred (2,500) Options.
In all other respects, subsection (i) shall govern awards in the Calendar Year
ending December 31, 1998; provided, however, between March 28, 1998 and June
26, 1998, in addition to Options granted under this Section 5(a)(iii), the
Company shall grant to each party which is an Eligible Dealership on the date
that the grant of Options is to be made, one hundred (100) Options for each
Contract which such Eligible Dealership sold to CAC between March 28, 1998 and
June 26, 1998.
(iv) With respect to a Newly Eligible Dealership, for
the year in which the Newly Eligible Dealership first becomes eligible to
receive awards of Options only, awards of Options to be made under subsection
(i) above shall be determined based upon annual sales of Contracts to CAC on an
individual Dealer Location basis beginning on the date the Newly Eligible
Dealership becomes eligible to receive awards of Options. For the year in which
the Newly Eligible Dealership first becomes eligible to receive awards of
Options only, the individual Dealer Location Contract sales requirements for the
Newly Eligible Dealership shall be reduced from those set forth in subsection
(i) above as follows:
1) A Newly Eligible Dealership shall receive
one thousand (1,000) Options if sales of Contracts to CAC from
an individual Dealer Location are equal to or
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exceed an amount which is the product of One Million Dollars
($1,000,000) multiplied by a fraction, the numerator of which
shall be the number of whole months of the year remaining in
the year from the date the Newly Eligible Dealership becomes
eligible to receive awards of Options, including the month the
Newly Eligible Dealership becomes a Newly Eligible Dealership,
and the denominator of which shall be twelve (12);
2) A Newly Eligible Dealership shall receive
an additional one thousand five hundred (1,500) Options if
sales of Contracts to CAC from an individual Dealer Location
are equal to or exceed an amount which is the product of Two
Million Dollars ($2,000,000) multiplied by a fraction, the
numerator of which shall be the number of whole months of the
year remaining in the year from the date the Newly Eligible
Dealership becomes eligible to receive awards of Options,
including the month the Newly Eligible Dealership becomes a
Newly Eligible Dealership, and the denominator of which shall
be twelve (12); and
3) A Newly Eligible Dealership shall receive
an additional two thousand five hundred (2,500) Options if
sales of Contracts to CAC from an individual Dealer Location
are equal to or exceed an amount which is the product of Three
Million Dollars ($3,000,000) multiplied by a fraction, the
numerator of which shall be the number of whole months of the
year remaining in the year from the date the Newly Eligible
Dealership becomes eligible to receive awards of Options,
including the month the Newly Eligible Dealership becomes a
Newly Eligible Dealership, and the denominator of which shall
be twelve (12).
In all other respects, subsection (i) shall govern awards to a Newly Eligible
Dealership during the year the Newly Eligible Dealership becomes eligible to
receive awards of Options.
(b) Notwithstanding the foregoing, all or any number of the
Options which would otherwise be granted to an Eligible Dealership 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 the day of grant. 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.
(c) 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.
(d) 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 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.
(e) Insufficient Shares. If the aggregate number of Options
which, pursuant to Section 5(a), are to be granted on the twenty-fifth (25th)
day following the last day of a Calendar Quarter or on or before the
twenty-fifth (25th) day following the last day of a Calendar Year 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:
a) the number of Shares then available pursuant
to Section 3; and
b) 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).
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(f) 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.
(g) 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 its or 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, in the case of an individual 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, in the case of
an individual 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:
a) 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
b) 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:
a) 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
b) 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.
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(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:
a) 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;
b) a merger, consolidation, reorganization,
liquidation or dissolution in which the Company does not survive; or
c) 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.
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SECTION 10. ARBITRATION AND WAIVER OF JURY TRIAL.
Because the performance of the transactions contemplated by
the Plan involve a substantial nexus with interstate commerce, any dispute,
controversy or claim of any kind or nature which has arisen or may arise between
the Company, CAC, any Eligible Dealership, or any Optionee, or any of their
successors, assigns, heirs, representatives, parent companies, divisions,
subsidiaries, affiliates, officers, directors, employees, agents, or contractors
(including any dispute, controversy or claim relating to the validity of this
arbitration provision), whether arising out of past, present or future dealings
between the Company, CAC, any Eligible Dealership, or any Optionee, or any of
their successors, assigns, heirs, representatives, parent companies, divisions,
subsidiaries, affiliates, officers, directors, employees, agents, or contractors
shall be governed by the Federal Arbitration Act and shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. Such arbitration
proceedings shall be held at the principal place of business of the Company or
at such other location as shall be designated by the Company, and shall be heard
by an arbitrator who is either a (i) retired judge or (ii) practicing attorney
who has conducted more than three (3) arbitrations during the preceding five (5)
years. The arbitrator shall have all powers provided by law, and may award any
legal or equitable relief, including, without limitation, money damages,
declaratory relief and injunctive relief; provided, however, that the arbitrator
shall have no power to award punitive damages or other damages not measured by
the prevailing party's actual damages. The Company, CAC, any Eligible
Dealership, or any Optionee, or any of their successors, assigns, heirs,
representatives, parent companies, divisions, subsidiaries, affiliates,
officers, directors, employees, agents, or contractors waive any right to a jury
trial with respect to any controversy between such parties, their successors,
assigns, heirs, representatives, parent companies, divisions, subsidiaries,
affiliates, officers, directors, employees, agents, and contractors.
SECTION 11. 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.
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(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
create a joint venture between any Eligible Dealership, on the one hand, and the
Company and CAC, on the other hand. 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 12. 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 September 6, 2005.
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APPENDIX B
CAVALIER HOMES, INC.
AMENDED AND RESTATED DEALERSHIP STOCK OPTION PLAN
DEALERSHIP 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 Amended and Restated Dealership Stock Option Plan (the "Plan") of
Cavalier Homes, Inc. (the "Company"), 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 Plan. After reviewing the Prospectus,
the undersigned desires that his/her dealership be eligible for options to be
granted pursuant to the terms of the Plan. This Plan does not constitute or
designate any Eligible Dealership (as such term is defined in the Plan) as an
agent of the Company or Cavalier Acceptance Corporation ("CAC"), and nothing
herein shall be interpreted to confer upon any Eligible Dealership 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 Plan 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 Dealership Participation Letter, either as an agent of the dealership or
dealership 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 Plan.
The undersigned acknowledges and agrees that the Company 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 Plan:
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
Designation of Option Recipient(s) (if other than Eligible 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%). Fractional percentages may not be designated and no grants of
options to purchase fractional shares will be made. Each option recipient
designated below, if any, must have received a copy of the Prospectus prior to
receiving option grants under the Plan.
B-1
<PAGE> 29
Recipient No. 1;
Name:___________________________________________________________________________
Address:________________________________________________________________________
================================================================================
Title:__________________________________________________________________________
S.S. # or Federal Tax ID #:_____________________________________________________
Percentage of Options Granted to be received by this Recipient:_________________
Recipient No. 2;
Name:___________________________________________________________________________
Address:________________________________________________________________________
================================================================================
Title:__________________________________________________________________________
S.S. # or Federal Tax ID #:_____________________________________________________
Percentage of Options Granted to be received by this Recipient:_________________
Recipient No. 3;
Name:___________________________________________________________________________
Address:________________________________________________________________________
================================================================================
Title:__________________________________________________________________________
S.S. # or Federal Tax ID #:_____________________________________________________
Percentage of Options Granted to be received by this Recipient:_________________
Note: The designation of the option recipient(s) may be changed at any time by
providing Cavalier Homes, Inc. with a supplemental Dealership Participation
Letter Completed, dated and signed by an authorized representative of the
dealership and/or the dealer principal(s). Grants of options, if any, will be
made to the recipient(s) as indicated on the last Dealership Participation
Letter received by Cavalier Homes, Inc. before the date of grant or, if no
designation has been received by Cavalier, participants will have no vested
right to receive option grants until such time as the options are actually
granted pursuant to the terms of the Plan.
B-2
<PAGE> 30
APPENDIX C
CAVALIER HOMES, INC.
QUESTIONS AND ANSWERS ABOUT
THE AMENDED AND RESTATED DEALERSHIP STOCK OPTION PLAN
C-1
<PAGE> 31
CAVALIER HOMES, INC.
QUESTIONS AND ANSWERS ABOUT
THE AMENDED AND RESTATED DEALERSHIP STOCK OPTION PLAN
Cavalier Homes, Inc. ("Cavalier") has launched a new era in dealer
principal relations ... and a new opportunity for you to build your personal net
worth. Our Amended and Restated Dealership Stock Option Plan (the "Plan") awards
you options to acquire Cavalier 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 annual contract volume.
Most importantly, these options are offered in addition to profits already
earned on the sale of the home.
QUESTIONS AND ANSWERS
Q. How do I become eligible to participate in this Plan?
A. Any dealership, other than a Company retail sales center, that sells
only homes manufactured by Cavalier and has been approved by Cavalier Acceptance
Corporation ("CAC") with the execution of the Qualifying Non-Recourse Time Sales
Agreement is eligible to participate in the Plan. Your local Cavalier Sales
Manager can furnish you with additional information on this Plan and get you
started.
Q. Does it cost anything to participate?
A. There is no cost for you to participate in the Plan. We are offering
the Plan to provide an additional incentive for you to sell us Contracts. The
benefits that you can derive from the Plan 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 Plan give you the right to buy
a specified number of shares of Cavalier 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 financial obligation for you when the
option is granted. 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. Of course, once you exercise your options, the
return or loss on your investment will depend on how much the Cavalier stock
price rises or falls in relation to the exercise price between the time you
exercise the options and the time you resell your shares.
Let's go through an example. Under the Plan, let's assume that you are
granted options to buy 1,000 shares of Cavalier stock at $10 per share. If the
price of Cavalier stock later increases to $20, by exercising your options and
selling the shares, you could realize a gain of $10,000. If the price of
Cavalier stock does not increase, your options would have no value, and you
presumably would not exercise them.
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.
Q. When will I get my stock options?
A. Stock options will be awarded to participating dealerships in a
stock option grant on the twenty-fifth (25th) day following the end of each
fiscal quarter in which an individual dealership location achieves goals for
sales of Contracts to CAC established under the Plan. Following the end of the
year, the individual dealership location that
C-2
<PAGE> 32
has the highest dollar amount of annual sales of Contracts to CAC during the
year will receive five thousand (5,000) Options.
Q. How many stock options will I receive?
A. The amount of grants of Options will be based upon annual sales of
Contracts from individual dealership locations to CAC. Generally, a
participating dealership will be awarded one thousand (1,000) Options for
selling to CAC $1 million of Contracts generated by an individual dealership
location during the calendar year. The participating dealership will receive an
additional one thousand five hundred (1,500) Options if $2 million of Contracts
generated by the individual dealership location during the calendar year are
sold to CAC and an additional two thousand five hundred (2,500) Options if the
individual dealership location generates and sells $3 million of Contracts to
CAC during the calendar year. During the period beginning March 28, 1998 and
ending December 31, 1998, the sales goals applicable to the individual dealer
locations are reduced to $750,000.00, $1.5 million and $2.25 million,
respectively. The Company will also award one hundred (100) Options for each
Contract sold by an Eligible Dealership to CAC during the period beginning March
28, 1998 and ending June 26, 1998. Additionally, the individual dealer location
sales goals for a Newly Eligible Dealership (as that term is defined in the
Plan) are prorated during the calendar year the Newly Eligible Dealership
becomes eligible to participate in the Plan. A maximum of five thousand (5,000)
Options will be awarded for sales of Contracts generated by any individual
dealership location in any calendar year. In addition to these option grants,
the individual dealership location that has the highest dollar amount of annual
sales of Contracts to CAC during the year will receive (5,000) Options. Thus, it
is possible that the individual dealership location having the highest dollar
amount of annual sales of Contracts to CAC could receive ten thousand (10,000)
Options during a year.
Q. How do I exercise my option?
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 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 stock. You may hold those shares of stock for as long as you wish.
If you do not want to pay the exercise price in cash and hold your
Cavalier 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 $10 and Cavalier stock was currently selling at $20, you could
profit through a cashless exercise program as follows:
<TABLE>
<S> <C>
Broker sells Cavalier stock obtained from
option exercise (1,000 x $20.00) $ 20,000
Broker pays exercise price to us (1,000 x $10.00) (10,000)
-----------
Cash to you from Broker, excluding transaction costs $ 10,000
===========
</TABLE>
Cavalier would be pleased to provide you with names of stock brokerage firms
having cashless exercise programs. Of course, you may incur brokerage
commissions and other transaction costs in connection with a cashless stock
exercise.
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 above
the option exercise price, you can realize a profit by exercising your option
and reselling your shares (assuming Cavalier's share price does not fall below
your option exercise price before you resell the shares). Cavalier's
shareholders, management and employees all have the same interest in Cavalier's
success.
C-3
<PAGE> 33
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.
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 $10.00 and Cavalier's stock increased in value at rates ranging from 25% to
100% over the three-year term of the options.
<TABLE>
<CAPTION>
Number Value if Cavalier Homes, Inc. Stock Increases
of Options 25% 50% 75% 100%
<S> <C> <C> <C> <C>
1,000 $ 2,500 $ 5,000 $ 7,500 $ 10,000
2,000 $ 5,000 $ 10,000 $ 15,000 $ 20,000
5,000 $ 12,500 $ 25,000 $ 37,500 $ 50,000
10,000 $ 25,000 $ 50,000 $ 75,000 $ 100,000
</TABLE>
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 financial obligations upon the grant of the options. If the price of
Cavalier stock does not increase, the stock options will have no value and you
can let them expire.
Q. What are the Federal Income Tax consequences of the Plan?
A. The grant of a stock option should 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. Such capital
gain or loss will be long-term, mid-term or short-term depending on your holding
period following the exercise of your Options (i.e., long-term if the holding
period is greater than 18 months, mid-term if the holding period is more than 12
months but not more than 18 months, and short-term if the holding period is 12
months or less).
You should consult with your tax advisor regarding the specific tax
consequences of this Plan 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. Can Cavalier take my options away?
A. Options previously granted generally cannot be canceled. However,
they are cancelable upon cessation of being an exclusive Cavalier dealer or if
Cavalier undergoes certain transactions like a change in control or merger
(please refer to the plan for more details about this). There are no credit
performance requirements or other conditions
C-4
<PAGE> 34
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 amend or cancel this Plan 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.
NOTICE
In certain states, Cavalier is not legally authorized to solicit or
accept offers of participation in the Plan. In those states, solicitation of
offers to participate in this Plan will be made by and through a broker-dealer
licensed to engage in such solicitations.
This brochure contains highlights of the Plan and does not purport to
be complete. For a complete description of the Plan, please review the
accompanying Prospectus covering the Plan and the Dealership Stock Options. A
copy of the Plan is also available and should be reviewed. In the event of any
discrepancy between this information and the information contained in the
official Plan documents, the official Plan documents shall govern in all cases.
This Plan does not constitute or designate any Eligible Dealer as an
agent of Cavalier or CAC, and nothing herein shall be interpreted to confer upon
any Eligible Dealer the right to hold himself as an agent of Cavalier or CAC for
any purpose.
To receive more information about our Exclusive Dealer Stock Option
Program, contact CAC at 1-800-844-4845.
C-5
<PAGE> 35
To receive more information about our Exclusive Dealer Stock Option
Program, contact CAC at 1-800-844-4845.
<PAGE> 36
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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information 2
Incorporation of Certain
Documents by Reference 3
Risk Factors 4
The Company 8
Description of the Plan 9
Federal Income Tax Consequences
13
Use of Proceeds 14
Plan of Distribution 14
Restrictions on Resale 15
Legal Matters 15
Experts 15
Amended and Restated
Dealership Stock Option Plan A-1
Dealer Participation Letter B-1
Questions and Answers C-1
</TABLE>
CAVALIER HOMES, INC.
Common Stock Issuable Upon
Exercise of Stock Options
Granted Under the Amended and Restated Dealership
Stock Option Plan of Cavalier
Homes, Inc.
and the
Grant of Related Stock Options
-----------------
562,500 Shares
$0.10 Par Value
-----------------
PROSPECTUS
, 1998
<PAGE> 37
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.
<TABLE>
<CAPTION>
ITEM AMOUNT
---- ------
<S> <C>
SEC Registration fee $ 1,561
Printing expenses 3,000*
Legal fees and expenses 4,000*
Accounting fees and expenses 2,000*
Miscellaneous 4,439*
----------
Total $ 15,000*
==========
</TABLE>
- ---------------------
*Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated By-laws of Registrant provide that Registrant
will indemnify its directors and officers in actions, suits or proceedings
(other than derivative actions) against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such director or officer if such director or officer acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of Registrant and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The By-laws give the
Registrant the power in its discretion to indemnify any employee or agent of the
Registrant in the same manner as the Registrant is required to indemnify its
officers and directors pursuant to the foregoing sentence. The By-laws provide
that the Registrant shall indemnify any director or officer of the Registrant
who is a party to any derivative action on behalf of the Registrant against
expenses (including attorneys' fees) actually and reasonably incurred by such
director or officer if such director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
Registrant, and except that no indemnification shall be made in respect of any
claim as to which such person shall have been judged to be liable to Registrant
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 that such person is
fairly and reasonably entitled to indemnity. The By-laws give the Registrant the
power in its discretion to indemnify any employee or agent of Registrant in the
same manner as the Registrant is required to indemnify its officers and
directors pursuant to the foregoing sentence. The By-laws further provide that
the Registrant may purchase and maintain insurance on behalf of its respective
directors, officers, employees or agents.
Section 145 of the Delaware General Corporation Law contains provisions
governing the indemnification of directors and officers by Delaware
corporations. The statute provides that a corporation has the power to indemnify
a person who was or is a party or is threatened to be made a party to a
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 or she 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, partner, trustee,
employee or agent of another foreign or domestic 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 or her in connection with the action, suit or proceeding, if the
person acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
a criminal action or proceeding, if the person had no reasonable cause to
believe his or her conduct was unlawful. The termination of an action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he
II-1
<PAGE> 38
or she reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to a criminal action or proceeding, had reasonable
cause to believe that his or her conduct was unlawful.
Indemnification of expenses (including attorneys' fees) and amounts
paid in settlement is permitted in derivative actions, except that
indemnification is not allowed for any claim, issue or matter in which such
person has been found liable to the corporation unless and to the extent that
the Delaware Court of Chancery or the court in which such action was brought
decides indemnification is proper. To the extent that any such person has been
successful on the merits or otherwise in defense of an action, suit or
proceeding, or in defense of a claim, issue or matter in the action, suit or
proceeding, he or she shall be indemnified against actual and reasonable
expenses (including attorneys' fees) incurred by him or her in connection with
the action, suit or proceeding, and any action, suit or proceeding brought to
enforce the mandatory indemnification provided under the Delaware General
Corporation Law.
A determination that the person to be indemnified meets the applicable
standard of conduct and an evaluation of the reasonableness of the expenses
incurred and amounts paid in settlement must be made by a majority vote of a
quorum of the board of directors who are not parties or threatened to be made
parties to the action, suit or proceeding, even though less than a quorum, or by
a committee of such directors designated by majority vote of such directors,
even though less than a quorum, or if there are no such directors, or such
directors so direct, by independent legal counsel in a written opinion, or by
the stockholders.
Under the Delaware General Corporation Law, a corporation may pay or
reimburse the reasonable expenses incurred by a director or officer who is a
party or threatened to be made a party to an action, suit or proceeding in
advance of final disposition of the proceeding if the person furnishes the
corporation a written undertaking to repay the advance if it is ultimately
determined that he or she was not entitled to be indemnified.
The indemnification provisions of the Delaware General Corporation Law
are not exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise. The indemnification
provided for under the Delaware General Corporation Law continues as to a person
who ceases to be a director or officer.
The Registrant's Amended and Restated Certificate of Incorporation, as
amended, provides that a director of the corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, as the same exists or may be hereafter amended, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Delaware General Corporation Law permits the Registrant to purchase
insurance on behalf of its directors and officers against liabilities arising
out of their positions with the Registrant, whether or not such liabilities
would be within the above indemnification provisions. Pursuant to this authority
and as authorized by its By-laws, the Registrant maintains such insurance on
behalf of its directors and officers.
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.
<TABLE>
<CAPTION>
Item Description
- ---- -----------
<S> <C>
*3(a) Cavalier Homes, Inc.'s Amended and Restated Certificate of
Incorporation, filed as Exhibit 3(a) to Cavalier Homes, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1993, and the
amendment thereto, filed as Exhibit 3(b) to Cavalier Homes, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 27, 1997.
*3(b) Cavalier Homes, Inc. Amended and Restated By-laws, filed as Exhibit
3(d) to Cavalier Homes, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 27, 1997, and the amendment thereto filed as Exhibit
3(e) to Cavalier Homes, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 26, 1997.
</TABLE>
II-2
<PAGE> 39
<TABLE>
<S> <C>
*3(c) The Certificate of Designation of Series A Junior Participating
Preferred Stock of Cavalier Homes, Inc. as filed with the Office of the
Delaware Secretary of State on October 24, 1996 and filed as Exhibit A
to Exhibit 4 to Cavalier Homes, Inc.'s Registration Statement on Form
8-A filed on October 30, 1996.
*4(a) Articles four, six, seven, eight and nine of the Company's Amended and
Restated Certificate of Incorporation, as amended, included in Exhibit
3(a) above.
*4(b) Article II, Sections 2.1 through 2.18; Article III, Sections 3.1 and
3.2; Article IV, Sections 4.1 and 4.3; Article VI, Sections 6.1 through
6.5; Article VIII, Sections 8.1 and 8.2; and Article IX of the
Company's Amended and Restated By-laws, included in Exhibit 3(b) above.
*4(c) Rights Agreement between Cavalier Homes, Inc. and ChaseMellon
Shareholder Services, L.L.C., filed as Exhibit 4 to Cavalier Homes,
Inc.'s Current Report on Form 8-K dated October 30, 1996.
5 Opinion of Bradley Arant Rose & White LLP as to the legality of the
securities being registered.
23(a) Consent of Bradley Arant Rose & White LLP (included in Exhibit 5).
23(b) Consent of Deloitte & Touche LLP.
24 Power of Attorney.
</TABLE>
- ----------------------
* Incorporated by reference.
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. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 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.
II-3
<PAGE> 40
(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.
II-4
<PAGE> 41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 this 17 day of June,
1998.
CAVALIER HOMES, INC.
By: /s/ David A. Roberson
-----------------------------------
David A. Roberson
President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ DAVID A. ROBERSON Director and June 17, 1998
- -------------------------------------------- Principal Executive Officer
David A. Roberson
/s/ MICHAEL R. MURPHY Director and Principal June 17, 1998
- -------------------------------------------- Financial and Accounting Officer
Michael R. Murphy
/s /BARRY B. DONNELL* Chairman of the Board and Director June 17, 1998
- --------------------------------------------
Barry B. Donnell
/s/ THOMAS A. BROUGHTON, III* Director June 17, 1998
- --------------------------------------------
Thomas A. Broughton, III
/s/ JOHN W LOWE* Director June 17, 1998
- --------------------------------------------
John W Lowe
/s/ LEE ROY JORDAN* Director June 17, 1998
- --------------------------------------------
Lee Roy Jordan
/s/ GERALD W. MOORE* Director June 17, 1998
- --------------------------------------------
Gerald W. Moore
</TABLE>
II-5
<PAGE> 42
<TABLE>
<S> <C> <C>
/s/ A. DOUGLAS JUMPER, SR.* Director June 17, 1998
- ---------------------------------------------
A. Douglas Jumper, Sr.
/s/ MIKE KENNEDY* Director June 17, 1998
- ---------------------------------------------
Mike Kennedy
* /s/ DAVID A. ROBERSON June 17, 1998
-------------------------------------------
David A. Roberson
Attorney in Fact
</TABLE>
II-6
<PAGE> 43
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page in Sequentially
Number Description Numbered Filing
------ ----------- ---------------
<S> <C> <C>
*3(a) Cavalier Homes, Inc.'s Amended and Restated Certificate of
Incorporation, filed as Exhibit 3(a) to Cavalier Homes, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1993, and the
amendment thereto, filed as Exhibit 3(b) to Cavalier Homes, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 27, 1997.
*3(b) Cavalier Homes, Inc. Amended and Restated By-laws, filed as Exhibit
3(d) to Cavalier Homes, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 27, 1997, and the amendment thereto filed as Exhibit
3(e) to Cavalier Homes, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 26, 1997.
*3(c) The Certificate of Designation of Series A Junior Participating
Preferred Stock of Cavalier Homes, Inc. as filed with the Office of the
Delaware Secretary of State on October 24, 1996 and filed as Exhibit A
to Exhibit 4 to Cavalier Homes, Inc.'s Registration Statement on Form
8-A filed on October 30, 1996.
*4(a) Articles four, six, seven, eight and nine of the Company's Amended and
Restated Certificate of Incorporation, as amended, included in Exhibit
3(a) above.
*4(b) Article II, Sections 2.1 through 2.18; Article III, Sections 3.1 and
3.2; Article IV, Sections 4.1 and 4.3; Article VI, Sections 6.1 through
6.5; Article VIII, Sections 8.1 and 8.2; and Article IX of the
Company's Amended and Restated By-laws, included in Exhibit 3(b) above.
*4(c) Rights Agreement between Cavalier Homes, Inc. and ChaseMellon Shareholder
Services, L.L.C., filed as Exhibit 4 to Cavalier Homes, Inc.'s Current
Report on Form 8-K dated October 30, 1996.
5 Opinion of Bradley Arant Rose & White LLP as to the legality of the
securities being registered.
23(a) Consent of Bradley Arant Rose & White LLP (included in Exhibit 5).
23(b) Consent of Deloitte & Touche LLP.
24 Power of Attorney.
</TABLE>
- ---------------------
* Incorporated by reference.
II-7
<PAGE> 1
EXHIBIT 5
June 18, 1998
Board of Directors
Cavalier Homes, Inc.
Highway 41 North and Cavalier Road
Addison, Alabama 35540
Gentlemen:
In our capacity as counsel for Cavalier Homes, Inc., a
Delaware corporation (the "Company"), we have examined the Amendment No.2 to
Registration Statement on Form S-3 (the "Registration Statement"), in form as
proposed to be filed by the Company with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933, as amended, relating to the
registration by the Company of up to 562,500 shares of common stock, par value
$0.10 per share (the "Common Stock"), and 562,500 rights to purchase Common
Stock (the "Rights") associated therewith, in connection with the provisions of
the Company's Amended and Restated Dealership Stock Option Plan. In this
connection, we have examined such records, documents and proceedings as we have
deemed relevant and necessary as a basis for the opinions expressed herein.
Upon the basis of the foregoing, we are of the opinion that
the shares of the Common Stock of the Company and the Rights referred to above
to be offered under the Registration Statement, as amended, have been duly
authorized and, when issued and paid for, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an Exhibit to the above-referenced
Registration Statement.
Very truly yours,
/s/ BRADLEY ARANT ROSE & WHITE LLP
<PAGE> 1
EXHIBIT 23(B)
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 2 to Registration Statement No. 33-62487 of Cavalier Homes, Inc. on Form S-3
of our report dated February 17, 1998 (March 13, 1998 as to the amendment to the
Credit Facility described in Note 5), appearing in the Annual Report on Form
10-K of Cavalier Homes, Inc. for the year ended December 31, 1997, and appearing
in the current report on Form 8-K dated January 15, 1998, as amended by Form
8-K/A dated March 16, 1998 and by Form 8-K/A dated March 17, 1998, and to the
reference to us under the heading "Experts" in the Prospectus, which is a part
of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Birmingham, Alabama
June 15, 1998
<PAGE> 1
EXHIBIT 24
STATE OF ALABAMA )
COUNTY OF WINSTON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints Michael R. Murphy
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign a second amendment to a registration statement
of Cavalier Homes, Inc. (the "Company") on Form S-3 relating to shares of the
Company proposed to be issued pursuant to the Company's Amended and Restated
Dealership Stock Option Plan, including all additional amendments to such
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and with any state securities commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ DAVID A. ROBERSON
-------------------------------
David A. Roberson
<PAGE> 2
STATE OF ALABAMA )
COUNTY OF WINSTON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
his true and lawful attorney-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign a second amendment to a registration statement of Cavalier
Homes, Inc. (the "Company") on Form S-3 relating to shares of the Company
proposed to be issued pursuant to the Company's Amended and Restated Dealership
Stock Option Plan, including all additional amendments to such registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission and with
any state securities commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Dated as of this 14th day of April, 1998.
/s/ MICHAEL R. MURPHY
------------------------------------
Michael R. Murphy
<PAGE> 3
STATE OF TEXAS )
COUNTY OF WICHITA )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
and Michael R. Murphy, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a second amendment
to a registration statement of Cavalier Homes, Inc. (the "Company") on Form S-3
relating to shares of the Company proposed to be issued pursuant to the
Company's Amended and Restated Dealership Stock Option Plan, including all
additional amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ BARRY B. DONNELL
--------------------------------
Barry B. Donnell
<PAGE> 4
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
and Michael R. Murphy, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a second amendment
to a registration statement of Cavalier Homes, Inc. (the "Company") on Form S-3
relating to shares of the Company proposed to be issued pursuant to the
Company's Amended and Restated Dealership Stock Option Plan, including all
additional amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ THOMAS A. BROUGHTON, III
------------------------------------------
Thomas A. Broughton, III
<PAGE> 5
STATE OF ALABAMA )
COUNTY OF WINSTON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
and Michael R. Murphy, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a second amendment
to a registration statement of Cavalier Homes, Inc. (the "Company") on Form S-3
relating to shares of the Company proposed to be issued pursuant to the
Company's Amended and Restated Dealership Stock Option Plan, including all
additional amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ JOHN W LOWE
-----------------------------------
John W Lowe
<PAGE> 6
STATE OF TEXAS )
COUNTY OF DALLAS )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
and Michael R. Murphy, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a second amendment
to a registration statement of Cavalier Homes, Inc. (the "Company") on Form S-3
relating to shares of the Company proposed to be issued pursuant to the
Company's Amended and Restated Dealership Stock Option Plan, including all
additional amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ LEE ROY JORDAN
-----------------------------
Lee Roy Jordan
<PAGE> 7
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
and Michael R. Murphy, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a second amendment
to a registration statement of Cavalier Homes, Inc. (the "Company") on Form S-3
relating to shares of the Company proposed to be issued pursuant to the
Company's Amended and Restated Dealership Stock Option Plan, including all
additional amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ GERALD W. MOORE
--------------------------------
Gerald W. Moore
<PAGE> 8
STATE OF MISSISSIPPI )
COUNTY OF PRENTISS )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
and Michael R. Murphy, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a second amendment
to a registration statement of Cavalier Homes, Inc. (the "Company") on Form S-3
relating to shares of the Company proposed to be issued pursuant to the
Company's Amended and Restated Dealership Stock Option Plan, including all
additional amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ A. DOUGLAS JUMPER, SR.
-----------------------------------
A. Douglas Jumper, Sr.
<PAGE> 9
STATE OF MISSISSIPPI )
COUNTY OF TISHOMINGO )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints David A. Roberson
and Michael R. Murphy, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a second amendment
to a registration statement of Cavalier Homes, Inc. (the "Company") on Form S-3
relating to shares of the Company proposed to be issued pursuant to the
Company's Amended and Restated Dealership Stock Option Plan, including all
additional amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 14th day of April, 1998.
/s/ MIKE KENNEDY
---------------------------------
Mike Kennedy
