CAVALIER HOMES INC
REVOLVING PROMISSORY NOTE
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>revolvingnoteexhibit10y.txt
<DESCRIPTION>REVOLVING PROMISSORY NOTE
<TEXT>




                            REVOLVING PROMISSORY NOTE



$50,000,000.00                                             Birmingham, Alabama
                                                              December 6, 2005


         FOR VALUE RECEIVED, the undersigned, CAVALIER HOMES, INC., a Delaware
corporation, CAVALIER PROPERTIES, INC., a Delaware corporation, CAVALIER HOME
BUILDERS, LLC, a Delaware limited liability company, CAVALIER REAL ESTATE CO.,
INC., a Delaware corporation, QUALITY HOUSING SUPPLY, LLC, a Delaware limited
liability company, CIS FINANCIAL SERVICES, INC., an Alabama corporation f/k/a
"Cavalier Acceptance Corporation", BRC COMPONENTS, INC., an Alabama corporation,
THE HOME PLACE, LLC, an Alabama limited liability company, and RIDGE POINTE
MANUFACTURING, LLC, an Alabama limited liability company (jointly and severally,
the "Borrower"), promises to pay to the order of FIRST COMMERCIAL BANK (the
"Bank"), an Alabama banking corporation, at the principal office of the Bank in
Birmingham, Alabama, or at such other place as the holder of this note may from
time to time designate in writing, a principal sum not to exceed Fifty Million
and No/100 Dollars ($50,000,000.00), or so much thereof as may have been
advanced to Borrower from time to time and not repaid by the Borrower pursuant
to the terms hereof, together with interest on the unpaid principal amount of
such advances, as provided in that certain Amended and Restated Revolving and
Term Loan Agreement between Borrower and Bank dated as of March 31, 2000, as
amended, (the "Loan Agreement"). The principal amount of such advances shall
bear interest from the date of each such advance or as otherwise provided in the
Loan Agreement. Capitalized terms used herein but not otherwise defined herein
shall have the respective meanings ascribed to them in the Loan Agreement.

         Interest provided for herein shall be due and payable monthly as
provided in the Loan Agreement, and continuing on the same day of each month
thereafter through and until such time as there remains no unpaid principal
balance on the amounts advanced to the Borrower hereunder or under the Loan
Agreement. Principal and interest shall be payable in lawful money of the United
States of America. Interest on the principal amount shall be calculated on the
basis of a 360-day year by multiplying the principal amount by the per annum
rate set forth above, multiplying the product thereof by the actual number of
days elapsed, and dividing the product so obtained by 360. The term "Prime Rate"
means the rate of interest designated by the Bank periodically as its Prime Rate
but is not necessarily the lowest borrowing rate available to the Bank's
corporate customers. Time is of the essence with respect to the amounts due
hereunder.

         Until the Loan Termination Date, the Borrower may borrow, repay and
reborrow the principal sum of this Note, all in accordance with the terms of the
Loan Agreement but only in such amounts and to the extent therein provided. On
the Loan Termination Date, or such earlier date as may be provided in the Loan
Agreement, this note shall mature and all principal, interest, and other fees
and charges due with respect hereto, if not previously paid, shall be
immediately due and payable.

<PAGE>

         Borrower shall have the right at any time to prepay this Note, in whole
or in part as provided in the Loan Agreement, but only on the terms and
conditions therein provided. Failure of Borrower to make payments when and as
due shall result in a Late Charge as provided in the Loan Agreement.

         This note is referred to in and is entitled to the benefits of the Loan
Agreement and is secured by the security set forth and/or referred to in said
Loan Agreement and by the guaranty agreements referenced therein. Funds
disbursed hereunder shall be disbursed in accordance with the Loan Agreement.

         The principal sum evidenced by this Note, together with accrued but
unpaid interest, shall be due and payable on the Loan Termination Date Date, but
in any event at the option of Bank upon the occurrence of any Event of Default
as provided in the Loan Agreement.

         The acceptance by the Bank of any payment or payments due hereunder, or
any part of such payment, after any default shall not constitute a waiver of
such default by the Bank.

         With respect to the amounts due under this note, the Borrower waives
the following:

1. All rights of exemption of property from levy or sale under execution or
other process for the collection of debts under the Constitution or laws of the
United States or any state thereof;

2. Demand, presentment, protest, notice of dishonor, notice of non-payment, suit
against any party, diligence in collection, and all other requirements necessary
to charge or hold the undersigned liable on any obligations hereunder; and

3. Any further receipt for or acknowledgment of any collateral now or hereafter
deposited as security for the obligations hereunder.

         Regardless of any provision contained in this Note or any of the Loan
Documents, in no event shall the aggregate of all amounts that are contracted
for, charged or collected pursuant to the terms of this Note or any of the Loan
Documents, and that are deemed interest under Applicable Law, exceed the maximum
rate permitted by any applicable law (the "Maximum Rate"). No provision of this
Note or in any of the Loan Documents or the exercise by Bank of any right
hereunder or under any Loan Document or the prepayment by Borrower of any of the
Obligations or the occurrence of any contingency whatsoever, shall entitle Bank
to charge or receive, or to require Borrower to pay, interest or any amounts
deemed interest by Applicable Law (such amounts being referred to herein
collectively as "Interest") in excess of the Maximum Rate, and all provisions
hereof or in any Loan Document which may purport to require Borrower to pay
Interest exceeding the Maximum Rate shall be without binding force or effect to
the extent only of the excess of Interest over such Maximum Rate. Any Interest
charged or received in excess of the Maximum Rate ("Excess"), shall be
conclusively presumed to be the result of an accident and bona fide error, and
shall, to the extent received by Bank, at the option of Bank, either be applied
to reduce the principal amount of the Obligations or returned to Borrower. The
right to accelerate the maturity of any of the Obligations does not include the
right to accelerate unaccrued interest, and no such interest will be collected
by Bank. All monies paid to Bank hereunder or under any of the Loan Documents
shall be subject to any rebate of unearned interest as and to the extent

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<PAGE>

required by Applicable Law. By the execution of this Note, Borrower covenants
that (i) the credit or return of any Excess shall constitute the acceptance by
Borrower of such Excess, and (ii) Borrower shall not seek or pursue any other
remedy, legal or equitable, against Bank, based in whole or in part upon
contracting for, charging or receiving any Interest in excess of the Maximum
Rate. For the purpose of determining whether or not any Excess has been
contracted for, charged or received by Bank, all interest at any time contracted
for, charged or received from Borrower in connection with this Note shall, to
the extent permitted by Applicable Law, be amortized, prorated, allocated and
spread in equal parts throughout the full term of the Obligations. Borrower and
Bank shall, to the maximum extent permitted under Applicable Law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as Interest and (ii) exclude voluntary prepayments and the effects thereof. The
provisions of this Section shall be deemed to be incorporated into each Loan
Document (whether or not any provision of this Section is referred to therein).

         Borrower and Bank hereby waive any right to trial by jury on any claim,
counterclaim, setoff, demand, action or cause of action (a) arising out of or in
any way pertaining or relating to this Note, the Loan Agreement, any Loan
Document, or any other instrument, document or agreement executed or delivered
in connection with this Note or (b) in any way connected with or pertaining or
related to or incidental to any dealings of the parties hereto with respect to
this Note, the Loan Agreement, any Loan Document, or any other instrument,
document or agreement executed or delivered in connection herewith or in
connection with the transactions related thereto or contemplated thereby or the
exercise of either party's rights and remedies thereunder, in all of the
foregoing cases whether now existing or hereafter arising, and whether sounding
in contract, tort or otherwise. Borrower and Bank agree that either or both of
them may file a copy of this paragraph with any court as written evidence of the
knowing, voluntary and bargained agreement between the parties irrevocably to
waive trial by jury, and that any dispute or controversy whatsoever between them
shall instead be tried in a court of competent jurisdiction by a judge sitting
without a jury.

         The Bank shall not by any act, delay, omission, or otherwise be deemed
to have waived any of its rights or remedies, and no waiver of any kind shall be
valid unless in writing and signed by the Bank. All rights and remedies of the
Bank under the terms of this note and under applicable statutes or rules of law
shall be cumulative and may be exercised successively or concurrently. The
Borrower agrees that there are no defenses, equities or set offs in respect to
the obligations set forth herein. The obligations of the Borrower hereunder
shall be binding upon and enforceable against the Borrower's successors and
assigns. The obligations of each person named as Borrower herein shall be joint
and several obligations of all such persons. This note shall be governed by, and
construed in accordance with, the laws of the State of Alabama. Any provision in
this note which may be unenforceable or invalid under any law shall be
ineffective to the extent of such unenforceability or invalidity without
affecting the enforceability or validity of any other provision hereof. Any
notice required to be given shall be deemed given if mailed, postage prepaid, to
the Borrower at the address set forth in the Loan Agreement.

         This Note represents the renewal and modification of the indebtedness
of Borrower to Bank described in the Loan Agreement. This Note shall relate back
to the execution of the original Note and shall have all the rights and
privileges accorded thereto under the Loan Agreement. Nothing contained herein

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<PAGE>

shall be deemed to be or operate as a novation or an accord and satisfaction of
Borrower's indebtedness to Bank

         IN WITNESS WHEREOF, each Borrower has executed this instrument as of
the day and year first above written.

                                   BORROWERS:

                                   CAVALIER HOMES, INC., a Delaware corporation


                                   By:
                                      -----------------------------------------
                                                    Michael R. Murphy
                                                   Its Vice-President


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<PAGE>



                                   CAVALIER PROPERTIES, INC., a
                                   Delaware corporation


                                   By:
                                      -----------------------------------------
                                                    Michael R. Murphy
                                                     Its President



                                   CAVALIER HOME BUILDERS, LLC, a Delaware
                                   limited liability company


                                   By:
                                       ----------------------------------------
                                                    Michael R. Murphy
                                                     Its President


                                   CAVALIER REAL ESTATE CO., INC., a
                                   Delaware corporation


                                   By:
                                       ----------------------------------------
                                                    Michael R. Murphy
                                                       Its President


                                   QUALITY HOUSING SUPPLY, LLC, a Delaware
                                   limited liability company


                                   By:
                                      -----------------------------------------
                                                    Michael R. Murphy
                                                   Its Vice-President


                                   CIS FINANCIAL SERVICES, INC., an
                                   Alabama corporation


                                   By:
                                     -----------------------------------------
                                                    June Martin
                                                   Its Secretary

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<PAGE>



                                   BRC COMPONENTS, INC., an Alabama corporation


                                   By:
                                      -----------------------------------------
                                                    Michael R. Murphy
                                                     Its Secretary

                                   THE HOME PLACE, LLC, an Alabama
                                   limited liability company


                                   By:
                                      -----------------------------------------
                                                    Michael R. Murphy
                                                   Its Vice-President


                                   RIDGE POINTE MANUFACTURING, LLC,
                                   an Alabama limited liability company


                                   By:
                                      -----------------------------------------
                                                    Michael R. Murphy
                                                  Its Managing Member



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