On April 27, 2009, Palm Harbor Homes, Inc. (the "Company") issued warrants (the "Warrants") to each of Capital Southwest Venture Corporation, Sally Posey and the Estate of Leroy Posey, Deceased (collectively, the "Lenders"), to purchase up to an aggregate of 429,939 shares of common stock of the Company (the "Common Stock") at a price of $3.14 per share, which was the closing price of the Company's Common Stock on the Nasdaq National Stock Exchange ("Nasdaq") on April 24, 2009. The Warrants were granted in connection with a loan made by the Lenders to the Company of an aggregate of $4,500,000 pursuant to senior subordinated secured promissory notes between the Company and each of the Lenders (collectively, the "Notes"). If the Notes are not repaid in full by June 29, 2009 (the "Due Date"), the aggregate number of shares of Common Stock that may be purchased pursuant to the Warrants may be increased by an amount equal to $450,000 divided by the closing price of the Common Stock on Nasdaq on the Due Date. The Warrants, which expire on April 24, 2019, contain anti-dilution provisions and other customary provisions. The Warrants were offered and sold to the Lenders in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933. Also on April 27, 2009, in connection with the Warrants and the Notes, the Company and the Lenders executed a Pledge and Security Agreement and an Intercreditor Agreement (together with the Warrants and the Notes, the "Loan Documents").

The description of the Loan Documents is a summary and does not purport to be complete, and is qualified in its entirety by reference to the copies of the Loan Documents attached as exhibits to this Current Report on Form 8-K.

(d) Exhibits.

Exhibit No.      Description
99.1             Common Stock Purchase Warrant dated April 24, 2009 issued to
                 Capital Southwest Venture Corporation by Palm Harbor Homes, Inc.

99.2             Common Stock Purchase Warrant dated April 24, 2009 issued to Sally
                 Posey by Palm Harbor Homes, Inc.

99.3             Common Stock Purchase Warrant dated April 24, 2009 issued to The
                 Estate of Leroy Posey, Deceased, by Palm Harbor Homes, Inc.

99.4             Senior Subordinated Secured Promissory Note dated April 24, 2009
                 issued to Capital Southwest Venture Corporation by Palm Harbor
                 Homes, Inc.

99.5             Senior Subordinated Secured Promissory Note dated April 24, 2009
                 issued to Sally Posey by Palm Harbor Homes, Inc.

99.6             Senior Subordinated Secured Promissory Note dated April 24, 2009
                 issued to The Estate of Leroy Posey, Deceased, by Palm Harbor
                 Homes, Inc.

99.7             Pledge and Security Agreement dated April 24, 2009 by and among
                 Palm Harbor Homes, Inc., Capital Southwest Venture Corporation,
                 Sally Posey and the Estate of Leroy Posey, Deceased

99.8             Intercreditor Agreement dated April 24, 2009 by and among Palm
                 Harbor Homes, Inc., Sally Posey and the Estate of Leroy Posey,
                 Deceased.