Exhibit 10.4

SECOND AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT
Effective January 1, 2007
(Original Date: February 1, 2000)

Dear Larry:

The Board of Directors believes that it is in the best interests of Meritage
Homes Corporation (“Meritage”), and its shareholders to take appropriate steps
to allay any concerns you (sometimes referred to herein as “Executive”) may have
about your future employment opportunities with Meritage and its subsidiaries
(Meritage and its subsidiaries are collectively referred to as the “Company”). 
As a result, the Board has decided to offer to you the benefits described below.

1.             Term of Agreement.

This Agreement is effective immediately and will continue in effect as long as
you are employed by Meritage, unless you and Meritage agree in writing to its
termination.

2.             Severance Payment.

If your employment with the Company is terminated without “Cause” (as defined in
Section 7) at any time within 90 days prior to or within two years following a
“Change of Control” (as defined in Section 5), you will receive the “Severance
Payment” described below.  You will also receive the Severance Payment if you
terminate your employment for “Good Reason” (as defined in Section 6) at any
time within two years following a Change of Control.

The Severance Payment equals the sum of (i) two times the higher of (x) your
annual base salary on the date of termination of your employment, or (y) your
annual base salary on the date preceding the Change of Control, and (ii) two
times the highest of the following:  (x) your average annual incentive
compensation for the two years prior to termination of your employment or
(y) your annual incentive compensation for the year preceding the year in which
the Change of Control occurred.  Notwithstanding the above, the Severance
Payment shall not exceed the lesser of (i) an amount that could be paid on
account of a Change of Control that is not subject to the imposition of any
excise tax under Code Section 4999 and is not otherwise subject to the
non-deductibility provisions of Code Section 280G, or (ii) $6 million.

The Severance Payment will be paid in one lump sum as soon as administratively
feasible following termination of your employment, but in no event more than 30
days following termination of your employment; provided that if you are a
“specified employee” (as defined in Section 409A of the Internal Revenue Code of
1986, as amended (“Code”)) and the payment does not comply with either the
short-term deferral or separation pay exception to the requirements of Code
Section 409A, as described in Prop. Treas. Reg. §§ 1.409A-1(b)(4) and
1.409A-1(b)(9)(iii) (or successor provisions in the final 409A regulations), or
any other exception to Section 409A, the above payment will be paid to you in
one lump sum on the first day any such payments may be made without incurring a
penalty pursuant to the Code along with accrued interest at the rate of interest
announced by Bank of America, Arizona from time to

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time as its prime rate (the “Prime Rate”) from the date that payments to you
should have been made under this Agreement.  If you die after your termination
of employment but before receiving the above payment, the Company will
distribute the benefits to your beneficiary as soon as administratively feasible
following the date of your death.

You are not entitled to receive the Severance Payment if your employment is
terminated for Cause, if you terminate your employment without Good Reason, or
if your employment is terminated by reason of your “Disability” (as defined in
Section 8(d)) or your death (unless death or Disability occurs after a Notice of
Termination).  In addition, you are not entitled to receive the Severance
Payment if your employment is terminated by you or the Company for any or no
reason prior to 90 days before a Change of Control occurs or more than two years
after a Change of Control has occurred.

In order to receive the Severance Payment, you must execute any mutual release
reasonably requested by the Company.

The Severance Payment will be paid to you without regard to whether you look for
or obtain alternative employment following termination of your employment with
the Company.

3.             Benefits Continuation.

If you are entitled to severance under Section 2, you will continue to receive
life, disability, accident and group health insurance benefits substantially
similar to those which you were receiving immediately prior to termination of
your employment for a period of 24 months following termination of your
employment.  Such benefits shall be provided on substantially the same terms and
conditions as they were provided prior to the Change of Control, provided that,
if coverage for such benefits is not available under the plans of the Company,
the Company shall pay you an amount in cash equal to the cost of your obtaining
such alternative coverage.

Benefits otherwise receivable pursuant to this Section also shall be reduced or
eliminated if and to the extent that you receive comparable benefits from any
other source (for example, another employer); provided, however, you shall have
no obligation to seek, solicit or accept employment from another employer in
order to receive such benefits.

4.             Stock Option Acceleration.

Notwithstanding anything in this Agreement or in any option agreement to the
contrary, upon a Change of Control, any stock options and restricted stock
granted to you shall accelerate and become vested without further action and, to
the extent permitted under the plan’s governing documents, Executive shall have
a period of one year from the date of termination to exercise such options.  In
addition, all restrictions on awards granted shall lapse.

5.             Change of Control Defined.

For purposes of this Agreement, the term “Change of Control” shall mean and
include the following transactions or situations:

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(a)           The acquisition of beneficial ownership, directly or indirectly,
of securities having 35% or more of the combined voting power of Meritage’s then
outstanding securities by any “Unrelated Person” or “Unrelated Persons” acting
in concert with one another.  For purposes of this Section, the term “Person”
shall mean and include any individual, partnership, joint venture, association,
trust, corporation, or other entity (including a “group” as referred to in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Act”)).  For
purposes of this Section, the term “Unrelated Person” shall mean and include any
Person other than the Company, or an employee benefit plan of the Company, or
any officer, director, or 10% or more shareholder of the Company as of the date
of this Agreement.

(b)           A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of Meritage to an Unrelated Person or Unrelated Persons acting in concert
with one another.

(c)           Any consolidation or merger of Meritage with or into an Unrelated
Person, unless immediately after the consolidation or merger the holders of the
common stock of Meritage immediately prior to the consolidation or merger are
the Beneficial Owners of securities of the surviving corporation representing at
least 50% of the combined voting power of the surviving corporation’s then
outstanding securities.

(d)           A change during any period of two consecutive years of a majority
of the members of the Board of Directors of Meritage for any reason, unless the
election, or the nomination for election by the Company’s shareholders, of each
director was approved by the vote of a majority of the directors then still in
office who were directors at the beginning of the period.

6.             Good Reason Defined.

For purposes of this Agreement, the term “Good Reason” shall include the
following circumstances:  (a) if the Company assigns you duties that are
materially inconsistent with, or constitute a material reduction of powers or
functions associated with, your position, duties, or responsibilities with the
Company, or a material adverse change in your titles, authority, or reporting
responsibilities, or in conditions of your employment, (b) if your base salary
is reduced, (c) if the Company fails to cause any successor to expressly assume
and agree to be bound by the terms of this Agreement, (d) any purported
termination by the Company of your employment for grounds other than for
“Cause,” (e) if the Company relieves you of your duties other than for “Cause,”
(f) if you are required to relocate to an employment location that is more than
fifty (50) miles from Scottsdale, Arizona, or (g) the Company materially
breaches its obligations under this Agreement and such breach is not cured
within a reasonable period of time after written notice from the Executive.  The
Company and you further acknowledge and agree that, if following a Change of
Control, you do not serve or are not serving as Chief Financial Officer of the
parent corporation of the surviving organization, you have experienced a
material reduction of powers or functions associated with your position, duties
or responsibilities with the Company such that Good Reason shall be deemed to
exist.

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7.             Cause Defined.

For purposes of this Agreement, the term “Cause” will exist if Executive, during
the term of this Agreement as set forth in Section 1, (i) has engaged in
malfeasance, willful or gross misconduct, or willful dishonesty that materially
harms the Company or its stockholders, (ii) is convicted of a felony that is
materially detrimental to the Company or its stockholders, (iii) is convicted of
or enters a plea of nolo contendere to a felony that materially damages the
Company’s financial condition or reputation or to a crime involving fraud; (iv)
is in material violation of the Company’s ethics/policy code, including breach
of duty of loyalty in connection with the Company’s business; (v) willfully
fails to perform duties under this Agreement or under the Second Amended and
Restated Employment Agreement between you and the Company effective as of
January 1, 2007 (“Employment Agreement”) after notice by the Board and an
opportunity to cure; (vi) impedes, interferes or fails to reasonably cooperate
with an investigation authorized by the Board or fails to follow a legal and
proper Board directive; and (vii) a restatement of financial results that occurs
as the result of your willful misconduct or gross negligence pursuant to the
Sarbanes-Oxley Act.

8.             Termination Notice And Procedure.

Any termination by the Company or you of your employment shall be communicated
by written Notice of Termination to you if such Notice of Termination is
delivered by the Company and to the Company if such Notice of Termination is
delivered by you, all in accordance with the following procedures:

(a)           The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances alleged to provide a basis for termination.

(b)           Any Notice of Termination by the Company shall be in writing
signed by the Chairman of the Compensation Committee (the “Committee”) of the
Board of Directors of the Company specifying in detail the basis for such
termination.

(c)           If the Company shall furnish a Notice of Termination for Cause and
you in good faith notify the Company that a dispute exists concerning such
termination within the 30-day period following your receipt of such notice, you
may elect to continue your employment (or you may be placed on paid
administrative leave, at the Company’s option), during such dispute.  If it is
thereafter determined that (i) Cause did exist, your “Termination Date” shall be
the earlier of (A) the date on which the dispute is finally determined, either
by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 15, or (B) the date of your death; or
(ii) Cause did not exist, your employment shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.  A determination of Cause shall be made by a
majority of the members of the Board only after the Executive and his counsel,
if any, have been giving an opportunity to meet with the Board in advance of the
Board’s vote on the matter.

(d)           If the Company shall furnish a Notice of Termination by reason of
Disability and you in good faith notify the Company that a dispute exists
concerning such

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termination within the 30-day period following your receipt of such notice, you
may elect to continue your employment during such dispute (or you may be placed
on paid administrative leave, at the Company’s option).  The dispute relating to
the existence of a Disability shall be resolved by the opinion of the licensed
physician selected by Meritage, provided, however, that if you do not accept the
opinion of the licensed physician selected by Meritage, the dispute shall be
resolved by the opinion of a licensed physician who shall be selected by you;
provided further, however, that if Meritage does not accept the opinion of the
licensed physician selected by you, the dispute shall be finally resolved by the
opinion of a licensed physician selected by the licensed physicians selected by
Meritage and you, respectively.  If it is thereafter determined that (i) a
Disability did exist, your Termination Date shall be the earlier of (A) the date
on which the dispute is resolved, or (B) the date of your death, or (ii) a
Disability did not exist, your employment shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.  For purposes of this Agreement, “Disability” shall
be given the meaning ascribed to such term in your Employment Agreement at the
time the Disability determination is being made.

(e)           If you in good faith furnish a Notice of Termination for Good
Reason and the Company notifies you that a dispute exists concerning the
termination within the 30-day period following the Company’s receipt of such
notice, you may elect to continue your employment (or you may be placed on paid
administrative leave with pay, at the Company’s option), during such dispute. 
If it is thereafter determined that (i) Good Reason did exist, your Termination
Date shall be the earlier of (A) the date on which the dispute is finally
determined, either by mutual written agreement of the parties or pursuant to the
alternative dispute resolution provisions of Section 15, (B) the date of your
death, or (C) one day prior to the second anniversary of a Change of Control,
and your payments hereunder shall reflect events occurring after you delivered
Notice of Termination; or (ii) Good Reason did not exist, your employment shall
continue after such determination as if you had not delivered the Notice of
Termination asserting Good Reason.  The Company shall be given an opportunity to
cure the event causing Good Reason within the 15-day period following
Executive’s Notice of Termination for Good Reason.

(f)            If you do not elect to continue employment pending resolution of
a dispute regarding a Notice of Termination, and it is finally determined that
the reason for termination set forth in such Notice of Termination did not
exist, if such notice was delivered by you, you shall be deemed to have
voluntarily terminated your employment other than for Good Reason and if
delivered by the Company, the Company will be deemed to have terminated you
other than by reason of Disability or with Cause.

9.             Successors.

Meritage will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of Meritage or any of its subsidiaries to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Meritage or any subsidiary would be required to perform it if no such succession
had taken place.  Failure of Meritage to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a material breach of
this Agreement by Meritage and shall entitle you to compensation in the same
amount and on the

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same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date.  As used in this
agreement “Company” shall mean Company, as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.

10.           Binding Agreement.

This Agreement shall inure to the benefit of and be enforceable by you and your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  If you should die while any amount would
still be payable to you hereunder had you continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to your devisee, legatee or other designee or, if there is no
such designee, to your estate.

11.           Notice.

For purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as shown in the Employment
Agreement, provided that all notices to Meritage shall be directed to the
attention of the Chairman of the Committee with a copy to the Secretary of
Meritage, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of a change of
address shall be effective only upon receipt.

12.           Miscellaneous.

No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by you and
the Chairman of the Committee.  No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.  No agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Arizona without regard to its conflicts of law
principles.  All references to sections of the Act or the Code shall be deemed
also to refer to any successor provisions to such sections.  Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law.  The obligations of Meritage that arise prior
to the expiration of this Agreement shall survive the expiration of the term of
this Agreement.

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13.           Validity.

The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

14.           Counterparts.

This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.

15.           Alternative Dispute Resolution.

All claims, disputes and other matters in question between the parties arising
under this Agreement shall, unless otherwise provided herein (such as in Section
8), be resolved in accordance with the arbitration or mediation provisions
included in your Employment Agreement.

16.           Expenses and Interest.

If a good faith dispute shall arise with respect to the enforcement of your
rights under this Agreement or if any arbitration or legal proceeding shall be
brought in good faith to enforce or interpret any provision contained herein, or
to recover damages for breach hereof, the prevailing party shall recover any
reasonable attorneys’ fees and necessary costs and disbursements incurred as a
result of such dispute or legal proceeding, and prejudgment interest on any
money judgment obtained calculated at the Prime Rate from the date that payments
were or should have been made under this Agreement.

17.           Payment Obligations Absolute.

Meritage’s obligation to pay you the compensation and to make the arrangements
in accordance with the provisions herein shall be absolute and unconditional and
shall not be affected by any circumstances.  All amounts payable by Meritage in
accordance with this Agreement shall be paid without notice or demand.  If
Meritage has paid you more than the amount to which you are entitled under this
Agreement, Meritage shall have the right to recover all or any part of such
overpayment from you or from whomsoever has received such amount.

18.           Effect on Employment Agreement.

This Agreement supplements, and does not replace, your Employment Agreement.  If
there is any conflict between the provisions of this Agreement and your
Employment Agreement, such conflict shall be resolved so as to provide the
greater benefit to you.  However, the Company does not intend to provide
duplicative payments, severance or benefits with in the Employment Agreement or
under any employee severance plan to the extent such a plan exists or is
subsequently implemented by the Company.  As a result, benefits otherwise
receivable pursuant to this Agreement shall be reduced or eliminated if and to
the extent that you receive severance, consulting or non-competition payments or
benefits pursuant to the Employment

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Agreement, including, but not limited to, payments or benefits pursuant to
Section 6 of the Employment Agreement, or pursuant to an employee severance
plan.

19.           Entire Agreement.

This Agreement, your Employment Agreement and your option grant documents set
forth the entire agreement between you and the Company concerning the subject
matter discussed in this Agreement and supersede all prior agreements, promises,
covenants, arrangements, communications, representations, or warranties, whether
written or oral, by any officer, employee or representative of the Company.  Any
prior agreements or understandings with respect to the subject matter set forth
in this Agreement are hereby terminated and canceled.  Notwithstanding the
foregoing, nothing in this Agreement is intended to affect any previous
agreements pertaining to the grant of options to the Executive, including
without limitation, provisions set forth in Executive’s prior Change of Control
Agreement providing for acceleration upon a change of control.

20.           Deferral of Payments.

To the extent that any payment under this Agreement, when combined with all
other payments received during the year that are subject to the limitations on
deductibility under Code Section 162(m), exceeds the limitations on
deductibility under Code Section 162(m), such payment shall be deferred to the
next calendar year.  The determination of deductibility under the preceding
sentence shall be made by legal counsel, certified public accountants, and/or
executive compensation consultants selected by Meritage but who shall be
reasonably acceptable to you.  Meritage will notify you as soon as it becomes
aware of specific information that may cause it to exercise its discretion to
require deferral and shall provide you with access to all information on which
its decision is based.  If the date for payment of any amount is deferred
pursuant to this Section 20, then Meritage will transfer an amount in cash equal
to the deferred amount to a trust which shall be in substantially the same form
as is set forth in Revenue Procedure 92-64, 1992-2 C.B. 422.  The terms of the
trust, including the designation of trustee, shall be determined by Meritage but
shall be reasonably acceptable to you.  All deferred amounts held in the trust
shall bear interest at the Prime Rate from the date that the payment would have
been made to you but for this Section 20 to the date that such payment is
actually made to you.  Payment of the deferred amounts shall be made no later
than the 30th day after the end of the calendar year in which the deferral
occurs, provided that such payment, when combined with any other payments
subject to the Section 162(m) limitations received during the year, does not
exceed the limitations on deductibility under Code Section 162(m).

21.           Parties.

This Agreement is an agreement between you and Meritage and all successors and
assigns of Meritage.  In certain cases, though, obligations imposed upon
Meritage may be satisfied by a subsidiary of Meritage.  Any payment made or
action taken by a subsidiary of Meritage shall be considered to be a payment
made or action taken by Meritage for purposes of determining whether Meritage
has satisfied its obligations under this Agreement.

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If you would like to participate in this special benefits program, please sign
and return the extra copy of this letter which is enclosed.

 

Sincerely,

 

 

 

MERITAGE HOMES CORPORATION

 

 

 

 

 

By:

/s/ Ray Oppel

 

Name:

Ray Oppel

 

Its:

Exec. Compensation Committee Chairman

 

Enclosure

ACCEPTANCE

I hereby accept the offer to participate in this special benefits program and I
agree to be bound by all of the provisions noted above.

LARRY W. SEAY

 

 

 

/s/ Larry W. Seay

 

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