<PAGE>   1
                                                                    EXHIBIT 10.2


                              EMPLOYMENT AGREEMENT


         This EMPLOYMENT AGREEMENT (the "AGREEMENT") is effective as of May 30,
2001 by and among MERITAGE CORPORATION, a Maryland corporation ("PARENT"),
HANCOCK-MTH BUILDERS, INC., an Arizona corporation ("BUILDER BUYER"),
HANCOCK-MTH COMMUNITIES, INC., an Arizona corporation ("SALES BUYER" and
collectively with Builder Buyer, the "COMPANY") and GREG HANCOCK, an individual
("EMPLOYEE"). All capitalized terms used herein and not otherwise defined shall
have the same meaning as set forth in the Master Transaction Agreement by and
among Parent, the Company and others dated May 7, 2001 ("MASTER AGREEMENT").

                                    RECITALS

         1. Pursuant to the Master Agreement, the Company will acquire all or
substantially all of the assets of the Hancock Communities Business.

         2. Parent and the Company desire to obtain the consultation,
coordination and management services of Employee, and Employee desires to
provide such services to the Company, in accordance with the terms, conditions
and provisions of this Agreement.

         3. Parent and the Company require, as a condition to the Closing and
payment of the Purchase Price, that Employee provide to the Company the
non-competition and confidentiality protections set forth herein.

         In consideration of the covenants and mutual agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in reliance upon the representations,
covenants and mutual agreements contained herein, Parent, the Company and
Employee agree as follows:

         1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
the Company agrees to employ Employee as President of the Company, and Employee
agrees to diligently perform the duties associated with such position,
including, but not limited to the duties and responsibilities listed on EXHIBIT
A attached hereto. Employee will report to a Co-CEO of the Parent (initially
John Landon). Employee will devote substantially all of his business time,
attention and energies to the business of the Company and will comply with the
policies and guidelines established by the Company from time to time applicable
to its senior management executives. However, Parent and Company acknowledge
that Employee is engaged in homebuilding with an entity called Diamond Crest
Homes in Los Angeles County and San Bernardino County, California, and is also
an owner and engaged in certain real estate development activities (but not
homebuilding) at Sundance in Maricopa County, Arizona, Florence Boulevard in
Pinal County, Arizona, and with respect to the TASH, L.L.C. properties in
Maricopa County, Arizona (collectively, the "OUTSIDE ACTIVITIES"). Consequently,
Employee will, from time to time, devote some of his business time, attention
and energies to the Outside Activities. Parent and the Company consent to such
Outside Activities as, and in the geographic
<PAGE>   2
areas, currently conducted provided they do not interfere in any material
respect with Employee's primary duties and responsibilities to the Company.

         2. TERM. Employee will be employed under this Agreement for a term of
three (3) years beginning on the date hereof (the "EFFECTIVE DATE") and ending
on the third anniversary of the Effective Date, unless Employee's employment is
terminated earlier pursuant to Section 7 or extended at the sole discretion of
Parent.

         3. SALARY. The Company will pay Employee a base salary equal to
$395,000 per year, pro rated as appropriate ("BASE SALARY"), plus additional
compensation of $150,000 per year, pro rated, as appropriate, due and payable
within thirty days of each calendar year end, as compensation for his assistance
in operating the Meritage Phoenix division ("MERITAGE COMPENSATION"). Base
Salary will be payable bi-weekly in accordance with the payroll practices of the
Company as determined by Parent in effect from time to time. All of Employee's
compensation (but not benefits) under this Agreement will be subject to
deduction and withholding authorized or required by applicable law.

         4. INCENTIVE COMPENSATION. Employee will be entitled to incentive
compensation based on the achievement of certain performance targets specified
in EXHIBIT B hereto, pro rated as appropriate (the "Bonus"). The Bonus will be
due and payable within thirty days of each calendar year end.

         5. OPTION GRANT. Employee will be granted a four-year option to
purchase 15,000 shares of common stock of the Parent at an exercise price that
is equal to the market price of the Company's listed common stock as of the date
the option is granted, pursuant to the Stock Option Agreement in the form
attached as EXHIBIT C hereto, to be effective as of the date hereof, between the
Company and Employee. The option will be granted one day following the Closing
Date and will be subject to vesting at the rate of one-third (5,000 options) on
each of the next three anniversary dates of the Closing Date. Employee's option
rights will immediately vest in the event Employee is terminated by the Company
or Parent without Cause (as defined herein).

         6. EMPLOYEE BENEFITS. During the term of this Agreement, the Company
will provide to Employee such fringe benefits and other employee benefits as are
regularly provided by Parent for its senior management (e.g., health and
long-term disability insurance, paid vacation, etc.); PROVIDED, HOWEVER, that
nothing herein shall preclude the Company or Parent from amending or terminating
any employee benefit plans or programs.

         7. TERMINATION.

                  A. If Employee voluntarily terminates his employment with the
         Company or if the Company discharges Employee for Cause (as defined
         below), then the Company's obligations to pay the Base Salary and Bonus
         under this Agreement will terminate immediately, except for the payment
         of the Base Salary through the Date of Termination; PROVIDED, HOWEVER,
         that in the event that "Cause" is attributed to Employee's willful
         disregard of his primary duties to the Company, Employee must first be
         notified by the


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<PAGE>   3
         Company in writing and be given 10 days to cure such action or inaction
         to the reasonable satisfaction of the Company.

                  For purposes of this Agreement, "CAUSE" is defined to mean (i)
         Employee's wrongful misappropriation of any money or other assets or
         properties of the Company, or any subsidiary or affiliate of the
         Company, resulting, or intended to result, directly or indirectly, in
         substantial personal gain or enrichment to Employee; (ii) the
         conviction of Employee for any felony; (iii) engagement by Employee in
         conduct involving fraud, moral turpitude, dishonesty, gross misconduct,
         embezzlement, theft, or similar matters that are materially detrimental
         to the Company; or (iv) Employee's willful disregard of his primary
         duties to the Company.

                  B. If Employee's employment with the Company is terminated by
         the Company without Cause or as a result of Employee's death or
         Disability (as defined below), then the Company will be obligated to
         pay Employee's then current Base Salary and Meritage Compensation
         pursuant to Section 3 for one year and Bonus pursuant to Section 4 for
         the year in which termination occurs. For purposes hereof, "Disability"
         means a disability (as reasonably determined by the Company by its
         Board of Directors) that results in Employee being unable to fulfill
         his duties under this Agreement for 90 consecutive days. Nothing
         contained herein will affect or alter Employee's rights or privileges
         under legislation such as ERISA, Americans with Disabilities Act or any
         other existing or future federal or state employment related
         legislation

                  C. For purposes of this Agreement, "Date of Termination" shall
         mean (i) if the Agreement is terminated as a result of Employee's
         death, the date of Employee's death, (ii) if the Agreement is
         terminated by Employee, the date on which he delivers a notice of
         termination to the Company, (iii) if this Agreement is terminated by
         the Company for Disability, the date a notice of termination is given,
         or (iv) if Employee's employment is terminated by the Company for any
         other reason, the date on which a notice of termination is given to
         Employee; or (v) upon Employee's voluntary resignation.

         8. RESTRICTIVE COVENANT. In consideration of Employee's employment and
as an inducement for Company and Parent to enter into the Master Agreement,
Employee hereby agrees to the following:

                  A. For five years from the date of this Agreement ("FIRST
         RESTRICTION PERIOD"), Employee will not, directly or indirectly, either
         as an employee, partner, owner, lender, director, adviser or consultant
         or in any other capacity or through any entity:

                           (1) except for Outside Activities as, and in the
                  geographic areas, currently conducted, engage in any
                  homebuilding business within 100 miles of any Company or
                  Parent project provided, however, that Employee may own less
                  than 1% of any publicly traded homebuilder.


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<PAGE>   4
                           (2) recruit, hire or discuss employment with any
                  person who is, or within the six month period preceding the
                  date of such activity was, an employee of the Company or
                  Parent (other than as a result of a general solicitation for
                  employment);

                           (3) solicit any customer or supplier of the Company
                  or Parent for a Competing Business or otherwise attempt to
                  induce any such customer or supplier to discontinue its
                  relationship with the Company or Parent.

                  B. For three years from the date of this Agreement ("SECOND
         RESTRICTION PERIOD"), Employee will not, directly or indirectly, either
         as an employee, partner, owner, lender, director, adviser or consultant
         or in any other capacity or through any entity:

                           (1) except for Outside Activities as, and in the
                  geographic areas, currently conducted, engage in any home
                  sales, land banking, or land development businesses within 100
                  miles of any Company or Parent project provided, however, that
                  Employee may be a passive investor, owning up to 25%, of any
                  land banking or land development project;

                  C. Employee represents to the Company that he is willing and
         able to engage in businesses that are not competing businesses
         hereunder and that enforcement of the restrictions set forth in this
         Section 8 would not be unduly burdensome to Employee. Employee hereby
         agrees that the period of time provided for in this Section 8 and other
         provisions and restrictions set forth herein are reasonable and
         necessary to protect the Company and its successors and assigns in the
         use and employment of the goodwill of the business conducted by
         Employee. Employee further agrees that damages cannot compensate the
         Company in the event of a violation of this Section 8 and that, if such
         violation should occur, injunctive relief shall be essential for the
         protection of the Company and its successors and assigns. Accordingly,
         Employee hereby covenants and agrees that, in the event any of the
         provisions of this Section 7 shall be violated or breached, the Company
         shall be entitled to obtain injunctive relief against the party or
         parties violating such covenants, without bond but upon due notice, in
         addition to such further or other relief as may be available at equity
         or law. Obtainment of such an injunction by the Company shall not be
         considered an election of remedies or a waiver of any right to assert
         any other remedies which the Company has at law or in equity. No waiver
         of any breach or violation hereof shall be implied from forbearance or
         failure by the Company to take action thereof. The prevailing party in
         any litigation, arbitration or similar dispute resolution proceeding to
         enforce this provision will recover any and all reasonable costs and
         expenses, including attorneys' fees.

                  D. Employee further agrees that the period of time in which
         this Section 8 is in effect shall be extended for a period equal to the
         duration of any breach of this Section 8 by Employee.

                  E. Notwithstanding anything to the contrary in this Section 8,
         if Employee's employment with the Company is terminated by the Company
         without Cause, the


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<PAGE>   5
         restrictions of this Section 8 will extend only for the period in which
         Greg Hancock continues to receive compensation pursuant to Section 7B,
         and will thereafter terminate.

         9.       CONFIDENTIAL INFORMATION AND NON-DISCLOSURE.

                  A. It is understood that in the course of Employee's
employment with Company, Employee will become acquainted with Company
Confidential Information (as defined in subsection 9D below). Employee
recognizes that Company Confidential Information has been developed or acquired
at great expense, is proprietary to the Company, and is and shall remain the
exclusive property of the Company. Accordingly, Employee agrees that he will
not, without the express written consent of the Company, during Employee's
employment with the Company and thereafter or until such time as Company
Confidential Information becomes generally known, or readily ascertainable by
proper means, by persons unrelated to the Company, disclose to others, copy,
make any use of, or remove from Company's premises any Company Confidential
Information, except as Employee's duties may specifically require.

                  B. Employee acknowledges and agrees that a breach by Employee
of the provisions of this Section 9 will cause Company irreparable injury and
damage that cannot be reasonably or adequately compensated by damages at law.
Employee expressly agrees that Company shall be entitled, without posting any
bond, to injunctive or other equitable relief to prevent a threatened breach,
breach or continued breach of this Section 9 in addition to any other remedies
legally available to it.

                  C. Upon termination, whether for Cause or not, Employee shall
promptly deliver to the Company the originals and all copies of any and all
materials, documents, notes, manuals, or lists containing or embodying Company
Confidential Information, or relating directly or indirectly to the business of
the Company, in the possession or control of Employee.

                  D. Employee agrees to pay any and all reasonable costs and
expenses, including attorneys' fees, incurred by the Company in enforcing this
provision if it is determined that Employee breached this provision.

                  E. "COMPANY CONFIDENTIAL INFORMATION" shall mean confidential,
proprietary information or trade secrets of Company including without limitation
the following: (1) customer lists and customer information as compiled by
Company; (2) Company's internal practices and procedures; (3) Company's
financial condition and financial results of operation to the extent not
generally available to the public; (4) supply of materials information,
including sources and costs; (5) information relating to designs or other
subject matter related to Company's business, strategic planning, manufacturing,
engineering, purchasing, finance, marketing, promotion, distribution, and
selling activities, whether now existing, or acquired, developed, or made
available anytime in the future to Company; (6) all information which Employee
has a reasonable basis to consider confidential or which is treated by Company
as confidential; and (7) any and all information having independent economic
value to Company that is not generally known to, and not readily ascertainable
by proper means by, persons who can obtain economic value from its disclosure or
use. Employee acknowledges that such information is Company Confidential
Information.


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<PAGE>   6
         10. SEVERABILITY. In the event that a court of competent jurisdiction
determines that the First Restriction Period is unenforceable, the First
Restriction Period shall mean the period ending at least 3 years from the
Effective date. If such alternative Second Restriction Period remains
unenforceable, the Second Restriction Period shall mean the period ending at
least 2 years after the Effective Date. If that alternative Second Restriction
Period remains unenforceable, the Second Restriction Period shall mean the
period ending at least 1 year after the Effective Date. In the event that a
court of competent jurisdiction determines that the Second Restriction Period is
unenforceable, the Second Restriction Period shall mean the period ending at
least 2 years from the Effective date. If such alternative First Restriction
Period remains unenforceable, the Second Restriction Period shall mean the
period ending at least 1 year after the Effective Date. Additionally, if any
provision of this Agreement is held to be illegal, invalid or unenforceable
under any applicable law, then such provision will be deemed to be modified to
the minimum extent necessary to render it legal, valid and enforceable, and if
no such modification will render it legal, valid and enforceable, then this
Agreement will be construed as if not containing the provision held to be
invalid, and the rights and obligations of the parties will be construed and
enforced accordingly.

         11. INJUNCTIVE RELIEF. Employee acknowledges and agrees that the
Company would be irreparably harmed by any violation of Employee's obligations
under Sections 8 and 9 hereof and that, in addition to all other rights or
remedies available at law or in equity, the Company will be entitled to
injunctive and other equitable relief to prevent or enjoin any such violation.

         12. ASSIGNMENT BY COMPANY. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation or entity that assumes
this Agreement and all obligations and undertakings hereunder. Upon such
consolidation, merger or transfer of assets and assumption, the term "Company"
as used herein shall mean such other corporation or entity, as appropriate, and
this Agreement shall continue in full force and effect. Furthermore, the term
"Company" shall mean all joint ventures (50% or more owned by Company),
subsidiaries and parent companies of Company (whether corporate, partnership or
other form).

         13. ENTIRE AGREEMENT. This Agreement embodies the complete agreement of
the parties hereto with respect to the subject matter hereof and supersedes any
prior written, or prior or contemporaneous oral, understandings or agreements
between the parties that may have related in any way to the subject matter
hereof. This Agreement may be amended only in writing executed by Parent, the
Company and Employee.

         14. GOVERNING LAW. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement, shall be governed by and
construed in accordance with the internal laws, and not the law of conflicts, of
the State of Arizona.

         15. NOTICE. Any notice required or permitted under this Agreement must
be in writing and will be deemed to have been given when delivered personally or
by overnight courier service or three days after being sent by mail, postage
prepaid, at the address indicated below or to such changed address as such
person may subsequently give such notice of:


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<PAGE>   7
                  if to Parent or Company:   Meritage Corporation
                                             6613 North Scottsdale Road,
                                               Suite 200
                                             Scottsdale, Arizona 85250
                                             Attention: Chief Financial Officer

                  With a copy to:            Snell & Wilmer L.L.P.
                                             One Arizona Center
                                             Phoenix, Arizona 85004-0001
                                             Phone: (602) 382-6252
                                             FAX:  (602) 382-6070
                                             Attn:  Steven D. Pidgeon, Esq.

                  if to Employee:            Greg Hancock
                                             4369 N. 66th Street
                                             Scottsdale, Arizona 85251
                                             FAX: (480) ____________

                  With a copy to:            Titus, Brueckner & Berry, P.C.
                                             7373 N. Scottsdale Road, Suite B252
                                             Scottsdale, Arizona 85253
                                             Phone: (480) 483-9600
                                             FAX:  (480) 483-3215
                                             Attn:  Jon A. Titus, Esq.

         16. ARBITRATION. Any dispute, controversy, or claim, whether
contractual or non-contractual, between the parties hereto arising directly or
indirectly out of or connected with this Agreement, relating to the breach or
alleged breach of any representation, warranty, agreement, or covenant under
this Agreement, unless mutually settled by the parties hereto, shall be resolved
by binding arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA"). Any arbitration shall be
conducted by arbitrators approved by the AAA and mutually acceptable to Company
and Employee. All such disputes, controversies, or claims shall be conducted by
a single arbitrator, unless the dispute involves more than $50,000 in the
aggregate in which case the arbitration shall be conducted by a panel of three
arbitrators. If the parties hereto are unable to agree on the arbitrator(s),
then the AAA shall select the arbitrator(s). The resolution of the dispute by
the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable
by a court of competent jurisdiction under the Federal Arbitration Act. The
arbitrator(s) shall award compensatory damages to the prevailing party. The
arbitrator(s) shall have no authority to award consequential or punitive or
statutory damages, and the parties hereby waive any claim to those damages to
the fullest extent allowed by law. The arbitration award shall be in writing and
shall include a statement of the reasons for the award. The arbitration shall be
held in Phoenix, Arizona. The arbitrator(s) shall award reasonable attorneys'
fees and costs to the prevailing party.

         17. WITHHOLDING; RELEASE. Employee acknowledges and agrees that the
Company may withhold against payments due Employee any such amounts required
under the withholding laws, as well as any other amounts payable by Employee to
Company.


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<PAGE>   8
         The Company's obligation to make any payments hereunder, other than
salary payments and expense reimbursements through the date of termination,
shall be subject to receipt by the Company from Employee of a mutually agreeable
release.

         18. EARN-OUT. Nothing contained in this Agreement will modify the
Earn-Out payments payable by Parent and Company to Employee under the terms of
the Master Agreement.

         19. SUCCESSORS AND ASSIGNS This Agreement is solely for the benefit of
the parties and their respective successors, assigns, heirs and legatees.
Nothing herein shall be construed to provide any right to any other entity or
individual.



                [REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]



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         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.


                                       MERITAGE CORPORATION, a Maryland
                                       corporation


                                       By: ____________________________________
                                       Name:
                                       Title:


                                       HANCOCK-MTH BUILDERS, INC.,
                                       an Arizona corporation



                                       _________________________________________
                                       By:
                                       Its:

                                       HANCOCK-MTH COMMUNITIES, INC.,
                                       an Arizona corporation


                                       _________________________________________
                                       By:
                                       Its:



                                       EMPLOYEE

                                       _________________________________________
                                       Gregory S. Hancock

              [SIGNATURE PAGE TO GREG HANCOCK EMPLOYMENT AGREEMENT]


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<PAGE>   10
                                    EXHIBIT A

            GREG HANCOCK'S DUTIES AND RESPONSIBILITIES FOR CONTINUED
                      OPERATIONS OF "HANCOCK COMMUNITIES"

         The following include certain obligations and duties of Greg Hancock
under this Agreement:

         -        Operate the Company in a manner intended to continue its
                  profitability, with due regard to prudent operations and
                  general market conditions.

         -        Subject to the general oversight of the CEO designee and Board
                  of Directors of Parent, Greg Hancock shall have daily
                  operating responsibility for product design, marketing,
                  pricing, purchasing, personnel and routine legal and
                  accounting matters.

         -        Greg Hancock shall ensure that Buyer supplies Parent with
                  weekly closing and sales traffic reports and monthly operating
                  reports (by the 15th day of the following month).

         -        Greg Hancock shall assist Parent in the following
                  matters:

                  -        Annual Audit - Meritage Auditors;

                  -        Tax Returns - Meritage Tax Accountants

                  -        Obtaining Liability Insurance - Meritage Broker

                  -        Legal review

                  -        Review of major legal issues

                  -        Assist in financing, land banking and cash management
                           activities performed by Meritage

         -        Major business decisions shall require the prior written
                  consent and reasonable approval of Parent, including budgeting
                  and planning, new projects, land acquisition, financing, debt,
                  cash management and expansion into new product or market
                  areas;

         -        Parent shall manage liability, insurance, major legal issues,
                  audits, employee benefits and tax return presentation and
                  shall handle certain non-operating operations;


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<PAGE>   11
                                    EXHIBIT B


                         INCENTIVE COMPENSATION SCHEDULE


                  The Company shall pay Employee an annual performance based
cash bonus (the "Bonus") equal to $265,000 contingent upon Employee achieving
the following performance targets in that respective year:

         -        Target* is $12,494,000 Pre-Tax Net Income (as defined in
                  Master Agreement)

                  -        100% of Target = 100% bonus

                  -        90% - 99% of Target = 66% of bonus

                  -        89% -80% of Target = 33% of bonus

                  -        Lesser than 80% of Target = 0% of bonus



*        Amount represents budgeted pre-tax net income from May through December
         2001. Amount for 2002 and thereafter will be based on budgeted pre-tax
         net income for the year.


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<PAGE>   12
                                    EXHIBIT C

                             STOCK OPTION AGREEMENT

                        QUALIFIED STOCK OPTION AGREEMENT


THIS AGREEMENT, made this ____ day of _________, by and between Meritage
Corporation, a corporation (the "Company") and ________________ (the Optionee").


                                   WITNESSETH:

WHEREAS, the Optionee is now employed by the Company in a key capacity and the
Company desires to afford him/her the opportunity to acquire, or enlarge,
his/her stock ownership in the Company so that he may have a direct proprietary
interest in the Company's success;

NOW, THEREFORE, in consideration of the covenants and agreement herein
contained, the parties hereto hereby agree as follows:

1.       GRANT OF OPTION. Pursuant to the provisions of the Meritage Corporation
         Stock Option Plan (the "Plan") the Company hereby grants to the
         Optionee, subject to the terms and conditions of the Plan and subject
         further to the terms and conditions herein set forth, the right and
         option to purchase from the Company for cash all or any part of an
         aggregate of       shares of Common Stock ($.01 par value) of the
         Company at the purchase price of $    per share, such option to be
         exercised as hereinafter provided. Such options shall vest in equal
         increments of 20% of the total grant on        ,     and each of the
         four subsequent         dates thereafter.

2.       TERMS AND CONDITIONS. It is understood and agreed that the option
         evidenced hereby is subject to the following terms and conditions:

         a)       EXPIRATION DATE. The option shall expire on _________________,
                  ________.

3.       EXERCISE OF OPTION. This option may be exercised, to the extent
         exercisable by its terms, in whole or in part at anytime prior to the
         expiration thereof. Any exercise shall be accompanied by a written
         notice to the Company specifying the number of shares as to which the
         option is being exercised.

         a)       PAYMENT OF PURCHASE PRICE UPON EXERCISE. At the time of any
                  exercise, the purchase price shall be paid in cash to the
                  Company.

         b)       EXERCISE UPON DEATH OR TERMINATION OF EMPLOYMENT.

                  i)       If the Optionee shall cease to be employed by the
                           Company for any reason other than death, the Optionee
                           (except in the case of termination of employment in
                           the manner set forth in subparagraph (ii) of this
                           paragraph) may nevertheless exercise this Option to
                           the extent it is then exercisable within the three
                           month period following the date of such cessation of
                           employment, but not after the termination of such
                           three month period. If the Optionee shall die while
                           in the employ of the Company or within three months
                           following termination of such employment (except in
                           case of termination of employment in the manner set
                           forth in subparagraph (ii) of this paragraph) such
                           Option to the extent it is then exercisable may
                           nevertheless be exercised by the Optionee's personal
<PAGE>   13
                           representative within the three month period
                           following the date of death of the Optionee, but not
                           after the termination of such three month period.

                  ii)      If the Optionee ceases to be employed by the Company
                           by reason of his/her own volition (other than death)
                           or by reason of discharge by the Company for cause,
                           this Option shall expire to the extent that it is
                           unexercised at the time of such termination of
                           employment.

         c)       NON-TRANSFERABILITY. This option shall not be transferable
                  other than by will or by the laws of descent and distribution.
                  During the lifetime of Optionee, this option shall be
                  exercisable only by him/her.

         d)       ADJUSTMENTS. In the event of any change in the Common Stock of
                  the Company by reason of any stock dividend, recapitalization,
                  reorganization, merger, consolidated, split-up, combination or
                  exchange of shares, or of any similar change affecting the
                  Common Stock, then in any such event the number and kind of
                  shares subject to this option and their purchase price per
                  share shall be appropriately adjusted consistent with such
                  change in such manner as the Committee of the Plan may deem
                  equitable to prevent substantial dilution or enlargement of
                  the rights granted to Optionee hereunder. Any adjustment so
                  made shall be final and binding upon Optionee.

         e)       NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a
                  stockholder with respect to any shares of Common Stock subject
                  to this option prior to the date of issuance to him/her or a
                  certificate or certificates for such shares. No adjustment
                  shall be made for dividends or distributions or other rights
                  with respect to such shares for which the record date is prior
                  to the date upon which he shall become the holder of record
                  thereof.

         f)       NO RIGHT TO CONTINUED EMPLOYMENT. This option shall not confer
                  upon Optionee any right with respect to continuance of
                  employment by the Company or any Subsidiary, nor shall it
                  interfere in any way with the right of his/her employer to
                  terminate his/her employment at any time.

         g)       COMPLIANCE WITH LAW AND REGULATIONS. This option and the
                  obligation of the Company to sell and deliver shares
                  hereunder, shall be subject to all applicable Federal and
                  State laws, rules and regulations and to such approvals by any
                  government or regulatory agency as may be required.

4.       INVESTMENT REPRESENTATION. If there is no Registration Statement in
         effect covering the sale of the shares upon exercise, the Committee
         appointed pursuant to the Plan may require Optionee to furnish to the
         Company, prior to the issuance of any shares upon the exercise of all
         or any part of this option, an agreement (in such form as such
         Committee may specify) in which Optionee represents that the shares
         acquired by him/her upon exercise are being acquired for investment and
         not with a view to the sale or distribution thereof. The Committee may
         further require that the certificates for the shares acquired by the
         Optionee under this Option bear a special legend.

5.       OPTIONEE BOUND BY PLAN. Optionee hereby acknowledges receipt of a copy
         of the Plan and agrees to be bound by all the terms and provisions
         thereof.

6.       NOTICES. Any notice hereunder to the Company shall be addressed to it
         at its office, 6613 North Scottsdale Road, Suite 200, Scottsdale,
         Arizona 85250: Attention: Chief Financial Officer, and any notice
         hereunder to Optionee shall be addressed to him/her, either part may
         designate some other address at any time hereafter in writing.


<PAGE>   14
IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its
President or a Vice-President and Optionee has executed this Agreement, both as
of the day and year first above written.


                                  ______________________________________________
                                              (Authorized Signature)



                                  ______________________________________________
                                                Name of Individual