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










 



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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