Exhibit 10.3


 


DEFERRED BONUS AGREEMENT


2004 AWARD YEAR


 


THIS
DEFERRED BONUS AGREEMENT (the “Agreement”) is entered into as of May 9, 2005,
by Larry W. Seay (the “Executive”) and Meritage Homes Corporation, a Maryland
corporation (the “Company”).


1.             PURPOSE.


The
purpose of this Agreement is to reward Executive for his service for the
Company.


2.             COMPANY CONTRIBUTION.


The Company agrees
to make a “Company Contribution” of $47,000 to the Deferred Bonus Account
established pursuant to Section 3 effective as of December 31, 2004.  The purpose of this Company Contribution is
to further compensate Executive for his many years of service to the Company as
a tool to retain the valuable services of the Executive.


3.             DEFERRED COMPENSATION ACCOUNT.


The
Company shall maintain a bookkeeping account (the “Deferred Bonus Account”) to
which it shall credit the Company Contribution in accordance with
Section 2.  Interest shall be
credited to the Deferred Bonus Account in accordance with Section 5,
below.  The Deferred Compensation Account
is a bookkeeping account only and Executive shall not have any claim to any
particular assets of the Company.


4.             VESTING.


(a)           As of the date of this Agreement, the Company
Contribution credited to Executive’s Deferred Bonus Account shall be unvested
and subject to forfeiture on the termination of Executive’s employment for any
reason prior to January 1, 2008. If Executive continues to be employed by the
Company on and through December 31, 2007, Executive shall be fully vested in
amounts credited to his Deferred Bonus Account and his rights and interests
therein shall not be forfeitable.


(b)           Not withstanding the previous paragraph 4(a), if the
Executive is terminated without “cause”, upon a “change of control”, or upon
the “death” or “disability” or Executive, (as defined in the Executive’s
Employment Agreement), all amounts due under this Agreement shall fully vest
and shall be payable within 30 days of the Executive’s termination.


5.             INTEREST. 



Each
December 31, the Company shall credit the Deferred Bonus Account with interest
calculated at an annual rate equal to 1.5% plus the prime rate as announced in
the Wall Street Journal on the first
business day of each year compounded annually (or, if no prime rate is
announced in the Wall Street Journal on such date,
then on the first day of each year in which


 


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the prime rate is
reported in the Wall Street Journal), or such
other greater interest rate as determined by the Company in its discretion.


6.             DISTRIBUTION OF BENEFITS.


(a)   Distribution
of Benefits.  Payment to Executive shall occur within
thirty (30) days of the effective date of Executive’s vesting in his Deferred
Bonus Account. For purposes of determining the distributable amount, the
Deferred Bonus Account shall be valued through the day prior to the day on
which the Deferred Bonus Account is distributed, less any claim, debt,
reimbursement, recoupment, or offset the Company may have against Executive.


(b)   In-Service
Distributions.  Executive shall have no right to borrow
money from his Deferred Bonus Account nor shall he be allowed to receive a
distribution except as provided above.


(c)   Method
of Distribution.  Distribution of benefits shall be made in
one cash lump sum.


7.             INALIENABILITY OF BENEFITS.


(a)           General Prohibition. 
Executive, nor creditors of Executive, shall have any right to assign,
pledge, hypothecate, anticipate or in any way create a lien upon Executive’s
interest created under this Agreement. 
All payments to be made to Executive shall be made only upon his
personal receipt or endorsement, and no interest under this Agreement shall be
subject to assignment or transfer or otherwise be alienable, either by
voluntary or involuntary act or by operation of law or equity, or subject to
attachment, execution, garnishment, sequestration, levy or other seizure under
any legal, equitable or other process, or be liable in any way for the debts or
defaults of Executive.


(b)           Permitted Arrangements.  This Section shall not preclude arrangements for the
withholding of applicable taxes from payments under this Agreement, or
arrangements for direct deposit of benefit payments to an account in a bank,
savings and loan association or credit union (provided that such arrangement is
not part of an arrangement constituting an assignment or alienation).


8.             BINDING NATURE OF AGREEMENT.


This
Agreement shall be binding upon the heirs, executors, administrators,
successors and assigns of any and all interested parties, present and future.


9.             NATURE OF PAYMENTS.


Executive
shall, for the purpose of this Agreement, be treated as general creditors of
the Company.  Nothing in this Agreement
or any action taken pursuant to this Agreement shall create or be construed to
create a fiduciary relationship between the Company and Executive, or any other
person.


 


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10.          DISPUTE RESOLUTION.


All claims, disputes and other matters in question
between the parties arising under this Agreement shall, unless otherwise
provided herein, be resolved in accordance with the dispute resolution
provisions set forth in Executive’s Employment Agreement.  If no such agreement is in effect, or if the
Employment Agreement in effect at the time of Executive’s termination of
employment does not include a dispute resolution provision, all claims,
disputes and other matters in question between the parties arising under this
Agreement shall be decided in accordance with the dispute resolution provisions
stated below:


(a)               
Mediation. 
Any and all disputes arising under, pertaining to or touching upon this
Agreement, or the statutory rights or obligations of either party hereto,
shall, if not settled by negotiation, be subject to non-binding mediation
before an independent mediator selected by the parties pursuant to Section
10(d).  Notwithstanding the foregoing,
both Executive and Company may seek preliminary judicial relief if such action
is necessary to avoid irreparable damage during the pendency of the proceedings
described in this Section 10.  Any demand
for mediation shall be made in writing and served upon the other party to the
dispute, by certified mail, return receipt requested, at the address specified
in the signature blocks of this agreement. 
The demand shall set forth with reasonable specificity the basis of the
dispute and the relief sought.  The
mediation hearing will occur at a time and place convenient to the parties
within 30 days of the date of selection or appointment of the mediator.


(b)              
Arbitration. 
In the event that the dispute is not settled through mediation, the
parties shall then proceed to binding arbitration before an independent
arbitrator selected pursuant to Section 10(d). 
The mediator shall not serve as the arbitrator.  EXCEPT AS PROVIDED IN SECTION 10(a), ALL
DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, TERMINATION BY
ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED EMPLOYMENT TORT COMMITTED BY
COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING CLAIMS OF VIOLATIONS OF
FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED
PURSUANT TO THIS SECTION 10 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR
WITHOUT A JURY TRIAL.  The arbitration
hearing shall occur at a time and place convenient to the parties within 90
days of selection or appointment of the arbitrator, or as otherwise agreed
to.  The arbitration shall be governed by
the Federal Arbitration Act, 9 U.S.C. §§ 1-16 and the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association (“AAA”)
in effect on the date of the first notice of demand for arbitration.  Notwithstanding any provisions in such rules
to the contrary, the arbitrator shall issue findings of fact and conclusions of
law, and an award, within 15 days of the date of the hearing unless the parties
otherwise agree.


 


(c)               
Damages. 
In case of breach of contract or policy, damages shall be limited to
contract damages.  In cases of
discrimination claims prohibited by statute, the arbitrator may direct payment
consistent with the applicable statute. 
In cases of employment tort, the arbitrator may award punitive damages
if proved by clear and convincing evidence. 
Issues of procedure, arbitrability, or confirmation of award shall be
governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, except that court
review of the arbitrator’s award shall be that of an appellate court reviewing
a decision of a trial judge sitting without a jury.


 


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(d)              
Selection
of Mediator or Arbitrator. 
The parties shall select the mediator and arbitrator from a panel list
made available by the AAA.  If the
parties are unable to agree to a mediator or an arbitrator within 10 days of
receipt of a demand for mediation or arbitration, the mediator or arbitrator
will be chosen by alternatively striking from a list of five mediators or
arbitrators obtained by Company from the AAA. Executive shall have the first
strike.


(e)               
Fees
and Expenses.  The fees of the AAA and Mediation/Arbitration
shall be borne equally by the parties, unless ordered otherwise by the
Arbitrator.  Each party shall bear its
own attorney’s fees and other expenses, unless ordered otherwise by the
Arbitrator.


11.          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.


12.          NO EMPLOYMENT OR SERVICE CONTRACT.


Except as may be otherwise
provided in the Executive’s Employment Agreement, nothing in this Agreement
shall confer upon Executive any right to continue in the service of the Company
(or any parent or subsidiary corporation of the Company employing or retaining
Executive) for any period of time.


13.          AMENDMENT AND TERMINATION.


Any
amendment, modification, change, or termination of this Agreement must be done
so in writing and signed by both parties.


14.          GOVERNING LAW.


The
validity, interpretation, construction, and performance of this Agreement shall
be governed by the laws of the State of Arizona.


15.          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.


16.          EFFECT ON EMPLOYMENT AGREEMENT.


This Agreement supplements, and does not replace,
Executive’s Employment Agreement as it may be amended or replaced from time to
time.  If there are any conflicts between
the provisions of this Agreement and Executive’s Employment Agreement, the
provisions of this Agreement shall control.


 


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17.          ENTIRE AGREEMENT.


This
Agreement sets forth the entire agreement between Executive and the Company
concerning the subject matter discussed in this Agreement and supersedes all
prior agreements, promises, covenants, arrangements, communications, and
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.


IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
set forth above.


	
   

  	
  MERITAGE HOMES CORPORATION

  
	
   

  	
   

  
	
   

  	
  8501 E.
  Princess Drive, Suite 290

  
	
   

  	
  Scottsdale, AZ 85255

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J. Hilton

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Co-Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
  Larry W. Seay

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  



 


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