Exhibit
10.2


 


DEFERRED BONUS AGREEMENT


2003 AWARD YEAR


 


THIS DEFERRED BONUS AGREEMENT (the “Agreement”) is
entered into as of March 17, 2004, by Larry W. Seay (the “Executive”) and
Meritage 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
$46,000 to the Deferred Bonus Account established pursuant to Section 3
effective as of December 31, 2003.  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, 2007.
If Executive continues to be employed by the Company on and through December
31, 2006, 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


 


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announced in the Wall Street
Journal on such date, then on the first day of each year in which
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 CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
  8501 E.
  Princess Drive, Suite 290

  
	
   

  	
  Scottsdale, AZ 85255

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Steven J. Hilton

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Co-CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Larry W. Seay

  
	
   

  	
   

  
	
   

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  802 W. El
  Caminito Drive

  
	
   

  	
   

  	
  Phoenix, AZ  85021

  
						



 


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