Exhibit
10.2


 


EXHIBIT A


 


INCENTIVE COMPENSATION SCHEDULE


C. TIMOTHY WHITE Bonus
Compensation


Base Salary                                                      $500,000
effective September 30, 2005


Part I — Bonus


	
  2005

  	
  ·

  	
  For
  2005, as previously approved, Executive shall be entitled to a bonus of
  $350,000, so long as his employment with the Company starts by
  October 1, 2005 (with the first business day of such employment to be on
  or before October 3, 2005). Such bonus shall be paid to Executive by January
  31, 2006.

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  If
  the Executive elects to commence employment with the Company after October 3,
  2005, the Board at its discretion may award a subjective bonus to Executive
  if Executive fails to receive a bonus pursuant to the above provision.

  
	
   

  	
   

  	
   

  
	
  2006/2007

  	
  ·

  	
  For
  2006 and 2007 and any Renewal Term, Executive shall be entitled to a bonus
  equal to .1125% of the Company’s EBITDA (excluding one time bond,
  refinancing, offering and similar costs).

  
	
   

  	
   

  	
   

  
	
   

  	
  Such
  bonus calculation will be determined before taking into account the deduction
  for the compensation of (i) the Executive; (ii) the Co-Chief Executive
  Officers; and (iii) the Chief Financial Officer.

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  In
  addition, The Board at its discretion may award a subjective bonus to
  Executive if Executive fails to earn a bonus pursuant to the above formula.

  



 


 


Part II — Payment


The
bonus for 2006 and 2007 and any Renewal Term shall be paid within a reasonable
time after year-end, but, in any event, no later than ten days after EBITDA is
determined.  Executive does not have to
wait until the Form 10-K is filed with the SEC.


 





















 


C.
TIMOTHY WHITE


CHANGE
OF CONTROL AGREEMENT


Effective
September 30, 2005


 


Dear
Tim:


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 will be effective on
September 30, 2005, the date you begin employment as Executive Vice President
and General Counsel for Meritage, 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 8) at any time within 150
days before or within two years following a “Change of Control” (as defined in
Section 6), you will receive the “Change of Control Payment” described
below.  You will also receive the Change
of Control Payment if you terminate your employment for “Good Reason” (as
defined in Section 7) at any time within two years following a Change of
Control.


The Change of Control Payment equals
the lesser of:  (i) two times your total
annual base salary and two times your bonus compensation on the date of
termination of your employment; or (ii) $2,500,000.


The Change of Control 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.


You are not entitled to receive the Change of Control 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 10(d)) or your death, unless death or disability occurs
after a qualifying notice of termination. 
If your death occurs after a qualifying notice of termination and your
heirs or estate receive payments from any life insurance policy purchased by
the Company, then those payments will offset any Change of Control
payment.   In addition, you are not
entitled to receive the Change of Control Payment if your employment is
terminated by you or the Company for any or no reason prior to 150 days before
a Change of Control occurs or more than two years after a Change of Control has
occurred.


 


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To receive the Change of Control
Payment, you must execute a release of all claims to be requested by the
Company regarding the termination of your employment.


The Change of Control 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 the Change of
Control Payment under Section 2, you will continue to receive life, accident,
group health, and disability 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.             INCENTIVE COMPENSATION.


If you are employed by the Company on
the day on which a Change of Control occurs, the incentive compensation to
which you will be entitled (pursuant to any performance-based incentive
compensation program established by the Company) for the calendar year in which
the Change of Control occurs will equal at least the “Minimum Incentive
Compensation Amount.”  The “Minimum
Incentive Compensation Amount” will equal the incentive compensation to which
you would have been entitled if the year were to end on the day on which the Change
of Control occurs, based upon performance up to that date.  In measuring financial performance, financial
results through the date of the Change of Control will be annualized.


5.             STOCK OPTION
ACCELERATION.


Notwithstanding anything in this Agreement or in any option agreement
to the contrary, upon a Change of Control, any stock options granted to you
shall accelerate and become vested without further action.  You will have a period of one year from the
date of termination of your employment to exercise such options.


 


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6.             CHANGE OF CONTROL
DEFINED.


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


(a)                   The acquisition of beneficial ownership,
directly or indirectly, of securities having 33% 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,
limited liability company, 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 a 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.


(e)                   If neither Steven Hilton nor John Landon
are Chief Executive Officers of the Company and you have not been offered or
provided with an Executive Vice President and General Counsel or similar
position with equivalent duties, responsibility, authority, compensation,
benefits, severance, employment and change of control terms and which does not
require Executive to relocate or to travel more than he does in his position
with the Company.


7.             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 significantly reduced
or the potential incentive compensation (or bonus) to which you may become
entitled to at any level of


 


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performance
by you or the Company is significantly 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,” or (f) if you are required to relocate to an
employment location that is more than fifty (50) miles from Scottsdale,
Arizona.  The Company and you further
acknowledge and agree that, if following a Change of Control, you do not serve
or are not serving as the Executive Vice President and General Counsel or
comparable position of the parent corporation of the surviving organization,
then 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.


8.             CAUSE DEFINED.


For purposes of this Agreement, the
term “Cause” will exist if you have engaged in malfeasance that materially
harms the Company or its stockholders, or if you are convicted of a felony that
is materially detrimental to the Company or its stockholders.


9.             [RESERVED].


10.           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 or your Employment
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 Board of Meritage 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 17, 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.


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(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 termination within the 30-day period
following your receipt of such notice, you may elect to continue your
employment during such dispute.  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, 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 17, (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.


(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 Cause.


11.           SUCCESSORS.


Meritage will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business 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


 


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succession
shall be a breach of this Agreement and shall entitle you to compensation in
the same amount and on the 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 or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.


12.           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.


13.           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 your Employment Agreement, provided that all
notices to Meritage shall be directed to the attention of the Chairman of the
Board of Meritage and to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.


14.           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 Board of Meritage.  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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15.           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.


16.           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.


17.           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 10(d)), be resolved in accordance
with the arbitration or alternative dispute resolution provisions included in
your Employment Agreement.


18.           EXPENSES AND INTEREST.


If a good faith dispute shall arise with
respect to the enforcement of your rights or the Company’s 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, then the prevailing party shall recover from the
other party its 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 by the prevailing party,
calculated at the rate of interest announced by Bank of America, Arizona from
time to time as its prime rate or eight percent per annum, whichever is
greater.


19.           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, you agree that
Meritage shall have the right to recover all or any part of such overpayment
from you or from whomsoever has received such amount.


20.           EFFECT ON EMPLOYMENT
AGREEMENT.


This Agreement supplements, and does not replace, your
Employment Agreement, as it may be amended or replaced from time to time (the “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.  But the Company does not intend to nor does
this Agreement provide you


 


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with
duplicative benefits with your Employment Agreement.  As a result, benefits otherwise receivable
pursuant to this Agreement shall be reduced or eliminated if and to the extent
that you or your heirs or estate receive severance, life insurance benefit
payments from life insurance purchased for you by the Company, or other
benefits (other than base and bonus compensation for periods prior to the date
of termination) pursuant to any employment agreement you may have with the
Company.


21.           ENTIRE AGREEMENT.


This Agreement, your Employment
Agreement and any stock 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.


22.           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, in
the discretion of Meritage, 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 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 will 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 22, then Meritage will transfer an
amount in cash equal to the deferred amount pursuant 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 greater of the
rate of interest announced by Bank of America, Arizona from time to time as its
prime rate or 8%, from the date that the payment would have been made to you
but for this Section 22 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).


 


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23.           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.


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


 


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  MERITAGE HOMES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J Hilton

  
	
   

  	
  Name:

  	
  Steven J Hilton

  
	
   

  	
  Its: 

  	
  Co-Chairman and CEO

  



 


 


 


ACCEPTANCE


 


I accept
the offer to participate in this special benefits program and I agree to be
bound by all of the provisions of this Change of Control Agreement.


	
   

  	
  C. TIMOTHY WHITE

  
	
   

  	
   

  
	
   

  	
  /s/ C. Timothy White

  



 


 


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