Document:

<PAGE>

                                                                   Exhibit 4.2.5

         FIFTH SUPPLEMENTAL INDENTURE, dated as of August 22, 2003 (the "Fifth
Supplemental Indenture") between Meritage Corporation, a corporation organized
under the laws of the State of Maryland (the "Issuer"), the Guarantors named
therein, Mission Royale Golf Course, LLC, an Arizona limited liability company
("Mission Royale") and Legacy-Hammonds Materials, L.P., a Texas limited
partnership ("Legacy-Hammonds") (Mission Royale and Legacy-Hammonds together,
the "Additional Guarantors") and Wells Fargo Bank, National Association, as
trustee (the "Trustee"), under the Indenture (as defined below). Capitalized
terms used and not defined herein shall have the same meanings given in the
Indenture unless otherwise indicated.

         WHEREAS, the Issuer, the Guarantors thereto and the Trustee are parties
to that certain Indenture dated as of May 30, 2001 (the "Indenture") pursuant to
which the Company issued its 9 3/4% Senior Notes 2011 (the "Notes") and the
Guarantors guaranteed the obligations of the Issuer under the Indenture and the
Notes;

         WHEREAS, pursuant to Section 4.13 of the Indenture, if the Issuer
acquires or creates any additional subsidiary which is a Restricted Subsidiary,
each such subsidiary shall execute and deliver a supplemental indenture pursuant
to which such subsidiary shall unconditionally guaranty the Issuer's obligations
under the Notes;

         WHEREAS, the Issuer, the Guarantors thereto, Hulen Park Venture, LLC,
Meritage Holdings, L.L.C. and the Trustee are parties to that First Supplemental
Indenture, dated as of September 20, 2001 (the "First Supplemental Indenture")
pursuant to which Hulen Park Venture, LLC and Meritage Holdings, L.L.C. were
added as Guarantors;

         WHEREAS, the Issuer, the Guarantors thereto, MTH Homes-Texas, L.P.,
MTH-Texas GP II, Inc., MTH-Texas LP II, Inc. and the Trustee are parties to that
Second Supplemental Indenture, dated as of July 12, 2002 (the "Second
Supplemental Indenture") pursuant to which MTH Homes-Texas, L.P., MTH-Texas GP
II, Inc. and MTH-Texas LP II, Inc. were added as Guarantors;

         WHEREAS, the Issuer, the Guarantors thereto, MTH Homes-Nevada, Inc. and
the Trustee are parties to that Third Supplemental Indenture, dated as of
October 21, 2002 (the "Third Supplemental Indenture") pursuant to which MTH
Homes-Nevada, Inc. was added as a Guarantor;

         WHEREAS, the Issuer, the Guarantors thereto, MTH Cavalier, LLC and the
Trustee are parties to that Fourth Supplemental Indenture, dated as of February
19, 2002 (the "Fourth Supplemental Indenture") pursuant to which MTH Cavalier,
LLC was added as a Guarantor;

         WHEREAS, the Additional Guarantors are Restricted Subsidiaries of the
Issuer;

         WHEREAS, the Issuer and the Trustee desire to have the Additional
Guarantors enter into this Fifth Supplemental Indenture and agree to guaranty
the obligations of the Issuer under the Indenture and the Notes and the
Additional Guarantors desire to enter into this Fifth Supplemental Indenture and
to guaranty the obligations of the Issuer under the Indenture and the Notes as
of such date;

<PAGE>

         WHEREAS, Section 8.01 of the Indenture provides that the Issuer, the
Guarantors and the Trustee may, without the written consent of the Holders of
the outstanding Notes, amend the Indenture as provided herein;

         WHEREAS, by entering into this Fifth Supplemental Indenture, the Issuer
and the Trustee have consented to amend the Indenture in accordance with the
terms and conditions herein;

         WHEREAS, each Guarantor hereby acknowledges and consents to amend the
Indenture in accordance with the terms and conditions herein; and

         WHEREAS, all acts and things prescribed by the Articles of Organization
of Mission Royale (as now in effect) and the Certificate of Limited Partnership
and the Agreement of Limited Partnership of Legacy-Hammonds (as now in effect)
necessary to make this Fifth Supplemental Indenture a valid instrument legally
binding on the Additional Guarantors for the purposes herein expressed, in
accordance with its terms, have been duly done and performed.

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Issuer, the Additional Guarantors and the Trustee hereby agree for the benefit
of each other and the equal and ratable benefit of the Holders of the Notes as
follows:

         1.       Additional Guarantors as Guarantors. As of the date hereof and
pursuant to this Fifth Supplemental Indenture, the Additional Guarantors shall
become Guarantors under the definition of Guarantor in the Indenture in
accordance with the terms and conditions of the Indenture and shall assume all
rights and obligations of a Guarantor thereunder.

         2.       Compliance with and Fulfillment of Condition of Section 4.13.
The execution and delivery of this Fifth Supplemental Indenture by the
Additional Guarantors (along with such documentation relating thereto as the
Trustee shall require) fulfills the obligations of the Issuer under Section 4.13
of the Indenture.

         3.       Construction. For all purposes of this Fifth Supplemental
Indenture, except as otherwise herein expressly provided or unless the context
otherwise requires: (i) the defined terms and expressions used herein shall have
the same meanings as corresponding terms and expressions used in the Indenture;
and (ii) the words "herein," "hereof" and "hereby" and other words of similar
import used in this Fifth Supplemental Indenture refer to this Fifth
Supplemental Indenture as a whole and not to any particular Section hereof.

         4.       Trustee Acceptance. The Trustee accepts the amendment of the
Indenture effected by this Fifth Supplemental Indenture, as hereby amended, but
only upon the terms and conditions set forth in the Indenture, as hereby
amended, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee in the performance of its duties
and obligations under the Indenture, as hereby amended. Without limiting the
generality of the foregoing, the Trustee has no responsibility for the
correctness of the recitals of fact herein contained which shall be taken as the
statements of each of the Issuer and the Additional Guarantors, respectively,
and makes no representations as to the validity or enforceability against either
the Issuer or the Additional Guarantors.

                                       -2-

<PAGE>

         5.       Indenture Ratified. Except as expressly amended hereby, the
Indenture is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect.

         6.       Holders Bound. This Fifth Supplemental Indenture shall form a
part of the Indenture for all purposes, and every Holder of the Notes heretofore
or hereafter authenticated and delivered shall be bound hereby.

         7.       Successors and Assigns. This Fifth Supplemental Indenture
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

         8.       Counterparts. This Fifth Supplemental Indenture may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, and all of such counterparts shall together constitute
one and the same instrument.

         9.       Governing Law. This Fifth Supplemental Indenture shall be
governed by and construed in accordance with the internal laws of the State of
New York without giving effect to principles of conflicts of laws.

         IN WITNESS WHEREOF, the Issuer, the Additional Guarantors and the
Trustee have caused this Fifth Supplemental Indenture to be duly executed as of
the date first above written.

                                   ISSUER:

                                   MERITAGE CORPORATION

                                   By:  /s/ Steven J. Hilton
                                        ---------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman, Co-President and Co-Chief
                                        Executive Officer

                                   By:  /s/ Larry W. Seay
                                        ---------------------------------------
                                        Larry W. Seay
                                   Its: Chief Financial Officer, Vice President-
                                        Finance and Secretary

                                      -3-

<PAGE>

                                   ADDITIONAL GUARANTORS:

                                   MISSION ROYALE GOLF COURSE, LLC

                                   By:  Hancock-MTH Builders, Inc., its Sole
                                        Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-Chairman and Co-CEO

                                   LEGACY-HAMMONDS MATERIALS, L.P.

                                   By:  Meritage Holdings, L.L.C., its General
                                        Partner

                                   By:  Legacy/Monterey Homes L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                   TRUSTEE:

                                   WELLS FARGO BANK, NATIONAL
                                   ASSOCIATION, as Trustee

                                   By:  /s/ Jeanie Mar
                                        ----------------------------------------
                                   Its: Vice President

                                       -4-

<PAGE>

                                   GUARANTORS:

                                   MONTEREY HOMES ARIZONA, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO, President and Chief
                                        Executive Officer

                                   MERITAGE PASEO CROSSING, LLC

                                   By:  Meritage Homes of Arizona, Inc., its
                                        Sole Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO and Chairman

                                   MONTEREY HOMES CONSTRUCTION, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO, President and Chief
                                        Executive Officer

                                   MERITAGE PASEO CONSTRUCTION, LLC

                                   By:  Meritage Homes Construction, Inc., its
                                        Sole Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO and Co-Chairman

                                      -5-

<PAGE>

                                   MERITAGE HOMES OF ARIZONA, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO and Co-Chairman

                                   MERITAGE HOMES CONSTRUCTION, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO and Co-Chairman

                                   MTH-TEXAS GP, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-Chairman

                                   MTH-TEXAS LP, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-Chairman

                                       -6-

<PAGE>

                                   LEGACY/MONTEREY HOMES L.P.

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-Chairman

                                   MERITAGE HOMES OF NORTHERN
                                   CALIFORNIA, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO, President and Chief
                                        Executive Officer

                                   HANCOCK-MTH BUILDERS, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-Chairman and Co-CEO

                                   HANCOCK-MTH COMMUNITIES, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-Chairman and Co-CEO

                                       -7-

<PAGE>

                                   LEGACY OPERATING COMPANY, L.P.

                                   By:  Meritage Holdings, L.L.C., its General
                                        Partner

                                   By:  Legacy/Monterey Homes L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                   HULEN PARK VENTURE, LLC

                                   By:  Legacy/Monterey Homes L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                   MERITAGE HOLDINGS, L.L.C.

                                   By:  Legacy/Monterey Homes L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                       -8-

<PAGE>

                                   MTH HOMES-TEXAS, L.P.

                                   By:  MTH-Texas GP II, Inc., its General
                                        Partner

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                   MTH-TEXAS GP II, INC.

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                   MTH-TEXAS LP II, INC.

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                   MTH-HOMES NEVADA, INC.

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Steven J. Hilton
                                   Its: Co-Chairman and Chief Executive Officer

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                   Its: Vice President-Secretary

                                       -9-

<PAGE>

                                   MTH-CAVALIER, LLC

                                   By:  Monterey Homes Construction, Inc., its
                                        Sole Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Name:  Larry W. Seay
                                        Title: Vice President-Secretary

                                   By:  /s/ Steven J. Hilton
                                        ----------------------------------------
                                        Name:  Steven J. Hilton
                                        Title: Co-CEO, President and Chief
                                        Executive Officer

                                      -10-<PAGE>

                                                                  Exhibit 10.1.1

                       FIRST AMENDMENT TO CREDIT AGREEMENT

         THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment"),
dated as of September 8, 2003, is entered into among MERITAGE CORPORATION, a
Maryland corporation (the "Borrower"), the lenders listed on the signature pages
hereof as Lenders (the "Lenders"), GUARANTY BANK, as Administrative Agent and
Swing Line Lender, FLEET NATIONAL BANK, as Syndication Agent, and BANK ONE, NA,
as Documentation Agent.

                                   BACKGROUND

         A.       The Borrower, the Lenders, the Syndication Agent, the
Documentation Agent, the Administrative Agent and the Swing Line Lender are
parties to that certain Credit Agreement, dated as of December 12, 2002 (the
"Credit Agreement"). The terms defined in the Credit Agreement and not otherwise
defined herein shall be used herein as defined in the Credit Agreement.

         B.       The Borrower has requested an amendment to the Credit
Agreement to account for a change in GAAP.

         C.       The Lenders, the Syndication Agent, the Documentation Agent,
the Administrative Agent and the Swing Line Lender hereby agree to amend the
Credit Agreement, subject to the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the Borrower, the
Lenders, the Syndication Agent, the Documentation Agent, the Swing Line Lender
and the Administrative Agent covenant and agree as follows:

         1.       AMENDMENT. Section 1.03 of the Credit Agreement is hereby
amended by adding a new clause (d) thereto to read as follows:

                  (d)        In order to adhere to the intent of this Section
         1.03, the financial ratios, calculations and covenants (including the
         computation of the components thereof) shall be calculated without
         giving effect to FASB Interpretation No. 46 enacted by the Financial
         Accounting Standards Board after the Closing Date, and all references
         to GAAP herein shall refer to GAAP as so calculated.

         2.       REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By
its execution and delivery hereof, the Borrower represents and warrants that, as
of the date hereof:

         (a)      the representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct on and as of the
date hereof as made on and as of such date;

                                        1

<PAGE>

         (b)      no event has occurred and is continuing which constitutes a
Default or an Event of Default;

         (c)      (i) the Borrower has full power and authority to execute and
deliver this First Amendment, (ii) this First Amendment has been duly executed
and delivered by the Borrower, and (iii) this First Amendment and the Credit
Agreement, as amended hereby, constitute the legal, valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable Debtor Relief Laws
and by general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws;

         (d)      neither the execution, delivery and performance of this First
Amendment or the Credit Agreement, as amended hereby, nor the consummation of
any transactions contemplated herein or therein, will conflict with any Law or
Organization Documents of the Borrower, or any indenture, agreement or other
instrument to which the Borrower or any of their properties are subject; and

         (e)      no authorization, approval, consent, or other action by,
notice to, or filing with, any governmental authority or other Person (including
the Board of Directors of the Borrower or any Guarantor) is required for (i) the
execution, delivery or performance by the Borrower of this First Amendment or
(ii) the acknowledgement by each Guarantor of this First Amendment.

         3.       CONDITIONS TO EFFECTIVENESS. This First Amendment shall be
effective upon satisfaction or completion of the following:

         (a)      the Administrative Agent shall have received counterparts of
this First Amendment executed by the Required Lenders;

         (b)      the Administrative Agent shall have received counterparts of
this First Amendment executed by the Borrower and acknowledged by each
Guarantor; and

         (c)      the Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent and its counsel, such other
documents, certificates and instruments as the Administrative Agent shall
require.

         4.       REFERENCE TO THE CREDIT AGREEMENT.

         (a)      Upon the effectiveness of this First Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", or words of like
import shall mean and be a reference to the Credit Agreement, as affected and
amended hereby.

         (b)      The Credit Agreement, as amended by the amendments referred to
above, shall remain in full force and effect and is hereby ratified and
confirmed.

         5.       COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on
demand all costs and expenses of the Administrative Agent in connection with the
preparation, reproduction,

                                       2

<PAGE>

execution and delivery of this First Amendment and the other instruments and
documents to be delivered hereunder (including the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent with respect
thereto).

         6.       GUARANTOR'S ACKNOWLEDGMENT. By signing below, each Guarantor
(a) acknowledges, consents and agrees to the execution, delivery and performance
by the Borrower of this First Amendment, (b) acknowledges and agrees that its
obligations in respect of its Guaranty (i) are not released, diminished, waived,
modified, impaired or affected in any manner by this First Amendment or any of
the provisions contemplated herein, (c) ratifies and confirms its obligations
under its Guaranty, and (d) acknowledges and agrees that it has no claims or
offsets against, or defenses or counterclaims to, its Guaranty.

         7.       EXECUTION IN COUNTERPARTS. This First Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which when taken together shall constitute
but one and the same instrument. For purposes of this First Amendment, a
counterpart hereof (or signature page thereto) signed and transmitted by any
Person party hereto to the Administrative Agent (or its counsel) by facsimile
machine, telecopier or electronic mail is to be treated as an original. The
signature of such Person thereon, for purposes hereof, is to be considered as an
original signature, and the counterpart (or signature page thereto) so
transmitted is to be considered to have the same binding effect as an original
signature on an original document.

         8.       GOVERNING LAW; BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas
applicable to agreements made and to be performed entirely within such state,
provided that each party shall retain all rights arising under federal law, and
shall be binding upon the parties hereto and their respective successors and
assigns.

         9.       HEADINGS. Section headings in this First Amendment are
included herein for convenience of reference only and shall not constitute a
part of this First Amendment for any other purpose.

         10.      ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS
FIRST AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

                                        3

<PAGE>

         IN WITNESS WHEREOF, this First Amendment is executed as of the date
first set forth above.

                                   MERITAGE CORPORATION

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        VP-CFO

                                        4

<PAGE>

                                   GUARANTY BANK, as Administrative Agent

                                   By:  /s/ Sam A. Meade
                                        ----------------------------------------
                                        Name:  Sam A. Meade
                                        Title: Senior Vice President

                                   GUARANTY BANK, as a Lender and Swing Line
                                   Lender

                                   By:  /s/ Sam A. Meade
                                        ----------------------------------------
                                        Name:  Sam A. Meade
                                        Title: Senior Vice President

                                        5

<PAGE>

                                   FLEET NATIONAL BANK, as a Lender and
                                   Syndication Agent

                                   By:  /s/ Daniel L. Silbert
                                        ----------------------------------------
                                        Name:  Daniel L. Silbert
                                        Title: Director

                                        6

<PAGE>

                                   BANK ONE, NA, as a Lender and Documentation
                                   Agent

                                   By: ___________________________
                                       Name:  ____________________
                                       Title: ____________________

                                        7

<PAGE>

                                   WELLS FARGO BANK ARIZONA
                                   NATIONAL ASSOCIATION, as a Lender

                                   By:  /s/ Victoria Benedict
                                        ----------------------------------------
                                        Name:  Victoria Benedict
                                        Title: SVP

                                        8

<PAGE>

                                   U.S. BANK NATIONAL ASSOCIATION, as a
                                   Lender

                                   By:  /s/ Adrian Montero
                                        ----------------------------------------
                                        Name:  Adrian Montero
                                        Title: Assistant Vice President

                                        9

<PAGE>

                                   CALIFORNIA BANK AND TRUST, as a Lender

                                   By:  /s/ Stephanie Lantz
                                        ----------------------------------------
                                        Name:  Stephanie Lantz
                                        Title: VP

                                       10

<PAGE>

                                   COMPASS BANK, as a Lender

                                   By:  /s/ Steven S. Heslep
                                        ----------------------------------------
                                        Name:  Steven S. Heslep
                                        Title: SVP

                                       11

<PAGE>

                                   ACKNOWLEDGED AND AGREED TO:

                                   MONTEREY HOMES ARIZONA, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MONTEREY HOMES CONSTRUCTION, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MERITAGE HOMES OF ARIZONA, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MERITAGE PASEO CROSSING, LLC

                                   By:  Meritage Homes of Arizona, Inc., its
                                        Sole Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                       12

<PAGE>

                                   MERITAGE HOMES CONSTRUCTION, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MERITAGE PASEO CONSTRUCTION, LLC

                                   By:  Meritage Homes Construction, Inc., its
                                        Sole Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   HANCOCK-MTH COMMUNITIES, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   HANCOCK-MTH BUILDERS, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                       13

<PAGE>

                                   MTH-TEXAS GP, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MTH-TEXAS LP, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   LEGACY/MONTEREY HOMES L.P.

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MERITAGE HOLDINGS, L.L.C.

                                   By:  Legacy/Monterey Homes, L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                       14

<PAGE>

                                   LEGACY OPERATING COMPANY, L.P.

                                   By:  Meritage Holdings, L.L.C., its General
                                        Partner

                                   By:  Legacy/Monterey Homes, L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   HULEN PARK VENTURE, LLC

                                   By:  Legacy Monterey Homes L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MTH-TEXAS GP II, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                       15

<PAGE>

                                   MTH-TEXAS LP II, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MTH HOMES-TEXAS, L.P.

                                   By:  MTH-Texas GP II, Inc., its General
                                        Partner

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MERITAGE HOMES OF NORTHERN
                                   CALIFORNIA, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MTH-HOMES NEVADA, INC.

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                       16

<PAGE>

                                   MTH-CAVALIER, LLC

                                   By:  Monterey Homes Construction, Inc., its
                                        Sole Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   MISSION ROYALE GOLF COURSE, LLC

                                   By:  Hancock-MTH Builders, Inc., its Sole
                                        Member

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                   LEGACY-HAMMONDS MATERIALS, L.P.

                                   By:  Meritage Holdings, L.L.C., its General
                                        Partner

                                   By:  Legacy/Monterey Homes L.P., its Sole
                                        Member

                                   By:  MTH-Texas GP, Inc., its General Partner

                                   By:  /s/ Larry W. Seay
                                        ----------------------------------------
                                        Larry W. Seay
                                        Vice President and Secretary

                                       17

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