Document:

Exhibit
10.1

 

 

THIRD AMENDMENT

TO

CREDIT AGREEMENT

 

Dated as of
April 20, 2004

 

among

 

MERITAGE
CORPORATION,

as the Borrower

 

GUARANTY BANK,

as Administrative
Agent and Swing Line Lender,

 

BANK ONE, NA,

as Syndication
Agent

 

FLEET NATIONAL
BANK,

as Documentation
Agent

 

and

 

The Other Lenders
Party Thereto

 

 

GUARANTY BANK,

as Joint Lead
Arranger and Joint Book Manager

 

and

 

BANC ONE CAPITAL
MARKETS, INC.,

as Joint Lead
Arranger and Joint Bank Manager

 

 

THIRD AMENDMENT TO
CREDIT AGREEMENT

 

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Third
Amendment”), dated as of April 20, 2004, 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, BANK ONE, NA, as
Syndication Agent, and FLEET NATIONAL BANK, as Documentation Agent.

 

BACKGROUND

 

A.            The
Borrower, certain of 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, as amended by
that certain First Amendment to Credit Agreement, dated as of September 8,
2003, and that certain Second Amendment to Credit Agreement, dated as of
December 3, 2003 (said Credit Agreement, as amended, 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 increase the Letter of Credit Sublimit
under the Credit Agreement.

 

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.  The definition of “Letter of Credit
Sublimit” set forth in Section 1.01 of the Credit Agreement is
hereby amended to read as follows:

 

“Letter of Credit Sublimit” means an amount
equal to $150,000,000.  The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

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;

 

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

 

1

 

(c)           (i) the
Borrower has full power and authority to execute and deliver this Third
Amendment, (ii) this Third Amendment has been duly executed and delivered
by the Borrower, and (iii) this Third 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 Third 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 its properties are subject; and

 

(e)           no
authorization, approval, consent, or other action by, notice to, or filing
with, any governmental authority or other Person not previously obtained is
required for (i) the execution, delivery or performance by the Borrower of
this Third Amendment or (ii) the acknowledgement by each Guarantor of this
Third Amendment.

 

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

 

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

 

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

 

(c)           the
Administrative Agent shall have received a certified resolution of the Board of
Directors of the Borrower authorizing the execution, delivery and performance
of this Third Amendment; and

 

(d)           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 Third 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

 

execution and
delivery of this Third 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 Third Amendment,
(b) acknowledges and agrees that its obligations in respect of its
Guaranty are not released, diminished, waived, modified, impaired or affected
in any manner by this Third 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 Third
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 Third 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 Third
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 Third Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Third Amendment for any other purpose.

 

10.           ENTIRE
AGREEMENT.  THE CREDIT AGREEMENT, AS
AMENDED BY THIS THIRD 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

 

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

 

	
   

  	
  MERITAGE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W. Seay

  
	
   

  	
   

  	
  Name:

  	
  Larry W. Seay

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Secretary

  

 

4

 

	
   

  	
  GUARANTY
  BANK, as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sam A. Meade

  
	
   

  	
   

  	
  Name:

  	
  Sam A. Meade

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sam A. Meade

  
	
   

  	
   

  	
  Name:

  	
  Sam A. Meade

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

5

 

	
   

  	
  FLEET
  NATIONAL BANK, as a Lender and

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel L. Silbert

  
	
   

  	
   

  	
  Name:

  	
  Daniel L. Silbert

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

6

 

	
   

  	
  BANK
  ONE, NA, as a Lender and Syndication

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Engler

  
	
   

  	
   

  	
  Name:

  	
  Paul Engler

  
	
   

  	
   

  	
  Title:

  	
  First Vice President

  

 

7

 

	
   

  	
  WELLS
  FARGO BANK ARIZONA

  NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia A. Richards

  
	
   

  	
   

  	
  Name:

  	
  Patricia A. Richards

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

8

 

	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adrian Montero

  
	
   

  	
   

  	
  Name:

  	
  Adrian Montero

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  

 

9

 

	
   

  	
  CALIFORNIA
  BANK AND TRUST, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephanie Lantz

  
	
   

  	
   

  	
  Name:

  	
  Stephanie Lantz

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

10

 

	
   

  	
  COMPASS
  BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J. Heslep

  
	
   

  	
   

  	
  Name:

  	
  Steven J. Heslep

  
	
   

  	
   

  	
  Title:

  	
  S.V.P.

  

 

11

 

	
   

  	
  COMERICA
  BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casey L. Ostrander

  
	
   

  	
   

  	
  Name:

  	
  Casey L. Ostrander

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

12

 

	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION, as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas G. Paul

  
	
   

  	
   

  	
  Name:

  	
  Douglas G. Paul

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

13

 

	
   

  	
  SOUTHTRUST
  BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel L. Boroughs

  
	
   

  	
   

  	
  Name:

  	
  Samuel L. Boroughs

  
	
   

  	
   

  	
  Title:

  	
  VP

  

 

14

 

	
   

  	
  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

  

 

15

 

	
   

  	
  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

  

 

16

 

	
   

  	
  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

  

 

17

 

	
   

  	
  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

  

 

18

 

	
   

  	
  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 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

  

 

19

 

	
   

  	
  MTH-CAVALIER, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    Monterey Homes Construction, Inc., its

  
	
   

  	
   

  	
    Sole Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Larry W. Seay

  
	
   

  	
   

  	
    Larry W. Seay

  
	
   

  	
   

  	
    Vice President and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MTH GOLF, 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 

  

 

20Exhibit
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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