Document:

<PAGE>
                                                                    EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (the "AGREEMENT") is effective as of October
15, 2003 by and between MERITAGE CORPORATION, a Maryland corporation (the
"COMPANY") and Larry W. Seay, an individual ("EXECUTIVE").

                                    RECITALS

         WHEREAS, Executive is currently the Chief Financial Officer, Vice
President-Finance and Secretary of the Company;

         WHEREAS, the Company desires to continue to obtain the services of
Executive, and Executive desires to provide services to the Company, in
accordance with the terms, conditions and provisions of this Agreement;

         NOW THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in reliance upon the
representations, covenants and mutual agreements contained herein, the Company
and Executive agree as follows:

         1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
the Company agrees to employ Executive as Chief Financial Officer, Vice
President-Finance and Secretary of the Company, and Executive agrees to
diligently perform the duties associated with such positions. Executive will
report directly to the Co-Chairman and Co-Chief Executive Officers. Executive
will devote substantially all of his business time, attention and energies to
the business of the Company and will comply with the charters, policies and
guidelines established by the Company from time to time applicable to its senior
management executives.

         2. TERM. Executive will be employed under this Agreement until December
31, 2005, unless Executive's employment is terminated earlier pursuant to
Section 6. The Agreement will renew for additional one year periods (the
"RENEWAL TERM(S)"), unless on or before February 15, 2005 (or February 15 of any
Renewal Term), either Executive or the Company notifies the other in writing
that it wishes to terminate employment under this Agreement at the end of the
term then in effect.

         3. SALARY. The Company will pay Executive a base salary (the "BASE
SALARY") at the annual rate of $250,000. Such salary will increase retroactively
to $262,500 commencing June 30, 2003. The Base Salary will increase 5% on
January 1, 2004 and on each Renewal Term thereafter. The Base Salary will be
payable in accordance with the payroll practices of the Company in effect from
time to time. The Base Salary may be raised, but not lowered, without
Executive's consent.
<PAGE>
         4. INCENTIVE COMPENSATION.

         A. Bonus.

         Executive will be entitled to incentive compensation based on the
achievement of certain performance targets pursuant to the plan specified in
Exhibit A hereto (the "BONUS"). The Bonus will be due and payable in accordance
with Exhibit A.

         B. Options.

         During the term of this Agreement, commencing in 2004, the Company
annually shall grant the Executive options to acquire 12,500 shares (or
equivalent consideration at the discretion of the Board of Directors). The
options will have an exercise price equal to the fair market value on the date
of grant as defined under the relevant plan. Subject to the provisions hereof
and Executive's Change of Control Agreement, the options will be on the same
terms and conditions as other standard option grants.

         5. EXECUTIVE BENEFITS. During the term of this Agreement, Executive
will be entitled to reimbursement of reasonable and customary business expenses.
The Company will provide to Executive a $1,200 per month automobile allowance,
such fringe benefits and other Executive benefits as are regularly provided by
the Company to its management (e.g., health and life insurance, paid vacation,
etc.); provided, however, that nothing herein shall preclude the Company from
amending or terminating any employee or general executive benefit plans or
programs.

         6. TERMINATION.

         A. Voluntary Resignation by Executive (With Good Reason) or Termination
Without Cause by the Company.

         If Executive voluntarily terminates his employment with the Company
with Good Reason, or if the Company terminates Executive without Cause, then (i)
the Company will be obligated to pay Executive's Base Salary through the Date of
Termination; (ii) no Bonus shall be payable for the fiscal year in which the
termination occurs (except as provided below); (iii) the Company shall pay
Executive an amount equal to 100% of Executive's base salary and 100% of
Executive's average bonus for the previous two fiscal years (the "CONSULTING,
SEVERANCE AND NON-COMPETITION PAYMENT") in cash or by check within 15 days of
the Date of Termination (subject to Executive's compliance with this Agreement,
including Sections 7 and 8 as provided therein); (iv) the Company shall
reimburse Executive for COBRA premiums for the period that the Company is
required to offer COBRA coverage as a matter of law; and (v) at the option of
the Company, the Executive shall, for a period of two years following
termination, render consulting services to the Company as may be requested from
time to time by the Chairman of the Board, not to exceed 10 hours per month.
Provided (a) the Company requests Executive to provide consulting services to
the Company pursuant to clause (v) above, and (b) Executive provides (or makes
himself available to provide) such consulting services, any options previously
granted to Executive shall continue to vest as if Executive remained employed by
the Company. If the Company terminates employment under this Agreement without
Cause during

                                     - 2 -
<PAGE>
the last three months of the Company's fiscal year, then Executive will be paid
a pro rata bonus based upon the Company's performance for the fiscal year,
payable at the time set forth in Exhibit A.

         B. Termination upon Death or Disability. If Executive's employment is
terminated as a result of Executive's death or Disability, then the Company will
be obligated to pay (i) Executive's then current Base Salary through the Date of
Termination, (ii) a pro rated amount of Executive's Bonus for the year, payable
at the time set forth in Exhibit A, and (iii) Executive's COBRA premiums for the
period that the Company is required to offer COBRA coverage as a matter of law.
In addition, upon such a termination, the Executive's options granted shall
accelerate and become vested without further action and, to the extent permitted
under the plan's governing documents, Executive shall have a period of one year
from the Date of Termination to exercise such options. If Executive dies or
becomes disabled during any period that the Company is obliged to make payments
under Section 6(A), the Company shall make a lump sum payment to Executive (or
his estate) of any unpaid amount within thirty (30) days of such death or
disability.

         C. Voluntary Termination by Executive (Without Good Reason) or
Termination for Cause by the Company.

                  (1) If the Executive resigns without Good Reason or if the
         Company discharges Executive for Cause, then the Company will be
         obligated to pay Executive's Base Salary through the Date of
         Termination. No bonus shall be payable.

                  (2) Upon a termination for Cause by the Company, the
         provisions of Section 7 (Restrictive Covenant) shall automatically
         become applicable for the periods set forth in Section 7, without any
         further payment due Executive. Executive acknowledges and agrees that
         the compensation herein is adequate consideration for such covenants.

         D. Definitions. For purposes of this Agreement:

                  (1) "CAUSE" and "GOOD REASON" shall have the meanings ascribed
         to them in the Amended and Restated Change of Control Agreement (the
         "CHANGE OF CONTROL AGREEMENT"), effective as of October 15, 2003,

                  (2) "DATE OF TERMINATION" shall mean (i) if this Agreement is
         terminated as a result of Executive's death, the date of Executive's
         death, (ii) if this Agreement is terminated by Executive, the date on
         which he notifies the Company in writing, (iii) if this Agreement is
         terminated by the Company for Disability, the date a notice of
         termination is given, (iv) if this Agreement is terminated by the
         Company for Cause, the date a notice of termination is given to
         Executive by the Company, or (v) if this Agreement is terminated by the
         Company without Cause, the date notice of termination is given to
         Executive by the Company, and

                  (3) "DISABILITY" shall mean a disability that results in
         Executive being medically unable to fulfill his duties under this
         Agreement for six consecutive months.

                                     - 3 -
<PAGE>
         E. Procedures for Notices of Termination. The procedures set forth in
Section 10 (a), (b) and (d) of the Change of Control Agreement shall apply under
this Agreement in connection with a notice of termination as to the kind of
termination events described in those subsections.

         7. RESTRICTIVE COVENANT.

         A. Executive hereby covenants and agrees that for a period of six
months from the Date of Termination, Executive will not engage, directly or
indirectly, either as a principal, partner, joint venturer, consultant or
independent contractor, agent, or proprietor or in any other manner participate
in the ownership, management, operation, or control of any person, firm,
partnership, limited liability company, corporation, or other entity which
engages in the business of providing any products or services, including,
without limitation, homebuilding products or services, which are competitive
with those products or services offered or sold by Company or its subsidiaries
within any jurisdiction in which Company or its subsidiaries does or proposes to
do business.

         B. Executive hereby covenants and agrees that for a period of one year
from the Date of Termination, Executive will not:

                  (1) Directly or indirectly solicit for employment (whether as
         an employee, consultant, independent contractor, or otherwise) any
         person who is an employee, independent contractor or the like of the
         Company or any of its subsidiaries, unless Company gives its written
         consent to such employment or offer of employment.

                  (2) Call on or directly or indirectly solicit or divert or
         take away from Company or any of its subsidiaries (including, without
         limitation, by divulging to any competitor or potential competitor or
         company or its subsidiaries) any person, firm, corporation, or other
         entity who was a customer or prospective customer of the Company during
         Executive's term of employment.

         C. The covenants set forth in this Section 7 shall begin as of the date
hereof and will survive the termination of employment under Section 6.

         8. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.

         A. It is understood that in the course of Executive's employment with
Company, Executive will become acquainted with Company Confidential Information
(as defined below). Executive recognizes that Company Confidential Information
has been developed or acquired at great expense, is proprietary to the Company,
and is and shall remain the exclusive property of the Company. Accordingly,
Executive agrees that he will not, disclose to others, copy, make any use of, or
remove from Company's premises any Company Confidential Information, except as
Executive's duties may specifically require, without the express written consent
of the Company, during Executive's employment with the Company and thereafter
until such time as Company Confidential Information becomes generally known, or
readily ascertainable by proper means by persons unrelated to the Company.

                                     - 4 -
<PAGE>
         B. Upon any termination of employment, Executive shall promptly deliver
to the Company the originals and all copies of any and all materials, documents,
notes, manuals, or lists containing or embodying Company Confidential
Information, or relating directly or indirectly to the business of the Company,
in the possession or control of Executive.

         C. Executive hereby agrees that the period of time provided for in this
Section 8 and other provisions and restrictions set forth herein are reasonable
and necessary to protect the Company and its successors and assigns in the use
and employment of the goodwill of the business conducted by Executive. Executive
further agrees that damages cannot compensate the Company in the event of a
violation of this Section 8 and that, if such violation should occur, injunctive
relief shall be essential for the protection of the Company and its successors
and assigns. Accordingly, Executive hereby covenants and agrees that, in the
event any of the provisions of this Section 8 shall be violated or breached, the
Company shall be entitled to obtain injunctive relief against the party or
parties violating such covenants, without bond but upon due notice, in addition
to such further or other relief as may be available at equity or law. Obtainment
of such an injunction by the Company shall not be considered an election of
remedies or a waiver of any right to assert any other remedies which the Company
has at law or in equity. No waiver of any breach or violation hereof shall be
implied from forbearance or failure by the Company to take action thereof. The
prevailing party in any litigation, arbitration or similar dispute resolution
proceeding to enforce this provision will recover any and all reasonable costs
and expenses, including attorneys' fees.

         D. "COMPANY CONFIDENTIAL INFORMATION" shall mean confidential,
proprietary information or trade secrets of Company and its subsidiaries and
affiliates including without limitation the following: (1) customer lists and
customer information as compiled by Company; (2) Company's internal practices
and procedures; (3) Company's financial condition and financial results of
operation; (4) supply of materials information, including sources and costs,
designs, information on land and lot inventories, and current and prospective
projects; (5) strategic planning, manufacturing, engineering, purchasing,
finance, marketing, promotion, distribution, and selling activities; (6) all
other information which Executive has a reasonable basis to consider
confidential or which is treated by Company as confidential; and (7) all
information having independent economic value to Company that is not generally
known to, and not readily ascertainable by proper means by, persons who can
obtain economic value from its disclosure or use. Notwithstanding the foregoing
provisions, the following shall not be considered "Company Confidential
Information": (i) the general skills of the Executive as an experienced real
estate and homebuilding senior management level employee; (ii) information
generally known by senior management executives within the homebuilding and/or
land development industry; (iii) persons, entities, contacts or relationships of
Executive that are also generally known in the industry; and (iv) information
which becomes available on a non-confidential basis from a source other than
Executive which source is not prohibited from disclosing such confidential
information by legal, contractual or other obligation.

         9. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any applicable law, then such provision
will be deemed to be modified to the extent necessary to render it legal, valid
and enforceable, and if no such modification will make the provision legal,
valid and enforceable, then this Agreement will be construed as if not

                                     - 5 -
<PAGE>
containing the provision held to be invalid, and the rights and obligations of
the parties will be construed and enforced accordingly.

         10. ASSIGNMENT BY COMPANY. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation or entity that assumes
this Agreement and all obligations and undertakings hereunder. Upon such
consolidation, merger or transfer of assets and assumption, the term "Company"
as used herein shall mean such other corporation or entity, as appropriate, and
this Agreement shall continue in full force and effect.

         11. ENTIRE AGREEMENT. This Agreement, the Change of Control Agreement
with Executive, and any agreements concerning stock options or other benefits,
embody the complete agreement of the parties hereto with respect to the subject
matter hereof and supersede any prior written, or prior or contemporaneous oral,
understandings or agreements between the parties that may have related in any
way to the subject matter hereof. This Agreement may be amended only in writing
executed by the Company and Executive. Notwithstanding the foregoing, nothing in
this Agreement is intended to affect any previous agreements pertaining to the
grant of options to the Executive, including without limitation, provisions in
Executive's prior Change of Control Agreement, providing for acceleration upon a
change-in-control.

         12. GOVERNING LAW. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement, shall be governed by and
construed in accordance with the internal laws, and not the law of conflicts, of
the State of Arizona.

         13. NOTICE. Any notice required or permitted under this Agreement must
be in writing and will be deemed to have been given when delivered personally or
by overnight courier service or three days after being sent by mail, postage
prepaid, at the address indicated below or to such changed address as such
person may subsequently give such notice of:

                  if to Parent or Company:   Meritage Corporation
                                             8501 E. Princess Drive, Suite 290
                                             Scottsdale, Arizona 85255
                                             Attention: Chief Executive Officer

                  with a copy to:            Snell & Wilmer L.L.P.
                                             One Arizona Center
                                             400 E. Van Buren Street
                                             Phoenix, Arizona 85004-0001
                                             Phone: (602) 382-6252
                                             Fax:  (602) 382-6070
                                             Attn:  Steven D. Pidgeon, Esq.

                  if to Executive:           Larry W. Seay
                                             802 W. El Caminito Dr.
                                             Phoenix, Arizona 85021
                                             Phone: (602) 943-3128

                                     - 6 -
<PAGE>
                  with a copy to:            Gallagher & Kennedy, P.A.
                                             2575 E. Camelback Road, Suite 1100
                                             Phoenix, Arizona 85016-9225
                                             Phone: (602) 530-8407
                                             Fax: (602) 530-8500
                                             Attn: Jay A. Zweig, Esq.

         14. ARBITRATION. Any dispute, controversy, or claim, whether
contractual or non-contractual, between the parties hereto arising directly or
indirectly out of or connected with this Agreement, relating to the breach or
alleged breach of any representation, warranty, agreement, or covenant under
this Agreement, unless mutually settled by the parties hereto, shall be resolved
by binding arbitration in accordance with the Employment Arbitration Rules of
the American Arbitration Association (the "AAA"). Any arbitration shall be
conducted by arbitrators approved by the AAA and mutually acceptable to Company
and Executive. All such disputes, controversies, or claims shall be conducted by
a single arbitrator, unless the dispute involves more than $50,000 in the
aggregate in which case the arbitration shall be conducted by a panel of three
arbitrators. If the parties hereto are unable to agree on the arbitrator(s),
then the AAA shall select the arbitrator(s). The resolution of the dispute by
the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable
by a court of competent jurisdiction under the Federal Arbitration Act. The
arbitrator(s) shall award damages to the prevailing party. The arbitration award
shall be in writing and shall include a statement of the reasons for the award.
The arbitration shall be held in the Phoenix/Scottsdale metropolitan area. The
arbitrator(s) shall award reasonable attorneys' fees and costs to the prevailing
party.

         15. WITHHOLDING; RELEASE; NO DUPLICATION OF BENEFITS. All of
Executive's compensation under this Agreement will be subject to deduction and
withholding authorized or required by applicable law. The Company's obligation
to make any post-termination payments hereunder (other than salary payments and
expense reimbursements through a date of termination), shall be subject to
receipt by the Company from Executive of a mutually agreeable release, and
compliance by Executive with the covenants set forth in Sections 7 and 8 hereof.
If there is any conflict between the provisions of the Change of Control
Agreement and this Agreement, such conflict shall be resolved so as to provide
the greater benefit to Executive. However, in order to avoid duplication of any
monetary benefits, any payments or benefits due under Executive's Change of
Control Agreement, will be reduced by any payments or benefits provided
hereunder.

         16. SUCCESSORS AND ASSIGNS. This Agreement is solely for the benefit of
the parties and their respective successors, assigns, heirs and legatees.
Nothing herein shall be construed to provide any right to any other entity or
individual.

         17. RELATED PARTY TRANSACTIONS. Executive may not engage in any related
party transactions with the Company unless approved in the specific instance by
the Audit Committee of the Board of Directors of Meritage Corporation.

                                     - 7 -
<PAGE>
         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.

                                        MERITAGE CORPORATION, a Maryland
                                        corporation

                                        By: /s/ Steven J. Hilton
                                            -----------------------------

                                        Name:
                                              ---------------------------

                                        Title:
                                               --------------------------

                                        EXECUTIVE:  LARRY W. SEAY

                                        /s/ Larry W. Seay
                                        ---------------------------------

                                     - 8 -
<PAGE>
                                    EXHIBIT A

                         INCENTIVE COMPENSATION SCHEDULE

                             CFO BONUS COMPENSATION

BASE SALARY           $250,000; $262,500 (effective, June 30, 2003)

PART I - BONUS

<TABLE>
<S>                  <C>
2003                 -    For 2003, as provided in the plan previously approved.

2004/05              -    For 2004 and 2005 and any Renewal Term, Executive
                          shall be entitled to a bonus equal to 0.40% of the
                          EBITDA if Company's ROA and ROE are each in the top
                          1/2 of public homebuilders having revenues of $500
                          million or more per year, based upon revenues for the
                          preceding year.

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

                     -    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.
</TABLE>

PART II - PAYMENT

The bonus shall be paid within a reasonable time after year-end, but, in any
event, no later than 10 days after ROE and ROA information on public
homebuilders becomes available. Executive does not have to wait until the Form
10-K is filed with the SEC.<PAGE>
                                                                    EXHIBIT 10.8

                              AMENDED AND RESTATED
                           CHANGE OF CONTROL AGREEMENT
                           Effective October 15, 2003
                        (Original Date: February 1, 2000)

Dear Larry:

         The Board of Directors believes that it is in the best interests of
Meritage 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 is effective immediately 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 90 days prior to or within two years
following a "Change of Control" (as defined in Section 6), you will receive the
"Severance Payment" described below. You will also receive the Severance 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 Severance Payment equals the sum of (i) two times the higher of (x)
your annual base salary on the date of termination of your employment, or (y)
your annual base salary on the date preceding the Change of Control, and (ii)
two times the highest of the following: (x) your average incentive compensation
for the two years prior to termination of your employment, (y) your incentive
compensation for the year preceding the year in which the Change of Control
occurred, or (z) your "Minimum Incentive Compensation Amount" (as defined below
in Section 4).

         The Severance 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 Severance 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 notice of termination). In addition, you are not entitled to receive the
Severance Payment if your employment is terminated by you or the Company for any
or no reason prior to 90 days before a Change of Control occurs or more than two
years after a Change of Control has occurred.

<PAGE>
         In order to receive the Severance Payment, you must execute any release
reasonably requested by the Company.

         The Severance 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 severance under Section 2, you will continue to
receive life, accident and group health 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 Executive 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
after the date hereof (previous options being governed by Executive's prior
agreements) shall accelerate and become vested without further action and, to
the extent permitted under the plan's governing documents, Executive shall have
a period of one year from the date of termination to exercise such options.

         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

                                       2
<PAGE>
this Section, the term "Person" shall mean and include any individual,
partnership, joint venture, association, trust, corporation, 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 an 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.

         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 reduced or the potential incentive compensation (or bonus) to which you may
become entitled to at any level of performance by you or the Company is 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 Chief Financial Officer or comparable position of the parent
corporation of the surviving organization, 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.

                                       3
<PAGE>
         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 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.

                  (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

                                       4
<PAGE>
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 Disability or 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 and/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 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 and/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,

                                       5
<PAGE>
addressed as shown in the Employment Agreement, provided that all notices to
Meritage shall be directed to the attention of the Chairman of the Board of
Meritage or 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.

         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 he 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 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, and you are the prevailing party, you
shall recover from the Company any 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 you
calculated at the rate of interest

                                       6
<PAGE>
announced by Bank of America, Arizona from time to time as its prime rate from
the date that payments to you should have been made under this Agreement,
provided that such interest rate shall not be less than eight percent. It is
expressly provided that the Company shall in no event recover from you any
attorneys' fees, costs, disbursements or interest as a result of any dispute or
legal proceeding involving the Company and you.

         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, 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. However, the Company does not intend to provide
duplicative benefits with its employment agreement. As a result, benefits
otherwise receivable pursuant to this Agreement shall be reduced or eliminated
if and to the extent that you receive severance, consulting or non-competition
payments or benefits pursuant to any employment agreement you may have with the
Company.

         21. ENTIRE AGREEMENT.

         This Agreement, your Employment Agreement and your 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. Notwithstanding the foregoing, nothing in this Agreement is
intended to affect any previous agreements pertaining to the grant of options to
the Executive, including without limitation, provisions set forth in Executive's
prior Change of Control Agreement providing for acceleration upon a
change-in-control.

         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/or executive compensation consultants selected
by Meritage but who shall be reasonably acceptable to you. Meritage will notify
you as soon as it becomes aware

                                       7
<PAGE>
of specific information that may cause it to exercise its discretion to require
deferral and shall 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 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).

         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 the extra copy of this letter which is enclosed.

                                             Sincerely,

                                             MERITAGE CORPORATION

                                             By: /s/ Steven S. Hilton
                                             ---------------------------------
                                             Name:
                                             ---------------------------------
                                             Its:
                                             ---------------------------------

Enclosure

                                   ACCEPTANCE

         I hereby accept the offer to participate in this special benefits
program and I agree to be bound by all of the provisions noted above.

                                             LARRY W. SEAY

                                             /s/ Larry W. Seay
                                             ---------------------------------

                                       8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]