Document:

Exhibit
10.2

 

LARRY W. SEAY

THIRD AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

(Effective as of January 1, 2010)

 

This Employment Agreement (“Agreement”)
is entered into on January 19, 2010 by and between Meritage Homes Corporation, a Maryland corporation (“Company”) and Larry W. Seay, an
individual (“Executive”)
effective as of January 1, 2010 (“Effective Date”).

 

RECITALS

 

WHEREAS, the Executive is currently employed by the Company as its Chief
Financial Officer, Executive Vice President and Secretary of the Company;

 

WHEREAS, Company and the Executive previously entered into two
amended and restated employment agreements defining the terms and conditions of
Executive’s employment with the Company, dated as of July 1, 2003 and January 1,
2007 (“Original Agreement”);

 

WHEREAS, the Original Agreement provided Executive with certain
rights, responsibilities and benefits;

 

WHEREAS, the Company and Executive believe that it is in the best
interest of each to make certain other changes to Executive’s terms and conditions
of his employment with the Company; and

 

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 to amend and restate the Original Agreement as follows:

 

1.             Employment. 
Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive as Executive Vice President and Chief Financial
Officer of the Company, and Executive agrees to diligently perform the duties
associated with such positions. 
Executive will report directly to the Chairman and Chief Executive
Officer.  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.  Except as
otherwise specifically listed on Schedule 1, during the term of this Agreement
(as set forth in Section 2), Executive shall be prohibited from engaging
in any personal land banking or lot or land development without the prior
written consent of the Board.

 

2.             Term.  Executive will be employed under this Agreement until December 31,
2012, unless Executive’s employment is terminated earlier pursuant to Section 6.  Thereafter, the 

 

 

Agreement will
automatically renew for additional periods of one year (“Renewal Term(s)”),
unless on or before August 31, 2012 (or August 31 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.             Base Salary.  The Company will pay Executive a base salary (“Base Salary”) at the annual rate of $500,000
per year.  The Board may adjust Executive’s
Base Salary from time to time, provided that the Base Salary may not be reduced
without Executive’s consent.  The Base
Salary will be payable in accordance with the payroll practices of the Company
in effect from time to time.

 

4.             Incentive Compensation.

 

A.            Bonus.  Executive
may, as determined in the discretion of the Compensation Committee of the Board
(“Committee”), be entitled to annual incentive compensation based on the
achievement of certain goals and performance criteria established pursuant to
the Company’s 2006 Executive Management Incentive Plan as specified in Exhibit A
hereto (“Bonus”).  The Committee has the complete discretion to act
reasonably to reduce the amount of the annual incentive compensation
established pursuant to Exhibit A (the “Actual Bonus”) and any such
Actual Bonus, if any, will be due and payable in accordance with Exhibit A.

 

B.            Long-Term Incentives.  In
February, 2009, the Committee granted to Executive 75,000 shares of restricted
Company stock (“Restricted Shares”) under the Company’s 2006 Stock Incentive
Plan (“2006 Plan”) which will vest ratably in 2010, 2011 and 2012 if certain
conditions are satisfied.  This
Restricted Shares grant was designed to constitute equity award grants for
2009, 2010 and 2011; provided, however that the Committee will continue to
review the Company’s operating results and may from time to time consider
additional stock option and/or restricted stock grants.  For years after 2011, the Committee shall
grant Executive an option to purchase a minimum of 36,667 shares of Company
stock or such equivalent number of shares subject to full value awards as the
Committee determines in its discretion. 
The Restricted Shares grant and any options or other equity-based awards
shall, upon termination of Executive’s employment under Section 6.B., C or
E or the nonrenewal of this Agreement, be immediately accelerated and become
fully vested without further action and all restrictions on such awards shall
immediately lapse.  Such restricted
stock, options and other equity-based awards shall also be subject to the
accelerated vesting and other provisions set forth in the Amended and Restated
Change in Control Agreement between Executive and Company, effective as of January 1,
2010 (“CIC Agreement”).

 

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 Time Off, etc.);
provided, however, that nothing herein shall preclude the Company from amending
or terminating any employee or general executive benefit plans or programs.  The Company shall provide Executive with $3,000,000
of term life insurance (subject to the Executive’s insurability), to which the
Company will pay up to $20,000 of annual premium payments towards the purchase
of such life insurance.

 

2

 

6.             Termination.

 

A.            Voluntary Resignation by Executive without Good
Reason.  If Executive voluntarily terminates his
employment with the Company without Good Reason, 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; and
(iii) the Company shall not pay or reimburse Executive for COBRA premiums
for the period that the Company is required to offer COBRA coverage as a matter
of law.

 

B.            Voluntary Resignation by Executive with Good
Reason.  If Executive voluntarily terminates his
employment with the Company with Good Reason, then (i) the Company will be
obligated to pay Executive’s Base Salary through the Date of Termination and
any Bonus earned in a previous year but not yet paid; (ii) no Bonus shall
be payable for the fiscal year in which the termination occurs; (iii) the
Company shall pay or reimburse Executive for COBRA premiums for the period that
the Company is required to offer COBRA coverage as a matter of law; (iv) at
the Company’s option, the Executive shall render reasonable consulting services
to the Company during the 12-month period following termination of employment
as may be requested from time to time by the Chairman of the Committee; (v) any
restricted stock, options and other equity-based awards previously granted will
become fully vested and exercisable and all restrictions on restricted stock
awards will lapse; and (vi) the Company will pay Executive an amount equal
to the sum of (A) two times Executive’s Base Salary on the Date of Termination
of employment, and (B) two times the higher of (x) the average of the
Actual Bonus compensation Executive earned for the two years prior to his
termination of employment, or (y) the annual bonus paid to Executive for the
year preceding the date of termination. 
For purposes of determining the amount of the Executive’s Bonus paid for
any year during the above two-year period, the amount of the Bonus compensation
considered paid for purposes of this provision shall be the greater of (a) the
actual Bonus paid to the Executive, or (b) the actual stock price on the
day of grant of the shares of the Company’s restricted stock, stock options or
other equity awards that became vested in such year); provided, however that
the total amount set forth in this Section 6.B.(v) shall not exceed $3
million.  Unless otherwise provided in
this Agreement, this amount shall be paid in a lump-sum payment within 60 days
following Executive’s termination of employment.  If the Company requests Executive to provide
consulting services to the Company pursuant to clause (iv) above, the
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. 
In addition, in no event will the Executive be required to provide
services to Company pursuant to this Section 6.B. at a level that exceeds
20% or less of the average level of bona fide services Executive provided to Company
in the immediately preceding 36 months.

 

C.            Termination without Cause by the Company. 
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 and any Bonus earned in a previous year but not yet paid; (ii) no
Bonus shall be payable for the fiscal year in which the termination occurs,
except if the Company terminates Executive’s employment without Cause during
the last six months of the Company’s fiscal year, Executive will be paid a pro
rata bonus based upon the Company’s performance for the fiscal year, payable in
accordance with the terms and conditions and at the time all as set forth in Exhibit A;
(iii) the Company shall pay or reimburse Executive for COBRA premiums for
the period that the Company is required to offer COBRA coverage as a matter of
law; (iv) any restricted stock, 

 

3

 

options and other
equity-based awards previously granted will become fully vested and exercisable
and all restrictions on awards will lapse; (v) at the Company’s option,
the Executive shall render reasonable consulting services to the Company during
the 12-month period following termination of employment as may be requested
from time to time by the Chairman of the Committee; and (vi) the Company
will pay Executive an amount equal to the sum of sum of (A) one times
Executive’s Base Salary on the Date of Termination of employment, and (B) the
average of the Actual Bonus compensation Executive earned in the two years
prior to his termination of employment (for purposes of determining the amount
of the Executive’s Bonus paid for any year during this two-year period, the
amount of the Bonus compensation considered paid for purposes of this provision
shall be the greater of (x) the actual Bonus paid to the Executive, or (y) the
actual stock price on the day of grant of the shares of the Company’s
restricted stock, stock options or other equity awards that became vested in
such year); provided, however, that the amount set forth in this Section 6(c)(vi) shall
not exceed $2 million.  Unless otherwise
provided in this Agreement, this amount shall be paid in a lump-sum payment
within 60 days following Executive’s termination of employment.  If the Company requests Executive to provide
consulting services to the company pursuant to clause (v) above, the
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. 
In addition, in no event will the Executive be required to provide
services to Company pursuant to this Section 6(C) at a level that
exceeds 20% or less of the average level of bona fide services Executive
provided to Company in the immediately preceding 36 months

 

D.            Termination for Cause by the Company.  If
the Company terminates Executive’s employment for Cause, then, (i) the
Company will be obligated to pay Executive’s Base Salary through the Date of
Termination and any Bonus earned in a previous year but not yet paid; and (ii) no
Bonus shall be payable for the fiscal year in which the termination
occurs.  Upon a termination for Cause by
the Company, the provisions of Section 7 (Restrictive Covenant)
shall automatically become applicable for the six-month period set forth
therein, without any further payment due Executive.  Executive acknowledges and agrees that the
compensation herein is adequate consideration for such covenants.

 

E.             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 and any Bonus earned
in a previous year but not yet paid, (ii) a pro rated amount of Executive’s
Actual Bonus for the year, payable at the time set forth in Exhibit A,
(iii) Executive’s COBRA premiums for the period that the Company is
required to offer COBRA coverage as a matter of law; and (iv) any restricted
stock, options and other equity-based awards previously granted will become
fully vested and exercisable and all restrictions on awards will lapse and, to
the extent permitted under the plan’s governing documents, Executive (or
Executive’s beneficiary(ies)) shall have a period of one year from the Date of
Termination of employment to exercise such options (or if shorter, the
expiration date of the option).  If
Executive dies or becomes Disabled during any period that the Company is
obliged to make payments under Section 6.B. or C, 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.

 

F.             Definitions. 
For purposes of this Agreement:

 

(1)           “Cause”
and “Good Reason” shall have the
meanings ascribed to them in the CIC Agreement, provided, that Good Reason also
exists under this Agreement if 

 

4

 

(A) the Company fails to cause any successor to immediately assume
the terms of this Agreement, or (B) the Company materially breaches its
obligations under this Agreement and such breach is not cured within a
reasonable period of time not to exceed 30 days after written notice from the
Executive;

 

(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 (but following the Company’s opportunity to cure as provided
in the CIC Agreement), (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 final
determination is provided to Executive by the Company (following the procedures
set forth in the CIC Agreement), 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 if, by reason of any medically determinable physical or metal
impairment which actually hinders Executive’s ability to perform his job and
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, Executive is receiving income
replacement benefits for a period of not less than six months under an accident
and health plan established by the Company for its employees.

 

(4)           “Separation from Service”
means, either (a) termination of Executive’s employment with Company and
all Affiliates, or (b) a permanent reduction in the level of bona fide
services Executive provides to Company and all Affiliates to an amount that is
20% or less of the average level of bona fide services Executive provided to
Company in the immediately preceding 36 months, with the level of bona fide
service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii).  Solely for purposes of determining whether
Executive has a “Separation from Service,” Executive’s employment relationship
is treated as continuing while Executive is on military leave, sick leave, or
other bona fide leave of absence (if the period of such leave does not exceed
six months, or if longer, so long as Executive’s right to reemployment with Company
or an Affiliate is provided either by statute or contract).  If Executive’s period of leave exceeds six
months and Executive’s right to reemployment is not provided either by statute
or by contract, the employment relationship is deemed to terminate on the first
day immediately following the expiration of such six-month period.  Whether a termination of employment has
occurred will be determined based on all of the facts and circumstances and in
accordance with regulations issued by the United States Treasury Department
pursuant to Section 409A of the Code.

 

G.            Procedures for Notices of Termination. 
The procedures set forth in Section 8(a), (b) and (d) of
the CIC Agreement shall apply under this Agreement in connection with a notice
of termination as to the kind of termination events described in those subsections.

 

H.            Release Agreement. 
Notwithstanding anything to the contrary herein, no payment shall be
made under this Section 6 unless Executive executes (and does not
revoke) a legal release (“Release Agreement”), in the form and substance
reasonably requested by the Company, in which Executive releases the Company,
Affiliates, directors, officers, employees, agents and others 

 

5

 

affiliated with the Company
from any and all claims, including claims relating to Executive’s employment
with the Company and the termination of Executive’s employment.  The Release Agreement shall be provided to
Executive within 5 days following Executive’s termination of employment (or “Separation
from Service” if Executive is a “Specified Employee”).  The Release Agreement must be executed and
returned to the Company within the 21 or 45 day (as applicable) period
described in the Release Agreement and it must not be revoked by Executive
within the 7-day revocation period described in the Release Agreement.

 

I.              Compliance with Section 409A of the Internal
Revenue Code.  Any payment under this Section 6 shall
be subject to the provisions of this Section 7.I. (except for a payment
pursuant to Section 6.E.).  If
Executive is a “Specified Employee” of the Company for purposes of Internal
Revenue Code Section 409A (“Code Section 409A”) at the time of a
payment event set forth in Sections 6.B. or C, and if no exception from Section 409A
applies in whole or impart, then the severance or other payments pursuant to Section 6.C.(vi) shall
be made to Executive by the Company on the first day of the seventh month
following the date of the Executive’s Separation from Service (the “409A Payment
Date”), should this Section 6.I. result in a delay of payments to
Executive, the Company shall begin to make such payments as described in this Section 6,
provided that any amounts that would have been payable earlier but for the
application of this paragraph 6.I., shall be paid in lump-sum on the 409A
Payment Date along with accrued interest at the rate of interest 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.  The balance of such severance payments shall
be payable in accordance with regular payroll timing and the COBRA premiums
shall be paid or reimbursed monthly.  For
purposes of this provision, the term Specified Employee shall have the meaning set
forth in Section 409A(a)(2)(B)(i) of the Internal Revenue Code of
1986, as amended or any successor provision and the treasury regulations and
rulings issued hereunder.

 

7.             Restrictive Covenant.

 

A.            Executive hereby covenants and agrees that for a period
of two years from the Date of Termination, Executive will not:

 

(1)           Directly or indirectly hire or solicit
for employment for any other business entity other than the Company (whether as
an employee, consultant, independent contractor, or otherwise) any person who
is, or within the six month period preceding the date of such activity was, 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.

 

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

 

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.

 

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 

 

7

 

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.             Cooperation; No Disparagement. 
During the one-year period following the Executive’s Date of
Termination, Executive agrees to provide reasonable assistance to the Company
(including assistance with litigation matters), upon the Company’s request,
concerning the Executive’s previous employment responsibilities and functions
with the Company.  Additionally, at all
times after the Executive’s employment with the Company has terminated, Company
and Executive agree to refrain from making any disparaging or derogatory
remarks, statements and/or publications regarding the other, its employees or
its services.  In consideration for such
cooperation, Company shall compensate Executive for the time Executive spends
on such cooperative efforts (at an hourly rate based on Executive’s total
compensation during the year preceding the Date of Termination) and Company
shall reimburse Executive for his reasonable out-of-pocket expenses Executive
incurs in connection with such cooperative efforts.

 

10.           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 containing the provision held
to be invalid, and the rights and obligations of the parties will be construed
and enforced accordingly.

 

11.           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.

 

12.           Entire Agreement.  This
Agreement, the CIC Agreement, and any agreements concerning stock options,
restricted stock 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 prior to the Effective Date, including
without limitation, provisions in Executive’s prior Change of Control
Agreement, providing for acceleration upon a change of control.

 

13.           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.

 

14.           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 

 

8

 

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 Homes Corporation

  
	
   

  	
  17851 N. 85th Street,
  Suite 300

  
	
   

  	
  Scottsdale, Arizona 85255

  
	
   

  	
  Attention:  Chief Executive Officer

  
	
   

  	
   

  
	
  if
  to Executive:

  	
  Larry W. Seay

  
	
   

  	
  802 W. El Caminito Drive

  
	
   

  	
  Phoenix, Arizona 85021

  
	
   

  	
  Phone:  (602) 943-3128

  

 

15.           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”).  The parties agree that before the proceeding
to arbitration that they will mediate their disputes before the AAA by a
mediator approved by 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 mediator or 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 Company shall pay all AAA, mediation, and
arbitrator’s fees and costs.  The
arbitrator(s) shall award reasonable attorneys’ fees and costs to the
prevailing party.

 

16.           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 CIC 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 CIC Agreement or under any employee severance plan to the extent
such a plan exists or is subsequently implemented by the Company, will be
reduced by any payments or benefits provided hereunder.  This offset provision shall not apply to
accrued but unused paid time off amounts.

 

17.           Effect of Restatement of Financial Results. 
Notwithstanding anything in this Agreement to the contrary, to the
extent any financial results are misstated as a result of Executive’s willful
misconduct or gross negligence, and as a result such financial results are
subsequently 

 

9

 

restated downward
resulting in lower levels of bonuses pursuant to Section 4 and the
accompanying Exhibit A, offsets shall be made against future bonuses.  If such future bonuses are insufficient to
offset the full difference between awarded bonuses and restated bonuses and/or
if such restatement occurs at the end of the Agreement Term and subsequent
Renewal Term(s), if any, bonuses previously earned and delivered under this
Agreement may be clawed-back.

 

18.           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.

 

19.           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.

 

IN WITNESS WHEREOF, the parties
have executed and delivered this Agreement as of the date first above written.

 

	
   

  	
  MERITAGE HOMES CORPORATION, a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven J. Hilton

  
	
   

  	
  Name:

  	
  Steven
  J. Hilton

  
	
   

  	
  Title:

  	
  Chairman
  and CEO

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE: LARRY W. SEAY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Larry W. Seay

  

 

10

 

EXHIBIT A

 

INCENTIVE COMPENSATION SCHEDULE

 

CFO
Bonus Compensation

 

Part I — Bonus

 

	
  2010 and any Renewal Term

  	
  For
  2010 (and any Renewal Term), Executive may, in the Board’s reasonable
  discretion, be entitled to a maximum bonus equal to .20% of the EBITDA
  (excluding impairments, one-time bond, refinancing, offering, significant
  litigation, settlement payments, by the Company and similar costs associated
  with one-time or extraordinary events) if Company’s ROA is in the top 1/2 of
  public homebuilders having revenues of $500 million or more per year, and an
  additional .20% of EBITDA if the Company’s ROE is in the top 1/2 of these
  public homebuilders.  If either
  measurement falls within the 33% to 49% percentile, the bonus shall be .13%
  of EBITDA for the applicable measurement. 
  If either measurement falls below the 33% threshold, then there will
  not be any formula bonus paid with respect to such measurement.  Such bonus calculation will be determined
  before taking into account the deduction for the compensation of (i) the
  Executive; (ii) the Chief Executive Officer; (iii) the General
  Counsel; and (iv) the Chief Operating Officer.  This bonus is established pursuant to, and
  its terms and conditions shall be subject to, the Company’s 2006 Executive
  Management Incentive Plan.  Notwithstanding
  the above, the above calculation of EBITDA assumes that the Company makes an
  actual profit before calculating EBITDA. 
  If the Company does not make an actual profit before calculating
  EBITDA, no bonus will be paid.

  

 

Part II — Payment

 

Any
bonus shall be paid in the form and time as determined by the Board in its reasonable
discretion, provided that the bonus shall be paid in cash no later than the
later of (i) March 15 of the year following the calendar year to
which the payment relates, or (ii) the date that is two and one-half
months following the end of the Company’s fiscal year to which the payment
relates.

 

In
addition, the Board at its discretion may award a subjective bonus to
Executive.

 

A-1Exhibit
10.3

 

C. TIMOTHY WHITE

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

(Effective as of January 1, 2010)

 

This Employment Agreement (“Agreement”)
is entered into on January 19, 2010 by and between Meritage Homes Corporation, a Maryland corporation (“Company”) and C. Timothy White,
an individual (“Executive”)
effective as of January 1, 2010 (“Effective Date”).

 

RECITALS

 

WHEREAS, the Executive is currently employed by the Company as its Executive
Vice President and General Counsel of the Company;

 

WHEREAS, Company and the Executive previously entered into an
amended and restated employment agreement defining the terms and conditions of
Executive’s employment with the Company, dated as of September 30, 2005, (“Original
Agreement”);

 

WHEREAS, the Original Agreement provided Executive with certain rights,
responsibilities, and benefits;

 

WHEREAS, the Company and Executive believe that it is in the best
interest of each to make certain changes to Executive’s terms and conditions of
his employment with the Company; and

 

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 to amend and restate the Original Agreement as follows:

 

1.             Employment. 
Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive as Executive Vice President and General Counsel of
the Company, and Executive agrees to diligently perform the duties associated
with such positions.  Executive will
report directly to the Chairman and Chief Executive Officer.  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.  Except as otherwise specifically listed on
Schedule 1, during the term of his employment under this Agreement (as set
forth in Section 2) Executive shall be prohibited from engaging in
any personal land banking or lot or land development without the prior written
consent of the Board.

 

2.             Term.  Executive will be employed under this Agreement until December 31,
2012, unless Executive’s employment is terminated earlier pursuant to Section 6.  Thereafter, the 

 

 

Agreement will
automatically renew for additional periods of one year (“Renewal Term(s)”),
unless on or before August 31, 2012 (or August 31 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.             Base Salary.  The Company will pay Executive a base salary (“Base Salary”) at the annual rate of $525,000
per year.  The Board may adjust Executive’s
Base Salary from time to time, provided that the Base Salary may not be reduced
without Executive’s consent.  The Base
Salary will be payable in accordance with the payroll practices of the Company
in effect from time to time.

 

4.             Incentive Compensation.

 

A.            Bonus.  Executive
may, as determined in the discretion of the Compensation Committee of the Board
(“Committee”), be entitled to annual incentive compensation based on the
achievement of certain goals and performance criteria established pursuant to
the Company’s 2006 Executive Management Incentive Plan as specified in Exhibit A
hereto (“Bonus”).  The Committee has the complete discretion to act
reasonably to reduce the amount of the annual incentive compensation
established pursuant to Exhibit A (the “Actual Bonus”) and any such
Actual Bonus, if any, will be due and payable in accordance with Exhibit A.

 

B.            Long-Term Incentives.  In
February, 2009, the Committee granted to Executive 75,000 shares of restricted
Company stock (“Restricted Shares”) under the Company’s 2006 Stock Incentive
Plan (“2006 Plan”) which will vest ratably in 2010, 2011 and 2012 if certain
conditions are satisfied.  This
Restricted Shares grant was designed to constitute equity award grants for 2009,
2010 and 2011; provided, however that the Committee will continue to review the
Company’s operating results and may from time to time consider additional stock
option and/or restricted stock grants.  For
years after 2011, the Committee shall grant Executive an option to purchase a
minimum of 15,000 shares of Company stock or such equivalent number of shares
subject to full value awards as the Committee determines in its discretion.  The Restricted Shares grant and any options or
other equity-based awards shall, upon termination of Executive’s employment
under Section 6.B., C or E or the nonrenewal of this Agreement, be
immediately accelerated and become fully vested without further action and all
restrictions on such awards shall immediately lapse.  Such restricted stock, options and other
equity-based awards shall also be subject to the accelerated vesting and other
provisions set forth in the Amended and Restated Change in Control Agreement
between Executive and Company, effective as of January 1, 2010 (“CIC
Agreement”).

 

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 employees generally
and senior management (e.g., health
and life insurance, Paid Time Off, etc.); provided, however, that nothing
herein shall preclude the Company from amending or terminating any employee or
general executive benefit plans or programs.  The Company shall provide Executive with $3,000,000
of term life insurance (or reimbursement for the premiums paid by Executive for
such policy) disability insurance with monthly benefits of $20,000 in the event
of Executive’s total disability (or reimbursement for the premiums paid by
Executive for such policy).

 

2

 

6.             Termination.

 

A.            Voluntary Resignation by Executive without Good
Reason.  If Executive voluntarily terminates his
employment with the Company without Good Reason, 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; and
(iii) the Company shall not pay or reimburse Executive for COBRA premiums
for the period that the Company is required to offer COBRA coverage as a matter
of law.

 

B.            Voluntary Resignation by Executive with Good
Reason.  If Executive voluntarily terminates his
employment with the Company with Good Reason, then (i) the Company will be
obligated to pay Executive’s Base Salary through the Date of Termination and
any Bonus earned in a previous year but not yet paid; (ii) no Bonus shall
be payable for the fiscal year in which the termination occurs, except if the
Executive terminates his employment for Good Reason during the last six months
of the Company’s fiscal year, Executive will be paid a pro rata bonus based
upon the Company’s performance for the fiscal year, payable in accordance with
the terms and conditions and at the time all as set forth in Exhibit A;
(iii) the Company shall pay or reimburse Executive for COBRA premiums for
the period that the Company is required to offer COBRA coverage as a matter of
law; (iv) any restricted stock, options, and other equity-based awards previously
granted will become fully vested and exercisable and all restrictions on awards
will lapse; and (v) the Company will pay Executive an amount equal to the
sum of (A) two times the Executive’s Base Salary on the Date of
Termination of employment, and (B) two times the higher of (x) the average
of the Actual Bonus compensation paid to Executive for the two years prior to
his termination of employment or (y) the annual bonus paid to Executive for
the year preceding the date of termination. 
For purposes of determining the amount of the Executive’s Bonus paid for
any year during the above two-year period, the amount of the Bonus compensation
considered paid for purposes of this provision shall be the greater of (a) the
actual Bonus paid to the Executive, or (b) the actual stock price on the
day of grant of the shares of the Company’s restricted stock, stock options or
other equity awards that became vested in such year; provided, however that the
sum of (A) and (B) above shall not exceed $3 million.  Unless otherwise provided in this Agreement,
this amount shall be paid in a lump-sum payment within 60 days following
Executive’s termination of employment.

 

C.            Termination without Cause by the Company. 
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 and any Bonus earned in a previous year but not yet paid; (ii) no
Bonus shall be payable for the fiscal year in which the termination occurs,
except if the Company terminates Executive’s employment without Cause during
the last six months of the Company’s fiscal year, Executive will be paid a pro
rata bonus based upon the Company’s performance for the fiscal year, payable in
accordance with the terms and conditions and at the time all as set forth in Exhibit A;
(iii) the Company shall pay or reimburse Executive for COBRA premiums for
the period that the Company is required to offer COBRA coverage as a matter of
law; (iv) any restricted stock, options and other equity-based awards previously
granted will become fully vested and exercisable and all restrictions on awards
will lapse; and (v) the Company will pay Executive an amount equal to the
sum of (A) Executive’s Base Salary on the Date of Termination of
employment, and (B) the average of the Actual Bonus compensation paid to Executive
for the two years prior to his termination of employment (for purposes of
determining the amount of the Executive’s Bonus paid for any year during this
two-year period, the amount of the Bonus compensation considered paid for 

 

3

 

purposes of this
provision shall be the greater of (i) the actual Bonus paid to the
Executive, or (ii) the actual stock price on the day of grant of the
shares of the Company’s restricted stock, stock options or other equity awards that
became vested in such year; provided, however that the sum of (A) and (B) above
shall not be less than $1,250,000 for a termination in 2010 or $1,000,000 for a
termination in 2011, but in no event shall the amount exceed $2 million.  Unless otherwise provided in this Agreement,
this amount shall be paid in a lump-sum payment within 60 days following
Executive’s termination of employment.

 

D.            Termination for Cause by the Company.  If
the Company terminates Executive’s employment for Cause, then, (i) the
Company will be obligated to pay Executive’s Base Salary through the Date of
Termination and any Bonus earned in a previous year but not yet paid; and (ii) no
Bonus shall be payable for the fiscal year in which the termination
occurs.  Upon a termination for Cause by
the Company, the provisions of Section 7 (Restrictive Covenant)
shall automatically become applicable for the six-month period set forth
therein, without any further payment due Executive.  Executive acknowledges and agrees that the
compensation herein is adequate consideration for such covenants.

 

E.             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 and any Bonus earned
in a previous year but not yet paid, (ii) a pro rated amount of Executive’s
Actual Bonus for the year, payable at the time set forth in Exhibit A,
(iii) Executive’s COBRA premiums for the period that the Company is
required to offer COBRA coverage as a matter of law; and (iv) any restricted
stock, options and other equity-based awards previously granted will become
fully vested and exercisable and all restrictions on awards will lapse and, to
the extent permitted under the 2006 Plan’s governing documents, Executive (or
Executive’s beneficiary(ies)) shall have a period of one year from the Date of
Termination of employment to exercise such options (or if shorter, the
expiration date of the option).  If
Executive dies or becomes Disabled during any period that the Company is
obliged to make payments under Section 6.B. or C, 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.

 

F.             Definitions.  For purposes
of this Agreement:

 

(1)           “Cause”
and “Good Reason” shall have the
meanings ascribed to them in the CIC Agreement, provided, that Good Reason also
exists under this Agreement if (A) the Company fails to cause any
successor to immediately assume the terms of this Agreement, or (B) the
Company materially breaches its obligations under this Agreement and such
breach is not cured within a reasonable period of time not to exceed 30 days after
written notice from the Executive;

 

(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 (but following the Company’s opportunity to cure as provided
in the CIC Agreement), (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 final
determination is provided to Executive by the Company (following the procedures
set forth 

 

4

 

in the CIC Agreement), or (v) if this Agreement is terminated by
the Company without Cause, the date notice of termination is given to Executive
by the Company;

 

(3)           “Disability”
shall mean if, by reason of any medically determinable physical or metal
impairment which actually hinders Executive’s ability to perform his job and
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, Executive is receiving income
replacement benefits for a period of not less than six months under an accident
and health plan established by the Company for its employees; and

 

(4)           “Separation from Service”
means, either (a) termination of Executive’s employment with Company and
all Affiliates, or (b) a permanent reduction in the level of bona fide
services Executive provides to Company and all Affiliates to an amount that is
20% or less of the average level of bona fide services Executive provided to
Company in the immediately preceding 36 months, with the level of bona fide
service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii).  Solely for purposes of determining whether
Executive has a “Separation from Service,” Executive’s employment relationship
is treated as continuing while Executive is on military leave, sick leave, or
other bona fide leave of absence (if the period of such leave does not exceed
six months, or if longer, so long as Executive’s right to reemployment with
Company or an Affiliate is provided either by statute or contract).  If Executive’s period of leave exceeds six
months and Executive’s right to reemployment is not provided either by statute
or by contract, the employment relationship is deemed to terminate on the first
day immediately following the expiration of such six-month period.  Whether a termination of employment has
occurred will be determined based on all of the facts and circumstances and in
accordance with regulations issued by the United States Treasury Department
pursuant to Section 409A of the Code.

 

G.            Procedures for Notices of Termination. 
The procedures set forth in Section 8 (a), (b) and (d) of
the CIC Agreement shall apply under this Agreement in connection with a notice
of termination as to the kind of termination events described in those subsections.

 

H.            Release Agreement.  Notwithstanding anything to the contrary
herein, no payment shall be made under this Section 6 unless
Executive executes (and does not revoke) a legal release (“Release Agreement”),
in the form and substance reasonably requested by the Company, in which
Executive releases the Company, Affiliates, directors, officers, employees,
agents and others affiliated with the Company from any and all claims,
including claims relating to Executive’s employment with the Company and the
termination of Executive’s employment.  The
Release Agreement shall be provided to Executive within 5 days following
Executive’s termination of employment (or “Separation from Service” if
Executive is a “Specified Employee”). 
The Release Agreement must be executed and returned to the Company
within the 21 or 45 day (as applicable) period described in the Release
Agreement and it must not be revoked by Executive within the 7-day revocation
period described in the Release Agreement.

 

I.              Compliance with Section 409A of the Internal
Revenue Code.  Any payment under this Section 6 shall
be subject to the provisions of this Section 6.I. (except for a payment
pursuant to Section 6.E.).  If
Executive is a “Specified Employee” of the Company for purposes of Internal
Revenue Code Section 409A (“Code Section 409A”) at the time of a
payment 

 

5

 

event set forth in
Sections 6.B. or C, and if no exception from Section 409A applies in whole
or in part, then the severance payments pursuant to Section 6.C.(v) shall
be made to Executive by the Company on the first day of the seventh month following
the date of the Executive’s Separation from Service (the “409A Payment Date”).  Should this Section 6.I. result in a
delay of payments to Executive, the Company shall begin to make such payments
as described in this Section 6, provided that any amounts that would have
been payable earlier but for the application of this Section 6.I., shall
be paid in lump-sum on the 409A Payment Date along with accrued interest
at  the rate of interest announced by
Bank of America, Arizona from time to time at its prime rate from the date that
payments to you should have been made under this Agreement.  The balance of such severance payments shall
be payable in accordance with regular payroll timing and the COBRA premiums
shall be reimbursed monthly.  For
purposes of this provision, the term Specified Employee shall have the meaning
set forth in Section 409A(a)(2)(B)(i) of the Internal Revenue Code of
1986, as amended  or any successor
provision and the Treasury Regulations issued thereunder.

 

7.             Restrictive Covenant.

 

A.            Executive hereby covenants and agrees that for a
period of two years from the Date of Termination, Executive will not:

 

(1)           Directly or indirectly hire or solicit
for employment for any other business entity other than the Company (whether as
an employee, consultant, independent contractor, or otherwise) any person who
is, or within the six month period preceding the date of such activity was, 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.

 

B.            The covenants set forth in this Section 7
shall begin as of the date hereof and will survive the Executive’s 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.

 

6

 

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.             Cooperation; No Disparagement. 
During the one-year period following the Executive’s Date of
Termination, Executive agrees to provide reasonable assistance to the Company
(including assistance with litigation matters), upon the Company’s request,
concerning the Executive’s previous employment responsibilities and functions
with the Company.  Additionally, at all
times after the Executive’s employment with the Company has terminated, Company
and Executive agree to refrain from making any disparaging or derogatory remarks,
statements and/or 

 

7

 

publications regarding
the other, its employees or its services. 
In consideration for such cooperation, Company shall compensate
Executive for the time Executive spends on such cooperative efforts (at an
hourly rate based on Executive’s total compensation during the year preceding
the Date of Termination) and Company shall reimburse Executive for his
reasonable out-of-pocket expenses Executive incurs in connection with such cooperative
efforts.

 

10.           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 containing the
provision held to be invalid, and the rights and obligations of the parties
will be construed and enforced accordingly.

 

11.           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.  Failure of Company to obtain
assumption of this Agreement by a successor upon a consolidation, merger or
transfer of assets prior to the effectiveness of any such succession shall be a
material breach of this Agreement.

 

12.           Entire Agreement.  This
Agreement, the CIC Agreement, and any agreements concerning stock options,
restricted stock 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 prior to the Effective Date, including
without limitation, provisions in Executive’s prior Change of Control
Agreement, providing for acceleration upon a change of control.

 

13.           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.

 

14.           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 Homes Corporation

  
	
   

  	
  17851 N. 85th Street,
  Suite 300

  
	
   

  	
  Scottsdale, Arizona 85255

  
	
   

  	
  Attention:  Chief Executive Officer and Chief Financial
  Officer

  

 

8

 

	
  if
  to Executive:

  	
  C. Timothy White

  
	
   

  	
  6601 E. Malcomb Drive

  
	
   

  	
  Paradise Valley, Arizona
  85253

  
	
   

  	
  Phone:  (602) 689-2081

  

 

15.           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”).  The parties agree that before the proceeding
to arbitration that they will mediate their disputes before the AAA by a
mediator approved by 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 mediator or 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 Company shall pay all AAA, mediation, and
arbitrator’s fees and costs.  The
arbitrator(s) shall award reasonable attorneys’ fees and costs to the
prevailing party.

 

16.           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 CIC 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
CIC Agreement or under any employee severance plan to the extent such a plan
exists or is subsequently implemented by the Company, will be reduced by any
payments or benefits provided hereunder. 
This offset provision shall not apply to accrued but unused paid time
off amounts.

 

17.           Effect of Restatement of Financial Results. 
Notwithstanding anything in this Agreement to the contrary, to the
extent any financial results are misstated as a result of Executive’s willful
misconduct or gross negligence, and as a result such financial results are
subsequently restated downward resulting in lower levels of bonuses pursuant to
Section 4 and the accompanying Exhibit A, offsets shall be made
against future bonuses.  If such future bonuses
are insufficient to offset the full difference between awarded bonuses and
restated bonuses and/or if such restatement occurs at the end of the Agreement
Term and subsequent Renewal Term(s), if any, bonuses previously earned and
delivered under this Agreement may be clawed-back.

 

9

 

18.           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.

 

19.           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.

 

IN WITNESS WHEREOF, the parties
have executed and delivered this Agreement as of the date first above written.

 

	
   

  	
  MERITAGE HOMES CORPORATION, a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven J. Hilton

  
	
   

  	
  Name:

  	
  Steven
  J. Hilton

  
	
   

  	
  Title:

  	
  Chairman
  and CEO

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:
  C. TIMOTHY WHITE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  C. Timothy White

  

 

10

 

EXHIBIT A

 

INCENTIVE COMPENSATION
SCHEDULE

 

C.
Timothy White Bonus Compensation

 

Part I — Bonus

 

	
  2010 and any Renewal Term

  	
  For
  2010 (and any Renewal Term), Executive may, in the Board’s reasonable
  discretion, be entitled to a maximum bonus equal to .15% of the EBITDA
  (excluding impairments, one-time bond, refinancing, offering, significant
  litigation, settlement payments, by the Company and similar costs associated
  with one-time or extraordinary events) if Company’s ROA is in the top 1/2 of
  public homebuilders having revenues of $500 million or more per year, and an
  additional .15% of EBITDA if the Company’s ROE is in the top 1/2 of these
  public homebuilders.  If either measurement
  falls within the 33% to 49% percentile, the bonus shall be .0975% of EBITDA
  for the applicable measurement.  If
  either measurement falls below the 33% threshold, then there will not be any
  formula bonus paid with respect to such measurement.  Such bonus calculation will be determined
  before taking into account the deduction for the compensation of (i) the
  Executive; (ii) the Chief Executive Officer; (iii) the Chief
  Financial Officer; and (iv) the Chief Operating Officer.  Notwithstanding the above, the above
  calculation of EBITDA assumes that the Company makes an actual profit before
  calculating EBITDA.  If the Company
  does not make an actual profit before calculating EBITDA, no bonus will be
  paid.

  

 

Part II — Payment

 

Any
bonus shall be paid in the form and time as determined by the Board in its reasonable
discretion, provided that the bonus shall be paid in cash no later than the
later of (i) March 15 of the year following the calendar year to
which the payment relates, or (ii) the date that is two and one-half
months following the end of the Company’s fiscal year to which the payment
relates.

 

In
addition, the Board at its discretion may award a subjective bonus to
Executive.

 

A-1

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