Document:

Exhibit 10.2

Execution Copy

SETTLEMENT AGREEMENT AND

MUTUAL RELEASE AND WAIVER OF CLAIMS

This Settlement Agreement and Mutual Release and
Waiver of Claims (this “Agreement”) is made and entered into freely and
voluntarily and is effective as of the 12th day of June, 2006, by and between
Meritage Homes Corporation (hereinafter referred to, collectively with all of
its subsidiaries and affiliates, as “Meritage”) and John R. Landon
(hereinafter referred to as “Landon”).

WHEREAS, Landon and Meritage are
parties to that certain Employment Agreement, effective as of July 1,
2003, as amended from time to time (the “Employment Agreement”);

WHEREAS, simultaneously with the
execution of this Agreement, Meritage and Landon have executed and delivered a
Stock Purchase Agreement, pursuant to which, among other things, Meritage has
agreed to repurchase shares of Meritage common stock from Landon and Landon has
agreed, upon such repurchase, to resign as a director of Meritage (the “Stock
Purchase Agreement”), and a Cooperation Agreement regarding certain matters
relating to Landon’s ownership of Meritage stock (the “Cooperation Agreement”);
and

WHEREAS, the parties mutually
wish to memorialize the terms and conditions of the termination of Landon’s
service as an officer and employee of Meritage and, in the circumstances
described below, as a director of Meritage.

NOW, THEREFORE, in consideration
of the acts, payments, covenants and mutual agreements herein described and
agreed to be performed, Landon and Meritage agree as follows:

1.             Termination.

(a)           Landon
hereby acknowledges the termination of Landon’s service as an officer and
employee of Meritage, and his termination and/or resignation from all other
positions held by Landon in any capacity with any subsidiary, affiliate or
related party of Meritage, in each case effective as of the close of business
on May 17, 2006.

(b)           Landon
hereby acknowledges that, pursuant to Section 3 of the Employment
Agreement and the terms hereof, Landon will be deemed to have resigned as a
director of Meritage at such time as Landon owns less than 5% of the
outstanding common stock of Meritage, unless Landon otherwise resigns earlier. Landon
further acknowledges that he has resigned as a director of Meritage pursuant to
the terms of, and subject to the closing of the transactions contemplated by,
the Stock Purchase Agreement.

2.             Principal Economic Terms.

(a)           Landon and
Meritage agree that (i) Landon’s termination shall be treated as a
termination without Cause pursuant to, and that Landon will receive the
benefits provided by, Section 7A of the Employment Agreement applicable
thereto, and (ii) Landon will remain

 

subject to the restrictive covenants and
confidentiality obligations of Sections 8 and 9 of the Employment Agreement.

(b)           Landon
hereby represents and warrants that the provisions of Sections 8 and 9 of the
Employment Agreement constitute valid and legally binding obligations of
Landon, enforceable against Landon in accordance with their respective terms.

(c)           Meritage
agrees to make the Consulting, Severance and Non-Competition Payments (as such
term is defined in Section 7A of the Employment Agreement) to Landon as,
and to the extent, required by the terms of the Employment Agreement. The
parties intend to comply with the provisions of Section 409A(a)(2), (3) and
(4) of the Internal Revenue Code of 1986, as amended (the “Code”) to the
extent those provisions apply to the payments due to Landon. In furtherance of
that intent and with respect to the payments described in this subsection (c) and
in 3(f) below with respect to COBRA premium reimbursements, the parties
agree that, unless otherwise mutually agreed by the parties, all such payments
that would otherwise be paid by Meritage to Landon during the six month period
after May 17, 2006, will instead be paid by Meritage to North Dallas Bank &
Trust, as trustee, (or such other financial institution as may be mutually
agreed by the parties) under an agreement of trust in the form attached hereto;
provided, however, that if Landon dies before November 30,
2006, no further payments will be made to such trustee and instead such
payments will be made in the time and manner provided in the Employment
Agreement. Meritage agrees to comply with the requirements of Code Section 409A(a)(2),
(3) and (4) to the extent those provisions apply to the payments due
to Landon. Anything in the foregoing to the contrary notwithstanding, the
parties acknowledge and agree that (i) Meritage has paid the first
Consulting, Severance and Non-Competition Payment into an escrow account
established by Meritage at Guaranty Bank, Dallas, Texas (the “Guaranty
Escrow”), (ii) following the execution and delivery of this Agreement,
the Stock Purchase Agreement and the Cooperation Agreement and the consummation
of the transactions contemplated by the Stock Purchase Agreement, Meritage will
direct the amounts in the Guaranty Escrow applicable to the period May 17,
2006 though May 31, 2006 to be delivered to the trust (unless otherwise
agreed by the parties as provided above), and (iii) all subsequent
Consulting, Severance and Non-Competition Payments payable by Meritage shall be
paid by Meritage in arrears on the first day of each calendar month beginning July 1,
2006 (with any payments relating to partial months to be pro-rated accordingly)
to the trust (as provided above or as otherwise mutually agreed by the parties).

3.             Other Matters. Landon and Meritage
hereby agree as follows:

(a)           Meritage
will allow to vest, and be exercisable in accordance with their terms, all
options granted to Landon that are scheduled to vest on June 12, 2006.

(b)           Meritage
shall pay an amount equal to the rate of his base salary, as it existed on May 17,
2006, for a period of sixty (60) days as unpaid and unused but accrued
vacation.

(c)           Landon will deliver
to Meritage by no later than Tuesday, June 13, 2006,  the automobile leased by Meritage and utilized
by Landon as of the termination of his employment, such automobile to be
returned in good condition (ordinary wear and tear

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excepted); provided that Landon shall be responsible
for any charges to Meritage in respect of damages or otherwise with respect to
such automobile, with such amounts to be charged to, and payable by, Landon in
the manner provide in Section 3(e) below.

(d)           Except as
provided in the next sentence, all season or other tickets to sports and other
events held in Meritage’s name shall be retained by Meritage and Landon hereby
disclaims any interest or other right in any such tickets. Notwithstanding the
foregoing, ownership of four season tickets (two floor seats and two tickets in
Section 119) to the Dallas Mavericks basketball team shall be retained by,
or otherwise transferred by Meritage to, Landon for his personal ownership and
use and Meritage hereby disclaims any interest or other right in such tickets.

(e)           Landon shall
reimburse to Meritage promptly following the execution of this Agreement and
delivery by Meritage of reasonable documentation thereof, and in no event later
than sixty days after Landon’s receipt of such documentation, the amount of all
non-reimburseable personal charges made by Landon on his Meritage corporate
American Express card. Meritage shall reimburse to Landon promptly following
the execution of this Agreement and delivery by Landon of reasonable
documentation thereof, and in no event later than sixty days after Meritage’s
receipt of such documentation, the amount of all reimbursable business expenses
incurred by Landon during 2006 and not reimbursed by Meritage as of the date hereof.

(f)            Matters
related to continuing insurance coverage available to Landon shall be handled
in the manner set forth in that certain letter delivered to Landon by Meritage,
dated May 26, 2006. Meritage agrees that it will reimburse to Landon each
month for up to 18 months following his termination of employment the amount of
each monthly payment made by Landon in respect of his COBRA coverage; provided
that Landon shall send to Meritage within 15 days of each month end evidence of
his payment of the applicable monthly COBRA payment and Meritage will reimburse
Landon for such payment within 15 days of receipt of such documentation from
Landon.

(g)           Meritage
will provide and/or maintain in effect directors and officers insurance for
Landon’s benefit covering any claims arising out of any conduct prior to the
date on which Landon is no longer a member of the board of directors of
Meritage, such coverage to be on the same terms as are available to all other
members of Meritage’s board of directors.

(h)           Meritage
will continue to pay to Sherry Martino her monthly salary for a period of six
months following the termination of her employment with Meritage if (i) Meritage
terminates Ms. Martino without cause, or (ii) Ms. Martino
voluntarily resigns from Meritage to work with Landon or any business owned by
Landon and, in fact, works for Landon or such business. The provisions of Section 8(A)(2) of
the Employment Agreement shall not apply to Ms. Martino.

(i)            Within
thirty days of the execution of this Agreement, Meritage will pay to Landon all
gross up payments required to be paid by Meritage pursuant to Exhibit B to
the Employment Agreement, items 1 and 2, unless Meritage provides documentation
that such payments have been made previously.

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(j)            Landon
acknowledges and agrees that, except as expressly set forth in Section 2,
this Section 3, Section 4 and Section 9,
Landon has no rights to, and hereby expressly disclaims any right to, any
compensation, benefits or other remuneration from Meritage of any kind or
nature whatsoever, including, without limitation, any of the benefits listed on
Exhibit B of the Employment Agreement, or any profit sharing, deferred
compensation, or retirement plan benefits, and Meritage has no further
obligation to pay or provide to Landon any such compensation, benefits or other
remuneration.

4.             Mutual Release and Covenant Not to Sue.

(a)           In
consideration of the matters referenced in Section 2 and Section 3
above, Landon, on behalf of himself and his heirs, executors, administrators,
and assigns, hereby forever releases, discharges, cancels, waives, and acquits
Meritage and its subsidiaries, affiliates, agents, officers, owners, directors,
employees, insurers, and assigns, of and from any and all rights, claims,
demands, causes of action, obligations, damages, penalties, fees, costs,
expenses, and liabilities of any nature whatsoever, whether in law or equity
(collectively, “Claims”), which Landon has, had or may hereafter have
against it arising out of, or by reason of, any cause or matter, existing as of
the date of execution of this Agreement, WHETHER KNOWN TO LANDON AT THE TIME OF
EXECUTION OF THIS AGREEMENT OR NOT, other than any Claims arising out of, or by
reason of any breaches by Meritage of its obligations under this Agreement, the
Stock Purchase Agreement, the Cooperation Agreement or Section 7 of the
Employment Agreement. This FULL RELEASE AND WAIVER OF ALL CLAIMS by Landon
includes, without limitation, any Claims arising out of, or relating in any
manner whatsoever to, the employment and/or termination of the employment of Landon
by Meritage, such as, BUT NOT LIMITED TO, any charge, claim, lawsuit or other
proceeding arising under the Civil Rights Acts, Title VII as amended by the
Civil Rights Act of 1991, the Americans with Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the Labor Management Relations Act
(LMRA), Employee Retirement Income Security Act (ERISA), the Consolidated
Omnibus Budget Reconciliation Act, the Fair Labor Standards Act (FLSA), the
Equal Pay Act, the Rehabilitation Act of 1973, and the Family and Medical Leave
Act of 1993, worker’s compensation laws, or any other federal, state, or local
statute, or any contract, agreement, plan or policy, including any Claims for
breach of express or implied contract, wrongful discharge, tort, personal
injury, or any claims for attorney’s fees or other costs. This release shall
not apply to (i) any vested amounts in Landon’s 401(k) account, (ii) any
benefits due to, or on behalf of, Landon or his dependents pursuant to the
terms of any health, dental, vision or other similar health-related plan or
policy of Meritage, or (iii) any right to indemnification, advancement of
expenses, limitation of liability or exculpation of liability to the extent
provided under or arising from the Articles
of Incorporation or Bylaws of Meritage or under any insurance policy
maintained by Meritage benefiting Landon with respect to his service as an
officer, employee, or director of Meritage.

(b)           In
consideration of the matters referenced in Section 2 and Section 3
above, Meritage, on behalf of itself and its subsidiaries, affiliates, agents,
officers, owners, directors, employees, insurers, and assigns, hereby forever
releases, discharges, cancels, waives, and acquits Landon of and from any and
all Claims existing as of the date of execution of this Agreement, WHETHER
KNOWN TO MERITAGE AT THE TIME OF EXECUTION OF THIS AGREEMENT OR NOT, other than
any Claims arising out of, or by reason of, (i) any breaches

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by Landon of his obligations under this Agreement, the
Stock Purchase Agreement, or the Cooperation Agreement, (ii) any  actions or omissions by Landon in connection
with his employment that subject Meritage to any criminal liabilities under
federal, state or other laws, (iii) any 
actions or omissions by Landon in connection with his employment that
subject Meritage to any civil liabilities under federal, state or other laws
and with respect to which Landon is not entitled to the indemnification or
other rights referenced in Section 4(a)(ii) above, and (iv) any
breaches by Landon of his obligations under Sections 8 and 9 of the Employment
Agreement. This FULL RELEASE AND WAIVER OF ALL CLAIMS by Meritage includes,
without limitation, any Claims arising out of, or relating in any manner
whatsoever to, any applicable federal, state, or local statute, or any
contract, agreement, plan or policy, including any Claims for breach of express
or implied contract, tort, or any claims for attorney’s fees or other costs.

(c)           Each of
Meritage and Landon further covenants and agrees not to institute, nor cause to
be instituted, any legal proceeding of any nature whatsoever, including,
without limitation, filing any claim or complaint with any government agency
alleging any violation of law or public policy or seeking workers’ compensation
from Meritage (or any of its representatives) for any claim released hereunder premised
upon any legal theory or claim whatsoever, including without limitation,
contract, tort, wrongful discharge, personal injury, interference with
contract, breach of contract, defamation, negligence, infliction of emotional
distress, fraud, or deceit, except that a party hereto may file a legal
proceeding against the other solely to enforce the terms of this Agreement or
any agreement contemplated hereunder.

(d)           Each of
Meritage and Landon acknowledges that the considerations afforded such party
under this Agreement are in full and complete satisfaction of any Claims such
party may have or may have had prior to the date hereof, including, without
limitation, any such Claim arising out of Landon’s employment with Meritage or
the termination thereof, and provide good and sufficient consideration for
every promise, duty, release, obligation, agreement and right contained in this
Agreement.

5.             No Disparagement. During the period
through May 17, 2008, each of Meritage and Landon agrees that as part of
the consideration for this Agreement, each will not make disparaging or
derogatory remarks, whether oral or written, about the other party, including,
in the case of Landon, any disparaging or derogatory remarks by Landon, whether
oral or written, regarding Meritage or its business, products, subsidiaries,
affiliates, directors, officers or agents. Each of Meritage and Landon also
agree that neither it nor he will characterize Landon’s termination in a manner
other than as described herein, in the press release issued by Meritage on May 18,
2006 related thereto, or in the Current Report on Form 8-K filed by
Meritage on May 22, 2006, or the Meritage webcast of June 1, 2006. Nothing
in this Agreement shall prevent Landon from giving truthful testimony or
providing any information requested by any agent of the United States
government or member of Congress.

6.             Cooperation. Landon agrees that he
will not counsel or assist any attorneys or their clients in the presentation
or prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against Meritage or its subsidiaries, affiliates,
directors, officers or agents regarding any alleged acts or omissions prior to May 17,
2006 by Meritage (or its subsidiaries, affiliates, directors, officers or
agents), unless under a subpoena or court order to 

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do so and except as may be required to enforce his
rights hereunder or any agreement contemplated herein. Nothing herein shall be
construed to prohibit Landon from giving truthful testimony. Landon further
agrees that, at Meritage’s expense (including the expense of reimbursing Landon
for travel on a private aircraft, with such reimbursement not to exceed $4500
per hour) and upon its reasonable request, Landon will assist Meritage in its
defense or prosecution of any disputes, differences, grievances, claims,
charges, or complaints between Meritage and any third party, including, without
limitation, in respect of any litigation or other proceedings related to the
ongoing Hancock litigation, which assistance will include testifying on
Meritage’s behalf in connection with any such matter or performing any other
task reasonably requested by Meritage in connection therewith.

7.             No Admission of Liability. Nothing
contained in this Agreement shall be construed in any manner as an admission by
any party that it has or may have violated any statute, law or regulation, or
breached any contract or agreement.

8.             Reliance. Landon represents and
warrants that: (a) he has relied on his own judgment regarding the
consideration for and language of this Agreement; (b) he has been given a
reasonable period of time to consider this Agreement, has been advised to
consult with independent counsel of his own choosing before signing this
Agreement, and has consulted with independent counsel or voluntarily elected
not to consult with independent counsel with respect hereto; (c) Meritage
has not in any way coerced or unduly influenced him to execute this Agreement;
and (d) this Agreement is written in a manner that is understandable to
him and he has read and understood all paragraphs of this Agreement.

9.             Nature of the Agreement. This
Agreement and all provisions thereof, including all representations and
promises contained herein, are contractual and not a mere recital and shall
continue in permanent force and effect. This Agreement and all attachments
constitute the sole and entire agreement of the parties with respect to the
subject matter hereof, and there are no agreements of any nature whatsoever
between the parties hereto with respect to the subject matter hereof, except as
expressly stated herein. Except for (a) Sections 7, 8, and 9 of the
Employment Agreement, and Section 15 of the Employment Agreement as
modified below, (b) that certain Change of Control Agreement, effective as
of July 1, 2003, between Meritage and Landon with respect to any change of
control occurring within ninety (90) days of Landon’s termination (but subject
to Landon’s compliance with the Cooperation Agreement), and (c) the
benefits referred to in the last sentence of Section 4(a) above,
which constitute continuing obligations of the parties in accordance with their
terms, all prior agreements or plans between Meritage and Landon or otherwise
relating to Landon, including the Employment Agreement (including any bonus set
forth therein) or other severance, benefit or compensation arrangements,
written or oral, are hereby terminated. This Agreement may not be modified or
changed unless done so in writing, signed by both parties. In the event that
any portion of this Agreement is found to be unenforceable for any reason
whatsoever, the unenforceable provision shall be considered to be severable,
and the remainder of the Agreement shall continue to be in full force and
effect. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas without regard to choice of law principles.

With regard to any
dispute, claim or controversy relating to Sections 8 or 9 of the Employment
Agreement that are subject to Section 15 of the Employment Agreement, the
parties 

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hereby agree that, anything in Section 15 to the
contrary notwithstanding, (i) in the event Landon violates or breaches any
of the provisions of Sections 8 or 9 of the Employment Agreement, Meritage
shall be entitled to seek a temporary restraining order and/or preliminary
injunctive relief from any court of competent jurisdiction, without bond but
upon due notice, (ii) any other dispute, claim or controversy, including
any claim for permanent injunctive relief, shall be subject to arbitration
under Section 15 of the Employment Agreement, (iii) any dispute,
claim or controversy subject to arbitration under Section 15 of the
Employment Agreement shall be conducted by a panel of three arbitrators,
selected as provided in said Section 15, and (iv) if any party to
such arbitration, or the arbitration panel itself, seeks to challenge, or
otherwise impose any limitations on, the power of the arbitration panel to
grant permanent injunctive relief, then Section 15 shall immediately be
deemed null and void and of no further force or effect, and the parties hereto
may immediately institute legal proceedings in any court of competent
jurisdiction and seek any remedies to which a party hereunder may be entitled
at law or in equity

10.           Time Period of Considering or Canceling This
Agreement. Landon acknowledges that he has been offered a period
of time of at least twenty-one (21) days to consider whether to sign this
Agreement, which he has waived, and Meritage agrees that Landon may revoke his
release of any Claims arising under the Age Discrimination in Employment Act
referred to in Section 3(a) above at any time during the seven (7) days
following the date on which this Agreement has been signed by all parties to
this Agreement. In order to effect a revocation of any Claims under the Age
Discrimination in Employment Act referred to in Section 3(a) above,
Landon must deliver to Meritage, c/o Meritage Homes Corporation, Attn: General
Counsel, at Meritage Homes Corporation, 17851 North 85th Street, Suite 300, Scottsdale, Arizona
85255, written notice expressly stating that Landon is revoking his release of
Claims under the Age Discrimination in Employment Act. If Landon delivers such
notice revoking his release of Claims under the Age Discrimination in
Employment Act, then:

(a)           Landon’s
release of Claims under the Age Discrimination in Employment Act shall not be
effective or enforceable;

(b)           Landon’s
release of all other Claims under Section 3(a) above shall remain in
full force and effect;

(c)            Meritage
shall be entitled, at its sole option, to stop paying to Landon the Consulting,
Severance and Non-Competition Payments (as such term is defined in Section 7A
of the Employment Agreement) (provided that Meritage’s decision not to make any
such payments as a result of such revocation shall not impact the legality or
enforceability of Landon’s continuing obligations under Sections 8 and 9 of the
Employment Agreement);

(d)           Meritage
shall be entitled, at its sole option, to cease providing to Landon any other
benefits under the Employment Agreement or this Agreement; and

(e)            Meritage
shall be entitled, at its sole option, to rescind the Stock Purchase Agreement,
in which case Landon shall be required to repay to Meritage the amount of the
purchase price paid thereunder and Meritage shall be required to return to
Landon the shares of common stock acquired from Landon thereunder.

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11.           Remedies. Meritage, on the one hand,
and Landon, on the other, acknowledge and agree that irreparable damage will
occur in the event that any provision of this Agreement is not performed in
accordance with its specific terms or is otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction to prevent breaches
of the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court having jurisdiction pending any arbitration. Landon
agrees that, if Landon in any non-immaterial respect violates Sections 8 or 9
of the Employment Agreement, Meritage shall not be obliged to pay any remaining
Consulting, Severance, and Non-Competition Payments, provided that
Meritage must first provide Landon with written notice of such violation and
the opportunity to provide within thirty (30) days any information showing that
he has not in any non-immaterial respect breached such Agreement. During any
notice period or the pendency of any dispute relating to any actual or
potential violations or breaches by Landon of Sections 8 or 9 of the Employment
Agreement, Meritage will place any Consulting, Severance, and Non-Competition
Payments in an interest bearing escrow account at Bank of America, Phoenix, Arizona,
or Guaranty Bank, Dallas, Texas, or their respective successors.  The parties acknowledge and agree that
Meritage’s decision to place any such payments into escrow as provided above
shall not impact (a) the legality or enforceability of Landon’s continuing
obligations under Sections 8 and 9 of the Employment Agreement or Landon’s
obligation to continue to comply therewith, or (b) Meritage’s ability to
pursue any other remedy available to it at law or in equity with respect to any
such violation or breach. The foregoing remedies shall be in addition to any
other remedy to which a party hereunder may be entitled at law or in equity.

12.           Severability. If any provision of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable for whatever reason, the remaining provisions of this
Agreement shall nevertheless continue in full force and effect without being
impaired in any manner whatsoever.

13.           Notices. Unless otherwise provided,
any notice required or permitted by this Agreement shall be in writing and
shall be deemed sufficient upon receipt, when delivered by overnight courier or
sent by facsimile, or upon delivery when delivered personally, or upon
seventy-two (72) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, addressed to the party to be notified at
such party’s address or facsimile number, as subsequently modified by written
notice, as follows:

(i)            if to
Landon, to 2200 Willow Bend Drive, Plano, Texas 75093, Attn: John R. Landon, or

(ii)           if to Meritage,
to Meritage Homes Corporation, 17851 North 85th Street, Suite 300, Scottsdale, Arizona
85255, Attn: General Counsel.

14.           Effectiveness. This Agreement is
effective as of the execution hereof; provided, that if the transactions
contemplated by Section 2(a) and Section 2(b) of the Stock
Purchase Agreement are not consummated in accordance with the terms thereof,
then this Agreement shall terminate immediately and be of no further force or
effect; provided, that, in the event of such termination, Meritage shall be
entitled, at its sole option, to place any Consulting, Severance and
Non-Competition Payments into escrow as provided in Section 11 above, and
the parties acknowledge and agree that Meritage’s decision to place any such
payments into escrow as 

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provided above shall not impact (a) the legality
or enforceability of Landon’s continuing obligations under Sections 8 and 9 of
the Employment Agreement or Landon’s obligation to continue to comply
therewith, or (b) Meritage’s ability to pursue any other remedy available
to it at law or in equity with respect to any violations or breaches by Landon
of such continuing obligations.

[Signature
Page Follows]

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  Dated this 12th day of June, 2006.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MERITAGE HOMES CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ C. Timothy White

  
	
   

  	
   

  	
   

  	
  Name: C. Timothy White

  
	
   

  	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated this 12th day of June, 2006.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  JOHN R. LANDON

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ John R. Landon

  
	
   

  	
   

  	
   

  	
   

  	
  John R. Landon

  
							

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature
Page to Mutual Release and Waiver of Claims]

 

 10Exhibit 10.3

Execution
Copy

COOPERATION
AGREEMENT

This Cooperation Agreement (this “Agreement”),
effective as of June 12, 2006, is by and between Meritage Homes
Corporation, a Maryland corporation (together with any successor, “Meritage”)
and John R. Landon (“Landon”).

WHEREAS, Landon and Meritage are
parties to that certain Employment Agreement effective as of July 1, 2003,
as amended from time to time (the “Employment Agreement”);

WHEREAS, Landon’s service as an
officer and employee of Meritage has been terminated;

WHEREAS, Landon and Meritage are
entering into (i) a Stock Purchase Agreement, dated the date hereof (the “Stock
Purchase Agreement”), pursuant to which Meritage will acquire shares of
common stock from Landon, and (ii) a Settlement Agreement and Mutual
Release and Waiver of Claims, dated the date hereof (the “Settlement
Agreement”);

WHEREAS, Landon owns  or controls, and will continue to own and
control, a substantial amount of Meritage common stock; and

WHEREAS, Meritage and Landon
wish to provide a constructive and mutually beneficial relationship between
themselves with respect to his Meritage securities.

NOW THEREFORE, Meritage and
Landon, in consideration of the mutual covenants contained herein and other
consideration, the receipt and sufficiency of which are hereby acknowledged,
hereby agree as follows:

1.             Definitions.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth below:

“Affiliate” of a Person means such Person’s
spouse and children and any other Person that directly or indirectly through
one or more intermediaries controls, is controlled by, or is under common
control with such Person.

“Beneficial Ownership” shall be deemed to exist
and securities shall be deemed “Beneficially Owned” under circumstances that
would cause a Person to be deemed a beneficial owner of securities in
accordance with Rule 13d-3 promulgated by the SEC under the
Securities Exchange Act of 1934, as amended, and including any capital stock
that such Person or Affiliate of such Person has the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, warrants
or options, or otherwise.

“Landon Group” means Landon and any Affiliate of Landon.

 

“Person” means and includes any natural person,
company, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or agency, department
or political subdivision thereof.

“Proxy” means any proxy, consent or similar
instrument.

“SEC” means the U.S. Securities and Exchange
Commission.

“Voting Power” of any Voting Securities means
the aggregate number of votes attributable to such Voting Securities that could
generally be cast by the holders thereof for the election of directors at the
time of determination.

“Voting Securities” means (i) the
outstanding shares of common stock of Meritage, (ii) any other outstanding
securities of Meritage that are generally entitled to vote for the election of
directors at the time of determination, and (iii) any outstanding
securities of Meritage that are convertible into, or exercisable or
exchangeable for, securities as described in clauses (i) and
(ii) above that are owned by the Person in question.

2.             Term of
Agreement. This Agreement shall terminate, and the covenants
contained herein shall expire, upon the termination of the Restriction Period
(as such term is defined in the Employment Agreement).

3.             Representations
and Warranties of Landon. Landon hereby represents and warrants
to Meritage that Landon has duly executed and delivered this Agreement, has the
power and authority to enter into and perform this Agreement (on behalf of
himself and all persons with a beneficial interest in the Voting Securities he
beneficially owns, whether by community or otherwise) and (assuming due
execution and delivery by Meritage) this Agreement is a legal, valid and
binding obligation of Landon enforceable against Landon in accordance with its
terms and that the execution and performance of this Agreement does not
conflict with or result in any violation or default under any agreement to
which Landon is a party, including any voting agreement, trust agreement,
voting trust, proxy, pledge agreement, loan or credit agreement, note, bond,
indenture, mortgage, lease or other agreement or instrument.

4.             Representations
and Warranties of Meritage. Meritage hereby represents and
warrants to Landon that Meritage has duly executed and delivered this
Agreement, has the corporate power and authority to enter into and perform this
Agreement and has duly authorized by all requisite action the execution,
delivery and performance of this Agreement, and (assuming due execution and
delivery by Landon) this Agreement is a legal, valid and binding obligation of
Meritage enforceable against Meritage in accordance with its terms and that the
execution and performance of this Agreement does not conflict with or result in
any violation or default under any agreement to which Meritage or any of its
direct or indirect subsidiaries is a party, including any voting agreement,
trust agreement, voting trust, proxy, pledge agreement, loan or credit
agreement, note, bond, indenture, mortgage, lease or other agreement or
instrument.

5.             Covenants.
In addition to his obligations under the Stock Purchase Agreement and the
Settlement Agreement, Landon covenants and agrees as follows:

 2
 

 

 

(a)           Voting by Landon Group.  Landon shall, and shall cause each other
Person in the Landon Group to, vote all the Voting Securities, whether now
existing or hereinafter acquired, over which Landon or such Person exercises
voting control: (i) with respect to any election of directors, in favor of
the directors recommended by the Nominating/Corporate Governance Committee (the
“Governance Committee”) of the Board of Directors of Meritage and
nominated by the Board of Directors of Meritage; and (ii) with respect to
any other proposal before the shareholders of Meritage, in accordance with the
recommendation of the Board of Directors of Meritage.

(b)           Standstill.
Landon shall not, and shall cause each other Person in the Landon Group not to,
without the prior written approval of the Governance Committee, acting alone or
as part of a group: (i) acquire, propose, or offer to acquire, or agree to
acquire, directly or indirectly, by purchase or otherwise, any securities or
direct or indirect rights to acquire any securities of Meritage (other than
securities owned beneficially by any Person in the Landon Group) or any of its
subsidiaries or any material portion of the assets of Meritage or any of its
subsidiaries or divisions, provided however, that if Landon sells shares that
bring his beneficial ownership of Voting Securities below 5% of the outstanding
Voting Securities of Meritage, Landon or any Person in the Landon Group may
reacquire Voting Securities from time to time provided that as a result of such
acquisitions the aggregate beneficial ownership of Voting Securities by the
Landon Group does not increase and thereafter exceed 4.99% of the outstanding
Voting Securities of Meritage; (ii) make, or in any way participate,
directly or indirectly, in any “solicitation” of “proxies” (as such terms are
used in the rules of the SEC) to vote or seek to advise or influence any
Person with respect to the voting of any securities of Meritage, or otherwise
seek to control or influence the management of Meritage or its Board of
Directors by means of statements or communications with any party other than
Meritage’s Chief Executive Officer, Chief Financial Officer, or General Counsel
or members of its Board of Directors; (iii) make any public announcement
with respect to, or submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving Meritage or any of its
securities or assets, or take any other action that might reasonably be
expected to force Meritage to make a public announcement regarding any of the
matters of the type set forth in clauses (i) through (iii) of this
Section 5(b); (iv) form, join, or in any way participate in a “group”
as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, in connection with any of the foregoing clauses
(i) through (iii)  of this Section 5(b), (v) make or
support in any fashion any shareholder proposal not supported by the Governance
Committee or the Board of Directors of Meritage; (vi) call, or encourage
any other Person to call, any special or annual meeting of shareholders of
Meritage, (vii) cause Meritage’s directors, officers, employees, agents
(including investment bankers), partners or Affiliates to, directly or
indirectly, engage in negotiations with, provide any information to, induce or
attempt to induce or give encouragement to, any Person, in furtherance of any
change of control of Meritage (whether pursuant to a tender or exchange offer,
a stock or asset sale or a merger, consolidation, amalgamation, plan or
arrangement or any other form of transaction), or any transaction that would be
inconsistent with or frustrate the purpose of this Agreement,
(viii) execute any written consent in lieu of a meeting of shareholders of
Meritage except a written consent solicited by or on behalf of the Governance
Committee or the Board of Directors of Meritage or (ix) except with his,
her or its own personal financial and tax advisors, discuss Meritage or its
business affairs or prospects with financial analysts, bankers, investment
bankers, fund managers, investors or any other Persons engaged in the financial
markets; provided, that nothing in this clause (ix) shall preclude Landon
from discussing such 

 3
 

 

 

matters with such Persons as they relate to his
historical roles with Meritage or in connection with capital raising activities
for business ventures so long as any such discussions, activities or ventures
are conducted by Landon in compliance with this Agreement, the Settlement
Agreement and his continuing obligations under Sections 8 and 9 of the
Employment Agreement. In addition, Landon agrees not to request Meritage to
directly or indirectly amend or waive any provision of this Section 5(b),
or to take any action designed to or which could reasonably be expected to
require Meritage to make a public announcement regarding any of the matters
referred to in this Section 5(b).

(c)           No Voting Trusts.
Landon shall not, and shall cause each other Person in the Landon Group not to,
deposit any Voting Securities in a voting trust or subject any Voting
Securities to any Proxy or other arrangement or agreement with respect to the
voting thereof.

(d)           Attendance at Meetings.
Landon shall and shall cause each other Person that owns of record Voting
Securities Beneficially Owned by the Landon Group to be present, in person or
by proxy, at all meetings of shareholders of Meritage so that all Voting
Securities Beneficially Owned by the Landon Group may be counted for the
purpose of determining the presence of a quorum at each such meeting.

(e)           No Action.
Landon shall not, and shall cause each other Person in the Landon Group not to,
take any action indirectly if such action, if taken directly, would be
prohibited by this Agreement.

(f)            Irrevocable
Proxy. To facilitate the provisions of this Section 5,
Landon hereby grants, and shall cause each other record holder of Voting
Securities beneficially owned by Landon to grant, an irrevocable Proxy to the
members of the Governance Committee in the form attached hereto and agrees that
any and all prior proxies given by Landon or any such other record holder with
respect to Voting Securities over which Landon has Beneficial Ownership or
exercises voting control are hereby revoked. Landon further agrees not to
grant, and to cause each other record holder of Voting Securities beneficially
owned by Landon not to grant, any subsequent proxies with respect to any Voting
Securities over which Landon has Beneficial Ownership or exercises voting
control until after expiration of this Agreement. Nothing contained in this
Section 5(f) shall preclude any Person who has granted a Proxy
hereunder from selling the Voting Securities subject to such Proxy to any third
party that is not an Affiliate of such Person, Landon or any member of the
Landon Group, provided that such Person does not retain any ownership or other
rights, direct or indirect, contingent or otherwise, in respect of such Voting
Securities, and upon any such sale, the Proxy shall not apply to the Voting
Securities so sold.

6.             Notices.
Unless otherwise provided, any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
by overnight courier or sent by facsimile, or upon delivery when delivered
personally, or upon seventy-two (72) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, addressed to the
party to be notified at such party’s address or facsimile number, as
subsequently modified by written notice, as follows:

 4
 

 

 

(a)           if to Landon, to 2200 Willow Bend
Drive, Plano, Texas 75093, Attn: John R. Landon, or

(b)           if to Meritage, to Meritage Homes
Corporation, 17851 North 85th Street,
Suite 300, Scottsdale, Arizona 85255, Attn: General Counsel.

7.             Amendments
and Modifications; Termination. This Agreement may not be
amended or modified except by a written instrument signed by both parties
hereto. No termination, waiver or amendment of this Agreement by Meritage shall
be effective unless it is approved by a majority of the members of the
Governance Committee.

8.             Entire
Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto relating to the subject matter hereof
and supersedes any prior agreements and understandings between the parties
hereto which relate to such subject matter.

9.             Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same document.

10.           Governing Law.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Maryland without giving effect to choice of law provisions
thereof.

11.           Remedies.
Meritage, on the one hand, and Landon, on the other, acknowledge and agree that
irreparable damage will occur in the event that any provision of this Agreement
is not performed in accordance with its specific terms or is otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court having
jurisdiction. The foregoing remedy shall be in addition to any other remedy to
which any party hereto may be entitled at law or in equity.

12.           Severability.
This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.

13.           Parties
in Interest; Assignment. This Agreement and all provisions
hereof are binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but, except as otherwise
provided for in this Agreement, neither this Agreement nor any of the rights,
interests and obligations hereunder may be assigned by any party hereto without
the prior written consent of the other parties hereto. Nothing in this
Agreement, whether expressed or implied, is to be construed to give any Person
other than the parties hereto any legal or equitable right, remedy or claim
under or in respect of this Agreement.

14.           Advice of Counsel.
EACH PARTY TO THIS AGREEMENT (INCLUDING EACH ACKNOWLEDGING PARTY) ACKNOWLEDGES
THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK
THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE

 5
 

 

TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT
SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR
PREPARATION HEREOF.

15.           Effectiveness.
This Agreement is effective as of the execution hereof; provided, that
if the transactions contemplated by Section 2(a) and
Section 2(b) of the Stock Purchase Agreement are not consummated in
accordance with the terms thereof, then this Agreement shall terminate
immediately and be of no further force or effect.

[Signature Page Follows]

 6
 

 

 

IN WITNESS WHEREOF, the parties
hereto have executed this Agreement the day and year first above written.

	
   

  	
  MERITAGE HOMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ C. Timothy White

  
	
   

  	
   

  	
  Name:

  	
  C. Timothy White

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  JOHN R. LANDON

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s John R. Landon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED
  BY:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accepted and Agreed to the extent of her interests
  in the Voting Securities owned by Landon:

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Eleanor Landon

  	
   

  	
   

  	
   

  
	
  Name:

  	
  ELEANOR LANDON

  	
   

  	
   

  	
   

  
								

 7
 

 

IRREVOCABLE
PROXY COUPLED WITH AN INTEREST

KNOW
ALL MEN BY THESE PRESENTS, that the undersigned stockholder of Meritage Homes Corporation, a
Maryland corporation (the “Company”), does hereby make, constitute and
appoint the individuals who are members of the Nominating/Governance Committee
of the Board of Directors of the Company, or any of them, the true and lawful
attorneys-in-fact and proxies (each, an “Attorney in Fact”)
of the undersigned for and in his name, place and stead (i) to attend all
meetings of the shareholders of the Company and to receive notices thereof,
(ii) to vote all of the shares of the Company’s common stock that the
undersigned beneficially owns or may own in the future or over which he
exercises voting control, whether at a meeting of shareholders or by written
consent, as well as any other shares of capital stock of the Company that the
undersigned may acquire after the date hereof (collectively, the “Voting
Securities”), at all meetings of the shareholders of the Company and any
adjournment or postponement thereof, and (iii) in order to implement the
provisions of that certain Cooperation Agreement, dated the date hereof, by and
between the undersigned and the Company (the “Cooperation Agreement”),
(A) for the period beginning on the date hereof and ending on the date of
the termination or expiration of the Cooperation Agreement in accordance with
its terms, to exercise all consensual or other voting rights with respect to
the Voting Securities with respect to the election of directors, and
(B) for the period beginning on the date hereof and ending on May 17,
2007, to exercise all consensual or other voting rights with respect to the
Voting Securities on all others matters other than the election of directors,
including, without limitation, compensation proposals, charter amendments,
mergers, sales of assets, or other matters submitted to the vote of
shareholders. This proxy is coupled with an interest and is irrevocable for the
period beginning on the date hereof and ending on the date of the termination
or expiration of the Cooperation Agreement in accordance with its terms. The
undersigned hereby ratifies and confirms all that the Attorney in Fact my
lawfully do or cause to be done by virtue of this proxy. The rights and
obligations of the Attorney in Fact hereunder may be delegated and assigned to
any other individual or entity, and such Attorney in Fact shall be entitled to
exercise all rights hereunder with full rights of substitution.

This proxy shall only be
binding upon the Landon Group (as such term is defined in the Cooperation
Agreement) and upon the heirs and personal representatives of any member of the
Landon Group and may not be amended or terminated, unless such amendment or
termination shall have been approved by the Nominating/Governance Committee of
the Board of Directors of the Company. If the undersigned stockholder sells
Voting Securities subject to this proxy to any third party that is not an
Affiliate of such Person, Landon or any member of the Landon Group, and the
undersigned stockholder does not retain any ownership or other rights, direct
or indirect, contingent or otherwise, in respect of such Voting Securities,
then, upon any such sale, this proxy shall not apply to the Voting Securities
so sold.

GIVEN this 12th day of June,
2006.

	
   

  	
   

  	
  /s/ John R. Landon

  
	
   

  	
   

  	
  JOHN R. LANDON,
  on behalf of himself and all Affiliates and persons with a beneficial
  interest in the Voting Securities

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Eleanor
  Landon

  
	
   

  	
   

  	
  ELEANOR LANDON,
  on behalf of herself

  

 

 8
 

 

 

	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss:

  
	
  COUNTY OF COLLIN

  	
  )

  	
   

  

 

BE IT
REMEMBERED, that on June 12, 2006, before me, the
subscriber, a Notary Public in the State of Texas, personally appeared John R.
Landon, to me known, who being by me duly sworn did depose and say that he
resides at 2200 Willow Bend Drive, Plano, Texas 75093, that he is the person
described in and who executed the above instrument on his own behalf, and he
acknowledged that he signed and delivered the same as his voluntary act and
deed.

	
  /s/ Sherry Kelly Martino

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  
	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss:

  
	
  COUNTY OF COLLIN

  	
  )

  	
   

  

 

BE IT
REMEMBERED, that on June 12, 2006, before me, the
subscriber, a Notary Public in the State of Texas, personally appeared Eleanor
Landon, to me known, who being by me duly sworn did depose and say that she
resides at 2200 Willow Bend Drive, Plano, Texas 75093, that she is the person
described in and who executed the above instrument on her own behalf, and she
acknowledged that she signed and delivered the same as her voluntary act and
deed.

	
  /s/ Sherry Kelly Martino

  	
   

  
	
  Notary Public

  

 

 

 9

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