<SUBMISSION>
<ACCESSION-NUMBER>0000950147-02-000506
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20020508
<FILING-DATE>20020402
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>MERITAGE CORP
<CIK>0000833079
<ASSIGNED-SIC>1531
<IRS-NUMBER>860611231
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>001-09977
<FILM-NUMBER>02600224
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>6613 N SCOTTSDALE RD
<STREET2>STE 200
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85250
<PHONE>6029988700
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>6613 NORTH SCOTTSDALE ROAD
<STREET2>SUITE200
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85250
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MONTEREY HOMES CORP
<DATE-CHANGED>19970113
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>EMERALD MORTGAGE INVESTMENTS CORP
<DATE-CHANGED>19900502
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>HOMEPLEX MORTGAGE INVESTMENTS CORP
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>e-8361.txt
<DESCRIPTION>DEFINITIVE N&PS OF MERITAGE CORPORATION
<TEXT>
                            SCHEDULE 14A INFORMATION
                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ]  Preliminary Proxy Statement           [ ]  Confidential, For Use of the
[X]  Definitive Proxy Statement                 Commission Only (as permitted
[ ]  Definitive Additional Materials            by Rule 14a-6(e)(2))
[ ]  Soliciting Material Pursuant to
     Rule 14a-11(c) or Rule 14a-12


                              Meritage Corporation
--------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X]  No fee required.
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1)   Title of each class of securities to which transaction applies:

--------------------------------------------------------------------------------
2)   Aggregate number of securities to which transaction applies:

--------------------------------------------------------------------------------
3)   Per unit price or other underlying value of transaction  computed  pursuant
     to Exchange  Act Rule 0-11 (set forth the amount on which the filing fee is
     calculated and state how it was determined):

--------------------------------------------------------------------------------
4)   Proposed maximum aggregate value of transaction:

--------------------------------------------------------------------------------
5)   Total fee paid:

--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided  by  Exchange  Act
    Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
    paid  previously.  Identify the previous filing by  registration  statement
    number, or the form or schedule and the date of its filing.

    1)   Amount previously paid:
                                ------------------------------------------
    2)   Form, Schedule or Registration Statement No.:
                                                      --------------------
    3)   Filing Party:
                      ----------------------------------------------------
    4)   Date Filed:
                    ------------------------------------------------------
<PAGE>
                           [LOGO] MERITAGE CORPORATION

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                          DATE: WEDNESDAY, MAY 8, 2002
                                 TIME: 9:00 a.m.
               LOCATION: DOUBLETREE HOTEL DALLAS - LINCOLN CENTRE
                                5410 LBJ FREEWAY
                                  DALLAS, TEXAS

To Our Stockholders:

     You are invited to attend the Meritage  Corporation  2002 Annual Meeting of
Stockholders for the following purposes:

     1.   To elect three Class I  Directors,  each to hold office for a two-year
          term;

     2.   To  approve  an  amendment  to our 1997  Stock  Option  Plan that will
          increase  the total  number  of  shares  authorized  for  issuance  by
          300,000, and the number of shares that may be issued to any one person
          under the plan from 100,000 to 150,000; and

     3.   To  transact  any other  business  that may  properly  come before the
          meeting. We are not currently aware of any other matters that may come
          before the meeting.

     Only  stockholders of record at the close of business on March 29, 2002 are
entitled  to notice  of and to vote at the  annual  meeting.  A copy of our 2001
Annual Report to Stockholders,  which includes audited financial statements,  is
enclosed.

                                        By Order of the Board of Directors


                                        /s/ Larry W. Seay
                                        ----------------------------------------
Scottsdale, Arizona                     Larry W. Seay
April 2, 2002                           Secretary


                             YOUR VOTE IS IMPORTANT.
      WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE SIGN AND DATE THE ENCLOSED
      PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED
      TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED. YOU MAY ALSO VOTE BY
                CALLING THE 800-NUMBER LISTED ON YOUR PROXY CARD.
<PAGE>
                              MERITAGE CORPORATION
                           6613 NORTH SCOTTSDALE ROAD
                                    SUITE 200
                            SCOTTSDALE, ARIZONA 85250

                           --------------------------
                                 PROXY STATEMENT
                           --------------------------

     This  Proxy   Statement  is  furnished  to  you  in  connection   with  the
solicitation  of  proxies  to be  used  in  voting  at  our  Annual  Meeting  of
Stockholders  on May 8,  2002.  The  meeting  will be held at 9:00  a.m.  at the
Doubletree Hotel Dallas - Lincoln Centre, 5410 LBJ Freeway, Dallas, Texas 75240.
THE MERITAGE  BOARD OF  DIRECTORS IS  SOLICITING  PROXIES.  The proxy  materials
relating  to the  annual  meeting  were  mailed on or about  April  10,  2002 to
stockholders  of record at the close of business on March 29, 2002 (the  "record
date").

     You are entitled to revoke your proxy at any time before it is exercised by
attending the annual meeting and voting in person, duly executing and delivering
a proxy  bearing a later date,  or sending  written  notice of revocation to the
Corporate Secretary at the above address.  Whether or not you plan to be present
at the annual  meeting,  we encourage you to sign and return the enclosed  proxy
card or to use  telephone  or  internet  voting.  Refer to your  proxy  card for
instructions about voting by telephone, internet or mail.

     We will bear the entire cost of proxy  solicitation,  including charges and
expenses of brokerage firms and others for forwarding  solicitation  material to
beneficial  owners of our  outstanding  common  stock.  We may  solicit  proxies
through the mail, by personal interview or telephone.

                          VOTING SECURITIES OUTSTANDING

     As of the record date, there were 5,662,873 shares of Meritage common stock
outstanding.  Each share is entitled to one vote on each proposal to be voted on
at the annual  meeting.  Only  holders of record of common stock at the close of
business on the record date will be permitted to vote at the meeting,  either in
person or by valid proxy.  Abstentions  and broker  non-votes will be treated as
shares that are  present and  entitled  to vote for  purposes of  determining  a
quorum, but as unvoted for purposes of determining the approval of any matter.

     The  following  information  should  be  reviewed  along  with the  audited
consolidated  financial statements,  notes to consolidated financial statements,
report of independent auditors and other information included in our 2001 Annual
Report that was mailed to you along with this Proxy Statement.

                                       2
<PAGE>
                              ELECTION OF DIRECTORS
                                (PROPOSAL NO. 1)

     Our Board of Directors  has seven  members.  The directors are divided into
two classes serving  staggered  two-year terms.  This year our Class I directors
are up for election. The Board has nominated Steven J. Hilton and Raymond Oppel,
who are incumbent Class I Directors,  for re-election and William G. Campbell as
a new Director.  William W. Cleverly,  a current Class I Director will not stand
for  re-election.  Management  is deeply  grateful to William  Cleverly  for his
dedicated service to Meritage.

     All nominees have  consented to serve as directors.  The Board of Directors
has no reason to  believe  that any of the  nominees  will be unable to act as a
director.  However,  if a nominee becomes unable to serve or if a vacancy should
occur  before  election,  the Board may either  reduce its size or  designate  a
substitute  nominee.  If a substitute  nominee is named, the Board will vote the
proxies held by it for the election of the substitute nominee.

     Directors  will be elected by a  plurality  of the votes cast at the Annual
Meeting.  This means that the three  nominees that receive the largest number of
FOR votes cast will be  elected as  Directors.  In the vote on the  election  of
three Director nominees, stockholders may:

     *    vote FOR all nominees;
     *    vote to WITHHOLD votes for all nominees; or
     *    WITHHOLD votes as to specific nominees.

     Unless  you tell us by your  proxy to vote  differently,  we will vote your
properly completed proxies FOR the Board's nominees.

                        THE BOARD OF DIRECTORS RECOMMENDS
                    A VOTE "FOR" APPROVAL OF PROPOSAL NO. 1.

                                       3
<PAGE>
                        DIRECTOR AND OFFICER INFORMATION

     JOHN R.  LANDON,  44,  has served as  co-chairman  and  co-chief  executive
officer  (or  co-managing  director)  since  April  1998 and served as our chief
operating officer and co-chief  executive officer from the combination of Legacy
Homes and Meritage in July 1997 to April 1998.  Mr. Landon  founded Legacy Homes
in 1987 and, as its  president,  managed all aspects of the company's  business.
Mr.  Landon is a member of the  National  Association  of  Homebuilders  and the
Dallas Home and Apartment Builders' Association.

     STEVEN J. HILTON,  40, has served as  co-chairman  and  co-chief  executive
officer (or  co-managing  director) since April 1998 and served as our president
and co-chief  executive  officer from  December 31, 1996 to April 1998. In 1985,
Mr.  Hilton  co-founded  Monterey  Homes,  which merged with  Homeplex  Mortgage
Investment Co., the Company's predecessor, and was its treasurer,  secretary and
director until December 31, 1996. Mr. Hilton is a member of the Central  Arizona
Homebuilders' Association and the National Association of Homebuilders.

     ROBERT G. SARVER,  40, has served as a director since December 1996, and is
currently  a  director  of  Skywest  Airlines.  He was the  chairman  and  chief
executive  officer of California  Bank and Trust from 1998 to 2001. From 1995 to
1998, he served as chairman of Grossmont  Bank. In 1990,  Mr. Sarver  co-founded
and currently  serves as the executive  director of Southwest Value Partners and
Affiliates,  a real estate investment company. Mr. Sarver was the founder of the
National Bank of Arizona and was its President  until its  acquisition  by Zions
Bancorporation in 1994.

     C. TIMOTHY  WHITE,  41, has served as a director  since  December 1996, and
served as a director of Monterey  Homes from February 1995 until  December 1996.
Since 1989, Mr. White has been an attorney with the law firm of Tiffany & Bosco,
P.A. in Phoenix, Arizona, which provides legal services to Meritage.

     RAYMOND OPPEL, 45, has served as a director since December 1997. He was the
co-founder,  chairman and chief executive  officer of the Oppel Jenkins Group, a
regional  homebuilder  in Texas and New  Mexico,  which  was sold to the  public
homebuilder  KB Home.  Mr. Oppel has served as president of the Texas  Panhandle
Builder's  Association and is a licensed real estate broker. Mr. Oppel currently
is active as a private  investor in real estate  development,  banking and a new
automobile dealership.

     PETER L. AX, 43, has served as a director  since  September 2000 and is the
managing  partner of Phoenix  Capital  Management,  an  investment  banking  and
merchant-banking firm. Mr. Ax is the former chairman and chief executive officer
of  SpinCycle,   Inc.,  the  nation's  largest  consolidator  and  developer  of
coin-operated laundromats.  Prior to his involvement in SpinCycle, Mr. Ax served
as Head of the  Private  Equity  Division  and Senior Vice  President  of Lehman
Brothers in New York.  Mr. Ax is also on the Board of Directors  of CashX,  Inc.
and Medit Marketing,  Inc. Mr. Ax is a certified public  accountant and holds an
M.B.A. from the Wharton School at the University of Pennsylvania.

     WILLIAM G. CAMPBELL, 43, is nominated to serve as a director this year. Mr.
Campbell  is  a  co-founder  and  managing  director  of  Knightsbridge  Capital
Corporation,   an  advisory  firm  that  plans  and  implements   capitalization
strategies  for  commercial  real estate.  Prior to forming  Knightsbridge,  Mr.
Campbell was division  manager of FINOVA Realty  Capital,  the  commercial  real
estate financing  division of The FINOVA Group.  From 1995 until its acquisition
by FINOVA in 1997, Mr. Campbell was chief operating officer of Belgravia Capital
Corporation,  a nationwide  commercial mortgage banking firm. Mr. Campbell holds
an M.B.A. from Pepperdine University and is a certified public accountant.

     LARRY  W.  SEAY,  46,  has  served  as  chief  financial  officer  and vice
president-finance  since December 31, 1996, and has also served as our secretary
and  treasurer  since  1997.  Mr.  Seay was  chief  financial  officer  and vice
president-finance  of Monterey Homes from April 1996 to December 31, 1996. Prior
to 1996, Mr. Seay served as vice president and treasurer of UDC Homes,  Inc. Mr.
Seay is a certified public accountant and a member of the American  Institute of
Certified Public Accountants.

     RICHARD T. MORGAN,  46, has served as vice  president  since April 1998 and
also served as chief  financial  officer of our Texas  division since July 1997.
Mr. Morgan was appointed Legacy's chief financial officer in 1997.

                                       4
<PAGE>
              STOCK OWNED BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT

     The  following  table  summarizes,  as of March 15,  2002,  the  number and
percentage of outstanding  shares of our common stock  beneficially owned by the
following:

     *    each person or group management knows to beneficially own more than 5%
          of such stock;
     *    all Meritage directors and nominees for director;
     *    all  executive  officers  named  in  the  compensation  summary  under
          "Executive Compensation"; and
     *    all Meritage directors and executive officers as a group.

     The address  for our  directors  and  executive  officers  is c/o  Meritage
Corporation,  6613 North Scottsdale Road, Suite 200, Scottsdale,  Arizona 85250.
The number of shares  includes  shares of common  stock  owned of record by such
person's spouse and minor children and by other related individuals and entities
over whose shares of common stock such person has custody, voting control or the
power of disposition.

<TABLE>
<CAPTION>
                                                                                           RIGHT TO
                                                                              NUMBER       ACQUIRE      TOTAL      PERCENT OF
                                                                             OF SHARES      BY MAY    BENEFICIAL  OUTSTANDING
  NAME OF BENEFICIAL OWNER              POSITION WITH COMPANY                  OWNED       30, 2002     SHARES     SHARES (1)
  ------------------------              ---------------------                  -----       --------     ------     ----------
<S>                           <C>                                           <C>            <C>          <C>        <C>
       John R. Landon         Class II Director, Co-Chairman and Co-CEO       750,734(2)     32,280     783,014       13.8%

      Steven J. Hilton        Class I Director, Co-Chairman and Co-CEO        672,341        75,147     747,488       13.0%

      Robert G. Sarver              Class II Director, Audit and              264,800(3)     12,500     277,300        4.9%
                                   Compensation Committee Member

      C. Timothy White                   Class II Director                        316        12,500      12,816         *

       Raymond Oppel                Class I Director, Audit and                    --        12,500      12,500         *
                                   Compensation Committee Member

        Peter L. Ax                 Class II Director, Audit and                   --         3,500      3,500          *
                                   Compensation Committee Member

    William G. Campbell               Class I Director Nominee                     --            --         --          *

    William W. Cleverly                   Class I Director                      1,000            --       1,000         *

       Larry W. Seay               Chief Financial Officer, Vice                4,354        15,900      20,254         *
                                  President-Finance, Secretary and
                                             Treasurer

     Richard T. Morgan                     Vice President                       1,500        15,700      17,200         *

   All directors, nominees and executive officers as a group (10 persons)   1,695,045       180,027   1,875,072       33.3%

  NAME OF BENEFICIAL OWNER          ADDRESS OF BENEFICIAL OWNER
  ------------------------          ---------------------------
Capital Growth Management LP   One International Place, Boston MA 02110       576,200(4)         --     576,200       10.2%
</TABLE>

----------
*    Represents less than 1%.
(1)  The percentages  shown include the shares of common stock actually owned as
     of March 15,  2002,  and the shares which the person or group had the right
     to acquire  within 60 days of that date. In  calculating  the percentage of
     ownership,  all shares of common stock which the identified  person had the
     right to acquire  within 60 days of March 15, 2002 upon exercise of options
     are  considered as  outstanding  for computing the percentage of the shares
     owned by that person or group,  but are not considered as  outstanding  for
     computing the percentage of the shares of stock owned by any other person.
(2)  647,267 shares are owned with Eleanor Landon, spouse, as tenants-in-common.
(3)  Mr. Sarver beneficially owns 1,500 shares through his spouse and 500 shares
     through a minor child.
(4)  Based on Schedule  13G,  filed with the SEC on  February  8, 2002.  Capital
     Growth  Management LP ("CGM") has sole voting power with respect to 576,200
     shares and shared  dispositive  power with respect to those 576,200 shares.
     The Schedule 13G also states that CGM disclaims any beneficial  interest in
     the shares.

              MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES

THE BOARD OF DIRECTORS met nine times in fiscal 2001. Each director  attended at
least 75% of the Board and committee meetings of which he is a member.

     THE  COMPENSATION  COMMITTEE  reviews the  performance  of the Co-CEO's and
will, at the  appropriate  times,  review plans for management  succession.  The
Committee also reviews and approves the Company's  compensation policies as they
relate to the Co-CEO's and administers Meritage's Executive Management Incentive
Plan.

                                       5
<PAGE>
THE AUDIT COMMITTEE recommends appointment of our independent auditors,  reviews
our financial statements and considers other matters in relation to the external
audit of financial affairs to promote accurate and timely  reporting.  The Audit
Committee members are independent as described by Sections  303.01(B)(2)(a)  and
(3) of the New York Stock Exchange Listing Standards.

The  following   summarizes  the  membership  of  the   Compensation  and  Audit
Committees, and the number of times each met during 2001.

                                       COMPENSATION COMMITTEE    AUDIT COMMITTEE
                                       ----------------------    ---------------
Robert G. Sarver                                  x                     x
Raymond Oppel                                     x                     x
Peter L. Ax                                       x                     x
Number of meetings in 2001                        2                     5

OTHER COMMITTEES.  We do not maintain a standing  nominating  committee or other
committee performing similar functions. The entire Board performs those duties.

                              DIRECTOR COMPENSATION

     Non-employee directors received an annual retainer of $13,200 in 2001, plus
expenses  related  to  attending  Board  and  Committee  meetings.  Non-employee
directors  receive  no  additional  cash  compensation  for  attending  Board or
Committee meetings.  In 2001, each non-employee  director was granted options to
acquire 5,000 shares of our common stock as additional  consideration  for their
services. All non-employee director stock options vest in equal share increments
on each of the  first  two  anniversary  dates of the date of grant  and have an
exercise price equal to the closing price of our common stock on the grant date.

                             EXECUTIVE COMPENSATION

     The following table  summarizes the  compensation we paid in 2001, 2000 and
1999 to our  co-chief  executive  officers  and other  most  highly  compensated
executive officers who were paid in excess of $100,000 in 2001.

                         2001 SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                        LONG-TERM
                                                                                       COMPENSATION
                                                          ANNUAL COMPENSATION             AWARDS
                                                 ------------------------------------   ----------
                                                                            OTHER       SECURITIES
                                                                            ANNUAL      UNDERLYING     ALL OTHER
     NAME AND PRINCIPAL POSITION          YEAR    SALARY       BONUS     COMPENSATION   OPTIONS(#)   COMPENSATION(2)
     ---------------------------          ----   --------   ----------   ------------   ----------   ---------------
<S>                                       <C>    <C>        <C>           <C>           <C>            <C>
John R. Landon - Co-Chairman and          2001   $425,000   $1,417,401         --         49,000        $ 57,277
  Co-Chief Executive Officer              2000    400,000      975,597         --         11,200          63,257
                                          1999    375,000      475,000         --         30,000          63,504

Steven J. Hilton - Co-Chairman and        2001    425,000    1,417,401         --         49,000          40,964
  Co-Chief Executive Officer              2000    400,000      975,597         --         11,200          35,005
                                          1999    375,000      475,000         --         30,000          33,212

Larry W. Seay - Chief Financial Officer,  2001    191,308      225,000     45,000(1)      19,500          15,229
  Vice President-Finance, Secretary and   2000    161,428      175,000         --          7,500          14,654
  Treasurer                               1999    150,000      125,000         --         20,000          12,611

Richard T. Morgan - Vice President        2001    150,000       90,000     40,000(1)      13,500           4,968
                                          2000    122,500       80,000         --             --           5,334
                                          1999    110,833       60,000         --         15,000           3,737
</TABLE>

----------
(1)  Represents deferred compensation, payable in December 2004.
(2)  These  amounts  represent  matching  contributions  by us to the  officers'
     accounts  under the 401(k) plan,  group medical,  long-term  disability and
     life  insurance  plan  premiums  and  automobile  allowances  paid by us as
     follows:

                                       6
<PAGE>
                                             GROUP,
                                           LONG-TERM
                                           DISABILITY
                                 401(K)     AND LIFE     VEHICLE    TOTAL OTHER
       NAME             YEAR     MATCH      INSURANCE   ALLOWANCE   COMPENSATION
       ----             ----    -------     ---------   ---------   ------------
John R. Landon          2001    $ 2,250      $38,347     $ 16,680     $ 57,277
                        2000      2,306       37,945       23,006       63,257
                        1999      3,000       37,500       23,004       63,504

Steven J. Hilton        2001      3,130       15,115       22,719       40,964
                        2000      2,423       16,889       15,693       35,005
                        1999      2,880       14,651       15,681       33,212

Larry W. Seay           2001      3,150        7,429        4,650       15,229
                        2000      3,060        7,394        4,200       14,654
                        1999      2,880        5,531        4,200       12,611

Richard T. Morgan       2001      2,362        2,606           --        4,968
                        2000      2,460        2,874           --        5,334
                        1999      1,237        2,500           --        3,737

                               2001 OPTION GRANTS

     The  following  table lists stock  options  granted in 2001 to the officers
named in the Summary  Compensation  Table above.  The amounts shown as potential
realizable  values rely on arbitrarily  assumed share price  appreciation  rates
prescribed  by the SEC over  the  five or  seven-year  term of the  options.  In
assessing  those  values,  please  note that the  ultimate  value of the options
depends  on  actual  future  share  values  and  do  not   necessarily   reflect
management's  assessment  of our  future  stock  price  performance  and are not
intended to indicate the Company's assessment of the value of the options.

<TABLE>
<CAPTION>
                                       INDIVIDUAL GRANTS
                      ----------------------------------------------------
                                    PERCENTAGE                                POTENTIAL REALIZABLE VALUE
                       NUMBER OF     OF TOTAL                                   AT ASSUMED ANNUAL RATES
                        SHARES        OPTIONS                                 OF STOCK PRICE APPRECIATION
                      UNDERLYING    GRANTED TO    EXERCISE OR                       FOR OPTION TERM
                        OPTIONS      EMPLOYEES    BASE PRICE    EXPIRATION    ---------------------------
      NAME            GRANTED (#)     IN 2001      ($/SHARE)       DATE          5%                 10%
      ----            -----------     -------      ---------    ----------    --------           --------
<S>                    <C>             <C>         <C>           <C>          <C>                <C>
John R. Landon          49,000          15%         $ 31.75       6/14/06     $249,091           $721,737
Steven J. Hilton        49,000          15%           31.75       6/14/06      249,091            721,737
Larry W. Seay           19,500           6%           28.86       3/13/08      229,104            533,910
Richard T. Morgan       13,500           4%           28.86       3/13/08      158,610            369,630
</TABLE>

     No options  were granted at a below market price in 2001 and we do not have
a stock appreciation rights ("SAR") program.

                                       7
<PAGE>
                       AGGREGATED OPTION EXERCISES IN 2001
                  AND OPTION VALUES AT END OF FISCAL YEAR 2001

     The  following  table  lists the  number of shares  acquired  and the value
realized as a result of options  exercised  during 2001 for the listed officers.
The table  contains  values for "in the money"  options,  which are those with a
positive spread between the exercise price and the December 31, 2001 share price
of $51.30.  The values are the  difference  between the year-end price per share
and the exercise price per share,  multiplied by the number of applicable shares
in the money.  These  values may never be  realized.  The  options  may never be
exercised, and the value, if any, will depend on the share price on the exercise
date.

<TABLE>
<CAPTION>
                                                      NUMBER OF SECURITIES
                                                     UNDERLYING UNEXERCISED          VALUE OF UNEXERCISED
                                                       OPTIONS AT FISCAL           IN-THE-MONEY OPTIONS AT
                       SHARES                              YEAR-END (#)              FISCAL YEAR END ($)
                     ACQUIRED ON      VALUE       ---------------------------    ---------------------------
      NAME           EXERCISE(#)     REALIZED     EXERCISABLE   UNEXERCISABLE    EXERCISABLE   UNEXERCISABLE
      ----           -----------    ----------    -----------   -------------    -----------   -------------
<S>                    <C>          <C>             <C>            <C>           <C>            <C>
John R. Landon         166,667      $3,562,509       14,240         75,960        $  517,769     $1,960,284
Steven J. Hilton        83,800       3,536,550       97,107         75,960         4,333,794      1,960,284
Larry W. Seay            7,000         213,513        8,500         40,000           316,300      1,235,240
Richard T. Morgan        2,000          72,780       12,000         24,500           479,100        721,990
</TABLE>

         REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

     THE FOLLOWING  REPORT OF THE  COMPENSATION  COMMITTEE  DOES NOT  CONSTITUTE
SOLICITING  MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE
INTO ANY  COMPANY  FILING  UNDER THE  SECURITIES  ACT OF 1933 OR THE  SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES
THIS REPORT.

     It is the duty of the  Compensation  Committee to review and  determine the
salaries and bonuses of the Co-CEO's,  and to establish the general compensation
policies for such  individuals.  The  Compensation  Committee  believes that the
compensation  programs for each Co-CEO should reflect the Company's  performance
and the value created for our stockholders.  The Compensation Committee believes
that our  compensation  programs  should  support  the goals  and  values of the
Company.  In  addition,   the  Compensation   Committee  administers  Meritage's
Executive Management Incentive Plan.

     GENERAL  COMPENSATION  POLICY AND PHILOSOPHY.  Our philosophy is to provide
the  Company's  Co-CEO's  with  compensation  that is based on their  individual
performance  and  the  financial  performance  of  the  Company.  Each  Co-CEO's
compensation is comprised of:

     *    a base salary;
     *    performance  bonuses designed to reward performance based on financial
          results; and
     *    stock-based   incentives   designed  to  tie  the   Co-CEO's   overall
          compensation  to  the  interests  of  the  Company's  stockholders  by
          providing  rewards to  executives if  stockholders  benefit from stock
          price appreciation.

     The Co-CEO's also  participate  in various  other  benefit plans  generally
available to all company employees, including medical, 401(k) and life insurance
plans.

     The  Company  attempts  to set  executive  compensation  at levels that are
competitive   within  the  industry.   Each  year  the  Company  reviews  Co-CEO
compensation  against  publicly  available  information for other  homebuilders.
Periodically,   the  Company  engages   outside   consultants  to  evaluate  its
compensation programs.

     A  substantial  portion of each Co-CEO's  compensation  is in the form of a
bonus  program,  which is tied to an annual  budget.  The Company  believes that
tying  compensation to financial  performance aligns the interests of executives
with those of stockholders.

                                       8
<PAGE>
     CEO COMPENSATION.  Our two co-chief executive officers,  John R. Landon and
Steven J. Hilton, were compensated during 2001 pursuant to employment agreements
they have with us. Mr. Landon's and Mr. Hilton's employment  agreements provided
for a base salary, stock options and bonuses based on company performance.  Both
agreements provided for an annual salary and annual performance bonus based on a
percentage of consolidated net income,  as determined by the Board of Directors.
These  agreements   expired  in  2001,  and  the   Compensation   Committee  has
commissioned  a  compensation  study to assist it in  determining an appropriate
Co-CEO compensation program going forward.

     During 2001, the Company continued to compensate Messrs.  Landon and Hilton
under the  parameters  of their  employment  agreements  after  such  agreements
expired.  The performance  bonus criteria for each Mr. Landon and Mr. Hilton was
based on  consolidated  net income.  Based on 2001  financial  results,  Messrs.
Landon and Hilton each exceeded the minimum  threshold  consolidated  net income
goal to qualify for a  performance  bonus.  As a result,  the Board of Directors
approved the following compensation for Messrs. Landon and Hilton:

     *    an annualized salary of $425,000;
     *    a performance bonus of $1,417,401; and
     *    a grant of 49,000 stock options vesting 20% per year for five years.

     In 2001,  the Board of  Directors  and  stockholders  approved the Meritage
Corporation  Incentive Plan (the "Annual Incentive Plan").  The Annual Incentive
Plan  provides  for annual  incentive  awards to certain  of the  Company's  key
executives.  In determining  awards to be made under the Annual  Incentive Plan,
the  Compensation  Committee  may approve a formula that is based on one or more
objective  criteria,  including  performance  criteria  and  performance  goals.
Performance  criteria  must  include  one or  more  of the  following:  pre-  or
after-tax  earnings,  revenue  growth,  operating  income,  operating cash flow,
return on net assets,  return on stockholders'  equity, return on assets, return
on capital, share price growth, stockholder returns, gross or net profit margin,
earnings  per  share,  price  per share and  market  share,  any of which may be
measured either in absolute terms or as compared to any incremental increase, or
as  compared to results of a peer  group.  It is the intent of the Company  that
awards  made  pursuant  to  the  Annual  Incentive  Plan  constitute  "qualified
performance-based  compensation" satisfying the requirement of Section 162(m) of
the Internal Revenue Code (the "Code").

     COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). Section 162(m) of the
Code limits the  deductibility of executive  compensation  paid by publicly held
corporations  to $1  million  for each  executive  officer  named in this  proxy
statement.  The $1 million  limitation  generally does not apply to compensation
that is pursuant to a  performance-based  plan  approved  by  stockholders.  The
Company's  policy is to comply  with the  requirements  of  Section  162(m)  and
maintain deductibility for all executive  compensation,  except in circumstances
where the  Compensation  Committee  concludes on an informed basis that it is in
the best  interest of the  Company and the  stockholders  to take  actions  with
regard to the  payment of  executive  compensation  which do not qualify for tax
deductibility.

     Certain  stock  options  granted  to Mr.  Landon  in  connection  with  the
Company's combination with Legacy Homes in 1997 do not satisfy the exceptions to
the  non-deductibility  of tax or $1 million threshold described above and, as a
result of  substantial  appreciation  in the  price of our  common  stock,  have
resulted in Mr. Landon  receiving  compensation  in excess of $1 million that is
not deductible.

                                        Robert G. Sarver
                                        Raymond Oppel
                                        Peter L. Ax

                                       9
<PAGE>
                          REPORT OF THE AUDIT COMMITTEE

     THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE  SOLICITING
MATERIAL AND SHOULD NOT BE DEEMED FILED OR  INCORPORATED  BY REFERENCE  INTO ANY
COMPANY FILING UNDER THE  SECURITIES ACT OF 1933 OR THE SECURITIES  EXCHANGE ACT
OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES THIS REPORT.

     It is the duty of the Audit  Committee  to provide  independent,  objective
oversight of the Company's accounting functions and internal controls. The Audit
Committee is composed of independent directors, and acts under a written charter
that sets forth the audit related  functions  the  committee is to perform.  The
Board of Directors has adopted a written  charter for the Audit  Committee.  The
audit functions of the Audit Committee are to:

     *    serve as an independent  and objective  party to monitor the Company's
          financial reporting process and internal control system;

     *    review and appraise  the audit  efforts of the  Company's  independent
          accountants; and

     *    provide  an  open  avenue  of  communication   among  the  independent
          accountants,  financial  and  senior  management,  and  the  Board  of
          Directors.

     The Audit  Committee  meets with  management  periodically  to consider the
adequacy of the Company's internal controls and the objectivity of its financial
reporting.  We discuss these matters with the Company's independent auditors and
with appropriate Company financial  personnel.  We regularly meet privately with
the independent auditors, who have unrestricted access to the Committee. We also
recommend to the Board the  appointment of the  independent  auditors and review
periodically  their  performance  and  independence  from  management.  We  have
considered the provision of additional services by our independent  auditors and
believe that the provision of such additional services does not adversely impact
their independence.

     Although the Committee  reviews the Company's  financing  plans and reports
recommendations  to  the  full  Board  for  approval,   management  has  primary
responsibility for the Company's financial  statements and the overall reporting
process,  including the Company's system of internal  controls.  The independent
auditors audit the annual financial  statements prepared by management,  express
an opinion as to whether those financial statements fairly present the financial
position, results of operations and cash flows of the Company in conformity with
generally  accepted  accounting  principles  and discuss with us any issues they
believe should be raised with us.

     This year, we reviewed the Company's audited  financial  statements and met
with both  management  and KPMG LLP,  the  Company's  independent  auditors,  to
discuss those  financial  statements.  Management has represented to us that the
financial  statements  were  prepared  in  accordance  with  generally  accepted
accounting principles in the United States of America. We have received from and
discussed  with KPMG LLP the  written  disclosure  and the  letter  required  by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). These items relate to that firm's independence from the Company. We
also discussed with KPMG LLP those matters required to be discussed by Statement
on Auditing Standards No. 61 (Communication with Audit Committees).

     Based on these reviews and  discussions,  we  recommended to the Board that
the Company's audited  financial  statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2001.

                                        Robert G. Sarver
                                        Raymond Oppel
                                        Peter L. Ax

                                       10
<PAGE>
                              EMPLOYMENT AGREEMENTS

     We had employment  agreements with our  co-chairmen and co-chief  executive
officers, John R. Landon and Steven J. Hilton, that expired on June 30, 2001 and
December 31, 2001,  respectively.  Both  agreements  provided for an annual base
salary and annual  performance  bonus based on a percentage of consolidated  net
income, as determined by the Board of Directors. Both agreements provided for us
to pay each officer his base salary  through the term of his agreement if he was
terminated  without cause. In addition,  both agreements  contained  traditional
non-compete  provisions restricting each Mr. Landon and Mr. Hilton from engaging
in the homebuilding business (subject to certain defined exceptions), recruiting
or hiring our  employees,  and  soliciting  our  customers  and  suppliers for a
competing business or otherwise attempting to induce any customer or supplier to
discontinue its relationship with us.

     We have an employment  agreement  with Larry W. Seay,  our chief  financial
officer,  which  provides  for an initial term  through  December 31, 2003.  Mr.
Seay's  agreement  is designed to provide for a base salary and an annual  bonus
based on the  achievement of specific  performance  objectives.  Compensation is
subject to continuing employment and standard employment policies.

     If Mr. Seay is terminated without cause or he terminates his employment due
to a demotion in position, he will be entitled to receive:

     *    an amount equal to 75% of his base salary;
     *    75% of his average bonus for the previous three fiscal years; and
     *    acceleration  of  vesting  of his  stock  options  as if he held  them
          through the end of the following fiscal year.

                         CHANGE OF CONTROL ARRANGEMENTS

     We have senior executive severance agreements with Messrs.  Landon, Hilton,
Seay and Morgan.  Under these  severance  agreements,  the executive  officer is
entitled to a severance  payment if his  employment is terminated by the Company
without cause within two years of a change of control  event.  In addition,  the
executive  officer is entitled to the  severance  payment it he  terminates  his
employment  for good reason within two years of a change in control  event.  The
severance payment equals the sum of:

     *    for  Messrs.  Landon  and  Hilton,  two times  their  base  salary (as
          defined), and for Messrs. Seay and Morgan, one times their base salary
          (as defined);
     *    for  Messrs.  Landon and  Hilton,  two times  their  annual  incentive
          compensation (as defined),  and for Messrs. Seay and Morgan, one times
          their annual incentive compensation (as defined); and
     *    immediate vesting of all their stock options.

                                       11
<PAGE>
                                PERFORMANCE GRAPH

     The chart below  graphs our  performance  in the form of  cumulative  total
return to stockholders  for the past five years. Our total return is compared to
that of the  Standard  and  Poor's 500 Index and of a  cumulative  return on the
common stock of seven publicly traded peer issuers, which is comprised of Beazer
Homes USA, Inc., Hovnanian Enterprises,  Inc., MDC Holdings, Inc., Ryland Group,
Inc., Toll Brothers,  Inc.,  Standard-Pacific  Corporation and M/I Schottenstein
Homes, Inc. (the "Peer Group").

     The  comparison  assumes $100 was invested on December 31, 1996 in Meritage
common  stock and in each of the  other  indices  and  assumes  reinvestment  of
dividends.

                                               AS OF DECEMBER 31,
                               -------------------------------------------------
                               1996     1997     1998     1999     2000     2001
                               ----     ----     ----     ----     ----     ----
Meritage Corporation            100      167      168      150      514      708
S&P 500 Index                   100      133      171      208      189      166
Peer Group                      100      177      196      154      288      471


                                     [GRAPH]


                                       12
<PAGE>
             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Executive  officers,  directors  and  "beneficial  owners" of more than ten
percent of our common stock must file initial  reports of ownership  and reports
of changes in  ownership  with the  Securities  and  Exchange  Commission  under
Section 16(a).  Based solely on review of the copies of such forms  furnished to
us, or representations  that no forms were required,  we believe that during our
preceding  fiscal year all Section 16(a) filing  requirements  applicable to our
officers, directors and greater than ten percent beneficial owners were complied
with except Mr. Cleverly did not timely report stock transactions on one Form 4.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Since 1997, we have leased office space in Plano, Texas from Home Financial
Services,  a Texas  partnership  owned by John and  Eleanor  Landon.  The  lease
expires  May 15,  2002.  Rents paid to the  partnership  were  $193,771 in 2001,
$185,613 in 2000 and $176,773 in 1999.

     We paid legal fees to Tiffany & Bosco,  P.A. of  approximately  $420,000 in
2001,  $311,000  in 2000 and  $334,000 in 1999.  C.  Timothy  White,  one of our
Directors, is a partner of Tiffany & Bosco, P.A.

     William Cleverly resigned as a managing director  effective March 18, 1999.
Mr.  Cleverly has served as a Director of Meritage  since 1996 and has indicated
that he will not stand for re-election as a Director following the expiration of
his term at the Annual Meeting.  Mr. Cleverly also serves as a consultant to us.
In connection with Mr.  Cleverly's  resignation as a managing  director in 1999,
Meritage and Mr.  Cleverly  entered into a separation and consulting  agreement.
The  separation  was deemed a  termination  without  cause under Mr.  Cleverly's
employment agreement.  For three years from the effective date of the separation
agreement,  Mr.  Cleverly  agreed to consult on our new product  development and
other areas agreed upon by the parties.  The  separation  agreement  contained a
non-compete  provision that  prohibited Mr.  Cleverly from competing with us for
three years  following the effective  date,  subject to various  exceptions.  In
consideration  for Mr.  Cleverly's  agreement not to compete,  he will be paid a
total of $285,000 in quarterly  installments  of $23,750 through March 31, 2002.
As of December 31, 2001, we have paid Mr. Cleverly  $261,250 of this amount.  In
connection  with the  separation  agreement,  both  Mr.  Cleverly  and  Meritage
released the other party from any liabilities or obligations either party had or
may have against such party in the future, subject to certain exceptions.

     In 2001 we  purchased  77 lots for  development  in Arizona from a business
controlled by Mr. Cleverly. The total amount paid for the lots was approximately
$3.5 million.  We purchased 42 lots at a cost of approximately $2.4 million from
this same business in 2000.

     During 2001, we chartered an aircraft  from a company owned by Mr.  Sarver.
The total amount paid for the charter service during 2001 was $101,000.

     Management believes that the terms and fees negotiated for all transactions
listed above are no less  favorable than those that could be negotiated in arm's
length transactions.

            PROPOSAL TO APPROVE AMENDMENT TO THE MERITAGE CORPORATION
                                STOCK OPTION PLAN
                                (PROPOSAL NO. 2)

     On January 16, 2002, our Board of Directors adopted, subject to shareholder
approval,  amendments to the Meritage Corporation Stock Option Plan (the "Plan")
that would  increase the number of shares of common stock  reserved for issuance
under the plan from 775,000 to 1,075,000 and would  increase the maximum  amount
of shares  that could be issued to one person from  100,000 to 150,000.  Certain
material features of the plan are discussed below,  however,  the description is
subject to, and  qualified by the full text of the plan,  attached as EXHIBIT A,
which includes the proposed amendment highlighted in bold. The closing price for
our  common  stock on  January  16,  2001,  as  reported  on the New York  Stock
Exchange, was $51.25 per share.

                                       13
<PAGE>
     The affirmative vote of a majority of the shares of common stock present at
the annual meeting,  in person or by proxy,  and entitled to vote is required to
approve the proposal.

     The Board believes the plan promotes  success and enhances our value, as it
ties the personal  interests of the  participants to those of  stockholders  and
provides the  participants  with an incentive for outstanding  performance.  The
Board of Directors  administers  the plan, and has the exclusive  authority over
it, including the power to determine a participant's  eligibility,  the types of
awards to be granted, the timing of the awards and the exercise price of awards.

GENERAL - DESCRIPTION OF AVAILABLE AWARDS

     INCENTIVE  STOCK  OPTIONS.  An Incentive  Stock  Option  ("ISO") is a stock
option that satisfies the requirements  specified in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").  Under the Code, ISOs may only be
granted to  employees.  In order for an option to  qualify as an ISO,  the price
payable to  exercise  the option  must be equal or greater  than the fair market
value of the stock at the date of the  grant,  the option  must  expire no later
than 10 years from the date of the grant, and the stock subject to ISOs that are
first  exercisable  by an employee in any calendar year must not have a value of
more than $100,000 as of the grant date. Certain other requirements must also be
met.  The Board  determines  the amount of  consideration  to be paid to us upon
exercise  of any  options.  Payment may be made in cash,  common  stock or other
property.

     An  optionee  is not treated as  receiving  taxable  income upon either the
grant or the exercise of an ISO.  However,  the difference  between the exercise
price and the fair market  value of the stock at the time of exercise is an item
of tax  preference  at the time of exercise  in  determining  liability  for the
alternative  minimum tax, assuming that the common stock is either  transferable
or is not subject to a substantial  risk of  forfeiture  under Section 83 of the
Code. If at the time of exercise,  the common stock is both  nontransferable and
is subject to a  substantial  risk of  forfeiture,  the  difference  between the
exercise price and the fair market value of the common stock  (determined at the
time the stock becomes either  transferable or not subject to a substantial risk
of  forfeiture)  will be a tax  preference  item in the year in which  the stock
becomes either transferable or not subject to a substantial risk of forfeiture.

     If common stock acquired by the exercise of an ISO is not sold or otherwise
disposed of within two years from the date of its grant and is held for at least
one year after the date the stock is  transferred to the optionee upon exercise,
any gain or loss resulting from its disposition is treated as long-term  capital
gain or loss.  If such common stock is disposed of before the  expiration of the
above-mentioned  holding periods,  a "disqualifying  disposition"  occurs.  If a
disqualifying  disposition  occurs, the optionee realizes ordinary income in the
year of the  disposition in an amount equal to the  difference  between the fair
market value of the common stock on the date of exercise and the exercise price,
or the selling  price of the common stock and the exercise  price,  whichever is
less. The balance of the optionee's gain on a disqualifying disposition, if any,
is taxed as a capital gain.

     We are not  entitled  to any tax  deduction  as a  result  of the  grant or
exercise  of an ISO, or on a later  disposition  of the common  stock  received,
except  in the  event  of a  disqualifying  disposition.  In such  case,  we are
entitled to a deduction  equal to the amount of ordinary  income realized by the
optionee.

     NON-QUALIFIED  STOCK OPTIONS. A Non-Qualified  Stock Option ("NQSO") is any
stock option other than an Incentive Stock Option. These options are referred to
as  "non-qualified"  because they do not meet the  requirements  of, and are not
eligible for, the favorable tax treatment provided by Section 422 of the Code.

     The optionee  realizes no taxable income upon the grant of an NQSO, nor are
we entitled to a tax deduction by reason of such grant.  Upon the exercise of an
NQSO, the optionee  realizes ordinary income in an amount equal to the excess of
the fair market value of the common stock on the exercise date over the exercise
price, and we are entitled to a corresponding tax deduction.

     Upon subsequent sale or other  disposition of common stock acquired through
exercise of an NQSO,  the optionee  realizes a short-term  or long-term  capital
gain or loss to the extent of any intervening appreciation or depreciation. Such
a resale by the optionee has no tax consequence to us.

CHANGE OF CONTROL

     Upon the occurrence of a Corporate Transaction (as defined in the Plan), if
the surviving corporation or the purchaser does not assume Meritage's obligation
under the Plan, all outstanding options shall become immediately  exercisable in

                                       14
<PAGE>
full and each option  holder shall be given the  opportunity  to exercise  their
options before the consummation of the Corporate  Transaction so that the option
holder  can  participate  in the  Corporate  Transaction.  The  Plan  defines  a
"Corporate Transaction" to include:

     *    a merger or  consolidation  in which the Company is not the  surviving
          entity;
     *    the sale, transfer or other disposition of all or substantially all of
          the  assets of the  Company in a  liquidation  or  dissolution  of the
          company; or
     *    any reverse merger in which the Company is the surviving entity but in
          which the beneficial ownership of securities  possessing more than 50%
          of the  total  combined  voting  power  of the  Company's  outstanding
          securities are  transferred  to holders  different from those who held
          such securities immediately prior to such merger.

     To the extent  that the Plan is  unaffected  and  assumed by the  successor
corporation or its parent company,  a Corporate  Transaction will have no effect
on the outstanding options and the options shall continue in effect according to
their terms. Options which continue in effect shall be appropriately adjusted to
account for the number and class of  securities  which would have been issued to
the  option  holder  in  connection  with  the  consummation  of  the  Corporate
Transaction had the option holder exercised the option  immediately prior to the
Corporate  Transaction.  Appropriate  adjustments  also  shall  be  made  to the
exercise price of such options, provided that the aggregate exercise price shall
remain the same.

PLAN BENEFITS

     The  following  table sets forth  grants of options  made under the current
Plan during 2001 to (i) each of the executive officers named on page 5; (ii) all
current executive officers, as a group; (iii) all current directors and director
nominees who are not executive  officers,  as a group;  and (iv) all  employees,
including  all current  officers  who are not  executive  officers,  as a group.
Grants under the current Plan and the new Plan are made at the discretion of the
Board of Directors. Accordingly, future grants are not yet determinable.

                                             NUMBER OF SHARES   WEIGHTED AVERAGE
                                                SUBJECT TO       EXERCISE PRICE
INDIVIDUAL OF GROUP NAME                      OPTIONS GRANTED       PER SHARE
------------------------                      ---------------       ---------
Executive Officers
  John R. Landon                                   49,000            $ 31.75
  Steven J. Hilton                                 49,000            $ 31.75
  Larry W. Seay                                    19,500            $ 28.86
  Richard T. Morgan                                13,500            $ 28.86
                                                 --------
Executive Officer Group (4 persons)               131,000            $ 31.02
                                                 ========

Director Group (6 persons)                         25,000            $ 28.86

Employee Group (39 persons)                       165,950            $ 30.03

AMENDMENTS TO PLAN

     The Board of Directors has reviewed the options currently  remaining in the
option pool for the Plan and has  determined  that it is appropriate to increase
the maximum number of shares authorized for issuance (i) under the Plan and (ii)
to any one person.  As of March 15,  2002,  (i) 161,780  shares have been issued
upon  exercise  of  options  and are  included  in the  total  number  of shares
outstanding  Common Stock,  and (ii) option grants  representing  595,030 shares
were  outstanding  under the Plan.  The total  number of shares of common  stock
available for awards under the Plan currently is 18,190. The Board believes that
an increase in the number of  authorized  shares is necessary  for the continued
optimal use of the Plan,  thus  increasing  the Plan's success and its impact on
our value.  In  addition,  Messrs.  Landon and Hilton,  our  co-chief  executive
officers have each been issued 90,200  options  under the Plan.  Therefore,  the
Board is proposing the  amendment to the Plan that would  increase the number of
shares  authorized  for issuance  under the Plan to be increased from 775,000 to
1,075,000, and that the number of options granted for issuance to any one person
be increased from 100,000 to 150,000.

                                       15
<PAGE>
SECURITIES ACT REGISTRATION

     We intend to register the additional  shares of common stock  available for
issuance  under a  Registration  Statement  on Form  S-8 to be  filed  with  the
Securities and Exchange Commission.

      THE BOARD RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THIS PROPOSAL TO
                AMEND THE MERITAGE CORPORATION STOCK OPTION PLAN.

                              INDEPENDENT AUDITORS

     KPMG LLP served as our principal  independent  auditors for the fiscal year
ended  December  31,  2001 and the firm has been  appointed  as our  independent
auditors for the fiscal year ending December 31, 2002. We expect representatives
of KPMG LLP to be present at our Annual  Meeting to answer  questions,  and they
will be given an opportunity to make a statement if they wish to.

AUDIT FEES

     The aggregate fees billed by KPMG LLP for  professional  services  rendered
for  the  annual  audit  of our  financial  statements  and the  reviews  of the
financial  statements  included  in our Forms  10-Q for the  fiscal  year  ended
December 31, 2001 were $150,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

     For the fiscal year ended  December  31,  2001,  KPMG LLP did not  provide,
directly or indirectly, any services relating to the design or implementation of
our information system, local area network, or any hardware or software system.

ALL OTHER FEES

     Other  audit  related  fees  paid to KPMG  LLP in 2001  were  $101,808  for
services  related  to our  filing  of Form S-4 and  $9,000  for the audit of our
401(k) plan. The aggregate fees paid to KPMG LLP for other professional services
during the  fiscal  year  ended  December  31,  2001 were  $265,031,  which were
comprised of $240,845 for income tax  consulting and tax  compliance,  including
preparation  of our state  and  federal  income  tax  returns  and  $24,186  for
management advisory services.

                                       16
<PAGE>
                              STOCKHOLDER PROPOSALS

     The Board of Directors will consider  nominations from stockholders for the
class  of  directors  whose  terms  expire  at the  year  2003  Annual  Meeting.
Nominations  must be made in writing to our  Corporate  Secretary,  received  at
least  90  days  prior  to the  2003  Annual  Meeting,  and  contain  sufficient
background  information concerning the nominee's  qualifications.  Our Corporate
Secretary  must  receive  any other  stockholder  proposals  for the 2003 Annual
Meeting by December 6, 2002 to be  considered  for  inclusion  in our 2003 Proxy
Statement.  Proposals to be  presented  at the 2003 Annual  Meeting that are not
intended for  inclusion in the Proxy  Statement  must be submitted in accordance
with the Company's Bylaws. A nomination or other proposal will be disregarded if
it does not comply with the above procedures.

                                  OTHER MATTERS

     The Board of Directors is not aware of any other matters to be presented at
the meeting. If any other business should properly come before the meeting,  the
proxy holders will vote according to their best judgment.


                                Meritage Corporation


                                /s/ Larry W. Seay
                                ------------------------------------------------
                                Larry W. Seay
                                Chief Financial Officer, Vice President-Finance,
                                Secretary and Treasurer
                                April 2, 2002

                                       17
<PAGE>
                                    EXHIBIT A

                              MERITAGE CORPORATION
                                STOCK OPTION PLAN

1.   ESTABLISHMENT, PURPOSE AND DEFINITIONS.

     a.   The Stock  Option  Plan (the  "Option  Plan") of  Meritage  Homes (the
          "Company")  is hereby  adopted.  The Option Plan shall provide for the
          issuance of incentive stock options  ("ISOs") and  nonqualified  stock
          options ("NSOs").

     b.   The purpose of this Option Plan is to promote the long-term success of
          the Company by attracting,  motivating  and retaining key  executives,
          consultants  and  directors  (the  "Participants")  through the use of
          competitive   long-term  incentives  which  are  tied  to  stockholder
          interests by providing  incentives to the  Participants in the form of
          stock   options  which  offer  rewards  for  achieving  the  long-term
          strategic and financial objectives of the Company.

     c.   The Option Plan is intended  to provide a means  whereby  Participants
          may be given an  opportunity  to purchase  shares of Stock (as defined
          herein) of the Company  pursuant  to (i) options  which may qualify as
          ISOs  under  Section  422 of the  Internal  Revenue  Code of 1986,  as
          amended (the "Internal  Revenue Code"),  or (ii) NSOs which may not so
          qualify.

     d.   The term  "Affiliates"  as used in this  Option  Plan means  parent or
          subsidiary  corporations,  as defined in Section 424(e) and (f) of the
          Code (but  substituting  "the  Company" for  "employer  corporation"),
          including parents or subsidiaries  which become such after adoption of
          the Option Plan.

2.   ADMINISTRATION OF THE PLAN

     a.   The  Option  Plan  shall be  administered  by  members of the Board of
          Directors of the Company (the  "Board")  qualifying  as  "non-employee
          directors"  as such term is defined in Rule 16b-3  promulgated  by the
          Securities and Exchange Commission (the "Commission").

     b.   The Board  may from  time to time  determine  which  employees  of the
          Company or its  Affiliates or other  individuals  or entities (each an
          "option  holder") shall be granted  options under the Option Plan, the
          terms thereof (including without  limitation  determining  whether the
          option is an incentive stock option and the times at which the options
          shall become exercisable), and the number of shares of Stock for which
          an option or options may be granted.

     c.   If rights of the Company to  repurchase  Stock are imposed,  the Board
          may, in its sole discretion, accelerate, in whole or in part, the time
          for lapsing of any rights of the Company to repurchase  shares of such
          Stock or forfeiture restrictions.

     d.   If  rights  of the  Company  to  repurchase  Stock  are  imposed,  the
          certificates  evidencing  such  shares  of  Stock  awarded  hereunder,
          although issued in the name of the option holder  concerned,  shall be
          held by the Company or a third party designated by the Board in escrow
          subject to  delivery  to the option  holder or to the  Company at such
          times and in such  amounts as shall be directed by the Board under the
          terms of this Option Plan. Share certificates  representing Stock that
          is subject to repurchase  rights shall have imprinted or typed thereon
          a legend or legends summarizing or referring to the repurchase rights.

     e.   The Board shall have the sole authority,  in its absolute  discretion,
          to adopt,  amend and rescind  such rules and  regulations,  consistent
          with the  provisions  of the Option Plan,  as, in its opinion,  may be
          advisable in the  administration  of the Option Plan,  to construe and
          interpret  the  Option  Plan,  the  rules  and  regulations,  and  the
          instruments  evidencing  options  granted under the Option Plan and to
          make all other  determinations  deemed  necessary or advisable for the
          administration of the Option Plan. All decisions,  determinations  and
          interpretations  of the Board  shall be binding on all option  holders
          under the Option Plan.

                                       18
<PAGE>
3.   STOCK SUBJECT TO THE PLAN

     a.   "Stock" shall mean Common Stock of the Company or such stock as may be
          changed as  contemplated  by Section 3(c) below.  Stock shall  include
          shares drawn from either the Company's  authorized but unissued shares
          of Common Stock or from reacquired  shares of Common Stock,  including
          without  limitation  shares  repurchased  by the  Company  in the open
          market.  THE  MAXIMUM  NUMBER OF SHARES  OF COMMON  STOCK  THAT CAN BE
          ISSUED  UNDER THIS OPTION PLAN IS  1,075,000  SHARES,  AND THE MAXIMUM
          NUMBER OF SHARES OF COMMON  STOCK THAT CAN BE ISSUED TO ANY ONE PERSON
          UNDER THIS OPTION PLAN IS 150,000 SHARES.

     b.   Options  may be  granted  under the  Option  Plan from time to time to
          eligible  persons.  Stock options awarded  pursuant to the Option Plan
          which are  forfeited,  terminated,  surrendered  or  canceled  for any
          reason prior to exercise shall again become available for grants under
          the Option Plan  (including any option canceled in accordance with the
          cancellation regrant provisions of Section 6(f) herein).

     c.   If there shall be any changes in the Stock subject to the Option Plan,
          including  Stock  subject to any  option  granted  hereunder,  through
          merger,     consolidation,      recapitalization,      reorganization,
          reincorporation,  stock split,  reverse stock split,  stock  dividend,
          combination  or  reclassification  of the  Company's  Stock  or  other
          similar events,  an appropriate  adjustment shall be made by the Board
          in the number of shares of Stock.  Consistent  with the foregoing,  in
          the event that the outstanding  Stock is changed into another class or
          series  of  capital  stock  of the  Company,  outstanding  options  to
          purchase  Stock granted under the Option Plan shall become  options to
          purchase such other class or series and the provisions of this Section
          3(c) shall apply to such new class or series.

     d.   The  aggregate  number of shares of Stock  approved by the Option Plan
          may not be exceeded  without  amending  the Option Plan and  obtaining
          stockholder approval within twelve months of such amendment.

4.   ELIGIBILITY

     Persons who shall be eligible to receive  stock  options  granted under the
     Option  Plan shall be those  individuals  and  entities as the Board in its
     discretion  determines  should be awarded  such  incentives  given the best
     interests  of the  Company;  provided,  however,  that (i) ISOs may only be
     granted to employees of the Company and its  Affiliates and (ii) any person
     holding capital stock possessing more than 10% of the total combined voting
     power of all classes of Stock of the Company or any Affiliate  shall not be
     eligible to receive ISOs unless the exercise price per share of Stock is at
     least 110% of the fair market  value of the Stock on the date the option is
     granted.

5.   EXERCISE PRICE FOR OPTIONS GRANTED UNDER THE PLAN

     a.   All ISOs and NSOs will have option  exercise  prices per option  share
          not less  than the fair  market  value of a share of the  Stock on the
          date the option is granted, except that in the case of ISOs granted to
          any person possessing more than 10% of the total combined voting power
          of all  classes  of stock of the  Company or any  Affiliate  the price
          shall be not less than 110% of such fair  market  value.  The price of
          ISOs or NSOs  granted  under  the  Option  Plan  shall be  subject  to
          adjustment to the extent provided in Section 3(c) above.

     b.   The fair market value on the date of grant shall be  determined  based
          upon the closing  price on an exchange on that day or, if the Stock is
          not listed on an exchange, on the average of the closing bid and asked
          prices in the Over the Counter Market on that day.

6.   TERMS AND CONDITIONS OF OPTIONS

     a.   Each option granted  pursuant to the Option Plan shall be evidenced by
          a written stock option agreement (the "Option Agreement")  executed by
          the Company and the person to whom such option is granted.  The Option
          Agreement shall designate whether the option is an ISO or an NSO.

     b.   The term of each ISO and NSO shall be no more  than 10  years,  except
          that the term of each ISO  issued to any person  possessing  more than
          10% of the voting  power of all classes of stock of the Company or any
          Affiliate shall be no more than 5 years.  Subsequently issued options,
          if Stock becomes available because of further allocations or the lapse
          of previously outstanding options, will extend for terms determined by
          the Board or the  Committee  but in no event shall an ISO be exercised
          after the expiration of 10 years from the date of its grant.

                                       19
<PAGE>
     c.   In the case of ISOs, the aggregate fair market value (determined as of
          the time  such  option  is  granted)  of the  Stock to which  ISOs are
          exercisable for the first time by such individual  during any calendar
          year (under this Option Plan and any other plans of the Company or its
          Affiliates  if any) shall not exceed the amount  specified  in Section
          422(d) of the Internal  Revenue Code,  or any  successor  provision in
          effect at the time an ISO becomes exercisable.

     d.   The Option  Agreement  may contain  such other terms,  provisions  and
          conditions regarding vesting, repurchase or other provisions as may be
          determined  by the Board.  To the extent  such terms,  provisions  and
          conditions  are  inconsistent  with this  Option  Plan,  the  specific
          provisions of the Option Plan shall prevail. If an option, or any part
          thereof,  is intended to qualify as an ISO, the Option Agreement shall
          contain those terms and conditions,  which the Board  determines,  are
          necessary  to so qualify  under  Section 422 of the  Internal  Revenue
          Code.

     e.   The Board shall have full power and  authority to extend the period of
          time for which any option  granted  under the Option Plan is to remain
          exercisable  following the option holder's  cessation of service as an
          employee,   director  or  consultant,   including  without  limitation
          cessation as a result of death or disability;  provided, however, that
          in no event  shall  such  option be  exercisable  after the  specified
          expiration date of the option term.

     f.   As a condition  to option  grants  under the Option  Plan,  the option
          holder  agrees  to grant  the  Company  the  repurchase  rights as the
          Company  may at its  option  require  and  as  may be set  forth  in a
          separate  repurchase  agreement.  Any option  granted under the Option
          Plan may be subject to a vesting  schedule  as  provided in the Option
          Agreement and,  except as provided in this Section 6 herein,  only the
          vested  portion of such option may be exercised at any time during the
          Option Period. All rights to exercise any option shall lapse and be of
          no  further  effect  whatsoever  immediately  if the  option  holder's
          service as an employee  is  terminated  for  "Cause"  (as  hereinafter
          defined) or if the option  holder  voluntarily  terminates  the option
          holder's  service as an employee.  The unvested  portion of the option
          will  lapse  and  be  of  no  further  effect   immediately  upon  any
          termination of employment of the option holder for any reason.  In the
          remaining  cases where the option  holder's  service as an employee is
          terminated due to death, permanent disability, or is terminated by the
          Company  (or  its  affiliates)  without  Cause  at  any  time,  unless
          otherwise provided by the Committee,  the vested portion of the option
          will extend for a period of three (3) months following the termination
          of  employment  and shall  lapse and be of no further  force or effect
          whatsoever  only if it is not  exercised  before the end of such three
          (3) month period.  "Cause" shall be defined in an Employment Agreement
          between  Company and option  holder and if none there shall be "Cause"
          for  termination  if (i) the option  holder is  convicted of a felony,
          (ii) the option holder  engages in any  fraudulent or other  dishonest
          act to the detriment of the Company,  (iii) the option holder fails to
          report for work on a regular  basis,  except for periods of authorized
          absence or bona fide illness,  (iv) the option holder  misappropriates
          trade  secrets,   customer  lists  or  other  proprietary  information
          belonging  to the Company for the option  holder's  own benefit or for
          the  benefit of a  competitor,  (v) the option  holder  engages in any
          willful  misconduct  designed to harm the Company or its stockholders,
          or (vi) the option holder fails to perform properly assigned duties.

     g.   No  fractional  shares of Stock shall be issued under the Option Plan,
          whether by initial grants or any adjustments to the Option Plan.

7.   USE OF PROCEEDS

     Cash  proceeds  realized from the sale of Stock under the Option Plan shall
     constitute general funds of the Company.

8.   AMENDMENT, SUSPENSION OR TERMINATION OF PLAN

     a.   The Board may at any time  suspend or terminate  the Option Plan,  and
          may amend it from time to time in such  respects as the Board may deem
          advisable provided that (i) such amendment,  suspension or termination
          complies  with all  applicable  state  and  federal  requirements  and
          requirements  of any stock exchange on which the Stock is then listed,
          including  any  applicable  requirement  that  the  Option  Plan or an
          amendment to the Option Plan be approved by the stockholders, and (ii)
          the Board  shall not amend the Option  Plan to  increase  the  maximum
          number of shares of Stock  subject to ISOs under the Option Plan or to
          change the  description  or class of persons  eligible to receive ISOs
          under the Option Plan without the consent of the  stockholders  of the
          Company  sufficient to approve the Option Plan in the first  instance.

                                       20
<PAGE>
          The  Option  Plan  shall   terminate  on  the  earlier  of  (i)  tenth
          anniversary  of the  Plan's  approval  or (ii)  the  date on  which no
          additional shares of Stock are available for issuance under the Option
          Plan.

     b.   No  option  may  be  granted   during  any  suspension  or  after  the
          termination  of the  Option  Plan,  and no  amendment,  suspension  or
          termination  of the Option  Plan shall,  without  the option  holder's
          consent,  alter or impair  any rights or  obligation  under any option
          granted under the Option Plan.

     c.   [Reserved.]

     d.   Nothing  contained  herein shall be construed to permit a termination,
          modification or amendment adversely affecting the rights of any option
          holder  under an  existing  option  theretofore  granted  without  the
          consent of the option holder.

9.   ASSIGNABILITY OF OPTIONS AND RIGHTS

     Each ISO and NSO granted  pursuant  to this  Option Plan shall,  during the
     option holder's  lifetime,  be exercisable  only by the option holder,  and
     neither  the option nor any right to purchase  Stock shall be  transferred,
     assigned or pledged by the option holder, by operation of law or otherwise,
     other than upon a beneficiary designation executed by the option holder and
     delivered to the Company or the laws of descent and distribution.

10.  PAYMENT UPON EXERCISE

     Payment  of the  purchase  price  upon  exercise  of any option or right to
     purchase  Stock  granted under this Option Plan shall be made by giving the
     Company  written  notice of such  exercise,  specifying  the number of such
     shares of Stock as to which the option is  exercised.  Such notice shall be
     accompanied  by  payment  of an amount  equal to the  Option  Price of such
     shares of Stock.  Such payment may be (i) cash, (ii) by check drawn against
     sufficient funds, (iii) such other  consideration as the Board, in its sole
     discretion, determines and is consistent with the Option Plan's purpose and
     applicable law, or (iv) any combination of the foregoing. Any Stock used to
     exercise  options to purchase  Stock  (including  Stock  withheld  upon the
     exercise of an option to pay the  purchase  price of the shares of Stock as
     to which the  option is  exercised)  shall be  valued  in  accordance  with
     procedures  established  by the Board.  If accepted by the Committee in its
     discretion,  such  consideration  also may be paid through a  broker-dealer
     sale and remittance procedure pursuant to which the option holder (i) shall
     provide irrevocable written  instructions to a designated brokerage firm to
     effect the immediate sale of the purchased  Stock and remit to the Company,
     out of the sale proceeds available on the settlement date, sufficient funds
     to cover the aggregate  option price  payable for the purchased  Stock plus
     all applicable Federal and State income and employment taxes required to be
     withheld by the Company in  connection  with such  purchase  and (ii) shall
     provide written  directives to the Company to deliver the  certificates for
     the purchased  Stock  directly to such  brokerage firm in order to complete
     the sale transaction.

11.  WITHHOLDING TAXES

     a.   Shares  of Stock  issued  hereunder  shall be  delivered  to an option
          holder  only upon  payment by such person to the Company of the amount
          of any withholding tax required by applicable federal, state, local or
          foreign law.  The Company  shall not be required to issue any Stock to
          an option holder until such obligations are satisfied.

     b.   The  Board  may,   under  such  terms  and   conditions  as  it  deems
          appropriate,  authorize an option  holder to satisfy  withholding  tax
          obligations  under this  Section 11 by  surrendering  a portion of any
          Stock  previously  issued to the option  holder or by electing to have
          the  Company  withhold  shares of Stock from the Stock to be issued to
          the option  holder,  in each case having a fair market  value equal to
          the amount of the withholding tax required to be withheld.

12.  RATIFICATION

     This  Option Plan and all  options  issued  under this Option Plan shall be
     void  unless  this  Option  Plan is or was  approved or ratified by (i) the
     Board;  and (ii) a majority of the votes cast at a  stockholder  meeting at
     which a quorum  representing at least a majority of the outstanding  shares
     of Stock is (either in person or by proxy) present and voting on the Option
     Plan  within  twelve  months of the date this Option Plan is adopted by the
     Board.  No ISOs  shall be  exercisable  prior to the date such  stockholder
     approval is obtained.

                                       21
<PAGE>
13.  CORPORATE TRANSACTIONS

     a.   For the purpose of this  Section 13, a "Corporate  Transaction"  shall
          include  any of the  following  stockholder-approved  transactions  to
          which the Company is a party:

          (i)   a merger  or  consolidation  in  which  the  Company  is not the
                surviving entity, except for a transaction the principal purpose
                of which is to change the State of the Company's incorporation;

          (ii)  the sale,  transfer or other disposition of all or substantially
                all of the assets of the Company in  liquidation  or dissolution
                of the Company; or

          (iii) any reverse merger in which the Company is the surviving  entity
                but in which beneficial ownership of securities  possessing more
                than fifty percent (50%) of the total  combined  voting power of
                the Company's outstanding  securities are transferred to holders
                different from those who held such securities  immediately prior
                to such merger.

     b.   Upon the  occurrence  of a  Corporate  Transaction,  if the  surviving
          corporation or the purchaser,  as the case may be, does not assume the
          obligations of the Company under the Option Plan, then irrespective of
          the vesting provisions contained in individual option agreements,  all
          outstanding  options shall become immediately  exercisable in full and
          each option holder will be afforded an  opportunity  to exercise their
          options prior to the consummation of the merger or sale transaction so
          that they can participate on a pro rata basis in the transaction based
          upon the number of shares of Stock  purchased  by them on  exercise of
          options if they so  desire.  To the  extent  that the  Option  Plan is
          unaffected  and  assumed by the  successor  corporation  or its parent
          company a  Corporate  Transaction  will have no effect on  outstanding
          options and the options  shall  continue in effect  according to their
          terms.

     c.   Each  outstanding  option  under this  Option Plan which is assumed in
          connection with the Corporate  Transaction or is otherwise to continue
          in effect  shall be  appropriately  adjusted,  immediately  after such
          Corporate Transaction, to apply and pertain to the number and class of
          securities  which  would  have  been  issued to the  option  holder in
          connection  with the  consummation  of such Corporate  Transaction had
          such person exercised the option  immediately  prior to such Corporate
          Transaction.  Appropriate adjustments shall also be made to the option
          price payable per share,  provided the aggregate  option price payable
          for such securities shall remain the same. In addition,  the class and
          number of  securities  available  for issuance  under this Option Plan
          following  the  consummation  of the  Corporate  Transaction  shall be
          appropriately adjusted.

     d.   The grant of options under this Option Plan shall in no way affect the
          right of the Company to adjust,  reclassify,  reorganize  or otherwise
          change its capital or  business  structure  or to merge,  consolidate,
          dissolve,  liquidate  or  sell  or  transfer  all or any  part  of its
          business or assets.

14.  REGULATORY APPROVALS

     The  obligation  of the Company with respect to Stock issued under the Plan
     shall be subject to all applicable  laws,  rules and  regulations  and such
     approvals  by  any  governmental  agencies  or  stock  exchanges  as may be
     required.  The Company reserves the right to restrict, in whole or in part,
     the  delivery  of  Stock  under  the  Plan  until  such  time as any  legal
     requirements  or  regulations  have been met  relating  to the  issuance of
     Stock, to their registration or qualification under the Securities Exchange
     Act of 1934, if applicable,  or any applicable state securities laws, or to
     their  listing  on any stock  exchange  at which time such  listing  may be
     applicable.

15.  NO EMPLOYMENT/SERVICE RIGHTS

     Neither the action of the Company in establishing this Option Plan, nor any
     action taken by the Board or the Committee hereunder,  nor any provision of
     this Option Plan shall be construed so as to grant any individual the right
     to  remain  in the  employ  or  service  of the  Company  (or  any  parent,
     subsidiary or affiliated  corporation) for any period of specific duration,
     and the  Company  (or any  parent,  subsidiary  or  affiliated  corporation
     retaining  the  services of such  individual)  may  terminate or change the
     terms of such  individual's  employment  or service at any time and for any
     reason, with or without cause.

                                       22
<PAGE>
16.  MISCELLANEOUS PROVISIONS

     a.   The  provisions  of this  Option Plan shall be governed by the laws of
          the State of Arizona,  as such laws are applied to  contracts  entered
          into  and  performed  in  such  State,  without  regard  to its  rules
          concerning conflicts of law.

     b.   The provisions of this Option Plan shall insure to the benefit of, and
          be binding upon, the Company and its successors or assigns, whether by
          Corporate Transaction or otherwise,  and the option holders, the legal
          representatives of their respective estates, their respective heirs or
          legatees and their permitted assignees.

     c.   The option holders shall have no dividend rights, voting rights or any
          other rights as a  stockholder  with respect to any options  under the
          Option  Plan prior to the  issuance  of a stock  certificate  for such
          Stock.

     d.   If there is a conflict  between the terms of any employment  agreement
          pursuant  to which  options  under this Plan are to be granted and the
          provisions of this Plan, the terms of the employment  agreement  shall
          prevail.

                                       23

</TEXT>
</DOCUMENT>
</SUBMISSION>
