Exhibit 99.1
On November 4, 2004, the reporting person entered into a Stock Purchase
Agreement with UBS Securities LLC (the "Broker"). The Stock Purchase
Agreement constitutes a preliminary agreement that becomes effective
upon the execution of a pricing schedule setting forth the terms and
conditions of the sale of securities by the reporting person to the Broker.
Pursuant to an executed pricing schedule dated November 10, 2004, which
constitutes a forward sale contract, (a) on November 12, 2004, the Broker
paid the reporting person $16,021,876.25, which amount represents the
product of 200,000 (the number of shares of Meritage Homes Corporation
common stock sold short by the Broker during the initial hedging period,
i.e., the "Base Amount") and $80.10938 (which represents 88.85% of
$90.1625 (the "Initial Share Price", which is the volume weighted average
of the per share prices of the shares of common stock sold short during the
initial hedging period)) and (b) within three business days following
January 12, 2007, the reporting person is obligated to deliver to the Broker
the number of shares of common stock equal to the Base Amount times the
Settlement Ratio, which shall be determined as follows: (i) if the closing
price per share of the Common Stock (the "Settlement Price") on January
12, 2007 (the "Settlement Date") is less than $112.7031 (the "Threshold
Appreciation Price") but greater than $90.1625 (the "Downside Protection
Threshold Price"), the Settlement Ratio will be equal to the Downside
Protection Threshold Price divided by the Settlement Price, (ii) if the
Settlement Price is equal to or greater than the Threshold Appreciation
Price, the Settlement Ratio will be equal to a fraction, the numerator of
which will be the sum of (A) the Downside Protection Threshold Price and
(B) the excess, if any, of the Settlement Price over the Threshold
Appreciation Price, and the denominator of which will be the Settlement
Price, and (iii) if the Settlement Price is equal to or less than the
Downside Protection Threshold Price, the Settlement Ratio will be 1.
1939360.1
