Exhibit 14
MERITAGE CORPORATION
CODE OF ETHICS
Meritage Corporation is committed to conducting our business consistent
with the highest ethical and legal standards. This Code reinforces our
commitment to these standards and provides each employee of Meritage, as well as
Meritage's affiliated and subsidiary companies, with guidance and perspective in
understanding business ethics at Meritage.
It is designed to guide and help us identify activities and behaviors that
are appropriate in conducting business and those that are not. No code of
conduct can hope to spell out the appropriate moral conduct and ethical behavior
for every situation we may confront. In the final analysis, we must rely on our
own good judgment.
Whenever we find ourselves with a difficult decision to make, we must seek
counsel from our colleagues, our supervisors and, most importantly, our own
conscience and common sense. Specific interpretation or application of any
guidelines or other content of this Code should be requested from any one of the
following persons:
Steve Hilton (SHILTON@MERITAGECORP.COM or 480-609-3330) the Company's Co-CEO;
John Landon (JLANDON@MERITAGECORP.COM or 972-612-8085) the Company's Co-CEO;
Rick Morgan (RMORGAN@LEGHOMES.COM or 972-612-8085), the Company's Treasurer; or
Larry Seay (LSEAY@MERITAGECORP.COM or 480-609-3336), the Company's Chief Financial Officer;
YOUR RESPONSIBILITIES
Meritage believes that ethical behavior is good business. Meritage
employees share certain responsibilities, but individually each is accountable
for:
* Conducting Meritage's business with integrity and operating in
compliance with all applicable laws.
* Avoiding situations where personal interests are, or appear to be, in
conflict with Meritage's interests.
* Treating all customers, suppliers and fellow employees in an honest
and fair manner.
* Safeguarding properly using Meritage's proprietary information, assets
and resources, as well as those of other organizations.
* Maintaining confidentiality of nonpublic information and not acting on
such information for personal gain.
We are sometimes faced with situations where pressure exists to act
unethically. However, at Meritage we depend on each other to conduct our
business with honesty and integrity. If you are unsure in any situation, ask
yourself these questions:
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* Is this action legal?
* Does it comply with our values?
* Would you feel comfortable telling someone else about your decision?
Compromises in behavior that lead to violations of our standards will not
be considered a benefit to the company and may result in disciplinary action, up
to and including termination of employment.
Unethical or unlawful behavior hurts Meritage, but also hurts us as
employees, our customers and our stockholders. As an employee, you can play a
major role in ensuring ethical and legal compliance by reporting known or
suspected wrongdoing within the company. If you discover or suspect an illegal,
dishonest or unethical act is being committed or a violation is reported to you,
we want you to report it immediately to your supervisor, your Division
President, or John Landon and Steve Hilton, our Co-CEO's; Rick Morgan, our
Treasurer; or Larry Seay our CFO. Employees will not be disciplined or otherwise
retaliated against as a result of reporting such matters.
CONFLICTS OF INTEREST
All employees have a responsibility to avoid situations and relationships
that involve actual or potential conflicts of interest. Generally, a conflict of
interest arises whenever an employee's personal interests diverge from his or
her responsibilities to Meritage or from Meritage's best interests. Put another
way, a conflict of interest is created whenever an activity, association or
relationship of yours might impair your independent exercise of judgment in the
company's best interest.
Examples of situations that could be perceived as conflicts of interest and
should be avoided include:
* Conducting company business with a firm owned, partially owned, or
controlled by an employee or an employee's relatives or friends.
* Ownership of a financial interest in Meritage's competitors. Ownership
of less than three percent of stock of a publicly traded company that
competes or does business with Meritage is permissible.
* Working as an employee or a consultant for a competitor, regulatory
governmental entity, customer or supplier of Meritage, or doing any
work for a third party that may adversely affect your performance or
judgment on the job or diminish your ability to devote the necessary
time and attention to your duties.
* Using company property, materials, supplies, funds or other resources
for personal purposes, or appropriating or diverting to others any
business opportunity or idea in which Meritage might have an interest.
These situations, and others like them, where loyalties to Meritage could
be compromised, must be avoided. Employees who believe they are involved in a
potential conflict of interest have a responsibility to discuss it with their
supervisor, your Division President or Meritage's Chief Financial Officer.
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GIFTS AND ENTERTAINMENT
All decisions regarding the purchasing of materials, supplies and services
must be made on the basis of competitive price, quality and performance in a way
that preserves Meritage's integrity. Giving or accepting anything of value is
inappropriate if it could be reasonably interpreted as an effort to influence a
business relationship or decision. The difference between a gift and a bribe is
a question of intent. It is impermissible to accept or request any form of
kickback or bribe. A bribe or a kickback includes any item or favor provided for
the purpose of improperly obtaining favorable treatment or seeking a competitive
advantage. Such efforts should never be used to accomplish indirectly what
Meritage could not properly or legally do directly.
In certain situations or on certain occasions, small gifts of nominal value
may be presented to customers or potential customers, such as specialty
advertising items bearing the corporate logo, tickets to local sports, civic or
cultural events and/or restaurant meals or refreshments.
Standards governing the acceptance of gifts from suppliers or their agents
mirror those relating to the giving of gifts to our customers and/or potential
customers, in that acceptance of a significant gift could be construed as
improperly influencing the selection of a vendor or the awarding of a contract.
Gifts of a nominal value of less than $100 may be accepted on an infrequent or
occasional basis, such as during the holiday season, as a reasonable business
courtesy. Routine entertainment by suppliers that is business related --such as
business meals, sports outings or cultural events --is acceptable.
Ultimately, each employee must exercise good business judgment in deciding
which situations are unacceptable. Bottom line: If there is ever any doubt as to
the acceptability of any gift or entertainment activity, consult with your
supervisor.
PROTECTION AND USE OF CORPORATE ASSETS
All employees are responsible for ensuring that appropriate measures are
taken to properly protect Meritage's corporate assets. Employees are expected to
assist in the protection of all confidential and proprietary information,
including technical, financial, marketing and other business information, which,
if made available to Meritage's competitors or the public, would be advantageous
to such competitors and detrimental to Meritage. Protection of such information
is critical to our ability to grow and compete.
Meritage's computer systems, electronic mail (e-mail), voice mail and
Internet access are employer-provided technologies and company property. The use
of Meritage's computer systems, e-mail, voice mail and Internet access are
primarily for matters of concern to Meritage's operations, and not for
communications of a personal nature. Such non-business related use should be on
an infrequent basis. Employees may not use these assets to display, transmit or
store inappropriate materials at any time.
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ANTITRUST
The free enterprise system rests on the proposition that free and open
competition is the best way to ensure an adequate supply of goods and services
at reasonable prices. The antitrust laws of the U.S. are intended to protect and
promote vigorous and fair competition. All Meritage employees must adhere
strictly to both the spirit and the letter of antitrust laws of the U.S.
Violation of antitrust laws can result in severe civil and criminal penalties,
including imprisonment for individuals, and Meritage can be subjected to
substantial fines and damage awards.
All employees must obtain advice from the Chief Financial Officer before
engaging in any conduct or practice that may be regulated by antitrust laws. The
Chief Financial Officer will consult as necessary with our outside legal counsel
on any such matters.
The following agreements, arrangements or understandings with competitors,
whether oral or in writing, should always be avoided:
* Agreements to fix prices or boycott specified suppliers.
* Agreements to allocate products, territories or markets.
* Agreements to exchange competitively sensitive information, especially
prices.
* Agreements that limit the production or sale of our products.
Contacts with competitors are sensitive and risky, since courts can infer
an agreement or collusion from such contacts when they are followed by common
action or behavior. In all contacts with competitors, employees must avoid
discussing prices, terms and conditions of sale, costs, inventories,
competition, marketing plans or studies, production plans and capabilities, and
any other proprietary or confidential information.
If any competitor initiates a discussion involving the subjects above, an
employee should immediately excuse himself/herself from the conversation and
immediately report the matter to the Chief Financial Officer.
Meritage employees should normally avoid all contacts with competitors if
they have authority over the pricing, terms or conditions of sale of Meritage
homes.
INSIDER TRADING
It is illegal to buy or sell securities (either personally or on behalf of
others) on the basis of material, nonpublic information. It also is illegal to
communicate (i.e., to "tip") material, nonpublic information to others so that
they may buy or sell securities on the basis of that information. All Meritage
employees who know material, nonpublic information about Meritage or any other
company are prohibited from trading (directly or indirectly), or tipping others
to trade in the securities of that company.
Material, nonpublic information is factual information that a reasonable
investor would want to know before making an investment decision. Examples of
material, nonpublic information may include:
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* Quarterly or annual financial results
* Financial forecasts
* Significant financial developments
* Possible mergers, acquisitions, joint ventures or divestitures
* Information about important contracts
* Significant new developments
These prohibitions continue for as long as the information you know remains
material and nonpublic. Anyone who gives such nonpublic information to others
may be subject to disciplinary action and possible criminal prosecution.
Guidance on questions about specific transactions should be obtained from
Meritage's Chief Financial Officer in advance of the transaction. In addition,
Meritage maintains a detailed insider trading policy that must be complied with
by all employees.
ADVERTISING, MARKETING AND PROMOTION
It is Meritage's policy to be truthful, fair and honest in the advertising,
marketing, and promotion of its products. All advertising and promotion of
Meritage products should be appropriate in nature to a homebuilder company.
FINANCIAL INTEGRITY; RECORD RETENTION
Meritage's books, records and accounts are to be maintained in a manner
that accurately reflects all financial transactions in conformity with generally
accepted accounting principles. An employee shall not:
* Improperly accelerate or defer expenses or revenues to achieve
financial results or goals.
* Maintain any undisclosed or unrecorded funds or "off the book" assets.
* Establish or maintain improper, misleading, incomplete or fraudulent
accounting documentation or financial reporting.
* Make any payment for purposes other than those described in the
documents supporting the payment.
* Sign any documents believed to be inaccurate or untruthful.
Meritage maintains a detailed Record Retention Policy. Any employee that
becomes aware of any investigation, litigation, administrative proceeding or
other governmental or regulatory proceeding must immediately consult with the
Chief Financial Officer regarding any records relating to that matter. If
necessary, the Chief Financial Officer will consult with Meritage's outside
legal counsel regarding the appropriate steps that should be taken in regard to
records relating to any such proceeding. Federal and state law provides for
imprisonment and severe penalties for any person who alters, mutilates, conceals
or destroys a record or an object with intent to impair the availability of such
item or influence the investigation of a governmental department or agency.
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ACCOUNTING CONCERNS
Employees are encouraged to talk to their supervisor, Chief Financial Officer or
Chairman of the Audit Committee regarding any concerns that they have pertaining
to the Company's accounting, internal controls or audit practices. It is our
policy not to allow retaliation for reports of misconduct or potential
misconduct by others made in good faith by employees. To the extent possible,
the reporting of potential issues will be kept confidential.
RELATIONS WITH EMPLOYEES
Meritage recognizes that its continued success depends on the development
and fair treatment of all of its employees. Meritage is committed to providing
equal opportunity for employment and advancement at every level of employment on
the basis of ability and aptitude, without regard to race, sex, age, religion,
national origin, disability, or any other classification protected by federal,
state and local laws and ordinances. Similarly, Meritage is committed to
maintaining a workplace that is free from harassment by a co-worker, supervisor,
vendor or customer.
If you feel you are being discriminated or harassed, you should contact
your supervisor, a Human Resources Manager or any other member of management you
feel comfortable discussing the matter with. In addition, employees can report
such conduct to the Chief Financial Officer. Employees will not be disciplined
or otherwise retaliated against as a result of reporting such conduct.
ALCOHOL AND DRUGS IN THE WORKPLACE
Meritage has a responsibility to all of its employees to provide a safe
workplace, including a drug and alcohol-free workplace. Meritage reinforces its
commitment by prohibiting employees from using, possessing, distributing or
being under the influence of illegal drugs or alcohol at any time while on
company premises or performing company business at any location.
WORKPLACE HEALTH, SAFETY AND ENVIRONMENT
Meritage is committed to the safety and health of its employees. Providing
and maintaining a safe work environment and instituting and following work
practices to safeguard employees must be a primary consideration for all of us.
Reviewing all of our businesses and identifying where we can act to improve
safety awareness is an ongoing task to which the entire corporation and each
employee should be dedicated. There is no job so important that we cannot take
the time to complete it safely.
Safe work practices also include exercising good judgment with regard to
the environmental aspects of our business. Additionally, discharge and
disposition of hazardous materials should be performed only in a manner that
complies with environmental protection laws.
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