Document:

<PAGE>
                                                                    EXHIBIT 10.4

                    TERMINATION AGREEMENT AND MUTUAL RELEASE

         THIS TERMINATION AGREEMENT AND MUTUAL RELEASE (this "Agreement") is
being executed and delivered by the undersigned parties in accordance with
Section 6.14 of the Agreement and Plan of Merger, dated as of ____________, 2002
(the "Merger Agreement"), between D.R. HORTON, INC., a Delaware corporation
("DHI"), and SCHULER HOMES, INC., a Delaware corporation (the "Company").
Capitalized terms used in this Agreement without definition have the respective
meanings given to them in the Merger Agreement.

                                   WITNESSETH:

         WHEREAS, the undersigned constitute all of the parties to the Agreement
and Plan of Reorganization, dated as of September 12, 2000 (the "Reorganization
Agreement"), and to the Stockholders Agreement, dated as of April 3, 2001 (the
"Stockholders Agreement"), pursuant to which the parties made certain
representations and warranties and entered into certain covenants and agreements
that the parties have determined to be unnecessary or undesired upon
consummation of the transactions contemplated by the Merger Agreement; and

         WHEREAS, each of the undersigned acknowledges that execution and
delivery of this Agreement is a condition to DHI's and the Company's obligations
to consummate the transactions contemplated by the Merger Agreement, and that
DHI and the Company are relying on this Agreement in consummating the
transactions contemplated by the Merger Agreement.

                                    AGREEMENT

         NOW, THEREFORE, each of the undersigned, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, in order to induce DHI and the Company to
consummate the transactions contemplated by the Merger Agreement, hereby agrees
as follows:

         1. Effective as of the Effective Time, the Reorganization Agreement
(other than Article I (Definitions), Section 6.7 (Public Announcements), Section
6.12 (Non-Disclosure of Proprietary Data), Section 6.13 (Section 341(f) Consent)
and Article XII (General Provisions) thereof) and the Stockholders Agreement are
each hereby terminated and shall be of no further force and effect.

         2. Effective as of the Effective Time, each of the Schuler Parties (as
defined on the signature pages hereto), on behalf of themselves and their
respective Affiliates, shareholders, officers, directors, trustees, employees,
agents, representatives, subsidiaries, predecessors, successors and assigns
(collectively, the " Schuler Releasing Parties"), hereby releases and forever
discharges each of the Western Pacific Parties (as defined on the signature
pages hereto) and each of their respective Affiliates, shareholders, members,
partners, managers, officers, directors, employees, agents, representatives,
subsidiaries, predecessors, successors and assigns (collectively, "Western
Pacific Released Persons") from any and all claims, demands, proceedings,
actions, causes of action, orders, obligations, duties, costs, damages, losses,
rights, contracts, agreements, debts and liabilities whatsoever, of whatever
character, whether

<PAGE>

contractual or non-contractual, known or unknown, suspected or unsuspected, both
at law and in equity (collectively, "Claims"), which the Schuler Releasing Party
now has, has ever had or may hereafter have against (a) the respective Western
Pacific Released Persons and (b) any other person to the extent that such other
person possesses a right of contribution, subrogation or indemnification with
respect to such Claims against any Western Pacific Released Person, in all
cases, whether arising contemporaneously with or prior to the Closing Date,
arising out of or relating to the Reorganization Agreement or the Stockholders
Agreement, whether or not relating to claims pending on, or asserted after, the
Closing Date; provided, however, that nothing contained herein shall operate to
release:

                  (i) any obligations of the Western Pacific Released Persons
         arising under the Merger Agreement and any agreement or instrument
         delivered in connection therewith and

                  (ii) any obligations of the Company, its subsidiaries and
         their respective successors and assigns to indemnify their respective
         directors, officers or managers arising under applicable law or the
         Company's or such subsidiary's certificate or articles of
         incorporation, bylaws or other organizational document.

         Each Schuler Releasing Party hereby irrevocably covenants to refrain
from, directly or indirectly, asserting any claim or demand, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
Western Pacific Released Person, based upon any matter purported to be released
hereby.

         THE SCHULER PARTIES FURTHER WAIVE, TO THE FULLEST EXTENT POSSIBLE, ANY
RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542 (OR ANY SIMILAR PROVISION UNDER
THE LAW OF ANY OTHER JURISDICTION), WHICH PROVIDES: "A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM, MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         3. Effective as of the Effective Time, each of the Western Pacific
Parties, on behalf of themselves and their respective Affiliates, shareholders,
members, partners, managers, officers, directors, employees, agents,
representatives, subsidiaries, predecessors, successors and assigns
(collectively, the "Western Pacific Releasing Parties"), hereby releases and
forever discharges each of the Schuler Parties and each of their respective
Affiliates, shareholders, officers, directors, trustees, employees, agents,
representatives, subsidiaries, predecessors, successors and assigns
(collectively, "Schuler Released Persons") from any and all Claims, which the
Western Pacific Releasing Party now has, has ever had or may hereafter have
against (a) the respective Schuler Released Persons and (b) any other person to
the extent that such other person possesses a right of contribution, subrogation
or indemnification with respect to such Claims against any Schuler Released
Person, in all cases, whether arising contemporaneously with or prior to the
Closing Date, arising out of or relating to the Reorganization Agreement or the
Stockholders Agreement, whether or not relating to claims pending on, or
asserted after, the Closing Date; provided, however, that nothing contained
herein shall operate to release:

                                        2

<PAGE>

                  (i) any obligations of the Schuler Released Persons arising
         under the Merger Agreement and any agreement or instrument delivered in
         connection therewith and

                  (ii) any obligations of the Company, its subsidiaries and
         their respective successors and assigns to indemnify their respective
         directors, officers or managers arising under applicable law or the
         Company's or such subsidiary's certificate or articles of
         incorporation, bylaws or other organizational document.

         Each Western Pacific Releasing Party hereby irrevocably covenants to
refrain from, directly or indirectly, asserting any claim or demand, or
commencing, instituting or causing to be commenced, any proceeding of any kind
against any Schuler Released Person, based upon any matter purported to be
released hereby.

         THE WESTERN PACIFIC PARTIES FURTHER WAIVE, TO THE FULLEST EXTENT
POSSIBLE, ANY RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542 (OR ANY SIMILAR
PROVISION UNDER THE LAW OF ANY OTHER JURISDICTION), WHICH PROVIDES: "A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM,
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         4. Each of the undersigned hereby represents and warrants to each of
the other parties hereto (i) that, as of the date hereof, there are no pending
or threatened claims by such party or any of such party's Releasing Parties
asserting any rights to indemnification under the Reorganization Agreement and,
to the knowledge of such party, no reasonable basis exists for any such claim
and (ii) that this Agreement has been duly and validly executed and delivered by
such party and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of such party
and release by such party's Releasing Parties, enforceable against such party
and such party's Releasing Parties in accordance with its terms.

         5. The parties hereto have entered into this Agreement in reliance
solely upon the representations, warranties and agreements set forth in this
Agreement and not upon any other representation or statement, written or oral.

         6. If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.

         7. This Agreement may not be amended except in a writing signed by the
person(s) against whose interest such change shall operate.

         8. IT IS THE EXPRESS INTENTION OF THE PARTIES TO THIS AGREEMENT THAT
EACH RELEASED PARTY BE RELEASED FROM HIS, HER, OR ITS OWN NEGLIGENCE.

                                        3

<PAGE>

         9. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF
THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THAT
WOULD APPLY ANY OTHER LAW.

         10. This Agreement contains the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes any prior
understandings and agreements of the parties with respect to the subject matter
hereof.

                            [SIGNATURES ON NEXT PAGE]

                                        4

<PAGE>

         IN WITNESS WHEREOF, the undersigned has executed and delivered this
Agreement as of ________________________, 2002.

                               SCHULER PARTIES

                               SCHULER HOMES, INC.

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

                               THE JAMES AND PATRICIA SCHULER FOUNDATION

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

                               JAMES K. SCHULER,

                               as trustee for the James K. Schuler 1998
                               Qualified Annuity Trust and the James K. Schuler
                               Revocable Living Trust

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

<PAGE>

                               WESTERN PACIFIC PARTIES

                               APOLLO REAL ESTATE INVESTMENT FUND, L.P.

                               By: APOLLO REAL ESTATE ADVISORS, L.P.
                                   Its General Partner

                               By: APOLLO REAL ESTATE
                                   MANAGEMENT, INC.
                                   Its General Partner

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

                               BLACKACRE WPH, LLC

                               By: BLACKACRE CAPITAL GROUP, L.P.
                                   Its Managing Member

                               By: BLACKACRE CAPITAL MANAGEMENT, CORP.
                                   Its General Partner

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

                               HIGHRIDGE PACIFIC HOUSING INVESTORS, L.P.

                               By: WPH ACQUISITIONS, INC.
                                   Its General Partner

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

<PAGE>

                               AP WP PARTNERS, L.P.

                               By: AP WP OPERATING CORPORATION
                                   Its General Partner

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

                               AP WESTERN GP CORPORATION

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

                               AP LHI, INC.

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

                               LAMCO HOUSING, INC.

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------

<PAGE>

         D.R. Horton, Inc. hereby consents to and, from and after the Effective
Time, agrees to be bound by the provisions of this Agreement.

                               D.R. HORTON, INC.

                               By:
                                  ----------------------------------------------
                               Name:
                                    --------------------------------------------
                               Title:
                                     -------------------------------------------<PAGE>
                                                                    EXHIBIT 10.5

                  CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

                  THIS CONFIDENTIALITY AND NONCOMPETITION AGREEMENT (this
"Agreement") is being executed and delivered as of _________, 2002 by JAMES K.
SCHULER ("Stockholder") in favor and for the benefit of D.R. HORTON, INC., a
Delaware corporation ("DHI").

                                    RECITALS

                  WHEREAS, Stockholder beneficially owns approximately 47.7% of
the outstanding shares of Class A common stock of Schuler Homes, Inc., a
Delaware corporation ("Schuler Homes"), and is the Co-Chairman, President and
Chief Executive Officer of Schuler Homes;

                  WHEREAS, as an employee and stockholder of Schuler Homes,
Stockholder has obtained extensive and valuable knowledge and information
concerning the business of Schuler Homes, including confidential information
relating to Schuler Homes and its operations, assets, contracts, customers,
personnel, plans, and prospects;

                  WHEREAS, in connection with the Agreement and Plan of Merger,
dated as of October 22, 2001 (as it may be amended from time to time, the
"Merger Agreement"), between DHI and Schuler Homes, Schuler Homes will, as a
result thereof, merge with and into DHI, with DHI as the surviving corporation
and DHI shall, by operation of law, succeed to all property, rights, privileges,
powers and franchises, and all and every other interest of Schuler Homes,
including the reputation and goodwill associated therewith (the "Merger");

                  WHEREAS, the business of Schuler Homes prior to the date of
the Merger Agreement has been (i) the construction or sale of single-family or
multi-family residences, (ii) the development of real property for use as lots
for residential construction, and (iii) activities ancillary or related to the
foregoing activities (collectively, the "Business");

                  WHEREAS, DHI and its Affiliates (as defined below) intend to
continue to engage in the Business and like business activities in the cities,
counties and territories set forth on Schedule A hereto (the "Territories");

                  WHEREAS, if Stockholder were to compete with DHI or any of its
Affiliates' operation of the Business in the Territories, DHI would be deprived
of the full benefit of any reputation or goodwill associated with Schuler Homes
and DHI as the surviving corporation in the Merger;

                  WHEREAS, in connection with the Merger and as a condition to
consummating the Merger, and to more fully secure unto DHI the benefits of the
Merger, DHI has requested that Stockholder enter into this Agreement; and
Stockholder is entering into this Agreement in order to induce DHI to consummate
the Merger; and

<PAGE>

                  WHEREAS, the covenants provided herein are material,
significant and essential to effecting the transactions contemplated by the
Merger Agreement, and good and valuable consideration under the Merger Agreement
has been transferred to Stockholder in exchange for such covenants and the
goodwill associated with DHI.

                                    AGREEMENT

                  NOW, THEREFORE, in order to induce DHI to consummate the
Merger, and in consideration of the benefits transferred to Stockholder pursuant
to the Merger Agreement and the agreements and instruments related thereto, the
receipt and sufficiency of such consideration being hereby acknowledged by
Stockholder, Stockholder agrees as follows:

                  1. Acknowledgments By Stockholder. Stockholder acknowledges
that the promises and restrictive covenants that Stockholder is providing in
this Agreement are reasonable and necessary to the protection of DHI's business
and DHI's legitimate interests in its acquisition of Schuler Homes, including
Schuler Homes's goodwill, pursuant to the Merger Agreement. Stockholder further
acknowledges that, in connection with the consummation of the Merger, all of
Stockholder's shares of common stock of Schuler Homes will be exchanged for cash
and shares of common stock of DHI pursuant to the terms of the Merger Agreement.

                  2. Covenant Not to Compete. During the one year period
following the effective time of the Merger, except for (i) activities to be
engaged by him on behalf of DHI (whether as an employee, director, consultant or
in any other capacity) or (ii) the activities or investments engaged by him as
of the date hereof that are described on Schedule B hereto, Stockholder shall
not, voluntarily or involuntarily, for any reason whatsoever, directly or
indirectly, individually or on behalf of persons not now parties to this
Agreement, or as a partner, stockholder, member, director, officer, manager,
principal, agent, employee, or in any other capacity or relationship, for his
own account or for the benefit of any other person:

                     (a) engage in the Business or any business activity
competing with the Business within any city or county included within any of the
Territories; or

                     (b) have any interest in, own, manage, operate, control, or
join or participate in the ownership, management, operation, or control of, or
provide consulting services to or otherwise advise or assist, enable (whether by
license, sublicense, assignment or otherwise), or furnish any capital to or be
connected in any manner with, either as a stockholder, joint venturer,
proprietor, member, officer, director, manager, agent, lender, representative,
partner, trustee, affiliate, employee or consultant, or otherwise engage or
invest or participate in the Business or any business that competes with the
Business, whether conducted by DHI, any Affiliate of DHI or any of their
successors or assigns in any city or county included within any of the
Territories; or

                     (c) in any of the Territories, accept any business relating
to the Business from any material customer, supplier or contractor of DHI, any
of its Affiliates, or any of their respective successors or assigns or solicit
or encourage any such person to terminate or adversely alter in any material
respect any relationship such person may have with DHI, any of its Affiliates or
any of their successors or assigns; or

                                       2

<PAGE>

                     (d) market, endorse or promote any products that are
competitive with the Business;

provided, however, that nothing in this Section 2 shall prevent Stockholder from
owning as a passive investment less than 5% of the outstanding shares of the
capital stock of a publicly-held corporation if (i) such shares are actively
traded on an established national securities market in the United States and
(ii) Stockholder is not otherwise associated directly or indirectly with such
corporation or any affiliate of such corporation.

                  3. Nonsolicitation. During the one-year period following the
Effective Time of the Merger, Stockholder shall not nor will he permit any of
his Affiliates to:

                     (a) personally or through others, encourage, induce,
attempt to induce, solicit, or attempt to solicit (on Stockholder's own behalf
or on behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by DHI, its Affiliates, or
their respective successors or assigns to leave his or her employment with such
entity; or

                     (b) personally or through others, use any trade secret or
proprietary information of DHI or any other improper means to interfere or
attempt to interfere with the relationship or prospective relationship of DHI,
its Affiliates, or their respective successors or assigns with any person or
entity that is, was, or is expected to become a customer or client of such
entity; or

                     (c) solicit the business of any client or customer of DHI,
its Affiliates, or their respective successors or assigns for any activity
relating to the Business, other than on behalf of such entity.

                  4. Confidential and Proprietary Information. Stockholder
acknowledges and agrees that, as an executive officer of Schuler Homes, he has
obtained extensive and valuable knowledge and information concerning the
business of Schuler Homes, including confidential information relating to
Schuler Homes and its operations, assets, contracts, customers, personnel, plans
and prospects. Stockholder further acknowledges and agrees that, through the
dealings in connection with the Merger, he has obtained and will continue to
obtain extensive and valuable knowledge and information concerning the business
of DHI, including confidential information relating to DHI and its operations,
assets, contracts, customers, personnel, plans, and prospects. Collectively, all
of the knowledge and information described in the preceding two sentences
constitutes the "Confidential Information". Stockholder further acknowledges and
agrees that the Confidential Information has been acquired and developed through
the expenditure of valuable resources, that it provides a competitive advantage
over those who do not know and use it and that both Schuler Homes and DHI have
taken reasonable precautions against its disclosure to and use by others.
Accordingly:

                     a. Stockholder shall not, directly or indirectly, divulge,
communicate, disclose, or use any Confidential Information at any time except as
may be expressly authorized by DHI in writing.

                                       3

<PAGE>

                     b. All files, records, documents, computer-recorded
information, marketing surveys, operating manuals, price lists, memoranda, and
similar items arising out of the Business or any business activity of DHI,
whether prepared by Stockholder or otherwise coming into his possession, shall,
following the Merger, be and remain the exclusive property of DHI. Upon the
request of DHI, Stockholder shall immediately turn over to DHI all such
material, along with any copies or derivatives of such material, following the
Merger.

                     c. Notwithstanding the foregoing, this Section 4 shall not
preclude Stockholder from disclosing information and material described herein
to the extent that it (i) is or becomes generally available to the public other
than by Stockholder's breach of this Section 4, (ii) is required to be disclosed
by law or court order, and Stockholder has promptly notified DHI of the
requirement to disclose and allowed DHI a reasonable period to obtain a
protective order or take other steps to prevent such disclosure, or (iii) is
disclosed to Stockholder's accountant, lawyer, or other professional advisor for
the sole purpose of receiving professional advice with respect thereto, provided
that such professional advisor does not disclose the covered information or
material to any other person or entity except as permitted by this Section 4.

                  5. Definition of Affiliate. As used in this Agreement,
Affiliate means a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
first mentioned person, including any partnership, limited liability company or
joint venture in which the first mentioned person (either alone, or through or
together with any other subsidiary) has, directly or indirectly, an interest of
10% or more.

                  6. Equitable Remedies. Stockholder hereby acknowledges and
agrees that the obligations under this Agreement are such that DHI, its
Affiliates, and their respective successors and assigns cannot be fully and
adequately compensated by damages for breach of such obligations. As a result,
Stockholder hereby acknowledges and agrees that, in the event of any breach or
threatened breach of this Agreement, DHI, its Affiliates, and their respective
successors and assigns will be entitled not only to damages or other relief at
law, but also to equitable relief to enforce the breached obligations, including
preliminary and permanent injunctive relief (including temporary restraining
orders) without the need to post any bond in connection therewith.

                  7. Amendment, Modification and Waiver; Beneficiary. Except as
provided herein, no amendment, modification, alteration or supplement of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by the parties hereto, except that any of the terms
or provisions of this Agreement may be waived in writing at any time by the
party that is entitled to the benefits of such waived terms or provisions.
Nothing in this Agreement, express or implied, is intended to confer upon any
third person (other than Affiliates, successors, and assigns of DHI, which are
hereby expressly made third party beneficiaries of this Agreement) any rights or
remedies under or by reason of this Agreement. No waiver of any provision of
this Agreement shall be deemed to or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof.

                                       4

<PAGE>

                  8. Enforceability and Severability. It is the desire and
intent of the parties hereto that the provisions of this Agreement be enforced
to the fullest extent permissible under the laws and public policies of each
jurisdiction in which enforcement is sought. Accordingly, if any provision of
this Agreement shall be adjudicated to be invalid or unenforceable, such
provision, without any action on the part of the parties hereto, shall be deemed
amended to modify (including a reduction in duration, geographical area, or
prohibited business activities), or if such modification is impossible then to
delete, the portion adjudicated to be invalid or unenforceable, such
modification or deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made, and
such deletion or modification to be made only to the extent necessary to cause
the provision as amended to be valid and enforceable.

                  9. Complete Understanding. This Agreement, in combination with
the Merger Agreement and the agreements and instruments related thereto,
constitutes the full and complete understanding and agreement of the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous oral understandings and agreements with respect to the subject
matter hereof and all prior written understandings and agreements with respect
to the subject matter hereof.

                  10. Costs. In the event a dispute or controversy arises
hereunder, or any action is brought by any party hereto or any other
party-in-interest to enforce its rights hereunder, the prevailing party in any
such dispute, controversy or action shall be entitled to recover its reasonable
attorneys' fees, court costs and other related expenses of enforcement.

                  11. Section Headings and Construction. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. Unless otherwise expressly provided, the
word "including" means including, without limitation, with regard to the items
listed thereafter.

                  12. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):

                  If to Stockholder:

                  3249 Diamond Head Rd.
                  Honolulu, Hawaii  96815
                  Telephone No.:  (808) 924-6826
                  Facsimile No.:  (808) 924-6827

                                       5

<PAGE>

                  If to DHI:

                  D.R. Horton, Inc.
                  1901 Ascension Blvd., Suite 100
                  Arlington, Texas  76006
                  Facsimile: (817) 436-6053 and (817) 856-8252
                  Telephone: (817) 856-8200
                  Attention: Rick Beckwitt and Ted Harbour

                  13. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware without regard to the principles of conflicts of
law that would apply any other law.

                  14. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, it being agreed that only an express written amendment,
termination, or waiver of this Agreement by DHI or its Affiliates, successors,
or assigns can relieve Stockholder of his personal obligations hereunder and
then only with respect to the entity executing such amendment, termination, or
waiver.

                  15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement, and all of which, when taken together, shall be deemed to constitute
one and the same agreement.

                  16. Cumulative Remedies. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided under applicable law.

                            [SIGNATURES ON NEXT PAGE]

                                       6

<PAGE>

                  IN WITNESS WHEREOF, the undersigned has executed this
Confidentiality and Noncompetition Agreement as of the date first above written.

                                  THE COMPANY:

                                  D.R. HORTON, INC.

                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                  STOCKHOLDER:

                                  ----------------------------------------------
                                               James K. Schuler

                                       7

<PAGE>

                                   Schedule A

                                   Territories

(i) Anywhere within the State of California within the Counties of Alameda,
Contra Costa, Los Angeles, Napa, Orange, Riverside, Sacramento, San Benito, San
Bernadino, San Diego, San Joaquin, San Mateo, Santa Clara, Solano, Stanislaus
and Ventura;

(ii) anywhere else within every other city and county within the State of
California; and

(iii) anywhere within every city and county within the States of Arizona,
Colorado, Hawaii, Oregon and Washington.

<PAGE>

                                   Schedule B

                           Activities and Investments

<Table>
<Caption>

   NAME OF ACTIVITY OR INVESTMENT             NATURE OF BUSINESS                   INVOLVEMENT IN BUSINESS
   ------------------------------             ------------------                   -----------------------

<S>                                    <C>                                <C>
Port Quendall Development Co., Inc.    Lot Development Single Family      President/Investor
                                       Home Sales
                                       Cle Elum, WA

Pacific Resorts, Inc.                  Land Development                   President
                                       Cle Elum, WA

James K. Schuler & Assoc., Inc.        Land Development                   President
                                       36 Acres
                                       Hyak Ski Resort

Diamond Point Joint Venture            Single Family Lot Development      Partner
                                       Moses Lake, WA

Ronald Mill Site I, II & III, Inc.     Land Development                   Investor
                                       Ronald, WA

Gordon/Schuler Partnership             Duplex Development                 Partner
                                       State of WA

Malulani Partners, Inc.                Construction & Sale of Single      Partner
                                       Family Homes
                                       Kona, HI

American Housing Partners, Inc.        Apartment Development              Partner
                                       WA & NV
</Table>

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