Document:

<PAGE>
                                                                    EXHIBIT 10.4

                               D. R. HORTON, INC.

                    Form of Incentive Stock Option Agreement

                                 (Term Vesting)

         WHEREAS, _____________________________ (hereinafter called the
"Participant") has become an employee of D.R. Horton, Inc., a Delaware
corporation (hereinafter called the "Company"), or one of its Subsidiaries (as
defined herein) as a result of the merger of Schuler Homes, Inc. ("Schuler")
with and into the Company, with the Company as the surviving corporation,
pursuant to the Agreement and Plan of Merger, dated as of October 22, 2001, as
amended (the "Merger Agreement"), between the Company and Schuler;

         WHEREAS, pursuant to Section 2.1.6 of the Merger Agreement and the
terms of the Amended and Restated 1992 Stock Option Plan and the Amended and
Restated 2000 Stock Incentive Plan of Schuler (the "Schuler Stock Option
Plans"), each outstanding stock option held by the Participant to purchase
shares of common stock of Schuler has been terminated and is being replaced with
a comparable option to purchase Common Stock of the Company;

         WHEREAS, the grant of Option Rights to the Participant effective
February 21, 2002 (the "Date of Grant") and the execution of a Stock Option
Agreement in the form hereof has been duly authorized by a resolution of the
Committee duly adopted on February 21, 2002 and incorporated herein by
reference;

         WHEREAS, the option granted hereby is intended to be an "incentive
stock option" within the meaning of that term under Section 422A of the Code and
it is intended that such grant shall not constitute a "modification" as defined
in Section 424 of the Code, because it will constitute the issuance or
substitution of a new option for an old option in a corporate merger

<PAGE>

under Section 424(a) of the Code, pursuant to an exception from the modification
rules in Section 424(h)(3)(A) of the Code; and

         WHEREAS, pursuant to Section 424(a) of the Code, the excess of the
aggregate fair market value of the shares subject to the Company option
immediately after the substitution over the aggregate option price of such
shares is not more than the excess of the aggregate fair market value of all
shares subject to the Schuler option immediately before such substitution over
the option price of such shares; and the new Company option does not give the
Participant additional benefits which he didn't have under the old Schuler
option;

         NOW, THEREFORE, effective as of the Date of Grant the Company hereby
grants to the Participant an incentive stock option pursuant to the Company's
1991 Stock Incentive Plan (the "Plan") to purchase (INSERT NUMBER OF REPLACED
SCHULER OPTIONS TIMES STOCK EXCHANGE RATIO (0.598)) shares of Common Stock at
the price of (INSERT EXERCISE PRICE OF REPLACED SCHULER OPTIONS DIVIDED BY STOCK
EXCHANGE RATIO (0.598)) Dollars ($_________ ) per share, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the
Participant upon payment of the aggregate Option Price in full, all subject,
however, to the terms and conditions hereinafter set forth and in the Plan,
which is incorporated herein by reference and, in the event of any conflict
between the Plan and this Agreement, the terms of the Plan shall prevail.
Capitalized terms used in this Agreement that are not otherwise defined in this
Agreement are used as defined in the Plan.

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       2
<PAGE>

         1. (A) This option (until terminated as hereinafter provided) shall
become exercisable as follows:

<Table>
<Caption>
                     Time Period After         Number of Shares for Which
                       Date of Grant           Option is Exercisable
                       -------------           ---------------------
<S>                                            <C>
</Table>

        (INSERT VESTING SCHEDULE REMAINING FROM REPLACED SCHULER OPTION)

                  Except as otherwise provided in paragraph 3, this option shall
be exercisable only if the Participant shall have been in the continuous employ
of the Company or any Subsidiary from the date hereof until this option is
exercised. For the purposes of this paragraph, leaves of absence approved by the
Board for illness, disability, military or governmental service, or other cause,
shall be considered as employment. The Participant shall be deemed to be in the
employ of the Company or any Subsidiary for so long as such Participant
continues to render periodic services to the Company or any Subsidiary as an
employee. The Participant shall be deemed to be an employee and to continue in
the Company's employ for so long as the Participant continues in the employ of
the Company or one or more of its Subsidiaries, subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance. To the extent exercisable, this option may be
exercised in whole or in part from time to time.

                  (B) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified upon the occurrence of any Change in Control (as
hereinafter defined) of the Company. For purposes of this Agreement, a "Change
in Control" means the occurrence of any of the following events:

                           (i) A merger, consolidation or reorganization of the
                  Company into or with another corporation or other legal person
                  if the stockholders of the Company, immediately before such
                  merger, consolidation or reorganization, do not,

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       3
<PAGE>

                  immediately following such merger, consolidation or
                  reorganization, then own directly or indirectly, more than 50%
                  of the combined voting power of the then-outstanding voting
                  securities of the corporation or other legal person resulting
                  from such merger, consolidation or reorganization in
                  substantially the same proportion as their ownership of Voting
                  Securities (as hereinafter defined) immediately prior to such
                  merger, consolidation or reorganization;

                           (ii) The Company sells all or substantially all of
                  its assets to another corporation or other legal person, or
                  there is a complete liquidation or dissolution of the Company;

                           (iii) There is a report filed on Schedule 13D or
                  Schedule 14D-1 (or any successor schedule, form or report)
                  each as promulgated pursuant to the Securities Exchange Act of
                  1934, as amended (the "Exchange Act"), disclosing that any
                  person (as the term "person" is used in Section 13(d)(3) or
                  Section 14(d) (2) of the Exchange Act) has become the
                  beneficial owner (as the term "beneficial owner" is defined
                  under Rule 13d-3 or any successor rule or regulation
                  promulgated under the Exchange Act) of securities representing
                  20% or more of the combined voting power of the
                  then-outstanding voting securities of the Company ("Voting
                  Securities") (computed in accordance with the standards for
                  the computation of total percentage ownership for the purposes
                  of Schedule 13D or Schedule 14D-1 (or any successor schedule,
                  form or report)); or

                           (iv) The Company files a report or proxy statement
                  with the Securities and Exchange Commission pursuant to the
                  Exchange Act disclosing in response to Form 8-K or Schedule
                  14A (or any successor schedule, form or report or item
                  therein) that a change in control of the Company has occurred
                  or will occur in the future pursuant to any then-existing
                  contract or transaction.

Notwithstanding the provisions set forth in (iii) or (iv) above, a "Change in
Control" shall not be deemed to have occurred for purposes of this Agreement
solely because (i) the Company, (ii) any Subsidiary, or (iii) any employee stock
ownership plan or any other employee benefit plan of the Company or any
Subsidiary either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or item therein) under
the Exchange Act disclosing beneficial ownership by it of Voting Securities,
whether in excess of 20% or otherwise, or because the Company reports that a
change in control of the Company has occurred or will occur in the

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       4
<PAGE>

future by reason of such beneficial ownership. For purposes of calculating
beneficial ownership pursuant to this subparagraph (B), any Voting Securities
held by Donald R. Horton as of the date hereof or received by Donald R. Horton
in connection with any merger involving the Company and any affiliate of the
Company shall not be included in the calculation of beneficial ownership.

                  (C) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified at the time the Participant ceases to be an
employee of the Company or any Subsidiary upon the occurrence of the events
described in subparagraph (B) or (D) of paragraph 3.

                  (D) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified if the Participant is involuntarily terminated as
an employee of the Company and its Subsidiaries without Cause for Termination
(and not on account of death or disability) within six months from the Date of
Grant. For purposes of this subparagraph (D) of this paragraph 1, "Cause for
Termination" shall mean any reason related to the violation of policies, rules
or directions of any employer or its management, misconduct or negligence in
performing assigned responsibilities, failure to meet performance goals or
objectives or to fulfill customary duties, conduct damaging to property or other
interests, fraud, misappropriation, dishonesty or abuse of alcohol or any
controlled substance, or similar basis related to performance or character.

                  2. The Option Price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock which have been owned by the Participant for more than six months prior to
the date of exercise and which have an aggregate Market Value per Share on the
date of exercise equal to the aggregate Option Price, (c) by a combination of
the methods of payment set forth in clauses (a) or (b) above, or

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       5
<PAGE>

(d) through a broker-dealer sale and remittance procedure, pursuant to which the
Participant shall provide irrevocable written instructions (i) to the designated
broker-dealer to effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds an amount equal to the aggregate option
price payable for the purchased shares plus all applicable Federal and State
income and employment taxes required to be withheld by the Company by reason of
such purchase and (ii) to the Company to deliver the certificates for the
purchased shares directly to such broker-dealer.

         3. The nonvested portion of this option shall terminate immediately
upon termination of employment. The vested portion of this option shall
terminate on the earliest of the following dates:

                  (A) Three months after delivery to the Participant by the
         Company or a Subsidiary of notice of termination of the Participant's
         employment with the Company or a Subsidiary other than for any matter
         that constitutes a violation of the standard of employee conduct set
         forth in the Company's Employee Manual as in effect on the date of such
         termination or delivery to the Company by the Participant of notice of
         the voluntary termination by the Participant of the Participant's
         employment with the Company or a Subsidiary;

                  (B) Three months after the Participant ceases to be an
         employee of the Company or a Subsidiary by reason of retirement under a
         retirement plan of the Company or a Subsidiary, which retirement is at
         or after normal retirement age provided for in such retirement plan;

                  (C) Immediately upon the delivery to the Participant by the
         Company or a Subsidiary of notice of termination of the Participant's
         employment with the Company or

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       6
<PAGE>

         a Subsidiary for any matter that constitutes a violation of the
         standard of employee conduct set forth in the Company's Employee Manual
         as in effect on the date of such termination;

                  (D) One year after the death or permanent disability of the
         Participant if the Participant dies or becomes permanently disabled
         while an employee of the Company or a Subsidiary; and

                  (E) (INSERT EXPIRATION DATE FROM REPLACED SCHULER OPTION).

Nothing contained in this option shall limit whatever right the Company or a
Subsidiary might otherwise have to terminate the employment of the Participant.
Except as otherwise provided in subparagraph (C) of paragraph 1, after the
termination of the Participant's employment this option shall be exercisable for
the same number of shares for which it was exercisable prior to such
termination. In the event that the Participant's employment terminates on the
same date that a Change in Control of the Company occurs, the Change in Control
will be deemed to have occurred prior to the termination of the Participant's
employment.

         4. This option is not transferable or exercisable except as provided in
Paragraph 9 of the Plan.

         5. Notwithstanding the provisions of Paragraph 10 of the Plan, no
adjustment shall be made to this option without the prior written consent of the
Participant if any such adjustment would constitute a "modification" of this
option within the meaning of Section 424(h) of the Code.

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       7
<PAGE>

         6. If the Company shall be required to withhold any federal, state,
local or foreign tax in connection with the exercise of this option, it shall be
a condition to such exercise that the Participant pay or make provision
satisfactory to the Company for payment of all such taxes.

         7. Upon each exercise of this option, the Company as promptly as
practicable shall mail or deliver to the Participant a stock certificate or
certificates representing the shares then purchased, and shall pay all stamp
taxes payable in connection therewith. The issuance of such shares and delivery
of the certificate or certificates therefor shall, however, be subject to any
delay necessary to complete (a) the listing of such shares on any stock exchange
upon which shares of the same class are then listed, (b) such registration or
qualification of such shares under any state or federal law, rule or regulation
as the Company may determine to be necessary or advisable, and (c) the making of
provision for the payment or withholding of any taxes required to be withheld
pursuant to any applicable law, in respect of the exercise of this option or the
receipt of such shares.

         8. The term "Subsidiary" as used in this Agreement means any
corporation, trust, joint venture, partnership or other unincorporated entity in
which, at the time, the Company owns or controls, directly or indirectly, (i) in
the case of a corporation, not less than 50% of the total combined voting power
represented by all classes of stock issued by such corporation, or (ii) in the
case of a trust, joint venture, partnership or other unincorporated entity, not
less than 50% of the beneficial interest of such entity. A corporation shall be
considered to be a Subsidiary of the Company if it is a member of an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. For purposes of this Agreement,
the continuous employ

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       8
<PAGE>

of the Participant with the Company or a Subsidiary shall not be deemed
interrupted, and the Participant shall not be deemed to have ceased to be an
employee of the Company or any Subsidiary, by reason of the transfer of his
employment among the Company and any of its Subsidiaries.

         EXECUTED at Arlington, Texas as of this 21st day of February, 2002.

                                                 D. R. HORTON, INC.

                                                 By
                                                    ----------------------------

         The undersigned Participant hereby acknowledges receipt of an executed
original of this Incentive Stock Option Agreement and accepts the stock option
granted thereunder.

                                                 -------------------------------
                                                 Participant

                                                         Stock Option Agreement-
                                                          Incentive Stock Option
                                          (Replacement of Schuler Stock Options)

                                       9<PAGE>
                                                                    EXHIBIT 10.5

                                D.R. HORTON, INC.
                      NON-QUALIFIED STOCK OPTION AGREEMENT
                                 (TERM VESTING)

                                FEBRUARY 21, 2002

         WHEREAS, _______________________ (hereinafter called the "Participant")
has become an employee of D.R. Horton, Inc., a Delaware corporation (hereinafter
called the "Company"), or one of its Subsidiaries as a result of the merger of
Schuler Homes, Inc. ("Schuler") with and into the Company, with the Company as
the surviving corporation, pursuant to the Agreement and Plan of Merger, dated
as of October 22, 2001, as amended (the "Merger Agreement"), between the Company
and Schuler;

         WHEREAS, pursuant to Section 2.1.6 of the Merger Agreement and the
terms of the Amended and Restated 1992 Stock Option Plan and the Amended and
Restated 2000 Stock Incentive Plan of Schuler (the "Schuler Stock Option
Plans"), each outstanding stock option held by the Participant to purchase
shares of common stock of Schuler has been terminated and is being replaced with
a comparable option to purchase Common Stock of the Company;

         WHEREAS, the grant of Option Rights to the Participant effective
February 21, 2002 (the "Date of Grant") and the execution of a Stock Option
Agreement in the form hereof has been duly authorized by a resolution of the
Committee duly adopted on February 21, 2002 and incorporated herein by
reference; and

         WHEREAS, the option granted hereby is intended to be a non-qualified
stock option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422A of the Code;

         NOW, THEREFORE, effective as of the Date of Grant, the Company hereby
grants to the Participant a non-qualified option pursuant to the Company's 1991
Stock Incentive Plan (the

<PAGE>

"Plan") to purchase (INSERT NUMBER OF REPLACED SCHULER OPTIONS TIMES STOCK
EXCHANGE RATIO (0.598)) shares of Common Stock at the price of (INSERT EXERCISE
PRICE OF REPLACED SCHULER OPTIONS DIVIDED BY STOCK EXCHANGE RATIO (0.598))
Dollars (_______________) per share, and agrees to cause certificates for any
shares purchased hereunder to be delivered to the Participant upon payment of
the aggregate Option Price in full, all subject, however, to the terms and
conditions hereinafter set forth and in the Plan, which is incorporated herein
by reference and, in the event of any conflict between the Plan and this
Agreement, the terms of the Plan shall prevail. Capitalized terms used in this
Agreement that are not otherwise defined in this Agreement are used as defined
in the Plan.

         1. (A) This option (until terminated as hereinafter provided) shall
become exercisable as follows:

        (INSERT VESTING SCHEDULE REMAINING FROM REPLACED SCHULER OPTION)

<Table>
<Caption>
                    TIME PERIOD                    NUMBER OF SHARES FOR
                AFTER DATE OF GRANT            WHICH OPTION IS EXERCISABLE
                -------------------            ---------------------------
<S>                                            <C>
                -------------------            ---------------------------

                -------------------            ---------------------------

                -------------------            ---------------------------

                -------------------            ---------------------------

                -------------------            ---------------------------

                -------------------            ---------------------------
</Table>

                Except as otherwise provided in paragraph 3, this option shall
be exercisable only if the Participant shall have been in the continuous employ
of the Company or any Subsidiary from

                                                         Stock Option Agreement-
                                                      Non-Qualified Stock Option
                                          (Replacement of Schuler Stock Options)

                                       2
<PAGE>

the date hereof until this option is exercised. For the purposes of this
paragraph, leaves of absence approved by the Board for illness, disability,
military or governmental service, or other cause, shall be considered as
employment. The Participant shall be deemed to be in the employ of the Company
or any Subsidiary for so long as such Participant continues to render periodic
services to the Company or any Subsidiary, whether as an employee, a
non-employee member of the Company's or its Subsidiary's Board of Directors, or
similar governing body, or an independent consultant or advisor. The Participant
shall be deemed to be an employee and to continue in the Company's employ for so
long as the Participant continues in the employ of the Company or one or more of
its Subsidiaries, subject to the control and direction of the employer entity as
to both the work to be performed and the manner and method of performance. To
the extent exercisable, this option may be exercised in whole or in part from
time to time.

                (B) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified upon the occurrence of any Change in Control (as
hereinafter defined) of the Company. For purposes of this Agreement, a "Change
in Control" means the occurrence of any of the following events:

                (i) A merger, consolidation or reorganization of the Company
        into or with another corporation or other legal person if the
        stockholders of the Company, immediately before such merger,
        consolidation or reorganization, do not, immediately following such
        merger, consolidation or reorganization, then own directly or
        indirectly, more than 50% of the combined voting power of the
        then-outstanding voting securities of the corporation or other legal
        person resulting from such merger, consolidation or reorganization in
        substantially the same proportion as their ownership of Voting
        Securities (as hereinafter defined) immediately prior to such merger,
        consolidation or reorganization;

                  (ii) The Company sells all or substantially all of its assets
         to another

                                                         Stock Option Agreement-
                                                      Non-Qualified Stock Option
                                          (Replacement of Schuler Stock Options)

                                       3
<PAGE>

         corporation or other legal person, or there is a complete liquidation
         or dissolution of the Company;

                  (iii) There is a report filed on Schedule 13D or Schedule
         14D-1 (or any successor schedule, form or report), each as promulgated
         pursuant to the Securities Exchange Act of 1934, as amended (the
         "Exchange Act"), disclosing that any person (as the term "person" is
         used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
         become the beneficial owner (as the term "beneficial owner" is defined
         under Rule 13d-3 or any successor rule or regulation promulgated under
         the Exchange Act) of securities representing 20% or more of the
         combined voting power of the then-outstanding voting securities of the
         Company ("Voting Securities") (computed in accordance with the
         standards for the computation of total percentage ownership for the
         purposes of Schedule 13D or Schedule 14D-1 (or any successor schedule,
         form or report)); or

                  (iv) The Company files a report or proxy statement with the
         Securities and Exchange Commission pursuant to the Exchange Act
         disclosing in response to Form 8-K or Schedule 14A (or any successor
         schedule, form or report or item therein) that a change in control of
         the Company has occurred or will occur in the future pursuant to any
         then-existing contract or transaction.

Notwithstanding the provisions set forth in (iii) or (iv) above, a "Change in
Control" shall not be deemed to have occurred for purposes of this Agreement
solely because (i) the Company, (ii) any Subsidiary, or (iii) any employee stock
ownership plan or any other employee benefit plan of the Company or any
Subsidiary either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or item therein) under
the Exchange Act disclosing beneficial ownership by it of Voting Securities,
whether in excess of 20% or otherwise, or because the Company reports that a
change in control of the Company has occurred or will occur in the future by
reason of such beneficial ownership. For purposes of calculating beneficial
ownership pursuant to this subparagraph (B), any Voting Securities held by
Donald R. Horton as of the date hereof or received by Donald R. Horton in
connection with any merger involving the Company and any

                                                         Stock Option Agreement-
                                                      Non-Qualified Stock Option
                                          (Replacement of Schuler Stock Options)

                                       4
<PAGE>

affiliate of the Company shall not be included in the calculation of beneficial
ownership.

                (C) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified at the time the Participant ceases to be an
employee of the Company or any Subsidiary upon the occurrence of the events
described in subparagraph (B) or (D) of paragraph 3.

                (D) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified if the Participant is involuntarily terminated as
an employee of the Company and its Subsidiaries without Cause for Termination
(and not on account of death or disability) within six months from the Date of
Grant. For purposes of this subparagraph (D) of this paragraph 1, "Cause for
Termination" shall mean any reason related to the violation of policies, rules
or directions of any employer or its management, misconduct or negligence in
performing assigned responsibilities, failure to meet performance goals or
objectives or to fulfill customary duties, conduct damaging to property or other
interests, fraud, misappropriation, dishonesty or abuse of alcohol or any
controlled substance, or similar basis related to performance or character.

         2. The Option Price shall be payable (a) in cash or by check acceptable
to the Company, (b) by transfer to the Company of shares of Common Stock which
have been owned by the Participant for more than six months prior to the date of
exercise and which have an aggregate Market Value per Share on the date of
exercise equal to the aggregate Option Price, (c) by a combination of the
methods of payment set forth in clauses (a) or (b) above, or (d) through a
broker-dealer sale and remittance procedure, pursuant to which the Participant
shall provide

                                                         Stock Option Agreement-
                                                      Non-Qualified Stock Option
                                          (Replacement of Schuler Stock Options)

                                       5
<PAGE>

irrevocable written instructions (i) to the designated broker-dealer to effect
the immediate sale of the purchased shares and remit to the Company, out of the
sale proceeds an amount equal to the aggregate option price payable for the
purchased shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Company by reason of such purchase and (ii)
to the Company to deliver the certificates for the purchased shares directly to
such broker-dealer.

        3. The nonvested portion of this option shall terminate immediately upon
termination of employment. The vested portion of this option shall terminate on
the earliest of the following dates:

                (A) Three months after delivery to the Participant by the
Company or a Subsidiary of notice of termination of the Participant's employment
with the Company or a Subsidiary other than for any matter that constitutes a
violation of the standard of employee conduct set forth in the Company's
Employee Manual as in effect on the date of such termination, or delivery to the
Company by the Participant of notice of the voluntary termination by the
Participant of the Participant's employment with the Company or a Subsidiary;

                (B) One year after the Participant ceases to be an employee of
the Company or a Subsidiary by reason of retirement under a retirement plan of
the Company or a Subsidiary, which retirement is at or after normal retirement
age provided for in such retirement plan;

                (C) Immediately upon the delivery to the Participant by the
Company or a Subsidiary of notice of termination of the Participant's employment
with the Company or a Subsidiary for any matter that constitutes a violation of
the standard of employee conduct set

                                                         Stock Option Agreement-
                                                      Non-Qualified Stock Option
                                          (Replacement of Schuler Stock Options)

                                       6
<PAGE>

forth in the Company's Employee Manual as in effect on the date of such
termination;

                (D) Two years after the death or permanent disability of the
Participant if the Participant dies or becomes permanently disabled while an
employee of the Company or a Subsidiary; and

                (E)      (INSERT EXPIRATION DATE FROM REPLACED SCHULER OPTION).
Nothing contained in this option shall limit whatever right the Company or a
Subsidiary might otherwise have to terminate the employment of the Participant.
Except as otherwise provided in subparagraph (C) of paragraph 1, after the
termination of the Participant's employment this option shall be exercisable for
the same number of shares for which it was exercisable prior to such
termination. In the event that the Participant's employment terminates on the
same date that a Change in Control of the Company occurs, the Change in Control
will be deemed to have occurred prior to the termination of the Participant's
employment.

         4. This option is not transferable or exercisable except as provided in
Paragraph 9 of the Plan.

         5. If the Company shall be required to withhold any federal, state,
local or foreign tax in connection with the exercise of this option, it shall be
a condition to such exercise that the Participant pay or make provision
satisfactory to the Company for payment of all such taxes.

        6. Upon each exercise of this option, the Company as promptly as
practicable shall mail or deliver to the Participant a stock certificate or
certificates representing the shares then purchased, and shall pay all stamp
taxes payable in connection therewith. The issuance of such

                                                         Stock Option Agreement-
                                                      Non-Qualified Stock Option
                                          (Replacement of Schuler Stock Options)

                                       7
<PAGE>

shares and delivery of the certificate or certificates therefor shall, however,
be subject to any delay necessary to complete (a) the listing of such shares on
any stock exchange upon which shares of the same class are then listed, (b) such
registration or qualification of such shares under any state or federal law,
rule or regulation as the Company may determine to be necessary or advisable,
and (c) the making of provision for the payment or withholding of any taxes
required to be withheld pursuant to any applicable law, in respect of the
exercise of this option or the receipt of such shares.

        EXECUTED at Arlington, Texas as of the date first above written.

                                                D. R. HORTON, INC.

                                                By
                                                  ------------------------------

        The undersigned Participant hereby acknowledges receipt of an executed
original of this Non-Qualified Stock Option Agreement and accepts the stock
option granted thereunder.

                                                --------------------------------
                                                Participant

                                                         Stock Option Agreement-
                                                      Non-Qualified Stock Option
                                          (Replacement of Schuler Stock Options)

                                       8

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