Document:

EX-10.3

Exhibit 10.3

LA QUINTA CORPORATION

2005 ANNUAL BONUS PROGRAM

INTRODUCTION

The Annual Bonus Program provides a clear connection between financial rewards and specific
business objectives that are the personal responsibility of each individual who is eligible for the
bonus plan. The achievement of these business objectives is a direct measure of the efforts and
results of the individual. The attainment of these objectives supports the overall success of La
Quinta.

This bonus program provides incentives to selected Corporate Management. The plan includes a
component of total compensation that is linked to both the achievement of our business objectives
and individual performance.

OBJECTIVES

1. Link actual performance with financial incentives.

2. Provide enhanced rewards for above average financial returns.

3. Provide a financial incentive to achieve the business objectives.

PURPOSE

The purpose of this plan is to provide incentives for the achievement of company results.
This document provides information that enables the individual, at the beginning of the year, to
have a clear understanding of the financial rewards that can be earned for achieving specific
performance objectives and standards.

The principal cornerstones of this program are:

	 	1.	 	Bonus amounts are earned each year. These rewards must be earned through actual
performance.

2. Maximize EBITDA.

3. Increase Corporate Revenues.

	 	4.	 	Increase Franchise success as determined by increased RevPAR and contribution to
EBITDA.

5. Improve Guest Satisfaction.

6. Increase RevPAR.

7. Control costs.

8. Achieve individual objectives.

PARTICIPATION

Participation in the plan is limited to Corporate Management. Determination of membership in
the plan is the sole responsibility of the Board of Directors Compensation Committee.

After the Compensation Committee has approved participation in the plan, each senior executive will
receive the necessary materials in order to enable him/her to communicate the plan to participants
in their area of responsibility.

ELIGIBILITY

	 	 	 
	•

	 	Executive Committee Members – Job titles such as:
	
 
	 	President and CEO, Executive Vice President, Senior Vice President, etc.
	 
	 	 
	•

	 	Corporate Vice Presidents – Job titles such as:

Controller, Development Services, Reservation Systems, Revenue Management, Risk
Management, Sales, Tax, RVP’s, etc.

• Corporate Directors – Job titles such as:

Cash Management, Construction Services, Assistant Treasurer, Assistant Controller,
Relationship Marketing, Training, etc.

• Corporate Managers – Job titles such as:

System Development, Field Marketing, Corporate Tax, General Accounting, Payroll, Hotel
General Managers, etc.

• Corporate Staff – Job titles such as:

Benefits Specialist, Staff Accountant, Contracts Administrator, Administrative
Assistant, Accounting Clerk, etc.

• Other selected position titles – As determined by senior management.

Individuals are eligible for participation in the Annual Bonus Program:

	 	A.	 	If the individual has not voluntarily or involuntarily terminated employment prior to
the date incentive payments are issued.

	 	B.	 	In cases where an eligible individual has been transferred or promoted by Sept.
30th of the year, the bonus payout will be pro-rated according to the number of
rounded whole months in each position. In cases where an eligible individual has been
transferred or promoted on or after October 1st of the year, the bonus payout
will be based on the location, bonus percentage entitlement, etc. of the old
position/location for the entire year (as if the promotion/transfer had not occurred).

	 	C.	 	In cases where an employee takes or omits to take any action that could result in
termination of that employee, including but not limited to, manipulation of expenses or
revenues, the entire bonus for the employee will be at risk of forfeiture as determined by
the Compensation Committee.

ADMINISTRATION

The Board of Directors Compensation Committee is the sole interpreter and arbitrator of these
provisions and has the right to amend, withdraw, or revoke them at any time. Recommended bonus
payments (including any “stretch” bonus) are not final until approved by the Compensation
Committee.

DEFINITIONS

Pay is defined as the regular base pay earned during the year, as accounted for by the Payroll
system. It does not include any other bonus, auto allowance, relocation reimbursements, or other
similar types of payments received by the individual.

Gate is defined as the minimum level of achievement eligible for a bonus payment.

Target is defined as the planned level of achievement in the annual budget.

Stretch Bonus is defined as bonus payments greater than target. Stretch bonus can be up to double
the overall target bonus potential and is completely discretionary within the range of payment
established for the position.

Quantitative goals are goals based on numbers set forth in the annual budget or operations plan.
Financial goals such as IOC, EBITDA, Revenue or a Guest Satisfaction target are examples of
quantitative goals.

Qualitative goals are individual goals determined between the individual and his/her supervisor.

Department budget is the budget for the department for which the bonus eligible person is
responsible.

TARGET BONUS OPPORTUNITIES

Bonus opportunities are established through a goal setting exercise for each individual’s
immediate area of responsibility. The bonus opportunities are divided into quantitative and
qualitative categories.

The qualitative component of each individual’s bonus is determined by the achievement of individual
business objectives. The weighting for achievement of business objectives varies by individual.

The individual and his/her immediate supervisor at the beginning of the year set individual
business objectives. These objectives may be revised, eliminated, or amended during the course of
the plan year depending on changes in business needs and conditions. Each business objective is
given target points that represent the importance of the objective. The total number of target
points must be 100. At the end of the year, the supervisor rates performance toward the
achievement of the business objectives by assigning achieved points for each objective. If the
objective is achieved, the assigned points equal the target points. If the objective is not
achieved, the assigned points are a percentage of the target points. This percentage represents
the degree to which the objective was completed. The achieved points determine the bonus amount
paid.

STRETCH BONUS OPPORTUNITIES

A portion of a stretch bonus can also be earned by exceeding expectations for planned
objectives and exceptional performance. An individual who exceeded their objectives or, who
achieved unexpected results by overcoming unforeseen or difficult business conditions, can earn an
additional bonus payment based on the discretion of the Executive Committee member and with the
approval of the President and CEO. The amount of stretch bonus awarded is completely discretionary
within the range of payment established for that position, without limitation by component.

Reasons for granting this additional bonus are demonstrating leadership and management ability by
exceptionally:

	 	•	 	Overcoming adverse business conditions and obstacles, or foreseeing issues to
avoid problems that would have had an adverse impact on Company results.

	 	•	 	Enhancing La Quinta’s image with customers, employees, shareholders, the local
communities where we operate, the general business community, or vendors.

	 	•	 	Managing others to achieve outstanding results and increasing morale.

	 	•	 	Acting individually or as a member of a team to complete special assignments
that are critical to the success of the Company.

Where possible, the above accomplishments are to be supported by measurable results.
Recommendations for a stretch bonus are submitted to Executive Committee members.

DISCRETIONARY ADJUSTMENT FACTOR

The Compensation Committee may adjust any participant’s bonus amount by up to 20% of the
actual bonus amount otherwise earned, in order to address extraordinary or unusual performance
and/or events, notwithstanding the failure to meet established bonus criteria. This is in addition
to the Committees ability to pay bonuses upon the achievement of stretch goals.

BONUS AWARDS

All Bonus components are earned separately. The awarding of any single bonus component is not
contingent upon the achievement of any other bonus component. The Executive Committee will review
all bonus recommendations with approval by the President and CEO prior to submission to the
Compensation Committee for final approval. All bonus award recipients and their shares of target,
stretch and discretionary bonus payments shall be at the complete discretion of the Compensation
Committee.EX-10.21

Exhibit 10.21

Technical Olympic USA, Inc. (“TOUSA”) Performance Unit Program

Term Sheet for Performance Unit Program

Pursuant to Section 6(c) of TOUSA Annual and Long-Term Incentive Plan (LTIP)

	 	 	 
	Program:

	 	This Performance Unit Program is established

pursuant to the authority set forth in Section

6(c) of the LTIP.
	 
	 	 
	Awards:

	 	Performance Units (“Units”) will be awarded to

eligible Associates1. The number of

Units to be awarded to Associates will be

proposed by the CEO and approved by the TOUSA

Human Resources, Compensation, and Benefits

Committee (the “Committee”), except for awards

to the CEO which will be determined solely by

the Committee.
	 
	 	 
	Eligible Associates:

	 	Associates of TOUSA and its wholly owned

affiliates. Eligible Associates may include:

	 	•	 	Corporate Associates (e.g., CEO, senior corporate executives and
their senior managers) and CEO-designated high potential associates
at the Corporate level

	 	•	 	Operations Associates (e.g., senior regional executives and their
senior managers, division and unit presidents) and CEO-designated
high potential associates at the Operations level

	 	 	 
	Grant Date:

	 	Initial grant date effective as of January 1,

2005. Subsequent grants may occur annually

effective as of January 1 of such year.
	 
	 	 
	Vesting Period/Vesting

Date:

	 	

The Vesting Period is three (3) years (e.g., for

the initial grant, January 1, 2005 to December

31, 2007). The Vesting Date is the last date of

the Vesting Period (e.g., for the initial grant,

December 31, 2007).
	 
	 	 
	Expiration:

	 	Expiration shall occur automatically either upon

payment in full of vested Units or upon failure

to vest, unless earlier terminated in accordance

with the Program. Upon expiration, all Unit

rights and benefits are terminated.
	 
	 	 
	Amount of Payment:

	 	Each Unit represents the right to be paid the

amount equivalent to the appreciation of one

share of TOUSA common stock from the Unit Grant

Date to the Vesting Date (the “Unit Value”). The

stock value on each of the Grant Date and the

Vesting Date shall be established as the

equivalent of the average closing price of one

share of TOUSA common stock on the U.S.

securities exchange on which such stock is or was

listed during the 90 days prior to and including

such dates. 2 The Unit Value will be

subject to adjustment as described under

“Adjustments” and “Multiple Incentive” below.
	 
	 	 
	Form of Payment:

	 	Payment shall be made in cash.
	 
	 	 
	Payment Dates:

	 	Payments shall be made: (1) 50% on March 31 in

the year immediately following the Vesting Date,

and (2) 50% on March 31 in the second year

following the Vesting Date.3
	 
	 	 
	Vesting:

	 	Units will become vested on the Vesting Date if

Return on Equity (ROE) and Cumulative Earnings

(CE) targets have been achieved. ROE and CE are

weighted equally for purposes of vesting, each at

50%, as follows:

	 	•	 	In the event that both are achieved, then 100% of Units are
vested.

	 	•	 	In the event that one, but not the other, is achieved, then 50% of
Units are vested and the remainder fail to vest.

	 	•	 	In the event that neither is achieved, then Units fail to vest.

Units that fail to vest shall automatically expire.

	 	 	 
	Targets/Results:

	 	Detailed ROE and CE targets for Unit awards shall

be as proposed by the CEO and approved by the

Committee.
	 
	 	 
	
 
	 	Return on Equity (ROE) during Vesting Period
	
 
	 	 
	 
	 	 
	
 
	 	ROE means, for any Vesting Period, the average of

ROE during such Vesting Period. Average ROE is

calculated as: stockholders’ equity at the

beginning of the Vesting Period (grant date), plus

stockholder’s equity at the end of each quarter

during the Vesting Period, divided by thirteen

(13).

Equity issuances will then be added in on a monthly weighted basis
commencing 9 months after the issuance. The average equity will then be
divided into net income for the year to calculate ROE.

Cumulative Earnings (CE) during Vesting Period

CE means, for any Vesting Period, the cumulative earnings during the
Vesting Period.

Extraordinary gains and losses (as defined by GAAP), payments under
management services agreements, and payments to affiliates are excluded
from all calculations. Extraordinary dividends4 will be
ascribed an earnings factor using the earnings ratio from the prior year.

	 	 	 	Multiple Incentive: As additional incentive to meet and exceed established ROE and CE targets,
multiples will be applied to the Unit Value, calculated as follows:

	 	•	 	Where at least 100% but less than 150% of target is achieved, Unit
Value shall be increased consistent with actual results.5

	 	•	 	Where at least 150% of target is achieved, Unit Value shall be
multiplied by 150%.

As described in “Vesting” above, Multiple Incentive calculations shall
apply separately to each of ROE and CE targets.

	 	 	 
	Effect of Termination

Of Employment:

	 	

By the Company Without Cause/By the Associate

for Good Reason/Due to Associate’s Death or

Disability/Expiration of Employment Agreement

According to Terms6
	 
	 	 
	
 
	 	If, as of the date of termination, Units are:

	 	•	 	Vested, but not fully paid, then payments shall occur in the
ordinary course as if Associate were employed on the Payment Dates.

	 	•	 	Not vested, then:

	 	(a)	 	For Associates who have been
employed for less than two (2) years during the Vesting Period,
all Units will expire immediately.

	 	(b)	 	For Associates who been employed
for at least two (2) years during the Vesting Period, all Units
will remain outstanding for the remainder of the Vesting Period.

If the Units vest on the Vesting Date, then:

	 	•	 	Unit Value shall be reduced
pro rata with Associate’s term of employment during the
Vesting Period7,

	 	•	 	Multiple Incentive
calculations will not apply, and

	 	•	 	Payments shall occur in the
ordinary course as if the Associate were employed on the
Payment Dates.

By the Company For Cause or By the Associate Without Good Reason

All Units, whether vested or unvested, shall expire immediately.

	 	 	 
	Change of Control:

	 	In the event of a Change of Control8,

Units shall vest and be payable as follows:
	 
	 	 
	
 
	 	Corporate. For Corporate Associates:
	
 
	 	 

	 	•	 	Vesting shall occur immediately upon a Change of Control, and

	 	•	 	Full Unit Value is payable within 90 days.
	 
	 	 	 	Operations. For Operations Associates, no change in vesting or payment
schedules shall apply, so long as the program remains in existence and without
modification after the Change of Control occurs. In the event of a material
program change or its termination during the Vesting Period in which the Change
of Control occurred, then:

	 	•	 	Vesting shall occur immediately upon the date of such material
change or termination,

	 	•	 	Unit Value shall be reduced pro rata to reflect the shortened
Vesting Period9,

	 	•	 	Multiple Incentive calculations will not apply, and

	 	•	 	Payments shall occur in the ordinary course as if there were no
change or termination in the program and Associate were employed on
the Payment Dates.

	 	 	 
	Withholding:

	 	Upon payment of vested Units, federal and state

income tax withholding and payroll taxes will

apply.
	 
	 	 
	Adjustments:

	 	Adjustments to Units and/or Unit Value shall be

made if necessary to prevent dilution or an

enlargement of the benefit intended to be made

available under this program. Such adjustments

shall occur automatically in case of any event that

may affect the common stock of the Company,

including but not limited to subdivisions or

combinations of shares, dividends or distributions,

or certain other transactions or events, all as set

forth on Annex B of this Term Sheet.
	 
	 	 
	Transferability:

	 	Units shall not be transferable or assignable,

except without consideration to a permitted

transferee, in accordance with Section 6(g)(iii)(C)

of the TOUSA LTIP.
	 
	 	 
	Administration:

	 	The Committee shall have authority to direct

administration of this Program as provided by

Section 6(c) of the LTIP. Terms and conditions of

each grant made under this Program, including

specified targets for performance results, shall be

set forth in the award agreements provided to each

recipient at the time of the award, together with a

copy of this Program Term Sheet. The Committee

may, in its discretion, make such determinations

necessary or advisable for the operation and

administration of this Program, provided that no

modifications may be made to any award that cause a

dilution of the benefit intended to be granted to

the recipient.

1 “Associate,” as used herein, is
defined as “Employee” in the LTIP.

2 For example: If average stock price during
90 days prior to and including Grant Date = $25 and average stock price during
90 days prior to and including Vesting Date = $40, Unit Value = $15. With
1,000 Units, total Unit Value is $15 x 1,000 Units = $15,000, subject to
adjustments and taxes.

3 For example, assuming a Grant Date of 1/1/05,
with Vesting Date of 12/31/07, then 50% payment on 3/31/08 and 50% payment on
3/31/09.

4 Extraordinary dividends are dividends
exceeding 3% of net income on a trailing 4 quarter basis.

5 E.g., if 120% of target is achieved, then
Unit Value shall be multiplied by 120%.

6 Terms such as “For Cause,”
“For Good Reason,” “Death,” “Disability,”
etc. shall be defined as set forth in the Company’s standard form of
Employment Agreement, as such form may change from time to time, and
notwithstanding alternate definitions as may exist in individual employment
agreements.

7 E.g., if the Associate’s employment
terminates 6 months prior to the Vesting Date (thus Eligible Associate was
employed for 30 of 36 months, or 83%, of the Vesting Period), then the Unit
Value would be adjusted downward from 100% to 83%.

8 “Change of Control” is defined on
Annex A of this Term Sheet.

9 Apply same calculations as set forth in
footnote 7.

1

Annex A

“Change of Control” means the occurrence of any of the following events, each of which shall
be determined independently of the others:

(a) any “Person” (as defined below) becomes a “beneficial owner” (as such term is used in Rule
13d-3 promulgated under the Exchange Act) of forty percent (40%) or more of the stock of any member
of the Consolidated Group (as defined below) entitled to vote in the election of directors. For
purposes of this Exhibit A, the term “Person” is used as such term is used in Sections 13(d) and
14(d) of the Exchange Act; provided, however that the term shall not include any member of the
Consolidated Group, any trustee or other fiduciary holding securities under an employee benefit
plan of any member of the Consolidated Group, or any corporation owned, directly or indirectly, by
the shareholders of any member of the Consolidated Group;

(b) shareholders of any member of the Consolidated Group adopt a plan of complete or
substantial (eighty-five percent (85%) or more) liquidation or an agreement providing for the
distribution of all or substantially all of the assets of such member;

(c) any member of the Consolidated Group is party to a merger, consolidation, other form of
business combination or a sale of all or substantially all (eighty-five percent (85%) or more) of
its assets, unless the business of such member is continued following any such transaction by a
resulting entity (which may be, but need not be, such member) and the shareholders of such member
immediately prior to such transaction (the “Prior Shareholders”) hold, directly or indirectly, at
least forty percent (40%) of the voting power of the resulting entity (there being excluded from
the voting power held by the Prior Shareholders, but not from the total voting power of the
resulting entity, any voting power received by Affiliates of a party to the transaction (other than
such member) in their capacities as shareholders of such member); provided, however, that a merger
or consolidation effected to implement a recapitalization of such member (or similar transaction)
in which no Person acquires more than thirty percent (30%) of the combined voting power of such
member’s then outstanding securities shall not constitute a Change in Control; or

(d) any member of the Consolidated Group is a subject of a “Rule 13e-3 transaction” as that
term is defined in Exchange Act Rule 13e-3, and the first purchase has been made pursuant to such
transaction.

Notwithstanding the foregoing, if, immediately after the occurrence of any event enumerated
above, the Continuing Directors control the majority of the Board of Directors of the Company (or,
in the case of any merger or combination in which the Company is not the surviving entity, continue
to constitute a majority of the board of directors of such successor entity), such event shall not
constitute a Change of Control for purposes of this Agreement until such time as the Continuing
Directors no longer constitute a majority of the Board of Directors of the Company (or the
successor entity, if applicable). “Continuing Directors” for this purpose means the members of the
Board of Directors of the Company on the Effective Date, provided that any person becoming a member
of the Board of Directors of the Company subsequent to such date whose election or nomination for
election was supported by a majority of the directors who at the time of the election or nomination
for election comprised the Continuing Directors shall be considered to be a Continuing Director.

“Consolidated Group” shall mean (i) the group of companies composed of Technical Olympic S.A. or
the Company, and (ii) any successor or surviving company of any of the foregoing entities.

2

Annex B

In the event that the outstanding shares of common stock shall be subdivided into a
greater number of shares (stock split) or the outstanding shares of common stock shall be
combined into a smaller number of shares (reverse split), the number of Units under each
outstanding award shall be automatically adjusted and shall, for calculation purposes
only, be treated as one Unit equals one share of common stock. Thus, simultaneously with
the effectiveness of such subdivision or combination, the number of Units (shares) shall
be adjusted so as to be equal to the number of Units (shares) that would be issuable as a
result of applying such subdivision or combination with respect to the Units (shares)
subject to the outstanding Award immediately prior to the subdivision or combination.

In the event a dividend or other distribution of common stock of the Company shall be paid
in respect of common stock, then immediately after the record date of such dividend or
distribution, the number of Units under each outstanding Award shall be automatically
increased and shall, for calculation purposes only, be treated as one Unit equals one
share of common stock. Thus, the number of Units (shares) shall be increased to include
the dividend or other distribution that would have been payable with respect to the Units
(shares), without requiring the payment of any additional consideration therefore.

In the event of any dividend or other distribution of other securities, property, or cash
(excluding cash dividends amounting to 3% or less of net income on a trailing 4 quarter
basis paid out of current earnings) not otherwise described above, then the Unit Value of
each Unit under each outstanding Award shall be increased as of the Vesting Date by that
dollar amount equivalent to the total dollar amount of any such dividends or distributions
paid per share of common stock during the Vesting Period.

In the event that any other corporate transaction or event occurs that affects the common
stock or if any other change in the corporate structure of the Company affecting the
common stock occurs, the Committee shall adjust the number of Units under each outstanding
Award accordingly and shall, for calculation purposes only, be treated as one Unit equals
one share of common stock. Any such adjustment shall be made in such manner as shall be
appropriate in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be granted under the Award.

3

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