TERM SHEET FOR PERFORMANCE UNIT PROGRAM

This Performance Unit Program is pursuant to the authority set forth in Section 6(c) of the LTIP.

Performance Units (“Units”) will be awarded to eligible Associates ¹ . 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.

Associates of TOUSA and its wholly owned affiliates. Eligible Associates may include:

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

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

Initial grant date effective as of January 1, 2005. Subsequent grants may occur annually effective as of January 1 of such year.

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 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.

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 ² (the “Unit Value”). The stock value on each of the Grant Date and the Vesting Date shall be equivalent to the closing price of one share of TOUSA common stock on the U.S. securities exchange on which such stock is listed or the closing bid quotation on NASDAQ on such dates. The Unit Value will be subject to adjustment as described under “Adjustments” and “Multiple Incentive” below.

Cash or (in TOUSA’s discretion) up to 50% of payment amount in TOUSA common stock and the balance in cash. In the event that any amount is paid in TOUSA common stock, the total Unit Value on the Vesting Date will be converted into the equivalent number of shares of TOUSA common stock on the Payment Dates ³ .

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. ⁴

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:

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

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

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In the event that neither is achieved, then Units fail to vest. Units that fail to vest shall automatically expire.

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 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 agreement, and payments to affiliates are excluded from all calculations. Extraordinary dividends ⁵ will be ascribed an earnings factor using the earnings ratio from the prior year.

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

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Where at least 100% but less than 150% of target is achieved, Unit Value shall be increased consistent with actual results. ⁶

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Where at least 150% of target is achieved, Unit Value shall be multiplied by 175%.

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

By the Company Without Cause/By the Associate for Good Reason/Due to Associate’s Death or Disability/Expiration of Employment Agreement According to Terms ⁷

If, as of the date of termination, Units are:

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

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Not vested, then:

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Unit