Exhibit 10.2

EFJ, INC. 2005 OMNIBUS INCENTIVE COMPENSATION PLAN

STOCK APPRECIATION RIGHTS AGREEMENT

This Stock Appreciation Rights Agreement is made and entered into by and between
EFJ, Inc. (the “Company”) and [Insert Full Name] (“Participant”) as of the date
of acceptance, pursuant to the EFJ, Inc. 2005 Omnibus Incentive Compensation
Plan (the “Plan”). The Committee administering the Plan have selected the
Participant to receive the following grant of stock appreciation rights (“SAR”).
This SAR entitles the Participant to receive a payment in shares of the common
stock of EFJ, Inc. (the “Common Stock”) that reflects the appreciation over the
Grant Price, as specified in Section 1 hereof, for the number of shares of the
Common Stock for which this SAR was granted, as specified in Section 1 hereof,
(the “Grant Shares”), on the terms and conditions of the Plan and as set forth
below, which Participant accepts and to which the Participant agrees:

1. SAR Granted:

 

Number of Shares Subject to SAR    [Insert Number Shares] Grant Date    [Insert
Grant Date] Grant Price per Share (U.S. dollars)    [Insert Exercise Price
Expiration Date    [Insert Expiration Date]

2. This SAR may be exercised in whole or in part until fully exercised. The
payment due to Participant upon exercise shall be equal to a number shares of
Common Stock of the Company with an aggregate fair market value on the exercise
date equal to (i) the difference between the fair market value of the Common
Stock on the date of exercise and the Grant Price, multiplied by (ii) the number
of Grant Shares being exercised. The payment shall be made in the form of shares
of the Common Stock (the “Payment Shares”), rounded down to the nearest whole
number, subject to applicable income and employment tax withholding. Except as
herein otherwise stated, the SAR, to the extent not theretofore exercised, shall
terminate on the day immediately preceding the fifth (5th) anniversary of the
Grant Date, except that the SAR may expire earlier as provided elsewhere in this
Agreement and/or in the Plan. The number of shares subject to the SAR granted
hereunder shall be adjusted as provided in the Plan.

3. This SAR shall be exercisable in all respects in accordance with the terms of
the Plan, which are incorporated herein by this reference. Participant
acknowledges having received and read a copy of the Plan.

4. Shares of Common Stock shall not be issued with respect to any SAR granted
under the Plan, unless the exercise of that SAR and the issuance and delivery of
the shares pursuant thereto shall comply with all applicable provisions of
federal, state, local and foreign laws.

5. This SAR shall vest and Participant shall have the right to exercise the SAR
in accordance with the following schedule:

(a)

 

Date

   Percentage
Vested  

1st Anniversary of Grant Date

   25 %

2nd Anniversary of Grant Date

   25 %

3rd Anniversary of Grant Date

   25 %

4th Anniversary of Grant Date

   25 %

 

  (b) The right to exercise the SAR shall be cumulative. Participant may
exercise all, or from time to time any part, of the maximum number of Grant
Shares which are exercisable under this SAR, but in no case may Participant
exercise the SAR with regard to a fraction of a Grant Share, or for any Grant
Share for which the SAR is not exercisable.

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6. Withholding Taxes. All SARs are subject to the condition that if at any time
the Company shall determine, in its discretion, that the satisfaction of
withholding tax or other withholding liabilities under any federal, state, local
or foreign laws is necessary or desirable as a condition of, or in connection
with, the grant, vesting or exercise of a SAR or the delivery or purchase of
shares pursuant thereto, then such action shall not be effective unless such
withholding shall have been effected or obtained in a manner acceptable to the
Company. Such withholding liabilities shall be satisfied by reducing the number
of whole shares that would otherwise be payable to Participant on exercise of a
SAR by an amount equal in value to the withholding liability, unless at the
Company’s sole and complete discretion, the Company determines to require or
accept cash from Participant.

7. Termination as a Service Provider other than by Death or Disability. If the
Participant ceases to be an employee, consultant or director of the Company or
any Subsidiary (used herein as defined in the Plan) (collectively referred to as
“Service Provider”) for any reason other than his or her death or disability,
the SAR may be exercised, to the extent it had vested at the time Participant
ceases to be a Service Provider of the Company, at any time within three
(3) months after his or her termination of continuous status as a Service
Provider, but not beyond the otherwise applicable term of the SAR.

For purposes of this Section 7, the Service Provider relationship shall be
treated as continuing intact while the Participant is an active Service Provider
of the Company or any subsidiary, or other bona fide leave of absence to be
determined in the sole discretion of the Committee.

8. Disability of Participant. If the Participant ceases to be a Service Provider
of the Company due to becoming totally and permanently disabled within the
meaning of Section 22(e)(3) of the Code, as determined by the Committee in their
sole discretion, the SAR may be exercised, to the extent it had vested at the
time of termination of continuous status as a Service Provider of the Company
and subject to the Plan, at any time within one year after the Participant’s
termination as a Service Provider, but not beyond the otherwise applicable term
of the SAR.

9. Death of Participant. If the Participant dies while a Service Provider, or
after ceasing to be a Service Provider but during the period while he or she
could have exercised the SAR, the SAR may be exercised, to the extent it had
vested at the time of death and subject to the Plan, at any time within one year
after the Participant’s death, by the executors or administrators of his or her
estate or by any person or persons who acquire the SAR by will or the laws of
descent and distribution, but not beyond the otherwise applicable term of the
SAR.

10. Rights as a Shareholder. The Participant, or a transferee of the
Participant, shall have no rights as a shareholder of the Company with respect
to any Payment Share for which his or her SAR is exercisable until the date of
the issuance of such Payment Share. No adjustment shall be made for dividends,
ordinary or extraordinary (whether in currency, securities, or other property),
distributions, or other rights for which the record date is prior to the date
such stock is issued.

11. Modification, Extension, and Renewal of SAR. Within the limitations of the
Plan, the Committee may modify, extend or renew the SAR or accept the
cancellation of the SAR for the granting of a new SAR in substitution therefor.
Notwithstanding the preceding sentence, no modification of the SAR shall,
without the consent of the Participant, alter or impair any rights or
obligations under the SAR.

12. Nontransferability. This SAR may not be sold, transferred, pledged,
assigned, encumbered or otherwise alienated or hypothecated otherwise than by
will or by the laws of descent and distribution.

13. Acknowledgements. Participant acknowledges receipt of and understands and
agrees to the terms of this SAR Agreement and the Plan. In addition to the above
terms, Participant understands and agrees to the following:

(a) Participant hereby acknowledges receipt of a copy of the Plan and agrees to
be bound by all of the terms and provisions thereof, including the terms and
provisions adopted after the date of this Agreement but

 

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prior to the completion of the vesting period. If and to the extent that any
provision contained in this Agreement is inconsistent with the Plan, the Plan
shall govern.

(b) Participant acknowledges that as of the date of this Agreement, the
Agreement and the Plan set forth the entire understanding between Participant
and the Company regarding the acquisition of shares of Common Stock underlying
the SAR and supersedes all prior oral and written agreements pertaining to the
SAR.

(d) Participant understands that the Company has reserved the right to amend or
terminate the Plan at any time, and that the award of this SAR under the Plan at
one time does not in any way obligate the Company or its subsidiaries to grant
additional SARs in any future year or in any given amount. Participant
acknowledges and understands that Participant’s participation in the Plan is
voluntary and that this SAR and any future SARs under the Plan are wholly
discretionary in nature, the value of which do not form part of any normal or
expected compensation for any purposes, including, but not limited to,
calculating any termination, severance, resignation, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement benefits or
similar payments, other than to the extent required by local law.

14. No Right to Continued Employment. Neither this SAR nor any terms contained
in this Agreement shall confer upon Participant any expressed or implied right
to be retained in the service of the Company or any of its subsidiaries for any
period at all, nor restrict in any way the right of the Company or any such
subsidiary, which right is hereby expressly reserved, to terminate his or her
employment at any time with or without cause. Participant acknowledges and
agrees that any right to receive delivery of shares of Common Stock is earned
only by continuing as an employee of the Company or its subsidiary at the will
of Company or such subsidiary, or satisfaction of any other applicable terms and
conditions contained in this Agreement and the Plan, and not through the act of
being hired, being granted this SAR or acquiring shares of Common Stock
hereunder.

15. Compliance with Laws, Regulations and Plan Rules. The award of this SAR to
Participant and the obligation of the Company to deliver shares of Common Stock
hereunder and the sale or the disposition of the Payment Shares received
pursuant to the exercise of such SAR shall be subject to (a) all applicable
federal, state, local and foreign laws, rules and regulations, and (b) any
registration, qualification, approvals or other requirements imposed by any
government or regulatory agency or body which the Company shall, in its sole
discretion, determine to be necessary or applicable. Moreover, shares of Common
Stock shall not be delivered hereunder if such delivery would be contrary to
applicable law or the rules of any stock exchange. Exercise of the SAR shall be
conditioned on the Participant’s compliance with procedures established from
time to time by the Committees for exercise, including but not limited to
submission of such forms and documents as the Committees may require.

16. Definitions. All capitalized terms that are used in this Agreement that are
not defined herein have the meanings defined in the Plan. In the event of a
conflict between the terms of the Plan and the terms of this Agreement, the
terms of the Plan shall prevail.

17. Notices. Any notice or other communication required or permitted hereunder
shall, if to the Company, be in accordance with the Plan, and, if to
Participant, be in writing and delivered in person or by registered or certified
mail or overnight courier, postage prepaid, addressed to Participant at his or
her last known address as set forth in the Company’s records.

18. Severability. If any of the provisions of this Agreement should be deemed
unenforceable, the remaining provisions shall remain in full force and effect.

19. Governing Law. This Agreement and this SAR shall be governed by the laws of
the State of Delaware.

[Signature page to follow]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this SAR Agreement,
in the case of the Company by its duly authorized officer, as of the date of
acceptance.

 

Participant     [Insert Name of Company Signatory]       By:     (Signature)    
        Its:     (Name)      

 

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