EXHIBIT 10.9

UNITRIN, INC. PENSION EQUALIZATION PLAN

As Adopted Effective April 10, 1990

As Amended and Restated Effective January 19, 1995

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TABLE OF CONTENTS

 

ARTICLE I.    DEFINITIONS    1 ARTICLE II.    ELIGIBILITY    3 ARTICLE III.   
SUPPLEMENTAL RETIREMENT BENEFIT    3 ARTICLE IV.    SUPPLEMENTAL SURVIVING
SPOUSE BENEFIT    4 ARTICLE V.    ADMINISTRATION OF THE PLAN    5 ARTICLE VI.   
AMENDMENT OR TERMINATION    5 ARTICLE VII.    GENERAL PROVISIONS    6

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UNITRIN, INC. PENSION EQUALIZATION PLAN

The Unitrin, Inc. Pension Equalization Plan (the “Plan”) was adopted effective
April 10, 1990, and is amended and restated effective January 19, 1995. The Plan
is established and maintained by Unitrin, Inc. for the purpose of providing
benefits in excess of the limitations on benefits imposed by Section 415 of the
Internal Revenue Code for certain of its or its Affiliates’ employees who
participate in any Qualified Plan, as hereinafter defined.

Also, only with respect to those Participants hereunder who are Top Hat
Participants as defined in Section 1.16 hereof, this Plan shall provide benefits
in excess of the limitations on benefits imposed by Section 401(a)(17) of the
Internal Revenue Code.

Accordingly, Unitrin, Inc. hereby adopts the Plan pursuant to the terms and
provisions set forth below:

ARTICLE I.

DEFINITIONS

Whenever used herein the following terms shall have the meanings hereinafter set
forth:

1.1. “Affiliated Company” or “Affiliate” means any corporation, trade or
business entity which is a member of a controlled group of corporations, trades
or businesses, or an affiliated service group, of which the Company is also a
member, as provided in Code Sections 414(b), (c), (m) or (o).

1.2. “Board” means the Board of Directors of the Company.

1.3. “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations relating thereto.

1.4. “Committee” means the Compensation Committee of the Board.

1.5. “Company” means Unitrin, Inc., a Delaware corporation, or, to the extent
provided in Section 7.8 below, any successor corporation or other entity
resulting from a reorganization, merger or consolidation into or with the
Company, or a transfer or sale of substantially all of the assets of the
Company.

1.6. “Normal Retirement Age” means a Participant’s age when he has both attained
his 65th birthday and completed five Years of Vesting Service under a Qualified
Plan.

1.7. “Normal Retirement Date” means the first day of the month coinciding with
or next following the date on which a Participant terminates employment with the
Company and all Affiliates because of his normal retirement under a Qualified
Plan on or after attainment of his Normal Retirement Age.

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1.8. “Participant” means an employee of the Company or of an Affiliated Company
who at any time after April 10, 1990, is a participant under a Qualified Plan
and to whom or with respect to whom a benefit is payable under this Plan. The
term “Participant” shall include Top Hat Participants.

1.9. “Plan” means the Unitrin, Inc. Pension Equalization Plan.

1.10. “Qualified Plan” means any tax-qualified defined benefit pension plan
maintained by Unitrin, Inc. or any Affiliate and each predecessor, successor or
replacement to any such Qualified Plan, excluding any Qualified Plan maintained
pursuant to a collective bargaining agreement.

1.11. “Qualified Plan Retirement Benefit” means the aggregate benefit payable to
a Participant pursuant to a Qualified Plan by reason of his termination of
employment with the Company and all Affiliates for any reason other than death.
Where a Qualified Plan provides for an offset to a Participant’s benefit
thereunder to reflect payment to a Participant of additional defined benefit
pension payments (within the meaning of Code Section 414(j)) under other defined
benefit pension plans of the Company or an Affiliated Company, the Participant’s
Qualified Plan Retirement Benefit shall be the total value of all such defined
benefit pensions.

1.12. “Qualified Plan Surviving Spouse Benefit” means the aggregate benefit
payment to the Surviving Spouse of a Participant with respect to the
Participant’s Qualified Plan Retirement Benefit in the event of the death of the
Participant at any time prior to commencement of payment of his Qualified Plan
Retirement Benefit.

1.13. “Supplemental Retirement Benefit” means the benefit payable to a
Participant pursuant to the Plan by reason of his termination of employment with
the Company and all Affiliates for any reason other than death.

1.14. “Surviving Spouse” means a person who is married to a Participant at the
date of his death.

1.15. “Supplemental Surviving Spouse Benefit” means the benefit payable to a
Surviving Spouse pursuant to the Plan.

1.16. “Top Hat Participant” means a Participant who qualifies for inclusion in a
“select group of management or highly compensated employees” as provided in
Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement
Income Security Act of 1974 and who has been designated as a Top Hat Participant
by the Board. Such designation shall be made in writing and shall be filed with
the records of this Plan.

1.17. Construction. Words in the masculine gender shall include the feminine and
the singular shall include the plural, and vice versa, unless qualified by the
context. Any headings used herein are included for ease of reference only, and
are not to be construed so as to alter the terms hereof.

 

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ARTICLE II.

ELIGIBILITY

An employee who is eligible to receive a Qualified Plan Retirement Benefit, the
amount of which is reduced by reason of the application of the limitations on
benefits imposed by application of Code Section 415 (or in the case of a Top Hat
Participant, is reduced by the limitations on benefits imposed by application of
Code Section 401(a)(17)), in each case as in effect on the date for commencement
of the Qualified Plan Retirement Benefit, or as in effect at any time
thereafter, shall be eligible to receive a Supplemental Retirement Benefit. If a
Participant described in the preceding sentence dies prior to commencement of
payment of his Qualified Plan Retirement Benefit, his Surviving Spouse shall be
eligible to receive a Supplemental Surviving Spouse Benefit.

ARTICLE III.

SUPPLEMENTAL RETIREMENT BENEFIT

3.1. Amount. The Supplemental Retirement Benefit payable to a Participant in the
form of a straight life annuity over the lifetime of the Participant only,
commencing on his Normal Retirement Date, shall be a monthly amount equal to the
difference between (a) and (b) below:

(a) the monthly amount of the Qualified Plan Retirement Benefit to which the
Participant would have been entitled if such Benefit were computed without
giving effect to the limitations on benefits imposed by application of Code
Section 415 (and in the case of a Top Hat Participant, Code Section 401(a)(17))
to plans to which those Sections apply;

LESS

(b) the monthly amount of the Qualified Plan Retirement Benefit payable to the
Participant.

The amounts described in (a) and (b) shall be computed as of the date of
termination of employment of the Participant with the Company and all Affiliates
in the form of a straight life annuity payable over the lifetime of the
Participant only commencing on his Normal Retirement Date.

3.2. Form of Benefit. The Supplemental Retirement Benefit payable to a
Participant shall be paid in the same form under which the Qualified Plan
Retirement Benefit is payable to the Participant. The Participant’s election
under a Qualified Plan of any optional form of payment of his Qualified Plan
Retirement Benefit (with the valid consent of his Surviving Spouse where
required under such Qualified Plan) shall also be applicable to the payment of
his Supplemental Retirement Benefit.

 

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3.3. Commencement of Benefit. Payment of the Supplemental Retirement Benefit to
a Participant shall commence on the same date as payment of the Qualified Plan
Retirement Benefit to the Participant commences. Any election under a Qualified
Plan made by the Participant with respect to the commencement of payment of his
Qualified Plan Retirement Benefit shall also be applicable with respect to the
commencement of payment of his Supplemental Retirement Benefit.

3.4. Actuarial Equivalent. A Supplemental Retirement Benefit which is payable in
any form other than a straight life annuity over the lifetime of the
Participant, or which commences at any time prior to the Participant’s Normal
Retirement Date, shall be the actuarial equivalent of the Supplemental
Retirement Benefit set forth in Section 3.1 above as determined by the same
actuarial adjustments as those specified in the Qualified Plan with respect to
determination of the amount of the Qualified Plan Retirement Benefit on the date
for commencement of payment hereunder or on the last day that any such Qualified
Plan was in effect.

ARTICLE IV.

SUPPLEMENTAL SURVIVING SPOUSE BENEFIT

4.1. Amount. If a Participant dies prior to commencement of payment of his
Qualified Plan Retirement Benefit under circumstances in which a Qualified Plan
Surviving Spouse Benefit is payable to his Surviving Spouse, then a Supplemental
Surviving Spouse Benefit is payable to his Surviving Spouse as hereinafter
provided. The Supplemental Surviving Spouse Benefit payable to a Surviving
Spouse shall be a monthly amount equal to the difference between (a) and
(b) below:

(a) the monthly amount of the Qualified Plan Surviving Spouse Benefit to which
the Surviving Spouse would have been entitled if such Benefit were computed
without giving effect to the limitations on benefits imposed by application of
Code Section 415 (and in the case of the Surviving Spouse of a Top Hat
Participant, Code Section 401(a)(17)) to plans to which those Sections apply;

LESS

(b) the monthly amount of the Qualified Plan Surviving Spouse Benefit payable to
the Surviving Spouse.

4.2. Form and Commencement of Benefit. A Supplemental Surviving Spouse Benefit
shall be payable over the lifetime of the Surviving Spouse only in monthly
installments commencing on the date for commencement to the Surviving Spouse of
payment of the Qualified Plan Surviving Spouse Benefit, and terminating on the
date of the last payment of the Qualified Plan Surviving Spouse Benefit made
before the Surviving Spouse’s death.

 

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ARTICLE V.

ADMINISTRATION OF THE PLAN

5.1. Administration by the Company. The Company, acting through the Committee,
shall be responsible for the general operation and administration of the Plan
and for carrying out the provisions thereof.

5.2. General Powers of Administration. The Company shall have such powers and
duties with respect to the administration of the Plan as are applicable to the
Plan Administrative Committee of Unitrin, Inc. under the Unitrin, Inc.
Retirement Plan for Salaried Employees. The Company shall be entitled to rely
conclusively upon all tables, valuations, certificates, opinions and reports
furnished by any actuary, accountant, treasurer, controller, counsel or other
person employed or engaged by the Company with respect to the Plan.

ARTICLE VI.

AMENDMENT OR TERMINATION

6.1. Amendment or Termination. The Company intends the Plan to be permanent but
reserves the right, subject to Section 6.2, to amend or terminate the Plan when,
in the sole opinion of the Company, such amendment or termination is advisable.
Any such amendment or termination shall be made pursuant to a resolution of the
Board and shall be effective as of the date of such resolution or as specified
therein.

6.2. Effect of Amendment or Termination. No amendment or termination of the Plan
shall, without the express written consent of the affected current or former
Participant or Surviving Spouse, reduce or alter any benefit entitlement (as
defined below) of such Participant or Surviving Spouse. The benefit entitlement
of any Participant or Surviving Spouse whose benefit hereunder shall have
commenced on a date prior to or coincident with the date of a Plan termination
or amendment shall be the amount and form of payment hereunder in effect at the
time of such termination or amendment. The benefit entitlement of any other
Participant or Surviving Spouse shall be the benefit that would be payable
hereunder as a life annuity if payment of the Participant’s Qualified Plan
Retirement Benefit or the Surviving Spouse’s Qualified Plan Surviving Spouse
Benefit were to commence on the date of a Plan termination or amendment;
provided that such benefit entitlement shall not exceed the benefit that would
be subsequently calculated and payable hereunder as a life annuity if the Plan
in effect on the day immediately preceding the date of such Plan termination or
amendment were to continue until the Participant’s Qualified Plan Retirement
Benefit or the Surviving Spouse’s Qualified Plan Surviving Spouse Benefit
actually commences. If the benefit of a Participant is payable in any form other
than a straight-life annuity over the lifetime of the Participant, the
provisions of Section 3.4 shall be applicable in determining the amount of
benefit so payable.

 

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ARTICLE VII.

GENERAL PROVISIONS

7.1. Funding. The Plan at all times shall be entirely unfunded and the Company
shall not be required at any time to segregate any assets of the Company for
payment of any benefits hereunder. No Participant, Surviving Spouse or any other
person shall have any interest in any particular assets of the Company by reason
of the right to receive a benefit under the Plan and any such Participant,
Surviving Spouse or other person shall have only the contractual rights of a
general unsecured creditor of the Company with respect to any rights under the
Plan.

7.2. General Conditions. Except as otherwise expressly provided herein, all
terms and conditions of the Qualified Plan applicable to a Qualified Plan
Retirement Benefit or a Qualified Plan Surviving Spouse Benefit shall also be
applicable to a Supplemental Retirement Benefit or Supplemental Surviving Spouse
Benefit payable hereunder. Any Qualified Plan Retirement Benefit or Qualified
Plan Surviving Spouse Benefit, or any other benefit payable under a Qualified
Plan, shall be paid solely in accordance with the terms and conditions of such
Qualified Plan and nothing in this Plan shall operate or be construed in any way
to modify, amend or affect the terms and provisions of such Qualified Plan.

7.3. No Guaranty of Benefits. Nothing contained in the Plan shall constitute a
guaranty by the Company or any other entity or person that the assets of the
Company will be sufficient to pay any benefit hereunder.

7.4. No Enlargement of Employee Rights. No Participant or Surviving Spouse shall
have any right to a benefit under the Plan except in accordance with the terms
of the Plan. Establishment of the Plan shall not be construed to give any
Participant the right to be retained in the service of the Company.

7.5. Spendthrift Provision. No interest of any person or entity in, or right to
receive a benefit under, the Plan shall be subject in any manner to sale,
transfer, assignment, pledge, attachment, garnishment, or other alienation or
encumbrance of any kind; nor may such interest or right to receive a benefit be
taken, either voluntarily or involuntarily, for the satisfaction of the debts
of, or other obligations or claims against, such person or entity, including
claims for alimony, support, separate maintenance and claims in bankruptcy
proceedings.

7.6. Applicable Law. The Plan shall be construed and administered under the laws
of the State of Illinois.

7.7. Small Benefits. If the actuarial value of any Supplemental Retirement
Benefit or Supplemental Surviving Spouse Benefit is less than or equal to
$25,000, the Company may pay the actuarial value of such Benefit to the
Participant or Surviving Spouse in a single lump sum in lieu of any further
benefit payments hereunder.

7.8. Corporate Successor. The Plan shall not be automatically terminated by a
transfer or sale of assets of the Company or by the reorganization, merger or
consolidation of the Company into or with any other corporation or other entity,
but the Plan shall be continued after

 

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such transfer, sale, reorganization, merger or consolidation only if and to the
extent that the transferee, purchaser or successor entity agrees to continue the
Plan. In the event that the Plan is not continued by the transferee, purchaser
or successor entity, then the Plan shall terminate subject to the provisions of
Section 6.2.

7.9. Unclaimed Benefit. Each Participant shall keep the Company informed of his
current address and the current address of his spouse. The Company shall not be
obligated to search for the whereabouts of any person. If the location of a
Participant is not made known to the Company within three (3) years after the
date on which payment of the Participant’s Supplemental Retirement Benefit may
first be made, payment may be made as though the Participant had died at the end
of the three-year period. If, within one additional year after such three-year
period has elapsed, or, within three years after the actual death of a
Participant, the Company is unable to locate any Surviving Spouse for the
Participant, then the Company shall have no further obligation to pay any
benefit hereunder to such Participant or Surviving Spouse or any other person
and such benefit shall be irrevocably forfeited.

7.10. Limitations on Liability. Notwithstanding any of the preceding provisions
of the Plan, neither the Company nor any individual acting as an employee or
agent of the Company shall be liable to any Participant, former Participant,
Surviving Spouse or any other person for any claim, loss, liability or expense
incurred in connection with the Plan.

The Company has executed the Unitrin, Inc. Pension Equalization Plan on
January 19, 1995.

 

UNITRIN, INC. By:  

/s/ Richard C. Vie

 

President and Chief Executive Officer

 

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FIRST AMENDMENT TO THE UNITRIN, INC. PENSION EQUALIZATION PLAN

as amended and restated effective January 19, 1995

WHEREAS, Unitrin, Inc. (the “Company”) maintains the Unitrin, Inc. Pension
Equalization Plan (the “Plan”) for the purpose of providing benefits in excess
of those which may be provided under the qualified retirement plans maintained
by Unitrin, Inc. and its affiliates, due to limitations imposed by the Internal
Revenue Code of 1986, as amended;

WHEREAS, Section 6.1 of the Plan gives the Company, pursuant to a resolution
adopted by its Board of Directors, the authority to amend the Plan;

WHEREAS, the Board of Directors of the Company has approved this First Amendment
to the Plan;

NOW, THEREFORE, the Plan is hereby amended as of January 1, 2002 as follows:

1. Section 3.1(a) of the Plan is amended in its entirety to read as follows:

“(a) the monthly amount of the Qualified Plan Retirement Benefit to which the
Participant would have been entitled if such Benefit were computed: (1) without
giving effect to the limitations on benefits imposed by application of Code
Section 415 (and in the case of a Top Hat Participant, Code Section 401(a)(17))
to plans to which those Sections apply and (2) by modifying the compensation
used to determine such Benefit by including in compensation any amount which a
Participant elected to have deducted from his compensation on a pre-tax basis
and contributed to a nonqualified deferred compensation plan maintained by the
Company or an Affiliate and excluding from compensation any benefits paid or
payable to the Participant under such deferred compensation plan;

LESS”

2. Section 4.1(a) of the Plan is amended in its entirety to read as follows:

“(a) the monthly amount of the Qualified Plan Surviving Spouse Benefit to which
the Surviving Spouse would have been entitled if such Benefit were computed:
(1) without giving effect to the limitations on benefits imposed by application
of Code Section 415 (and in the case of a Top Hat Participant, Code
Section 401(a)(17)) to plans to which those Sections apply and (2) by modifying
the compensation used to determine such Benefit by including in compensation any
amount which a Participant elected to have deducted from his compensation on a
pre-tax basis and contributed to a nonqualified deferred compensation plan
maintained by the Company or an Affiliate and excluding

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from compensation any benefits paid or payable to the Participant under such
deferred compensation plan;

LESS”

The Company has executed this First Amendment to the Unitrin, Inc. Pension
Equalization Plan on December 17, 2001.

 

UNITRIN, INC.

By:  

/s/ David F. Bengston

Name:

 

David F. Bengston

Title:

 

Vice President

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SECOND AMENDMENT TO THE UNITRIN, INC. PENSION EQUALIZATION PLAN

as amended and restated effective January 19, 1995

WHEREAS, Unitrin, Inc. (the “Company”) maintains the Unitrin, Inc. Pension
Equalization Plan (the “Plan”) for the purpose of providing benefits in excess
of those which may be provided under the qualified retirement plans maintained
by Unitrin, Inc. and its affiliates, due to limitations imposed by the Internal
Revenue Code of 1986, as amended;

WHEREAS, Section 6.1 of the Plan gives the Company, pursuant to a resolution
adopted by its Board of Directors, the authority to amend the Plan;

WHEREAS, the Board of Directors of the Company has authorized the Plan to be
amended to provide that the Board shall have the right to delegate the authority
to amend the Plan;

NOW, THEREFORE, Section 6.1 of the Plan is hereby amended, effective January 1,
2002, by adding the following sentence at the end thereof:

“Notwithstanding the foregoing, the Board may from time to time by specific
resolution delegate its right to amend the Plan to any person or persons and in
such event, such person may take such action to amend the Plan in lieu of the
Board in accordance with this Section.”

The Company has executed this Second Amendment to the Unitrin, Inc. Pension
Equalization Plan on December 17, 2001.

 

UNITRIN, INC.

By:  

/s/ David F. Bengston

Name:

 

David F. Bengston

Title:

 

Vice President