<PAGE>


                                                                    EXHIBIT 10.2

                                  UNITRIN, INC.
                             1997 STOCK OPTION PLAN
                             AS AMENDED AND RESTATED
                                   May 3, 2000

         1.  PURPOSE

         The purpose of the Unitrin, Inc. 1997 Stock Option Plan is to secure
         for Unitrin, Inc. and its shareholders the benefits arising from stock
         ownership by selected executive and other key employees of Unitrin,
         Inc. or its subsidiaries or affiliates and such other persons as the
         Committee (as defined hereafter) may from time to time determine.

         2.  DEFINITIONS

         As used herein, the following words or terms have the meanings set
         forth below:

         "Board" means the Board of Directors of the Company.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
         time, or any successor statute.

         "Committee" means the Stock Option Committee of the Board or any
         successor committee. The Committee shall be composed of two or more
         persons who qualify both as "outside directors" under Section 162(m) of
         the Code and related regulations and "non-employee directors" under
         Rule 16b-3 of the Securities Exchange Act of 1934, or any successor
         provisions.

         "Company" means Unitrin, Inc., a Delaware corporation.

         "Constructive or Actual Delivery" means either: (i) presentation to the
         Company of a recent brokerage account statement or other written
         evidence satisfactory to the Committee evidencing beneficial ownership
         by the Participant of shares of Stock other than shares held in 401(k),
         pension, IRA or similar accounts, or (ii) physical delivery of
         certificates evidencing shares of Stock, properly indorsed for transfer
         to the Company or with an appropriately executed stock power.

         "Disability" means a physical or mental disability of such a nature
         that it would qualify a Participant for benefits under the long-term
         disability insurance plan of Unitrin, Inc., or one of its subsidiaries
         or affiliates.

                                       1

<PAGE>

         "Exercise Price" means the price at which the Stock underlying an
         Option granted under this Plan may be purchased upon exercise of the
         Option.

         "Fair Market Value," as used to refer to the price of a share of Stock
         on a particular day, means the closing price for the Common Stock for
         that day as subsequently reported in The Wall Street Journal, or if no
         prices are quoted for that day, the last preceding day on which such
         prices of Stock are so quoted (or, if for any reason no such price is
         available, in such other manner as the Committee may deem appropriate
         to reflect the fair market value.)

         "ISO" means an Option that satisfies the requirements of Section 422(b)
         of the Code and any regulations promulgated thereunder from time to
         time, or any successor provisions thereto.

         "Non-Qualified Option" means an Option that does not satisfy the
         requirements for an ISO.

         "Option" means an option, including a Non-Qualified Option, an ISO and
         a Restorative Option, granted to a Participant under this Plan to
         purchase a designated number of shares of Stock.

         "Option Agreement" means an agreement between the Company and a
         Participant evidencing the terms and conditions of a particular Option.

         "Participant" means an individual selected by the Committee to receive
         an Option under the Plan.

         "Representative" means an executor, administrator, guardian, trustee or
         other representative of a Participant who has legal authority to
         exercise such Participant's Options or Stock Appreciation Rights on
         behalf of such Participant or such Participant's estate.

         "Restorative Option" means an Option granted to a Participant under
         Section 8 of the Plan.

         "Retirement" means the termination of employment with the Company
         and/or its subsidiaries or affiliates by a Participant after attaining
         age 55, where such Participant does not continue to render services as
         a consultant, advisor or director to the Company or any such
         subsidiaries or affiliates.

         "Stock" means the Common Stock of the Company.

                                       2

<PAGE>

         "Stock Appreciation Right" means a stock appreciation right granted
         pursuant to Section 9 of the Plan.

         "Substantial Cause" means (a) the commission of a criminal act against,
         or in derogation of, the interests of the Company or its subsidiaries
         or affiliates; (b) knowingly divulging confidential information about
         the Company or its subsidiaries or affiliates to a competitor or to the
         public or using such information for personal gain; or (c) the
         performance of any similar action that the Committee, in its sole
         discretion, may deem to be sufficiently injurious to the interests of
         the Company or its subsidiaries or affiliates to constitute substantial
         cause for the termination of services by a Participant as an employee,
         director, consultant or advisor. Nothing in this Plan shall be
         construed to imply that a Participant's employment may only be
         terminated for Substantial Cause.

         3.  THE COMMITTEE

         a) Administration. The Plan shall be administered by the Committee,
         which shall have authority: (i) to construe and interpret the Plan and
         to prescribe, amend and rescind rules and regulations relating to the
         Plan, (ii) to make all determinations as to eligibility pursuant to
         Section 5 of the Plan, (iii) to grant Options and Stock Appreciation
         Rights as more fully described in Section 3(b) below, (iv) to approve
         and determine the duration of leaves of absence which may be granted to
         Participants without constituting a termination of their employment for
         the purposes of the Plan, and (v) to make all other determinations
         necessary or advisable for the administration of the Plan. All
         determinations and interpretations made by the Committee shall be
         binding and conclusive on all Participants and their Representatives,
         successors in interest and beneficiaries. Any action of the Committee
         with respect to administration of the Plan shall be taken by a majority
         vote or written consent of its members.

         b) Granting Authority. Subject to the provisions of the Plan, the
         Committee shall have sole authority and discretion to determine the
         Participants to whom and the time or times at which Options shall be
         granted, whether an Option will be an ISO or a Non-Qualified Option,
         whether to couple a Stock Appreciation Right with an Option and the
         terms of such Right, the number of shares of Stock to be subject to
         each Option, the Exercise Price, the number of installments, if any, in
         which each Option may vest, and the expiration date of each Option.

         4.  SHARES SUBJECT TO PLAN

         Subject to adjustment as provided in Section 14 hereof, the maximum
         number of shares of Stock which may be issued pursuant to the exercise
         of Options and Stock

                                       3

<PAGE>

         Appreciation Rights granted under the Plan shall not exceed four
         million (4,000,000) shares in total. The maximum number of shares that
         may be granted to an individual Participant under the Plan shall be
         one-third of such total. If any Option granted under the Plan shall
         expire or terminate for any reason (other than surrender at the time of
         exercise of a related Stock Appreciation Right provided for in
         paragraph 9 hereof), without having been exercised in full, the
         unpurchased shares subject thereto shall again be available for Options
         to be granted under the Plan. Any shares of Stock that are used by
         Constructive or Actual Delivery as full or partial payment for the
         Exercise Price of an Option and/or the withholding taxes arising from
         the exercise of such Option, or that are withheld from the shares that
         would otherwise be issued upon exercise of such Option in full or
         partial payment of such withholding taxes, shall in each case be added
         to the aggregate number of shares of Stock available for issuance under
         this Plan.

         5.  ELIGIBILITY

         The following persons shall be eligible to receive grants of Options
         and Stock Appreciation Rights under this Plan:

         a) all executive and other key employees of the Company or of any
         subsidiary or affiliate of the Company who are designated as such by
         the Committee in its sole discretion;

         b) directors of the Company who are regular employees of the Company or
         any such subsidiary or affiliate; and

         c) key persons selected by the Committee in its sole discretion who
         render services to the Company or its subsidiaries or affiliates as
         consultants or advisors, but such persons shall only be eligible to
         receive Non-Qualified Options (including Restorative Options issued
         with respect to such Options).

         6.  TERMS OF OPTIONS

         a) Duration. Each Option and all rights associated therewith, shall
         expire on such date as the Committee may determine, subject to earlier
         termination as provided herein. All Options granted under this Plan
         shall be granted on or before December 31, 2006, except for Restorative
         Options which may continue to be granted after December 31, 2006 until
         the expiration dates of the original Options to which such Restorative
         Options relate, subject to the limitations in the last sentence of
         Section 8.

                                       4

<PAGE>

         b) Exercise Price. The Exercise Price of the Stock covered by each
         Option shall be determined by the Committee.

         c) Vesting. Each Option granted under this plan shall vest and be
         exercisable in such installments, if any, during the period prior to
         its expiration date as the Committee shall determine, and, unless
         otherwise specified in an Option Agreement, no Option shall be
         exercisable for at least six months after grant except in the case of
         the death or Disability of the Participant.

         d) Non-Transferability. Unless otherwise provided in an Option
         Agreement, an Option (and any accompanying Stock Appreciation Right)
         granted under the Plan shall, by its terms, be non-transferable by the
         Participant, either voluntarily or by operation of law, otherwise than
         by will or the laws of descent and distribution, and shall be
         exercisable during the Participant's lifetime only by the Participant
         (or, in the case of the incapacity of the Participant, by the
         Participant's Representative) regardless of any community property
         interest therein of the spouse of the Participant, or such spouse's
         successors in interest. If the spouse of the Participant shall have
         acquired a community property interest in such Option (or accompanying
         Stock Appreciation Right), the Participant, or the Participant's
         Representative, may exercise the Option (or accompanying Stock
         Appreciation Right) on behalf of the spouse of the Participant or such
         spouse's successors in interest.

         e) Option Agreements. The terms of each Option granted pursuant to this
         Plan shall be evidenced by an Option Agreement in a form approved by
         the Committee and signed by both the Company and the Participant,
         except that a Restorative Option may be evidenced by a certificate
         reciting the essential terms of such Option and signed only by the
         Company.

         7.  EXERCISE OF OPTIONS

         a) Notice by Participant. Each Participant (or such Participant's
         Representative) who desires to exercise an Option shall give advance
         written notice of such exercise to the Company in such form as may be
         prescribed from time to time by the Committee.

         b) Payment for Exercises. The Exercise Price of an Option shall be paid
         in full at the time of exercise of such Option: (i) by check payable to
         the order of the Company, (ii) by Constructive or Actual Delivery,
         (iii) by wire transfer or other means acceptable to the Committee, (iv)
         if authorized by the Committee, by a promissory note made by the
         Participant in favor of the Company, upon such terms and conditions and
         secured by such collateral as may be required by the

                                       5

<PAGE>

         Committee, or (v) any combination of the foregoing acceptable to the
         Committee. Shares of Stock used by Constructive or Actual Delivery to
         satisfy the Exercise Price of an Option shall be valued at their Fair
         Market Value on the date of exercise.

         c) Partial Exercises. No Option may be exercised for a fraction of a
         share and no partial exercise of any Option may be made for less than
         fifty (50) shares.

         d) Withholding Taxes. Upon the exercise of a Non-Qualified Option or a
         Stock Appreciation Right, the Company shall have the right to: (i)
         require such Participant (or such Participant's Representative) to pay
         the Company the amount of any taxes which the Company may be required
         to withhold with respect to such exercise, or (ii) deduct from all
         amounts paid in cash with respect to the exercise of a Stock
         Appreciation Right the amount of any taxes which the Company may be
         required to withhold with respect to such cash amounts.

         Subject to the limitation set forth in the next sentence, a Participant
         or such Participant's Representative may elect to satisfy all or any
         portion of the tax withholding obligations arising from the exercise of
         an Option or Stock Appreciation Right either by: (i) Constructive or
         Actual Delivery, or (ii) directing the Company to withhold shares that
         would otherwise be issued pursuant to such exercise. With respect to
         exercises of Options and Stock Appreciation Rights granted on or after
         May 5, 1999, no Participant or Participant's Representative shall have
         the right to utilize Constructive or Actual Delivery or have shares of
         Stock withheld in excess of the minimum number required to satisfy
         applicable tax withholding requirements based on minimum statutory
         withholding rates for federal and state tax purposes, including payroll
         taxes. Shares of Stock used in either of the foregoing ways to satisfy
         tax withholding obligations will be valued at their Fair Market Value
         on the date of exercise.

         8.  GRANT OF RESTORATIVE OPTIONS

         Subject to the remaining provisions of this Section 8, if a Participant
         elects to pay some or all of the Exercise Price of an Option (the
         "Underlying Option") and/or any related withholding taxes by
         Constructive or Actual Delivery (or, in the case of such taxes, by
         directing the Company to withhold shares that would otherwise be issued
         upon exercise of such Underlying Option), then such Participant shall
         be granted a Restorative Option to purchase additional shares of Stock.
         The number of shares of Stock subject to the Restorative Option shall
         be equal to the sum of: (a) any shares used by Constructive or Actual
         Delivery to pay the Exercise Price and/or the related withholding
         taxes, and (b) any shares withheld in connection with the exercise in
         payment of withholding taxes. The Exercise Price of the Restorative
         Option shall be equal to one hundred percent (100%) of the Fair

                                       6

<PAGE>

         Market Value of the Stock on the date the Underlying Option is
         exercised. The Restorative Option shall be fully vested beginning six
         months after the date of its grant and shall expire on the expiration
         date of the Underlying Option. All other terms of the Restorative
         Option shall be identical to the terms of the Underlying Option. No
         Restorative Option shall be granted: (i) to any Participant who is not
         actively employed by the Company or one of its subsidiaries or
         affiliates on the date of exercise of the Underlying Option or who is
         not then rendering services to the Company or any such subsidiaries or
         affiliates as a consultant, advisor or director, or (ii) if, on the
         date of exercise of the Underlying Option such Option would be
         scheduled to expire within six months.

         9.  STOCK APPRECIATION RIGHTS

         If deemed appropriate by the Committee, any Option may be coupled with
         a Stock Appreciation Right at the time of the grant of the Option, or
         the Committee may grant a Stock Appreciation Right to any Participant
         at any time after granting an Option to such Participant but prior to
         the expiration date of such associated Option. Such Stock Appreciation
         Right shall be subject to such terms and conditions consistent with the
         Plan as the Committee shall impose, provided that:

         (a) A Stock Appreciation Right shall be exercisable to the extent, and
         only to the extent, the associated Option is exercisable and shall be
         exercisable only for such period as the Committee may determine (which
         period may expire prior to the expiration date of the Option);

         (b) A Stock Appreciation Right shall entitle the Participant to
         surrender to the Company unexercised the Option to which it is related,
         or any portion thereof, and to receive from the Company in exchange
         therefor that number of shares (rounded down to the nearest whole
         number) having an aggregate value equal to the excess of the Fair
         Market Value of one share over the Exercise Price per share specified
         in such Option, multiplied by the number of shares subject to the
         Option, or portion thereof, which is so surrendered; and

         (c) The Committee may elect to settle, or the Stock Appreciation Right
         may permit the Participant to elect to receive (subject to approval by
         the Committee), any part or all of the Company's obligation arising out
         of the exercise of a Stock Appreciation Right by the payment of cash
         equal to the aggregate Fair Market Value of that part or all of the
         shares it would otherwise be obligated to deliver, provided that in no
         event shall cash be payable to an officer or director of the Company
         upon exercise of a Stock Appreciation Right: (i) if the Stock
         Appreciation Right was exercised during the first six months of its
         term; or (ii)

                                       7

<PAGE>

         unless the transaction is otherwise exempt from the operation of
         Section 16(b) of the Securities Exchange Act of 1934.

         10.  HOLDING OF STOCK AFTER EXERCISE OF OPTION

         At the discretion of the Committee, any Option Agreement may provide
         that the Participant, by accepting such Option, represents and agrees,
         for the Participant and the Participant's permitted transferees, that
         none of the shares purchased upon exercise of the Option or any
         accompanying Stock Appreciation Right will be acquired with a view to
         any sale, transfer or distribution of said shares in violation of the
         Securities Act of 1933, as amended, and the rules and regulations
         promulgated thereunder, or any applicable state "blue sky" laws, and
         the person entitled to exercise the same shall furnish evidence
         satisfactory to the Company (including a written and signed
         representation) to that effect in form and substance satisfactory to
         the Company, including an indemnification of the Company in the event
         of any violation of the Securities Act of 1933 or state blue sky law by
         such person.

         11.  CESSATION OF SERVICES

         Unless otherwise specified in an Option Agreement or approved in
         writing by the Committee, if a Participant ceases to provide services
         to any of the Company, its subsidiaries and affiliates as an employee,
         director, consultant or advisor, other than as a result of the
         Participant's Retirement, death or Disability, the Participant's
         outstanding Options (and any accompanying Stock Appreciation Rights)
         shall, to the extent such Options are already vested, be exercisable
         for a period of 90 days after the date such Participant ceases to
         provide all such services and shall thereafter expire and be void and
         of no further force or effect. A leave of absence approved in writing
         by the Committee shall not be deemed a cessation of services for
         purposes of this paragraph, but no Option (or accompanying Stock
         Appreciation Right) may be exercised during any such leave of absence,
         except during the first 90 days thereof unless otherwise agreed to in
         writing by the Committee. If a Participant's services as an employee,
         director, consultant or advisor are terminated for Substantial Cause,
         all of the Participant's outstanding Options (and accompanying Stock
         Appreciation Rights) will terminate as of the date of such termination.

         12.  RETIREMENT, DEATH OR DISABILITY OF PARTICIPANT

         Upon the Retirement of a Participant or upon such Participant's death
         or Disability while employed by the Company or one of its subsidiaries
         or affiliates or while such Participant was providing services thereto
         as a director, consultant or advisor,

                                       8

<PAGE>

         the Participant's outstanding Options (and any accompanying Stock
         Appreciation Rights) shall expire one (1) year after the date of such
         Retirement, death or Disability unless by their terms they expire
         sooner. During such period after the death of a Participant, such
         Options (and any accompanying Stock Appreciation Rights) may, to the
         extent that they were vested but unexercised on the date of death, be
         exercised by the Participant's Representative.

         13.  PRIVILEGES OF STOCK OWNERSHIP

         No Participant shall have any of the rights or privileges of a
         shareholder of the Company in respect of any shares of Stock issuable
         upon exercise of any Option or Stock Appreciation Right until
         certificates representing such shares shall have been issued and
         delivered. No shares shall be issued and delivered upon the exercise of
         any Option or accompanying Stock Appreciation Rights unless and until
         there shall have been full compliance with all applicable requirements
         of the Securities Act of 1933 (whether by registration or satisfaction
         of exemption conditions), all applicable listing requirements of The
         Nasdaq Stock Market or any national securities exchange on which shares
         of the same class are then listed and any other requirements of law or
         of any regulatory bodies having jurisdiction over such issuance and
         delivery.

         14.  ADJUSTMENTS

         If the outstanding shares of the Stock of the Company are increased,
         decreased, changed into or exchanged for a different number or kind of
         shares of securities of the Company through reorganization,
         recapitalization, reclassification, stock dividend, stock split,
         reverse stock split or other similar transaction, an appropriate and
         proportionate adjustment shall be made in the maximum number and kind
         of shares as to which Options (and accompanying Stock Appreciation
         Rights) may be granted under this Plan. A corresponding adjustment
         changing the number or kind of shares allocated to unexercised Options
         or portions thereof, which shall have been granted prior to any such
         change, shall likewise be made. Any such adjustment in an outstanding
         Option shall be made without change in the aggregate purchase price
         applicable to the unexercised portion of such Option but with a
         corresponding adjustment in the Exercise Price for each share or other
         unit of any security covered by the Option. The share limit in Section
         4 of this Amended and Restated Plan has been restated in accordance
         with this Section 14 to reflect the Company's 2-for-1 stock split
         effective March 26, 1999.

         Upon the dissolution or liquidation of the Company, or upon a
         reorganization, merger or consolidation of the Company with one or more
         corporations as a result of which the Company is not the surviving
         corporation, or upon a sale of

                                       9

<PAGE>

         substantially all the property or more than eighty percent (80%) of the
         then outstanding Stock of the Company to another corporation, this Plan
         shall terminate; provided, however, that notwithstanding the foregoing,
         the Board shall provide in writing in connection with such transaction
         for any one or more of the following alternatives (separately or in
         combinations); (i) for each Option and any accompanying Stock
         Appreciation Rights theretofore granted to become immediately
         exercisable notwithstanding the provisions of Section 6(c) hereof, (ii)
         for the assumption by the successor corporation of the Options and
         Stock Appreciation Rights theretofore granted or the substitution by
         such corporation for such Stock Appreciation Rights theretofore granted
         or the substitution by such corporation for such Options and rights of
         new Options and rights covering the stock of the successor corporation,
         or a parent or subsidiary thereof, with appropriate adjustments as to
         the number and kind of shares and prices; (iii) for the continuance of
         the Plan by such successor corporation in which event the Plan and the
         Options and any accompanying Stock Appreciation Rights therefore
         granted shall continue in the manner and under the terms so provided;
         or (iv) for the payment in cash or stock in lieu of and in complete
         satisfaction of such Options and rights.

         Adjustments under this paragraph shall be made by the Committee, whose
         determination as to which adjustments shall be made, and the extent
         thereof, shall be final, binding and conclusive. No fractional shares
         of Stock shall be issued under the plan on any such adjustment.

         At the discretion of the Committee, any Option Agreement may contain
         provisions to the effect that upon the happening of certain events,
         including a change in control (as defined by the Committee in such
         Option Agreement) of the Company, any outstanding Options and
         accompanying Stock Appreciation Rights not theretofore vested shall
         immediately become vested and exercisable in their entirety,
         notwithstanding any of the other provisions of the Option.

         15.  AMENDMENT AND TERMINATION OF PLAN

         The Board may at any time suspend or terminate the Plan or amend or
         revise the terms of the Plan. In the event that any provision of
         applicable law mandates that any such amendment or revision be approved
         by the Company's shareholders, then such amendment or revision shall be
         submitted to such shareholders for approval or ratification within a
         time period that satisfies such law. In the case of other laws that
         require shareholder approval of amendments or revisions as a condition
         to receiving or preserving certain benefits (e.g., deductibility of
         certain compensation under Section 162(m) of the Code) or achieving a
         "safe harbor" status, the Board

                                       10

<PAGE>

         shall have sole discretion to determine whether or not to submit
         amendments and revisions to the Company's shareholders for approval.

         Notwithstanding the foregoing, no amendment, suspension or termination
         of the Plan shall, without specific action of the Board and the consent
         of the Option holder, in any way modify, amend, alter or impair any
         rights or obligations under any Option or accompanying Stock
         Appreciation Right theretofore granted under the Plan.

                                       11

<PAGE>

                         AMENDMENT TO THE UNITRIN, INC.
                             1997 STOCK OPTION PLAN
                             As Amended and Restated
                                   May 3, 2000

WHEREAS, Section 157(c) of the Delaware General Corporation Law permits a board
of directors of a Delaware corporation to delegate to one or more officers of
such corporation the power to designate the persons to whom options to purchase
shares of such corporation's stock may be granted and the number and terms of
such options;

WHEREAS, Unitrin, Inc. (the "Company") is a Delaware corporation and has options
available for grant under the Unitrin, Inc. 1997 Stock Option Plan (the "Plan");

WHEREAS, the Board of Directors has concluded that it is in the best interest of
the Company to amend the terms of the Plan to permit such a delegation upon the
conditions described below;

RESOLVED, that effective immediately, paragraph (b) of Section 3 of the Plan is
hereby amended to read in its entirety as follows:

(b) Granting Authority. Subject to the provisions of the Plan, the authority and
discretion to determine the Participants to whom and the time or times at which
Options shall be granted, whether an Option will be an ISO or a Non-Qualified
Option, whether to couple a Stock Appreciation Right with an Option and the
terms of such Right, the number of shares of Stock to be subject to each Option,
the Exercise Price, the number of installments, if any, in which each Option may
vest, and the expiration date of each Option shall reside with the following
persons:

               (i)  the Committee; and

               (ii) if authorized by a resolution adopted by the Board, one or
more executive officers of the Company may be delegated such authority and
discretion, provided that no such officer may grant Options or Rights to himself
or herself or to any officer of the Company who is subject to the reporting and
short-swing liability provisions of Section 16 of the Securities Exchange Act of
1934.

The Company has executed this Amendment this 7th day of November, 2001.

                                                      UNITRIN, INC.


                                                      By:  /s/ Scott Renwick
                                                           ---------------------
                                                           Scott Renwick
                                                           Secretary

                                       12