Document:

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                                                                    EXHIBIT 10.3

                                  UNITRIN INC.
                                  -----------

                  1995 Non-Employee Director Stock Option Plan
                  --------------------------------------------
                              Amended and Restated
                              --------------------
                                   May 3, 2000
                                   -----------

1.  Purpose.
    -------

    The purpose of this 1995 Non-Employee Director Stock Option Plan ("Plan") of
Unitrin, Inc. ("Company") is to encourage ownership in the Company by
non-employee directors of the Company and to attract and retain qualified
non-employee personnel to serve as directors of the Company.

2.  Administration.
    --------------

    The Plan will be administered by a committee or committees (which term
includes subcommittees) consisting of two or more persons appointed by the Board
of Directors of the Company. The composition of any committee responsible for
administration of the Plan shall comply with the applicable requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Members of a
committee will serve for such term as the Board of Directors may determine,
subject to removal by the Board of Directors at any time. With respect to any
matter, the term "Committee" refers to the committee that has been delegated
authority with respect to such matter.

    Subject to the provisions of the Plan, the Committee shall have authority:
(i) to construe and interpret the Plan; (ii) to define the terms used herein;
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan; (iv) to make such changes to the Plan as may become necessary or advisable
to comply with the Exchange Act or other legal requirements; 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 in the Plan and their legal representatives
and beneficiaries.

3.  Shares Subject to the Plan.
    --------------------------

    The shares to be offered under the Plan shall consist of authorized but
unissued shares or treasury shares of the Company's common stock ("Common
Stock") and, subject to adjustment as provided in paragraph 13 hereof, the
aggregate amount of Common Stock which may be subject to options granted
pursuant to paragraphs 5a, 5b and 5c hereunder ("Options") shall not exceed
400,000 shares. If any Option granted under the Plan shall expire or terminate
for any reason, without having been exercised or vested in full, as the case may
be, the unpurchased shares subject thereto shall again be available for Options
to be granted under the Plan. Options granted under the Plan will not be
qualified as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended ("Code"). All Options granted under the Plan shall be
granted on or before

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August 2, 2005, except for restorative options which may continue to be granted
after August 2, 2005 until the expiration dates of the original options to which
such restorative options relate, subject to the limitation in the last sentence
of paragraph 5f.

4.  Eligibility.
    -----------

    Each director of the Company who first becomes a director after November 1,
1993 and is not an employee of the Company or any subsidiary of the Company and
each director who has retired as an employee of the Company or a subsidiary of
the Company shall be eligible to participate in the Plan ("Eligible Directors").
Each Option granted under the Plan shall be governed by an agreement in such
form as the Committee shall from time to time approve.

5.  Stock Option Grants.
    -------------------

    a. Initial Option Grants.
       ---------------------

       An Option covering 4,000 shares of Common Stock shall be granted to such
director on the date that he or she first becomes an Eligible Director.

    b. Annual Option Grants.
       --------------------

       An Option covering 4,000 shares of Common Stock will be granted to each
Eligible Director automatically at the conclusion of each Company Annual
Meeting.

    c. Retainer Option Grants.
       ----------------------

       Eligible Directors may file with the Committee or its designee at least
six months prior to the commencement of a fiscal year of the Company ("Plan
Year") an irrevocable election to receive an Option in lieu of the Annual
Retainer for service during the Plan Year ("Retainer Option"). Retainer Options
will be granted on January 2 of a Plan Year (or if January 2 is not a business
day, on the next succeeding business day) for service during such Plan Year. The
number of shares of Common Stock to be subject to a Retainer Option shall be
equal to the nearest number of whole shares determined by dividing the Annual
Retainer by the fair market value of a share of Common Stock on the date of
grant. For these purposes "Annual Retainer" shall mean the amount of money which
the Eligible Director would be entitled to receive for serving as a director
during the Plan Year, but shall not include the amount of money which the
Eligible Director would be entitled to receive for any other services to be
provided to the Company.

       Notwithstanding the foregoing, elections to receive Retainer Options may
be made at any time during a Plan Year so long as such elections are made at
least six months in advance of receiving the corresponding Retainer Options and
the director making such election first becomes an Eligible Director less than
six months before the commencement of the subject Plan Year. In any such case,
the Retainer Option shall be granted on the first business day which is six
months and one day after the date of the director's election to receive a
Retainer Option. Such Retainer Option shall pertain only

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to that portion of the Annual Retainer remaining to be paid during such Plan
Year on or after the date of grant.

    d. Duration of Options.
       -------------------

       Subject to paragraph 9, below, each Option granted pursuant to this
paragraph 5 and all rights associated therewith shall expire ten years from the
date of grant.

    e. Purchase Price.
       --------------

       The purchase price of the stock covered by each Option shall be the fair
market value (as defined in paragraph 6) of a share of Common Stock as of the
date of the grant of such Option.

    f. Exercise of Options.
       -------------------

       Options granted hereunder shall be exercisable during an Option holder's
lifetime only by the Option holder or by his or her guardian or legal
representative. Each Option granted under this Plan shall be exercisable in full
one year after the date of the grant. No Option may be exercised for a fraction
of a share and no partial exercise of any Option may be for less than: (i) one
hundred (100) shares; or (ii) the total number of shares then eligible for
exercise, if less than one hundred (100) shares.

       The purchase price for the shares shall be paid in full at the time of
exercise: (i) in cash or by check payable to the order of the Company; (ii) by
constructive or actual delivery of shares of Common Stock already owned by, and
in the possession of, the Option holder; (iii) by wire transfer to an account
specified by the Company or (iv) by delivering a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly to
the Company the amount of sale or loan proceeds to pay the Option price (in
which case the exercise will be effective upon receipt of such proceeds by the
Company). Shares of Common Stock used to satisfy the exercise price of an Option
shall be valued at their fair market value determined in accordance with
paragraph 6 hereof. For purposes hereof, the term "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 an Eligible Director of shares of Common
Stock other than shares held in 401(k), pension, IRA or similar accounts, or
(ii) physical delivery of certificates evidencing shares of Common Stock,
properly indorsed for transfer to the Company or with an appropriately executed
stock power.

       Subject to the remaining provisions of this paragraph 5f, if an Eligible
Director elects to pay some or all of the exercise price of an Option granted on
or after May 3, 2000 (the "Underlying Option") by constructive or actual
delivery, then such Eligible Director shall be granted an Option to purchase
additional shares of Common Stock equal to the number of shares used by
constructive or actual delivery to pay the exercise price (a "restorative
option"). The exercise price of a restorative option shall be equal to one

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hundred percent (100%) of the fair market value of the Common 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 if, on the date of exercise of the Underlying Option
such Option would be scheduled to expire within six months.

6.  Fair Market Value of Common Stock.
    ---------------------------------

    For purposes of the Plan, the fair market value of a share of Common Stock
shall be determined by reference to the closing price on the Nasdaq Stock Market
(or the principal stock exchange on which the Common Stock is then listed) or,
if the Common Stock is not then listed on the Nasdaq Stock Market (or on a stock
exchange), by reference to the mean between the bid and asked price of a share
as supplied by the National Association of Securities Dealers (or its successor
in function), in each case as reported by The Wall Street Journal, for the date
on which the Option is granted or exercised, as the case may be, or if such date
is not a business day, for the business day immediately preceding such date or,
if for any reason no such price is available for such date, then by reference to
the most recent closing price or the mean between the bid and asked price of a
share for the last date on which the Common Stock was traded.

7.  Withholding Tax.
    ---------------

    Upon the exercise of Options issued hereunder, the Company shall have the
right to require the Option holder to pay the Company the amount of taxes, if
any, which the Company may be required to withhold with respect to such shares.

8.  Transferability.
    ---------------

    Options granted hereunder shall not be transferable, other than by will or
the laws of descent and distribution, except to the extent: (i) transfer is
permitted by Rule 16b-3 of the Exchange Act; and (ii) approved by the Committee.
Subject to the foregoing, Options shall not be assigned, pledged or otherwise
encumbered by the holder thereof, either voluntarily or by operation of law.

9.  Termination of Directorship.
    ---------------------------

    All rights of a director in an Option, to the extent that the Option has not
been exercised, shall terminate three months after the date of the termination
of his or her services as a director for any reason other than: (i) the death of
the director; (ii) cessation of services as a director because the individual,
although nominated by the Board of Directors, is not elected by the shareholders
to the Board of Directors; or (iii) retirement because of total and permanent
disability as defined in Section 22(e)(3) of the Code (collectively,
"Termination Events"). If a director ceases to be a director of the Company
because of a Termination Event, his or her unvested Options shall vest
immediately. All vested Options shall expire twelve months after the date of a
Termination Event.

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10. No Right to Continue as a Director.
    ----------------------------------

    Neither the Plan nor the granting of an Option under the Plan shall
constitute or be evidence of any agreement or understanding that any director
has a right to continue as a director for any period of time or at any
particular rate of compensation.

11. Restrictions on Disposition of Shares.
    -------------------------------------

    Each Option shall provide that the holder, by accepting such Option,
represents and agrees, for the Option holder and the Option holder's permitted
transferees, that none of the shares acquired upon exercise of such Option will
be acquired with a view towards 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 "blue sky" laws, and the
holder of such Option 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 by such person of the Securities Act of
1933, as amended, or state blue sky law.

12. Privileges of Stock Ownership.
    -----------------------------

    No Option holder shall have any of the rights or privileges of a shareholder
of the Company in respect of any shares of Common Stock issuable with respect to
such Option until certificates representing such shares shall have been issued
and delivered. No shares shall be issued and delivered upon the exercise of an
Option unless and until there shall have been full compliance with all
applicable requirements of the Securities Act of 1933, as amended (whether by
registration or satisfaction of exemption conditions), all applicable listing
requirements of the National Association of Securities Dealers 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.

13. Adjustments.
    -----------

    If the outstanding shares of the Common Stock are increased, decreased,
changed into or exchanged for a different number or kind of shares or 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 may be granted under this Plan. A
corresponding adjustment changing the number or kind of shares allocated to
unexercised Options, which shall have been granted prior to any such change, and
to the number of shares covered by initial and annual Option grants under
paragraph 5, shall likewise be made. Any such adjustment in the outstanding
Options shall be made without change in the aggregate purchase price applicable
to the unexercised portion of the Options but with a corresponding adjustment in
the price for each share or other unit of security covered by the Option. Share
amounts

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specified in paragraphs 3, 5a and 5b of this Amended and Restated Plan have been
restated in accordance with this paragraph 13 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 substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, the
Plan shall terminate, and all Options theretofore granted shall immediately
become exercisable.

    No fractional shares of stock shall be issued under the Plan on any such
adjustment.

14. Amendment and Termination of Plan.
    ---------------------------------

    The Board of Directors may at any time terminate the Plan. The Board of
Directors may also at any time amend or revise the terms of the Plan, provided
that no such amendment or revision shall become effective without the approval
of the Company's shareholders if such approval is required in order to comply
with Rule 16b-3 of the Exchange Act or any other applicable law or regulation.
Notwithstanding the foregoing, Plan provisions relating to the amount, price and
timing of Options may be amended only by action of the shareholders, but not
more than once every six months, other than to comport with changes in the Code
or the Employee Retirement Income Security Act of 1974, as amended, or the rules
in effect thereunder.

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

                                        6<PAGE>

                                                                    EXHIBIT 10.4

         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

<PAGE>

         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

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