Re: Amendment to Note Purchase and Private Shelf Agreement

Reference is made to that certain Amended and Restated Note Purchase and Private Shelf Agreement dated as of September 20, 2002 (as amended prior to the date hereof, the "Note Agreement") among The Steak N Shake Company, an Indiana corporation (the "Company"), Prudential Investment Management, Inc., The Prudential Insurance Company of America and each Prudential Affiliate which may become a party thereto in accordance with the terms thereof (collectively, "Prudential"), pursuant to which the Company issued and sold and Prudential purchased the Company’s senior fixed rate notes from time to time. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Note Agreement.

Pursuant to the request of the Company and in accordance with the provisions of paragraph 11C of the Note Agreement, the parties hereto agree as follows:

SECTION 1 . Amendment . From and after the date this letter becomes effective in accordance with its terms, the Agreement is amended as follows:

1.1   Paragraph 2B(2) of the Agreement is amended to delete in its entirety clause (i) thereof and to substitute therefor the following: "(i) September 30, 2008 (or if such date is not a Business Day, the Business Day next preceding such date) and".

1.2   The Company and Prudential expressly agree and acknowledge that as of the date hereof the Available Facility Amount is $75,000,000. NOTWITHSTANDING THE FOREGOING, THIS AMENDMENT AND THE AGREEMENT HAVE BEEN ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE (AS SUCH TERM IS DEFINED IN THE AGREEMENT AFTER GIVING EFFECT TO THIS LETTER)   SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.

1.3   Paragraph 6 of the Agreement is amended by inserting the following new paragraph 6C(10) immediately after paragraph 6C(9):

" 6C(10). Terrorism Sanction Regulations. The Company will not, and will not permit any Subsidiary, to (i) become a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (ii) engage in any dealings or transactions with any such Person."

1.4   Paragraph 6C(5) of the Agreement is amended by replacing the reference to "6C(6)" with a reference to "6C(7)" and by replacing the reference to "6C(4)" with a reference to "6C(5)".

1.5   Paragraph 6C(7) of the Agreement is amended by replacing the references to "6C(4)" with references to "6C(5)".

1.6   Paragraph 8 of the Agreement is amended by inserting the following new paragraph 8Q immediately after paragraph 8P:

" 8Q.   Foreign Assets Control Regulations, Etc. (i) (a) Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CF