1. |
Purpose:
The purpose of the 2006 Stock Option Plan (the "Plan") is to secure
for
the Company and its shareholders the benefits inherent in common
stock
ownership by the officers and key employees of the Company who will
be
largely responsible for the Company's future growth and continued
financial success by providing long-term incentives, in addition
to
current compensation, to certain key executives of the Company who
contribute significantly to the long-term performance and growth
of the
Company. It is intended that these purposes will be furthered through
the
granting of options to purchase shares of the Company’s common
stock.
|
2. |
Definitions:
For purposes of this Plan:
|
(a) |
"Affiliate"
shall mean any entity in which the Company has, directly or indirectly,
an
ownership interest of at least 25%.
|
(b) |
"Award"
shall mean an award of options granted under this
Plan.
|
(c) |
"Code"
shall mean the Internal Revenue Code of 1986, as
amended.
|
(d) |
"Common
Stock" shall mean the Company's common
stock.
|
(e) |
"Company"
shall mean The Steak n Shake Company and its Subsidiaries and
Affiliates.
|
(f) |
"Disability"
or "Disabled" shall mean qualifying for and receiving payments under
the
Company’s Long-Term Disability
Plan.
|
(g) |
"Exchange
Act" shall mean the Securities Exchange Act of 1934, as
amended.
|
(h) |
"Fair
Market Value" shall mean the closing price of a share of Common Stock
on
the New York Stock Exchange on the date of measurement or on any
date as
determined by the Committee and, if there were no trades on such
date, on
the day on which a trade occurred next preceding such
date.
|
(i) |
"Retirement"
shall mean termination of the employment of an employee with the
Company
on terms that would entitle such person to obtain benefits under
the
Company’s 401k and Profit Sharing Plan or any successor
plan.
|
(j) |
"Subsidiary"
shall mean any corporation which at the time qualifies as a subsidiary
of
the Company under the definition of "subsidiary corporation" in Section
424 of the Code.
|
3. |
Amount
of Stock:
|
4. |
Administration:
|
5. |
Eligibility
:
|
6. |
Qualifying
Performance Criteria
:
|
1. |
cash
flow or free cash flow,
|
2. |
earnings
per share,
|
3. |
earnings
before interest, taxes and
amortization,
|
4. |
return
on equity,
|
5. |
same
store sales,
|
6. |
total
shareholder return,
|
7. |
sales
or revenue,
|
8. |
income
or net income,
|
9. |
operating
income or net operating income,
|
10. |
operating
profit or net operating profit,
|
11. |
operating
margin or profit margin,
|
12. |
return
on operating revenue,
|
13. |
return
on invested capital,
|
14. |
market
segment share,
|
15. |
brand
recognition/acceptance, or
|
16. |
customer
satisfaction.
|
7. |
Stock
Options.
|
8. |
Forfeiture
of Awards; Recapture of Benefits
:
|
9. |
Determination
of Breach of Conditions:
|
10. |
Adjustment
of and Changes in the Common
Stock:
|
11. |
Taxes:
|
12. |
Change
in Control:
|
13. |
Amendment
of the Plan
:
|
(a) |
increase
the limitations in Section 3;
|
(b) |
reduce
the price at which stock options may be granted to below Fair Market
Value
on the date of grant;
|
(c) |
reduce
the option price of outstanding stock
options;
|
(d) |
extend
the term of this Plan; or
|
(e) |
change
the class of persons eligible to be
participants.
|
14. |
Miscellaneous
:
|
15. |
Term
of the Plan, Termination of Prior Plan
:
|
16. |
Grants
in Connection with Corporate Transactions and
Otherwise
:
|
17. |
Governing
Law
:
|
18. |
Unfunded
Plan:
|
19. |
Compliance
with Other Laws and Regulations
:
|
20. |
Liability
of Company:
|
(b) |
"Award"
means the opportunity to earn cash compensation under this Plan,
subject
to the achievement of one or more Performance Goals and such other
terms
and conditions as the Committee may
impose.
|
(d) |
"Cause"
means a Participant’s commission of any act or acts involving dishonesty,
fraud, illegality or moral
turpitude.
|
(i) |
any
acquisition directly from the
Company,
|
(ii) |
any
acquisition by the Company,
|
(iii) |
any
acquisition by any employee benefit plan (or related trust) sponsored
or
maintained by the Company or any entity controlled by the Company,
or
|
13. |
Miscellaneous:
|
1.
|
Grant
of Options
.
The Company hereby grants to the Grantee the right and option to
purchase,
on the terms and conditions hereinafter set forth, all or any part
of an
aggregate of
______
shares (hereinafter called "Subject Shares") of the presently authorized,
but unissued, or treasury Common Stock of the Company at a purchase
price
of $_____per share, exercisable in whole or in part from time to
time
subject to the limitation that no option may be exercised with respect
to
fewer than one hundred (100) shares unless there are fewer than one
hundred (100) shares then subject to purchase hereunder, in which
event
any exercise must be as to all such shares and subject to the further
limitation that the options represented by this Agreement shall be
exercisable only at such times and in such amounts as are set forth
on
Schedule I, attached hereto and made a part hereof. The option shall
expire as to all Subject Shares on the
tenth
anniversary date of this Agreement if not exercised on or before
such
date.
|
2.
|
Regulatory
Compliance
.
This option may not be exercised until all applicable federal and
state
securities requirements pertaining to the offer and sale of the securities
issued pursuant to the Plan have been met and the Company has been
advised
by counsel that all applicable requirements have been
met.
|
3.
|
Exercise
of Options
.
Subject to the limitation specified in Section 2 and Schedule I hereof,
the Grantee may from time to time exercise this option by delivering
a
written notice of exercise and subscription agreement to the Secretary
of
the Company specifying the number of whole shares to be purchased,
accompanied by payment in cash, by certified check, or bank cashier's
check, of the aggregate option price of such number of shares; provided,
however, that the Grantee may, with the approval of the Company's
Compensation Committee (the "Committee"), make payment in the form
of
delivery to the Company of Common Stock of the Company owned by the
Grantee, the fair market value of which equals the aggregate option
price,
or by payment partially in cash and partially in Common Stock of
the
aggregate option price. For this purpose, any shares so tendered
by the
Grantee shall be deemed to have a fair market value equal to the
average
of the closing sales price for the shares on the New York Stock Exchange
for the five trading days preceding the date of the exercise of the
option. Only the Grantee may exercise the option during the lifetime
of
the Grantee. No fractional shares may be purchased at any time
hereunder.
|
4.
|
Termination
of Employment
.
If the Grantee ceases to be an employee of the Company or any of
its
subsidiaries for any reason other than retirement, permanent and
total
disability, or death, this option shall forthwith terminate. If the
Grantee's employment by the Company or any of its subsidiaries is
terminated by reason of retirement (which means such termination
of
employment as shall entitle the Grantee to benefits under the Company's
401k Plan or any successor plan of the Company or one of its
subsidiaries), the Grantee may exercise this option in whole or in
part at
any time within three months after such retirement, but not later
than the
date upon which this option would otherwise expire. If the Grantee
ceases
to be an employee of the Company or any of its subsidiaries because
of
permanent or total disability, the Grantee may exercise this option
in
whole or in part at any time within one year after such termination
of
employment by reason of such disability, but not later than the date
upon
which this option would otherwise expire. The foregoing exercise
provisions apply whether or not this option was otherwise vested
at the
date of the Grantee's retirement or termination of employment because
of
permanent and total disability.
|
5.
|
Death
of Grantee
.
If the Grantee dies while employed by the Company or any of its
subsidiaries, within three months after the termination of his employment
because of retirement, or within one year after the termination of
his
employment because of permanent or total disability, this option
may be
exercised in whole or in part by the executor, administrator, or
estate
beneficiaries of the Grantee at any time after the date of the Grantee's
death but not later than the date upon which this option would otherwise
expire. The foregoing exercise provisions apply whether or not this
option
was otherwise vested at the date of the Grantee's
death.
|
6.
|
Delivery
of Certificates
.
Upon the effective exercise of the option, or any part thereof,
certificates representing the shares so purchased, marked fully paid
and
non-assessable shall be delivered to the person who exercised the
option
as soon as the Company is reasonably able to do so. Until certificates
representing such shares shall have been issued and delivered, the
Grantee
shall not have any of the rights or privileges of a shareholder of
the
Company in respect of any of such
shares.
|
7.
|
Stock
Splits or Dividends
.
In the event that prior to the delivery by the Company of all the
Subject
Shares, there shall be an increase or reduction in the number of
shares of
Common Stock of the Company issued and outstanding by reason of any
subdivision or consolidation of the Common Stock or any other capital
adjustment, the number of shares then subject to this option shall
be
increased or decreased as provided in the
Plan.
|
8.
|
No
Assignment
.
The option and the rights and privileges conferred by this Option
Agreement shall not be assigned or transferred by the Grantee in
any
manner except by will or under the laws of descent and distribution.
In
the event of any attempted assignment or transfer in violation of
this
paragraph, the option, rights and privileges conferred by this Stock
Option Agreement shall become null and
void.
|
9.
|
Employment
at Will
.
Nothing herein contained shall be deemed to create any limitation
or
restriction upon such rights as the Company would otherwise have
to
terminate a person as an employee of the
Company.
|
10.
|
Notices
.
Any notices to be given or served under the terms of this Option
Agreement
shall be addressed to the Secretary of the Company at 36 South
Pennsylvania Street, Indianapolis, Indiana, 46204, and to the Grantee
at
the address set forth on page one of this Stock Option Agreement,
or such
other address or addresses as either party may hereafter designate
in
writing to the other. Any such notice shall be deemed to have been
duly
given or served, if and when enclosed in a properly sealed envelope
addressed as aforesaid, postage prepaid, and deposited in the United
States mail or set via reputable overnight
carrier.
|
11.
|
Interpretation
of Agreement and Plan
.
The interpretation by the Committee of any provisions of the Plan
or of
this Stock Option Agreement shall be final and binding on the Grantee
unless otherwise determined by the Company's Board of
Directors.
|
12.
|
Controlling
Document
.
This option is subject to all the terms, provisions and conditions
of the
Plan, which is incorporated herein by reference and to such regulations
as
may from time to time be adopted by the Committee. A copy of the
Plan will
be furnished to the Grantee upon request and is available for free
on the
Company’s web site,
www.steaknshake.com
in
the Company’s 2006 Proxy Statement. In the event of any conflict between
the provisions of the Plan and the provisions of this Stock Option
Agreement, the terms, conditions and provisions of the Plan shall
control,
and this Stock Option Agreement shall be deemed to be modified
accordingly.
|
13.
|
Incentive
Stock Options
.
This Stock Option Agreement is intended to grant an option which
meets the
requirements of stock options as defined in Section 422A of the Internal
Revenue Code. Subject to and upon the terms, conditions and provisions
of
the Plan, each and every provision of this Stock Option Agreement
shall be
administered, construed and interpreted so that the option granted
herein
shall qualify as an incentive stock
option.
|
14.
|
Governing
Law
.
This Stock Option Agreement shall be governed by the laws of the
State of
Indiana. Any suit filed regarding this Agreement shall be venued
only in
the Federal District Court for the Southern District of Indiana,
Indianapolis, Indiana.
|
I. |
Introduction
|
II. |
The
Marketplace
|
· |
Commitment
|
· |
Compliance
with Laws, Rules and Regulations
|
· |
Payments
to Government Personnel
|
· |
Political
Contributions
|
· |
Competition
and Fair Dealing
|
· |
Soliciting
Suppliers, Consultants and Business
Partners
|
III. |
Our
Company and Shareholders
|
· |
Commitment
|
· |
Record
Keeping
|
· |
Disclosure
|
· |
Corporate
Opportunities
|
· |
Confidentiality
|
· |
Insider
Trading
|
· |
Protection
and Use of Company Assets
|
· |
Conflicts
of Interest
|
(1) |
Interests
in Other Companies
|
(2) |
Employment
by Competitors or Vendors
|
(3) |
Conducting
Business with Related Companies
|
(4) |
Unrelated
Outside Employment
|
(5) |
Reporting
to an Immediate Family Member
|
(6) |
Fees
and Honorariums
|
(7) |
Gifts,
Favors, Entertainment and Payments
|
(8) |
Company
Funds
|
IV. |
Our
Associates
|
· |
Commitment
|
· |
Equal
Employment Opportunity
|
· |
Health
and Safety
|
V. |
Upholding
the Standards
|
· |
Interpretation
of the Code
|
· |
Reporting
Illegal or Unethical Behavior
|
· |
Waivers
of the Code
|
VI. |
Conclusion
|
I. |
Introduction
|
II. |
The
Marketplace
|
B. |
Payments
to Government Personnel
|
C. |
Political
Contributions
|
D. |
Competition
and Fair Dealing
|
E. |
Soliciting
Suppliers, Consultants and Business
Partners
|
III. |
Our
Company and
Shareholders
|
"Steak
n Shake commits to operating in the best interests of the Company
and our
shareholders. We will be forthright about our operations and performance.
We will exercise care in the use of our assets and resources. We
will
avoid conflicts of
interest.æ
|
A. |
Record
Keeping
|
B. |
Disclosures
|
C. |
Corporate
Opportunities
|
D. |
Confidential
and Proprietary Information
|
· |
Not
disclose this information to persons outside the Company. (Exercise
caution when discussing Company business in public places where
conversations can be overheard. Recognize the potential for eavesdropping
on cellular phones.)
|
· |
Not
use this information for personal benefit or the benefit of persons
outside the Company.
|
· |
Not
share this information with other Associates except on a legitimate
"need
to know" basis.
|
E. |
Insider
Trading
|
F. |
Protection
and Use of Company Assets
|
(1) |
Use
of email, voice mail and Internet
Services
|
(2) |
Proprietary
Information
|
G. |
Conflicts
of Interest
|
(1) |
Interests
in Other Companies
|
(2) |
Employment
by Competitors or Vendors
|
(3) |
Conducting
Business with Related Companies
|
(4) |
Unrelated
Outside Employment
|
(5) |
Reporting
to an Immediate Family Member
|
(6) |
Fees
and Honorariums
|
(7) |
Gifts,
Favors, Entertainment and
Payments
|
· |
Occasional
meals with a business associate;
|
· |
Ordinary
sports and other cultural events (so long as the vendor attends
the event
with you);
|
· |
Other
reasonable and customary gifts;
|
· |
Promotional
items (pens, coffee mugs, calendars,
etc.)
|
· |
Anything
that would constitute a violation of any
law;
|
· |
Cash
or cash equivalents (gift cards, loans, shares of stock,
etc.);
|
· |
Anything
given as part of a "quid pro quo" situation where the Associate
has agreed
to do something for the vendor in exchange for the Gift or
Entertainment;
|
· |
Participation
in anything that is inappropriate or violates the Company’s
policies;
|
· |
Acceptance
of anything that the Associate knows is a violation of the supplier’s
policies.
|
· |
Gifts
or Entertainment an Associate solicits from a
supplier.
|
Q:
|
A
supplier offered me tickets to the NBA finals. When I received
mine in the
mail on the day of the game I saw that the face value was $375.
What
should I do?
|
A:
|
You
should have discussed our policy with the vendor prior to accepting
and
ascertained the value of the tickets. Assuming you could not do
so, you
should arrange to return the tickets to the
vendor.
|
Q:
|
The
same supplier offers me two tickets for a professional basketball
game
that he will not be able to attend. The tickets have a face value
of $65
each. Should I accept them?
|
Q:
|
I
was offered a box of Cuban cigars, which the vendor got for only
$28 when
he was on vacation recently. Can I accept
them?
|
A:
|
No.
The possession of products made in Cuba is illegal in the United
States.
|
Q:
|
I
need to work late with a consultant and we are hungry. I have already
gone
to a football game with this person, and my ticket was $150. Can
I go to
dinner tonight if we discuss
business?
|
A:
|
You
can go to dinner with this vendor, but must pay for your portion
of the
check. The Company will reimburse you for this
cost.
|
Q:
|
My
son is a huge fan of the Lakers. I know that one of our suppliers
has
season tickets to the Pacers and I tell that supplier how much
I would
love to take my son to see the Lakers when they are in town. The
supplier
sends me two tickets with a note telling me he can’t wait to see how happy
my son is at the game. Can I accept the
tickets?
|
A:
|
No.
You solicited the tickets from the supplier. The receipt of something
you
asked for from a supplier is more likely to impair your impartiality
with
that vendor.
|
IV. |
Our
Associates
|
"Steak
n Shake commits that all Associates and applicants will be treated
with
honesty, fairness and respect. We believe in cooperation, teamwork
and
trust. Hostility and harassment are illegal and offensive - there
is no
place for them at Steak n Shake. We believe in providing and promoting
the
safest possible
workplace."
|
A. |
Equal
Employment Opportunity
|
B. |
Health
and Safety
|
V. |
Upholding
the Standards
|
A. |
Interpretation
of the Code
|
B. |
Reporting
Illegal or Unethical Behavior, (The "Whistleblower
Policy")
|
1. |
Reports
of Violations of the Code.
Every
director, officer and Associate has a duty to adhere to this Code
of
Business Conduct and Ethics and to report to the Company any suspected
violations. All violations or suspected violations of any law,
regulation,
rule or this Code should be reported to the Company’s General Counsel via
the following means:
|
2. |
Reports
of Questionable Accounting, Auditing or Disclosure Practices.
Any
concerns regarding questionable accounting, auditing or disclosure
practices of the Company should be reported to the Company’s Audit
Committee at the following address:
|
3. |
Maintenance
of Confidentiality.
Confidentiality
is a priority and every effort will be made to protect it. The
Company may
be required by law or necessity to reveal the identity of a complainant
or
it may be impossible to keep one’s identity confidential (for example, if
the Company is investigating retaliation complaints which require
interviews of all witnesses). Complainants wishing to maintain
anonymity
should call the Anonymous Hotline ((888) 989-7444) or send an anonymous
letter to the Company’s General Counsel or the Company’s outside
counsel.
|
4. |
Response
to Complaints of Inquiries
.
The Company will use its best efforts to provide a prompt response
to all
questions and reports. If a call requires an investigation, the
Company
will do so promptly and take the appropriate corrective action.
When
possible, the Company will provide those making a complaint with
the
status of its investigation and the
outcome.
|
5. |
Retaliation
is Prohibited.
Retaliation
by any officer, Associate, director or agent of the Company against
any
individual who seeks advice, raises a concern, reports misconduct
or any
violation of law, regulation or the Code, or uses this Whistleblower
Policy is strictly prohibited and will not be tolerated. The Company
will
take appropriate action against any individuals engaging in retaliatory
conduct against a person who has reported such a violation or otherwise
used this Whistleblower Policy. Retaliatory actions include suspension
or
termination of employment, demotion, threats, harassment or any
other form
of discrimination. This "anti-retaliation" policy is not intended
to
protect a person who is involved in wrongdoing about which he or
she is
making a report or to protect any person who intentionally makes
a false
report, however.
|
C. |
Waivers
of the Code of Business Conduct and
Ethics
|
VI. |
Conclusion
|
· |
Make
sure you have all the facts.
In
order to reach the right solutions, we must be as fully informed
as
possible.
|
· |
Ask
yourself: What specifically am I being asked to do? Does it seem
unethical
or improper?
This will enable you to focus on the specific question you are
faced with,
and the alternatives you have. Use your judgment and common sense;
if
something seems unethical or improper, it probably
is.
|
· |
Clarify
your responsibility role.
In
most situations, there is shared responsibility. Are your colleagues
informed? It may help to get others involved and discuss the
problem.
|
· |
Seek
help from Company resources.
In
the rare case where it may not be appropriate to discuss an issue
with
your supervisor, or where you do not feel comfortable approaching
your
supervisor with your question, discuss it with the Company’s General
Counsel. If you prefer to write, address your concerns to the Company’s
General Counsel or to the Audit Committee at the Company’s headquarters,
or call the Anonymous Hotline.
|