STEAK & SHAKE CO (Form: 8-K, Received: 02/14/2006 16:38:03)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)		February 8, 2006

THE STEAK N SHAKE COMPANY
(Exact name of registrant as specified in its charter)

Indiana	000-08445			37-0684070
(State or other jurisdiction	(Commission			(IRS Employer
of incorporation)	File Number)			Identification No.)

36 South Pennsylvania Street, Suite 500 Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code			(317) 633-4100

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 Entry into a Material Definitive Agreement

On February 8, 2006, the shareholders of The Steak n Shake Company (the "Company") approved the 2006 Employee Stock Option Plan (the "Option Plan") at the annual shareholder's meeting. The purpose of the Option 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. The Option Plan provides options to purchase shares of the Company's Common Stock to certain key executives of the Company who contribute significantly to the long-term performance and growth of the Company. A copy of the Option Plan is attached hereto as Exhibit 10.1 and the information set forth therein is incorporated herein by reference and constitutes a part of this report. Also attached is hereto as Exhibit 10.3 is the form of incentive stock option agreement which is incorporated herein by reference and constitutes a part of this report.

On February 8, 2006 the shareholders of the Company approved the 2006 Incentive Bonus Plan (the "Bonus Plan"), the purpose of which is to promote the interests of the Company and its shareholders by providing additional cash compensation as incentives to certain key executives of the Company and its subsidiaries and affiliates who contribute materially to the success of the Company and such subsidiaries and affiliates. A copy of the Bonus Plan is attached hereto as Exhibit 10.2 and the information set forth therein is incorporated by reference and constitutes a part of this report.

On February 8, 2006, the Compensation Committee of the Board of Directors established the performance criteria and specific goals for the payment of bonuses under the Bonus Plan for fiscal 2006. The criteria established for the current fiscal year is a combination of growth in Earnings Before Interest and Taxes and Same Store Sales during fiscal 2006. The awards under the Bonus Plan in fiscal year 2006 could range from 25% to 250% of the participant's target bonus level, depending on the Company's performance. Awards at the higher end of the scale are expected to be made only in the event of exceptional Company performance.

ITEM 5.05 Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics

On February 8, 2006, the Company updated its Code of Business Conduct and Ethics (the "Code"). The Company revised the policy on the acceptance of gifts contained in the code of to remove subjective and/or ambiguous terms and to provide specific guidance on the value of gifts that may be accepted and the terms under which they can be accepted. The new policy should ensure that all associates have an understanding of appropriate terms under which they could accept gifts, ensure there is never an appearance of impropriety involving a gift, and, most importantly, ensure that decisions made by associates are not influenced by gifts provided by vendors or other third parties. The new policy imposes a limit of $150 from any source in a calendar year and prohibits the solicitation of gifts, agreements for a quid pro quo arrangement involving a gift, gifts that violate laws, gifts that violate the provider's policies, or tickets to events where the donor will not attend with the associate. The policy does not apply to items that will not be retained by the recipient, but will be shared among associates on an equal basis. A copy of this updated Code is attached hereto as Exhibit 14.1 and the information set forth therein is incorporated herein by reference and constitutes a part of this report.

ITEM 9.01 Financial Statements and Exhibits

(c) Exhibits

10.1 2006 Employee Stock Option Plan

10.2 2006 Incentive Bonus Plan

10.3 Form of Incentive Stock Option Agreement

14.1 Code of Business Conduct and Ethics

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE STEAK N SHAKE COMPANY

By: /s/ Jeffrey A. Blade

Senior Vice President and Chief Financial Officer

Dated February 14, 2006

THE STEAK N SHAKE COMPANY

2006 EMPLOYEE STOCK OPTION PLAN

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:

(a ) Aggregate Limitation . The aggregate amount of Common Stock which may be made subject to Awards under the Plan shall not exceed 750,000 shares plus the number of shares that are subject to Awards granted hereunder that terminate or expire or are cancelled, forfeited, exchanged or surrendered during the term of this Plan without being exercised or fully vested. Awards granted under Section 16 shall not be considered in applying this limitation.

(b) Other Limitations . No individual participant may be granted Awards in any single calendar year of more than 50,000 options. Awards granted under Section 16 shall not be included in applying this limitation.

(c) Adjustment . The limitations under Section 3(a) and (b) are subject to adjustment in number and kind pursuant to Section 10.

(d) Treasury or Market Purchased Shares. Common Stock issued hereunder may be authorized and unissued shares or issued shares acquired by the Company on the market or otherwise.

4.	Administration:

The Plan shall be administered under the supervision of the Board of Directors of the Company through the agency of the Compensation Committee or a subcommittee thereof (the "Committee").

(a) Composition of Committee . The Committee shall consist of not less than two (2) members of the Board who are intended to meet the definition of "non-employee director" under the provisions of Section 162(m) of the Code and the definition of "independent directors" under the provisions of the Exchange Act or rules or regulations promulgated thereunder.

(b) Delegation and Administration . The Committee may delegate to one or more separate committees (any such committee a "Subcommittee") composed of one or more directors of the Company (who may, but need not be, members of the Committee) the ability to grant Awards with respect to participants who are not executive officers of the Company under the provisions of the Exchange Act or rules or regulations promulgated thereunder, and such actions shall be treated for all purposes as if taken by the Committee. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee and references in this Plan to the Committee shall include any such Subcommittee. The Committee may delegate the administration of the Plan to an officer or officers of the Company, and such administrator(s) may have the authority to execute and distribute agreements or other documents evidencing or relating to Awards granted by the Committee under this Plan, to maintain records relating to the grant, vesting, exercise, forfeiture or expiration of Awards, to process or oversee the issuance of shares of Common Stock upon the exercise, vesting and/or settlement of an Award, to interpret the terms of Awards and to take such other actions as the Committee may specify, provided that in no case shall any such administrator be authorized to grant Awards under the Plan. Any action by any such administrator within the scope of its delegation shall be deemed for all purposes to have been taken by the Committee and references in this Plan to the Committee shall include any such administrator, provided that the actions and interpretations of any such administrator shall be subject to review and approval, disapproval or modification by the Committee.

5.	Eligibility :

Awards may be granted only to present or future officers and employees of the Company whose performance may play a role in the Company’s future success, including Subsidiaries and Affiliates which become such after the effective date of the Plan. Any officer or key employee of the Company shall be eligible to receive one or more Awards under the Plan. Any director who is not an officer or employee of the Company shall be ineligible to receive an Award under the Plan. The adoption of this Plan shall not be deemed to give any officer or employee any right to an Award, except to the extent and upon such terms and conditions as may be determined by the Committee.

6.	Qualifying Performance Criteria :

Awards under this Plan (other than incentive stock options) in the discretion of the Committee may be contingent upon achievement of Qualifying Performance Criteria.

(a) Available Criteria . For purposes of this Plan, the term "Qualifying Performance Criteria" shall mean any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole, to a business unit, to a specific geographic region, Affiliate or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified by the Committee in the Award:

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.

(b) Adjustments. The Committee may adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (1) asset write-downs, (2) litigation or claim judgments or settlements, (3) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (4) accruals for reorganization and restructuring programs and (5) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report to shareholders for the applicable year. Notwithstanding satisfaction or completion of any Qualifying Performance Criteria, to the extent specified at the time of grant of an Award, the number of stock options granted, issued, retainable and/or vested under an Award on account of satisfaction of such Qualifying Performance Criteria may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.

(c) Establishment and Achievement of Targets . The Committee shall establish the specific targets for the selected Qualified Performance Criteria. These targets may be set at a specific level or may be expressed as relative to the comparable measure at comparison companies or a defined index. In cases where Qualifying Performance Criteria are established, the Committee shall determine the extent to which the criteria have been achieved and the corresponding level to which vesting requirements have been satisfied or other restrictions to be removed from the Award or the extent to which a participant's right to receive an Award should lapse in cases where the Qualifying Performance Criteria have not been met, and shall certify these determinations in writing. The Committee may provide for the determination of the attainment of such targets in installments where it deems appropriate.

7.	Stock Options.

Stock options under the Plan shall consist of incentive stock options under Section 422 of the Code or nonqualified stock options (options not intended to qualify as incentive stock options), as the Committee shall determine.

Each option shall be subject to the following terms and conditions:

(a) Grant of Options. The Committee shall (1) select the officers and key employees of the Company to whom options may from time to time be granted, (2) determine whether incentive stock options or nonqualified stock options are to be granted, (3) determine the number of shares to be covered by each option so granted, (4) determine the terms and conditions (not inconsistent with the Plan) of any option granted hereunder including but not limited to restrictions upon the options, conditions of their exercise (including as to nonqualified stock options, subject to any Qualifying Performance Criteria), or restrictions on the shares of Common Stock issuable upon exercise thereof, (5) prescribe the form of the instruments necessary or advisable in the administration of options.

(b) Terms and Conditions of Option. Any option granted under the Plan shall be evidenced by a Stock Option Agreement entered into by the Company and the optionee, in such form as the Committee shall approve, which agreement shall be subject to the following terms and conditions and shall contain such additional terms and conditions not inconsistent with the Plan, and in the case of an incentive stock option not inconsistent with the provisions of the Code applicable to incentive stock options, as the Committee shall prescribe:

(1 ) Number of Shares Subject to an Option . The Stock Option Agreement shall specify the number of shares of Common Stock subject to the Agreement.

(2) Option Price . The purchase price per share of Common Stock purchasable under an option will be determined by the Committee but will be not less than the Fair Market Value of a share of Common Stock on the date of the grant of the option, except as provided in Section 16.

(3) Option Period . The period of each option shall be fixed by the Committee, but no option shall be exercisable after the expiration of ten years from the date the option is granted.

(4) Consideration . Unless the Committee determines otherwise, each optionee, as consideration for the grant of an option, shall remain in the continuous employ of the Company for at least one year from the date of the granting of such option, and no option shall be exercisable until after the completion of such one year period of employment by the optionee.

(5) Exercise of Option . An option may be exercised in whole or in part from time to time during the option period (or, if determined by the Committee, in specified installments during the option period) by giving written notice of exercise to the Company specifying the number of shares to be purchased. Such written notice must be accompanied by payment in full of the purchase price and Withholding Taxes (as defined in Section 11 hereof), due either (i) by personal, certified or bank check, (ii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iii) in shares of Common Stock owned by the optionee having a Fair Market Value at the date of exercise equal to such purchase price, (iv) in any combination of the foregoing, or (v) by any other method that the Committee approves. At its discretion, the Committee may modify or suspend any method for the exercise of stock options, including any of the methods specified in the previous sentence. Delivery of shares for exercising an option shall be made either through the physical delivery of shares or through an appropriate certification or attestation of valid ownership. Shares of Common Stock used to exercise an option shall have been held by the optionee for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the option. No shares shall be issued until full payment therefor has been made. An optionee shall have the rights of a shareholder only with respect to shares of stock that have been recorded on the Company's books on behalf of the optionee or for which certificates have been issued to the optionee.

Notwithstanding anything in the Plan to the contrary, the Committee may, in its sole discretion, allow the exercise of a lapsed grant if the Committee determines that: (i) the lapse was solely the result of the Company's inability to execute the exercise of an option Award due to conditions beyond the Company's control and (ii) the optionee made valid and reasonable efforts to exercise the Award. In the event the Committee makes such a determination, the Company shall allow the exercise to occur as promptly as possible following its receipt of exercise instructions subsequent to such determination.

(6) Nontransferability of Options . No option granted under the Plan shall be transferable by the optionee other than by will or by the laws of descent and distribution, and such option or stock appreciation right shall be exercisable, during the optionee's lifetime, only by the optionee.

(7) Retirement and Termination of Employment Other than by Death or Disability . If an optionee shall cease to be employed by the Company for any reason (other than termination of employment by reason of Retirement, death or Disability) after the optionee shall have been continuously so employed for one year after the granting of the option, or as otherwise determined by the Committee, the option shall be exercisable only to the extent that the optionee was otherwise entitled to exercise it at the time of such cessation of employment with the Company, unless otherwise determined by the Committee. If cessation of employment is on account of Retirement, the option shall be fully exercisable for the three-month period following the Retirement, regardless of whether it was fully exercisable at the time of Retirement. The Plan does not confer upon any optionee any right with respect to continuation of employment by the Company.

(8 ) Disability of Optionee . An optionee who ceases to be employed by reason of Disability shall be treated as though the optionee remained in the employ of the Company until the earlier of (i) cessation of payments under a disability pay plan of the Company, (ii) the optionee's death, or (iii) the optionee's 65th birthday.

(9) Death of Optionee . Except as otherwise provided in subsection (11), in the event of the optionee's death (i) while in the employ of the Company, (ii) while Disabled as described in subsection (8) or (iii) after cessation of employment due to Retirement, the option shall be fully exercisable by the executors, administrators, legatees or distributees of the optionee's estate, as the case may be, at any time following such death. Notwithstanding the foregoing, no option shall be exercisable after the expiration of the option period set forth in the Stock Option Agreement. In the event any option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased optionee, the Company shall be under no obligation to issue stock thereunder unless and until the Company is satisfied that the person or persons exercising the option are the duly appointed legal representatives of the deceased optionee's estate or the proper legatees or distributees thereof.

(10) Incentive Stock Options . Incentive stock options may only be granted to employees of the Company and its Subsidiaries and parent corporations, as defined in Section 424 of the Code. In the case of any incentive stock option granted under the Plan, the aggregate Fair Market Value of the shares of Common Stock (determined at the time of grant of each option) with respect to which incentive stock options granted under the Plan and any other plan of the Company or its parent or a Subsidiary which are exercisable for the first time by an employee during any calendar year shall not exceed $100,000 or such other amount as may be required by the Code.

(11) Rights of Transferee . Notwithstanding anything to the contrary herein, if an option has been transferred in accordance with Section 7(b)(6), the option shall be exercisable solely by the transferee. The option shall remain subject to the provisions of the Plan, including that it will be exercisable only to the extent that the optionee or optionee's estate would have been entitled to exercise it if the optionee had not transferred the option. In the event of the death of the optionee prior to the expiration of the right to exercise the transferred option, the period during which the option shall be exercisable will terminate on the date one year following the date of the optionee's death. In the event of the death of the transferee prior to the expiration of the right to exercise the option, the period during which the option shall be exercisable by the executors, administrators, legatees and distributees of the transferee's estate, as the case may be, will terminate on the date one year following the date of the transferee's death. In no event will the option be exercisable after the expiration of the option period set forth in the Stock Option Agreement. The option shall be subject to such other rules as the Committee shall determine.

(12) No Reload . Options shall not be granted under this Plan in consideration for and shall not be conditioned upon the delivery of shares of Common Stock in payment of the exercise price and/or tax-withholding obligation under any other employee stock option.

(13) No Deferral Feature. No option granted under this Plan shall include any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise of the option under Section 83 of the Code, or the time the stock acquired pursuant to the exercise of the option first becomes substantially vested (as defined in regulations interpreting Section 83 of the Code).

8.	Forfeiture of Awards; Recapture of Benefits :

The Committee may, in its discretion, provide in an agreement evidencing any Award that, in the event that the participant engages, within a specified period after termination of employment, in certain activity specified by the Committee that is deemed detrimental to the interests of the Company (including, but not limited to, the breach of any non-solicitation and/or non-compete agreements with the Company), the participant will forfeit all rights under any Awards that remain outstanding as of the time of such act and will return to the Company an amount of shares of Common Stock with a Fair Market Value (determined as of the date such shares are returned) or an amount of cash, equal to the amount of any gain realized upon the exercise of any Award that occurred within a specified time period.

9.	Determination of Breach of Conditions:

The determination of the Committee as to whether an event has occurred resulting in a forfeiture or a termination of an Award or any reduction of the Company's obligations in accordance with the provisions of the Plan shall be conclusive.

10.

Adjustment of and Changes in the Common Stock:

(a) Effect of Outstanding Awards . The existence of outstanding Awards shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustment, recapitalizations, reorganizations, exchanges, or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company or any issuance of Common Stock or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. Further, except as expressly provided herein or by the Committee, (i) the issuance by the Company of Common Stock or any class of securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations to the Company convertible into such shares or other securities, (ii) the payment of a dividend in property other than shares of Common Stock, or (iii) the occurrence of any similar transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to stock options or other Awards theretofore granted or the purchase price per share, unless the Committee shall determine, in its sole discretion, that an adjustment is necessary or appropriate.

(b) Adjustments. If the outstanding Common Stock or other securities of the Company, or both, for which an Award is then exercisable or as to which an Award is to be settled shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, extraordinary dividend of cash and/or assets, recapitalization, reorganization or any similar event affecting the Common Stock or other securities of the Company, the Committee may appropriately and equitably adjust the number and kind of shares or other securities which are subject to this Plan or subject to any Awards theretofore granted, and the exercise or settlement prices of such Awards, so as to maintain the proportionate number of shares of Common Stock or other securities without changing the aggregate exercise or settlement price.

(c) Fractional Shares . No right to purchase fractional shares shall result from any adjustment in stock options pursuant to this Section. In case of any such adjustment, the shares subject to the stock option shall be rounded down to the nearest whole share.

(d) Assumption of Awards . Any other provision hereof to the contrary notwithstanding (except for Section 10(a)), in the event the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption of outstanding Awards by the surviving corporation or its parent, for their continuation by the Company (if it is the surviving corporation), for accelerated vesting and accelerated expiration, or for settlement in cash.

(a) Each participant shall, no later than the Tax Date (as defined below), pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Withholding Tax (as defined below) with respect to an Award, and the Company shall, to the extent permitted by law, have the right to deduct such amount from any payment of any kind otherwise due to the participant. The Company shall also have the right to retain or sell without notice, or to demand surrender of, shares of Common Stock in value sufficient to cover the amount of any Withholding Tax, and to make payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Withholding Tax, remitting any balance to the participant. For purposes of this paragraph, the value of shares of Common Stock so retained or surrendered shall be the average of the high and low sales prices per share on the New York Stock Exchange on the date that the amount of the Withholding Tax is to be determined (the "Tax Date") and the value of shares of Common Stock so sold shall be the actual net sales price per share (after deduction of commissions) received by the Company.

(b) Notwithstanding the foregoing, if the stock options have been transferred, the optionee shall provide the Company with funds sufficient to pay such Withholding Tax. If such optionee does not satisfy the optionee's tax payment obligation and the stock options have been transferred, the transferee may provide the funds sufficient to enable the Company to pay such taxes. However, if the stock options have been transferred, the Company shall have no right to retain or sell without notice, or to demand surrender from the transferee of, shares of Common Stock in order to pay such Withholding Tax.

(c) The term "Withholding Tax" means the minimum required withholding amount applicable to the participant, including federal, state and local income taxes, Federal Insurance Contribution Act taxes and other governmental impost or levy.

(d) Notwithstanding the foregoing, the participant shall be entitled to satisfy the obligation to pay any Withholding Tax, in whole or in part, by providing the Company with funds sufficient to enable the Company to pay such Withholding Tax or by requiring the Company to retain or to accept upon delivery thereof by the participant shares of Common Stock held by the participant for more than six months having a Fair Market Value sufficient to cover the amount of such Withholding Tax. Each election by a participant to have shares retained or to deliver shares for this purpose shall be subject to the following restrictions: (i) the election must be in writing and be made on or prior to the Tax Date; (ii) the election must be irrevocable; and (iii) the election shall be subject to the disapproval of the Committee.

12.

Change in Control:

In the event an optionee's employment with the Company terminates pursuant to a Qualifying Termination (as defined below) during the three (3) year period following a Change in Control of the Company (as defined below) and prior to the exercise of options granted under this Plan, all outstanding options shall become immediately fully vested and exercisable notwithstanding any provisions of the Plan or of the applicable Agreement to the contrary.

In addition, in the event of a Change in Control of the Company, the Committee may (i) determine that outstanding options shall be assumed by, or replaced with comparable options by, the surviving corporation (or a parent or subsidiary of the surviving corporation) and that outstanding Awards shall be converted to similar awards of the surviving corporation (or a parent or subsidiary of the surviving corporation), or (ii) take such other actions with respect to outstanding options and other Awards as the Committee deems appropriate.

(a) For purposes of this Plan, a Change in Control shall be deemed to have occurred on the earliest of the following dates:

(1) The date any person (as defined in Section 14(d)(3) of the Exchange Act) shall have become the direct or indirect beneficial owner of twenty percent (20%) or more of the then outstanding common shares of the Company;

(2) The date the shareholders of the Company approve a merger or consolidation of the Company with any other corporation other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent at least 75% of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company in which no Person acquires more than 50% of the combined voting power of the Company's then outstanding securities;

(3) The date the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or

(4) The date there shall have been a change in a majority of the Board of Directors of the Company within a two (2) year period beginning after the effective date of the Plan, unless the nomination for election by the Company's shareholders of each new director was approved by the vote of two-thirds of the directors then still in office who were in office at the beginning of the two (2) year period.

(b) For purposes of this Plan provision, a Qualifying Termination shall be deemed to have occurred under the following circumstances:

(1) A Company-initiated termination for reasons other than the employee's death, Disability, resignation without good cause, willful misconduct or activity deemed detrimental to the interests of the Company, provided the participant executes a general release and, where applicable, a non-solicitation and/or non-compete agreement with the Company;

(2) The participant resigns with good cause, which includes (i) a substantial adverse alteration in the nature or status of the participant's responsibilities, (ii) a reduction in the participant's base salary or levels of entitlement or participation under any incentive plan, award program or employee benefit program without the substitution or implementation of an alternative arrangement of substantially equal value, or (iii) the Company requiring the participant to relocate to a work location more than fifty (50) miles from the participant's work location prior to the Change in Control.

13.

Amendment of the Plan :

The Board of Directors may amend or suspend this Plan at any time and from time to time; provided, however, that the Board of Directors shall submit for shareholder approval any amendment (other than an amendment pursuant to the adjustment provisions of Section 10) required to be submitted for shareholder approval by law, regulation or applicable stock exchange requirements or that otherwise would:

(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.

In addition, no such amendment or alteration shall be made which would impair the rights of any participant without such participant's consent under any Award theretofore granted, provided that no such consent shall be required with respect to any amendment or alteration if the Committee determines in its sole discretion that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to meet the requirements of any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated.

14.

Miscellaneous :

(a) By accepting any benefits under the Plan, each participant and each person claiming under or through such participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or to be taken or made under the Plan by the Company, the Board, the Committee or any other committee appointed by the Board.

(b) No participant or any person claiming under or through him shall have any right or interest, whether vested or otherwise, in the Plan or in any Award, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan and the Agreement that affect such participant or such other person shall have been complied with.

(c) Neither the adoption of the Plan nor its operation shall in any way affect the rights and powers of the Company to dismiss or discharge any employee at any time.

15.

Term of the Plan, Termination of Prior Plan :

This Plan was approved by the Board of Directors of the Company on November 8, 2005 and will become effective on February 8, 2006, subject to the affirmative vote of the holders of a majority of the votes cast at the 2006 annual meeting of shareholders. The Plan shall expire on February 8, 2010, unless suspended or discontinued earlier by action of the Board of Directors. The expiration of the Plan, however, shall not affect the rights of participants under Awards theretofore granted to them, and all Awards shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions.

16.

Grants in Connection with Corporate Transactions and Otherwise :

Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make substitute awards under this Plan to an employee of another corporation who becomes an employee of the Company by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company in substitution for an option or award granted by such corporation, or limit the ability of the Company to grant options outside this Plan. The terms and conditions of any Substitute Awards may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives. The Committee shall prescribe the provisions of the Substitute Awards. Any Substitute Awards made pursuant to this Section 16 shall not count against the limitations provided under Section 3.

17.

Governing Law :

The validity, construction, interpretation and effect of the Plan and agreements issued under the Plan shall be governed and construed by and determined in accordance with the laws of the State of Indiana, without giving effect to the conflict of laws provisions thereof. The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration.

18.

Unfunded Plan:

Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts may be established with respect to participants who are granted Awards under this Plan, any such accounts will be used merely as a bookkeeping convenience. The Company shall not be required to segregate or earmark any cash or other property which may at any time be represented by Awards, nor shall this Plan be construed as providing for such segregation or earmarking, nor shall the Company or the Committee be deemed to be a trustee of stock or cash to be awarded under the Plan.

19.

Compliance with Other Laws and Regulations :

This Plan, the grant and exercise of Awards thereunder, and the obligation of the Company to sell, issue or deliver shares of Common Stock under such Awards, shall be subject to all applicable federal, state and local laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a participant's name or deliver any shares of Common Stock prior to the completion of any registration or qualification of such shares under any federal, state or local law or any ruling or regulation of any government body which the Committee shall determine to be necessary or advisable. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder, the Company shall be relieved of any liability with respect to the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. No stock option shall be exercisable and no shares of Common Stock shall be issued and/or transferable under any other Award unless a registration statement with respect to the shares underlying such stock option is effective and current or the Company has determined that such registration is unnecessary.

20.

Liability of Company:

The Company shall not be liable to a participant or other persons as to (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence expected, but not realized, by any participant or other person due to the receipt, exercise or settlement of any Award granted hereunder.

THE STEAK N SHAKE COMPANY

2006 INCENTIVE BONUS PLAN

1. Purpose: The purpose of the 2006 Incentive Bonus Plan (the "Plan") is to promote the interests of the Company and its shareholders by providing additional cash compensation as incentives to certain key executives of the Company and its Subsidiaries and Affiliates who contribute materially to the success of the Company and such Subsidiaries and Affiliates.

2. Definitions: The following terms when used in the Plan shall, for the purposes of the Plan, have the following meanings:

(a) "Affiliate" shall mean any entity in which the Company has an ownership interest of at least 25%.

(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.

(e) "Change in Control" means the happening of any of the following events:

(1) the acquisition by any Person or "beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of either (A) the then-outstanding shares of Stock ("Outstanding Company Common Stock") or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that, for purposes of this Section 2(e)(1), the following acquisitions shall not constitute a Change in Control:

(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

(2) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(3) consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company and/or any entity controlled by the Company, or a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any entity controlled by the Company (each, a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting form such Business Combination (including, without limitation, any entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(f) "Code" means the Internal Revenue Code of 1986, as amended

(g) "Company" means the Steak n Shake Company, its Subsidiaries and Affiliates.

(h) "Job Loss" means a Termination of Employment resulting from a corporate restructuring or reorganization, job restructuring, reduction in force, outsourcing or replacement of jobs by technology.

(i) "Participant" means an employee of the Company who is an "executive officer" as defined in Rule 3b-7 promulgated under the Exchange Act who has been granted an Award.

(j) "Performance Goal" means any of the following measures as applied to the Company as a whole or to any Subsidiary, division or other unit of the Company; revenue; operating income; net income; basic or diluted earnings per share; return on revenue; return on assets; return on equity; return on total capital; or total shareholder return.

(k) "Performance Period" for an Award means the period of time for the measurement of the extent to which the applicable Performance Goals are attained.

(l) "Retirement" shall mean termination of the employment of an employee with the Company or a Subsidiary or Affiliate on terms that allow them to collect benefits under the Company’s 401k and Profit Sharing Plan.

(m) "Section 162(m) Exemption" means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.

(n) "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.

(o) "Termination of Employment" of a Participant means the termination of the Participant’s employment with the Company and the Subsidiaries.

3. Administration: The Plan shall be administered under the supervision of the Board, which may exercise its powers, to the extent herein provided, through the agency of its Compensation Committee or a subcommittee thereof (the "Committee"). The Committee shall consist of not less than two (2) members of the Board who meet the definition of "non-employee directors" under the provisions of Section 162(m) of the Code and the definition of "independent directors" under the provisions of the Exchange Act or the regulations or rules promulgated thereunder.

4. Eligibility; Maximum Awards: Awards may be granted to any Participant. The maximum amount of cash that may be payable with respect to any one Award shall be 175% of a Participant’s salary in the first year of the performance period.

5. Establishment of Awards:

(a) Basic Terms of Awards. In connection with the grant of each Award, the Committee shall, within the time period required to qualify for the Section 162(m) Exemption.

(1) determine the Performance Goal(s) and Performance Period applicable to such Award,

(2) establish the formula for determining the amounts payable based upon achievement of the applicable Performance Goal,

(3) determine the consequences for the Award of the Participant’s Termination of Employment for various reasons or the Participant’s demotion or promotion during the Performance Period,

(4) specify the consequences for the Award of the occurrence of a Change in Control during the Performance Period (if such consequences are to be different from those provided in Section 6 below), and

(5) establish such other terms and conditions for the Award as it may deem appropriate.

(b) Performance Goals may take the form of absolute goals or goals relative to the performance of one or more other companies comparable to the Company or of an index covering multiple companies. In establishing Performance Goals, the Committee may specify that there shall be excluded the effect of restructuring charges, discontinued operations, extraordinary items, cumulative effects of accounting changes, and other unusual or nonrecurring items, and asset impairment, in each case as those terms are defined under generally accepted accounting principles and provided in each case that such excluded items are objectively determinable by reference to the Company’s financial statements, notes to the Company’s financial statements and/or management’s discussion and analysis in the Company’s financial statements.

(c) A cash payment may be made to a Participant pursuant to an Award only upon the achievement of the applicable Performance Goal(s), except that the Committee may provide, either in connection with the grant thereof or by amendment thereafter, that achievement of such Performance Goals will be waived in whole or in part upon the death or Disability of the Participant, in the event of a Change in Control, or such other event as the Committee may deem appropriate. Notwithstanding the foregoing, however, the Committee may not exercise any discretionary authority it may otherwise have under this Plan with respect to an Award, in any manner to waive the achievement of the applicable Performance Goals or to increase the amount payable pursuant thereto or the value thereof, or otherwise in a manner that would cause the Award to cease to qualify for the Section 162(m) Exemption.

6. Change in Control: Unless otherwise determined by the Committee in connection with the grant of an Award, upon a Change in Control during the Performance Period for any Award, the Participant shall be entitled to receive, promptly following the Change in Control (and in any event within 30 days thereafter), a payment with respect thereto equal to (i) the amount that would be payable with respect to such Award, if the applicable Performance Goals for the Performance Period were achieved at the level achieved during the portion of the Performance Period that precedes the Change in Control times, (ii) a fraction, the numerator of which is the number of days in the portion of the Performance Period that precedes the Change in Control and the denominator of which is the total number of days in the Performance Period; provided, that the Participant shall forfeit his or right to receive such payment if he or she experiences a Termination of Employment for Cause before the payment is made. The amount paid with respect to any Award under this Section 6 shall offset the amount (if any) that becomes payable with respect thereto following completion of the Performance Period of the Award.

7. Non-Transferability: Awards granted hereunder shall not be assignable or transferable other than by will or the laws of descent and distribution.

8. Withholding Taxes: The Company may withhold or cause to be withheld from any or all cash payments made under this Plan such amounts as are necessary to satisfy all federal, state and local withholding tax requirements related thereto.

9. Funding: Benefits payable under this Plan to any person shall be paid directly by the Company. The Company shall not be required to fund, or otherwise segregate assets to be used for payment of, benefits under this Plan.

10. No Employment Rights: Neither the establishment of this Plan, nor the granting of any Award, shall be construed to (a) give any Participant the right to remain employed by the Company or to any benefits not specifically provided by this Plan, or (b) in any manner modify the right of the Company to modify, amend, or terminate any of its employee benefit plans.

11. Nature of Payments: Any and all grants of Awards and payments of cash hereunder shall constitute special incentive payments to the Participant, other than payments pursuant to Awards with Performance Periods of one year or less, and shall not be taken into account in computing the amount of salary or compensation of the Participant for the purposes of determining any pension, retirement, death or other benefits under (a) any qualified, non-qualified or supplemental pension, retirement or profit-sharing plan of the Company, (b) any bonus, life insurance or other employee benefit plan of the Company, or (c) any agreement between the Company, and the Participant, on the other hand, except as such plan or agreement shall otherwise expressly provide.

Without limiting the generality of the foregoing, payments of cash hereunder may be deferred under any such plan if and to the extent such plan so provides.

12. Non-Uniform Determinations: The Committee’s determinations under this Plan need not be uniform, and may be made by the Committee selectively among individuals who receive, or are eligible to receive, Awards (whether or not such individuals are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, to enter into non-uniform and selective Award Agreements as to (a) the identity of the Participants, (b) the terms and provisions of Awards, and (c) the treatment of Terminations of Employment.

13.

Miscellaneous:

(a) By accepting any benefits under the Plan, each Participant and each person claiming under or through him shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or made to be taken or made under the Plan by the Company, the Board, the Committee or any other committee appointed by the Board.

(b) Any action taken or decision made by the Company, the Board, the Committee, or any other committee appointed by the Board arising out of or in connection with the construction, administration, interpretation or effect of the Plan or of the Regulations shall lie within its absolute discretion, as the case may be, and shall be conclusive and binding upon all Participants and all persons claiming under or through any Participant.

(c) No member of the Board, the Committee, or any other committee appointed by the Board shall be liable for any act or failure to act of any other member, or of any officer, agent or employee of such Board or Committee, as the case may be, or for any act or failure to act, except on account of their own acts done in bad faith. The fact that a member of the Board shall then be, shall theretofore have been or thereafter may be a Participant in the Plan shall not disqualify such person from voting at any time as a director with regard to any matter concerning the Awards, or in favor of or against any amendment or alteration of the Plan, provided that such amendment or alteration shall provide no benefit for directors as such and provided that such amendment or alteration shall be of general application.

(d) The Board, the Committee, or any other committee appointed by the Board may rely upon any information supplied to them by any officer of the Company or any Subsidiary and may rely upon the advice of counsel in connection with the administration of the Plan and shall be fully protected in relying upon information or advice.

14. Amendment of Plan and Awards: The Board may from time to time in its discretion amend or modify this Plan or Awards without the approval of the shareholders of the Company; provided that except as provided in the next sentence, no such amendment shall adversely affect any previously-granted Award without the consent of the Participant. Notwithstanding the foregoing, the Board may from time to time amend Awards, without the consent of affected Participants, (i) to comply with applicable law, stock exchange rules or accounting rules, and (ii) to make changes that do not materially decrease the value of such Awards. In no event may any Award be amended in any manner that would cause it to cease to qualify for the Section 162(m) Exemption.

15. Term of the Plan: This Plan was approved by the Board of Directors of the Company on November 8, 2005 and will become effective on February 8, 2006, subject to the affirmative vote of the holders of a majority of the votes cast unless suspended or discontinued earlier by action of the Board of Directors. The Plan will expire on the last day of the Company’s Fiscal Year 2010. The expiration of the Plan, however, shall not affect the rights of the Participants under Awards theretofore granted to them, and all Awards shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions.

16. Controlling Law: The law of the State of Indiana, except its law with respect to choice of law, shall be controlling in all matters relative to this Plan.

THE STEAK N SHAKE COMPANY

Form of Incentive Stock Option Agreement

THIS AGREEMENT, made this ____ day of _______, 20__ by and between THE STEAK N SHAKE COMPANY, an Indiana corporation with its principal office at 36 South Pennsylvania Street, Indianapolis, Indiana (hereinafter called "Company") and _______________________ (hereinafter called "Grantee") pursuant to the terms, conditions and limitations contained in the Company's Employee Stock Option Plan (hereinafter called the "Plan").

WHEREAS, in the interests of affording an incentive to the Grantee to give his/her best efforts to the Company as a key employee, the Company wishes to provide that the Grantee shall have an option to buy shares of the common stock ("Common Stock") of the Company:

NOW, THEREFORE, it is hereby mutually agreed as follows:

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.

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.

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.

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.

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.

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.

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.

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.

IN WITNESS WHEREOF, the Company and the Grantee have signed this Stock Option Agreement as of the day and year first above written.

By: ___________________________________

_________________________________ " GRANTEE"

By: ___________________________________

Exhibit 14.1

THE STEAK N SHAKE COMPANY

Code of Business Conduct

and Ethics

Adopted August 24, 2005

Last Updated February 8, 2006

Dear Colleague:

As an Associate of Steak n Shake, you share the privilege and responsibility of upholding the Company’s commitment to the highest standards of integrity. You do this each time you act ethically and legally. And, while such conduct is often considered second nature, there are many situations where making the "right choice" can be challenging. In a time when the news media is full of business leaders and companies whose actions have engendered public suspicion and mistrust, Steak n Shake must continue to stand apart; and in that spirit, we make the following commitments. To the marketplace, Steak n Shake commits to compete legally and ethically. We will act responsibly in our relationships with our guests, business partners, suppliers and each other. We will be honest and fair in our business dealings. T o our Company and shareholders, Steak n Shake commits to doing the right thing and operating with your best interests in mind. We will be forthright about our operations and performance, and exercise care in the use of our assets and resources. We will avoid conflicts of interest. To 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 promoting the safest possible workplace.

This Code of Business Conduct and Ethics is a guide to help all of us keep these commitments. Please read it carefully to acquaint or re-acquaint yourself with the standards of conduct expected of everyone at Steak n Shake. We trust that each of you will accept and adhere to these principles faithfully. While we live and work in a complicated world, in the end, our ethics will be a primary source of our strength and success, both as individuals and as a Company.

Sincerely,

Alan B. Gilman, Chairman

Peter M. Dunn, President

Table of Contents

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

("Whistleblower Policy")

·	Waivers of the Code

VI.

Conclusion

The Steak n Shake Company

Code of Business Conduct and Ethics

I.	Introduction

This Code of Business Conduct and Ethics (the "Code") covers a wide range of business practices and procedures. It is intended as an overview of the Company’s guiding principles and not as a restatement of the Company’s existing policies. It does not cover every issue that may arise, but sets out basic principles to guide all Associates, officers and directors of the Company. All of our Associates, officers and directors must conduct themselves according to this Code and seek to avoid even the appearance of improper behavior.

The policies in this Code are designed to ensure complete compliance with all federal, state and local laws and regulations. If, as a result of a revision or change in the law a law conflicts with a policy in this Code, Associates, officers and directors must always comply with the law. However, if a local custom or policy conflicts with this Code, you must comply with the Code. The Company’s General Counsel serves as the corporate Compliance Officer for the Code. Having one Compliance Officer will ensure that there is a broad application and consistent interpretation of our standards throughout the Company. Questions about the applicability of the Code to any particular situation should be addressed to the Company’s General Counsel by the following methods:

By telephone: (317) 656-4533

By mail: General Counsel

The Steak n Shake Company

36 South Pennsylvania Street

Suite 500

Indianapolis, IN 46204

By email: dave.milne@steaknshake.com

II.

The Marketplace

Our Commitment

"Steak n Shake commits to compete legally and ethically. We will act responsibly in our relationships with our guests, business partners, suppliers and each other. We will be honest and fair in our business dealings."

A. Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit is the foundation on which this Company’s ethical standards are built. All Associates, officers and directors must respect and obey the laws of the United States and of the states and cities in which the Company conducts business. To that effect, all Associates, officers and directors must take an active role in becoming knowledgeable of and ensuring compliance with all applicable laws and regulations.

Steak n Shake is a restaurant company that always strives to serve the highest quality food to our guests in a clean and healthy environment. Our Associates must, therefore, comply fully with all health and safety laws and regulations that relate to our restaurants. During any government inspection or investigation, or any Company investigation relating to the violation of a law or policy, you should never destroy or alter any Company documents, lie or make misleading statements to the government investigator, attempt to cause another Associate to fail to provide accurate information and/or obstruct, mislead or delay the communication of information and records.

B.	Payments to Government Personnel

It is illegal for any Steak n Shake Associate to make or approve payments to government officials at the national, state or local levels to improperly influence the behavior of such officials. In addition, federal, state and local governments have a number of laws and regulations regarding the acceptance of gratuities by government personnel. The promise, offer or delivery to a government official of a gift, favor or gratuity in violation of these laws and regulations would not only violate Company policy, but could also be a criminal offense. Making improper payments and gratuities to government official is strictly prohibited.

C.	Political Contributions

It is against the Company’s policy for directors, officers or Associates to use Company funds for contributions of any kind to any political party or Committee or to any candidate for, or holder of, any office of any national, state or local government. Further, Associates may not be given time off with pay for political activity. This policy applies only to the use of Company funds or assets, however, and is not intended to restrict in any manner the use of personal funds by the Company’s directors, officers or Associates for political contributions. In fact, the Company encourages all Associates, officers and directors to take part in the political process.

D.	Competition and Fair Dealing

We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present Associates of other companies is prohibited. You should endeavor to respect the rights of and deal fairly with the Company’s suppliers, competitors and their Associates. You should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

E.	Soliciting Suppliers, Consultants and Business Partners

The Company desires that its suppliers, consultants, vendors and other business partners understand that their business relationship with the Company is based totally on their ability to competitively meet the Company’s business needs. Therefore, solicitations of cash, merchandise or services from suppliers, consultants, vendors and other business partners are not allowed, except when made in furtherance of the Company's business. Likewise, our Associates, officers and directors are prohibited from providing vendors with inappropriate gifts to solicit an unfair advantage or favorable treatment.

III.

Our Company and Shareholders

Our Commitment

"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

Accurate business records are essential to the management of the Company and to maintaining and safeguarding investor confidence. Accurate business records also help Steak n Shake to fulfill its obligations to provide full, fair, timely and understandable financial disclosure. Therefore, all of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must fully and fairly reflect all Company transactions and must conform both to applicable laws and regulations and to the Company’s system of internal controls.

Unrecorded or "off the books" funds or assets are contrary to the Company’s policies and should not be maintained. This policy also applies to time reports, vouchers, bills, invoices, expense reports, benefits records, performance evaluations and other essential Company data. Records should always be retained or destroyed according to the Company’s record retention policy.

B.	Disclosures

It is the Company’s policy to provide full, fair, timely and understandable disclosures in all reports and documents that the Company files with or submits to the Securities Exchange Commission, or state, local or national taxing authorities, as well as in all other public communications made by the Company. In furtherance of this policy, the executive officers of the Company will design, implement and amend as necessary, disclosure controls and procedures and internal controls for financial reporting (collectively, "Controls and Procedures"). All executive officers, directors and Associates will fully comply with the Controls and Procedures to promote full, fair, accurate, timely, and understandable disclosures by the Company.

C.	Corporate Opportunities

No director, officer or Associate may: (a) take for himself or herself personally, opportunities that are discovered through the use of Company property, information or position (for example, purchasing a piece of property that the Company plans to purchase); (b) use Company property, information or position for personal gain; or (c) compete with the Company. Directors, officers and Associates owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

D.	Confidential and Proprietary Information

Associates, officers and directors must not disclose any Company confidential or proprietary information or trade secrets to persons outside of the Company, except as specifically authorized by management pursuant to written authorization from the Company’s General Counsel. Confidential information includes, but is not limited to, all non-public business, financial, personnel or technological information, plans, data, pricing and sales information, food and beverage processes, recipes and the like, and other processes or systems related to any portion of the Company’s business that might be of use to competitors or harmful to the Company, its suppliers or business partners.

Associates, officers and directors who have access to confidential information are obligated to safeguard it from unauthorized access and;

·	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

Associates, officers or directors who have access to non-public material information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of the Company’s business. The term "trade" includes all purchases and sales of securities. All non-public information about the Company should be considered confidential information. To use non-public information for personal financial benefit or to "tip" others who might make an investment decision on the basis of this information is not only unethical, but also a violation of federal securities laws and can result in civil and criminal penalties. Non-public material information includes, but is not limited to, significant new product/service developments, sales and earnings reports or projections, major contracts with suppliers, plans for stock splits, buy backs or dividends and potential acquisitions or mergers. Such non-public material information in the case of another company would also include knowledge that the other company may enter into or is negotiating for a contract important to it for the sale of property, goods or services to or by the Company. In these instances where you have such information, you must refrain from buying or selling or encouraging others to buy or sell the Company’s securities or securities of another company, as the case may be, until the information has been disclosed to the general public. For more complete information, please refer to the Company’s Insider Trading Policy.

F.	Protection and Use of Company Assets

All Associates, officers and directors should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company assets should not be used for non-Company business, though incidental personal use may be permitted.

(1)	Use of email, voice mail and Internet Services

Email systems and Internet services are provided to help Associates perform their work. Incidental and occasional personal use is permitted, but never for personal gain or any improper purpose. Associates should not access, send, or download any message that could be viewed as offensive to others or in violation of the Company’s harassment policies.

Messages (including voice mail) and computer information are considered Company property and Associates should not have any expectation of privacy with regard to them. Unless prohibited by law, the Company reserves the right to access and disclose this information as necessary for business purposes. Associates should use good judgment, and not access, send messages, or store any information that they would not want to be seen or heard by other individuals. Violation of these policies may result in disciplinary actions up to and including discharge from the Company.

(2)	Proprietary Information

Associates, officers and directors have an obligation to protect the Company’s assets, including proprietary information. Proprietary information includes intellectual property such as trade secrets, recipes, patents and trademarks, as well as business, marketing and service plans, engineering ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information may destroy the information’s value, harm the Company’s competitive position, or constitute breaches of agreements. It could also be illegal and result in civil or criminal penalties.

G.	Conflicts of Interest

Conflicts of interest are strictly prohibited under this Code. A "conflict of interest" exists when the private interest of an Associate, officer or director interferes - or even appears to interfere - in any way with the interests of the Company. The existence of a conflict depends upon the circumstances, including the nature and relative importance of the interest involved. A conflict of interest situation can arise when an Associate, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest may also arise when an Associate, officer or director, or a member of his or her family (Family members include spouse, children, stepchildren, grandchildren, parents, stepparents, brothers, sisters, grandparents, in- laws, spouse’s in-laws, and any person living in the same household as the director, officer or Associate.) , receives improper personal benefits as a result of his or her position with the Company.

Although it is not practical to list every activity or interest that might present a conflict of interest, the following are examples of specific situations in which conflicts of interest could arise, and sets forth the Company’s policy with respect to such conflicts of interest.

(1)	Interests in Other Companies

Directors, officers or Associates, or members of their families, shall not acquire, own or have a significant financial interest (As a minimum standard, a significant financial interest is an aggregate interest of a director, officer or Associate and family members of more than (a) 5% of any class of the outstanding securities of a company, (b) 5% interest in a partnership or association, or (c) 5% of the total direct and beneficial assets or income of such director, officer or Associate. A significant financial interest generally will not include an investment representing less than 1% of a class of utstanding securities of a publicly held company.) in any business organization that does or seeks to do business with the Company or is a competitor of the Company, unless (a) such interest has been fully disclosed in writing to the Company’s General Counsel and (b) the General Counsel notifies the director, officer or Associate in writing that it has been determined that the interest is permissible. The Company’s General Counsel will seek the assistance of the Audit Committee or Nominating/Corporate Governance Committee of the Board of our Directors in reaching a decision regarding a possible conflict of interest when required.

(2)	Employment by Competitors or Vendors

Directors, officers or Associates shall not serve or accept an offer to serve as a director, partner, consultant of, or in a managerial position, or any other form of employment or affiliation with any business organization that does significant business with or is a competitor of the Company, unless (a) such position, employment or affiliation has been fully disclosed in writing to the Company’s General Counsel and (b) the General Counsel notifies the director, officer or Associate in writing that it has been determined that such position, employment or affiliation is permissible.

(3)	Conducting Business with Related Companies

No director, officer or Associate shall conduct business on behalf of the Company with a member of his or her family, or a business organization with which he or she or a family member has an interest or employment relationship that calls for disclosure under the Code standards described above or that otherwise could be considered significant in terms of potential conflict of interest, unless (a) such business dealings have been disclosed in writing to the Company’s General Counsel and (b) the General Counsel notifies the director, officer or Associate in writing that it has been determined that such transaction is permissible.

(4)	Unrelated Outside Employment

Should an officer or Associate be engaged in outside employment not related to his or her regularly assigned work and not covered by the Code standards described above, such outside employment must not detract from the officer’s or Associate’s job performance or otherwise be detrimental to the best interests of the Company.

(5)	Reporting to an Immediate Family Member

The potential for conflict of interest exists if an Associate’s spouse, partner or immediate family member also works at the Company and is in a direct reporting relationship with that Associate. Associates should not directly supervise, report to, or be in a position to influence the hiring, work assignments or evaluations of someone with whom they have a romantic or familial relationship. For more detailed information regarding this policy, please refer to the Administration Manual.

(6)	Fees and Honorariums

With prior approval, Associates and officers may give lectures, conduct seminars, publish articles in books or engage in any other similar activity for which an Associate or officer may be paid a fee or honorarium. However, any fees, honorariums or reimbursements must be transferred to the Company unless written approval is given by the Company’s General Counsel to retain them. This provision does not apply to the Company’s non-employee directors.

(7)	Gifts, Favors, Entertainment and Payments

The Company has many suppliers, and they are vital to our success. Accordingly, relationships with suppliers must be based entirely on sound business decisions and fair dealing. Meals, gifts and entertainment can build goodwill, enable our Associates to better know those with whom they work, and can be an integral part of doing business. They can also make it harder to be objective about the person providing the gift or entertainment. This Policy is designed to help you draw a proper line between appropriate and inappropriate gifts and entertainment. If you have any questions about a particular situation you should contact the Company’s General Counsel for clarification.

As used in this policy, "Gifts" and "Entertainment" mean anything of value offered to an Associate or his/her immediate family member (spouse, parents, children) by a supplier, potential supplier, or any person who may seek to influence any business decision or transaction involving the Company. Examples of Gifts and Entertainment include discounts, loans, cash, favorable terms on any product or service, services, prizes, transportation, use of another company’s vehicles or vacation facilities, jobs, tickets, meals and gift certificates. The potential list is endless - these are simply examples.

You should keep accurate written records of all Gifts and Entertainment you are offered each year to assist you in completing an annual Gift and Entertainment reporting form.

The Company relies on its Associates to make business judgments based on the Company’s best interests. Gifts and Entertainment could adversely affect one’s judgment or create the appearance of doing so. The Company has adopted guidelines for the acceptance of Gifts and Entertainment to ensure an Associate’s judgment is not impaired or perceived to be impaired as a result of the receipt of a Gift or Entertainment.

The limits in this policy do not apply to larger gifts that are intended to be shared with all Associates (i.e. - donations for Associate events, basketball tickets provided to the Company by a college or television station for game(s) the Company sponsors, etc.). Notify the Company’s General Counsel of these gifts and allocate them in accordance with the guidance provided by the General Counsel and/or your department’s Vice President.

To assist you in your evaluation of Gifts and Entertainment we have categorized them as "Acceptable" or "Never Acceptable."

A Acceptable Gifts and Entertainment

Some Gifts and Entertainment are of such an inconsequential value that they would not impair an Associate’s judgment. Gifts and/or Entertainment from any single source with a value of less than $150 in any calendar year are acceptable (so long as they do not fall into the "Never Acceptable" category below). Examples include:

·	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.)

If you accept a Gift or Entertainment that you believe will fall into this category but later realize it does not, you must notify your direct supervisor in writing on the next business day and resolve the potential violation of this Policy to the satisfaction of your supervisor and the Company’s General Counsel.

B. Never Acceptable

Some Gifts and Entertainment are simply never acceptable, for legal or appearance reasons. Examples of such Gifts and Entertainment are:

·	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.

C. How to Handle Impermissible Gifts and Entertainment

If you receive an impermissible Gift you should immediately return it with an explanation of this policy. Likewise, you should decline an invitation to impermissible Entertainment with an explanation of this policy.

If you cannot reasonably return an impermissible Gift you should notify your supervisor and/or the Company’s General Counsel. Such a Gift will become the Company’s property and may either be shared among Associates, offered to a particular Associate or group of Associates, sold, auctioned or donated to charity.

D. Questions and Answers

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?

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.

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?

A: No, since the vendor will not attend with you.

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?

No. The possession of products made in Cuba is illegal in the United States.

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?

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.

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?

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.

No policy can cover every situation, but we hope this Policy provides you with some guidance in your dealings with vendors. If you have any questions regarding the Policy or any specific situation please contact your supervisor or the Company’s General Counsel.

(8) Company Funds

All Associates are responsible for Company funds under their control. Funds should be spent only for valid business purposes and at prices representing the best value for the Company.

IV.

Our Associates

Our Commitment

"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

Steak n Shake’s people are a key source of our competitive edge. The Company strongly supports and recognizes its responsibility to provide equal employment opportunities to all qualified individuals. The Company places a high value on diversity. The Company strongly believes that all people are unique and valuable and should be respected for their individual abilities.

In support of these beliefs, the Company has established a corporate policy regarding discrimination or harassment on the basis of race, gender, age, color, religion, disability, ethnic or national origin, or any other characteristic protected by law. The policy applies to all personnel relationships including, but not limited to: promotions, transfers, training, job assignments, job stations, hours of work, rates of pay, working conditions, terminations, and all terms and conditions of employment. Further, the Company prohibits discrimination against guests on the basis of race, gender, age, color, religion, disability, ethnic or national origin, or any other characteristic protected by law.

All officers and Associates are expected to adhere to the laws, regulations and Company policies relating to equal opportunity, non-discrimination and non-harassment. To review these policies in greater detail, please refer to the Crew Member Handbook or the Administration Manual.

B.	Health and Safety

The Company strives to provide the safest possible workplace. Each Associate has a responsibility to help us maintain a safe and healthy workplace by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted. Associates should report to work in a condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs or alcohol in the workplace will not be tolerated. For more information regarding the Company’s health and safety policies, please consult the Company’s Crew Member Handbook or Administration Manual

V.	Upholding the Standards

Steak n Shake counts on all Associates, officers and directors to uphold the Company’s standards. By knowing, understanding and following applicable laws and Company policies, Associates, officers and directors have the ability to make Steak n Shake a better Company and to enhance their futures. Inquiries about the applicability of this Code, laws or Company policies to a particular situation should be directed to the Company’s General Counsel under the procedure set forth below. Steak n Shake is dedicated to ensuring that the standards of legal and ethical behavior are upheld.

A.	Interpretation of the Code

The Company’s General Counsel is responsible for interpreting this Code and applying it to specific situations. The Company’s General Counsel may be contacted by the following methods:

By telephone: (317) 656-4533

By Mail: General Counsel

The Steak n Shake Company

36 South Pennsylvania Street

Suite 500

Indianapolis, IN 46204

By Email: dave.milne@steaknshake.com

Under some circumstances, the General Counsel will seek guidance from the Audit Committee or Nominating/Corporate Governance Committee of the Board of Directors or from outside counsel. All inquiries or reports made to the General Counsel will receive a response.

B.	Reporting Illegal or Unethical Behavior, (The "Whistleblower Policy")

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:

By Telephone (317) 656-4533

By Mail: General Counsel

The Steak n Shake Company

36 South Pennsylvania Street

Suite 500

Indianapolis, IN 46204

By Email: dave.milne@steaknshake.com

or via the Anonymous Hotline at (888) 989-7444.

Reports of any violations or suspected violations of any law, regulation, rule or this Code may also be made to the Company’s independent outside lawyers on a confidential or anonymous basis at:

Baker & Daniels

c/o Dave Worrell

300 North Meridian Street

Indianapolis, IN 46204

317-237-0300

While you are free to report any violations of law or this policy to Baker & Daniels, if your complaint concerns harassment, discrimination, your employment, pay or benefits and does not involve upper corporate management, it is recommended you report it through the Company’s hotline at 1-888-989-7444.

Baker & Daniels will report complaints directly to the Company's Audit Committee. Further, the Company is legally obligated to report any concerns or complaints to the Audit Committee.

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:

Audit Committee

c/o General Counsel

36 South Pennsylvania Street

Suite 500

Indianapolis, IN 46204

or via the Anonymous Hotline at (888) 989-7444.

Concerns regarding the Company’s auditing, accounting, or disclosure practices may also be made to the Company’s independent outside law firm on a confidential or anonymous basis at:

Baker & Daniels

c/o Dave Worrell

300 North Meridian Street

Indianapolis, IN 46204

317-237-0300

Baker & Daniels will report complaints directly to the Company's Audit Committee. Further, the Company is legally obligated to report any concerns regarding accounting, auditing or disclosure matters to the Audit Committee.

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.

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.

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.

Any alleged retaliation for using this Whistleblower Policy should be reported to the Company’s General Counsel immediately at (317) 656-4533 or at the address set forth above. Reports of retaliation may also be made to the Anonymous Hotline at ((888) 989-7444) or to the Company’s Audit Committee, or to the Company’s outside counsel at the addresses set forth above. Complaints should be as detailed as possible, including the names of individuals involved, the names of any witnesses, and any documentary evidence.

The Company will promptly undertake and direct an effective, thorough and objective investigation of all allegations of prohibited retaliation. The investigation will be completed in a timely manner and a determination regarding the alleged retaliation will be made and communicated to the person who complained and to the person(s) accused of retaliation. Based on the results of the investigation, the Company will take appropriate action to rectify any violations of this Whistleblower Policy including, but not limited to, disciplining (up to and including discharge) any person who engages in prohibited retaliation. The Company will also take action to deter any future retaliation. Whatever action is taken against the person responsible for the retaliation will be communicated to the party who complained.

C.	Waivers of the Code of Business Conduct and Ethics

Any waivers of this Code for the Company’s executive officers or directors may only be made by the Audit Committee of the Board of Directors and must be promptly disclosed to the Company’s shareholders, as required by law and regulation.

Any waiver of this Code for other Associates may only be made in writing by the Company’s General Counsel, who may seek the guidance of the Company’s executive officers or the Audit or Nominating/Corporate Governance Committee of the Board of Directors or outside counsel before providing a response.

VI.

Conclusion

While the Code standards are extensive, they are by no means exhaustive. The Code can not express all the policies and procedures the Company believes its Associates, officers and directors should follow.

If you suspect that a violation of the law or the Code has taken place or may take place, keep the following guidelines in mind:

·	*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.

You may report ethical violations in confidence and without fear of retaliation. If your situation allows your identity be kept secret, your anonymity will be protected. The Company does not permit retaliation of any kind against Associates for good faith reports of ethical violations.