Execution
      Copy





August
      11, 2008





The
      Steak
      N Shake Company


500
      Century Building


36
      South
      Pennsylvania Street


Indianapolis,
      Indiana 46204


Attention:  Chief
      Financial Officer





Re:
            Amendment
                No. 8 to Amended and Restated Note Purchase and Private Shelf
                Agreement





Ladies
      and Gentlemen:





Reference
      is made to that certain
      Amended and Restated Note Purchase and Private Shelf Agreement dated as of
      September 20, 2002, as amended by that certain Amendment No. 1 dated December
      18, 2002, that certain Amendment No. 2 dated May 21, 2003, that certain
      Amendment No. 3 dated September 17, 2003, that certain Amendment dated November
      7, 2005, that certain Amendment No. 5 dated October 30, 2007, that certain
      Amendment No. 6 dated December 5, 2007 and that certain Amendment No. 7 dated
      May 16, 2008 (as so amended, the “Note Agreement”) among The
      Steak N Shake Company, an Indiana corporation (the “Company”), Prudential
      Investment Management, Inc., The Prudential Insurance Company of America and
      each Prudential Affiliate which has or may become a party thereto in accordance
      with the terms thereof (collectively, “Prudential”), pursuant to
      which the Company issued and sold and Prudential purchased the Company’s senior
      fixed rate notes from time to time.  Capitalized terms used herein and
      not otherwise defined herein shall have the meanings assigned to such terms
      in
      the Note Agreement.





The
      Company has advised Prudential that
      Events of Default exist under paragraph 7A(v) of the Note Agreement as a result
      of the Company’s failure to comply with the provisions of paragraph 6A of the
      Note Agreement and the provisions of paragraph 6C(2) of the Note Agreement
      as of
      and for the fiscal quarter of the Company ending on or about June 30, 2008
      (the
“Existing Events of
      Default”).





The
      Company has requested that Prudential waive the Existing Events of
      Default.  The Company has further requested that the Holders agree to
      amend the Note Agreement as more particularly set forth below.





Subject
      to the terms and conditions
      hereof, the Holders are willing to agree to such
      requests.  Accordingly, and in accordance with the provisions of
      paragraph 11C of the Note Agreement, the parties hereto agree as
      follows:





SECTION
      1.  Amendment.  From
      and after
      the Effective Date (as defined in Section 4 below), the Note Agreement is
      amended as follows:





1.1.                      
      A new paragraph 4B(3) is added to the Note Agreement as follows:





“4B(3).                                
      Pro Rata
      Prepayments.  Until such time as the holders of the Notes have
      received an amendment to the Intercreditor Agreement in form acceptable to
      the
      holders of the Notes, executed by the Collateral Agent and the Bank, which
      amends the Intercreditor Agreement such that upon the occurrence of an
      Enforcement (as defined in the Intercreditor Agreement) the participations
      to be
      purchased under Section 6 of the Intercreditor Agreement shall be in an amount
      so as to cause the outstanding principal amount of the Notes divided by the
      outstanding principal amount of the Loan and Reimbursement Obligations (as
      defined in the Intercreditor Agreement) to equal the Pro Rata Share, or such
      other form acceptable to the holders of the Notes, on any date when the
      aggregate Indebtedness under the Credit Agreement is reduced below the Threshold
      Amount (including, without limitation, as a result of an application of proceeds
      to the payment of Indebtedness under the Credit Agreement pursuant paragraph
      6C(7)(iii)), then, on such date the Company shall prepay a principal amount
      of
      the Notes equal to the Pro Rata Amount with respect to such reduction, together
      with interest thereon to such date and together with the Yield-Maintenance
      Amount, if any, with respect to each Note.  Any partial prepayment of
      the Notes pursuant to this paragraph 4B(3) shall be applied in satisfaction
      of
      the required payments of principal thereof (including the required payment
      of
      principal due upon the maturity thereof) in the inverse order of their scheduled
      due dates.




1.2.                      
      The last sentence of paragraph 4E of the Note Agreement is amended in its
      entirety as follows:





“In
      the
      case of each prepayment of less than the entire unpaid principal amount of
      all
      outstanding Notes pursuant to paragraph 4B(2), 4B(3) or 4C, the amount to be
      prepaid shall be applied pro rata to all outstanding Notes (excluding any Notes
      prepaid or otherwise retired or purchased or otherwise acquired by the Company
      or any of its Subsidiaries or Affiliates) according to the respective unpaid
      principal amounts thereof.”





1.3.                      
      A new paragraph 5J is added to the Note Agreement to read as
      follows:





5J.           
      Mortgages.  At
      all times on and afterNovember
      21, 2008, the Company shall have, and shall have caused its Subsidiaries to
      have, executed and delivered to the Collateral Agent and the holders of the
      Notes such mortgages and leasehold mortgages in favor of the Collateral
      Agent for the benefit of the Bank and the holders of the Notes securing the
      Senior Indebtedness (as defined in the Intercreditor Agreement) (the “Mortgages”), each in form and
      substance satisfactory to the Required Holders, so that substantially all (or
      such lesser amount as is consistent with Prudential Capital Group’s reasonable
      practices for similar transactions under similar circumstances) of the real
      property owned or leased by the Company or its Subsidiaries shall be subject
      to
      a Mortgage, each duly filed and recorded in all such places so as to perfect
      the
      liens intended to be created thereby.  With respect to the real estate
      subject to each Mortgage, the Company shall have delivered to the Collateral
      Agent and the holders of the Notes, at or before the time such Mortgage is
      delivered to the Collateral Agent, (a) from a title company acceptable to the
      Required Holders, a prepaid mortgagee title insurance policy in form acceptable
      to the Required Holders, in an amount at least equal to the estimated fair
      market value of such real estate and the improvements thereon, insuring the
      lien
      of such mortgage with respect to such real estate as a valid, prior lien on
      such
      real estate subject only to such exceptions as shall be approved by the Required
      Holders and containing such endorsements as may be required by the Required
      Holders, (b) an ALTA/ACSM Land Title Survey with respect to such real estate,
      dated (or updated and recertified) as of a recent date, certified to the holders
      of the Notes by a land surveyor licensed in the jurisdiction in which such
      real
      estate is located, and satisfactory to the Required Holders, and (c) a Phase
      1
      environmental assessment, and such additional environmental assessments and
      reports as the Required Holders may request, satisfactory to the Required
      Holders, and each holder of the Notes shall be satisfied with the environmental
      condition of such real estate.”




1.4.                      
      Paragraph 6A of the Note Agreement is amended in its entirety to read as
      follows:





“6A.                      
      Debt Service Coverage
      Ratio.  The Company will not permit the Debt Service Coverage
      Ratio to be less than (i) 0.90 to 1.00 at any time on or prior to the fiscal
      period ending on (or nearest to) December 19, 2007, (ii) 0.70 to 1.00 at any
      time on or after the fiscal period beginning on (or nearest to)
      December 19, 2007 to the fiscal period ending on (or nearest to) June
      30, 2009 and (iii) 1.25 to 1.00 at any other time.”





1.5.                      
      The proviso appearing at the end of paragraph 6C(2) (Debt) of the Note Agreement
      is amended in its entirety and the following is hereby substituted
      therefore:





“provided
      that for each period of four
      (4) consecutive fiscal quarters, the Company shall, at all times, maintain
      a
      ratio of Consolidated Debt to consolidated EBITDA (the “Leverage Ratio”) not exceeding
      (i) 3.75 to 1.00 for the four (4) consecutive fiscal quarter periods ending
      on
      (or nearest to) December 30, 2007, (ii) 4.75 to 1.00 for the four (4)
      consecutive fiscal quarter periods ending on (or nearest to) March 30, 2008,
      June 29, 2008 and September 30, 2008, (iii) 4.00 to 1.00 for the four
      consecutive fiscal quarter periods ending on (or nearest to) December 31, 2008,
      (iv) 3.50 to 1.00 for the four consecutive fiscal quarter periods ending on
      (or
      nearest to) March 31, 2009 and June 30, 2009, and (v) 2.75 to 1.00 at any other
      time; further provided that for purposes of the Leverage Ratio, all current
      and
      future Capitalized Lease Obligations shall, for so long as the underlying leases
      are in effect, at all times be included in the computation of Consolidated
      Debt
      of the Company notwithstanding any subsequent reclassification of such
      Capitalized Lease Obligations as operating leases under generally accepted
      accounting principles (and with respect to such rental obligations that are
      reclassified as operating leases, the amount of such rental obligations included
      in the computation of Consolidated Debt shall be the amount that would otherwise
      be required to be capitalized in accordance with generally accepted accounting
      principles if such rental obligations were in fact Capitalized Lease Obligations
      (it being understood and agreed that if the Company and/or its Subsidiaries
      has
      Capitalized Lease Obligations at the time of calculating the capitalized amount
      of such operating leases, such calculation of the capitalized amount of such
      operating leases shall be performed consistent with the methodology used to
      calculate the capitalized amount of such Capitalized Lease
      Obligations)).  Together with the delivery of financial statements
      required by paragraphs 5A(i) and (ii), for each Capitalized Lease Obligation
      reclassified as an operating lease the Company will deliver to each Significant
      Holder an Officer’s Certificate demonstrating the computation (including
      disclosing the discount rate used in each such computation) of the capitalized
      portion of such operating lease required to be included in the computation
      of
      Consolidated Debt for purposes of the Leverage Ratio pursuant to the immediately
      preceding proviso.”





1.6.                      
      Paragraph 6C(2A) is amended in its entirety to read as follows:





“6C(2A).                                
      Leverage
      Fee.In addition to interest accruing on the Notes, the
      Company agrees to pay to the holders of the Notes a fee (the “Leverage Fee”) with respect
      to each fiscal quarter of the Company, beginning with the fiscal quarter ending
      on (or nearest to) March 31, 2008, on the last day of which the Leverage Ratio
      for the four most recent fiscal quarters then ended is equal to or greater
      than
      3.00 to 1.00.  The Leverage Fee payable for any fiscal quarter with
      respect to each Note shall be a dollar amount equal to (a) the product obtained
      by multiplying
      (i) (1) for each fiscal quarter ending before November 21, 2008 (A) .010 if
      the
      Leverage Ratio is less than 4.00 to 1.00, and (B) .025 if the Leverage Ratio
      is
      equal to or greater than 4.00 to 1.00 and (2) for each fiscal quarter ending
      on
      or after November 21, 2008 (A) .025 if the Leverage Ratio is less than 4.00
      to
      1.00, and (B) .040 if the Leverage Ratio is equal to or greater than 4.00 to
      1.00, in either case times (ii) the
      Weighted Dollar Average (as defined below) of the principal balance of such
      Note
      during the fiscal quarter to which the Leverage Fee relates and (b) dividing
      the
      product thus obtained by four.  The Leverage Fee for each applicable
      fiscal quarter shall be payable in arrears on the date upon which the financial
      statements for such fiscal quarter are to be delivered under paragraph 5A(i)
      (or
      paragraph 5A(ii), if the applicable fiscal quarter is the last fiscal quarter
      in
      a fiscal year).  If the Company fails to deliver financial statements
      under paragraphs 5A(i) or 5A(ii) for any fiscal quarter or fiscal year by the
      date such delivery is due, and fails to provide such financial statements within
      five (5) days of written notice of such failure given to the Company, then
      the
      Company shall be deemed to owe the Leverage Fee for such fiscal quarter and
      shall make the payment required for such fiscal quarter on the date due pursuant
      to the preceding sentence.  Payment of the Leverage Fee shall be made
      pursuant to the terms of paragraph 11A.





The
      acceptance of the Leverage Fee by any holder of a Note shall not constitute
      a
      waiver of any Default or Event of Default, including, without limitation, any
      Default or Event of Default under paragraph 6C(2).  The consequences
      for the failure to pay the Leverage Fee when due shall be governed by paragraph
      7A(ii) hereof, treating the Leverage Fee, for such purposes and for the purpose
      of determining the amount payable upon acceleration of the Notes, as
      interest.





As
      used
      in this paragraph 6C(2A), “Weighted Dollar Average”
      shall mean, with respect to any Note, during any fiscal quarter of the Company,
      a dollar amount determined by adding together the daily outstanding principal
      balance of such Note during such fiscal quarter and dividing the amount thus
      obtained by the total number of days in such fiscal quarter.”





1.7.                      
      Paragraph 6C(11) of the Note Agreement is amended and restated in its entirety
      as follows:





“6C(11).                                
      Restricted
      Payments.  At any time declare or make, or become obligated to
      declare or make, any Restricted Payment.”





1.8.                      
      Paragraph 6D of the Note Agreement is amended and restated in its entirety
      as
      follows:





“6D.                      
      Availability under Credit
      Agreement.  The Company shall not permit at any time there not
      to be in full force and effect a commitment by the Banks under a Credit
      Agreement to make revolving loans to the Company in an aggregate outstanding
      principal amount of up to at least $30,000,000, and on and after November 21,
      2008 no portion of such commitment shall have a scheduled termination date
      prior
      to one year after such time.”




1.9.                      
      New paragraphs 6E and 6F are added to the Note Agreement as
      follows:





“6E.                      
      Management
      Fees.  The Company will not, and will not permit any Subsidiary
      to, pay,agree to pay or
      set aside funds for the payment of, any management fees, consulting
      fees,
      advisory feesor similar fees or expenses to any of its employees,
      directors or holders of its capital stock or other equity interests, or any
      Affiliate thereof, either directly
      or indirectly, whether in cash or property or otherwise, provided that the
      Company may reimburse out-of-pocket expenses in an aggregate amount not to
      exceed $500,000 incurred byWestern Sizzlin and the Lion Fund in
      connection with the proxy contest among the shareholders of the Company in
      calendar year 2008.




6F.           
      Compensation.  The
      Company will not, and will not permit any Subsidiary to, pay, agree to pay or set aside
      funds for
      the payment of any salary, bonus or other compensation, either directly or indirectly,
      whether
      in cash or property or otherwise, to (i) its Chief Executive Officer or
      similar officer in an aggregate amount not to exceed $500,000 in any full fiscal
      year, and a lesser proportionate amount for any period of less than a full
      fiscal year, or (ii) to any other employee, except, solely with respect to
      such
      other employees, salaries, bonuses and other compensation that is market-based,
      consistent with reasonable business practices and sound business judgment and
      reflective of the performance of the Company.”




1.10.                      
      Paragraph 10A of the Note Agreement is amended by amending the following defined
      terms therein in their entirety as follows:





“Called
      Principal” shall mean,
      with respect to any Note, the principal of such Note that is to be prepaid
      pursuant to paragraph 4B(2), 4B(3) 4C, is put to the Company pursuant to
      paragraph 5G or is declared to be immediately due and payable pursuant to
      paragraph 7A, as the context requires.





“Settlement
      Date” shall mean,
      with respect to the Called Principal of any Note, the date on which such Called
      Principal is to be prepaid pursuant to paragraph 4B(2), 4B(3) or 4C, is put
      to
      the Company pursuant to paragraph 5G or is declared to be immediately due and
      payable pursuant to paragraph 7A, as the context requires.





1.11.                      
      Paragraph 10B of the Note Agreement is amended by adding, or amending and
      restating, as applicable, the following defined terms:





“Collateral”
      shall mean all
      accounts, accounts receivable, inventory, machinery, equipment, general
      intangibles, fixtures and all other tangible or intangible personal property
      of
      the Company and its Subsidiaries, whether now owned or hereafter acquired and
      whether now or hereafter existing; provided that on and after November 21,
      2008,
“Collateral” shall include substantially all (or such lesser amount as is
      consistent with Prudential Capital Group’s reasonable practices for similar
      transactions under similar circumstances) real property owned or leased by
      the
      Company and its Subsidiaries, and all improvements thereon, whether now owned
      or
      hereafter acquired and whether now or hereafter existing.




“Collateral
      Documents” shall
      mean the Security Agreement, the Mortgages and any other agreement, document
      or
      instrument in effect on the Seventh Amendment Effective Date or executed by
      the
      Company or any Subsidiary after the Seventh Amendment Effective Date under
      which
      the Company or such Subsidiary has granted a lien upon or security interest
      in
      any property or assets to the Collateral Agent to secure all or any part of
      the
      obligations of the Company under this Agreement or the Notes or of any Guarantor
      under any Guaranty Agreement, and all financing statements, certificates,
      documents and instruments relating thereto or executed or provided in connection
      therewith, each as amended, restated, supplemented or otherwise modified from
      time to time.




“EBITDA”shall
      mean earnings
      before interest, taxes, depreciation and amortization, plus, to the extent
      deducted in determining the same, the Specified Impairment Charge, all
      determined in accordance with generally accepted accounting
      principles.




“Debt
      Service Coverage Ratio”
      shall mean the ratio of (i) consolidated net income of the Company and
      Subsidiaries plus, to the extent deducted in determining the same, interest
      expense, rental expense and the Specified Impairment Charge to (ii) the sum
      of
      interest expense, rental expense, the current portion of all lease obligations
      and the current portion of Debt, in each case for the period of four consecutive
      fiscal quarters (or in the case of the current portion of Debt, as of the last
      day of the fiscal quarter) of the Company most recently ended as of any time
      of
      determination.




“Mortgages”
      shall have the
      meaning given in paragraph 5J hereof.




“Pro
      Rata Amount” shall mean,
      with respect to any reduction of Indebtedness under the Credit Agreement, the
      product of the Pro Rata Share multiplied by the Reduction with respect to such
      reduction, less any payments of principal made on the Notes pursuant to
      paragraph 4A or 4B(1) after August 11, 2008 and not previously subtracted to
      compute the Pro Rata Amount.





“Pro
      Rata Share” shall mean
      (i) $17,142,857 divided by (ii) $11,640,000.





“Reduction”
      shall mean, with
      respect to any reduction of Indebtedness under the Credit Agreement, the
      difference between (i) the Threshold Amount immediately prior to such reduction
      and (ii) the aggregate Indebtedness outstanding under the Credit Agreement
      after
      giving effect to such reduction.





“Specified
      Impairment Charge”
      shall mean that certain non-cash impairment charge incurred on or before July
      2,
      2008 by the Company as a result of the closing of 12 retail restaurant locations
      and the write down in value of 14 other retail restaurant locations, in an
      aggregate amount not to exceed $17,500,000, provided that for purposes of
      calculating the Debt Service Coverage Ratio, the amount of the “Specified
      Impairment Charge” shall be determined on an after-tax basis.




“Threshold
      Amount” shall mean
      $11,640,000, less the aggregate amount of all Reductions (without
      duplication).





SECTION
      2.                                           
Waiver.  Effective
      on the
      Effective Date, Prudential hereby waives the Existing Events of Default,
      provided that the Company would have been in compliance with the provisions
      of
      paragraph 6A and the provisions of paragraph 6C(2) as of the fiscal quarter
      of
      the Company ended on or about June 30, 2008 if the amendments to the Note
      Agreement in Section 1 hereof had been effective as of the end of such fiscal
      quarter.




SECTION
      3.  Representations
      and Warranties.  The Company
      represents and warrants that  (a) each representation and warranty set
      forth in paragraph 8 of the Note Agreement is true and correct as of the date
      of
      execution and delivery of this letter by the Company with the same effect as
      if
      made on such date (except to the extent such representations and warranties
      expressly refer to an earlier date, in which case they were true and correct
      as
      of such earlier date); (b) after giving effect to the amendments set forth
      in
      Section 1 hereof and the waivers in Section 2 hereof, no Event of Default or
      Default exists or has occurred and is continuing on the date hereof and (c)
      neither the Company nor any of its Subsidiaries has paid or agreed to pay,
      and
      neither the Company nor any of its Subsidiaries will pay or agree to pay, any
      fees or other consideration to any Bank or any other Person in connection with
      the waiver and amendment referenced in Section 4.2 hereof except an amendment
      fee in the aggregate not to exceed $30,000.





SECTION
      4.  Conditions
      Precedent.  This letter
      shall
      be deemed effective on the date (the “Effective Date”) each of the
      following conditions shall have been satisfied:





4.1.                      
      Documents.  Prudential
      shall have received original counterparts or, if satisfactory to Prudential,
      certified or other copies of all of the following, each duly executed and
      delivered by the party or parties thereto, in form and substance satisfactory
      to
      Prudential, dated the Effective Date unless otherwise indicated, and on the
      Effective Date in full force and effect with no event having occurred and being
      then continuing that would constitute a default thereunder or constitute or
      provide the basis for the termination thereof:





(i)           
      this letter; and




(ii)           
      such other certificates, documents and agreements as Prudential may reasonably
      request.




4.2.                      
      Waiver and Amendment to Credit
      Agreement.Prudential shall have received a copy of the
      executed waiver and amendment to Credit Agreement, in form and substance
      satisfactory to Prudential, and such waiver amendment shall be in full force
      and
      effect.




4.3.                      
      Amendment
      Fee.                                                      
The Company shall have paid to the holders of the Notes, by wire transfer
      of
      immediately available funds, such holder’s ratable portion (in proportion to the
      aggregate principal amount of the Notes held by such holders as of the Effective
      Date) of an amendment fee in the aggregate amount, for all holders of the Notes,
      of $30,000.




4.4.                      
      Proceedings.  All
      corporate and other proceedings taken or to be taken in connection with the
      transactions contemplated hereby and all documents incident thereto shall be
      satisfactory in substance and form to Prudential, and Prudential shall have
      received all such counterpart originals or certified or other copies of such
      documents as it may reasonably request.




Upon
      execution hereof by the Company, this letter and each of the
      other  foregoing documents should be returned to: Prudential Capital
      Group, Two Prudential Plaza, Suite 5600, Chicago, Illinois 60601,
      Attention:  Wiley S. Adams.





SECTION
      5.                                           
Reference
      to and Effect on Note Agreement.  Upon the
      effectiveness of this letter, each reference to the Note Agreement and the
      Notes
      in any other document, instrument or agreement shall mean and be a reference
      to
      the Note Agreement and the Notes as modified by this letter.  Except
      as specifically set forth in Sections 1 and 2 hereof, each of the Note Agreement
      and the Notes shall remain in full force and effect and each is hereby ratified
      and confirmed in all respects.  The execution, delivery and
      effectiveness of this letter shall not be construed as a course of dealing
      or
      other implication that Prudential or any holder of any Note has agreed to or
      is
      prepared to grant any waivers or consents or agree to any amendments to the
      Note
      Agreement in the future, whether or not under similar
      circumstances.







SECTION
      6.                                           
Expenses.  The
      Company
      hereby confirms its obligations under the Note Agreement, whether or not the
      transactions hereby contemplated are consummated, to pay, promptly after request
      by Prudential or any holder of any Note, all reasonable out-of-pocket costs
      and
      expenses, including attorneys’ fees and expenses, incurred by Prudential or any
      holder of any Note in connection with this letter agreement or the transactions
      contemplated hereby, in enforcing any rights under this letter, or in responding
      to any subpoena or other legal process or informal investigative demand issued
      in connection with this letter or the transactions contemplated
      hereby.  The obligations of the Company under this Section 6 shall
      survive transfer by any holder of any Note and payment of any Note.




SECTION
      7.                                           
Reaffirmation.
      Each Guarantor hereby
      consents to the terms and conditions of this letter and hereby ratifies and
      reaffirms all of its payment and performance obligations, contingent or
      otherwise, under the Guaranty Agreement, including without limitation, with
      respect to the Note Agreement as amended by this letter.  The Company
      hereby reaffirms its grant of liens in the Collateral under the Security
      Agreement and confirms that such liens continue to secure the Obligations (as
      defined in the Security Agreement), including without limitation, under the
      Note
      Agreement as amended by this letter.




SECTION
      8.                                           
Release.  The
      Company and
      the Guarantors hereby release, remise, acquit and forever discharge Prudential
      and their employees, agents, representatives, consultants, attorneys,
      fiduciaries, servants, officers, directors, partners, predecessors, successors
      and assigns, subsidiary corporations, parent corporations and related corporate
      divisions (collectively, “Released Parties”) from any
      and all actions and causes of action, judgments, executions, suits, debts,
      claims, demands, liabilities, obligations, damages and expenses of any and
      every
      character, known or unknown, direct and/or indirect, at law or in equity, of
      whatsoever kind or nature, whether heretofore or hereafter arising, for or
      because of any matter or thing done, omitted or suffered to be done by any
      Released Party prior to and including the date or execution hereof and in any
      way directly or indirectly arising out of or in any way connected to this letter
      and the Transaction Documents , including but not limited to, claims relating
      to
      any actions taken in connection with the administration of the investment
      evidenced by the Notes (collectively, the “Released
      Matters”).  The Company and the Guarantors acknowledge that the
      agreements in this Section are intended to be in full satisfaction of all or
      any
      alleged injuries or damages arising in connection with the Released
      Matters.  The Company and the Guarantors represent and warrant to
      Prudential that they have not purported to transfer, assign or otherwise convey
      any right, title or interest in any Released Matter to any other Person and
      that
      the foregoing constitutes a full and complete release of all Released
      Matters.




SECTION
      9.  Governing
      Law.  THIS
      LETTER SHALL BE CONSTRUED AND
      ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
      BY,
      THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH
      WOULD OTHERWISE CAUSE THIS LETTER TO BE CONSTRUED OR ENFORCED IN ACCORDANCE
      WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER
      JURISDICTION).





SECTION
      10.  Counterparts;
      Section Titles.  This letter
      may
      be executed in any number of counterparts and by different parties hereto in
      separate counterparts, each of which when so executed and delivered shall be
      deemed to be an original and all of which taken together shall constitute but
      one and the same instrument.  Delivery of an executed counterpart of a
      signature page to this letter by facsimile or other electronic transmission
      shall be effective as delivery of a manually executed counterpart of this
      letter.  The section titles contained in this letter are and shall be
      without substance, meaning or content of any kind whatsoever and are not a
      part
      of the agreement between the parties hereto.





[signature
      page follows]





Very
      truly yours,





PRUDENTIAL
      INVESTMENT MANAGEMENT, INC.





By:
/s/
      Julia Buthman


Julia
      Buthman, Vice
      President








THE
      PRUDENTIAL INSURANCE COMPANY


OF
      AMERICA


By:
/s/
        Julia Buthman
 Julia
        Buthman, Vice
        President








PRUCO
      LIFE INSURANCE COMPANY


By:
/s/
        Julia Buthman
 Julia
        Buthman, Vice
        President







UNITED
      OF OMAHA LIFE INSURANCE


COMPANY





By:                      
      Prudential Private Placement Investors,


L.P.
      (as Investment
      Advisor)





By:                      
      Prudential Private Placement Investors, Inc.


(as
      its
      General Partner)





By:
/s/
            Julia Buthman
 Julia
            Buthman, Vice
            President





Agreed
      and Accepted:





THE
      STEAK N SHAKE COMPANY











By:       /s/
      David C.
      Milne


Name:  David
      C. Milne


Title:
      Vice President, General Counsel, Corporate Secretary





STEAK
      N SHAKE OPERATIONS, INC.








By:       /s/
        David C.
        Milne
 Name:  David
        C. Milne
 Title:
        Vice President, General Counsel, Corporate
        Secretary


SNS
      INVESTMENT COMPANY







By:       /s/
        David C.
        Milne
 Name:  David
        C. Milne
 Title:
        Vice President, General Counsel, Corporate Secretary





STEAK
      N SHAKE ENTERPRISES, INC.











By:       /s/
        David C.
        Milne
 Name:  David
        C. Milne
 Title:
        Vice President, General Counsel, Corporate Secretary