|   | (a) | Amended                Definitions.  The following definitions appearing under                Section 1 of the Agreement are hereby amended and restated in their                respective entireties as follows: |
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|   | c. | "Applicable                Spread" means that number of Basis Points to be taken into account                in determining the LIBOR-based Rate determined by reference to the                Company’s ratio of Funded Debt to EBITDA as follows: |
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| Ratio                of Funded  Debt                to EBITDA | Applicable                Spread |
|-------------------------------------------------------------------------|----------------------------------|
| >                4.00                                                | 250                b.p.          |
| >                3.00 but < 4.00                                  | 200                b.p.          |
| >                2.00 but < 3.00                                  | 150                b.p.          |
| <                2.00                                                | 100                b.p.          |

|   | Effective                as of the date of the Eighth Amendment, the Applicable Spread shall                be the                highest tier. Thereafter, the Applicable Spread shall be determined                as of                the end of each fiscal quarter upon receipt of the                Company’s quarterly financial statements delivered in accordance with                Section 5(b)(ii) herein. |
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|   | x. | “Loan                Document”                means any of this Agreement, the Revolving Note, the Guaranties,                all                Reimbursement Agreements, the Security Agreement, the Intercreditor                Agreement, and any other instrument or document which evidences or                secures                the Loan or Letters of Credit, or which expresses an agreement as                to terms                applicable to the Loan or Letters of Credit, and in the plural means                any                two or more of the Loan Documents, as the context requires. |
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|   | jj. | “Prudential                Note                Purchase Agreement” means that certain Amended and Restated Note                Purchase and Private Shelf Agreement dated as of September 20, 2002,                entered into by and among the Company, Prudential, Prudential Investment                Management, Inc., and each Prudential Affiliate party thereto, as                amended,                and as it may hereafter be amended, modified, or restated from time                to                time. |
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|   | (b) | New                Definitions.  The following new definitions are hereby                added to Section 1 of the Agreement as follows: |
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|   | vv. | “Collateral”is                used as defined in Section 4(a) herein. |
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|   | ww. | “Eighth                Amendment” means that certain agreement entitled “Eighth Amendment                to Credit Agreement” entered into by and between the Company and the Bank                dated as of May 16, 2008, for the purpose of amending this Agreement. |
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|   | xx. | “Intercreditor                Agreement” is used as defined in Section 4(b) herein. |
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|   | yy. | “Noteholders”                means Prudential Investment Management, Inc., The Prudential Insurance                Company of America, Pruco Life Insurance Company, and United of Omaha                Life                Insurance Company, and their respective successors and assigns. |
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|   | zz. | “Security                Agreement” is used as defined in Section 4(a) herein. |
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|   | (i) | The                Commitment -- Use                of Proceeds.  From the date of the Eighth Amendment and                until the Revolving Loan Maturity Date, the Bank agrees to make Advances                (collectively, the “Revolving Loan”) to the Company from time to time                under a revolving line of credit of amounts not exceeding in the                aggregate                principal amount at any time outstanding the amounts shown for the                corresponding periods (such amount for each period hereinafter called                the                “Commitment”) in the following chart: |
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| Period                                                                                                      | Commitment  |
|-------------------------------------------------------------------------------------------------------------|-------------|
| Commencing                on the date of the Eighth Amendment and until and on                7/31/08       | $45,000,000 |
| On                8/1/08, and at all times thereafter until the Revolving Loan Maturity                Date | $40,000,000 |

|   | (ii) | Method                of                Borrowing.  The obligation of the Company to repay the                Revolving Loan shall be evidenced by a Promissory Note of the Company                in                the form of Exhibit“A”                attached to the Eighth Amendment (the “Revolving Note”). |
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|   | (iv) | Unused                Fee.  The Company  shall pay to the Bank a                facility  or unused fee for each partial or full calendar                quarter during which the Commitment is outstanding equal to, as of                the                date of the Eighth Amendment, thirty (30) Basis Points per annum                of the                average daily excess of the Commitment over the aggregate outstanding                principal balance of the Revolving Loan.  For purposes of                calculating the unused fee, the aggregate amount available to be                drawn                under all outstanding Letters of Credit shall be added to the aggregate                outstanding principal balance of the Revolving Loan for the same                period.  Unused fees for each calendar quarter shall be due and                payable within ten (10) calendar days following the Bank's submission                of a                statement of the amount due, and if not paid by such date, then such                fees                may be debited by the Bank to any demand deposit account of the Company                carried with the Bank without further authority.  Such fees                shall be calculated on the basis of a year of 360 days and actual                days                elapsed. |
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|   | (vi) | Excess                Utilization                Fee.In                  addition to the payment of accrued interest and the unused fee                  provided in                  Section 2(a)(iv) herein, commencing on the date of the Eighth Amendment,                  the Company shall also pay to the Bank an excess utilization fee                  equal to                  fifty (50) Basis Points per annum on the daily amount by which                  the                  aggregate outstanding principal amount of the Revolving Loan on                  and after                  May 1, 2008, and until and on July 31, 2008, is in excess of $40,000,000.                  The excess utilization fee shall be due and payable monthly within                  ten                  (10) calendar days following the Bank's submission of a statement                  of the                  amount due, and if not paid by such date, then such fees may be                  debited by                  the Bank to any demand deposit account of the Company carried with                  the                  Bank without further authority. Such fees shall be calculated on                  the basis                  of a year of 360 days and actual days elapsed. |   |
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|   | (i) | Maximum                Ratio of                Funded Debt to EBITDA. As of the end of each period of four (4)                consecutive fiscal quarters ending as of the last day of each fiscal                quarter commencing with the period of four (4) consecutive fiscal                quarters                ending on April 9, 2008, the Company shall maintain a ratio of Funded                Debt                to EBITDA of not more than 4.75 to 1.00. |
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|   | (ii)   |  Debt                Service                Coverage Ratio.  As of the end of each period of four (4)                consecutive fiscal quarters ending as of the last day of each fiscal                quarter commencing with the period of four (4) consecutive fiscal                quarters                ending on Aril 9, 2008, the Company shall maintain a debt service                coverage                ratio of not less than .70 to 1.00.  For purposes of this                covenant, the phrase "debt service coverage ratio" means the ratio                of: (A)                the sum of net income, interest expense, plus rent expense, to (B)                the sum                of interest expense, rent expense, the Current                Portion of all lease obligations, plus the Current Portion of all                long                term debt. The term “Current Portion” means all payments scheduled to be                paid over the twelve (12) month period immediately following the                date of                determination. |
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|   | a. | Security                Agreement.  The Obligations shall be secured by a                security interest in all of the Company's equipment, inventory, accounts                receivable, chattel paper, software, general intangibles and all                deposit                accounts maintained by the Company individually or jointly with the                Bank                or any of the Bank's affiliates, all whether now owned  or                hereafter acquired, and in all proceeds thereof (all such business                assets                on which a lien is granted to the Bank hereinafter collectively referred                to as the “Collateral”), which security interest will be created by a                Security Agreement  in the form attached to the Eighth Amendment                as Exhibit                "E" (the "Security Agreement").  The Security Agreement                shall provide a security interest in the Collateral described therein                subject only to liens and security interests described in the exceptions                enumerated in Section 6(b) herein. |
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|   | b. | Intercreditor                Agreement. The liens on the Collateral granted to the Bank and also                granted to the Noteholders will be given equal priority and treated                as                pari                passu pursuant to the terms of the Intercreditor and Collateral                Agency Agreement entered into by the Noteholders and the Bank, both                in its                individual capacity and in the role of collateral agent for itself                and the                Noteholders, contemporaneously with execution of the Eighth Amendment                in                the form of Exhibit“F”                attached to thereto (the “Intercreditor Agreement”). |
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|   | k. | Additional                Stores.  The Company shall not open more than nine (9)                new stores during its 2008 fiscal year. |
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|   | h. | Default                under                Prudential Note Purchase Agreement.  Default shall occur                under the Prudential Note Purchase Agreement, or there shall occur                an                event under the Prudential Note Purchase Agreement, if the effect                of such                default or occurrence is to accelerate the maturity of the indebtedness                provided thereunder or to permit the holders of such indebtedness                to cause                such indebtedness to become due and payable prior to its scheduled                maturity. |
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|   | (i) | This                Amendment duly executed by the Company. |
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|   | (ii) | The                Revolving Note in the form of Exhibit                "A"                attached hereto duly executed by the Company. |
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|   | (iii) | The                Reaffirmation of Guaranty Agreement in the form attached hereto asExhibit                "B"                duly executed by Steak n Shake Operations, Inc. |
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|   | (iv) | The                Reaffirmation of Guaranty Agreement in the form attached hereto asExhibit                "C"                duly executed by Steak n Shake Enterprises, Inc. |
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|   | (v)   | The                Reaffirmation of Guaranty Agreement in the form attached hereto asExhibit                "D"                duly executed by SnS Investment                Company. |
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|   | (vi) | A                Security Agreement in the form attached hereto as Exhibit                "E"                duly executed by the Company. |
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|   | (vii) | The                Intercreditor Agreement executed by Prudential and the Prudential                Affiliates, and acknowledged by the Company, in the form attached                hereto                as Exhibit                “F.” |
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|   | (viii) | Resolutions                of the Board of Directors of the Company authorizing the execution,                delivery and performance, respectively, of this Amendment, the Revolving                Note, Security Agreement, and all other Loan Documents provided for                in                this Amendment to which the Company is a party certified by the Secretary                of the Board of Directors of the Company as being in full force and                effect                and duly adopted as of the date hereof. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ix) | The                Certificate of the Secretary of the Board of Directors of the Company                certifying the names of the officer or officers authorized to execute                this                Amendment, the Revolving Note, Security Agreement, and all other                Loan                Documents provided for in this Amendment to which the Company is                a party,                together with a sample of the true signature of each such officer,                dated                as of the date of this Amendment. |
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|   | (x) | Resolutions                of the Board of Directors of Steak n Shake Operations, Inc., an Indiana                corporation, authorizing the execution, delivery and performance,                respectively, of its Reaffirmation of Guaranty Agreement and all                other                Loan Documents provided for in this Amendment to which Steak n Shake                Operations, Inc. is a party certified by the Secretary of the Board                of                Directors of Steak n Shake Operations, Inc. as being in full force                and                effect and duly adopted as of the date hereof. |
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|   | (xi) | The                Certificate of the Secretary of the Board of Directors of Steak n                Shake                Operations, Inc. certifying the names of the officer or officers                authorized to execute its Reaffirmation of Guaranty Agreement and                all                other Loan Documents provided for in this Amendment to which Steak                n Shake                Operations, Inc. is a party, together with a sample of the true signature                of each such officer, dated as of the date of this Amendment. |
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|   | (xii) | Resolutions                of the Board of Directors of Steak n Shake Enterprises, Inc., an                Indiana                corporation, authorizing the execution, delivery and performance,                respectively, of its Reaffirmation of Guaranty Agreement and all                other                Loan Documents provided for in this Amendment to which Steak n Shake                Enterprises, Inc. is a party certified by the Secretary of the Board                of                Directors of Steak n Shake Enterprises, Inc. as being in full force                and                effect and duly adopted as of the date hereof. |
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|   | (xiii) | The                Certificate of the Secretary of the Board of Directors of Steak n                Shake                Enterprises, Inc. certifying the names of the officer or officers                authorized to execute its Reaffirmation of Guaranty Agreement and                all                other Loan Documents provided for in this Amendment to which Steak                n Shake                Enterprises, Inc. is a party, together with a sample of the true                signature                of each such officer, dated as of the date of this Amendment. |
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|   | (xiv) | Resolutions                of the Board of Directors of SnS Investment Company, an Indiana                corporation, authorizing the execution, delivery and performance,                respectively, of its Reaffirmation of Guaranty Agreement and all                other                Loan Documents provided for in this Amendment to which SnS Investment                Company is a party certified by the Secretary of the Board of Directors                of                SnS Investment Company as being in full force and effect and duly                adopted                as of the date hereof. |
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|   | (xv) | The                Certificate of the Secretary of the Board of Directors of SnS Investment                Company certifying the names of the officer or officers authorized                to                execute its Reaffirmation of Guaranty Agreement and all other Loan                Documents provided for in this Amendment to which SnS Investment                Company                is a party, together with a sample of the true signature of each                such                officer, dated as of the date of this Amendment. |
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|   | (xvi) | An                amendment fee in the amount of $100,000 payable to the Bank by the                Company                contemporaneously with the execution of this Amendment. |
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|   | THE                STEAK N SHAKE                COMPANY, an Indiana corporation |
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|   | By: | /s/                David C. Milne  |  |
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|   | Vice                President, General Counsel and Corporate                Secretary |
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|   | FIFTH                  THIRD BANK, a Michigan banking corporation,                  formerly known                  as Fifth Third Bank (Central Indiana), and Fifth Third Bank, Indiana                  (Central) |
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|   | By: | /s/                William J. Krummen       |
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|   | William                J. Krummen, Vice President |
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| Exhibit                "A" | - | Promissory                Note (Revolving Loan) ($45,000,000.00) (The Steak n Shake Company) |
|----------------------------|---|----------------------------------------------------------------------------------------------|

| Exhibit                "B" | - | Reaffirmation                of Guaranty Agreement (Steak n Shake Operations, Inc.) |
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| Exhibit                "C" | - | Reaffirmation                of Guaranty Agreement (Steak n Shake Enterprises, Inc.) |
|----------------------------|---|--------------------------------------------------------------------------------------|

| Exhibit                "D" | - | Reaffirmation                of Guaranty Agreement (SnS Investment Company) |
|----------------------------|---|-----------------------------------------------------------------------------|

| Exhibit                “E” | - | Security                Agreement (The Steak n Shake Company) |
|----------------------------------------|---|---------------------------------------------------------------|

| Exhibit                “F” | - | Intercreditor                and Collateral Agency Agreement (Prudential Investment Management,                Inc.,                The Prudential Insurance Company of America, Pruco Life Insurance                Company,                United of Omaha Life Insurance Company, and Fifth Third Bank, individually                and as Collateral Agent) |
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|   | THE                STEAK N SHAKE                COMPANY, an Indiana corporation |
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| STATE                OF INDIANA | ) |
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| COUNTY                OF  Marion      | ) |
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| STATE                  OF INDIANA | ) |
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| COUNTY                  OF  Marion      | ) |
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| STATE                  OF INDIANA | ) |
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| COUNTY                  OF  Marion      | ) |
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|   | THE                      STEAK N SHAKE                      COMPANY, an Indiana corporation |
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| STATE                      OF INDIANA | ) |
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| COUNTY                      OF  Marion      | ) |
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