Unassociated Document


    (Face of
Debenture)

    


     

    
      	 
      	
              CUSIP  857873
      AA1

            
	 	 
	 
      	
              ISIN   US857873AA13

            
	 
      	 
      
	
              No.__________________

            	
              $______________________

            


    

    


     

    THE STEAK
N SHAKE COMPANY

     

    14%
Subordinated Debenture Due 2015

     

    Interest
Payment Dates:  June 30 and December 31

     

    Record
Dates:  June 15 and December 15

     

    


     

    The Steak
n Shake Company promises to pay to __________________________ or registered
assigns, the sum of _________________________ Dollars on March 30,
2015.

     

    This
Debenture is subordinated to Senior Debt as defined by the
Indenture.  The Steak n Shake Company may, at its option, redeem the
Debentures, in whole or in part and without premium or penalty, as of any date
that occurs on or after March 30, 2011.  See the reverse and the
Indenture referenced for additional provisions of this Debenture.

     

    


    
      	
              Dated:

            	 
      	 	 
      	 
      
	 
      	 
      	 	 
      	 
      
	
              Authenticated:

            	 
      	 	 
      	 
      
	 
      	 
      	 	 
      	 
      
	
              WELLS
      FARGO BANK,

            	 	 
      	 
      
	
              NATIONAL
      ASSOCIATION, as Trustee

            	 	
              THE
      STEAK N SHAKE COMPANY

            
	 
      	 
      	 	 
      	 
      
	 
      	 
      	 	 
      	 
      
	
              By

            	 
      	 	
              By

            	 
      
	 
      	

              Authorized
      Officer

            	 	 
      	
               

            
	 
      	 
      	 	 
      	 
      
	 
      	 
      	 	
              By

            	 
      
	 
      	 
      	 	 
      	 
      
	 
      	 
      	 	 
      	
              [SEAL]

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (Back of
Debenture)

     

    THE STEAK
N SHAKE COMPANY

     

    14%
Subordinated Debenture Due 2015

     

    (1)           Interest.  The
Steak n Shake Company (the "Company"), an Indiana
corporation, promises to pay interest on the principal amount of this Debenture
at the rate per annum shown above.  The Company will pay interest
semiannually on June 30 and December 31 of each year, commencing June 30, 2010,
and on the date of maturity of the Debentures.  Interest on the
Debentures will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from March 30, 2010.  Interest will
be computed on the basis of a 360-day year of twelve 30-day months.

     

    (2)           Method of
Payment.  The Company will pay interest on the Debentures to
the Persons who are registered holders of Debentures at the close of business on
the record date for the next interest payment date, except as otherwise provided
herein or in the Indenture even though Debentures are cancelled after the record
date and on or before the interest payment date.  Holders must
surrender Debentures to a Paying Agent to collect principal payments and
interest payable on the date of maturity.  The Company will pay
Principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts.  However, the
Company may pay Principal and interest by wire transfer or check payable in such
money.  It may mail an interest check to a record date holder's
registered address.

     

    (3)           Agents.  Initially,
Wells Fargo Bank, National Association ("Trustee"), Corporate
Trust Services, 230 West Monroe Street, Suite 2900, Chicago,
Illinois 60606, will act as Registrar and Paying Agent.  With
respect to presentation of the Debentures for payment or registration of
transfers or exchanges, the Trustee's address is 608 Second Avenue South,
N9303-121, Minneapolis, Minnesota 55479, Attention: Corporate Trust Operations.
The Company may change any such Agent without notice.  The Company or
an Affiliate may act in any such capacity.  Subject to certain
conditions, the Company may change the Trustee.

     

    (4)           Indenture.  The
Company issued the Debentures under an Indenture dated as of March 30, 2010
("Indenture")
between the Company and the Trustee.  The terms of the Debentures
include those stated in the Indenture and those made part of the Indenture by
the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the "Act").  The
Debentures are subject to all such terms, and Debentureholders are referred to
the Indenture and the Act for a statement of such terms.  The
Debentures are unsecured subordinated general obligations of the Company limited
to $22,959,000 in aggregate principal amount.

     

    (5)           Redemption.  The
Debentures are not redeemable by the Company at any time prior to March 30,
2011.  From and after March 30, 2011, the Company may, at its option,
redeem Debentures in accordance with Article III of the Indenture in whole or in
part without premium or penalty.  The Company's right to redeem Debentures
under this Section
5 may not be exercised if and for so long as the Company has failed to
pay interest on any Debenture when the same becomes due and
payable.

     

    (6)           Notice of
Redemption.  Notice of redemption will be mailed at least 30
days but not more than sixty (60) days before the redemption date to each holder
of Debentures to be redeemed at his registered address.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (7)           Subordination.  The
Debentures are subordinated to Senior Debt as defined in the
Indenture.  To the extent provided in the Indenture, Senior Debt must
be paid before the Debentures may be paid.  The Company agrees, and
each Debentureholder by accepting a Debenture agrees, to the subordination and
authorizes the Trustee to give it effect.

     

    (8)           Denominations, Transfer,
Exchange.  The Debentures are in registered form without
coupons in denominations of $1,000 and whole multiples of $1,000.  The
transfer of Debentures may be registered and Debentures may be exchanged as
provided in the Indenture.  The Registrar may require a holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes required by law.  The Registrar need not exchange or
register the transfer of any Debenture or portion of a Debenture selected for
redemption.  Also, it need not exchange or register the transfer of
any Debentures for a period of fifteen (15) days before a selection of
Debentures to be redeemed.

     

    (9)           Persons Deemed
Owners.  Subject to 0 of the Indenture, the registered holder
of a Debenture may be treated as its owner for all purposes.

     

    (10)           Amendments and
Waivers.  Subject to certain exceptions, the Indenture or the
Debentures may be amended, and any Default may be waived, with the consent of
the holders of a majority in Principal amount of the
Debentures.  Without the consent of any Debentureholder, the Indenture
or the Debentures may be amended to cure any ambiguity, defect or inconsistency,
to provide for assumption of Company obligations to Debentureholders or to make
any change that does not adversely affect the rights of any
Debentureholder.

     

    (11)           Successors.  When
successors assume all the obligations of the Company under the Debentures and
the Indenture, the Company will be released from those obligations, except as
provided in the Indenture.

     

    (12)           Satisfaction and Discharge
Prior to Redemption or Maturity.  Subject to certain
conditions, the Company at any time may terminate some or all of its obligations
under the Debentures and the Indenture if the Company deposits with the Trustee
money or U.S. Government Obligations for the payment of Principal and interest
on the Debentures to redemption or maturity.

     

    (13)           Defaults and
Remedies.  Subject to the Indenture, if an Event of Default, as
defined in the Indenture, occurs and is continuing, the Trustee or the holders
of at least 25% in Principal amount of the Debentures may declare all the
Debentures to be due and payable immediately.  Debentureholders may
not enforce the Indenture or the Debentures except as provided in the
Indenture.  The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Debentures.  Subject to
certain limitations, holders of a majority in Principal amount of the Debentures
may direct the Trustee in its exercise of any trust or power.  The
Trustee may withhold from Debentureholders notice of any continuing Default
(except a Default in payment of Principal or interest) if it determines that
withholding notice is in their interests.  The Company must furnish an
annual compliance certificate to the Trustee.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (14)           Trustee Dealings with
Company.  The Trustee under the Indenture, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company, or its Affiliates, as if it were not Trustee, subject to the Indenture
and the Act.

     

    (15)           No Recourse Against
Others.  A director, officer, employee or stockholder, as such,
of the Company shall not have any liability for any obligations of the Company
under the Debentures or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation.  Each
Debentureholder by accepting a Debenture waives and releases all such
liability.  The waiver and release are part of the consideration for
the issue of the Debentures.

     

    (16)           Authentication.  This
Debenture shall not be valid until authenticated by a manual signature of the
Trustee.

     

    (17)           Abbreviations.  Customary
abbreviations may be used in the name of a Debentureholder or an assignee, such
as:  TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (Custodian), and U/G A (= Uniform Gifts to Minors
Act).

     

    The
Company will furnish to any Debentureholder upon written request and without
charge a copy of the Indenture.  Requests may be made
to:  Secretary, The Steak N Shake Company, 175 East Houston Street,
Suite 1300, San Antonio, Texas 78205.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    Assignment
Form

     

    


    To assign
this Debenture, fill in the form below:

    


    
      	
              (I)
      or (we) assign and transfer this Debenture to:

            	 
      
	 
      	
              (Insert assignee's legal
      name)

            


    

    


    


    
      
        

      

    

    (Insert assignee's soc. sec. or tax I.D.
no.)

    


    
      
        

      

       

    

    
      
        

      

    

    


    
      
        

      

    

    
       

      
        

      

    

    (Print or type assignee's name, address
and zip code)

    


    
      	
              and
      irrevocably appoint

            	 
      


    

    to
transfer this Debenture on the books of the Company.  The agent may
substitute another to act for him.

    


    
      	
              Date:

            	 
      	 	 
      	 
      
	 
      	 
      	 	 
      	 
      
	 
      	 
      	 	
              Your
      Signature:

            	 
      
	 
      	 
      	 	
              (Sign exactly as your name appears
      on the face of this
Debenture)

            


    

    


    


    


    
      	
              Signature
      Guarantee*:

            	 
      	 
      	 
      


    

    


    *           Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor
acceptable to the Trustee).