Exhibit 10.1 Creation of Financial Obligation


    Exhibit 10.1

     

    

      THE
        STEAK N SHAKE COMPANY

      


       

      


      SENIOR
        SERIES I NOTE 

      


      


      No.
        2006
        I-1         PPN:
        857873
        A@
        2

      ORIGINAL
        PRINCIPAL AMOUNT: $4,300,000.00

      ORIGINAL
        ISSUE DATE: October 27, 2006

      INTEREST
        RATE: 5.66% per annum

      INTEREST
        PAYMENT DATES: January
        27, April 27, July 27 and

      
        	
                 

              	 	 	 	 	
                October
                  27, commencing January 27, 2007

              


      

      FINAL
        MATURITY DATE: October 27, 2011

      PRINCIPAL
        PREPAYMENT DATES AND AMOUNTS: $1,433,333.33
        annually on

      October
        27th
        of each
        year, commencing 

      October
        27, 2009.

      


      


      FOR
        VALUE
        RECEIVED, the undersigned, Steak N Shake Company (herein called the "Company"),
        a corporation organized and existing under the laws of the State of Indiana,
        hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, or
        registered assigns, the principal sum of FOUR MILLION THREE HUNDRED THOUSAND
        DOLLARS ($4,300,000.00), payable on the Princi-pal Prepayment Dates and in
        the
        amounts specified above, and on the Final Maturity Date specified above in
        an
        amount equal to the unpaid balance of the principal here-of, with interest
        (computed on the basis of a 360-day year--30-day month) (a) on the unpaid
        balance thereof at the Interest Rate per annum specified above, payable on
        each
        Interest Payment Date specified above and on the Final Maturity Date specified
        above, commencing with the Interest Payment Date next succeeding the date
        hereof, until the principal hereof shall have become due and pay-able, and
        (b)
        on any overdue payment (including any overdue prepayment) of principal, any
        overdue payment of Yield Maintenance Amount and any overdue payment of interest,
        payable on each Interest Payment Date as aforesaid (or, at the option of
        the
        registered holder hereof, on demand), at a rate per annum from time to time
        equal to the greater of (i) 2% over the Interest Rate specified above or
        (ii) 2%
        over the rate of interest publicly announced by Morgan Guaranty Trust Com-pany
        of New York from time to time in New York City as its Prime Rate.

      


      Payments
        of principal, Yield Maintenance Amount, if any, and interest are to be made
        at
        the main office of Morgan Guaranty Trust Company of New York in New York
        City or
        at such other place as the holder hereof shall designate to the Company in
        writing, in lawful money of the United States of America.

      
 

      This
        Note
        is one of a series of Senior Notes (herein called the "Notes") issued pursuant
        to the Amended and Restated Note Purchase and Private Shelf Agreement, dated
        as
        of September 20, 2002 (as amended from time to time, the "Agree-ment"), between
        the Company, on the one hand, and The Prudential Insurance Company of America
        and each Prudential Affiliate (as defined in the Agreement) which becomes
        party
        thereto, on the other hand, and is entitled to the benefits
        thereof.

      


      This
        Note
        is subject to optional prepayment, in whole or from time to time in part,
        on the
        terms specified in the Agreement. 

      


      This
        Note
        is a registered Note and, as provided in the Agreement, upon surrender of
        this
        Note for registration of transfer, duly endorsed, or accompanied by a written
        instrument of transfer duly executed, by the registered holder hereof or
        such
        holder's attorney duly authorized in writing, a new Note for the then
        outstanding principal amount will be issued to, and registered in the name
        of,
        the transferee. Prior to due presentment for registration of transfer, the
        Company may treat the person in whose name this Note is registered as the
        owner
        hereof for the purpose of receiving payment and for all other purposes, and
        the
        Company shall not be affected by any notice to the contrary.

      


      In
        case
        an Event of Default shall occur and be continuing, the principal of this
        Note
        may be declared or otherwise become due and payable in the manner and with
        the
        effect provided in the Agreement.

      


      Capitalized
        terms used and not otherwise defined herein shall have the meanings (if any)
        provided in the Agreement.

      


      THIS
        NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE CONSTRUED
        AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS (AS OPPOSED
        TO
        THE CONFLICTS OF LAW PROVISIONS) OF SUCH STATE.

      


      STEAK
        N SHAKE COMPANY

      


      


      


                   By: /s/
        Jeffrey A. Blade   

        
Name: Jeffrey
        A. Blade

      Title:
        Senior Vice President, Chief Financial Officer