exhibit10_31.htm


    EXHIBIT
      10.31 

    


    


    CHANGE
      IN CONTROL BENEFITS AGREEMENT

    


    


    This
      Change in Control Benefits Agreement (“Agreement”) is made and entered into as
      of November 7, 2007, by and between The Steak N Shake Company, an Indiana
      corporation (hereinafter referred to as the “Company”), and Jeffrey A. Blade
      (hereinafter referred to as “Executive”).

    


    WITNESSETH

    


    WHEREAS,
      Executive is an executive officer of the Company and/or its subsidiaries;
      and

    


    WHEREAS,
      the Company believes that Executive has made and will continue to make valuable
      contributions to the productivity and profitability of the Company;
      and

    


    WHEREAS,
      the Company desires to encourage Executive to continue to make such
      contributions and not to seek or accept employment elsewhere; and

    


    WHEREAS,
      the Company, therefore, desires to assure Executive of certain benefits in
      the
      event there is a Change in Control of the Company or in the case of any
      termination or significant redefinition of the terms of his employment with
      the
      Company subsequent to any Change in Control of the Company;

    


    NOW,
      THEREFORE, in consideration of the foregoing and of the mutual covenants herein
      contained and the mutual benefits herein provided, the Company and Executive
      hereby agree as follows:

    


    1.           The
      term of this Agreement shall be from the date hereof through December 31,
      2010; provided, however, that such term shall be automatically extended for
      an
      additional year each year thereafter unless either party hereto gives written
      notice to the other party not to so extend prior to June 30 of the final
      year of the Agreement prior to such extension, in which case no further
      automatic extension shall occur.

    


    2.           As
      used in this Agreement, “Change in Control” of the Company means:

    


    (A)           The
      acquisition, within a 12-month period ending on the date of the most recent
      acquisition, by any individual, entity or group (within the meaning of
      Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
      as amended (the “Exchange Act”) (a “Person”) of beneficial ownership (within the
      meaning of Rule 13d-3 promulgated under the Exchange Act as in effect from
      time to time) of fifty percent (50%) or more of the combined voting power of
      the
      then outstanding voting securities of the Company entitled to vote generally
      in
      the election of directors; provided, however, that the following acquisitions
      shall not constitute an acquisition of control:  (i) any
      acquisition by a Person who, immediately before the commencement of the 12-month
      period, already held beneficial ownership of fifty percent (50%) or more of
      that
      combined voting power; (ii) any acquisition directly from the Company (excluding an acquisition by virtue of
      the exercise of a
      conversion privilege), (iii) any acquisition by the Company, (iv) any
      acquisition by any employee benefit plan (or related trust) sponsored or
      maintained by the Company or any corporation controlled by the Company, or
      (v) any acquisition by any corporation pursuant to a reorganization, merger
      or consolidation, if, following such reorganization, merger or consolidation,
      the conditions described in clauses (i), (ii) and (iii) of
      subsection (C) of this definition are satisfied;

     

    (B)           The
      replacement of a majority of members of the Board of Directors during any
      12-month period, by members whose appointment or election is not endorsed by
      a
      majority of the members of the Board of Directors prior to the date of the
      appointment or election;

     

    (C)           A
      reorganization, merger or consolidation, in each case, unless, following such
      reorganization, merger or consolidation, (i) more than sixty percent (60%)
      of, respectively, the then outstanding shares of common stock of the corporation
      resulting from such reorganization, merger or consolidation and the combined
      voting power of the then outstanding voting securities of such corporation
      entitled to vote generally in the election of directors is then beneficially
      owned, directly or indirectly, by all or substantially all of the individuals
      and entities who were the beneficial owners, respectively, of the outstanding
      Company common stock and outstanding Company voting securities immediately
      prior
      to such reorganization, merger or consolidation in substantially the same
      proportions as their ownership, immediately prior to such reorganization, merger
      or consolidation, of the outstanding Company stock and outstanding Company
      voting securities, as the case may be, (ii) no Person (excluding the
      Company, any employee benefit plan or related trust of the Company or such
      corporation resulting from such reorganization, merger or consolidation and
      any
      Person beneficially owning, immediately prior to such reorganization, merger
      or
      consolidation, directly or indirectly, twenty-five percent (25%) or more of
      the
      outstanding Company common stock or outstanding voting securities, as the case
      may be) beneficially owns, directly or indirectly, twenty-five percent (25%)
      or
      more of, respectively, the then outstanding shares of common stock of the
      corporation resulting from such reorganization, merger or consolidation or
      the
      combined voting power of the then outstanding voting securities of such
      corporation entitled to vote generally in the election of directors and
      (iii) at least a majority of the members of the board of directors of the
      corporation resulting from such reorganization, merger or consolidation were
      members of the Incumbent Board at the time of the execution of the initial
      agreement providing for such reorganization, merger or
      consolidation;

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (D)           A
      complete liquidation or dissolution of the Company; or

     

    (E)           The
      sale or other disposition of all or substantially all of the assets of the
      Company, other than any of the following dispositions: (i) to a corporation
      with
      respect to which following such sale or other disposition (1) more than
      sixty percent (60%) of, respectively, the then outstanding shares of common
      stock of such corporation and the combined voting power of the then outstanding
      voting securities of such corporation entitled to vote generally in the election
      of directors is then beneficially owned, directly or indirectly, by all or
      substantially all of the individuals and entities who were the beneficial
      owners, respectively, of the outstanding Company common stock and outstanding
      Company voting securities immediately prior to such sale or other disposition
      in
      substantially the same proportion as their ownership, immediately prior to
      such
      sale or other disposition, of the outstanding Company common stock and
      outstanding Company voting securities, as the case may be, (2) no Person
      (excluding the Company and any employee benefit plan or related trust of the
      Company or such corporation and any Person beneficially owning, immediately
      prior to such sale or other disposition, directly or indirectly, twenty-five
      percent (25%) or more of the outstanding Company common stock or outstanding
      Company voting securities, as the case may be) beneficially owns, directly
      or
      indirectly, twenty-five percent (25%) or more of, respectively, the then
      outstanding shares of common stock of such corporation and the combined voting
      power of the then outstanding voting securities of such corporation entitled
      to
      vote generally in the election of directors and (3) at least a majority of
      the members of the board of directors of such corporation were members of the
      Incumbent Board at the time of the execution of the initial agreement or action
      of the Board providing for such sale or other disposition of assets of the
      Company; (ii) to a shareholder of the Company in exchange for or with
      respect to its stock; (iii) to a Person that owns, directly or indirectly,
      fifty percent (50%) or more of the total value or voting power of all
      outstanding stock of the Company; or (iv) to an entity, at least fifty
      percent (50%) or more of the total value or voting power of which is owned,
      directly or directly, by the Company or by a Person described in
      (iii).

     

    Despite
      any other provision of this definition to the contrary, an occurrence shall
      not
      constitute a Change in Control if it does not constitute a change in the
      ownership or effective control, or in the ownership of a substantial portion
      of
      the assets of, the Company within the meaning of Section 409A(a)(2)(A)(v) of
      the
      Internal Revenue Code of 1986, as amended (the “Code”) and its interpretive
      regulations.

     

    3.           The
      Company shall provide Executive with the benefits set forth in Section 6 of
      this Agreement upon any termination of Executive’s employment by the Company
      within twelve (12) months following a Change in Control for any reason except
      the following:

    


    (A)           Termination
      by reason of Executive’s death.

    


    (B)           Termination
      by reason of Executive’s “disability.”  For purposes hereof,
“disability” shall be defined as Executive’s inability by reason of illness or
      other physical or mental disability to perform the duties required by his
      employment for any consecutive ninety (90) day period.

    


    (C)           Termination
      for “Cause.”  As used in this Agreement, the term “Cause” shall mean
      the occurrence of one or more of the following
      events:  (i) Executive’s conviction for a felony or of any crime
      involving moral turpitude; (ii) Executive’s engaging in any fraudulent or
      dishonest conduct in his dealings with, or on behalf of, the Company (or its
      affiliates); (iii) Executive’s gross or habitual negligence in the
      performance of his employment duties for the Company (or its affiliates);
      (iv) Executive’s material violation of the Company’s business ethics or
      conflict-of-interest policies, as such policies currently exist or as they
      may
      be amended or implemented during Executive’s employment with the Company; or
      (v) Executive’s misuse of alcohol or illegal drugs which interferes with
      the performance of Executive’s employment duties for the Company or which
      compromises the reputation or goodwill of the Company.

    


    4.           Subject
      to the procedural conditions prescribed below, the Company shall also provide
      Executive with the benefits set forth in Section 6 of this Agreement upon
      any voluntary resignation of Executive if any one of the following events occurs
      within twelve (12) months following a Change in Control:

    


    (A)           A
      material diminution in Executive’s base compensation from the level of such base
      compensation immediately prior to the Change in Control;

    


    (B)           A
      material diminution in Executive's authority, duties, or responsibilities from
      his authority, duties, or responsibilities immediately prior to the Change
      in
      Control;

    


    (C)           A
      material change in the geographic location at which Executive is assigned to
      perform his duties and responsibilities on behalf of the Company from such
      geographic location immediately prior to the Change in Control;

    


    (D)           A
      material diminution in the budget over which Executive has authority from such
      budget immediately prior to the Change in Control; or

    


    (E)           Any
      other material breach by the Company of its obligations to Executive under
      this
      Agreement or any other agreement prescribing the terms and conditions of his
      employment.

    


    For
      the
      Executive to be entitled to benefits because of his resignation following the
      occurrence of one of the listed events, each of the following procedural
      conditions must be satisfied: (i) within ninety (90) days of the initial
      occurrence of the event, the Executive must give written notice to the Company
      of such occurrence; (ii) the Company must have failed to remedy that occurrence
      within thirty (30) days after receiving such notice, and (iii) the Executive
      must resign no later than one hundred eighty (180) days after the initial
      occurrence of the event.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    5.           Any
      termination by Company of Executive’s employment as contemplated by
      Section 3 hereof (except subsection 3(A)) or any resignation by
      Executive as contemplated by Section 4 hereof shall be communicated by a
      written notice to the other party hereto.  Any notice given by
      Executive in connection with a voluntary resignation pursuant to Section 4
      or given by the Company in connection with a termination as to which the Company
      believes it is not obligated to provide Executive with benefits set forth in
      Section 6 hereof shall indicate the specific provisions of this Agreement
      relied upon and shall set forth in reasonable detail the facts and circumstances
      claimed to provide a basis for such termination.

    


    6.           Subject
      to the conditions and exceptions set forth in Section 3 and Section 4
      hereof, the following benefits, less any amounts required to be withheld
      therefrom under any applicable federal, state or local income tax, other tax,
      or
      social security laws or similar statutes, shall be paid to
      Executive:

    


    (A)           On
      the next regular payday following such a termination, Executive shall be paid,
      at his then-effective salary, for services performed through the date of his
      termination.  In addition, any earned but unpaid amount of any bonus
      or incentive payment (which, for purposes of this Agreement, shall mean that
      amount computed in a fashion consistent with the manner in which Executive’s
      bonus or incentive plan for the year preceding the year of termination was
      computed, if Executive received a bonus or incentive payment during such
      preceding year in accordance with a plan or program of the Company, or, if
      not,
      then the total bonus or incentive payment received by the Executive during
      such
      preceding year, in either case prorated through the date of termination) shall
      be paid to Executive within thirty (30) days following the termination of his
      employment.

    


    (B)  Within
      thirty (30) days following such a termination, Executive shall be paid a lump
      sum payment of an amount equal of Executive’s current base salary (which shall
      not be lower than the Executive’s base salary on the date of this
      Agreement).

    


    (C)  Within
      thirty (30) days following the last day of any computation period under an
      incentive bonus plan or similar plan following such a termination, Executive
      shall be paid a lump sum payment equal to any bonus to which Executive would
      have been entitled had all requirements for earning the bonus been met,
      multiplied by a fraction, the denominator of which will be the number of days
      in
      any such computation period and the numerator of which shall be the number
      of
      days during the computation period the Executive was employed by the
      Company.  By way of example, should the computation period be one
      year, during which the Executive worked 75 days before the termination, then
      the
      fraction would be 75/365.

    


    (D)  Should
      Executive be provided with the use of an automobile owned or leased by the
      Company, Executive shall be entitled to continue to use such automobile on
      the
      same terms and conditions as he/she did prior to the termination for a period
      of
      up to sixty (60) days following such termination.

    


    (E)  For
      up to
      twelve (12) months following such a termination, the Company shall reimburse
      Executive for any amounts paid by Executive for COBRA insurance continuation
      coverage, reduced by an amount equal to the payments Executive made for such
      coverage immediately prior to such termination;

    


    (F)           At
      any time within the first twelve (12) months following such a termination,
      the
      Company shall, upon request, either pay for directly or reimburse Executive
      for
      up to $15,000 for outplacement services on Executive’s behalf.

    


    (G)           If
      as of the date his employment terminates, Executive is a “key employee” within
      the meaning of Section 416(i) of the Code, without regard to paragraph 416(i)(5)
      thereof, and the Company has stock that is publicly traded on an established
      securities market or otherwise, any payment that constitutes deferred
      compensation because of employment termination will be suspended until, and
      will
      be paid to Executive on, the first day of the seventh month following the month
      in which Executive’s last day of employment occurs.  For purposes of
      this Section 6, “deferred compensation” means compensation provided under a
      nonqualified deferred compensation plan as defined in, and subject to,
      Section 409A of the Code.

    


    7.           Should
      Executive be employed by Company on the date of any Change in Control of the
      Company that occurs on or prior to November 7, 2008 then Company shall pay
      to
      Executive in a lump sum on the date of the Change in Control or as soon
      thereafter as is reasonably practical, an amount equal to 30% of Executive’s
      then-current annual salary (the “Salary”) on the date of the Change in
      Control.  In computing the amount to be paid, the Salary shall not be
      less than Executive’s annual salary on the date of this
      Agreement.  The payment contemplated in this Section 7 shall be
      reduced by any tax or other withholdings required by law or elected by
      Executive.

    


    8.           Executive
      acknowledges and agrees that the Company’s payment of the severance compensation
      pursuant to Sections 6 and/or 7 of this Agreement shall be deemed to constitute
      a full settlement and discharge of any and all obligations of the Company to
      Executive arising out of this Agreement, Executive’s employment with the Company
      and/or the termination of Executive’s employment with the Company, except for
      any vested rights Executive may have under any insurance, stock option or equity
      compensation plan or any other employee benefit plans sponsored by the
      Company.  Executive further acknowledges and agrees that as a
      condition to receiving any of the severance compensation pursuant to
      Section 6 or 7 of this Agreement, Executive will execute and deliver to the
      Company a release agreement in form and substance reasonably satisfactory to
      the
      Company pursuant to which Executive will release and waive any and all claims
      against the Company (and its officers, directors, shareholders, employees and
      representatives) arising out of this Agreement, Executive’s employment with the
      Company, and/or the termination of Executive’s employment with the Company (as
      applicable under the relevant Section above), including without limitation
      claims under all federal, state and local laws; provided, however, that such
      Release Agreement shall not affect or relinquish (a) any vested rights
      Executive may have under any insurance, stock option or equity compensation
      plan, or other employee benefit plan sponsored by the Company, (b) any
      claims for reimbursement of business expenses incurred prior to the employment
      termination date, or (c) any rights to severance compensation under
      Section 6 of this Agreement.

    


    9.           Executive
      is not required to mitigate the amount of benefit payments to be made by the
      Company pursuant to this Agreement by seeking other employment or otherwise,
      nor
      shall the amount of any benefit payments provided for in this Agreement be
      reduced by any compensation earned by Executive as a result of employment by
      another employer or which might have been earned by Executive had Executive
      sought such employment, after the date of termination of his employment with
      the
      Company or otherwise.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    10.           In
      order to induce the Company to enter into this Agreement, Executive hereby
      agrees as follows:

    


    (A)           He
      will keep confidential and not improperly divulge for the benefit of any other
      party any of the Company’s confidential information and business secrets
      including, but not limited to, confidential information and business secrets
      relating to such matters as the Company’s finances and
      operations.  All of the Company’s confidential information and
      business secrets shall be the sole and exclusive property of the
      Company.

    


    (B)           For
      a period of one year after Executive’s employment with the Company ceases,
      Executive shall not either on his own account or for any other person, firm
      or
      company solicit or endeavor to cause any employee of the Company to leave his
      employment or to induce or attempt to induce any such employee to breach any
      employment agreement with the Company.

    


    In
      the
      event of a breach or threatened breach by Executive of the provisions of this
      Section 9, the Company shall be entitled to an injunction restraining
      Executive from committing or continuing such breach.  Nothing herein
      contained shall be construed as prohibiting the Company from pursuing any other
      remedies available to it for such breach or threatened breach including the
      recovery of damages from Executive.  The covenants of this
      Section 9 shall run not only in favor of the Company and its successors and
      assigns, but also in favor of its subsidiaries and their respective successors
      and assigns and shall survive the termination of this Agreement.

    


    11.           Should
      Executive die while any amounts are payable to him hereunder, this Agreement
      shall inure to the benefit of and be enforceable by Executive’s executors,
      administrators, heirs, distributees, devisees and legatees and all amounts
      payable hereunder shall be paid in accordance with the terms of this Agreement
      to Executive’s devisee, legatee or other designee or if there be no such
      designee, to his estate.

    


    12.           For
      purposes of this Agreement, notices and all other communications provided for
      herein shall be in writing and shall be deemed to have been given when delivered
      or mailed by United States registered or certified mail, return receipt
      requested, postage prepaid, addressed as follows:

    


    If
      to
      Executive:

    


    


    If
      to the
      Company:

    


    The
      Steak
      N Shake Company

    500
      Century Building

    36
      South
      Pennsylvania Street

    Indianapolis,
      Indiana  46204

    Attention:  Chief
      Executive Officer

    Copy
      to:    General Counsel

    


    or
      to
      such other address as any party may have furnished to the other party in writing
      in accordance herewith, except that notices of change of address shall be
      effective only upon receipt.

    


    13.           The
      validity, interpretation, and performance of this Agreement shall be governed
      by
      the laws of the State of Indiana.  The parties agree that all legal
      disputes regarding this Agreement will be resolved in Indianapolis, Indiana,
      and
      irrevocably consent to service of process in such City for such
      purpose.

    


    14.           No
      provision of this Agreement may be modified, waived or discharged unless such
      waiver, modification or discharge is agreed to in writing signed by Executive
      and the Company.  No waiver by any party hereto at any time of any
      breach by any other party hereto of, or compliance with, any condition or
      provision of this Agreement to be performed by such other party shall be deemed
      a waiver of similar or dissimilar provisions or conditions at the same or any
      prior or subsequent time.  No agreements or representation, oral or
      otherwise, express or implied, with respect to the subject matter hereof have
      been made by any party which are not set forth expressly in this
      Agreement.

    


    15.           The
      invalidity or unenforceability of any provisions of this Agreement shall not
      affect the validity or enforceability of any other provision of this Agreement,
      which shall remain in full force and effect.

    


    16.           This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which together will constitute one and the same
      Agreement.

    


    17.           This
      Agreement is personal in nature and neither of the parties hereto shall, without
      the consent of the other, assign or transfer this Agreement or any rights or
      obligations hereunder, except as provided in Section 10
      above.  Without limiting the foregoing, Executive’s right to receive
      payments hereunder shall not be assignable or transferable, whether by pledge,
      creation of a security interest or otherwise, other than a transfer by will
      or
      by the laws of descent and distribution as set forth in Section 10 hereof,
      and in the event of any attempted assignment or transfer contrary to this
      Section 16, the Company shall have no liability to pay any amount so
      attempted to be assigned or transferred.

    


    18.           Any
      benefits payable under this Agreement shall be paid solely from the general
      assets of the Company.  Neither Executive nor Executive’s beneficiary
      shall have interest in any specific assets of the Company under the terms of
      this Agreement.  This Agreement shall not be considered to create an
      escrow account, trust fund or other funding arrangement of any kind or a
      fiduciary relationship between Executive and the Company.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    19.  This
      Agreement shall be interpreted and applied in a manner consistent with any
      applicable standards for nonqualified deferred compensation plans established
      by
      Section 409A of the Code and its interpretive regulations and other regulatory
      guidance.  To the extent that any terms of this Agreement would
      subject Executive to gross income inclusion, interest, or additional tax
      pursuant to Section 409A of the Code, those terms are to that extent superseded
      by, and shall be adjusted to the minimum extent necessary to satisfy, the
      applicable Section 409A of the Code standards.

    


    20.  This
      Agreement completely supersedes and replaces any other employment agreement
      or
      other agreement covering the same terms and conditions of this Agreement whether
      written or oral, between Company and Executive which was entered into prior
      to
      the date of this Agreement.

    


    IN
      WITNESS WHEREOF, the parties have caused this Agreement to be executed and
      delivered as of the day and year first above set forth.

    


    THE
      STEAK
      N SHAKE COMPANY

    


    
      	
               

            	
              By: 
                /s/ Alan B.
                Gilman                                                          
                 

            


    

    
      	
               

            	
              Alan
                B. Gilman, Interim Chief Executive
                Officer

            


    

    


    


    


                                                               
      /s/ Jeffrey A.
      Blade                                                             


                                                        Executive
      Vice President, Chief Financial and Administrative Officer

     

    5