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Share Name | Share Symbol | Market | Type |
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Stewart & Stevenson Com | NYSE:SNS | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 402.05 | 0.00 | 01:00:00 |
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 2)(1) The Steak n Shake Company ------------------------- (Name of Issuer) Common Stock, $.50 Par Value ---------------------------- (Title of Class of Securities) 857873-10-3 ----------- (CUSIP Number) STEVEN WOLOSKY, ESQ. OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP Park Avenue Tower 65 East 55th Street New York, New York 10022 (212) 451-2300 -------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 1, 2007 --------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / /. NOTE. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. SEE Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 15 Pages) ------------ (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, SEE the NOTES).----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 2 of 15 Pages ----------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) The Lion Fund, L.P. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 2,071,945 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,071,945 -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,071,945 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 3 of 15 Pages ----------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Biglari Capital Corp. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF, WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Texas -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 2,071,945 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,071,945 -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,071,945 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 4 of 15 Pages ----------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Sardar Biglari -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF, WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 2,071,945 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,071,945 -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,071,945 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 5 of 15 Pages ----------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Western Sizzlin Corp. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 2,071,945 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,071,945 -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,071,945 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 6 of 15 Pages ----------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Western Acquisitions L.P. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 2,071,945 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,071,945 -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,071,945 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 7 of 15 Pages ----------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Western Investments Inc. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF, WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 2,071,945 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,071,945 -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,071,945 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 8 of 15 Pages ----------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Philip L. Cooley -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF, WC, PF -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 2,071,945 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,071,945 -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,071,945 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.3% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 9 of 15 Pages ----------------------- ---------------------- The following constitutes Amendment No. 2 ("Amendment No. 2") to the Schedule 13D filed by the undersigned. This Amendment No. 2 amends the Schedule 13D as specifically set forth. Item 3 is hereby amended and restated to read as follows: Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The aggregate purchase price of the Shares owned directly by the Lion Fund is $15,220,138. The aggregate purchase price of the Options owned directly by the Lion Fund is $50,400. The Securities owned directly by the Lion Fund were acquired with the working capital of the Lion Fund. Certain of the Shares reported in this Amendment No. 2 as owned by Western Acquisitions were acquired by way of an internal contribution from WSC. Western Acquisitions acquired from WSC an aggregate of 299,945 Shares on September 7, 2007 at a per Share price of $15.58, equal to the last reported sales price on the New York Stock Exchange on the date the transaction was completed, or an aggregate purchase price of approximately $4,673,143. The total of 299,945 Shares transferred by WSC to Western Acquisitions were initially acquired by WSC for an aggregate purchase price of approximately $4,581,977. The aggregate purchase price of the Shares owned directly by Western Acquisitions is approximately $8,606,853. The Shares owned directly by Western Acquisitions were acquired with the working capital of Western Acquisitions. The aggregate purchase price of the Options owned directly by WSC is $1,630,938. The Securities owned directly by WSC were acquired with the working capital of WSC. The aggregate purchase price of the Shares owned directly by Dr. Cooley and owned directly by Dr. Cooley's spouse, Sandy Cooley who shares the same business address as Dr. Cooley, which he may also be deemed to beneficially own is $93,297. Of the 6,300 Shares beneficially owned by Dr. Cooley, 3,800 Shares were acquired with Dr. Cooley's personal funds, 2,000 Shares were acquired with his spouse's personal funds and 500 Shares were acquired with the working capital of BCC and subsequently gifted to Dr. Cooley. The Lion Fund, WSC and Western Acquisitions effect purchases of securities primarily through margin accounts maintained for them with prime brokers, which may extend margin credit to them as and when required to open or carry positions in the margin accounts, subject to applicable federal margin regulations, stock exchange rules and the prime brokers' credit policies. In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts. ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 10 of 15 Pages ----------------------- ---------------------- Item 4 is hereby amended to add the following: On October 1, 2007, Sardar Biglari issued a letter to the shareholders of the Issuer concurrent with the launch by the Reporting Persons of the website WWW.ENHANCESTEAKNSHAKE.COM. In the letter, Mr. Biglari stated, among other things, that under the current board's watch, shareholder value has been significantly diminished and the time has long passed to add new board members who aspire to create value for all shareholders. A copy of the letter is attached as an exhibit hereto and incorporated herein by reference. Item 5 is hereby amended and restated to read as follows: Item 5. INTEREST IN SECURITIES OF THE ISSUER. (a-e) As of the date hereof, each of the Reporting Persons may be deemed to be the beneficial owner of 2,071,945 Shares or 7.3% of the outstanding Shares of the Issuer, based upon the 28,469,808 Shares outstanding as of July 31, 2007, according to the Issuer's most recent Form 10-Q. The 2,071,945 Shares reported herein as beneficially owned by the Reporting Persons consist of the following: (1) 929,200 Shares held directly by the Lion Fund and 20,000 Shares underlying Options held directly by the Lion Fund, (2) 561,100 Shares underlying Options held directly by WSC, (3) 555,345 Shares held directly by Western Acquisitions, (4) 4,300 Shares held directly by Dr. Cooley, and (5) 2,000 Shares held directly by Dr. Cooley's spouse which Dr. Cooley may also be deemed to beneficially own. Each of the Reporting Persons may be deemed to have the sole power to vote or direct the vote of 0 Shares and the shared power to vote or direct the vote of 2,071,945 Shares. Each of the Reporting Persons may be deemed to have the sole power to dispose or direct the disposition of 0 Shares and the shared power to dispose or direct the disposition of 2,071,945 Shares. Schedule A annexed hereto lists all transactions in the Securities by the Reporting Persons since the filing of Amendment No. 1 to the Schedule 13D. All of such transactions were effected in the open market. No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Securities except for Dr. Cooley's spouse with respect to the 2,000 Shares she owns directly. The Reporting Persons specifically disclaim beneficial ownership of the Securities reported herein except to the extent of their pecuniary interest therein. Item 7 is hereby amended to add the following exhibit: Item 7. MATERIAL TO BE FILED AS EXHIBITS. A. Letter from Sardar Biglari to The Steak n Shake Company, dated October 1, 2007 (filed herewith as Exhibit A). ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 11 of 15 Pages ----------------------- ---------------------- SIGNATURES After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: October 1, 2007 THE LION FUND L.P. By: Biglari Capital Corp. General Partner By: /s/ Sardar Biglari ----------------------------------- Sardar Biglari, Chief Executive Officer BIGLARI CAPITAL CORP. By: /s/ Sardar Biglari ----------------------------------- Sardar Biglari, Chief Executive Officer WESTERN ACQUISITIONS L.P. By: Western Investments Inc. General Partner By: /s/ Sardar Biglari ----------------------------------- Sardar Biglari, Chief Executive Officer WESTERN INVESTMENTS INC. By: /s/ Sardar Biglari ----------------------------------- Sardar Biglari, Chief Executive Officer /s/ Sardar Biglari --------------------------------------- SARDAR BIGLARI WESTERN SIZZLIN CORP. By: /s/ Sardar Biglari ----------------------------------- Sardar Biglari, Chief Executive Officer /s/ Sardar Biglari --------------------------------------- SARDAR BIGLARI As Attorney In Fact for Philip L. Cooley ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 12 of 15 Pages ----------------------- ---------------------- SCHEDULE A ---------- Transactions in the Securities by the Reporting Persons Since the Filing of --------------------------------------------------------------------------- Amendment No. 1 to the Schedule 13D ----------------------------------- Transactions in Common Stock ---------------------------- Shares Purchased Price Per Share ($) Date of Purchase ---------------- ------------------- ---------------- WESTERN ACQUISITIONS L.P. ------------------------- 33,900 14.9935 09/17/07 10,000 16.0181 09/21/07 15,000 15.8118 09/24/07 26,900 15.2744 09/25/07 21,700 15.1886 09/26/07 12,300 15.2250 09/27/07 38,800 15.0492 09/28/07 THE LION FUND, L.P. ------------------- None BIGLARI CAPITAL CORP. --------------------- None SARDAR BIGLARI -------------- None WESTERN SIZZLIN CORP. --------------------- None WESTERN INVESTMENTS INC. ------------------------ None PHILIP L. COOLEY ---------------- None ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 13 of 15 Pages ----------------------- ---------------------- EXHIBIT A THE LION FUND, L.P. 9311 SAN PEDRO AVENUE, SUITE 1440 SAN ANTONIO, TEXAS 78216 TELEPHONE (210) 344-3400 FAX (210) 344-3411 SARDAR BIGLARI, CHAIRMAN October 1, 2007 Dear Fellow Shareholders: The group I represent, composed of The Lion Fund, L.P. and Western Sizzlin Corp. together with certain of their affiliates, is one of the largest stockholders of The Steak n Shake Company. As owners of 7% of the corporation, we naturally are deeply concerned about its mismanagement by the present board of directors. Under the current board's watch, shareholder value has been significantly diminished. Time has long since passed to add new board members who aspire to create value for all shareholders -- and to do so with a sense of urgency. Our aim was to join the board without the distraction of a potentially contentious and expensive proxy fight. However, our efforts to discuss representation with the board have been fruitless. We are therefore appealing to you the shareholders, the true owners of Steak n Shake, to assert your dissatisfaction. In our opinion, the optimal avenue to achieve good corporate governance and enhance long-term value is to place shareholders with substantial holdings on the board to ensure the proper coalescence of interests between the board and shareholders. We own more stock than all the directors and officers of the company combined and thus justifiably look askance at the troublesome turn Steak n Shake's top leadership has persisted in taking. We believe a board of directors should participate in the future of its company by making considerable financial commitments on the same basis as other shareholders do, not simply through stock options or other stock grants. We are disturbed by the present direction of The Steak n Shake Company as exemplified by its failed vision, failed strategy, failed execution, and failed board. The amalgam of poor corporate governance, lack of strategic direction, and deteriorating operating and financial performance has led to dismal shareholder returns. To illustrate the mismanagement, corporate general and administrative ("G&A") costs over the last five years have escalated from approximately $98,000 per company-owned store to roughly $125,000 per unit. Just returning to past G&A levels -- on a per unit basis -- would save the company around $12 million annually. Clearly, the board has exhibited a lack of discipline about expenses and capital allocation, thereby damaging shareholder value. Yet G&A overspending is only one symptom of the firm's myriad problems that must be confronted and corrected. ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 14 of 15 Pages ----------------------- ---------------------- Needless to say, we are disenchanted by both the recent and long-term performance of the company. We are not alone; other shareholders have expressed to us a similar degree of disappointment. Consequently, we believe that NOW is a critical period for the company, so critical it warrants change of board leadership. Towards that end, our group has nominated Dr. Philip L. Cooley -- Lion Fund director and Western Sizzlin's Vice Chairman -- and me for election to Steak n Shake's board at the next annual shareholders' meeting to be held in 2008. We have chosen a pro-active approach because we see opportunities to create tremendous value. We are convinced the company has not yet attained its full potential. But to reach that potential requires forward-looking leadership. Phil and I have the experience to serve knowledgeably and impartially. Because we are tenacious by nature, we would commit ourselves for the long term and would work tirelessly to ensure that the board explores all paths to maximize shareholder value. Over the coming months we will be communicating with you regarding details of our ideas to improve Steak n Shake. Our recently launched web site, www.enhancesteaknshake.com, will be the primary channel over which we will impart information on vital matters. I will also be writing you directly. Our principle is to tell you the facts that we would want to know if our roles were reversed. We encourage shareholders to visit our web site regularly and to share their thoughts with us about Steak n Shake. We look forward to serving YOUR best interests. Sincerely, /s/ Sardar Biglari Sardar Biglari ----------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 15 of 15 Pages ----------------------- ---------------------- CERTAIN INFORMATION CONCERNING THE PARTICIPANTS THIS COMMUNICATION IS NOT A SOLICITATION OF A PROXY WHICH MAY BE DONE ONLY PURSUANT TO A DEFINITIVE PROXY STATEMENT. STOCKHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY THE LION FUND, L.P. ("LION FUND"), BIGLARI CAPITAL CORP. ("BCC"), WESTERN SIZZLIN CORP. ("WSC"), WESTERN ACQUISITIONS L.P. ("WAL"), WESTERN INVESTMENTS, INC. ("WII"), SARDAR BIGLARI AND PHILIP L. COOLEY, FROM THE STOCKHOLDERS OF THE STEAK N SHAKE COMPANY, FOR USE AT ITS NEXT ANNUAL MEETING OF STOCKHOLDERS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF THE STEAK N SHAKE COMPANY AND WILL BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. IN ADDITION, COPIES OF THE PROXY STATEMENT AND OTHER DOCUMENTS WILL BE PROVIDED WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO OUR PROXY SOLICITOR, MORROW & CO., INC. AT ITS TOLL-FREE NUMBER (800) 607-0088. THE PARTICIPANTS IN THE PROXY SOLICITATION ARE ANTICIPATED TO BE LION FUND, BCC, WSC, WAL, WII, SARDAR BIGLARI AND PHILIP L. COOLEY (THE "PARTICIPANTS"). INFORMATION REGARDING THE PARTICIPANTS, INCLUDING THEIR DIRECT OR INDIRECT INTERESTS, BY SECURITY HOLDINGS OR OTHERWISE, IS CONTAINED IN THE SCHEDULE 13D FILED BY THEM WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 2007 WITH RESPECT TO THE STEAK N SHAKE COMPANY, AS AMENDED. THAT SCHEDULE 13D, AS AMENDED, IS CURRENTLY AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. AS OF SEPTEMBER 28, 2007, EACH OF THE PARTICIPANTS MAY BE DEEMED TO BENEFICIALLY OWN 2,071,945 SHARES OF COMMON STOCK OF THE STEAK N SHAKE COMPANY, CONSISTING OF THE FOLLOWING: (1) 929,200 SHARES HELD DIRECTLY BY LION FUND AND 20,000 SHARES UNDERLYING AMERICAN-STYLE CALL OPTIONS HELD DIRECLTY BY LION FUND, (2) 561,100 SHARES UNDERLYING AMERICAN-STYLE CALL OPTIONS HELD DIRECLTY BY WSC, (3) 555,345 SHARES HELD DIRECTLY BY WAL, (4) 4,300 SHARES HELD DIRECTLY BY PHILIP L. COOLEY, (5) 2,000 SHARES HELD DIRECTLY BY PHILIP L. COOLEY'S SPOUSE. EACH OF THE PARTICIPANTS DISCLAIMS BENEFICIAL OWNERSHIP OF SUCH SHARES EXCEPT TO THE EXTENT OF HIS/ITS PECUNIARY INTEREST THEREIN.
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