sec document
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.