Exhibit 10.3

THE HABIT RESTAURANTS, INC.
2014 omnibus INCENTIVE PLAN

1.DEFINED TERMS

Exhibit A, which is incorporated by reference, defines the terms used in the
Plan and sets forth certain operational rules related to those terms.  

2.PURPOSE

The Plan has been established to advance the interests of the Company by
providing for the grant to Participants of Awards.

3.ADMINISTRATION

The Administrator has discretionary authority, subject only to the express
provisions of the Plan, to interpret the Plan; determine eligibility for and
grant Awards; determine, modify or waive the terms and conditions of any Award;
prescribe forms, rules and procedures relating to the Plan; and otherwise do all
things necessary or appropriate to carry out the purposes of the Plan.  Any
reference in the Plan or in any Award to a determination or action by the
Administrator, or to the power or ability of the Administrator to make any such
determination or to take any such action, shall be construed as permitting the
Administrator to make any such determination or to take any such action in its
sole and absolute discretion.  Determinations of the Administrator made under
the Plan will be conclusive and will bind all parties.

4.LIMITS ON AWARDS UNDER THE PLAN

(a)Number of Shares.  The maximum number of shares of Stock that may be
delivered in satisfaction of Awards under the Plan is 2,525,275.  Up to the
total number of shares available for awards to employee Participants may be
issued in satisfaction of ISOs, but nothing in this Section 4(a) will be
construed as requiring that any, or any fixed number of, ISOs be awarded under
the Plan.  For purposes of this Section 4(a), the number of shares of Stock
delivered in satisfaction of Awards will be determined (i) net of shares of
Stock underlying the portion of any Award that is settled in cash or the portion
of any Award that expires, terminates or is forfeited prior to the issuance of
Stock thereunder, and (ii) by treating as having been delivered the full number
of shares covered by any portion of an SAR that is settled in Stock (and not
only the number of shares of Stock delivered in settlement) and shares of Stock
withheld by the Company in payment of the exercise price of the Award or in
satisfaction of tax withholding requirements with respect to the Award.

(b)Type of Shares.  Stock delivered by the Company under the Plan may be
authorized but unissued Stock or previously issued Stock acquired by the
Company.  No fractional shares of Stock will be delivered under the Plan.

(c)Section 162(m) and Other Limits.  The following additional limits will apply
to Awards of the specified type granted, or in the case of Cash Awards, payable
to any person in any calendar year:

(1)Stock Options:  1,010,110 shares of Stock.

(2)SARs:  1,010,110 shares of Stock.

(3)Awards other than Stock Options, SARs or Cash Awards:  1,010,110 shares of
Stock.

(4)Cash Awards:  $2,500,000.

1

--------------------------------------------------------------------------------

 

In applying the foregoing limits, (i) all Awards of the specified type granted
to the same person in the same calendar year will be aggregated and made subject
to one limit; (ii) the limits applicable to Stock Options and SARs refer to the
number of shares of Stock subject to those Awards; (iii) the share limit under
clause (3) refers to the maximum number of shares of Stock that may be
delivered, or the value of which could be paid in cash or other property, under
an Award or Awards of the type specified in clause (3) assuming a maximum
payout; and (iv) the dollar limit under clause (4) refers to the maximum dollar
amount payable under an Award or Awards of the type specified in clause (4)
assuming a maximum payout.  The foregoing provisions will be construed in a
manner consistent with Section 162(m), including, without limitation, where
applicable, the rules under Section 162(m) pertaining to permissible deferrals
of exempt awards.

Without limiting the generality of the foregoing, the maximum grant date fair
value of any Award granted to any non-Employee Director during any calendar year
shall not exceed $500,000.

5.ELIGIBILITY AND PARTICIPATION

The Administrator will select Participants from among those key Employees and
directors of, and consultants and advisors to, the Company and its Affiliates
who in the determination of the Administrator are in a position to contribute to
the success of the Company and its Affiliates.  Eligibility for ISOs is limited
to individuals described in the first sentence of this Section 5 who are
employees of the Company or of a “parent corporation” or “subsidiary
corporation” of the Company as those terms are defined in Section 424 of the
Code.  Eligibility for Stock Options other than ISOs is limited to individuals
described in the first sentence of this Section 5 who are providing direct
services on the date of grant of the Stock Option to the Company or to a
subsidiary of the Company that would be described in the first sentence of
Treas. Reg. Section 1.409A-1(b)(5)(iii)(E).

6.RULES APPLICABLE TO AWARDS

(a)All Awards.

(1)Award Provisions.  The Administrator will determine the terms of all Awards,
subject to the limitations provided herein.  By accepting (or, under such rules
as the Administrator may prescribe, being deemed to have accepted) an Award, the
Participant will be deemed to have agreed to the terms of the Award and the
Plan.  Notwithstanding any provision of this Plan to the contrary, awards of an
acquired company that are converted, replaced or adjusted in connection with the
acquisition may contain terms and conditions that are inconsistent with the
terms and conditions specified herein, as determined by the Administrator.

(2)Term of Plan.  No Awards may be made after ten years from the Date of
Adoption, but previously granted Awards may continue beyond that date in
accordance with their terms.

(3)Transferability.  Neither ISOs nor, except as the Administrator otherwise
expressly provides in accordance with the third sentence of this Section
6(a)(3), other Awards may be transferred other than by will or by the laws of
descent and distribution.  During a Participant’s lifetime, ISOs (and, except as
the Administrator otherwise expressly provides in accordance with the third
sentence of this Section 6(a)(3), SARs and NSOs) may be exercised only by the
Participant.  The Administrator may permit the gratuitous inter vivos transfer
(i.e., transfer not for value) of Awards other than ISOs, subject to such
limitations as the Administrator may impose.

(4)Vesting, etc. The Administrator will determine the time or times at which an
Award will vest or become exercisable and the terms on which a Stock Option or
SAR will remain exercisable.  Without limiting the foregoing, the Administrator
may at any time accelerate the vesting or exercisability of an Award, regardless
of any adverse or potentially adverse tax or other consequences resulting from
such acceleration.  Unless the Administrator expressly provides otherwise,
however, the following rules will apply if a Participant’s Employment ceases:

(A)Immediately upon the cessation of the Participant’s Employment and except as
provided in (B) and (C) below, each Stock Option and SAR that is then held by
the Participant or by the

2

--------------------------------------------------------------------------------

 

Participant’s permitted transferees, if any, will cease to be exercisable and
will terminate and all other Awards that are then held by the Participant or by
the Participant’s permitted transferees, if any, to the extent not already
vested will be forfeited. 

(B)Subject to (C) and (D) below, all Stock Options and SARs held by the
Participant or the Participant’s permitted transferees, if any, immediately
prior to the cessation of the Participant’s Employment, to the extent then
exercisable, will remain exercisable for the lesser of (i) a period of
forty-five (45) days or (ii) the period ending on the latest date on which such
Stock Option or SAR could have been exercised without regard to this Section
6(a)(4), and will thereupon immediately terminate.

(C)All Stock Options and SARs held by a Participant or the Participant’s
permitted transferees, if any, immediately prior to the cessation of the
Participant’s Employment due to his or her death or Disability, to the extent
then exercisable, will remain exercisable for the lesser of (i) a period of
twelve (12) months or (ii) the period ending on the latest date on which such
Stock Option or SAR could have been exercised without regard to this Section
6(a)(4), and will thereupon immediately terminate.

(D)For the avoidance of doubt, all Stock Options and SARs (whether or not
exercisable) held by a Participant or the Participant’s permitted transferees,
if any, immediately prior to the cessation of the Participant’s Employment will
immediately terminate upon such cessation of Employment if the termination is
for Cause or occurs in circumstances that in the determination of the
Administrator would have constituted grounds for the Participant’s Employment to
be terminated for Cause.

(5)Additional Restrictions.  The Administrator may cancel, rescind, withhold or
otherwise limit or restrict any Award at any time if the Participant is not in
compliance with all applicable provisions of the Award agreement and the Plan,
or if the Participant breaches any agreement with the Company or its Affiliates
with respect to non-competition, non-solicitation or confidentiality.  Without
limiting the generality of the foregoing, the Administrator may recover Awards
made under the Plan and payments under or gain in respect of any Award to the
extent required to comply with Section 10D of the Securities Exchange Act of
1934, as amended, or any stock exchange or similar rule adopted under said
Section.

(6)Taxes.  The delivery, vesting and retention of Stock, cash or other property
under an Award are conditioned upon full satisfaction by the Participant of all
tax withholding requirements with respect to the Award.  The Administrator will
prescribe such rules for the withholding of taxes as it deems necessary.  The
Administrator may, but need not, hold back shares of Stock from an Award or
permit a Participant to tender previously owned shares of Stock in satisfaction
of tax withholding requirements (but not in excess of the minimum withholding
required by law).

(7)Dividend Equivalents, Etc.  The Administrator may provide for the payment of
amounts (on terms and subject to conditions established by the Administrator) in
lieu of cash dividends or other cash distributions with respect to Stock subject
to an Award whether or not the holder of such Award is otherwise entitled to
share in the actual dividend or distribution in respect of such Award.  Any
entitlement to dividend equivalents or similar entitlements will be established
and administered either consistent with an exemption from, or in compliance
with, the requirements of Section 409A.  Dividends or dividend equivalent
amounts may be made subject to such limits or restrictions as the Administrator
may determine.

(8)Rights Limited.  Nothing in the Plan will be construed as giving any person
the right to continued employment or service with the Company or its Affiliates,
or any rights as a stockholder except as to shares of Stock actually issued
under the Plan.  The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of Employment for
any reason, even if the termination is in violation of an obligation of the
Company or any Affiliate to the Participant.

(9)Section 162(m).   In the case of any Performance Award (other than a Stock
Option or SAR) intended to qualify for the performance-based compensation
exception under Section 162(m), the

3

--------------------------------------------------------------------------------

 

Administrator will establish the applicable Performance Criterion or Criteria in
writing no later than ninety (90) days after the commencement of the period of
service to which the performance relates (or at such earlier time as is required
to qualify the Award as performance-based under Section 162(m)) and, prior to
the event or occurrence (grant, vesting or payment, as the case may be) that is
conditioned on the attainment of such Performance Criterion or Criteria, will
certify whether it or they have been attained.  The preceding sentence will not
apply to an Award eligible (as determined by the Administrator) for exemption
from the limitations of Section 162(m) by reason of the post-initial public
offering transition relief in Section 1.162-27(f) of the Treasury Regulations. 

(10)Coordination with Other Plans. Awards under the Plan may be granted in
tandem with, or in satisfaction of or substitution for, other Awards under the
Plan or awards made under other compensatory plans or programs of the Company or
its Affiliates.  For example, but without limiting the generality of the
foregoing, awards under other compensatory plans or programs of the Company or
its Affiliates may be settled in Stock (including, without limitation,
Unrestricted Stock) if the Administrator so determines, in which case the shares
delivered will be treated as awarded under the Plan (and will reduce the number
of shares thereafter available under the Plan in accordance with the rules set
forth in Section 4).  In any case where an award is made under another plan or
program of the Company or its Affiliates and such award is intended to qualify
for the performance-based compensation exception under Section 162(m), and such
award is settled by the delivery of Stock or another Award under the Plan, the
applicable Section 162(m) limitations under both the other plan or program and
under the Plan will be applied to the Plan as necessary (as determined by the
Administrator) to preserve the availability of the Section 162(m)
performance-based compensation exception with respect thereto.

(11)Section 409A.  Each Award will contain such terms as the Administrator
determines, and will be construed and administered, such that the Award either
qualifies for an exemption from the requirements of Section 409A or satisfies
such requirements.

(12)Fair Market Value. In determining the fair market value of any share of
Stock under the Plan, the Administrator will make the determination in good
faith consistent with the rules of Section 422 and Section 409A to the extent
applicable.

(b)Stock Options and SARs.

(1)Time And Manner Of Exercise. Unless the Administrator expressly provides
otherwise, no Stock Option or SAR will be deemed to have been exercised until
the Administrator receives a notice of exercise (in form acceptable to the
Administrator), which may be an electronic notice, signed (including electronic
signature in form acceptable to the Administrator) by the appropriate person and
accompanied by any payment required under the Award.  A Stock Option or SAR
exercised by any person other than the Participant will not be deemed to have
been exercised until the Administrator has received such evidence as it may
require that the person exercising the Award has the right to do so.

(2)Exercise Price.  The exercise price of each Stock Option and the base value
from which appreciation is to be measured of each SAR will be no less than 100%
(or in the case of an ISO granted to a ten-percent shareholder within the
meaning of subsection (b)(6) of Section 422, 110%) of the fair market value of
the Stock subject to the Award, determined as of the date of grant, or such
higher amount as the Administrator may determine in connection with the
grant.  Fair market value will be determined by the Administrator consistent
with the requirements of Section 422 and Section 409A to the extent applicable.

(3)Payment Of Exercise Price.  Where the exercise of an Award is to be
accompanied by payment, payment of the exercise price will be by cash or check
acceptable to the Administrator or by such other legally permissible means, if
any, as may be acceptable to the Administrator.

(4)Maximum Term.  Stock Options and SARs will have a maximum term not to exceed
ten (10) years from the date of grant (five (5) years from the date of grant in
the case of an ISO granted to a ten-percent shareholder described in Section
6(b)(2) above); provided, however, that, if a Participant still holding an
outstanding but unexercised NSO or SAR ten (10) years from the date of grant
(or, in the case of an NSO or SAR with a

4

--------------------------------------------------------------------------------

 

maximum term of less than ten (10) years, such maximum term) is prohibited by
applicable law or a written policy of the Company applicable to similarly
situated employees from engaging in any open-market sales of Stock, and if at
such time the Stock is publicly traded (as determined by the Administrator), the
maximum term of such Award will instead be deemed to expire on the thirtieth
(30th) day following the date the Participant is no longer prohibited from
engaging in such open market sales. 

(5)Special Provisions Applicable to Stock Options and SARs.  No Stock Option or
SAR, once granted, may be repriced other than with stockholder approval, and,
except upon exercise as hereinabove provided and except as provided in Section
7, no payment shall be made in respect of any Stock Option or SAR in connection
with its cancellation.

7.EFFECT OF CERTAIN TRANSACTIONS

(a)Mergers, etc.  Except as otherwise provided in an Award agreement, the
following provisions will apply in the event of a Covered Transaction:

(1)Assumption or Substitution.  If the Covered Transaction is one in which there
is an acquiring or surviving entity, the Administrator may (but, for the
avoidance of doubt, need not) provide (i) for the assumption or continuation of
some or all outstanding Awards or any portion thereof or (ii) for the grant of
new awards in substitution therefor by the acquiror or survivor or an affiliate
of the acquiror or survivor.

(2)Cash-Out of Awards. Subject to Section 7(a)(5) below the Administrator may
(but, for the avoidance of doubt, need not) provide for payment (a “cash-out”),
with respect to some or all Awards or any portion thereof, equal in the case of
each affected Award or portion thereof to the excess, if any, of (A) the fair
market value of one share of Stock (as determined by the Administrator) times
the number of shares of Stock subject to the Award or such portion, over (B) the
aggregate exercise or purchase price, if any, under the Award or such portion
(in the case of an SAR, the aggregate base value above which appreciation is
measured), in each case on such payment terms (which need not be the same as the
terms of payment to holders of Stock) and other terms, and subject to such
conditions, as the Administrator determines, it being understood, for the
avoidance of doubt and without limiting the generality of clause (4) below, that
if the exercise or purchase price (or base value) of an Award is equal to or
greater than the fair market value of one share of Stock (as determined by the
Administrator), the Award may be cancelled with no payment due hereunder.

(3)Acceleration of Certain Awards. Subject to Section 7(a)(5) below, the
Administrator may (but, for the avoidance of doubt, need not) provide that any
Award requiring exercise will become exercisable, in full or in part and/or that
the delivery of any shares of Stock remaining deliverable under any outstanding
Award of Stock Units (including Restricted Stock Units and Performance Awards to
the extent consisting of Stock Units) will be accelerated in full or in part, in
each case on a basis that gives the holder of the Award a reasonable
opportunity, as determined by the Administrator, following exercise of the Award
or the delivery of the shares, as the case may be, to participate as a
stockholder in the Covered Transaction.

(4)Termination of Awards Upon Consummation of Covered Transaction.  Except as
the Administrator may otherwise determine in any case, each Award will
automatically terminate (and in the case of outstanding shares of Restricted
Stock, will automatically be forfeited) upon consummation of the Covered
Transaction, other than Awards assumed pursuant to Section 7(a)(1) above.

(5)Additional Limitations.  Any share of Stock and any cash or other property
delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to
an Award may, if the Administrator so determines, contain such restrictions, if
any, as the Administrator determines to be appropriate to reflect any
performance or other vesting conditions to which the Award was subject and that
did not lapse (and were not satisfied) in connection with the Covered
Transaction.  For purposes of the immediately preceding sentence, a cash-out
under Section 7(a)(2) above or acceleration under Section 7(a)(3) above will
not, in and of itself, be treated as the lapsing (or satisfaction) of a
performance or other vesting condition.  In the case of Restricted Stock that
does not vest and is not forfeited in connection with the Covered Transaction,
the Administrator may require that any

5

--------------------------------------------------------------------------------

 

amounts delivered, exchanged or otherwise paid in respect of such Stock in
connection with the Covered Transaction be placed in escrow or otherwise made
subject to such restrictions as the Administrator determines to be appropriate
to carry out the intent of the Plan.  

(b)Changes in and Distributions With Respect to Stock.

(1)Basic Adjustment Provisions.  In the event of a stock dividend, stock split
or combination of shares (including a reverse stock split), recapitalization or
other change in the Company’s capital structure that constitutes an equity
restructuring within the meaning of FASB ASC 718, the Administrator will make
appropriate adjustments to the maximum number of shares specified in Section
4(a) that may be delivered under the Plan and to the maximum share limits
described in Section 4(c), and will also make appropriate adjustments to the
number and kind of shares of stock or securities subject to Awards then
outstanding or subsequently granted, any exercise or purchase prices (or base
values) relating to Awards and any other provision of Awards affected by such
change.

(2)Certain Other Adjustments.  The Administrator may also make adjustments of
the type described in Section 7(b)(1) above to take into account distributions
to stockholders other than those provided for in Section 7(a) and 7(b)(1), or
any other event, if the Administrator determines that adjustments are
appropriate to avoid distortion in the operation of the Plan, having due regard
for the qualification of ISOs under Section 422, the requirements of Section
409A, and the performance-based compensation rules of Section 162(m), where
applicable.

(3)Continuing Application of Plan Terms.  References in the Plan to shares of
Stock will be construed to include any stock or securities resulting from an
adjustment pursuant to this Section 7.

8.LEGAL CONDITIONS ON DELIVERY OF STOCK

The Company will not be obligated to deliver any shares of Stock pursuant to the
Plan or to remove any restriction from shares of Stock previously delivered
under the Plan until: (i) the Company is satisfied that all legal matters in
connection with the issuance and delivery of such shares have been addressed and
resolved; (ii) if the outstanding Stock is at the time of delivery listed on any
stock exchange or national market system, the shares to be delivered have been
listed or authorized to be listed on such exchange or system upon official
notice of issuance; and (iii) all conditions of the Award have been satisfied or
waived.  The Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Securities Act of 1933, as amended, or any
applicable state or non-U.S. securities law.  Any Stock required to be issued to
Participants under the Plan will be evidenced in such manner as the
Administrator may deem appropriate, including book-entry registration or
delivery of stock certificates.  In the event that the Administrator determines
that Stock certificates will be issued to Participants under the Plan, the
Administrator may require that certificates evidencing Stock issued under the
Plan bear an appropriate legend reflecting any restriction on transfer
applicable to such Stock, and the Company may hold the certificates pending
lapse of the applicable restrictions.

9.AMENDMENT AND TERMINATION

The Administrator may at any time or times amend the Plan or any outstanding
Award for any purpose which may at the time be permitted by law, and may at any
time terminate the Plan as to any future grants of Awards; provided, that,
except as otherwise expressly provided in the Plan the Administrator may not,
without the Participant’s consent, alter the terms of an Award so as to affect
materially and adversely the Participant’s rights under the Award, unless the
Administrator expressly reserved the right to do so at the time the Award was
granted.  Any amendments to the Plan will be conditioned upon stockholder
approval only to the extent, if any, such approval is required by law (including
the Code and applicable stock exchange requirements), as determined by the
Administrator.

6

--------------------------------------------------------------------------------

 

10.OTHER COMPENSATION ARRANGEMENTS 

The existence of the Plan or the grant of any Award will not in any way affect
the Company’s right to Award a person bonuses or other compensation in addition
to Awards under the Plan.

11.MISCELLANEOUS

(a)Waiver of Jury Trial.  By accepting an Award under the Plan, each Participant
waives any right to a trial by jury in any action, proceeding or counterclaim
concerning any rights under the Plan and any Award, or under any amendment,
waiver, consent, instrument, document or other agreement delivered or which in
the future may be delivered in connection therewith, and agrees that any such
action, proceedings or counterclaim will be tried before a court and not before
a jury.  By accepting an Award under the Plan, each Participant certifies that
no officer, representative, or attorney of the Company has represented,
expressly or otherwise, that the Company would not, in the event of any action,
proceeding or counterclaim, seek to enforce the foregoing
waivers.  Notwithstanding anything to the contrary in the Plan, nothing herein
is to be construed as limiting the ability of the Company and a Participant to
agree to submit disputes arising under the terms of the Plan or any Award made
hereunder to binding arbitration or as limiting the ability of the Company to
require any eligible individual to agree to submit such disputes to binding
arbitration as a condition of receiving an Award hereunder.

(b)Limitation of Liability.  Notwithstanding anything to the contrary in the
Plan, neither the Company, nor any Affiliate, nor the Administrator, nor any
person acting on behalf of the Company, any Affiliate, or the Administrator,
will be liable to any Participant or to the estate or beneficiary of any
Participant or to any other holder of an Award by reason of any acceleration of
income, or any additional tax (including any interest and penalties), asserted
by reason of the failure of an Award to satisfy the requirements of Section 422
or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted
with respect to the Award; provided, that nothing in this Section 11(b) will
limit the ability of the Administrator or the Company, in its discretion, to
provide by separate express written agreement with a Participant for any payment
in connection with any such acceleration of income or additional tax.

12.ESTABLISHMENT OF SUB-PLANS

The Administrator may from time to time establish one or more sub-plans under
the Plan for purposes of satisfying applicable blue sky, securities or tax laws
of various jurisdictions.  The Administrator will establish such sub-plans by
adopting supplements to the Plan setting forth such limitations and such
additional terms and conditions as it determines.  All supplements so
established will be deemed to be part of the Plan, but except as the
Administrator determines each supplement will apply only to Participants within
the affected jurisdiction.

13.GOVERNING LAW

(a)Certain Requirements of Corporate Law.  Awards will be granted and
administered consistent with the requirements of applicable Delaware law
relating to the issuance of stock and the consideration to be received therefor,
and with the applicable requirements of the stock exchanges or other trading
systems on which the Stock is listed or entered for trading, in each case as
determined by the Administrator.

(b)Other Matters.  Except as otherwise provided by the express terms of an Award
agreement, under a sub-plan described in Section 12 or as provided in Section
13(a) above, the provisions of the Plan and of Awards under the Plan and all
claims or disputes arising out of our based upon the Plan or any Award under the
Plan or relating to the subject matter hereof or thereof will be governed by and
construed in accordance with the domestic substantive laws of the State of
Delaware without giving effect to any choice or conflict of laws provision or
rule that would cause the application of the domestic substantive laws of any
other jurisdiction.

(c)Jurisdiction.  By accepting an Award, each Participant will be deemed to
(a) have submitted irrevocably and unconditionally to the jurisdiction of the
federal and state courts located within the geographic boundaries of  the United
States District Court for the District of Delaware for the purpose of any suit,
action or

7

--------------------------------------------------------------------------------

 

other proceeding arising out of or based upon the Plan or any Award; (b) agree
not to commence any suit, action or other proceeding arising out of or based
upon the Plan or an Award, except in the federal and state courts located within
the geographic boundaries of the United States District Court for the District
of Delaware; and (c)  waive, and agree not to assert, by way of motion as a
defense or otherwise, in any such suit, action or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts that its
property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the Plan or an Award or the subject
matter thereof may not be enforced in or by such court. 

 

 

8

--------------------------------------------------------------------------------

 

EXHIBIT A

Definition of Terms

The following terms, when used in the Plan, will have the meanings and be
subject to the provisions set forth below:

“Administrator”: The Compensation Committee, except that the Compensation
Committee may delegate (i) to one or more of its members (or one or more other
members of the Board (including the full Board)) such of its duties, powers and
responsibilities as it may determine; (ii) to one or more officers of the
Company the power to grant Awards to the extent permitted by Section 157(c) of
the Delaware General Corporation Law; and (iii) to such Employees or other
persons as it designates such ministerial tasks as it determines to be
appropriate.  In the event of any delegation described in the preceding
sentence, the term “Administrator” will include the person or persons so
delegated to the extent of such delegation.

“Affiliate”: Any corporation or other entity that stands in a relationship to
the Company that would result in the Company and such corporation or other
entity being treated as one employer under Section 414(b) and Section 414(c) of
the Code.

“Award”: Any or a combination of the following:  

(i) Stock Options.

(ii) SARs.  

(iii) Restricted Stock.

(iv) Unrestricted Stock.

(v)  Stock Units, including Restricted Stock Units.

(vi) Performance Awards.

(vii) Cash Awards.

(viii)  Awards (other than Awards described in (i) through (vii) above) that are
convertible into or otherwise based on Stock.

“Board”:  The Board of Directors of the Company.

“Cash Award”:  An Award denominated in cash.

“Cause”: In the case of any Participant who is party to an employment,
severance-benefit or similar agreement that contains a definition of “Cause,”
the definition set forth in such agreement will apply with respect to such
Participant under the Plan for so long as such agreement is in effect.  In the
case of any other Participant, “Cause” will mean, as determined by the
Administrator in its reasonable judgment, (i) a substantial failure of the
Participant to perform the Participant’s duties and responsibilities to the
Company or subsidiaries or substantial negligence in the performance of such
duties and responsibilities; (ii) the commission by the Participant of a felony
or a crime involving moral turpitude; (iii) the commission by the Participant of
theft, fraud, embezzlement, material breach of trust or any material act of
dishonesty involving the Company or any of its subsidiaries; (iv) a significant
violation by the Participant of the code of conduct of the Company or its
subsidiaries of any material policy of the Company or its subsidiaries, or of
any statutory or common law duty of loyalty to the Company or its subsidiaries;
(v) material breach of any of the terms of the Plan or any Award made under the
Plan, or of the terms of any other agreement between the Company or
subsidiaries  and the Participant; or (vi) other conduct by the Participant that
could reasonably be expected to be harmful to the business, interests or
reputation of the Company.

9

--------------------------------------------------------------------------------

 

“Code”:  The U.S. Internal Revenue Code of 1986 as from time to time amended and
in effect, or any successor statute as from time to time in effect.

“Compensation Committee”: The Compensation Committee of the Board.

“Company”:  The Habit Restaurants, Inc.

“Covered Transaction”: Any of (i) a consolidation, merger, or similar
transaction or series of related transactions, including a sale or other
disposition of stock, in which the Company is not the surviving corporation or
which results in the acquisition of all or substantially all of the Company’s
then outstanding common stock by a single person or entity or by a group of
persons and/or entities acting in concert, (ii) a sale or transfer of all or
substantially all the Company’s assets, or (iii) a dissolution or liquidation of
the Company.  Where a Covered Transaction involves a tender offer that is
reasonably expected to be followed by a merger described in clause (i) (as
determined by the Administrator), the Covered Transaction will be deemed to have
occurred upon consummation of the tender offer.

“Date of Adoption”:  The earlier of the date the Plan was approved by the
Company’s stockholders or adopted by the Board, as determined by the
Compensation Committee.

“Disability”:  In the case of any Participant who is party to an employment,
severance-benefit or similar agreement that contains a definition of permanent
or long-term disability, the definition set forth in such agreement will apply
with respect to such Participant under the Plan for so long as such agreement is
in effect.  In the case of any other Participant, “Disability” will mean a
disability that would entitle such Participant to long-term disability benefits
under the Company’s disability plan or insurance policy.  Notwithstanding the
foregoing, in any case in which a benefit that constitutes or includes
“nonqualified deferred compensation” subject to Section 409A is payable in a
manner that is required to be consistent with Treas. Reg. Section
1.409A-3(a)(2), the term “Disability” will mean a disability as described in
Treas. Reg. Section 1.409A-3(i)(4)(i)(A).

“Employee”: Any person who is employed by the Company or an Affiliate.

“Employment”:  A Participant’s employment or other service relationship with the
Company and its Affiliates.  Employment will be deemed to continue, unless the
Administrator expressly provides otherwise, so long as the Participant is
employed by, or otherwise is providing services in a capacity described in
Section 5 to the Company or an Affiliate.  If a Participant’s employment or
other service relationship is with an Affiliate and that entity ceases to be an
Affiliate, the Participant’s Employment will be deemed to have terminated when
the entity ceases to be an Affiliate unless the Participant transfers Employment
to the Company or its remaining Affiliates.  Notwithstanding the foregoing and
the definition of “Affiliate” above, in construing the provisions of any Award
relating to the payment of “nonqualified deferred compensation” (subject to
Section 409A) upon a termination or cessation of Employment, references to
termination or cessation of employment, separation from service, retirement or
similar or correlative terms will be construed to require a “separation from
service” (as that term is defined in Section 1.409A-1(h) of the Treasury
Regulations) from the Company and from all other corporations and trades or
businesses, if any, that would be treated as a single “service recipient” with
the Company under Section 1.409A-1(h)(3) of the Treasury Regulations.  The
Company may, but need not, elect in writing, subject to the applicable
limitations under Section 409A, any of the special elective rules prescribed in
Section 1.409A-1(h) of the Treasury Regulations for purposes of determining
whether a “separation from service” has occurred.  Any such written election
will be deemed a part of the Plan.

“ISO”: A Stock Option intended to be an “incentive stock option” within the
meaning of Section 422.  Each Stock Option granted pursuant to the Plan will be
treated as providing by its terms that it is to be an NSO unless, as of the date
of grant, it is expressly designated as an ISO.

“Non-Employee Director”:  A member of the Board that is not an officer or
employee of the Company or any of its Affiliates.

10

--------------------------------------------------------------------------------

 

“NSO”:  A Stock Option that is not intended to be an “incentive stock option”
within the meaning of Section 422.  

“Participant”: A person who is granted an Award under the Plan.

“Performance Award”:  An Award subject to Performance Criteria.  The
Administrator may grant Performance Awards that are intended to qualify for the
performance-based compensation exception under Section 162(m) and Performance
Awards that are not intended so to qualify.

“Performance Criteria”:  Specified criteria, other than the mere continuation of
Employment or the mere passage of time, the satisfaction of which is a condition
for the grant, exercisability, vesting or full enjoyment of an Award.  Subject
to the special rules set forth below in the case of Awards that are intended to
qualify for the performance-based compensation exception under Section 162(m),
the Administrator may apply such rules for determining or adjusting Performance
Criteria or related goals or factors as it determines.  

For purposes of Awards that are intended to qualify for the performance-based
compensation exception under Section 162(m), a Performance Criterion means an
objectively determinable measure of performance relating to any or any
combination of the following (measured either absolutely or by reference to an
index or indices and determined either on a consolidated basis or, as the
context permits, on a divisional, subsidiary, line of business, project or
geographical basis or in combinations thereof), and expressed as an absolute
goal, percentage of revenue, on a per share basis, or as growth or improvement
over a particular period): net income; pre-tax income; sales; revenues; assets;
expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation, or amortization, whether or not on a continuing operations
or an aggregate or per share basis; return on equity, investment, capital or
assets; one or more operating ratios; borrowing levels, leverage ratios or
credit rating; market share; capital expenditures; cash flow; operating cash
flow; free cash flow; stock price; stockholder return; return on stockholder
equity; book value; expense control; economic value added; sales of particular
products or services; customer acquisition or retention; acquisitions and
divestitures (in whole or in part); joint ventures and strategic alliances;
spin-offs, split-ups and the like; reorganizations; or recapitalizations,
restructurings, financings (issuance of debt or equity) or refinancings.  A
Performance Criterion and any targets with respect thereto determined by the
Administrator need not be based upon an increase, a positive or improved result
or avoidance of loss.  To the extent consistent with the requirements for
satisfying the performance-based compensation exception under Section 162(m),
the Administrator may provide in the case of any Award intended to qualify for
such exception that one or more of the Performance Criteria, goals or other
factors applicable to such Award will be adjusted in an objectively determinable
manner to reflect events (for example, but without limitation, acquisitions or
dispositions) occurring during the performance period that affect the applicable
Performance Criterion or Criteria.

“Plan”:  The Habit Restaurants, Inc. Omnibus Incentive Plan as from time to time
amended and in effect.

“Restricted Stock”: Stock subject to restrictions requiring that it be
redelivered or offered for sale to the Company if specified performance or other
vesting conditions are not satisfied.

“Restricted Stock Unit”: A Stock Unit that is, or as to which the delivery of
Stock or cash in lieu of Stock is, subject to the satisfaction of specified
performance or other vesting conditions.

“SAR”:  A right entitling the holder upon exercise to receive an amount (payable
in cash or in shares of Stock of equivalent value) equal to the excess of the
fair market value of the shares of Stock subject to the right over the base
value from which appreciation under the SAR is to be measured.

“Section 409A”: Section 409A of the Code.

“Section 422”: Section 422 of the Code.

“Section 162(m)”: Section 162(m) of the Code.

“Stock”: Common stock of the Company, par value $0.01 per share.

11

--------------------------------------------------------------------------------

 

“Stock Option”: An option entitling the holder to acquire shares of Stock upon
payment of the exercise price.

“Stock Unit”: An unfunded and unsecured promise, denominated in shares of Stock,
to deliver Stock or cash measured by the value of Stock in the future.

“Unrestricted Stock”:  Stock not subject to any restrictions under the terms of
the Award.

 

12