**Exhibit 10.61**

** **

**CONSULTING AGREEMENT**

 

This Consulting Agreement(the “***Agreement***”)is entered into on August 5, 2003 to be effective as of July 16, 2003, by andbetween New World Restaurant Group, Inc., a Delaware corporation (the “***Company***”), andHerbert Buchwald, P.A., a Florida Professional Association (the “***Consultant***”).

** **

**PRELIMINARY STATEMENTS**

 

## A.            The Company is a Delaware corporation primarily engagedin the operation of bagel bakeries.

## B.            Consultant is knowledgeable and experienced in legal andbusiness matters affecting the business and affairs of the Company.

## C.            The Company desires to retain Consultant to providecertain legal, consulting and advisory services to the Board of Directors ofthe Company (the “***Board***”)in connection with the Company’s ongoing business activities (the “***Services***”) under theterms and conditions set forth herein, and Consultant desires to be soretained.

NOW, THEREFORE, for good,valuable and binding consideration, the receipt and sufficiency of which wehereby acknowledged, the parties hereto, intending to be legally bound hereby,agree as follows:

** **

**STATEMENT OF AGREEMENT**

 

                1.             Retentionas Independent Contractor Consultant. The Company hereby retains Consultant as an independent contractorconsultant (not as an employee) for a period beginning on the date hereof and,subject to earlier termination as provided herein, expiring on the thirdanniversary of the date hereof.  In suchcapacity, Consultant shall perform the Services including those Servicesfurther detailed on Schedule I hereof. Consultant shall be and at all times remain an independent contractor ofthe Company.  Neither the Company norConsultant shall be considered or held to be a partner, limited partner,associate or agent of the other, or be joint venturers with one another.  Neither the Company nor Consultant shall beauthorized by the other to contract any debt, liability or obligation for or onbehalf of the other.  As an independentcontractor, Consultant shall accept any directions issued by the Board (throughits designated representative) pertaining to the goals to be attained and theresults to be achieved, but shall be solely responsible for the means andmethod of work in which it will perform Services under this Agreement.  Consultant agrees to complete all Servicesin the agreed upon timeframe.  To do so,Consultant shall determine his own working hours and schedule and shall not besubject to the Company’s personnel policies and procedures.  The Company will not set a minimum ormaximum number of hours that the Consultant may work in any given day, butConsultant shall be required to spend a minimum of one hundred sixty (160)hours per month on average in each calendar month during the term of thisAgreement providing Services to the Company.

 

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                2.             Compliancewith Legal Requirements.  TheCompany shall not provide workers’ compensation, disability insurance, SocialSecurity or unemployment compensation coverage or any other statutory benefitto Consultant, his agents or employees or any subcontractors.  Consultant shall comply at his expense withall applicable provisions of workers’ compensation laws, unemploymentcompensation laws, Federal Social Security law, the Fair Labor Standards Act,federal, state and local income tax laws, and all other applicable federal,state and local laws, regulations and codes relating to terms and conditionsrequired to be fulfilled by independent contractors and consultants.  Other than as stated in this Agreement,Consultant shall be solely responsible and liable for all expenses, costs,liabilities, assessments, taxes, maintenance, insurance, undertakings and otherobligations incurred by Consultant, his agents or employees or anysubcontractors.

 

                3.             Compensation.

 

#### (a)            *Consulting Fee*.  As long as this Agreement remains in effect, the Company shallpay Consultant a consulting fee (the “***Consulting Fee***”) asfollows:

#### •                  $100,000 withintwo (2) days after the execution of this Agreement by the parties;

#### •                  $100,000 on orbefore August 16, 2003;

#### •                  $100,000 on orbefore September 16, 2003;

#### •                  $50,000 on orbefore October 16, 2003;

#### •                  $50,000 on orbefore November 16, 2003;

#### •                  $50,000 on orbefore December 16, 2003; and

#### •                  $25,000 on or before the sixteenth day ofeach month thereafter until the expiration or termination of this Agreement.

#### (b)            *Transaction Fee*.  If during the term of this Agreement, the Company concludes atransaction (or series of related transactions or events) which results in (1)the acquisition by any person or entity (by purchase, merger, consolidation orotherwise) of fifty-one percent (51%) or more of the aggregate of alloutstanding securities of the Company; or (2) the sale, disposition, lease,exchange, or other transfer of all or substantially all the assets of theCompany (a “***Transaction***”),Consultant shall also be entitled to a fee (the “***Transaction Fee***”) equal to the sum of (A)3.75% of the first $65 million of gross proceeds from the Transaction receivedby the holders of the Company’s Common Stock and (B) 1% of the gross proceedsreceived by holders of the Company’s Common Stock from the Transaction inexcess of $65 million.  The TransactionFee shall be reduced by the amount of all previously received Consulting Feesif (i) a Transaction occurs prior to the first anniversary of this Agreementand (ii) the amount of any previously received Consulting Fees and theTransaction Fee total in the aggregate in excess of $2.5 million.  The Transaction Fee shall be paid to Consultantpromptly after the closing of the Transaction.

#### (c)            *Effect of Termination on Transaction Fee*.  In the event that this Agreement isterminated for any reason on or prior to the six month anniversary of the datehereof (including as a result of the Continuation Vote as defined in Section9), Consultant shall not be entitled to the Transaction Fee unless theTransaction was considered by the Board prior to such 

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#### termination and theTransaction is consummated within six months after the date of suchtermination.

#### (d)            *Grant of Option*.  If this Agreement remains in full force and effect after theexpiration of six months after the date hereof, Consultant shall be entitled toreceive a ten year option (the “***Option***”) to purchase 5% of the Company’s Common Stock ata strike price initially based on a valuation of the Company’s Common Stock of$65 million, but which shall increase at a rate of LIBOR plus 2%, compoundedmonthly.  Consultant may not exerciseany amount of the Option so long as entities affiliated with GreenlightCapital, Inc. hold 10% or more of the outstanding equity securities of theCompany.

                4.             ExpenseReimbursement.  The Company shallreimburse Consultant for his or her reasonable and necessary out-of-pocketexpenses incurred at the request of the Company or with prior approval of theCompany, subject to provision of reasonable supporting documentation relatedthereto.  Such reimbursable expensesinclude, but are not limited to, travel expenses such as hotels, meals andtransportation while traveling on business pursuant to this Agreement.  Furthermore, the Company acknowledges thatConsultant may make use of Consultant’s Cessna 425 aircraft for Company relatedtravel, provided that reimbursement for use of such aircraft shall be limitedto $650 per flight hour unless otherwise approved by the Company.

 

                5.             Placeof Performance.  The Consultantshall perform the services in such locations as the Consultant and the Companyshall agree.

 

                6.             InformationFurnished.  The Company shall furnishthe Consultant with such information as the Consultant may reasonably requestto perform services hereunder.

 

                7.             Confidentiality.  For the purposes of this Agreement, the term“***Confidential Information***”means any information regarding the Company’s (or its affiliates’) businessthat is (1) not generally known to the public and was acquired through theexpenditure of the Company’s time, effort and/or funds, including (but notlimited to) information concerning its clients, accounts, inventory, personnel,financial and performance data, financial and risk management models andrelated translation code, existing and contemplated business, investment andfinancial methods, analysis, strategy, concepts, practices and know-how;client, principal, investor, vendor and employee lists and records; customerand principal preferences and relationship information, market developmentinformation, procedures and confidential or proprietary information relating tothe Company’s policies, strategies, administration or operation, and (2)acquired by Consultant during the term of this Agreement, as well as anyadditional information that may be classified as proprietary or constitute atrade secret under applicable state or federal law.

 

Consultant will not,directly or indirectly, disclose any Confidential Information to any person orentity that is not an employee, officer, director, agent or affiliate of theCompany unless such disclosure is authorized in advance by the Company.  Consultant will not, during the term of thisAgreement or any time thereafter, directly or indirectly, use any ConfidentialInformation in any manner that is not directly and primarily in the bestinterests of the Company unless expressly authorized to do so by the Board.  Consultant acknowledges that the 

 

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ConfidentialInformation is the sole property of the Company, and that the Company would beirreparably damaged if such Confidential Information was misappropriated ordisclosed to third parties, in violation of this Agreement.  Upon the termination of this Agreement,Consultant must promptly return any and all records, information, papers,media, recordings, files or computer files or diskettes (and all copies,duplicates or facsimiles of any of the foregoing) of the Company and itsaffiliates (including parent and subsidiary entities) that relate in any waywhatsoever to any Confidential Information.

 

                8.             Severability.  Whenever possible, each provision of thisAgreement will be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Agreement is held to be invalid,illegal or unenforceable in any respect under any applicable law or rule in anyjurisdiction, such invalidity, illegality or unenforceability will not affectany other provision or the validity, legality or enforceability of suchprovision in any other jurisdiction, but this Agreement will be performed,construed and enforced in such jurisdiction as if such invalid, illegal orunenforceable provision had never been contained herein.  It is the intent of the parties hereto thatthe provisions hereof be enforceable to the full extent permitted by applicablelaw.

 

                9.             Termination.  This Agreement shall be terminable by anyparty hereto upon thirty (30) days’ prior written notice.  The Company may, upon notice to Consultant,immediately terminate this Agreement if Consultant breaches any of theprovisions of this Agreement.  Inaddition to and notwithstanding the foregoing, on or before the six monthanniversary of the date of this Agreement, if the Agreement has not beenterminated and remains in effect, the Board shall vote (in accordance with thevoting procedures and requirements provided in the Company’s Articles ofIncorporation and/or Bylaws) whether to continue to engage consultant pursuantto this Agreement (the “Continuation Vote”). In the event that the Board votes not to continue to engage Consultant,this Agreement shall immediately terminate upon notice to Consultant and cease tobe of any further force or effect.

 

                10.           CompleteAgreement.  This Agreement embodiesthe complete agreement and understanding between the parties and supersedes andpreempts any prior understandings, agreements or representations by or betweenthe parties, written or oral, which may have related to the subject matterhereof in any way.

 

                11.           Remedies.  Each of the parties to this Agreement willbe entitled to enforce its rights under this Agreement specifically, to recoverdamages by reason of any breach of any provision of this Agreement and toexercise all other rights existing in his or its favor.  The parties hereto agree and acknowledgethat money damages may not be an adequate remedy for any breach or threatenedbreach of the provisions of this Agreement and that any party may in its solediscretion apply to any court of law or equity of competent jurisdiction forspecific performance and/or injunctive relief in order to enforce or preventany violations of the provisions of this Agreement.

 

                12.           Amendmentsand Waivers.  Any provisions of thisAgreement may be amended or waived only with the prior written consent of theCompany and Consultant.

 

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                13.           Notices.  Any notice provided for in this Agreementmust be in writing and must be either personally delivered, or mailed by firstclass mail (postage prepaid and return receipt requested) or sent by reputableovernight courier service or facsimile transmission, to the recipient at theaddress below indicated:

 

Tothe Company:

 

NewWorld Restaurant Group, Inc.

1687Cole Boulevard

Golden,CO 80401

Attn:  Chief Executive Officer

 

ToConsultant:

 

HerbertBuchwald, P.A.

P.O.Box 24649

Denver,CO  80224

 

or such other addresses orto the attention of such other person as the recipient party shall havespecified by prior written notice to the sending party.  Any notice under this Agreement will bedeemed to have been given when so delivered or sent or if mailed, five days afterso mailed.

 

                14.           ApplicableLaw.  This Agreement shall begoverned by and construed in accordance with the laws of the State of New York,without regard to conflict of law principles.

 

                15.           Indemnification. Each party shall indemnify and hold harmless the other party against andfrom any and all liabilities, damages and expenses (including attorney fees)made against or incurred by the other party from any third party source for anydamages caused, or contributed to, by a breach of its obligations under thisAgreement.

 

                16.           PartiesBound.  This Agreement shall bebinding on the parties hereto, their respective heirs, legatees, legalrepresentatives, successors and assigns including but not limited to anysuccessor of the Company upon a merger, reorganization or recapitalizationexcept that Consultants’ duty to perform services hereunder shall not beassignable.

 

                17.           Entirety.  This Agreement constitutes the entireagreement of the parties hereto with respect to the subject matter hereof.

 

[SignaturePage Follows]

 

 

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IN WITNESS HEREOF, theparties hereto have executed this Consulting Agreement as of the date firstwritten above.

 

 
|   | **NEW WORLD RESTAURANT GROUP, INC.** |
|--------|--------------------------------------|
|   |                                 |   |
|   | By:                                  | **/s/****Anthony D. Wedo** |
|   | Name:                                | Anthony  D. Wedo |
|   | Title:                               | Chief  Executive Officer and Chairman of the Board of Directors |
|   |                                 |   |
|   |                                 | **HERBERT BUCHWALD, P.A.** |
|   |                                 |   |
|   |                                 | **/s/****Herbert Buchwald** |
|   |                                 | Herbert  Buchwald, President |

 

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**SCHEDULE I**

** **

**Description of Services**

 

Consultant shall provide legal, consultingand advisory services to the Company as deemed appropriate or desirable by theBoard, which Services shall include:

 

**•**                  Serving as Chairman of theAdvisory Committee of the Board;

**•**                  Conducting a comprehensiveanalysis and evaluation of the financial condition of the Company;

**•**                  Developing a business planfor the Company for approval by the Board to include:  (i) a strategic plan for the stability and future growth of theCompany; (ii) a compensation plan, (iii) an audit plan, and (iv) a legal plan;

**•**                  Providing monthly reports tothe Board on Consultant’s activities and progress in connection with theServices; and

**•**                  Consulting services as maybe reasonably needed in the Company in connection with the implementation ofthe Services described above.

 

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