-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WMp2nmQn3/1VLkCKubd8mlqgPJD9lbW2v97W2UkXeMIwZP8ilEI4VyOaU7YZKKYq HGWSxOxGstNszNUjY58dMA== 0001177456-04-000211.txt : 20040603 0001177456-04-000211.hdr.sgml : 20040603 20040603164727 ACCESSION NUMBER: 0001177456-04-000211 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20040603 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WENHOLD TIMOTHY G CENTRAL INDEX KEY: 0001283780 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O SMARTSERV ONLINE INC STREET 2: 2250 BUTLER PIKE SUITE 150 CITY: PLYMOUTH MEETING STATE: PA ZIP: 19462 BUSINESS PHONE: 6103970689 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SMARTSERV ONLINE INC CENTRAL INDEX KEY: 0001005698 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 133750708 STATE OF INCORPORATION: DE FISCAL YEAR END: 0902 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-49961 FILM NUMBER: 04847630 BUSINESS ADDRESS: STREET 1: METRO CENTER STREET 2: ONE STATION PLACE CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033535950 MAIL ADDRESS: STREET 1: ONE STATION PLACE CITY: STAMFORD STATE: CT ZIP: 06902 SC 13D 1 wenhold13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. __)* SmartServ Online, Inc. (Name of Issuer) Common Stock (Title of Class of Securities) 83169M 40 1 (CUSIP Number) Eric D. Schoenborn, Esquire, Stradley Ronon Stevens & Young, LLP Woodland Falls Corporate Park, 210 Lake Drive East, Suite 102 Cherry Hill, New Jersey 08002 (856) 321-2413 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 12, 2004 (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 ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-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. *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 ("Act") 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). SCHEDULE 13D - ---------------------- CUSIP NO. 83169M 40 1 - ---------------------- - ---------- --------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON TIMOTHY G. WENHOLD - ---------- --------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ---------- --------------------------------------------------------------------- 3 SEC USE ONLY - ---------- --------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ---------- --------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ---------- --------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - --------------------------- ----- ---------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 350,000 SHARES ------ ---------------------------------------- ---------- BENEFICIALLY 8 SHARED VOTING POWER n/a OWNED BY ------ ---------------------------------------- ---------- EACH 9 SOLE DISPOSITIVE POWER 350,000 REPORTING ------ ---------------------------------------- ---------- PERSON WITH 10 SHARED DISPOSITIVE POWER n/a - ---------- --------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 350,000 - ---------- --------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ---------- --------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.84% /1/ - ---------- --------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ---------- --------------------------------------------------------------------- 1 Please note the dilution of the Reporting Person's voting power due to the existence of certain preferred stock of the Issuer as described in Item 5 below. Item 1. Security and Issuer. -------------------- This statement on Schedule 13D relates to the common stock, $0.01 par value per share (the "Common Stock"), of SmartServ Online, Inc., a Delaware corporation, which has its principal business office at 2250 Butler Pike, Suite 150, Plymouth Meeting, PA 19462 (the "Issuer"). Item 2. Identity and Background. ------------------------ This Schedule 13D is being filed by Timothy G. Wenhold, an individual (the "Reporting Person"). The 350,000 shares of Common Stock ("Shares") reported are held directly by the Reporting Person. The Reporting Person, a citizen of the United States of America, has a business address of: c/o SmartServ Online, Inc., 2250 Butler Pike, Suite 150, Plymouth Meeting, PA 19462. The Reporting Person is the Executive Vice President, Chief Operating Officer and Secretary of the Issuer. The Reporting Person has not been, during the last five (5) years, (i) convicted in any criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds and Other Consideration. --------------------------------------------------- As described further in Item 4, options to purchase the Shares were issued to the Reporting Person pursuant to an employment agreement between the Reporting Person and the Issuer. Item 4. Purpose of the Transaction. --------------------------- On March 12, 2004, the Reporting Person entered into a certain Employment Agreement (the "Agreement") with the Issuer. In connection with entering into the Agreement, the Issuer granted the Reporting Person stock options (the "Options") for the purchase of an aggregate of 700,000 shares of the Common Stock of the Issuer with an exercise price of $1.50 per share. The Options shall vest as follows: (i) 300,000 shares on the date of grant (March 12, 2004) and (ii) the balance of 400,000 shares in equal amounts as of the last day of each calendar quarter beginning with the quarter ending March 31, 2004 and ending with the quarter ending December 31, 2007; provided, however, that the Options shall immediately vest in their entirety upon a Change of Control and certain other events as defined in the form of Option Agreement attached to the Agreement. Item 5. Interest in Securities of the Issuer. ------------------------------------- (a) and (b). The Reporting Person beneficially owns the number and percentage of outstanding shares of Common Stock listed in each of its responses to Items 11 and 13, respectively, on the cover page filed herewith. In addition, the number of shares of Common Stock which may be deemed beneficially owned by the Reporting Person with respect to which it (i) has sole voting power, (ii) shares voting power, (iii) has sole dispositive power and (iv) shares dispositive power are listed in the responses to Items 7, 8, 9 and 10, respectively, on the cover page relating to the Reporting Person filed herewith. Based on the 2,878,840 shares of Common Stock of the Issuer outstanding on April 15, 2004 (per the Issuer's records), the Reporting Person would beneficially own 10.84% of the outstanding Common Stock of the Issuer. The percentage owned by the Reporting Person in terms of voting power is diluted by the existence of outstanding Series A convertible preferred shares (the "Preferred Shares") that give the holders of such shares the right to vote with the common stockholders on all matters submitted to a vote of the stockholders, and the holders of the Preferred Shares are entitled to the number of votes equal to the number of shares of common stock into which the Preferred Shares are then convertible (currently ten (10) votes per each Preferred Share held). Assuming the conversion of all outstanding Preferred Shares, the Reporting Person would be the beneficial owner of 2.92% of the then outstanding Common Stock of the Issuer, which also represents the Reporting Person's percentage voting power. In addition to the Options referenced in Item 4, the Reporting Person also owns a warrant to purchase up to 8,333 shares (after the one-for-six reverse stock split effective November 25, 2003) of Common Stock of the Issuer at an exercise price of $2.04 per share (the "Warrant"), pursuant to a certain Consulting Agreement dated August 1, 2003, between the Reporting Person and the Issuer. The Warrant will become exercisable in August 2004. (c). In the 60 days prior to the date of this Schedule 13D, the Reporting Person has not engaged in any transactions in shares of Common Stock. (d). To the knowledge of the Reporting Person, no other person is known to have the right to receive and the power to direct the receipt of dividends from, and the proceeds from the sale of, the Shares. (e). Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to ------------------------------------------------------------------------ Securities of the Issuer. ------------------------- The information set forth in Item 4 and Item 5 of this statement is hereby incorporated by reference herein. Except as set forth in this statement, the Reporting Person does not have any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Issuer, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint venture, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Item 7. Material to Be Filed as Exhibits. --------------------------------- The exhibits are listed in the Exhibit Index appearing below and are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission. [Signature on following page] Signature - --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: May 21, 2004 /s/ Timothy G. Wenhold - ------------------------ Timothy G. Wenhold EXHIBIT INDEX ------------- Exhibit # Description Location - --------- ----------- -------- 1.1 Option Agreement dated as of March 12, 2004 Filed herewith between the Issuer and Timothy G. Wenhold 1.2 Common Stock Purchase Warrant date as of Filed herewith August 1, 2003 between the Issuer and Timothy G. Wenhold EX-1 2 wenhold13dex1_1.txt EXHIBIT 1.1 OPTION AGREEMENT EXHIBIT 1.1 SMARTSERV ONLINE, INC. Date of Grant: March 12, 2004 To: Timothy G. Wenhold 4031 Mill Road Collegeville, Pennsylvania 19426 You are hereby granted an option (the "Option") effective as of the date hereof, to purchase 700,000 shares of Common Stock, par value $.01 per share ("Common Stock"), of SmartServ Online, Inc. (the "Company") at an exercise price of $1.50 per share (the "Exercise Price"). This Option shall terminate and is not exercisable after the expiration of ten years from the date of its grant, except if terminated earlier as hereinafter provided (the "Expiration Date"). Your Option shall vest, subject to accelerated vesting as provided below, over a four (4) year period as follows: (i) 300,000 shares on the date hereof; and (ii) the balance of 400,000 shares in equal amounts as of the last day of each calendar quarter beginning with the quarter ending March 31, 2004 and ending with the quarter ending December 31, 2007. In the event that a "change of control" (as hereinafter defined) of the Company occurs at any time prior to the Expiration Date (as hereinafter defined), your Option may, from and after such date, and notwithstanding the second paragraph of this Option, be exercised for up to 100% of the total number of shares then subject to the Option minus the number of shares previously purchased upon exercise of the Option (as adjusted for any changes in the outstanding Common Stock by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Compensation Committee deems in its sole discretion to be similar circumstances, (a "Recapitalization")). A "Change of Control" shall be deemed to have occurred upon the happening of any of the following events:(i) the shareholders of the Company approve a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of complete liquidation of the Company or consummate the sale or disposition by the Company of all or substantially all of the Company's assets (other than to a subsidiary or subsidiaries) or (ii) any other event deemed to constitute a "Change of Control" by the Board of Directors of the Company. In addition, notwithstanding the second paragraph of this Option the vesting schedule of your Option with respect to the balance of 742,859 shares of Common Stock (the "Remaining Shares") (as adjusted for any changes in the outstanding Common Stock by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Compensation committee deems it its sold discretion to be similar circumstances) shall accelerate as follows: (i) 33.33% of the Remaining Shares upon the Company's Common Stock achieving a Market Price of $5.00 per share ten (10) consecutive trading days; (ii) 33.33% of the Remaining Shares upon the Company's Common Stock achieving a Market Price of $10.00 per share ten (10) consecutive trading days; and (iii)33.33% of the Remaining Shares upon the Company's Common Stock achieving a Market Price of $15.00 per share ten (10) consecutive trading days. For purposes of (i), (ii) and (iii) above, the Market Price of the Company's Common Stock is subject to adjustment in the event of a Recapitalization. The vesting schedule of your Option shall also accelerate in the event of the following: (i) 25% of the Remaining Shares upon the Company becoming "Cash Flow Positive". For purposes herein, Cash Flow Positive shall be defined as any quarterly period in which revenues of the Company exceed cash expenditures for operating expenses. (ii) 12.5% of the Remaining Shares upon the Company achieving $4.0 million in revenue in any calendar year based upon the Company's audited financial statements; (iii)12.5% of the Remaining Shares upon the Company achieving $8.0 million in revenue in any calendar year based upon the Company's audited financial statements; (iv) 12.5% of the Remaining Shares upon the Company achieving $12.0 in revenue in any calendar year based upon the Company's audited financial statements; and (v) 12.5% of the Remaining Shares upon the Company's shares becoming listed on Nasdaq (SmallCap or NMS) or the American Stock Exchange. In lieu of paying the Exercise Price in cash and/or upon exercise of the Option, you may elect a "cashless exercise," in which event you will receive upon exercise a reduced number of shares equal to (i) the number of shares that would be issuable pursuant to this Option upon payment of the Exercise Price minus (ii) the number of shares that have an aggregate Market Price (as defined below) equal to the Exercise Price. In addition, you may elect to have the 2 Company's tax withholding obligations in connection with your exercise of the option satisfied on a cashless basis, in which event the number of shares that would otherwise be issuable pursuant to this Option shall be reduced by the number of shares that have an aggregate Market Price (as defined below) equal to the amount of tax required to be withheld (but not more than such amount). For purposes of this Option "Market Price" per share of Common Stock on any date shall be: (i) if the Common Stock is listed or admitted for trading on any national securities exchange, the last reported sales price as reported on such national securities exchange; (ii) if the Common Stock is not listed or admitted for trading on any national securities exchange, the last reported closing bid price for the Common Stock as reported on the Nasdaq Stock Market's National Market ("NNM") or Nasdaq Stock Market's Small Cap Market ("NSM") or a similar service if NNM or NSM are not reporting such information; (iii) if the Common Stock is not listed or admitted for trading on any national securities exchange, NNM or NSM or a similar service, the last reported bid quotation for the Common Stock as quoted by a market maker in the Common Stock (or if there is more than one market maker, the bid quotation shall be obtained from two market makers and the average of the highest bid quotation shall be the "Market Price"); or (iv) if the Common Stock is not listed or admitted for trading on any national securities exchange or NNM or quoted by NSM and there is no market maker in the Common Stock, the fair market value of such shares as determined in good faith by the Board of Directors of the Company. This Option may be exercised by you, in whole or in part (but not as to less than a whole share), as to the vested portion of this Option only, at any time prior to the Expiration Date, by the presentation of this Option, with the purchase form attached duly executed, at the Company's office (or such office or agency of the Company as it may designate in writing to you) specifying the number of shares of Common Stock as to which the Option is being exercised, and upon payment by you to the Company in cash or by certified check or bank draft, in an amount equal to the Exercise Price times the number of shares or in lieu thereof you may elect a cashless exercise as provided herein. No fractional shares shall be issued or delivered upon exercise of this Option. This Option is exchangeable by you at your option at the office of the Company for other Options of different denominations entitling you to purchase in the aggregate the same number of shares of Common Stock as are purchasable hereunder; and this Option may be divided or combined with other Options which carry the same rights, in either case, upon presentation hereof at the office of the Company together with a written notice, signed by you, specifying the names and denominations in which new Options are to be issued, and the payment of any transfer tax due in connection therewith. Your Option will, to the extent not previously exercised by you, terminate one (1) year after the date on which your employment by the Company or Affiliate of the Company is terminated, whether such termination is voluntary or not, whether by reason of disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder, or death; provided, that, in the event your employment with the Company is terminated due to a "Termination For Cause" by the Company (as such term is defined in Section 9 of your Employment Agreement, dated March 12, 2004) your option will expire immediately; and provided further, that, in the event your employment with the Company 3 is terminated without "Good Reason" by you (as such term is defined in Section 10 of your Employment Agreement, dated March 12, 2004) your Option will terminate thirty (30) days from the date of such termination and you may only exercise this Option for the number of shares you had a right to purchase on the date your employment terminated. In the event of termination of your employment upon a "Termination Other Than For Cause" or "For Good Reason" (as such terms are defined in Sections 9 and 10 of your Employment Agreement), after the date of such termination you may exercise this Option for 100% of the number of shares then subject to the Option minus the number of shares previously purchased upon exercise of the Option as adjusted for a Recapitalization. If you are employed by an Affiliate of the Company, your employment shall be deemed to have terminated on the date your employer ceases to be an Affiliate of the Company, unless you are on that date transferred to the Company or another Affiliate of the Company. Your employment shall not be deemed to have terminated if you are transferred from the Company to an Affiliate, or vice versa, or from one Affiliate to another Affiliate. For purposes herein, an Affiliate of the Company shall be defined as an entity controlled by or under common control with the Company. If you die while employed by the Company or an Affiliate of the Company, your legatee(s), distributee(s), executor(s) or administrator(s), as the case may be, may, at any time within one (1) year after the date of your death, exercise the Option as to any shares which you had a right to purchase and did not purchase during your lifetime plus those shares that would have vested within one (1) year thereafter. If your employment with the Company, or an Affiliate is terminated by reason of your becoming disabled (within the meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may at any time within one (1) year after the date of such termination, exercise the Option as to any shares which you had a right to purchase and did not purchase prior to such termination plus those shares that would have vested within one (1) year thereafter. Your legatee, distributee, executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this Option. This Option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability. Until the Option Price has been paid in full pursuant to due exercise of this Option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company. The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this Option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law. This Option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, modification or waiver of this Option, in whole or in part, shall be binding upon the Company unless in writing and signed by an appropriate officer of the Company. This Option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Pennsylvania without regard to principles of conflict of law. 4 Please sign the copy of this Option and return it to the Company, thereby indicating your understanding of and agreement with its terms and conditions. SMARTSERV ONLINE, INC. By: /s/ Robert M. Pons ------------------------------------- Robert M. Pons Chief Executive Officer I hereby acknowledge receipt of a copy of the foregoing Stock Option to purchase 700,000 shares at an Exercise Price of $1.50 per share, and having read such document, hereby signify my understanding of, and my agreement with, its terms and conditions. /s/ Timothy G. Wenhold March 12, 2004 - --------------------------- -------------------------------- Timothy G. Wenhold 5 PURCHASE FORM To Be Executed Upon Exercise of Option The undersigned record holder of the within Option hereby irrevocably elects to exercise the right to purchase _______ share of Common Stock evidenced by the within Option, according to the terms and conditions thereof, and herewith makes payment of the purchase price in full or, alternatively, elects a cashless exercise in accordance with the terms of the Option as designated by holder in writing to the Company. The undersigned requests that certificates for such shares shall be issued in the name set forth below. Dated: _________________________________ Signature _________________________________ Print Name of Signatory _________________________________ Name to whom certificates are to be issued if different from above Address _________________________ _________________________ Social Security No. or other identifying number ______________ If said number of shares shall not be all the shares purchasable under the within Option, the undersigned requests that a new Option for the unexercised portion shall be registered in the name of: _________________________________ (Please Print) Address _________________________ _________________________ Social Security No. or other identifying number ______________ Signature _______________________ _________________________________ Print Name of Signatory 6 EX-1 3 wenhold13dex1_2.txt EXHIBIT 1.2 COMMON STOCK PURCHASE WARRANT EXHIBIT 1.2 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT OR APPLICABLE BLUE SKY LAWS. THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN PROVIDED. COMMON STOCK PURCHASE WARRANT For the Purchase of 50,000 Shares of Common Stock of SMARTSERV ONLINE, INC. (a Delaware corporation) 1. Warrant. THIS CERTIFIES THAT, in exchange for due consideration, the sufficiency of which is hereby acknowledged, paid by or on behalf of Timothy Wenhold (the "Holder"), as registered owner of this Warrant, to SMARTSERV ONLINE, INC. (the "Company"), the Holder is entitled, at any time and from time to time during the period commencing on August 1, 2004 and expiring on and after 5:00 p.m., New York time on July 31, 2008 (the "Exercise Period"), to subscribe for, purchase and receive, in whole or in part, up to 50,000 shares of Common Stock, $.01 par value (the "Common Stock"), of the Company. This Warrant is initially exercisable as to each share of Common Stock covered thereby at thirty-four cents ($.34) per share (the "Exercise Price"). The term "Exercise Price" shall mean the initial exercise price or such exercise price, as adjusted in the manner provided herein, depending on the context. 2. Exercise. 2.1 In order to exercise this Warrant, the exercise form attached hereto must be duly executed, completed and delivered to the Company, together with this Warrant and payment of the Exercise Price for the shares of the Common Stock being purchased. If the rights represented hereby shall not be exercised on or before the end of the Exercise Period, this Warrant shall become and be void and without further force or effect and all rights represented hereby shall cease and expire. 1 3. Restrictions on Transfer; Registration of Transfers. 3.1 Restrictions on Transfer. The registered Holder of this Warrant, by acceptance hereof, agrees that prior to any proposed transfer of this Warrant or any securities purchased upon exercise of this Warrant, if such transfer is not made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Act"), the Holder will, if requested by the Company, deliver to the Company: (i) an opinion of counsel reasonably satisfactory in form and substance to the Company that the Warrant or the securities purchased upon exercise of this Warrant may be transferred without registration under the Act; (ii) an agreement by the proposed transferee to the placement of the restrictive investment legend set forth below on the Warrant or the securities to be received upon exercise of the Warrant; (iii) an agreement by such transferee that the Company may place a notation in the stock books of the Company or a "stop transfer order" with any transfer agent or registrar with respect to the securities purchased upon exercise of this Warrant; and (iv) an agreement by such transferee to be bound by the provisions of this Section 3 relating to the transfer of such Warrant or the securities purchased upon exercise of such Warrant. Each Warrant Holder agrees that each Warrant and each certificate representing securities purchased upon exercise of this Warrant shall bear a legend as follows unless such securities have been registered under the Act: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"). The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act or applicable blue sky laws." 3.2 Registration of Transfers. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with this Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall immediately transfer the number of Warrants specified in the assignment form on the books of the Company and shall execute and deliver a new warrant or warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the number of shares of Common Stock purchasable hereunder or such portion of such number as shall be contemplated by such assignment. 2 4. New Warrants to be Issued. 4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any required transfer tax, the Company shall cause to be delivered to the Holder without charge a new warrant or new warrants of like tenor with this Warrant in the name of the Holder evidencing the right to purchase, in the aggregate, the remaining number of underlying shares of Common Stock purchasable hereunder after giving effect to any such partial exercise or assignment. 4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and of an indemnification in favor of the Company, reasonably satisfactory to it, the Company shall execute and deliver a new warrant of like tenor and date. Any such new warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute an additional contractual obligation on the part of the Company. 5. Adjustments to Exercise Price and Number of Securities. 5.1 Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination. 5.2 Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 5, the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full number obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. 5.3 Recapitalization. For the purpose of this Warrant, the term "Common Stock" shall also mean any other class of stock resulting from successive changes or reclassifications of Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. 5.4 Merger or Consolidation. In case of any consolidation of the Company with, or merger of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Common Stock), the corporation formed by such consolidation or merger shall execute and deliver to the Holder(s), in lieu of this Warrant, a supplemental warrant providing that the holder of each warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such warrant) to receive, upon exercise of such warrant, the kind and number of shares of stock and other securities and property receivable upon such 3 consolidation or merger, by a holder of the number of shares of Common Stock of the Company for which such warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Each such supplemental warrant shall provide for adjustments, which shall be identical to the adjustments provided in Section 5. The above provision of this Section shall similarly apply to successive consolidations or mergers. 5.5 Redemption of Warrants. This Warrant cannot be redeemed by the Company without the prior written consent of the Holder. 5.6 Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Common Stock upon the exercise of the Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise thereof. 6. Reservation. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon exercise of the Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Warrant and payment of the Exercise Price therefor, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid and nonassessable. 7. Certain Notice Requirements. 7.1 Holder's Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holder the right to vote or consent or to receive notice as a stockholder for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of the Warrant and its exercise, any of the events described in Section 7.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least ten (10) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. 7.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 7 upon one or more of the following events: (i) if the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, or (ii) a dissolution, 4 liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed. 7.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 5 hereof, send notice to the Holders of such event and change (the "Price Notice"). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company's Chief Financial Officer. 7.4 Transmittal of Notices. All notices, requests, consents and other communications under this Warrant shall be in writing and shall be deemed to have been duly given or made when hand delivered, or when delivered by responsible overnight courier: (i) If to the registered Holder of this Warrant, to: Timothy Wenhold 4031 Mill Road Collegeville, PA 19426 (ii) if to the Company, to: SmartServ Online, Inc. Metro Center, One Station Place Stamford, CT 06902 Attention: Chairman Either the Holder or the Company may change its address by notice given pursuant to this Section 7.4. 8. Miscellaneous. 8.1 Amendments. The Company and the Holder may from time to time supplement or amend this Warrant. 8.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Warrant. 8.3 Entire Agreement. This Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. 8.4 Binding Effect. This Warrant shall inure solely to the benefit of, and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, and legal representatives, and no other person shall have or be construed to have any 5 legal or equitable right, remedy or claim under or in respect of or by virtue of this Warrant or any provisions herein contained. 8.5 Governing Law; Submission to Jurisdiction. This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws. The prevailing party in any such action shall be entitled to recover from the other party all of its reasonable attorneys' fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefore. 8.6 Waiver. The failure of the Company or the Holder to at any time enforce any of the provisions of this Warrant shall not be deemed or construed to be a waiver of any such provision, nor in any way to affect the validity of this Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Warrant. No waiver of any breach, noncompliance or nonfulfillment of any of the provisions of this Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, noncompliance or nonfulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, noncompliance or nonfulfillment. 9.0 Cashless Exercise. Notwithstanding anything to the contrary contained herein, this Warrant may be exercised by presentation and surrender of this Warrant to the Company at its principal executive offices with a written notice of the holder's intention to effect a cashless exercise, including a calculation of the number of shares of Common Stock to be issued upon such exercise in accordance with the terms hereof (a "Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the holder shall surrender this Warrant (or portion thereof) for that number of shares of Common Stock determined by multiplying the number of shares of Common Stock to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between the closing price per share of the Common Stock on the trading day immediately prior to the date of exercise and the Exercise Price, and the denominator of which shall be such closing price per share of Common Stock. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer effective as of the 1st day of August, 2003. SMARTSERV ONLINE, INC. By: /s/ Scott Perry ----------------------------- Name: Scott Perry Title: Chairman of the Board 6 Form to be used to exercise Warrant: SMARTSERV ONLINE, INC. Metro Center, One Station Place Stamford, CT 06902 Date: __________________ The undersigned hereby elects irrevocably to exercise the within Warrant and to purchase __________ shares of Common Stock of SmartServ Online, Inc. and hereby makes payment of $_____________ (at the rate of $______________ per share) in payment of the Exercise Price pursuant thereto. The undersigned represents that it is an accredited investor within the meaning of Regulation D of the General Rules and Regulations under the Securities Act of 1933, as amended. Please issue the shares as to which this Warrant is exercised in accordance with the instructions given below. ________________________________ Signature ________________________________ Signature Guaranteed INSTRUCTIONS FOR REGISTRATION OF SECURITIES Name____________________________________________________________________________ (Print in Block Letters) Address_________________________________________________________________________ NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange. 7 Form to be used to assign Warrant: ASSIGNMENT (To be executed by the registered Holder to effect a transfer of the within Warrant): FOR VALUE RECEIVED, ________________________________ does hereby sell, assign and transfer unto __________________________ the right to purchase ____________ shares of Common Stock of SmartServ Online, Inc. (the "Company") evidenced by the within Warrant and does hereby authorize the Company to transfer such right on the books of the Company. Dated:___________________ ________________________________ Signature ________________________________ Signature Guaranteed NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange. 8 -----END PRIVACY-ENHANCED MESSAGE-----