UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 28, 2005
SmartServ Online, Inc.
--------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-28008 13-3750708
- ------------------------------- --------------- -------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
2250 Butler Pike, Suite 150, Plymouth Meeting, Pennsylvania 19462
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (610) 397-0689
N/A
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On January 28, 2005, SmartServ Online, Inc. (the "Company") entered into a
letter agreement ("Agreement") with TecCapital, Ltd. ("TEC"), pursuant to which
TEC agreed to waive and release certain rights TEC has under a certain Stock
Purchase Agreement by and among the Company, TEC, The Abernathy Group and
Conseco Equity Fund, dated May 12, 2000 ("SPA"). TEC provided these waivers and
releases in consideration for the grant to TEC of 500,000 shares ("Shares") of
the Company's common stock ("Common Stock"). The Company believes that TEC is
the beneficial owner of more than ten percent (10%) of the Company's Common
Stock.
The Agreement provides that TEC waives and releases the Company from all claims
that TEC may have:
o for additional shares of Common Stock issuable to TEC pursuant to certain
anti-dilution rights provided for in the SPA;
o for warrants issuable to TEC as compensation for the Company's failure to
register with the Securities and Exchange Commission ("SEC") the resale of
the shares acquired by TEC under the SPA and the related anti-dilution
shares described above; and
o with respect to all covenants made by the Company under Article IV of the
SPA (i.e., affirmative post-closing covenants made by the Company under the
SPA), except certain indemnification rights of TEC described below.
The Agreement also provides that the covenants under Article IV shall be
terminated and all of TEC's rights thereunder waived, except for certain
indemnification rights of TEC with regard to liability under any registration
statements filed by the Company covering the shares of TEC. These waived
covenants include, without limitation, TEC's right to attend meetings of the
Company's Board of Directors and to appoint a director to the Board, along with
preemptive, anti-dilution and registration rights previously granted to TEC.
Under the terms of the Agreement, the Company agreed to use best efforts to
register the Shares, and all other shares of Common Stock held by TEC, in a
registration statement filed with the SEC. The Company also agreed to use best
efforts to cause this registration statement to become effective within 180 days
after the acquisition of Telco Group is consummated or this acquisition is
abandoned, which proposed acquisition was previously disclosed by a press
release dated November 17, 2004. In the event that both the acquisition of Telco
Group is not consummated and a registration statement covering all of TEC's
shares of Common Stock is not declared effective within 270 days after the date
of the Agreement, TEC may (in its sole discretion) return all of the Shares to
the Company within 330 days from the date of the Agreement, and in such case the
waivers and releases granted in the Agreement would become void and TEC could
pursue any claims against the Company as if such waivers and releases had never
been granted.
2
The Company also agreed that until the contemplated acquisition of Telco Group
is consummated, the Company would not:
o acquire or repurchase for cash any of its outstanding securities (other
than in connection with the termination of employment or independent
contractor services); and
o pay or otherwise deliver any cash to a holder of the Company's securities
in consideration for failure to register the Company's securities for
resale.
Item 3.02 Unregistered Sale of Equity Securities
On January 28, 2005, the Company agreed that it would issue 500,000 shares of
Common Stock in the aggregate to TEC under the Agreement. The Shares are being
issued by the Company as consideration for the waiver and release of certain
claims TEC may have under the SPA as described in Item 1.01 above. As described
above, these Shares are subject to being returned by TEC in the event the
Company fails to register all shares of Common Stock owned by TEC and the Telco
Group transaction is not consummated within 270 days from the date of the
Agreement. These Shares are to be issued in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended.
TEC is an accredited investor and had access to our most recent Form 10-KSB/A,
all quarterly and other periodic reports filed subsequent to such Form 10-KSB/A
and our most recent proxy materials.
Forward-Looking Statements
This current report on Form 8-K contains forward-looking statements that involve
risks and uncertainties. Forward-looking statements in this document and those
made from time-to-time by the Company are made under the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements concerning future plans or results are necessarily only estimates and
actual results could differ materially from expectations. Certain factors that
could cause or contribute to such differences are described from time to time in
the Company's filings with the Securities and Exchange Commission, including but
not limited to, the "Risk Factors" described under the heading "Certain Factors
That May Affect Future Results" in the Company's Annual Report on Form 10-KSB/A
for the year ended December 31, 2003 and other SEC filings.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SMARTSERV ONLINE, INC.
Dated: February 3, 2005 By: /s/ Len von Vital
Len von Vital,
Chief Financial Officer
4
