Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of September
___, 2003, among SMARTSERV ONLINE, INC., a Delaware corporation (the "Company")
and the investors signatories hereto.
RECITALS:
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF UNITS
Section 1.1 Purchase and Sale. The Company hereby agrees to issue and
sell to each signatory hereto (collectively, the "Investors", and each,
individually, an "Investor") and, subject to all of the terms and conditions
hereof and in reliance on the representations and warranties set forth or
referred to herein, each Investor severally agrees to purchase such number of
units (collectively, the "Purchased Units") as is equal to the result obtained
when the aggregate purchase price (as to each Investor, the "Aggregate Purchase
Price") being paid by each such Investor (as set forth below such Investor's
name on the signature page hereto or any amendment hereto) is divided by the
"Per Unit Purchase Price" (as such term is defined in Section 1.2 below), up to
a maximum of 12 Purchased Units. Each Purchased Unit shall consist of a $50,000
convertible debenture (each a "Debenture", and collectively the "Debentures"),
the form of which is attached hereto as Exhibit A, and a warrant (the "Warrant")
to purchase 100,000 shares of Common Stock, par value $0.01 per share, of the
Company ("Common Stock"), the form of which is attached hereto as Exhibit B.
Section 1.2 Purchase Price. The purchase price per Purchased Unit (the
"Per Unit Purchase Price") is $50,000.
Section 1.3 Closing. At such time as there are persons purchasing 2
Purchased Units (the "First Investors"), there shall be a closing for the
purchase and sale of such Purchased Units (the "First Closing") at the offices
of Jenkens & Gilchrist Parker Chapin LLP, counsel to the Company, at such time
and date as is mutually agreed upon by the Company and the First Investors, or
at such other place as is mutually agreed upon by the Company and the First
Investors. Subsequent to the First Closing, there shall be one or more
subsequent closings for the purchase and sale of any additional Purchased Units
(each a "Subsequent Closing"; and collectively with the First Closing, the
"Closings") at the offices of Jenkens & Gilchrist Parker Chapin LLP at such time
and date as is mutually agreed upon by the Company and the Investors purchasing
Purchased Units at each Subsequent Closing (the "Subsequent Investors"), or at
such other place as is mutually agreed upon by the Company and the Subsequent
Investors. The date and time of the First Closing and each Subsequent Closing
are referred to herein as the "First Closing Date" and the "Subsequent Closing
Date", respectively.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as follows, which
representations and warranties are true as of the date hereof and as of the
First Closing Date and each Subsequent Closing Date:
Section 2.1 Corporate Organization. The Company is a corporation duly
incorporated, validly existing and subsisting under the laws of the State of
Delaware. The Company has all requisite power and authority to own, operate and
lease its properties and to conduct its business as currently conducted. The
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such licensing or qualification, except to the extent
that the failure to be so qualified or licensed would not have a Material
Adverse Effect (as defined below). The Company has delivered to the Investors
complete and correct copies of its Amended and Restated Certificate of
Incorporation and By-laws, as in effect on the date hereof, copies of which are
attached hereto as Exhibit C. As used in this Agreement, "Material Adverse
Effect" means any event, circumstance or development which individually or in
the aggregate could have a material adverse effect on the business, properties,
operations, condition (financial or otherwise), assets, liabilities, tradability
of the Common Stock, earnings or results of operations of the Company or on the
transactions contemplated hereby.
Section 2.2 Subsidiaries. Except as set forth in Schedule 2.2, the
Company does not directly or indirectly own any equity or similar interest, or
any interest convertible into or exchangeable or exercisable for any equity or
similar interest, in any corporation, partnership, limited liability company,
joint venture or other business association, entity or person.
Section 2.3 Authorization. The Company has all requisite power and full
legal right to execute and deliver this Agreement and the Ancillary Agreements,
and to perform all of its obligations hereunder and thereunder in accordance
with the respective terms hereof and thereof. This Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby have been duly
approved and authorized by all requisite corporate action on the part of the
Company, and this Agreement has been duly executed and delivered by the Company
and constitutes, and each of the Ancillary Agreements, when executed and
delivered by the Company at the Closings, will constitute, a legal, valid, and
binding obligation of the Company, enforceable against it in accordance with its
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to the enforcement of creditors' rights and remedies or by other
equitable principles of general application. The execution, delivery, and
performance by the Company of this Agreement and the Ancillary Agreements in
accordance with their respective terms, and the consummation by the Company of
the transactions contemplated hereby or thereby, will not result (with or
without the giving of notice or the lapse of time or both) in any conflict,
violation, breach, or default, or the creation of any Lien, or the termination,
acceleration, vesting, or modification of any right or obligation, under or in
respect of (x) the Amended and Restated Certificate of Incorporation or By-laws
of the Company, (y) any judgment, decree, order, statute, rule or regulation
binding on or applicable to the Company, or (z) any agreement or instrument to
which the Company is a party or by which it or any of its assets is or are
bound.
Section 2.4 Capitalization. (a) Immediately prior to the First Closing,
and immediately prior to each Subsequent Closing, as the case may be, not giving
effect to the sale and purchase of the Purchased Units, the authorized and the
outstanding capital stock of the Company (on a Fully Diluted Basis including all
Derivative Securities) will be as set forth in Schedule 2.4. All such
outstanding shares of capital stock will be duly authorized, validly issued,
fully paid, and nonassessable, and will have been issued free and clear of
Liens. Except as set forth in Schedule 2.4, no adjustment has previously been
made (or should have been made) nor will any adjustment be required to be made
as a result of the
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Company's issuance of the Purchased Units to the rate at which any shares of any
class of the equity securities of the Company, subscriptions, options, warrants,
calls, commitments or agreements or Derivative Securities of the Company are
convertible into or exercisable for shares of Common Stock, Derivative
Securities or shares of other equity securities of the Company (by reason of any
"anti-dilution" provisions or agreements or otherwise).
(b) Except as set forth on Schedule 2.4, the Company does not
have, is not bound by, and has no obligation to grant or enter into, any
outstanding subscriptions, options, warrants, calls, commitments, or agreements
of any character calling for it to issue, deliver, or sell, or cause to be
issued, delivered, or sold, any shares of its capital stock, any other equity
security, or any securities convertible into, exchangeable for, or representing
the right to subscribe for, purchase, or otherwise acquire any shares of its
capital stock or any other equity security.
(c) Except as set forth in Schedule 2.4, the Company (i) has
no outstanding obligations, contractual or otherwise, to repurchase, redeem, or
otherwise acquire any shares of capital stock or other equity securities of the
Company, (ii) is not a party to or bound by any agreement or instrument relating
to the voting of any of its securities, and (iii) is not a party to or bound by
any agreement or instrument under which any person has the right to require it
to effect, or to include any securities held by such person in, any registration
under the Securities Act (as defined in Section 2.7).
(d) All of the Purchased Units have been offered and at the
Closings will be issued and sold, in compliance with (i) all applicable
preemptive or similar rights of all persons, and (ii) assuming the truthfulness
and accuracy of the representations made by the Investors in Section 3 hereof,
all applicable provisions of the Securities Act and the rules and regulations
thereunder, and all applicable state securities laws and the rules and
regulations thereunder and other applicable securities laws and regulations.
(e) The Purchased Units (which, for purposes of this Section
2.4(e) shall be deemed to include all shares of Common Stock issuable upon
conversion of the Debentures and all shares of Common Stock issuable upon
exercise of the Warrants) shall, upon issuance pursuant to the terms hereof
and/or the terms of the Debentures, as the case may be, be duly authorized and
validly issued, fully paid and non-assessable and free and clear of any Lien,
security interest, option or other charge or encumbrance and free of all
preemptive and other third party rights.
Section 2.5 Financial Statements. The Company has previously delivered
to the Investors, or made the Investors aware of how to obtain, complete and
correct copies of its audited balance sheets, statements of income and
statements of cash flows as of and for the fiscal years ended December 31, 2002,
2001 and 2000 and the unaudited balance sheet, statement of income and statement
of cash flows as of and for the quarter ended June 30, 2003. All such financial
statements were prepared from the books and records of the Company, in
conformity with GAAP applied on a consistent basis, are complete and correct,
contain provisions for all significant accruals or contingencies and fairly and
accurately present the financial position of the Company as of the respective
dates thereof and the results of operations and cash flows of the Company for
the periods shown therein. No event has occurred and nothing has come to the
attention of the Company since the date of the Balance Sheet (as defined below)
that would indicate that such financial statements are not true and correct as
of the date hereof.
Section 2.6 No Undisclosed or Contingent Liabilities. Except as set
forth in Schedule 2.6, the Company has no liabilities or obligations of any
nature (whether absolute, accrued, contingent or otherwise and whether due or to
become due) which are not fully reflected or reserved against on the balance
sheet as of June 30, 2003 (including the footnotes and schedules thereto, the
"Balance Sheet") in
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accordance with GAAP, except for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the date
thereof.
Section 2.7 SEC Documents. The Company has delivered to the Investors,
or made the Investors aware of how to obtain, true and complete copies of all
documents filed by the Company with the Securities and Exchange Commission (the
"SEC") (such documents, the "SEC Documents"). The SEC Documents comply in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act") or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and rules and regulations of
the SEC promulgated thereunder and none of the SEC Documents contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. The Company has effected all filings required by the Securities
Act, Exchange Act and the rules and regulations promulgated by the SEC
thereunder and has made all such filings on a timely basis within the last 12
months, except as set forth in Schedule 2.7.
Section 2.8 Absence of Certain Changes. Except as set forth on Schedule
2.8 or otherwise disclosed in the SEC Documents, since the date of the Balance
Sheet, the Company has conducted its business only in the ordinary course and
consistent with past practice, and has not:
(a) suffered any Material Adverse Effect;
(b) materially increased, or experienced any change in any
assumptions underlying or methods of calculating, any bad debt, contingency or
other reserves;
(c) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities and obligations reflected or reserved against in
the Balance Sheet or incurred in the ordinary course of business and consistent
with past practice since the date of the Balance Sheet;
(d) permitted or allowed any of its assets to be subjected to
any Lien of any kind;
(e) incurred any indebtedness not in the ordinary course of
business or executed any guarantees on behalf of any person;
(f) canceled any material debts or waived any claims or rights
of substantial value;
(g) sold, transferred or otherwise disposed of any of its
properties or assets, except in the ordinary course of business and consistent
with past practice;
(h) granted any general increase in the compensation of
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment), other than such increases as are
consistent with the Company's past practice or required by agreement or
understanding disclosed to the Investors; or experienced any material loss of
personnel of the Company, material change in the terms and conditions of the
employment of the Company's key personnel, loss of any of the five most highly
compensated employees of the Company or entered into any written employment
agreement with any Company employee;
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(i) made any capital expenditure or commitment for additions
to its property, equipment or intangible capital assets other than in the
ordinary course of business and consistent with past practice;
(j) made any change in any method of accounting or accounting
practice, changed accountants or auditors or failed to maintain its books,
accounts and records in the ordinary course of business and consistent with past
practice;
(k) failed to maintain any material properties or equipment in
good operating condition and repair, ordinary wear and tear excepted;
(l) entered into any transaction or made or entered into any
material contract or commitment, except in the ordinary course of business and
consistent with past practice, or terminated or amended any material contract or
commitment;
(m) declared, paid or set aside for payment any dividend or
other distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of its capital stock or
other securities;
(n) amended its Amended and Restated Certificate of
Incorporation or By-laws;
(o) taken, suffered, or permitted any action which would
render untrue any of the representations or warranties of the Company herein
contained, and not omitted to take any action, the omission of which would
render untrue any such representation or warranty; or
(p) agreed in writing or otherwise committed to take actions
in furtherance of, or otherwise taken, any action with respect to any of the
matters described in this Section 2.8.
Section 2.9 No Violation. Neither the execution and delivery of this
Agreement or any of the Ancillary Agreements by the Company nor the performance
by the Company of its obligations hereunder or thereunder will: (i) conflict
with or result in any breach of any provision of its Amended and Restated
Certificate of Incorporation or By-laws, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default or give rise to any Lien on the Company's properties or assets or any
right of termination, cancellation or acceleration under any of the terms or
conditions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Company is a party or by which it or any
of its material properties or assets may be bound, or require the consent of any
person, (iii) violate any statute, law, rule, regulation, writ, injunction,
judgment, order or decree of any court, administrative agency or governmental
authority binding on the Company or any of its properties or assets, or (iv)
violate any provision (including those requiring the furnishing of notice prior
to the taking of specific actions) of the rules of the NASD OTCBB (or the rules
of any other marketplace on which the Common Stock of the Company is listed or
quoted).
Section 2.10 Compliance with Applicable Law. The Company is currently
in compliance with all applicable laws (whether statutory or otherwise), rules,
regulations, orders, ordinances, judgments, decrees, writs, requirements and
injunctions of all governmental authorities, agencies, courts, and
administrative tribunals, except for such noncompliance that, individually and
in the aggregate, would not have a Material Adverse Effect. The Company has not
received any notice or request for information from any federal, state, or local
governmental authority (i) that the Company has been identified by the
Environmental Protection Agency or any state environmental regulatory authority
as a potentially
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responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B, or under any equivalent state
law; or (ii) that it is or may be in violation of any Environmental Laws or is
or will or may be a named party to any claim, action, cause of action, complaint
or legal or administrative proceeding arising out of any third party's
incurrence of Damages in connection with any environmental matters.
Section 2.11 Licenses and Permits. The Company has and maintains all
licenses, permits and other authorizations from all governmental authorities as
are necessary for the conduct of its business as presently conducted or in
connection with the ownership or use of its properties, except for licenses,
permits and other authorizations that the failure to obtain or maintain in
effect, either singly or in the aggregate, has not had and could not reasonably
be expected to have a Material Adverse Effect.
Section 2.12 Governmental Consents. Except for the filing of any forms
required under the federal securities laws (including any registration statement
under the Securities Act required to be filed by the Company under the
Registration Rights Agreement) and any filings required under state "blue sky"
laws, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is required to be
made or obtained by the Company in connection with the execution and delivery of
this Agreement or any of the Ancillary Agreements by the Company or the
performance by the Company of its obligations hereunder and thereunder, or the
continued conduct by the Company of its present business after the Closings.
Section 2.13 Taxes. Except as set forth in Schedule 2.13, the Company
has filed all Tax (as hereinafter defined) reports and returns that it was
required to file. All such reports and returns were correct and complete in all
material respects. All Taxes owed by the Company (whether or not shown on any
report or return) have been paid or, if not yet due, appropriate accruals
therefor as required under GAAP have been made on the Company's financial
records and on the financial statements described in Section 2.5. No claim has
been made by a taxing authority in a jurisdiction where the Company does not pay
Tax or file tax returns that the Company is or may be subject to Taxes assessed
by such jurisdiction. There are no Liens for Taxes (other than current Taxes not
yet due and payable) on the assets of the Company. There is no action, suit,
investigation, liability, taxing authority proceeding, or audit with respect to
any Tax now in progress, pending or, to the Company's knowledge, threatened,
against or with respect to the Company, whether in respect of any Tax reports
and returns that were not filed in a timely manner or for any other reason. No
deficiency or proposed adjustment in respect of Taxes that has not been settled
or otherwise resolved has been asserted or assessed by any taxing authority
against the Company which is not accrued on the Balance Sheet. The Company has
not consented to extend the time in which any Tax may be assessed or collected
by any taxing authority. As used in this Section 2.13, the terms "Taxes" and
"Tax" mean all federal, state, local and foreign taxes, including, without
limitation, income, unemployment, withholding, payroll, social security, real
property, personal property, excise, sales, use and franchise taxes, levies,
assessments, duties, licenses and registration fees and charges of any nature
whatsoever, including interest, penalties and additions with respect thereto and
any interest in respect of such additions and penalties.
Section 2.14 Litigation. Except as set forth in Schedule 2.14, in the
Company's annual report on Form 10-KSB for the fiscal year ended December 31,
2002, or the Company's quarterly report on Form 10-QSB for the quarter ended
June 30, 2003, there is no action, suit or proceeding pending or, to the
knowledge of the Company, threatened against the Company, before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable likelihood of a decision which could have a Material Adverse Effect
on the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company or which challenges the validity of this
Agreement or any Ancillary Agreement.
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Section 2.15 Title to Properties. The Company does not own any real
property. Except as set forth on Schedule 2.15, the Company has title to all of
its properties and assets free and clear of all Liens, charges and encumbrances,
except Liens for taxes not yet due and payable and such Liens or other
imperfections of title, if any, that do not materially detract from the value of
or interfere with the present use of the property affected thereby. There is no
existing default or event of default (or event which with notice or lapse of
time, or both, would constitute a default) by the Company under any lease
pursuant to which the Company leases real or personal property.
Section 2.16 Contracts and Commitments. Except as set forth in Schedule
2.16, the Company is not a party or subject to or bound by (whether written or
oral), nor has it committed to enter into in the future:
(a) any agreement, which, in the future, would lead to (i) an
acquisition, merger or similar transaction with respect to the Company, or (ii)
a debt or equity financing for the Company (other than this Agreement and the
Ancillary Agreements);
(b) any agreement requiring it to purchase all or
substantially all of its requirements for a particular product or service from a
particular supplier or suppliers, or requiring it to supply all of a particular
customer's or customers' requirements for a certain service or product;
(c) any agreement with any current or former Affiliate,
officer or director of the Company, or with any person in which any such
Affiliate has an interest; and
(d) any agreement with any domestic or foreign government or
agency or executive office thereof or any subcontract between it and any third
party relating to a contract between such third party and any domestic or
foreign government or agency or executive office thereof.
Section 2.17 Intellectual Property. (a) Except as set forth on Schedule
2.17, all patents, patent applications, trademarks, trade names, service marks,
logos and copyrights and other intellectual property used in or material to the
Company's business as now being conducted or as proposed to be conducted
(collectively, and together with any technology, know-how, trade secrets,
processes, formulas, and techniques used in or material to the Company's
business, "Proprietary Information") are either owned or licensed by the
Company.
(b) Except as set forth on Schedule 2.17, to the Company's
knowledge, none of the Proprietary Information is being infringed by others, or
is subject to any outstanding order, decree, judgment, or stipulation. No
litigation (or other proceedings in or before any court or other governmental,
adjudicatory, arbitral, or administrative body) relating to the Proprietary
Information is pending or, to the Company's knowledge, threatened, nor, to the
Company's knowledge, is there any basis for any such litigation or proceeding.
(c) Except as set forth on Schedule 2.17, to the Company's
knowledge, it is not infringing on or making unlawful use of any intellectual
property or any proprietary or confidential information of any Person. No
litigation (or other proceedings in or before any court or other governmental,
adjudicatory, arbitral, or administrative body) charging the Company with
infringement or unlawful use of any patent, trademark, copyright, or other
proprietary right is pending or, to the Company's knowledge, threatened; nor, to
the Company's knowledge, is there any basis for any such litigation or
proceeding.
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Section 2.18 Insurance. Except as set forth on Schedule 2.18, the
Company maintains policies of insurance with, to the knowledge of the Company,
financially sound and reputable insurance companies, funds, or underwriters,
which are of the kinds and which cover such risks, and are in such amounts and
with such deductibles and exclusions, as are consistent with prudent business
practice for similarly situated businesses in the Company's business. Except as
set forth on Schedule 2.18, all such policies are in full force and effect, are
sufficient for compliance in all respects by the Company with all requirements
of law and of all agreements to which it is a party and will not terminate or
lapse or otherwise be affected in any way by reason of the transactions
contemplated hereby.
Section 2.19 Investment Company. The Company is not an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended, and will not be an investment company under such Act upon consummation
of the transactions contemplated hereby or after giving effect to the use of
proceeds from the purchase of the Purchased Units.
Section 2.20 Securities Laws. The offer, sale and issuance of the
Purchased Units without registration (assuming the accuracy of the
representations and warranties made by the Investors in Section 3.1 hereof) will
not violate the Securities Act, or any applicable state securities or "blue sky"
laws or other applicable laws. None of the Company, its affiliates or any person
acting on its behalf has engaged in any form of general solicitation or
advertising (as defined in Rule 502(c) of the Securities Act) or engaged in any
action that would require the registration under the Securities Act of the
offering and sale of the Purchased Units pursuant to this Agreement.
Section 2.21 Investment Banking; Brokerage. Except as set forth on
Schedule 2.21, there are no claims for investment banking fees, brokerage
commissions, finder's fees or similar compensation (exclusive of professional
fees to attorneys and accountants) in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Company or any of its Affiliates.
Section 2.22 Labor Relations. There is no charge pending or, to the
Company's knowledge, threatened, against or with respect to the Company before
any court or agency and alleging unlawful discrimination in employment
practices, and there is no charge of or proceeding with regard to any unfair
labor practice against the Company pending before the National Labor Relations
Board. There is no labor strike, dispute, slow-down, or work stoppage pending
or, to the Company's knowledge, threatened against or involving the Company.
None of the employees of the Company is covered by any collective bargaining
agreement, and no such collective bargaining agreement is currently being
negotiated. No one has petitioned and, to the Company's knowledge, no one is now
petitioning, for union representation of any employees of the Company. The
Company believes its relationships with its employees is satisfactory.
Section 2.23 Disclosure. The Company confirms that neither it nor, to
its knowledge, any other person acting on its behalf has provided any of the
Investors or their agents or counsel with any information that constitutes or
might constitute material, nonpublic information. The Company understands and
confirms that the Investors may rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Investors regarding the Company, its business and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or
on behalf of the Company with respect to the representations and warranties made
herein are true and correct with respect to such representations and warranties
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The Company
acknowledges and agrees that no Investor makes or has made any representations
or warranties
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with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.
Section 2.24 Internal Accounting Controls. Except as set forth in
Schedule 2.24, the Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. There are no disagreements of any kind presently
existing, or reasonably anticipated by the Company to arise, between the
accountants and lawyers formerly or presently employed by the Company that could
reasonably be expected to delay the filing or processing of a registration
statement with the SEC. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company
and designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company's Form 10-KSB or 10-QSB, as the case may be, is
being prepared. The Company's certifying officers have evaluated the
effectiveness of the Company's controls and procedures as of a date within 90
days prior to the filing date of the Form 10-QSB for the quarter ended June 30,
2003 (such date, the "Evaluation Date"). The Company presented in the Form
10-QSB for the quarter ended June 30, 2003 the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls (as such
term is defined in Item 307(b) of Regulation S-B under the Exchange Act) or, to
the Company's knowledge, in other factors that could significantly affect the
Company's internal controls.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Section 3.1 Representations and Warranties. Each Investor represents
severally as to himself only that (each of which representations and warranties
are true as of the date hereof and as of the Closing (either the First Closing
or any Subsequent Closing) in which such Investor participates):
(a) He has all requisite power and full legal right to execute
and deliver this Agreement and the Ancillary Agreements to which he is a party
and to carry out his obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Ancillary Agreements to which he is a party
and the performance by him of his obligations hereunder and thereunder, have
been duly authorized by him, and no other proceeding therefor on his part is
required. This Agreement and each of the Ancillary Agreements to which he is a
party have been duly executed and delivered by him and constitute his valid and
binding obligations, enforceable against him in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to
the enforcement of creditors' rights and remedies or by other equitable
principles of general application.
(b) He is purchasing the Purchased Units for his own account
for investment only and not with a present view to the distribution thereof.
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(c) He has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
investment contemplated by this Agreement and making an informed investment
decision with respect thereto.
(d) He is an "accredited investor" as such term is defined in
Rule 501 under the Securities Act, and that he has truthfully filled out the
questionnaire attached hereto as Exhibit D. Such Investor understands that the
Company is relying on the information contained in such questionnaire.
(e) He has had the opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of securities
purchased hereunder, as well as the opportunity to obtain additional information
necessary to verify the accuracy of information furnished in connection with
such offering that the Company possesses or can acquire without unreasonable
effort or expense.
(f) He understands that the Purchased Units have not been
registered under the Securities Act or any state securities laws, and may not be
transferred unless subsequently registered thereunder or pursuant to an
exemption from registration, and that a legend indicating such restrictions will
be placed on the certificates representing the Warrants and the Debentures.
(g) There are no claims for investment banking fees, brokerage
commissions, finder's fees or similar compensation (other than professional fees
to attorneys and accountants) in connection with the transactions contemplated
by this Agreement or any of the Ancillary Agreements based on any arrangement or
agreement made by or on behalf of him.
(h) Neither the execution and delivery of this Agreement or
any of the Ancillary Agreements by him nor the performance by him of his
obligations hereunder or thereunder will: (i) constitute (with or without due
notice or lapse of time or both) a default or give rise to any lien or
encumbrance on any of his material properties or assets or any right of
termination, cancellation or acceleration under any of the terms or conditions
of any material note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which he is a party or by which he or any of his
material properties or assets may be bound, or (ii) to his knowledge violate any
statute, law, rule, regulation, writ, injunction, judgment, order or decree of
any court, administrative agency or governmental authority binding on him or any
of his material properties or assets.
(i) Except for filings required under federal or state
securities laws, to his knowledge, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by him in connection with the
execution and delivery of this Agreement or any of the Ancillary Agreements by
him, or the performance by him of his obligations hereunder and thereunder.
(j) There are no claims, actions, suits, proceedings,
investigations or inquiries pending before any court, arbitrator or governmental
or regulatory official or office, or, to his knowledge, threatened, against or
affecting him which question the validity of this Agreement or any of the
Ancillary Agreements, the transactions contemplated hereby or thereby or any
action taken or to be taken by him pursuant to this Agreement or any of the
Ancillary Agreements, at law or in equity.
(k) He has adequate means of providing for his current
financial needs and foreseeable contingencies and has no need for liquidity of
the investment in the Units for an indefinite period of time.
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(l) He is aware that an investment in the Units involves a
number of very significant risks and has carefully read and considered the
information set forth herein and in the Company's disclosure schedules annexed
hereto.
ARTICLE IV
COVENANTS OF THE COMPANY AND THE INVESTORS
Section 4.1 Further Assurances. The Company and each Investor shall
execute and deliver, or cause to be executed and delivered each Ancillary
Agreement to be executed and delivered by it or him. The Company shall execute
and deliver, or cause to be executed and delivered, all such additional
instruments and other documents and shall take such further actions as the
Investors may reasonably require to effectuate, carry out and comply with all of
the terms of this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby.
Section 4.2 Reservation of Shares; Compliance with Securities Laws. The
Company will at all times reserve the appropriate number of shares of Common
Stock solely for the purpose of issuance upon exercise of the Warrants and
conversion of the Debentures. The Company will file within the required time
periods all filings, notices and other documents required by applicable federal
and state securities laws in connection with the transactions contemplated by
this Agreement.
Section 4.3 Non-Public Information. The Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide any
Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Investor shall
be relying on the foregoing covenant in effecting transactions in securities of
the Company.
Section 4.4 Inter-Creditor Agreement. Each Investor hereby agrees that
the payment of all amounts due under the Debentures shall be shared in
proportion to the amount owed to each Investor pursuant to their Debenture. To
the extent that any Investor receives a Debenture payment in excess of the
payment amount due to such Investor pursuant to such Investor's Debenture, the
other Investors shall immediately be notified and such excess amounts shall be
paid to such parties on a pro-rata basis. If an Event of Default (as defined in
the Debentures) occurs under any Debenture and any Investor collects proceeds
pursuant to its rights hereunder and under the Debentures, the other Investors
shall be immediately notified and such proceeds shall be shared with the other
Investors on a pro-rata basis. To the extent that any Investor receives a
payment that is in excess of its pro-rata portion of the payment received by all
Investors, such excess payment shall be deemed to be held in trust by such
Investor on behalf of the other Investors.
ARTICLE V
CLOSING CONDITIONS
Section 5.1 Investor Closing Conditions. The obligation of the
Investors to consummate the transactions contemplated hereby is subject to
satisfaction or waiver of each of the following conditions at or prior to the
First Closing and any Subsequent Closing:
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(a) Secretary's Certificate. The Company shall have
delivered to the Investors a
certificate of the Secretary of the Company, dated as of the First Closing Date
or any Subsequent Closing Date, as applicable, certifying: (i) the adoption by
the Company's Board of Directors of attached resolutions authorizing, among
other things, the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated herein, and
(ii) the incumbency and signatures of the officers of the Company executing this
Agreement, the Ancillary Agreements and the other agreements and instruments
contemplated herein.
(b) Certificates. The Company shall have delivered to
each Investor certificates
evidencing the Warrants and the Debenture acquired by such Investor pursuant to
the terms hereof, each duly executed by the appropriate Company officers.
(c) Closing Certificate. The Company shall have
delivered to the Investors a
certificate of an authorized officer of the Company certifying that the
representations and warranties of the Company contained in this Agreement and in
each certificate or document delivered by the Company to the Investors in
connection with the transactions contemplated hereby and thereby are true and
correct when made on the date hereof and shall be true and correct in all
material respects on and as of the First Closing Date or any Subsequent Closing
Date, as applicable, as though made on and as of such date and the Company shall
have performed all obligations and complied in all material respects with all
agreements, undertakings, covenants and conditions required hereunder or
thereunder to be performed by it prior to the First Closing or any Subsequent
Closing, as applicable.
(d) Opinion of Counsel. The Investors shall have
received at the Closings from Jenkens & Gilchrist Parker Chapin LLP, counsel to
the Company, a favorable written opinion dated as of the First Closing Date or
any Subsequent Closing Date, as applicable, which shall be in the form attached
hereto as Exhibit E hereto.
Section 5.2 Company Closing Conditions for the First Closing. The
obligation of the Company to consummate the transactions contemplated hereby at
the First Closing is subject to the Company having received payment by wire
transfer or check payable to the order of the Company of $100,000 at or prior to
the First Closing.
Section 5.3 Company Closing Conditions for Subsequent Closings. The
obligation of the Company to consummate the transactions contemplated hereby at
each Subsequent Closing is subject to the satisfaction or waiver of each of the
following conditions at or prior to such Subsequent Closing:
(a) Payment of Purchase Price. The Company shall have
received payment by wire transfer or check payable to the order of the Company
for the balance of the Purchased Units being purchased by the Investors.
(b) First Closing. The First Closing shall have taken
place.
Section 5.4 Mutual Closing Condition for the First Closing and each
Subsequent Closing. The obligation of the Company and the Investors to
consummate the transactions contemplated hereby at the First Closing or any
Subsequent Closing is subject to the satisfaction or waiver of each of the
following conditions at or prior to the First Closing or any Subsequent Closing:
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(a) Injunctions. There not being in effect any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby.
(b) Last Closing Date. No Closing shall take place
after September 25, 2003.
(c) Consent of Existing Debenture Holders. The
Company shall have obtained the prior written consent to the Closings of the
holders of 51% or more of the outstanding principal balance of Company's
$1,500,000 Convertible Debentures issued in May and June 2003 (the "Existing
Debentures") and due six months from their respective issuance dates.
(d) Agreement of Existing Debenture Holders. The
Company shall have obtained the written agreement of the holders of 51% or more
of the outstanding principal balance of all outstanding Existing Debentures to
amend such Existing Debentures to provide that the then outstanding balance of
such Existing Debentures will automatically convert into securities of the
Company upon the terms and conditions of any private offering consummated at any
time prior to November 19, 2003 resulting in gross proceeds to the Company of
not less than $3,000,000 (inclusive of the Debentures and the Existing
Debentures being converted).
ARTICLE VI
DEFINITIONS
Section 6.1 Certain Defined Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth or cross-referenced in
this Section 6:
"Affiliate" means any other person directly or indirectly controlling,
controlled by, or under direct or indirect common control with any referenced
person and includes without limitation, (a) any Person who is an officer,
director, or direct or indirect beneficial holder of at least 5% of the then
outstanding capital stock of any referenced Person, and any of the Family
Members of any such Person, (b) any Person of which a referenced Person and/or
its Affiliates (as defined in clause (a) above), directly or indirectly, either
beneficially own(s) at least 5% of the then outstanding equity securities or
constitute(s) at least a 5% equity participant, (c) in the case of a specified
Person who is an individual, Family Members of such Person, and (d) in the case
of the Investors, any entities for which an Investor or any of its Affiliates
serve as general partner and/or investment adviser or in a similar capacity, and
all mutual funds or other pooled investment vehicles or entities under the
control or management of such Investor or the general partner or investment
adviser thereof, or any Affiliate of any of them, or any Affiliates of any of
the foregoing.
"Affiliated Group" has the meaning given to it in Section 1504 of the
Code, and in addition includes any analogous combined, consolidated, or unitary
group, as defined under any applicable state, local, or foreign income Tax law.
"Ancillary Agreements" means the Warrants, Debentures, the Registration
Rights Agreement and any other agreement or document delivered or executed in
connection with this Agreement or the transactions contemplated hereby.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
13
"Code" means the Internal Revenue Code of 1986, as amended.
"Damages" means all damages, losses, claims, demands, actions, causes
of action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including without limitation court costs and the fees and expenses of counsel
and experts.
"Derivative Securities" means (i) all shares of stock and other
securities that are convertible into or exchangeable for shares of Common Stock,
and (ii) all options, warrants, and other rights to acquire shares of Common
Stock or any class of stock or other security or securities convertible into or
exchangeable for shares of Common Stock or any class of stock or other security.
"Environmental Laws" means, collectively, the Resource Conservation and
Recovery Act, CERCLA, the Superfund Amendments and Reauthorization Act of 1986,
the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, and any and all state or local statutes, regulations, ordinances,
orders, and decrees relating to health, safety, or the environment, each, as the
case may be, as amended.
"Family Members" means, as applied to any individual, any parent,
spouse, child, spouse of a child, brother or sister of the individual, and each
trust, limited partnership or limited liability company created primarily for
the benefit of one or more of such persons and each custodian of a property of
one or more such persons and the personal representative or estate of any such
persons.
"Fully Diluted Basis" means that the relevant calculation of the
ownership or percentage ownership (as applicable) of any Person of the equity
securities of the Company shall be performed as if (i) all Derivative Securities
have been exercised or converted, as the case may be, into shares of Common
Stock of the Company, and (ii) all shares of preferred stock or any other series
of equity securities of the Company shall have been converted into shares of
Common Stock of the Company.
"GAAP" means generally accepted accounting principles in the United
States that are (i) consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, (ii) applied on a
basis consistent with prior periods, and (iii) such that, insofar as the use of
accounting principles is pertinent, a certified public accountant could deliver
an unqualified opinion with respect to financial statements in which such
principles have been properly applied.
"Liens" means any and all liens, claims, mortgages, security interests,
charges, encumbrances, and restrictions on transfer of any kind, except: (i) in
the case of references to securities, any of the same arising under applicable
securities laws solely by reason of the fact that such securities were issued
pursuant to exemptions from registration under such securities laws, (ii) real
estate taxes not yet due and payable, and (iii) any lien in favor of any
landlord for unpaid rent, additional rent, or other charges, which lien is
created by statute or under any lease under which the Company or any of its
Subsidiaries is lessee, unless the Company is given written notice of the
imposition of any such lien described in this clause (iii).
"Person" or "person" (regardless of whether capitalized) means any
natural person, entity, or association, including without limitation any
corporation, partnership, limited liability company, government (or agency or
subdivision thereof), trust, joint venture or proprietorship.
14
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the First Closing Date or any Subsequent Closing Date, as
applicable, by and among the Company and the Investors participating in such
closing, in the form attached hereto as Exhibit F.
"Subsidiary" or "Subsidiaries" means, with respect to any person, any
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of which are at the time owned by such person or by a
Subsidiary of such person, if the holders of the shares of such class or classes
(a) are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right so to vote exists by reason of the happening of a
contingency.
"Trading Day" means a day on which the Company's Common Stock is able
to be traded on the NASD OTCBB.
Section 6.2 Terms Defined Elsewhere. The following terms are defined
herein in the sections identified below:
TERM SECTION
Aggregate Purchase Price 1.1
Agreement Preamble
Balance Sheet 2.6
Closings 1.3
Common Stock 1.1
Company Preamble
Debenture and Debentures 1.1
Evaluation Date 2.24
Exchange Act 2.7
First Closing 1.3
First Closing Date 1.3
First Investors 1.3
Investor Preamble
Material Adverse Effect 2.1
Per Unit Purchase Price 1.2
Proprietary Information 2.17
Purchased Units 1.1
SEC 2.7
SEC Documents 2.7
Subsequent Closing 1.3
Subsequent Closing Date 1.3
Subsequent Investors 1.3
Securities Act 2.7
Tax 2.13
Warrant 1.1
Warrants 1.1
ARTICLE VII
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MISCELLANEOUS
Section 7.1 Independent Nature of Purchasers' Obligations and Rights.
The Company acknowledges each of the following: The obligations of each Investor
participating in this transaction are several and not joint with the obligations
of any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor. Nothing contained herein
or in any other agreement, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a "group" (within the meaning
of Sections 13 and 16 of the Exchange Act and any rules promulgated thereunder),
in each case with respect to such obligations or the transactions contemplated
hereunder. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other agreements relating to this transaction, and it
shall not be necessary for any other Investor to be joined as an additional
party in any proceeding for such purpose. Each Investor has been represented by
its own separate legal counsel (or has chosen not to be represented by legal
counsel) in its review and negotiation of this agreement and the related
transaction documents. The Company has elected to provide various Investors with
the same terms and agreements for the convenience of the Company and not because
it was required or requested to do so by the Investors.
Section 7.2 Waivers and Consents. For the purposes of this Agreement
and all agreements executed pursuant hereto, no course of dealing between the
Company and the Investors and no delay on the part of any party hereto in
exercising any rights hereunder or thereunder shall operate as a waiver of the
rights hereof or thereof. No provision hereof may be waived except by a written
instrument signed by the party so waiving such provision.
Section 7.3 Governing Law; Jurisdiction; Venue etc. This Agreement
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware, without giving effect to the principles of conflicts of
law thereof. The state and federal courts of the State of New York located in
New York County shall have exclusive jurisdiction to hear and determine any
claims or disputes between the Investors and the other party or parties hereto
pertaining directly or indirectly to this Agreement and all documents,
instruments and agreements executed pursuant hereto, or to any matter arising
therefrom (unless otherwise expressly provided for therein); the exclusive
choice of forum set forth in this Section 7.3 shall not be deemed to preclude
the enforcement of any judgment obtained in such forum or the taking of any
action to enforce the same in any other appropriate jurisdiction. All of the
parties hereto waive all rights to trial by jury in any action or proceeding
instituted by any party against any other party arising out of, on or by reason
of this Agreement or the documents and transactions contemplated herein.
Section 7.4 Headings. The descriptive headings in this Agreement have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction or interpretation of any provision thereof or hereof.
Section 7.5 Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original; but such counterparts shall together
constitute but one and the same document.
Section 7.6 Notices and Demands. Any notice or demand which is required
or provided to be given under this Agreement shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand or by
telecopy that has been confirmed as received by 5:00 P.M. on a
16
business day, one (1) business day after being sent by nationally recognized
overnight courier or received by telecopy after 5:00 P.M. on any day, or five
(5) business days after being sent by certified or registered mail, postage and
charges prepaid, return receipt requested, to the following addresses:
If to the Company:
SmartServ Online, Inc.
One Station Place
Stamford, Connecticut 06902
Attn: Chief Financial Officer
Facsimile: (203) 353-5984
With a copy to:
SmartServ Online, Inc.
One Station Place
Stamford, Connecticut 06902
Attn: General Counsel
Facsimile: (203) 353-5984
And:
Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attn: Michael J. Shef, Esq.
Facsimile: (212) 704-6288
If to the Investors:
To their respective addresses set forth
below their respective names on the
signature pages hereto.
Section 7.7 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement, provided, however, that no such
severability shall be effective if it materially changes the economic benefit of
this Agreement to any party.
Section 7.8 Integration. This Agreement, including the exhibits,
documents and instruments referred to herein or therein, constitutes the entire
agreement, and supersedes any other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
Section 7.9 Publicity. The Company and the Investors shall have the
right to approve before issuance of any press releases or any other public
statements is sought to be made by the other with respect to the transactions
contemplated hereby, except for any disclosures required in connection with
17
obtaining any consents to the transactions contemplated by this Agreement. The
Company shall have the right to issue any press release or other public
statement in connection with the transaction contemplated hereby, excluding the
identity of the Investors, without the prior consent of the Investors, but may
disclose the identity of the Investors upon prior written consent of the
Investors, which shall not be unreasonably withheld. The Company shall also have
the right to file this Agreement and the Ancillary Agreements with the SEC under
the Securities Act or the Exchange Act if required by such acts or regulations
thereunder.
Section 7.10 Expenses. The Company and the Investors will each bear
their own costs and expenses and those of their respective advisors related to
the transactions herein contemplated.
Section 7.11 Assignment. (a) The Company may not assign this Agreement
or its rights and obligations hereunder.
(b) The rights and obligations hereunder and the Purchased
Units (or a component thereof) may be transferred by each of the Investors in
its sole discretion at any time, in whole or in part, to (i) any Affiliate(s) or
Affiliated Group(s) of the transferor or (ii) with the consent of the Company,
which shall not be unreasonably withheld, delayed, or conditioned, any party
that is an "accredited investor" (as such term is defined in Rule 501 under the
Securities Act), without the consent of any other party thereto.
(c) Notwithstanding the other provisions of this Section 7.11,
no Person acquiring any Common Stock in a public trade shall receive the benefit
of any of the covenants set forth in this Agreement as an assignee thereof.
(d) Subject to clause (c) immediately above, any Person
acquiring, in a manner permitted by this Agreement, any Units (or components
thereof) and/or rights of an Investor under this Agreement shall constitute an
Investor for purposes of this Agreement and any reference to an Investor in this
Agreement shall also refer to any such Person.
Section 7.12 Equitable Relief. Each of the parties acknowledges that
any breach by such party of his obligations under this Agreement would cause
substantial and irreparable damage to one or more of the other parties and that
money damages would be an inadequate remedy therefor. Accordingly, each party
agrees that the other parties or any of them will be entitled to an injunction,
specific performance and/or other equitable relief to prevent the breach of such
obligations.
Section 7.13 Usage. All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require. All terms defined in this Agreement in their singular or plural forms
have correlative meanings when used herein in their plural or singular forms,
respectively.
Section 7.14 Facsimile Signatures. A facsimile signature on this
Agreement or an original signature delivered by facsimile shall be considered
the same as an original.
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IN WITNESS WHEREOF, the parties have caused this Securities Purchase
Agreement to be duly executed and delivered as of the day and year first above
written. EXECUTION OF THIS AGREEMENT BY ANY INVESTOR SHALL BE DEEMED TO
CONSTITUTE EXECUTION OF THE REGISTRATION RIGHTS AGREEMENT BY SUCH INVESTOR.
SMARTSERV ONLINE, INC.
By: /s/ Thomas W. Haller
-------------------------------------------------
Name: Thomas W. Haller
Title: Senior Vice President and Chief Financial
Officer
INVESTORS:
If an individual:
-------------------------------------------
Name:
If an entity:
Name of Entity:
----------------------------
By:
---------------------------------------
Name:
Title:
Number of Units Purchased:
-------------------
Amount of Investment: $
----------------------
Address of Investor:
----------------------------------------------
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