EXHIBIT 10.3
SMARTSERV ONLINE, INC.
Date of Grant: April 26, 2004
To: Daniel Wainfan
105 Avonbrook Road
Wallingford, PA 19086
You are hereby granted an option (the "Option") effective as of the date
hereof, to purchase 100,000 shares of Common Stock, par value $.01 per share
("Common Stock"), of SmartServ Online, Inc. (the "C`ompany") at an exercise
price of $3.25 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,
quarterly over a four (4) year period in 16 equal amounts as of the last day of
each calendar quarter beginning with the quarter ending June 30, 2004 and ending
with the quarter ending March 31, 2008.
The Company will use its commercially reasonable best efforts to file and
maintain a Registration Statement on Form S-8 to register the exercise of the
Option and resale of the shares issuable hereunder.
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 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
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.
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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, your option will
expire immediately; and provided further, that, in the event your employment
with the Company is terminated without cause by you, 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 by
the Company without cause or by you with cause, 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
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shall be construed in accordance with and governed by the laws of the State of
Pennsylvania without regard to principles of conflict of law.
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 300,000 shares at an Exercise Price of $3.25 per share, and having read
such document, hereby signify my understanding of, and my agreement with, its
terms and conditions.
April 26, 2004
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Daniel Wainfan
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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
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 the undersigned.
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