EMPLOYMENT AGREEMENT


          THIS EMPLOYMENT AGREEMENT dated as of the 1st day of January 1999,
between SmartServ Online, Inc., a Delaware Corporation, with its principal
executive offices at Metro Center, One Station Place, Stamford, Connecticut
06902 (the "Company"), and Mario F. Rossi, an individual and resident of
Trumbull, Connecticut (the "Executive").

          WHEREAS, the Executive is and has been employed by the Company and is
currently Senior Vice President Operations and Chief Technology Officer;

          NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound hereby, the Company and the
Executive hereby agree as follows:

          1.   Position and Duties.

               a. The Company agrees to, and hereby does, continue to employ the
Executive for the term of this Agreement as Senior Vice President - Operations
and Chief Technology Officer, and the Executive agrees to perform such duties as
the Executive is now performing and such other duties commensurate with such
positions as the Executive may reasonably be directed to perform by the Board of
Directors. The Executive will continue to serve in his present capacity, and in
connection therewith, perform such duties as the Executive is now performing and
such other duties, commensurate with such positions, as the Executive may
reasonably be directed to perform by the Board of Directors of the Company. The
Executive shall have the right to devote a reasonable amount of time to (i)
industry, community or charitable organizations, and (ii) and the management of
personal investments so long as such activities do


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not interfere or conflict with the performance by the Executive of his
obligations hereunder. Subject to the provisions of Section 9 and Section 10
hereof, the Executive may serve as a director of other companies with the
consent of the Board of Directors of the Company, which consent shall not be
unreasonably withheld.

              b. The Executive hereby accepts such employment and agrees
faithfully to perform to the best of his ability the duties described in Section
l(a).

          2.   Term. Subject to Section 4 hereof, the term of employment of the
Executive under this Agreement shall commence as of the date first above written
(the "Effective Date") and shall terminate on the last day of the calendar month
which is 36 calendar months after the Effective Date. Commencing on the last
day of the first full calendar month after the Effective Date and on the last
day of each succeeding calendar month, the term of this Agreement shall be
automatically extended without further action by either party for one additional
calendar month unless one party notifies the other in writing that such party
does not wish to extend the term of this Agreement. In the event that such
notice shall have been delivered, the term hereof shall no longer be subject to
automatic extension and the term hereof shall expire on the date which is 36
calendar months after the last day of the month in which such written notice is
received. (The last day of the calendar month in which the term hereof, as
extended from time to time, shall end is hereinafter referred to as the
"Expiration Date").

          3.   Compensation. In consideration for the Executive's agreements
contained herein, and as compensation to the Executive for the performance of
the services required hereunder, the Company shall pay or grant to him the
following salary and other compensation and benefits:



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              a. a base salary, payable in equal installments not less
frequently than monthly, at such annual rate not less than $135,000 per year
(the "Base Salary"), and determined from time to time by the Board of Directors
or an appropriate committee thereof, provided, however, that the Executive's
base salary shall be periodically reviewed by the Board of Directors and shall
be increased if the Board of Directors determines that an increase is
appropriate on the basis of the types of factors it generally takes into account
in increasing the salaries of executive officers of the Company, provided that
the Base Salary shall automatically be adjusted annually to reflect the
increase, if any, in the cost of living by adding to the Base Salary an amount
obtained by multiplying the Base Salary by the percentage by which the Consumer
Price Index for All-Urban Consumers, as reported by the Bureau of Labor
Statistics of the United States Department of Labor, has increased over its
level from the previous twelve month period ending December 31st of each year;

              b. the Executive shall have the opportunity to receive an annual
aggregate bonus in the amount of up to One Hundred percent (50%) of the Base
Salary (the "Cash Bonus"). The payment of the Cash Bonus will be dependent upon
the yearly revenue growth of the Company. For the fiscal year ending June 30,
1999 (the "Initial Year") the amount of the Cash Bonus shall be determined as
follows: for each 10% increase in the revenues of the Company over the fiscal
year ending June 30, 1998 the Executive shall earn a Cash Bonus of 5% of the
Base Salary, up to a maximum Cash Bonus of 50% of the Base Salary. For each
fiscal year following the Initial Year, the amount of the Cash Bonus shall be
2.5% of the Base Salary for each 5% increase in revenues, as compared to the
preceding fiscal year, up to a maximum Cash


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Bonus of 50% of the Base Salary. The Cash Bonus shall be paid in cash and shall
be paid within ninety (90) days of the end of the fiscal year to which the Cash
Bonus relates;

              c. such other awards under the Company's 1996 Employee Stock
Option Plan (the "Plan") or under any other stock option, incentive compensation
or other compensation plan, program or arrangement now existing, or hereafter
adopted and applicable to executive officers of the Company, as the Board of
Directors, or an appropriate committee thereof administering such plan, program
or arrangement, may determine appropriate in light of the duties and
responsibilities of the Executive in respect to other executive officers;

              d. participation on the same terms and conditions as all other
employees in all employee benefit plans, whether or not qualified within the
meaning of Section 401(a) of the Internal Revenue Code of 1986, as may be
amended from time to time (the "Code"), as may be now or hereafter sponsored or
maintained for all employees of the Company, and participation on the same terms
and conditions as other executive officers in such other plan, program or
arrangement as may be now or hereafter sponsored or maintained for executive
officers of the Company;

              e. reimbursement of not less than a monthly allowance of $500.00
for reasonable travel within the New York metropolitan area in connection with
the performance of services under this Agreement, covering a vehicle allowance
for business mileage at the applicable mileage rate as established by the
Internal Revenue Service, maintenance, gas, insurance, parking and all other
related expenses and the Company shall further reimburse the Executive for all
reasonable other travel and other expenses incurred by the Executive in
connection with the performance of services under this Agreement, upon
presentation of expense statements or


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vouchers and such other support information as it may from time to time request,
provided that such expenses meet the usual test of being business related in
accordance with the Company's usual procedures in this regard; and

              f. reasonable vacations of not less than four (4) weeks per year,
absences on account of temporary illness and fringe benefits customarily enjoyed
by employees or officers of the Company under the terms and conditions of the
Company's policy in respect thereto.

              g. continuation of the Executive's life insurance and disability
insurance policies in existence as of the date of this Agreement.

          4.    Termination of Employment. This Agreement shall terminate upon
the Expiration Date or upon the death of the Executive. The Company may
terminate this Agreement prior to the Expiration Date (and the Executive's
employment hereunder shall terminate) for "Disability" or "Cause". Termination
of this Agreement by the Company for any reason not set forth in the preceding
sentence shall not be deemed a permitted termination and shall be deemed a
breach of this Agreement. In the event of any termination of this Agreement
prior to the Expiration Date, whether a permitted termination or otherwise, the
provisions of Section 5 of this Agreement shall determine the amount, if any, of
any compensation thereafter due the Executive in respect to such termination.

          As used in this Agreement, the following terms shall have the meanings
set forth:

          Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
with the Company


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on a full-time basis for four (4) consecutive months, and within thirty days
after written notice of termination is given by the Company, the Executive shall
not have returned to the full-time daily performance of his duties, the
Executive shall be deemed to have experienced a Disability and the Company may
terminate the Executive's employment. The Executive shall be entitled to leaves
of absence from the Company in accordance with the Company's policy generally
applicable to executives for illness or other temporary disabilities for a
period or periods not exceeding an aggregate of four months in any calendar
year, and his compensation and status as an employee hereunder shall continue
during any such period or periods.

              b. Cause. Termination by the Company of employment for "Cause"
shall mean termination upon:

               (i) the willful and continued failure by the Executive to
               substantially perform his duties with the Company (other than any
               such failure resulting from his incapacity due to physical or
               mental illness), after a written demand for substantial
               performance is delivered to the Executive by the Board of
               Directors which specifically identifies the manner in which the
               Board of Directors believes that the Executive has not
               substantially performed his duties, and which failure has not
               been cured within thirty days after such written demand; or

               (ii) the willful and continued engaging by the Executive in
               conduct which is demonstrably and materially injurious to the
               Company, monetarily or otherwise.


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For purposes of this Subsection (b), no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that such
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than 51% of the entire
membership of the Board of Directors at a meeting of the Board of Directors
called and held for that purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with his counsel, to be heard before
the Board of Directors), finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth above in clauses (i) or
(ii) of the first sentence of this Subsection (b) and specifying the particulars
thereof in detail.

              c. Notice of Termination. Any purported termination by the Company
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination, resignation or retirement provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination, resignation or retirement under the
provision so indicated.

              d. Date of Termination, Etc. "Date of Termination" shall mean (i)
if the Executive's employment is terminated for Disability, thirty days after
Notice of Termination is given (provided that the Executive shall not have
returned to the performance of the Executive's duties on a full-time daily basis
during such thirty-day period), (ii) if the Executive's employment is terminated
for any other reason, the date specified in the Notice of Termination (which
shall not


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be less than thirty days nor more than sixty days, from the date such Notice of
Termination is given), or (iii) if within thirty days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined by
mutual written agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected). Any
party giving notice of a dispute shall pursue the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
base salary) and continue the Executive as a participant in all compensation,
employee benefit and insurance plans, programs and arrangements in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this Subsection
(d).

          5.   Compensation Upon Termination.

              a. Death. If the Executive's employment hereunder terminates by
reason of his death, the Company shall be obligated to pay to his surviving
widow, or to his legal representatives if he leaves no surviving widow or if his
surviving widow dies prior to fulfillment of the Company's obligations, (i) the
Executive's then current base salary for a twelve (12) month period commencing
on the first day of the month following the Executive's death, or until the
Expiration Date, whichever shall be the first to occur; and (ii) any benefits to
which the Executive


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is entitled under any insurance policies on the life of the Executive, under the
Company's insurance programs and other employee benefit plans, programs and
arrangements then in effect and under the Company's pension plan for salaried
employees, if any. In addition to the foregoing, the Company shall be obligated
to continue coverage, to the extent not prohibited by law, for a period of
twelve (12) months from the date of the Executive's death for the Executive's
eligible dependents under all of the Company's benefit plans in effect and
applicable to the Executive's eligible dependents as of the date of death,
provided that in the event that such eligible dependents, cannot be covered or
fully covered under any or all of the Company's benefit plans, the Company shall
continue to provide such eligible dependents with the same level of such
coverage in effect prior to the Executive's death, on an unfunded basis if
necessary.

              b. Disability. If the Executive's employment hereunder terminates
by reason of his Disability, the Company shall (i) continue to pay to the
Executive, in accordance with the payroll practices of the Company in effect
prior to the Date of Termination, the Executive's then current base salary for
twenty-four (24) months after the Date of Termination, reduced by any benefits
to which the Executive may be entitled under any Company sponsored disability
income or income protection plan, policy or arrangement, the premiums for which
or benefits under which are paid by the Company (ii) for the first year after
the Date of Termination pay an amount equal to the highest annual bonus that the
Executive received in the three years prior to the Date of Termination, payable
in a lump sum at approximately the same time as annual bonuses were paid by the
Company in the year prior to the Date of Termination, and (iii) continue
coverage, to the extent not prohibited by law, for a period of twelve (12)
months from the Date of Termination or until comparable benefits are made
available to the Executive in connection with subsequent


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<PAGE>


employment, whichever period is shorter, for the Executive and his eligible
dependents under all of the Company's benefit plans in effect and applicable to
the Executive and his eligible dependents as of the Date of Termination,
provided that in the event that the Executive and his eligible dependents,
because of the Executive's terminated status, cannot be covered or fully covered
under any or all of the Company's benefit plans, the Company shall continue to
provide the Executive and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary. If
the Executive dies prior to the date on which such additional amounts would have
ceased to be payable under this Subsection (b), the amount that would have been
payable by the Company had he lived shall continue to be paid by the Company to
his surviving widow, for a period of 12 months following the Executive's death,
at the same times and rates as it would have been payable to him.

              c. Cause. If the Executive's employment hereunder is terminated by
the Company for Cause, the Company shall pay to the Executive his full base
salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given and the Company shall have no further obligations to the
Executive under this Agreement.

              d. Voluntary Resignation or Retirement. In the event the Executive
retires or resigns other than for Good Reason (as defined below), the Company
shall pay to the Executive his full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given and, except as
provided in Section 8, the Company shall have no further obligations to the
Executive under this Agreement.


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<PAGE>


              e. Other. If the Executive's employment hereunder is terminated by
the Company other than for Cause or Disability or by the Executive for Good
Reason (as defined below), then the Executive shall be entitled all to the
benefits provided below:

               (i) the Company shall pay the Executive his full base salary
               through the Date of Termination at the rate in effect at the time
               Notice of Termination is given;

               (ii) in lieu of any further salary payments to the Executive for
               periods subsequent to the Date of Termination, the Company shall
               pay as severance pay to the Executive, not later than the
               fifteenth day following the Date of Termination, a lump sum
               severance payment equal to the Executive's full base salary for
               the then remaining term of this Agreement (without regard to the
               date of such Notice of Termination) at the rate then in effect
               (the "Lump Sum Payment"), discounted to present value at a
               discount rate of 8% per annum applied to each future payment from
               the time it would have become payable;

               (iii) in lieu of shares of common stock issuable upon exercise of
               outstanding stock options ("Options"), if any, or any stock
               appreciation rights ("SAR"), if any, whether or not such Options
               or SARs are vested or then exercisable pursuant to their
               respective terms, granted to the Executive under the Plan or
               another of the Company's stock option or stock appreciation
               rights plans or otherwise (which Options and SARs shall be
               canceled upon the making of the payment referred to below), the
               Executive shall receive, not later than the fifteenth day
               following the Date of Termination, an amount in cash equal to the
               product of (x) the difference (to the extent that such difference
               is a positive number) obtained by subtracting the


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<PAGE>


               per share exercise price of each Option and each SAR held by the
               Executive, whether or not then fully exercisable, from the
               closing price of the Common Stock (on the Date of Termination) as
               reported on the National Association of Securities Dealers
               Automatic Quotation System/National Market System or such
               quotation system or stock exchange as the Common Stock is then
               listed or principally traded (or if not traded on the Date of
               Termination, the closing price on the next preceding business day
               on which the Common Stock traded and in the event that there is
               no established trading market for the Common Stock, the per share
               exercise price shall be subtracted from the fair market value of
               the Common Stock on the Date of Termination as determined in good
               faith by the Board of Directors of the Company and approved by an
               independent accounting firm), and (y) the number of shares of
               Common Stock covered by each such Option or SAR;

               (iv) the Company shall remove all restrictions on vesting and any
               and all forfeiture provisions or repurchase options applicable to
               any shares of restricted stock held by the Executive shall
               automatically lapse and be of no further force or effect;

               (v) the Company shall continue coverage, to the extent not
               prohibited by law, for a period of twelve (12) months from the
               Date of Termination or the remaining term of this Agreement,
               whichever period is shorter, for the Executive and his eligible
               dependents under all of the Company's benefit plans in effect and
               applicable to the Executive and his eligible dependents as of the
               Date of Termination, provided that in the event that the
               Executive and his eligible dependents, because


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<PAGE>


               of the Executive's terminated status, cannot be covered or fully
               covered under any or all of the Company's benefit plans, the
               Company shall continue to provide the Executive and/or his
               eligible dependents with the same level of such coverage in
               effect prior to termination, on an unfunded basis, if necessary;

               (vi) the Company shall also pay to the Executive all legal fees
               and expenses incurred by the Executive in contesting or disputing
               any such termination or in seeking to obtain or enforce any right
               or benefit provided by this Agreement or in connection with any
               tax audit or proceeding to the extent attributable to the
               application of Section 4999 of the Code to any payment or benefit
               provided hereunder;

               (vii) the payments under this Subsection (e) are intended by the
               parties to be due and payable under the circumstances of a
               termination for the reasons set forth above whether or not such
               circumstances are preceded by a change in control of the Company.
               If, notwithstanding the intentions of the parties, it is asserted
               by any governmental agency, in any tax audit, administrative
               proceeding or otherwise, that any payments provided under this
               Section 5(e) (the "Severance Payments") are or will be subject to
               the tax (the "Excise Tax") imposed by Section 4999 of the Code
               and/or that a federal income tax deduction for amounts paid as
               Severance Payments will not be allowed to the Company for any
               year by reason of Section 28OG of the Code, the Executive may
               contest or refute such assertion with respect to the Excise Tax
               in any appropriate forum (the "Executive's Contest") and the
               Company shall diligently and vigorously contest or refute such
               assertion with




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<PAGE>


               respect to the disallowance of such deduction in all
               administrative proceedings and in the federal district court or
               the Tax Court, whichever shall have jurisdiction (the "Company's
               Contest"). The Executive's Contest and the Company's Contest
               shall be conducted and presented separately unless the Executive,
               in his discretion but with the consent of the Company, joins in
               the Company's Contest. In any event, the Executive shall be
               entitled to retain attorneys and other experts deemed necessary
               or appropriate by the Executive to the proper presentation of the
               Executive's Contest and shall not be compelled by the Company to
               compromise, settle or otherwise terminate the Executive's Contest
               without his written consent thereto. The Company and the
               Executive shall cooperate one with the other and each shall
               provide to the other copies of all documents relevant to or
               useful in connection with either the Executive's Contest or the
               Company's Contest as may reasonably be requested by the other.
               The Executive shall attend any hearing, deposition or other
               proceeding at which his attendance in person is material to the
               Company's Contest. The Company shall cause the appropriate
               authorized officer or officers of the Company to attend any
               hearing, deposition or other matter at which the Company's
               appearance is requested by any party. In the event that the
               Severance Payments are finally determined to be subject to the
               Excise Tax, then the Company shall pay to the Executive an
               additional payment (a "Gross-Up Payment") in an amount such that
               after payment by the Executive of all taxes (including any
               interest or penalties), including, without limitation, any income
               taxes


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               (including any interest or penalties) and Excise Tax imposed on
               the Gross-Up Payment, the Executive retains an amount of the
               Gross-Up Payment equal to the Excise Tax imposed upon the
               Severance Payments; and

               (viii) The payments provided for in this Subsection (e), shall be
               made not later than the fifteenth day following the Date of
               Termination, provided, however, that if the amounts of such
               payments cannot be finally determined on or before such day, the
               Company shall pay to the Executive on such day an estimate, as
               determined in good faith by the Company, of the minimum amount of
               such payments and shall pay the remainder of such payments
               (together with interest at the rate provided in Section
               1274(b)(2)(B) of the Code) as soon as the amount thereof can be
               determined but in no event later than the thirtieth day after the
               Date of Termination provided that any Gross-Up Payment shall be
               made within thirty days of the final determination that the
               Severance Payments are subject to the Excise Tax. In the event
               that the amount of the estimated payments exceeds the amount
               subsequently determined to have been due, such excess shall
               constitute a loan by the Company to the Executive payable on the
               fifth day after demand by the Company (together with interest at
               the rate provided in Section 1274(b)(2)(B) of the Code).

              f. For purposes of this Agreement Good Reason shall mean the
occurrence of any one of the following events: (i) a material breach by the
Company of this Agreement, (ii) the Company's assignment to Executive of duties
inconsistent in any material respect with his position (including status and
reporting) or any other diminution of authority,


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                                      -14-


duties or responsibilities, excluding any isolated action by the Company not
taken in bad faith and which is remedied by the Company within 15 days after
receipt of notice from the Executive, (iii) a Change of Control (as defined
below), other than a Change of Control Transaction (as defined below) that was
approved by a majority of the Continuing Directors (as defined below), or (iv)
the relocation of the Executive's principal place of employment to a location
more than 50 miles from his principal place of employment on the date of this
Agreement (unless such relocation is closer to the Executive's principal
residence).

              g. For purposes of this Agreement, a Change of Control shall occur
if: (i) at any time less than 60% of the members of the Board of Directors shall
be individuals who were either (x) Directors on the effective date of this
Agreement or (y) individuals whose election, or nomination for election, was
approved by a vote (including a vote approving a merger or other agreement
providing for the membership of such individuals on the Board of Directors) of
at least two-thirds of the Directors then still in office who were Directors on
the effective date of this Agreement or who were so approved (the "Continuing
Directors"); or (ii) the shareholders of the Corporation shall approve an
agreement or plan providing for the Corporation to be merged, consolidated or
otherwise combined with, or for all or substantially all its assets or stock to
be acquired by, another corporation, as a consequence of which the former
shareholders of the Corporation will own, immediately after such merger,
consolidation, combination or acquisition, less than a majority of the Voting
Power of such surviving or acquiring corporation or the parent thereof (a
"Change of Control Transaction").

              h. The Executive shall not be required to mitigate the amount of
any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the


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amount of any payment provided for in this Section 5 be reduced by any
compensation earned by the Executive as the result of employment by another
employer, or otherwise.

              i. In addition to all other amounts payable to the Executive under
this Section 5, the Executive shall be entitled to receive all benefits payable
to him under the Company's retirement savings plan and pension plan, if any, and
any other plan, program or arrangement relating to retirement, profit sharing,
or other benefits including, without limitation, any employee stock ownership
plan or any plan established as a supplement to any such plans. No amount
payable to the Executive under Subsection 5(e) shall be considered for any
benefit calculation or other purpose under the Company's pension plan, if any.

          6.   Change of Control

              In the event of a Change of Control, the Company shall provide the
Executive with the following benefits:

               (i) in lieu of shares of common stock issuable upon exercise of
               outstanding stock options ("Options"), if any, or any stock
               appreciation rights ("SAR"), if any, whether or not such Options
               or SARs are vested or then exercisable pursuant to their
               respective terms, granted to the Executive under the Plan or
               another of the Company's stock option or stock appreciation
               rights plans or otherwise (which Options and SARs shall be
               canceled upon the making of the payment referred to below), the
               Executive shall receive, not later than the fifteenth day
               following the date of the Change of Control, an amount in cash
               equal to the product of (x) the difference (to the extent that
               such difference is a positive number) obtained by


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<PAGE>


               subtracting the per share exercise price of each Option and each
               SAR held by the Executive, whether or not then fully exercisable,
               from the closing price of the Common Stock (on the date of the
               Change of Control) as reported on the National Association of
               Securities Dealers Automatic Quotation System/National Market
               System or such quotation system or stock exchange as the Common
               Stock is then listed or principally traded (or if not traded on
               the date of the Change of Control, the closing price on the next
               preceding business day on which the Common Stock traded and in
               the event that there is no established trading market for the
               Common Stock, the per share exercise price shall be subtracted
               from the fair market value of the Common Stock on the date of the
               Change of Control as determined in good faith by the Board of
               Directors of the Company and approved by an independent
               accounting firm), and (y) the number of shares of Common Stock
               covered by each such Option or SAR;

               (ii) the Company shall remove all restrictions on vesting and any
               and all forfeiture provisions or repurchase options applicable to
               any shares of restricted stock held by the Executive shall
               automatically lapse and be of no further force or effect.

          7.   Retirement

               Nothing contained in this Agreement shall be deemed to limit the
Executive's ability to retire for any reason and to receive benefits under the
Company's retirement policies and


                                      -18-
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pension plan for salaried employees, if any and to thereby receive all benefits
for which he is eligible under such plans and any other plan, program or
arrangement relating to retirement.

         8.    Indemnification

              a. The Company shall indemnify and hold harmless to the fullest
extent not prohibited by law, as the same exists or may hereinafter be amended,
interpreted or implemented (but, in the case of any amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than are permitted the Company to provide prior to such
amendment), each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in (as a witness or otherwise) any threatened,
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative and whether or not by or in the right of the
Company or otherwise, (hereinafter, a "proceeding") by reason of the fact that
he or she, or a person of whom he or she is the heir, executor, or
administrator, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer or trustee of
another Company or of a partnership, joint venture, trust or other enterprise
(including, without limitation, service with respect to employee benefit plans),
or where the basis of such proceeding is any alleged action or failure to take
any action by such person while acting in an official capacity as a director or
officer of the Company or in any other capacity on behalf of the Company while
such person is or was serving as a director or officer of the Company, against
all expenses, liability and loss, including but not limited to attorneys' fees,
judgments, fines, excise taxes or penalties and amounts paid or to be


                                      -19-
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paid in settlement whether with or without court approval, actually incurred or
paid by such person in connection therewith.

              b. Notwithstanding the foregoing, except as provided in Section
8(f) below, the Company shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Company.

              c. Subject to the limitation set forth above concerning
proceedings initiated by the person seeking indemnification, the right to
indemnification conferred in this Section 8 shall be a contract right and shall
include the right to be paid by the Company the expenses incurred in defending
any such proceeding (or part thereof) or in enforcing his or her rights under
this Section 8 in advance of the final disposition thereof promptly after
receipt by the Company of a request therefor stating in reasonable detail the
expenses incurred; provided, however, that to the extent required by law, the
payment of such expenses incurred by a director or officer of the Company in
advance of the final disposition of a proceeding shall be made only upon receipt
of an undertaking, by or on behalf of such person, to repay all amounts so
advanced if and to the extent it shall ultimately be determined by a court that
he or she is not entitled to be indemnified by the Company under this Section 8,
or in the case of a criminal action, the majority of the Board of Directors so
determines that he or she is not entitled to be indemnified by the Company, or
otherwise.

              d. The right to indemnification and advancement of expenses
provided herein shall continue as to a person who has ceased to be a director or
officer of the Company or


                                      -20-
<PAGE>


to serve in any of the other capacities described herein, and shall inure to the
benefit of the heirs, executors and administrators of such person.

              e. Any dispute related to the right to indemnification,
contribution or advancement of expenses as provided under this Section 8, except
with respect to indemnification for liabilities arising under the Securities Act
of 1933, that the Company has undertaken to submit to a court for adjudication,
shall be decided only by arbitration as provided in Section 13 of this
Agreement.

              f. The Company shall reimburse an indemnified person or his
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending any arbitration pursuant to
Section 13 of this Agreement.

              g. The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of a final disposition conferred
in this Section 8 and the right to payment of expenses conferred in Section
12(h) shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses hereunder may be entitled under any
Bylaw, agreement, vote of shareholders, vote of directors or otherwise, both as
to actions in his or her official capacity and as to actions in any other
capacity while holding that office, the Company having the express authority to
enter into such agreements or arrangements as the Board of Directors deems
appropriate for the indemnification of and advancement of expenses to present or
future directors and officers as well as employees, representatives or agents of
the Company in connection with their status with or services to or on behalf of
the Company or any other Company, partnership, joint venture, trust or other
enterprise, including any employee benefit plan, for which such person is
serving at the request of the Company.


                                      -21-
<PAGE>


              h. The Company may create a fund of any nature which may, but need
not be, under the control of a trustee, or otherwise secure or insure in any
manner its indemnification obligations, including its obligation to advance
expenses, whether arising under or pursuant to this Section 8 or otherwise.

              i. The Company may purchase and maintain insurance on behalf of
any person who is or was a director or officer or representative of the Company,
or is or was serving at the request of the Company as a representative of
another Company, partnership, joint venture, trust or other enterprise, against
any liability asserted against such person and incurred by such person in any
such capacity, or arising out of his or her status as such, whether or not the
Company has the power to indemnify such person against such liability under the
laws of this or any other state.

              Neither the modification, amendment, alteration or repeal of this
Section 8 or any of its provisions nor the adoption of any provision
inconsistent with this Section 8 or any of its provisions shall adversely affect
the rights of any person to indemnification and advancement of expenses existing
at the time of such modification, amendment, alteration or repeal or the
adoption of such inconsistent provision.

          9. Non-Competition. During the term of this Agreement and for two
years after the Date of Termination, the Executive shall refrain from competing
with the Company or any subsidiary of the Company except with the Company's
prior written consent. The phrase "refrain from competing with the Company or
any subsidiary of the Company" shall mean that the Executive will not engage,
directly or indirectly (including, by way of example only, as a principal,



                                      -22-
<PAGE>


partner, venturer, employee or agent) nor have any direct or indirect interest
in any enterprise (a "Competing Enterprise") which competes with the Company or
any subsidiary thereof by engaging in the online informational and transactional
services business or in substantial and direct competition with any other
business operation actively conducted by the Company or its subsidiaries at the
Date of Termination. It is agreed that the foregoing provisions shall not
restrict the Executive from either (i) being a director of or having any
investments or other interests in an enterprise which is not a competing
enterprise, or (ii) having any investments in any competing enterprise the stock
of which is listed on a national securities exchange or traded publicly
over-the-counter so long as such investment does not give the Executive more
than five percent (5%) of the voting stock of such enterprise. Provided further
that if the Executive's employment hereunder is terminated pursuant to Section
5(e) and the Executive provides a written waiver of the Lump Sum Payment, the
Executive shall be automatically released from the limitations imposed by this
Section 9 and this Section shall be of no force and effect.

          10.  Non-Solicitation of Customers and Suppliers. Employee agrees that
during his employment with the Company he shall not, directly or indirectly,
solicit the trade of, or trade with, any customer, prospective customer,
supplier, or prospective supplier of the Company for any business purpose other
than for the benefit of the Company. Employee further agrees that for two (2)
years following termination of his employment with the Company, including
without limitation termination by the Company for cause or without cause,
Employee shall not, directly or indirectly, solicit the trade of, or trade with,
any customers or suppliers, or prospective customers or suppliers, of the
Company. Provided further that if the Executive's employment hereunder is


                                      -23-
<PAGE>


terminated pursuant to Section 5(e) and the Executive provides a written waiver
of the Lump Sum Payment, the Executive shall be automatically released from the
limitations imposed by this Section 10 and this Section shall be of no force and
effect.

          11. Non-Solicitation of Employees. Employee agrees that, during his
employment with the Company and for two (2) years following termination of
Employee's employment with the Company, including without limitation termination
by the Company for cause or without cause, Employee shall not, directly or
indirectly, solicit or induce, or attempt to solicit or induce, any employee of
the Company to leave the Company for any reason whatsoever, or hire any employee
of the Company. Provided further that if the Executive's employment hereunder is
terminated pursuant to Section 5(e) and the Executive provides a written waiver
of the Lump Sum Payment, the Executive shall be automatically released from the
limitations imposed by this Section 11 and this Section shall be of no force and
effect.

          12.  Confidentiality and Inventions.  The Executive agrees:

              a. To keep secret all confidential matters of the Company and its
subsidiaries and affiliates and not to disclose them to anyone outside the
Company or its subsidiaries and affiliates, either during or after his
employment with the Company, except with the Company's prior written consent or
as required by law;

              b. To deliver promptly to the Company on termination of employment
of the Executive by the Company all memoranda, notes, records, reports and other
documents (and all copies thereof) with respect to any such confidential matters
and other proprietary information (such as customers lists, suppliers lists,
etc.) which the Executive may then possess or



                                      -24-
<PAGE>


have under his control (For purposes of this Section 12, all information which
is not publicly available shall be deemed to be confidential and covered by the
foregoing provisions);

              c. He will promptly and fully disclose to the Company or such
officer or other agent as may be designated by the Company any and all
inventions made or conceived by Executive (whether made solely by Executive or
jointly with others) during employment with the Company (i) which are along the
line of the business, work or investigations of the Company, or (ii) which
result from or are suggested by any work which Executive may do for or on behalf
of the Company; and

              d. He will assist the Company and its nominees during and
subsequent to such employment in every proper way (entirely at its or their
expense) to obtain for its or their own benefit patents for such inventions in
any and all countries; the said inventions, without further consideration other
than such salary as from time to time may be paid to him by the Company as
compensation for his services in any capacity, shall be and remain the sole and
exclusive property of the Company or is nominee whether patented or not; and

              e. He will keep and maintain adequate and current written records
of all such inventions, in the form of but not necessarily limited to notes,
sketches, drawings, or reports relating thereto, which records shall be and
remain the property of and available to the Company at all times.

              f. Promptly upon termination of his employment, he will disclose
to the Company, or to such officer or other agent as may be designated by the
Company, all inventions which have been partly or wholly conceived, invented or
developed by him for which applications for patents have not been made and will
thereafter execute all such instruments of the




                                      -25-
<PAGE>


character hereinbefore referred to, and will take such steps as may be necessary
to secure and assign to the Company the exclusive rights in and to such
inventions and any patents that may be issued thereon any expense therefor to be
borne by the Company.

              g. He will not at any time aid in attacking the patentability,
scope, or validity of any invention to which the provisions of subparagraphs (c)
through (f), above, apply.

              In the event that (i) Executive institutes any legal action to
enforce his rights under, or to recover damages for breach of this agreement, or
(ii) the Company institutes any action to avoid making any payments due to
Executive under this agreement, Executive, if he is the prevailing party, shall
be entitled to recover from the Company any actual expenses for attorney's fees
and other disbursements incurred by him in relation thereto.

          13.  Arbitration. Any disputes hereunder shall be settled as follows:

              a. Election Of Arbitration. At the option of either party, any and
all disputes or controversies whether of law or fact and of any nature
whatsoever arising from or respecting this Agreement shall be decided by
arbitration by the American Arbitration Association in accordance with the rules
and regulations of that Association.

              b. Selection Of Arbitrators. The arbitrators shall be selected as
follows: In the event the Company and Executive agree on one arbitrator, the
arbitration shall be conducted by such arbitrator. In the event the Company and
Executive do not so agree, the Company and Executive shall each select one
independent, qualified arbitrator, and the two arbitrators so selected shall
select the third arbitrator. The Company reserves the right to object to any
individual arbitrator who shall be employed by or affiliated with a competing
organization.


                                      -26-
<PAGE>


              c. Conduct Of Arbitration. Arbitration shall take place in
Stamford, Connecticut or any other location mutually agreeable to the parties.
Reasonable notice of the time and place of arbitration shall be given to all
persons other than the parties as shall be required by law, and such persons or
their authorized representatives shall have the right to attend and/or
participate in all the arbitration hearings in such manner as the law shall
require.

              d. Secrecy Of Proceedings. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such case
all documents, testimony and records shall be received, heard and maintained by
the arbitrators in secrecy under seal, available for the inspection only of the
Company or Executive and their respective attorneys and their respective
experts, who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known.

              e. Relief. The arbitrators, who shall act by majority vote, shall
be able to award damages, with or without an accounting and costs. The decree or
judgment of an award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.

         14. Notices. All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be delivered
personally or by registered or certified mail addressed to the party concerned
at the following addresses:

                     If to the Company:

                           SmartServ Online, Inc.
                           Metro Center
                           One Station Place
                           Stamford, CT 06902


                                      -27-
<PAGE>

                     If to the Executive:

                           Mr. Mario F. Rossi
                           22 Split Rock Road
                           Trumbull, CT  06611

                     With a copy to:

                           Stephen M. Cohen, Esq.
                           Buchanan Ingersoll Professional Corporation
                           Eleven Penn Center
                           14th Floor
                           1835 Market Street
                           Philadelphia, PA  19103-2985

or to such other address as shall be designated by notice in writing to the
other party in accordance herewith. Notices and other communications hereunder
shall be deemed effectively given when personally delivered, or, if sent by
overnight courier, upon receipt, or, if mailed, 48 hours after deposit in the
United States first class mail, postage prepaid.

          15.      Miscellaneous.

              a. This Agreement supersedes all prior agreements, arrangements
and understandings, written or oral, relating to the subject matter hereof,
without limitation, including the Employment Agreement.

              b. (i) This Arrangement shall inure to the benefit of the
Executive's heirs, representatives or estate to the extent stated herein.


                                      -28-
<PAGE>


              (ii) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as defined in the
preamble to this Agreement and any successor to its business or assets which
executes and delivers the agreement provided for in this Subsection 15 (b) (ii)
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

              c. This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provisions hereof shall in no manner
affect the right at a later time to enforce such provisions thereafter. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach or a waiver of the breach of any other term or covenant contained in this
Agreement.

              d. In the event any one or more of the covenants, terms or
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity of the remaining covenants, terms and
provisions contained herein shall be in no way affected, prejudiced or disturbed
thereby.


                                      -29-
<PAGE>


              e. This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Subsection 15(b) above. Without limiting the foregoing, the Executive's right to
receive payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer by
his will or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this Subsection 15(e) the Company
shall have no liability to pay any amount so attempted to be assigned or
transferred.

              This Agreement shall be governed by laws of the State of
Connecticut, without regard to its choice of law provisions.


                                      -30-
<PAGE>


              IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.

ATTEST:                                     SMARTSERV ONLINE, INC:


By:________________________                 By:_________________________________
   ________________________                    _________________________________


WITNESS:                                    EXECUTIVE:


___________________________                 ____________________________________
                                                       Mario F. Rossi



                                      -31-