SMARTSERV ONLINE, INC.
                       RESTRICTED STOCK PURCHASE AGREEMENT

         THIS AGREEMENT is made as of October 13, 1999 between SmartServ Online,
Inc., a Delaware corporation (the "Company"), and Robert W. Pearl ("Purchaser").

         WHEREAS  Purchaser  is an  employee  of  the  Company  whose  continued
affiliation  with the Company is  considered  to be important  for the Company's
continued growth; and

         WHEREAS  in order to provide  Purchaser  an  opportunity  to acquire an
equity  interest in the Company as an  incentive  for  Purchaser  to continue to
participate  in the  affairs of the  Company,  the Company is willing to sell to
Purchaser and Purchaser  desires to purchase shares of Common Stock according to
the terms and conditions hereof.

         THEREFORE, the parties agree as follows:

         1. PURCHASE AND SALE OF STOCK.  Subject to the terms and  conditions of
         this  Agreement,  the Company  hereby  agrees to sell to Purchaser  and
         Purchaser  agrees to  purchase  from the Company  76,818  shares of the
         Company's Common Stock (the "Stock") at a price of $0.75 per share (the
         "Per  Share  Purchase  Price"),  for an  aggregate  purchase  price  of
         $57,613.5. (The Per Share Purchase Price being equal to the fair market
         value of the Stock as  determined  by the  closing  sales price for the
         Stock on October 12,  1999.) The purchase  price for the Stock shall be
         paid as  follows:  $768.18 in cash and the  balance  by a  non-recourse
         promissory  note (the "Note") in the form attached hereto as Exhibit A,
         in the amount of $56,845.32.  The Note is non-recourse  with respect to
         the principal and recourse with respect to the interest obligation. The
         Note  shall be secured  by pledge of the Stock and  Purchaser  shall be
         required  to  execute  and  deliver a  Security  Agreement  in the form
         attached hereto as Exhibit B (the "Security Agreement").  If during the
         time that the Note remains outstanding, the Company sells shares of the
         Company's  Common  Stock  or  other  securities  convertible  into  the
         Company's Common Stock, pursuant to a Change of Control Transaction (as
         defined  below) at a price per share  less than the Per Share  Purchase
         Price the aggregate principal amount of the Note shall be automatically
         reduced to an amount equal the number of shares of Stock  multiplied by
         the per  share  price at which  such  securities  are to be sold in the
         Change of Control Transaction (the "Adjusted Principal Amount").


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2. REPURCHASE OPTION, PUT OPTION AND RELEASE OF SHARES.

                  (a) REPURCHASE OPTION AND PUT OPTION.

                           (i) In the  event  of any  voluntary  or  involuntary
                           termination  of  Purchaser's   employment   with  the
                           Company (including as a result of death but excluding
                           Purchaser's  termination of employment  without Cause
                           (as  defined  below) or for Good  Reason (as  defined
                           below))  before all shares of the Stock are  released
                           from the  Company's  repurchase  option under Section
                           2(b) below, the Company shall,  upon the date of such
                           termination  (as  reasonably  fixed and determined by
                           the Company) have an  irrevocable,  exclusive  option
                           for a period of twelve  (12) months from such date to
                           repurchase  all or any portion of the Stock which has
                           not  been   released  from  the   repurchase   option
                           described in this Section 2 (the "Repurchase Option")
                           at the  time  of  such  termination  at the  original
                           purchase price per share. The Repurchase Option shall
                           be  exercised  by the  Company by  written  notice to
                           Purchaser  or his  executor  and,  at  the  Company's
                           option,  (A) by delivery to Purchaser or his executor
                           with  such  notice  and a check in the  amount of the
                           aggregate   repurchase  price  for  the  Stock  being
                           repurchased, (B) by cancellation by the Company of an
                           amount of  Purchaser's  indebtedness  to the  Company
                           equal to the aggregate repurchase price for the Stock
                           being repurchased, or (C) by a combination of (A) and
                           (B) so that the combined  payment and cancellation of
                           indebtedness equals such aggregate  repurchase price.
                           Upon  delivery  of such notice and the payment of the
                           aggregate   repurchase  price  in  any  of  the  ways
                           described  above,  the Company shall become the legal
                           and beneficial  owner of the Stock being  repurchased
                           and all rights  and  interests  therein  or  relating
                           thereto,  and the  Company  shall  have the  right to
                           retain  and  transfer  to its own name the  number of
                           shares of the Stock being repurchased by the Company.

                           (ii) If  Purchaser's  employment  with the Company is
                           terminated  (A) by the Company  other than for Cause,
                           (B) as a result of  Purchaser's  death or  Disability
                           (as  defined  below)  or (C) by  Purchaser  for  Good
                           Reason,  Purchaser  or his  executor  shall  have the
                           right to cause the Company to repurchase all Stock at
                           the  original  purchase  price  per  share  (the "Put
                           Option").  The  Put  Option  shall  be  exercised  by
                           Purchaser by written notice to the Company  delivered
                           within  sixty  (60)  days  of such  termination.  The
                           repurchase  price  shall  be  paid  at the  Company's
                           option,  (A) by delivery to Purchaser or his executor
                           within  ninety  (90) days of a check in the amount of
                           the  aggregate  repurchase  price for the Stock being
                           repurchased, (B) by cancellation by the Company of an
                           amount of  Purchaser's  indebtedness  to the  Company
                           equal to the aggregate repurchase price for the Stock
                           being repurchased, or (C) by a combination of (A) and
                           (B) so that the combined  payment and cancellation of
                           indebtedness equals such aggregate  repurchase price.
                           Upon payment of the aggregate repurchase price in any

                                      -2-

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                           of the ways described above, the Company shall become
                           the legal  and  beneficial  owner of the Stock  being
                           repurchased  and all rights and interests  therein or
                           relating  thereto,  and the  Company  shall  have the
                           right  to  retain  and  transfer  to its own name the
                           number of shares of the Stock  being  repurchased  by
                           the Company.

                  (b) RELEASE OF SHARES FROM REPURCHASE OPTION.

                           (i) Subject to Section 2(b)(ii),  1/36th of the Stock
                           shall  be  released  from  the  Company's  Repurchase
                           Option   on  the   one-month   anniversary   of  this
                           Agreement,  and an  additional  1/36th  of the  Stock
                           shall be released on each monthly anniversary of such
                           date  thereafter  until all  shares of the Stock have
                           been  released;  provided in each case that there has
                           not been any  voluntary  or  involuntary  termination
                           prior to each such date of release.

                           (ii)  Notwithstanding  Section  2(b)(i),  all  of the
                           stock shall be released from the Company's Repurchase
                           Option in the event that (A) Purchaser terminates his
                           employment  for Good Reason (as defined  below),  (B)
                           the Company  terminates  the  Purchaser's  employment
                           with the  Company  without  cause  or (C)  there is a
                           Change of Control (as defined below).

                  (c) CERTAIN DEFINITIONS

                           (i) For  purposes of this  Agreement,  "Cause"  shall
                           mean  termination  of the  Purchaser  by the  Company
                           upon:

                                    (A) the willful and continued failure by the
                                    Purchaser  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  Purchaser by the Board of
                                    Directors which specifically  identifies the
                                    manner  in  which  the  Board  of  Directors
                                    believes   that   the   Purchaser   has  not
                                    substantially   performed  his  duties,  and
                                    which  failure  has not  been  cured  within
                                    thirty days after such written demand; or

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

                           For purposes of this  Subsection  (c)(i),  no act, or
                           failure  to act,  on the  Purchaser's  part  shall be
                           considered  "willful"  unless done,  or omitted to be
                           done,  by the  Purchaser  in bad  faith  and  without
                           reasonable belief that such action or omission was in
                           the best interest of the Company.


                                      -3-
<PAGE>


                           (ii)  For  purposes  of  this  Agreement  "Change  of
                           Control" shall mean 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").

                           (iii) For  purposes of this  Agreement,  "Disability"
                           shall  mean  that  Purchaser,  at the time  notice of
                           termination   is   given,    has   been   unable   to
                           substantially perform his duties under this Agreement
                           for a  period  of not less  than six (4)  consecutive
                           months  as  the  result  of  his  incapacity  due  to
                           physical or mental illness.

                           (iv) For purposes of this  Agreement,  "Good  Reason"
                           shall  mean  the  termination  of  employment  by the
                           Purchaser  upon  the  occurrence  of  any  one of the
                           following  events:  (i) the  Company's  assignment to
                           Purchaser  of  duties  inconsistent  in any  material
                           respect  with  his  position  (including  status  and
                           reporting)  or any  other  diminution  of  authority,
                           duties or  responsibilities,  excluding  an  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  Purchaser,  (ii) a Change
                           of   Control,   other   than  a  Change  of   Control
                           Transaction  that was  approved  by a majority of the
                           Continuing Directors,  or (iii) the relocation of the
                           Purchaser'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   Purchaser's
                           principal residence).

                           (iv) This  Agreement  shall not confer upon Purchaser
                           any right with respect to  employment by the Company,
                           nor shall it  interfere  with or affect in any manner
                           the  right or power of the  Company,  or a parent  or
                           subsidiary of the Company,  to terminate  Purchaser's
                           employment  with the  Company,  which right is hereby
                           reserved.

         3. STOCK  SPLITS,  ETC.  If,  from time to time during the term of this
         Agreement:  (i) there is any stock dividend or liquidating  dividend of
         cash and/or property,  stock split,

                                      -4-

<PAGE>

         recapitalization,  readjustment  or other  change in the  character  or
         amount of any of the  outstanding  securities  of the Company;  or (ii)
         there is any  consolidation,  merger or sale of all,  or  substantially
         all, of the assets of the  Company;  then,  in such event,  any and all
         new,  substituted  or additional  securities or other property to which
         Purchaser is entitled by reason of  Purchaser's  ownership of the Stock
         shall be  immediately  subject to this Agreement and be included in the
         word  "Stock"  for all  purposes  with the same force and effect as the
         shares of Stock  currently  subject to the Repurchase  Option and other
         terms of this Agreement.  While the aggregate  repurchase price payable
         upon  execution  of the  Repurchase  Option shall remain the same after
         each such  event,  the  repurchase  price  per share of Stock  shall be
         appropriately adjusted.

         4. RESTRICTION ON TRANSFER. Purchaser shall not, except as contemplated
         by the Security  Agreement,  sell,  transfer,  pledge,  hypothecate  or
         otherwise  dispose of any shares of the Stock which  remain  subject to
         the  Repurchase  Option.  The  Company  shall  not be  required  (i) to
         transfer on its books any shares of Stock which shall have  purportedly
         been sold or  transferred  in  violation of any of the  provisions  set
         forth in this Agreement, or (ii) to treat as owner of such shares or to
         accord  the  right  to vote as such  owner or to pay  dividends  to any
         purported  transferee  to whom such shares shall have been  purportedly
         transferred.

         5. REGISTRATION RIGHTS

                  (a) Piggy Back Registration Rights. If at any time the Company
                  shall determine to register for its own account or the account
                  of others under the  Securities  Act of 1933,  as amended (the
                  "Securities Act") any of its equity securities,  other than on
                  Form S-8 or Form S-4 or their  then  equivalents  relating  to
                  shares of Common Stock to be issued solely in connection  with
                  any  acquisition of any entity or business or shares of Common
                  Stock  issuable  in  connection  with  stock  option  or other
                  employee benefit plans, it shall send to the Purchaser written
                  notice of such  determination  and,  if  within 15 days  after
                  receipt  of such  notice,  the  Purchaser  shall so request in
                  writing,  the Company shall use its best efforts to include in
                  such  registration  statement all or any part of the Stock not
                  then subject to the Repurchase  Option the Purchaser  requests
                  to be  registered,  except  that if,  in  connection  with any
                  offering  involving an  underwriting  of the Company's  Common
                  Stock to be issued by the Company,  the  managing  underwriter
                  shall  impose a  limitation  on the  number  of shares of such
                  Common  Stock  which  may  be  included  in  the  registration
                  statement  because,  in  its  judgment,   such  limitation  is
                  necessary to effect an orderly public  distribution,  then the
                  Company  shall be  obligated  to include in such  registration
                  statement only such limited  portion of the Stock with respect
                  to which the Purchaser has requested inclusion hereunder.  Any
                  exclusion  of the Stock  shall be made pro rata  among the all
                  holders  of  the   Company's   Common   Stock   with   similar
                  registration   rights  seeking  to  include  such  shares,  in
                  proportion  to the number of such shares sought to be included
                  by such holders.  No incidental  right under

                                      -5-

<PAGE>

                  this Section 5(a) shall be construed to limit any registration
                  required  under Section 5(b).  The  obligations of the Company
                  under  this  Section  5(a) may be  waived at any time upon the
                  written  consent of the  Purchaser and shall expire on the 3rd
                  anniversary of this Agreement.

                  (b)  S-3  Registration  Rights.  In  addition  to  the  rights
                  provided  the  Purchaser  and other  holders of the  Company's
                  Common Stock with  registration  rights in Section 5(a) above,
                  if the  registration  of the Company's  Common Stock under the
                  Securities  Act can be  effected  on Form S-3 (or any  similar
                  form  promulgated  by the  Commission  that permits  secondary
                  offerings of securities), then upon the written request of the
                  Purchaser, the Company will, as expeditiously as possible, use
                  its best  efforts  to effect  qualification  and  registration
                  under the Securities Act on Form S-3 of all or such portion of
                  the Stock as the  Purchaser  shall  specify (but not less than
                  25,000 shares); provided,  however, that the Company shall not
                  be required to effect  more than one  registration  during any
                  12-month period pursuant to this Section 5(b).

                  (c) The  Company  will use its best  efforts to  maintain  the
                  effectiveness  for up to 90 days (or such  shorter  period  of
                  time as the underwriters  need to complete the distribution of
                  the registered offering,  or one year in the case of a "shelf"
                  registration  statement  on  Form  S-3)  of  any  registration
                  statement pursuant to which any of the Stock is being offered,
                  and  from  time  to  time  will  amend  or   supplement   such
                  registration statement and the prospectus contained therein to
                  the extent necessary to comply with the Securities Act and any
                  applicable state securities statute or regulation. The Company
                  will also  provide  the  Purchaser  with as many copies of the
                  prospectus contained in any such registration  statement as he
                  may reasonably request.

                  (d) The Company  shall not be required to register  any shares
                  under this paragraph 5 if the Purchaser could sell such shares
                  under Rule 144 promulgated under the Securities Act.

         6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

                  (a) LEGENDS. The share certificate evidencing the Stock issued
                  hereunder  shall be endorsed  with the  following  legends (in
                  addition  to  any  legends  required  under  applicable  state
                  securities laws):

                  THE SHARES  REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
                  FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION  WITH,
                  THE SALE OR DISTRIBUTION  THEREOF. NO SUCH SALE OR DISPOSITION
                  MAY BE EFFECTED  WITHOUT AN EFFECTIVE  REGISTRATION  STATEMENT
                  RELATED  THERETO OR AN OPINION OF COUNSEL  SATISFACTORY TO THE
                  COMPANY  THAT  SUCH  REGISTRATION  IS NOT  REQUIRED  UNDER THE
                  SECURITIES ACT OF 1933.

                                      -6-

<PAGE>

                  THE SHARES  REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
                  ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT  BETWEEN THE
                  COMPANY AND THE  SHAREHOLDER,  A COPY OF WHICH IS ON FILE WITH
                  THE SECRETARY OF THE COMPANY.

                  (b) STOP-TRANSFER NOTICES.  Purchaser agrees that, in order to
                  ensure  compliance with the  restrictions  referred to herein,
                  the Company may issue appropriate "stop transfer" instructions
                  to its  transfer  agent,  if any,  and  that,  if the  Company
                  transfers  its  own  securities,   it  may  make   appropriate
                  notations to the same effect in its own records.

         7. PURCHASER'S  REPRESENTATIONS  AND COVENANTS.  In connection with the
         purchase of the Stock,  Purchaser hereby represents and warrants to the
         Company as follows:

                  (a)  INVESTMENT   INTENT;   CAPACITY  TO  PROTECT   INTERESTS.
                  Purchaser is purchasing the Stock solely for  Purchaser's  own
                  account for  investment  and not with a view to or for sale in
                  connection  with any  distribution of the Stock or any portion
                  thereof  and  not  with  any  present  intention  of  selling,
                  offering to sell or otherwise disposing of or distributing the
                  Stock or any portion  thereof.  Purchaser also represents that
                  the entire legal and beneficial interest of the Stock is being
                  purchased, and will be held, for Purchaser's account only, and
                  neither  in whole or in part for any other  person.  Purchaser
                  either   (i)  has  a   pre-existing   business   or   personal
                  relationship with the Company or at least one of its officers,
                  directors  or  controlling  persons,  or  (ii)  by  reason  of
                  Purchaser's  business or financial experience (or the business
                  or financial experience of Purchaser's  professional  advisors
                  who are  unaffiliated  with and who are not compensated by the
                  Company  or any  affiliate  or selling  agent of the  Company,
                  directly or indirectly), can be reasonably assumed to have the
                  capacity to evaluate the merits and risks of an  investment in
                  the  Company  and to  protect  Purchaser's  own  interests  in
                  connection with this transaction.

                  (b) RESIDENCE.  Purchaser's  principal residence is within the
                  State of New  York and is  located  at the  address  indicated
                  beneath Purchaser's signature below.

                  (c) INFORMATION  CONCERNING  COMPANY.  Purchaser has discussed
                  the Company and its plans,  operations and financial condition
                  with  the  Company's   officers  and  has  received  all  such
                  information as Purchaser has deemed  necessary and appropriate
                  to enable Purchaser to evaluate the financial risk inherent in
                  making an  investment  in the Stock.  Purchaser  has  received
                  satisfactory and complete information  concerning the business
                  and  financial  condition  of the  Company in  response to all
                  inquiries in respect thereof.

                  (d) ECONOMIC RISK. Purchaser realizes that the purchase of the
                  Stock will be a highly  speculative  investment and involves a
                  high  degree of risk.  Purchaser  is

                                      -7-

<PAGE>

                  able, without impairing  Purchaser's  financial condition,  to
                  hold the Stock for an indefinite  period of time and to suffer
                  a complete loss on Purchaser's investment.

                  (e)   RESTRICTED   SECURITIES.   Purchaser   understands   and
                  acknowledges that:

                           (i) The  Stock  has not  been  registered  under  the
                           Securities Act of 1933, as amended,  in reliance upon
                           a  specific  exemption  therefrom,   which  exemption
                           depends  upon,  among  other  things,  the bona  fide
                           nature of Purchaser's  investment intent as expressed
                           herein.

                           (ii) The Stock must be held indefinitely unless it is
                           subsequently  registered  under the Securities Act or
                           unless  an  exemption  from  such   registration   is
                           otherwise   available.    In   addition,    Purchaser
                           understands that the certificate evidencing the Stock
                           will be imprinted  with a legend which  prohibits the
                           transfer of the Stock unless it is registered or such
                           registration  is  not  required  in  the  opinion  of
                           counsel satisfactory to the Company.

                  (f) DISPOSITION UNDER RULE 144. Purchaser understands that:

                           (i) The  shares  of Stock are  restricted  securities
                           within the meaning of Rule 144 promulgated  under the
                           Securities Act; that the exemption from  registration
                           under Rule 144 will not be available in any event for
                           at least one (1) year from the date of payment of the
                           Note (or the applicable  portion thereof  relating to
                           such  shares  of  Stock),  and even  then will not be
                           available  unless (i) a public  trading  market  then
                           exists  for the  Common  Stock of the  Company,  (ii)
                           adequate  information  concerning the Company is then
                           available  to the  public,  and (iii) other terms and
                           conditions  of Rule 144 are complied  with;  and that
                           any sale of the  Stock  may be made  only in  limited
                           amounts in accordance  with such terms and conditions
                           of Rule 144;

                           (ii)  That at the time  Purchaser  wishes to sell the
                           Stock  there may be no public  market  upon  which to
                           make such a sale;  that, even if such a public market
                           then exists,  the Company may not be  satisfying  the
                           current public information  requirements of Rule 144;
                           and that, in such event, Purchaser would be precluded
                           from selling the Stock under Rule 144 even if the one
                           (1) year minimum  holding period had been  satisfied;
                           and

                           (iii) In the  event all of the  requirements  of Rule
                           144  are  not  satisfied,   registration   under  the
                           Securities  Act or  compliance  with  Regulation A or
                           another  registration  exemption  will  be  required;
                           that,  notwithstanding  the fact that Rule 144 is not
                           exclusive,  the  Staff of the SEC has  expressed  its
                           opinion  that  persons   proposing  to  sell  private
                           placement  securities  other  than  in  a  registered
                           offering   or  pursuant  to  Rule  144  will  have  a
                           substantial  burden of proof in establishing  that an
                           exemption  from  registration  is available  for such
                           offers or  sales;  and that  such  persons  and their

                                      -8-

<PAGE>

                           respective    brokers   who   participate   in   such
                           transactions do so at their own risk.

                  (g) FURTHER  LIMITATIONS  ON  DISPOSITION.  Without in any way
                  limiting   Purchaser's   representations   set  forth   above,
                  Purchaser further agrees that Purchaser shall in no event make
                  any  disposition of all or any portion of the Stock unless and
                  until:

                           (i) Either:

                                    (A) There is then in  effect a  Registration
                                    Statement  under the Securities Act covering
                                    such   proposed   disposition,    and   such
                                    disposition is made in accordance  with said
                                    Registration Statement; or

                                    (B) (1)  Purchaser  shall have  notified the
                                    Company  of  the  proposed  disposition  and
                                    shall  have  furnished  the  Company  with a
                                    detailed   statement  of  the  circumstances
                                    surrounding  the proposed  disposition;  (2)
                                    Purchaser  shall have  furnished the Company
                                    with an  opinion of  Purchaser's  counsel to
                                    the effect  that such  disposition  will not
                                    require  registration  of such shares  under
                                    the Securities  Act; and (3) such opinion of
                                    Purchaser's    counsel   shall   have   been
                                    concurred in by counsel for the Company, and
                                    the Company shall have advised  Purchaser of
                                    such concurrence; and,

                           (ii) The shares of Stock  proposed to be  transferred
                           are no longer  subject to the  Repurchase  Option set
                           forth in Section 2 hereof.

         8. ARBITRATION.

                  (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  Purchaser
                  agree on one arbitrator, the arbitration shall be conducted by
                  such arbitrator. In the event the Company and Purchaser do not
                  so agree,  the  Company  and  Purchaser  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.

                  (c) CONDUCT OF  ARBITRATION.  Arbitration  shall take place in
                  Stamford, Connecticut or any other location mutually agreeable
                  to the  parties.  Reasonable

                                      -9-

<PAGE>

                  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 Purchaser 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 decree  any and all  relief  of an  equitable
                  nature (including  without limitation such relief as temporary
                  restraining orders or temporary and/or permanent injunctions),
                  and shall  also 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.

         9. GOVERNING LAW. This Agreement shall be governed and construed by the
         laws of the State of  Connecticut  without regard to its choice of laws
         provisions.

         10. MISCELLANEOUS.

                  (a)  RIGHTS AS  SHAREHOLDER.  Subject  to the  provisions  and
                  limitations  hereof,  Purchaser  may,  during the term of this
                  Agreement, exercise all rights and privileges of a shareholder
                  of the Company with respect to the Stock purchased hereby.

                  (b)  FURTHER  ASSURANCES.  The parties  agree to execute  such
                  further  instruments  and to take such  further  action as may
                  reasonably  be  necessary  to  carry  out the  intent  of this
                  Agreement.

                  (c) NOTICES.  Any notice required or permitted hereunder shall
                  be given in writing and shall be deemed effectively given upon
                  personal  delivery  (including  by  express  courier)  or upon
                  deposit in the United States Post Office,  by First Class mail
                  with postage and fees  prepaid,  addressed to Purchaser at his
                  address shown on the Company's  employment  records and to the
                  Company at the  address  of its  principal  corporate  offices
                  (attention:  Chief Executive Officer) or at such other address
                  as such party may designate by ten (10) days' advance  written
                  notice to the other party.

                  (d)  ASSIGNMENT.  This Agreement shall inure to the benefit of
                  the successors and assigns of the Company and,  subject to the
                  restrictions  on transfer  herein set


                                      -10-

<PAGE>

                  forth,  be  binding  upon  Purchaser,  his  heirs,  executors,
                  administrators,  successors  and  assigns.  No  party  to this
                  Agreement  may assign its  rights and  obligations  under this
                  Agreement  without  the  prior  written  consent  of the other
                  party.

                  (e) AUTHORIZATION OF TRANSFER. Purchaser hereby authorizes and
                  directs  the  Secretary  or  transfer  agent of the Company to
                  transfer the Stock as to which the Repurchase  Option has been
                  exercised  from  Purchaser  to the  Company  or the  Company's
                  assignees.

                  (f) WAIVER. Either party's failure to enforce any provision or
                  provisions of this Agreement shall not in any way be construed
                  as a waiver of any such provision or  provisions,  nor prevent
                  that party  thereafter  from  enforcing  each and every  other
                  provision of this  Agreement.  The rights granted both parties
                  herein are  cumulative  and shall not  constitute  a waiver of
                  either  party's  right to  assert  all  other  legal  remedies
                  available to it under the circumstances.

                  (g) ADVICE OF COUNSEL.  Purchaser has reviewed this  Agreement
                  in its entirety,  has had an  opportunity to obtain the advice
                  of  counsel  prior  to  executing  this  Agreement  and  fully
                  understands all provisions hereof.

                  (h) COUNTERPARTS. This Agreement may be executed in any number
                  of counterparts, each of which shall be an original and all of
                  which together shall constitute one instrument.

                  (i)  ENTIRE  AGREEMENT.  This  Agreement,  the  Note  and  the
                  Security Agreement  represent the entire agreement between the
                  parties  with  respect  to the  purchase  of  Common  Stock by
                  Purchaser  and  the  vesting  thereof,   supersede  all  prior
                  understandings  and agreements,  written and oral, with regard
                  thereto,  and  satisfy  all of the  Company's  obligations  to
                  Purchaser  with regard to the issuance or sale of  securities.
                  This  Agreement  may be  modified  or amended  only in writing
                  signed by both parties.

        IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.

SMARTSERV ONLINE, INC.,
a Delaware corporation

/s/ Sebastian E. Cassetta
-------------------------
Sebastian E. Cassetta
Chief Executive Officer


/s/ Robert W. Pearl
--------------------------
Robert W. Pearl
57 Vista Drive
Nanuet, New York 10954


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