EXHIBIT 10.4

                             SMARTSERV ONLINE, INC.

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                     NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

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          This  Non-Employee  Director  Compensation  Plan is for the purpose of
compensating non-employee directors. The terms of the plan are as follows:

          1. Each non-employee  Director  ("Outside  Director") will receive (i)
$1,000 per meeting for attendance at each Board  meeting,  (ii) $500 per meeting
for  attendance  at each  Committee  meeting of the  Board,  and (iii) an option
covering 60,000 shares of common stock.

          2. The meeting fees shall be payable in a lump sum twice per year.

          3. The option for existing Outside  Directors serving at the effective
date of this plan shall vest in  installments  of 20,000  shares on December 31,
2004,  2005 and 2006.  The option for new Outside  Directors  who join the Board
after the  effective  date of this plan  shall  vest in  installments  of 20,000
shares at the end of the  first,  second and third  years of service  commencing
upon the date of grant. An Outside  Director must be serving as a director as of
each vesting date as a requirement for the vesting of each installment of 20,000
shares.

          4. Each  Outside  Director  currently  serving  on the Board as of the
effective  date of this  Plan  shall  receive  his/her  grant of an option as of
August 1, 2004. The exercise price of any such option shall be the closing stock
price on the date of grant.

          5. Each Outside Director joining the Board after the effective date of
this Plan shall receive  his/her grant of an option as of the effective  date of
his/her  joining the Board.  The exercise  price of any such option shall be the
closing stock price on the date of grant.

          6. All such options shall expire ten years from date of grant.

          7. The form of option  agreement to be used under the plan is attached
hereto as Annex A.

          8. Directors shall be separately reimbursed for their expenses related
to services, and this Plan is not intended to cover expense reimbursement.


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          9. This Plan shall be effective June 4, 2004.


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                                     ANNEX A


                             SMARTSERV ONLINE, INC.



                                         Date of Grant:  _______________________



To:




          You are hereby  granted an option (the  "Option")  effective as of the
date hereof pursuant to the Non-Employee Director Compensation Plan of SmartServ
Online,  Inc. (the  "Company"),  to purchase 60,000 shares of Common Stock,  par
value $.01 per share  ("Common  Stock"),  of the Company at an exercise price of
$_______ per share (the "Exercise  Price").  This Option shall  terminate and is
not  exercisable  after the  expiration of ten years from the date of its grant,
except if terminated earlier as hereinafter provided (the "Expiration Date").

          Your Option  shall vest,  subject to  accelerated  vesting as provided
below, annually in installments of 20,000 shares on _________________; provided,
you must be serving as a Director of the Company as of each such vesting date as
a  requirement  for the vesting of each  installment  of 20,000 shares of Common
Stock.

          In the event that a "change of control"  (as  hereinafter  defined) of
the Company occurs at any time prior to vesting hereunder (provided, you must be
serving as a Director of the  Company),  your  Option  may,  from and after such
date, and  notwithstanding the second paragraph of this Option, be exercised for
up to 100% of the total  number of shares then  subject to the Option  minus the
number of shares  previously  purchased upon exercise of the Option (as adjusted
for any changes in the  outstanding  Common Stock by reason of a stock dividend,
stock split,  combination of shares,  recapitalization,  merger,  consolidation,
transfer  of  assets,  reorganization,   conversion  or  what  the  Compensation
Committee  deems  in  its  sole  discretion  to  be  similar  circumstances,  (a
"Recapitalization")).

          A  "Change  of  Control"  shall be deemed  to have  occurred  upon the
happening of any of the following  events:(i)  the  shareholders  of the Company
approve a merger or  consolidation  of the Company with any other entity,  other
than a merger or  consolidation  which would result in the voting  securities of
the Company  outstanding  immediately prior thereto continuing to represent more
than fifty  percent  (50%) of the total voting power  represented  by the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or


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consolidation,  or the  shareholders  of the Company  approve a plan of complete
liquidation  of the Company or consummate the sale or disposition by the Company
of all or substantially  all of the Company's assets (other than to a subsidiary
or  subsidiaries)  or (ii) any other  event  deemed to  constitute  a "Change of
Control" by the Board of Directors of the Company.

          In lieu of paying the Exercise  Price in cash and/or upon  exercise of
the Option, you may elect a "cashless exercise," in which event you will receive
upon exercise a reduced  number of shares equal to (i) the number of shares that
would be issuable  pursuant to this Option upon  payment of the  Exercise  Price
minus (ii) the number of shares that have an aggregate  Market Price (as defined
below)  equal to the  Exercise  Price.  In  addition,  you may elect to have the
Company's tax  withholding  obligations in connection  with your exercise of the
option  satisfied on a cashless  basis, in which event the number of shares that
would  otherwise  be issuable  pursuant  to this Option  shall be reduced by the
number of shares that have an aggregate Market Price (as defined below) equal to
the amount of tax required to be withheld (but not more than such amount).

          For purposes of this Option  "Market  Price" per share of Common Stock
on any date shall be: (i) if the Common  Stock is listed or admitted for trading
on any national securities  exchange,  the last reported sales price as reported
on such national securities exchange;  (ii) if the Common Stock is not listed or
admitted  for trading on any national  securities  exchange,  the last  reported
closing bid price for the Common Stock as reported on the Nasdaq Stock  Market's
National  Market  ("NNM") or Nasdaq Stock Market's Small Cap Market ("NSM") or a
similar service if NNM or NSM are not reporting such  information;  (iii) if the
Common Stock is not listed or admitted  for trading on any  national  securities
exchange,  NNM or NSM or a similar service,  the last reported bid quotation for
the Common Stock as quoted by a market maker in the Common Stock (or if there is
more than one market maker,  the bid quotation shall be obtained from two market
makers  and the  average  of the  highest  bid  quotation  shall be the  "Market
Price");  or (iv) if the Common  Stock is not listed or admitted  for trading on
any national  securities exchange or NNM or quoted by NSM and there is no market
maker in the Common Stock, the fair market value of such shares as determined in
good faith by the Board of Directors of the Company.

          This Option may be  exercised  by you, in whole or in part (but not as
to less than a whole  share),  as to the vested  portion of this Option only, at
any time prior to the Expiration Date, by the presentation of this Option,  with
the purchase  form  attached duly  executed,  at the  Company's  office (or such
office  or  agency  of the  Company  as it may  designate  in  writing  to  you)
specifying  the number of shares of Common Stock as to which the Option is being
exercised,  and upon payment by you to the Company in cash or by certified check
or bank  draft,  in an amount  equal to the  Exercise  Price times the number of
shares or in lieu thereof you may elect a cashless  exercise as provided herein.
No fractional shares shall be issued or delivered upon exercise of this Option.

          Your  Option,  to the extent not  previously  exercised by you, in the
event your  service as a Director of the Company is  terminated  due to cause by
the Board of Directors, will expire immediately.

          If  you  die  while  serving  as  a  Director  of  the  Company,  your
legatee(s), distributee(s), executor(s) or administrator(s), as the case may be,
may,  exercise the Option as to any shares

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which you had a right to purchase and did not purchase during your lifetime.  If
your  service  as a Director  of the  Company  is  terminated  by reason of your
becoming  disabled,  you or your legal  guardian or  custodian  may exercise the
Option as to any shares  which you had a right to purchase  and did not purchase
prior to such termination. Your legatee, distributee,  executor,  administrator,
guardian or custodian  must present proof of his authority  satisfactory  to the
Company prior to being allowed to exercise this Option.

          This Option is not transferable  otherwise than by will or the laws of
descent and distribution,  and is exercisable  during your lifetime only by you,
including,  for this purpose,  your legal  guardian or custodian in the event of
disability.  Until  the  Option  Price  has been  paid in full  pursuant  to due
exercise of this Option and the  purchased  shares are  delivered to you, you do
not have any rights as a shareholder  of the Company.  The Company  reserves the
right not to deliver to you the shares  purchased  by virtue of the  exercise of
this Option  during any period of time in which the Company  deems,  in its sole
discretion,  that  such  delivery  would  violate  a  federal,  state,  local or
securities exchange rule, regulation or law.

          This Option constitutes the entire  understanding  between the Company
and you with respect to the subject matter hereof and no amendment, modification
or waiver of this Option, in whole or in part, shall be binding upon the Company
unless in writing  and signed by an  appropriate  officer of the  Company.  This
Option and the  performances  of the parties  hereunder  shall be  construed  in
accordance  with and governed by the laws of the State of  Pennsylvania  without
regard to principles of conflict of law.

          Please  sign the copy of this  Option  and  return it to the  Company,
thereby  indicating  your  understanding  of and  agreement  with its  terms and
conditions.

                                        SMARTSERV ONLINE, INC.


                                        By:
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                                           Robert M. Pons
                                           Chief Executive Officer

          I hereby  acknowledge  receipt of a copy of the foregoing Stock Option
to purchase  60,000  shares at an Exercise  Price of $_________  per share,  and
having read such document,  hereby signify my understanding of, and my agreement
with, its terms and conditions.


________________________________            _____________________, 2004


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                                  PURCHASE FORM
                                 To Be Executed
                             Upon Exercise of Option

          The undersigned  record holder of the within Option hereby irrevocably
elects to exercise the right to purchase _______ share of Common Stock evidenced
by the  within  Option,  according  to the terms  and  conditions  thereof,  and
herewith makes payment of the purchase price in full or, alternatively, elects a
cashless  exercise in  accordance  with the terms of the Option as designated by
holder in writing to the Company.

          The undersigned  requests that  certificates  for such shares shall be
issued in the name set forth below.

Dated:                                  ________________________________________
                                                        Signature

                                        ________________________________________
                                                Print Name of Signatory


                                        Address ________________________________

                                        Social Security No. or other identifying
                                        number _________________________________


If said  number of  shares  shall not be all the  shares  purchasable  under the
within Option,  the  undersigned  requests that a new Option for the unexercised
portion shall be issued in the name of the undersigned

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