EXHIBIT 4.2

                             SmartServ Online, Inc.
                                      up to
                         233,000 Shares of Common Stock
                                ($.01 Par Value)

                            Placement Agent Agreement
                            -------------------------

                                                                January 11, 2000


America First Associates Corp.
415 Madison Avenue
3rd Floor

New York, NY 10017

Gentlemen:

         1.       Introductory.

                  SmartServ   Online,   Inc.,   a  Delaware   corporation   (the
"Company"), proposes to issue and sell up to 233,000 shares of its Common Stock,
$.01 par value (the "Shares").  The Company hereby appoints you as its exclusive
agent for the purpose of finding purchasers for and selling the Shares,  subject
to the terms and provisions of this agreement, on a "best efforts basis".

                  The term "Placement Agent", as used herein, shall mean America
First  Associates  Corp.  Whether or not so expressed,  all  obligations  of the
Placement  Agent  and of the  Company  are  several  in  accordance  with  their
respective   interests  and  not  joint,  and  nothing  herein  contained  shall
constitute the Placement Agent or the Company partners of one another.

           2.  Representations  and  Warranties  of  the  Company.  The  Company
represents and warrants to you that:

                  (a) The Company is a  corporation  duly  organized and validly
         existing in good standing under the laws of the State of Delaware, with
         power and  authority  to own or lease its  properties  and  conduct its
         business as described in the Private Placement  Memorandum  hereinafter
         mentioned;  and that the Company is duly qualified and in good standing
         as  a  foreign   corporation  in  each   jurisdiction   in  which  such
         qualification is required.

                  (b) A Private Placement Memorandum ("Memorandum") with respect
         to the Shares has been prepared by the Company in  conformity  with the
         requirements  of the


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         Securities Act of 1933 (the "Act") and the rules and  regulations  (the
         "Rules and  Regulations")  of the  Securities  and Exchange  Commission
         thereunder. The Memorandum, together with exhibits, covering the Shares
         proposed to be  offered,  have been  carefully  prepared by the Company
         with the  cooperation  of the  Placement  Agent,  and the Company shall
         prepare  all  filings   necessary  with  the  Securities  and  Exchange
         Commission,  including  the  preparation  and filing of Form D, and all
         applicable   filings  under  state  securities  laws.   Copies  of  the
         Memorandum  have been delivered to you and the Company has consented to
         the use of such copies for purposes permitted by the Act.

                  (c)  There  has  been  no  order  by  any  agency   exercising
         jurisdiction over the offering  preventing or suspending the use of the
         Memorandum.  The Memorandum does not contain any untrue  statement of a
         material  fact or omit to state any material  fact  required to be made
         therein or necessary  to make the  statements  therein not  misleading;
         provided,  however,  that  the  Company  makes  no  representations  or
         warranty as to  statements  or omissions  made in reliance  upon and in
         conformity  with  written  information  furnished to the Company by you
         expressly for use therein.

                  (d) The  securities of the Company  conform to all  statements
         with regard thereto contained in the Memorandum, and the Company has an
         authorized  and  outstanding   capitalization   as  set  forth  in  the
         Memorandum.  All of the  outstanding  shares  of  common  stock  of the
         Company  have  been duly and  validly  issued  and are  fully  paid and
         nonassessable. Upon issuance of and payment for the Shares to be issued
         and sold by the Company,  as provided herein,  such Shares will be duly
         and validly authorized and issued, fully paid and nonassessable.

                  (e) Except as reflected in or  contemplated by the Memorandum,
         since  the  respective  date as of  which  information  is given in the
         Memorandum,  there  has not been any  material  adverse  change  in the
         financial  condition or general  affairs of the Company or any material
         transaction  entered into by the Company other than transactions in the
         ordinary course of business.

                  (f)  The  financial  statements  contained  in the  Memorandum
         fairly  present the financial  condition of the Company and the results
         of its operations as of the dates and for the periods therein specified
         and such  financial  statements  have been prepared in conformity  with
         generally   accepted   accounting   principles   consistently   applied
         throughout  the  periods  involved,  and  Ernst & Young  LLP,  who have
         rendered  reports  on  certain  of  such  financial   statements,   are
         independent public accountants as required by the Act and the Rules and
         Regulations.

                  (g) No consent, approval, authorization, or other order of any
         governmental  authority is required in connection with the execution or
         delivery by the Company of this  agreement  or the issuance and sale by
         the  Company of the Shares to be sold by it  hereunder,  except such as
         may be required under the Act or state securities laws.

                  (h)  Except  as set  forth  in the  Memorandum,  there  are no
         actions,  suits,  or  proceedings  pending,  or to the knowledge of the
         Company threatened,  against the

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         Company or any of its property, at law or in equity or before or by any
         federal or state commission,  regulatory body, or administrative agency
         or other governmental body,  domestic or foreign,  in which any adverse
         decision  might have a  materially  adverse  effect on the  business or
         property of the Company.

                  (i)  The  execution  and  delivery  of  this  agreement,   the
         consummation of the transactions  herein  contemplated,  and compliance
         with the terms of this agreement by the Company will not conflict with,
         or constitute a default under, any indenture,  mortgage, deed of trust,
         or other  agreement or instrument  to which the Company is a party,  or
         the Certificate of Incorporation or Bylaws of the Company,  or any law,
         order, rule or regulation,  writ, judgment,  indenture, order or decree
         of any government,  governmental instrumentality, or court, domestic or
         foreign, having jurisdiction over the Company or any of its property.

                  (j)      The Company does not have any subsidiaries.

                  (k) Except as set forth in the Memorandum,  the Company is not
         in default in any  material  respect and no event has  occurred  which,
         with the  passage  of time or the  giving  of  notice,  or both,  would
         constitute a material default in any contract or agreement to which the
         Company is a party or by which it is bound.

         3.       Sale, Purchase and Delivery of Shares.

                  (a) Subject to the terms and conditions  herein set forth, the
         Company hereby appoints you as its exclusive agent from the date hereof
         and until  January 31,  2000 for the purpose of offering  the Shares as
         provided in this agreement on a "best efforts basis".  You agree to use
         your best efforts to sell the Shares as our agent. It is understood and
         agreed that there is no firm commitment on your part to purchase any of
         the Shares.  If subscriptions  for Shares of common stock are less than
         233,000 Shares, you and the Company will agree to close or not to close
         the offering.  Conversely,  if subscriptions exceed 233,000 Shares, you
         and the  Company and will agree or not agree upon the sale of Shares to
         cover over-subscriptions.

                           You will  offer the  Shares  hereunder  at a price of
         $15.00 per share.  You will be entitled to a  commission  of 8% on each
         Share sold by you as such agent  payable by the  Company on the Closing
         Date  from the funds  deposited  in the  special  bank  escrow  account
         described in paragraph (b) hereof. You may, in your discretion, offer a
         part  of the  Shares  to  dealers  who  are  members  of  the  National
         Association of Securities Dealers,  Inc., selected by you at such price
         less a  concession  as you  determine  and you may  form  and  manage a
         selling group of such selected dealers.

                           Upon the closing of the  offering,  the Company  will
         sell to the Placement Agent warrants (the "Placement  Agent  Warrants")
         for a purchase price of $.01 per Warrant, entitling the Placement Agent
         to purchase  an amount of Shares  equal to 8% of the Shares sold in the
         Offering.  The  Placement  Agent  Warrants  will contain  anti-dilution
         provisions  acceptable to the  Placement  Agent.  The  Placement  Agent
         Warrants will be  exercisable  for a period of five (5) years after the
         date of the  Memorandum  and, if the

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<PAGE>

         Warrants are not exercised  during such term, they shall  automatically
         expire. The exercise price of the Placement Agent Warrants shall be the
         Share offering price.  The Company will set aside and at all times have
         available  a  sufficient  number of Shares  of its  Common  Stock to be
         issued upon the exercise of the Placement Agent Warrants.  The Warrants
         will not be transferable to anyone, except to officers or affiliates of
         the Placement Agent.

                  (b) All funds  received  from  subscribers  of Shares  will be
         deposited by you in a special noninterest bearing escrow account (or if
         invested,  such investment will only be made in permissible  investment
         under SEC Rule 15c2-4) to be  maintained  by you for the account of the
         Company at a bank of your choice.  All funds,  represented  by check or
         otherwise,  shall be made payable to you for our account and  deposited
         in escrow.  On the Closing  Date,  you will  distribute  the funds then
         deposited in such special bank escrow  account,  as their interests may
         appear, to the Company, selected dealers, and to yourself.

                           In the event this  agreement in  terminated  prior to
         the Closing Date for any reason  whatsoever,  you shall promptly refund
         to the  subscribers  of the Shares all funds  which have been  received
         from them by you without interest.

                           All  costs,   expense,   and   charges   incurred  in
         connection  with the special bank escrow  account  shall be paid by the
         Company.

                  (c)  It  is  understood  and  agreed  that,  unless  we  agree
         otherwise, if all Shares are not sold by you pursuant to this agreement
         during the offering, we shall close with respect to the Shares sold.

                  (d) Closing of the offering will take place at your offices in
         New York, New York, at 10 o'clock a.m., Eastern Time, on the earlier of
         (i) five days from the date on which all of the Shares  have been sold,
         or (ii)  January 31, 2000,  said date being herein  called the "Closing
         Date".  Certificates for the Shares  registered in such a manner and in
         such  denominations as you may request will be delivered to you so that
         you may examine and package such certificates for delivery at least ten
         full business days after the Closing Date.

                  (e) The Company agrees that,  within 90 days after the closing
         of the offering of the Shares,  it will file a  Registration  Statement
         and all necessary  amendments  thereto under the Securities Act of 1933
         registering  the Shares of Common Stock subject to the offering and the
         Common  Stock  underlying  the  Warrants to the  Placement  Agent.  The
         Company  will use its best  efforts to cause the above filing to become
         effective.  All  expenses  of  such  registration,  including,  but not
         limited to, legal,  accounting and printing costs, will be borne by the
         Company,  but the Company shall not be responsible  for the cost of any
         separate counsel to review the  Registration  Statement on behalf of or
         to advise the  shareholders  or the Placement  Agent.  In the event the
         Company  fails to file the  Registration  Statement  or to use its best
         efforts to cause such filing to become effective, then the Company will
         issue to the purchasers in this offering additional Shares amounting to
         10% of the Shares  purchased by such  shareholders and to the Placement
         Agent an additional 10% of Placement Agent Warrants.

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         4. Covenants of the Company.  The Company covenants and agrees with you
that:

                  (a) The Company  will  furnish to you and dealers  selected by
         you as soon as possible as many  copies of the  Memorandum  (and of any
         amended or supplemented  Memorandum) as you may reasonably  request. If
         during  such  period  any  event  occurs  as  a  result  of  which  the
         Memorandum,  as then amended or  supplemented,  would include an untrue
         statement of a material fact or omit to state a material fact necessary
         in order to make the statements made, in the light of the circumstances
         under which they were made, not misleading, or it shall be necessary to
         amend or supplement  the  Memorandum to comply with the Act or with the
         Rules and  Regulations,  the Company will forthwith  notify you thereof
         and on your request prepare and furnish to you and dealers  selected by
         you, in such quantity as you and such dealers may  reasonably  request,
         an  amendment  or  supplement  which will  correct  such  statement  or
         omission  or cause the  Memorandum  to comply with the Act and with the
         Rules and  Regulations.  The Company  will not at any time prior to the
         expiration  of  the  offering  period  prepare  any  amendment  to  the
         Memorandum  of which you shall not  previously  have been  advised  and
         furnished  with a copy or to which your counsel  shall have  reasonably
         objected in writing, or which is not in compliance with the Act and the
         Rules and Regulations.

                  (b) The Company  will,  when and as requested by you, take all
         action  necessary to permit the offering of the Shares as  contemplated
         hereby under the securities  laws of such states as you shall designate
         and,  during  the  period  of  twelve  months  after  the  date  of the
         Memorandum,  to keep qualification of the Shares in good standing under
         such laws; provided, however, that the Company shall not be required to
         qualify  as a foreign  corporation  or to file a consent  to service of
         process in any state in any action  other than one  arising  out of the
         offering or sale of the Shares.  Said qualification of the Shares under
         the  securities  laws of the  said  states  shall be  effected  by your
         counsel and the Company shall pay the legal fees therefor and all other
         expenses incident thereto.

                  (c) Whether or not the  transactions  contemplated  hereby are
         consummated or this  agreement is terminated,  the Company will pay all
         costs and expenses  incident to the  performance of the  obligations of
         the Company hereunder, including the fees and expenses of the Company's
         counsel and  accountants,  registration  fees,  the costs and  expenses
         incident  to the  preparation,  printing,  shipping  and  filing of the
         Memorandum and all amendments and supplements  thereto (and such copies
         thereof  as the  Placement  Agent  may  reasonably  require)  and  this
         agreement and related documents, filing fees required to be paid to the
         National  Association  of Securities  Dealers,  Inc., if any, the costs
         incurred in connection with the qualification of the Shares under state
         securities laws as provided in subparagraph  (b) hereof  (including the
         fees and disbursements of your counsel in this connection).  Payment to
         you of a non-refundable expense allowance of $25,000,  $15,000 of which
         has been  previously  paid,  and  $10,000  to be paid upon  closing  or
         termination of the offering.

                  (d) The Company will apply and utilize the  proceeds  from the
         sale of the Shares in the manner described in the Memorandum.

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                  (e) The  Company  will  comply  with  all  obligations  to the
         Placement  Agent and to its security  holders  undertaken  by it in the
         Memorandum.

         5. Conditions of Placement  Agent's  Obligations.  Your  obligations as
provided herein shall be subject in your  reasonable  discretion to the accuracy
of the  representations and warranties of the Company herein contained as of the
date hereof and as of the Closing Date, to the performance by the Company of its
obligations hereunder and the following additional conditions:

                  (a)  It is  agreed  between  the  Company  and  you  that  all
         documents and other information  relating to the Company's affairs will
         be made  available  upon request to you and your counsel at your office
         or at the office of your counsel and copies of any such  documents will
         be furnished upon request to you or your counsel.  Included  within the
         documents  which must be made  available  as soon as  possible  are the
         following:  The Company's  Certificate of Incorporation and By-laws and
         all  amendments  thereto,  minutes  of all  meetings  of the  Company's
         incorporators, stockholders and directors, all financial statements and
         correct copies of any and all material contracts, leases and agreements
         to which the Company is a party and all reports and filings made by the
         Company with the  Securities and Exchange  Commission  within the prior
         three years.

                  (b) You have not notified the Company that the  Memorandum  or
         any amendment or supplement  thereto  contains an untrue statement of a
         fact which in the  opinion of your  counsel  is  material,  or omits to
         state a fact which, in the opinion of such counsel,  is material and is
         required to be stated  therein or is necessary  to make the  statements
         therein not misleading.

                  (c) At the time of the execution of this  agreement and at the
         Closing  Date,  counsel for the  Company,  shall have  furnished to you
         their written opinion,  addressed to you and dated as of the date it is
         required to be delivered,  in form and substance  satisfactory  to you,
         with  photostats  or  signed  counterparts  thereof  for  each  of  the
         soliciting dealers, to the effect that:

                           (i) The  Company  has been duly  incorporated  and is
                  validly  existing as a corporation  in good standing under the
                  laws of the State of Delaware and has full corporate power and
                  authority  to own and lease its  properties  and  conduct  its
                  business, as described in the Memorandum;  and, the Company is
                  duly  qualified  to do business  and is in good  standing as a
                  foreign  corporation in each jurisdiction where the conduct of
                  its business or its ownership or leasing of property  requires
                  it to be qualified  where the failure to be so qualified would
                  cause a material adverse effect on the Company; and

                           (ii) The  Shares  of  Common  Stock to be sold by the
                  Company  hereunder,  at the time of delivery to the  Placement
                  Agent  pursuant to Section 3 hereof,  will be duly and validly
                  authorized and issued,  fully paid and  nonassessable and will
                  conform in all material  respects to the  description  thereof


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                  contained  in the  Memorandum;  other than as described in the
                  Memorandum  there are  presently no preemptive or other rights
                  to  subscribe  for  or to  purchase  shares  of  Common  Stock
                  pursuant to the Certificate of Incorporation or the law of the
                  State of  Delaware,  and none of the  Shares of  Common  Stock
                  being  sold  hereunder  by  the  Company  will  be  issued  in
                  violation of any such preemptive  rights of any stockholder of
                  the Company; and all corporate action required to be taken for
                  the  authorization,  issue  and sale of the  Shares  of Common
                  Stock has been validly taken; and

                           (iii)  This  agreement  has  been  duly  and  validly
                  authorized,   executed  and   delivered  by  the  Company  and
                  constitutes  the valid and legally  binding  obligation of the
                  Company  except  insofar as  indemnification  of the Placement
                  Agent may be  limited  under  applicable  securities  laws and
                  decisions thereunder.

                           (iv) The  execution  and  delivery of and  compliance
                  with this agreement by the Company,  the  consummation  of the
                  transactions  herein  contemplated and the compliance with the
                  terms hereof will not  conflict  with or result in a breach or
                  violation of any of the terms and provisions of, or constitute
                  a default  under,  any indenture,  mortgage,  deed of trust or
                  other material  agreement or instrument  known to such counsel
                  to which the  Company is a party or by which it is bound or to
                  which its  property is subject,  or under its  Certificate  of
                  Incorporation or Bylaws. No consent,  approval,  authorization
                  or  order  of any  court  or  governmental  agency  or body is
                  required  for  the  consummation  of the  transactions  by the
                  Company  contemplated by this  agreement,  except such as have
                  been obtained under the Act and the Rules and  Regulations and
                  such  as  may be  required  under  state  securities  laws  in
                  connection with the purchase and distribution of the Shares by
                  the Placement Agent.

                           (v)  The  statements  in  the  Memorandum  under  the
                  caption "Description of Capital Stock" insofar as they are, or
                  refer to,  descriptions  of documents or  statements of law or
                  legal conclusions,  have been reviewed by them and are correct
                  in all material respects.

                           (vi)  Such  counsel  does  not  know of any  legal or
                  governmental  proceedings  required  to be  described  in  the
                  Memorandum  which are not  described  as  required,  or of any
                  contracts (other than this agreement, as to which such counsel
                  need express no opinion) or documents of a character  required
                  to be described in the  Memorandum  which are not described as
                  required.

                  Such  counsel  shall  confirm  that,  in  connection  with the
         preparation  of  the  Memorandum,  such  counsel  has  participated  in
         telephone conferences with officers of the Company at which conferences
         the contents of the  Memorandum  were  discussed  and  (without  taking
         further  action  to verify  independently  the  statements  made in the
         Memorandum,  and without  assuming  responsibility  for the accuracy or
         completeness  of such  statements,  except as provided in paragraph (v)
         above)  nothing has come to such  counsel's  attention  that would lead
         such  counsel to believe  that  either the  Memorandum

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         (except for the financial  statements and other financial data included
         therein, as to which such counsel need express no opinion) contains any
         untrue  statement of a material  fact or omits to state a material fact
         required  to be  stated  therein  or  necessary  to make the  statement
         therein not misleading,  provided,  however,  that we make no statement
         herein  whatsoever  as to any  of the  financial  statements  or  notes
         contained therein or omitted  therefrom or other financial,  numerical,
         statistical or accounting data included therein or omitted therefrom.

                  In giving such opinion, such counsel may rely as to matters of
         fact upon statements and  certifications of officers of the Company and
         of other  appropriate  persons and may rely as to matters of law, other
         than the law of the United States, upon an opinion or opinions of local
         counsel  acceptable  to the  Placement  Agent,  provided  that any such
         opinion or  opinions  are  referred  to in said  opinion  and that said
         counsel  shall state that they believe that you and they are  justified
         in relying thereon.

                  (e) At and as of the date  hereof and the  Closing  Date,  the
         Placement Agent shall have received a certificate, dated as of the date
         hereof and the Closing Date,  signed by the chief executive officer and
         the principal  financial officer of the Company,  in form and substance
         satisfactory to you,  stating in effect that except as may be reflected
         in or  contemplated  by the  Memorandum  (i)  the  representations  and
         warranties of the Company in this  agreement are true and correct as of
         the date hereof and the Closing Date, and the Company has complied with
         all  of  the  material   agreements  and  satisfied  all  the  material
         conditions  on its part to be performed or satisfied at or prior to the
         date hereof and the Closing Date; (ii) since the respective dates as of
         which  information is given in the  Memorandum,  there has not been any
         material  adverse  change in the  condition  or in the  business of the
         Company  considered  as a whole;  (iii)  since such dates there has not
         been any material  transaction  entered into by the Company  other than
         transactions  in the ordinary  course of business;  and (iv) such other
         matters as the Placement  Agent or counsel for the Placement  Agent may
         reasonably request.

                  (f) Before  the  Closing  Date,  Michael  G.  Quinn,  Esquire,
         counsel for the Placement  Agent,  shall have been  furnished with such
         opinions and copies of such documents as he may reasonably  require for
         the purpose of enabling  him to pass upon the  issuance and sale of the
         Shares as herein contemplated and related  proceedings,  or in order to
         evidence the accuracy or completeness of any of the  representations or
         warranties,  or  the  fulfillment  of any  of  the  conditions,  herein
         contained;  and all proceedings taken by the Company in connection with
         the  issuance  and sale of the  Shares as herein  contemplated  and all
         opinions  and  certificates   mentioned  above  or  elsewhere  in  this
         agreement  shall be satisfactory in form and substance to the Placement
         Agent and said counsel for the Placement Agent.

                  (g) Except as contemplated  in the  Memorandum,  subsequent to
         the  respective  dates  as  of  which   information  is  given  in  the
         Memorandum,  there  shall  not have  been any  material  change  in the
         capital stock or long-term  debt of the Company or any adverse  change,
         or any development  specifically related to the business of the Company
         involving a  prospective  material  adverse  change,  in the  condition
         (financial or other), net

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<PAGE>

         worth or results of operations of the Company which, in the judgment of
         the Placement  Agent,  makes it  impractical or inadvisable to offer or
         deliver the Shares on the terms and in the manner  contemplated  in the
         Memorandum.

                  (h) There shall have been  furnished or caused to be furnished
         to the Placement Agent such further  certificates  and documents as the
         Placement Agent may have reasonably requested.

         If any of the  conditions  specified  in this  Section 5 shall not have
been  fulfilled,  this  agreement may be terminated by the Placement  Agent upon
notice to the Company or such conditions may be waived, modified or the time for
fulfillment  thereof may be extended by the  Placement  Agent upon notice to the
Company.

         6.       Indemnification.

                  (a) The Company will indemnify and hold harmless the Placement
         Agent,  its agents and each person,  if any, who controls the Placement
         Agent within the meaning of the Act against any losses, claims, damages
         or  liabilities,  joint or several,  to which they may become  subject,
         under the Act or otherwise,  insofar as such losses, claims, damages or
         liabilities  (or actions in respect  thereof) arise out of or are based
         upon any untrue  statement or alleged untrue  statement of any material
         fact contained in the Memorandum or any amendment or supplement thereto
         or arise out of or are based upon the  omission or alleged  omission to
         state  therein  a  material  fact  required  to be  stated  therein  or
         necessary  to make the  statements  therein  not  misleading;  and will
         reimburse the Placement Agent and each such controlling  person for any
         legal or other expenses  reasonably  incurred by the Placement Agent or
         such controlling  person in connection with  investigating or defending
         any such loss,  claim,  damage,  liability  or action.  This  indemnity
         agreement  will be in addition to any  liability  which the Company may
         otherwise have.

                  (b) The Placement  Agent will  indemnify and hold harmless the
         Company,  each of its directors,  each of its officers and each person,
         if any, who controls the Company within the meaning of the Act, against
         any losses,  claims, damages or liabilities to which the Company or any
         such director,  officer or controlling person may become subject, under
         the Act or  otherwise,  insofar  as such  losses,  claims,  damages  or
         liabilities  (or actions in respect  thereof) arise out of or are based
         upon any untrue  statement or alleged untrue  statement of any material
         fact  contained  in the  Memorandum  or  any  amendment  or  supplement
         thereto,  or arise out of or are based upon the omission or the alleged
         omission to state therein a material fact required to be stated therein
         or necessary to make the  statements  therein not  misleading,  in each
         case to the extent, but only to the extent,  that such untrue statement
         or alleged untrue statement or omission or alleged omission was made in
         reliance upon and in conformity with written  information  furnished to
         the Company by the Placement Agent  specifically  for use therein;  and
         will reimburse any legal or other expenses  reasonably  incurred by the
         Company  or  any  such  director,  officer  or  controlling  person  in
         connection  with  investigating  or  defending  any such  loss,  claim,
         damage,  liability  or  action.  This  indemnity  agreement  will be in
         addition to any liability which the Placement Agent may otherwise have.

                                        9
<PAGE>

                  (c) Promptly after receipt by an indemnified  party under this
         Section of notice of the  commencement of any action,  such indemnified
         party  will,  if a claim in respect  thereof is to be made  against the
         indemnifying party under this Section, notify the indemnifying party of
         the   commencement   thereof,   but  the  omission  so  to  notify  the
         indemnifying  party will not relieve it from any liability which it may
         have to any indemnified  party otherwise than under this Section except
         to the extent the  indemnifying  party is prejudiced by such delay.  In
         case any such action is brought against any indemnified  party,  and it
         notifies  the  indemnifying  party  of the  commencement  thereof,  the
         indemnifying party will be entitled to participate  therein and, to the
         extent  that it may  wish,  join  with  any  other  indemnifying  party
         similarly  notified,  to  assume  the  defense  thereof,  with  counsel
         satisfactory  to such  indemnified  party,  and after  notice  from the
         indemnifying  party to such  indemnified  party of its  election  so to
         assume the defense thereof,  the indemnifying  party will not be liable
         to such  indemnified  party  under this  Section for any legal or other
         expenses  subsequently incurred by such indemnified party in connection
         with the defense thereof other than reasonable costs of  investigation.
         The indemnified party shall have the right to employ its counsel in any
         such action,  but the fees and expenses of such counsel shall be at the
         expense of such  indemnified  party  unless (i) the  employment  of the
         counsel  by  such   indemnified   party  has  been  authorized  by  the
         indemnifying  party, (ii) the indemnified party shall have been advised
         in writing by counsel  that there may be conflict  of interest  between
         the indemnifying  party and the indemnified party in the conduct of the
         defense of such action (in which case the indemnifying  party shall not
         have the right to direct the  defense  of such  action on behalf of the
         indemnified  party) or (iii) the  indemnifying  party shall not in fact
         have employed counsel to assume the defense of such action,  in each of
         which cases the fees and  expenses  of one such  counsel for all of the
         indemnified  parties shall be at the expense of the indemnifying party.
         An  indemnifying  party shall not be liable for any  settlement  of any
         action or claim effected without its consent.

         7.       Termination.

                  (a) This  agreement may be terminated at any time prior to the
         Closing Date by the Placement Agent by written notice to the Company if
         (i) the Company has sustained a loss, whether or not insured, by reason
         of fire,  flood,  accident or other calamity,  which, in the reasonable
         opinion of the Placement Agent  substantially  affects the value of the
         properties of the Company or materially  interferes  with the operation
         of the business of the Company,  (ii) all trading in  securities on the
         New  York  Stock  Exchange  or the  American  Stock  Exchange  has been
         suspended  or limited or minimum  prices have been  established  on any
         such exchange,  (iii) a banking  moratorium has been declared by either
         federal  or New  York  state  authorities,  (iv) an  outbreak  of major
         hostilities  or other national or  international  calamity has occurred
         which,  in each case,  make it inadvisable to proceed with the offering
         or (v) any action has been  taken by any  government  in respect of its
         monetary  affairs  which,  in the  reasonable  opinion of the Placement
         Agent,  has a material  adverse effect on the United States  securities
         markets.

                                       10
<PAGE>

                  (b) If this agreement shall be terminated  pursuant to Section
         5 or this Section 7, or if the  obligation  provided for herein are not
         consummated because of any refusal, inability or failure on the part of
         the  Company to comply  with any of the terms or to fulfill  any of the
         conditions of this agreement, or if for any reason the Company shall be
         unable to perform all its obligations under this agreement, the Company
         shall not be liable to the  Placement  Agent for  damages on account of
         loss of anticipated profits arising out of the transactions  covered by
         this  agreement,  but the  Company  shall  remain  liable to the extent
         provided in Sections 4(d), 6(a) and 6(c) hereof.

         8.  Survival  of  Indemnities,   Representations  and  Warranties.  All
representations,  warranties,  agreements,  covenants and indemnities  contained
herein of the Company and of the Placement  Agent shall remain  operative and in
full force and effect and shall  survive  the  delivery  of and  payment for the
Shares or  termination of this  agreement  pursuant to Section 7 hereof,  as the
case may be.

         9. Parties in Interest.  This  agreement  shall inure to the benefit of
and be binding upon the Company and the Placement Agent, the officers, directors
and partners of such parties,  each controlling  person referred to in Section 6
hereof, and their respective  successors and assigns.  Nothing in this agreement
is intended or shall be  construed to give to any person,  firm or  corporation,
other than the parties  hereto and their  respective  successors and assigns and
the  controlling  persons and  officers and  directors  referred to in Section 6
hereof,  any legal or  equitable  right,  remedy or claim under or in respect of
this  agreement  or any  provision  herein  contained;  this  agreement  and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive  benefit of the parties  hereto and their  respective  successors  and
assigns,  and such  controlling  persons,  directors and  officers,  and for the
benefit of no other person or corporation.

                  The  term  "successor"  as used in this  agreement  shall  not
include any purchaser, as such purchaser, of any Shares from the Placement Agent
or any selected dealer.

                  This agreement  constitutes the entire  agreement  between the
parties  concerning  the subject  matter  hereof,  and  supersedes any letter of
intent previously entered into.

         10. Notices.  All  communications,  terminations and notices  hereunder
shall be in writing  and,  if sent to the  Placement  Agent,  shall be mailed or
delivered and confirmed to America First  Associates  Corp., 415 Madison Avenue,
3rd Floor, New York, NY 10017, Attn: Joseph Genzardi,  President; if sent to the
Company  shall be mailed or  delivered to SmartServ  Online,  Inc.,  One Station
Place, Stamford, Connecticut 06902, Attn: Thomas W. Haller, CFO.

         11.  Counterparts.  This  agreement  may be  executed  in any number of
counterparts which, taken together shall constitute one and the same instrument.

         12. Governing Law. This agreement shall be governed by and construed in
accordance  with  the  laws of the  State  of New  York  without  regard  to its
principles of conflicts of laws.

                                       11
<PAGE>

         Please sign the  enclosed  duplicate  of this  letter,  whereupon  this
letter will become a binding  agreement  between the parties in accordance  with
its terms.

                                          Very truly yours,

                                          SMARTSERVE ONLINE, INC.


                                          By:
                                               ---------------------------------
                                               Thomas W. Haller, Chief Financial

                                                    Officer

The foregoing  agreement is hereby confirmed and accepted,  as of the date first
above written.

AMERICA FIRST ASSOCIATES CORP.


By: ___________________________________
       Joseph Genzardi, President