Document:

SECURITY AGREEMENT

         This  Security  Agreement  is  made  as of  January  31,  2000  between
SmartServ Online, Inc., a Delaware corporation ("Pledgee"),  and Robert W. Pearl
("Pledgor").

                                    Recitals

         Pursuant to  Pledgor's  purchase of Stock  under the  Restricted  Stock
Purchase  Agreement  dated  October 13, 1999  between  Pledgor and Pledgee  (the
"Purchase  Agreement"),  and  Pledgor's  election to pay for such Stock with his
promissory note (the "Note"),  Pledgor has purchased  76,818 shares of Pledgee's
Common Stock (the "Shares") at a price of $0.75per  share,  for a total purchase
price of $57,613.50. The Note and the obligations thereunder are as set forth in
Exhibit B to the Purchase Agreement.

         NOW, THEREFORE, it is agreed as follows:

         1. Creation and Description of Security  Interest.  In consideration of
the  issuance of the Shares to Pledgor  under the Purchase  Agreement,  Pledgor,
pursuant to the Connecticut  Uniform Commercial Code, hereby pledges all of such
Shares  (herein  sometimes  referred  to as  the  "Collateral")  represented  by
certificate number ______, duly endorsed in blank or with executed stock powers,
and herewith  delivers  said  certificate  to the  Pledgee,  who shall hold said
certificate subject to the terms and conditions of this Security Agreement.

         The pledged  stock  shall be held by the  Pledgee as  security  for the
repayment  of the Note,  and the Pledgee  shall not  encumber or dispose of such
Shares except in accordance with the provisions of this Security Agreement.

         2. Pledgor's  Representations and Covenants. To induce Pledgee to enter
into this Security Agreement,  Pledgor represents and covenants to Pledgee,  its
successors and assigns, as follows:

            a. Payment of  Indebtedness.  Pledgor will pay the  principal sum of
the Note secured hereby,  together with interest thereon, at the time and in the
manner provided in the Note.

            b.  Encumbrances.  The  Shares  are free of all other  encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.

         3.  Voting  Rights.  During the term of this  pledge and so long as all
payments of  principal  and interest are made as they become due under the terms
of the Note,  Pledgor  shall  have the right to vote all of the  Shares  pledged
hereunder.

         4. Stock  Adjustments.  In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares  or  other  securities  issued  by  reason  of any such  change  shall be
delivered to and held by the Pledgee under the terms of this Security  Agreement
in the same manner as the Shares originally pledged  hereunder.  In the event of
substitution  of such securities the Pledgor and the Pledgee shall cooperate and
execute such documents as are  reasonable so as to provide for the  substitution
of such Collateral and, upon such  substitution,  references to "Shares" in this
Security  Agreement shall include the substituted shares of capital stock issued
to Pledgor as a result thereof.

                                      -2-
<PAGE>

         5.  Options  and  Rights.  In the event  that,  during the term of this
pledge,  subscription  options  or other  rights or  options  shall be issued in
connection  with the  pledged  Shares,  such  rights  and  options  shall be the
property  of  Pledgor  and,  if  exercised  by  Pledgor,  all new stock or other
securities so acquired by Pledgor as it relates to the pledged  Shares then held
by Pledgee shall be immediately delivered to Pledgee, to be held under the terms
of this Security Agreement in the same manner as the Shares pledged.

         6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:

          a.   Payment of principal or interest on the Note shall be  delinquent
               for a period of 10 days or more; or

          b.   Pledgor  fails to perform any of the  covenants  set forth in the
               Restricted Stock Purchase Agreement or contained in this Security
               Agreement  for a period of 10 days after written  notice  thereof
               from Pledgee.

In the case of an event of Default,  as set forth above,  Pledgee shall have the
right to  accelerate  payment of the Note upon  notice to  Pledgor,  and Pledgee
shall  thereafter  be  entitled  to pursue its  remedies  under the  Connecticut
Uniform Commercial Code.

         7. Release of  Collateral.  There shall be released  from this pledge a
portion of the pledged  Shares  held by Pledgee  hereunder  upon  payment of the
principal of the Note.  The number of the pledged Shares which shall be released
shall be that  number of full  Shares  which  bears the same  proportion  to the
initial number of Shares pledged  hereunder as the payment of principal bears to
the initial full  principal  amount (or in the event that the initial  principal
amount on the Note has been  adjusted  pursuant  to  Section  1 of that  certain
Restricted  Stock  Purchase  Agreement  by and between the Company and Robert W.
Pearl,  dated as of October 13, 1999 (the  "Purchase  Agreement"),  the Adjusted
Principal Amount) of the Note.

         8. Withdrawal or  Substitution  of Collateral.  Pledgor shall not sell,
withdraw,  pledge,  substitute  or  otherwise  dispose of all or any part of the
Collateral without the prior written consent of Pledgee.

         9. Term.  The within pledge of Shares shall  continue until the payment
of all indebtedness  secured hereby,  at which time the remaining  pledged stock
shall be promptly  delivered  to Pledgor,  subject to the  provisions  for prior
release of a portion of the Collateral as provided in paragraph 7 above.

         10.  Insolvency.  Pledgor  agrees that if a  bankruptcy  or  insolvency
proceeding  is  instituted  by or against him, or if a receiver is appointed for
the property of Pledgor,  or if Pledgor makes an  assignment  for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.

         11. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement  shall not render any other provision or provisions  herein  contained
unenforceable or invalid.

         12.  Successors  or Assigns.  Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns,  and that the term  "Pledgor" and the term "Pledgee" as used herein
shall  be  deemed  to  include,  for all  purposes,  the  respective  designees,
successors, assigns, heirs, executors and administrators.

         13.  Governing Law. This Security  Agreement  shall be interpreted  and
governed  under  the laws of the  State of  Connecticut  without  regard  to its
conflict of laws provisions.

                                      -3-

<PAGE>

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

"PLEDGOR"

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

"PLEDGEE"
SMARTSERV ONLINE, INC.,
a Delaware corporation

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

                                      -4-<PAGE>

                                 Amendment No. 1
                                       To
                           Master Repurchase Agreement

     This Amendment No. 1 ("Amendment No. 1") to that certain Master
Repurchase Agreement (the "Agreement") dated March 24, 1998 between
NationsBanc Mortgage Capital Corporation ("Buyer") and Metropolitan Mortgage
& Securities Co , Inc. and its subsidiary named therein (each jointly and
severally, "Seller") is entered into this 26th day of May, 1998.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree,
promise and covenant as follows:

                                    ARTICLE I
                                   DEFINITIONS

     Defined terms used herein, unless otherwise defined herein, have the same
meaning ascribed to them in the Agreement.

                                   ARTICLE II
                             AMENDMENT OF SECTION 14

     Section 14 of the Agreement is hereby amended to read in its entirety as
follows:

     14.  P & I COLLECTIONS

     Commencing May 15, 1998, Seller shall cause to be deposited into the
deposit account specified in, and with the depository institution that is a
party to, the Blocked Account Agreement between Seller and Buyer (i) within one
Business Day after receipt by Seller, all payments of principal with respect to
any Purchased Security and (ii) on each Business Day, an amount equal to the
amount of the Pricing Differential which has accrued but has not been previously
deposited into such deposit account by Seller through the immediately preceding
Business Day; provided, however, that absent a Default, Seller need not cause
such amounts to be deposited during a month in which a securitization occurs.
Absent an Event of Default, Buyer shall not terminate the Blocked Account
Agreement without the written consent of the Seller.

                                   ARTICLE III
                                  MISCELLANEOUS

     SECTION 3.1 AGREEMENT. The other terms, agreements, representations,
warranties, terms and conditions contained in the Agreement shall continue in
full force and effect.

     SECTION 3.2 TERM OF THIS AGREEMENT. This Amendment No. 1 shall have the
same term of, and shall expire at the same time as, the Agreement.
<PAGE>

     SECTION 3.3 AMENDMENTS AND WAIVERS. This Amendment No. 1 may not be
amended, modified, terminated or any provision thereof waived without the
written agreement of the parties hereto.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
as of the date first above written.

METROPOLITAN MORTGAGE & SECURITIES CO., INC., as Seller (jointly and severally)

/s/ Bruce J. Blohowiak
-------------------------------
Name: Bruce J. Blohowiak
Title: Executive Vice President

METWEST MORTGAGE SERVICES, INC., as Seller (jointly and severally)

/s/ Bruce J. Blohowiak
-------------------------------
Name: Bruce J. Blohowiak
Title: Executive Vice President

NATIONSBANC MORTGAGE CAPITAL CORPORATION, as Buyer and Agent as applicable

/s/ John T. McCarthy
-------------------------------
Name: John T. McCarthy
Title: Senior Vice President

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