Document:

REGISTRATION RIGHTS AGREEMENT

                          MADE AS OF SEPTEMBER 28, 2000

                                     BETWEEN

                             SMARTSERV ONLINE, INC.

                                       AND

                             HEWLETT-PACKARD COMPANY

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<TABLE>
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                                TABLE OF CONTENTS

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1.       Demand Registration........................................................................1
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2.       Piggyback Registrations....................................................................2
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3.       Holdback Agreements........................................................................3
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4.       Registration Procedure.....................................................................4
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5.       HP Procedures..............................................................................6
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6.       Registration Expenses......................................................................6
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7.       Indemnification and Contribution...........................................................6
         --------------------------------

8.       Participation in Underwritten Registrations................................................9
         -------------------------------------------

9.       Compliance with Rule 144...................................................................9
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10.      Definitions................................................................................9
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11.      Miscellaneous.............................................................................11
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</TABLE>

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                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
as of September 28, 2000, between SmartServ Online, Inc. (the "Company") and
Hewlett-Packard Company ("HP").

                  WHEREAS,  the parties to this  Agreement are parties to a Note
Purchase  Agreement of even date  herewith  (the "Note  Purchase  Agreement  "),
pursuant  to which the  Company  shall issue to HP a  Convertible  Secured  U.S.
$20,00,000 Note (the "Note") convertible into shares of Common Stock (as defined
below).  In order to induce HP to enter into the Note  Purchase  Agreement,  the
Company  has  agreed  to  provide  the  registration  rights  set  forth in this
Agreement.  Unless otherwise provided in this Agreement,  capitalized terms used
herein shall have the meanings set forth in Section 10 hereof.

                  NOW, THEREFORE, the parties hereto agree as follows:

1.       Demand Registration.

         (a)      HP may, at any time, request registration under the Securities
                  Act of all or 30% or greater of its Registrable  Securities on
                  Form S-1 or any similar or  successor  long-form  registration
                  ("Long-Form Registration") or, if available, on Form S-2, S-3,
                  or  on  any  similar  or  successor  short-form   registration
                  ("Short-Form  Registration")  provided  that the  total  gross
                  estimated  proceeds of such offering are at least  $2,000,000.
                  HP shall be entitled to request two (2) Long-Form Registration
                  and  unlimited  Short-Form  Registrations.  All  registrations
                  requested  pursuant to this  Section  1(a) are  referred to as
                  "Demand  Registrations".  A  Demand  Registration  will  be  a
                  Short-Form  Registration  whenever the Company is permitted to
                  use any applicable short form.

         (b)      If a Demand  Registration is an  underwritten  public offering
                  and the  managing  underwriters  advise the Company in writing
                  that in their opinion the number of securities requested to be
                  included in such  registration  exceeds  the number  which can
                  successfully  be sold  in  such  offering,  the  Company  will
                  include  in  such  registration  the  Registrable   Securities
                  requested  to be included in such  registration  by HP and all
                  other   Common   Stock   requested  to  be  included  in  such
                  registration,  to be  included  pro  rata on the  basis of the
                  number of shares of such  securities for which the Company has
                  been given written requests for inclusion therein by each such
                  holder thereof.

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<PAGE>

         (c)      The  Company  shall  not be  obligated  to effect  any  Demand
                  Registration  within one  hundred  and eighty  (180) days of a
                  previous Demand  Registration or within one hundred and eighty
                  (180)  days of a previous  registration  in which HP was given
                  piggyback  rights  pursuant  to  Section  2. The  Company  may
                  postpone  for up to one  hundred  and  eighty  (180)  days the
                  filing or  effectiveness  of a  registration  statement  for a
                  Demand  Registration if the Company  reasonably  believes such
                  Demand  Registration  would  have  an  adverse  effect  on any
                  proposal or plan by the Company or any of its  subsidiaries to
                  engage  in  any  acquisition  of  assets  (other  than  in the
                  ordinary  course of  business)  or any merger,  consolidation,
                  tender offer or other significant transaction or to permit the
                  Company to avoid a special audit.

         (d)      The  Company  shall  have the right to select  the  investment
                  banker(s) and manager(s), if any, to administer the offering.

         (e)      The Registration Expenses of HP will be paid by the Company in
                  all Demand Registrations.

2.       Piggyback Registrations.

         (a)      If, at any time during which any Registrable Securities remain
                  outstanding,  the  Company  proposes  to  register  any of its
                  Common  Stock  under  the  Securities  Act in an  underwritten
                  public offering, other than pursuant to a registration on Form
                  S-8 or Form  S-4,  or any  similar  forms  then in  effect  (a
                  "Piggyback  Registration"),   the  Company  will  give  prompt
                  written  notice  to HP of  its  intention  to  effect  such  a
                  registration (the "Registration  Notice") and will, subject to
                  Sections  2(c) and  2(d),  include  in such  registration  all
                  Registrable Securities of HP with respect to which the Company
                  has received  written  requests for inclusion  therein  within
                  fifteen (15) days after the receipt of the  Company's  notice,
                  not to exceed a maximum  number of shares  for HP equal to the
                  product  obtained  when  HP's  pre-registration   holdings  of
                  Registrable  Securities  are  multiplied  by a  fraction,  the
                  numerator of which is the total  number of shares  proposed to
                  be sold in the  Piggyback  Registration  by all other  selling
                  shareholders  and  the  denominator  of  which  is  the  total
                  pre-transaction    shareholdings    of   all   other   selling
                  shareholders ("Pro Rata Fraction").

         (b)      The Registration Expenses of HP will be paid by the Company in
                  all Piggyback Registrations.

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         (c)      If a  Piggyback  Registration  includes  shares  to be sold on
                  behalf of the Company  ("Primary  Shares"),  and the  managing
                  underwriter or  underwriters  advise the Company that in their
                  opinion the number of  securities  requested to be included in
                  such registration exceeds the number which can be sold in such
                  offering   without   materially    adversely   affecting   the
                  marketability  of the  offering,  the Company  will include in
                  such  registration,  (i) first,  the  securities  the  Company
                  proposes to sell; and (ii) second, the Registrable  Securities
                  requested  to be included in such  registration  by HP and all
                  other   Common   Stock   requested  to  be  included  in  such
                  registration  (the "Other Common  Stock"),  to be included pro
                  rata on the basis of the  number of shares of such  securities
                  for which the  Company  has been given  written  requests  for
                  inclusion therein by each such holder thereof.

         (d)      If a  Piggyback  Registration  is  an  underwritten  secondary
                  registration on behalf of holders of the Company's  securities
                  (not including Primary Shares), and the managing  underwriters
                  advise the Company in writing that in their opinion the number
                  of  securities  requested to be included in such  registration
                  exceeds the number which can be sold in such offering  without
                  adversely  affecting the  marketability  of the offering,  the
                  Company  will  include in such  registration  (i)  first,  the
                  securities  requested  to be  included  therein by the holders
                  requesting  such  registration,  if any, and (ii) second,  the
                  Registrable  Securities  requested  to  be  included  in  such
                  registration  by HP and all Other Common Stock requested to be
                  included in such registration,  to be included pro rata on the
                  basis of the number of shares of such securities for which the
                  Company has been given written requests for inclusion  therein
                  by each such holder thereof.

3. Holdback Agreements.  HP agrees not to effect any public sale or distribution
(including sales pursuant to Rule 144) of equity  securities of the Company,  or
any  securities  convertible  into  or  exchangeable  or  exercisable  for  such
securities,  during the seven (7) days  prior to and the  earlier of (a) the one
hundred  and eighty  (180) day period  beginning  on the  effective  date of any
Demand  Registration or Piggyback  Registration in which Registrable  Securities
are included  (except as part of such  underwritten  registration),  and (b) the
time period for which all executive  officers and directors of the Company agree
to be bound pursuant to similar agreements, or such shorter term period to which
the underwriters managing the registered public offering otherwise agree.

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4. Registration Procedure. The Company will effect the registration and the sale
of such  Registrable  Securities  in  accordance  with  the  provisions  of this
Agreement,  and pursuant  thereto the Company will, as expeditiously as possible
but subject to the terms hereof:

         (a)      Prepare and file with the SEC a  Registration  Statement  with
                  respect to such Registrable Securities on such appropriate and
                  legally  available form as the Company in its discretion shall
                  elect (the "Registration  Statement") and use all commercially
                  reasonable  efforts to cause such  Registration  Statement  to
                  become  effective  within 30 days of any  request for a Demand
                  Registration  (provided  that  before  filing  a  Registration
                  Statement  or  prospectus  or any  amendments  or  supplements
                  thereto,  the Company will furnish to the counsel selected and
                  paid for by HP copies  of all such  documents  proposed  to be
                  filed).  Notwithstanding  anything in this Agreement, the Note
                  or  the  Note  Purchase  Agreement  to  the  contrary,  if the
                  Registration Statement does not become effective within thirty
                  (30) days of a request for a Demand  Registration,  and if the
                  conversion  was the result of the  Company's  exercise  of its
                  conversion  rights  pursuant to Section 6(b) of the Note,  the
                  Company's  election to convert  outstanding  Obligations under
                  the Note, as provided for therein,  which conversion has given
                  rise  to  said  request  for  Demand  Registration,  shall  be
                  ineffective,  and the  Obligations  (as  defined  in the Note)
                  which the Company had sought to convert shall be reinstated as
                  if the  Company  had not  elected to convert  pursuant  to the
                  terms of the Note;

         (b)      Prepare and file with the SEC such  amendments and supplements
                  to such  Registration  Statement  and the  prospectus  used in
                  connection therewith (the "Prospectus") as may be necessary to
                  keep such Registration Statement effective for a period of not
                  less than one hundred and eighty (180) days from the effective
                  date  of  the  Registration  Statement  and  comply  with  the
                  provisions  of  the   Securities   Act  with  respect  to  the
                  disposition  of all  securities  covered by such  Registration
                  Statement during such period;

         (c)      Furnish  HP  such  number  of  copies  of  such   Registration
                  Statement,   each  amendment  and  supplement   thereto,   the
                  Prospectus included in such Registration  Statement (including
                  each  preliminary  Prospectus)  and such other documents as HP
                  may reasonably  request in order to facilitate the disposition
                  of the Registrable Securities;

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         (d)      Use all commercially reasonable efforts to register or qualify
                  such  Registrable  Securities under the securities or blue sky
                  laws of  such  states  and  the  District  of  Columbia  as HP
                  reasonably  requests  and do any and all other acts and things
                  which  may  be   reasonably  or  advisable  to  enable  HP  to
                  consummate the  disposition in such states and the District of
                  Columbia of the Registrable  Securities  owned by HP (provided
                  that the Company will not be required to (i) qualify generally
                  to  do  business  in  any  jurisdiction  where  it  would  not
                  otherwise be required to qualify but for this  subsection (d),
                  (ii) subject  itself to taxation in any such  jurisdiction  or
                  (iii)  consent  to  general  service  of  process  in any such
                  jurisdiction);

         (e)      Notify HP of the  happening  of any event of which the Company
                  becomes aware, as a result of which the Prospectus included in
                  such Registration  Statement contains an untrue statement of a
                  material  fact  or  omits  any  fact  necessary  to  make  the
                  statements  therein  not  misleading,  and  the  Company  will
                  prepare a supplement  or amendment to the  Prospectus so that,
                  as thereafter  delivered to the purchasers of such Registrable
                  Securities,   such  Prospectus  will  not  contain  an  untrue
                  statement  of a  material  fact  or  omit to  state  any  fact
                  necessary to make the statements therein not misleading;

         (f)      Cause  all such  Registrable  Securities  to be listed on each
                  securities  exchange on which similar securities issued by the
                  Company are then listed;

         (g)      Otherwise use all  commercially  reasonable  efforts to comply
                  with all applicable rules and regulations of the SEC, and make
                  available  to its  security  holders,  as soon  as  reasonably
                  practicable,  an earnings  statement covering the period of at
                  least  twelve  months  beginning  with  the  first  day of the
                  Company's first full calendar quarter after the effective date
                  of the Registration Statement,  which earnings statement shall
                  satisfy the  provisions of Section 11(a) of the Securities Act
                  and Rule 158 thereunder; and

         (h)      In the event of the issuance of any stop order  suspending the
                  effectiveness  of a  Registration  Statement,  or of any order
                  suspending or preventing the use of any related  Prospectus or
                  suspending the  qualification  of any Common Stock included in
                  such Registration Statement for sale in any jurisdiction,  the
                  Company will use all commercially  reasonable efforts promptly
                  to obtain the withdrawal of such order.

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5.       HP Procedures.

         (a)      In connection with any Registration Statement, the Company may
                  require  HP  to  furnish  to  the  Company  such   information
                  regarding  HP and its  proposed  distribution  of  Registrable
                  Securities,  to  the  extent  necessary  to  comply  with  the
                  Securities   Act,  as  the  Company  may  from  time  to  time
                  reasonably request in writing.

         (b)      HP agrees to  cooperate  with the  Company  in all  reasonable
                  respects in connection with the preparation and filing of each
                  Registration   Statement  and  any  amendment   thereof,   any
                  Prospectus  relating  thereto  and any  Prospectus  supplement
                  relating  thereto  with  respect  to the  offer  and  sale  of
                  Registrable Securities of HP.

6.  Registration  Expenses.  All  expenses  incident  to the  Company's  or HP's
performance  of  or  compliance   with  this   Agreement,   including  all  NASD
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, listing fees, printing expenses, messenger and delivery expenses,
and fees and  disbursements  of  counsel  for the  Company  and all  independent
certified  public  accountants,  and  other  Persons  retained  by the  Company,
including  all  consultants,  advisors,  and  experts  fees and  expenses of the
Company of the type ordinarily  incurred in connection with the  registration of
securities (all such expenses being herein called "Registration Expenses"), will
be borne by the Company;  provided that Registration Expenses shall not include,
and HP shall vis a vis the other selling  stockholders,  pay its  respective Pro
Rata  Fraction of, all  underwriting  discounts  and  commissions  applicable to
Registrable  Securities sold by it pursuant to this Agreement and all legal fees
and expenses of counsel,  consultants,  advisors and experts retained by HP. Any
Registration  Expenses  not  so  allocable  will  be  borne  by all  sellers  of
securities  included in such registration in proportion to the aggregate selling
price of the securities to be so registered.

7.       Indemnification and Contribution.

         (a)      The Company shall indemnify and hold harmless,  to the fullest
                  extent  permitted  by law,  HP,  against all  losses,  claims,
                  damages,  liabilities and expenses (including  reasonable fees
                  and legal expenses)  resulting from any untrue  statement of a
                  material fact  contained in the  Registration  Statement,  any
                  Prospectus,  or any  amendment or supplement  thereto,  or any
                  omission of a material fact  required to be stated  therein or
                  necessary  to make  the  statements  therein,  in light of the
                  circumstances  under  which  they were made,  not  misleading,
                  except in each case  insofar  as the same  arises out of or is
                  based  upon  an  untrue  statement  of a  material

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                  fact  or  an  omission  to  state  a  material  fact  in  such
                  Registration Statement,  Prospectus,  amendment or supplement,
                  as the case may be,  made or  omitted,  as the case may be, in
                  reliance  upon  and in  conformity  with  written  information
                  furnished  to the  Company  by HP for use  therein  or by HP's
                  failure to  deliver a copy of the  Registration  Statement  or
                  Prospectus or any amendments or supplements  thereto after the
                  Company has furnished HP with a sufficient number of copies of
                  the same.

         (b)      HP shall  indemnify  and hold  harmless to the fullest  extent
                  permitted  by  law,  the  Company,  its  officers,  directors,
                  employees,  representatives  and  agents,  and each Person who
                  controls  (within  the  meaning  of the  Securities  Act)  the
                  Company, against all losses, claims, damages,  liabilities and
                  expenses  (including  reasonable  costs of  investigation  and
                  legal  expenses)  resulting  from any  untrue  statement  of a
                  material fact  contained in any  Registration  Statement,  any
                  Prospectus,  or any  amendment or supplement  thereto,  or any
                  omission of a material fact  required to be stated  therein or
                  necessary  to make  the  statements  therein,  in light of the
                  circumstances  under which they were made, not misleading,  to
                  the extent the same  arises out of or is based upon any untrue
                  statement  of a  material  fact  or any  omission  to  state a
                  material  fact in  such  Registration  Statement,  Prospectus,
                  amendment or supplement,  as the case may be, made or omitted,
                  as the case may be in  reliance  upon and in  conformity  with
                  written  information  furnished  to the  Company by HP for use
                  therein.

         (c)      Each party  entitled to  indemnification  under this Section 7
                  (the  "Indemnified  Party")  shall  give  notice  to the party
                  required to provide indemnification (the "Indemnifying Party")
                  promptly after such Indemnified  Party has actual knowledge of
                  any  claim as to which  indemnity  may be  sought,  and  shall
                  permit the  Indemnifying  Party to assume  the  defense of any
                  such claim or any litigation  resulting  therefrom;  provided,
                  that counsel for the Indemnifying  Party, who will conduct the
                  defense  of such  claim  or  litigation,  is  approved  by the
                  Indemnified  Party (whose  approval  will not be  unreasonably
                  withheld or delayed);  and provided further,  that the failure
                  of any  Indemnified  Party to give notice as  provided  herein
                  shall not relieve the  Indemnifying  Party of its  obligations
                  except  to  the  extent  that  its  defense  of the  claim  or
                  litigation  involved is prejudiced by such failure;  provided,
                  however,  that the  Indemnified  Party shall have the right to
                  retain one separate counsel,  with the fees and expenses to be
                  paid by the  Indemnifying  Party,  if  representation  of such
                  Indemnified  Party by the

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                  counsel   retained   by  the   Indemnifying   Party  would  be
                  inappropriate  due to the  conflicted  interests  between such
                  Indemnified Party and the Indemnifying  Party. The Indemnified
                  Party may  participate  in such  defense  at such  Indemnified
                  Party's expense.  No Indemnifying Party, in the defense of any
                  such claim or  litigation,  except  with the prior  consent of
                  each Indemnified Party, shall consent to entry of any judgment
                  or enter  into any  settlement  that  does not  include  as an
                  unconditional  term  thereof  the  giving by the  claimant  or
                  plaintiff  to such  Indemnified  Party of a  release  from all
                  liability  in  respect  to any  claim  or  litigation,  and no
                  Indemnified  Party will  consent to entry of any  judgment  or
                  settle  any claim or  litigation  without  the  prior  written
                  consent of the  Indemnifying  Party.  Each  Indemnified  Party
                  shall furnish such information regarding himself,  herself, or
                  itself and the claim in question as the Indemnifying Party may
                  reasonably  request  and as shall be  reasonably  required  in
                  connection  with the  defense  of such  claim  and  litigation
                  resulting therefrom.

         (d)      If for any reason  the  indemnification  provided  for in this
                  Section  7 from  an  Indemnifying  Party,  although  otherwise
                  applicable by its terms, is determined by a court of competent
                  jurisdiction  to  be  unavailable  to  an  Indemnified   Party
                  hereunder,   then   the   Indemnifying   Party,   in  lieu  of
                  indemnifying such Indemnified  Party,  shall contribute to the
                  amount paid or payable by the Indemnified  Parties as a result
                  of such losses,  claims,  damages,  liabilities or expenses in
                  such  proportion  as is  appropriate  to reflect the  relative
                  fault of such Indemnifying  Party and the Indemnified  Parties
                  in  connection  with the actions that resulted in such losses,
                  claims,  damages,  liabilities,  or  expenses,  as well as any
                  other relevant equitable considerations. The relative fault of
                  such Indemnifying  Party and the Indemnified  Parties shall be
                  determined by reference  to, among other  things,  whether any
                  action  in  question,  including  any  untrue  statement  of a
                  material  fact,  has been made by, or relates  to  information
                  supplied  by,  such  Indemnifying  Party  or  the  Indemnified
                  Parties, and the parties' relative intent,  knowledge,  access
                  to  information  and  opportunity  to correct or prevent  such
                  action.  The amount  paid or payable by a party as a result of
                  the losses, claims, damages, liabilities and expenses referred
                  to  above  shall  be  deemed  to   include,   subject  to  the
                  limitations set forth in Section 7(c), any legal or other fees
                  or expenses  reasonably  incurred by such party in  connection
                  with any investigation or proceeding.

8. Participation in Underwritten Registrations. No Person may participate in any
registration  hereunder which is  underwritten  unless such Person (a) agrees to
sell  such

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Person's  securities  on the basis  provided  in any  underwriting  arrangements
approved  by the  Company  and other  Person or Persons  entitled  hereunder  to
approve such  arrangements  and (b) completes  and executes all  questionnaires,
powers  of  attorney,  share  custody  agreements,   indemnities,   underwriting
agreements and other  documents  required  under the terms of such  underwriting
arrangements.

9.  Compliance  with Rule 144.  To the extent the  Company is a publicly  traded
company and with a view to making  available  to HP the benefits of Rule 144 and
any other rule or  regulation  of the SEC that may at any time permit HP to sell
securities of the Company to the public  without  registration  or pursuant to a
registration  on Form S-3,  the Company  agrees to use  commercially  reasonable
efforts to:

         (a)      Make and keep public information available, as those terms are
                  understood and defined in Rule 144, at all times;

         (b)      File with the SEC in a timely  manner  all  reports  and other
                  documents required of the Company under the Securities Act and
                  the Securities Exchange Act; and

         (c)      Furnish to HP, so long as HP owns any Registrable  Securities,
                  promptly  upon request (i) a written  statement by the Company
                  that it has complied  with the reporting  requirements  of the
                  Securities  Exchange Act, or that it qualifies as a registrant
                  whose  securities  may be resold  pursuant to Form S-3 (at any
                  time after it so  qualifies),  (ii) a copy of the most  recent
                  annual or  quarterly  report  of the  Company  and such  other
                  reports and documents so filed by the Company,  and (iii) such
                  other  information as may be reasonably  requested in availing
                  HP of any  rule or  regulation  of the SEC  that  permits  the
                  selling  of  any  such  securities  without   registration  or
                  pursuant to such Form S-3.

10.      Definitions.

         (a)      "Agreement" has the meaning set forth in the preamble.

         (b)      "Common  Stock" means the  Company's  Common  Stock,  $.01 par
                  value per share.

         (c)      "Company" has the meaning set forth in the preamble.

         (d)      "Demand  Registrations"  has the  meaning set forth in Section
                  1(a).

         (e)      "HP" has the meaning set forth in the preamble.

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         (f)      "Indemnified Party" has the meaning set forth in Section 7(c).

         (g)      "Indemnifying  Party"  has the  meaning  set forth in  Section
                  7(c).

         (h)      "Long-Form  Registration" has the meaning set forth in Section
                  1(a).

         (i)      "Note" has the meaning set forth in the recitals.

         (j)      "Note  Purchase  Agreement"  has the  meaning set forth in the
                  recitals.

         (k)      "Other  Common  Stock"  has the  meaning  set forth in Section
                  2(c).

         (l)      "Person"  means  any  natural  person  and  any   corporation,
                  partnership,  limited  liability  company  or  other  business
                  entity.

         (m)      "Piggyback  Registration" has the meaning set forth in Section
                  2(a).

         (n)      "Primary Shares" has the meaning set forth in Section 2(c).

         (o)      "Pro Rata Fraction" has the meaning set forth in Section 2(a).

         (p)      "Prospectus" has the meaning set forth in Section 4(b).

         (q)      "Registrable  Securities"  means,  with respect to HP, (i) the
                  Common Stock  issued to HP upon  conversion  of the Note,  and
                  (ii) any Common  Stock or other  equity  securities  issued or
                  issuable with respect to the securities  referred to in clause
                  (i) by way of a stock dividend or stock split or in connection
                  with  a  combination  of  shares,  recapitalization,   merger,
                  consolidation  or other  reorganization.  As to any particular
                  Registrable  Securities,  such  securities  will  cease  to be
                  Registrable  Securities (A) when they have been distributed to
                  the  public  pursuant  to an  offering  registered  under  the
                  Securities Act or (B) after the Registrable Securities held by
                  HP first become  eligible for sale all at one time in a single
                  sale pursuant to Rule 144 (or any similar rule then in force).

         (r)      "Registration  Expenses"  has the meaning set forth in Section
                  6(a).

         (s)      "Registration  Notice"  has the  meaning  set forth in Section
                  2(a).

         (t)      "Registration  Statement" has the meaning set forth in Section
                  4(a).

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         (u)      "Rule  144" means Rule 144  promulgated  under the  Securities
                  Act, as such Rule may be amended from time to time.

         (v)      "SEC" means the Securities and Exchange Commission.

         (w)      "Securities Act" means the Securities Act of 1933, as amended.

         (x)      "Securities Exchange Act" means the Securities Exchange Act of
                  1934, as amended.

         (y)      "Short-Form Registration" has the meaning set forth in Section
                  1(a).

11.      Miscellaneous.

         (a)      Amendments and Waivers.  Except as otherwise  provided herein,
                  the provisions of this Agreement may be amended or waived only
                  upon the prior written consent of the Company and HP.

         (b)      Successors  and Assigns.  All covenants and agreements in this
                  Agreement  by or on behalf of any of the  parties  hereto will
                  bind and inure to the benefit of the respective successors and
                  permitted assigns.

         (c)      Severability.   Whenever  possible,  each  provision  of  this
                  Agreement  will  be  interpreted  in  such  manner  as  to  be
                  effective and valid under applicable law, but if any provision
                  of this Agreement is held to be prohibited by or invalid under
                  applicable law, such provision will be ineffective only to the
                  extent of such prohibition or invalidity, without invalidating
                  the remainder of this Agreement.

         (d)      Counterparts. This Agreement may be executed simultaneously in
                  two or more  counterparts,  any one of which need not  contain
                  the   signatures  of  more  than  one  party,   but  all  such
                  counterparts  taken together will  constitute one and the same
                  agreement.

         (e)      Descriptive   Headings.   The  descriptive  headings  of  this
                  Agreement  are  inserted  for  convenience  only  and  do  not
                  constitute a part of this Agreement

         (f)      Governing  Law.  This  Agreement  shall  be  governed  by  and
                  construed in accordance with the internal law, and not the law
                  of conflicts, of Delaware.

                                       12
<PAGE>

         (g)      Waiver  of  Jury  Trial.   The  Company  and  HP  each  hereby
                  irrevocably  waives  any and all right to trial by jury in any
                  legal proceeding  arising out of or relating to this Agreement
                  or the transactions  contemplated  hereby,  whether the claims
                  raised in such  proceeding  are based on  contract,  tort,  or
                  otherwise.

         (h)      Notices. Any notice,  request, or other communication required
                  or permitted hereunder shall be in writing and shall be deemed
                  to have been duly given on the date of delivery if  personally
                  delivered,  or the  date of being  faxed if sent by  confirmed
                  fax,  on the first  business  day after  being sent if sent by
                  recognized  overnight  courier,  and on the third business day
                  after being mailed if sent by  registered  or certified  mail,
                  postage  prepaid,  addressed (i) if to HP, to  Hewlett-Packard
                  Company,  Financing &  Complements  Group,  333 Logue  Avenue,
                  Mountain  View,  CA 94043,  Attention:  General  Manager,  Fax
                  Number 650-919-8013,  with a copy to Hewlett-Packard  Company,
                  3000 Hanover Street, MS: 20BQ, Palo Alto,  California,  94304,
                  Attention:  Legal Department, Fax Number (650) 857-4392, or to
                  such other  address as HP shall have  furnished to the Company
                  in writing as provided herein, or (ii) if to the Company,  to:
                  SmartServ Online, Inc., One Station Place, Stamford, CT 06902,
                  Attention:   Chief  financial  Officer  and  General  Counsel,
                  facsimile  (203)353-5962,  or to  such  other  address  as the
                  Company  shall have  furnished  to HP in  writing as  provided
                  herein.

         IN WITNESS WHEREOF,  the parties have executed this Registration Rights
Agreement as of the date first written above.

COMPANY:                                    HP:

SMARTSERV ONLINE, INC.                      HEWLETT-PACKARD COMPANY

By: /s/ Thomas W. Haller                    By: /s/ Craig A. White
   -----------------------------                 ---------------------------
Name:   Thomas W. Haller                    Name:  Craig A. White
   -----------------------------                 ---------------------------
Title: Vice President, Chief                Title: Vice President & GM
        Accounting Officer                       ---------------------------CONVERTIBLE

                    SECURED U.S. $20,000,000 PROMISSORY NOTE

                            DATED: SEPTEMBER 28, 2000

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                               <C>
1.       Definitions...............................................................................1
         -----------

2.       Loans; Payments; Prepayment; and Status of Obligations....................................4
         ------------------------------------------------------

3.       Grant of Security Interest................................................................5
         --------------------------

4.       Events of Default.........................................................................6
         -----------------

5.       Rights and Remedies of HP upon Default....................................................7
         --------------------------------------

6.       Conversion................................................................................8
         ----------

7.       Conversion Adjustments...................................................................10
         ----------------------

8.       Representations and Warranties...........................................................13
         ------------------------------

9.       Covenants Relating to Collateral.........................................................13
         --------------------------------

10.      Affirmative Covenants....................................................................14
         ---------------------

11.      Negative Covenants.......................................................................15
         ------------------

12.      Successors and Assigns...................................................................15
         ----------------------

13.      Notices..................................................................................15
         -------

14.      Usury....................................................................................16
         -----

15.      Governing Law............................................................................16
         -------------
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                              <C>
16.      Waiver of Jury Trial.....................................................................16
         --------------------

17.      Waivers..................................................................................16
         -------

18.      Waivers and Amendments...................................................................16
         ----------------------

19.      Remedies Cumulative......................................................................16
         -------------------

20.      Expenses.................................................................................16
         --------

21.     No Offset................................................................................16
        ---------
</TABLE>

SCHEDULE A        Transactions on Note
SCHEDULE B        Conditions to Funding
SCHEDULE C        Collateral
SCHEDULE D        Drawdown Schedule

ATTACHMENT 1      Operating Plan and Projections as of August 16, 2000

                                       ii

<PAGE>

THIS NOTE AND THE  SECURITIES  REPRESENTED  HEREUNDER  HAVE NOT BEEN  REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED WITHOUT A REGISTRATION  STATEMENT OR AN OPINION OF
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

                               CONVERTIBLE SECURED
                        U.S. $20,000,000 PROMISSORY NOTE

                            Dated: September 28, 2000

         FOR VALUE RECEIVED,  SmartServ  Online,  Inc., a Delaware  corporation,
(the  "Company"),  promises  to  pay  to  Hewlett-Packard  Company,  a  Delaware
corporation,  and its  successors  and assigns  ("HP"),  in lawful  money of the
United  States of America and in  immediately  available  funds,  the  aggregate
unpaid  principal amount of all advances (each such advance being a "Loan") made
hereunder as set forth on Schedule A attached hereto and incorporated  herein by
reference,  as the same may from time to time be modified  or amended,  together
with accrued and unpaid interest thereon,  each due and payable on the dates and
in the manner set forth in this Note. The Company  hereby  authorizes HP to list
on Schedule A all advances made by HP hereunder,  which notations  shall, in the
absence of manifest error, be conclusive; provided, however, that the failure to
make a notation or the  inaccuracy of the notation  shall not limit or otherwise
affect the obligations of the Company under this Note. Subject to the provisions
of Sections 2, 5 and 6 below,  all  outstanding  principal  and unpaid  interest
shall be due and payable on the Maturity Date (as defined below).  This Note has
been  issued  pursuant  to the terms of a Note  Purchase  Agreement  (as defined
below).

         The following is a statement of the rights of HP and the  conditions to
which this Note is subject, and to which HP agrees:

1. Definitions.  As used in this Note, the following  capitalized terms have the
following meanings:

         "Capital Stock" shall mean the capital stock of the Company.

         "Capital Stock  Equivalents"  shall have the meaning given to that term
in Section 7(a).

         "Certificate"  shall  mean  the  Certificate  of  Incorporation  of the
Company as the same may be amended or restated from time to time.

                                       1
<PAGE>

         "Change of Control" shall mean, with respect to the Company on or after
the date hereof,  (i) that any change in the composition of the  shareholders of
the Company as of the date hereof  shall occur which would  result in any person
or entity (or group of persons or  entities  acting in  concert),  acquiring  in
excess of fifty  percent (50 %) of the votes  attaching in the  aggregate to all
classes  of  Capital  Stock of the  Company  which  carry  voting  rights in all
circumstances,  or (ii)  that any  person  or entity  (or  group of  persons  or
entities  acting in  concert)  shall  otherwise  acquire the power to direct the
management or affairs of the Company by obtaining proxies,  entering into voting
agreements or trusts, acquiring securities or otherwise.

         "Collateral" shall have the meaning given to that term in Section 3.

         "Common  Stock" shall mean the Common  Stock of the  Company,  $.01 par
value.

         "Company"  shall  have  the  meaning  set  forth  in  the  introductory
paragraph.

         "Conversion Price" shall have the meaning given to that term in Section
6(a).

         "Effective Date" shall mean September 28, 2000.

         "Event of Default" shall have the meaning given to that term in Section
4.

         "Exchange  Event" shall have the meaning  given to that term in Section
7(d).

         "HP" shall have the meaning set forth in the introductory paragraph.

         "Loan" shall have the meaning set forth in the introductory paragraph.

         "Maturity Date" shall mean September 28, 2003.

         "Note" shall mean this Convertible Secured U.S. $20,000,000  Promissory
Note.

         "Note  Purchase  Agreement"  shall mean that Note  Purchase  Agreement,
dated as of this date, between the Company and HP.

                                       2
<PAGE>

         "Obligations"  shall  mean and  include  all  loans,  advances,  debts,
liabilities and  obligations,  howsoever  arising,  owed by the Company to HP of
every kind and  description  (whether or not evidenced by any note or instrument
and whether or not for the payment of money),  now existing or hereafter arising
under or pursuant to the Transaction Documents,  including, all Loans, interest,
fees, charges, expenses,  attorneys' fees and costs chargeable to and payable by
the Company hereunder and thereunder,  in each case, whether direct or indirect,
absolute or  contingent,  due or to become due, and whether or not arising after
the  commencement  of a proceeding  under Title 11 of the United States Code (11
U.S.C.,  Section  101  et  seq.),  as  amended  from  time  to  time  (including
post-petition  interest)  and whether or not allowed or  allowable as a claim in
any such proceeding.

         "Other  Transaction  Documents"  shall mean all  Transaction  Documents
other than this Note.

         "Permitted Liens" shall mean the following:

                  (1)      any  liens for  taxes,  fees,  assessments,  or other
                           governmental charges or levies, either not delinquent
                           or  being  contested  in good  faith  by  appropriate
                           proceedings;

                  (2)      liens (A) upon or in any  equipment  acquired or held
                           by the Company to secure the  purchase  price of such
                           equipment  or  indebtedness  incurred  solely  or the
                           purpose  of  financing   the   acquisition   of  such
                           equipment,  or (B) existing on such  equipment at the
                           time of its  acquisition,  provided  that the lien is
                           confined  solely  to the  property  so  acquired  and
                           improvements  thereon,  accessions  thereto  and  the
                           proceeds thereof;

                  (3)      liens on equipment  leased by the Company pursuant to
                           a capital  lease in the  ordinary  course of business
                           (including  proceeds thereof and accessions  thereto)
                           incurred  solely  for the  purpose of  financing  the
                           lease of such equipment;

                  (4)      liens  granted to secure any  indebtedness  senior to
                           that of HP;

                  (5)      liens  existing  as of the date hereof  disclosed  in
                           writing to, and approved by, HP;

                  (6)      liens  on  assets  of  the  Company  other  than  the
                           Collateral   granted   by  the   Company   to  secure
                           indebtedness  of  the  Company  in an  amount  not to
                           exceed $5,000,000 in the aggregate; and

                                       3
<PAGE>

                  (7)      liens associated with licensing rights granted by the
                           Company  to  Data  Transmission  Network  Corporation
                           pursuant to a Software License and Service  Agreement
                           dated April 23, 1998, as the same has been and may be
                           amended.

         "Registration  Rights  Agreement" shall mean that certain  Registration
Rights Agreement dated September 28, 2000, by and between the Company and HP.

         "Senior Lienholder" shall have the meaning set forth in Section 8(b).

         "Transaction  Documents" shall mean the Note Purchase  Agreement,  this
Note, the Registration  Rights Agreement and the UCC-1 financing  statements and
any other documents executed in connection with this Note.

         "UCC" shall mean the Uniform  Commercial Code as in effect in the State
of California,  as amended from time to time.  Unless otherwise  defined herein,
all terms defined in the UCC shall have the  respective  meanings given to those
terms in the UCC.

2.       Loans; Payments; Prepayment; and Status of Obligations.
         ------------------------------------------------------

         (a)      Loans.  This Note shall evidence the Company's  obligations to
                  repay the Loans outstanding hereunder. The Company may request
                  Loans hereunder from time to time until the first  anniversary
                  of this Note, in an aggregate  principal  amount not to exceed
                  $20,000,000;  provided,  that the  requirements  set  forth in
                  Schedule  B  are  met,  as   determined  by  HP  in  its  sole
                  discretion. The Company shall make such requests in amounts of
                  at least  $500,000  each,  and not more  often  than once each
                  thirty (30) calendar days, by submitting a written  request to
                  the HP not less  than  five  (5)  business  days  prior to the
                  desired funding date.

         (b)      Principal  and  Interest  Payments.   All  principal,   unpaid
                  interest  and  other  amounts  due  shall  be  payable  on the
                  Maturity  Date.  Interest  shall  accrue on the Loans from the
                  date of this Note at a rate per annum equal to eleven  percent
                  (11%).  Upon the occurrence  and during the  continuance of an
                  Event of Default  interest  shall accrue on the unpaid balance
                  at a rate per  annum  equal  to  twelve  and one half  percent
                  (12.5%). Interest shall be payable quarterly in arrears on the
                  first business day after the end of any quarter, commencing on
                  October 2, 2000, and shall accrue on all outstanding  interest
                  that has not yet been paid when due.  Unpaid accrued  interest
                  shall  be  added  to  the  principal  balance  hereunder  on a
                  quarterly  basis.  Interest  shall be computed on

                                       4
<PAGE>

                  the basis of the actual  number of days  elapsed and a year of
                  360 days.

         (c)      Payments.  The Company  will make all  payments due under this
                  Note  by  check  on the  date  such  payments  are  due to the
                  following address:

                                    Hewlett-Packard Company
                                    3585 Atlanta Avenue
                                    Hapeville, GA 30354
                                    Attn: REI/Lockbox 101511

                  or in any other manner that HP may from time to time direct.

         (d)      Prepayment.  The Company may prepay this Note upon the sale of
                  the Company or substantially all of its assets; provided, that
                  the Company  gives HP at least thirty (30) days' prior written
                  notice of such  prepayment.  The Company's option to prepay is
                  subject  to  HP's  right  to   convert  as   provided   below,
                  immediately  and at any time prior to the  expiration  of such
                  thirty-day notice period. Prepayments in part shall be applied
                  first to reimbursable fees and expenses, second to outstanding
                  interest, and third to principal.

         (e)      Right  to  Convert.  HP shall  have  the  right at any time to
                  convert the outstanding  principal and unpaid accrued interest
                  under this Note into  shares of the  Company's  Capital  Stock
                  pursuant to Section 6(a) below.

         (f)      Prepayment  at the Option of HP. In the event that the Company
                  enters into an agreement  approved by its Board of  Directors,
                  for:

                  (i)      the sale of all or substantially all of its assets or
                           intellectual property; or

                  (ii)     the  acquisition  of it by another entity or entities
                           which after such acquisition controls more than fifty
                           percent (50%) or more of the Company's voting shares;

                  then the Company shall give HP at least  forty-five  (45) days
                  prior written notice of such event, and at HP's option, HP may
                  either (A) exercise its conversion  rights pursuant to Section
                  6(a)  below,  or (B)  immediately  declare all amounts due and
                  owing under this Note due and payable upon  written  notice of
                  demand for prepayment given by HP to the Company within ninety
                  (90) days  after the date of notice  but in no event  prior to
                  the consummation of the transaction;  provided,  however, that
                  if such agreement is not consummated, HP may not take any such
                  action.

                                       5
<PAGE>

3. Grant of Security  Interest.  To secure the  Obligations,  the Company hereby
pledges  and  assigns to HP and grants to HP a security  interest  in all right,
title, and interests of the Company in and to the property described in Schedule
C hereto  (collectively and severally,  the  "Collateral"),  which Schedule C is
incorporated herein by this reference.

4. Events of Default. The occurrence of any of the following shall constitute an
"Event of Default" under this Note:

         (a)      Failure  to Pay.  The  Company  fails  to pay  any  principal,
                  interest or any fees or  expenses  when due under this Note or
                  the  Other  Transaction  Documents,  and  such  failure  shall
                  continue for a period of five (5) business  days after written
                  notice to the Company by HP; or

         (b)      Covenant Default. The Company shall default in the performance
                  of any of its obligations  hereunder or under any of the Other
                  Transactions   Documents  and  such  default  shall   continue
                  unremedied  for a period of fifteen (15)  business  days after
                  written notice to the Company by HP; or

         (c)      Representations and Warranties.  Any representation,  warranty
                  or  certification  made  herein  or in the  Other  Transaction
                  Documents  shall prove to have been false or misleading in any
                  material respect when made; or

         (d)      Voluntary  Bankruptcy or Insolvency  Proceedings.  The Company
                  shall  (i)  apply  for  or  consent  to the  appointment  of a
                  receiver,  trustee,  liquidator or custodian of itself or of a
                  substantial part of its property,  (ii) be unable, or admit in
                  writing  its  inability,  to pay its debts  generally  as they
                  mature, (iii) make a general assignment for the benefit of its
                  or any of its  creditors,  (iv) be dissolved or  liquidated in
                  full or in  part,  (v)  commence  a  voluntary  case or  other
                  proceeding seeking liquidation, reorganization or other relief
                  with  respect  to itself or its  debts  under any  bankruptcy,
                  insolvency  or other similar law now or hereafter in effect or
                  consent  to any  relief  or to the  appointment  of or  taking
                  possession  of its property by any official in an  involuntary
                  case or other  proceeding  commenced  against it, or (vi) take
                  any action for the purpose of effecting any of the  foregoing;
                  or

         (e)      Involuntary Bankruptcy or Insolvency Proceedings.  Proceedings
                  for the  appointment  of a receiver,  trustee,  liquidator  or
                  custodian  of the Company or of all or a  substantial  part of
                  its  property,  or an  involuntary

                                       6
<PAGE>

                  case or other proceedings seeking liquidation,  reorganization
                  or other relief with respect to the Company or its debts under
                  any  bankruptcy,  insolvency  or  other  similar  law  now  or
                  hereafter in effect shall be commenced and an order for relief
                  entered  or  such   proceeding   shall  not  be  dismissed  or
                  discharged within sixty (60) days of commencement; or

         (f)      Cross-Default.  The  Company  shall  default  under  any other
                  material  agreement,  note,  indenture,  instrument  or  other
                  contract  pursuant to which the Company has borrowed money and
                  such default shall result in the holder having accelerated the
                  maturity  of the  outstanding  indebtedness  under  such other
                  agreements  and,  if the  holder  or  other  party  to such an
                  agreement, note, indenture, instrument or other contract shall
                  be an  entity  other  than  HP or an  affiliate  of  HP,  such
                  indebtedness  shall  exceed  $500,000;  or the  Company  shall
                  default under any material  equipment lease  agreement,  which
                  shall  result  in  the  lessor  having  terminated  the  lease
                  arrangement; or

         (g)      Collateral.  A  material  portion of the  Collateral  is lost,
                  stolen,  substantially  damaged or destroyed and such material
                  portion of the  Collateral  is not covered in full by a policy
                  or policies of insurance as required by Section 10(d), or sold
                  or  encumbered,  or any levy,  seizure,  or attachment is made
                  upon the Collateral; or

5. Rights and Remedies of HP upon Default.  Upon the  occurrence  and during the
continuance  of any Event of Default under Sections 4 (a), (b), (c), (f), (g) or
(h)  above,  HP, by  written  notice to the  Company,  may  cease  making  Loans
hereunder,  and may declare all principal,  accrued and unpaid interest, and any
other amounts payable under the Transaction Documents, to be immediately due and
payable without  presentment,  demand,  protest or any other notice of any kind,
all of which are  waived by the  Company.  Upon the  occurrence  and  during the
continuance  of any Event of Default  described in Sections  4(d) or (e), HP may
immediately  and  without  notice,   cease  making  Loans  hereunder,   and  all
outstanding amounts payable by the Company under the Transaction Documents shall
automatically become immediately due and payable,  without presentment,  demand,
protest or any other notice of any kind, all of which are waived by the Company.

         In addition to any rights set forth in this Note,  upon the  occurrence
and  continuance of any Event of Default,  HP shall have the rights of a secured
creditor  under  the  UCC and  applicable  federal  law.  Without  limiting  the
generality  of the  foregoing,  HP may sell,  resell,  lease,  assign,  license,
sublicense, transfer or otherwise dispose of any or all of the Collateral in its
then  condition  or  following  any  commercially   reasonable   preparation  or
processing at public or private sale, by one or more  contracts,  in one or more
parcels,  at the same or different times, or for cash or

                                       7
<PAGE>

credit, all as HP deems reasonably  advisable.  HP shall have the right upon any
such public sale,  and, to the extent  permitted  by law,  upon any such private
sale, to purchase the whole or any part of the  Collateral so sold.  The Company
hereby agrees that the sending of notice by ordinary mail,  postage prepaid,  to
the address of the Company set forth herein, of the place and time of any public
sale or of the time after which any private sale or other  intended  disposition
is to be made, shall be deemed  reasonable notice thereof if such notice is sent
ten days prior to the date of such sale or other  disposition  or the date on or
after which such sale or other disposition may occur.

6.       Conversion

         (a)      Optional  Conversion by HP. HP shall have the right,  prior to
                  the Maturity Date, by providing written notice to the Company,
                  to convert  all, or some,  of the  outstanding  principal  and
                  unpaid  accrued  interest  under this Note into  shares of the
                  Common Stock at a price equal to the lower of $49.50 per share
                  or the  average of the  closing  sale  price of the  Company's
                  Common  Stock over the twenty (20)  trading  days prior to the
                  Effective Date, subject to adjustment as provided in Section 7
                  below (the "Conversion Price").

         (b)      Mandatory  Conversion by HP.  Subject to the terms hereof,  so
                  long  as no  Event  of  Default  shall  have  occurred  and be
                  continuing,  the  Company  shall have the  right,  at any time
                  after six (6) months  after the initial  draw-down of funds by
                  Company under the Note, by providing  written notice to HP, to
                  require HP to convert some or all of the outstanding principal
                  and unpaid  accrued  interest  under this Note into  shares of
                  Common Stock at the Conversion Price, subject to adjustment as
                  provided in Section 7 below, as follows:

                  (i) If the closing  sale price of the  Company's  Common Stock
                  exceeds 150% of the Conversion  Price for at least twenty (20)
                  trading days during the thirty (30)  consecutive  trading days
                  immediately  prior to such notice of  conversion,  the Company
                  may  require  HP  to  convert   fifty  percent  (50%)  of  the
                  outstanding principal and unpaid interest under this Note; and

                  (ii) If the closing sale price of the  Company's  Common Stock
                  exceeds 200% of the Conversion  Price for at least twenty (20)
                  trading days during the thirty (30)  consecutive  trading days
                  immediately  prior  to such  notice  of  conversion,  then the
                  Company  may  require  HP  to  convert  all  the   outstanding
                  principal and unpaid interest under this Note.

                  (iii)  Notwithstanding the foregoing,  the Company may require

                                       8
<PAGE>

                  conversion  pursuant to this  Section  6(b) only to the extent
                  that the number of shares of Common Stock  issuable to HP upon
                  such  conversion  does not exceed fifteen percent (15%) of the
                  average  daily number of shares of Common Stock traded  during
                  the thirty (30) -day period immediately  preceding the date of
                  such conversion.

         (c)      Mechanics  and  Effect  of  Conversion.   Promptly  after  the
                  conversion  of  this  Note,  HP  shall  surrender  this  Note,
                  endorsed,  at the principal office of the Company.  As soon as
                  possible (or as otherwise  noted in the provisions  above) and
                  after HP has executed  documentation  necessary to satisfy all
                  applicable  federal and state securities laws exemptions,  the
                  Company shall issue and deliver to HP at its principal  office
                  a  certificate  or, if HP so  requests,  certificates  for the
                  number of shares of  Capital  Stock  into  which  this Note is
                  convertible  to which HP shall  be  entitled  upon  conversion
                  (bearing  such legends as are required by  applicable  federal
                  and state  securities  laws in the  opinion  of counsel to the
                  Company).  All such shares  shall be issued and fully paid and
                  non-assessable,  and  free  and  clear  of  all  liens.  If HP
                  converts less than all of the amounts payable under this Note,
                  the Company  shall issue a  replacement  note or notes for the
                  remaining balance containing terms substantially  identical to
                  this Note.

         (d)      Registration.   Common  Stock  received  by  HP  need  not  be
                  registered  under  federal  and state  securities  laws  until
                  thirty (30) days after issuance of such Common Stock to HP, by
                  which  time the  Company  covenants  to have  registered  such
                  Common Stock or have  otherwise  provided HP with Common Stock
                  registered  under  federal  securities  laws  and  registered,
                  qualified or exempt under  applicable  state or blue sky laws.
                  The  Company  shall  also do any and all other acts and things
                  which  may  be   reasonable  or  advisable  to  enable  HP  to
                  consummate the  disposition in such states and the District of
                  Columbia.  Upon the effective  date of any  registration,  the
                  Company shall,  upon written request from HP, deliver to HP an
                  opinion of counsel , in form and substance satisfactory to HP,
                  stating,   among  other  things,  that  the  Common  Stock  so
                  registered is subject to an effective  registration  statement
                  and is freely  tradable  subject  to  compliance  by HP or its
                  broker  with  any  prospectus  delivery   requirements.   HP's
                  registration  rights in  connection  with the shares of Common
                  Stock  into  which  this  Note may be  converted  are  further
                  described in the Registration Rights Agreement.

         (e)      Right to Convert.  HP's right to convert shall  terminate upon
                  the sale by the Company of substantially  all of its assets or
                  the merger or

                                       9
<PAGE>

                  consolidation  of the Company with another person or entity in
                  which the Company is not the surviving  entity (except for any
                  transaction  done  solely  for the  purpose  of  changing  the
                  Company's  state of  incorporation),  provided  in either case
                  that HP is  given at least 30  business  days'  prior  written
                  notice of such event so that HP may  exercise  its  conversion
                  rights as provided .

7.       Conversion Adjustments.

         (a)      Adjustments  for Stock Splits and  Subdivisions.  In the event
                  the  Company,  at any time from time to time after the date of
                  issuance hereof,  while this Note is outstanding,  (i) fixes a
                  record  date to effect a split or  subdivision  of the Capital
                  Stock into which this Note is convertible,  or (ii) determines
                  that the holders of such class or series of shares is entitled
                  to  receive  a  dividend  or  other  distribution  payable  in
                  additional  shares of such class or series or other securities
                  or rights convertible into, or entitling the holder to receive
                  directly  or  indirectly,  additional  shares of such class or
                  series  other  than  options to  purchase  the  Capital  Stock
                  ("Capital   Stock   Equivalents")   without   payment  of  any
                  consideration by such holder for the additional shares of such
                  class or series or the Capital Stock  Equivalents  (including,
                  if convertible preferred stock or other convertible securities
                  have been issued,  the additional  shares of the Capital Stock
                  issuable  upon  conversion  thereof),  then, as of such record
                  date  (or the  date of such  dividend  distribution,  split or
                  subdivision if no record date is fixed),  the Conversion Price
                  shall be  appropriately  decreased and the number of shares of
                  the Capital Stock issuable upon  conversion of this Note shall
                  be increased in  proportion  to such  increase of  outstanding
                  shares.

         (b)      Adjustments  for Reverse Stock  Splits.  If, at any time after
                  the effective  date, the number of  outstanding  shares of the
                  Capital Stock into which this Note is convertible is decreased
                  by a combination  of the  outstanding  shares of such class or
                  series,  then,  following the record date of such combination,
                  the Conversion Price shall be appropriately  increased and the
                  number of shares of the Capital  Stock  issuable on conversion
                  shall  be  appropriately   decreased  in  proportion  to  such
                  decrease in outstanding shares.

         (c)      Merger,  Sale of  Assets.  If at any time  while the Loans are
                  outstanding there shall be (i) a reorganization  (other than a
                  combination,  reclassification,  exchange  or  subdivision  of
                  shares  otherwise  provided  for  herein),  (ii) a  merger  or
                  consolidation  of the Company with or into  another  entity in
                  which the Company is not the  surviving  entity,  or a

                                       10
<PAGE>

                  reverse   triangular  merger  in  which  the  Company  is  the
                  surviving   entity  but  the  shares  of  the  Capital   Stock
                  outstanding  immediately  prior to the merger are converted by
                  virtue of the merger into other property,  whether in the form
                  of securities,  cash or otherwise, or (iii) a sale or transfer
                  of the Company's  properties  and assets as, or  substantially
                  as, an entirety to any other person or persons  (which  person
                  or persons  shall,  for purposes of this Note, be considered a
                  successor  to the  Company  even if for  other  purposes  such
                  person or persons would not be deemed a successor)  (each,  an
                  "Exchange  Event"),  then, as a part of such  Exchange  Event,
                  lawful  provision shall be made so that the successor  company
                  assumes  the  terms and  obligations  of this Note in a manner
                  that provides that HP shall  thereafter be entitled to receive
                  upon  proper  conversion  of  this  Note,  during  the  period
                  specified herein and upon payment at the Conversion Price then
                  in effect, (A) to the extent the consideration received by the
                  Company  or  its  shareholders  consists  of  stock  or  other
                  securities,  the number of shares of stock or other securities
                  of the successor company  resulting from such  reorganization,
                  merger, consolidation,  sale or transfer which a holder of the
                  shares  deliverable  upon  conversion  of this Note would have
                  been entitled to receive in such  Exchange  Event if this Note
                  had been converted  immediately  prior to such Exchange Event,
                  and (B) to the extent that the  consideration  received by the
                  Company or its  shareholders  in connection with such Exchange
                  Event consists of cash or property other than securities,  the
                  cash or  property  other than  securities  to which the holder
                  would  have  been  entitled  if this  Note had been  converted
                  immediately  prior to the record date taken in connection with
                  such  Exchange  Event,  in both  cases (A) and (B)  subject to
                  further   adjustment  as  provided  in  this  Section  7.  The
                  foregoing  provisions of this Section 7 shall  similarly apply
                  to successive reorganizations,  consolidations, mergers, sales
                  and  transfers  and to the  stock or  securities  of any other
                  corporation   which  are  at  the  time  receivable  upon  the
                  conversion  of this  Note.  If the  shares  of  stock or other
                  securities or property of the successor  corporation resulting
                  from  such  reorganization,  merger,  consolidation,  sale  or
                  transfer, to which HP would be entitled upon conversion hereof
                  in lieu of  Capital  Stock,  are in a form  other than cash or
                  marketable  securities,  then the value of such  consideration
                  shall be determined  in good faith by the  Company's  Board of
                  Directors.   In  all  events,   appropriate   adjustment   (as
                  determined in good faith by the Company's  Board of Directors)
                  shall be made in the  application  of the  provisions  of this
                  Note with respect to the rights and  interests of HP after the
                  transaction, to the end that the provisions of this Note shall
                  be applicable after such event, as nearly as reasonably may be
                  feasible,   in  relation  to  any  shares  or  other  property
                  deliverable after such event

                                       11
<PAGE>

                  upon  conversion  of this Note.  The  Company  represents  and
                  warrants  that it will take  whatever  action is  necessary to
                  ensure  that any  successors  are  bound by the  terms of this
                  Section 7(d).

         (d)      Reclassification,  etc.  If the  Company at any time while the
                  Loans are outstanding shall, by reclassification of securities
                  or  otherwise,  change  any  of  the  securities  as to  which
                  conversion  rights  under  this Note  exist into the same or a
                  different  number of securities of any other class or classes,
                  this Note shall thereafter represent the right to acquire such
                  number and kind of  securities  as would have been issuable as
                  the result of such change with respect to the securities which
                  were   subject  to  the   purchase   rights  under  this  Note
                  immediately  prior to such  reclassification  or other change,
                  and the  Conversion  Price  therefor  shall  be  appropriately
                  adjusted,  all  subject to further  adjustment  as provided in
                  this Section 7.

         (f)      Notices of Record Date, etc.  In the event of:

                  (i)      Any taking by the  Company of a record of the holders
                           of any class of  securities  of the  Company  for the
                           purpose of  determining  the holders who are entitled
                           to receive any dividend  (other than a cash  dividend
                           payable  out of  earned  surplus  at the same rate as
                           that of the last  such cash  dividend  paid) or other
                           distribution, or any right to subscribe for, purchase
                           or otherwise acquire any shares of stock of any class
                           or any other  securities  or property,  or to receive
                           any other right; or

                  (ii)     Any  capital   reorganization  of  the  Company,  any
                           reclassification  or  recapitalization of the Capital
                           Stock  of  the  Company  or  any  transfer  of all or
                           substantially all of the assets of the Company to any
                           other  person  or  entity,  or any  consolidation  or
                           merger  in which  the  Company  is not the  surviving
                           entity  (except for any  transaction  done solely for
                           the  purpose  of  changing  the  Company's  state  of
                           incorporation); or

                  (iii)    Any voluntary or involuntary dissolution, liquidation
                           or winding-up of the Company,

                  then the  Company  shall mail to HP at the same time notice is
                  provided  to  shareholders  but in no event less than ten (10)
                  business days prior to said event,  a notice with (A) the date
                  on which any such  record is to be taken  for the  purpose  of
                  such  dividend,  distribution  or right,  and the  amount  and
                  character of such dividend, distribution or right; and (B) the

                                       12
<PAGE>

                  date  on  which  any  such  reorganization,  reclassification,
                  recapitalization,     transfer,     consolidation,     merger,
                  dissolution,  liquidation  or winding-up is expected to become
                  effective  and the record  date for  determining  shareholders
                  entitled to vote thereon.

         (g)      Reservation  of Stock  Issuable Upon  Conversion.  The Company
                  shall at all  times  reserve  and keep  available,  out of its
                  authorized   shares  of  Common  Stock,  for  the  purpose  of
                  effectuating  the conversion the this Note, the full number of
                  shares of Common Stock then  issuable  upon the  conversion of
                  this  Note and shall  take all  action  necessary  so that the
                  shares of Common Stock so issued will be validly  issued fully
                  paid and nonassessable

8.  Representations  and Warranties.  The Company  represents and warrants to HP
that:

         (a)      Title.  The  Company  is,  or in the  case  of  after-acquired
                  Collateral  will be, the owner of the  Collateral and no other
                  person has, or will have,  any right,  title claim or interest
                  (by way of lien or otherwise) in, against or to the Collateral
                  other than Permitted Liens.

         (b)      Senior  Lienholder.  There  are no  entities  with a  security
                  interest  senior to that of HP (a  "Senior  Lienholder")  with
                  respect to the Collateral.

         (c)      Perfection.   HP  has  (or  in  the  case  of   after-acquired
                  Collateral,  at the time the Company  acquires rights therein,
                  will have) a perfected  security  interest in the  Collateral,
                  provided  that HP performs all acts  necessary to perfect such
                  security interest.

         (d)      Location of Collateral and Chief Executive  Office.  As of the
                  date hereof,  the  Company's  principal  place of business and
                  chief  executive  office is  located  at: One  Station  Place,
                  Stamford,  CT. The  Collateral  is maintained at the following
                  locations in addition to the chief executive office:  811 10th
                  Avenue, New York, N.Y. 10019.

9.       Covenants Relating to Collateral.

         (a)      Maintenance  of  Collateral.  The  Company  hereby  agrees  to
                  perform all acts that may be reasonably necessary to maintain,
                  preserve,  protect and perfect  the  Collateral,  and the lien
                  granted to HP therein, including:

                  (i)      not to change the Company's name or place of business
                           or chief  executive  office or the location of any of
                           its other  Collateral

                                       13
<PAGE>

                           without  giving HP twenty  (20)  days  prior  written
                           notice;

                  (ii)     to  appear in and  defend  any  action or  proceeding
                           which may affect its title to or HP's interest in the
                           Collateral  other  than  with  respect  to  Permitted
                           Liens;  provided however, that the Company shall have
                           no  obligation to appear in or defend any such action
                           against HP wherein it is alleged that HP has assigned
                           its title to or interest in the Collateral; and

                  (iii)    to  comply  with  all  material  requirements  of law
                           relating to the  production,  possession,  operation,
                           maintenance and control of the Collateral,  except to
                           the  extent  that  the  failure  to do so  could  not
                           reasonably  be  expected  to have a material  adverse
                           effect upon the  financial  or business  condition of
                           the Company.

         (b)      Records; Sale or Other Disposition of Collateral.  The Company
                  shall at all times keep at least one  complete  set of records
                  concerning  the Collateral at its chief  executive  office and
                  shall make such records available for inspection by HP at such
                  times as HP may reasonably  request.  The Company shall not be
                  authorized to sell, transfer,  grant nonexclusive  licenses of
                  or otherwise  dispose of any item of Collateral  other than in
                  the ordinary course of business.

10. Affirmative Covenants. For so long as any amounts are outstanding under this
Note and until payment or conversion of all amounts outstanding under this Note:

         (a)      Use of Proceeds.  All of the Note  proceeds  shall be used for
                  the purchase of (i) Hewlett-Packard Company products,  support
                  or services,  or (ii) complementary  non-HP products purchased
                  from HP;  provided,  that not more than fifty percent (50%) of
                  such proceeds shall be used to purchase such non-HP products.

         (b)      Taxes. The Company shall file all tax returns when due and pay
                  or cause to be paid  before the same shall  become  delinquent
                  and  before  penalties  have  accrued   thereon,   all  taxes,
                  assessments and governmental  charges or levies imposed on the
                  income,  profits,  franchises,  property  or  business  of the
                  Company  except to the  extent and so long as (i) the same are
                  being contested in good faith by appropriate proceedings,  and
                  (ii)  as  to  which  adequate   reserves  in  conformity  with
                  generally accepted accounting  principles with respect thereto
                  have been provided on the books of the Company.

         (c)      Notice of Events  of  Default.  The  Company  shall  notify HP
                  within five (5)

                                       14
<PAGE>

                  business day of the occurrence of any Event of Default.

         (d)      Insurance. The Company will at all times while any Obligations
                  remain outstanding maintain or cause to be maintained a policy
                  or policies of insurance  covering all of the Collateral in an
                  aggregate  amount of not less than the  purchase  price of the
                  Collateral,  insuring  against  such risks as are  customarily
                  carried by businesses similarly situated,  including,  without
                  limitation,  insurance  against loss or damage by fire, theft,
                  sprinkler leakage,  tornado,  explosion or other similar risk.
                  HP  shall  be  named  as an  additional  insured  on all  such
                  policies and each such policy shall provide that it may not be
                  cancelled  without  providing  HP with at least 30 days' prior
                  written notice

11. Negative  Covenants.  For so long as any amounts are outstanding  under this
Note and until payment or conversion of all amounts outstanding under this Note,
without the prior written consent of HP:

         (a)      Dividends.  The Company shall not declare or pay any dividends
                  on any class or classes of Capital Stock (other than dividends
                  or other distributions in the stock of the Company ).

         (b)      Liens.  The  Company  shall not grant a lien,  encumbrance  or
                  security  interest  in  assets  of  the  Company,  other  than
                  Permitted Liens.

12. Successors and Assigns.  The obligations of the Company and the rights of HP
under this Note shall be  binding  upon and  benefit  the  successors,  assigns,
heirs,  administrators and transferees of the parties.  The Company shall not be
entitled  to assign,  transfer or delegate  any of its  rights,  obligations  or
liabilities hereunder without the prior written consent of HP.

13. Notices. Any notice,  request, or other communication  required or permitted
hereunder shall be in writing and shall be deemed to have been duly given on the
date of delivery if personally delivered,  on the date of being faxed if sent by
confirmed  fax, on the first business day after being sent if sent by recognized
overnight  courier,  and on the third business day after being mailed if sent by
registered  or  certified  mail,  postage  prepaid,  addressed  (i) if to HP to:
Hewlett-Packard  Company,  333 Logue  Avenue,  MS32,  Mountain  View,  CA 94043,
Attention:  General  Manager,  fax  number,   (650)919-8013;   with  a  copy  to
Hewlett-Packard  Company,  3000 Hanover  Street,  MS20BQ,  Palo Alto,  CA 94304,
Attention General Counsel, fax number  (650)857-4392,  or (ii) if to the Company
to: SmartServ Online, Inc., One Station Place,  Stamford,  CT 06902,  Attention:
Chief financial Officer and General Counsel, facsimile (203)353-5962.

                                       15
<PAGE>

14. Usury.  In the event any interest is paid on this Note which is deemed to be
in excess of the then legal  maximum  rate,  then that  portion of the  interest
payment representing an amount in excess of the then legal maximum rate shall be
deemed a payment of principal and applied against the principal of this Note.

15.  Governing  Law.  This Note and all actions  arising out of or in connection
with this Note shall be governed by and construed in accordance with the laws of
the State of Delaware,  without regard to the conflicts of law provisions of the
State of Delaware or of any other state.

16.  Waiver of Jury Trial.  The Company  hereby  irrevocably  waives any and all
right to trial by jury in any legal  proceeding  arising  out of or  relating to
this Note.

17. Waivers. The Company hereby waives presentment,  demand,  protest, notice of
dishonor, diligence and all other notices, any release or discharge arising from
any extension of time,  discharge of a prior party, release of any or all of any
security  given  from time to time for this Note,  or other  cause of release or
discharge other than actual payment in full hereof.

18. Waivers and Amendments. No provision of this Note may be amended or modified
without  the written  consent of the Company and HP. HP shall not be deemed,  by
any act or  omission,  to have waived any of its rights or remedies  unless such
waiver is in writing  and signed by HP and then only to the extent  specifically
set forth in such  writing.  A waiver with  reference  to one event shall not be
construed as  continuing or as a bar to or waiver of any right or remedy as to a
subsequent  event.  No delay or omission of HP to  exercise  any right,  whether
before or after a default,  shall impair any such right or shall be construed to
be a waiver of any right or default, and the acceptance at any time by HP of any
past-due  amount  shall not be  deemed  to be a waiver  of the right to  require
prompt payment of any other amounts due and payable.

19. Remedies  Cumulative.  The remedies of HP as provided herein,  or any one or
more of the, or in law or equity, shall be cumulative and concurrent, and may be
pursued singularly, successively or together in HP's sole discretion, and may be
exercised as often as occasion therefor shall occur.

20. Expenses.  The Company shall pay on demand all fees and expenses,  including
reasonable  attorneys'  fees and  expenses,  incurred by HP in  connection  with
custody, preservation or sale of, or other realization on, any of the Collateral
or the  enforcement or attempt to enforce any of the  Obligations  which are not
performed as and when required by the Transaction Documents.

21. No Offset. Notwithstanding any rights of offset, recoupment or other similar
rights that the Company may have in connection with any Transaction  Document or

                                       16
<PAGE>

under  applicable law, the Company agrees and hereby waives any right to offset,
deduct,  recoup,  credit or otherwise reduce any amounts owing by the Company to
HP under the terms of this Note.

         IN  WITNESS  WHEREOF,  the  Company  has  caused  this  Note to be duly
executed and  delivered  by its duly  authorized  representative  as of the date
first written above.

SMARTSERV ONLINE, INC.

By: /s/ Thomas W. Haller
   ---------------------------
Name:   Thomas W. Haller
Title:  Vice President, and Chief
        Accounting Officer

Accepted:

HEWLETT-PACKARD COMPANY

By: /s/ Craig A. White
     ---------------------------
Name:  Craig A. White
     ---------------------------
Title: Vice President & GM
     ---------------------------

                                       17

<PAGE>
<TABLE>
<CAPTION>

                                   SCHEDULE A

                              TRANSACTIONS ON NOTE

<S>                   <C>                  <C>                 <C>                 <C>
--------------------- -------------------- ------------------- ------------------- -------------------
DATE                  LOANS                PAYMENTS            INTEREST PAID       BALANCE

--------------------- -------------------- ------------------- ------------------- -------------------

--------------------- -------------------- ------------------- ------------------- -------------------

--------------------- -------------------- ------------------- ------------------- -------------------

--------------------- -------------------- ------------------- ------------------- -------------------

--------------------- -------------------- ------------------- ------------------- -------------------
</TABLE>

                                       18
<PAGE>

                                   SCHEDULE B

                              CONDITIONS TO FUNDING

------------------------------ -------------------------------------------------
LOANS                          CONDITIONS TO FUNDING

------------------------------ -------------------------------------------------

Initial Funding            1.       Conditions  to the  Closing  under  the Note
                                    Purchase Agreement are met;

                           2.       As of the date of the proposed  funding,  no
                                    Event  of  Default  has   occurred   and  is
                                    continuing under the Transaction Documents;

                           3.       The initial Loan request does not exceed the
                                    maximum Loan permitted,  if any, pursuant to
                                    the  limitations  contained  in the Drawdown
                                    Schedule attached hereto as Schedule D; and

                           4.       As the date of the subsequent  Loan Request,
                                    the Company represents and warrants that all
                                    of the  representations  and warranties made
                                    by the Company in the Transaction  Documents
                                    were true and correct when made, and, except
                                    to   the    extent    that   a    particular
                                    representation  or  warranty  by  its  terms
                                    expressly  applies only to an earlier  date,
                                    are true and  correct as of the date of such
                                    subsequent Loan Request.

------------------------------ -------------------------------------------------

Additional Funding         1.       As of the date of the proposed  funding,  no
                                    event  of  default  has   occurred   and  is
                                    continuing under the Transaction Documents.

                           2.       Each subsequent Loan Request does not exceed
                                    the maximum Loan permitted, if any, pursuant
                                    to the limitations contained in the Drawdown
                                    Schedule attached hereto as Schedule D;.

                           3.       The   Company   has   met   the    following
                                    milestones:

                                    (i)      The  consolidated  revenues  of the
                                             Company  and its  subsidiaries  for
                                             the  calendar  quarter  immediately
                                             preceding  the calendar  quarter in
                                             which the  proposed  funding  would
                                             take  place are no less than 80% of
                                             the

                                       19
<PAGE>
------------------------------ -------------------------------------------------
                                             Projections previously delivered by
                                             Company to HP pursuant to the Note
                                             Purchase Agreement;

                                    (ii)     The  consolidated  quarterly EBITDA
                                             deficit  of  the  Company  and  its
                                             subsidiaries   for   the   calendar
                                             quarter  immediately  preceding the
                                             quarter  in  which  such   proposed
                                             funding  would  take place does not
                                             exceed  1.2  times  the   projected
                                             EBITDA  deficit for such quarter or
                                             set forth in the Projection; and

                                    (iii)    The  ratio  of  Total  Shareholders
                                             equity  to Total  Assets  as of the
                                             date of such  proposed  funding  is
                                             not less than the  projected  ratio
                                             set   forth  or   implied   in  the
                                             Projection; and

                           4.       As the date of the subsequent  Loan Request,
                                    the Company represents and warrants that all
                                    of the  representations  and warranties made
                                    by the Company in the Transaction  Documents
                                    were true and correct when made, and, except
                                    to   the    extent    that   a    particular
                                    representation  or  warranty  by  its  terms
                                    expressly  applies only to an earlier  date,
                                    are true and  correct as of the date of such
                                    subsequent Loan Request.
------------------------------ -------------------------------------------------

                                       20
<PAGE>

                                   SCHEDULE C

                                   COLLATERAL

                  All right,  title and  interest  of the  Company  now owned or
hereafter acquired in and to the following:

 (1)     All  Hewlett-Packard  equipment and other equipment,  including but not
         limited  to  all  computer  data  communications  and  network  control
         equipment,  storage  devices,  software  (excluding  software  which is
         created,  developed,  modified or customized by the Company for sale or
         lease by the  Company to  others),  and  firmware,  and all  additions,
         accessions, substitutions,  attachments, improvements, repairs thereto,
         and all fixtures;

(2)      All  accounts,   contracts  rights,   inventory,   general  intangibles
         (excluding software which is created, developed, modified or customized
         by the Company  for sale or lease by the  Company to  others),  chattel
         paper,  documents,  letter of credit rights,  investment property,  tax
         refund and insurance proceeds of the Company; and

(3)      All products and proceeds of the foregoing,  and, in any event, (a) any
         and all proceeds of any insurance, indemnity or warranty payable to the
         Company  from time to time with respect to any of the  Collateral,  (b)
         any and all  payments  made or due and payable to the Company from time
         to time in connection with any requisition, confiscation, condemnation,
         seizure  or  forfeiture  of all or any  part of the  Collateral  by any
         governmental  authority,  (c)  any and all  recoveries  by the  Company
         against  third  parties  with  respect  to any  litigation  or  dispute
         concerning  any of the  Collateral,  and (d) any and all other  amounts
         from time to time paid or payable  under or in  connection  with any of
         the Collateral, upon disposition or otherwise.

                                       21
<PAGE>

                                   SCHEDULE D

                                DRAWDOWN SCHEDULE

CALENDAR QUARTER IN WHICH           MAXIMUM LOAN AMOUNT AVAILABLE
-------------------------           -----------------------------
LOAN REQUESTS CAN BE  MADE          IN EACH QUARTER*
--------------------------          ----------------

2000
----

Initial Loan                                  $300,000

Third Quarter                               $2,500,000

Fourth Quarter                              $4,250,000

2001
----

First Quarter                               $4,250,000

Second Quarter                              $4,250,000

Third Quarter (prior to

Termination Date)                           $4,450,000

* If the Company does not borrow the full Loan amount  specified  above to which
the Company is otherwise entitled after satisfaction of all milestones specified
in Schedule B and all other requirements hereunder, the unborrowed amount may be
carried over to and borrowed by the Company during the immediately following two
calendar  quarters,  provided  that the  Company  has  otherwise  satisfied  all
milestones and other  requirements for the quarter in which the Company requests
such Loan,  and  provided  further that in any case such sums may not be carried
over beyond the two  quarters  immediately  following  the quarter in which they
first became available to the Company pursuant to this drawdown schedule.

                                       22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00016-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00016-of-00352.parquet"}]]