SMARTSERV ONLINE INC
EXHIBIT 10.1
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ssrv8k022804ex10_1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
                                                                    EXHIBIT 10.1

     This  REORGANIZATION  AND STOCK PURCHASE  AGREEMENT dated as of January 29,
2004  (this  "Agreement")  is by and by  and  among  nReach,  Inc.,  a  Colorado
corporation  with an address at 1120  Washington  Avenue Suite 200,  Golden,  CO
80401  ("nReach") and SmartServ  Online,  Inc., a Delaware  corporation  with an
address at 2250 Butler Pike, Suite 150, Plymouth Meeting,  PA 19462 ("SmartServ"
or the  "Company")  and the  shareholders  of nReach listed on Schedule A hereto
(the "nReach Shareholders"), including the address of each such shareholder.

                                    RECITALS

A. WHEREAS,  SmartServ  desires to acquire  directly or  indirectly  100% of the
equity of nReach;

B. WHEREAS,  the nReach  Shareholders  desire to acquire  equity in SmartServ in
connection with the proposed acquisition;

C. WHEREAS,  the parties hereto intend that the transaction  contemplated hereby
shall be completed  as a tax-free  exchange of stock  interests  for purposes of
Federal tax laws.

     NOW,  THEREFORE,  in  consideration of the respective  representations  and
warranties  hereinafter  set forth and of the mutual  covenants  and  agreements
contained herein, the parties hereto agree as follows:

                                    ARTICLE I
                                     CLOSING

     1.1 Closing  Conditions of nReach. As conditions to the Closing (as defined
below) as set forth herein, SmartServ shall undertake the following actions:

     (a) The Board of Directors  of SmartServ  shall duly approve and deliver to
nReach resolutions with respect to approving the transactions set forth herein.

     (b) Subject to adjustment as provided for herein,  the purchase price to be
paid to the nReach  Shareholders for their common stock of nReach shall be equal
to 500,000 shares (the "SmartServ  Shares") of common stock,  par value $.01 per
share,  of the Company  ("Common  Stock") (the "Purchase  Price").  The Purchase
Price shall be paid to the nReach  Shareholders  by  delivery  of the  SmartServ
Shares  at the  Closing  in the  percentages  set  forth  opposite  such  nReach
Shareholder's name on Schedule A annexed hereto (the "Pro Rata Percentage").

     (c) From the date hereof until the Closing Date,  there shall not have been
any material  adverse change in the business of SmartServ,  including a decrease
in the closing  price of the Common Stock to an amount less than $1.00 per share
(subject to adjustment for forward or reverse stock splits, recapitalization and
the like),  other than  changes in the  ordinary  course of  business  or due to
general economic, industry or political conditions.

     1.2 Closing  Conditions  of Company.  As  conditions  to the Closing as set
forth herein,
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nReach shall undertake the following actions:

     (a) The Board of Directors of nReach shall execute and deliver to SmartServ
resolutions unanimously approving the transactions set forth herein.

     (b)  The  nReach  Shareholders  shall  execute  and  deliver  to  SmartServ
resolutions approving the transactions contemplated hereby.

     (c) The  shareholders  of nReach shall  deliver to SmartServ at Closing (i)
certificates  representing  1,200,665  shares of common and  preferred  stock of
nReach,  duly  endorsed  for  transfer,  representing  100%  of the  issued  and
outstanding  fully-diluted equity of nReach, in the individual amounts set forth
on Schedule A annexed hereto (the "nReach  Shares") and (ii) an  instrument,  in
the form  annexed  hereto as  Exhibit A,  including  a  representation  that the
SmartServ Shares being acquired as a result of the transactions  contemplated by
this Agreement are being  acquired for  investment  purposes only and not with a
view to, or sale in connection with, any distribution  within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). SmartServ understands
that no nReach  Shareholder is an "Accredited  Investor" as such term is defined
in the Securities Act.

     (d) All  third  party  consents  to the  transactions  contemplated  herein
required to be obtained by nReach shall have been obtained.

     (e) Upon  execution  hereof,  SmartServ  shall  prepare  and  deliver  such
business  and  financial  information  and  financial  statements  to the nReach
Shareholders as may be required to comply with all applicable  federal and state
securities laws, rules and regulations.

     1.3 Additional Conditions to Closing and Other Covenants.

     The parties'  obligation to close the transactions set forth herein will be
subject to additional specified conditions precedent as follows:

     (a) The representations and warranties of SmartServ as set forth in Article
3 herein shall remain accurate as of the Closing Date (as defined below).

     (b)  The   representations   and   warranties  of  nReach  and  the  nReach
Shareholders  as set forth in Article 2 herein shall  remain  accurate as of the
Closing Date.

     (c) All the documents  necessary to be filed with local,  state and federal
authorities  (including  the SEC) by SmartServ,  are prepared and  appropriately
filed with such  authorities  by SmartServ and all approvals  required from such
authorities are granted.

     (d)  Upon  execution  hereof  and up  through  the  Closing,  nReach  shall
cooperate with  SmartServ,  including the  preparation and delivery to SmartServ
and its  professional  advisors of all business and financial  information,  and
financial  statements  currently in nReach's possession which

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<PAGE>

SmartServ requires to be included in filings with the US Securities and Exchange
Commission  ("SEC").  SmartServ agrees that nReach may incur and pay immediately
after  the  Closing  up to  $25,000  (the  "Fee  Cap") in the  aggregate  legal,
accounting  and  other  fees  and  expenses  associated  with  the  transactions
contemplated hereby. All legal, accounting and other expenses and fees of nReach
and the nReach Shareholders in excess of the Fee Cap shall be paid by the nReach
Shareholders.  Such costs and  expenses  up to the Fee Cap shall be  included in
nReach's  operating  budget for fiscal year 2004 which  budget and fees shall be
provided to nReach at and after the Closing.

     (e)  SmartServ  shall have received an opinion of counsel to nReach in form
and  substance  satisfactory  to  SmartServ  and its counsel  with regard to the
transaction and other matters contemplated herein.

     (f) None of the  properties  or assets of  nReach  shall  have been sold or
otherwise  disposed of other than in the  ordinary  course of business  from the
date  hereof  through  the Closing  Date,  except  with the  written  consent of
SmartServ.  nReach  shall not have  suffered a loss on  account of fire,  flood,
accident or other calamity of such a character as to interfere  materially  with
the  continuous  operation of its business or  materially  affect  adversely its
condition,  financial or otherwise (each a "Material Adverse Event").  Except as
disclosed in this  Agreement or in the  schedules  annexed  hereto,  no material
adverse change in the aggregate shall have occurred in the financial  condition,
business, properties, assets, liabilities, results of operations or prospects of
nReach since the date of this Agreement.

     (g) Between the date of this  Agreement and the Closing  Date,  nReach will
afford SmartServ and its authorized  representatives reasonable access to all of
their  respective  sites,  properties,  books and records during normal business
hours and will furnish such  additional  financial and operating  data and other
information  as to nReach's  business and properties as may from time to time be
reasonably requested.  nReach will cooperate in the preparation of any documents
or other  material  which may be  reasonably  required  in  connection  with any
documents or  materials  required by this  Agreement  or otherwise  necessary to
effect  the  Closing.  All  documents  and/or  materials  provided  by nReach to
SmartServ  prior  to, in  contemplation  of or  pursuant  to this  Agreement  is
Confidential Information as described in Article IV below.

     (h) nReach shall not, nor shall any agent,  officer,  director,  trustee or
any  representative of nReach,  during the period commencing on the date of this
Agreement  and  ending  with the  earlier  to occur of the  Closing  Date or the
termination  of this  Agreement  in  accordance  with  its  terms,  directly  or
indirectly,  (i) solicit or initiate the  submission of proposals or offers from
any person for, (ii)  participate  in any  discussions  pertaining  to, or (iii)
furnish  any  information  to any  person  other  than the other  party or their
respective  authorized agents relating to, any acquisition or purchase of all or
a  material  amount of the  assets  of, or any  equity  interest  in nReach or a
consolidation or business combination of or with nReach.

     (i) nReach  shall,  and shall cause each of its  subsidiaries,  if any, to,
terminate  any  stockholders  agreements,   voting  agreements,  voting  trusts,
options, warrants and employment

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agreements with any employee on or prior to the Closing Date. Such  terminations
shall be delivered at the Closing.

     (j) As and when  requested by  SmartServ,  or by any of its  successors  or
assigns,  nReach and the nReach Shareholders shall execute and deliver, or cause
to be executed and delivered,  all such deeds and  instruments  and will take or
cause to be taken all such  further  action as SmartServ  may deem  necessary or
desirable in order to vest in and confirm to SmartServ  title to and  possession
of  the  property  acquired  by  SmartServ  by  reason  or as a  result  of  the
transactions  contemplated  hereby,  and  otherwise  to carry out the intent and
purposes hereof,  and the officers,  directors of SmartServ are fully authorized
in the name of nReach or otherwise to take any and all such action.

     (k) The nReach  Shareholders  shall have "piggy-back"  registration  rights
entitling the holders thereof to have the SmartServ Shares issuable hereunder to
be included in the registration  statement filed by SmartServ in connection with
the Financing (as defined below) on the same terms and conditions as are granted
to the investors in the Financing.

     (l) At the Closing,  each nReach  Shareholder  shall  execute and deliver a
lock-up letter with respect to the SmartServ Shares issued hereunder in the form
annexed hereto as Exhibit B.

     (m) At the Closing,  Mike Stemple ("Stemple") and SmartServ shall each have
executed and delivered Stemple's  employment  agreement with SmartServ,  in form
and substance satisfactory to each of SmartServ and Stemple; and SmartServ shall
have entered into severance agreements with each of Clint Fayling, Blake Fayling
and Chris Stemple  providing  for three months  severance pay in the event their
employment with nReach is terminated without cause.

     (n) SmartServ shall be satisfied with its due diligence review of nReach.

     (o) SmartServ  shall have closed upon a private  offering of its securities
and received gross proceeds of at least $2,500,000 (the "Financing").

     (p)  SmartServ  agrees to contribute to nReach at and after the Closing (as
part of its 2004  operating  budget) an amount up to $25,000  (the "Fee Cap") in
the  aggregate for nReach's and the nReach  Shareholders'  legal and auditor and
other fees and expenses  associated with the transactions  contemplated  hereby.
All  legal,  accounting  and other  expenses  and fees of nReach  and the nReach
Shareholders in excess of the Fee Cap shall be paid by the nReach Shareholders.

     (q) SmartServ  hereby agrees to extend the maturity date of the  promissory
note of nReach dated November, 2003, in the original principal amount of $15,000
until  February 29, 2004 (the "nReach  Note").  At the Closing,  SmartServ  also
agrees  to pay  nReach,  through  the  cancellation  of such  nReach  Note,  for
marketing and consulting services rendered prior to the Closing.

     (r) nReach and each  nReach  Shareholder,  together  with their  respective
affiliates,  successors  and  assigns,  hereby  represent,  warrant  and  agree,
severally and not jointly,  that they have not and will not enter into any short
sales of SmartServ's  Common Stock from the period

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<PAGE>

commencing on the date hereof and ending on September 30, 2004.

     (s) The parties  acknowledge that the schedules of nReach to this Agreement
have not been prepared or are incomplete as of the date hereof (such  unprepared
or incomplete schedules being the "nReach Incomplete  Schedules").  nReach shall
deliver to  SmartServ  and its counsel for their  review a complete and accurate
version of the nReach's Incomplete Schedules (as so revised, the "Final Proposed
Schedules")  not later than 10 business  days after the date of this  Agreement.
nReach shall also provide SmartServ with copies of any supporting  documents and
such  access  to  those  officers  and  other  employees  of  nReach  and  other
representatives  as may be  reasonably  requested  by  SmartServ  and its  legal
counsel  in  connection  with  their  review  of the Final  Proposed  Schedules.
Notwithstanding anything herein to the contrary,  SmartServ shall have the right
to  terminate  this  Agreement  by  written  notice to nReach in the event  that
SmartServ,  in its sole  discretion,  is not satisfied  with the Final  Proposed
Schedules.  Not later than 10 business days after the Final Proposed  Schedules,
certified by an officer of nReach, and all such supporting  documents and access
shall have been provided to and acknowledged by SmartServ in writing,  SmartServ
shall either (i) advise nReach that the Final Proposed  Schedules are acceptable
to SmartServ,  whereupon the Final Proposed Schedules shall become the schedules
hereto, or (ii) advise nReach that it has determined to terminate this Agreement
pursuant to the provisions of this Section 1.3(s),  provided,  however,  that if
SmartServ  does not respond  within the  aforementioned  10 business day period,
then SmartServ shall be deemed to have accepted the Final Proposed Schedules.

     1.4 At the Closing.

     (a) At the  Closing,  SmartServ  shall  issue the  SmartServ  Shares to the
nReach Shareholders in accordance with their Pro Rata Percentages.

     (b) At the Closing,  all equity  securities  of nReach,  duly  endorsed for
transfer,  and the  executed  investor  representation  letter  for each  nReach
Shareholder  in the form  annexed  hereto  as  Exhibit A shall be  delivered  to
SmartServ.

     (c) At the Closing,  SmartServ and nReach each shall be in compliance  with
its  representations,  warranties and covenants contained herein in all material
respects, and each shall receive from the other certificates to such effect from
the  President  of such party as of the Closing  Date,  except  with  respect to
nReach,  as set forth in a schedule of exceptions  attached to such  certificate
and acceptable to SmartServ.

     (d) At the Closing,  SmartServ shall have received (i) certificates,  dated
the Closing Date and signed by the secretary of nReach, certifying the truth and
correctness of attached copy of nReach's  articles of  incorporation  (including
amendments  thereto) and such other  matters as may  reasonably  be requested by
SmartServ  (including  certification of the identity of the names and titles and
the signatures of the officers of nReach individually  authorized to execute and
deliver this  Agreement and other  documents to be executed and delivered by the
nReach in connection therewith); and by-laws (including amendments thereto), and
(ii) a certificate of good standing for nReach in the State of Colorado.

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<PAGE>

     (e)  At  the  Closing,   the  nReach   Shareholders   shall  have  received
certificates,  dated the Closing Date and signed by the  secretary of SmartServ,
certifying the truth and correctness of attached copy of SmartServ's certificate
of incorporation  (including  amendments  thereto) and such other matters as may
reasonably be requested by the nReach Shareholders  (including  certification of
the  identity  of the names and titles and the  signatures  of the  officers  of
SmartServ  individually  authorized  to execute and deliver this  Agreement  and
other  documents  to be executed  and  delivered  by the  SmartServ  officers in
connection therewith); and by-laws (including amendments thereto).

     (e) At the  Closing,  evidence of all  applicable  filings  and  regulatory
approvals required to be made or obtained by the parties shall be delivered.

     (f) There shall have been full compliance with the applicable securities or
"blue sky" laws and regulations of any state or other  governmental  body having
jurisdiction over the transactions contemplated hereby

     (g) In addition to the documents  expressly required herein, at the Closing
each party hereto shall deliver such further  instruments  and take such further
action as may  reasonably  be  requested  by any other party  hereto in order to
carry out the intent and purposes of this Agreement.

     1.5 Timing of  Closing.  The  consummation  of the  transactions  set forth
herein (the "Closing")  shall occur upon the  satisfaction of the conditions set
forth in this Agreement. The date of Closing (the "Closing Date") shall occur on
or before February 29, 2004 (the "Outside Closing Date").

     1.6 Post-Closing Adjustments to the Purchase Price.

     (a) Advance Earnout.

          (i) In the event that on June 1, 2004,  the value of the original five
     hundred thousand  (500,000)  SmartServ Shares issued hereunder is less than
     $900,000  (i.e.  five  hundred  thousand  (500,000)  multiplied  by  $1.80)
     (hereinafter,  the "Threshold  Value"),  SmartServ  shall issue  additional
     shares of Common Stock to the nReach  Shareholders  in accordance with this
     Section 1.6(a) (such shares, the "Advance Earnout Shares").

          (ii) If the average of the closing  sale price of the Common  Stock on
     the five  trading  days  immediately  prior to June 1, 2004  (the  "Closing
     Price") is less than $1.80 per share (in each case,  subject to  adjustment
     in  connection  with any forward or reverse  stock split,  stock  dividend,
     merger,  reorganization  or similar  event),  then  SmartServ  shall  issue
     Advance Earnout Shares to the nReach Shareholders such that on June 1, 2004
     the SmartServ  Shares together with such Advance Earnout Shares  multiplied
     by $1.80 equals the  Threshold  Value.  By way of an example,  in the event
     that the Closing Price equals $1.50, one hundred thousand (100,000) Advance
     Earnout  Shares  would be issued to the nReach  Shareholders  on a pro-rata
     basis (the  500,000  SmartServ  Shares x $1.50=  $750,000  plus the

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<PAGE>

     100,000 Advance Earnout Shares x $1.50= $150,000, for an aggregate value of
     $900,000).

          (iii) In no event  will the  amount of  Advance  Earnout  Shares to be
     issued be more than 229,167.

          (iv) The Advance Earnout Shares  issuable to the nReach  Shareholders,
     if any, shall be issued to such  shareholders  in accordance with their Pro
     Rata  Percentages on or before July 15, 2004. The Advance Earnout Shares to
     be issued pursuant to this Section  1.6(a),  if any, shall be deducted from
     the Earnout  Shares (as defined  below),  if any, to be issued  pursuant to
     Section 1.6(b).

     (b)  Earnout.  In addition to the  SmartServ  Shares to be delivered at the
Closing,  the nReach  Shareholders may receive additional shares of Common Stock
(the  "Earnout  Shares") in  accordance  with the terms of this  paragraph.  The
number of  Earnout  Shares  which may be  issuable  to the  nReach  Shareholders
pursuant  to the  Earnout  shall be  determined  based on the gross  revenue  of
SmartServ (the "SmartServ  Revenue")  during the first five full fiscal quarters
following the Closing Date (the "Earnout Period").  SmartServ shall issue to the
nReach  Shareholders  (on a pro-rata  basis in their Pro Rata  Percentages)  one
share of Common  Stock for every one  dollar of  SmartServ  Revenue in excess of
$7,200,000 (the "Earnout  Trigger") during the Earnout Period. In the event that
SmartServ does not consummate its  contemplated  acquisition of Mobile Airwaves,
Inc. by March 31, 2004,  the Earnout  Trigger  shall be reduced by $4,500,000 to
$2,700,000.  The  maximum  number of Earnout  Shares  issuable  pursuant  to the
Earnout  shall be 916,667 less any Advance  Earnout  Shares  issued  pursuant to
Section 1.6(a). The Earnout Shares issuable to the nReach Shareholders,  if any,
shall  be  issued  to such  shareholders  in  accordance  with  their  Pro  Rata
Percentages  on or before sixty days after the last day of the fifth full fiscal
quarter following the Closing Date.

     (c) If at any time  following the issuance of the Earnout Shares or Advance
Earnout Shares, if any, the Company shall determine to prepare and file with the
SEC a registration  statement relating to an offering for its own account or the
account of others  under the  Securities  Act of any of its  equity  securities,
other  than on Form S-4 or Form S-8 (each as  promulgated  under the  Securities
Act) or their then equivalents relating to equity securities to be issued solely
in  connection  with  any  acquisition  of any  entity  or  business  or  equity
securities  issuable  in  connection  with the stock  option  or other  employee
benefit plans, then the Company shall send to each such nReach  Shareholder that
is issued Earnout Shares or Advance  Earnout  Shares,  as applicable,  a written
notice of such  determination and, if within fifteen days after the date of such
notice,  any such nReach  Shareholder  shall so request in writing,  the Company
shall  include in such  registration  statement  all or any part of the  Earnout
Shares or Advance Earnout Shares issuable  hereunder to such nReach  Shareholder
requests to be registered,  subject to customary underwriter cutbacks applicable
to all holders of  registration  rights,  to the extent such  Earnout  Shares or
Advance  Earnout  Shares are not eligible for resale  pursuant to Rule 144 under
the Securities Act.

     (d) During the two year period  following the Closing Date,  with a view to
making  available the benefits of certain rules and regulations of the SEC which
may  permit  the  sale of the

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<PAGE>

"restricted  securities" to the public without registration,  the Company agrees
to make and keep public information available, as those terms are understood and
defined in Rule 144 under the Securities Act.

                                   ARTICLE II
                     NREACH'S REPRESENTATIONS AND WARRANTIES

     nReach and each nReach Shareholder hereby jointly and severally  represents
and warrants to, and agrees with,  SmartServ as follows,  except as set forth on
the schedule of exceptions annexed hereto and made a part hereof:

     2.1 Organization;  Capitalization.  nReach is, and on the Closing Date will
be, a duly organized and a validly  existing  corporation in good standing under
the laws of its state of formation. There are issued and outstanding, and on the
Closing Date there will be issued and outstanding,  only the nReach Shares,  all
of which are,  and on the  Closing  Date will be,  duly  authorized  and validly
issued. There are, and on the Closing Date there will be, no outstanding rights,
options or warrants to purchase any equity interest in nReach, and there will be
no other or any other issued or outstanding securities of any nature convertible
into or  exercisable  or  exchangeable  for equity of nReach.  No person has any
right of first  refusal,  right of  participation,  or any  similar  right  with
respect to dispositions of the nReach Shares.

     2.2 Authority.  nReach and each nReach  Shareholder has, and on the Closing
Date will have,  full power and authority to enter into this  Agreement  and, to
consummate  the  transactions   contemplated  hereby.  This  Agreement  and  the
transactions  contemplated  hereby  have  been  duly  approved  by the  Board of
Directors of nReach and,  prior to the Closing,  by all  stockholders  of nReach
whose consent is required under applicable law.

     2.3 Binding Agreement.  This Agreement has been duly executed and delivered
by nReach and each  nReach  Shareholder  and  constitutes  the legal,  valid and
binding obligation of nReach and each nReach  Shareholder,  enforceable  against
each of them in accordance  with the terms  hereof,  except as may be limited by
bankruptcy,  insolvency,  reorganization,  moratorium or similar laws of general
application  relating to or affecting  the  enforcement  of rights  hereunder or
general  principles  of equity  (regardless  of whether such  enforceability  is
considered in a proceeding in equity or at law).

     2.4 No  Conflicts.  The  execution  and  delivery by nReach and each nReach
Shareholder  of  this  Agreement,   the  consummation  and  performance  of  the
transactions  herein  contemplated,  and  compliance  with  the  terms  of  this
Agreement by nReach and each nReach  Shareholder will not conflict with,  result
in a breach of or constitute or give rise to a default under (i) any  indenture,
mortgage,  deed of trust or other  agreement,  instrument  or  contract to which
nReach  or any  nReach  Shareholder  is now a party or by which it or any of its
assets or properties  are bound;  (ii) nReach's  articles of  incorporation  and
bylaws,  in each case as amended;  or (iii) any law,  order,  rule,  regulation,
writ,   injunction,   judgment  or  decree  of  any   government,   governmental
instrumentality or court, domestic or foreign,  having jurisdiction over nReach,
or any of its business or  properties  wherein

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<PAGE>

such  breach  could  have a  material  adverse  effect  on  nReach or any of its
business or properties.

     2.5  Subsidiaries.  nReach does not have,  and on the Closing Date will not
have, any  subsidiaries,  nor does it own any direct or indirect interest in any
other business entity.

     2.6 Foreign  Qualifications.  nReach is, and on the  Closing  Date will be,
qualified or licensed as a foreign  corporation in all  jurisdictions  where its
business or  ownership  of assets so  requires,  except  where the failure to be
qualified  or  licensed  would not be  reasonably  expected  to have a  material
adverse  effect on the  business  of nReach.  The  business  of nReach  does not
require it to be registered as an investment company or investment  adviser,  as
such  terms  are  defined  under  the  Investment  Company  Act of 1940  and the
Investment Advisers Act of 1940, each as amended.

     2.7 Financial  Statements.  All financial  statements of nReach  previously
delivered  to  SmartServ,  and attached  hereto as Schedule 2.7 (the  "Financial
Statements")  fairly  present in all material  respects the financial  position,
results of  operations  and other  information  purported to be shown therein of
nReach,  at the dates and for the  respective  periods to which they apply.  The
Financial  Statements  have not  been  prepared  in  accordance  with  generally
accepted  accounting  principles for any of the periods involved,  but have been
prepared  in  accordance  with sound  business  practices  consistently  for the
periods indicated.

     2.8  No  Adverse  Events.  Since  the  date  of the  Financial  Statements,
otherwise as set forth therein:

          (a) there has not been any material  adverse  change in the  financial
     position or condition  of nReach,  its  liabilities,  assets or any damage,
     loss or other change in  circumstances  materially  affecting  nReach,  its
     business or assets or nReach's  right to carry on its business,  other than
     changes in the  ordinary  course of  business  or due to general  economic,
     industry or political conditions;

          (b) there has not been any  damage,  destruction,  loss or other event
     (whether or not covered by insurance)  materially  and adversely  affecting
     nReach, its business or assets;

          (c)  there  has not been any  material  increase  in the  compensation
     payable  or to  become  payable  by  nReach  to any of  nReach's  officers,
     employees or agents or any bonus,  payment or  arrangement  made to or with
     any of them;

          (d) nReach's  business has been and  continues to be carried on in the
     ordinary course;

          (e)  nReach  has not  discharged  or  satisfied  or paid  any  lien or
     encumbrance  or obligation or liability  other than current  liabilities in
     the ordinary course of business; and

          (f) no  capital  expenditures  in excess of  $10,000  individually  or
     $50,000 in total have been authorized or made.

                                       9
<PAGE>

     2.9 Ordinary Course of Business.  Except for transactions  occurring in the
ordinary  course of business,  there has not been, and on the Closing Date there
will not have been, any transactions involving nReach since November 30, 2003 in
an amount in excess of $25,000.

     2.10  Liabilities;  Claims.  There are, and on the Closing Date will be, no
liabilities  (including,  but not limited to, tax liabilities) or claims against
nReach (whether such liabilities or claims are contingent or absolute, direct or
indirect, matured or unmatured) not appearing on the Financial Statements, other
than (i) liabilities incurred in the ordinary course of business since November,
30,  2003 in an amount not  exceeding  $25,000,  (ii) taxes  accrued on earnings
since  December  31,  2002 which are not yet due or  payable,  ), (iii)  amounts
incurred to accountants and attorneys in connection with this  transaction up to
the Fee Cap and (iv) short term  borrowings from Curt Jensen which do not exceed
$75,000 in the aggregate.

     2.11 Tax Returns.  All federal,  state,  county and local  income,  excise,
property  and  other tax  returns  required  to be filed by nReach  are true and
correct in all material  respects and have been timely  filed,  and all required
taxes,  fees or assessments  have been paid or an adequate  reserve therefor has
been established in the Financial Statements. The federal income tax returns and
state and  foreign  income tax  returns of nReach  have not been  audited by the
Internal  Revenue Service ("IRS") or any other taxing  authority within the past
five (5) years.  Neither the IRS nor any state,  local or other taxing authority
has proposed any additional taxes,  interest or penalties with respect to nReach
or any  of its  operations  or  businesses.  There  are  no  pending,  or to the
knowledge of nReach,  threatened,  tax claims or  assessments,  and there are no
pending,  or to the knowledge of nReach,  threatened,  tax  examinations  by any
taxing  authorities.  nReach  has not given any  waivers  of rights  (which  are
currently in effect) under  applicable  statutes of limitations  with respect to
the federal income tax returns of nReach for any year.

     2.12 Title to Assets.  Except as provided for in the Financial  Statements,
nReach, has, and on the Closing Date will have, good and marketable title to all
of its furniture, fixtures, equipment and other assets owned by nReach, and such
assets  are owned  free and clear of all  security  interests,  pledges,  liens,
restrictions and  encumbrances of every kind and nature.  nReach is the owner of
its  inventory  as set  forth  in the  Financial  Statements  and has  good  and
marketable  title  thereto.  Except as  provided  in the  Financial  Statements,
nReach's assets comprise all of the property and assets of its business,  and no
other person or entity owns any assets used by nReach in operating  the business
of nReach,  whether under a lease,  rental  agreement or other  arrangement.  At
Closing, nReach will provide a list of all its assets and inventory as of a date
not more than two days prior to Closing.

     2.13  Accounts  Receivable.  The  accounts  receivable  as set forth in the
Financial  Statements  represent amounts due for goods sold or services rendered
by nReach in the ordinary  course of business and, except as reserved for in the
Financial Statements,  nReach believes are collectable in the ordinary course of
business, without any claims by the obligor for set-off or counter-claims.

     2.14  Material  Contracts.  A copy (or summary if oral) of all  agreements,
contracts,

                                       10
<PAGE>

arrangements,  understandings and commitments, whether written or oral, to which
nReach is or on the Closing Date will be, a party (each,  an "nReach  Contract")
that (i)  represents  an nReach  contract  upon  which  nReach is  substantially
dependent or (ii)  represents an nReach  Contract  pursuant to which nReach will
receive substantial  benefits or (iii) represents an nReach Contact, the absence
of which would have a material adverse effect on the business of nReach prior to
and  following  the  transactions  contemplated,  have been or will be delivered
prior to Closing,  to SmartServ or its counsel,  unless  nReach has been advised
that such  contracts  are not  required to be  delivered.  Any nReach  Contracts
entered  into  between the date hereof and the Closing Date will be delivered to
SmartServ or its counsel prior to Closing.  The validity and  enforceability of,
and rights of nReach  contained in, each nReach  Contract shall not be adversely
effected  by the  transactions  contemplated  hereby  or any  actions  taken  in
furtherance  hereof.  To its knowledge,  nReach is not in material default under
any nReach Contract.

     2.15 Legal  Proceedings.  Except as set forth in Schedule 2.15,  there are,
and on the  Closing  Date there will be, no legal,  administrative,  arbitral or
other proceedings,  claims, actions or governmental investigations of any nature
pending, or to nReach's knowledge,  threatened, involving nReach, or challenging
the validity or propriety of the  transactions  contemplated  by this Agreement.
nReach is not a party to any order,  judgment  or decree  which  will,  or might
reasonably be expected to, materially adversely affect the business, operations,
properties, assets or financial condition of nReach.

     2.16 Certain  Transactions.  Since  November 30, 2003 there have been,  and
through  the  Closing  Date  there  will  be (i)  no  bonuses  or  extraordinary
compensation  to any of the officers or directors of nReach,  (ii) no loans made
to or any other  transactions with any of the officers or directors of nReach or
their families and (iii) no dividends or other distributions declared or paid by
nReach.

     2.17 Insurance.  nReach has, and on the Closing Date will have,  maintained
casualty and liability policies and other insurance policies with respect to its
business which are  appropriate  and customary for  businesses  similar in size,
industry and risk profile.  Copies of all of the policies of insurance and bonds
presently in force with respect to nReach,  including  without  limitation those
covering properties,  buildings,  machinery,  equipment,  worker's compensation,
officers  and  directors  and public  liability,  will be delivered to SmartServ
prior to  Closing.  All such  insurance  is  outstanding  and in full  force and
effect,  with all premiums  thereon  duly paid,  and nReach has not received any
notice of cancellation of any such policies.

     2.18  Intellectual  Property.  Section 2.18 of the  schedule of  exceptions
lists  all  patents,  patent  applications,  trademarks,  trade  names  (whether
registered or unregistered),  copyrights, patent licenses, service marks, logos,
commercial symbols,  industrial designs,  inventions,  licenses,  trade secrets,
patterns,  drawings,  software (other than standard,  off-the-shelf commercially
available programs), formulae, technical information,  research, data, concepts,
methods,  "know-how," and all other intellectual property owned by, licensed to,
or used by, nReach,  presently held,  owned or used by nReach (the "IP Rights").
Except for the IP Rights, no other intellectual property rights are required for
nReach to conduct  its  business in the  ordinary  course  consistent  with past
practice.  All

                                       11
<PAGE>

of the IP Rights are valid and in good standing and none of them  infringes (nor
has any claim been made that any of them  infringes) the patents,  trademarks or
other  rights of others.  There is no agreement to which nReach is a party or is
legally bound and, to nReach's  knowledge,  no restriction or liens,  materially
and adversely  affecting the use by nReach and,  after the Closing Date, the use
by  SmartServ,  of any of the IP Rights.  There is no  litigation or other legal
action pending or, to nReach's knowledge,  threatened with respect to any of the
IP Rights, and no order, holding,  decision or judgment has been rendered by any
authority, and no agreement,  consent or stipulation exists to which nReach is a
party or of which nReach has knowledge, which would prevent nReach, or after the
Closing Date, SmartServ, from using any of the IP Rights. Except as set forth on
Schedule  2.18,  nReach has not  received any notice or inquiry  indicating,  or
claiming,  that the  design,  manufacture,  sale or use of any  products  now or
heretofore  manufactured,  sold or used by nReach  infringes the patent or other
intellectual  property  rights of any other person or entity.  To its knowledge,
nReach has not infringed upon any third party's intellectual property.

     2.19 Compliance  with Laws.  nReach has, and on the Closing Date will have,
in all material  respects  operated its  business and  conducted  its affairs in
compliance with all applicable  laws,  rules and  regulations,  except where the
failure  to so comply did not have or would not be  expected  to have a material
adverse effect on its business or property.

     2.20 Related Party Contracts.  On the Closing Date there will be, no loans,
leases or other nReach Contracts or arrangements or  understandings  outstanding
between  nReach and any of its officers,  directors or any person  related to or
affiliated with any such officers or directors.

     2.21  Officer and  Director  Information.  During the past five year period
neither nReach, nor any of its officers or directors, has been the subject of:

          (a) a  petition  under  the  Federal  bankruptcy  laws  or  any  other
     insolvency  or  moratorium  law or has a receiver,  fiscal agent or similar
     officer been appointed by a court for the business or property of nReach or
     such person,  or any  partnership  in which nReach or any such person was a
     general  partner at or within two years before the time of such filing,  or
     any corporation or business  association of which nReach or any such person
     was an  executive  officer at or within  two years  before the time of such
     filing;

          (b) a  conviction  in a criminal  proceeding  or a named  subject of a
     pending  criminal  proceeding  (excluding  traffic  violations which do not
     relate to driving while intoxicated or driving under the influence);

          (c)  any  order,  judgment  or  decree,  not  subsequently   reversed,
     suspended or vacated, of any court of competent  jurisdiction,  permanently
     or  temporarily  enjoining  nReach or any such person  from,  or  otherwise
     limiting, the following activities:

               (i) Acting as a futures commission merchant,  introducing broker,
          commodity  trading  advisor,  commodity pool  operator,  floor broker,
          leverage  transaction  merchant,  any other  person  regulated  by the
          United States

                                       12
<PAGE>

          Commodity Futures Trading Commission or an associated person of any of
          the foregoing,  or as an investment  adviser,  underwriter,  broker or
          dealer in securities, or as an affiliated person, director or employee
          of any  investment  company,  bank,  savings and loan  association  or
          insurance  company,  or  engaging  in or  continuing  any  conduct  or
          practice in connection with such activity;

               (ii) Engaging in any type of business practice; or

               (iii) Engaging in any activity in connection with the purchase or
          sale of any security or commodity or in connection  with any violation
          of Federal, state or other securities laws or commodities laws;

          (d)  any  order,  judgment  or  decree,  not  subsequently   reversed,
     suspended or vacated,  of any Federal,  state or local  authority  barring,
     suspending or otherwise  limiting for more than 60 days the right of nReach
     or any such person to engage in any  activity  described  in the  preceding
     sub-paragraph,  or to be  associated  with  persons  engaged  in  any  such
     activity;

          (e) a finding by a court of competent  jurisdiction  in a civil action
     or by the SEC to have violated any securities law, regulation or decree and
     the  judgment  in such  civil  action  or  finding  by the SEC has not been
     subsequently reversed, suspended or vacated; or

          (f) a finding by a court of competent  jurisdiction  in a civil action
     or by the Commodity Futures Trading Commission to have violated any federal
     commodities  law,  and the judgment in such civil action or finding has not
     been subsequently reversed, suspended or vacated.

     2.22 Benefit Plans.  nReach does not have any pension plan, profit sharing,
option or similar  employee  benefit plan.  Evidence of the  cancellation of any
such plan has been previously delivered to SmartServ.

     2.23  Consents  and  Approvals.  Except for the consent and approval of the
nReach  Shareholders,  no consents or approvals of, or filings or  registrations
with,  any  third  party  or any  public  body or  authority  are  necessary  in
connection  with (i) the execution and delivery by nReach of this  Agreement and
(ii) the consummation by nReach of the transactions contemplated hereby.

     2.24 Finder's Fees. nReach has taken no action which would give rise to any
claim by any person for brokerage commissions, finders' fees or the like against
SmartServ relating to this Agreement or the transactions contemplated hereby.

     2.25 Employee Matters.  No employees of nReach are on strike or to the best
of nReach's knowledge  threatening any strike or work stoppage.  nReach does not
have any obligations under any collective  bargaining or labor union agreements,
nor is nReach involved in any material  controversy

                                       13
<PAGE>

with any of its employees or any organization representing any of its employees.
nReach believes its relationships with its employees are good.

     2.26 Disclosure.  None of the information  supplied or to be supplied by or
about  nReach  herein or for  inclusion  or  incorporation  by  reference in any
information to be supplied to holders of SmartServ  Common Stock concerning this
Agreement and transactions  contemplated hereby contains any untrue statement of
a  material  fact or omits to state  any  material  fact  required  to be stated
therein or necessary in order to make the  statements  therein,  in light of the
circumstances under which they are made, not misleading.

     2.27 Actions  Prior to Closing.  From the date hereof  through the Closing,
nReach shall not, other than in the ordinary course of business, consistent with
past practice, without due consent of SmartServ:

               (i) sell,  lease,  assign,  transfer or otherwise  dispose of any
          material assets;


               (ii) agree to assume or assume,  guarantee,  endorse or otherwise
          in any  way be or  become  responsible  or  liable  for,  directly  or
          indirectly, any material contingent obligation;

               (iii)  participate or engage in any  discussions or  negotiations
          with any person regarding, or enter into any transaction concerning, a
          merger,  stock  exchange or  consolidation,  other than with the other
          parties  hereto,  or  liquidate  or  dissolve  itself  (or  suffer any
          liquidation  or  dissolution)  or convey,  sell,  lease,  transfer  or
          otherwise  dispose  of,  in one  transaction  or a series  of  related
          transactions,  all or a substantial  part of its  property,  business,
          assets or,  capital stock or securities  convertible  into equity,  or
          make any material change in the present method of conducting business;

               (iv) make any amendment to its  certificate of  incorporation  or
          bylaws;

               (v) enter into or amend any employment agreements or increase the
          salary or bonus of any existing employee;

               (vi)  create,  incur,  assume or suffer to exist,  any  mortgage,
          pledge,  lien,  charge,  security  interest or encumbrance of any kind
          upon any of its property, assets, income or profits, whether now owned
          or hereafter acquired;

               (vii) declare or authorize any dividends or  distributions on any
          shares of capital stock of nReach.

     2.28  Charter  Documents.  The  charter  documents  of nReach have not been
altered since its  incorporation,  except as filed in the record books of nReach
and delivered to SmartServ.

                                       14
<PAGE>

     2.29  Corporate  Minute  Books.  The  corporate  minute books of nReach are
complete and the minutes and consents  contained therein  accurately reflect the
actions that were taken at a duly called and held meeting or by consent  without
a meeting. All actions by nReach which required director or shareholder approval
are  reflected  on the  corporate  minute  books  of  nReach.  nReach  is not in
violation  or  breach  of,  or in  default  with  respect  to,  any  term of its
Certificate of Incorporation (or other charter documents) or by-laws.

     2.30 Environmental Matters. nReach has, in all material respects,  complied
with and are in compliance with all material Federal,  state,  local and, so far
as it is required,  foreign  statutes,  laws,  ordinances,  regulations,  rules,
notices, permits,  judgments,  orders and decrees applicable to it or any of its
respective   properties,   assets,   operations  and   businesses   relating  to
environmental  protection  (collectively  "Environmental Laws"). nReach does not
have any actual or  contingent  liability in connection  with any  Environmental
Laws which would have a material adverse effect on its business or assets.

     2.31 Real Property.  Except as set forth in Section 2.31 of the schedule of
exceptions,  nReach does not own or lease any real property. Except as set forth
in  Section  2.31  of  the  disclosure  schedule,   nReach  does  not  have  any
obligations,  directly or indirectly,  pursuant to any lease or other  agreement
related to real property.  Copies of all lease agreements  binding on nReach are
in writing and have been delivered to SmartServ.


                                   ARTICLE III
                   SMARTSERV'S REPRESENTATIONS AND WARRANTIES

     SmartServ hereby represents and warrants to, and agrees with, the nReach as
follows:

     3.1  Corporate   Existence;   Validity  of  Transaction.   SmartServ  is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware  and has the  corporate  power to carry on all business
conducted by it, and is duly  authorized  and qualified to do business under all
applicable  laws,  regulations,  ordinances and orders of public  authorities to
carry on its business in the places and in the manner as now  conducted,  except
where the failure to be so  authorized  or  qualified  would not have a material
adverse  effect on the  business or  operations  of nReach.  The  execution  and
delivery of this Agreement by SmartServ and the performance of the  transactions
contemplated  herein  have  been  duly and  validly  authorized  by the Board of
Directors of SmartServ.  This Agreement has been duly and validly  authorized by
all necessary  corporate action and is a legal,  valid and binding obligation of
SmartServ,  enforceable in accordance with its terms,  except as the same may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
other laws  relating  to or  affecting  the  enforcement  of  creditors'  rights
generally,  now or  hereafter  in  effect  and  subject  to the  application  of
equitable principles and the availability of equitable remedies.

     3.2 Authorization, Etc. SmartServ has full corporate power and authority to
enter into

                                       15
<PAGE>

this  Agreement and all ancillary  documents to which it is a party and to carry
out the  transactions  contemplated  hereby and thereby  and no other  corporate
proceedings on the part of SmartServ are necessary to authorize this  Agreement,
such ancillary  documents and the transactions  contemplated hereby and thereby.
The Board of Directors of SmartServ or the appropriate committee thereof has or,
prior to  Closing  will  have,  duly  authorized  the  execution,  delivery  and
performance of this  Agreement,  the ancillary  documents to which it is a party
and the  transactions  contemplated  hereby  and  thereby.  Upon  execution  and
delivery of this Agreement and the ancillary documents by the parties hereto and
thereto,  this  Agreement  and the ancillary  documents to which  SmartServ is a
party shall  constitute  the legal,  valid and binding  obligation of SmartServ,
enforceable against it in accordance with their respective terms.

     3.3  Governmental  Authorities.  SmartServ  has  complied  in all  material
respects with all applicable laws,  rules,  regulations and orders in connection
with its execution,  delivery and performance of this  Agreement,  the ancillary
documents to which it is a party and the  transactions  contemplated  hereby and
thereby.  Except as  otherwise  expressly  disclosed  herein,  SmartServ  is not
required to submit any notice,  report,  or other  filing with any  governmental
authority in connection  with its execution or delivery of this  Agreement,  the
ancillary  documents  to  which  it  is a  party  or  the  consummation  of  the
transactions  contemplated  hereby and thereby.  Except as  otherwise  expressly
provided for herein, no authorization, consent, approval, exemption or notice is
required to be obtained by SmartServ in connection with the execution, delivery,
and  performance  of this  Agreement,  the ancillary  documents to which it is a
party and the  transactions  contemplated  hereby and  thereby.  SmartServ  will
comply in all material  respects with all applicable  regulations  and orders in
connection  with its execution,  delivery and  performance of this Agreement and
the transactions contemplated hereby.

     3.4 Legal Proceedings. Except as disclosed in its filings with the SEC: (i)
there are,  and on the  Closing  Date  there will be, no legal,  administrative,
arbitral or other proceedings,  claims,  actions or governmental  investigations
pending  against  SmartServ  or  challenging  the  validity or  propriety of the
transactions contemplated by this Agreement and (ii) SmartServ is not a party to
any order,  judgment or decree,  in either case which might reasonably be likely
to have a  material  adverse  effect on the  business,  financial  condition  or
results of operation of SmartServ.

     3.5  SmartServ  Shares.  The shares of SmartServ  Common Stock to be issued
hereunder to the nReach Shareholders  constitute valid and legally issued shares
of the common stock of SmartServ, and upon issuance in accordance with the terms
hereof, will be fully paid and nonassessable.

     3.6 Finder's  Fees.  SmartServ has taken no action which would give rise to
any claim by any person for  brokerage  commissions,  finders'  fees or the like
against  nReach or any nReach  Shareholder  relating  to this  Agreement  or the
transactions contemplated hereby.

     3.7 No Violation.  The execution,  delivery and performance by SmartServ of
this  Agreement  and the  ancillary  documents  to which it is a party,  and the
fulfillment  of and compliance  with the respective  terms hereof and thereof by
SmartServ do not and will not (a) conflict  with or

                                       16
<PAGE>

result in a  material  breach of the terms,  conditions  or  provisions  of, (b)
constitute a default or event of default  under (with due notice,  lapse of time
or both), (c) give any third party the right to accelerate any obligation under,
(d)  result  in a  violation  of, or (e)  require  any  authorization,  consent,
approval,  exemption  or other action by or notice to any  individual  or entity
pursuant to, the  certificate of  incorporation  or bylaws of SmartServ,  or any
law,  rule,  or  regulation  applicable  to which  SmartServ is subject,  or any
material  contract or order to which  SmartServ or its  properties  are subject.
SmartServ will comply with all applicable  regulations  and orders in connection
with  its  execution,  delivery  and  performance  of  this  Agreement  and  the
transactions contemplated hereby.

     3.8 SEC Reports.  SmartServ has filed with the SEC, and has made  available
to  nReach,  complete  and  correct  copies of all  forms,  reports,  schedules,
statements  and other  documents  required  to be filed by  SmartServ  under the
Securities  Act and the  Exchange  Act (as such  documents  have been amended or
supplemented since the time of their filing) (collectively,  the "SEC Reports").
As of their respective dates, the SEC Reports (including without limitation, any
financial  statements  or  schedules  included  therein) (a) did not contain any
untrue  statement of a material fact required to be stated  therein or necessary
in order to make the  statements  made  therein,  in light of the  circumstances
under which they were made,  not  misleading,  and (b)  complied in all material
respects with the applicable requirements of the Securities Act and Exchange Act
(as the  case  may  be) and all  applicable  rules  and  regulations  of the SEC
promulgated thereunder.

                                   ARTICLE IV
                                 CONFIDENTIALITY

     4.1  Confidentiality.  "Confidential  Information"  means  any  information
disclosed by any party hereto to any other party,  in writing,  or by inspection
of tangible  objects,  which is designated as  "Confidential,"  "Proprietary" or
some similar designation or any information  (specifically  including via e-mail
communications and due diligence materials provided to the other party,  whether
or  not  such   communications  and  materials  are  marked   "Confidential"  or
"Proprietary),  which by the  circumstances of disclosure,  or the nature of the
information  itself,  should  reasonably  be understood  to be  proprietary  and
confidential.  Confidential  Information  is  explicitly  understood to include,
without limitation,  any concepts,  business models, marketing plans, proposals,
business  plans,  financial data,  customer and prospect lists and  information,
personnel data, contract information, properties, methods of operation, recipes,
software,  trade  secrets,   inventions,   discoveries,  and  know-how,  of  the
disclosing  party.  Confidential  Information  shall not,  however,  include any
information  which (a) was publicly  known and made  generally  available in the
public  domain prior to the time of  disclosure  by the  disclosing  party;  (b)
becomes  publicly known and made  generally  available  after  disclosure by the
disclosing  party to the  receiving  party  through no action or inaction of the
receiving  party; (c) is already in the possession of the receiving party at the
time of disclosure  by the  disclosing  party as shown by the receiving  party's
files and records  immediately prior to the time of disclosure;  (d) is obtained
by the receiving party from a third party without a breach of such third party's
obligations of confidentiality;  (e) is independently developed by the receiving
party  without  use of or  reference  to  the  disclosing  party's  Confidential
Information, as shown by documents and other competent evidence in the receiving
party's  possession;  or (f) is required by law to be disclosed by the receiving
party;  provided,  that the receiving  party gives the  disclosing  party prompt
written notice

                                       17
<PAGE>

of such legal  requirement  prior to such disclosure and provides  assistance in
obtaining an order protecting the information from public disclosure.

     4.2  Non-use  and  Non-disclosure.   Each  party  agrees  not  to  use  any
Confidential  Information  of the other party for any purpose except to evaluate
and engage in discussions  concerning a potential business  relationship between
the parties,  and each party  agrees to hold and continue to hold all  disclosed
Confidential  Information in trust and in  confidence.  Each party agrees not to
disclose any  Confidential  Information  of the other party to third  parties or
such party's  employees or agents without prior written  consent to such party's
employees,  except to those  employees and agents of the receiving party who are
required to have the  information  in order to evaluate or engage in discussions
concerning the contemplated business  relationship.  Neither party shall reverse
engineer,  disassemble or decompile any  prototypes,  software or other tangible
objects which embody the other party's  Confidential  Information  and which are
provided to the party hereunder.  Each party agrees to notify the other party in
writing of any misuse or  misappropriation  of  Confidential  Information of the
other party that comes to its attention.

     4.3  Maintenance of  Confidentiality.  Each party agrees that it shall take
reasonable  measures  to  protect  the  secrecy  of  and  avoid  disclosure  and
unauthorized  use of the  Confidential  Information of the other party.  Without
limiting the  foregoing,  each party shall take at least those  measures that it
takes to protect its own most highly confidential information and shall take the
necessary  steps to  inform  and make all of its  employees  who have  access to
Confidential Information aware of their duty of confidentiality.

     4.2  Injunctive  Relief.  Because of the  difficulty of measuring  economic
losses  to the  disclosing  party  as a  result  of a  breach  of the  foregoing
covenants  in this  Article IV, and  because of the  immediate  and  irreparable
damage that could be caused to the  disclosing  party for which it would have no
other adequate  remedy,  each and every receiving party, on behalf of itself and
its employees, directors, shareholders,  consultants,  contractors and advisors,
agrees that the foregoing  covenants may be enforced by the disclosing  party in
the  event of breach  by it or them,  by  injunctions  and  restraining  orders.
Nothing  herein shall be  construed as  prohibiting  the  disclosing  party from
pursuing  any other  available  remedy  for such  breach or  threatened  breach,
including the recovery of damages.

     4.5  Survival.  The  obligations  of the parties  under this Section  shall
survive the termination of this Agreement.

                                    ARTICLE V
                           TERMINATION AND ABANDONMENT

     5.1  Methods of  Termination.  This  Agreement  may be  terminated  and the
transactions  herein  contemplated  may be abandoned  at any time,  upon written
notice:

          (a) by mutual consent of nReach and SmartServ; or

                                       18
<PAGE>

          (b) by nReach or  SmartServ  if Closing has not  occurred on or before
     February  29,  2004;  provided  that the party  seeking to  terminate  this
     Agreement  pursuant to the preceding  sentence shall not be, on the date of
     such termination, in material breach of its representations,  warranties or
     covenants under this Agreement; or

          (c)  by  SmartServ  if,  as  of  the  Closing  Date   (including   any
     extensions),   any  of  the  conditions  specified  in  this  Agreement  as
     requirements  to be completed by nReach shall not have been satisfied or if
     nReach or any  nReach  Shareholder  is  otherwise  in  default  under  this
     Agreement; or

          (d) by  SmartServ if it is not  satisfied  with the results of its due
     diligence investigation of nReach; or

          (e) by nReach or the nReach  Shareholders  if, as of the Closing  Date
     (including  any  extensions),  any  of the  conditions  specified  in  this
     Agreement as  requirements to be completed by SmartServ shall not have been
     satisfied or if SmartServ is otherwise in default under this Agreement.

     5.2 Procedure Upon Termination. In the event of termination and abandonment
pursuant  to Section 5.1 hereof,  and subject to the proviso  contained  in this
Section 5.2, this  Agreement  shall  terminate  and shall be abandoned,  without
further action by any of the parties hereto.  If this Agreement is terminated as
provided  herein each party shall  redeliver all documents and other material of
any other  party  relating  to the  transactions  contemplated  hereby,  whether
obtained before or after the execution hereof, to the party furnishing the same;

                                   ARTICLE VI
                       SURVIVAL OF TERMS; INDEMNIFICATION

     6.1 Survival; Knowledge.

     (a) Each representation,  warranty, covenant and agreement of nReach or any
nReach  Shareholder  contained herein or in any instrument or document furnished
in connection with this Agreement or the transactions contemplated hereby, shall
survive the  execution  and delivery of this  Agreement  and the Closing and any
investigation at any time made by or on behalf of SmartServ for a period of time
equal to the  greater  of two years or until the  expiration  of the  applicable
statute of limitation, including any extensions thereof.

     (b) The right to indemnification,  payment of damages or other remedy based
on such  representations,  warranties,  covenants,  and obligations  will not be
affected  by any  investigation  conducted  with  respect  to, or any  knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this  Agreement or the Closing  Date,  with respect to
the accuracy or  inaccuracy  of or  compliance  with,  any such  representation,
warranty,  covenant,  or  obligation.  The waiver of any condition  based on the
accuracy  of  any  representation  or  warranty,  or on  the  performance  of or
compliance  with any  covenant  or  obligation,  will not  affect  the

                                       19
<PAGE>

right to  indemnification,  payment of damages,  or other  remedy  based on such
representations, warranties, covenants, and obligations.

     6.2 Indemnification by nReach Shareholders. (a) Subject to this Article VI,
each of Stemple and Clint Fayling (each, an "nReach  Indemnifying Party") shall,
jointly and severally, indemnify, defend and hold harmless each of SmartServ and
its  officers,   directors,   employees,   stockholders,   members,   attorneys,
accountants, partners,  representatives,  agents, successors and assigns of each
of the foregoing (each a "SmartServ  Indemnified  Party" and  collectively,  the
"SmartServ Indemnified Parties"), at all times after the date of this Agreement,
against  and  in  respect  of  any  and  all  losses,  costs,  claims,  damages,
liabilities,  expenses (including, without limitation, the reasonable legal fees
and expenses),  directly or  indirectly,  solely to the extent arising out of or
relating  to  any  of  the   following:   (a)  any   intentional   material  (i)
misrepresentation,  (ii)  breach of  warranty,  or (iii)  nonfulfillment  of any
covenant  or other  obligation  on the part of nReach or any nReach  Shareholder
under this Agreement or any of the ancillary documents; (b) any conduct, action,
inaction  of nReach or any nReach  Shareholder  arising  from or relating to the
operation,   management   or  ownership  of  nReach   before  the  Closing  Date
constituting  gross  negligence  or  willful  misconduct;  and (c) all  demands,
assessments,  judgments,  costs and reasonable  legal and other expenses arising
from, or in connection with any claim incident to any of the foregoing.

     (b)  Indemnification  by SmartServ.  Subject to this Article VI,  SmartServ
shall  indemnify and hold harmless the nReach  Shareholders  (collectively,  the
"nReach  Indemnified  Parties"),  from and against all  losses,  costs,  claims,
damages, liabilities, expenses (including reasonable attorneys' and accountant's
fees,  costs of suit and costs of appeal),  fines and penalties  incurred by any
nReach Indemnified Party,  directly or indirectly,  solely to the extent arising
out of or relating to any of the  following:  (a) any  intentional  material (i)
misrepresentation,  (ii)  breach of  warranty,  or (iii)  nonfulfillment  of any
covenant or other  obligation on the part of SmartServ  under this  Agreement or
any of the ancillary  documents;  and (b) all demands,  assessments,  judgments,
costs and  reasonable  legal and other  expenses  arising from, or in connection
with any claim incident to any of the foregoing.

     6.3 If any party (the "Indemnified  Party") receives notice of any claim or
other  commencement  of any action or proceeding with respect to which any other
party  (or  parties)  (the   "Indemnifying   Party")  is  obligated  to  provide
indemnification  pursuant  to this  Article  VI,  the  Indemnified  Party  shall
promptly give the  Indemnifying  Party written notice thereof which notice shall
specify,  if known,  the amount or an  estimate  of the amount of the  liability
arising  therefrom  and all known facts  associated  with such claim,  action or
proceeding.  The failure of a party to give notice  under this Section 6.3 shall
not relieve any party from  liability,  unless and to the extent the other party
has been materially  prejudiced thereby.  The Indemnified Party shall not settle
or  compromise  any  claim  by a  third  party  for  which  it  is  entitled  to
indemnification hereunder, without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld, conditioned, or delayed) unless
a suit shall have been instituted  against it and the Indemnifying  Party either
(i) shall not have  undertaken  the  defense  of such  suit  after  notification
thereof as provided in Section 6.4 or (ii) is  demonstrably  unable to undertake
the defense of such suit or satisfy the claims arising thereunder.

                                       20
<PAGE>

     6.4 Defense by Indemnifying Party.

     (a) In  connection  with  any  claim  giving  rise to  indemnity  hereunder
resulting  from or arising out of any claim or legal  proceeding by a person who
is not a party to this Agreement,  the  Indemnifying  Party at its sole cost and
expense may, upon written notice to the Indemnified Party, assume the defense of
any such claim or legal  proceeding  using counsel of its choice (subject to the
approval  of the  Indemnified  Party,  which  approval  may not be  unreasonably
withheld,  conditioned or delayed).  The Indemnifying Party shall have the right
to settle  any  claim  against  it or as to which it has  assumed  the  defense,
subject to the prior written approval of the Indemnified  Party,  which approval
shall not be unreasonably withheld,  conditioned or delayed,  provided that such
settlement  involves only the payment of a fixed sum which the Indemnified Party
is  obligated  to pay and does not include any  admission  of liability or other
such similar  admissions by or related to the Indemnified  Party with respect to
such claim. An Indemnified  Party shall have the right to employ its own counsel
in any case,  but the fees and expenses of such counsel  shall be at the expense
of the  Indemnified  Party unless (i) the  employment of such counsel shall have
been  authorized in writing by the  Indemnifying  Party in  connection  with the
defense  of such  action  or  claim,  (ii)  the  Indemnified  Party  shall  have
reasonably  concluded  that  there  may be  defenses  available  to it which are
contrary to, or inconsistent with, those available to the Indemnifying Party, in
any of which  events  such  reasonable  fees and  expenses  of not more than one
additional  counsel for the Indemnified Party shall be borne by the Indemnifying
Party. In the event that the  Indemnifying  Party shall assume or participate in
the defense of such audit,  assessment or other  proceeding as provided  herein,
the  Indemnified  Party  shall  make  available  to the  Indemnifying  Party all
relevant  records and sign such documents as are necessary to defend such audit,
assessment or other proceeding in a timely manner

     (b) If the Indemnifying Party does not assume the defense of any such claim
or litigation  resulting  therefrom,  the Indemnified Party may settle or defend
against  such  claim  or  litigation,  after  giving  notice  of the same to the
Indemnifying Party, on such terms as the Indemnified Party may deem appropriate,
and the Indemnifying Party shall be entitled to participate in (but not control)
the defense of such  action,  with its counsel  and at its own  expense.  If the
Indemnifying  Party  thereafter  seeks to  question  the  manner  in  which  the
Indemnified Party defended such third-party claim or the amount or nature of any
such  settlement,  the  Indemnifying  Party  shall have the burden to prove by a
preponderance  of the  evidence  that the  Indemnified  Party did not  defend or
settle such third-party  claim in a reasonably  prudent manner.  Notwithstanding
the foregoing,  however,  SmartServ shall in all cases be entitled to control of
the  defense  of any such  action if it (i) may result in  injunctions  or other
equitable  remedies in respect of SmartServ or its business;  (ii) may result in
liabilities which, taken with other then-existing claims by SmartServ under this
Article  VI,  would  not be fully  indemnified  hereunder;  or (iii) may have an
adverse impact on the business or the financial condition of SmartServ including
an effect on the tax liabilities,  earnings or ongoing business relationships of
SmartServ even if nReach or any nReach Shareholder satisfies all indemnification
amounts in full.  If the  Indemnifying  Party  desires to appeal from an adverse
judgment,  then  the  Indemnifying  Party  shall  post  and pay the  cost of the
security or bond to stay  execution of the  judgment  pending  appeal.  Upon the
payment in full by the  Indemnifying  Party of

                                       21
<PAGE>

such  amounts,  the  Indemnifying  Party  shall  succeed  to the  rights  of the
Indemnified  Party,  to the extent not waived in  settlement,  against the third
party who made such third party claim.

     6.5 Limitation on Indemnification.

     (a)  None  of  the   SmartServ   Indemnified   Parties   shall  assert  any
Indemnification claim hereunder against any nReach Indemnifying Party until such
time as, and solely to the extent that,  the  aggregate of all such claims which
such  parties may have  against such nReach  Indemnifying  Parties  shall exceed
$7,500.

     (b) None of the nReach Indemnified Parties shall assert any Indemnification
claim hereunder  against  SmartServ until such time as, and solely to the extent
that,  the  aggregate  of all such  claims  which the nReach  Shareholders  have
against SmartServ shall exceed $7,500.

     (c)  Notwithstanding   any  other  term  of  this  Agreement,   the  nReach
Indemnifying  Parties shall not, in the aggregate,  be liable under this Article
VI (or otherwise) for an amount which exceeds $750,000.

     (d) At its sole option,  in addition to all other rights and remedies  that
it may have,  SmartServ  shall  have the right to set off,  in whole or in part,
amounts  owed under  this  Article VI to  SmartServ  by any nReach  Indemnifying
Party,  against  the  Earnout  Shares to be issued to such  nReach  Indemnifying
Parties hereunder, if any.

     (e)   The   parties   have   negotiated   the    indemnification    rights,
responsibilities and obligations set forth in this Article VI with the intention
that this Article VI shall  constitute  each of their sole and exclusive  remedy
with  respect  to any and  all  losses,  costs,  claims,  damages,  liabilities,
expenses  (including,   without  limitation,   the  reasonable  legal  fees  and
expenses),  directly  or  indirectly,  arising  out of or relating to any of the
following:  (a)  any  misrepresentation,  (ii)  breach  of  warranty,  or  (iii)
nonfulfillment of any covenant or other obligation;  or (b) any conduct, action,
inaction of any nReach  Shareholder  arising from or relating to the  operation,
management or ownership of nReach before the Closing Date, and in no event shall
any nReach  Shareholder  (other than an nReach Shareholder who is also an nReach
Indemnifying  Party) have any  liability to the  SmartServ  Indemnified  Parties
pursuant to this Article VI, or otherwise.

                                   ARTICLE VII
                                  MISCELLANEOUS

     7.1 Limitation of Liability. The representations and warranties made by any
party to this Agreement are intended to be relied upon only by the other parties
to this  Agreement and by no other person.  Nothing  contained in this Agreement
shall be deemed to confer  upon any  person  not a party to this  Agreement  any
third party beneficiary rights or any other rights of any nature whatsoever.

     7.2 Further Instruments and Actions.  Each party shall deliver such further
instruments  and take such further action as may be reasonably  requested by any
other in order to carry out the

                                       22
<PAGE>

intent and purposes of this Agreement.

     7.3 Governing Law. This Agreement is being  delivered and is intended to be
performed  in the State of  Delaware,  and shall be  construed  and  enforced in
accordance  with the laws of such state,  without  regard to  conflicts  of laws
thereof.  If either party shall  commence an action or proceeding to enforce any
provisions  of this  Agreement,  then the  prevailing  party in such  action  or
proceeding  shall be reimbursed by the other party for its reasonable  attorneys
fees and other costs and expenses incurred with the  investigation,  preparation
and prosecution of such action or proceeding.

     7.4 Notices. All notices or other communications to be sent by any party to
this Agreement to any other party to this  Agreement  shall be sent by certified
mail,  personal  delivery  or  nationwide  overnight  courier  to the  addresses
hereinbefore designated,  or such other addresses as may hereafter be designated
in writing by a party.  Notice shall be deemed given and received on the date of
actual delivery to the address specified thereon.

     7.5 Binding Agreement. This Agreement and the ancillary documents expressly
contemplated  hereby  executed by the parties in  connection  herewith as of the
date hereof represent the entire agreement among the parties hereto with respect
to the  matters  described  herein  and is binding  upon and shall  inure to the
benefit of the parties  hereto and their legal  representatives,  successors and
permitted  assigns.  This  Agreement may not be assigned  and,  except as stated
herein,  may not be altered or amended except in writing  executed by all of the
parties hereto.

     7.6  Counterparts.  This Agreement may be executed in counterparts,  all of
which, when taken together, shall constitute the entire Agreement.

     7.7 Severability.  The provisions of this Agreement shall be severable,  so
that the  unenforceability,  validity or legality of any one provision shall not
affect the  enforceability,  validity or legality  of the  remaining  provisions
hereof.

     7.8 Joint  Drafting.  This  Agreement  shall be deemed to have been drafted
jointly by the parties hereto,  and no inference or  interpretation  against any
party  shall be made  solely by virtue of such party  allegedly  having been the
draftsperson of this Agreement.

     7.9 Reliance on Certificates.  In rendering any opinion referred to herein,
counsel for the parties hereto may rely, as to any factual  matters  involved in
their respective opinions,  on certificates of public officials and of corporate
and company officers,  and on such other evidence as such counsel may reasonably
deem  appropriate  and, as to the matters  governed by the laws of jurisdictions
other  than the  United  States or the State of  Delaware,  an  opinion of local
counsel in such other  jurisdiction(s),  which counsel shall be  satisfactory to
the other parties in the exercise of their reasonable discretion.

     7.10  Public  Announcements.  All  parties  hereto  agree  that any  public
announcement,  press  release or other public  disclosure of the signing of this
Agreement  shall be made jointly and only

                                       23
<PAGE>

after all parties  hereto have  reviewed and approved the language and timing of
such disclosure, except as such disclosure may be required pursuant to any legal
obligation  or order of any court  having  proper  jurisdiction  over any of the
parties  hereto.  The parties hereby  acknowledge and agree that SmartServ shall
file  a  Current  Report  on  Form  8-K  following  the   consummation  of  this
transaction,  disclosing the  transactions  contemplated  hereby and making such
other filings and notices in the manner and time required by the SEC.

     7.11  Consent.  Whenever  consent  is  required  to be  given by any of the
Companies to any of the other Companies  hereunder in connection with any matter
contemplated hereby, such consent shall not be unreasonably withheld, delayed or
conditioned.

     7.12 Expenses.  Except as otherwise  provided for herein,  each party shall
pay its own  expenses  incident  to the  preparation  and  consummation  of this
Agreement, although SmartServ acknowledges and agrees that the fees and expenses
of nReach  and the nReach  Shareholders  in an amount up to the Fee Cap is being
accrued  by nReach  prior to the  Closing  and will be paid by nReach out of its
operations after Closing up to such Fee Cap.

     7.13  Effectiveness.  This  Agreement  shall be deemed to be effective upon
execution and delivery by nReach, SmartServ,  Michael Stemple and Clint Fayling.
If for any reason all other nReach  Shareholders  have not  delivered  signature
pages hereto to SmartServ  within 10 business  days  following  the date hereof,
SmartServ may terminate this Agreement upon written notice to nReach.

                                       24
<PAGE>



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

                                        NREACH, INC.


                                        By: /s/ Mike Stemple
                                           -------------------------------------
                                        Name: Mike Stemple
                                        Title: CEO

                                        SMARTSERV ONLINE, INC.


                                        By: /s/ Robert M. Pons
                                           -------------------------------------
                                        Name: Robert M. Pons
                                        Title: President & CEO

NREACH SHAREHOLDERS:

/s/ Mike Stemple                        /s/ Chris Stemple
-------------------------------         ----------------------------------------
Mike Stemple                            Chris Stemple

/s/ Mike Rosol                          /s/ Blake Fayling
-------------------------------         ----------------------------------------
Mike Rosol                              Blake Fayling

/s/ Clint Fayling                       /s/ Jan Martin
-------------------------------         ----------------------------------------
Clint Fayling                           Jan Martin

/s/ C. Andrew Shepp                     /s/ E. Lee Reichert, Member
-------------------------------         ----------------------------------------
C. Andrew Shepp                         JAWLER Investments, LLC

/s/ Andy Casazza                        /s/ Curtis and Patricia Jensen
-------------------------------         ----------------------------------------
Andy Casazza                            Curtis and Patricia Jensen

/s/ Curtis Jensen
-------------------------------
Fuzion Ventures, LLC

                                       25

</TEXT>
</DOCUMENT>
