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The following is an excerpt from a 10KSB/A SEC Filing, filed by SMARTSERV ONLINE INC on 5/12/2004.
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UPHONIA,INC. - 10KSB/A - 20040512 - COMPENSATION
Item 10. Executive Compensation

Executive Compensation

The following table sets forth, for each of the last three full fiscal years, information concerning annual and long-term compensation, paid or accrued for services in all capacities during the fiscal year ended December 31, 2003, for our Chief Executive Officers during 2003 and for the two executive officers (collectively, the "Named Executive Officers") with base salary and bonuses exceeding $100,000 during 2003:

                                                 Summary Compensation Table
                                                 --------------------------
                                      Annual Compensation                  Long-term Compensation
                             --------------------------------------- --------------------------------------

                                                          Other
                                                          Annual     Restricted   Securities
Name and Principal           Fiscal                    Compensation    Stock      Underlying    All Other
Position                      Year    Salary    Bonus     (1)(2)     Awards (3)   Options (4)  Compensation
-----------------------------------------------------------------------------------------------------------
Robert Pons (5)             2003     $44,000   $   --     $   --      $   --        50,000       $16,000
Chief Executive Officer     2002         -0-       --         --          --            --            --
                            2001         -0-       --         --          --            --            --

Sebastian E. Cassetta (6)   2003      90,449       --         --          --            --        12,941(8)
Former Chief Executive      2002     215,521       --      7,500          --        34,667        42,022(8)
Officer                     2001     255,000   50,000      9,750          --            --        37,218(8)

Thomas W. Haller (7)        2003     102,400        --     4,000          --            --         9,932(9)
Former Senior Vice          2002     134,479        --     6,000          --        13,250         9,932(9)
President and Chief         2001     164,558    37,500     6,000          --         3,750         9,932(9)
Financial Officer

Richard Kerschner (10)      2003     100,000       --         --          --            --            --
Former Senior Vice          2002     131,667       --         --          --            --            --
President and General       2001     160,000   48,000         --          --        13,333            --
Counsel

(1) Amounts shown consist of a non-accountable expense allowance.
(2) The aggregate amount of personal benefits not included in the Summary Compensation Table does not exceed the lesser of either $50,000 or 10% of the total annual salary and bonus paid to the Named Executive Officers.

(3) The Named Executive Officers did not receive any long-term incentive plan payouts during fiscal 2003, 2002 or 2001.

(4) All options granted to the Named Executive Officers in 2002 were the result of the reduction of the exercise prices of options to purchase a like number of shares granted in previous years. The exercise price reductions were approved by our stockholders at the Annual Meeting of Stockholders on December 13, 2002. The previously granted options are shown in the table if such options were granted during the reported period. Mr. Pons' warrants were granted in 2003 pursuant to his Consulting Agreement with us dated August 4, 2003.

(5) Salary reflects amounts paid under Mr. Pons' Consulting Agreement with us dated August 4, 2003. Mr. Pons served as Interim Chief Executive Officer from August 28, 2003 to January 24, 2004 pursuant to this Consulting Agreement. He is now our Chief Executive Officer.

(6) Mr. Cassetta left our employ in August 2003.
(7) Mr. Haller left our employ in January 2004.
(8) Amount represents premiums paid by for life and disability insurance for the benefit of Mr. Cassetta and membership dues approved by the Board of Directors.
(9) Amounts represent premiums paid by us for life insurance for the benefit of the employee.
(10) Mr. Kerschner left our employ in February 2004.

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Stock Options

The following table sets forth information with respect to stock options granted to the Named Executive Officers in fiscal year 2003:

Option Grants in Last Fiscal Year

                                    Number of         % of Total Options Granted
                              Securities Underlying   to Employees in the fiscal    Exercise           Expiration
Name                            Options Granted(1)              year(2)               Price               Date
----------------------------- ----------------------- --------------------------- ----------------- ---------------------
Robert Pons                          41,667(1)                 83.3%                   $2.04           August 4, 2008

                                      8,133(1)                 16.7%                   $2.04           August 4, 2008

(1) Represents warrants to purchase shares of our common stock issued to Mr. Pons pursuant to his consulting arrangement with us. See "Agreements with Named Executive Officers" for details.
(2) We did not grant any options in fiscal year 2003. However, during fiscal year 2003 we did grant these warrants to Mr. Pons, who subsequently became our Interim Chief Executive Officer in August 2003.

The following table sets forth information as to the number of unexercised shares of common stock underlying stock options and the value of unexercised in-the-money stock options at December 31, 2003:

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Value (1)(2)

                                                   Number of Unexercised       Value of Unexercised
                                                  Securities Underlying        In-The-Money Options
                          Shares                  Options at Fiscal Year        at Fiscal Year End
                        Acquired on      Value      End Exercisable/              Exercisable/
Name                     Exercise      Realized      Unexercisable                Unexercisable
---------------------------------------------------------------------------------------------------
Robert Pons                   --          --          50,000/0                      $0/$0

Sebastian E. Cassetta         --          --          21,250/0                      $0/$0

Thomas W. Haller              --          --        29,083/1,500                    $0/$0

Richard Kerschner             --          --          21,667/0                      $0/$0

(1) Value is based on the closing price of our common stock as reported by the OTC Bulletin Board on December 31, 2003 ($1.40) less the exercise price of the option.
(2) No stock options were exercised by the Named Executive Officers during the fiscal year ended December 31, 2003.

Agreements with Named Executive Officers

We entered into a consulting agreement with Robert Pons, dated August 4, 2003 ("Pons Consulting Agreement"), whereby Mr. Pons rendered consulting services to us related to our business activities, strategic planning, and market research and strategic due diligence on proposed business opportunities. The agreement had an initial term of four months and was continued until he became our Chief Executive Officer on January 24, 2004. As compensation for such services, we agreed to pay him a cash fee of $15,000 per month ($4,000 of which was deferred until we closed a financing on no less than $2.5 million), issued to him a warrant to purchase 41,667 shares of our common stock, which was changed to 50,000 shares of our common stock, and agreed to pay him a transaction fee equal to 1% of (i) any cash or securities received by us from any equity transaction during the term of the agreement and (ii) sales revenue received and recognized by us resulting

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from his assistance. The warrant expires in August 2008, is convertible at the price of $2.04 per share, and became exercisable in December 2003. The Pons Consulting Agreement was entered into prior to Mr. Pons becoming our Interim Chief Executive Officer on August 28, 2003.

We entered into an Employment Agreement with Robert Pons, dated March 12, 2004. The agreement provides for a 4 year term with a base annual salary of $210,000 in the first year of the term, subject to increases as determined by the Board of Directors. Mr. Pons shall also be eligible for bonuses in the event we meet certain performance goals related to raising additional capital, revenue targets or other goals mutually set by Mr. Pons and us. Mr. Pons also received an option to purchase 1,300,000 shares of our common stock under a non-plan option agreement, which option has an exercise price of $1.50 per share and a term of 10 years. The option provides for 557,141 shares to vest immediately and the remaining 742,859 shares to vest in equal amounts as of the last day of each calendar quarter commencing March 31, 2004. The options will vest immediately upon a Change of Control (as defined in his option agreement) or in the event Mr. Pons is terminated Other Than for Cause or he terminates employment for Good Reason (as each is defined under the Employment Agreement). Mr. Pons will also receive 12 months of base salary upon termination Other Than for Cause or if he terminates employment for Good Reason

We entered into a Separation Agreement with Sebastian E. Cassetta, our former Chairman and Chief Executive Officer, effective as of October 21, 2003 (the "Cassetta Separation Agreement"). The Cassetta Separation Agreement terminated Mr. Cassetta's rights under his employment agreement, including without limitation, any rights to compensation and severance, in exchange for the consideration set forth therein, including the following: (i) a cash payment for unpaid base salary and accrued vacation of $18,990.30, payable on or before October 31, 2003, (ii) forgiveness over a 3 year period of certain loans in the original principal amount of $500,000 plus accrued interest, (iii) extension of the Put Right contained in Mr. Cassetta's Restricted Stock Agreement dated December 28, 1998, allowing Mr. Cassetta 1 year instead of 60 days to either repay a promissory note in the original principal amount of $457,496.86 plus accrued interest, or return 94,707 restricted shares of our common stock in full satisfaction of such promissory note and accrued interest thereon.

In connection with his retirement, we entered into a Separation Agreement with Mario Rossi, our former Executive Vice President, Chief Technology Officer, and Director, effective as of October 21, 2003 (the "Rossi Separation Agreement"). The Rossi Separation Agreement terminated Mr. Rossi's rights under his employment agreement, including without limitation, any rights to compensation and severance, in exchange for the consideration set forth therein, including the following: (i) a cash payment for unpaid base salary and vacation of $16,667.00 payable in two equal installments on October 31, 2003 and November 20, 2003, (ii) a cash payment for unpaid contractual base salary of $112,500.00, of which $81,370.69 will be offset against Mr. Rossi's obligation to us of $47,004.00 in accrued interest on a restricted stock note in the original principal amount of $152,500 (the "Rossi Note"), and the remaining $31,129.31 to be paid in two equal installments on April 21, 2004 and October 21, 2004, (iii) a warrant to purchase 41,667 shares of our common stock at no less than $2.40 per share, and (iv) pursuant to Mr. Rossi's rights under a Restricted Stock Agreement, cancellation of the principal amount of the Rossi Note upon delivery by Mr. Rossi to us of the 34,347 shares of restricted stock securing the Rossi Note. In January 2004, Mr. Rossi assigned and transferred all 34,397 restricted shares of common stock to us in full satisfaction of the outstanding non-recourse debt of $68,000.

We entered into a retention agreement with Thomas W. Haller, Senior Vice President and Chief Financial Officer, effective as of June 20, 2003 (the "Haller Agreement"), pursuant to which Mr. Haller would receive the following severance benefits if he is terminated by us other than for Cause (as defined in the Haller Agreement): (i) 12 months of Mr. Haller's then current annual base salary (but in no event less than $165,000 per annum), plus any deferred and unpaid salary and bonus, payable in equal quarterly installments, in advance,
(ii) continuation of health, disability, and life insurance coverage for a period equal to the earlier of 12 months or Mr. Haller's eligibility for replacement coverage from a new employer, and (iii) vesting of any unvested stock options and extension of the exercise period of all stock options to one year from the Termination Date, as defined in the Haller Agreement. Mr. Haller left our employ in January 2004, which we believe does not trigger such severance benefits.

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We entered into a retention agreement with Richard D. Kerschner, Senior Vice President, General Counsel and Secretary, effective as of June 20, 2003 (the "Kerschner Agreement"), pursuant to which Mr. Kerschner would receive the following severance benefits if he was terminated by us other than for Cause (as defined in the Kerschner Agreement): (i) 9 months of Mr. Kerschner's then current annual base salary (but in no event less than $160,000 per annum), plus any deferred and unpaid salary and bonus, payable in equal quarterly installments, in advance, (ii) continuation of health and disability insurance coverage for a period equal to the earlier of 9 months or Mr. Kerschner's eligibility for replacement coverage from a new employer, and (iii) vesting of any unvested stock options and extension of the exercise period of all stock options to one year from the Termination Date, as defined in the Kerschner Agreement. In connection with him leaving our employ in February 2004, Mr. Kerschner entered into an Employee Separation Agreement with us, dated February 2, 2003, providing for his severance compensation of continuation of his current, reduced salary of $100,000 through June 30, 2004, a one-time payment of $15,000 and issuance of a warrant to purchase 50,000 shares of our common stock. The Employee Separation Agreement replaced and superceded the Kerschner Agreement. The warrant has a term of five years, is immediately exercisable, has an exercise price of $1.65 per share, and contains registration rights for the shares underlying the warrants. In consideration of his severance payments, he agreed to join our Advisory Board to provide strategic advice and transition services until June 30, 2004.

Directors' Compensation

Each director who is not an officer or employee of SmartServ is reimbursed for his or her out-of-pocket expenses incurred in connection with attendance at meetings or other SmartServ business. As of January 1, 2004, each non-employee director receives a $1,500 fee for each meeting he or she attends. Additionally, each committee member receives up to $1,000 per committee meeting attended.

The Compensation Committee has the discretionary authority to grant options to directors. The exercise price of each share of common stock under any option granted to a director is equal to the fair market value of a share of common stock on the date the option was granted. On September 13, 2002, each director was granted an option to purchase 1,667 shares of our common stock at an exercise price of $8.52 per share, which was the average of high and low stock prices for the preceding day. As the then Vice Chairman of the Board of Directors, L. Scott Perry was granted an option to purchase an additional 5,000 shares at an exercise price of $8.52 per share. No options were granted to directors in the year ended 2003. Commencing January 1, 2003, the Compensation Committee set L. Scott Perry's compensation as Vice Chair at $5,000 per quarter, which arrangement has continued in his current position as Chairman of the Board of Directors.

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