Exhibit 10.4

SMART ONLINE, INC.

Cash Bonus Program

(Approved, November 2007)

The Cash Bonus Program of Smart Online, Inc. (the “Company”) is designed to
award and motivate employees for acting as partners with the Company to achieve
financial success during a fiscal year. All employees of the Company, including
named executive officers, would be eligible to receive annual cash bonus awards.

Pursuant to the program, each fiscal year commencing with fiscal 2008, a cash
bonus pool for awards shall be established based upon the Company’s net profit
as of the fiscal year end once a threshold net profit number of $300,000 is met
by the Company. If the threshold net profit number is met as of December 31 of
the fiscal year, a cash bonus pool of 10% of the actual net profit as of that
date shall be allocated for distribution to employees based on the
recommendations of management and approval of the Compensation Committee of the
Board. The bonuses would be awarded after the fiscal year audit is complete, and
each intended bonus recipient must be an employee at the time the bonus awards
are paid out in order to be eligible to receive an award.