Exhibit 10.5

SMART ONLINE, INC.

Equity Award Program

(Approved, November 2007)

The Equity Award Program of Smart Online, Inc. (the “Company”) is designed to
encourage the Company’s employees to focus on its long-term performance and
provide an opportunity for employees to increase their stake in the Company. All
employees of the Company, including named executive officers, would be eligible
to receive annual cash bonus awards.

The equity pool of shares of restricted stock available for award under the
program is equal to the number of shares resulting from subtracting from
1,000,000 shares the following: (1) the number of outstanding shares of
restricted stock as of December 12, 2007, and (2) the number of shares issuable
upon exercise or exchange of outstanding options. The resulting pool of
restricted shares is to be distributed over the next five years in equal annual
amounts. The chief executive officer of the Company will provide recommendations
for such restricted stock awards at the board of director’s meeting held during
the fourth quarter of each fiscal year, with awards to be granted as of January
1 of the following fiscal year. The restrictions on the shares of restricted
stock granted to an employee would lapse as to 50% of such shares on the second
anniversary of the grant date, as to 25% of such shares on the third anniversary
of the grant date, and as to 25% of such shares on the fourth anniversary of the
grant date.