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Exhibit 10.40
 

 
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
 
THIS AMENDMENT, dated as of the latter of the two dates set forth under the
signatures below (the “Amendment”), to the Registration Rights Agreement,
effective _________ ____, 2005 (the “Agreement”), is by and between Smart
Online, Inc., a Delaware corporation (the “Company”) and the undersigned
(together with its affiliates, successors, assigns, or transferees of its rights
under the Agreement or this Amendment, the “Investor”).
 
WHEREAS, the Company and the Investor previously entered into the Agreement in
connection with the Subscription Agreement with the Company for the purchase of
a certain number of shares of the Company’s common stock (the “Shares”), and
 
WHEREAS, the Agreement provides that, inter alia, the Company is required to pay
a certain penalty each month to the Investor if the Shares have not been
registered for resale with the Securities and Exchange Commission (“SEC”) by a
certain date (the “Penalty”), and
 
WHEREAS, the Company and the Investor wish to amend the Agreement to settle the
amount of the Penalty owed to the Investor as calculated under the Agreement.
 
NOW THEREFORE, in consideration of the mutual promises and covenants set forth
in the Agreement and the Amendment, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor agree as follows:
 
1.  Section 2(b) of the Agreement is deleted in its entirety and replaced with
the following:
 
(b)    Payment by the Company. The Company shall use its best efforts to obtain
effectiveness of the Registration Statement as soon as reasonably practicable.
If the Registration Statement covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not filed by the Target
Filing Date, then the Company will make payment to the Investor in such amount
and at such time determined pursuant to this Section 2(b) as liquidated damages
by reason of any such delay in their ability to sell the Registrable Securities
(which remedy shall be exclusive of any other remedies available at law or in
equity). The Company shall pay to Investor an amount (the “Damage Amount”) equal
to $_______. In the sole discretion of the Company, the Company may issue to
Investor in lieu of the cash payment described above, a number of shares of
Common Stock of the Company equal to the quotient derived by dividing (i) the
Damage Amount, by (ii) purchase price per share set forth in Paragraph (1) of
the Subscription Agreement.

 
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2.  The cash payment to be made as the Damage Amount as set forth in Paragraph 1
of this Amendment shall be paid, or the shares in lieu of a cash payment shall
be issued, within thirty (30) days of the date of this Amendment.
 
3.  All capitalized terms not otherwise defined herein shall have the meaning
set forth in the Agreement.
 
4.  All other terms and conditions of the Agreement shall remain in full force
and effect.
 
IN WITNESS WHEREOF, the Company and the Investor have duly executed and
delivered this Amendment, effective as of the date set forth above.

SMART ONLINE, INC.
 
 
 
By: ______________________________
Name: ____________________________
Title: _____________________________
Date: _____________________________
INVESTOR
 
 
 
By: ______________________________
Name: ____________________________
Title: _____________________________
Date: _____________________________

 
 
 
 
 
 
 
 
 
 
 
 
 
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