Exhibit 10.1

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT, made and entered into as of the       day of
     , 2007, by and between Smart Online, Inc., a Delaware corporation (the
“Company), and      (the “Director”).

WHEREAS, in consideration of the services of the Director, the Company is
desirous of giving the Director shares of common stock of the Company under the
Company’s 2004 Equity Compensation Plan (the “Plan”) (all capitalized terms not
otherwise defined herein shall have the meaning set forth in the Plan), subject
to the restrictions set forth below.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set
forth below and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. Restricted Stock Award. The Company shall issue      (     ) shares of the
common stock of the Company (the “Securities”) to the Director, as part of the
Director’s compensation. The Securities are subject to the restrictions set
forth in Section 4 below.

2. Director Representations. The Director hereby acknowledges and represents the
following:

(a) Compensation. The Director acknowledges that the Securities are part of his
or her compensation from the Company.

(b) Taxes. The Director has not relied upon the Company with respect to any tax
consequences related to the acquisition or disposition of the Securities. The
Director acknowledges that the Director may incur a substantial tax liability.
The Director assumes full responsibility for all such consequences and the
filing of all tax returns and elections the Director may be required or find
desirable to file in connection therewith. In the event any valuation of the
Securities purchased pursuant to its exercise must be made under federal or
state tax laws and such valuation affects any return or election of the Company,
the Director agrees that the Company may determine such value and that the
Director will observe any determination so made by the Company in all returns
and elections filed by the Director. In the event the Company is required by
applicable law to collect any withholding, payroll or similar taxes by reason of
the grant of the Securities, the Director agrees that the Company may withhold
such taxes from any monetary amounts otherwise payable by the Company to the
Director and that, if such amounts are insufficient to cover the taxes required
to be collected by the Company, the Director will pay to the Company such
additional amounts as are required.

(c) Compliance with Securities Laws. The Director hereby agrees to comply with
any plan, policy or other document of the Company approved by the Board of
Directors of the Company to ensure compliance with securities laws, rules and
regulations both prior to the Termination of Service of the Director and for one
(1) year thereafter. The Company may impose stop transfer restrictions with
respect to the Securities to enforce this provision.

(d) Legends. Each certificate representing Securities shall also bear any legend
required by any applicable state securities law or by any other agreement to
which the holder thereof is a party or by which the holder thereof is bound,
including the provisions of any existing “lock-up” or similar agreements between
the Director and the Company, and including the following legend as required in
Section 4, below:

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ASSIGNED, CONVEYED
OR PLEDGED ONLY UPON COMPLIANCE WITH THE TERMS AND CONDITIONS OF A RESTRICTED
STOCK AGREEMENT, AS THE SAME MAY BE AMENDED OR REPLACED FROM TIME TO TIME, A
COPY OF WHICH IS ON FILE WITH, AND AVAILABLE FOR INSPECTION AT THE OFFICES OF
THE SECRETARY OF THE CORPORATION.

3. Condition to Issuance. The representations, warranties, understandings,
acknowledgments and agreements in this Agreement are true and accurate as of the
date hereof, shall be true and accurate as of the date of the issuance of the
Securities by the Company and shall survive thereafter.

4. Restrictions. The Securities described above shall be subject to the
following restrictions:

(a) Restriction Period; Lapse of Restriction. The Director agrees not to
transfer, assign or sell the Securities, without the express written consent of
the Company, which may be granted or withheld in the sole discretion of the
Company. This restriction shall expire and cease to be of any effect with
respect to the number of shares equal to                  ; provided that this
restriction shall lapse with respect to an increment as specified only if there
has been no Termination of Service prior to the specified date for such
increment. Shares representing the Securities shall bear a legend to such
effect.

The schedule set forth above is cumulative, so that the Securities as to which
the restriction has lapsed on and after a date indicated by the schedule may be
transferred, assigned, or sold at any subsequent date.

(b) Acceleration of Lapse of Restriction. Upon a Change of Control or Corporate
Organization, as defined below, the restriction set forth in Section 5(a) shall
accelerate so as to lapse as to all of the Securities to which the restriction
applies on the date of such event.

(i) A “Change in Control” shall be deemed to have occurred if, after the class
of stock then subject to this Agreement becomes publicly traded, (1) the direct
or indirect beneficial ownership (within the meaning of Section 13(d) of the Act
and Regulation 13D thereunder) of fifty percent (50%) or more of the class of
securities then subject to this Agreement is acquired or becomes held by any
person or group of persons (within the meaning of Section 13(d)(3) of the Act),
but excluding the Company and any employee benefit plan sponsored or maintained
by the Company, or (2) assets or earning power constituting more than fifty
percent (50%) of the assets or earning power of the Company and its subsidiaries
(taken as a whole) is sold, mortgaged, leased or otherwise transferred, in one
or more transactions not in the ordinary course of the Company’s business, to
any such person or group of persons; provided, however, that a Change in Control
shall not be deemed to have occurred upon an investment by one or more venture
capital funds, Small Business Investment Companies (as defined in the Small
Business Investment Act of 1958, as amended) or similar financial investors. For
the purposes of this Agreement, the class of stock then subject to this
Agreement shall be deemed to be “publicly traded” if such stock is listed or
admitted to unlisted trading privileges on a national securities exchange or as
to which sales or bid and offer quotations are reported in the automated system
operated by the National Association of Securities Dealers, Inc.

(ii) A “Corporate Reorganization” means the happening of any one (1) of the
following events: (1) the dissolution or liquidation of the Company; (2) a
capital reorganization, merger or consolidation involving the Company, unless
(A) the transaction involves only the Company and one or more of the Company’s
parent corporation and wholly-owned (excluding interests held by employees,
officers and directors) subsidiaries; or (B) the shareholders who had the power
to elect a majority of the board of directors of the Company immediately prior
to the transaction have the power to elect a majority of the board of directors
of the surviving entity immediately following the transaction; (3) the sale of
all or substantially all of the assets of the Company to another corporation,
person or business entity; or (4) an acquisition of Company stock, unless the
shareholders who had the power to elect a majority of the board of directors of
the Company immediately prior to the acquisition have the power to elect a
majority of the board of directors of the Company immediately following the
transaction; provided, however, that a Corporate Reorganization shall not be
deemed to have occurred upon an investment by one or more venture capital funds,
Small Business Investment Companies (as defined in the Small Business Investment
Act of 1958, as amended) or similar financial investors.

5. Effect of Termination of Service. The restriction on the Securities shall
lapse as specified in Section 4 above until the Termination of Service of the
Director for reasons other than death, Disability or Retirement. Pursuant to
Section 7.6 of the Plan, where the Termination of Service is for death,
Disability or Retirement, than the Committee shall determine, in its sole
discretion, whether to waive any remaining restriction.

All shares of the Securities still subject to the restriction set forth in
Section 5 shall be forfeited by the Director and reacquired by the Company on
such date. Upon such date, the Director shall have no further rights to any
Securities to which the restriction has not lapsed.

6. Rights as Stockholder. The Director shall have all rights as a stockholder
with respect to the Securities; provided, however, any dividends or
distributions on the Securities shall be automatically deferred and reinvested
as restricted Securities subject to the same restrictions set forth in this
Agreement.

7. Incorporation of the Plan. The terms and conditions included in the Plan, the
receipt of a copy of which Participant hereby acknowledges by execution of this
Agreement, are incorporated by reference herein, and to the extent that any
conflict may exist between any term or provision of this Agreement and any term
or provision of the Plan, such term or provision of the Plan shall control.

8. Governing Law. This Agreement shall be enforced, governed and construed in
all respects in accordance with the laws of the State of Delaware, as such laws
are applied by Delaware courts to agreements entered into and to be performed in
Delaware, and shall be binding upon the Director, the Director’s heirs, estate,
legal representatives, successors and assigns and shall inure to the benefit of
the Company and its successors and assigns.

9. Miscellaneous. This Agreement and the Plan constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous representations, warranties,
agreements and understandings in connection therewith, other than any existing
“lock-up” or similar agreements between the parties which by their terms would
apply to the Securities. This Agreement may be amended only by a writing
executed by all parties hereto. This Agreement may be executed in one or more
counterparts.

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IN WITNESS WHEREOF, Director has executed this Restricted Stock Agreement
effective as of the date first written above.

     
EMPLOYEE:
  SMART ONLINE, INC.
By:     
  By:     
Name:      
Title:      

Print Name:     
Address:     

     

     

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