Exhibit 10.21
SMART ONLINE, INC.

REVISED BOARD COMPENSATION POLICY

(Effective April 1, 2009)

1.           Introduction. Smart Online, Inc. (the “Company”) will compensate
non-management directors through the payment of Board retainers based on
election of the Board in consideration of the services provided by such
directors and in recognition of their responsibilities to the company and
potential liabilities associated therewith. Management directors are not
entitled to receive any directors’ compensation outlined in this policy.

2.           Board Member Fees. Each non-management member of the Board of
Directors not serving as Chairman of the Board shall be entitled to monetary and
equity compensation in following amounts:

A.           Monetary Compensation.

(1)           Each such director shall be paid a fee of $1,500 per month, due
and payable by the fifteenth (15th) day of the same month in which services are
rendered.

(2)           Additional monetary compensation may be awarded at the Chairman of
the Board’s discretion for any director incurring overnight travel to attend
Board meetings or other functions for the benefit of the Company.

B.           Equity Compensation. Each such director shall, at the sole
discretion of the director, be awarded pursuant to the Company’s 2004 Equity
Compensation Plan either:

(1)           Upon such director’s appointment or election to the Board, a
non-statutory stock option grant representing 40,000 shares of the Company’s
common stock, having an exercise price equal to the fair market value of the
Company’s common stock on the date of grant. In addition, at the time of the
annual meeting of the Company’s stockholders, each such non-management member of
the Board who is re-elected to the Board, and who has been serving on the Board
for at least six months prior to the date of the annual meeting, shall be
granted an additional non-statutory stock option grant representing 40,000
shares of the Company’s common stock, having an exercise price equal to the fair
market value of the Company’s common stock on the date of grant. All options
granted under this Section 2.B.(1) shall vest either (a) quarterly over a year’s
time, or (b) in full on the one-year anniversary of the award but in either
case, subject to the requirement that the grantee is a member of the Board of
Directors on the applicable vesting date; or

(2)           Upon such director’s appointment or election to the Board, an
award of 20,000 shares of restricted common stock of the Company, valued at the
fair market value of the Company’s common stock on the date of the award. In
addition, at the time of the annual meeting of the Company’s stockholders, each
such non-management member of the Board who is re-elected to the Board, and who
has been serving on the Board for at least six months prior to the date of the
annual meeting, shall be awarded an additional 20,000 shares of restricted
common stock of the Company, valued at the fair market value of the Company’s
common stock on the date of the award. The contractual restrictions on all
restricted stock awards granted under this Section 2.B.(2) shall lapse quarterly
over a year’s time, provided that the grantee is a member of the Board of
Directors on the applicable lapse date.

3.           Chairman of the Board Fees. If a non-management member of the Board
of Directors serves as Chairman of the Board, he or she shall be entitled to
monetary and equity compensation in following amounts:

A.           Monetary Compensation. Such Chairman of the Board shall be paid a
fee of $1,500 per month, due and payable by the fifteenth (15th) day of the same
month in which services are rendered.

B.           Equity Compensation. Such Chairman of the Board shall, at the sole
discretion of the Chairman, be awarded pursuant to the Company’s 2004 Equity
Compensation Plan either:
 

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(1)           Upon such director’s appointment or election to the post of
Chairman of the Board, a non-statutory stock option representing 60,000 shares
of the Company’s common stock, having an exercise price equal to the fair market
value of the Company’s common stock on the date of grant. In addition, at the
time of the annual meeting of the Company’s stockholders, each non-management
Chairman of the Board who is re-elected to the Chairman of the Board post, and
who has been serving on the Board as its Chairman for at least six months prior
to the date of the annual meeting, shall be granted an additional non-statutory
stock option grant representing 60,000 shares of the Company’s common stock,
having an exercise price equal to the fair market value of the Company’s common
stock on the date of grant. All options granted under this Section 3.B.(1) shall
vest either (a) quarterly over a year’s time, or (b) in full on the one-year
anniversary of the award but in either case, subject to the requirement that the
grantee is a member of the Board of Directors on the applicable vesting date; or

(2)           Upon such director’s appointment or election to the post of
Chairman of the Board, an award of 30,000 shares of restricted common stock of
the Company, valued at the fair market value of the Company’s common stock on
the date of the award. In addition, at the time of the annual meeting of the
Company’s stockholders, each non-management Chairman of the Board who is
re-elected to the Chairman of the Board post, and who has been serving on the
Board as its Chairman for at least six months prior to the date of the annual
meeting, shall be awarded an additional 30,000 shares of restricted common stock
of the Company, valued at the fair market value of the Company’s common stock on
the date of the award. The contractual restrictions on all restricted stock
awards granted under this Section 3.B.(2) shall lapse quarterly over a year’s
time, provided that the grantee is a member of the Board of Directors on the
applicable lapse date.

4.           Reimbursement for Expenses. Each non-management director is
eligible for expense reimbursement for reasonable travel and lodging expenses
incurred in connection with his or her attendance at Board and committee
meetings, in accordance with the same standards applicable to members of the
Company’s executive management. The Company will ensure all such reasonable
expenses are processed and paid expeditiously upon submission to the company
with the required forms and receipts.

 
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