EX-10.1






EXHIBIT 10.1




AMENDMENT TO EMPLOYMENT AGREEMENT




THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is made and entered into as of the
1st day of February, 2008 by and between SMART ONLINE, INC., a Delaware company (the
“Company”) and NICHOLAS A. SINIGAGLIA (the “Employee”).



WHEREAS, the Company and Employee are parties to an Employment Agreement dated March 21, 2006
(the “Employment Agreement”);



WHEREAS, the current term of employment under the Employment Agreement will end March 30,
2008;



WHEREAS, pursuant to Section 5(b) of the Employment Agreement, Employee has the right to
terminate employment at any time upon the giving of thirty (30) days notice to the Company of
Employee’s intent to do so;



WHEREAS, Employee has no entitlement to any severance benefits under the Employment Agreement;



WHEREAS, Employee has expressed a desire to resign from his current position as Chief
Financial Officer, but is willing to remain employed with the Company until March 30, 2008 in
exchange for the severance payment and continuation of health benefits provided by this Amendment;
and



WHEREAS, the Company and Employee have agreed to amend the Employment Agreement as set forth
below.



NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree that the Employment Agreement shall be amended as
follows:



1. The Employment Agreement is amended by the deletion of Section 1 in its entirety and the
insertion in lieu thereof the following:



1. EMPLOYMENT PERIOD.



The Company shall employ the Employee, and the Employee shall serve the
Company, on the terms and conditions set forth in this Agreement. Such employment
pursuant to the terms of this Agreement shall commence on March 21, 2006, and shall
terminate on the first to occur of (i) the termination of this Agreement as provided
herein, or (ii) March 30, 2008. The term during which this Agreement is in effect
is referred to herein as the “Employment Period.”



2. The Employment Agreement is amended by the addition of a new Section 17, which shall read
as follows:



17. SEVERANCE.



If Employee refrains from exercising his right to terminate his employment
hereunder pursuant to Section 5(b) (with 30 days notice) hereof and remains employed
until March 30, 2008, then the Company shall pay him a severance payment in an
amount equal to three (3) times his then current monthly salary (the “Severance
Payment”). The Severance Payment shall be paid in three (3) substantially equal
installments on the last business day of April 2008, May 2008 and June 2008. In
addition, the Company shall reimburse Employee for premium payments he makes under
the Consolidated Budget Reconciliation Act (“COBRA”) to continue his health
insurance coverage for three (3) months. All reimbursements for COBRA payments
shall be made as soon as practicable following Employee’s submission of proof of
timely payments to the Company; provided, however, that all such claims for
reimbursement shall be submitted by Employee and paid by the Company no later than
six (6) months following Employee’s termination of employment.



The Company’s obligation to provide the Severance Payment and the COBRA
reimbursements is conditioned upon Employee’s execution and non-revocation of a
release of all claims and his compliance with Sections 7, 8, 9 and 10 hereof.



3. The Employment Agreement is further amended by the addition of a new Section 18, which
shall read as follows:



18. DELAYED DISTRIBUTION TO KEY EMPLOYEES.



If the Company determines, in accordance with Sections 409A and 416(i) of the
Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
promulgated thereunder, in the Company’s sole discretion, that Employee is a Key
Employee of the Company on the date his employment with the Company terminates and
that a delay in payment of the severance pay and benefits provided under this
Agreement is necessary for compliance with Code Section 409A(a)(2)(B)(i), then any
severance payments and any continuation of benefits or reimbursement of benefit
costs provided under this Agreement and not otherwise exempt from Section 409A shall
be delayed for a period of six (6) months (the “409A Delay Period”). In such event,
any such severance payments and the cost of any such continuation of benefits
provided under this Agreement that would otherwise be due and payable to Employee
during the 409A Delay Period shall be paid to Employee in a lump sum cash amount in
the month following the end of the 409A Delay Period. For purposes of this
Agreement, “Key Employee” shall mean an employee who, on an Identification Date
(“Identification Date” shall mean each December 31) is a key employee as defined in
Section 416(i) of the Code without regard to paragraph (5) of that section. If
Employee is identified as a Key Employee on an Identification Date, then Employee
shall be considered a Key Employee for purposes of this Agreement during the period
beginning on the first April 1 following the Identification Date and ending on the
following March 31.



4. Except as amended hereby, the Employment Agreement shall remain in full force and effect
and is hereby ratified and confirmed by the Company and Employee in all respects.



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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year set forth above.



SMART ONLINE, INC.



By: /s/ David E. Colburn

Name: David E. Colburn

Title: CEO





EMPLOYEE:



/s/ Nicholas A. Sinigaglia


Nicholas A. Sinigaglia




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