**FORM
      OF**


**DRIBBLE
      OUT AGREEMENT**








AGREEMENT
      dated as of ________________, 2005 between Smart Online, Inc., Delaware
      corporation (the “Company”), and _______________ (“Subscriber”).





WHEREAS,
      Subscriber has purchased shares of Common Stock (the “Purchased Shares”) from
      the Company and the Company desires Subscriber to agree to limit its sales
      of
      the Purchased Shares in return for granting Subscriber the right to have the
      Purchased Shares registered. The Purchased Shares are hereinafter individually
      and collectively referred to as the “Securities”).





NOW,
      THEREFORE, the parties hereby agree as follows:





(1) Registration
      of Shares. The
      Company agrees to enter into the Registration Rights Agreement with
      Subscriber.





(2) “ Dribble-Out”
      Agreement .





(a) In
      consideration for the Registration Rights Agreement, Subscriber hereby agrees
      that, except as permitted under subsection (c) of this Section, during the
      Dribble Out Period, as defined herein, Subscriber will not:





(i) Sell
      any
      of the Securities or other securities of the Company or Holding Company received
      on account of ownership of the Securities (the “Dribble-Out
      Securities”).





(ii) Transfer,
      assign or otherwise dispose of any of the Dribble-Out Securities.





(iii) Pledge,
      hypothecate or otherwise create a lien on any of the Lock-Up
      Securities.





(iv) Loan
      to
      any person or entity any shares or other securities of the Company or Holding
      Company.





(v) Sell
      short any shares or other securities of the Company or Holding
      Company.





(vi) Acquire
      a
      put option or grant a call option with respect to any shares or other securities
      of the Company or Holding Company.





(vii) Enter
      into any agreement concerning any of the foregoing transactions, or otherwise
      facilitate any other person conducting any of the foregoing
      transactions.





(b) For
      purposes of this Section, Holding Company shall mean any company whose stock
      is
      publicly traded (i) with which the Company merges or consolidates or (ii) of
      which










(b) For
        purposes of this Section, Holding Company shall mean any company whose stock
        is
        publicly traded (i) with which the Company merges or consolidates or (ii)
        of
        which the
        Company or its successor becomes a subsidiary. For purposes of this Section,
        the
        Dribble Out Period shall mean the period beginning on the date of this Agreement
        and ending six (6) months after the effective date of the first registration
        statement of the Company that registers for resale the Dribble-Out Securities
        (the “Effective Date”). Notwithstanding the foregoing, after the Effective Date
        Subscriber may sell (if permitted under a registration statement), during
        any
        rolling thirty-day period during the Dribble Out Period, up to 25% of the
        Dribble-Out Securities owned by Subscriber on the Effective Date. The Board
        of
        Directors of the Company or Holding Company may terminate the Dribble Out
        Period
        or allow Subscriber to take a prohibited action prior to termination of the
        Dribble Out Period with respect to some or all of the Dribble-Out Securities
        owned by the Subscriber, if the Board provides all other Subscribers of the
        Company or Holding Company who have the same Dribble Out Period with the
        same
        termination or waiver at the same time and to the same extent as for
        Subscriber.





(c) Notwithstanding
      the foregoing, provided the transferee first signs an agreement on substantially
      the terms set forth herein and reasonably acceptable to the Company or Holding
      Company, Subscriber may transfer securities of the Company or Holding Company
      without payment or other consideration: (i) if Subscriber is an individual,
      to
      any family member, (ii) if Subscriber is a corporation, to any direct or
      indirect parent or subsidiary or any shareholder of Subscriber, (iii) if
      Subscriber is a partnership, to any partner of Subscriber, (iv) if Subscriber
      is
      a limited liability company, to any member of Subscriber, and (v) if Subscriber
      is a trust, to any beneficiary of such trust.





(d) Subscriber
      further agrees that before and after termination of the Dribble Out Period,
      Subscriber will comply with all securities laws, rules and regulations when
      purchasing or reselling securities of the Company or Holding Company, including,
      without limitation, those prohibiting sales and purchases of securities while
      in
      possession of material nonpublic information.





(e) The
      Dribble-Out Securities of Subscriber shall have a legend in form and substance
      acceptable to the Company and Holding Company referring to the restrictions
      of
      this Agreement and the Company or Holding Company may instruct the transfer
      agent of the Company or Holding Company to stop any transfer of any securities
      in violation of this Agreement and may take any other action required to avoid
      violation of this Agreement, including, without limitation, obtaining an
      injunction.





(f) The
      provisions of this Section shall continue in effect after the Dribble-Out
      Securities are registered pursuant to the Registration Rights
      Agreement.





(g) Stop
      Transfer Instructions. Subscriber agrees that the Company may issue instructions to its transfer agent
      that prohibit transfer in violation of this Agreement.





(h) Legends. The
      Company may place a legend on the Dribble Out Securities referring to the
      restrictions contained in this Agreement.





(3) 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 acceptance hereof by the Company and shall
      survive thereafter.





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(4) 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 Subscriber, the Subscriber’s heirs, estate, legal
      representatives, successors and assigns and shall inure to the benefit of the
      Company and its successors and assigns.





(5) Subscriber
      agrees not to transfer or assign this Agreement, or any of Subscriber’s interest
      herein, without the express written consent of the Company.





(6) This
      Agreement constitutes 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. This Agreement may be amended only by a writing executed by all
      parties hereto. This Agreement may be executed in one or more
      counterparts.





(The
      remainder of this page is intentionally left blank.)





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IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      written above.








SMART
                ONLINE, INC.By:
                ______________________
            By:
                __________________________Michael
                Nouri, President
            Name:Address:
                ____________________________________________






















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