**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.
  1
   
  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:
                  _____________________________
              2