**Exhibit
      10.48**


REIMBURSEMENT
      AGREEMENT





THIS
      REIMBURSEMENT AGREEMENT, dated as of November 10, 2006, is made and entered
      into
      by and between Smart Online, Inc., a Delaware corporation (the “ Company ”)
      and
      Atlas Capital SA, a Swiss business organization ****** (“ Atlas ”).





W
      I T N E
      S S E T H:





WHEREAS,
      pursuant to a Loan Agreement dated as of even date herewith (as the same may
      be
      amended pursuant to its terms from time to time, the “ Loan
      Agreement ”)
      between the Company and Wachovia Bank, NA (the “ Bank ”),
      the
      Bank will make a revolving line of credit in a maximum principal amount of
      $1,300,000 available to the Company (the “ Revolving
      Line ”);
      and




WHEREAS,
      to induce the Bank to enter into the Loan Agreement and make the Revolving
      Line
      available to the Company, and to provide security under the Loan Agreement
      for
      the payment of the Revolving Line, the Company has requested that Atlas direct
      HSBC Private Bank (Suisse) SA, a Swiss business organization (the “ Letter
      of Credit Provider ”),
      to
      issue an irrevocable, direct-pay letter of credit to the Bank substantially
      in
      the form of Exhibit
      A attached
      hereto (as the same may be amended from time to time, the “ Letter
      of Credit ”);
      and




WHEREAS,
      Atlas is willing to direct the Letter of Credit Provider to issue the Letter
      of
      Credit, subject to the following terms and conditions.





NOW,
      THEREFORE, in consideration of the foregoing premises and for other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto hereby agree as follows:





ARTICLE
      I


DEFINITIONS





Section
      1.1  Defined
      Terms .
      The
      following terms when used herein shall have the following respective meanings
      (unless the context requires otherwise, words in the singular include the plural
      and words in the plural include the singular):





“ Accredited
      Investor ”
means
      an “accredited investor” as defined in Rule 501(a) under the Securities
      Act, a copy of which definition is attached hereto as Exhibit
      B .





“ Agreement ”
means
      this Reimbursement Agreement, as the same may be amended, modified, supplemented
      or restated from time to time.





“ Atlas ”
has
      the
      meaning ascribed thereto in the first paragraph hereof.





“ Bank ”
has
      the
      meaning ascribed thereto in the first Recital.







“ Business
      Day ”
means
      any day on which The New York Stock Exchange is not closed.





“ Company ”
has
      the
      meaning ascribed thereto in the first paragraph hereof.





“ Default
      Rate ”
means
      a
      per annum interest rate of six percent (6%).





“ Letter
      of Credit ”
has
      the
      meaning ascribed thereto in the second Recital.





“ Letter
      of Credit Provider ”
has
      the
      meaning ascribed thereto in the second Recital.





“ Loan
      Agreement ”
has
      the
      meaning ascribed thereto in the first Recital.





“ Person ”
means
      an individual, a corporation, a partnership, a limited liability company, an
      association, a trust or any other entity or organization, including a government
      or political subdivision or an agency or instrumentality thereof.





“ Revolving
      Line ”
has
      the
      meaning ascribed thereto in the first Recital.





“ Schedule
      of Exceptions ”
has
      the
      meaning ascribed thereto in Article III.





“ Securities
      Act ”
has
      the
      meaning ascribed thereto in Section 3.4.





“ Shares ”
has
      the
      meaning ascribed thereto in Section 3.1.





ARTICLE
      II


LETTER
      OF
      CREDIT





Section
      2.1  Agreement
      to Issue Letter of Credit .




(a)  Atlas
      shall direct the Letter of Credit Provider to issue the Letter of Credit on
      the
      date of this Agreement. The Letter of Credit shall be issued in an amount equal
      to $1,300,000. The term
      of the Letter of Credit shall end one year from the date of the issuance of
      the
      Letter of Credit.




(b)  So
      long
      as there is no continuing default on the date of the expiration of the Letter
      of
      Credit described in Section 2.1(a), Atlas shall direct the Letter of Credit
      Provider to issue a replacement Letter of Credit for an equal amount for a
      term
      of one year from the date of the issuance thereof.




Section
      2.2  Reimbursement
      of Drawings under Letter of Credit .




(a)  The
      Company hereby agrees to pay to Atlas within thirty (30) Business Days following
      the Business Day any amount is drawn and paid under any Letter of Credit a
      sum
      equal to the amount so drawn together with interest at half of the Default
      Rate.




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(b)  If
      the
      Company fails to pay to Atlas any amount when due under subsection (a) above,
      interest shall accrue on any and all such amounts at the Default Rate (in the
      case of interest on interest, to the maximum extent permitted by law),
      commencing the day after such amounts first became due until payment in full,
      and the Company hereby agrees to pay such accrued interest to Atlas upon
      demand. All
      interest hereunder shall be computed on the basis of the actual number of days
      elapsed over a 360-day year and shall include the first day but exclude the
      last
      day of the relevant period.




(c)  The
      Company may pay any principal or interest amount due under this Section 2.2
      in
      U.S. Dollars or in common stock of the Company. In the event the Company elects
      to pay in common stock of the Company, such stock shall be deemed to be valued
      at $2.50 per share.




Section
      2.3  Letter
      of Credit Fee .
      The
      Company hereby agrees to pay to Atlas on the date of issuance of any Letter
      of
      Credit a commitment fee in an amount equal to the product of one tenth of one
      percent and the amount of the Letter of Credit.




ARTICLE
      III


REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY





Subject
      to the exceptions and qualifications set forth on the Schedule of Exceptions
      attached hereto and incorporated by reference herein (the “ Schedule
      of Exceptions ”),
      the
      Company hereby represents and warrants to Atlas as follows:





Section
      3.1  Organization
      and Good Standing; Power and Authority; Qualifications .
      The
      Company (i) is a corporation duly organized, validly existing and in good
      standing under the laws of Delaware and (ii) has all requisite corporate power
      and authority to own, lease and operate its properties and to carry on its
      business as presently conducted and as proposed to be conducted. The Company
      has
      all requisite legal and corporate power to execute and deliver this Agreement
      and to issue the shares of capital stock that may be issuable hereunder
      (collectively, the “ Shares ”),
      and
      to carry out and perform its other obligations under the terms of the Agreement.
      The Company is qualified to transact business as a foreign corporation in,
      and
      is in good standing under the laws of, all of the jurisdictions wherein the
      character of the property owned or leased or the nature of the activities
      conducted by it makes such qualification necessary, except jurisdictions in
      which the failure to be so qualified would not have a material adverse effect
      on
      the condition (financial or otherwise), results of operations, business, assets
      or prospects of the Company.





Section
      3.2  Authorization .
      All
      corporate action on the part of the Company, its officers, directors and
      stockholders necessary for the authorization, execution and delivery of this
      Agreement, the performance of all obligations of the Company hereunder and
      thereunder and the authorization, issuance and delivery of the Shares has been
      taken or will be taken, and the Agreement, when executed and delivered by the
      Company, shall constitute valid and legally binding obligations of the Company,
      enforceable against the Company in accordance with their respective terms except
      (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
      fraudulent conveyance, and other laws of general application affecting
      enforcement of creditors’ rights generally, and (ii) as limited by laws relating
      to the availability of specific performance, injunctive relief, or other
      equitable remedies. The Shares will not be subject to any preemptive rights
      or
      rights of first refusal that have not been properly waived or complied
      with.


3





Section
      3.3  Capitalization .
      The
      Shares which may be issued pursuant to Section 2.2(c) above shall be duly
      authorized, fully paid and are nonassessable and have been issued in compliance
      with all applicable federal, foreign, and state securities laws at the time
      of
      the issuance.





Section
      3.4  Consents .
      Except
      as set forth on the Schedule of Exceptions, no permit, consent, approval, order
      or authorization of, or registration, qualification, designation, declaration
      or
      filing with, any Person on the part of the Company is required in connection
      with the Company’s valid execution, delivery or performance of this Agreement,
      the consummation of the transactions contemplated by this Agreement or the
      offer, sale or issuance of the Shares except for filings pursuant to applicable
      state securities laws and Regulation D of the Securities Act of 1933, as amended
      (the “ Securities
      Act ”),
      which
      will be timely filed within the applicable periods therefor.





Section
      3.5  Financial
      Statements .
      The
      Company’s financial statements, including the Shares thereto, contained in the
      Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 have
      been prepared in accordance with generally accepted accounting principles
      applied on a consistent basis throughout the periods covered thereby, except
      as
      otherwise noted therein, and fairly present the consolidated financial condition
      and results of operations of the Company and its consolidated subsidiaries,
      on
      the bases therein stated, as of the respective dates thereof, and for the
      respective periods covered thereby and include, in the case of unaudited
      financial statements, all material adjustments and accruals consistent with
      those included in the audited financial statements.





ARTICLE
      IV


REPRESENTATIONS
      AND WARRANTIES OF ATLAS





Atlas
      represents and warrants to the Company as of the date hereof as
      follows:





Section
      4.1  Authorization.
      Atlas has the full legal right, power, capacity and authority to enter into
      this
      Agreement and the transactions contemplated hereby and to perform its
      obligations pursuant to the terms of this Agreement. This Agreement constitutes
      Atlas’s valid and legally binding obligation, enforceable in accordance with its
      terms, except as limited by (i) applicable bankruptcy, insolvency, receivership,
      reorganization, moratorium, fraudulent conveyance and other laws of general
      application affecting enforcement of creditors’ rights generally, and (ii)
      general principles of equity, the application of which may deny Atlas the right
      to specific performance, injunctive relief or other equitable
      remedies.





Section
      4.2  Public
      Information. Atlas has carefully reviewed all current public information
      regarding the Company, including financial information and risk factors, and
      fully understands the risks associated with investment in the
      Company.


4





Section
      4.3  Sophistication;
      Not Formed for the Specific Purpose of Acquisition; Acknowledgement of
      Risks. Atlas is experienced in evaluating and investing in private placement
      transactions of securities of technology companies such as the Company,
      acknowledges that it is able to fend for itself, can bear the economic risk
      of
      its investment, has such knowledge and experience in financial and business
      matters that it is capable of evaluating the merits and risks of this Agreement
      and an investment in the Shares, and is prepared to hold the Shares for an
      indefinite period of time. Atlas also represents it has not been organized
      for
      the purpose of acquiring the Shares. Atlas recognizes that its purchase of
      the
      Shares involves substantial risks, and has taken full cognizance of and
      understands such risks. Atlas also acknowledges and is aware that the Shares
      are
      a speculative investment involving a high risk of loss by it of its entire
      investment.





Section
      4.4  Accredited
      Investor. Atlas is an Accredited Investor.





Section
      4.5  Purchase
      Entirely for Own Account. Atlas is acquiring the Shares for its own account,
      for investment and not with a view to, or for resale in connection with, any
      distribution thereof within the meaning of the Securities Act. Atlas has no
      present intention of selling, transferring or distributing the Shares. Atlas
      does not have any contract, undertaking, agreement or arrangement with any
      Person to sell, transfer or grant participation to such Person or to any third
      party with respect to the Shares other than as set forth in this Agreement.
      Atlas understands that the Shares being transferred to it under this Agreement
      have not been registered under the Securities Act by reason of a specific
      exemption from the registration provisions of the Securities Act, which depend
      upon, among other things, the bona fide nature of the investment intent as
      expressed herein.





Section
      4.6  No
      Registration under the Securities Act. Atlas understands that the Shares are
      not registered under the Securities Act on the grounds that the sale provided
      for in this Agreement and the issuance of the Shares hereunder is being made
      in
      reliance upon an exemption from the registration requirements of the Securities
      Act pursuant to Section 4 thereof and that the Company’s reliance on such
      exemption is predicated on Atlas’s representations as set forth in this
      Agreement.





Section
      4.7  Restricted
      Securities. Atlas acknowledges that the Shares have not been registered
      under the Securities Act and that the Shares may not be sold, assigned, pledged,
      hypothecated or transferred, unless there exists an effective registration
      statement therefor under the Securities Act and all applicable state securities
      laws or the Company has received an opinion of counsel, reasonably acceptable
      to
      counsel for the Company, or other reasonable assurances, that such sale,
      assignment, pledge, hypothecation or transfer is exempt from registration.
      Atlas
      understands that in the absence of an effective registration statement covering
      the Shares, an exemption from the Securities Act and all applicable state
      securities laws, the Shares must be held indefinitely. In particular, Atlas
      is
      aware that the Shares may not be sold pursuant to Rule 144 promulgated under
      the
      Securities Act unless all conditions of Rule 144 are met. Among the conditions
      for use of Rule 144 may be the availability of current and adequate information
      to the public about the Company. Notwithstanding the foregoing, no opinion
      of
      counsel shall be required by the Company in connection with the transfer of
      the
      Shares to an entity that is a direct or indirect wholly-owned subsidiary of
      Atlas.





Section
      4.8  Legends.
      Atlas understands that the Shares and any securities issued in respect of or
      exchange for the Shares, shall, in addition to any legends required elsewhere,
      bear the following legends:


5





(a) THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAW AND MAY
      NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR TRANSFERRED UNLESS THERE EXISTS
      AN EFFECTIVE REGISTRATION STATEMENT THEREFOR UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED, AND ALL APPLICABLE STATE SECURITIES LAWS OR THE ISSUER HEREOF HAS
      RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL OF THE
      ISSUER, THAT SUCH SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR TRANSFER IS EXEMPT
      FROM REGISTRATION.





(b)  Any
      legend required by any applicable state securities law or by any other agreement
      to which the holder of the certificate is a party or by which the holder of
      the
      certificate thereof is bound.





Section
      4.9  Disclosure
      of Information .
      Atlas
      has received all information that it considers necessary or appropriate for
      deciding whether to enter this Agreement and purchase the Shares. Atlas has
      had
      an opportunity to ask questions and receive answers from the Company’s
      management regarding the Shares and the business, properties, prospects and
      financial conditions of the Company and to obtain additional information from
      the Company (to the extent that the Company possessed such information or could
      acquire it without reasonable effort or expense) necessary to verify the
      accuracy of any information furnished to Atlas or to which Atlas had
      access.





ARTICLE
      V


MISCELLANEOUS





Section
      5.1  Notices .
      All
      demands, notices, approvals, consents, requests and other communications
      hereunder shall be in writing and shall be deemed to have been given when the
      writing is delivered, if given or delivered by hand, overnight delivery service
      or facsimile transmitter (with confirmed receipt), or three (3) Business Days
      after being mailed, if mailed by first class, registered or certified mail,
      postage prepaid, to the address or telecopy number set forth below:





If
                to the Company:
            Smart
                Online, Inc.2530
                Meridian Parkway, 2nd FloorDurham,
                North Carolina 27713Attention:
                Dennis Michael NouriFax
                No.: (919) 765-5020




6





with
                a copy to counsel:
            Smith,
                Anderson, Blount, Dorsett,Mitchell
                & Jernigan, L.L.P.P.
                O. Box 2611Raleigh,
                North Carolina 27602-2611Attention:
                Margaret Rosenfeld, Esq.Fax
                No.: (919) 821-6800If
                to the Atlas:
            Atlas
                Capital SA116
                Rue Du RhoneGeneva,
                Switzerland CH-1204Attention:
                Avy LugassyFax
                No.: +011 41 2278 65855





The
      Company or Atlas may, by notice given hereunder, designate any further or
      different addresses or telecopy numbers to which subsequent demands, notices,
      approvals, consents, requests or other communications shall be sent or Persons
      to whose attention the same shall be directed.





Section
      5.2  Controlling
      Law .
      This
      Agreement has been executed, delivered and accepted at, and shall be deemed
      to
      have been made in, the State of Delaware and shall be interpreted in accordance
      with the internal laws (as opposed to conflicts of laws provisions) of the
      State
      of Delaware, without regard to principles of conflicts of laws.





Section
      5.3  Assignment .
      Without
      the prior written consent of the other party, neither party may sell, assign
      or
      transfer this Agreement or any portion hereof, including without limitation,
      either party’s rights, title, interests, remedies, powers and duties hereunder
      or thereunder.





Section
      5.4  Amendment .
      This
      Agreement can be amended or modified only by an instrument in writing signed
      by
      the Company and Atlas.





Section
      5.5  Severability .
      In the
      event that any provision of this Agreement shall be determined to be invalid
      or
      unenforceable by any court of competent jurisdiction, such determination shall
      not invalidate or render unenforceable any other provision hereof.





Section
      5.6  Entire
      Agreement .
      This
      Agreement constitutes the entire agreement and understanding between the parties
      hereto and supersedes all prior agreements and understandings of such parties,
      verbal or written, relating to the subject matter hereof. This Agreement
      represents the final agreement between the parties and may not be contradicted
      by prior, contemporaneous or subsequent oral agreements of the parties. There
      are no unwritten oral agreements between the parties.





Section
      5.7  Counterparts .
      This
      Agreement may be executed in several counterparts, each of which shall be an
      original and all of which together shall constitute but one and the same
      instrument.




*[Signature
      Page Follows]*


7


*[Signature
      Page to the Reimbursement Agreement]*





IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed and delivered as of the date first above written.





SMART
                ONLINE, INC.By:
            /s/
                Michael NouriMichael
                NouriPresident
                and Chief Executive OfficerATLAS
                CAPITAL SABy:
            /s/
                Avy LugassyName:Title:




8