Document:

Exhibit 4.7

                  [Form of Note to be issued post January 2009]

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THE COMPANY, IN ITS SOLE DISCRETION, SHALL
HAVE THE RIGHT TO REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN
CONNECTION WITH ANY PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY NOTE
ISSUED IN EXCHANGE FOR THIS NOTE.

                               SMART ONLINE, INC.

                CONVERTIBLE SECURED SUBORDINATED PROMISSORY NOTE

$[_______________]                                           __________ __, 20__

                                                                      Durham, NC

      FOR VALUE RECEIVED, Smart Online, Inc., a Delaware corporation (the
"Company") promises to pay to [____________________] ("Investor"), or its
registered assigns, in lawful money of the United States of America the
principal sum of [__________] Dollars ($[_________]), or such lesser amount as
shall equal the outstanding principal amount hereof, together with interest from
the date of this Note on the unpaid principal balance at a rate equal to 8.00%
per annum, computed on the basis of the actual number of days elapsed and a year
of 360 days. All unpaid principal, together with any then unpaid and accrued
interest and other amounts payable hereunder, shall be due and payable on the
earlier of (i) ________ __, 20__, (ii) a Change of Control or (iii) when, upon
or after the occurrence of an Event of Default (as defined below), such amounts
are declared due and payable by Investor or made automatically due and payable
in accordance with the terms hereof (such date upon which all amounts payable
hereunder are due is referred to herein as the "Maturity Date").

<PAGE>

      This Note is one of the "Notes" issued pursuant to the Convertible Secured
Subordinated Note Purchase Agreement of even date herewith (as amended, modified
or supplemented, the "Note Purchase Agreement") between the Company and the
Investors (as defined in the Note Purchase Agreement). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned thereto in the
Note Purchase Agreement. This Note and the Investor are subject to certain
restrictions, and are entitled to certain rights and privileges, set forth in
the Note Purchase Agreement.

      THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT
(THE "SECURITY AGREEMENT") DATED AS OF THE DATE HEREOF AND EXECUTED BY COMPANY
FOR THE BENEFIT OF INVESTOR. ADDITIONAL RIGHTS OF INVESTOR ARE SET FORTH IN THE
SECURITY AGREEMENT.

      The following is a statement of the rights of Investor and the conditions
to which this Note is subject, and to which Investor, by the acceptance of this
Note, agrees:

      1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:

            (a) "Business Day" shall mean any day other than a Saturday or
Sunday or other day on which the New York Stock Exchange is permitted or
required by law to close.

            (b) the "Company" includes the corporation initially executing this
Note and any Person which shall succeed to or assume the obligations of the
Company under this Note.

            (c) "Conversion Price" shall mean the lowest "Applicable Conversion
Price" determined for each Note issued under the Note Purchase Agreement. The
"Applicable Conversion Price" for each Note issued under the Note Purchase
Agreement shall be calculated by multiplying 120% by the lowest of (i) the
average of the high and low prices of the Common Stock on the OTC Bulletin Board
averaged over the five (5) trading days prior to the Closing Date of the
issuance of such Note, (ii) if the Common Stock is not traded on the
Over-The-Counter market, the closing price of the Common Stock reported on the
Nasdaq National Market or the principal exchange on which the Common Stock is
listed, averaged over the five (5) trading days prior to the Closing Date of the
issuance of such Note, or (iii) the closing price of the Common Stock on the OTC
Bulletin Board, the Nasdaq National Market or the principal exchange on which
the Common Stock is listed, as applicable, on the trading day immediately
preceding the date such Note is converted (in each case as adjusted for stock
splits, dividends or combinations, recapitalizations or similar events).

            (d) "Change of Control" shall mean (i) any consolidation or merger
or other transaction or series of transactions involving the Company pursuant to
which the Company's stockholders own less than fifty percent (50%) of the voting
securities of the surviving entity (other than an equity financing) or (ii) the
sale of all or substantially all of the assets of the Company.

            (e) "Event of Default" has the meaning given in Section 4 hereof.

                                       2
<PAGE>

            (f) "Lien" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the
interest of a vendor or lessor under a conditional sale agreement, capital lease
or other title retention agreement, or any agreement to provide any of the
foregoing, and the filing of any financing statement or similar instrument under
the Uniform Commercial Code or comparable law of any jurisdiction.

            (g) "Note Purchase Agreement" has the meaning given in the
introductory paragraph hereof.

            (h) "Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by the Company to Investor
of every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), now existing or
hereafter arising under or pursuant to the terms of this Note, the Note Purchase
Agreement and the Security Agreement, including, all interest, fees, charges,
expenses, attorneys' fees and costs and accountants' fees and costs chargeable
to and payable by the Company hereunder and thereunder, in each case, whether
direct or indirect, absolute or contingent, due or to become due, and whether or
not arising after the commencement of a proceeding under Title 11 of the United
States Code (11 U. S. C. Section 101 et seq.), as amended from time to time
(including post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding.

            (i) "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.

            (j) "Requisite Percentage" shall mean, at least a majority of the
aggregate outstanding principal amount of the Notes issued pursuant to the Note
Purchase Agreement.

            (k) "Securities Act" shall mean the Securities Act of 1933, as
amended.

            (l) "Security Agreement" has the meaning given in the introductory
paragraphs to this Note.

            (m) "Transaction Documents" shall mean this Note, each of the other
Notes issued under the Note Purchase Agreement, the Note Purchase Agreement, the
Registration Rights Agreement and the Security Agreement.

      2. Interest. Accrued interest on this Note shall be payable in cash in
quarterly installments commencing on the third month anniversary of the date of
issuance of this Note with the final installment payable on the Maturity Date.

      3. Prepayment. This Note may not be prepaid without the consent of a
Requisite Percentage. Any prepayment must be made in connection with the
prepayment of all outstanding Notes.

      4. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note and the other Transaction
Documents:

                                       3
<PAGE>

            (a) Failure to Pay. The Company shall fail to pay (i) when due any
principal or interest payment on the due date hereunder or (ii) any other
payment required under the terms of this Note or any other Transaction Document
on the date due and, with respect to this subclause (ii) only, such payment
shall not have been made within five (5) days of the Company's receipt of
written notice to the Company of such failure to pay;

            (b) Non-Performance of Affirmative Covenants. The Company shall
default in the due observance or performance of any material covenant set forth
in the Note, the Note Purchase Agreement on the Security Agreement, which
default shall continue uncured for 15 days after receipt of written notice to
the Company thereof;

            (c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated, (v) become insolvent
(as such term may be defined or interpreted under any applicable statute), (vi)
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it, or (vii) take any action for the purpose of effecting any of the
foregoing;

            (d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered or such proceeding shall not be
dismissed or discharged within 30 days of commencement;

            (e) Misrepresentations. Any of the representations and warranties of
the Company in the Note Purchase Agreement or the Security Agreement proves to
have been false or misleading in any material respect when made or furnished or
deemed made;

            (f) Judgments. One or more judgments, decrees or orders (excluding
settlement orders) for the payment of money shall be entered against the Company
or any of its subsidiaries involving in the aggregate a liability of $1,000,000
or more, and any such judgment, decree or order shall continue without discharge
or stay for a period of sixty (60) days; or

            (g) Cross-Defaults. The Company or any of its subsidiaries shall
default in the performance or observance of any agreement or instrument relating
to any indebtedness, or any other event shall occur or condition exist, and the
effect of such default, event or condition is to cause or permit the holder or
holders of any such indebtedness to cause indebtedness, in excess of $500,000
individually or in the aggregate, to become due prior to its stated maturity.

                                       4

<PAGE>

      5. Rights of Investor upon Default. Upon the occurrence or existence of
any Event of Default (other than an Event of Default described in Sections 4(c)
or 4(d)) and at any time thereafter during the continuance of such Event of
Default, Investor may, with the consent of the Agent, by written notice to the
Company, declare all outstanding Obligations payable by the Company hereunder to
be immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived. Upon the
occurrence or existence of any Event of Default described in Sections 4(c) and
4(d), immediately and without notice, all outstanding Obligations payable by the
Company hereunder shall automatically become immediately due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived. In addition to the foregoing remedies, upon
the occurrence or existence of any Event of Default and subject to the consent
of the Agent, Investor may exercise any other right power or remedy granted to
it by the Transaction Documents or otherwise permitted to it by law, either by
suit in equity or by action at law, or both.

      6. Conversion.

            (a) Optional Conversion. At the Maturity Date, each Investor shall
have the option to convert the entire principal amount of this Note then
outstanding into Common Stock. The number of shares of Common Stock that this
Note may be converted into shall be determined by dividing the principal amount
then outstanding by the Conversion Price at the time of conversion. If the
Investor elects to convert this Note at maturity, it shall provide the Company
with written notice of its election at least one (1) day prior to the Maturity
Date. Upon conversion, the Investor shall deliver to the Company the original of
this Note (or a notice to the effect that the original Note has been lost,
stolen or destroyed and an agreement reasonably acceptable to the Company
whereby the holder agrees to indemnify the Company from any loss incurred by it
in connection with this Note). However, upon such conversion of this Note, this
Note shall be deemed converted and of no further force and effect, whether or
not the Note is delivered for cancellation as set forth in the preceding
sentence. If there shall occur a Change of Control, the Company shall give
written notice to the Investor at least five (5) days prior to any closing
thereof and the Investor's election to convert this Note shall be conditional
upon the consummation thereof.

            (b) Mechanics of Optional Conversion. As soon as practicable
following surrender by the Investor of the original of its Note, the Company
shall issue and deliver to Investor a certificate or certificates for the shares
of Common Stock into which the Note has been converted (bearing such legends as
may be required or advisable in the opinion of counsel to the Company). Such
conversion shall be deemed to have been made immediately prior to the close of
business on the Maturity Date, and the Investor shall be treated for all
purposes as the record holder or holders of such Common Stock on such date.

            (c) Fractional Shares; Interest; Effect of Conversion. No fractional
shares shall be issued upon conversion of this Note. In lieu of the Company
issuing any fractional shares to Investor upon the conversion of this Note, the
Company shall pay to Investor an amount equal to the product obtained by
multiplying the Conversion Price by the fraction of a share not issued pursuant
to the previous sentence. Upon conversion of this Note in full and the payment
of any amounts specified in this Section 6(c), the Company shall be forever
released from all its obligations and liabilities under this Note.

                                       5
<PAGE>

      7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 below, the rights and obligations of the Company
and Investor shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.

      8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and the holders of a
Requisite Percentage.

      9. Transfer of this Note or Securities Issuable on Conversion Hereof. With
respect to any offer, sale or other disposition of this Note or securities into
which such Note may be converted, Investor will give written notice to the
Company prior thereto, describing briefly the manner thereof, together with
(unless waived by the Company) a written opinion of Investor's counsel, or other
evidence if reasonably satisfactory to the Company, to the effect that such
offer, sale or other distribution may be effected without registration or
qualification (under any federal or state law then in effect). Upon receiving
such written notice and reasonably satisfactory opinion, if so requested, or
other evidence, the Company, as promptly as practicable, shall notify Investor
that Investor may sell or otherwise dispose of this Note or such securities, all
in accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Section 9 that the opinion of
counsel for Investor, or other evidence, is not reasonably satisfactory to the
Company, the Company shall so notify Investor promptly after such determination
has been made. Each Note thus transferred and each certificate representing the
securities thus transferred shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for the Company such legend is
not required in order to ensure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions. Subject to the foregoing, transfers of this Note shall be
registered upon registration books maintained for such purpose by or on behalf
of the Company. Prior to presentation of this Note for registration of transfer,
the Company shall treat the registered holder hereof as the owner and holder of
this Note for the purpose of receiving all payments of principal and interest
hereon and for all other purposes whatsoever, whether or not this Note shall be
overdue and the Company shall not be affected by notice to the contrary.
Notwithstanding anything in this Section 9 to the contrary, no opinion of
counsel shall be required with respect to any transfer by an Investor to its
officers, directors, partners, members or other affiliates.

      10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by the Company without the prior written consent
of the holders of a Requisite Percentage.

                                       6
<PAGE>

      11. Notices. All notices, requests, demands, consents, instructions or
other communications required or permitted hereunder shall in writing and faxed,
mailed or delivered to each party at the respective addresses of the parties as
set forth in the Note Purchase Agreement, or at such other address or facsimile
number as the Company shall have furnished to Investor in writing. All such
notices and communications will be deemed effectively given the earlier of (i)
when received, (ii) when delivered personally, (iii) one business day after
being delivered by facsimile (with receipt of appropriate confirmation), (iv)
one business day after being deposited with an overnight courier service of
recognized standing or (v) two days after being deposited in the U.S. mail,
first class with postage prepaid.

      12. Pari Passu Notes. Investor acknowledges and agrees that the payment of
all or any portion of the outstanding principal amount of this Note and all
interest hereon shall be pari passu in right of payment and in all other
respects to the other Notes issued pursuant to the Note Purchase Agreement or
pursuant to the terms of such Notes. In the event Investor receives payments in
excess of its pro rata share of the Company's payments to the Investors of all
of the Notes, then Investor shall hold in trust all such excess payments for the
benefit of the holders of the other Notes and shall pay such amounts held in
trust to such other holders upon demand by such holders.

      13. Usury. In the event any interest is paid on this Note which is deemed
to be in excess of the then legal maximum rate, then that portion of the
interest payment representing an amount in excess of the then legal maximum rate
shall be deemed a payment of principal and applied against the principal of this
Note.

      14. Waivers. The Company hereby waives notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor and all other
notices or demands relative to this instrument.

      15. Remedies Cumulative. The remedies of Investor as provided herein and
in the Note Purchase Agreement and in any other documents governing or securing
repayment hereof shall be cumulative and concurrent and may be pursued singly,
successively, or together, at the sole discretion of Investor to the extent
provided herein and in the Note Purchase Agreement and may be exercised as often
as occasion therefore shall arise. No act or omission of the Investor, including
specifically, but without limitation, any failure to exercise any right, remedy
or recourse, shall be effective as a waiver of any right of the Investor
hereunder, unless set forth in a written document executed by the Investor, and
then only to the extent specifically recited therein. A waiver or release with
reference to one event shall not be construed as continuing, as a bar to, or as
a waiver or release of any subsequent right, remedy or recourse as to any
subsequent event. All notices, waivers, releases and/or consents by an Investor
shall be directed to the Company only through the Agent.

      16. No Rights of a Stockholder. Nothing contained in this Note shall be
construed as conferring upon the Investor or any other Person the right to vote
or consent or to receive notice as an stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company prior to the time that
this Note is converted pursuant to Section 6.

      17. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflicts of law
provisions of the State of Delaware, or of any other state.

                            (Signature Page Follows)

                                       7
<PAGE>

      The Company has caused this Note to be issued as of the date first written
above.

                                    SMART ONLINE, INC.
                                    a Delaware corporation

                                    By:
                                       -----------------------------------------

                                    Name:
                                         ---------------------------------------

                                    Title:
                                          --------------------------------------

                                       8Exhibit
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:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (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.

    
      
         

      

      
        2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]