STANDSTILL AND INTEREST MODIFICATION AGREEMENT
AGREEMENT dated as of December 19, 2003, between Smart Online, Inc., a Delaware
corporation (the "Company") and XXXX X. XXXXX ("Creditor").
This Standstill Agreement is given to induce holders of Series A Preferred Stock
of the Company to approve a reorganization of the capital structure of the
Company which will eliminate the Series A Preferred Stock of the Company, it
being agreed by Creditor that such reorganization would benefit Creditor who
holds shares of Common Stock, and /or options to purchase Common Stock, of the
company, by making the Company's Common Stock more valuable.
NOW, THEREFORE, the parties hereby agree as follows:
Effective immediately upon all shares of Series A Preferred Stock of the
Corporation ceasing to be issued or outstanding (the "Effective Date") and
ending on DECEMBER 31, 2005, Creditor shall refrain from taking any efforts to
collect on any amounts owed by the Company to Creditor, including, without
limitation, foreclosing on any security interest that secures the obligations of
the Company to Creditor. Notwithstanding the foregoing, nothing herein shall
prevent Creditor from seeking to collect any salary or other compensation
benefits that accrue after the Effective Date.
INTEREST ON THE NOTE WILL BE CHANGED FROM 15% TO 8% EFFECTIVE JUNE 1, 2004.
This Agreement is governed by the laws of the State of North Carolina. This
Agreement may be executed in one or more counterparts.
SMART ONLINE, INC. CREDITOR:
By: /S/ XXXXXX XXXXXXX XXXXX Signature: /S/ XXXX X. XXXXX
------------------------ -----------------
Title: CEO Print name: XXXX X. XXXXX
----------------------- -------------
