On December 9, 2008, the Compensation Committee of the Board of Directors of Network Engines, Inc. ("Network Engines" or the "Company") approved grants of stock options to the following executive officers under its 1999 Stock Incentive Plan, as amended, to purchase the number of shares of common stock of Network Engines set forth opposite their respective names below. Each option has an exercise price equal to $0.39 per share, which is equal to the closing price of the common stock of Network Engines on the NASDAQ Global Market on the date of grant. Each option grant was evidenced by an option agreement substantially in the form of the Form of Incentive Stock Option Agreement, which was filed as Exhibit 10.3 to the Company's registration statement on Form S-1 (File No. 333-34286) and is incorporated herein by reference, except that the vesting of the options shall be as follows: The options vest as to 6.25% of the shares underlying each option grant at the end of each successive full three-month period following the grant date until the fourth anniversary of the grant date.

                                                                           Number of
                                                                             Shares
                                                                           Underlying
                                                                          Stock Option
Executive                                                                    Grant
Gregory A. Shortell, Chief Executive Officer                                   100,000
Douglas G. Bryant, Chief Financial Officer, Treasurer and Secretary             75,000
Charles N. Cone, III, Senior Vice President of Sales and Marketing              60,000
Richard P. Graber, Senior Vice President of Engineering and Operations          60,000