On March 12, 2009, the Compensation Committee of the Board of Directors of Network Engines, Inc. (the "Company") approved a bonus plan for the second half of fiscal year 2009 (the "2009 Bonus Plan"). The 2009 Bonus Plan provides the Company's executive officers and certain other Company employees (collectively, the "Participants") the opportunity to earn cash incentive bonuses based on the Company's performance for the second half of fiscal year 2009. Targeted incentive bonuses for the Participants in the 2009 Bonus Plan are equal to 50% of each Participant's annual incentive bonus target. Measurement of the Company's performance is based on its net income for the second half of fiscal year 2009, calculated using accounting principles generally accepted in the United States ("GAAP"), adjusted to exclude any intangible asset impairment and other infrequent non-cash charges approved by the Compensation Committee (the "Corporate Metric").

Achievement of the minimum Corporate Metric, which is an established level of GAAP profitability (as opposed to loss), will result in a total bonus payout under the 2009 Bonus Plan of $40,000. If the Company's performance exceeds the minimum Corporate Metric, the total bonus payout will be increased by an amount equal to 50% of the excess, subject to a maximum total payout of $490,000. There will be no bonus payments made to any Participants if the minimum Corporate Metric is not achieved. The total bonus payout amount, if any, will be allocated to the 2009 Bonus Plan Participants on a pro-rata basis relative to their individually established bonus targets. The pro-rata allocation of the total bonus payout amount, if any, will be determined based on the Participants who are still actively employed by the Company as of September 30, 2009.

Targeted incentive bonuses and estimated payout ranges for the Company's executive officers under the 2009 Bonus Plan are as follows:

                                                 2009 Bonus
                                                    Plan          Estimated       Estimated
                                                  Targeted         Baseline        Maximum
Name and Principal Position                      Incentive        Payout (2)      Payout (3)
Gregory A. Shortell, Chief Executive Officer
and President                                   $     87,500     $      6,125    $     70,000
Douglas G. Bryant, Chief Financial Officer,
Treasurer and Secretary                         $     62,500     $      4,375    $     50,000
Charles N. Cone, III, Senior Vice President
of Sales and Marketing                          $      6,000 (1) $        420    $      4,800
Richard P. Graber, Senior Vice President of
Engineering and Operations                      $     52,500     $      3,675    $     42,000

(2) The amounts shown in this column represent estimated payouts based on the pro-rata allocations of the total bonus payout in the event that the Company achieves only the minimum Corporate Metric, as defined above. The pro-rata allocations are based on the current group of Participants who would receive payouts under the 2009 Bonus Plan. Actual pro-rata allocations will be determined based on the Participants who are still actively employed by the Company as of September 30, 2009. There will be no bonus payments made to any Participants if the minimum Corporate Metric is not achieved.

(3) The amounts shown in this column represent estimated maximum payouts based on the pro-rata allocations of the maximum total bonus payout, which are based on the current group of Participants who would receive payouts under the 2009 Bonus Plan. Actual pro-rata allocations will be determined based on the Participants who are still actively employed by the Company as of September 30, 2009. The actual maximum payout amount cannot exceed the 2009 Bonus Plan Targeted Incentive shown in this table.