EXHIBIT 10.27

 

Network Engines, Inc.

 

Executive Retention Agreement

 

THIS EXECUTIVE RETENTION AGREEMENT by and between Network Engines, Inc., a
Delaware corporation (the “Company”), and Don Oldham (the “Executive”) is made
as of October 7, 2002. (the “Effective Date”).

 

WHEREAS, the Company recognizes that, as is the case with many publicly-held
corporations, various business uncertainties may arise from time to time and
that such possibility, and the concerns and questions which it may raise among
key personnel, may result in the departure or distraction of key personnel to
the detriment of the Company and its stockholders, and

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that
appropriate steps should be taken to reinforce and encourage the continued
employment and dedication of the Company’s key personnel without distraction
from such uncertainties, including the possibility of a change in control of the
Company and related events and circumstances.

 

NOW, THEREFORE, as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance benefits set forth in this Agreement in the event the Executive’s
employment with the Company is terminated under the circumstances described
below, whether before or after a Change in Control (as defined in Section 1.1).

 

1. Key Definitions.

 

As used herein, the following terms shall have the following respective
meanings:

 

1.1 “Change in Control” means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):

 

(a) the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) 30% or more of
either (x) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote

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generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the Company,
unless the Person exercising, converting or exchanging such security acquired
such security directly from the Company or an underwriter or agent of the
Company), (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i) and (ii)
of subsection (c) of this Section 1.1; or

 

(b) such time as the Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, the Board of Directors of a successor
corporation to the Company), where the term “Continuing Director” means at any
date a member of the Board (i) who was a member of the Board on the date of the
execution of this Agreement or (ii) who was nominated or elected subsequent to
such date by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; provided,
however, that there shall be excluded from this clause (ii) any individual whose
initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents, by or on behalf of a
person other than the Board; or

 

(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company in
one or a series of transactions (a “Business Combination”), unless, immediately
following such Business Combination, each of the following two conditions is
satisfied: (i) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the “Acquiring
Corporation”) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively; and (ii)
no Person (excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 30% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors (except to the extent
that such ownership existed prior to the Business Combination); or

 

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(d) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

 

1.2 “Change in Control Date” means the first date during the Term (as defined in
Section 2) on which a Change in Control occurs. Anything in this Agreement to
the contrary notwithstanding, if (a) a Change in Control occurs, (b) the
Executive’s employment with the Company is terminated prior to the date on which
the Change in Control occurs, and (c) it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with or in anticipation of a Change in
Control, then for purposes of this Agreement the “Change in Control Date” shall
mean the date immediately prior to the date of such termination of employment.

 

1.3 “Cause” means:

 

(a) the Executive’s failure to substantially perform his assigned duties (other
than any such failure resulting from incapacity due to physical or mental
illness or any failure after the Executive gives notice of termination for Good
Reason), which failure is not cured within 20 days after a written demand for
substantial performance is received by the Executive from the Board of Directors
of the Company which specifically identifies the manner in which the Board of
Directors believes the Executive has not substantially performed the Executive’s
duties; or

 

(b) the Executive’s engagement in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.

 

1.4 “Good Reason” means the occurrence, without the Executive’s written consent,
of any of the events or circumstances set forth in clauses (a) through (e)
below. Notwithstanding the occurrence of any such event or circumstance, such
occurrence shall not be deemed to constitute Good Reason if, prior to the Date
of Termination specified in the Notice of Termination (each as defined in
Section 3.2(a)) given by the Executive in respect thereof, such event or
circumstance has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Company shall only apply to the first Notice of
Termination for Good Reason given by the Executive).

 

(a) the assignment to the Executive of duties inconsistent in any material
respect with the Executive’s position (including status, offices, titles and
reporting requirements), authority or responsibilities in effect on the
Effective Date, or any other action or omission by the Company which results in
a material diminution in such position, authority or responsibilities;

 

(b) a reduction in the Executive’s annual base salary as in effect on the
Effective Date or as the same was or may be increased thereafter from time to
time;

 

(c) a change by the Company in the location at which the Executive performs his
principal duties for the Company to a new location that is both (i) outside a
radius of 50 miles from the Executive’s principal residence immediately prior to
the Effective Date and

 

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(ii) more than 35 miles from the location at which the Executive performed his
principal duties for the Company immediately prior to the Effective Date;

 

(d) the failure of the Company to obtain the agreement from any successor to the
Company to assume and agree to perform this Agreement, as required by Section
6.1; or

 

(e) a purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
3.2(a).

 

The Executive’s right to terminate his employment for Good Reason shall not be
affected by his incapacity due to physical or mental illness.

 

1.5 “Disability” means the Executive’s absence from the full-time performance of
the Executive’s duties with the Company for 180 consecutive calendar days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive’s legal representative.

 

2. Term of Agreement. This Agreement, and all rights and obligations of the
parties hereunder, shall take effect upon the Effective Date and shall expire on
the date two years after the Effective Date. “Term” shall mean the period
commencing as of the Effective Date and continuing in effect through the date
that is two years after the Effective Date.

 

3. Employment Status; Termination Following Change in Control.

 

3.1 Not an Employment Contract. The Executive acknowledges that this Agreement
does not constitute a contract of employment or impose on the Company any
obligation to retain the Executive as an employee and that this Agreement does
not prevent the Executive from terminating employment at any time.

 

3.2 Termination of Employment.

 

(a) Any termination of the Executive’s employment by the Company or by the
Executive shall be communicated by a written notice to the other party hereto
(the “Notice of Termination”), given in accordance with Section 7. Any Notice of
Termination shall: (i) indicate the specific termination provision (if any) of
this Agreement relied upon by the party giving such notice, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated and (iii) specify the Date of Termination (as defined
below). The effective date of an employment termination (the “Date of
Termination”) shall be the close of business on the date specified in the Notice
of Termination (which date may not be less than 10 days or more than 120 days
after the date of delivery of such Notice of Termination), in the case of a
termination other than one due to the Executive’s death, or the date of the
Executive’s death, as the case may be. In the event the Company fails to satisfy
the requirements of Section 3.2(a) regarding a Notice of Termination, the
purported termination of the Executive’s employment pursuant to such Notice of
Termination shall not be effective for purposes of this Agreement.

 

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(b) The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting any such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

 

(c) Any Notice of Termination for Cause given by the Company must be given
within 90 days of the occurrence of the event(s) or circumstance(s) which
constitute(s) Cause.

 

4. Benefits to Executive.

 

4.1 Stock Acceleration. If (a) a Change in Control Date or an Acquisition Event
occurs after the one year anniversary of employment with Network Engines during
the Term on or before the Date of Termination and (b) the Executive’s employment
with the Company is terminated by the Company (other than for Cause, Disability
or Death) or by the Executive for Good Reason during the Term, then, effective
upon the Date of Termination, (x) each outstanding option to purchase shares of
Common Stock of the Company held by the Executive shall become immediately
exercisable in full, and (y) each outstanding restricted stock award shall be
deemed to be fully vested and will no longer be subject to any right of
repurchase by the Company. If (a) neither a Change of Control Date nor an
Acquisition Event occurs on or before the Date of Termination and (b) the
Executive’s employment with the Company is terminated by the Company (other than
for Cause, Disability or Death) or by the Executive for Good Reason during the
Term, then (x) the vesting of (i) each outstanding option to purchase shares of
the Company held by the Executive and (ii) each outstanding restricted stock
award shall be determined as though the Executive remained employed by the
Company until six months after the Date of Termination, and (y) each outstanding
option to purchase shares of the Company held by the Executive shall remain
exercisable (to the extent vested) for a period of six months after the Date of
Termination. For purposes of this Section 4.1, an Acquisition Event is the
acquisition by the Company of all of the outstanding equity interests of a
company or all or substantially all of the assets or business of a company.

 

4.2 Compensation. If the Executive’s employment with the Company terminates
during the Term, the Executive shall be entitled to the following benefits:

 

(a) Termination Without Cause or for Good Reason. If the Executive’s employment
with the Company is terminated by the Company (other than for Cause, Disability
or Death) or by the Executive for Good Reason during the Term, then the
Executive shall be entitled to the following benefits:

 

(i) the Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following amounts:

 

(1) the sum of (A) the Executive’s base salary through the Date of Termination,
and (B) the amount of any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not previously paid (the sum of the
amounts described in clauses (A) and (B) shall be hereinafter referred to as the
“Accrued Obligations”); and

 

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(2) the amount equal to (A) one-half (1/2) multiplied by (B) the Executive’s
highest annual base salary during the three year period prior to the Effective
Date.

 

(ii) for six months after the Date of Termination, or such longer period as may
be provided by the terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide benefits to the Executive and the
Executive’s family at least equal to those which would have been provided to
them if the Executive’s employment had not been terminated, in accordance with
the applicable Benefit Plans in effect on the Effective Date or, if more
favorable to the Executive and his family, in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies; provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive a particular type of
benefits (e.g., health insurance benefits) from such employer on terms at least
as favorable to the Executive and his family as those being provided by the
Company, then the Company shall no longer be required to provide those
particular benefits to the Executive and his family;

 

(iii) to the extent not previously paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to be
paid or provided or which the Executive is eligible to receive following the
Executive’s termination of employment under any plan, program, policy, practice,
contract or agreement of the Company and its affiliated companies (such other
amounts and benefits shall be hereinafter referred to as the “Other Benefits”);

 

(iv) for purposes of determining eligibility (but not the time of commencement
of benefits) of the Executive for retiree benefits to which the Executive is
entitled, the Executive shall be considered to have remained employed by the
Company until six months after the Date of Termination; and

 

(v) if a Change in Control Date occurs during the Term and on or before the Date
of Termination, the Company shall make an additional lump sum payment to the
Executive equal to the sum of (A) the product of (x) the annual bonus paid or
payable (including any bonus or portion thereof which has been earned but
deferred) for the most recently completed fiscal year and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (B) one-half
multiplied by the Executive’s highest annual bonus during the three-year period
prior to the Effective Date.

 

(b) Resignation Without Good Reason; Termination for Death or Disability. If the
Executive voluntarily terminates his employment during the Term, excluding a
termination for Good Reason, or if the Executive’s employment with the Company
is terminated by reason of the Executive’s death or disability during the Term,
then the Company shall (i) pay the Executive (or his estate, if applicable), in
a lump sum in cash within 30 days after the Date of Termination, the Accrued
Obligations and (ii) timely pay or provide to the Executive the Other Benefits.

 

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(c) Termination for Cause. If the Company terminates the Executive’s employment
with the Company for Cause during the Term, then the Company shall (i) pay the
Executive, in a lump sum in cash within 30 days after the Date of Termination,
the sum of (A) the Executive’s base salary through the Date of Termination and
(B) the amount of any compensation previously deferred by the Executive, in each
case to the extent not previously paid, and (ii) timely pay or provide to the
Executive the Other Benefits.

 

(d) Severance Agreement. As a condition of receipt of any payments under Section
4.2(a)(i), the Executive shall be required to sign a severance agreement and
release prepared by and provided by the Company (the “Severance Agreement”) and
to abide by the provisions of the Severance Agreement. Among other things, the
Severance Agreement shall contain a release and waiver of any claims the
employee or his or her representative may have against the Company, its
affiliates and/or representatives, and shall release those entities and persons
from any liability for such claims including, but not limited to, all employment
discrimination claims.

 

4.3 Taxes.

 

(a) Notwithstanding any other provision of this Agreement, except as set forth
in Section 4.3(b), in the event that the Company undergoes a “Change in
Ownership or Control” (as defined below), the Company shall not be obligated to
provide to the Executive a portion of any “Contingent Compensation Payments” (as
defined below) that the Executive would otherwise be entitled to receive to the
extent necessary to eliminate any “excess parachute payments” (as defined in
Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
“Code”)) for the Executive. For purposes of this Section 4.3, the Contingent
Compensation Payments so eliminated shall be referred to as the “Eliminated
Payments” and the aggregate amount (determined in accordance with Proposed
Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the
Contingent Compensation Payments so eliminated shall be referred to as the
“Eliminated Amount.”

 

(b) Notwithstanding the provisions of Section 4.3(a), no such reduction in
Contingent Compensation Payments shall be made if (i) the Eliminated Amount
(computed without regard to this sentence) exceeds (ii) the aggregate present
value (determined in accordance with Proposed Treasury Regulation Section
1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any
additional taxes that would be incurred by the Executive if the Eliminated
Payments (determined without regard to this sentence) were paid to him
(including, state and federal income taxes on the Eliminated Payments, the
excise tax imposed by Section 4999 of the Code payable with respect to all of
the Contingent Compensation Payments in excess of the Executive’s “base amount”
(as defined in Section 280G(b)(3) of the Code), and any employment taxes). The
override of such reduction in Contingent Compensation Payments pursuant to this
Section 4.3(b) shall be referred to as a “Section 4.3(b) Override.” For purpose
of this paragraph, if any federal or state income taxes would be attributable to
the receipt of any Eliminated Payment, the amount of such taxes shall be
computed by multiplying the amount of the Eliminated Payment by the maximum
combined federal and state income tax rate provided by law.

 

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(c) For purposes of this Section 4.3 the following terms shall have the
following respective meanings:

 

(i) “Change in Ownership or Control” shall mean a change in the ownership or
effective control of the Company or in the ownership of a substantial portion of
the assets of the Company determined in accordance with Section 280G(b)(2) of
the Code.

 

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in
the nature of compensation that is made or made available (under this Agreement
or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of
the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i)
of the Code) on a Change in Ownership or Control of the Company.

 

(d) Any payments or other benefits otherwise due to the Executive following a
Change in Ownership or Control that could reasonably be characterized (as
determined by the Company) as Contingent Compensation Payments (the “Potential
Payments”) shall not be made until the dates provided for in this Section
4.3(d). Within 30 days after each date on which the Executive first becomes
entitled to receive (whether or not then due) a Contingent Compensation Payment
relating to such Change in Ownership or Control, the Company shall determine and
notify the Executive (with reasonable detail regarding the basis for its
determinations) (i) which Potential Payments constitute Contingent Compensation
Payments, (ii) the Eliminated Amount and (iii) whether the Section 4.3(b)
Override is applicable. Within 30 days after delivery of such notice to the
Executive, the Executive shall deliver a response to the Company (the “Executive
Response”) stating either (A) that he agrees with the Company’s determination
pursuant to the preceding sentence, in which case he shall indicate, if
applicable, which Contingent Compensation Payments, or portions thereof (the
aggregate amount of which, determined in accordance with Proposed Treasury
Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal
to the Eliminated Amount), shall be treated as Eliminated Payments or (B) that
he disagrees with such determination, in which case he shall set forth (i) which
Potential Payments should be characterized as Contingent Compensation Payments,
(ii) the Eliminated Amount, (iii) whether the Section 4.3(b) Override is
applicable, and (iv) which (if any) Contingent Compensation Payments, or
portions thereof (the aggregate amount of which, determined in accordance with
Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor
provision, shall be equal to the Eliminated Amount, if any), shall be treated as
Eliminated Payments. In the event that the Executive fails to deliver an
Executive Response on or before the required date, the Company’s initial
determination shall be final and the Contingent Compensation Payments that shall
be treated as Eliminated Payments shall be determined by the Company in its
absolute discretion. If the Executive states in the Executive Response that he
agrees with the Company’s determination, the Company shall make the Potential
Payments to the Executive within three business days following delivery to the
Company of the Executive Response (except for any Potential Payments which are
not due to be made until after such date, which Potential Payments shall be made
on the date on which they are due). If the Executive states in the Executive
Response that he disagrees with the Company’s determination, then, for a period
of 60 days following delivery of the Executive Response, the Executive and the
Company shall use good faith efforts to resolve such dispute. If such dispute is
not resolved within such 60-day period, such dispute shall be settled
exclusively by arbitration in Boston, Massachusetts, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator’s award in any court having jurisdiction. The Company
shall,

 

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within three business days following delivery to the Company of the Executive
Response, make to the Executive those Potential Payments as to which there is no
dispute between the Company and the Executive regarding whether they should be
made (except for any such Potential Payments which are not due to be made until
after such date, which Potential Payments shall be made on the date on which
they are due). The balance of the Potential Payments shall be made within three
business days following the resolution of such dispute. Subject to the
limitations contained in Sections 4.3(a) and (b) hereof, the amount of any
payments to be made to the Executive following the resolution of such dispute
shall be increased by amount of the accrued interest thereon computed at the
prime rate announced from time to time by the Wall Street Journal, compounded
monthly from the date that such payments originally were due.

 

(e) The provisions of this Section 4.3 are intended to apply to any and all
payments or benefits available to the Executive under this Agreement or any
other agreement or plan of the Company under which the Executive receives
Contingent Compensation Payments.

 

5. Disputes.

 

5.1 Settlement of Disputes; Arbitration. All claims by the Executive for
benefits under this Agreement shall be directed to and determined by the Board
of Directors of the Company and shall be in writing. Any denial by the Board of
Directors of a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the denial and
the specific provisions of this Agreement relied upon. The Board of Directors
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s award in
any court having jurisdiction.

 

5.2 Expenses. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal, accounting and other fees and expenses which the
Executive may reasonably incur as a result of any claim or contest by the
Company, the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive regarding the
amount of any payment or benefits pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Code, but only if the Executive prevails in such
claim or contest.

 

6. Successors.

 

6.1 Successor to Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate employment, except
that

 

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for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, “Company” shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.

 

6.2 Successor to Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to the Executive or
his family hereunder if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive’s estate.

 

7. Notice. All notices, instructions and other communications given hereunder or
in connection herewith shall be in writing. Any such notice, instruction or
communication shall be sent either (i) by registered or certified mail, return
receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide
overnight courier service, in each case addressed to the Company, at 25 Dan
Road, Canton, Massachusetts, and to the Executive at the Executive’s address
indicated on the signature page of this Agreement (or to such other address as
either the Company or the Executive may have furnished to the other in writing
in accordance herewith). Any such notice, instruction or communication shall be
deemed to have been delivered three business days after it is sent by registered
or certified mail, return receipt requested, postage prepaid, or one business
day after it is sent via a reputable nationwide overnight courier service.
Either party may give any notice, instruction or other communication hereunder
using any other means, but no such notice, instruction or other communication
shall be deemed to have been duly delivered unless and until it actually is
received by the party for whom it is intended.

 

8. Miscellaneous.

 

8.1 Employment by Subsidiary. For purposes of this Agreement, the Executive’s
employment with the Company shall not be deemed to have terminated solely as a
result of the Executive continuing to be employed by a wholly-owned subsidiary
of the Company.

 

8.2 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

 

8.3 Injunctive Relief. The Company and the Executive agree that any breach of
this Agreement by the Company is likely to cause the Executive substantial and
irrevocable damage and, therefore, in the event of any such breach, in addition
to such other remedies which may be available, the Executive shall have the
right to such specific performance and injunctive relief.

 

8.4 Governing Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal laws of the Commonwealth of
Massachusetts, without regard to conflicts of law principles.

 

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8.5 Waivers. No waiver by the Executive at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by the Company
shall be deemed a waiver of that or any other provision at any subsequent time.

 

8.6 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together shall constitute
one and the same instrument.

 

8.7 Tax Withholding. Any payments provided for hereunder shall be paid net of
any applicable tax withholding required under federal, state or local law.

 

8.8 Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto in respect of the subject matter contained
herein; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.

 

8.9 Amendments. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.

 

8.10 Executive’s Acknowledgements. The Executive acknowledges that he: (a) has
read this Agreement; (b) has been represented in the preparation, negotiation,
and execution of this Agreement by legal counsel of the Executive’s own choice
or has voluntarily declined to seek such counsel; (c) understands the terms and
consequences of this Agreement; and (d) understands that the law firm of Hale
and Dorr LLP is acting as counsel to the Company in connection with the
transactions contemplated by this Agreement, and is not acting as counsel for
the Executive.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth above.

 

NETWORK ENGINES, INC.

By:

 

/s/ John H. Curtis

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Title: President and CEO

/s/ J. Donald Oldham

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J. Donald Oldham

Address:

 

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