December 31, 2004

Mr. Jeffrey
A. Brandes
3 Davis Road
Lexington, MA 02421

Dear
Jeff:

In
connection with the termination of your employment with Network Engines, Inc. (the "Company") on January 14, 2004, you are eligible to receive the severance benefits
described in the "Description of Severance Benefits" attached to this letter as Attachment A if you sign and return this letter agreement to Carol Walsh in the enclosed envelope by January 21,
2005. By signing and returning this letter, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below,
including the release of claims set forth in paragraph 3. Therefore, you are advised to consult with your attorney before signing this letter and you may take up to seven (7) days to do
so. If you sign this letter, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it. If you do not so revoke, this letter will become a
binding agreement between you and the Company upon the expiration of the seven (7) day revocation period.

If
you choose not to sign and return this letter agreement by January 21, 2005, you shall not receive any severance benefits from the Company. You will, however, receive payment
on your termination for any unused vacation time accrued through the termination date, which will be paid with your final paycheck. Also, regardless of signing this letter, you may elect to continue
receiving group medical insurance pursuant to the federal "COBRA" law, 29 U.S.C. § 1161et seq. All premium costs shall be paid by you on a
monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation. You should consult the COBRA materials to be provided by the Company for details regarding these
benefits. All other benefits, including life insurance and long term disability, will cease upon your termination date.

If,
after reviewing this letter agreement with your attorney, you find the terms and conditions are satisfactory to you, you should sign and return this letter to Carol Walsh in the
enclosed envelope by January 21, 2005.

The
following numbered paragraphs set forth the terms and conditions which will apply if you timely sign and return this letter agreement and do not revoke it within the seven
(7) day period:

1

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2

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3

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If
you have any questions about the matters covered in this letter, please contact Carol Walsh at 781-332-1157.

| |  | Very truly yours,                                            
| |  | -------------------------------------------------------------
| |  | /s/DOUGLAS G. BRYANTDouglas G. Bryant
Chief Financial Officer

I hereby agree to the terms and conditions set forth above and in the attached Description of Severance Benefits. I have been given at least seven (7)days to
consider this agreement and I have chosen to execute this on the date below. I intend that this letter agreement become a binding agreement between me and the Company if I do not revoke my acceptance
in seven (7) days.

|/s/JEFFREY A. BRANDESJeffrey A. Brandes |  | Date: January 11, 2005
|--------------------------------------- |  | ----------------------

To be returned in the enclosed envelope by January 21, 2005.

4

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ATTACHMENT A  DESCRIPTION OF SEVERANCE BENEFITS

Jeffrey A. Brandes

Compensation.The Company will pay you a lump sum payment equal to twenty six (26) weeks of severance pay (equivalent
to $100,000.16), less all applicable state and federal taxes. This severance pay will be paid no earlier than the eighth (8th) day after your execution of this letter agreement.

Benefits.The Company will reimburse you, provided that you elect COBRA continuation coverage, for six (6) months of
COBRA medical, dental and vision continuation costs. Thereafter, you may continue receiving group medical insurance pursuant to the federal "COBRA" law, 29 U.S.C. § 1161 et seq. and all premium
costs shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA
continuation. You should consult the COBRA materials to be provided by the Company for details regarding these benefits.

Stock Acceleration.Effective upon the Termination Date, the vesting of each outstanding option to purchase shares of the
Company held by you shall be determined as though you had remained employed by the Company until six months after the Termination Date. Further, each outstanding option to purchase shares of the
Company held by you shall remain exercisable (to the extent vested) for a period of six months after the Termination Date. Please note that the favorable tax treatment of Incentive Stock Options will
expire on the 90th day following your termination date.

Further,
outplacement services will be arranged for you by the Company, with King and bishop for up to three months. The use of the outplacement services must occur within the three
month period following the Termination Date. The cost of these outplacement services will be paid by the Company.

5

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