SECURED PROMISSORY NOTE, TIMOTHY J. DALTON



EXHIBIT 10.27

 SECURED PROMISSORY NOTE 

	$73,928	 April 6, 2001




      FOR VALUE RECEIVED, Timothy J. Dalton (the “Maker”), promises to pay to Network Engines, Inc., a Delaware corporation (the “Company”), or order, at its principal executive offices, the
principal sum of Seventy-Three Thousand and Nine Hundred and Twenty-Eight Dollars and No Cents ($73,928.00), together with interest on the unpaid principal balance of this Note from time to time outstanding at the rate of 4.63% per annum, compounded
annually, until paid in full. Principal and accrued interest on this Note shall be paid in full on April 6, 2002. Interest on this Note shall be computed on the basis of a year of 365 days for the actual number of days elapsed. 

      Notwithstanding the foregoing, payment of this Note shall be required in full, together with interest on the unpaid principal balance hereof at the rate of 4.63% per annum, upon the date which is 30 days after the
date of the Maker's termination of employment with the Company, unless such termination is involuntary and without Cause. For purposes of this Note, "Cause" shall mean willful misconduct by the Maker or willful failure by the Maker to perform his
responsibilities to the Company (including, without limitation, breach by the Maker of any provision of any employment, consulting, advisory, nondisclosure, nonsolicitation, non-competition or other similar agreement between the Maker and the
Company), as determined by the Company, which determination shall be conclusive. 

      Payment of this Note is secured by a security interest in shares of Common Stock of the Company owned or hereafter acquired by the Maker, pursuant to a pledge agreement of even date herewith between the Maker and
the Company (the “Pledge Agreement”). 

      The Company shall have (i) full recourse against the Pledged Collateral under the Pledge Agreement in connection with the repayment of the principal of the Note and accrued interest thereon, (ii) recourse up to the
Recourse Amount (as hereinafter defined) against any other personal assets of the Maker and (iii) recourse up to the Recourse Amount against any compensation or other amounts due the Maker resulting from his/her employment by the Company, and a
right to immediate set off against such compensation or other amounts to the full extent permitted by law. The Recourse Amount as of any time shall mean the sum of (i) 100% of the principal amount hereof and (ii) the full amount of accrued interest
under this Note. 

      The Maker may prepay, in whole or in part, without premium or penalty, any of the principal balance hereof or accrued interest thereon. 

      This Note shall become immediately due and payable without notice or demand upon the occurrence at any time of any of the following events of default (individually, “an Event of Default” and collectively,
“Events of Default”): 


 1.  default in the payment when due of any principal or interest under this Note; 


 2.  the occurrence of any Event of Default under the Pledge Agreement; 


 3.  the institution by or against the Maker of any proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors





	 	generally or the making by the Maker of a composition or an assignment or trust mortgage for the benefit of creditors; or
	 	 	 
	4.	the Maker violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Maker and the Company.


     Upon the occurrence of an Event of Default, the holder shall have then, or at any time thereafter, all of the rights and remedies afforded a secured creditor by the Uniform Commercial Code as from time to time in
effect in the Commonwealth of Massachusetts or afforded by other applicable law. 

      Maker agrees to pay on demand all costs of collection, including, but not limited to, reasonable attorney's fees, incurred by the holder in connection with any action taken to enforce the terms of this Note. 

      No delay or omission on the part of the holder in exercising any right under this Note or the Pledge Agreement shall operate as a waiver of such right or of any other right of such holder, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. The Maker regardless of the time, order or place of signing waives presentment, demand, protest and notices of every kind. 

      If any amounts under this Note become due and payable on a Saturday or Sunday or a day on which banks in the Commonwealth of Massachusetts are authorized by law to remain closed, such amounts shall be paid on the
next succeeding day that such banks shall be open for business. 

      Payments of principal and interest shall be made to the holder hereof, or its designee, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of
public and private debts, at the offices of Network Engines, Inc., 25 Dan Road, Canton, Massachusetts 02021. 

      All rights and obligations hereunder shall be governed by the laws of the Commonwealth of Massachusetts and this Note is executed as an instrument under seal. The Maker hereby submits to the jurisdiction of the
United States District Court for the District of Massachusetts and of any Massachusetts state court, with respect to any action, suit or proceeding brought against it arising out of or relating to this Note and the transactions contemplated hereby.
The Maker hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such action, suit or proceeding brought in such a court and any claim that any
such action, suit or proceeding brought in such a court has been brought in an inconvenient forum. 

	 	
/s/ Timothy J. Dalton______


 Signature 


 Timothy J. Dalton________


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