Exhibit
10.1


July 14, 2006


Mr. John Curtis

55 Harborview Road

Hull, MA  02045


Dear John :


In connection with the termination of your employment
with Network Engines, Inc.  (the “Company”)
on July 14, 2006, 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  August 28, 2006.  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 forty-five (45) 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 August 28, 2006, 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. § 1161 et  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 August
28, 2006.


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.                                       Termination
Date - Your effective date of termination from the Company is July 14,
2006. (the “Termination Date”).


2.                                       Description
of Severance Benefits - The severance benefits paid to you if you
timely sign and return this letter are described in the “Description of
Severance Benefits” attached as Attachment A (the “severance benefits”).



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3.                                       Release —In consideration of the
payment of the severance benefits, which you acknowledge you would not
otherwise be entitled to receive, you hereby fully, forever, irrevocably and
unconditionally release, remise and discharge the Company, its officers,
directors, stockholders, corporate affiliates, subsidiaries, parent companies, agents
and employees (each in their individual and corporate capacities) (hereinafter,
the “Released Parties”) from any and all claims, charges, complaints, demands,
actions, causes of action, suits, rights, debts, sums of money, costs,
accounts, reckonings, covenants, contracts, agreements, promises, doings,
omissions, damages, executions, obligations, liabilities, and expenses
(including attorneys’ fees and costs), of every kind and nature which you ever
had or now have against the Released Parties arising out of your employment
with and/or separation from the Company, including, but not limited to, all
employment discrimination claims under Title VII of the Civil Rights Act of
1964, 42 U.S.C. §2000e et seq., the Age
Discrimination in Employment Act, 29 U.S.C. § 621 et  seq., the
Americans With Disabilities Act of 1990, 42 U.S.C., §12101 et  seq.,
and the Family and Medical Leave Act, 29 U.S.C. § 2601 et  seq., all as amended; all claims arising out of the Fair Credit
Reporting Act, 15 U.S.C. §1681 et  seq., the Employee Retirement Income Security
Act of 1974 (“ERISA”), 29 U.S.C. §1001 et  seq., and the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. § 2101 et  seq., all as amended; the
Massachusetts Fair Employment Practices Act., M.G.L. c.151B, §1 et seq., the Massachusetts Civil Rights Act,
M.G.L. c.12 §§11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c.93,
§102 and M.G.L. c.214, §1C, the Massachusetts Labor and Industries Act, M.G.L.
c.149, §1 et  seq.,
and the Massachusetts Privacy Act, M.G.L. c. 214, §1B, all as amended; all
claims to any non-vested ownership interest in the Company, contractual or
otherwise, including but not limited to claims to stock or stock options; all
common law claims including, but not limited to, actions in tort, defamation
and breach of contract; and any claim or damage arising out of your employment
with or separation from the Company (including a claim for retaliation) under
any common law theory or any federal, state or local statute or ordinance not
expressly referenced above.


4.                                       Invention, Non-Disclosure, Non-Competition and
Non-Solicitation —You acknowledge and reaffirm your obligation to keep
confidential all non-public information concerning the Company which you
acquired during the course of your employment with the Company, as stated more
fully in the Invention, Non-Disclosure, Non-Competition and Non-Solicitation
Agreement you executed at the inception of your employment which remains in
full force and effect.  You further
acknowledge and reaffirm your obligations under the Invention, Non-Disclosure,
Non-Competition and Non-Solicitation Agreement with regard to inventions,
non-competition and non-solicitation which also remains in full force and
effect.


5.                                       Return of Company Property - You confirm
that you have returned to the Company all keys, files, records (and copies
thereof), equipment (including, but not limited to, computer hardware, software
and printers, wireless handheld devices, cellular phones, pagers, etc.),
Company identification, Company vehicles and any other Company-owned property
in your possession or control and have left intact all electronic Company
documents, including but not limited to those which you developed or help
develop during your employment.  You
further confirm that you have cancelled all accounts for 



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                                                your
benefit, if any, in the Company’s name, including but not limited to, credit
cards, telephone charge cards, cellular phone and/or pager accounts and
computer accounts.


6.                                       Non-Disparagement - You understand and
agree that as a condition for payment to you of the consideration herein
described, you shall not make any false, disparaging or derogatory statements
to any media outlet, industry group, financial institution or current or former
employee, consultant, client or customer of the Company regarding the Company
or any of its directors, officers, employees, agents or representatives or
about the Company’s business affairs and financial condition.


7.                                       Amendment -
This letter agreement shall be binding upon the parties and may not be modified
in any manner, except by an instrument in writing of concurrent or subsequent
date signed by duly authorized representatives of the parties hereto.  This letter agreement is binding upon and
shall inure to the benefit of the parties and their respective agents, assigns,
heirs, executors, successors and administrators.


8.                                       Waiver of Rights
- No delay or omission by the Company in exercising any right under this letter
agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on
any one occasion shall be effective only in that instance and shall not be
construed as a bar or waiver of any right on any other occasion.


9.                                       Validity -
Should any provision of this letter agreement be declared or be determined by
any court of competent jurisdiction to be illegal or invalid, the validity of
the remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to be a part of
this letter agreement.


10.                                 Confidentiality
- You understand and agree that as a condition for payment to you of the
severance benefits herein described, the terms and contents of this letter
agreement, and the contents of the negotiations and discussions resulting in
this letter agreement, shall be maintained as confidential by you and your
agents and representatives and shall not be disclosed except to the extent
required by federal or state law or as otherwise agreed to in writing by the
Company.


11.                                 Nature of Agreement
- You understand and agree that this letter agreement is a severance agreement
and does not constitute an admission of liability or wrongdoing on the part of
the Company.


12.                                 Acknowledgments
- You acknowledge that you have been given at least forty-five (45) days to
consider this letter agreement, including Attachment A, and that the Company
advised you to consult with an attorney of your own choosing prior to signing
this letter agreement.  You understand
that you may revoke this letter agreement for a period of seven (7) days after
you sign this letter agreement, and the letter agreement shall not be effective
or enforceable until the expiration of this seven (7) day revocation period.


13.                                 Voluntary Assent
- You affirm that no other promises or agreements of any kind have been made to
or with you by any person or entity whatsoever to cause you to sign this letter
agreement, and that you fully understand the meaning and intent of this letter
agreement.  You state and represent that
you have had an opportunity to fully discuss and 



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                                                review
the terms of this letter agreement with an attorney.  You further state and represent that you have
carefully read this letter agreement, including Attachment A, and understand
the contents herein, freely and voluntarily assent to all of the terms and
conditions hereof, and sign your name of your own free act.


14.                                 Applicable Law  — This letter agreement shall be interpreted
and construed by the laws of the Commonwealth of Massachusetts, without regard
to conflict of laws provisions.  You
hereby irrevocably submit to and acknowledge and recognize the jurisdiction of
the courts of the Commonwealth of Massachusetts, or if appropriate, a federal
court located in Massachusetts (which courts, for purposes of this letter agreement,
are the only courts of competent jurisdiction), over any suit, action or other
proceeding arising out of, under or in connection with this letter agreement or
the subject matter hereof.


15.                                 Entire Agreement
- This letter agreement, including Attachment A, contains and constitutes the
entire understanding and agreement between the parties hereto with respect to
your severance benefits and the settlement of claims against the Company and
cancels all previous oral and written negotiations, agreements, commitments,
writings in connection therewith. 
Nothing in this paragraph, however, shall modify, cancel or supersede
your obligations set forth in paragraph 4 herein.


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


	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
  

  	
  /s/ Doug Bryant

  
	
   

  	
   

  
	
   

  	
  Doug 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 forty-five (45)
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/ John Curtis

  	
   

  	
  08/03/2006

  
	
  John Curtis

  	
   

  	
  Date

  



 


To be returned in the enclosed envelope by August 28,
2006.



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ATTACHMENT
A


DESCRIPTION
OF SEVERANCE BENEFITS


John Curtis


Compensation.  The
Company will pay you a lump sum payment equal to nine (9) months of severance
pay (equivalent to $157,500.00 ), less all applicable state and federal
taxes.  In addition, you will receive a
lump sum payment equal to 25% of your annual bonus (equivalent to $25,000),
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 fourteen (14) months of COBRA
medical and dental continuation costs. 
Thereafter, you may continue receiving group 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.  The Company will extend your right to
exercise incentive stock options which vested prior to your termination date
(July 14, 2006) from the normal ninety (90) day period to the earlier of one
hundred and seventy (170) days or through December 31, 2006.



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