Document:

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                                                                   Exhibit 10.11

                              NETWORK ENGINES, INC.

                           Restricted Stock Agreement
                     Granted Under 1999 Stock Incentive Plan
                     ---------------------------------------

      AGREEMENT made this 18th day of November, 1999, between Network Engines,
Inc., a Delaware corporation (the "Company"), and John Blaeser (the
"Participant").

      For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:

      1. Purchase of Shares.
         ------------------

      The Company shall issue and sell to the Participant, and the Participant
shall purchase from the Company, subject to the terms and conditions set forth
in this Agreement and in the Company's 1999 Stock Incentive Plan (the "Plan")
75,000 shares (the "Shares") of common stock, $.01 par value, of the Company
("Common Stock"), at a purchase price of $.60 per share. The aggregate purchase
price for the Shares shall be paid by the Participant by check payable to the
order of the Company or such other method as may be acceptable to the Company.
Upon receipt by the Company of payment for the Shares, the Company shall issue
to the Participant one or more certificates in the name of the Participant for
that number of Shares purchased by the Participant. The Participant agrees that
the Shares shall be subject to the Purchase Option set forth in Section 2 of
this Agreement and the restrictions on transfer set forth in Section 4 of this
Agreement.

      2. Purchase Option.
         ---------------

      (a) In the event that the Participant ceases to be employed by the Company
for any reason or no reason, with or without cause, prior to November 18, 2003,
the Company shall have the right and option (the "Purchase Option") to purchase
from the Participant, for a sum of $.60 per share (the "Option Price"), some or
all of the Unvested Shares (as defined below).

      "Unvested Shares" means the total number of Shares multiplied by the
Applicable Percentage at the time the Purchase Option becomes exercisable by the
Company. The "Applicable Percentage" shall begin as 100% and shall be reduced by

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25% on November 18, 2000 and shall be reduced by 6.25 upon the completion of
each full three months of employment by the Participant after November 18, 2000,
and shall be zero on or after November 18, 2003.

      (b) For purposes of this Agreement, employment with the Company shall
include employment with a parent or subsidiary of the Company.

      3. Exercise of Purchase Option and Closing.
         ---------------------------------------

      (a) The Company may exercise the Purchase Option by delivering or mailing
to the Participant (or his estate), within 60 days after the termination of the
employment of the Participant with the Company, a written notice of exercise of
the Purchase Option. Such notice shall specify the number of Shares to be
purchased. If and to the extent the Purchase Option is not so exercised by the
giving of such a notice within such 60-day period, the Purchase Option shall
automatically expire and terminate effective upon the expiration of such 60-day
period.

      (b) Within 10 days after his receipt of the Company's notice of the
exercise of the Purchase Option pursuant to subsection (a) above, the
Participant (or his estate) shall tender to the Company at its principal offices
the certificate or certificates representing the Shares which the Company has
elected to purchase in accordance with the terms of this Agreement, duly
endorsed in blank or with duly endorsed stock powers attached thereto, all in
form suitable for the transfer of such Shares to the Company. Upon its receipt
of such certificate or certificates, the Company shall deliver or mail to the
Participant a check in the amount of the aggregate Option Price therefor.

      (c) After the time at which any Shares are required to be delivered to the
Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Participant on account of such Shares
or permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as permitted by
law, treat the Company as the owner of such Shares.

      (d) The Option Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Participant to the Company or in cash (by check) or both.

      (e) The Company shall not purchase any fraction of a Share upon exercise
of the Purchase Option, and any fraction of a Share resulting from a computation
made pursuant to Section 2 of this Agreement shall be rounded to the nearest
whole Share (with any one-half Share being rounded upward).

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      4. Restrictions on Transfer.
         ------------------------

      The Participant shall not sell, assign, transfer, pledge, hypothecate or
otherwise dispose of, by operation of law or otherwise (collectively
"transfer"):

      (a) any Shares, or any interest therein, that are subject to the Purchase
Option, except that the Participant may transfer such Shares to or for the
benefit of any spouse, child or grandchild, or to a trust for their benefit,
provided that such Shares shall remain subject to this Agreement (including
--------
without limitation the restrictions on transfer set forth in this Section 4, the
Purchase Option and the right of first refusal set forth in Section 5) and such
permitted transferee shall, as a condition to such transfer, deliver to the
Company a written instrument confirming that such transferee shall be bound by
all of the terms and conditions of this Agreement; or

      (b) any Shares, or any interest therein, that are no longer subject to the
Purchase Option, except in accordance with Section 5 below.

      5. Right of First Refusal.
         ----------------------

      (a) If the Participant proposes to transfer any Shares that are no longer
subject to the Purchase Option (either because they are no longer Unvested
Shares or because the Purchase Option expired unexercised), then the Participant
shall first give written notice of the proposed transfer (the "Transfer Notice")
to the Company. The Transfer Notice shall name the proposed transferee and state
the number of such Shares he proposes to transfer the ("Offered Shares"), the
price per share and all other material terms and conditions of the transfer.

      (b) For 30 days following its receipt of such Transfer Notice, the Company
shall have the option to purchase all (but not less than all) of the Offered
Shares at the price and upon the terms set forth in the Transfer Notice. In the
event the Company elects to purchase all of the Offered Shares, it shall give
written notice of such election to the Participant within such 30-day period.
Within 10 days after his receipt of such notice, the Participant shall tender to
the Company at its principal offices the certificate or certificates
representing the Offered Shares, duly endorsed in blank by the Participant or
with duly endorsed stock powers attached thereto, all in form suitable for
transfer of the Offered Shares to the Company. Upon receipt of such certificate
or certificates, the Company shall deliver or mail to the Participant a check in
payment of the purchase price for the Offered Shares; provided that if the terms
of payment set forth in the Transfer Notice were other than cash against

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delivery, the Company may pay for the Offered Shares on the same terms and
conditions as were set forth in the Transfer Notice.

      (c) If the Company does not elect to acquire all of the Offered Shares,
the Participant may, within the 30-day period following the expiration of the
option granted to the Company under subsection (b) above, transfer the Offered
Shares to the proposed transferee, provided that such transfer shall not be on
                                   -------- ----
terms and conditions more favorable to the transferee than those contained in
the Transfer Notice. Notwithstanding any of the above, all Offered Shares
transferred pursuant to this Section 5 shall remain subject to this Agreement
(including without limitation the restrictions on transfer set forth in Section
4 and the right of first refusal set forth in this Section 5) and such
transferee shall, as a condition to such transfer, deliver to the Company a
written instrument confirming that such transferee shall be bound by all of the
terms and conditions of this Agreement.

      (d) After the time at which the Offered Shares are required to be
delivered to the Company for transfer to the Company pursuant to subsection (b)
above, the Company shall not pay any dividend to the Participant on account of
such Offered Shares or permit the Participant to exercise any of the privileges
or rights of a stockholder with respect to such Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Offered Shares.

      (e) The following transactions shall be exempt from the provisions of this
Section 5:

            (1) a transfer of Shares to or for the benefit of any spouse, child
or grandchild of the Participant, or to a trust for their benefit;

            (2) any transfer pursuant to an effective registration statement
filed by the Company under the Securities Act of 1933, as amended (the
"Securities Act"); and

            (3) the sale of all or substantially all of the shares of capital
stock of the Company (including pursuant to a merger or consolidation);

provided, however, that in the case of a transfer pursuant to clause (1) above,
--------  -------
such Shares shall remain subject to this Agreement (including without limitation
the restrictions on transfer set forth in Section 4 and the right of first
refusal set forth in this Section 5) and such transferee shall, as a condition
to such transfer, deliver to the Company a written instrument confirming that
such transferee shall be bound by all of the terms and conditions of this
Agreement.

                                       4
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      (f) The Company may assign its rights to purchase Offered Shares in any
particular transaction under this Section 5 to one or more persons or entities.

      (g) The provisions of this Section 5 shall terminate upon the earlier of
the following events:

            (1) the closing of the sale of shares of Common Stock in an
underwritten public offering pursuant to an effective registration statement
filed by the Company under the Securities Act; or

            (2) the sale of all or substantially all of the capital stock,
assets or business of the Company, by merger, consolidation, sale of assets or
otherwise.

      6. Agreement in Connection with Public Offering.
         --------------------------------------------

      The Participant agrees, in connection with the initial underwritten public
offering of the Company's securities pursuant to a registration statement under
the Securities Act, (i) not to sell, make short sale of, loan, grant any options
for the purchase of, or otherwise dispose of any shares of Common Stock held by
the Participant (other than those shares included in the offering) without the
prior written consent of the Company or the underwriters managing such initial
underwritten public offering of the Company's securities for a period of 180
days from the effective date of such registration statement, and (ii) to execute
any agreement reflecting clause (i) above as may be requested by the Company or
the managing underwriters at the time of such initial offering.

      7. Effect of Prohibited Transfer.
         -----------------------------

      The Company shall not be required (a) to transfer on its books any of the
Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (b) to treat as owner of such Shares
or to pay dividends to any transferee to whom any such Shares shall have been so
sold or transferred.

      8. Escrow.
         ------

      The Participant shall, upon the execution of this Agreement, execute joint
Escrow Instructions in the form attached to this Agreement as Exhibit A. The
Joint Escrow Instructions shall be delivered to the Clerk of the Company, as
escrow agent thereunder. The Participant shall deliver to such escrow agent a
stock assignment duly endorsed in blank and hereby instructs the Company to
deliver to such escrow agent, on behalf of the Participant, the certificate(s)

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evidencing the Shares issued hereunder. Such materials shall be held by such
escrow agent pursuant to the terms of such joint Escrow Instructions.

      9. Restrictive Legend.
         ------------------

      All certificates representing Shares shall have affixed thereto a legend
in substantially the following form, in addition to any other legends that may
be required under federal or state securities laws:

            "The shares of stock represented by this certificate are subject to
            restrictions on transfer and an option to purchase set forth in a
            certain Stock Restriction Agreement between the corporation and the
            registered owner of these shares (or his predecessor in interest),
            and such Agreement is available for inspection without charge at the
            office of the Clerk of the corporation."

            "The shares represented by this certificate have not been registered
            under the Securities Act of 1933, as amended, and may not be sold,
            transferred or otherwise disposed of in the absence of an effective
            registration statement under such Act or an opinion of counsel
            satisfactory to the corporation to the effect that such registration
            is not required."

      10. Provisions of the Plan.
          ----------------------

      This Agreement is subject to the provisions of the Plan, a copy of which
is furnished to the Participant with this Agreement.

      11. Investment Representations.
          --------------------------

      The Participant represents, warrants and covenants as follows:

      (a) The Participant is purchasing the Shares for his own account for
investment only, and not with a view to, or for sale in connection with, any
distribution of the Shares in violation of the Securities Act, or any rule or
regulation under the Securities Act.

      (b) The Participant has had such opportunity as he has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit him to evaluate the merits and risks of his investment in the Company.

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      (c) The Participant has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the purchase of
the Shares and to make an informed investment decision with respect to such
purchase.

      (d) The Participant can afford a complete loss of the value of the Shares
and is able to bear the economic risk of holding such Shares for an indefinite
period.

      (e) The Participant understands that (i) the Shares have not been
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(iii) in any event, the exemption from registration under Rule 144 will not be
available for at least one year and even then will not be available unless a
public market then exists for the Common Stock, adequate information concerning
the Company is then available to the public, and other terms and conditions of
Rule 144 are complied with; and (iv) there is now no registration statement on
file with the Securities and Exchange Commission with respect to any stock of
the Company and the Company has no obligation or current intention to register
the Shares under the Securities Act.

                                       7
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      12. Withholding Taxes; Section 83(b) Election.
          -----------------------------------------

      (a) The Participant acknowledges and agrees that the Company has the right
to deduct from payments of any kind otherwise due to the Participant any
federal, state or local taxes of any kind required by law to be withheld with
respect to the purchase of the Shares by the Participant or the lapse of the
Purchase Option.

      (b) The Participant acknowledges that he has been informed of the
availability of making an election in accordance with Section 83(b) of the
Internal Revenue Code of 1986, as amended; that such election must be filed with
the Internal Revenue Service within 30 days of the transfer of shares to the
Participant; and that the Participant is solely responsible for making such
election.

      13. 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, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.

      14. Waiver.
          ------

      Any provision for the benefit of the Company contained in this Agreement
may be waived, either generally or in any particular instance, by the Board of
Directors of the Company.

      15. Binding Effect.
          --------------

      This Agreement shall be binding upon and inure to the benefit of the
Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Sections 4 and 5 of this Agreement.

      16. Notice.
          ------

      All notices required or permitted hereunder shall be in writing and deemed
effectively given upon personal delivery or five days after deposit in the
United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 16.

                                       8
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      17. Pronouns.
          --------

      Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural, and vice versa.

      18. Entire Agreement.
          ----------------

      This Agreement and the Plan constitutes the entire agreement between the
parties, and supersedes all prior agreements and understandings, relating to the
subject matter of this Agreement.

      19. Amendment.
          ---------

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

      20. Governing Law.
          -------------

      This Agreement shall be construed, interpreted and enforced in accordance
with the internal laws of the State of Delaware without regard to any applicable
conflicts of laws.

                                       9
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      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

                                          NETWORK ENGINES, INC.

                                          By: /s/ Lawrence A. Genovesi
                                             ------------------------------
                                          Title:  President, CEO and CTO
                                                 --------------------------

                                          /s/ John Blaeser
                                          ---------------------------------
                                          John Blaeser

                                          Address:

                                          1116 Great Pond Rd.
                                          ---------------------------------

                                          North Andover, MA  01845
                                          ---------------------------------

                                       10
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                                    Exhibit A

                              Network Engines, Inc.

                            Joint Escrow Instructions
                            -------------------------

                                       November 18, 1999

Secretary
Network Engines, Inc.
61 Pleasant Street
Randolph, MA 02368-4137

Dear Secretary:

      As Escrow Agent for Network Engines, Inc., a Delaware corporation (the
"Company"), and the undersigned Participant ("Holder"), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of that certain Restricted Stock Agreement (the "Agreement") of even date
herewith, to which a copy of these Joint Escrow Instructions is attached, in
accordance with the following instructions:

      1. Holder irrevocably authorizes the Company to deposit with you any
certificates evidencing Shares (as defined in the Agreement) to be held by you
hereunder and any additions and substitutions to said Shares. Holder does hereby
irrevocably constitute and appoint you as his attorney-in-fact and agent for the
term of this escrow to execute with respect to such Shares all documents
necessary or appropriate to make such Shares negotiable and to complete any
transaction herein contemplated. Subject to the provisions of this paragraph 1
and the terms of the Agreement, Holder shall exercise all rights and privileges
of a stockholder of the Company while the Shares are held by you.

      2. Upon any purchase by the Company of the Shares pursuant to the
Agreement, the Company shall give to Holder and you a written notice specifying
the purchase price for the Shares, as determined pursuant to the Agreement, and
the time for a closing hereunder (the "Closing") at the principal

                                       11
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office of the Company. Holder and the Company hereby irrevocably authorize and
direct you to close the transaction contemplated by such notice in accordance
with the terms of said notice.

      3. At the Closing, you are directed (a) to date the stock assignment form
or forms necessary for the transfer of the Shares, (b) to fill in on such form
or forms the number of Shares being transferred, and (c) to deliver same,
together with the certificate or certificates evidencing the Shares to be
transferred, to the Company against the simultaneous delivery to you of the
purchase price for the Shares being purchased pursuant to the Agreement.

      4. The Holder shall have the right to withdraw from this escrow any Shares
as to which the Purchase Option (as defined in the Agreement) has terminated or
expired.

      5. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.

      6. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact of Holder while acting in good faith and in
the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.

      7. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or Company, excepting
only orders or process of courts of law, and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court. In case you obey
or comply with any such order, judgment or decree of any court, you shall not be
liable to any of the parties hereto or to any other person, firm or Company by
reason of such compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.

      8. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

                                       12
<PAGE>

      9. You shall be entitled to employ such legal counsel and other experts as
you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.

      10. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Clerk of the Company or if you shall resign by written notice
to each party. In the event of any such termination, the Company shall appoint
any officer of the Company as successor Escrow Agent.

      11. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

      12. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

      13. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.

            COMPANY:                    Network Engines, Inc.
                                        61 Pleasant Street
                                        Randolph, MA 02368-4137

            HOLDER:                     Notices to Holder shall be sent to the
                                        address set forth below Holder's
                                        signature below.

            ESCROW AGENT:               Lawrence Genovesi
                                        -------------------
                                        61 Pleasant St.
                                        -------------------
                                        Randolph, MA 02368
                                        -------------------

                                       13
<PAGE>

      14. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said joint Escrow Instructions, and you do not become a
party to the Agreement.

      15. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

                                          Very truly yours,

                                          Network Engines, Inc.

                                          By:  /s/  Lawrence A. Genovesi
                                             --------------------------------
                                          Title:  President, CEO and CTO
                                                 ----------------------------

                                          HOLDER:

                                            /s/ J.A. Blaeser
                                          -----------------------------------
                                                      (Signature)

                                          John Blaeser
                                          -----------------------------------
                                                      Print Name

                                          Address:

                                          1116 Great Pond Rd.
                                          -----------------------------------

                                          North Andover, MA  01845
                                          -----------------------------------

                                          Date Signed:  11/29/99
                                                      -----------------------

ESCROW AGENT:

/s/  Lawrence A. Genovesi
-------------------------------

                                       14
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                                    (STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

      FOR VALUE RECEIVED, I hereby sell, assign and transfer unto Network
Engines, Inc. ____________________ (          ) shares of Common Stock, $.01 par
value per share, of Network Engines, Inc. (the "Corporation") standing in my
name on the books of said Corporation represented by Certificate(s) Number
___________ herewith, and do hereby irrevocably constitute and appoint Lawrence
A. Genovesi attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.

                                               Dated: 11/29/99
                                                      -----------------------

                                               /s/ J. A. Blaeser
                                               ------------------------------
                                               John Blaeser

IN PRESENCE OF

/s/ Ellen C. Goff
-----------------------------

NOTICE: The signature(s) to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration, enlargement, or any change whatever and must be guaranteed by a
commercial bank, trust company or member firm of the Boston, New York or Midwest
Stock Exchange.<PAGE>

                                                                   EXHIBIT 10.13

                          LOAN MODIFICATION AGREEMENT

     This LOAN MODIFICATION AGREEMENT is entered into as of April 5, 2000, by
and between SILICON VALLEY BANK, a California-chartered bank with its principal
place of business at 3003 Tasman Drive, Santa Clara, CA 95054 and with a loan
production office located at Wellesley Office Park, 40 William Street, Suite
350, Wellesley, MA 02481, doing business under the name "Silicon Valley East"
("Bank"), and NETWORK ENGINES, INC., a Delaware corporation with its principal
place of business at 61 Pleasant Street, Randolph, MA 02368 ("Borrower").

                                    RECITALS

     Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below.  In consideration of certain financial
accommodations from Bank, and Borrower's continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:

                                    AGREEMENT

     1.  DESCRIPTION OF EXISTING INDEBTEDNESS.  Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement dated as of November 2,
1998 between Borrower and Bank originally providing for a revolving credit
facility up to a maximum principal amount of THREE HUNDRED THOUSAND AND
NO/100THS DOLLARS ($300,000) and an equipment line facility up to a maximum
principal amount of TWO HUNDRED SIXTY THOUSAND AND NO/100THS DOLLARS ($260,000)
(the "Loan Agreement").

     Hereinafter, all indebtedness owing by Borrower to Bank shall be referred
to as the "Indebtedness."

     2.  DESCRIPTION OF COLLATERAL.  Repayment of the Indebtedness is secured
pursuant to the Loan Agreement.  Hereinafter, the Loan Agreement, together with
all other documents securing payment of the Indebtedness, shall be referred to
as the "Existing Loan Documents."

     3.  DESCRIPTION OF CHANGES IN TERMS.

     3.1  Modifications to Definitions.  Section 1.1 of the Loan Agreement is
hereby amended by substituting the following definitions for those set forth
therein for the same terms, and in the case of new definitions, by adding those
new definitions to that Section 1.1:

          "Committed Revolving Line" means a credit extension of up to FOUR
          MILLION AND NO/100THS Dollars ($4,000,000).

          "2000 Committed Equipment Line" means a credit extension of up to TWO
          MILLION AND N0/100THS Dollars ($2,000,000).

          "Credit Extension" means each Advance, Equipment Advance, 2000
          Equipment Advance, Letter of Credit or any other extension of credit
          by Bank for the benefit of Borrower hereunder.

          "2000 Equipment Advance" has the meaning set forth in Section 2.1.4.

          "2000 Equipment Availability End Date" has the meaning set forth in
          Section 2.1.4.

          "Letter of Credit" means a letter of credit or similar undertaking
          issued by Bank pursuant to Section 2.1.3.

          "Revolving Maturity Date" means APRIL 4, 2001.
<PAGE>

          The definition of "Permitted Investment" is amended by adding the
          following subparagraph:

          (c) the Promissory Note dated November 18, 1999 of Lawrence A.
          Genovesi  payable to the order of the Borrower in the amount of
          $90,000.

          Subparagraphs (c) and (d) of the definition of "Permitted Liens" are
          hereby replaced in their entirety with the following:

          (c) Liens (i) upon or in any Equipment acquired or held by Borrower or
          any of its Subsidiaries to secure the purchase price of such Equipment
          or indebtedness incurred solely for the purpose of financing the
          acquisition of such Equipment, or (ii) existing on such Equipment at
          the time of its acquisition, provided that the Lien is confined solely
          to the property so acquired and improvements thereon, and the proceeds
          of such Equipment; and further provided that such liens shall exist as
          of April 5, 2000, and, that the aggregate principal amount of the
          obligations secured by such liens and the liens in subsection (d) of
          this definition, shall not exceed $200,000;

          (d) Liens on Equipment leased by Borrower or any Subsidiary pursuant
          to an operating lease in the ordinary course of business (including
          proceeds thereof and accessions thereto) incurred solely for the
          purpose of financing the lease of such Equipment (including Liens
          pursuant to leases permitted pursuant to Section 7.1 and Liens arising
          from UCC financing statements regarding leases permitted by this
          Agreement); provided that such liens shall exist as of April 5, 2000,
          and that the aggregate principal amount of the obligations secured by
          such liens and the liens in subsection (c) of this definition, shall
          not exceed $200,000; and

     3.2  Modifications to Revolving Advances.  Section 2.1.1(a) of the Loan
Agreement is hereby replaced in its entirety with the following:

          2.1.1  Revolving Advances.

          (a) Bank will make Advances not exceeding (i) the Committed Revolving
          Line or the Borrowing Base, whichever is less minus (ii) the amount of
          all outstanding Letters of Credit (including drawn but unreimbursed
          Letters of Credit).  Amounts borrowed under this Section may be repaid
          and reborrowed during the term of this Agreement.

     3.3  Addition of Letters of Credit.  The following Section 2.1.3 is hereby
inserted in the Loan Agreement:

          2.1.3  Letters of Credit.  Bank will issue or have issued Letters of
          Credit for Borrower's account not exceeding (i) the lesser of the
          Committed Revolving Line or the Borrowing Base minus (ii) the
          outstanding principal balance of the Advances.  Each Letter of Credit
          will expire no later than 180 days after the Revolving Maturity Date
          provided Borrower's Letter of Credit reimbursement obligation is
          secured by cash on terms acceptable to Bank at any time after the
          Revolving Maturity Date if the term of this Agreement is not extended
          by Bank.

     3.4  Addition of 2000 Equipment Advances.  The following Section 2.1.4 is
hereby inserted in the Loan Agreement:

                                       2
<PAGE>

          2.1.4  2000 Equipment Advances.

          (a) Subject to and upon the terms and conditions of this Agreement, at
          any time from the date hereof through APRIL 4, 2001 (the "2000
          Equipment Availability End Date"), Bank agrees to make advances (each
          an "2000 Equipment Advance" and collectively, the "2000 Equipment
          Advances") to Borrower in an aggregate outstanding amount not to
          exceed the 2000 Committed Equipment Line; provided that the total 2000
          Equipment Advances made from APRIL 5, 2000 to OCTOBER 4, 2000 shall
          not exceed ONE MILLION AND NO/100THS DOLLARS ($1,000,000) and that the
          total 2000 Equipment Advances made from OCTOBER 5, 2000 to APRIL 4,
          2001 shall not exceed ONE MILLION AND NO/100THS DOLLARS ($1,000,000).
          To evidence the 2000 Equipment Advances, Borrower shall deliver to
          Bank, at the time of each 2000 Equipment Advance request, an invoice
          for the equipment to be purchased or financed.  The 2000 Equipment
          Advances shall be used only to purchase or finance Equipment and shall
          not exceed ONE HUNDRED Percent (100%) of the invoice amount of such
          equipment approved from time to time by Bank.  Software may, however,
          constitute up to THIRTY percent (30%) of aggregate 2000 Equipment
          Advances.

          (b) Interest shall accrue from the date of each 2000 Equipment Advance
          at the rate specified in Section 2.3(a), and shall be payable on the
          Payment date for each month through APRIL, 2001, except as otherwise
          provided herein.  Any 2000 Equipment Advances that are outstanding on
          OCTOBER 4, 2000 will be payable in THIRTY-SIX (36) equal monthly
          installments of principal, plus all accrued interest, on the Payment
          Date of each month commencing NOVEMBER 1, 2000 and ending on OCTOBER
          1, 2003.  Any 2000 Equipment Advances made after OCTOBER 4, 2000 that
          are outstanding on the 2000 Equipment Availability End Date will be
          payable in THIRTY-SIX (36) equal monthly installments of principal,
          plus all accrued interest, on the Payment Date of each month
          commencing MAY 1, 2001 and ending on APRIL 1, 2004.  2000 Equipment
          Advances, once repaid, may not be reborrowed.

          (c) When Borrower desires to obtain a 2000 Equipment Advance, Borrower
          shall notify Bank (which notice shall be irrevocable) by facsimile
          transmission to be received no later than 3:00 p.m. Pacific time one
          (1) Business Day before the day on which the 2000 Equipment Advance is
          to be made.  Such notice shall be substantially in the form of Exhibit
          B.  The notice shall be signed by a Responsible Officer or its
          designee and include a copy of the invoice(s) for the Equipment to be
          financed.  2000 Equipment Advance requests for Equipment purchased
          prior to APRIL 5, 2000 shall be made no later than SIXTY (60) business
          days after said date.  No 2000 Equipment Advances shall be made on
          Equipment purchased after APRIL 5, 2000 more than SIXTY (60) days past
          invoice date.

     3.5  Modifications to Overadvances. Section 2.2 of the Loan Agreement is
hereby replaced in its entirety by the following:

          2.2  Overadvances.  If, at any time or for any reason, the amount of
          Obligations owed by Borrower to Bank pursuant to Sections 2.1.1 and
          2.1.3 of this Agreement is greater than the lesser of (i) the
          Committed

                                       3
<PAGE>

          Revolving Line or (ii) the Borrowing Base, Borrower shall immediately
          pay to Bank, in cash, the amount of such excess.

     3.6  Modifications to Interest Rate. Section 2.3(a) of the Loan Agreement
is hereby replaced in its entirety by the following:

          2.3  Interest Rates, Payments, and Calculations.

          (a) Interest Rate.  Except as set forth in Section 2.3(b), any
          Advances and Equipment Advances shall bear interest, on the average
          daily balance thereof, at a per annum rate equal to ONE (1.0)
          percentage point above the Prime Rate, and any 2000 Equipment Advances
          shall bear interest, on the average daily balance thereof, at a per
          annum rate equal to ONE AND ONE QUARTER (1.25) percentage points above
          the Prime Rate.

     3.7  Modifications to Financial Reporting Covenants. Section 6.3 of the
Loan Agreement is hereby replaced in its entirety by the following:

          6.3  Financial Statements, Reports, Certificates.  (i) Borrower shall
          deliver to Bank:

          (a) as soon as available, but in any event within twenty-five (25)
          days after the end of each month, a company prepared consolidated
          balance sheet and income statement covering Borrower's consolidated
          operations during such period, in a form and certified by an officer
          of Borrower reasonably acceptable to Bank;

          (b) as soon as available, but in any event within one hundred twenty
          (120) days after the end of Borrower's fiscal year, audited
          consolidated financial statements of Borrower prepared in accordance
          with GAAP, consistently applied, together with an unqualified opinion
          on such financial statements of an independent certified public
          accounting firm reasonably acceptable to Bank;

          (c) if Borrower is a reporting company under the Securities and
          Exchange Act of 1934, then within five (5) days of filing, copies of
          all statements, reports and notices sent or made available generally
          by Borrower to its security holders or to any holders of Subordinated
          Debt and all reports on Form 10-K, 10-Q and 8-K filed with the
          Securities and Exchange Commission;

          (d) promptly upon receipt of notice thereof, a report of any legal
          actions pending or threatened against Borrower or any Subsidiary that
          could result in damages or costs to Borrower or any Subsidiary of One
          Hundred Thousand Dollars ($100,000) or more;

          (e) such budgets, sales projections, operating plans or other
          financial information as Bank may reasonably request from time to
          time, and no less frequently than annually, any material changes in
          Borrower's operating plans and financial projections.

          (f) within twenty-five (25) days after the last day of each month, a
          Borrowing Base Certificate signed by a Responsible Officer in
          substantially the form of Exhibit C hereto, together with aged
          listings of accounts receivable.

          (g) within twenty-five (25) days after the last day of each month,
          with the monthly financial statements, and within one hundred twenty
          (120) days after the end of Borrower's fiscal year, with the annual
          audited financial statements, a Compliance Certificate signed by a
          Responsible Officer in substantially the form of Exhibit D hereto.

          (ii) Bank shall have a right from time to time hereafter to audit
          Borrower's Accounts and Collateral at Borrower's expense, provided
          that such audits will be conducted no more often than every twelve
          (12) months unless an Event of Default has occurred and is continuing.
          Such an audit shall occur within 90 days of APRIL 5, 2000.

                                       4
<PAGE>

     3.8  Modifications to Tangible Net Worth. Section 6.9 of the Loan Agreement
is hereby replaced in its entirety by the following:

          6.9  Tangible Net Worth.  Borrower shall maintain, as of the last day
          of each calendar month commencing APRIL 30, 2000, a Tangible Net Worth
          of not less than FIFTEEN MILLION AND NO/100THS Dollars ($15,000,000).

     3.9  Modifications to Dispositions. Section 7.1 of the Loan Agreement is
hereby replaced in its entirety by the following:

          7.1  Dispositions.  Convey, sell, lease, transfer or otherwise dispose
          of (collectively, a "Transfer"), or permit any of its Subsidiaries to
          Transfer, all or any part of its business or property, other than
          Transfers: (i) of inventory in the ordinary course of business, (ii)
          of non-exclusive licenses and similar arrangements for the use of the
          property of Borrower or its Subsidiaries in the ordinary course of
          business, (iii) that constitute payment of normal and usual operating
          expenses in the ordinary course of business, (iv) of worn-out or
          obsolete Equipment, or (v) of Borrower's P6000 product line to
          Copernicus, Inc., a corporation wholly-owned by Cheryl Smith.

     3.10  Modifications to Transactions with Affiliates. Section 7.8 of the
Loan Agreement is hereby replaced in its entirety by the following:

          7.8  Transactions with Affiliates.  Directly or indirectly enter into
          or permit to exist any material transaction with any Affiliate of
          Borrower except for transactions that are in the ordinary course of
          Borrower's business, upon fair and reasonable terms that are no less
          favorable to Borrower than would be obtained in an arm's length
          transaction with a non-affiliated Person, except for the Promissory
          Note dated November 18, 1999 of Lawrence A. Genovesi payable to the
          order of Borrower in the amount of $90,000, and except for the
          Transfer of Borrower's P6000 product line to Copernicus, Inc., a
          corporation wholly-owned by Cheryl Smith.

     3.11  Modifications to Intellectual Property Agreements.  Section 7.9 of
the Loan Agreement is hereby replaced in its entirety with the following:

          7.9  Intellectual Property Agreements. Borrower shall not permit the
          inclusion in any material contract to which it becomes a party of any
          provisions that could or might in any way prevent the creation of a
          security interest in Borrower's rights and interests in any property
          included within the definition of the Intellectual Property Assets
          acquired under such contracts.

     3.12  Modifications to Covenant Default.  Section 8.2(b) of the Loan
Agreement is hereby replaced in its entirety with the following:

          (b) If Borrower fails or neglects to perform, keep, or observe any
          other material term, provision, condition, covenant, or agreement
          contained in this Agreement, in any of the Loan Documents, or in any
          other present or future agreement between Borrower and Bank and as to
          any default under such other term, provision, condition, covenant or
          agreement that can be cured, has failed to cure such default within
          ten (10) days after the occurrence thereof; provided, however, that if
          the default cannot by its nature be cured within the ten (10) day
          period or cannot after diligent attempts by Borrower be cured within
          such ten (10) day period, and such default is likely to be cured
          within a reasonable time, then Borrower shall have an additional
          reasonable period (which shall not in any case exceed thirty (30)
          days) to attempt to cure such

                                       5
<PAGE>

          default, and within such reasonable time period the failure to have
          cured such default shall not be deemed an Event of Default (provided
          that no Credit Extensions will be required to be made during such cure
          period);

     3.13 Modifications to Insolvency.  Section 8.5 of the Loan Agreement is
hereby replaced in its entirety with the following:

          8.5  Insolvency.  If Borrower becomes insolvent, or if an Insolvency
          Proceeding is commenced by Borrower, or if an Insolvency Proceeding is
          commenced against Borrower and is not dismissed or stayed within 30
          days (provided that no Credit Extensions will be made prior to the
          dismissal of such Insolvency Proceeding);

     3.14  Addition of  Letter of Credit Remedies.  The following Section 9.1(j)
is hereby inserted in the Loan Agreement:

          (j) Demand that Borrower (i) deposit cash with Bank in an amount equal
          to the amount of any Letters of Credit remaining undrawn, as
          collateral security for the repayment of any future drawings under
          such Letters of Credit, and Borrower shall forthwith deposit and pay
          such amounts, and (ii) pay in advance all Letters of Credit fees
          scheduled to be paid or payable over the remaining term of the Letters
          of Credit;

     3.15 Modifications to Exhibits.  Exhibits A, C and D of the Loan Agreement
are hereby replaced in their entirety with Exhibits A, C and D to this
Agreement.

     4.   FEES.  Borrower shall pay to Bank facility fees totaling THIRTY
THOUSAND DOLLARS ($30,000) as well as any out-of-pocket expenses incurred by the
Bank through the date hereof, including reasonable attorneys' fees and expenses,
and after the date hereof, all Bank Expenses, including reasonable attorneys'
fees and expenses, as and when they become due.

     5.  CONDITIONS TO FURTHER ADVANCES. The obligation of Bank to make further
advances to Borrower under the lines is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, the
following:

          (i) this Loan Modification Agreement duly executed by Borrower;

          (ii) payment of the fees and Bank Expenses then due specified in
Section 4 hereof; and

          (iii)  such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.

     6.  CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described in this Loan Modification
Agreement.

     7.  NO DEFENSES OF BORROWER.  Borrower agrees that as of this date, it has
no defenses against any of the obligations to pay any amounts under the
Indebtedness.

     8.  CONTINUING VALIDITY.  Borrower understands and agrees that (i) in
modifying the Existing Loan Documents, Bank is relying upon Borrower's
representations, warranties and agreements, as set forth in the Existing Loan
Documents, (ii) except as expressly modified pursuant to this Loan Modification
Agreement (including the effects of Section 6 hereof), the Existing Loan
Documents remain unchanged and in full force and effect, (iii) Bank's agreement
to modify the Existing Loan Documents pursuant to this Loan Modification
Agreement shall in no way obligate Bank to make any future modifications to the
Existing Loan Documents, (iv) it is the intention of Bank and Borrower to retain
as liable parties all makers and endorsers of the Existing Loan Documents,
unless a party is expressly released by Bank in writing, (v) no maker, endorser
or guarantor will be released by virtue of this Loan Modification Agreement, and
(vi) the terms of this Section 8 apply not only to this Loan Modification
Agreement but also to all subsequent loan modification agreements, if any.

                                       6
<PAGE>

     9.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  The laws of the
Commonwealth of Massachusetts shall apply to this Agreement.  BORROWER ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY
KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT; PROVIDED,
HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION OF THE COURTS AND
VENUE IN SANTA CLARA COUNTY, CALIFORNIA.  BORROWER AND BANK EACH HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND
AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO
ENTER INTO THIS AGREEMENT.  EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.

     10.  EFFECTIVENESS. This Agreement shall become effective only when it
shall have been executed by Borrower and Bank (provided, however, in no event
shall this Agreement become effective until signed by an officer of Bank in
California).

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the date first set forth above.
<TABLE>
<CAPTION>
<S>                                          <C>
"Borrower": NETWORK ENGINES, INC.            "Bank": SILICON VALLEY BANK, doing
                                             business as SILICON VALLEY EAST

By:  /s/ Lawrence A. Genovesi                By:  /s/ William R. Howell
    -----------------------------                -----------------------------
    Lawrence A. Genovesi, President & CEO        William R. Howell, AVP

                                             SILICON VALLEY BANK

                                             By:  /s/ Michelle D. Giannini
                                                 -----------------------------
                                                 Michelle D. Giannini

                                             Title: Assistant Vice President
                                                   ---------------------------
                                             (Signed in Santa Clara County, California)
</TABLE>

                           EXHIBITS A, C AND D FOLLOW

                                       7
<PAGE>

                    EXHIBIT A TO LOAN AND SECURITY AGREEMENT

     The Collateral shall consist of all right, title and interest of Borrower
in and to the following:

     (a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

     (b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

     (c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trade styles, trade names,
leases, license agreements, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims, computer programs,
computer discs, computer tapes, literature, reports, catalogs, income tax
refunds, payments of insurance and rights to payment of any kind; all rights to
unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired;

     (d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;

     (e) All documents, cash, deposit accounts, securities, investment property,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired;

     (f) All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter existing, created,
acquired or held; all trademark and service mark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks; all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same, including
without limitation the patents and patent applications; all mask work or similar
rights available for the protection of semiconductor chips, now owned or
hereafter acquired; all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held; all design rights which may be available to
Borrower now or hereafter existing, created, acquired or held; all claims for
damages by way of past, present and future infringement of any of the rights
included above, with the right, but not the obligation, to sue for and collect
such damages for said use or infringement of the foregoing; all licenses or
other rights to use any of the foregoing, and all license fees and royalties
arising from such use to the extent permitted by such license or rights; all
amendments, renewals and extensions of any of the foregoing; and

     (g) All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds and products thereof, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.

                                       8
<PAGE>

                                    EXHIBIT C
                           BORROWING BASE CERTIFICATE

<TABLE>
<CAPTION>
Borrower:    Network Engines, Inc.            Bank:        Silicon Valley Bank
             61 Pleasant Street                            3003 Tasman Drive
             Randolph, MA 02368                            Santa Clara, CA 95054

<S>                                                          <C>         <C>
Commitment Amount: $4,000,000

ACCOUNTS RECEIVABLE
      1.  Accounts Receivable Book Value as of ____________                $_________
      2.  Additions (please explain on reverse)                            $_________
      3.  TOTAL ACCOUNTS RECEIVABLE                                        $_________

ACCOUNTS RECEIVABLE DEDUCTIONS
      4.  Amounts over 90 days                                             $_________
      5.  Balance of 50% over 90 day accounts                              $_________
      6.  Concentration Limits                                             $_________
      7.  Ineligible Foreign Accounts                                      $_________
      8.  Governmental Accounts                                $_________
      9.  Contra Accounts                                      $_________
     10.  Promotion or Demo Accounts                                       $_________
     11.  Intercompany/Employee Accounts                                   $_________
     12.  Other (please explain on reverse)                    $_________
     13.  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                             $_________
     14.  Eligible Accounts (#3 - #13)                                     $_________
     15.  LOAN VALUE OF ACCOUNTS (80% of #14)                              $_________

BALANCES
     16.  Maximum Loan Amount                                              $4,000,000
     17.  Total Funds Available (Lesser of #16 or #15)                     $_________
     18.  Present balance owing on Line of Credit                          $_________
     19.  Outstanding under Sublimits (                   )                $_________
     20.  RESERVE POSITIVE (#17 minus #18 and #19)                         $_________
</TABLE>

The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement dated as of November 2, 1998, as may be amended from time to
time, between the undersigned and Silicon Valley Bank.

                                                 -------------------------------
                                                           BANK USE ONLY
                                                   Rec'd By: ___________________
                                                   Date: _______________________
                                                   Reviewed By: ________________
                                                   Compliance Status: Yes / No
                                                 -------------------------------

COMMENTS:

_______________________________

By: ____________________________
    Authorized Signer

                                       9
<PAGE>

                                   EXHIBIT D
                             COMPLIANCE CERTIFICATE

Borrower: Network Engines, Inc.            Bank: Silicon Valley Bank
          61 Pleasant Street                     3003 Tasman Drive
          Randolph, MA 02368                     Santa Clara, CA 95054

     The undersigned authorized officer of NETWORK ENGINES, INC. hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement dated as of November 2, 1998 between Borrower and Bank, as
may be amended from time to time (the "Agreement"), (i) Borrower is in complete
compliance for the period ending ___________ of all required conditions and
terms except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true, accurate and complete in all material
respects as of the date hereof.  Attached herewith are the required documents
supporting the above certification.   The Officer further certifies that these
are prepared in accordance with Generally Accepted Accounting Principals (GAAP)
and are consistent from one period to the next except as explained in an
accompanying letter or footnotes.  The Officer further expressly acknowledges
Borrower may not request any borrowings at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.

 Please indicate compliance status by circling Yes/No under "Complies" column

<TABLE>
<CAPTION>
          Reporting Covenant                           Required                           Complies
          ------------------                           --------                           --------
<S>                                               <C>                                <C>          <C>
Monthly financial statements w/ compliance        Monthly within 25 days                Yes         No
 certificate
Annual (CPA Audited) financial statements w/      FYE within 120 days                   Yes         No
 compliance certificate
Borrowing base certificate                        Monthly within 25 days                Yes         No
A/R agings                                        Monthly within 25 days                Yes         No
A/R and collateral audit                          Initial and Annual                    Yes         No
Material revisions to operating plans and         Annual                                Yes         No
 financial projections

<CAPTION>
         Financial Covenants                           Required                 Actual           Complies
         -------------------                           --------                 ------           --------
<S>                                                <C>                   <C>                  <C>        <C>
MAINTAIN ON A MONTHLY BASIS:
Minimum Quick Ratio - 4/30/00 and thereafter            1.5:1.0            __________:1.0      Yes         No
Minimum TNW - 4/30/00 and thereafter                $15,000,000            $_____________      Yes         No
</TABLE>

Comments Regarding Exceptions:

Sincerely,

___________________________________     ---------------------------------------
Signature                                             BANK USE ONLY
                                          Received by: ________________________
___________________________________       Date: _______________________________
TITLE                                     Reviewed by: ________________________
                                          Compliance Status:      Yes      No
___________________________________     ---------------------------------------
DATE

                                       10

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