2006 Executive Bonus Program
Each executive officer of Network Engines, Inc. (the “Company”) has the opportunity to earn quarterly
performance bonuses, based on his or her performance and the achievement of specific goals. Under the
Executive Bonus Program, the Compensation Committee of the Board of Directors selects, reviews and/or
approves individual objectives for each executive that directly contribute to overall Company performance
objectives. The Compensation Committee and Chief Executive Officer assign a specific dollar value to each
objective and evaluates each executive’s performance against those selected goals, generally on a quarterly basis.
The Company will pay to each of the executive officers, on a quarterly basis, a percentage of their annual base
salaries if the executive achieves selected targets for the quarter.
The Compensation Committee has approved the following guidelines for the Executive Bonus Program:
• The Chief Executive Officer of the Company (“CEO”), with approval from the Compensation Committee,
will designate an executive as a participant in the Executive Bonus Program.
• Participants must be full time employees for the entire period, either a quarter or the entire fiscal year,
depending on the bonus component.
• The CEO and/or the Compensation Committee reserve the right to modify the fiscal 2006 program to reflect
substantial changes in business conditions.
• Quarterly bonus payments will be paid at the rates defined in individual plans based on the actual
performance compared to targeted performance for specified parameters. Quarterly bonus payments are
only payable to certain maximum amounts for each specified parameter. Where appropriate, quarterly
performance for metrics such as revenue, contribution margin and operating income will be measured on the
better of performance for the specific quarter or the cumulative year-to-date perform