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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission
Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

NETERGY NETWORKS, INC.
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(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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PRELIMINARY COPIES

NETERGY NETWORKS, INC.
------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 17, 2001

To The Stockholders:

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Netergy
Networks, Inc., a Delaware corporation (the "Company"), will be held on Tuesday,
July 17, 2001 at 2:00 p.m., local time, at the offices of the Company at 2445
Mission College Boulevard, Santa Clara, California 95054, for the following
purposes:

1. To elect six directors to serve for the ensuing year or until their
successors are elected and duly qualified;

2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors of the Company for the fiscal year ending March 31, 2002;

3. To approve an amendment to the Company's Restated Certificate of
Incorporation, as amended, to change the Company's name to "8x8, Inc."

4. To transact such other business as may properly come before the meeting
and any adjournment or postponement of the meeting.

These items of business are more fully described in the proxy statement
accompanying this notice. Only stockholders of record at the close of business
on May 30, 2001 are entitled to notice of and to vote at the meeting.

All stockholders are cordially invited to attend the annual meeting in
person. However, to assure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the enclosed self-addressed envelope. Any stockholder attending the annual
meeting may vote in person even if he or she has previously returned a proxy.

THE BOARD OF DIRECTORS OF
NETERGY NETWORKS, INC.

Santa Clara, California
June , 2001

YOUR VOTE IS IMPORTANT

IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE.
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NETERGY NETWORKS, INC.
------------------------
PROXY STATEMENT
------------------------

INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

The enclosed proxy is solicited on behalf of the board of directors of
Netergy Networks, Inc. (the "Company") for use at the 2001 annual meeting of
stockholders to be held July 17, 2001 at 2:00 p.m., local time, or at any
adjournment thereof, for the purposes set forth herein. The annual meeting of
stockholders will be held at the offices of the Company at 2445 Mission College
Boulevard, Santa Clara, California 95054. The telephone number of the Company's
offices is (408) 727-1885.

These proxy solicitation materials and the Company's Annual Report on Form
10-K for the year ended March 31, 2001 (the Company's fiscal 2001), including
financial statements, were, or shall be, mailed on or about June 14, 2001, to
all stockholders entitled to vote at the annual meeting.

RECORD DATE AND VOTING SECURITIES

Stockholders of record at the close of business on May 30, 2001 (the
"Record Date"), are entitled to notice of and to vote at the annual meeting. At
the Record Date, 26,540,767 shares of the Company's common stock were issued and
outstanding having a total of 26,540,767 votes, and one share of preferred
stock, designated as Special Voting Stock, was issued and outstanding, having a
total of 233,759 votes.

REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at or before the taking of the vote at the annual meeting a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the annual meeting and voting in person.

VOTING AND SOLICITATION

Each stockholder holding common stock is entitled to one vote for each
share of the Company's common stock they hold on all matters presented at the
annual meeting. Stockholders holding a fractional interest in the Special Voting
Stock shall be entitled to the number of votes that their fractional interest
represents on all matters presented at the meeting. Stockholders do not have the
right to cumulate their votes in the election of directors.

Shares of the Company's common stock and fractional interests in the
Special Voting Share represented by properly executed proxies will, unless such
proxies have been previously revoked, be voted in accordance with the
instructions indicated thereon. In the absence of specific instructions to the
contrary, properly executed proxies will be voted: (i) FOR the election of each
of the Company's nominees for director; (ii) FOR ratification of the appointment
of PricewaterhouseCoopers LLP as independent auditors for the Company for the
period ending March 31, 2002; and (iii) FOR the amendment of the Company's
Restated Certificate of Incorporation, as amended, to change the Company's name
to "8x8, Inc." No business other than that set forth in the accompanying Notice
of Annual Meeting of Stockholders is expected to come before the annual meeting.
Should any other matter requiring a vote of stockholders properly arise, the
persons named in the enclosed form of proxy will vote such proxy in accordance
with the recommendation of the board of directors.

The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation materials to such
beneficial owners. Solicitation of proxies by mail may be supplemented by
telephone,

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telegram, facsimile or personal solicitation by directors, officers or regular
employees of the Company. No additional compensation will be paid to such
persons for such services.

QUORUM; ABSTENTIONS; BROKER NON-VOTES

The required quorum for the transaction of business at the annual meeting
is a majority of the votes eligible to be cast by holders of shares of the
Company's common stock issued and outstanding on the Record Date. Shares that
are voted "FOR," "AGAINST," "WITHHELD" or "ABSTAIN" are treated as being present
at the meeting for purposes of establishing a quorum and are also treated as
shares entitled to vote at the annual meeting with respect to such matter.

Abstentions shall be counted for purposes of determining both (i) the
presence or absence of a quorum for the transaction of business and (ii) the
total number of shares entitled to vote with respect to a proposal (other than
the election of directors). Accordingly, abstentions will have the same effect
as a vote against the proposal.

In instances where brokers are prohibited from exercising discretionary
authority for beneficial holders who have not returned a proxy (so-called
"broker non-votes"), those shares will be counted for purposes of determining
the presence or absence of a quorum for the transaction of business, but will
not be counted for purposes of determining the number of shares entitled to
vote. Thus, a broker non-vote will not affect the outcome of the voting on a
proposal other than the proposed amendment to the Company's Restated Certificate
of Incorporation, as amended, which requires the approval of a majority of the
Company's outstanding voting securities. Accordingly, a broker non-vote on
proposal 3 will have the same effect as a vote against the proposal..

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2002 annual meeting (the "2002 Meeting")
of stockholders must be received by the Company no later than February 14, 2002
in order that they may be considered for inclusion in the proxy statement and
form of proxy relating to that meeting.

Alternatively, under the Company's Bylaws, a proposal or a nomination that
the stockholder does not seek to include in our 2002 Proxy Statement may be
submitted in writing to the Company's Secretary not less than 90 days prior to
the 2002 Meeting. Note, however, that in the event we provide less than 100 days
notice or prior public disclosure to stockholders of the date of the 2002
Meeting, any stockholder proposal or nomination not submitted for inclusion in
the proxy statement must be submitted to the Company's Secretary not later than
the close of business on the tenth day following the day on which notice of the
date of the 2002 Meeting was mailed or public disclosure was made. For purposes
of the above, "public disclosure" means disclosure in a press release reported
by the Dow Jones News Service, Associated Press or a comparable national news
service, or in a document publicly filed by us with the Securities and Exchange
Commission (the "SEC"). As described in our Bylaws, the stockholder submission
must include certain specified information concerning the proposal or nominee,
as the case may be, and information as to the stockholder's ownership of our
common stock. If a stockholder gives notice of such proposal after the deadline
computed in accordance with our Bylaws (the "Bylaw Deadline"), the stockholder
will not be permitted to present the proposal to the stockholders for a vote at
the 2002 Meeting.

The rules of the SEC also establish a different deadline for submission of
stockholder proposals that are not intended to be included in our proxy
statement with respect to discretionary voting (the "Discretionary Vote
Deadline"). The Discretionary Vote Deadline for the 2002 Meeting is April 30,
2002, or the date which is 45 calendar days prior to the anniversary of the
mailing date of this Proxy Statement. If a stockholder gives notice of such a
proposal after the Discretionary Vote Deadline, our Proxy holders will be
allowed to use their discretionary voting authority to vote against the
stockholder proposal when and if the proposal is raised at the 2002 Meeting.

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Because the Bylaw Deadline is not capable of being determined until we
publicly announce the date for our 2002 Meeting, it is possible that the Bylaw
Deadline may occur after the Discretionary Vote Deadline. In such a case, a
proposal received after the Discretionary Vote Deadline but before the Bylaw
Deadline would be eligible to be presented at the 2002 Meeting and we believe
that our Proxy holders at such meeting would be allowed to use the discretionary
authority granted by the Proxy to vote against the proposal at such meeting
without including any disclosure of the proposal in the Proxy Statement relating
to such meeting.

We have not been notified by any stockholder of his, her or its intent to
present a stockholder proposal from the floor at the 2001 Annual Meeting. The
enclosed proxy grants the proxy holders discretionary authority to vote on any
matter properly brought before the 2001 annual meeting, including any
stockholder proposals received between the date of this proxy statement and the
Bylaw Deadline for the 2001 annual meeting, which is the date 10 days after the
date of notice of the 2001 annual meeting.

PROPOSAL ONE:

ELECTION OF DIRECTORS

NOMINEES

The Company's board of directors consists of six directors who are to be
elected at this annual meeting. Proxies cannot be voted for a greater number of
persons than the number of nominees named. Each of the directors elected at the
annual meeting will hold office until the annual meeting of stockholders in 2002
or until his successor has been duly elected and qualified.

Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's six nominees named below, all of whom are
currently directors of the Company. In the event that any nominee of the Company
becomes unable or declines to serve as a director at the time of the annual
meeting, the proxy holders will vote the proxies for any substitute nominee who
is designated by the current board of directors to fill the vacancy. It is not
expected that any nominee listed below will be unable or will decline to serve
as a director.

The names of the nominees and certain information about each of them are
set forth below.

DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
---- --- -------------------- --------

Joe Parkinson.......................... 55 Chairman of the Board and Chief Executive 2000
Officer, Netergy Networks, Inc.
Dr. Bernd Girod........................ 43 Professor of Electrical Engineering, 1996
Information Systems Laboratory, Stanford
University
Major General Guy L. Hecker, Jr. ...... 69 President, Stafford, Burke and Hecker, 1997
Inc. Retired, United States Air Force
Christos Lagomichos.................... 46 Vice President and General Manager, 2000
Set-Top Box Division, STMicroelectronics,
Inc.
Bryan R. Martin........................ 33 President and Chief Operating Officer, 2001
Netergy Networks, Inc.
William P. Tai......................... 38 General Partner, Institutional Venture 1994
Partners

Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships between any directors or executive officers of
the Company.

Joe Parkinson has been Chairman of the Board of the Company since November
2000, and was appointed Chief Executive Officer in January 2001. He was Chairman
and Chief Executive Officer of Netergy Microelectronics, Inc. (Netergy
Microelectronics), a subsidiary of the Company, from November 2000 to January
2001. He also served as Chairman of the Board and Chief Executive Officer of the
Company from June 1995 to January 1998. He previously served as Chairman of the
Board and Chief Executive Officer of Micron Technology, Inc. He currently serves
on the board of Tulane University and of several private

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companies. Mr. Parkinson received a B.A. from Columbia College, a J.D. from
Tulane University, and a L.L.M. in Taxation from New York University.

Dr. Bernd Girod has served as a director of the Company since November 1996
and has served as a director of Netergy Microelectronics since January 2001. Dr.
Girod is Professor of Electrical Engineering and (by courtesy) Computer Science
in the Information Systems Laboratory of Stanford University, a position he has
held since 1999. He was Chaired Professor of Telecommunications in the
Electrical Engineering Department of the University of Erlangen-Nuremberg from
1993 to 1999. His research interests are in the areas of networked multimedia
systems, video signal compression, and 3-D image analysis and synthesis. Prior
visiting or regular faculty positions include MIT, Georgia Tech, and Stanford.
He has been involved with several startup ventures as founder, director,
investor, or advisor, among them Polycom, Vivo Software and RealNetworks. Dr.
Girod received a M.S. in Electrical Engineering from the Georgia Institute of
Technology and a Doctoral degree from the University of Hanover, Germany. Dr.
Girod is a Fellow of the Institute of Electrical and Electronics Engineers.

Major General Guy L. Hecker, Jr. has served as a director of the Company
since August 1997 and has served as a director of Netergy Microelectronics since
December 2000. He has served as the President of Stafford, Burke and Hecker,
Inc., a consulting firm based in Alexandria, Virginia, since 1982. Prior to his
retirement from the Air Force in 1982, Major General Hecker's most recent
positions included Director of the Air Force Office of Legislative Liaison and
an appointment in the Office of the Deputy Chief of Staff, Research, Development
and Acquisition for the Air Force. Earlier, he served as a pilot and commander
in both fighter and bomber aircraft units, including command of a bomber wing
and an air division. During his Air Force career, Major General Hecker was
awarded a number of military decorations, including the Air Force Distinguished
Service Medal, the Silver Star, the Legion of Merit (awarded twice) and the
Distinguished Flying Cross. Major General Hecker received a B.A. from The
Citadel, an M.A. in International Relations from George Washington University,
an honorary Ph.D. in military science from The Citadel and completed the
management development program at Harvard Business School.

Christos Lagomichos has served as a director of the Company since June
2000. Mr. Lagomichos has been Vice President and General Manager of the Set-Top
Box Division of STMicroelectronics ("STM") since July 1997. In December 1996,
Mr. Lagomichos was promoted to Director of STM's PPG/Semicustom Products
Division for the Americas, and was subsequently promoted to Worldwide General
Manager of the Division in May 1997. From October 1989 through December 1996,
Mr. Lagomichos served as Product Marketing Manager of the Semicustom Business
Unit. From 1985 through 1988, he served in various technical roles in STM's
Munich design center. Mr. Lagomichos holds an engineering degree from the
Technical University of Munich.

Bryan R. Martin has served as a director and President and Chief Operating
Officer of the Company since February 2001. He has served as a director of
Netergy Microelectronics since January 2001 and of Centile, Inc., a subsidiary
of the Company, since March 2001. He served as Senior Vice President,
Engineering Operations from July 2000 to February 2001 and as the Company's
Chief Technical Officer from August 1995 to August 2000. He also served as a
director of the Company from January 1998 through July 1999. In addition, Mr.
Martin served in various technical roles for the Company from April 1990 to
August 1995. He received a B.S. and an M.S. in Electrical Engineering from
Stanford University.

William P. Tai has served as a director of the Company since April 1994.
Since July 1997, Mr. Tai has served as a general partner and managing director
of funds managed by Institutional Venture Partners, a venture capital firm. He
served from August 1995 to February 1998 as founding Chief Executive Officer,
and from August 1995 to August 1999 as Chairman of the board, of iAsiaWorks,
Inc., a provider of co-location and hosting services. From August 1991 to June
1997, Mr. Tai was associated with the Walden Group of Venture Capital Funds, a
venture capital firm, most recently as a general partner of several funds. Mr.
Tai also serves on the boards of directors of iAsia Works, imGO Limited, a Hong
Kong listed company that focuses on investments in the wireless sector,
Microtune, a provider of broadband wireless components, Transmeta Corporation, a
provider of hardware and software technologies for mobile computers, as well as
several

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privately held companies. Mr. Tai received a B.S. in Electrical Engineering from
the University of Illinois and an M.B.A. from Harvard Business School.

VOTE REQUIRED AND RECOMMENDATION

The six nominees receiving the highest number of affirmative votes of the
shares entitled to vote on this matter shall be elected as directors. Votes
withheld from any director will be counted for purposes of determining the
presence or absence of a quorum but are not counted as affirmative votes. A
broker non-vote will be counted for purposes of determining the presence or
absence of a quorum, but, under Delaware law, it will have no other legal effect
upon the election of directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE NOMINEES SET
FORTH ABOVE.

BOARD MEETINGS AND COMMITTEES

The board of directors of the Company held a total of thirteen meetings
during the fiscal year ended March 31, 2001 and acted by unanimous written
consent six times. No incumbent director attended fewer than 75% of the total
number of meetings of the board of directors and committees of the board of
directors upon which such director served during fiscal 2001. The board of
directors has an audit committee and a compensation committee. The board of
directors does not have a nominating committee or any committee performing
similar functions.

The audit committee currently consists of Dr. Girod, Mr. Hecker and Mr.
Tai. The audit committee reviews the Company's financial controls, evaluates the
scope of the annual audit, reviews audit results, consults with management and
the Company's independent auditors prior to the presentation of financial
statements to stockholders and, as appropriate, initiates inquiries into aspects
of the Company's financial affairs. This committee held three meetings during
fiscal 2001.

The compensation committee currently consists of Dr. Girod and Mr. Tai. The
compensation committee makes recommendations to the board of directors
concerning the compensation for the Company's officers and directors and the
administration of the Company's stock option and employee stock purchase plans.
This committee held three meetings during fiscal 2001.

COMPENSATION OF DIRECTORS

Through February 2001 board compensation consisted of reimbursement for
reasonable expenses incurred by directors in attending board and committee
meetings, upon approval of such reimbursement by the board of directors, and the
receipt of discretionary and non-discretionary grants of stock options under the
1996 Director Plan (Director Plan) and the 1996 Stock Option Plan (1996 Plan).
Pursuant to an amendment to the Director Plan approved by the Company's
stockholders in August 2000, non-employee directors receive a non-discretionary
option grant of 40,000 shares upon their initial election to the board of
directors and receive additional smaller grants of 15,000 shares upon their
re-election to the board. The initial non-discretionary grant vests annually
over a period of four years and subsequent non-discretionary grants vest monthly
over a period of forty-eight months. Grants are not made upon re-election in
cases where the initial term is shorter than six months.

On February 28, 2001, the board of directors approved certain changes to
director compensation. Non-employee directors now receive a $1,000 fee for
attendance of a meeting of the Company's board of directors. In addition, upon
termination of service as a director of the Company or upon a Change in Control
of the Company, each of the non-employee directors and their immediate families
will be eligible for medical insurance coverage for life, subject to the
director reimbursing the cost of such coverage to the Company. However, if an
individual commences coverage under another plan, coverage under the Company's
medical insurance will be discontinued. In addition, the board of directors
approved a change in vesting terms for non-employee director options whereby
upon a Change in Control of the Company any unvested options shall become fully
vested. For these purposes, a Change in Control is defined as a transaction or
series of transactions, including by merger or consolidation of the Company into
or with any other entity or corporation

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or the merger or consolidation of any other corporation into or with the
Company, in which any person, entity or group of persons and/or entities acting
in concert acquire(s) shares of the Company's stock representing fifty percent
(50%) or more of the outstanding voting power of the Company, including voting
shares issued or issuable upon conversion of any convertible security
outstanding on the date of such transaction including, without limitation, stock
options.

Under the foregoing policies, each of Lee Camp, Dr. Girod, Mr. Hecker, Joe
Markee and Mr. Tai received an option to purchase 15,000 shares of the Company's
common stock upon their re-election to the Company's board of directors on
August 14, 2000 at an exercise price of $7.00. On February 28, 2001, each of
Messrs. Camp, Girod, Hecker, Markee and Tai also received a discretionary option
grant to purchase 60,000 shares of the Company's common stock under the 1996
Plan and 40,000 shares of the Company's common stock under the Director Plan at
an exercise price of $1.875. In addition, Mr. Hecker and Dr. Girod each received
a discretionary option grant to purchase 25,000 shares of Netergy
Microelectronics common stock under the Netergy Microelectronics 2000 Stock
Option Plan at an exercise price of $0.50 per share in February 2001. The above
noted exercise prices represented the fair market value of the Company's stock
on the date of grant. These grants will vest monthly for forty-eight months.

Under a policy of his employer, which holds shares in the Company, Mr.
Lagomichos does not receive option grants in connection with his service on the
board, nor does he receive the $1,000 per meeting payment for attending meetings
of the Company's board of directors.

PROPOSAL TWO:

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The board of directors at the recommendation of the audit committee (the
"Audit Committee") has selected PricewaterhouseCoopers LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending March 31, 2002. PricewaterhouseCoopers LLP has served as the Company's
independent auditors since 1987. In the event of a negative vote on the
ratification of PricewaterhouseCoopers LLP, the board of directors will
reconsider its selection. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the annual meeting and will have the opportunity to
make a statement if they so desire. The representatives also are expected to be
available to respond to appropriate questions from stockholders.

Audit Fees. During the fiscal year ended March 31, 2001, the aggregate fees
billed, or to be billed, by PricewaterhouseCoopers LLP for the audit of the
Company's consolidated financial statements for such fiscal year and for the
reviews of the Company's interim financial statements included in the Company's
Forms 10-Q for the fiscal year ended March 31, 2001 were $162,000.

Financial Information Systems Design and Implementation Fees. During the
fiscal year ended March 31, 2001, PricewaterhouseCoopers LLP billed no fees for
information technology consulting services.

All Other Fees. During the fiscal year ended March 31, 2001, the aggregate
fees billed by PricewaterhouseCoopers LLP for professional services other than
audit and information technology consulting fees were $102,202, $42,000 of which
were billed in connection with tax related services and $60,202 of which were
billed for services such as performance of statutory audits for international
subsidiaries, consulting on accounting standards, review of registration
statements and acquisition related services.

The Audit Committee has determined that the rendering of the information
technology consulting services and all other non-audit services by
PricewaterhouseCoopers LLP is compatible with maintaining the auditor's
independence.

VOTE REQUIRED AND RECOMMENDATION

Ratification of the appointment of PricewaterhouseCoopers LLP as our
independent auditors will require the affirmative vote of a majority of the
votes entitled to vote on this proposal that are present at the meeting in
person or by proxy. Broker non-votes will not be counted as having been
represented. A representative of
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PricewaterhouseCoopers LLP will be present at the annual meeting, with the
opportunity to make a statement if the representative so desires, and will be
available to respond to appropriate questions.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE RATIFICATION
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 2002.

PROPOSAL THREE:

AMENDMENT TO THE RESTATED CERTIFICATE
OF INCORPORATION

The board of directors has unanimously adopted, subject to stockholder
approval, an amendment to the Company's Restated Certificate of Incorporation
(the "Restated Certificate"), to change the name of the Company to "8x8, Inc."

PURPOSE AND EFFECT OF THE AMENDMENT

The Company desires to change its name from Netergy Networks, Inc. to 8x8,
Inc. Management believes that the 8x8, Inc. corporate identity is more
recognized in the marketplace than the Company's current name. In addition, the
Company has been unable to obtain certain rights to its current name because
they are held by another entity.

Upon consummation of the proposed name change it will not be necessary to
surrender stock certificates. Instead, when certificates are presented for
transfer, new certificates bearing the name, 8x8, Inc., will be issued. If there
exists any circumstance which would make consummation of the name change
inadvisable in the judgment of the board of directors, the proposal to amend the
Restated Certificate may be terminated by the board of directors either before
or after approval of the name change by the stockholders.

VOTE REQUIRED AND RECOMMENDATION

The affirmative vote of a majority of the Company's outstanding voting
shares is required for approval of the amendments to the Company's Restated
Certificate authorizing the change in the name of the Company. Accordingly,
broker non-votes and abstentions will have the same effect as a vote against the
proposal.

The Board of Directors recommends that the stockholders vote "FOR" approval
of the amendment to the Company's Restated Certificate to change the Company's
name to 8x8, Inc.

ADDITIONAL INFORMATION

EXECUTIVE OFFICERS

The following table sets forth certain information regarding the executive
officers of the Company not shown in the table of the nominees for director
above:

NAME AGE POSITION
---- --- --------

Dr. Barry Andrews............. 35 Vice President, Engineering and Chief Technical Officer
Dr. Theodore J. Beck.......... 33 Vice President, Manufacturing
Dr. Philip Bednarz............ 35 Chairman and Chief Executive Officer, Netergy
Microelectronics, Inc.
Jean-Francois Catz............ 38 Vice President, Marketing
Huw Rees...................... 40 Vice President, Sales
David M. Stoll................ 32 Chief Financial Officer, Vice President, Finance and Secretary
Jean Vincent.................. 37 Chairman and Chief Executive Officer, Centile, Inc.

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Dr. Barry Andrews was appointed Vice President, Engineering and Chief
Technical Officer of the Company in February 2001. From December 2000 to
February 2001, he served as Director of Customer Premise Equipment & Gateway
Development of the Company. From January 1996 to December 2000, Dr. Andrews
served as Video R&D Manager and Senior Software Engineer of the Company. He
received a B.A.Sc. in Engineering Science from Simon Fraser University, an M.S.
in Electrical Engineering, an M.S. in Statistics, and a Ph.D. in Electrical
Engineering from Stanford University.

Dr. Philip Bednarz has been Chairman and Chief Executive Officer of Netergy
Microelectronics, a subsidiary of the Company, since January 2001. He served as
President and Chief Operating Officer of Netergy Microelectronics from November
2000 to January 2001. He served as Vice President, Engineering of the Company
from February 2000 to November 2000. From October 1995 to February 2000 he
served in various technical roles including Director of Advanced Technology and
Director of System Software. Dr. Bednarz holds five U.S. patents. He earned his
undergraduate degree from the University of Michigan, and a M.S. and a Ph.D.
from Stanford University, all in Electrical Engineering.

Dr. Theodore J. Beck has been Vice President, Manufacturing of the Company
since May 1999. He has also been Vice President, Operations of Netergy
Microelectronics since December 2000. From July 1997 to May 1999, he served as
Manufacturing Manager and as Director of Manufacturing of the Company. Dr. Beck
joined the Company in December 1996 as Manufacturing Engineer for Systems
Products. Dr. Beck received a B.S. in Electrical Engineering from the University
of Texas at Austin, as well as an M.S. in Manufacturing Systems Engineering and
a Ph.D. in Electrical Engineering, both from Stanford University.

Jean-Francois Catz was appointed Vice President, Marketing of the Company
in February 2001. He was also named Chief Operating Officer and Vice President,
Marketing of Centile, Inc. (Centile), a subsidiary of the Company, in March
2001. He was also named to the board of directors of Centile in March 2001.
Between August 1999 and February 2001, he served as Systems Engineering Manager
for the Solutions Group of the Company. He previously worked for Quallaby, a
leading provider of highly scalable, service-level management solutions to
network service providers, as Pre-sales Manager from January 1998 to July 1999.
From January 1991 to December 1997, Messr. Catz worked for Perform S.A., a
French developer of network management software, as Pre-sales Manager.

Huw Rees was appointed Vice President, Sales of the Company in February
2001 and was named Vice President, Sales and Business Development of Centile in
March 2001. He was also named to the board of directors of Centile in March
2001. He served as Vice President, Sales of the Solutions Group of the Company
from August 2000 until February 2001. He served as Director, North American
Sales of the Company from April 1999 to August 2000. He previously worked at
Mitel Corporation as Sales Manager of the Western Region. He received a B.Sc.
(Hons) from the University of Manchester, Institute of Science and Technology in
Electrical and Electronic Engineering and a M.B.A. from the University of
LaVerne.

David M. Stoll has been Chief Financial Officer of the Company since
January 2000. He was named Acting Chief Financial Officer, Vice President,
Finance and Secretary of the Company in August 1999. Mr. Stoll joined the
Company in November 1996 and served previously as the Company's Corporate
Controller. Prior to joining the Company, Mr. Stoll served as a Finance Manager
for Maxtor Corporation and held various positions at PricewaterhouseCoopers LLP.
He received a B.A. from Santa Clara University and is a Certified Public
Accountant.

Jean Vincent was named the Chairman, Chief Executive Officer and Chief
Financial Officer of Centile in March 2001. From May 2000 to March 2001 he
served in various technical and marketing capacities for the Company. From
February 1998 to September 1999, he was responsible for business development in
the United States, on a consulting basis, for Eolring S.A., a French developer
of access switches for high availability optical multiservice metropolitan
networks. In addition, he founded Actane SARL, a French network security
software manufacturer, in December 1986 and served as its Chief Executive
Officer from December 1986 to May 2000.

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EXECUTIVE COMPENSATION

The following table sets forth all compensation received for services
rendered to the Company in all capacities during the fiscal years ended March
31, 2001, 2000 and 1999 by the Company's Chief Executive Officer and the
Company's other four most highly compensated executive officers whose salary and
bonus for such fiscal year exceeded $100,000 and who served as executive
officers of the Company on March 31, 2001 (collectively, the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
SECURITIES ALL OTHER
FISCAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
--------------------------- ------ --------- -------- ------------ ------------

Joe Parkinson(3)............................. 2001 54,308 -- 800,000 60
Chairman and Chief Executive Officer
Dr. Paul Voois(4)............................ 2001 190,008 12,463 610,000 1,962
Chairman and Chief Executive Officer 2000 190,008 24,062 35,000 1,941
1999 190,007 2,129 300,000(2) 1,887
Jonathan Foster(5)........................... 2001 182,692 372,090 280,000 1,942
Senior Vice President, Corporate
Development
Huw Rees(6).................................. 2001 273,864 692 195,000 1,751
Vice President, Sales
David M. Stoll(7)............................ 2001 175,615 34,000 175,000 1,938
Chief Financial Officer, Vice President,
Finance 2000 124,871 55,611 43,000 1,918
and Secretary
Bryan R. Martin.............................. 2001 193,104 8,667 780,413 1,984
President and Chief Operating Officer 2000 190,008 50,000 35,000 1,941
1999 190,007 14,676 55,000(2) 1,887

- ---------------
(1) Consists of Company contributions to 401(k) plan and premiums paid on behalf
of the Named Executive Officer with respect to term life insurance.

(2) Includes grants of options for the following number of shares issued
pursuant to a repricing of options on September 21, 1998 accomplished
through the cancellation of then existing options and the issuance of new
options; Dr. Voois, 225,000 shares and Mr. Martin, 30,000 shares.

(3) Mr. Parkinson was named Chairman of the board and an officer of the Company
in November 2000.

(4) Dr. Voois ceased serving as an officer and director of the Company on April
30, 2001.

(5) Mr. Foster became an officer of the Company in July 2000 and ceased serving
as an officer of the Company on April 30, 2001.

(6) Mr. Rees' fiscal 2001 salary consists of a base salary of $157,864 and sales
commissions of $80,000. Mr. Rees became an officer of the Company in
February 2001.

(7) Mr. Stoll became an officer of the Company in January 2000.

OPTION GRANTS AND HOLDINGS

The following table provides information with respect to stock option
grants to each of the Named Executive Officers during the fiscal year ended
March 31, 2001:

POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME (#) FISCAL YEAR(1) ($/SHARE) DATE 5%($) 10%($)
---- --------------- ----------------- ----------- ---------- ------------- -------------

Joe Parkinson....... 500,000(3) 6.6 $ 3.375 11/17/10 $1,061,260 $2,689,440
300,000(4) 4.0 1.875 02/28/11 353,753 896,480
Dr. Paul Voois(6)... 200,000(5) 2.7 $12.563 05/16/10 $1,580,161 $4,004,437
410,000(5) 5.4 7.125 08/24/10 1,837,158 4,655,720

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Jonathan $ 28,300 $ 71,718
Foster(6)......... 100,000(5) 1.3 $12.563 05/16/10
100,000(5) 1.3 11.750 07/18/10 50,312 127,499
80,000(4) 1.0 2.313 12/19/10 566,005 1,434,368
Huw Rees............ 10,000(4) 0.1 $11.750 07/18/10 $ 73,895 $ 187,265
25,000(4) 0.3 9.313 09/19/10 146,422 371,063
60,000(4) 0.8 2.313 12/19/10 87,278 221,180
100,000(4) 1.3 1.875 02/28/11 117,918 298,827
David M. Stoll...... 75,000(5) 1.0 $12.563 05/16/10 $ 592,560 $1,501,664
50,000(5) 0.7 11.750 07/18/10 369,476 936,324
50,000(4) 0.7 2.313 12/19/10 72,732 184,316
Bryan R. Martin..... 125,000(5) 1.7 $12.563 05/16/10 $ 987,600 $2,502,773
50,000(5) 0.7 11.750 07/18/10 369,476 936,324
80,000(4) 1.0 2.313 12/19/10 116,371 294,906
525,413(4) 7.0 1.875 02/28/11 619,555 1,570,074

- ---------------
(1) The Company granted options representing 7,539,100 shares to employees
during fiscal 2001.

(2) Potential gains are net of the exercise price, but before taxes associated
with the exercise. The 5% and 10% assumed annual rates of compounded stock
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future Company common stock price. Actual gains, if any, on stock option
exercises are dependent on the future financial performance of the Company,
overall market conditions and the option holders' continued employment
through the vesting period.

(3) The options vest at a rate of 1/12 of the shares at the end of each month,
subject to continued service as an employee, consultant or director. The
term of the option is ten years. The exercise price of the option granted
equals the fair market value of the common stock of the Company on the date
of grant.

(4) The options vest at a rate of 1/48 of the shares at the end of each month,
subject to continued service as an employee, consultant or director. The
term of each option is ten years. The exercise price of each option granted
equals the fair market value of the common stock of the Company on the date
of grant.

(5) One-fourth of the shares vest one year after the grant date, and 1/36 of the
remaining shares vest on the last day of each full month thereafter, subject
to continued service as an employee, consultant or director. The term of
each option is ten years. The exercise price of each option granted equals
the fair market value of the common stock of the Company on the date of
grant.

(6) Dr. Voois resigned as an officer and director of the Company and Mr. Foster
resigned as an officer of the Company effective as of April 30, 2001.
Pursuant to their employment agreements, each of Dr. Voois and Mr. Foster
options will continue to vest through October 31, 2001, subject to certain
conditions.

(7) In March 2001, Mr. Rees was granted an option to purchase 300,000 shares of
Centile common stock at an exercise price of $0.43 per share, representing
approximately 7% of total options issued to employees of Centile during
fiscal 2001. One-fourth of the shares vest one year after the grant date,
and 1/36 of the remaining shares vest on the last day of each full month
thereafter, subject to continued service as an employee, consultant or
director. The term of each option is ten years. The exercise price of the
option grant equaled the fair market value of the common stock of Centile,
as determined by the Centile board of directors, on the date of grant.

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14

The following table provides information with respect to option exercises
during the year ended March 31, 2001 and the value of stock options held as of
March 31, 2001 by each of the Named Executive Officers:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES VALUE YEAR END(#) YEAR END ($)(1)
ACQUIRED BY REALIZED --------------------------- ------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- ---- ----------- ------------- ----------- ----

Joe Parkinson............. -- $-- 89,583 710,417 $ -- $ --
Dr. Paul Voois(2)......... -- -- 329,934 634,066 5,339 --
Jonathan Foster(2)........ -- -- 55,995 324,005 -- --
Huw Rees(3)............... -- -- 20,414 204,586 -- --
David M. Stoll............ -- -- 46,788 207,212 -- --
Bryan R. Martin........... -- -- 81,878 788,535 -- --

- ---------------
(1) The value of unexercised options is based upon the difference between the
exercise price and the closing price on the Nasdaq National Market on March
30, 2001 of $0.781, multiplied by the number of shares underlying the
option.

(2) Dr. Voois resigned as an officer and director of the Company and Mr. Foster
resigned as an officer of the Company effective as of April 30, 2001.

(3) At March 31, 2001, Mr. Rees had an unexercisable stock option to purchase
300,000 shares of Centile common stock at $0.43 per share.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
bylaws.

In February 2001, the board of directors authorized a severance arrangement
for Joe Parkinson which provides for a one-year severance and one-year option
vesting (hereafter referred to as the "Severance Provisions") in the event of
termination of either employment or service as a director (whichever is later)
or a Change in Control. The Severance Provisions are subject to a forty-eight
month vesting period, such vesting period commenced on November 17, 2000, the
initial date of Mr. Parkinson's employment. If Mr. Parkinson's immediate family
moves to California with the intent that the children will attend school in
California, Mr. Parkinson will be considered fully vested in the Severance
Provisions. The severance is payable, and options shall vest, month by month,
commencing upon the voluntary or involuntary termination of employment or
service as a director (whichever is later), conditioned on Mr. Parkinson not
competing with the Company and being available for consulting (to the extent it
does not interfere with his job responsibilities at a new company, in the
discretion of the Chairman of the board of directors of the Company).
Notwithstanding the above, in the event of a Change in Control before the
expiration of the applicable severance period, all remaining severance would be
paid, and all options would vest.

In January and February 2001, the Board of Directors authorized severance
arrangements with Dr. Beck, Dr. Bednarz, Mr. Martin, Mr. Stoll and certain other
executives of the Company and its subsidiaries which provide for one year of
severance benefits and option vesting if the individuals are employed as of July
31, 2001. The severance is payable month by month, commencing upon the voluntary
or involuntary termination subsequent to July 31, 2001, conditioned on the
individual not competing with the Company and being available for consulting to
the extent it does not interfere with his job responsibilities at a new company,
in the

11
15

discretion of the Chairman of the board of directors of the Company. If the
Company is sold before the expiration of the twelve month severance period, or
if the Company is sold prior to July 31, 2001, all remaining severance would be
paid, and all remaining options would vest, as of the closing of the sale of the
Company. The executives will also be entitled to continued coverage under the
Company's medical plan for the severance period.

In April 2001, the Company entered into employment agreements with Mr.
Foster and Dr. Voois in connection with the resignations of Mr. Foster as an
officer of the Company and Dr. Voois as an officer and director of the Company.
These agreements provide that these individuals will remain employees of the
Company for six months at an annual salary of $190,000 and outstanding options
will continue to vest. The employment agreements do not limit the individuals'
ability to accept employment with an entity that is not competing with the
Company.

Notwithstanding the arrangements discussed above, in the event an
individual or corporate entity and any related parties cumulatively acquire at
least 35% of the Company's fully diluted stock, all stock options or stock
subject to repurchase by the Company held by officers under any stock option
plan shall vest immediately without regard to the term of the option. In
addition, in such an event, each officer shall be entitled to one year severance
pay and continuing medical benefits for life after leaving the Company, provided
that such medical benefits shall cease should such officer accept employment
with a competing company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee of the board of directors currently consists of
Dr. Girod and Mr. Tai. Neither individual was at any time since the formation of
the Company an officer or employee of the Company. No executive officer of the
Company serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of the
Company's board of directors or compensation committee. The following employee
directors of the Company, Messrs. Martin, Parkinson, and Voois and Keith
Barraclough, all participated in deliberations of the Company's board of
directors concerning executive officer compensation during fiscal 2001.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During fiscal 2001, Dr. Girod received $22,000 in consideration for
technical consulting services that he provided to the Company. In addition, the
Company contributed $150,000 during fiscal 2001 to a Stanford University
research program managed by Dr. Girod.

In July 2000, the Company and Mr. Barraclough, the Company's former
President and Chief Operating Officer, entered into a Settlement Agreement and
Release (the "Agreement"). Mr. Barraclough received cash payments totaling
$190,000 under the Agreement during fiscal 2001. The Company has no further cash
obligations pursuant to this agreement. In addition, the Agreement provided that
the Company accelerate the vesting of certain unvested options held by Mr.
Barraclough so that in effect, Mr. Barraclough was able to exercise options in
amounts as if he were employed by the Company through January 31, 2001. The
total number of exercisable options held by Mr. Barraclough after effectiveness
of the Agreement provided Mr. Barraclough with the right to purchase 345,892
shares of the Company's common stock. Pursuant to the Agreement, the Company
loaned Mr. Barraclough $589,939, at a rate of 6.6% per annum, as of July 19,
2001 solely for the purpose of exercising vested options for the purchase of
194,259 shares of the Company's common stock. The loan was secured by the stock
received upon exercise of the options. The loan was repaid in full, along with
accrued interest of $4,587, on August 31, 2000.

In October 2000, the Company and Dominique Pitteloud, the Company's former
Vice President, Marketing, entered into a Severance Agreement and Mutual Release
(the "Severance Agreement"). The Severance Agreement provided that Mr. Pitteloud
resign as the Company's Vice President, Marketing and as an employee as of
October 13, 2000. Under the Severance Agreement, Mr. Pitteloud received a cash
payment of $82,500, representing six months of salary at his then current rate.
In addition, he received an extension to the period in which he could exercise
vested options such that he is able to exercise options vested as of October 13,
2000 for a period of 270 days. Pursuant to the terms of his Employment and Stock
Restriction
12
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Agreement dated May 24, 1999, and as provided for in the Severance Agreement,
50,528 unvested restricted shares acquired in conjunction with the Company's
acquisition of Odisei S.A. in May 1999 became fully vested upon his termination.
Lastly, the Company agreed to pay for certain relocation and tax equalization
costs under the Severance Agreement.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Company's Board of Directors is comprised of
three directors, and operates under a written charter adopted by the Board of
Directors. A copy of the Audit Committee's written charter is attached to this
proxy statement as Appendix A. Each member of the Committee is "independent," as
such term is defined under the Nasdaq National Market listing standards.

The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management is responsible for the Company's
internal controls, financial reporting process and compliance with laws and
regulations and ethical business standards. The independent auditors are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report thereon. The Audit Committee's responsibility is to
monitor and oversee these processes.

The Audit Committee has reviewed and discussed the Company's audited
consolidated financial statements with the Company's management.

In this context, the Audit Committee has discussed and reviewed with the
independent auditors all matters required to be discussed by Statement on
Auditing Standards No. 61 (communication with Audit Committees). The Audit
Committee has met with the Company's independent auditors, with management
present, to discuss the overall scope of its audit, the results of its
examinations, its evaluations of the Company's internal controls and the overall
quality of its financial reporting.

The Audit Committee has received from the independent auditors a formal
written statement describing all relationships between the independent auditors
and the Company that might bear on the auditors' independence consistent with
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), discussed with the auditors any relationships that may impact their
objectivity and independence, and satisfied itself as to the auditors'
independence.

Based on these reviews and discussions, the Audit Committee recommended to
the Board of Directors that the Company's audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2001.

AUDIT COMMITTEE

Dr. Bernd Girod
Guy Hecker
William P. Tai, Chair

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The following is the report of the compensation committee of the Board of
Directors (the "Compensation Committee") describing compensation policies and
rationales applicable to the Company's executive officers with respect to
compensation paid to such executive officers for fiscal 2001. The Compensation
Committee makes recommendations to the board concerning the compensation for the
Company's executive officers. The board of directors is responsible for
reviewing and approving the Company's compensation policies and the compensation
paid to executive officers, based in part on recommendations of the Compensation
Committee.

Compensation Philosophy

The general philosophy of the Company's compensation program is to offer
executive officers competitive compensation based both on the Company's
performance and on the individual's contribution and perform-

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ance. The Company's compensation policies are intended to motivate, reward and
retain highly qualified executives for long-term strategic management and the
enhancement of stockholder value, to support a performance-oriented environment
that rewards achievement of specific internal Company goals and to attract and
retain executives whose abilities are critical to the long-term success and
competitiveness of the Company. There are three main components in the Company's
executive compensation program: base salary, incentive bonus and stock
incentives.

Base Salary

The salaries of the executive officers, including the Chief Executive
Officer, are reviewed annually by the compensation committee and the board of
directors with reference to surveys of salaries paid to executives with similar
responsibilities at comparable companies, generally in the high technology
industry and often within the Company's geographic area. The peer group for each
executive officer is composed of executives whose responsibilities are similar
in scope and content. The Company seeks to set executive compensation levels
that are competitive with the average levels of peer group compensation.

Incentive Bonus

Annual incentive bonuses for executive officers are intended to reflect the
Compensation Committee's belief that a significant portion of the annual
compensation of each executive officer should be contingent upon the performance
of the Company, as well as the individual contribution of each officer. The
Company's profit sharing plan provides for additional compensation to all
employees of the Company equal to up to 15% of the Company's quarterly net
income. Of this amount, one third is shared by all employees, one third is
shared among employees within certain business units, and one third is shared by
officers. Additionally, the plan provides for payment of certain discretionary
bonuses based on criteria established by the Company's board of directors and
management. During fiscal 2001, these discretionary bonuses were related
primarily to the achievement of the goal of selling the assets and licensing the
technology associated with the Company's video monitoring business.

Stock Incentives

The Company utilizes stock options as long term incentives to reward and
retain executive officers. The compensation committee believes that this
practice links management interests with stockholder interests and motivates
executive officers to make long-term decisions that are in the best interests of
the Company. The committee also believes that executive officers and other key
employees should own a significant percentage of the Company's stock. Generally,
stock options vest over four years after the grant date and optionees must be
employed by the Company at the time of vesting in order to exercise the options.

The Compensation Committee believes that stock option grants provide an
incentive that focuses the executives' attention on the Company from the
perspective of an owner with an equity stake in the business. Because options
are typically granted with an exercise price equal to the fair market value of
the Company's common stock on the date of grant, the Company's stock options are
tied to the future performance of the Company's common stock and will provide
value to the recipient only when the price of the Company's stock increases
above the exercise price, that is, only to the extent that stockholders as a
whole have benefited.

Compensation of the Chief Executive Officer

Dr. Paul Voois served as the Company's Chief Executive Officer from January
1998 to January 2001. During fiscal 2001, Dr. Voois received bonuses totaling
approximately $12,500. This amount consisted of bonuses related to the
successful issuance of several patents in fiscal 2001, as well an amount related
to cash payouts under the Company's vacation benefit program. In May 2000, Dr.
Voois was granted an option to purchase 200,000 shares of the Company's common
stock at a price of $12.563 per share, and in August 2000 he was granted an
option to purchase 410,000 shares of the Company's common stock at a price of
$7.125 per share. These exercise prices represented the fair market value of the
Company's stock on the date of grant.

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18

One-fourth of the shares vest one year after the grant date, and 1/36 of the
remaining shares vest on the last day of each full month thereafter.

Joe Parkinson has been the Company's Chief Executive Officer since January
2001. He has served as the Company's Chairman of the Board since November 2000.
From November 2000 to January 2001, Mr. Parkinson served as Chairman of the
Board and Chief Executive Officer of Netergy Microelectronics, a subsidiary of
the Company. From November 2000 to January 2001, Mr. Parkinson had a base salary
of $100,000 and was reimbursed by the Company for certain living expenses. His
annual base salary was increased to $160,000 effective January 1, 2001. On
February 28, 2001, his annual base salary was increased to $200,000 to be more
commensurate with compensation for Chief Executive Officers in our industry. In
November 2000, Mr. Parkinson was granted an option to purchase 500,000 shares of
the Company's common stock at a price of $3.4675 per share, which represented
the fair market value of the Company's stock on the date of grant. The option
becomes exercisable at the rate of 1/24 of the shares on December 17, 2000 and
on the last day of each full month thereafter. Mr. Parkinson was also granted an
option to purchase 300,000 shares of the Company's common stock at a price of
$1.875 per share in February 2001, which represented the fair market value of
the Company's stock on the date of grant. This grant will vest monthly for
forty-eight months.

COMPENSATION COMMITTEE

Dr. Bernd Girod
William P. Tai

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STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return for
the Company's common stock with the Nasdaq Stock Market (US) Composite Index and
the Nasdaq Computer Index for the period commencing July 2, 1997 and ending
March 31, 2001. The graph assumes that $100 was invested on the date of the
Company's initial public offering, July 2, 1997, and that all dividends for the
respective Nasdaq indexes have been reinvested. The Company has never paid
dividends on its common stock and has no present plans to do so. Historic stock
price performance should not be considered indicative of future stock price
performance.

COMPARISON OF 45 MONTH CUMULATIVE TOTAL RETURN*
AMONG NETERGY NETWORKS, INC., THE NASDAQ COMPOSITE INDEX
AND THE NASDAQ COMPUTER INDEX

- -----------------------------------------------------------------
7/02/97 3/31/98 3/31/99 3/31/00 3/31/01
- -----------------------------------------------------------------

NETERGY NETWORKS, INC. 100 108 59 456 12
NASDAQ COMPOSITE INDEX 100 128 171 318 128
NASDAQ COMPUTER INDEX 100 131 221 458 151
- -----------------------------------------------------------------

* $100 invested on 7/2/97 in stock or index -- including reinvestment of
dividends. Fiscal year ending March 31.

SECURITY OWNERSHIP

The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock as of May 14, 2001 by (i)
each person (or group of affiliated persons) who is known by the Company to own
beneficially 5% or more of the Company's common stock, (ii) each of the
Company's directors up for re-election (iii) each executive officer named in the
Summary Compensation Table and (iv) all directors and officers as a group.
Except as indicated in the footnotes to the table, the

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20

persons named in the table have sole voting and investment power with respect to
all shares of Company common stock shown as beneficially owned by them, subject
to community property laws where applicable.

NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS BENEFICIALLY OWNED(1) TOTAL SHARES
---------------- --------------------- -------------

STMicroelectronics NV(2).................................... 3,700,000 13.8%
Route de Pre-Bois
ICC Bloc A
1215 Geneva 15 Switzerland
Societe Generale de Financement du Quebec................... 1,410,329 5.3%
600 de la Gauchetiere Ouest, Suite 1700
Montreal, Quebec, Canada H3B 4L8
Joe Parkinson(3)(4)......................................... 522,337 1.9%
Dr. Paul Voois(4)........................................... 450,153 1.7%
Bryan R. Martin(4).......................................... 327,268 1.2%
Guy L. Hecker, Jr.(4)....................................... 115,059 *
Dr. Bernd Girod(4).......................................... 110,559 *
Jonathan Foster(4).......................................... 101,723 *
William P. Tai(4)........................................... 85,559 *
David M. Stoll(4)........................................... 74,132 *
Huw Rees(4)................................................. 44,848 *
All directors and officers as a group (17 persons)(4)(5).... 2,230,807 7.9%

- ---------------
* Less than 1%

(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). The number of shares of common stock
beneficially owned by each person is determined under rules promulgated by
the SEC. Under such rules, beneficial ownership includes any shares as to
which the person has sole or shared voting power or investment power, and
also includes any shares which the person has the right to acquire within
sixty days after May 14, 2001. Applicable percentages are based upon
26,774,344 voting shares issued and outstanding as of May 14, 2001,
consisting of 26,540,585 shares of the Company's common stock and one share
of preferred stock, designated as Special Voting Stock, having a total of
233,759 votes, adjusted as required by rules promulgated by the SEC.

(2) One of the Company's directors, Christos Lagomichos, serves as Vice
President and General Manager of the Set-Top Box Division of
STMicroelectronics.

(3) Includes 10,000 shares held by Jarbridge, Inc., of which Mr. Parkinson is
Chairman of the board. Mr. Parkinson disclaims beneficial ownership of the
shares except to the extent of his pecuniary interest therein.

(4) Includes the following number of shares subject to options that were
exercisable at or within 60 days after May 14, 2001: Mr. Parkinson, 170,833;
Dr. Voois, 389,415; Mr. Martin, 158,885; Mr. Hecker, 35,059; Dr. Girod,
60,559; Mr. Foster, 94,599; Mr. Tai, 60,559; Mr. Stoll, 74,132; Mr. Rees,
32,914; and all directors and officers as a group, 1,409,125.

(5) Although Mr. Lagomichos is an employee of STMicroelectronics, we have not
included the shares of common stock owned by STMicroelectronics NV in this
amount.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors and persons who own more than ten
percent of a registered class of the Company's equity securities to file an
initial report of ownership on Form 3 and changes in ownership on Form 4 or 5
with the SEC and furnish the Company with copies of all Section 16(a) forms that
they file. Based solely on its review of the copies of such forms received by it
and written representations from certain reporting persons, the Company believes
that all filing requirements applicable to its officers, directors and ten
percent stockholders

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21

were complied with for the year ended March 31, 2001, except in the cases of (i)
Jean-Luc Calonne and Messrs. Bednarz, Foster, and Parkinson, filed initial
reports of ownership on Form 3 late; (ii) Mr. Hecker who filed a late Form 4
related to the sale of 90,000 shares in December 2000 at an average price of
$2.70 per share; and (iii) Mr. Andrews inadvertently did not include in a report
on a Form 4 an exercise of stock options in March 2001, which was corrected by
including the information on the Form 5 filed for fiscal 2001.

OTHER MATTERS

The Company knows of no other matters to be submitted at the annual
meeting. If any other matters properly come before the meeting or any
adjournment or postponement thereof, it is the intention of the persons named in
the enclosed form of proxy to vote the shares they represent as the board of
directors may recommend.

By Order of the Board of Directors

/s/ DAVID M. STOLL
--------------------------------------
David M. Stoll
Secretary

Santa Clara, California
June , 2001

A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended March 31, 2001 is available
without charge upon written request to: Corporate Secretary, Netergy Networks,
Inc., 2445 Mission College Blvd., Santa Clara, CA 95054.

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22

APPENDIX A

AMENDED AND RESTATED CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
NETERGY NETWORKS, INC.

PURPOSE:

The purpose of the Audit Committee of the Board of Directors (the "Board")
of Netergy Networks, Inc. (the "Company") shall be:

- to provide oversight and monitoring of Company management and the
independent auditors and their activities with respect to the Company's
financial reporting process;

- to provide the Company's Board with the results of its monitoring and
recommendations derived therefrom;

- to nominate to the Board independent auditors to audit the Company's
financial statements and oversee the activities and independence of the
auditors; and

- to provide to the Board such additional information and materials as it
may deem necessary to make the Board aware of significant financial
matters that require the attention of the Board.

The Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board may from time
to time prescribe.

MEMBERSHIP:

The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board and will consist of at least three members of the
Board. The members will meet the following criteria:

1. Each member will be an independent director, in accordance with the
Nasdaq National Market (the "Nasdaq") Audit Committee requirements;

2. Each member will be able to read and understand fundamental financial
statements, in accordance with the Nasdaq Audit Committee requirements;
and

3. At least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background, including a current or past
position as a chief executive or financial officer or other senior
officer with financial oversight responsibilities.

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23

RESPONSIBILITIES:

The operation of the Audit Committee shall be subject to the provisions of
the Bylaws of the Company and Section 141 of the Delaware General Corporation
Law. The Audit Committee shall have full power and authority to carry out the
following responsibilities:

- Review and update the powers of the Audit Committee and this charter
annually and report and make recommendations to the Board on proposed
changes in these responsibilities or on changes to this charter;

- Review and evaluate the performance of the independent auditors and make
annual recommendations to the Board regarding the appointment or
termination of the independent auditors, which auditors are ultimately
accountable to the Audit Committee and the Board;

- Conferring with the independent auditors concerning the scope, extent and
procedures of their examinations of the books and records of the Company
and its subsidiaries; reviewing and approving the independent auditors'
annual engagement letter; annual audit plans and budgets; directing the
special attention of the auditors to specific matters or areas deemed by
the Audit Committee or the auditors to be of special significance; and
authorizing the auditors to perform such supplemental reviews or audits
as the Audit Committee may deem desirable;

- Reviewing the range and cost of audit and non-audit services performed by
the independent auditors; evaluating the possible effects of such
non-audit services on the independence of the auditors;

- Requesting from the independent auditors a formal written statement
delineating all relationships between the auditor and the Company,
consistent with Independent Standards Board Standard No. 1, and engaging
in a dialogue with the auditors with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the auditors;

- Reviewing with the independent auditors and the Company's financial and
accounting personnel the adequacy and effectiveness of the accounting and
financial controls of the Company, and eliciting any recommendations for
the improvement of such internal control procedures or particular areas
where new or more detailed controls or procedures are desirable with
particular emphasis given to the adequacy of such internal controls to
expose any payments, transactions, or procedures that might be deemed
illegal or otherwise improper; periodically reviewing Company policy
statements to determine their adherence to the code of conduct;

- Evaluating the cooperation received by the independent auditors during
their audit examination, including their access to all requested records,
data and information, and eliciting the comments of management regarding
the responsiveness of the independent auditors to the Company's needs;

- Directing the Company's independent auditors to review before filing with
the SEC the Company's interim financial statements included in Quarterly
Reports on Form 10-Q, using professional standards and procedures for
conducting such reviews;

- Discussing with the Company's independent auditors the matters required
to be discussed by Statement on Accounting Standard No. 61, as it may be
modified or supplemented;

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24

- Reviewing with management and the Company's independent auditors, before
release, the audited financial statements and Management's Discussion and
Analysis in the Company's Annual Report on Form 10-K to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the stockholders;

- Investigating any matter within the scope of its duties, with the power
to retain outside counsel and separate accountants for this purpose if,
in the Audit Committee's judgment, such retention or investigation is
appropriate;

- Providing a report in the Company's proxy statement in accordance with
the requirements of Item 306 of Regulation S-K and Item 7(e) (3) of
Schedule 14A;

- Reviewing the Audit Committee's own structure, processes and membership
requirements; and

- Performing such other duties as may be requested by the Board.

MEETINGS:

The Audit Committee will meet at least quarterly. The Audit Committee may
establish its own schedule, which it will provide to the Board in advance.

The Audit Committee will meet separately with the independent auditors as
well as members of the Company's management as it deems appropriate in order to
review the financial controls of the Company.

MINUTES:

The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board.

REPORTS:

Apart from the report prepared pursuant to Item 306 of Regulation S-K and
Item 7(e) (3) of Schedule 14A, the Audit Committee will summarize its
examinations and recommendations to the Board from time to time as may be
appropriate, consistent with the Committee's charter.

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25

PRELIMINARY COPIES

NETERGY NETWORKS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 17, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Netergy Networks, Inc., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
meeting of Stockholders and Proxy Statement, and hereby appoints Joe Parkinson
and David Stoll, and each of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf of the undersigned, to represent the
undersigned at the annual meeting of stockholders of Netergy Networks, Inc. to
be held at the offices of the Company at 2445 Mission College Boulevard, Santa
Clara, California 95054 on Tuesday, July 17, 2001 at 2:00 p.m., local time, and
at any adjournment or adjournments thereof, and to vote all shares of Company
common stock that the undersigned would be entitled to vote if then and there
personally present, on all matters set forth on the reverse side hereof.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE HEREIN. IF NO SPECIFICATION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH OF THE PERSONS AND THE
PROPOSALS ON THE REVERSE SIDE HEREOF AND FOR SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING AS THE PROXYHOLDERS DEEM ADVISABLE.

Please mark your vote as indicated in this example. [X]

ELECTION OF DIRECTORS

1. NOMINEES: 01 -- DR. BERND GIROD; 02 -- GUY L. HECKER, JR.; 03 -- CHRISTOS
LAGOMICHOS; 04 -- BRYAN R. MARTIN; 05 -- JOE PARKINSON;
06 -- WILLIAM P. TAI

WITHHOLD AUTHORITY TO VOTE FOR
FOR WITHHOLD INDIVIDUAL NOMINEES LISTED BY
ALL NOMINEES ALL NOMINEES NUMBER BELOW:
[ ] [ ] [ ]

THE BOARD RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES.
26

2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31,
2002.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED, TO CHANGE THE COMPANY'S NAME TO "8x8, INC."

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. TO VOTE OR OTHERWISE REPRESENT THE SHARES ON ANY AND ALL OTHER BUSINESS WHICH
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF, ACCORDING TO THEIR DISCRETION AND IN THEIR DISCRETION.

PLACE "X" HERE IF YOU PLAN TO VOTE YOUR SHARES AT THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE NEW ADDRESS IN SPACE TO THE LEFT [ ]

Date:
------------------------------------

------------------------------------
Signature

------------------------------------
Signature
NOTE: Please sign exactly as name
appears on your stock certificate.
If the stock is registered in the
names of two or more persons, each
should sign. Executors,
administrators, trustees, guardians,
attorneys and corporate officers
should insert their titles.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.