Clarent Corporation Board Approves Employee Motivation and Retention Initiative.

Business Editors/High-Tech Writers

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Jan. 18, 2001

Clarent(R) Corporation (Nasdaq:CLRN), a leading provider of Internet protocol (IP) communications solutions, today announced that its Board of Directors has approved a plan which offers company employees the opportunity to elect to return outstanding stock options in exchange for new options to be issued in the future.

The plan was adopted in recognition of the fact that most employee stock options issued since the company's initial public offering have strike prices that exceed the current market price of the stock (aka "under water"). Under the plan, employees may choose to return outstanding stock options in exchange for 1) a grant to be issued on February 15th, 2001 equal to 35% of the vested options surrendered plus 20% of the unvested options surrendered; and 2) a grant to be issued on August 17th, 2001 equal to 50% of the difference between the total number of shares surrendered and the number of shares issued in the February grant. The February grant will vest in full on August 15th, 2001 and will expire if not exercised before November 15th, 2001. The August grant will vest monthly over a 24-month period.

"The commitment and focus of Clarent's talented employees is critical to the company's ability to execute and deliver superior results. The value of Clarent's employees' stock options has been significantly impaired by the overall performance of the stock market in the last nine months and in particular by the decline in the stock prices of companies in the telecommunications sector," said Jerry Chang, Clarent's president and CEO. "This program can enhance the opportunity for Clarent employees to participate in the future growth and success of the company."

As of January 17th, 2001, options to purchase approximately 6.1 million shares of Clarent stock, or 58% of the outstanding options to purchase Clarent stock, had an exercise price higher than the market price on that date.

About Clarent

Clarent Corp. (Nasdaq:CLRN) is the world leader in providing intelligent, software-driven products for new generation, IP-based communications networks. Clarent solutions enable interconnection among communications service providers' disparate networks and foster the creation of global footprints for more than 300 telecom service providers worldwide, including AT&T, NTT and China Telecom. Clarent's software platform encourages innovation by allowing carriers to develop multiple new features for consumers and enterprises. Founded in 1996, Clarent is headquartered in Redwood City and has offices in Asia, Europe, Latin America and North America. To learn more about Clarent, visit its Web site at www.clarent.com.

Forward Looking Statements

This release contains forward-looking statements that involve risks and uncertainties, including statements about the impact of the adopted option exchange program on Clarent employees. These statements involve risks and uncertainties, including uncertainty about future growth of the Company, the Company's future stock price performance, and other factors which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. These risks and uncertainties are described further in the risk factors discussed in Clarent's periodic filings with the SEC.

Note to Editors: Clarent, the Clarent logo, NetPerformer, DynaStar, Clarent Command Center, Clarent ThroughPacket, PowerCell, SkyPerformer, ACTview and ServiceXchange are trademarks or registered trademarks, and "The Clearer. The Better" is a service mark of Clarent Corporation in the United States and other jurisdictions. All other trademarks, registered trademarks and service marks are the property of their respective owners.