<Page>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 2001
REGISTRATION NO. 333-65898

- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-------------------

AMENDMENT NO. 5
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-------------------

DSET CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------

<Table>

NEW JERSEY 7371 22-3000022
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</Table>

1160 U.S. HIGHWAY 22 EAST, BRIDGEWATER, NJ 08807 (908) 526-7500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

-------------------

WILLIAM P. MCHALE, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DSET CORPORATION
1160 U.S. HIGHWAY 22 EAST
BRIDGEWATER, NJ 08807
(908) 526-7500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)

-------------------

COPIES TO:

<Table>

WILLIAM J. THOMAS, ESQ. JAY K. HACHIGIAN ESQ.
RICHARD S. MATTESSICH, ESQ. ROBERT C. SEPUCHA, JR., ESQ.
HALE AND DORR LLP GUNDERSON DETTMER STOUGH VILLENEUVE FRANKLIN & HACHIGIAN, LLP
650 COLLEGE ROAD EAST 610 LINCOLN STREET
PRINCETON, NEW JERSEY 08540 WALTHAM, MASSACHUSETTS 02451
TELEPHONE: (609) 750-7600 TELEPHONE: (781) 890-8800
TELECOPY: (609) 750-7700 TELECOPY: (781) 622-1622
</Table>

-------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and certain
other conditions under the Merger Agreement are met or waived.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____________

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________

-------------------

CALCULATION OF REGISTRATION FEE

<Table>
<Caption>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE(3)

Common Stock, no par value per share...... 3,281,144 shares $0.0737 $241,821 $60.46
</Table>

(1) Based upon the actual number of shares of common stock of the Registrant
issuable in the merger described herein to shareholders of ISPSoft Inc.,
including 2,281,144 shares of common stock to be issued upon consummation of
the merger and 1,000,000 shares of common stock contingently issuable upon
the satisfaction of net revenue milestones by ISPSoft through June 30, 2002.
Such net revenue milestones are first set forth on page six of the joint
proxy statement/prospectus included herewith. Such number of contingently
issuable shares is based upon a reasonable good-faith estimate of the
maximum number of shares that DSET may issue to satisfy certain potential
additional consideration of up to $1,000,000 at an estimated per share price
of $1.00. The shares registered hereunder do not include an aggregate of
238,591 shares of DSET common stock issuable upon exercise of ISPSoft
options assumed by DSET in the merger.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(2) under the Securities Act of 1933, as amended, and
based upon one-third of the stated value of the capital stock of ISPSoft
computed as of December 7, 2001 (the latest practicable date prior to the
date of filing this Registration Statement).

(3) The Registrant previously paid $166.11 on July 26, 2001.

-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

- --------------------------------------------------------------------------------

<Page>

THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT OFFER OR SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.

SPECIAL MEETING OF SHAREHOLDERS
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT

-------------------

To the Shareholders of DSET and ISPSoft:

The boards of directors of DSET Corporation and ISPSoft Inc. have unanimously
approved a merger agreement, as amended (herein referred to as the merger
agreement) that will result in the merger of a wholly-owned subsidiary of DSET
with and into ISPSoft, immediately followed by the merger of ISPSoft with and
into DSET, with DSET continuing the combined operations as the surviving entity
(herein referred to as the merger).

If the merger is completed:

DSET shareholders will continue to own their existing shares of DSET common
stock;

DSET will issue up to an aggregate of 2,519,735 shares of its common stock
to security holders of ISPSoft as follows:

holders of ISPSoft common stock (including the preferred stock on an
as-converted to common stock basis) will be entitled to receive an
aggregate of 2,157,838 shares of DSET common stock, subject to downward
adjustment, at a conversion rate of 0.087648 shares of DSET common stock
for each one share of ISPSoft common stock surrendered. Such downward
adjustments relate to possible indemnification claims and specified
payments of expenses as set forth herein on pages 76 and 77;

Lucent Technologies, Inc. and Signal Lake Venture Fund, L.P., who are the
only holders of ISPSoft Series B Preferred Stock, will be entitled to
receive up to an aggregate of 123,306 shares of DSET common stock and
$1,000,000 in cash, as set forth in the merger agreement;

holders of options to purchase shares of ISPSoft common stock will be
entitled to receive an aggregate of 238,591 options to purchase shares of
DSET common stock at an exchange rate of 0.087648, subject to downward
adjustment for options to purchase shares of ISPSoft common stock
exercised prior to the merger, and DSET will assume ISPSoft's 2000 Option
Plan. As of October 31, 2001, there were outstanding options to purchase
2,722,510 shares of ISPSoft common stock, which will be exchanged for
options to purchase 238,591 shares of DSET common stock. The 2000 Stock
Plan provides both for the direct award or sale of shares of ISPSoft
common stock and for the grant of options to purchase shares of ISPSoft
common stock. Options granted under the ISPSoft 2000 Stock Plan may
include nonstatutory stock options and incentive stock options intended
to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended. Virtually all of the options granted to employees under the
ISPSoft Stock Plan are subject to four-year vesting;

holders of ISPSoft common stock, other than Lucent Technologies, Inc., will
also be entitled to receive, at the sole discretion of DSET at the time of
such payment or payments, up to an aggregate of $1,000,000 in cash or
registered shares of DSET common stock, subject to certain limitations and
the satisfaction of net revenue milestones to be achieved by ISPSoft through
June 30, 2002, as first set forth on page six herein. The number of shares
so issued, if DSET elects this option, will vary based upon fluctuations in
the fair market value of DSET's common stock at the time of each such
issuance; and

DSET will issue promissory notes to each of Lucent Technologies, Inc. and
Signal Lake Venture Fund, L.P., in the face amount of $400,000 each, thereby
assuming certain debts of ISPSoft to each such entity. DSET will also assume
and then pay in full the face amount of each other note payable of ISPSoft
as of the closing of the merger, which notes payable total $525,000,
including $300,000 of which is payable to SGM Capital Limited, an affiliate
of ISPSoft. No interest will be paid on such notes.

DSET will issue all such shares of common stock from its currently authorized
but unissued shares of common stock and will pay such cash payments from its
currently available cash balances. The aggregate value of all such consideration
is approximately $5,651,767 (based upon DSET's closing common stock price of
$1.02 as reported on Nasdaq on December 7, 2001).

In connection with the merger, the holders of ISPSoft preferred stock have
elected to waive their liquidation preferences.

Immediately after the merger, ISPSoft security holders will own approximately
47.7% of the outstanding DSET common stock, assuming the exercise of all
outstanding ISPSoft options assumed by DSET in the merger. DSET common stock is
quoted on the Nasdaq National Market under the symbol 'DSET.'

On August 14, 2001, DSET announced the approval of a reverse one-for-four
stock split effective as of the close of business on August 21, 2001. Unless
otherwise indicated, each of the per share amounts for DSET's common stock set
forth in this joint proxy statement/prospectus have been revised to reflect such
one-for-four reverse stock split recapitalization.

This document provides you with detailed information about the proposed
merger. We encourage you to read this entire document carefully. IN PARTICULAR,
PLEASE SEE THE SECTION ENTITLED 'RISK FACTORS' BEGINNING ON PAGE 20 OF THIS
DOCUMENT FOR A DISCUSSION OF RISKS ASSOCIATED WITH THE MERGER.

-------------------

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE DSET COMMON
STOCK TO BE ISSUED IN THE MERGER OR DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

-------------------

Joint Proxy Statement/Prospectus dated January [ ], 2002
First mailed to shareholders on or about January [ ], 2002

<Page>
DSET CORPORATION
1160 U.S. HIGHWAY 22 EAST
BRIDGEWATER, NEW JERSEY 08807

-------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 31, 2002

-------------------

To the Shareholders of DSET:

We will hold a special meeting of the shareholders of DSET on Thursday,
January 31, 2002, at 10:00 a.m., local time, at 1160 US Highway 22 East,
Bridgewater, NJ 08807 to consider and vote upon:

I. A proposal to approve and adopt the agreement and plan of merger, dated
as of June 26, 2001, as amended by and between DSET and ISPSoft Inc.,
the merger and the issuance of up to 2,519,735 shares of DSET common
stock and such other shares of common stock and consideration as
described in the attached joint proxy statement/prospectus.

II. A proposal to amend DSET's Amended and Restated Certificate of
Incorporation to provide for the classification of DSET's board of
directors into three classes of directors with staggered terms of
office.

III. A proposal to amend DSET's 1998 Stock Plan to increase the maximum
aggregate number of shares of DSET common stock available for issuance
under the 1998 Stock Plan from 875,000 shares to 1,125,000 shares and
to ensure compliance with Section 162(m) of the Internal Revenue Code
by approving the continuance of the 1998 Stock Plan, limiting the
maximum number of shares of DSET common stock with respect to which
awards may be granted to any person under the 1998 Stock Plan to
250,000 per calendar year, and making certain other conforming
amendments.

Holders of record of shares of DSET common stock at the close of business on
December 7, 2001, the record date for the DSET special meeting, are entitled to
notice of, and to vote at, the DSET special meeting and any adjournments or
postponements thereof.

After careful consideration, your board of directors has unanimously
approved the merger, the merger agreement, as amended, the issuance of DSET
common stock pursuant to the merger agreement, the classification of your board
of directors into three classes of directors with staggered terms of office, the
increase in the number of shares available for issuance under the 1998 Stock
Plan and certain amendments to the 1998 Stock Plan to ensure compliance with
Section 162(m) of the Internal Revenue Code and recommends: (i) that you vote
'FOR' approval of the merger, the merger agreement, as amended and the proposed
issuance of up to 2,519,735 shares of DSET common stock and such other shares of
common stock and consideration as described in the attached joint proxy
statement/prospectus to the security holders of ISPSoft in connection with the
merger; (ii) that you vote 'FOR' approval of the proposed amendment to DSET's
Amended and Restated Certificate of Incorporation to provide for the
classification of your board of directors into three classes of directors with
staggered terms of office. Upon approval of such staggered terms of office,
DSET's board of directors will appropriately amend DSET's bylaws with respect to
the term of office of its board of directors; and (iii) that you vote 'FOR'
approval of the proposed amendments to DSET's 1998 Stock Plan to increase the
maximum aggregate number of shares of DSET common stock available for issuance
under the 1998 Stock Plan from 875,000 shares to 1,125,000 shares and to ensure
compliance with Section 162(m) of the Internal Revenue Code by approving the
continuance of the 1998 Stock Plan, limiting the maximum number of shares of
DSET common stock with respect to which awards may be granted to any person
under the 1998 Stock Plan to 250,000 per calendar year, and making certain other
conforming amendments.

We have described the merger, the merger agreement, as amended and the
transactions associated with it, including the stock issuance, the amendment to
DSET's Amended and Restated Certificate of Incorporation and the amendments to
DSET's 1998 Stock Plan in more detail in the accompanying joint proxy
statement/prospectus, which you should read in its entirety before voting. A
copy of the merger agreement, as amended is attached as Annex A, a copy of the
amendment

to DSET's Amended and Restated Certificate of Incorporation is attached as Annex
B and a copy of DSET's 1998 Stock Plan, as amended is attached as Annex E to the
accompanying joint proxy statement/prospectus.

We cannot complete the merger unless the merger, the merger agreement, as
amended and the issuance of the shares in connection with the merger agreement
is approved by a majority of the votes represented by the shares of DSET common
stock cast on such proposal, whether in person or by proxy. We cannot amend the
Amended and Restated Certificate of Incorporation or the 1998 Stock Plan unless
each of the amendments is approved by a majority of the votes represented by the
shares of DSET common stock cast on each such proposal, whether in person or by
proxy.

All holders of shares of DSET common stock are cordially invited to attend
the DSET special meeting in person. However, to ensure your representation at
the DSET special meeting, whether or not you plan to attend the meeting, you are
urged to complete, sign and return the enclosed proxy card as promptly as
possible in the enclosed postage-prepaid envelope. You may revoke your proxy in
the manner described in the accompanying joint proxy statement/prospectus at any
time before it is voted at the DSET special meeting. Executed proxies with no
instructions indicated thereon will be voted 'FOR' approval of the merger, the
merger agreement, as amended and the issuance of up to 2,519,735 shares of DSET
common stock and such other shares of common stock and consideration as
described in the attached joint proxy statement/prospectus to the security
holders of ISPSoft in connection with the merger, the amendment to DSET's
Amended and Restated Certificate of Incorporation and the amendments to DSET's
1998 Stock Plan.

By Order of the Board of Directors,
/s/ BRUCE M. CROWELL
BRUCE M. CROWELL
Secretary

Bridgewater, New Jersey
January , 2002

The board of directors of DSET recommends that shareholders vote 'FOR' the
merger, the merger agreement, as amended, the proposed issuance of DSET common
stock in connection with the merger, the amendment to DSET's Amended and
Restated Certificate of Incorporation and the amendments to DSET's 1998 Stock
Plan.

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.

<Page>
ISPSOFT INC.
661 SHREWSBURY AVENUE
SHREWSBURY, NEW JERSEY 07702

-------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 31, 2002

-------------------

To the Shareholders of ISPSoft Inc.:

The special meeting of shareholders of ISPSoft Inc. will be held on
Thursday, January 31, 2002, at 10:00 a.m., local time, at 661 Shrewsbury Avenue,
Shrewsbury, NJ 07702 for the following purpose:

To consider and vote upon a proposal to approve and adopt the agreement and
plan of merger, dated as of June 26, 2001, as amended, by and between DSET
Corporation and ISPSoft, and the merger, as described in the attached joint
proxy statement/prospectus.

Holders of record of shares of ISPSoft common stock and of ISPSoft preferred
stock at the close of business on December 7, 2001, the record date for the
ISPSoft special meeting, are entitled to notice of, and to vote at, the ISPSoft
special meeting and any adjournment or postponement thereof.

UNDER NEW JERSEY LAW, SHAREHOLDERS OF ISPSOFT HAVE RIGHTS OF APPRAISAL IN
CONNECTION WITH THE MERGER AS DESCRIBED IN THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS.

Information regarding the merger, the merger agreement, as amended, ISPSoft,
DSET and related matters is contained in the accompanying joint proxy
statement/prospectus and the annexes thereto, which are incorporated by
reference herein and form a part of this notice.

PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME.

Your vote is important. Whether or not you plan to attend the ISPSoft
meeting, please complete, date and return your proxy in the enclosed envelope
promptly.

By Order of the Board of Directors,

/s/ RAMESH BALAKRISHAN

RAMESH BALAKRISHAN
Secretary

Shrewsbury, New Jersey
January [ ], 2002

<Page>
TABLE OF CONTENTS

<Table>
<Caption>
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETINGS AND THE
MERGER. 1

SUMMARY..................................................... 4
Selected Historical Consolidated Financial Information
of DSET................................................ 16
Selected Historical Financial Information of ISPSoft.... 17
Summary Unaudited Pro Forma Information................. 18
Comparative Per Share Data.............................. 19
RISK FACTORS................................................ 20
Risks Relating to the Merger............................ 20
Risks Relating to the Business and Strategy of the
Combined Company....................................... 23
Risks Relating to DSET.................................. 25
Cautionary Statement Concerning Forward-Looking
Statements............................................. 34
MARKET PRICE AND DIVIDEND INFORMATION....................... 35
Market Price Information and Reverse Stock Split........ 35
Dividend Information.................................... 36
THE DSET SPECIAL MEETING.................................... 36
General................................................. 36
Date, Time and Place.................................... 36
Purpose of the Special Meeting.......................... 36
DSET Board of Directors' Recommendation................. 37
Record Date............................................. 37
Vote Required; Vote at the Special Meeting.............. 37
Proxies................................................. 37
Revocability of Proxies................................. 38
Solicitation of Proxies................................. 38
THE ISPSOFT SPECIAL MEETING................................. 38
General................................................. 38
Date, Time and Place.................................... 38
Purpose................................................. 39
ISPSoft Board of Directors' Recommendation.............. 39
Record Date............................................. 39
Vote Required; Vote at the Special Meeting.............. 39
Voting Agreements....................................... 39
Proxies................................................. 40
Revocability of Proxies................................. 40
Solicitation of Proxies................................. 40
Dissenter's Rights...................................... 40
THE MERGER.................................................. 42
Background of the Merger................................ 42
Recommendation of DSET's Board of Directors and DSET's
Reasons for the Merger................................. 45
Recommendation of the Board of Directors of ISPSoft;
ISPSoft's Reasons for the Merger....................... 49
Interests of Executive Officers and Directors of ISPSoft
in the Merger.......................................... 57
Stock Options........................................... 58
Accounting Treatment of the Merger...................... 59
Form of Merger.......................................... 59
Merger Consideration.................................... 59
Effective Time of the Merger............................ 59
Material United States Federal Income Tax
Considerations......................................... 59
Nasdaq National Market Quotation........................ 66
Right of Shareholders to Dissent........................ 66
</Table>

<Page>

<Table>
<Caption>
PAGE
----

Dissenter's Rights Procedures........................... 66
Resale of DSET Common Stock Issued in Connection with
the Merger............................................. 69
THE MERGER AGREEMENT........................................ 70
The Merger.............................................. 70
Consideration........................................... 70
Conversion of Shares.................................... 71
Escrow.................................................. 72
Treatment of ISPSoft Stock Options...................... 72
Treatment of ISPSoft Warrants........................... 72
Treatment of ISPSoft Outstanding Promissory Notes....... 72
Exchange of Stock Certificates.......................... 72
Representations and Warranties.......................... 73
Certain Covenants....................................... 74
Expenses................................................ 76
Related Matters After the Merger........................ 76
Indemnification......................................... 76
Conditions to Obligations to Effect Merger.............. 77
Termination; Breakup Fees............................... 81
Amendment and Waiver.................................... 81
OTHER AGREEMENTS............................................ 82
Voting Agreements....................................... 82
Lock-Up Agreements...................................... 82
Escrow Agreement........................................ 82
Employment Agreement and Offer Letters of Employment.... 83
Invention, Confidentiality and Non-Competition
Agreement.............................................. 84
Loan Transaction........................................ 84
Value Added Reseller Agreement.......................... 86
INFORMATION CONCERNING DSET................................. 87
Business................................................ 87
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 97
Overview................................................ 97
Management.............................................. 112
DSET Summary Of Compensation In Fiscal 2000, 1999, and
1998................................................... 115
DSET Option Grants in 2000.............................. 116
Aggregated Option Exercises in 2000 and Year-End Option
Values................................................. 117
Employment Contracts, Termination Of Employment And
Change-In-Control...................................... 117
Compensation of Directors............................... 118
Certain Transactions.................................... 119
INFORMATION CONCERNING ISPSOFT.............................. 120
Business................................................ 120
ISPSoft Management's Discussion And Analysis Of
Financial Condition And Results Of Operations.......... 123
Quantitative and Qualitative Disclosures About Market
Risk................................................... 127
ISPSoft Management...................................... 128
ISPSoft Certain Transactions............................ 130
UNAUDITED PRO FORMA FINANCIAL STATEMENTS.................... 132
DSET Corporation and Subsidiaries Unaudited Pro Forma
Balance Sheet As of September 30, 2001................. 133
DSET Corporation and Subsidiaries Unaudited Pro Forma
Statement of Operations For the Nine Months Ended
September 30, 2001..................................... 134
DSET Corporation and Subsidiaries Unaudited Pro Forma
Statement of Operations For the Year Ended December 31,
2000................................................... 135
Notes to Unaudited Pro Forma Financial Statements....... 136
</Table>

<Page>

<Table>
<Caption>
PAGE
----

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND
MANAGEMENT OF DSET........................................ 138
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND
MANAGEMENT OF ISPSOFT..................................... 140
Stock Ownership Of Certain Beneficial Owners and
Management............................................. 140
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND
MANAGEMENT OF DSET FOLLOWING THE MERGER................... 142
DESCRIPTION OF DSET CAPITAL STOCK........................... 144
General................................................. 144
DSET Common Stock....................................... 144
DSET Preferred Stock.................................... 144
New Jersey Law and Bylaw Provisions..................... 144
Shareholder Rights Plan................................. 144
COMPARISON OF SHAREHOLDER RIGHTS............................ 147
General................................................. 147
Capitalization.......................................... 147
Voting Rights........................................... 147
Number and Classification of Directors.................. 148
Removal of Directors.................................... 148
Filling Vacancies on the Board of Directors............. 148
Charter Amendments...................................... 149
Amendments to Bylaws.................................... 149
Action by Written Consent............................... 149
Notice of Shareholder Meetings.......................... 149
Right to Call Special Meeting of Shareholders........... 150
Limitation of Personal Liability of Directors........... 150
Dividends............................................... 150
Conversion.............................................. 150
Liquidation............................................. 151
Rights in an Acquisition Event.......................... 151
PROPOSAL TO AMEND DSET'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO PROVIDE FOR A CLASSIFIED BOARD........... 151
PROPOSAL TO AMEND DSET'S 1998 STOCK PLAN.................... 153
LEGAL MATTERS............................................... 158
EXPERTS..................................................... 158
INCORPORATION BY REFERENCE.................................. 159
WHERE YOU CAN FIND MORE INFORMATION......................... 159
FINANCIAL STATEMENTS OF ISPSOFT INC......................... F-1
PART II INFORMATION NOT REQUIRED IN PROSPECTUS.............. II-1
SIGNATURES.................................................. II-5
</Table>

ANNEXES

<Table>

(A) Agreement and Plan Of Merger, as amended
(B) Amendment to DSET's Amended and Restated Certificate of
Incorporation
(C) Opinion of Kaufman Bros. L.P.
(D) Section 14A:11-1 through 14A:11-11 of the New Jersey
Business Corporation Act
(E) DSET's 1998 Stock Plan, as amended
</Table>

iii

<Page>

THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT DSET THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS
JOINT PROXY STATEMENT/PROSPECTUS. THIS INFORMATION IS AVAILABLE AT THE INTERNET
WEB SITE THAT THE SEC MAINTAINS AT HTTP://WWW.SEC.GOV, AS WELL AS FROM OTHER
SOURCES, SEE 'WHERE YOU CAN FIND MORE INFORMATION' ON PAGE 159. THIS INFORMATION
IS ALSO AVAILABLE WITHOUT CHARGE TO SECURITY HOLDERS BY WRITING OR TELEPHONING
US AT THE ADDRESS OR TELEPHONE NUMBER LISTED BELOW. TO OBTAIN TIMELY DELIVERY,
YOU MUST REQUEST THE INFORMATION NO LATER THAN FIVE BUSINESS DAYS BEFORE THE
DATE THAT YOU MUST MAKE AN INVESTMENT DECISION.

Bruce M. Crowell
Secretary
DSET Corporation
1160 U.S. Highway 22 East
Bridgewater, New Jersey 08807

(908) 526-7500

<Page>

QUESTIONS AND ANSWERS ABOUT THE
SPECIAL MEETINGS AND THE MERGER

Q. WHY ARE DSET AND ISPSOFT PROPOSING TO MERGE?

A. DSET and ISPSoft are proposing to merge for a number of reasons, including
the following:

UPX, ISPSoft's current product that was released in the third quarter of
2001, automatically sets up or activates virtual private networks over
Internet protocol (IP-based) networks in response to customer requests.
Implementing new services over IP-based networks is a major trend in the
industry.

ISPSoft is currently developing a line of products that can assure the
quality of services activated for its customers. By targeting markets that
DSET's products do not specifically address, each of ISPSoft's current and
future products may diversify DSET's risk and add additional sources of
revenues.

there is a tremendous strategic fit between ISPSoft's products under
development and DSET's resources and telecommunications industry expertise.

the two companies have complementary technologies, expertise and
relationships that may significantly strengthen DSET's competitive position.

the two companies have complementary management teams that will strengthen
the commercial infrastructure.

Q. WHO WILL OWN ISPSOFT FOLLOWING THE MERGER?

A. If the merger is completed, DSET will be the sole owner of all of the assets
of ISPSoft and will assume all of the outstanding liabilities of ISPSoft. As
of September 30, 2001, ISPSoft had total assets equal to $555,077 and total
liabilities equal to $4,581,642. ISPSoft released its first commercially
salable product during the third quarter of 2001 but has not yet consummated
a sale. Accordingly, ISPSoft has never had revenues and at September 30, 2001
had a deficit accumulated during the developmental stage of $8.9 million. As
of September 30, 2001, ISPSoft had reached technological feasibility with one
of its products.

Q. WHAT PERCENTAGE OF DSET WILL ISPSOFT SHAREHOLDERS OWN AFTER THE MERGER AND
WHAT EFFECT WILL THE MERGER HAVE ON DSET'S BOARD OF DIRECTORS?

A. Immediately after the merger, ISPSoft security holders will own approximately
47.7% of the outstanding DSET common stock, assuming the exercise of all
outstanding ISPSoft options assumed by DSET in the merger. SGM Capital
Limited, Lucent Technologies, Inc. and Signal Lake Venture Fund, L.P.,
ISPSoft's three largest shareholders, will own approximately 15.66%, 16.78%
and 4.84% of DSET after the merger. After the merger, DSET's board of
directors will increase from four directors to seven directors. Three of the
seven DSET directorships after the merger will be filled by the following
three designees of ISPSoft: Mr. Binay Sugla, Mr. Carl Pavarini and Mr. Arun
Inam.

Q. ARE THERE RISKS I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE FOR THE MERGER?

A. Yes. You should carefully consider the factors discussed in the section
entitled 'Risk Factors' on pages 20 to 34 hereof.

Q. WHAT DO ISPSOFT SHAREHOLDERS NEED TO DO NOW?

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you want to vote, we will count your proxy as a vote for the proposal to
approve the merger agreement and the merger.

Q. WHAT DO DSET SHAREHOLDERS NEED TO DO NOW?

A. After carefully reading and considering the information contained in this
joint proxy statement/prospectus, please complete and sign your proxy and
return it in the enclosed return envelope as soon as possible so that your
shares may be represented and voted at the DSET special meeting of
shareholders. If you sign and send in your proxy and do not indicate how you
want to vote, we will count your proxy as a vote for the proposals to approve
the merger, the merger agreement, the issuance of shares of DSET common stock
in connection with the merger, the amendment to DSET's Amended and Restated
Certificate of Incorporation to provide for the classification of DSET's
board of directors into three classes of directors with staggered terms of
office and the amendments to DSET's 1998 Stock Plan to increase the maximum
aggregate number of shares of DSET common stock available for issuance
thereunder from 875,000 shares to 1,125,000 shares and to ensure compliance
with Section 162(m) of the Internal Revenue Code by approving the continuance
of the 1998 Stock Plan, limiting the maximum number of shares of DSET common
stock with respect to which awards may be granted to any person under the
1998 Stock Plan to 250,000 per calendar year, and making certain other
conforming amendments.

Q. WHAT RIGHTS DO ISPSOFT SHAREHOLDERS HAVE IF THEY OPPOSE THE MERGER?

A. You may seek appraisal of the fair value of your shares of ISPSoft stock by
complying with all of the New Jersey law procedures explained on pages 66 to
69 and in Annex D.

Q. WHAT RIGHTS DO DSET SHAREHOLDERS HAVE IF THEY OPPOSE THE MERGER?

A. In the event the requisite majority of DSET shareholders vote to approve the
merger, those DSET shareholders voting to oppose the merger shall have no
recourse with respect to such vote.

Q. WHAT IF THE MERGER IS NOT COMPLETED?

A. It is possible the merger will not be completed. This might happen if, for
example, ISPSoft shareholders do not approve the merger and the merger
agreement or the DSET shareholders do not approve the merger, the merger
agreement and the issuance of the common stock in connection with the merger.
Should that occur, neither DSET nor ISPSoft is under any obligation to make
or consider any alternative proposal regarding the purchase of stock held by
ISPSoft shareholders. In certain circumstances either party may owe the other
party a termination fee and reimbursement of certain expenses. For example,
if either party breaches, without cure, its respective warranties,
representations or covenants contained in the merger agreement, such party
shall pay a termination fee equal to $2,000,000 plus certain documentable
expenses of the non-breaching party. For a discussion of each circumstance
where termination fees or expenses shall be paid, see page 81 hereof.

Q. IF MY SHARES ARE HELD IN 'STREET NAME' BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?

A. Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares. If you do not instruct your
broker, your shares will not be voted.

Q. CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?

A. Yes. You can change your vote at any time before your proxy is voted at the
special meeting. If you hold your shares in your own name, you can do this in
one of three ways. First, you can send a written notice stating that you
would like to revoke your proxy. Second, you can

<Page>
complete and submit a new proxy. If you choose either of these two methods,
you must submit your notice of revocation or your new proxy to the address
set forth in the answer to the last question below. Third, you can attend the
special meeting and vote in person. If you hold your shares in 'street name,'
you should follow the directions provided by your broker regarding how to
change your vote.

Q. WHEN AND WHERE ARE THE SPECIAL MEETINGS?

<Table>

A. For DSET: For ISPSoft:
January 31, 2002 January 31, 2002
10:00 a.m. local time 10:00 a.m. local time
DSET Corporation ISPSoft Inc.
1160 U.S. Highway 22 East 661 Shrewsbury Avenue
Bridgewater, NJ 08807 Shrewsbury, NJ 07702
Telephone: (908) 526-7500 Telephone: (732) 945-6000
</Table>

Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A. We expect to complete the merger in January 2002.

Q. SHOULD ISPSOFT SHAREHOLDERS SEND IN THEIR STOCK CERTIFICATES NOW?

A. No. After the merger is completed, ISPSoft shareholders will receive written
instructions for exchanging ISPSoft stock certificates. Please do not send in
your stock certificates with your proxy.

Q. WHO CAN HELP ANSWER MY QUESTIONS?

A. If you have any questions about the merger or if you need additional copies
of this joint proxy statement/prospectus or the enclosed proxy, you should
contact:

<Table>

FOR DSET SHAREHOLDERS: FOR ISPSOFT SHAREHOLDERS:
DSET Corporation ISPSoft Inc.
1160 U.S. Highway 22 East 661 Shrewsbury Avenue
Bridgewater, NJ 08807 Shrewsbury, NJ 07702
Attention: Bruce M. Crowell Attention: Binay Sugla
Chief Financial Officer President and Chief Executive Officer
Telephone: (908) 526-7500 Telephone: (732) 945-6000
</Table>

<Page>

SUMMARY

This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully and for a more complete description of the legal terms of the
merger, you should read carefully this entire document and the documents to
which we have referred you. See 'Where You Can Find More Information' on
page 159. We have included page references parenthetically to direct you to a
more complete description of the topics in this summary.

GENERAL INFORMATION CONCERNING AND ADDRESSES OF DSET AND ISPSOFT
(SEE PAGES 87 AND 120)

DSET CORPORATION
1160 U.S. HIGHWAY 22 EAST
BRIDGEWATER, NEW JERSEY 08807
(908) 526-7500

DSET is a supplier of electronic-bonding gateways and software solutions
that automate the provisioning of Internet Protocol (IP)-based services. DSET
gateways enable communications providers to implement electronic trading partner
networks for competitive telecommunications service providers. A trading partner
network plays a critical role in lowering the cost of acquiring customers,
reducing the amount of time required to provision new phone services for
customers, and minimizing the time required to resolve service outages to ensure
higher customer satisfaction and less customer churn. DSET IP provisioning
solutions facilitate the creation of virtual private networks (VPNs) and a
variety of other services at a fraction of the cost and time of conventional
provisioning methods.

At September 30, 2001, DSET had an accumulated deficit of $34.2 million as a
result of the severe downturn in the telecommunications industry which began in
the second half of 2000. Prior to the third quarter of 2000, DSET had 29
consecutive profitable quarters. For the nine months ending September 30, 2001
it had a net loss of $31.6 million and for the year ended December 31, 2000 it
had a net loss of $18.8 million.

DSET was organized as a New Jersey corporation in 1989. DSET's world wide
web site address is www.dset.com. The information in this web site is not
incorporated by reference into this joint proxy statement/prospectus. This web
site address is included in this document as an inactive textual reference only.

ISPSOFT INC.
661 SHREWSBURY AVENUE
SHREWSBURY, NEW JERSEY 07702
(732) 945-6000

ISPSoft develops and markets software solutions that enable any service
provider or large enterprise in the world to turn on new communications services
across networks that are based on the Internet Protocol (IP). For example,
ISPSoft's services could include virtual private networks (VPNs) that are
secure, guarantee a certain quality of service, utilize the Internet and can be
implemented in networks comprised of equipment from multiple vendors. The
applications that run on this type of service could be data, text, video or
voice.

ISPSoft also offers a variety of related services, such as installation,
integration with other related application software, testing, training,
technical support and software upgrades, all of which are necessary to ensure
that the service provider or the enterprise can efficiently implement the
software solution, thus allowing them to offer new services to their customers
or employees while generating new revenue and/or reducing costs.

ISPSoft is a development stage company that recently began marketing its
first product to reach technological feasibility, UPX, but which has not yet
consummated a sale. UPX automatically

<Page>

sets up or activates virtual private networks over Internet protocol networks in
response to customer requests. ISPSoft has never had revenues. At September 30,
2001, it accumulated a deficit of $8.9 million.

ISPSoft was organized as a New Jersey corporation in 1999. ISPSoft's world
wide web site address is www.ispsoft.com. The information in this web site is
not incorporated by reference into this joint proxy statement/prospectus. This
web site address is included in this document as an inactive textual reference
only.

THE CONSIDERATION TO BE ISSUED IN THE MERGER
(SEE PAGE 70)

ISPSoft security holders will receive an aggregate of up to 2,519,735 shares
of DSET common stock and other consideration as follows:

DSET will issue up to an aggregate of 2,519,735 shares of its common stock
to security holders of ISPSoft as follows:

holders of ISPSoft common stock (including the preferred stock on an
as-converted to common stock basis) will be entitled to receive an
aggregate of 2,157,838 shares of DSET common stock, subject to downward
adjustment, at a conversion rate of 0.087648 shares of DSET common
stock for each one share of ISPSoft common stock surrendered. Such
downward adjustments relate to possible indemnification claims and
specified payments of expenses as set forth herein on pages 76 and 77;

holders of ISPSoft Series B Preferred Stock will be entitled to receive
up to an aggregate of 123,306 shares of DSET common stock and
$1,000,000 in cash, as set forth in the merger agreement;

holders of options to purchase shares of ISPSoft common stock will be
entitled to receive an aggregate of 238,591 options to purchase shares
of DSET common stock at an exchange rate of 0.087648, subject to
downward adjustment for options to purchase shares of ISPSoft common
stock exercised prior to the merger, and DSET will assume ISPSoft's
2000 Option Plan. As of October 31, 2001, there were outstanding
options to purchase 2,722,510 shares of ISPSoft common stock, which
will be exchanged for options to purchase 238,591 shares of DSET common
stock. The 2000 Stock Plan provides both for the direct award or sale
of shares of ISPSoft common stock and for the grant of options to
purchase shares of ISPSoft common stock. Options granted under the
ISPSoft 2000 Stock Plan may include nonstatutory stock options and
incentive stock options intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended. Virtually all of the options
granted to employees under the ISPSoft Stock Plan are subject to
four-year vesting;

holders of ISPSoft common stock, other than Lucent Technologies, Inc., will
also be entitled to receive, at the sole discretion of DSET at the time of
such payment or payments, up to an aggregate of $1,000,000 in cash or
registered shares of DSET common stock, subject to certain limitations and
the satisfaction of net revenue milestones to be achieved by ISPSoft
through June 30, 2002, as set forth below. The number of shares so issued,
if DSET elects this option, will vary based upon fluctuations in the fair
market value of DSET's common stock at the time of each such issuance; and

DSET will issue promissory notes to each of Lucent Technologies, Inc. and
Signal Lake Venture Fund, L.P., in the face amount of $400,000 each,
thereby assuming certain debts of ISPSoft to each such entity. DSET will
also assume and then pay in full the face amount of each other note payable
of ISPSoft as of the closing of the merger, which notes payable total
$525,000, including $300,000 of which is payable to SGM Capital Limited, an
affiliate of ISPSoft. No interest will be paid on such notes.

<Page>

DSET will issue all such shares of common stock from its currently
authorized but unissued shares of common stock and will pay such cash payments
from its currently available cash balances. The aggregate value of all such
consideration is approximately $5,651,767 (based upon DSET's closing common
stock price of $1.02 as reported on Nasdaq on December 7, 2001).

The potential net revenue milestone payments aggregating as much as
$1,000,000 and referenced above will be paid by DSET pursuant to the following
schedule, and will be paid in cash and/or shares of DSET common stock, at DSET's
discretion, provided, however, that DSET may be required to issue shares of
common stock and not pay cash in order to preserve the status of the transaction
as a reorganization, and provided further, that DSET will in any event be
required to pay cash and not issue shares of common stock in order to avoid any
share issuance that would result in the current holders of ISPSoft capital stock
holding 50% or more of the outstanding shares of DSET:

an aggregate of $250,000 shall be paid on or before January 1, 2002 if,
prior to the closing of the merger, ISPSoft has achieved more than $500,000
in recognized revenues, net of related returns at any time, for sales of
certain ISPSoft products or services;

an aggregate of $250,000 shall be paid on or before March 31, 2002 if, for
the period beginning June 26, 2001 through December 31, 2001, ISPSoft (for
the period beginning June 26, 2001 through the closing of the merger) and
the combined company (for the period beginning upon the closing of the
merger through December 31, 2001) collectively achieve more than $3,000,000
in recognized revenues, net of related returns at any time, for sales of
certain ISPSoft products or services; and

an aggregate of $500,000 shall be paid on or before September 30, 2002 if,
for the period beginning January 1, 2002 through June 30, 2002, the
combined company achieves more than $4,000,000 in recognized revenues, net
of related returns at any time, for sales of certain ISPSoft products or
services.

The merger agreement is attached to this joint proxy statement/prospectus as
Annex A. We encourage you to read the merger agreement as it is the legal
document that governs the merger.

VOTES REQUIRED BY DSET AND ISPSOFT SHAREHOLDERS
TO APPROVE THE MERGER
(SEE PAGES 37 AND 39)

DSET

Approval of the merger, the merger agreement, the amendment to DSET's
Amended and Restated Certificate of Incorporation and the amendments to DSET's
1998 Stock Plan require the vote of a majority of the votes represented by the
shares of DSET common stock cast on such proposals. Pursuant to applicable rules
of the Nasdaq National Market, approval of the proposed issuance of DSET common
stock in connection with the merger requires the approval of a majority of the
votes represented by the shares of DSET common stock cast on the proposal,
whether in person or by proxy, because such issuance of shares of DSET common
stock will exceed 20% of the outstanding shares of DSET common stock prior to
the merger.

As of October 31, 2001, DSET's directors and executive officers owned
approximately 1% of the outstanding shares of DSET common stock and have already
agreed to vote in favor of the merger, the merger agreement and the issuance of
shares of DSET common stock in connection with the merger.

Approval of the merger agreement and the merger by ISPSoft shareholders is
assured in that certain holders of ISPSoft capital stock who are affiliates of
ISPSoft and who collectively beneficially own more than 90% of the outstanding
voting power of ISPSoft capital stock have already entered into voting
agreements whereby they have agreed to vote in favor of the merger agreement and
the merger. These holders collectively beneficially own approximately 67% of the

<Page>

outstanding ISPSoft common stock, 100% of the outstanding ISPSoft Series A
preferred stock and 100% of the outstanding Series B preferred stock.

ISPSOFT

Approval of the merger agreement and the merger requires the vote of:

a majority of the votes represented by the outstanding shares of ISPSoft
common stock and preferred stock (voting on an as-converted to common stock
basis), voting together as a single class; and

A majority of the votes represented by the outstanding shares of the
ISPSoft Series A preferred stock and Series B preferred stock, each voting
as a separate class.

Certain holders of ISPSoft common stock and preferred stock who collectively
beneficially own more than 90% of the outstanding voting power of ISPSoft
capital stock have already agreed to vote in favor of the merger agreement and
the merger.

OUR BOARD OF DIRECTOR RECOMMENDATIONS TO SHAREHOLDERS
IN FAVOR OF THE TRANSACTIONS
(SEE PAGES 37 AND 39)

TO DSET SHAREHOLDERS:

The DSET board of directors voted to approve the merger, the merger
agreement, the proposed issuance of DSET common stock in connection with the
merger, the amendment to DSET's Amended and Restated Certificate of
Incorporation and the amendments to DSET's 1998 Stock Plan. The DSET board
believes that the merger, the amendment to DSET's Amended and Restated
Certificate of Incorporation and the amendments to DSET's 1998 Stock Plan are in
your best interest and recommends that you vote 'FOR' each such proposal.

TO ISPSOFT SHAREHOLDERS:

The ISPSoft board of directors voted to approve the merger agreement, the
merger and the transactions contemplated thereby. The ISPSoft board believes
that the merger is advisable and in your best interests and recommends that you
vote 'FOR' the proposal to approve the merger agreement and the merger.

WHAT HOLDERS OF ISPSOFT SECURITIES WILL RECEIVE IN THE MERGER
(SEE PAGE 70)

In the merger:

DSET will issue up to an aggregate of 2,519,735 shares of its common stock
to security holders of ISPSoft as follows:

holders of ISPSoft common stock (including the preferred stock on an
as-converted to common stock basis) will be entitled to receive an
aggregate of 2,157,838 shares of DSET common stock, subject to downward
adjustment, at a conversion rate of 0.087648 shares of DSET common
stock for each one share of ISPSoft common stock surrendered. Such
downward adjustments relate to possible indemnification claims and
specified payments of expenses as set forth herein on pages 76 and 77;

holders of ISPSoft Series B preferred stock will be entitled to receive
up to an aggregate of 123,306 shares of DSET common stock and
$1,000,000 in cash, as set forth in the merger agreement;

holders of options to purchase shares of ISPSoft common stock will be
entitled to receive an aggregate of 238,591 options to purchase shares
of DSET common stock at

<Page>

an exchange rate of 0.087648, subject to downward adjustment for
options to purchase shares of ISPSoft common stock exercised prior to
the merger, and DSET will assume ISPSoft's 2000 Stock Plan;

holders of ISPSoft common stock, other than Lucent Technologies, Inc., will
also be entitled to receive net revenue milestone payments aggregating as
much as $1,000,000, which will be paid by DSET pursuant to the following
schedule, and will be paid in cash and/or shares of DSET common stock, at
DSET's discretion, provided, however, that DSET may be required to issue
shares of common stock and not pay cash in order to preserve the status of
the transaction as a reorganization, and provided further, that DSET will
in any event be required to pay cash and not issue shares of common stock
in order to avoid any share issuance that would result in the current
holders of ISPSoft capital stock holding 50% or more of the outstanding
shares of DSET:

an aggregate of $250,000 shall be paid on or before January 1, 2002 if,
prior to the closing of the merger, ISPSoft has achieved more than
$500,000 in recognized revenues, net of related returns at any time,
for sales of certain ISPSoft products or services;

an aggregate of $250,000 shall be paid on or before March 31, 2002 if,
for the period beginning June 26, 2001 through December 31, 2001,
ISPSoft (for the period beginning June 26, 2001 through the closing of
the merger) and the combined company (for the period beginning upon the
closing of the merger through December 31, 2001) collectively achieve
more than $3,000,000 in recognized revenues, net of related returns at
any time, for sales of certain ISPSoft products or services; and

an aggregate of $500,000 shall be paid on or before September 30, 2002
if, for the period beginning January 1, 2002 through June 30, 2002, the
combined company achieves more than $4,000,000 in recognized revenues,
net of related returns at any time, for sales of certain ISPSoft
products or services.

The number of shares so issued, if DSET elects this option, will vary
based upon fluctuations in the fair market value of DSET's common stock at
the time of each such issuance; and

DSET will issue promissory notes to each of Lucent Technologies, Inc. and
Signal Lake Venture Fund, L.P., in the face amount of $400,000 each,
thereby assuming certain debts of ISPSoft to each such entity. DSET will
also assume and then pay in full the face amount of each other note payable
of ISPSoft as of the closing of the merger, which notes payable total
$525,000, including $300,000 of which is payable to SGM Capital Limited, an
affiliate of ISPSoft. No interest will be paid on such notes.

DSET will issue all such shares of common stock from its currently
authorized but unissued shares of common stock and will pay such cash payments
from its currently available cash balances. The aggregate value of all such
consideration is approximately $5,651,767 (based upon DSET's closing common
stock price of $1.02 as reported on Nasdaq on December 7, 2001).

DSET will not issue fractional shares of DSET common stock in connection
with the merger. Instead, ISPSoft shareholders will receive shares of DSET
common stock rounded up to the nearest whole number.

Options that are exercisable for shares of ISPSoft capital stock will be
assumed by DSET and will be exercisable for DSET common stock. The number of
shares issuable upon exercise of these options and the exercise price per share,
will be adjusted using the same conversion ratio applied to determine the number
of shares of DSET stock to be issued per share of ISPSoft capital stock in the
merger except that any fractional shares will be rounded down and the exercise
price will be rounded up.

ISPSoft has agreed to cause the termination of all outstanding warrants
prior to the closing of the merger.

<Page>

The 2,519,735 shares of DSET common stock issued to ISPSoft security holders
at the closing of the merger, will approximate 47.7% of the issued and
outstanding shares of DSET common stock following the merger, assuming the
exercise or conversion of all ISPSoft stock options.

WHAT MUST OCCUR BEFORE THE MERGER
WILL BE COMPLETED
(SEE PAGE 77)

The completion of the merger depends upon meeting a number of conditions,
including the following:

the approval of the shareholders of each of DSET and ISPSoft;

the holders of no more than 3% of the outstanding voting stock of ISPSoft
shall have exercised appraisal rights under the New Jersey Business
Corporation Act;

the filing with the Nasdaq National Market with respect to the listing of
the shares of DSET common stock issued in connection with the merger;

the receipt of legal opinions regarding corporate matters;

the holders of all of the shares of capital stock of ISPSoft will have
signed lock-up agreements, subject to limited exceptions;

the execution and delivery of the escrow agreement;

the termination of existing ISPSoft shareholder agreements, investor rights
agreements, voting agreements and registration rights agreements;

Mr. Binay Sugla, ISPSoft's President and Chief Executive Officer, shall
have executed an employment agreement with DSET;

ten specific employees of ISPSoft shall remain employees of the surviving
corporation on the closing date and shall execute appropriate offer
documentation with DSET;

Lucent and Signal Lake shall have waived their liquidation preferences of
the ISPSoft Series B preferred stock owned by such entities;

DSET shall have received cancelled notes from all of the noteholders of
ISPSoft as described above;

DSET shall have received evidence of the cancellation of certain
outstanding ISPSoft warrants; and

other customary contractual conditions specified in the merger agreement.

The conditions to the merger may be waived by the company entitled to assert
the condition.

10% OF THE SHARES ISSUED BY DSET IN THE MERGER
WILL BE SUBJECT TO AN ESCROW ARRANGEMENT
(SEE PAGE 72)

Except for shares of common stock to be issued to holders of its Series B
preferred stock, ISPSoft shareholders will not immediately receive all of the
DSET shares issuable in the merger. Ten percent of such shares will
automatically be placed in escrow. If the merger agreement is approved and the
merger occurs, all shareholders of ISPSoft who have not perfected appraisal
rights under the New Jersey Business Corporation Act, by receipt of DSET common
stock in the merger, will be deemed to have agreed to the terms of the escrow
agreement referred to in the merger agreement.

The shares that are placed in escrow will be used to indemnify DSET against
damages due to:

any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of ISPSoft contained in the merger agreement;

<Page>

any failure of any shareholder of ISPSoft to have good, valid and
marketable title to the issued and outstanding shares of ISPSoft capital
stock issued in the name of such shareholder, free and clear of all
security interests;

any claim by a shareholder or former shareholder of ISPSoft, or any other
person or entity, seeking to assert, or based upon: (i) ownership or rights
to ownership of any shares of stock of ISPSoft; (ii) any rights of a
shareholder (other than the right to receive the shares pursuant to the
merger agreement or appraisal rights under the applicable provisions of the
New Jersey Business Corporation Act), including any option, preemptive
rights or rights to notice or to vote; (iii) any rights under the
Certificate of Incorporation or By-laws of ISPSoft; or (iv) any claim that
his, her or its shares were wrongfully repurchased by ISPSoft;

any amount referenced under the caption 'Reduction in Purchase Price' under
Section 1.12 of the merger agreement to the extent that such amount is not
deducted from the purchase price at the closing of the merger;

any amount paid by DSET under Section 4.8(b) of the merger agreement
relating to the payment of sales, use and transfer taxes and all
governmental charges, if any, arising in connection with the merger that
are to be paid by the shareholders of ISPSoft, because of the failure of
the shareholders of ISPSoft to pay such amount;

any amount paid to employees or consultants of ISPSoft for liabilities or
claims made in connection with the termination of such person's employment
or consulting arrangement with ISPSoft, which termination occurred during
the period beginning on the date that is 6 months prior to the date of the
merger agreement and ending at the effective time of the merger;

any accounts payable of ISPSoft that are more than 30 days past due on the
date of closing of the merger; and

any amounts owed by ISPSoft to Signal Lake, other than amounts owed
pursuant to ISPSoft's Agency Arrangement with Signal Lake, which are not
otherwise accounted for under the merger agreement.

This obligation to indemnify DSET is limited to the indemnification escrow
shares. The indemnification obligations will end 12 months after closing. At
that time, if DSET does not have any unresolved claims for the property
remaining in this escrow, the indemnification escrow shares will be released to
the former ISPSoft shareholders from whom they were withheld.

A representative will be authorized to represent the ISPSoft shareholders in
all matters relating to the escrow. Mr. Binay Sugla, ISPSoft's President and
Chief Executive Officer, has been selected by the ISPSoft board to act as the
representative of the ISPSoft shareholders. Approval by the ISPSoft shareholders
of the merger agreement and the merger will constitute approval of the selection
of this representative.

ISPSOFT HAS AGREED NOT TO ENGAGE
IN ALTERNATIVE TRANSACTIONS
(SEE PAGE 75)

ISPSoft has agreed that it will not initiate or engage in any discussion
regarding a business combination of ISPSoft with any other party. ISPSoft has
further agreed to cause each of its officers, directors, employees,
representatives and agents not to do any of these things.

<Page>

REASONS FOR TERMINATION OF THE MERGER AGREEMENT
(SEE PAGE 81)

DSET and ISPSoft can mutually agree to terminate the merger agreement
without completing the merger, and either DSET or ISPSoft can terminate the
merger agreement if any of the following occurs:

the other party commits a material breach of any representation, warranty
or covenant under the merger agreement;

the approval of the shareholders of DSET or ISPSoft is not obtained; or

the merger is not completed by December 31, 2001 by reason of the failure
of any condition precedent to that party's closing of the merger unless the
failure results primarily from a breach of any of that party's
representations, warranties or covenants contained in the merger agreement.

BREAK-UP FEE PAYABLE UPON TERMINATION OF
THE MERGER AGREEMENT
(SEE PAGE 81)

In certain circumstances, if the merger agreement is terminated prior to the
consummation of the merger, one party may be liable to the other party for a
termination fee totaling $2,000,000 plus certain documentable expenses of such
other party. Such fee would be paid:

by a party in breach, with certain exceptions, of any of its
representations, warranties or covenants contained in the merger agreement,
and such breach is not cured in a timely manner;

by a party whose shareholders fail to approve the merger agreement and the
merger if such failure is covered by a breach of previously executed voting
agreements to vote in favor of such matters;

by DSET if DSET enters into a business combination with a third-party and,
in connection therewith, terminates the merger agreement; or

by ISPSoft if ISPSoft terminates the merger agreement and accepts a
superior offer.

OPINION OF DSET FINANCIAL ADVISOR TO
DSET BOARD OF DIRECTORS WITH RESPECT
TO FAIRNESS OF THE CONSIDERATION IN THE MERGER
(SEE PAGE 50)

In deciding to approve the merger, DSET's board of directors, among other
things, received an opinion, dated June 25, 2001, from its financial advisor,
Kaufman Bros., L.P., that the total consideration to be paid in the merger was
fair from a financial point of view to DSET's shareholders. The full text of the
opinion is attached as Annex C to this joint proxy statement/prospectus and
should be read carefully in its entirety. THE OPINION OF KAUFMAN BROS. L.P. IS
DIRECTED TO THE BOARD OF DIRECTORS OF DSET AND DOES NOT CONSTITUTE A
RECOMMENDATION AS TO ANY ACTION ANY SHAREHOLDER SHOULD TAKE IN CONNECTION WITH
THE MERGER.

BENEFITS TO AND INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS OF ISPSOFT IN THE
MERGER
(SEE PAGE 57)

In considering the recommendation of the ISPSoft board, you should be aware
of the interests that executive officers and directors of ISPSoft have in the
merger. These include:

acceleration of vesting of restricted stock held by Mr. Binay Sugla,
ISPSoft's President and Chief Executive Officer;

<Page>

employment offers being extended to certain employees of ISPSoft;

indemnification of ISPSoft directors and officers for actions taken prior
to the merger; and

certain ISPSoft officers becoming officers and/or directors of DSET.

In discussing the fairness of the merger to shareholders of ISPSoft,
ISPSoft's board of directors took into account these interests. These interests
are different from and in addition to your and their interests as shareholders.

As of October 31, 2001, directors and executive officers of ISPSoft and
their affiliates as a group owned approximately 54% of the outstanding shares of
ISPSoft capital stock.

THE MERGER WILL BE ACCOUNTED FOR UNDER
THE PURCHASE METHOD OF ACCOUNTING
(SEE PAGE 59)

We expect the merger to be accounted for in accordance with accounting
principles generally accepted in the United States of America under the purchase
method of accounting for a business combination, with DSET being deemed to have
acquired ISPSoft.

THE MERGER IS INTENDED TO BE A REORGANIZATION
FOR FEDERAL INCOME TAX PURPOSES
(SEE PAGE 59)

The parties intend the merger to qualify as a reorganization under Section
368(a) of the Internal Revenue Code. Provided that the merger so qualifies, an
ISPSoft shareholder generally will recognize no gain or loss for United States
federal income tax purposes upon the receipt of shares of DSET common stock for
shares of ISPSoft stock in the merger. An ISPSoft shareholder may recognize
taxable gain, however, if cash or other non-stock payments are received by such
shareholder in exchange for ISPSoft stock in the merger. As explained more fully
below in the Material Federal Income Tax Considerations section, under certain
circumstances, the merger may not qualify as a reorganization under Section
368(a) of the Internal Revenue Code. If the merger does not qualify as a
reorganization, then an ISPSoft shareholder will recognize taxable gain or loss
with respect to the shares of DSET common stock, including escrowed shares and
any additional shares of DSET common stock that become payable after net revenue
milestones have been achieved, as set forth below, and any non-stock payments
payable in exchange for the shareholder's shares of ISPSoft stock.

The potential net revenue milestone payments referenced above and
aggregating as much as $1,000,000 will be paid by DSET pursuant to the following
schedule, and will be paid in cash and/or shares of DSET common stock, at DSET's
discretion, provided, however, that DSET may be required to issue shares of
common stock and not pay cash in order to preserve the status of the transaction
as a reorganization, and provided further, that DSET will in any event be
required to pay cash and not issue shares of common stock in order to avoid any
share issuance that would result in the current holders of ISPSoft capital stock
holding 50% or more of the outstanding shares of DSET:

<Page>

Tax matters are very complicated, and the tax consequences of the merger to
an ISPSoft shareholder will depend on the shareholder's individual
circumstances. See the discussion of Material United States Federal Income Tax
Considerations below. ISPSOFT SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM.

ISPSOFT SHAREHOLDERS' RIGHT TO RECEIVE FAIR VALUE FOR THEIR SHARES
(SEE PAGE 66)

Under New Jersey law, ISPSoft shareholders who do not vote in favor of the
merger and who comply with notice requirements and other procedures will have
the right to receive the 'fair value' of their shares in cash rather than the
shares of DSET common stock specified in the merger agreement. 'Fair value' will
be determined by a New Jersey court and may be more than, the same as, or less
than the value of the consideration to be paid to other ISPSoft shareholders.
Merely voting against the merger will not protect your rights to an appraisal.
Failure to follow all the steps required by New Jersey law will result in the
loss of your rights to appraisal. The New Jersey law requirements for exercising
appraisal rights are described in further detail on pages 66 to 69. In addition
to reading 'Appraisal Rights,' see Annex D, which contains a copy of the New
Jersey statute governing appraisal rights.

HOW THE RIGHTS OF ISPSOFT SHAREHOLDERS WILL DIFFER AS A DSET SHAREHOLDER
(SEE PAGE 147)

The rights of ISPSoft shareholders after the merger will be governed by
DSET's charter and bylaws. Those rights differ from rights of ISPSoft
shareholders under ISPSoft's charter and bylaws.

RISKS OF THE MERGER TO SHAREHOLDERS OF ISPSOFT AND DSET
(SEE PAGE 20)

In considering whether to approve the merger, the merger agreement and the
issuance of shares in connection with the merger, you should consider certain
risks of the merger, including the risk of fluctuations in the market price of
DSET common stock, risks associated with the merger and integrating the
companies' businesses and the fact that certain directors and officers of DSET
and ISPSoft may have interests in the merger that are different from, or in
addition to, yours. We urge you to read carefully all of the factors described
in 'Risk Factors' on pages 20 to 34 before voting.

DSET COMMON STOCK PRICE INFORMATION
(SEE PAGE 35)

Shares of DSET common stock are listed on the Nasdaq National Market. On
June 26, 2001, DSET common stock closed at $0.670 ($2.68 on a post reverse stock
split basis) per share and we publicly announced the proposed merger after the
close of trading on such date. On December 7, 2001, DSET common stock closed at
$1.02 per share.

We are unable to provide information with respect to the market prices of
the ISPSoft stock because there is no established trading market for shares of
ISPSoft stock.

REVERSE STOCK SPLIT OF DSET'S COMMON STOCK

On August 14, 2001, DSET announced the approval a reverse one-for-four stock
split effective as of the close of business on August 21, 2001, pursuant to
which one new share of DSET

<Page>

common stock would be issued in exchange for every four shares of DSET common
stock then outstanding. In connection with such reverse stock split
recapitalization, DSET reduced its authorized common stock from 40 million
shares to 10 million shares. After the one-for-four reverse split, DSET had
approximately 2.9 million shares of common stock outstanding.

DSET had received a notice on July 9, 2001 from Nasdaq indicating that it
faced the possibility of delisting from the National Market System because its
common stock had not maintained a minimum bid price of $1.00 over the preceding
30 consecutive trading days. DSET's board of directors effected such reverse
stock split recapitalization in order to raise the minimum bid price of its
common stock. Nasdaq formally notified the Company on September 7, 2001 that the
Company had regained compliance. On September 27, 2001, Nasdaq announced that
its Board of Directors authorized the suspension of the minimum bid and public
float listing requirements effective immediately until January 2, 2002.

DSET cannot be certain that the minimum bid price of its common stock will
maintain compliance with Nasdaq's continued listing requirement and you should
review the Risk Factor entitled 'The liquidity of our common stock could be
adversely affected if we are delisted from the Nasdaq National Market,' on
page 26 hereof.

Unless otherwise indicated, each of the per share amounts for DSET's common
stock set forth in this joint proxy statement/prospectus have been revised to
reflect such one-for-four reverse stock split recapitalization.

DSET'S STOCK REPURCHASE PLAN

DSET's board of directors approved a Stock Repurchase Plan on August 15,
2001 whereby DSET may repurchase up to 200,000 shares of common stock (on a post
reverse stock split basis). Several factors were considered by the board of
directors prior to approving the repurchase plan, including the potential
dilution of current shareholders from the issuance of shares of DSET's common
stock pursuant to DSET's employee stock purchase plan. The Stock Repurchase Plan
will be funded using DSET's working capital and funds provided by employees in
connection with the employee stock purchase plan. The Stock Repurchase Plan
program may be suspended or discontinued at any time.

DSET implemented the Stock Repurchase Plan by executing an agreement with
Kaufman Bros., L.P. on August 29, 2001. The first repurchase of shares of
outstanding common stock occurred on August 30, 2001 and DSET continues to
administer this program. DSET has entered into a second brokerage arrangement
(Legg Mason Wood Walker Incorporated) to divide the repurchases. As of
December 7, 2001, DSET had repurchased 150,200 shares of common stock. All
shares repurchased are held as treasury shares, not deemed to be outstanding and
available for reissuance.

FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
(SEE PAGE 34)

DSET has made forward-looking statements in this document that are subject
to risks and uncertainties. Forward-looking statements include the information
concerning possible or assumed future results of operations of DSET, including
the anticipated revenue enhancements from the merger. Also, when we use words
such as 'believes,' 'expects,' 'anticipates' or similar expressions, we are
making forward-looking statements. Shareholders should note that many factors
could affect the future financial results of DSET and ISPSoft, and could cause
these results to differ materially from those expressed in our forward-looking
statements. These factors include, but are not limited to, the following:

the risk that the combined company is unable to achieve the anticipated
cost savings and revenue enhancements;

<Page>

the risk that the combined company encounters greater than expected costs
and difficulties related to the integration of the businesses of DSET and
ISPSoft;

the risk that customers of DSET and ISPSoft may delay or cancel orders;

the risk that loss of key DSET or ISPSoft personnel could make it difficult
to complete existing projects and undertake new projects;

the risk that DSET and ISPSoft have each incurred substantial losses,
expect to incur additional losses and will not be successful until the
combined company reverses this trend, if at all;

the risk that DSET may not be able to obtain substantial additional
financing;

the risk of economic, political and competitive forces affecting our
businesses; and

the risk that our analyses of these risks and forces could be incorrect
and/or that the strategies developed to address them could be unsuccessful.

<Page>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF DSET

The annual financial information set forth below has been derived from the
audited consolidated financial statements of DSET. The data for the nine-month
periods ended September 30, 2001 and 2000 have been derived from the unaudited
consolidated financial statements of DSET. The information should be read in
connection with, and is qualified in its entirety by reference to DSET's
financial statements and the notes incorporated by reference elsewhere in this
joint proxy statement/prospectus. The interim data reflect all adjustments that,
in the opinion of management of DSET, are necessary to present fairly such
information for the interim periods. The results of operations for the
nine-month periods are not necessarily indicative of the results expected for a
full year or any interim period.

<Table>
<Caption>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ -------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
License revenues................................... $ 7,005 $10,850 $16,338 $24,084 $ 32,851 $30,090 $ 2,337
Service revenues................................... 6,111 8,515 12,952 20,545 14,191 11,609 5,710
Total revenues........................................ 13,116 19,365 29,290 44,629 47,042 41,699 8,047
Cost of revenues:
License revenues................................... 133 1,274 1,775 1,823 3,991 3,251 1,157
Service revenues................................... 2,149 3,405 3,692 7,063 11,131 8,121 4,639
Total cost of revenues................................ 2,282 4,679 5,467 8,886 15,122 11,372 5,796
Gross profit.......................................... 10,834 14,686 23,823 35,743 31,920 30,327 2,251
Operating expenses:
Sales and marketing................................ 4,243 4,872 9,143 11,972 12,130 9,502 5,952
Research and development........................... 1,328 3,299 6,237 11,046 18,467 12,491 8,595
General and administrative......................... 2,381 2,881 2,708 4,121 6,925 4,303 4,384
Bad debts and other charges........................ 12 114 50 665 13,378 5,793 987
Amortization of goodwill and other intangibles..... -- 22 38 200 419 312 273
Restructuring and other charges.................... -- -- -- -- 2,248 -- 14,789
Total operating expenses.............................. 7,964 11,188 18,176 28,004 53,567 32,401 34,980
Net operating income (loss)........................... 2,870 3,498 5,647 7,739 (21,647) (2,074) (32,729)
Net income (loss)..................................... $ 2,013 $ 2,469 $ 4,794 $ 6,517 $(18,812) $ (159) $(31,644)
Net income (loss) per common share.................... $ 1.46 $ 1.80 $ 2.13 $ 2.50 $ (6.61) $ (0.06) $ (10.90)
Weighted average number of common shares outstanding.. 827 892 2,253 2,606 2,847 2,826 2,903
Net income (loss) per common share assuming dilution.. $ 1.09 $ 1.18 $ 1.74 $ 2.36 $ (6.61) $ (0.06) $ (10.90)
Weighted average number of common shares and common
equivalent shares outstanding........................ 1,848 2,087 2,761 2,767 2,847 2,826 2,903
CONSOLIDATED BALANCE SHEET DATA (AT PERIOD END):
Cash, cash equivalents and marketable securities...... $ 1,778 $ 3,206 $45,023 $40,158 $ 35,075 $39,452 $ 18,365
Working capital....................................... 4,284 6,276 49,037 53,878 35,293 51,319 10,596
Total assets.......................................... 7,445 13,315 56,854 73,495 61,183 79,937 26,506
Long-term debt including capital leases, net of current
portion.............................................. -- 332 112 1,872 833 867 319
Redeemable convertible preferred stock................ 10,744 11,604 -- -- -- -- --
Shareholders' equity (deficit)........................ $(5,410) $(3,401) $51,189 $61,523 $ 47,717 $66,048 $ 15,740
</Table>

IN MARCH 1998, DSET COMPLETED ITS INITIAL PUBLIC OFFERING AND RECEIVED
PROCEEDS OF $37.2 MILLION. AT THAT TIME ALL PREFERRED STOCK WAS CONVERTED TO
COMMON STOCK.

ON AUGUST 8, 2001 THE BOARD OF DIRECTORS OF DSET DECLARED A ONE-FOR-FOUR
REVERSE STOCK SPLIT TO HOLDERS OF RECORD AS OF THE CLOSE OF TRADING AUGUST 21,
2001. ALL REFERENCES TO NUMBER OF SHARES AND PER SHARE INFORMATION IN THIS
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF DSET HAVE BEEN
ADJUSTED TO REFLECT THE STOCK SPLIT ON A RETROACTIVE BASIS.

DURING THE QUARTER ENDED SEPTEMBER 30, 2001, THE COMPANY RECORDED A PRE-TAX
RESTRUCTURING CHARGE OF APPROXIMATELY $4.6 MILLION FOR FIXED ASSET WRITE-OFFS,
LEASE WRITE-DOWNS, CONSOLIDATION OF OFFICE SPACE AND ASSET IMPAIRMENT OF CERTAIN
INTANGIBLE ASSETS BASED ON MANAGEMENT'S DECISION TO REDUCE OPERATIONS DUE TO THE
CONTINUING DETERIORATION OF MARKET CONDITIONS FOR DSET'S GATEWAY PRODUCTS. IN
ADDITION, A HEADCOUNT REDUCTION OF SIXTY EMPLOYEES WAS ANNOUNCED ON OCTOBER 3,
2001. ASSOCIATED SEVERANCE COSTS FOR EMPLOYEES OF APPROXIMATELY $700,000 WILL BE
AN EXPENSE FOR THE QUARTER ENDING DECEMBER 31, 2001 IN ACCORDANCE WITH STANDARDS
ESTABLISHED BY THE FINANCIAL ACCOUNTING STANDARDS BOARD'S EMERGING ISSUES TASK
FORCE, ISSUE NO. 94-3.

AS OF DECEMBER 7, 2001, DSET HAD REPURCHASED 150,200 SHARES OF ITS COMMON
STOCK.

<Page>
SELECTED HISTORICAL FINANCIAL INFORMATION OF ISPSOFT

The annual financial information set forth below has been derived from the
audited financial statements of ISPSoft. The data for the nine-month periods
ended September 30, 2001 and 2000 have been derived from the unaudited financial
statements of ISPSoft. The information should be read in connection with, and is
qualified in its entirety by reference to ISPSoft's financial statements and
notes included elsewhere in this joint proxy statement/prospectus. The interim
data reflect all adjustments that, in the opinion of management of ISPSoft, are
necessary to present fairly such information for the interim periods. The
results of operations for the nine-month periods are not necessarily indicative
of the results expected for a full year or any interim period. ISPSoft was
incorporated on March 30, 1999. Accordingly, no financial information prior to
March 31, 1999 is available.

<Table>
<Caption>
NINE MONTHS
PERIODS ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- -----------------
1999 2000 2000 2001
---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
General and administrative expenses...................... $ -- $ 1,294 $ 711 $ 2,017
Research and development expenses........................ 1,057 1,705 1,037 2,319
Loss from operations..................................... (1,057) (2,999) (1,748) (4,336)
Interest income (loss)................................... -- 87 62 (103)
Net (loss)............................................... $(1,057) $(2,912) $(1,686) $(4,439)
Dividends................................................ -- (227) (144) (256)
Net (loss) applicable to common shareholders............. $(1,057) $(3,139) $(1,830) $(4,695)
Net (loss) per common share -- basic and diluted......... $(10.57) $ (0.46) $ (0.27) $ (0.71)
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents................................ $ 23 $ 394 $ 1,665 $ 133
Working capital.......................................... 73 2 1,338 (4,420)
Total assets............................................. 84 786 1,957 555
Preferred stock.......................................... 1,200 5,200 5,200 5,200
Shareholders' equity (deficit)........................... 78 (3,688) (2,407) (8,027)
</Table>

NOTE: ISPSOFT HAS NOT HAD ANY REVENUES FROM ITS DATE OF INCEPTION TO
SEPTEMBER 30, 2001.

<Page>
SUMMARY UNAUDITED PRO FORMA INFORMATION

The following table summarizes unaudited pro forma information of DSET,
presented elsewhere in this joint proxy statement/prospectus, reflecting the
completion of the merger with ISPSoft assuming the merger had been effective for
the periods indicated. DSET will account for this transaction using the purchase
method of accounting.

The summary unaudited pro forma information is not necessarily indicative of
the results of operations or financial position that would have been reported if
the merger actually occurred on the dates indicated, nor is the information
necessarily indicative of the future operating results or financial position of
the combined company.

The summary unaudited pro forma condensed combined information is derived
from the unaudited pro forma financial statements and related notes included
elsewhere in this joint proxy statement/prospectus, which you should read in
their entirety.

<Table>
<Caption>
UNAUDITED UNAUDITED
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 2000 SEPTEMBER 30, 2001
----------------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA STATEMENT OF OPERATIONS DATA:
Total revenues............................................ $ 47,042 $ 8,047
Total cost of revenues.................................... 15,122 5,796
Total operating expenses.................................. 57,080 39,454
Net (loss)................................................ $(22,443) $(36,374)
Net (loss) per share-basic and diluted.................... $ (4.38) $ (7.02)
PRO FORMA BALANCE SHEET DATA (AT PERIOD END):
Cash, cash equivalents and marketable securities.......... $ 16,149
Working capital........................................... 4,716
Total assets.............................................. 37,481
Long-term debt including capital leases, net of current
portion................................................. 324
Shareholders' equity...................................... 22,467
</Table>

ON AUGUST 8, 2001 THE BOARD OF DIRECTORS OF DSET DECLARED A ONE-FOR-FOUR
REVERSE STOCK SPLIT TO HOLDERS OF RECORD AS OF THE CLOSE OF TRADING AUGUST 21,
2001. ALL REFERENCES TO NUMBER OF SHARES AND PER SHARE INFORMATION IN THIS
SUMMARY UNAUDITED PRO FORMA INFORMATION HAVE BEEN ADJUSTED TO REFLECT THE STOCK
SPLIT ON A RETROACTIVE BASIS.

<Page>
COMPARATIVE PER SHARE DATA

The following table summarizes certain unaudited historical per share data
for DSET and ISPSoft and the combined per share data on an unaudited pro forma
basis after giving effect to the merger using the purchase method of accounting.
You should read the information below along with the historical financial data
and the unaudited pro forma financial data included elsewhere in this joint
proxy statement/prospectus. Neither DSET nor ISPSoft has ever declared any cash
dividends.

We have used the following calculations in deriving the per share data:

Book value per share is computed by dividing total shareholders' equity by
the weighted average number of shares outstanding.

DSET pro forma combined book value per share is computed by dividing pro
forma shareholders' equity by the pro forma weighted average number of
shares of DSET common stock which would have been outstanding had the
merger been consummated as of each balance sheet date.

ISPSoft equivalent pro forma combined amounts are calculated by multiplying
the DSET pro forma combined per share amounts and book value by the
applicable exchange ratios.

<Table>
<Caption>
AT AND FOR THE
NINE MONTHS
AT AND FOR THE ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 2000 2001
----------------- ----

HISTORICAL -- DSET:
Net loss per share -- basic and diluted..................... $(6.61) $(10.90)
Book value per share........................................ 16.42 5.67
HISTORICAL -- ISPSOFT:
Net loss per share -- basic and diluted..................... (0.46) (0.71)
Book value per share........................................ (0.54) (1.21)
PRO FORMA COMBINED -- PER DSET SHARE:
Net loss per share -- basic and diluted..................... (4.38) (7.02)
Book value per share........................................ 11.46 4.33
EQUIVALENT PRO FORMA COMBINED -- PER ISPSOFT SHARE:
Net loss per share -- basic and diluted..................... (0.38) (0.62)
Book value per share........................................ 1.00 0.38
</Table>

ON AUGUST 8, 2001 THE BOARD OF DIRECTORS OF DSET DECLARED A ONE-FOR-FOUR
REVERSE STOCK SPLIT TO HOLDERS OF RECORD AS OF THE CLOSE OF TRADING AUGUST 21,
2001. ALL REFERENCES TO NUMBER OF SHARES AND PER SHARE INFORMATION IN THIS
COMPARATIVE PER SHARE DATA HAVE BEEN ADJUSTED TO REFLECT THE STOCK SPLIT ON A
RETROACTIVE BASIS.

<Page>
RISK FACTORS

You should carefully consider the following risk factors relating to the
merger before you decide whether to vote to approve and adopt the merger
agreement and the proposed issuance of DSET common stock in connection with the
merger. You should also consider the other information incorporated by reference
and included in this joint proxy statement/prospectus and the additional
information in DSET's other reports on file with the Securities and Exchange
Commission. See 'Where You Can Find More Information' on page 159.

RISKS RELATING TO THE MERGER

FAILURE TO CONSUMMATE THE MERGER COULD NEGATIVELY IMPACT DSET AND ITS STOCK
PRICE

If the merger is not consummated for any reason, DSET may be subject to a
number of material risks. For example, the price of DSET's common stock may
decline to the extent that the current market price of DSET's common stock
reflects an assumption by investors that the merger will be completed.
Furthermore, since DSET has restructured its organization to focus on the market
for software solutions that automate the provisioning of Internet Protocol
(IP)-based services, in the event the merger is not consummated, other parties
may enter into strategic relationships with or acquire ISPSoft which could
impede DSET's ability to access ISPSoft's technology. Also, the costs incurred
by DSET related to the merger, including legal and accounting fees, and
financial advisory fees, must be paid even if the merger is not consummated. In
addition, in the event the merger agreement is terminated through certain faults
of DSET, DSET may be required to pay ISPSoft a $2,000,000 termination fee.

INTEGRATING ISPSOFT INTO DSET WILL BE CHALLENGING AND THE COMBINED COMPANY MAY
NOT REALIZE THE EXPECTED BENEFITS OF THE ANTICIPATED MERGER

The merger involves the integration of two different companies that have
previously operated independently. Integrating DSET's operations, technologies
and personnel with those of ISPSoft will be a complex process, and it is
uncertain whether the integration will be completed rapidly or that after the
integration the combined company will achieve the expected benefits of the
merger. Importantly, ISPSoft has never operated as a publicly-held company, and
will now be subject to rigorous disclosure and reporting obligations. The
diversion of the attention of management and any difficulties encountered in the
process of combining our companies could lead to possible unanticipated
liabilities and costs and cause the disruption of, or a loss of momentum in, the
business activities of the combined company. The combined company will be forced
to operate in multiple locations in various states. Further, the process of
combining our companies could create uncertainty among employees about their
future roles with DSET, thereby negatively affecting employee morale. This
uncertainty may adversely affect the ability of the combined company to retain
some of its key employees after the merger. Furthermore, the management of the
combined company will have to establish a new organizational structure that is
cost efficient and productive. As a consequence, we cannot assure you that we
will successfully integrate ISPSoft or profitably manage the combined company.
In addition, we cannot be certain that, following the transaction, the combined
company will achieve revenues, net income, efficiencies or synergies that
justify the merger or that the merger will result in increased earnings for the
combined company in any future period.

SIGNIFICANT MERGER-RELATED CHARGES AGAINST EARNINGS WILL INCREASE DSET'S LOSSES
IN THE QUARTER IN WHICH THE MERGER IS CONSUMMATED AND DURING THE POST-MERGER
INTEGRATION PERIOD

DSET expects to incur charges of approximately $1.7 million in connection
with the merger. The charges include legal, accounting and financial advisory
fees and other integration costs. These costs may be higher than anticipated. In
addition, DSET may incur other additional unanticipated merger costs. Some of
these nonrecurring costs will be charged to operations in the fiscal quarter in
which the merger is consummated, thereby increasing expenses for such quarter,
while others will be expensed as incurred during the post-merger integration
period. Furthermore, upon

<Page>
determining the final purchase price allocation, DSET may be required to assign
a significant portion of its consideration to in process research and
development (IPR&D) costs. This would result in a charge to earnings in the
first quarter in which the merger is consummated.

CUSTOMERS OF DSET AND ISPSOFT WHO ARE CONCERNED ABOUT THE VIABILITY OR
INTEGRATION OF THE COMBINED COMPANY MAY DELAY OR CANCEL ORDERS

The announcement and closing of the merger could cause customers and
potential customers of DSET and ISPSoft to delay or cancel orders for products
and/or services as a result of customer concerns and uncertainty over the
evolution, integration and support of DSET's or ISPSoft's products and services.
A delay or cancellation of orders could have a material adverse effect on the
business of DSET, ISPSoft and/or the combined company.

EXCEPT FOR CONSIDERATION WITH RESPECT TO NET REVENUE MILESTONE PAYMENTS, THE
NUMBER OF SHARES ISPSOFT SHAREHOLDERS AND OPTIONHOLDERS WILL RECEIVE IN THE
MERGER IS FIXED AND THE VALUE OF SUCH FIXED SHARES COULD DECREASE

Except for consideration with respect to net revenue milestone payments, as
set forth below, the number of shares ISPSoft shareholders will receive in
connection with the merger will be fixed even if the DSET stock price changes.
All outstanding ISPSoft capital stock will be converted into an aggregate of up
to 2,519,735 shares of DSET common stock issuable in the merger (including
shares of DSET common stock being issued to holders of ISPSoft Series B
preferred stock) and the assumption by DSET of all outstanding stock options,
both vested and unvested, granted under ISPSoft's 2000 Stock Plan prior to the
merger. The number of shares of DSET common stock issued in the merger or upon
the exercise of assumed options will not be adjusted in the event of changes in
the price of DSET common stock. In addition, ISPSoft may not terminate the
merger agreement solely because of a change in the stock price of DSET.
Consequently, if the market price of DSET common stock decreases, the value of
the consideration that ISPSoft shareholders and optionholders will receive in
connection with the merger will decrease.

an aggregate of $250,000 shall be paid on or before January 1, 2002 if ,
prior to the closing of the merger, ISPSoft has achieved more than $500,000
in recognized revenues, net of related returns at any time, for sales of
certain ISPSoft products or services;

an aggregate of $500,000 shall be paid on or before September 30, 2002, if,
for the period beginning January 1, 2002 through June 30, 2002, the
combined company achieves more than $4,000,000 in recognized revenues, net
of related returns at any time, for sales of certain ISPSoft products or
services.

<Page>
ISPSOFT SHAREHOLDERS MAY FORFEIT UP TO TEN PERCENT OF THE DSET SHARES ISSUED IN
CONNECTION WITH THE MERGER IF THEY ARE REQUIRED TO INDEMNIFY DSET

ISPSoft shareholders risk forfeiture of up to ten percent of the DSET shares
issued in connection with the merger before those shares are received by them.
In connection with the merger, DSET will place ten percent of the shares of DSET
common stock to be issued in the merger into an escrow account. All of the
shares held in escrow will be available to DSET to satisfy the indemnification
obligations of the ISPSoft shareholders. ISPSoft shareholders may not receive
any of the escrowed shares since they may be required to indemnify DSET under
the terms of the merger agreement.

BECAUSE ISPSOFT SHAREHOLDERS ARE SUBJECT TO A LOCK-UP PERIOD, ISPSOFT
SHAREHOLDERS RISK A LOSS IN VALUE OF THE DSET COMMON STOCK ISSUED IN CONNECTION
WITH THE MERGER BEFORE THOSE SHARES CAN BE SOLD

The shares of DSET common stock issuable in connection with the merger, are
subject to a six month lock-up period. Twenty percent of these shares may be
sold beginning 60 days following the effective time of the merger and an
additional twenty percent of the shares may be sold each 30 days after such 60th
day. There is a risk that the value of the DSET shares issued in the merger will
decline before those shares are released from the lock-up.

BECAUSE THE TAX CONSEQUENCES OF THE MERGER ARE UNCERTAIN AND THE MERGER MAY
THEREFORE RESULT IN TAX TO CERTAIN ISPSOFT SHAREHOLDERS, AND BECAUSE ISPSOFT
SHAREHOLDERS ARE SUBJECT TO A LOCK-UP PERIOD WITH RESPECT TO THE DSET COMMON
STOCK ISSUED IN CONNECTION WITH THE MERGER, ISPSOFT SHAREHOLDERS MAY BE REQUIRED
TO PAY TAX INCURRED IN CONNECTION WITH THE MERGER BEFORE THE DSET COMMON STOCK
CAN BE SOLD

Counsel to DSET and ISPSoft can provide no greater assurance than that the
merger more likely than not will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, and such opinion of counsel is
based on several assumptions set forth on pages 63 and 64 of this joint proxy
statement/prospectus, some of which may or may not be true as of the closing
date. In order to avoid federal income tax with respect to the merger, those
ISPSoft shareholders who would otherwise recognize gain upon the exchange of
their ISPSoft stock for the merger consideration must exchange their ISPSoft
stock in a transaction qualifying as a reorganization under Section 368 of the
Internal Revenue Code. For the merger to qualify as a reorganization, the fair
market value of the DSET common stock received in the aggregate by ISPSoft
shareholders must constitute a substantial portion of the total merger
consideration received by all ISPSoft shareholders as described in the section
entitled 'Material United States Federal Income Tax Considerations' on page 64
of this joint proxy statement/prospectus. However, except for merger
consideration received in connection with certain net revenue milestones
payments as described on page 6 of this joint proxy statement/prospectus, the
number of shares ISPSoft shareholders will receive in connection with the merger
will be fixed even if the DSET common stock price changes, and therefore the
value of the consideration that ISPSoft shareholders receive and the resulting
proportion of merger consideration consisting of DSET common stock may decrease.
If the merger does not constitute a reorganization and is therefore a taxable
transaction, those ISPSoft shareholders recognizing gain may be obligated to pay
tax in connection with the merger. As discussed in the immediately preceding
risk factor regarding the lock-up period, the DSET common stock issuable in
connection with the merger is subject to a lock-up period and may not be sold
prior to the expiration of certain periods of time. Consequently, those ISPSoft
shareholders obligated to pay tax in connection with the merger may not be able
to sell DSET common stock in order to pay the tax at the time the tax is due,
and the fair market value of the DSET common stock may decrease during the
lock-up period such that a subsequent sale of the stock generates insufficient
proceeds to discharge the related tax.

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IN OUR COMPETITIVE MARKETS, POTENTIAL CUSTOMERS MAY CHOOSE COMPETITORS BECAUSE
WE ARE SELLING A NEW PRODUCT IN A NEW LINE OF BUSINESS, WHICH WOULD REDUCE OUR
ABILITY TO INCREASE OUR REVENUES

The success of our combined business will depend upon the willingness of
Internet Protocol (IP) service providers to accept us as a new provider of
provisioning and management applications. While we believe that our customer
marketing efforts, including targeted customer trials of our products and
services, will help us to develop products and services that are attractive to
potential customers, we cannot assure you that we will be successful in
overcoming any such resistance nor can we assure you that customers will buy our
products and services. A lack of customer acceptance would reduce our ability to
increase our revenues and would adversely affect our business. Potential
competition to our combined business will come from four categories of industry
segments. The first class of competitors is the equipment vendors, such as
Cisco, Nortel and Lucent. These vendors typically provide some management tools
with their equipment that would compete with our multi-vendor products. The
second group of competitors is the third-party established operations support
systems vendors such as Eftia, Vitria and Telecordia, each of whom could
leverage their existing markets to move into those markets targeted by us. New
entrants to the marketplace that we will target include Orchestream, Dorado,
Syndesis and Goldwire. Competition will also come from in-house systems that
various large service providers such as MCI Worldcom and AT&T have built for
internal use.

RISKS RELATED TO THE BUSINESS AND STRATEGY OF THE COMBINED COMPANY

DSET AND ISPSOFT HAVE EACH INCURRED SUBSTANTIAL LOSSES IN THE PAST, EXPECT TO
CONTINUE TO INCUR ADDITIONAL LOSSES IN THE FUTURE AND WILL NOT BE SUCCESSFUL
UNTIL THE COMBINED COMPANY REVERSES THIS TREND

DSET recently, and ISPSoft since inception, has incurred substantial losses.
The combined company expects to incur operating losses for the foreseeable
future.

Changes in the telecommunications industry have resulted in significant
decreases in DSET's revenue. For the year-end December 31, 2000 and for the nine
months ended September 30, 2001, DSET incurred net losses of approximately $18.8
million and $31.6 million, respectively.

The combined company expects to increase its spending significantly as the
combined company continues to expand its product offerings and commercialization
activities. The combined company will be dependent, in part, on the return of
the market for OSS interconnection products and services. As a result, the
combined company will need to generate significant revenues before it will be
able to achieve profitability.

ISPSoft's products and services are still in the development stage. ISPSoft
recently announced the commercial availability of its UPX product line and NCX
Router Management. Because of its limited operating history, ISPSoft has not had
an opportunity to test these products in the market. As a result, you have no
basis on which to evaluate whether the market will embrace these products, nor
do you have any basis to evaluate whether ISPSoft will be able to effectively
develop, market and sell additional products and services. A lack of customer
acceptance of ISPSoft's newly developed products and any future products would
substantially harm the combined company's business.

WE WILL REQUIRE SUBSTANTIAL FINANCING TO CONTINUE OPERATIONS OF THE COMBINED
BUSINESS, WHICH MAY BE DIFFICULT TO OBTAIN AND MAY DILUTE YOUR OWNERSHIP
INTEREST IN US

We will need significant financing to grow our combined business.
Historically, DSET has operated with cash from its initial public offering and
revenue from operations. Such cash balance and operating revenues have decreased
substantially over the past 12 months. The ability of ISPSoft to contribute to
operating revenues is uncertain, as it has had no operating revenues to date.
Based on our plan, which contemplates the merger with ISPSoft and the resulting
cash requirements for operations, we believe that our existing available cash
and marketable securities

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may not be adequate to satisfy current and planned operations for the next 12
months. Additionally, we expect that we will require additional financing prior
to our return to profitability.

If we cannot raise more funds, we could be required to reduce our capital
expenditures, scale back our research and product developments, reduce our
workforce and license to others products or technologies we would otherwise seek
to commercialize ourselves.

We may seek additional funding through collaborative arrangements, borrowing
money and by the sale of additional equity securities. Any sales of additional
equity securities are likely to result in further dilution to our then existing
shareholders. Further, if we issue additional equity securities, the new equity
securities may have rights, preferences or privileges senior to those of
existing holders of our common stock. Alternatively, we may borrow money from
conventional lenders, possibly at high interest rates, which may affect the
value of your holdings. Despite our efforts, funding may not be available to us
at all or only on terms that are unacceptable to us. We also could be required
to seek funds through arrangements with collaborative partners or others that
may require us to relinquish rights to certain of our technologies, product
candidates or products which we would otherwise pursue on our own.

OUR LACK OF OPERATING HISTORY IN PROVIDING PROVISIONING AND MANAGEMENT
APPLICATIONS AND SERVICES MAKES EVALUATING OUR FUTURE PERFORMANCE DIFFICULT

Historically, DSET developed and sold software tools, applications, gateways
and services to telecommunications equipment suppliers and competitive
telecommunications service providers. ISPSoft's products and services, although
software applications, perform different functions than DSET's products. They
are targeted at large incumbent communications providers and network providers,
and, in part, at DSET's traditional customer base. In addition, ISPSoft as a
development stage company has no operating history of selling its products to
this customer base. Because collectively we have not previously operated as a
provider of IP provisioning and management applications, you have no basis to
evaluate our ability to develop, market and sell such products. Our ability to
commercialize these products and services and generate operating profits and
positive operating cash flow will depend principally upon our ability to:

attract and retain an adequate number of customers;

enter new markets and compete successfully in them;

manage operating expenses;

raise additional capital to fund our capital expenditure plans; and

attract and retain qualified personnel.

WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER INTELLECTUAL
PROPERTY PROCEEDINGS WHICH COULD RESULT IN LIABILITY FOR DAMAGES OR STOP OUR
DEVELOPMENT AND COMMERCIALIZATION EFFORTS

We may become a party to patent litigation or other proceedings regarding
intellectual property rights.

Other types of situations in which we may become involved in patent
litigation or other intellectual property proceedings include:

we may initiate litigation or other proceedings against third parties to
enforce our patent rights;

we may initiate litigation or other proceedings against third parties to
seek to invalidate the patents held by these third parties or to obtain a
judgment that our products or services do not infringe the patents of these
third parties;

if our competitors file patent applications that claim technology also
claimed by us, we may participate in interference or opposition proceedings
to determine the priority of invention; and

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if third parties initiate litigation claiming that our processes or
products infringe their patents or other intellectual property rights, we
will need to defend against these claims.

The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. DSET maintains insurance coverage
to assist in defraying the costs and potential losses associated with defending
actions for intellectual property claims. We do not maintain insurance coverage
for actions commenced by DSET. Some of our competitors may be able to sustain
the cost of litigation or proceedings more effectively than we can because of
their substantially greater financial resources. If a patent litigation or other
intellectual property proceeding is resolved unfavorably to us, we may be
enjoined from selling our products and services without a license from the other
party and be held liable for significant damages. We may not be able to obtain
any required license on commercially acceptable terms or at all.

Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace and, therefore, to become profitable.
Patent litigation and other proceedings may also divert significant management
time away from growing our business.

RISKS RELATING TO DSET

THERE ARE A NUMBER OF FACTORS WHICH MAY CAUSE SUBSTANTIAL VARIABILITY IN OUR
QUARTERLY OPERATING RESULTS

DSET's revenue, gross profit, operating income and net income may vary
substantially from quarter to quarter due to a number of factors. Many factors,
some of which are not within our control, may contribute to fluctuations in
operating results. These factors include the following:

market acceptance of the 'Pay As You Grow' and Rental Program plans (see
page 94 for a discussion of these strategies);

timing and levels of hardware and software purchases by customers;

budgetary constraints of our customers;

consolidation within our target markets, such as with competitive local
exchange carriers (CLECs), via merger, acquisition or cessation of
business;

timing, size and stage of application development projects;

new product and service introductions by us or our competitors;

seasonal impact on projects for customers;

our hiring patterns;

costs associated with fixed-price contracts;

market factors affecting the availability or costs of qualified technical
personnel;

timing and customer acceptance of our new product and service offerings;

length of sales cycle;

variations in revenues from our distributors and partners;

costs related to acquisitions of technology or businesses; and

industry and general economic conditions.

Historically, our revenue is higher in the fourth quarter due to capital
budgeting and spending patterns by customers. In 2000, this was not the case.
The fourth quarter of 2000 was our lowest revenue quarter for that year.
Revenues for the third quarter of 2001 were approximately $2.0 million. It is
anticipated that the business will continue to be subject to seasonal
variations. In addition, a significant portion of quarterly revenue is
recognized in the last few weeks of the last month of each quarter. As a result,
we may not recognize any negative fluctuations in revenue until the end of a
particular quarter.

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Many of our costs, such as personnel and facilities costs, are relatively
fixed in nature. Expense levels are based in part on expectations of future
revenue. As a result, operating results have been and in the future will
continue to be impacted by changes in technical personnel cost and utilization
rates. Technical personnel utilization rates have been and are expected to
continue to be adversely affected during periods of rapid and concentrated
hiring. In addition, during such periods, we are likely to incur greater
technical training costs. Due to these and other factors, if we are successful
in expanding our service offerings and revenue, periods of variability in
utilization are likely to occur. In addition, revenues in any given period are
likely to come from a limited number of customer contracts. Any delay in the
closing of, or the loss of any number of, such contracts would adversely affect
results of operations. Therefore, past operating results and period-to-period
comparisons should not be relied upon as an indication of future operating
performance.

OUR SUCCESS DEPENDS ON THE SUCCESS AND SUSTAINABILITY OF THE MARKET FOR ADVANCED
TELECOMMUNICATIONS PRODUCTS AND SERVICES

The global telecommunications market is evolving rapidly and it is difficult
to predict its potential size or future growth rate. We cannot assure investors
that the global deregulation and privatization of the worldwide
telecommunication market that has resulted in increased competition and
escalating demand for new technologies and services will continue in a manner
favorable to us or our business strategies.

Since our customers are concentrated in the competitive telecommunications
industry in the United States, our future success is dependent upon increased
utilization of OSS interconnection and related applications by
telecommunications providers, the financial health and buying patterns of CLECs,
which in late 2000 was significantly impaired, and the continued demand for
integration, support and maintenance services. We cannot guarantee that current
or future products or services will achieve acceptance among telecommunications
carriers, network equipment vendors and other potential customers or that these
customers will not adopt alternative architectures or technologies that are
incompatible with our technologies.

In addition, it is predicted that the telecommunications industry may
experience significant consolidation in the near future. This may cause there to
be fewer potential customers for our products and services, increasing the level
of competition in the industry. Also, due to the predicted continued cash
shortage for the small to medium telecommunications providers, larger or
consolidated telecommunications providers may have stronger purchasing power,
which could put pressure on prices and result in lower operating margins.

THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED IF WE ARE DELISTED
FROM THE NASDAQ NATIONAL MARKET

On July 9, 2001, we received notification from Nasdaq that our common stock
had failed to maintain a minimum bid price of $1.00 per share for the 30 days
prior to the date of notification. We effected a one-for-four reverse stock
split recapitalization as of the close of business on August 21, 2001, which
enabled us to regain compliance with Nasdaq's minimum bid requirements. Nasdaq
formally notified the Company on September 7, 2001 that the Company had regained
compliance. On September 27, 2001, Nasdaq announced that its Board of Directors
authorized the suspension of the minimum bid and public float listing
requirements effective immediately until January 2, 2002. We cannot guarantee
that we will maintain a minimum bid price above $1.00 or that our common stock
will not be delisted from the Nasdaq National Market. In the event that we are
delisted from the Nasdaq National Market, we would attempt to trade on the OTC
Bulletin Board. A delisting from the Nasdaq National Market may have a material
adverse effect on our stock price and our ability to raise capital through the
issuance of additional equity. A delisting from the Nasdaq National Market will
also make us ineligible to use Form S-3 to register shares of our common stock
with the SEC, therefore, making it more expensive to register shares of our
common stock. In the event our common stock is delisted from the Nasdaq National

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Market, it would become subject to certain securities law restrictions requiring
broker/dealers who recommend low-priced securities to persons (with certain
exceptions) to satisfy special sales practice requirements, including making an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction. The securities laws
also require additional disclosure in connection with any trades involving
low-priced stocks (subject to certain exceptions), including the delivery, prior
to any transaction, of a disclosure schedule explaining the market for such
stocks and the associated risks. These requirements could severely limit the
market liquidity of our common stock and your ability to sell the common stock
in the secondary market.

IF OUR COMMON STOCK IS DELISTED FROM THE NASDAQ NATIONAL MARKET, IT MAY BE
SUBJECT TO THE 'PENNY STOCK' REGULATIONS WHICH MAY AFFECT THE ABILITY OF DSET
SHAREHOLDERS TO SELL THEIR SHARES

If Nasdaq delists our common stock from the National Market System, it could
become subject to Rule 15g-9 under the Exchange Act, which imposes additional
sales practice requirements on broker/dealers that sell such securities to
persons other than established customers and 'accredited investors' (generally,
an individual with a net worth in excess of $1,000,000 or an annual income
exceeding $200,000, or $300,000 together with his or her spouse's income). For
transactions covered by this rule, a broker/dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
consent to the transaction prior to the sale. Consequently, the rule may
adversely affect the ability of the holders of DSET common stock to sell their
shares in the secondary market.

Regulations of the SEC define 'penny stock' to be any non-Nasdaq equity
security that has a market price (as therein defined) of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction of penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. The SEC also
requires disclosure about commissions payable to both the broker/dealer and its
registered representative and information regarding current quotations of the
securities. Finally, the SEC requires that monthly statements be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.

If DSET's common stock were subject to the rules on penny stocks, the market
liquidity for DSET's common stock could be severely and adversely affected.

OUR INABILITY TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE COULD LEAD TO
DECLINES IN SALES AND OPERATING MARGINS

Over the last decade, and especially in the last year, the market for
telecommunications products and related services has been characterized by rapid
technological developments, evolving industry standards, changes in end-user
requirements and frequent new product and service introductions. Continued
changes such as these may render our existing product and service offerings
obsolete. As a result, our position in this market could be negatively impacted
due to unforeseen changes in product features and functions of competing
products. Our future results of operations will depend in part on our ability to
respond to these changes by enhancing existing products and services and by
developing and introducing, on a timely and cost-effective basis, new products,
features and related services to meet or exceed technological advances
introduced by competitors. However, we cannot guarantee success in identifying,
developing and marketing new products, product enhancements and related services
necessary to keep pace with technological change, which could lead to declines
in sales and operating margins.

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IF WE DO NOT MANAGE OUR CORPORATE CONSOLIDATION AND POTENTIAL GROWTH ON A
COST-EFFECTIVE AND TIMELY BASIS, OUR BUSINESS COULD SUFFER

Our recent downsizing has placed, and is expected to continue to place, a
significant strain on DSET's managerial, operational and technical resources.
Our ability to manage this consolidation or, when able to, grow effectively,
will require continued improvement of operational, financial and other internal
systems, as well as business development and strategic alliance capabilities.
Additionally, we must continue to attract, hire, train, retain, motivate and
manage our employees. We must allocate sufficient engineering resources to
improve the quality and depth of our current offerings and develop new products.
The failure to manage the reduced employee base, improve operating systems or
integrate resources when needed on a cost-effective and timely basis could have
a material adverse effect on our business.

INTENSE COMPETITION IN OUR TARGET MARKET COULD DECREASE OUR PROFITABILITY

DSET competes in rapidly changing markets that are intensely competitive and
involve changing technologies, evolving industry standards, frequent new product
introductions, regulatory issues and rapid changes in customer requirements. We
compete in the OSS interconnection market with other interconnection software
providers, order management system providers, system integrators, and in-house
development staffs of telecommunications providers and network equipment vendors
via partnerships with our direct product competitors or through development by
them of competing products. Many of our current and potential competitors have
longer operating histories, greater name recognition, larger or captive customer
bases and significantly greater financial, technical, sales, customer support,
marketing and other resources.

We believe the principal competitive factors affecting the market for our
products are:

pricing of our products and services;

ability to facilitate the flow-through of information between trading
partners;

breadth and depth of solutions offered;

product quality and performance;

strength of core technology and product features such as adaptability,
scalability, ability to integrate with other products, functionality and
ease of use;

ability to install and implement solutions;

customer support and service;

relationships with business partners and alliances; and

continued building of a base of satisfied and referable customers.

BECAUSE WE RELY HEAVILY ON SALES TO A LIMITED NUMBER OF CUSTOMERS FOR A
SIGNIFICANT PORTION OF REVENUE, THE LOSS OF ANY ONE SUCH CUSTOMER COULD CAUSE
OUR REVENUES TO DECLINE

DSET currently derives, and expects to continue to derive, a significant
portion of its revenues through large financial commitments by a limited number
of competitive service providers or CSPs. The market for competitive service
providers currently consists of approximately 250 entities. For the year ended
December 31, 2000, our ten largest customers accounted for approximately 33.1%
of total revenues. For the quarter ended March 31, 2001, DSET had one customer
which accounted for 37% of revenues for such quarter. For the quarter ended
June 30, 2001, DSET had two customers which accounted for 14% and 10% of
revenues, respectively, for such quarter. For the quarter ended September 30,
2001, DSET had three customers which accounted for 12%, 11%, and 10% of
revenues, respectively, for such quarter. The amount of revenue derived from a
specific customer for any one product varies from period to period, and a major
customer in one period may not produce significant additional revenue in a
subsequent period. Other than certain agreements that provide for on-going
maintenance revenues or minimum royalties for run-time licenses, none of our
customers have entered into agreements requiring on-going minimum

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purchases. Due to a continued decrease in the number of existing and prospective
CSPs as a result of current economic uncertainties, to the extent that we are
not able to capture new major customers or to maintain relations with existing
major customers, our revenues may be subject to further substantial
period-to-period fluctuations and could decline significantly.

A FAILURE TO PROTECT OUR PROPRIETARY RIGHTS OR TO ENFORCE OUR LICENSING RIGHTS
MAY ADVERSELY AFFECT OUR BUSINESS

Our success and ability to compete effectively is dependent, in part, upon
our proprietary rights. We rely primarily on a combination of copyright,
trademark, patent and trade secret laws, as well as confidentiality procedures
and contractual restrictions, to establish and protect these proprietary rights.
Our practice is to enter into non-competition, non-disclosure and invention
assignment agreements with our employees and consultants, and into
non-disclosure agreements with customers, partners and distributors. We cannot
assure investors that these measures will be adequate to protect our proprietary
rights.

We may also be subject to further risks as we enter into transactions in
countries where intellectual property laws are not well developed or are
difficult to enforce. Legal protections of proprietary rights may be ineffective
in other countries. Litigation may be necessary to defend and enforce those
proprietary rights, which could result in substantial costs and diversion of
management resources and could have a material adverse effect on our business,
financial condition and results of operations, regardless of the final outcome
of such litigation. Despite efforts to safeguard and maintain proprietary rights
both in the United States and abroad, there is no guarantee that we will be
successful in doing so. Furthermore, we cannot assure investors that the steps
taken by us will be adequate to deter misappropriation or independent
third-party development of our technology or to prevent an unauthorized
third-party from copying or otherwise obtaining and using our products or
technology. Any of these events could have a material adverse effect on our
business, financial condition and results of operations.

DSET, or our employees, may become subject to claims of infringement or
misappropriation of the intellectual property rights of others. In addition, in
our licenses and software development and distribution agreements, we agree to
indemnify customers and distributors for any expenses and liabilities resulting
from claimed infringements of patents, trademarks, copyrights or other
proprietary rights of third parties. The amount of indemnity obligations may be
greater than the revenue that may have been received under these agreements. We
cannot assure investors that third parties will not assert infringement or
misappropriation claims against us, our customers, partners or distributors in
the future with respect to our employees or current or future products or
services. Any claims or litigation, with or without merit, could be
time-consuming, result in costly litigation, cause product shipment delays or
require us to enter into royalty or licensing arrangements. Royalty or licensing
arrangements, if necessary, may not be available on terms acceptable to us, if
at all, which could have a material adverse effect on our business, financial
condition and results of operations.

IF OUR PRODUCTS CONTAIN DEFECTS, WE COULD EXPERIENCE A DECLINE IN REVENUES AND
DAMAGES

Applications developed, licensed and sold by DSET may contain errors or
failures. We cannot guarantee that errors or failures will not be found in our
products or applications or, if discovered, that we will be able to successfully
correct any errors or failures in a timely manner or at all. The occurrence of
errors or failures in our products and applications could result in loss of or
delay in market acceptance, increased service and warranty costs or payment of
compensatory or other damages. In addition, errors or failures may result in
delays in recognition of revenue and diversion of engineering resources during
the period in which we are required to correct any defects. In 2000, we obtained
errors and omissions insurance to cover liability associated with our software
development and license agreements. There is no assurance that we will be able
to maintain this coverage in the future. Although agreements with customers
typically contain provisions intended to limit exposure to potential claims as
well as any liabilities arising from such

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claims, our contracts with customers may not effectively protect us against the
liabilities and expenses associated with software errors or failures.
Accordingly, errors or failures in our products, solutions or applications could
have a material adverse effect upon our business, financial condition and
results of operations.

WE RELY ON THIRD-PARTY SOFTWARE THAT MAY BE DIFFICULT TO REPLACE

Some of the software we license from third parties and utilize in
conjunction with our products may be difficult to replace. This software may not
continue to be available on commercially reasonable terms, if at all. In many
cases we have indentified potential replacements or may have procured source
code rights for certain third party software. However, replacement software may
not have the same functionality or integration within our products.
Additionally, of the third party software that is not at least in some form
immediately replaceable, DSET would need to internally develop alternatives or
increased functionality, which could take substantial time and resources. The
loss or inability to maintain any of these technology licenses could result in
delays in the sale of our products and services until equivalent technology, if
available, is identified, licensed, and integrated, which could harm our
business.

THE REVENUE FROM LICENSING AND MAINTENANCE OF OUR TOOLS PRODUCTS MAY DECLINE

Effective January 1, 2001, we transitioned primary responsibility for
licensing, support and development services of our application development
toolkits to a distributor for which we receive a percentage of their revenue. We
cannot guarantee any revenue from this arrangement and historical projections
may be inaccurate in producing forecasts for these products.

A portion of the revenue from this arrangement is generated from direct
licensing, royalties for run-time licenses, maintenance and additional fees
relative to development projects. Run-time royalties generally become due upon
the deployment by equipment vendors to telecommunications carriers of network
devices, which have embedded applications built with our software. Many
customers are contractually required to periodically report the sales of these
network devices to our distributor or us. Although we both generally have the
right to periodic audits in these contracts which provide for run-time
royalties, we cannot assure investors that customers will accurately report
their sales or that we will be able to effectively monitor and enforce our
contractual rights with respect to run-time royalty fees.

THE COMPETITIVE MARKET FOR TECHNICAL PERSONNEL MAY MAKE IT DIFFICULT FOR US TO
MEET OUR CURRENT AND FUTURE DEMANDS

Our future success depends to a significant extent on our ability to
attract, hire, train, retain and motivate qualified technical and sales
personnel, with appropriate levels of managerial and technical capabilities. Our
complex technology generally requires a significant level of expertise to
effectively develop and market our products and services and to perform custom
application development and installation services. We believe that there remains
significant competition for professionals with the advanced skills required. We
have at times experienced, and continue to experience, difficulty in recruiting
and at times retaining, qualified personnel. We compete for personnel with
software companies, system integrators and telecommunications companies, many of
which have greater resources. Market conditions also may affect our ability to
attract and retain qualified personnel. This makes it difficult for us to hire
the quality and number of highly skilled technical and sales personnel required
to meet current and expected future demand. In addition, it may make it more
expensive to hire those personnel in general. Due to this competition, and
market conditions we have experienced, and expect to continue to experience,
turnover in technical and sales personnel is high. There is no guarantee that we
will be successful in attracting and retaining the technical or sales personnel
required to conduct and successfully expand operations. Our business, financial
condition and results of operations could be materially adversely

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affected if we are unable to attract, hire, train, retain and motivate qualified
technical and sales personnel.

IF OUR DIRECT SALES PROCESS IS INEFFECTIVE, OUR REVENUES WILL DECLINE

Although we are aggressively striving to enhance and expand our strategic
alliances programs, we continue to sell our products primarily through our
direct sales force. We believe that there is significant competition for sales
personnel with the advanced skills and technical knowledge we desire. Our
inability to hire and train competent sales and sales support personnel, or our
failure to retain them, would harm our business. Additionally, by relying
primarily on a direct sales model, we may miss opportunities available through
other channels. We plan to expand our sales efforts to include additional
resellers and partners and the failure to expand indirect channels may place us
at a competitive disadvantage.

Our entire sales and marketing strategy involves substantial risk. There can
be no assurance that we will be successful in implementing our strategy, that it
will lead to achievement of our objectives, or that some resellers or partners
will not attempt to partner with our competitors, or develop or acquire
products, or services that compete with our products or services. Any inability
to maintain our strategic relationships or to enter into any additional
strategic relationships may have a material adverse affect on our business. If
we are unable to implement our strategy effectively, our business will be
materially adversely affected.

THE UNCERTAIN LENGTH AND VARIABILITY OF DSET'S PRODUCT SALES CYCLE MAKES OUR
REVENUE STREAM LESS PREDICTABLE

Our products are often used by our customers to deploy mission-critical
solutions for their businesses. Additionally, the cost of our products and
suites of products can be significant to a customer's overall financial
position. As such, customers generally consider a wide range of issues before
committing to purchase products, including product benefits, ability to operate
with existing or planned computer systems, scalability, reliability and
competitive price. Many customers are still in the early stages of developing
their businesses and need to be educated about the use and benefits of our
products and services. Additionally, the purchase of our products generally
involves a significant commitment of capital and other resources by the
customer. This can mean additional technical reviews, assessment of competitive
products and approval at several levels within the customer's management and
executive structure.

The period of time between initial customer contact and execution of a
license agreement or contract for services with telecommunications service
providers typically ranges from three to nine months. The variability of these
sales cycles could have a material adverse effect on our business, financial
condition and results of operations.

DEPENDENCE ON SOFTWARE LICENSE REVENUES MAKES OUR OPERATING RESULTS DIFFICULT TO
PREDICT

License revenues in any quarter are difficult to forecast because they
depend on relatively few orders booked and shipped in that quarter. Moreover, we
have historically recognized a substantial percentage of revenues in the last
month of the quarter, frequently in the last week or even the last days of the
quarter, and we expect this trend to continue for as long as our licensed
software products represent a substantial part of our overall business. Since
our expenses are relatively fixed in the near term, any shortfall from
anticipated revenues or any delay in the recognition of revenues could result in
significant variations in operating results from quarter to quarter. We find it
difficult to forecast quarterly license revenues because our sales cycle, from
initial evaluation to delivery of software, is lengthy and varies substantially
from customer to customer. If revenues fall below our expectations in a
particular quarter, our business could be harmed. In the last two quarters of
fiscal 2000 and the first three quarters of fiscal 2001, our revenues did, in
fact, fall below our own and consensus securities analysts' estimates for those
quarters and, as a result, the price of our stock declined significantly during
those periods. Specifically, license revenues

<Page>
decreased by 92.2% to $2.3 million in the nine months ended September 30, 2001
from $30.1 million in the nine months ended September 30, 2000. Although we have
introduced both 'Pay As You Grow' and Rental Program pricing models providing
pricing alternatives to CSPs, if our revenues fall below our own estimates or
below the consensus securities analysts' estimate in an upcoming quarter, our
stock price could decline further, harming our business significantly in terms
of, among other things, diminished employee morale and public image.

WE DEPEND ON SERVICE REVENUES TO INCREASE OUR OVERALL REVENUES; SERVICES MAY NOT
ACHIEVE PROFITABILITY

Since the introduction of our interconnection gateway products in 1998, most
of our customers have installed and are operating our products. Many of these
have entered into service agreements, which make up a portion of our revenue.
Service revenues represented 30.2%, 46.0% and 44.2% of total revenues for fiscal
2000, 1999, and 1998, respectively. The level of service revenues depends
largely upon our implementation services and ongoing renewals of customer
support contracts by our growing installed customer base. Our implementation
revenues could decline if third-party organizations such as systems integrators
compete for the installation or servicing of our products. In addition, our
customer support contracts might not be renewed in the future. Due to the
increasing costs of operating a professional services organization, and our most
recent consolidation in this area, we may not be able to sustain profitability
in this part of our business in the near future, or ever.

OUR STOCK PRICE HAS BEEN VOLATILE

We completed our initial public offering in March 1998. Since then, the
market price of our common stock has been highly volatile and is subject to wide
fluctuations. We expect our stock price to continue to fluctuate:

in response to quarterly fluctuations in our operating results;

because of market conditions in our industry;

in reaction to announcements of technological innovations, new products, or
significant agreements by us or our competitors;

in reaction to changes in prices of our products or the products of our
competitors; and

in reaction to changes in financial estimates by securities analysts, and
our ability to meet or exceed the expectations of analysts or investors.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR STOCK PRICE
VOLATILITY

In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation, either due
to stock price declines associated with our failure to meet consensus securities
analysts' estimates for revenues or earnings for prior fiscal periods or due to
future volatility in our stock price. This litigation could result in
substantial costs and divert management's attention and resources. We are not
aware of any litigation due to stock price volatility at this time.

GOVERNMENT REGULATION AND RELATED LITIGATION MAY ADVERSELY AFFECT US AND OUR
CUSTOMERS

While our operations are not directly regulated, existing and potential
customers are subject to a variety of United States and foreign governmental
regulations. These regulations and future changes to them may negatively impact
the telecommunications industry, limit the number of potential customers for our
products and services or otherwise have a material adverse effect on our
business, financial condition and results of operations. Recently enacted
legislation, including the Telecommunications Act of 1996, deregulating the
telecommunications industry has caused and

<Page>
may continue to cause changes in the telecommunications industry, including the
entrance of new competitors and possible industry consolidation. These events
could reduce our potential customer base, increase pricing pressures, decrease
demand for our products, increase the cost of doing business or otherwise have a
material adverse effect on our business, financial condition and results of
operations. Currently the Federal Communications Commission and state
authorities are implementing the provisions of the Telecommunications Act of
1996 and several of the decisions by the Federal Communications Commission and
state authorities are being challenged in court. In addition, Congress is
exploring potential additional changes. We cannot predict the extent to which
such legislation and related litigation will affect our current and potential
customers or ultimately affect our business, results of operations and financial
condition.

POTENTIAL ACQUISITIONS OF OR BY US COULD BE COSTLY OR UNSUCCESSFUL

As part of our growth strategy, we intend to continue to pursue acquisitions
of businesses or technologies to broaden our product and service offerings, add
technical or sales personnel, increase our presence in existing markets, expand
into new geographic markets, establish strategic relationships and obtain
desirable customer relationships. If we buy another company or selected assets
or technologies, we could have difficulty assimilating acquired personnel,
operations, customers or vendors. In addition, one or more of such personnel,
customers or vendors may decide not to work for or continue to do business with
DSET. These difficulties could disrupt the ongoing business of DSET, distract
management and employees and increase expenses. Although we conduct due
diligence reviews with respect to all acquisition candidates, all material
liabilities or risks related to potential acquisitions may not be successfully
identified. Furthermore, we may have to incur debt or issue equity securities to
pay for any future acquisitions, the issuance of which could be dilutive to
existing shareholders. In addition, certain key DSET personnel have executed
change of control agreements detailing circumstances governing their removal and
severance rights in any acquisition or change in the management structure of
DSET.

ANTI-TAKEOVER PROVISIONS OF SHAREHOLDER RIGHTS PLAN, CHARTER, BY-LAWS AND
CERTAIN PROVISIONS UNDER NEW JERSEY LAW COULD REDUCE OUR STOCK PRICE

On July 20, 2001, DSET's board of directors adopted a shareholder rights
plan. Under the rights plan, each DSET shareholder of record on July 31, 2001
will receive a distribution of one right for each share of DSET common stock.
Initially, the rights will be represented by DSET's common stock certificates,
will not be traded separately from DSET's common stock, and will not be
exercisable. The rights become exercisable only if a person acquires, or
announces a tender offer, that would result in ownership of 15% or more of
DSET's common stock, at which time each right would enable the holder to buy one
one-thousandth of a share of DSET's Series A preferred stock at an exercise
price of $20, subject to adjustment. The actual number of shares acquirable by
the holder equals $20 divided by one-half of the current market price of DSET's
common stock. Additionally, the rights plan provides that in the event of a
subsequent merger or other acquisition of DSET, the holders of rights will be
entitled to buy shares of common stock of the acquiring entity at one-half of
the market price of the acquiring company's shares.

In addition, anti-takeover provisions of New Jersey law, our Certificate of
Incorporation and By-Laws could make it more difficult for a third-party to
acquire control of us, even if such change would be beneficial to our
shareholders. Our Certificate of Incorporation provides that the board of
directors may issue preferred stock with superior rights and preferences without
common shareholder approval.

Each of these anti-takeover measures could have the effect of delaying,
deterring or preventing a change in control. This could be harmful to
shareholders because it could prevent them from realizing a premium for their
stock.

<Page>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

DSET and ISPSoft believe this document contains 'forward-looking statements'
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are subject to risks and uncertainties and are based on the
beliefs and assumptions of the management of DSET and ISPSoft, based on
information currently available to each company's management. When we use words
such as 'believes,' 'expects,' 'anticipates,' 'intends,' 'plans,' 'estimates,'
'should,' 'likely' or similar expressions, we are making forward-looking
statements. Forward-looking statements include, among other things, the
information concerning possible or assumed future results of operations of DSET
set forth under:

'Summary';

'Risk Factors';

'The Merger -- Background of the Merger,' ' -- Recommendation of DSET's
Board of Directors and DSET's Reasons for the Merger,' ' -- Recommendation
of the Board of Directors of ISPSoft; ISPSoft's Reasons for the Merger'
and ' -- Opinion of Financial Advisor to DSET'; and

'Unaudited Pro Forma Financial Statements.'

Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and shareholder values
of DSET or ISPSoft may differ materially from those expressed in the
forward-looking statements. Many of the factors that will determine these
results and values are beyond our ability to control or predict. Shareholders
are cautioned not to put undue reliance on any forward-looking statements. For
those statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.

For a discussion of some of the factors that may cause actual results to
differ materially from those suggested by the forward-looking statements, please
read carefully the information under 'Risk Factors' beginning on page 20. This
list of factors that may affect future performance and the accuracy of
forward-looking statements is illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty. We expressly disclaim any
obligation to update or alter our forward-looking statements, whether as a
result of new information, future events or otherwise.

<Page>
MARKET PRICE AND DIVIDEND INFORMATION

MARKET PRICE INFORMATION AND REVERSE STOCK SPLIT

DSET common stock has traded on the Nasdaq National Market under the symbol
'DSET' since March 13, 1998.

On August 14, 2001, DSET announced the approval a reverse one-for-four stock
split effective as of the close of business on August 21, 2001, pursuant to
which one new share of DSET common stock would be issued in exchange for every
four shares of DSET common stock then outstanding. In connection with such
reverse stock split recapitalization, DSET reduced its authorized common stock
from 40 million shares to 10 million shares. After the one-for-four reverse
split, DSET had approximately 2.9 million shares of common stock outstanding.

The table below sets forth, for the periods indicated, the reported high and
low sale prices of DSET common stock on the Nasdaq National Market. Because
there is no established trading market for shares of ISPSoft common stock,
information with respect to the market prices of ISPSoft stock has been omitted.

<Table>
<Caption>
DSET
COMMON STOCK
-----------------
HIGH LOW
---- ---

CALENDAR 1999
Quarter ended March 31, 1999................................ $18.875 $ 9.563
Quarter ended June 30, 1999................................. 15.00 9.625
Quarter ended September 30, 1999............................ 15.125 8.875
Quarter ended December 31, 1999............................. 40.50 12.938

CALENDAR 2000
Quarter ended March 31, 2000................................ $48.625 $16.016
Quarter ended June 30, 2000................................. 31.188 13.250
Quarter ended September 30, 2000............................ 33.125 19.00
Quarter ended December 31, 2000............................. 20.438 1.625

CALENDAR 2001
Quarter ending March 31, 2001............................... $ 4.188 $ 0.938
Quarter ending June 30, 2001................................ 1.44 0.510
(August 21, 2001: One-For-Four Reverse Stock Split
effective)
Quarter ending September 30, 2001........................... 2.96 1.06
Quarter ending December 31, 2001 (Through December 7,
2001)..................................................... 1.45 0.70
</Table>

On June 26, 2001, the last reported sale price of DSET common stock on the
Nasdaq National Market was $0.670 ($2.68 on a post reverse stock split basis)
per share and we publicly announced the proposed merger after the close of
trading on such date. On June 27, 2001, the last reported sale price of DSET
common stock was $0.88 ($3.52 on a post reverse stock split basis).

The capital stock of ISPSoft is not publicly traded, and no market
information relating to its capital stock is available.

On December 7, 2001, the most recent practicable date prior to the printing
of this joint proxy statement/prospectus, DSET had approximately 65 shareholders
of record and the last reported sale price of DSET common stock on the Nasdaq
National Market was $1.02 per share.

Because the market price of DSET common stock may fluctuate, the market
price per share of the shares of DSET common stock that holders of ISPSoft stock
will receive in the merger may increase or decrease prior to the merger.

WE URGE ISPSOFT SHAREHOLDERS TO OBTAIN A CURRENT MARKET QUOTATION FOR DSET
COMMON STOCK.

We cannot assure you as to what the market price will be at the effective
time of the merger. Except for consideration with respect to net revenue
milestone payments, as set forth below, the number of shares to be issued by
DSET in the merger is fixed. Accordingly, the market value of such fixed number
of shares of DSET common stock that holders of ISPSoft stock will receive may
vary significantly from the prices shown above.

DIVIDEND INFORMATION

DSET has never declared or paid any dividends on its common stock. DSET does
not expect to pay cash dividends in the foreseeable future.

ISPSoft has never paid any cash dividends on the ISPSoft common stock, and
if the merger is not consummated, it anticipates that it will continue to retain
any earnings for the foreseeable future for use in the operation of the
business.

THE DSET SPECIAL MEETING

GENERAL

This joint proxy statement/prospectus is being furnished to shareholders of
DSET Corporation as part of the solicitation of proxies by the DSET board of
directors for use at a special meeting of shareholders of DSET. The DSET board
will use the proxies at the special meeting to be held on and at the date, time
and place set forth below.

DATE, TIME AND PLACE

We will hold the special meeting at our offices at 1160 U.S. Highway 22
East, Bridgewater, New Jersey 08807, at 10:00 a.m. local time on January 31,
2002.

PURPOSE OF THE SPECIAL MEETING

At the special meeting, we are asking holders of DSET common stock to
approve the merger, the merger agreement, the issuance of an aggregate of up to
2,519,735 shares of DSET common stock to ISPSoft security holders, either in the
merger or upon exercise or conversion of ISPSoft options assumed by DSET in the
merger, an amendment to DSET's Amended and Restated Certificate of Incorporation
to provide for the classification of DSET's board of directors into three

classes of directors with staggered terms of office and amendments to DSET's
1998 Stock Plan to increase the maximum aggregate number of shares of DSET
common stock available for issuance thereunder from 875,000 shares to 1,125,000
shares and to ensure compliance with Section 162(m) of the Internal Revenue Code
by approving the continuance of the 1998 Stock Plan, limiting the maximum number
of shares of DSET common stock with respect to which awards may be granted to
any person under the 1998 Stock Plan to 250,000 per calendar year, and making
certain other conforming amendments.

DSET BOARD OF DIRECTORS' RECOMMENDATION

The DSET board, after careful consideration, has approved the merger, the
merger agreement, the issuance of DSET common stock in connection with the
merger, the amendment to DSET's Amended and Restated Certificate of
Incorporation and the amendments to DSET's 1998 Stock Plan and recommends a vote
'FOR' each such proposal.

RECORD DATE

Only holders of record of DSET common stock at the close of business on
December 7, 2001, are entitled to notice of and to vote at the DSET special
meeting. On the record date there were 2,757,200 outstanding shares of DSET
common stock held by 65 shareholders of record. Each share is entitled to one
vote. The representation, in person or by properly executed proxy, of the
holders of a majority of all of the shares of common stock entitled to vote at
the DSET special meeting is necessary to constitute a quorum at the DSET special
meeting.

VOTE REQUIRED; VOTE AT THE SPECIAL MEETING

Pursuant to applicable rules of the Nasdaq National Market, the proposed
issuance of DSET common stock in connection with the merger will require the
affirmative vote of the holders of a majority of the votes represented by the
shares of DSET common stock cast on such proposal, whether in person or by
proxy, because such issuance of shares of DSET common stock in the merger will
exceed 20% of the outstanding shares of DSET common stock prior to the merger.

The approval of the merger, the merger agreement, the amendment to DSET's
Amended and Restated Certificate of Incorporation and the amendments to DSET's
1998 Stock Plan will require the affirmative vote of the holders of a majority
of the votes represented by the shares of DSET common stock cast on such
proposal.

Shares of DSET common stock represented in person or by proxy will be
counted for the purposes of determining whether a quorum is present at the DSET
special meeting. Shares which abstain from voting as to the proposals, and
shares held in 'street name' by brokers or nominees who indicate on their
proxies that they do not have discretionary authority to vote such shares on the
proposal, will be treated as shares that are present and entitled to vote at the
DSET special meeting for purposes of determining whether a quorum exists.
Abstentions are counted as a vote against for purposes of determining whether a
proposal is approved. Broker non-votes are not considered to be votes cast with
respect to a particular matter and will thus have no effect on such proposals.

As of the record date, DSET's directors and executive officers owned
approximately 1% of the outstanding shares of DSET common stock and have already
agreed to vote in favor of the merger, the merger agreement and the issuance of
shares of DSET common stock in connection with the merger.

As of the record date for the DSET special meeting, directors and executive
officers of DSET and their affiliates held approximately 1% of the outstanding
shares of DSET common stock.

PROXIES

All shares of DSET common stock which are entitled to vote and are
represented at the DSET special meeting by properly executed proxies received
prior to or at such meeting, and not revoked, will be voted at such meeting in
accordance with the instructions indicated on such

proxies. If no instructions are indicated (other than broker non-votes), such
proxies will be voted for approval of each proposal submitted for shareholder
vote.

The DSET board does not know of any matters other than those described in
the notice of the DSET special meeting that are to come before such meeting. If
any other matters are properly presented at the DSET special meeting for
consideration, including, among other things, consideration of a motion to
adjourn or postpone such meeting to another time and/or place (including,
without limitation, for the purposes of soliciting additional proxies or
allowing additional time for the satisfaction of conditions to the merger), the
persons named in the enclosed form of proxy and acting thereunder generally will
have discretion to vote on such matters in accordance with their best judgment.
Notwithstanding the foregoing, proxies voting against a specific proposal may
not be used by the persons named in the proxies to vote for adjournment or
postponement of the meeting for the purpose of giving management additional time
to solicit votes to approve such proposal.

REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by:

filing with the Secretary of DSET, at or before the taking of the vote at
the DSET special meeting, a written notice of revocation bearing a later
date than the proxy;

duly executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of DSET before the taking of the vote at the
DSET special meeting; or

attending the DSET special meeting and voting in person, although
attendance at the DSET special meeting will not in and of itself constitute
a revocation of a proxy.

Any written notice of revocation or subsequent proxy should be sent to DSET,
1160 U.S. Highway 22 East, Bridgewater, New Jersey 08807, Attention: Corporate
Secretary, or hand delivered to the Secretary of DSET at or before the taking of
the vote at the DSET special meeting. Shareholders that have instructed a broker
to vote their shares must follow directions received from such broker in order
to change their vote or to vote at the DSET special meeting.

SOLICITATION OF PROXIES

All expenses of DSET's solicitation of proxies for the DSET special meeting
will be borne by DSET. In addition to solicitation by use of the mails, proxies
may be solicited from DSET shareholders by directors, officers and employees of
DSET in person or by telephone, facsimile or other means of communication. Such
directors, officers and employees will not be additionally compensated, but may
be reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation. DSET has retained D.F. King & Co., Inc., a proxy solicitation
firm, for assistance in connection with the solicitation of proxies for the
DSET special meeting at a cost of approximately $6,500. DSET has also engaged
ADP Investor Communications to handle the mailing of the proxy solicitation at
a cost of approximately $3,000 plus reimbursement of reasonable out-of-pocket
expenses. Arrangements will also be made with brokerage houses, custodians,
nominees and fiduciaries for forwarding of proxy solicitation materials to
beneficial owners of shares held of record by such brokerage houses, custodians,
nominees and fiduciaries, and DSET will reimburse such brokerage houses,
custodians, nominees and fiduciaries for their reasonable expenses incurred in
connection therewith.

THE ISPSOFT SPECIAL MEETING

GENERAL

This joint proxy statement/prospectus is being furnished to shareholders of
ISPSoft as part of the solicitation of proxies by the ISPSoft board of
directors. The ISPSoft board will use the proxies at the special meeting to be
held on and at the date, time and place set forth below.

DATE, TIME AND PLACE

We will hold the special meeting of shareholders of ISPSoft at ISPSoft
offices at 661 Shrewsbury Avenue, Shrewsbury, New Jersey 07702, at 10:00 a.m.,
local time, on January 31, 2002.

PURPOSE

At the special meeting, ISPSoft shareholders will be asked to approve and
adopt the agreement and plan of merger dated as of June 26, 2001 among DSET and
ISPSoft, and the merger.

ISPSOFT BOARD OF DIRECTORS' RECOMMENDATION

The ISPSoft board of directors, after careful consideration, has approved
the merger agreement and the merger and has declared the merger agreement
advisable and in the best interests of ISPSoft and its shareholders. The ISPSoft
board of directors recommends a vote 'FOR' approval and the adoption of the
merger agreement and the merger.

RECORD DATE

Only holders of record of ISPSoft common stock and preferred stock at the
close of business on December 7, 2001, are entitled to notice of and to vote at
the ISPSoft special meeting. At such date there were:

6,595,000 outstanding shares of ISPSoft common stock;

9,000,000 outstanding shares of ISPSoft Series A preferred stock; and

8,000,000 outstanding shares of ISPSoft Series B preferred stock.

Each share of ISPSoft common stock and preferred stock will be entitled to
one vote. The representation, in person or by properly executed proxy, of the
holders of a majority of all of the shares of common stock and preferred stock
entitled to vote at the ISPSoft special meeting is necessary to constitute a
quorum at the ISPSoft special meeting.

VOTE REQUIRED; VOTE AT THE SPECIAL MEETING

The approval and adoption of the merger agreement and the merger will
require the affirmative vote of the holders of a majority of the votes
represented by the shares of ISPSoft common stock and preferred stock (voting on
an as-converted to common stock basis) outstanding on the ISPSoft record date,
voting together as a single class, and a majority of the votes represented by
the shares of ISPSoft Series A Preferred Stock and Series B Preferred Stock
outstanding on the ISPSoft record date, each voting as a separate class.

Shares of ISPSoft common stock and preferred stock represented in person or
by proxy will be counted for the purposes of determining whether a quorum is
present at the ISPSoft special meeting. All shares with respect to which holders
abstain from voting as to a proposal will be treated as shares that are present
and entitled to vote at the ISPSoft special meeting for purposes of determining
whether a quorum exists, but abstentions will have the same effect as votes
against the proposals being brought before the special meeting.

VOTING AGREEMENTS

Each director, officer and 5% shareholder of ISPSoft, have executed a voting
and transfer restriction agreement with DSET whereby they have agreed: (i) to
vote all shares of ISPSoft capital stock that are beneficially owned by him, her
or it in favor of the adoption of the merger agreement and the approval of the
merger, (ii) not to vote any of such shares in favor of any other acquisition
(whether by merger, consolidation, share exchange, stock purchase or asset
purchase) of all or a majority of the outstanding capital stock or assets of
ISPSoft, and (iii) otherwise to use his, her or its commercially reasonable
efforts to obtain requisite approval of ISPSoft shareholders. The shareholders
who executed such voting agreements beneficially own shares of ISPSoft capital
stock representing approximately 90% of the capital stock entitled to vote at
the ISPSoft special meeting, including approximately 67% of the common stock
entitled to vote at the special meeting, 100% of the Series A preferred stock
entitled to vote at the special

meeting and 100% of the Series B preferred stock entitled to vote at the special
meeting. See 'Other Agreements -- Voting Agreements.'

PROXIES

All shares of ISPSoft common stock and preferred stock that are entitled to
vote and are represented at the ISPSoft special meeting by properly executed
proxies received prior to or at such meeting, and not revoked, will be voted at
such meeting in accordance with the instructions indicated on such proxies. If
no instructions are indicated, such proxies will be voted for such proposal.

The ISPSoft board of directors does not know of any matters other than those
described in the notice of the ISPSoft special meeting that are to come before
such meeting. If any other matters are properly presented at the ISPSoft special
meeting for consideration, including, among other things, consideration of a
motion to adjourn or postpone such meeting to another time and/or place
(including, without limitation, for the purposes of soliciting additional
proxies or allowing additional time for the satisfaction of conditions to the
merger), the persons named in the enclosed form of proxy and acting thereunder
generally will have discretion to vote on such matters in accordance with their
best judgment. Notwithstanding the foregoing, proxies voting against a specific
proposal may not be used by the persons named in the proxies to vote for
adjournment or postponement of the meeting for the purpose of giving management
additional time to solicit votes to approve such proposal.

REVOCABILITY OF PROXIES

Any proxy given in connection with this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by:

filing with the Secretary of ISPSoft, at or before the taking of the vote
at the ISPSoft special meeting, a written notice of revocation bearing a
later date than the proxy;

duly executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of ISPSoft before the taking of the vote at
the ISPSoft special meeting; or

attending the ISPSoft special meeting and voting in person, although
attendance at the ISPSoft special meeting will not in and of itself
constitute a revocation of a proxy.

Any written notice of revocation or subsequent proxy should be sent to
ISPSoft, 661 Shrewsbury Avenue, Shrewsbury, New Jersey 07702, Attention:
Corporate Secretary, or hand delivered to the Secretary of ISPSoft at or before
the taking of the vote at the ISPSoft special meeting.

SOLICITATION OF PROXIES

All expenses of ISPSoft's solicitation of proxies for the ISPSoft special
meeting will be borne by ISPSoft and DSET. In addition to solicitation by use of
the mails, proxies may be solicited from ISPSoft shareholders by directors,
officers and employees of ISPSoft in person or by telephone, facsimile or other
means of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation.

DISSENTER'S RIGHTS

If you do not wish to accept DSET common stock in the merger, you have the
right under New Jersey law to dissent and to be paid the fair market value of
your shares. If you dissent and you are not able to reach an agreement with
ISPSoft as to the fair market value of your shares, the fair value of your
shares will be determined by the Superior Court of New Jersey, provided that you
perfect your dissenter's rights under New Jersey law. You can perfect your
dissenter's

rights by satisfying a number of restrictions and technical requirements.
Generally, in order to perfect your dissenter's rights you must:

send a written demand to ISPSoft stating that you intend to demand payment
for your shares in compliance with New Jersey law before the vote on the
merger;

not vote in favor of the merger; and

continuously hold your ISPSoft capital stock, from the date you make the
demand for appraisal through the closing of the merger.

Merely voting against the merger will not protect your rights to dissent.
Annex D to this joint proxy statement/prospectus contains a copy of the New
Jersey statute governing dissenter's rights. If you do not follow all the steps
required by New Jersey law, you will lose your rights to dissent. The New Jersey
law requirements for exercising dissenter's rights are further described on
pages 66 to 69.

See 'The Merger -- Right of Shareholders to Dissent' and 'The
Merger -- Dissenter's Rights Procedures' on page 66 and 'Comparison of
Shareholder Rights' on page 147.

<Page>

THE MERGER

The following summarizes the material terms of the merger and the merger
agreement. We urge shareholders to read carefully the merger agreement and the
fairness opinion of Kaufman Bros., financial advisor to DSET, which is attached
as Annex C to this joint proxy statement/prospectus.

BACKGROUND OF THE MERGER

Since DSET's initial public offering in March 1998, DSET's management has
been exploring opportunities to expand its product lines through strategic
partnerships and through acquisitions of complementary technologies and
businesses. During this time, DSET has identified and acquired two separate
businesses that have complimented its business and technology. Since August
2000, DSET had been looking at technologies to provision new services in the
telecommunications network. DSET had discussions with several companies
concerning strategic relationships, but no agreements could be reached. In March
2000, DSET learned of ISPSoft through a technology association located in New
Jersey of which DSET is a member.

In the third and fourth quarters of 2000, DSET incurred significant losses.
Given these losses and the prospects for continued financial difficulty due to
the economic uncertainties facing CSPs, DSET decided to diversify its business
in order to lessen its dependence on CSPs.

On March 28, 2001, William P. McHale, Jr., DSET's President and Chief
Executive Officer, called Binay Sugla, ISPSoft's President and Chief Executive
Officer to explore Mr. Sugla's interest in a potential business combination
between the two companies and to suggest a meeting.

On March 31, 2001, DSET and ISPSoft entered into a mutual nondisclosure
agreement.

On April 3, 2001, ISPSoft's management made a presentation concerning
ISPSoft's products and markets to DSET's management at ISPSoft's offices in
Shrewsbury, New Jersey. Later that day, Messrs. McHale and Sugla discussed by
phone the potential combination of DSET and ISPSoft.

On April 11, 2001, Mr. Sugla met with DSET's management at DSET's offices in
Bridgewater, New Jersey to discuss the potential synergies between the two
companies' products and personnel and preliminary valuations of the two
companies. Later that day, Mr. McHale informed DSET's board of directors of the
potential acquisition by electronic mail.

On April 12, 2001, Messrs. McHale and Sugla discussed by telephone the
structure of a potential acquisition.

On April 20, 2001, Messrs. McHale, Crowell and Gill of DSET and Mr. Sugla of
ISPSoft met at DSET's offices in Bridgewater, New Jersey to discuss the
parameters of a potential acquisition, including valuation, structure and
synergies. No specific valuation was discussed.

On April 24, 2001, Mr. Sugla met with Mr. McHale and Jacob J. Goldberg, a
member of DSET's board of directors, to discuss the two companies' businesses,
markets and operations in greater detail.

On April 26, 2001, DSET submitted a non-binding letter of intent to ISPSoft
indicating DSET's interest in entering into a merger transaction. The letter of
intent also contemplated a non-solicitation covenant and a termination fee.

From April 26, 2001 to May 9, 2001, representatives of DSET and ISPSoft and
their respective legal advisors negotiated the terms of the non-binding letter
of intent.

On May 3, 2001 DSET engaged Kaufman Bros., L.P. to represent DSET in the
proposed transaction with ISPSoft.

On May 4, 2001 and May 8, 2001, ISPSoft's board of directors met
telephonically to discuss the letter of intent and the letter of intent was
approved by ISPSoft's Board on May 8, 2001.

On May 8, 2001, DSET's board of directors met telephonically to discuss the
proposed transaction. At this meeting, DSET's board approved the letter of
intent and a secured bridge loan to ISPSoft of $500,000.

<Page>

On May 9, 2001, DSET and ISPSoft executed a non-binding letter of intent.
DSET also loaned $500,000 to ISPSoft pursuant to a promissory note and security
agreement executed by the companies. Such loan was secured by all of ISPSoft's
assets and was payable on the earlier of October 3, 2001, ISPSoft's termination
of the proposed acquisition and ISPSoft obtaining $2,000,000 in equity
financing. DSET also became party to ISPSoft's existing intercreditor agreement
with Lucent Technologies and Signal Lake Venture Fund, among other parties.
Under such arrangement, DSET's security interest was given the same priority as
the liens of ISPSoft's other lenders. The amount and nature of the aggregate
purchase price was based upon the following factors: the amount of cash DSET
could spend in the merger given its projected liquidity position; an amount of
stock which would likely leave DSET's shareholders in control of the combined
company; and an aggregate purchase price which would satisfy ISPSoft's
institutional investors' desired return on their investment in ISPSoft.

On May 9, 2001, DSET delivered its initial due diligence request to ISPSoft.

From May 10, 2001 through May 17, 2001, representatives of DSET and ISPSoft
met at various times at ISPSoft's Shrewsbury, New Jersey offices to discuss and
conduct due diligence requests and information on their respective companies.

From May 10, 2001 through May 22, 2001, representatives of DSET and ISPSoft
continued to conduct additional due diligence on their respective companies.

On May 11, 2001, DSET's legal counsel delivered a draft of the merger
agreement to ISPSoft and its counsel.

From May 11, 2001 to May 30, 2001, representatives of DSET, ISPSoft and
their respective legal advisors negotiated the terms of the merger agreement and
the other definitive documents. The parties negotiated multiple variations of a
merger agreement and the other definitive documents. A good deal of the
negotiations dealt with the division of the various components of the purchase
price -- stock, cash and earn-out and the amount to be paid to the common
shareholders. The parties also negotiated multiple times regarding the terms
under which a break-up fee would be payable under Article VII of the merger
agreement.

On May 14, 2001 and May 15, 2001, representatives of DSET's legal counsel,
Hale and Dorr LLP, and ISPSoft's legal counsel, Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP, met at Hale and Dorr's offices in
Princeton, New Jersey to conduct due diligence on the companies.

On May 14, 2001, representatives of Kaufman Bros. met with representatives
of DSET and ISPSoft to conduct due diligence. During the period from May 4, 2001
to May 29, 2001, Kaufman Bros. met and conducted conference calls with
representatives of DSET and ISPSoft as part of its due diligence.

On May 17, 2001, Mr. Sugla met with DSET's management at DSET's offices in
Bridgewater, New Jersey to discuss compensation plans for ISPSoft's employees.

On May 25, 2001, Mr. McHale met with Mr. Sugla at DSET's offices in
Bridgewater, New Jersey to further discuss the potential combination.

On May 29, 2001, DSET's management made a presentation at DSET's offices in
Bridgewater, New Jersey to ISPSoft's board of directors. The presentation
included DSET's products, customers and prospects and the synergies to be gained
from the combination of the two companies.

On May 30, 2001, Mr. Sugla contacted Mr. McHale by telephone to state that
ISPSoft was terminating the proposed acquisition. The acquisition was terminated
because ISPSoft was not comfortable with the viability of DSET's gateway
business and the proposed cash burn rate of the combined companies. ISPSoft also
had discussions with venture capital firms prior to the execution of the letter
of intent and ISPSoft decided to reopen such discussions.

On May 30, 2001 ISPSoft delivered a letter (of same date) addressed to DSET
notifying DSET of ISPSoft's intention to abandon negotiations between the
parties. At the time of the termination of negotiations, the parties had agreed
to the following material terms of the merger: the aggregate purchase price; the
escrow agreement; the structure of the merger (ISPSoft into

<Page>

DSET); the percentage of shares to be placed into escrow; the assumption of
ISPSoft options by DSET; the reduction in the purchase price for amounts paid to
Signal Lake under its services agreement with ISPSoft and legal and accounting
expenses in excess of $300,000 as described in Section 1.12 of the merger
agreement; substantially all of the representations and warranties of ISPSoft
and DSET; the indemnification obligations of the parties under Article VI of the
merger agreement, including the threshold amount and limitations on the
liability of ISPSoft's shareholders; and the termination fee. The unresolved
issues were: the materiality and knowledge qualifications of ISPSoft's
intellectual property representations; the nature and extent of benefits to be
provided by DSET to ISPSoft's employees; and the term of the lock-up agreements
to be executed by ISPSoft's equity holders.

On May 31, 2001, DSET delivered a letter (of same date) addressed to ISPSoft
acknowledging receipt of ISPSoft's May 30, 2001 letter and reminding ISPSoft of
its duty to repay the secured bridge loan of $500,000 provided by DSET.

On June 8, 2001, Mr. Sugla called Mr. McHale to reopen negotiations on the
proposed combination. ISPSoft had negotiated a term sheet for an equity
investment with a venture capital firm with which ISPSoft had discussions prior
to the execution of the letter of intent with DSET. ISPSoft's board of directors
considered the financial terms of the term sheet to be too dilutive to its
shareholders and decided to inquire as to whether DSET was still interested in a
merger.

On June 13, 2001, the board of directors of DSET held a regularly scheduled
meeting. At the meeting, Mr. McHale updated the board on ISPSoft's renewed
interest in a possible merger.

On June 14, 2001, Mr. Sugla called Mr. McHale to set up a telephonic meeting
with the boards of directors of both companies. Mr. McHale and Mr. Sugla met
later that day at ISPSoft's offices in Shrewsbury, New Jersey to discuss the
terms of a potential transaction.

On June 15, 2001, the boards of directors of both DSET and ISPSoft had a
conference call at which the respective boards discussed the proposed structure
and consideration for a possible combination. The boards of both companies also
discussed the plans for reducing DSET's cash burn rate and the prospects for
financing the combined companies.

On June 15, 2001, Hale and Dorr LLP distributed a revised letter of intent
for the parties to enter into a merger transaction.

From June 15, 2001 to June 20, 2001, DSET, ISPSoft and their respective
legal counsel negotiated the revised letter of intent.

On June 20, 2001, DSET and ISPSoft executed the revised letter of intent.

On June 20, 2001, Hale and Dorr LLP distributed a draft of the merger
agreement based on the revised letter of intent.

From June 20, 2001 to June 25, 2001, DSET, ISPSoft and their respective
legal counsel negotiated the merger agreement and the other definitive documents
and conducted additional due diligence on the respective companies. During
negotiations, ISPSoft's concerns over DSET's cash burn rate were addressed
through DSET's plans for employee reductions if negative financial results
continued and through the acceptance by certain of ISPSoft's bridge lenders of
term promissory notes from DSET at closing instead of cash payments. This change
in the nature of purchase price reduced the amount of cash that DSET would need
at the closing. ISPSoft's concerns with the viability of DSET's gateway business
were satisfied with DSET's business plan for its gateway business over the next
year.

The open items in the purchase agreement were resolved as follows: DSET
agreed to an earlier termination of the lock-up arrangements on some shares (as
early as 60 days after the closing in return for some of the shares being locked
up for 150 to 180 days); DSET insisted that there be limited qualifications to
ISPSoft's intellectual property representations as ISPSoft's main assets were
its intellectual property and ISPSoft agreed to eliminate certain limitations;
and the provision of substantially similar benefits under Section 4.14 of the
merger agreement was agreed upon by the parties after review of each party's
benefit plans.

<Page>

On June 25, 2001, DSET's and ISPSoft's respective boards of directors held
special meetings to consider the approval of the merger and the merger agreement
and related agreements. At the DSET board meeting, Mr. McHale again reviewed the
strategic and business rationale for the proposed merger. Representatives of
Kaufman Bros. then reviewed financial analyses they had prepared in connection
with their evaluation of the proposed consideration to be paid in the merger.
Kaufman Bros.' representatives rendered their oral opinion, subsequently
confirmed in writing, to the effect that, as of June 25, 2001, and subject to
various assumptions, the consideration to be paid in the merger was fair to
DSET's shareholders from a financial point of view. For a more detailed
discussion of Kaufman Bros.' analysis and opinion, you should review the section
captioned 'The Merger -- Opinion of Financial Advisor to DSET' beginning on
page 50 and the text of Kaufman Bros.' opinion attached as Annex C to this joint
proxy statement/prospectus. Representatives of Hale and Dorr LLP then reviewed
for the board the principal terms of the merger agreement and the related
agreements and the results of its legal due diligence review of ISPSoft.

After discussion and deliberation, the DSET board unanimously:

determined that the merger is in the best interests of DSET and its
shareholders;

approved the merger, the merger agreement and the related agreements;

resolved to call a special meeting of DSET's shareholders to approve the
issuance of DSET common stock in connection with the merger as required by
the rules of The Nasdaq National Market;

resolved to recommend that the shareholders of DSET vote in favor of the
issuance of shares of DSET common stock in connection with the merger; and

approved a secured loan to ISPSoft of up to $2 million. Such loan was
secured by all of ISPSoft's assets and is payable on the earlier of October
31, 2001, ISPSoft being required to pay a termination fee under the merger
agreement and ISPSoft obtaining $2 million in equity financing. Such loan
includes the $500,000 previously lent to ISPSoft. DSET also became party to
ISPSoft's existing intercreditor agreement and DSET's security interest was
therefore given the same priority as the liens of ISPSoft's other lenders.
This interim financing of ISPSoft by DSET was insisted upon by ISPSoft in
order to induce ISPSoft to terminate its negotiations with interested
venture capital investors who could consummate an agreement in a much
shorter period, less than 30 days, thereby providing needed cash flow to
ISPSoft and limiting additional investment by the current shareholders.

At the meeting of ISPSoft's board of directors held on June 25, 2001,
representatives of Gunderson Dettmer, counsel to ISPSoft, reviewed for the board
the principal terms of the merger agreement and the related agreements. After
discussion and deliberation, the ISPSoft board unanimously:

determined that the merger is fair to, and in the best interests of,
ISPSoft's shareholders;

approved the merger and the merger agreement;

resolved to call a special meeting of ISPSoft's shareholders to adopt and
approve the merger agreement and the transactions contemplated in the
merger agreement; and

resolved to recommend that the ISPSoft shareholders vote in favor of
adoption and approval of the merger agreement and the merger.

Following the conclusion of the two board meetings, on June 26, 2001, DSET
and ISPSoft finalized, executed and delivered the merger agreement and each
company issued a press release announcing the transaction.

RECOMMENDATION OF DSET'S BOARD OF DIRECTORS AND DSET'S REASONS FOR THE MERGER

The DSET board of directors has approved the merger, the merger agreement
and the transactions contemplated thereby and believes that the terms of the
merger are fair to, and in the

<Page>

best interests of, DSET and its shareholders. The DSET board of directors
recommends a vote 'FOR' such proposals.

At a meeting held on June 25, 2001, the board of directors of DSET concluded
that the merger was in the best interests of DSET and its shareholders and
determined to recommend that the DSET shareholders approve the merger, the
merger agreement and the issuance of the shares of DSET common stock in the
merger. The summary set forth below briefly describes the reasons, factors, and
information taken into account by the DSET board in its conclusion. The DSET
board did not assign any relative or specific weights to the factors considered
in reaching such determination and individual directors may have given differing
weights to different factors.

In reaching its determination the DSET board consulted with DSET's
management and legal and financial advisors, and carefully considered a number
of factors, including:

The board of directors has determined that, compared to continuing to
operate alone, in a segment of the market characterized by an overly
leveraged customer base with limited sources for new funding, the merger
with ISPSoft will have better potential to grow revenue based on products
that are targeted at one of the potentially highest growth
areas -- IP-based networks. These products can be sold to any service
provider, anywhere in the world, and to most large commercial businesses.
ISPSoft not only adds value to CSP's, DSET's primary customers, ISPSoft
also markets to a broader range of service providers, including incumbent
local exchange carriers and enterprise customers, at all levels and
worldwide. We expect that this will provide DSET with a more stable base of
customers because DSET's traditional CSP customer base has been especially
hard hit economically in late 2000 and through all of 2001. ISPSoft's
target customers are generally more stable, possess better cash flow
positions and are less likely to default on their obligations, therefore
reducing the likelihood of bad debts to DSET subsequent to the merger;

the favorable terms and structure of the transaction, including the fixed
number of shares being issued (other than consideration with respect to net
revenue milestone payments set forth below) and the termination fee to be
paid by ISPSoft in the event of the termination of the merger agreement for
specified reasons which will compensate DSET for its expenses and
opportunities costs associated with pursuing the merger with ISPSoft; DSET
believes the terms of the transaction are favorable because: there is
limited cash being used as part of the purchase price; ISPSoft shareholders
are indemnifying DSET for breaches for up to 10% of the stock purchase
price; under the earn-out, DSET pays additional consideration only if there
are significant revenues obtained from ISPSoft's products; a sufficient
portion of the purchase price will be directed at the common shareholders
of ISPSoft, most of whom are employees of ISPSoft, thereby providing
incentives to such employees for the growth of the combined companies; and
the shares to be delivered in this merger will be locked-up for up to 180
days (with some exceptions) thereby easing the impact on the market for
DSET's shares. The terms of the above referenced potential net revenue
milestone payments considered by the board of directors and aggregating as
much as $1,000,000, will be paid by DSET pursuant to the following
schedule, and will be paid in cash and/or shares of DSET common stock, at
DSET's discretion:

an aggregate of $250,000 shall be paid on or before January 1, 2002 if,
prior to the closing of the merger, ISPSoft has achieved more than
$500,000 in recognized revenues, net of related returns at any time,
for sales of certain ISPSoft products or services;

an aggregate of $250,000 shall be paid on or before March 31, 2002 if,
for the period beginning June 26, 2001 through December 31, 2001,
ISPSoft (for the period beginning June 26, 2001 through the closing of
the merger) and the combined company (for the period beginning upon the
closing of the merger through December 31, 2001) collectively achieve
more than $3,000,000 in recognized revenues, net of related returns at
any time, for sales of certain ISPSoft products or services; and

an aggregate of $500,000 shall be paid on or before September 30, 2002
if, for the period beginning January 1, 2002 through June 30, 2002, the
combined company

<Page>

achieves more than $4,000,000 in recognized revenues, net of related
returns at any time, for sales of certain ISPSoft products or services;

Since we can sell provisioning systems for IP-based networks to any service
provider anywhere in the world, we will have eliminated our dependence on
the CLECs in the United States. Selling to Tier One service providers
improves the chances of cash collection considerably;

DSET's shareholders would have the opportunity to participate in the
potential for growth of the combined company after the merger;

the strength of the combined management team for the merged companies which
DSET believes are as follows: Mr. McHale's experience in dealing with the
challenges of leading a public company and introducing new products and
markets; Mr. Sugla's extensive experience in the IP provisioning market;
and Mr. Crowell's experience in dealing with Wall Street and large and
small publicly-traded companies. The DSET management team is currently
comprised of an experienced CEO, CFO and VP of Implementation Services. We
have an 'acting' VP of Product Development for our gateway systems. DSET
currently lacks senior level executives in the area of Marketing, Business
Development, Product Development and Sales. The ISPSoft team already has a
VP of Marketing and the current CEO of ISPSoft will become the President of
the combined group, providing the technical vision and will manage product
development and business development. DSET has a search underway for a VP
of Worldwide Sales. DSET believes that this combination of senior level
talent, with many years of experience in public markets, the software and
services field and specifically the telecommunications field will help it
become a force in the communications market and survive the current telecom
software consolidation;

The ability to complete the merger as a tax-free reorganization for United
States federal income tax purposes;

DSET believes that the growth prospects for IP provisioning services are
significant;

the board's belief that the combination of the two companies will be
attractive to customers because it will represent a more integrated
solution for provisioning telecommunications services;

the board's belief that the combination of the two companies will be
attractive to potential investors and enable the combined company to raise
funds to pursue its objectives because the merger allows DSET to refocus
its sales and research and development efforts on high growth areas (IP
provisioning);

the transaction provides DSET the potential to pursue product and
technology extensions in its existing business using the engineering and
design expertise of ISPSoft;

information concerning the financial condition, results of operations,
prospects and businesses of DSET and ISPSoft, including their cash flows
from operations, the recent stock market performance of DSET common stock
and general information relating to possible synergies, cost reductions,
and operating efficiency and consolidations which led DSET to believe that:
it could integrate ISPSoft without significantly increasing overhead as
DSET could use its existing sales and research and development resources;
and ISPSoft could obtain venture capital financing as an alternative to the
merger;

current adverse industry, economic and market conditions for
telecommunications companies and especially CLECs to which DSET sells its
gateway products prompting DSET to diversify its business;

the fact that the combined company would have a larger market
capitalization and a more liquid trading market for its common stock, which
the board of directors believed could possibly result in a better trading
multiple. DSET believes that the market capitalization of the combined
companies subsequent to the merger will increase because of the significant
increase in the number of outstanding shares of common stock and the belief
that investors will view the merger as a positive step by DSET because it
will enable DSET to enhance

<Page>

and add to its product offerings, broaden DSET's customer base with service
provider and enterprise clients having cash flow and financial positions
superior to DSET's existing customer base, while decreasing DSET's
dependence on any one segment of the market;

the prospects of DSET independent of ISPSoft in which DSET would be
dependent almost entirely on the gateway market which has been materially
adversely affected by the downturn in the telecommunications industry;

the potential for other parties to enter into strategic relationships with
or to acquire ISPSoft which could impede DSET's ability to access ISPSoft's
technology through contractual arrangements;

reports from management and legal counsel as to the results of the due
diligence investigation of ISPSoft; and

the opinion of Kaufman Bros. to the effect that, as of June 25, 2001, based
upon and subject to the limitations, assumptions and qualifications set
forth in its written opinion attached to this document as Annex C, the
consideration to be paid by DSET was fair, from a financial point of view,
to DSET's shareholders. When considering Kaufman Bros.' opinion, DSET's
board of directors took into account that a substantial portion of Kaufman
Bros.' consideration was based upon the successful completion of the
merger. DSET's board of directors did not believe that the contingent
nature of the consideration detracted from Kaufman Bros.' opinion in light
of Kaufman Bros.' reputation and the common nature of contingent
consideration for investment bankers.

The DSET board of directors also considered several potentially unfavorable
factors. The most significant of these were:

the potential adverse effect that the public announcement of the merger
would have on the market price of DSET common stock as a result of the
dilutive effect of the shares of DSET common stock issued in the merger;

the fixed nature of the exchange ratio and the resulting risk that, should
there be a significant increase in the market value of DSET's common stock,
the value of the consideration to be received by ISPSoft stockholders would
be increased and the purchase price paid by DSET would be likewise
increased;

the risk ISPSoft products would not be successfully developed and marketed
in the projected timetable, if at all, and the risk that other benefits of
the merger would not be fully achieved;

the difficulty in successfully integrating separate operations of DSET and
ISPSoft;

the risk of disruption of DSET's on-going business as a result of
uncertainties created by the announcement of the merger;

the substantial dilution to DSET's current shareholders;

the risk that the merger might not be consummated despite the parties'
efforts and the disruption to DSET's business if the merger is abandoned;

the substantial charges to be incurred in connection with the merger,
including costs of integrating the businesses and transaction expenses
arising from the merger;

the significant amount of cash needed to close the transaction and satisfy
ISPSoft's outstanding debt;

the risk that key employees of ISPSoft might not want to work for DSET;

the termination fee to be paid by DSET in the event of the termination of
the merger agreement for specified reasons; and

the combined company would be a larger, but not necessarily a more
profitable participant in the telecommunications industry. There is no
guarantee that the merger will enable the combined company to become
profitable in the short or long term.

<Page>

The foregoing discussion of the information and facts considered by the DSET
board of directors is not intended to be exhaustive but includes material
factors considered by the DSET board of directors. In view of the complexity and
wide variety of information and factors, both positive and negative, considered
by the DSET board of directors, it did not find it practical to quantify, rank
or otherwise assign relative or specific weights to the factors considered. In
addition, the DSET board did not reach any specific conclusion with respect to
each of the factors considered, or any aspect of any particular factor. Instead,
the DSET board of directors conducted an overall analysis of the factors
described above, including discussions with DSET's management and legal and
financial advisors.

After taking into consideration all of the factors set forth above, DSET's
board of directors concluded that the merger was in the best interests of DSET
and its shareholders and that DSET should proceed with the merger.

RECOMMENDATION OF THE BOARD OF DIRECTORS OF ISPSOFT; ISPSOFT'S REASONS FOR THE
MERGER

ISPSoft's board determined that the merger agreement and the related
transactions, including the merger, are fair to and in the best interests of
ISPSoft and its shareholders. Accordingly, the ISPSoft board has adopted the
merger agreement, and recommends that ISPSoft's shareholders vote 'FOR' approval
of the merger agreement and the merger.

In the course of reaching its decision to adopt the merger agreement, the
ISPSoft board consulted with ISPSoft's management, as well as its outside legal
counsel, and considered the following material factors:

the risks and potential rewards associated with, as an alternative to the
merger, continuing to execute ISPSoft's strategic plan as an independent
entity. Such risks include, among others, the risks associated with
remaining independent amidst industry-wide consolidation and uncertainty
with respect to ISPSoft's ability to raise capital to fund operations, and
such rewards include, among others, the ability of existing ISPSoft
shareholders to partake in the potential future growth and profitability of
DSET;

the ability of ISPSoft to continue to operate as an independent entity
given its low cash position and the ISPSoft board's conclusion that
ISPSoft's ability to raise capital sufficient to fund ISPSoft's operations
is hampered given current economic conditions;

the likelihood that ISPSoft would be able to merge with, or enter into a
strategic transaction with, an entity other than DSET given the lack of
offers ISPSoft had received from other potential bidders and the additional
time and resources ISPSoft would need to expend to generate such interest;

the possibility, as alternatives to the merger, of seeking to be acquired
by another company, seeking to engage in one or more joint ventures or
seeking to engage in a combination with a company other than DSET and the
ISPSoft board's conclusion that a transaction with DSET is more feasible,
and is expected to yield greater benefits, than the likely alternatives.
The ISPSoft board concluded that a combination with DSET was more feasible
than the other alternatives it reviewed for reasons including the fact that
DSET was interested in pursuing a transaction with ISPSoft, and ISPSoft's
view that the transaction could be acceptably completed from a timing and
regulatory standpoint, and would yield greater benefits than the
alternatives given DSET's financial strength, and the ability of a combined
company to fund a greater number of long-term growth projects and to
compete effectively;

the value of the consideration provided for in the merger agreement based
on the then-current market price and historical trading price of DSET
shares over the past year and relative to the stock price premiums paid in
mergers of comparable size that the premium offered in the merger was
within the range of premiums paid in comparable transactions, and that
ISPSoft's shareholders would hold approximately 45.7% of the outstanding
stock of the combined company after the merger;

<Page>

publicly available information concerning DSET's financial condition and
results of operations, the recent stock market performance of DSET common
stock and the ISPSoft board's determination that, notwithstanding the
apparent decline in DSET's financial condition as set forth in its recent
publicly available information, the possible synergies of the combined
companies relating to cost reductions, operating efficiencies and
consolidations would likely lead to a better chance of success than if
ISPSoft elected to continue to operate as an independent entity;

the ability to complete the merger as a tax-free reorganization for United
States federal income tax purposes;

the terms and conditions of the merger agreement, which permit ISPSoft
generally to conduct its business in the ordinary course prior to the
merger. See 'The Merger Agreement -- Certain Covenants';

that three designees of ISPSoft would become directors of DSET, as
described under 'The Merger Agreement -- Certain Covenants';

that while the merger is likely to be completed, there are risks associated
with obtaining necessary approvals, and as a result of certain conditions
to the completion of the merger, it is possible that the merger may not be
completed. See 'The Merger Agreement -- Conditions to Obligations to Effect
Merger';

the interests that certain executive officers and directors of ISPSoft may
have with respect to the merger in addition to their interests as
shareholders of ISPSoft generally. See ' -- Interests of Executive Officers
and Directors of ISPSoft in the Merger';

the merger will enable ISPSoft shareholders to participate in, and benefit
from the future growth potential of, an integrated company with a greater
depth of technologies, marketing opportunities and financial and operating
resources which should enhance the ability to bring technology to market;

the public market for DSET common stock will offer ISPSoft shareholders
liquidity while avoiding the risk and investment in time and expense of an
initial public offering, if such initial public offering were even
possible. The ISPSoft board also considered the risk of DSET being delisted
from the Nasdaq National Market in light of DSET's current stock price;

the availability of stock options for the publicly traded DSET stock will
enable the combined companies to attract high caliber employees and
consultants to continue the development of technology; and

after the merger, the combined companies will be able to pursue further
acquisitions to strengthen their technology offerings using the publicly
traded DSET common stock as all or part of the consideration.

In view of the wide variety of factors considered in connection with its
evaluation of the merger and the complexity of these matters, the ISPSoft board
did not find it useful to and did not attempt to quantify, rank or otherwise
assign relative weights to these factors. In addition, the ISPSoft board did not
undertake to make any specific determination as to whether any particular
factor, or any aspect of any particular factor, was favorable or unfavorable to
the ISPSoft board's ultimate determination, but rather the ISPSoft board
conducted an overall analysis of the factors described above, including thorough
discussions with and questioning of ISPSoft's management and legal, financial
and accounting advisors. In considering the factors described above, individual
members of the ISPSoft board may have given different weight to different
factors.

OPINION OF FINANCIAL ADVISOR TO DSET

In connection with its consideration of the merger, DSET requested that
Kaufman Bros. advise the Board of Directors with respect to the fairness, from a
financial point of view, to the stockholders of DSET of the consideration to be
paid by DSET in the merger.

<Page>

DSET selected Kaufman Bros. for a number of reasons, including its
familiarity with DSET and its experience and reputation in the areas of
valuation and financial advice, particularly in relation to transactions of the
size and nature of the merger. Kaufman Bros. is an investment banking firm which
is regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, leveraged buyouts, negotiated
underwritings, private placements and valuations for corporate and other
purposes. In the normal course of its business, Kaufman Bros. trades DSET common
stock for its own account or for the account of its customers and, accordingly,
may, from time to time, hold long or short positions in DSET common stock.

On June 25, 2001, Kaufman Bros. reviewed with the Board of Directors of DSET
the financial analyses performed by Kaufman Bros., and delivered to the Board of
Directors an oral opinion, which opinion was subsequently confirmed by delivery
of a written opinion, dated June 25, 2001, to the effect that, based upon and
subject to the considerations and limitations set forth in such opinion, as of
June 25, 2001, the consideration to be paid by DSET in the merger was fair, from
a financial point of view, to the stockholders of DSET.

The following summary of Kaufman Bros.' opinion may not include all of the
information important to you. The full text of the opinion letter, dated
June 25, 2001, delivered by Kaufman Bros. to the DSET Board of Directors, which
sets forth fully the assumptions made, general procedures followed, matters
considered and limits on the scope of review undertaken, is included as Annex C
to this Joint Proxy Statement/Prospectus and is incorporated herein by
reference. Kaufman Bros. has consented to the inclusion of the full text of its
opinion as Annex C to this Joint Proxy Statement/Prospectus. The summary of
Kaufman Bros.' opinion set forth below is qualified in its entirety by reference
to the full text of such opinion. Holders of DSET common stock are urged to read
Kaufman Bros.' opinion carefully and in its entirety.

DSET did not place any limitation upon Kaufman Bros. with respect to the
procedures to be followed or factors to be considered in rendering its opinion.
In conducting its investigation and analysis and in arriving at its opinion,
Kaufman Bros. reviewed information and took into account the financial and
economic factors it deemed relevant and material under the circumstances. In
connection with its analysis, Kaufman Bros., among other things:

Reviewed a draft of the merger agreement, dated June 21, 2001;

Reviewed the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001, as filed with the Securities and Exchange
Commission;

Reviewed certain internal information relating to the Company provided to
Kaufman Bros. by management of the Company, including historical financial
information and financial forecasts;

Reviewed certain internal information relating to ISPSoft provided to
Kaufman Bros. by ISPSoft's management, including historical financial
information and financial forecasts;

Held discussions with the Company's and ISPSoft's respective managements
regarding the respective businesses, operations and prospects of the
Company and ISPSoft;

Visited ISPSoft's facilities in Shrewsbury, New Jersey;

Reviewed the historical trading prices and volumes of the Company's Common
Stock;

Reviewed certain publicly available information concerning certain other
companies engaged in businesses which Kaufman Bros. believed to be
reasonably comparable to ISPSoft;

Reviewed information concerning certain other business transactions which
Kaufman Bros. believed to be reasonably comparable to the merger;

Performed various valuation analyses as Kaufman Bros. deemed appropriate
using generally accepted analytical methodologies; and

Performed such other financial studies, analyses, inquiries and
investigations as Kaufman Bros. deemed appropriate.

<Page>

In arriving at its opinion, Kaufman Bros. assumed and relied upon, without
independent verification, the accuracy and completeness of all of the financial
and other information provided to it by or on behalf of DSET or ISPSoft, or
obtained by Kaufman Bros. from publicly available sources and upon the assurance
of the management of DSET and ISPSoft that they were not aware of any
information or facts that would make any such information incomplete or
misleading. Kaufman Bros. did not attempt to independently verify such
information. In conducting its review, Kaufman Bros. did not conduct or obtain
an independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of DSET or ISPSoft, nor was it furnished with any such
evaluation or appraisal. Kaufman Bros. assumed, with DSET's consent, that:

The merger will be consummated in accordance with the terms set forth in
the merger agreement, without any amendment thereto and without waiver by
the parties thereto of any of the conditions to their respective
obligations thereunder; and

All regulatory and other approvals and third party consents required for
consummation of the merger will be obtained without material cost to DSET
or ISPSoft.

Kaufman Bros. assumed that the financial forecasts examined by it were
reasonably prepared and were based upon the best available estimates and good
faith judgments of DSET's and ISPSoft's respective senior managements as to the
future performance of DSET and ISPSoft. Where Kaufman Bros. prepared forecasts
based upon information provided by DSET or ISPSoft, Kaufman Bros. obtained the
assurance of the management of DSET or ISPSoft, as the case may be, that such
forecasts were reasonable.

Kaufman Bros. noted that its opinion was necessarily based upon the
financial, economic, market and other conditions as they existed and could be
evaluated by Kaufman Bros. on, and the information made available to it as of,
the date of its opinion. Kaufman Bros. has disclaimed any undertaking or
obligation to advise any person of any change in any fact or matter affecting
its opinion that is brought to its attention after the date of its opinion.
Although Kaufman Bros. evaluated the consideration to be paid by DSET in the
merger from a financial point of view, Kaufman Bros. was not asked to, and did
not, recommend the specific consideration payable in the merger, which was
determined through negotiations between DSET and ISPSoft.

Kaufman Bros.' opinion is for the information of DSET's Board of Directors
for its use in evaluating the fairness, from a financial point of view, to the
stockholders of DSET of the consideration to be paid by DSET in the merger. Such
opinion does not constitute a recommendation as to any action the Board of
Directors or any stockholder of DSET should take in connection with the merger
or any aspect thereof. Kaufman Bros.' opinion is not an opinion as the
structure, terms or effect of any other aspect of the merger or of any of the
transactions contemplated in connection therewith or as to the merits of the
underlying decision of DSET to enter into the merger or any other such
transaction.

In preparing its opinion, Kaufman Bros. performed a variety of financial and
comparative analyses. The analyses which Kaufman Bros. considered to be material
to its opinion are described below. The summary of such analyses does not
purport to be a complete description of the analyses underlying Kaufman Bros.'
opinion or of the presentation by Kaufman Bros. to the Board of Directors. The
preparation of a fairness opinion is a complex analytical process involving
various determinations as to the most appropriate and relevant methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such opinion is not readily susceptible to summary
description. Furthermore, in arriving at its opinion, Kaufman Bros. did not
attribute particular weight to any analysis or factor considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. Accordingly, Kaufman Bros. believes that its analysis must
be considered as a whole and that selecting portions of its analyses and
factors, without considering all analyses and factors, could create a misleading
or incomplete view of the process underlying the preparation of its opinion. In
its analysis, Kaufman Bros. made numerous assumptions with respect to the DSET
and ISPSoft, industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond DSET's and
ISPSoft's control. The estimates contained in such analyses and the valuation
ranges resulting from any particular analysis are not necessarily indicative of
the

<Page>

actual values or predictive of future results or values, which may by
significantly more or less favorable than those suggested by such analyses. In
addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty. Kaufman Bros.' opinion and
analyses were only one of many factors considered by DSET's Board of Directors
in its evaluation of the merger and should not be viewed as determinative of the
view of the Board of Directors or management of DSET with respect to the merger
or the consideration to be paid by DSET in connection therewith.

The following is a summary of the material financial analyses performed by
Kaufman Bros. in connection with rendering its opinion.

Analysis of Selected Comparable Acquisition Transactions

Using publicly available information, Kaufman Bros. analyzed certain
financial and operating information relating to the following 16 selected merger
and acquisition transactions in the telecommunications software sector
('Comparable Transactions'), each of which was consummated in calendar year 2000
or 2001. The Comparable Transactions were chosen as they involved acquired
companies that Kaufman Bros. believes operate in the industry in which ISPSoft
operates.

Kaufman Bros. noted that none of the Comparable Transactions reviewed was
exactly comparable to the merger and that the range of information available for
each Comparable Transaction varied from detailed information relating to
publicly registered companies, to limited and summary information contained in
public press releases relating to private companies. The Comparable Transactions
reviewed by Kaufman Bros. were (the purchaser is listed first, followed by the
acquired company and the nature of the transaction (i.e. cash for stock, stock
for stock or a combination of the two):

<Table>
<Caption>
PURCHASER ACQUIRED COMPANY NATURE OF TRANSACTION
- --------- ---------------- ---------------------

CALENDAR YEAR 2001
McLeod USA Inc. Intelispan Inc. Stock for Stock
Convergys Corp. Geneva Technology Ltd Stock for Stock
Schlumberger Sema Stock for Stock
Agilent Objective Systems Integrators Cash
Orchestream CrossKeys Systems Stock for Stock
Lightbridge Inc. Corsair Communications Stock for Stock
NetIQ Corporation WebTrends Corporation Stock for Stock

CALENDAR YEAR 2000
Spirent PLC Hekimian Laboratories Combination
Portal Software Solution42 Stock for Stock
Cisco Systems CAIS Software Solutions Cash
Nortel Networks Alteon Websystems Stock for Stock
BCE Emergis InvoiceLink Not Available
Micromuse NetOps Stock for Stock
Nortel Networks Architel Systems Stock for Stock
Sema Group LHS Group Stock for Stock
Amdocs Ltd Solect Technology Stock for Stock
</Table>

In the Comparable Transactions which are designated as stock for stock or a
combination of stock and cash for stock, the amount of stock issued by the
purchaser ranged from 0.1% to 36.5% of its issued and outstanding shares.

For each Comparable Transaction, Kaufman Bros. calculated multiples of the
market value plus total debt minus total cash ('Enterprise Value') of the
acquired company compared to its last twelve months ('LTM') revenue, operating
income before interest, taxes, depreciation and amortization ('EBITDA') and net
income, based upon the most recent publicly available information prior to the
closing of the respective Comparable Transaction. Kaufman Bros. then

<Page>

applied these multiples of revenues to the projected financial results of
ISPSoft for the period ending December 31, 2001. Due to the stage of ISPSoft's
development (i.e. no historical revenues, history of losses and negative
EBITDA), Kaufman Bros. could not apply these multiples to ISPSoft's historical
results. Moreover, application of the multiples to ISPSoft's projected EBITDA
and net income (both of which are negative numbers) did not produce meaningful
results. The following table reflects the results of these analyses.

Comparable Transactions Analysis

<Table>
<Caption>
MEDIAN MEAN LOW - HIGH
------ ---- ----------
($ IN MILLIONS)

Enterprise Value to LTM Revenue.......................... 8.5x 19.9x 1.2x - 71.2x
Implied Enterprise Value of ISPSoft...................... $16.9 $39.4 $2.4 - $142.4
</Table>

Kaufman Bros. considered that the implied Enterprise Value of ISPSoft based
upon applying the median and mean of these multiples to ISPSoft's financial data
falls within the range of $16.9 million to $39.4 million.

Analysis of Selected Publicly Traded Companies

Kaufman Bros. reviewed publicly available financial information, as of the
most recently reported period, and stock market information as of June 22, 2001,
for the following eight publicly traded companies that Kaufman Bros. deemed
reasonably comparable to ISPSoft (the 'Comparable Companies' or 'Total Sample'):

1. Ace*Comm Corp.
2. Concord Communications
3. Evolving Systems Inc.
4. Metasolv Inc.
5. NetScout Systems Inc.
6. Orchestream Holdings plc
7. TCSI Corp.
8. Visual Networks

In its opinion, the public companies chosen by Kaufman Bros. for its
analysis (i) have products similar to ISPSoft, (ii) sell to the customer base
that ISPSoft's products are intended for, (iii) have products complementary to
ISPSoft's products or which can be integrated with ISPSoft's products in an
operational environment, or (iv) are software development companies that offer
products primarily for communication networks and produce a substantial portion
of their revenues from licensing their software.

In analyzing the Comparable Companies, Kaufman Bros. noted that Orchestream
is the company with products most closely resembling ISPSoft's products. In
addition, Orchestream's financial results were the most comparable to ISPSoft's
projected results in that Orchestream's LTM revenues were less than $5 million,
while the LTM revenues of the other Comparable Companies were significantly
higher. Kaufman Bros. also noted that Metasolv's products are complementary to
Orchestream's and that these products are sold to the same customers as the
customers targeted by ISPSoft's products. Moreover, Metasolv is the only company
in the Total Sample which to date has reported a profit. ISPSoft's projected
financial results for the periods analyzed indicated that ISPSoft will become
profitable in the near future. Accordingly, Kaufman Bros. conducted a parallel
analysis of Orchestream and Metasolv independent of the other comparable
companies (the 'Selected Sample').

For each Comparable Company, Kaufman Bros. divided the Enterprise Value of
the subject company by its LTM revenue, Fiscal Year 2001 revenue estimates
('FY2001') and Fiscal Year 2002 revenue estimates ('FY2002'), to calculate the
multiple of the company's Enterprise Value to each of those revenue numbers.
Kaufman Bros. then applied these multiples to the projected financial results of
ISPSoft for the periods ending December 31, 2001 and December 31, 2002,
furnished to

<Page>

Kaufman Bros. As noted earlier, ISPSoft is a development stage company and has
no historical revenues. Accordingly, Kaufman used for comparative purposes the
projected revenue for the year ending December 31, 2001 as LTM revenues, the
projected revenue for the 12 months ending June 30, 2002 for the FY2001 estimate
(as ISPSoft was not projected to generate revenues until the quarter ending
September 30, 2001), and the projected revenue for the year ending December 31,
2002 for the FY2002 estimate. The chart below summarizes these analyses:

Comparable Company Analysis

<Table>
<Caption>
TOTAL SAMPLE SELECTED SAMPLE
------------------------------- ------------------------------
MEDIAN MEAN LOW - HIGH MEDIAN MEAN LOW - HIGH
------ ---- ---------- ------ ---- ----------
($ IN MILLIONS)

Enterprise Value/LTM revenue........... 1.1x 3.2x 0.3x - 15.3x NM 8.2x 1.1x - 15.3x
Enterprise Value/FY2001 revenue........ 1.0x 1.2x (0.9x) - 5.4x NM 3.2x 1.0x - 5.4x
Enterprise Value/FY2002 revenue........ 0.8x 0.9x (0.6x) - 2.3x NM 1.5x 0.8x - 2.3x
Implied Enterprise Value of ISP based on:
Enterprise Value/LTM revenue....... $2.2 $6.3 $ 0.6 - $30.6 NM $16.2 $2.2 - $30.6
Enterprise Value/FY2001 revenue.... 5.9 7.5 (5.4) - 32.4 NM 19.0 6.0 - 32.4
Enterprise Value/FY2002 revenue.... 8.8 9.5 (5.9) - 24.4 NM 16.3 8.6 - 24.4
</Table>

Kaufman Bros. considered that the implied Enterprise Value of ISPSoft
determined by applying the median and mean multiples derived from the Total
Sample and mean multiple derived from the Selected Sample to ISPSoft's financial
data as described above falls within the range of $2.2 million to $19.0 million.

Analysis of Selected Privately Held Companies

Kaufman Bros. reviewed information for 30 privately held companies that
Kaufman Bros. deemed reasonably comparable to ISPSoft, eight of which had
disclosed sufficient financial information relevant to Kaufman Bros.' analysis
(such eight companies, the 'Private Comparable Companies'). Each of these
companies operates in the service activation, provisioning, workflow management,
network management and inventory management areas of the communication software
industry. In its opinion, the sample of 30 privately held companies chosen by
KBRO for its analysis (i) have products similar to ISPSoft, (ii) sell to the
same intended customer base as ISPSoft, (iii) have products complementary to
those of ISPSoft or which can be integrated with ISPSoft's products in an
operational environment, or (iv) are software development companies that offer
products primarily for communications networks and produce a substantial portion
of their revenues from licensing their software.

For each Private Comparable Company, Kaufman Bros. calculated multiples of
LTM revenue to their pre-money and post-money valuations. Kaufman Bros. then
applied these multiples to the projected revenues of ISPSoft for the year ending
December 31, 2001. An entity's pre-money valuation is the implied value of its
common stock outstanding prior to the issuance of new shares or share
equivalents in connection with a proposed investment. It is generally calculated
by multiplying the number of shares of common stock outstanding prior to the
investment by the per share (or per share equivalent) price of the new
investment. It is a measure of the value assigned by the investor to the
business just prior to its investment. An entity's post-money valuation is the
value of the common equity subsequent to the new investment and is determined
either by adding the dollar amount of the new investment to the pre-money
valuation or by multiplying the number of shares of common stock and common
stock equivalents by the per share investment price. The post-money valuation is
a measure of the valuation of the business subsequent to the new investment.

The table below summarizes these analyses.

<Page>

Private Company Analysis

<Table>
<Caption>
PRE-MONEY POST-MONEY
------------------------------- ------------------------------
MEDIAN MEAN LOW - HIGH MEDIAN MEAN LOW - HIGH
------ ---- ---------- ------ ---- ----------
($ IN MILLIONS)

Enterprise Value/LTM revenue........... 6.5x 7.2x 2.4x - 16.7x 8.6x 9.3x 3.8x - 20.7x
Implied Enterprise Value of ISPSoft.... $12.8 $14.2 $4.8 - $33.4 $16.9 $18.4 $7.6 - $41.4
</Table>

Kaufman Bros. considered that the implied Enterprise Value of ISPSoft
determined by applying the median and mean of these multiples to ISPSoft's
financial data as described above falls within the range of $12.8 million to
$18.4 million.

Discounted Cash Flow Analysis

Kaufman Bros. performed a discounted cash flow analysis of ISPSoft, on a
stand-alone-basis, for the fiscal years 2001 through 2005. The analysis was
based upon financial projections for the five year period as provided by the
management of ISPSoft and reviewed and discussed with the management of DSET. In
addition, Kaufman performed certain sensitivity analyses on ISPSoft's projected
financial results. A discounted cash flow analysis is a traditional valuation
methodology used to derive a valuation of a corporate entity by calculating the
estimated future free cash flows of such entity and discounting such cash flow
results back to the present. A sensitivity analysis is conducted in light of the
inherently uncertain nature of projections. It involves adjusting certain
assumptions or bases underlying management's projections and subjecting the
resulting data to the same financial analyses as management's case. The
adjustments applied by Kaufman Bros. served to reduce ISPSoft's projected
revenues and increase its projected expenses. The effect of these adjustments
was to analyze a lower range of projected results to that presented by ISPSoft's
management.

In its discounted cash flow analyses, Kaufman Bros. estimated a terminal
value of free cash flow in 2005 using a terminal value multiple range of 5.0x to
7.0x and discounted the stream of free cash flows during the forecast period
together with the estimated terminal value at discount rates ranging from 20.0%
to 30.0%. Selection of an appropriate discount rate is an inherently subjective
process and is affected by numerous factors. The discount rates used by Kaufman
Bros. were selected based upon ISPSoft's stage of development, current financial
condition and the risk associated with ISPSoft achieving its financial
projections. This range of discount rates also reflects an estimate of the cost
of capital for ISPSoft and the current valuation parameters for comparable
public companies. Such analysis produced Enterprise Values for ISPSoft ranging
from $27.8 million to $36.2 million. The following table summarizes the results
of Kaufman Bros.' discounted cash flow analysis.

DISCOUNTED CASH FLOW ANALYSIS
($ IN MILLIONS)

<Table>

Range of Free Cash Flow Multiples........................... 5.0x - 7.0x
Discount Rates.............................................. 20% - 30%
Implied Total Enterprise Value of ISPSoft................... $27.8 - $36.2
</Table>

Compensation

Pursuant to the terms of Kaufman Bros.' engagement, DSET has paid to Kaufman
Bros. the sum of $75,000 and has agreed to pay Kaufman Bros. a cash fee of 5% of
the consideration paid by DSET in the merger upon closing of the merger less any
amounts previously paid. DSET has also agreed to reimburse Kaufman Bros. for its
reasonable out-of-pocket expenses incurred in performing its services, including
the reasonable fees and expenses of its legal counsel, and to indemnify Kaufman
Bros. and related persons against certain liabilities relating to or arising out
of its engagement, including certain liabilities under the federal securities
laws.

<Page>

INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS OF ISPSOFT IN THE MERGER

In considering the recommendation of the ISPSoft board of directors in favor
of the merger agreement and the merger, ISPSoft shareholders should be aware of
the interests that certain directors and executive officers of ISPSoft have in
the merger as specified in the merger agreement that are different from, or in
addition to the interests of the shareholders of ISPSoft generally. These
interests are different from and in addition to their interests as shareholders
and the interests of the other ISPSoft shareholders. These interests relate to
or arise from, among other things:

Binay Sugla currently holds 1,400,000 shares of common stock of ISPSoft,
all of which are subject to a right of repurchase in the event Mr. Sugla's
service with ISPSoft terminates. This right of repurchase lapses over three
years so that none of Mr. Sugla's shares are subject to a right of
repurchase after April 19, 2003. Upon consummation of the merger, this
vesting schedule will be accelerated by one year, such that an additional
one-third of the shares will no longer be subject to the right of
repurchase;

employment offers being extended to ISPSoft management members;

the continued indemnification of ISPSoft directors and officers for actions
taken prior to the merger; and

the election of Binay Sugla, and two other individuals mutually acceptable
to each of DSET and ISPSoft as members of the DSET board of directors upon
the completion of the merger.

Except as described below, those persons have, to the knowledge of DSET and
ISPSoft, no material interest in the merger apart from those of shareholders
generally. The ISPSoft board of directors was aware of, and considered the
interests of, their directors and executive officers when it approved the merger
agreement and the merger.

ISPSoft Stock Options. No options to purchase shares of ISPSoft common stock
granted to directors and executive officers of ISPSoft will accelerate upon the
completion of the merger. The following table shows options held by directors
and executive officers of ISPSoft as of October 31, 2001:

<Table>
<Caption>
NUMBER OF
SHARES OF
ISPSOFT OPTION SHARES
DATE OF COMMON EXERCISABLE
OPTION STOCK SUBJECT EXERCISE AS OF
OFFICER OR DIRECTOR GRANT TO OPTIONS(1) PRICE OCTOBER 31, 2001
------------------- ----- ------------- ----- ----------------

Binay Sugla............................. 4/30/01 600,000 $0.10 300,000(1)
5/15/01 52,090 $0.10 52,090(2)
Hariharan Krishnan...................... 5/15/01 29,010 $0.10 29,010(3)
Anand Desai............................. 5/15/01 550,000 $0.10 550,000(4)
5/15/01 45,230 $0.10 45,230(5)
</Table>

- ---------

(1) The exercise price of each option listed in the table below will be adjusted
in connection with the merger by dividing the exercise price by the
conversion ratio of 0.087648, rounded up to the nearest whole cent. As a
result, the exercise price for each option after the merger will equal
$1.15.

(2) The number of options listed in the table below will be adjusted in
connection with the merger by multiplying the number of options set forth
below by the conversion ratio of 0.087648, rounded down to the nearest whole
number.

(3) Three hundred thousand shares underlying this option are immediately
exercisable. The remaining 300,000 options will become exercisable as
follows: (a) 150,000 of the remaining options will become exercisable when,
and if, ISPSoft successfully hires certain additional members of its
executive team; and (b) 150,000 of the remaining options will become
exercisable when, and

<Page>

if, ISPSoft achieves certain gross revenue targets during a fiscal year.
This vesting schedule will not be affected by the merger.

(4) All of the shares underlying this option are exercisable, and none of these
shares is subject to a right of repurchase in favor of the surviving entity.

(5) All of the shares underlying this option are exercisable, and none of these
shares is subject to a right of repurchase in favor of the surviving entity.

(6) All of the shares underlying this option are immediately exercisable and are
subject to a right of repurchase in favor of ISPSoft that lapses over time
in the event Mr. Desai is terminated. As of October 31, 2001, 137,500 shares
had vested and were no longer subject to a right of repurchase. The
remaining 412,500 shares shall vest in equal monthly installments
thereafter.

(7) All of the shares underlying this option are exercisable, and none of these
shares is subject to a right of repurchase in favor of the surviving entity.

Continued Employment. As a condition to the closing of the merger, the
following individuals must remain employed by DSET in positions substantially
similar to those in which they currently serve ISPSoft:

Raghvender Arni
Ramesh Balakrishan
Sukesh Garg
Ajita John
Hariharan Krisnan
Anand Desai
Edwin Park
Roshan Sequeira
Kumar Srinivasan
Ajay Wanchoo

Each of these employees will execute DSET's offer letter and other customary
agreements and will be eligible for an annual cash bonus and be able to
participate in DSET's stock option plan. Please see 'Other
Agreements -- Employment Agreement and Offer Letters of Employment' below for a
detailed description of the offers.

Indemnification of Directors and Officers. The merger agreement provides
that for three years after the completion of the merger, DSET will not alter or
impair any exculpatory or indemnification provision now existing in the ISPSoft
certificate of incorporation or bylaws. In addition, the merger agreement
provides that DSET will indemnify each present and former director and officer
for all liabilities pertaining to matters existing or occurring at or prior to
the completion of the merger to the fullest extent permitted by New Jersey law.

STOCK OPTIONS

Under the merger agreement, at the effective time of the merger, DSET will
assume the ISPSoft 2000 Stock Option Plan and all stock options granted under
the plan. Each stock option outstanding under the plan at the effective time
will be converted into a stock option to acquire DSET common stock on the same
terms and conditions as applied to the ISPSoft stock option. The number of
shares of DSET common stock to be issued in respect of a DSET option will be
equal to the number of shares of ISPSoft common stock that would be issued in
respect of that option multiplied by 0.088058, rounded down to the nearest whole
share. The exercise price per share of DSET common stock for any ISPSoft option
will be equal to the exercise price per share of ISPSoft common stock for that
option divided by 0.087648, rounded up to the nearest whole cent. As of October
31, 2001, the number of shares of ISPSoft common stock reserved for issuance
pursuant to outstanding ISPSoft stock options under the plan was 2,722,510.

Under the merger agreement, ISPSoft agrees to use its commercially
reasonable best efforts to cause the termination of any outstanding ISPSoft
warrants prior to the effective time of the merger.

<Page>

ACCOUNTING TREATMENT OF THE MERGER

The merger will be accounted for under the 'purchase' method of accounting
for a business combination in accordance with accounting principles generally
accepted in the United States. DSET expects a significant portion of the
purchase price to be allocated to identifiable intangible assets and goodwill.

FORM OF MERGER

Subject to the terms and conditions of the merger agreement and in
accordance with New Jersey law, a wholly-owned subsidiary of DSET will merge
with and into ISPSoft, immediately followed by the merger of ISPSoft with and
into DSET. DSET will be the surviving corporation of such mergers and will
continue under the name 'DSET Corporation.'

MERGER CONSIDERATION

At the effective time of the merger, the DSET common stock will be allocated
to the ISPSoft shareholders depending on the number of shares of ISPSoft common
stock held by such shareholder, treating the ISPSoft preferred stock on an
as-converted to common stock basis.

Shareholders will receive shares of DSET common stock rounded up to the
nearest whole number for any fractional share that they would otherwise receive
in the merger. As of the effective time of the merger, all shares of ISPSoft
stock will no longer be outstanding, will automatically cancel and will cease to
exist. At that time, each holder of a certificate representing shares of ISPSoft
stock (other than shares as to which appraisal rights have been properly
exercised) will cease to have any rights as a shareholder except the right to
receive DSET common stock and other consideration described herein and the right
to any dividends or other distributions in accordance with the merger agreement.
The merger consideration was determined through arm's-length discussions among
DSET, ISPSoft and certain ISPSoft shareholders.

EFFECTIVE TIME OF THE MERGER

The merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of New Jersey, or at such later time as
stated in the certificate of merger or agreed upon by DSET and ISPSoft. The
filing of the certificate of merger will occur at the time of closing of the
merger.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Hale and Dorr LLP, counsel to DSET, and Gunderson Dettmer
Stough Villeneuve Franklin & Hachigian, LLP, counsel to ISPSoft, the following
are the material United States federal income tax consequences of the merger to
ISPSoft shareholders who exchange their shares of ISPSoft stock for shares of
DSET common stock and, in some cases, cash pursuant to the merger. This
discussion addresses only the United States federal income tax consequences to
ISPSoft shareholders who hold their shares of ISPSoft stock as capital assets
and does not address all of the United States federal income tax consequences
that may be relevant to particular shareholders in light of their individual
circumstances. This discussion also does not address the tax consequences to
ISPSoft shareholders who are subject to special rules, including, without
limitation, financial institutions, tax-exempt organizations, insurance
companies, dealers in securities or foreign currencies, foreign holders, persons
who hold their shares of ISPSoft stock as or in a hedge against currency risk, a
constructive sale, or conversion transaction, holders who are subject to the
alternative minimum tax, or holders who acquired their shares pursuant to the
exercise of employee stock options or otherwise as compensation. This discussion
does not address the tax consequences of transactions effectuated prior or
subsequent to, or concurrently with, the merger (whether or not such
transactions are undertaken in connection with the merger). In addition, this
discussion does not address the effects of the merger under any state, local or
foreign tax laws.

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Based upon and subject to the facts, representations, covenants, and
assumptions set forth herein and in the tax opinions furnished to DSET and
ISPSoft by their respective counsel and attached as Exhibits 8.1 and 8.2 to this
joint proxy statement/prospectus (the 'Tax Opinions'), the merger more likely
than not will constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code. Accordingly, subject to the assumptions,
limitations, and qualifications referred to herein, the merger more likely than
not will result in the following federal income tax consequences:

(i) An ISPSoft shareholder will recognize no gain or loss upon the
receipt of shares of DSET common stock (including escrowed shares and any
additional shares that become payable after certain net revenue milestones
have been achieved as described on page 6 of this joint proxy
statement/prospectus) in exchange for the shareholder's ISPSoft stock, but,
in the event that additional shares of DSET common stock become payable
after such net revenue milestones have been achieved, a portion of such
additional shares may be treated as a payment of imputed interest, as
described in paragraph (vi), in which event the ISPSoft shareholder would
have to recognize such portion as ordinary income.

(ii) An ISPSoft shareholder will recognize any gain, but not loss,
realized upon the exchange of the shareholder's ISPSoft stock to the extent
of any cash or other non-stock consideration received for such stock (except
for any portion of a cash payment treated as imputed interest as discussed
below), and such gain generally will be capital gain unless the exchange has
the effect of the distribution of a dividend under Section 356(a)(2) of the
Internal Revenue Code, in which case the gain will be taxable as ordinary
income to the extent of the ISPSoft shareholder's ratable share of the
undistributed earnings and profits of ISPSoft. Whether the receipt of cash
or other non-stock consideration has the effect of a distribution of a
dividend will depend on each holder's particular circumstances. In general,
if, immediately prior to the merger, an ISPSoft shareholder (a) does not
actually or constructively (under Section 318 of the Internal Revenue Code)
own any DSET common stock and (b) is not a significant shareholder of
ISPSoft, the receipt of cash or other non-stock consideration by the ISPSoft
shareholder generally should not have the effect of a distribution of a
dividend. Nevertheless, in the event that additional cash becomes payable
after certain net revenue milestones have been achieved as described on page
6 of this joint proxy statement/prospectus, a portion of such payment may be
treated as a payment of imputed interest, as described in paragraph (vi), in
which event the ISPSoft shareholder would have to recognize such portion as
ordinary income. The gain attributable to any cash payment more likely than
not will be recognized by an ISPSoft shareholder as and when such cash is
actually received. Any capital gain will be long-term capital gain if the
ISPSoft stock exchanged was held for more than one year as of the closing
date of the merger and will be short-term capital gain if the ISPSoft stock
was held for a shorter period.

(iii) The gain attributable to any cash payment will depend upon the
ISPSoft shareholder's tax basis in the ISPSoft stock surrendered in the
merger. Generally, if an ISPSoft shareholder has an adjusted tax basis in
the ISPSoft stock surrendered in the merger that is less than the fair
market value of the DSET common stock received in the merger (including
escrowed shares and any additional shares that become payable after such net
revenue milestones have been achieved, except for additional shares treated
as a payment of imputed interest), the ISPSoft shareholder will recognize
gain equal to the amount of any cash payments received in exchange for
ISPSoft stock (except for any portion of a cash payment treated as a payment
of imputed interest). If an ISPSoft shareholder has an adjusted tax basis in
the ISPSoft stock surrendered in the merger that exceeds the fair market
value of the DSET common stock received in the merger (including escrowed
shares and any additional shares that become payable after such net revenue
milestones have been achieved, except for additional shares treated as a
payment of imputed interest), the ISPSoft shareholder will compute the
amount of gain attributable to each cash payment by offsetting a portion of
such excess basis against each cash payment. Because of the complexity of
the rules for determining the portion of the excess basis that may offset
each cash payment, any such ISPSoft shareholder should consult

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his, her, or its tax advisor for more detailed advice as to how to determine
the gain attributable to a cash payment.

(iv) In the event that more than six months following the date of the
merger additional shares or additional cash becomes payable after such net
revenue milestones have been achieved, a portion of such shares or cash will
be re-characterized for federal income tax purposes as a payment of
interest. The amount of imputed interest will be calculated in accordance
with Section 483 of the Internal Revenue Code based on the period of time
between the closing date and the issuance of additional shares or cash. In
general, the amount of imputed interest will equal the excess of the fair
market value of the additional shares or cash received over the present
value of such fair market value as of the closing date, determined using a
discount rate equal to the applicable federal rate. Because the method of
calculating such interest is complex, each ISPSoft shareholder should
consult with his, her, or its own tax advisor regarding the precise
mechanics of calculating the amount of such imputed interest payment.

(v) The tax basis of the shares of DSET common stock received by an
ISPSoft shareholder in the merger, including escrowed shares and any
additional shares of DSET common stock that become payable after such net
revenue milestones have been achieved (except for additional shares treated
as a payment of imputed interest), will be equal to the adjusted tax basis
of the shares of ISPSoft stock surrendered in the merger, decreased by the
amount of any cash payments received (except for any portion of a cash
payment treated as a payment of imputed interest), and increased by the
amount of any gain required to be recognized by the ISPSoft shareholder.
According to a pronouncement of the Internal Revenue Service, such tax basis
should be allocated to the maximum number of shares of DSET common stock
that may be received in the merger, including escrowed shares and any
additional shares of DSET common stock that may be received after such net
revenue milestones have been achieved (except for additional shares that
would be treated as a payment of imputed interest). Therefore, an ISPSoft
shareholder should have an interim tax basis in any shares of DSET common
stock received in the merger until such time as it is possible to determine
the actual number of escrowed shares and additional shares of DSET common
stock, if any, to be received by the ISPSoft shareholder. In addition, while
the matter is not free from doubt, no basis adjustments should be required
with respect to any additional cash payments that the ISPSoft shareholder
may receive until such payments are received (if such payments are reported
on the installment method of tax accounting). Because of the complexity of
the rules for determining the tax basis of the DSET common stock received,
each ISPSoft shareholder should consult his, her, or its tax advisor for
more detailed advice as to how to determine such tax basis.

(vi) The holding period of the shares of DSET common stock received by
an ISPSoft shareholder in the merger, including escrowed shares and any
additional shares of DSET common stock that become payable after such net
revenue milestones have been achieved (except for additional shares treated
as a payment of imputed interest), will include the holding period of the
shares of ISPSoft stock surrendered in exchange therefore in the merger.

(vii) Any additional shares of DSET common stock treated as a payment of
imputed interest will have a basis equal to the fair market value of such
shares on the date they are received, and the holding period for such shares
will begin on the date immediately following the date such shares are
received.

(viii) No gain or loss will be recognized by an ISPSoft shareholder upon
the distribution of escrowed shares to the ISPSoft shareholder upon
termination of the escrow.

(ix) Upon the distribution of escrowed shares to DSET in satisfaction of
an indemnification claim, an ISPSoft shareholder will likely recognize gain
or loss in an amount equal to the difference between the value of the
shareholder's escrowed shares distributed to DSET (as determined under the
escrow agreement) and the shareholder's adjusted tax basis in such shares.
In the event that some or all of the escrowed shares are distributed to DSET
in satisfaction of an indemnification claim, the amount of the
indemnification claim, or, if less,

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the value of the escrowed shares distributed to DSET, will be allocated
among and added to the shareholder's tax basis in the shareholder's
remaining shares of DSET common stock.

The discussion herein assumes that an ISPSoft shareholder who receives the
right to additional payments of cash or shares of DSET common stock if such net
revenue milestones are received will report any gain attributable to such
payments under the installment method of tax accounting. While, in general, an
ISPSoft shareholder more likely than not would qualify to report such gain under
the installment method, there can be no assurances that the Internal Revenue
Service would permit the use of the installment method under the circumstances
described herein. Moreover, if the exchange may be reported under the
installment method as assumed in the above discussion, the shareholder
nevertheless may affirmatively elect not to use such method. In the event that a
shareholder may not use, or elects not to use, the installment method, then the
fair market value of the right to receive additional payments of cash or shares
of DSET common stock would have to be determined by the shareholder, and the
shareholder generally would have to treat such amount as if it were received in
the year of the merger. EACH ISPSOFT SHAREHOLDER IS URGED TO CONSULT HIS, HER,
OR ITS TAX ADVISOR REGARDING THE AVAILABILITY OF THE INSTALLMENT METHOD TO
REPORT ANY GAIN FROM THE EXCHANGE OF HIS, HER, OR ITS ISPSOFT STOCK AND THE TAX
CONSEQUENCES OF ELECTING NOT TO USE SUCH METHOD. EACH ISPSOFT SHAREHOLDER SHOULD
ALSO CONSULT HIS, HER, OR ITS TAX ADVISOR REGARDING THE IMPACT OF USING THE
INSTALLMENT METHOD ON THE SHAREHOLDER'S ALTERNATIVE MINIMUM TAX COMPUTATION AND
THE POSSIBILITY THAT THE SHAREHOLDER WILL BE REQUIRED TO PAY INTEREST TO THE
INTERNAL REVENUE SERVICE WITH RESPECT TO ANY TAX ON GAIN DEFERRED UNDER THE
INSTALLMENT METHOD IN THE EVENT THAT THE SHAREHOLDER HAS DEFERRED GAIN WITH
RESPECT TO INSTALLMENT OBLIGATIONS TOTALING IN EXCESS OF $5 MILLION.

The discussion herein also assumes that the ISPSoft notes described in
Section 1.10 of the merger agreement are properly treated as debt for federal
income tax purposes. Whether such notes will be treated as debt or equity for
federal income tax purposes depends upon several factors, including the
following: (i) whether such notes include a written unconditional promise to pay
a sum certain in money on a specified date or on demand and to pay a fixed rate
of interest; (ii) whether such notes are subordinated to, or have a preference
over, any indebtedness of ISPSoft; (iii) whether such notes are convertible into
the stock of ISPSoft; and (iv) the ratio of debt to equity of ISPSoft. In the
event that such notes are properly treated as equity for federal income tax
purposes, the federal income tax consequences set forth herein may change for
ISPSoft shareholders who hold such notes. Among the federal income tax
consequences that may change for ISPSoft shareholders who hold such notes are
the following: (i) such holders could be required to recognize additional gain
in an amount up to the fair market value of any DSET notes or any cash payment
received in exchange for such notes; and (ii) the tax basis of the shares of
DSET common stock received in the merger by such holders could be decreased.
Furthermore, in such event, a holder of such a note who is not an ISPSoft
shareholder generally would recognize gain or loss in an amount equal to the
difference between the fair market value of any DSET note or any cash payment
received in exchange for such note and the holder's adjusted tax basis in such
note. Because the effects of any such characterization as equity are complex and
will depend upon each holder's individual circumstances, each ISPSoft
shareholder holding such notes should consult with his, her, or its tax advisors
as to the possibility and consequences of any such recharacterization.

It is important to note that some attributes of the merger agreement do not
comply in all respects with certain Internal Revenue Service guidelines for the
issuance of advance letter rulings regarding the tax consequences of
transactions intended to qualify as reorganizations under Section 368(a) of the
Internal Revenue Code. Although the Internal Revenue Service has specifically
indicated that such guidelines are only applicable for purposes of obtaining
advance letter rulings and do not necessarily constitute substantive rules of
law, there can be no assurances that the Internal Revenue Service will not
attempt to assert the guidelines as substantive legal requirements. If such an
attempt were successful, some (or, in certain cases, all) of the conclusions set
forth in the foregoing numbered paragraphs above would be inapplicable.

<Page>

It is also important to note that in rendering the Tax Opinions, Hale and
Dorr LLP and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP made
certain assumptions, including the following:

(1) for federal income tax purposes, the loans made to ISPSoft by DSET
and any additional loans to be made to ISPSoft by DSET, as evidenced by the
promissory notes issued, or to be issued, by ISPSoft to DSET with respect to
the loans and any additional loans, are valid indebtedness of ISPSoft, the
proceeds of which will be paid to creditors in connection with the merger,
which indebtedness, upon consummation of the merger, will be assumed by DSET
(and which indebtedness will be repaid to DSET in the event the merger is
not consummated);

(2) DSET will adjust the merger consideration to be payable in DSET
common stock as required by Section 1.14 of the merger agreement, if
applicable;

(3) the fair market value of one share of DSET common stock on the
closing date will be no less than $1.00;

(4) the aggregate fair market value of the DSET common stock receivable
by the ISPSoft shareholders, both as of the closing date and after
accounting for any postclosing issuances of merger consideration pursuant to
Section 1.11 of the merger agreement or otherwise, in exchange for ISPSoft
stock will be equal to or greater than forty-five percent (45%) of the total
merger consideration to be received by the ISPSoft shareholders with respect
to their holdings of ISPSoft stock or instruments that are treated as
ISPSoft equity for federal income tax purposes;

(5) for federal income tax purposes, other than indebtedness relating
to the notes payable of ISPSoft described in Section 1.10 of the merger
agreement with respect to which we have made no assumptions, (i) all
indebtedness on the financial statements of ISPSoft is valid indebtedness,
(ii) no outstanding equity of DSET or ISPSoft has or will represent
indebtedness, and (iii) no outstanding indebtedness of DSET or ISPSoft has
or will represent equity;

(6) no outstanding security, instrument, agreement, or arrangement that
provides for, contains, or represents either a right to acquire ISPSoft
stock (or to share in the appreciation thereof) constitutes or will
constitute 'stock' for purposes of Section 368 of the Internal Revenue Code;

(7) the total merger consideration payable by DSET to ISPSoft
shareholders will not be reduced pursuant to Section 1.12 of the merger
agreement;

(8) the ISPSoft shareholders do not, and will not on or before the
closing date, have an existing plan or intent to dispose of an amount of
DSET stock to be received in the merger (or to dispose of ISPSoft stock in
anticipation of the merger) such that the shareholders of ISPSoft will not
receive and retain a meaningful continuing equity ownership in DSET that is
sufficient to satisfy the continuity of interest requirement as specified in
Treasury Regulation Section 1.368-1(b) and as interpreted in certain
Internal Revenue Service rulings and federal judicial decisions;

(9) none of the escrow shares will be returned to DSET; and

(10) no ISPSoft shareholder guaranteed any ISPSoft indebtedness
outstanding during the period immediately prior to the merger.

To the extent that any one or more of the foregoing assumptions is not in
fact true and accurate, the merger may not constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code.

Moreover, to qualify as a reorganization under Section 368(a) of the
Internal Revenue Code, among other requirements, the merger must satisfy the
'continuity of interest' requirement. To satisfy the continuity of interest
requirement, the ISPSoft shareholders must receive a meaningful ownership
interest in DSET as a result of the merger. In general, this requirement will be
considered satisfied if the fair market value of the DSET common stock to be
received by ISPSoft

<Page>

shareholders in the merger constitutes a substantial portion of the total merger
consideration. For advance ruling purposes, the Internal Revenue Service has
provided that the continuity of interest requirement will be satisfied if the
shareholders of the acquired corporation exchange their stock in the acquired
corporation for stock in the acquiring corporation that has a fair market value,
as of the closing date, that equals or exceeds 50% of the total merger
consideration received by such shareholders. This safe harbor merely indicates
the level of continuity required by the Internal Revenue Service for the
issuance of an advance ruling and does not necessarily represent the degree of
continuity that is required to qualify as a reorganization. Courts have held the
continuity of interest requirement to be satisfied where the shareholders of the
acquired corporation receive a lower percentage (e.g., 45%) of acquiring
corporation stock.

As of the date that the merger agreement was entered into, 50% or more, by
value, of the total merger consideration to be received by ISPSoft shareholders
consisted of DSET common stock. The amount of DSET common stock to be received
by the ISPSoft shareholders, however, is not subject to adjustment by reason of
fluctuations in the market value of DSET common stock (other than consideration
with respect to such net revenue milestone payments). Therefore, it is possible,
if the market price of DSET common stock on the closing date of the merger is
substantially less than it was on the date the merger agreement was entered
into, that the value of the DSET common stock issued in the merger would not
constitute a high enough percentage of the total merger consideration to satisfy
the continuity of interest requirement. Specifically, in the event that the fair
market value of DSET common stock on the closing date of the merger is less than
$1.00 per share, there is a significant risk that the merger will fail the
continuity of interest requirement and thus not constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code.

In addition, for the merger to qualify as a reorganization under
Section 368(a) of the Internal Revenue Code, the merger of the wholly-owned
subsidiary of DSET with and into ISPSoft (the first step) and the merger of
ISPSoft with and into DSET (the second step) must be treated as one transaction
for federal income tax purposes. Because (i) DSET and ISPSoft have a binding
commitment to undertake the second step immediately following, and contingent
upon the occurrence of, the first step and (ii) the first step and second step
are mutually interdependent steps in an integrated plan pursuant to which DSET
and ISPSoft intend to achieve one end result, DSET and ISPSoft believe the
merger should be treated, and intend to treat the merger, as one transaction for
federal income tax purposes. If the Internal Revenue Service were to challenge
successfully the treatment of the merger as one transaction, however, the merger
would likely fail to qualify as a reorganization under Section 368(a) of the
Internal Revenue Code, and the ISPSoft shareholders would likely recognize
taxable gain or loss as described below.

Furthermore, the issuance of the Tax Opinions is not a condition to the
closing of the merger. Accordingly, the parties intend to consummate the merger
even if, as of the closing date, the above assumptions are not in fact true and
accurate or the above requirements relating to 'continuity of interest' or step
integration are not satisfied. If any one or more of the above assumptions is
not in fact true and accurate or the above requirements relating to 'continuity
of interest' or step integration are not satisfied, the merger may not qualify
as a reorganization under Section 368(a) of the Internal Revenue Code. In the
event that the merger does not qualify as a reorganization under Section 368(a)
of the Internal Revenue Code, an ISPSoft shareholder generally would recognize
taxable gain or loss with respect to the shares of DSET common stock, including
escrowed shares and any additional shares of DSET common stock that become
payable after such net revenue milestones have been achieved, and any cash
payments payable in exchange for the shareholder's shares of ISPSoft stock. As
discussed above, a portion of any shares of DSET common stock or any cash
payment that becomes payable after such net revenue milestones have been
received might also be treated as imputed interest, in which event the ISPSoft
shareholder would have to recognize such portion as ordinary income. Otherwise,
any gain or loss recognized generally would be capital gain or loss, and the
gain attributable to additional payments of cash or shares of DSET common stock
after such net revenue milestones have been achieved more likely than not would
be recognized as and when such payments are received (assuming the transaction
is reported on the installment method of tax accounting). In such event, an
ISPSoft

<Page>

shareholder's tax basis in any shares of DSET common stock received would equal
the fair market value of the shares on the date they are received and the
holding period for such shares would begin on the date immediately following the
date such shares are received.

Also, even if the merger qualifies as a reorganization, the Internal Revenue
Service could also attempt to challenge the allocation of consideration adopted
by the parties. In the event that the Internal Revenue Service were to make a
successful challenge of this type, certain ISPSoft shareholders could be
required to recognize additional income or loss.

The above description does not apply to an ISPSoft shareholder who exercises
appraisal rights. An ISPSoft shareholder who exercises appraisal rights with
respect to the merger and receives cash in exchange for shares of ISPSoft stock
will generally recognize capital gain or loss measured by the difference between
the amount of cash received and the ISPSoft shareholder's adjusted tax basis in
such shares, provided that the payment is not treated as a dividend pursuant to
the Internal Revenue Code or otherwise. The payment generally will not be
treated as a dividend if the ISPSoft shareholder owns no shares of DSET stock
after the merger, after giving effect to the constructive ownership rules of the
Internal Revenue Code.

Certain noncorporate holders of ISPSoft stock may be subject to backup
withholding, at a rate that is scheduled to be reduced progressively from 31% to
28% from 2001 to 2006 under recently enacted legislation, on cash payments
received pursuant to the merger, including cash payments received upon the
exercise of appraisal rights. Backup withholding will not apply, however, to a
shareholder who (1) furnishes a correct taxpayer identification number and
certifies that the shareholder is not subject to backup withholding on the
Form W-9 or successor form to be delivered to ISPSoft shareholders following the
completion of the merger, (2) provides a certification of foreign status on a
Form W-8 or successor form, or (3) is otherwise exempt from backup withholding.

Provided that the merger constitutes a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, each ISPSoft shareholder will be
required to attach a statement to the shareholder's tax return for the year of
the merger that contains the information listed in Treasury Regulation
Section 1.368-3(b). Such statement must include the shareholder's tax basis in
the ISPSoft stock exchanged and a description of the DSET common stock, cash,
and any other consideration received therefor. EACH ISPSOFT SHAREHOLDER IS URGED
TO CONSULT HIS, HER, OR ITS TAX ADVISOR REGARDING THIS STATEMENT AND ANY OTHER
TAX REPORTING OBLIGATIONS.

THE TAX OPINIONS PROVIDE THAT, SUBJECT TO THE LIMITATIONS, QUALIFICATIONS,
AND ASSUMPTIONS DESCRIBED HEREIN, THE ABOVE DISCUSSION SETS FORTH THE MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO THE ISPSOFT
SHAREHOLDERS. HOWEVER, THE ABOVE DISCUSSION IS INTENDED TO PROVIDE ONLY A
SUMMARY OF THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER. IT IS NOT INTENDED TO BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL
POTENTIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. IT DOES NOT ADDRESS
CERTAIN CATEGORIES OF SHAREHOLDERS, AND IT DOES NOT ADDRESS STATE, LOCAL, OR
FOREIGN TAX CONSEQUENCES. IN ADDITION, AS NOTED ABOVE, IT DOES NOT ADDRESS TAX
CONSEQUENCES THAT MAY VARY WITH, OR ARE CONTINGENT UPON, INDIVIDUAL
CIRCUMSTANCES.

The above discussion and the Tax Opinions neither bind the Internal Revenue
Service nor the courts nor preclude the Internal Revenue Service or a court from
adopting a contrary position. The Tax Opinions are based on facts existing on
the date thereof and on assumptions as to facts and conditions that will exist
on the closing date of the merger. The Tax Opinions and this discussion are
based on the Internal Revenue Code, laws, regulations, rulings, and decisions in
effect on the date thereof, all of which are subject to change, possibly with
retroactive effect, or to different interpretations which could result in
federal income tax consequences different from those described herein. As a
result, neither ISPSoft nor DSET can assure you that the tax considerations
contained in this discussion will not be challenged by the Internal Revenue
Service or will be sustained by a court if challenged by the Internal Revenue
Service. No ruling has been or will be sought from the Internal Revenue Service
as to the United States federal income tax consequences of the merger.

<Page>

BECAUSE OF THE COMPLEX NATURE OF THE TAX CONSEQUENCES OF THE MERGER, ISPSOFT
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABLE FEDERAL, STATE,
LOCAL, AND FOREIGN TAX CONSEQUENCES OF THE MERGER TO THEM AND THE EFFECT OF
POSSIBLE CHANGES IN TAX LAWS.

NASDAQ NATIONAL MARKET QUOTATION

It is a condition to the closing of the merger that DSET file a notification
form for listing of additional shares with the Nasdaq National Market.

RIGHT OF SHAREHOLDERS TO DISSENT

Under the New Jersey Corporation Law, any holder of ISPSoft capital stock
who does not wish to accept the merger consideration in respect of his, her or
its shares of common stock has the right to dissent from the merger and to be
paid the fair cash value (exclusive of any element of value arising from the
accomplishment or expectation of the merger) for, his, her or its shares of
stock. If such shareholder is not able to reach an agreement with ISPSoft as to
the fair market value of his, her or its stock, such shareholder has the right
to have the fair market value of his, her or its stock judicially determined,
and paid to the shareholder in cash in some instances, together with a fair rate
of interest, provided that the shareholder fully complies with the provisions of
N.J.S.A. 14A:11-1 through 14A:11-11 of the New Jersey Business Corporation Act
which are attached as Annex D.

Making sure that you actually perfect your dissenter's rights can be
complicated. The procedural rules are specific and must be followed precisely.
Failure to comply with the procedure may cause a termination or waiver of your
dissenter's rights. The following information is intended as a brief summary of
the material provisions of the statutory procedures you must follow in order to
perfect your dissenter's right. Please review Annex D for the complete
procedure. ISPSoft will not give you any notice other than as described in this
joint proxy statement/prospectus and as required by the New Jersey Business
Corporation Act. Any shareholder that files a written notice with ISPSoft
stating that he, she or it intends to demand payment for his, her or its stock
before the shareholder vote on the merger will receive a notice of the effective
date of the merger by certified mail within ten days after such date.

The holders of DSET common stock do not have any appraisal rights in
connection with the transactions contemplated by the merger agreement.

DISSENTER'S RIGHTS PROCEDURES

If you are an ISPSoft shareholder and you wish to exercise your dissenter's
rights, you must satisfy the provisions of the New Jersey Business Corporation
Act attached as Annex D which require the following:

You must file a written notice of intention to demand to be paid the fair
market value of your shares: You must deliver a written notice of intention to
demand to be paid the fair market value of your shares to ISPSoft before the
vote on the merger agreement is taken at the special meeting. This written
notice of intention to demand to be paid the fair market value of your shares
must be separate from your proxy. A vote against the merger agreement alone will
not constitute a notice of intention to demand to be paid the fair market value
of your shares.

You must refrain from voting for approval of the merger: You must not vote
any of your shares of ISPSoft capital stock for approval of the merger
agreement. If you vote, by proxy or in person, any of your shares of ISPSoft
capital stock in favor of the merger agreement, this will terminate your right
to dissent even if you previously filed a written demand to be paid the fair
market value of your shares.

You must continuously hold your ISPSoft shares: You must continuously hold
your shares of ISPSoft capital stock, from the date you file the notice of
intention to demand to be paid the fair

<Page>

market value of your shares through the closing of the merger. If you are the
record holder of ISPSoft capital stock on the date the written demand to be paid
the fair market value of your shares is made but thereafter transfer the shares
prior to the merger, you will lose any right to dissent in respect of those
shares. You should read the paragraphs below for more details on making a demand
to be paid the fair market value of your shares.

A written notice of intention to demand to be paid the fair market value of
your shares of ISPSoft stock is only effective if it is signed by, or for, the
shareholder of record who owns such shares at the time the demand is made. The
demand must be signed as the shareholder's name appears on the ISPSoft common
stock certificates(s). If you are the beneficial owner of ISPSoft capital stock,
but not the shareholder of record, you must have the shareholder of record sign
a written notice of intention to demand to be paid the fair market value of your
shares.

If you own ISPSoft capital stock in a fiduciary capacity, such as a trustee,
guardian or custodian, you must disclose the fact that you are signing the
notice of intention to demand to be paid the fair market value of your shares in
that capacity.

If you own ISPSoft capital stock with more than one person, such as in a
joint tenancy or tenancy in common, all the owners must sign, or have signed for
them, the notice of intention to demand to be paid the fair market value of your
shares. An authorized agent, which could include one or more of the joint
owners, may sign the notice of intention to demand to be paid the fair market
value of your shares for a shareholder of record; however, the agent must
expressly disclose who the shareholder of record is and that the agent is
signing the demand as that shareholder's agent.

If you are a record owner, such as a broker, who holds ISPSoft capital stock
as a nominee for others, you may exercise a right to be paid the fair market
value of your shares with respect to the shares held for one or more beneficial
owners, while not exercising such right for other beneficial owners. In such a
case, you should specify in the written notice of intention to demand the number
of shares as to which you intend to demand appraisal. If you do not expressly
specify the number of shares, we will assume that your written notice covers all
the shares of ISPSoft capital stock that are in your name.

If you are an ISPSoft shareholder who intends to exercise dissenter's
rights, you should mail or deliver a written notice of intention to demand to be
paid the fair market value of your shares to:

ISPSoft Inc.
661 Shrewsbury Avenue
Shrewsbury, New Jersey 07702
Attention: Binay Sugla, President and Chief Executive Officer

It is important that ISPSoft receive all written notices of intention to
demand to be paid the fair market value of your shares before the vote
concerning the merger agreement is taken at the special meeting. As explained
above, this written notice should be signed by, or on behalf of, the shareholder
of record. The written notice should specify the shareholder's name and mailing
address, the number of shares of stock owned, and that the shareholder is
thereby effecting notice of an intent to demand dissenter's rights with respect
to that shareholder's shares.

If you fail to comply with any of these conditions and the merger becomes
effective, you will only be entitled to receive the merger consideration
provided in the merger agreement.

Written notice from ISPSoft: Within ten days after the closing of the
merger, surviving corporation must give written notice that the merger has
become effective to each shareholder who has fully complied with the conditions
of the New Jersey Business Corporation Act.

Demand to be paid Fair Value: Within 20 days after the surviving corporation
mails its notice of the effective date of the merger, you must file a written
demand with the surviving corporation that the surviving corporation pay you the
fair value of your shares. Upon making such demand you (i) will cease to have
any rights as a shareholder of ISPSoft, other than the right to be paid

<Page>

the fair value of your shares, and (ii) may only withdraw your demand with the
written consent of the surviving corporation.

Surrender your stock certificate(s): Within 20 days after demanding to be
paid the fair value of your shares, you must deliver your stock certificate(s)
to the surviving corporation so that the surviving corporation may make a
notation on the certificate(s) reflecting your demand. If you fail to submit
your stock certificate(s) to the surviving corporation within this time frame,
you will lose your right to be paid the fair value of your shares.

Delivery of financial information: If you filed a notice of intention to
demand to be paid the fair value of your shares of capital stock of ISPSoft
before the vote on the merger, the surviving corporation will mail the ISPSoft
balance sheet and surplus statement to you within ten days after the surviving
corporation mailed its notice of the effective date of the merger. This mailing
may, but is not required to, include a written offer from the surviving
corporation to pay you a specified price for your shares.

Negotiation Period: If within 30 days after the expiration of the
immediately preceding 10 day period, you are able to agree with the surviving
corporation as to the fair value of your shares, the surviving corporation will
make payment to you in that amount.

Litigation Demand: If you are not able to agree with the surviving
corporation as to the fair value of your shares during the immediately preceding
30 day period, then within 30 days after the end of such 30 day period, you may
serve a written demand upon the surviving corporation demanding that the
surviving corporation commence an action in the Superior Court of New Jersey for
a determination of the fair value of your shares.

Commencement of Action: If the surviving corporation fails to commence an
action to determine the fair value of your shares within 30 days after it
receives your demand that it commence such an action, then you may commence the
action in the name of the surviving corporation within 60 days after the
expiration of such 30 day period. If an action is not commenced within this 60
day time period, you will lose your right to be paid the fair value of your
shares.

Appraisal of shares: If the court determines that you are entitled to
appraisal rights, the court will appraise the shares of stock as of the day
prior to the shareholder meeting. To determine the fair value of the shares, the
court will consider all relevant factors except for any appreciation or
depreciation due to the anticipation or accomplishment of the merger. After the
court determines the fair value of the shares, it will direct the surviving
corporation to pay that value to you. The court can also direct the surviving
corporation to pay interest, simple or compound, on that value if the court
determines that interest is appropriate. In order to receive payment for your
shares, you must then surrender your stock certificates to the surviving
corporation.

The court could determine that the fair value of shares of stock is more
than, the same as, or less than the merger consideration. In other words, if you
demand to be paid the fair market value of your shares, you could receive less
consideration than you would under the merger agreement. You should also be
aware that an opinion of an investment banking firm that the merger is fair is
not an opinion that the merger consideration is the same as the fair value under
the New Jersey Business Corporation Act.

Costs and expenses of appraisal proceeding: The costs of the appraisal
proceeding may be assessed against the surviving corporation and the
shareholders participating in the appraisal proceeding, as the court deems
equitable under the circumstances. You may request that the court determine the
amount of interest, if any, the surviving corporation should pay on the value of
your stock. You may also request that the chancery court allocate the expenses
of the appraisal action incurred by you pro rata against the value of all the
shares held by all of the ISPSoft shareholders entitled to appraisal.

Loss of shareholder's rights: If you demand to be paid the fair market value
of your shares, after the closing of the merger you will not be entitled:

to vote your shares of stock for any purpose;

<Page>

to receive payment of dividends or any other distribution with respect to
the shares of stock, except for dividends or distributions, if any, that
are payable to holders of record as of a record date prior to the effective
time of the merger; or

to receive the payment of the consideration provided for in the merger
agreement (unless you properly withdraw your demand to be paid the fair
market value of your shares) with the consent of the surviving corporation.

If you fail to comply strictly with the procedures described above, you will
lose your right to be paid the fair market value of your shares. Consequently,
if you wish to exercise your right to be paid the fair market value of your
shares, we strongly urge you to consult a legal advisor before attempting to
exercise your right to be paid the fair market value of your shares.

RESALE OF DSET COMMON STOCK ISSUED IN CONNECTION WITH THE MERGER

The shares of DSET common stock issuable to shareholders of ISPSoft upon
consummation of the merger have been registered under the Securities Act of
1933. Such shares will be freely tradeable without restriction by those
shareholders who are not deemed to be 'affiliates' of DSET or ISPSoft, as that
term is defined under the Securities Act.

Shares of DSET common stock received by those shareholders of ISPSoft who
are deemed to be affiliates of ISPSoft may be resold without registration under
the Securities Act as permitted by Rule 145 of the Securities Act or as
otherwise permitted under the Securities Act.

All shareholders of ISPSoft have signed or will sign lock-up agreements and
the holders of at least 89% of ISPSoft's capital stock have signed voting
agreements with respect to voting their share ownership. Pursuant to the lock-up
agreements, the signing shareholders agree, with respect to the shares of DSET
common stock owned as a result of the transactions contemplated by the merger
agreement, not to sell, transfer, pledge or otherwise dispose of, or reduce an
interest in or risk relating to such shares in accordance with the percentages
set forth below:

20% of such shares shall be subject to lock-up for a period of 60 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 90 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 120 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 150 days
subsequent to the date of closing of the merger, subject to customary
exceptions; and

20% of such shares shall be subject to lock-up for a period of 180 days
subsequent to the date of closing of the merger, subject to customary
exceptions.

In addition, DSET has agreed to file a registration statement with respect
to those options to purchase common stock assumed by DSET in the merger within
90 days of the closing of the merger. Such shares of common stock may not be
freely tradeable until at least such date.

Please see 'Other Agreements' below for a description of the voting
agreements.

This joint proxy statement/prospectus does not cover any resales of DSET
common stock received by persons who are deemed to be affiliates of ISPSoft.

THE MERGER AGREEMENT

The following description summarizes the material provisions of the merger
agreement. We urge shareholders to read carefully the merger agreement, which is
attached as Annex A to this joint proxy statement/prospectus.

THE MERGER

Following the adoption of the merger agreement and the approval of the
merger by the shareholders of ISPSoft, the approval of the merger, the merger
agreement and the issuance of shares of DSET common stock as contemplated by the
merger agreement by the shareholders of DSET and the satisfaction or waiver of
the other conditions to the merger, a wholly-owned subsidiary of DSET will be
merged with and into ISPSoft, immediately followed by the merger of ISPSoft with
and into DSET. DSET will survive the merger. If all conditions to the merger are
satisfied or waived, the merger will become effective at the time of the filing
by the surviving corporation of a duly executed certificate of merger with the
Secretary of State of the State of New Jersey.

CONSIDERATION

In connection with the merger, DSET will issue an aggregate of up to
2,519,735 shares of common stock, will make a cash payment of $1,000,000, may
make additional cash payments or issue additional shares of common stock
aggregating $1,000,000 and will assume certain obligations of ISPSoft as
follows. Of these 2,519,735 shares:

an aggregate of up to 2,157,838 shares will be issued in exchange for all
of the shares of ISPSoft capital stock outstanding immediately prior to the
effective time of the merger;

in addition to the consideration set forth above, 46,240 shares will be
issued to Lucent Technologies, Inc. as a holder of certain shares of
ISPSoft's Preferred Stock. Lucent will also receive, upon consummation of
the merger, a cash payment of $1,000,000;

in addition to the consideration set forth above, 77,066 shares will be
issued to Signal Lake Venture Fund L.P. as a holder of certain shares of
ISPSoft's Preferred Stock; and

an aggregate of up to 238,591 options to purchase shares of DSET common
stock will be issued in exchange for all options to purchase ISPSoft common
stock outstanding, immediately prior to the effective time of the merger
(assuming options to purchase 2,722,510 shares of ISPSoft common stock are
outstanding prior to the merger).

The additional cash payment or common stock issuance by DSET of $1,000,000
shall be made on a pro rata basis to each holder of the common stock of ISPSoft,
other than Lucent, as of the closing of the merger. In the event DSET determines
to pay any such amount in shares of its common stock, such number of shares of
common stock shall be calculated by dividing the applicable payment amount by
the average of the last reported sales price per share of DSET's common stock as
reported on Nasdaq over the ten consecutive trading days immediately prior to
the end of each applicable payment period. The potential net revenue milestone
payments aggregating as much as $1,000,000 and referenced above will be paid by
DSET pursuant to the following schedule, and will be paid in cash and/or shares
of DSET common stock, at DSET's discretion, provided, however, that DSET may be
required to issue shares of common stock and not pay cash in order to preserve
the status of the transaction as a reorganization, and provided further, that
DSET will in any event be required to pay cash and not issue shares of common
stock in order to avoid any share issuance that would result in the current
holders of ISPSoft capital stock holding 50% or more of the outstanding shares
of DSET:

an aggregate of $250,000 shall be paid on or before March 31, 2002 if, for
the period beginning June 26, 2001 through December 31, 2001, ISPSoft (for
the period beginning June

26, 2001 through the closing of the merger) and the combined company (for
the period beginning upon the closing of the merger through December 31,
2001) collectively achieve more than $3,000,000 in recognized revenues, net
of related returns at any time, for sales of certain ISPSoft products or
services; and

In addition,

DSET will issue promissory notes to each of Lucent Technologies, Inc. and
Signal Lake Venture Fund, L.P., in the face amount of $400,000 each,
thereby assuming certain debts of ISPSoft to each such entity. DSET will
also assume and then pay in full the face amount of each other note payable
of ISPSoft as of the closing of the merger, which notes payable total
$525,000, including $300,000 of which is payable to SGM Capital Limited, an
affiliate of ISPSoft. No interest will be paid on such notes.

CONVERSION OF SHARES

Holders of each series of ISPSoft preferred stock have waived their right to
receive their respective liquidation preference applicable to such series of
preferred stock.

Pursuant to the merger agreement, holders of ISPSoft capital stock will
receive the following merger consideration upon conversion of their shares:

<Table>
<Caption>
NUMBER OF
ISPSOFT CONVERSION NUMBER OF DSET
CLASS SHARES(3) RATIO(4) SHARES TO BE ISSUED(5)
----- --------- -------- ----------------------

Series A Preferred Stock............... 9,000,000 0.087648 788,832
Series B Preferred Stock(1)............ 9,024,144(6) 0.087648 790,949
Common Stock(2)........................ 6,595,000 0.087648 578,039
</Table>

- ---------

(1) Also will receive an aggregate of 123,306 shares of DSET common stock and
$1,000,000 in cash.

(2) Such number of shares may be adjusted for shares of ISPSoft held in the
treasury of ISPSoft or held by DSET shall be canceled. Dissenting shares
shall not be so converted, but shall be paid an amount in cash in accordance
with New Jersey appraisal rights described beginning on page 66.

(3) Determined as if converted to common stock.

(4) The conversion ratio for shares of common stock was calculated by dividing
$7,000,000 by the number of shares of common stock outstanding (after giving
effect to the conversion into shares of common stock of all outstanding
shares of preferred stock and excluding any shares of common stock
beneficially owned by DSET) at the effective time of the merger and dividing
such amount by the average of the last reported sales prices per share of
DSET's common stock on the Nasdaq National Market over the ten trading days
immediately prior to June 26, 2001, or $0.811 ($3.244 on a post reverse
stock split basis). The number of shares of DSET common stock to be paid at
the closing shall be reduced by (i) any amount owing to Signal Lake under
its agency agreement with ISPSoft that is not paid by the ISPSoft
shareholders and (ii) any legal and accounting fees incurred by ISPSoft in
connection with the merger in excess of $300,000.

(5) Final total shares are subject to change as determined by the rounding up
criteria in the merger agreement.

(6) As of October 31, 2001 dividends on Preferred B equaled $512,072, which
converts to 1,024,144 shares.

All shares of ISPSoft preferred stock and common stock, when converted, will
no longer be outstanding and will automatically be canceled and retired and will
cease to exist.

ESCROW

Ten percent of all shares received by ISPSoft shareholders in the merger,
other than those shares of common stock to be received by each of Lucent and
Signal Lake for their preferred stock, will be placed in escrow to secure the
indemnification obligations of the ISPSoft shareholders under the merger
agreement. By approving the merger, the ISPSoft shareholders will authorize the
creation of the escrow and the appointment of Mr. Binay Sugla, ISPSoft's
President and Chief Executive Officer, as their indemnification representative
with respect to indemnification matters.

TREATMENT OF ISPSOFT STOCK OPTIONS

At the effective time of the merger, each unexpired and unexercised
outstanding option to purchase shares of ISPSoft common stock, whether vested or
unvested, previously granted by ISPSoft under its 2000 Stock Plan will be
assumed by DSET and converted into options to purchase shares of DSET common
stock. The number of shares of DSET common stock subject to the assumed ISPSoft
stock options will be adjusted pursuant to the conversion ratio described above.
Any fractional shares of DSET common stock resulting from such adjustment will
be rounded down to the nearest share. The exercise price per share of DSET
common stock under the ISPSoft stock options will equal the exercise price per
share of the ISPSoft common stock under the original stock options divided by
the conversion ratio. The exercise prices will be rounded up to the next highest
whole cent.

TREATMENT OF ISPSOFT WARRANTS

Under the merger agreement, ISPSoft agrees to cause the termination of any
outstanding ISPSoft warrants that remain unexercised at the effective time of
the merger.

TREATMENT OF ISPSOFT OUTSTANDING PROMISSORY NOTES

Upon consummation of the merger, DSET will issue promissory notes to each of
Lucent and Signal Lake, in the face amount of $400,000 each, thereby assuming
certain debts of ISPSoft to each such entity. In addition to such issuances to
Lucent and Signal Lake, DSET will assume and then pay in full the face amount of
each other note payable of ISPSoft as of the closing of the merger, which notes
payable total $525,000, including $300,000 of which is payable to SGM Capital
Limited, an affiliate of ISPSoft. No interest will be paid on such notes.

EXCHANGE OF STOCK CERTIFICATES

Surrender of Shares of ISPSoft Common Stock and ISPSoft Preferred Stock.
From and after the effective time of the merger, each holder of a certificate
which represented, prior to the effective time, shares of ISPSoft capital stock
will have the right to surrender each certificate to DSET and receive
certificates representing the requisite number of shares of DSET common stock,
other than the shares placed in the escrow. The surrendered certificates will be
cancelled. ISPSOFT SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE ADDITIONAL INFORMATION FROM EITHER DSET OR ISPSOFT.

Fractional Shares. DSET will not issue any fractional shares of DSET common
stock in the merger. Instead, each holder of shares of ISPSoft common stock or
ISPSoft preferred stock exchanged pursuant to the merger who would otherwise
have been entitled to receive a fraction of a share of DSET common stock will be
entitled to receive shares of DSET common stock rounded up to the nearest whole
number.

No Further Registration or Transfer of ISPSoft Common Stock and ISPSoft
Preferred Stock. At the effective time of the merger, the stock transfer books
of ISPSoft will be closed and there will be no further transfers of shares of
ISPSoft common stock or ISPSoft preferred stock on the records of ISPSoft. After
the effective time of the merger, the holders of ISPSoft stock certificates will
cease to have any rights with respect to such shares of ISPSoft common stock and
ISPSoft preferred stock except as otherwise provided for in the merger agreement
or by applicable law.

Dissenting Shares. Dissenting ISPSoft shares will not be converted into or
represent the right to receive DSET common stock. If the holder of the
dissenting shares forfeits his, her or its right to appraisal under the New
Jersey Business Corporation Act or has properly withdrawn his, her or its right
to appraisal:

these shares will no longer be dissenting shares and will be converted into
and represent the right to receive shares of DSET common stock and certain
cash payments in connection with the merger; and

DSET will deliver to the holder of these shares a certificate representing
ninety percent of the shares issued to the shareholder in connection with
the merger, and will deliver to the escrow agent a certificate representing
the remaining ten percent of the shares of DSET common stock issued to the
shareholder in connection with the merger. Please see 'The Merger -- Right
of Shareholders to Dissent' and -- 'Dissenters' Rights Procedures.'

Lost Certificates. If any ISPSoft certificates are lost, stolen or
destroyed, an ISPSoft shareholder must provide an appropriate affidavit of that
fact. DSET may require the owner of such lost, stolen or destroyed ISPSoft
certificates to deliver a bond as indemnity against any claim that may be made
against DSET with respect to the ISPSoft certificates alleged to have been lost,
stolen or destroyed.

REPRESENTATIONS AND WARRANTIES

In the merger agreement, each of DSET and ISPSoft have made a number of
representations and warranties about their business, financial condition,
structure and other facts pertinent to the merger.

The representations and warranties given by ISPSoft as they relate to
ISPSoft include, among others:

organization, existence, good standing, corporate power and similar
corporate matters;

capitalization;

authorization, execution, delivery and performance of and the
enforceability of the merger agreement and related matters;

compliance with charter, bylaws and applicable laws;

required governmental and third-party consents;

financial statements;

the absence of certain changes in its businesses;

tax matters;

intellectual property;

material contracts, agreements and commitments;

accounts receivable;

insurance;

litigation;

customer warranties;

employees and employee benefit plans;

environmental matters; and

the accuracy of information provided to the other party.

The representations and warranties given by ISPSoft expire 12 months from
the consummation of the merger except as they relate to tax matters, which
representations and warranties expire as of their applicable statute of
limitations.

The representations and warranties given by DSET as they relate to DSET
include, among others:

organization, existence, good standing, corporate power and similar
corporate matters;

capitalization;

authorization, execution, delivery and performance of and the
enforceability of the merger agreement and related matters;

compliance with charter, bylaws and applicable laws;

financial statements;

the absence of certain changes in its businesses;

litigation;

the accuracy of information provided to the other party; and

filings and reports with the Securities and Exchange Commission.

The representations and warranties given by DSET expire 12 months from the
consummation of the merger.

CERTAIN COVENANTS

Each of DSET and ISPSoft has agreed to use its commercially reasonable best
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by the merger agreement. Each party
has made certain additional covenants to the other, including, among other
things:

Conduct of ISPSoft Business Prior to the Merger. ISPSoft has agreed to carry
on its business in the ordinary course in substantially the same manner as
previously conducted, except as contemplated by the merger agreement.
Specifically, ISPSoft has agreed not to, without the prior written consent of
DSET:

issue or sell, or redeem or repurchase, any stock or other securities of
ISPSoft or any rights, warrants or options to acquire any such stock or
other securities (except pursuant to the conversion or exercise of
convertible securities or options or warrants outstanding as of the date of
the merger agreement), or amend any of the terms of (including without
limitation the vesting of) any such convertible securities or options or
warrants;

split, combine or reclassify any shares of its capital stock; declare, set
aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock;

create, incur or assume any new bank debt, leases, loans, encumbrances,
liens, attachments, contractual obligations or other indebtedness other
than in the ordinary course of business; assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity; or make any
loans, advances or capital contributions to, or investments in, any other
person or entity;

enter into, adopt or amend any employee benefit plan or any employment or
severance agreement or arrangement, with certain exceptions, increase the
salary or any other payments, disbursements or distributions in any manner
or form to shareholders, members, directors, officers, employees or current
independent contractors (or related parties thereto) of ISPSoft or
affiliated or related entities, or, with certain exceptions, changes in the
cash or cash equivalent accounts of ISPSoft nor hire additional employees
or consultants except for the replacement of terminated employees or
consultants; provided, however, that ISPSoft

may not grant options or similar incentive compensation to any newly hired
employees or consultants, whether or not such individuals are replacing
terminated employees or consultants;

acquire, sell, lease, license or dispose of any assets or property other
than purchases and sales of assets in the ordinary course of business;

mortgage or pledge any of its property or assets or subject any such
property or assets to any security interest;

discharge or satisfy any security interest or pay any obligation or
liability other than in the ordinary course of business;

amend its charter, by-laws or other organizational documents;

change in any material respect its accounting or tax reporting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP or the Code, provided, however, that any change
in method or procedure for billing, collection or recording of client
accounts receivable must be approved in writing in advance by DSET;

enter into, amend, terminate, take or omit to take any action that would
constitute a violation of or default under, or waive any rights under, any
material contract or agreement, including, without limitation, any bank
debt or leases of property, or enter into any distribution agreement, value
added reseller agreement or other reseller arrangement;

make or commit to make any capital expenditure in excess of $5,000 per item
or $25,000 in the aggregate;

institute or settle any legal proceeding;

take any action or fail to take any action permitted by the merger
agreement with the knowledge that such action or failure to take such
action would result in (i) any of the representations and warranties of
ISPSoft set forth in the merger agreement becoming untrue or (ii) any of
the conditions to the merger set forth in Article V of the merger agreement
not being satisfied; or

agree in writing or otherwise to take any of the foregoing actions.

Governmental and Third-Party Approvals. ISPSoft and DSET have agreed to use
their respective commercially reasonable best efforts to obtain all waivers,
permits, consents, approvals or other authorizations of all third parties and
governmental entities which are necessary to be obtained by them to consummate
the merger.

ISPSoft is Restricted from Trying to Sell to Another Party. Except for
specified exceptions, ISPSoft has agreed that it will not, directly or
indirectly:

initiate, solicit, encourage or otherwise facilitate any inquiry, proposal,
offer or discussion with any party, other than DSET, concerning any merger,
reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale of material
assets or similar business transaction involving ISPSoft or a division of
ISPSoft;

furnish any non-public information concerning the business, properties or
assets of ISPSoft, or any division of ISPSoft, to any party, other than
DSET; or

engage in discussions or negotiations with any party other than DSET
concerning any such transaction.

ISPSoft has further agreed to cause each of its officers, directors,
employees, representatives and agents not to do any of the things described
above. ISPSoft has agreed that it will immediately notify DSET in detail about
inquiries, proposals or offers of the nature described above and of any response
or ongoing dialogue with respect thereto.

Director and Officer Indemnification. DSET shall not, for a period of 3
years after the effective time of the merger, take any action to alter or impair
any exculpatory or indemnification provisions now existing in the Certificate of
Incorporation or By-laws of ISPSoft for the benefit of

any individual who served as a director or officer of ISPSoft at any time prior
to the effective time of the merger, except for any changes which may be
required to conform with changes in applicable law and any changes which do not
affect the application of such provisions to acts or omissions of such
individuals prior to the effective time.

Proxy Statement and Shareholder Approval. Each of ISPSoft and DSET shall use
their respective commercially reasonable best efforts to obtain their respective
shareholders' approval of the merger and DSET shall, with the assistance of
ISPSoft, prepare and cause to be filed with the Securities and Exchange
Commission a Registration Statement on Form S-4, containing the requisite joint
proxy statement/prospectus of the companies.

Listing of Merger Shares. DSET has agreed to use commercially reasonable
efforts to list the shares of common stock to be used by it in connection with
the merger on Nasdaq.

EXPENSES

Each of DSET and ISPSoft will bear its own costs and expenses, including
legal fees and expenses, incurred in connection with the merger; provided,
however, that if the merger is consummated, (i) DSET shall assume an aggregate
of $300,000 in legal and accounting fees and expenses of ISPSoft in connection
with the merger (which amounts shall be paid directly by DSET to such
professionals at the closing of the merger upon receipt of final invoices at
such closing); and provided, further, that any such fees and expenses in excess
of $300,000 shall be paid by the holders of ISPSoft common stock as set forth in
Section 1.12 of the merger agreement; and (ii) any amounts owed under ISPSoft's
agency arrangement with Signal Lake shall be paid by the holders of ISPSoft
common stock as set forth in Section 1.12 of the merger agreement. In addition,
all costs and expenses of filing this registration statement on Form S-4 and
causing such registration statement to be effective shall be borne by DSET.

RELATED MATTERS AFTER THE MERGER

At the time of the merger, a wholly-owned subsidiary of DSET will be merged
with and into ISPSoft, immediately followed by the merger of ISPSoft with and
into DSET. DSET will become the surviving corporation in the merger. The
certificate of incorporation of DSET, as amended, will constitute the
certificate of incorporation of the surviving corporation and the bylaws of
DSET, as amended, will constitute the bylaws of the surviving corporation.

INDEMNIFICATION

The merger agreement provides that the holders of ISPSoft stock who receive
DSET common stock in the merger as consideration for their shares of ISPSoft
will indemnify DSET for any and all damages, subject to the limitations
described below, that DSET may suffer as a result of any of the following:

any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of ISPSoft contained in the merger agreement;

any amount paid by DSET under Section 4.8(b) of the merger agreement
because of the failure of the shareholders of ISPSoft to pay such amount;

any accounts payable of ISPSoft that are more than 30 days past due on the
date of closing of the merger; or

any amounts owed by ISPSoft to Signal Lake other than amounts owed pursuant
to ISPSoft's Agency Arrangement with Signal Lake which are otherwise
accounted for under the merger agreement.

To secure such indemnification obligations of the ISPSoft shareholders, ten
percent of the DSET common stock that would otherwise be payable to them in
connection with the merger will be held in escrow. Pursuant to the merger
agreement, Mr. Binay Sugla, the President and Chief Executive Officer of
ISPSoft, has been designated as the representative of the indemnifying holders
with respect to indemnification matters.

The total liability of the indemnifying shareholders of ISPSoft or of DSET,
as the case may be, for their or its indemnification obligations shall not
exceed the escrow amount, as established at the time of the closing of the
merger, and no party shall be liable until the aggregate claim for damages
exceeds $100,000, at which time the respective indemnifying party shall be
liable for amounts, including such $100,000 threshold amount.

No ISPSoft shareholder shall have a right of contribution against ISPSoft or
the surviving corporation with respect to any breach by ISPSoft of any of its
representations, warranties, covenants or agreements.

In addition, DSET shall indemnify such indemnifying shareholders in respect
of, and hold them harmless against, any and all damages incurred or suffered by
such indemnifying shareholders resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of DSET contained in the merger agreement.

Except with respect to claims based on fraud, after the closing of the
merger, the indemnification rights of each party are the exclusive remedy with
respect to claims resulting from or relating to any misrepresentation, breach of
warranty or failure to perform any covenant or agreement contained in the merger
agreement.

CONDITIONS TO OBLIGATIONS TO EFFECT MERGER

The respective obligations of DSET and ISPSoft to effect the merger are
subject to the satisfaction or waiver of the following conditions: (1) the
merger and merger agreement must have been approved by the shareholders of each
of ISPSoft and DSET, and (2) the registration statement on Form S-4 must have
been declared effective by the Securities and Exchange Commission and there must
be no stop order in effect suspending the effectiveness of the registration
statement or any proceedings pending that seek a stop order.

In addition, the obligation of DSET to effect the merger is subject to the
satisfaction or waiver of the following additional conditions:

the number of dissenting shares to the merger shall not exceed 3% of the
number of outstanding common shares of ISPSoft's common stock as of the
effective time of the merger (calculated after giving effect to the
conversion into shares of common stock of all outstanding shares of ISPSoft
preferred stock);

ISPSoft shall have obtained (and shall have provided copies thereof to
DSET) all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices,
referred to in Section 4.2 of the merger agreement which are required on
the part of ISPSoft, except where failure to do so would not result in a
Company Material Adverse Effect (as set forth in the merger agreement) or
materially

impair the ability of the parties to consummate the transactions
contemplated by the merger agreement;

the representations and warranties of ISPSoft set forth in the first
sentence of Section 2.1 and in Section 2.3 of the merger agreement and any
representations and warranties of ISPSoft set forth in the merger agreement
that are qualified as to materiality shall be true and correct in all
respects, and all other representations and warranties of ISPSoft set forth
in the merger agreement shall be true and correct in all material respects,
in each case as of the date of the merger agreement and as of the effective
time of the merger as though made as of the effective time of the merger,
except to the extent such representations and warranties are specifically
made as of a particular date or as of the date of the merger agreement (in
which case such representations and warranties shall be true and correct as
of such date);

ISPSoft shall have performed or complied with in all material respects its
agreements and covenants required to be performed or complied with under
the merger agreement as of or prior to the effective time of the merger;

no legal proceeding shall be pending or threatened wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of any of the transactions contemplated by the merger
agreement, (ii) cause any of the transactions contemplated by the merger
agreement to be rescinded following consummation or (iii) have a material
adverse effect on ISPSoft, and no such judgment, order, decree, stipulation
or injunction shall be in effect;

ISPSoft shall have delivered to DSET a certificate to the effect that each
of the conditions specified in clause (a) of Section 5.1 of the merger
agreement (with respect to ISPSoft's requisite shareholder approval) and
clauses (a) through (e) (insofar as clause (e) relates to legal proceedings
involving ISPSoft) of Section 5.2 of the merger agreement is satisfied in
all respects;

DSET shall have received from counsel to ISPSoft an appropriate opinion of
such counsel with respect to the matters agreed upon, addressed to and
dated as of the closing date of the merger;

DSET shall have received from both Lucent and Signal Lake a written waiver
of any of their respective liquidation preferences, rights to payments
under Section 1.11 of the merger agreement and their respective rights to
convert or otherwise exchange their shares of ISPSoft preferred stock into
shares of ISPSoft common stock

DSET shall have received executed UCC-3 termination statements with respect
to the security interests granted to Lucent, Signal Lake and SGM;

the Comprehensive Preferred Escrow Agreement dated January 29, 2001 among
ISPSoft, DSI Technology Escrow Services, Inc., Signal Lake, SGM and Lucent
shall be terminated in writing effective as of the closing of the merger;

DSET shall have received from Binay Sugla, President and Chief Executive
Officer of ISPSoft, a written waiver of Section 4(e) of that certain Stock
Option Agreement dated April 30, 2001 with respect to the transactions
contemplated by the merger agreement;

DSET shall have received from Anand Desai written confirmation of the
termination of that certain warrant issued by ISPSoft to Mr. Desai to
purchase 200,000 shares of ISPSoft common stock at an exercise price of
$2.50 per share;

that certain VAR Agreement executed by each of DSET and ISPSoft on or about
the date of the merger agreement shall be in full force and effect at the
closing of the merger pursuant to its terms;

DSET shall have received an executed employment agreement from Mr. Sugla
and executed offer letters from such other employees of ISPSoft as DSET has
designated on the disclosure schedule to the merger agreement, providing
for, among other things: (i) usual and customary invention agreement,
non-competition and non-solicitation provisions; (ii) an annual base
salary; and (iii) benefits as provided to other similarly situated
executives of

DSET; which employment agreements shall be in such form as is reasonably
satisfactory to DSET and each respective employee;

each of the employees set forth on Section 5.2(j) of the disclosure
schedule to the merger agreement shall remain as employees of the surviving
corporation on the closing date of the merger agreement and in capacities
substantially similar to those of each such employee with ISPSoft prior to
the consummation of the merger;

DSET shall have received executed invention assignment, non-competition and
non-solicitation provisions from each of the employees retained by DSET or
otherwise reasonably selected by DSET, in form and substance reasonably
satisfactory to each of DSET and ISPSoft;

DSET shall have received a fairness opinion from its investment banker with
respect to the fairness, from a financial point of view, of the merger to
the shareholders of ISPSoft;

DSET shall have received executed lock-up agreements, in form and substance
reasonably satisfactory to DSET from each of the holders of shares of
ISPSoft capital stock providing for the lock-up of all shares to be issued
in consideration of the merger to be received by each such holder as
follows;

20% of such shares shall be subject to lock-up for a period of 60 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 90 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 120 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 150 days
subsequent to the date of closing of the merger, subject to customary
exceptions; and

20% of such shares shall be subject to lock-up for a period of 180 days
subsequent to the date of closing of the merger, subject to customary
exceptions.

DSET shall have received from each of Lucent, Signal Lake and the holders
of the other promissory notes issued by ISPSoft the original notes
referenced in Section 1.10 of the merger agreement, duly canceled, with
respect to all principal and interest thereunder;

DSET shall have received the duly executed receipt of Signal Lake
indicating that all obligations owed to Signal Lake under the ISPSoft
agency arrangement between ISPSoft and Signal Lake have been satisfied in
full;

DSET shall have received from ISPSoft a copy of a letter of
non-applicability addressed to ISPSoft from the Department of Environmental
Protection of the State of New Jersey with respect to the merger;

DSET shall have received executed agreements from each of the shareholders
of ISPSoft receiving shares as consideration in the merger acknowledging
and agreeing that such shares are subject to the restrictions on transfer
and requirements of forfeiture referenced in Section 1.5(e) of the merger
agreement and as set forth on Section 2.2 of the disclosure schedule to the
merger agreement;

DSET shall have received such other certificates and instruments (including
without limitation certificates of tax and other good standing of ISPSoft
in its jurisdiction of organization and the various foreign jurisdictions
in which it is qualified, certified charter documents, certificates as to
the incumbency of officers and the adoption of authorizing resolutions) as
it shall reasonably request in connection with the closing of the merger;

the shareholders of ISPSoft shall have delivered to DSET properly executed
statements in a form reasonably acceptable to DSET for purposes of
satisfying DSET's obligations under Treasury Regulation Section
1.1445-2(b);

notwithstanding any other provision in the merger agreement, DSET shall
have the right to withhold taxes from any payments to be made under the
merger agreement (including any payments to be made under the Escrow
Agreement) if such withholding is required by law and to collect Forms W-8
or W-9, as applicable, from shareholders of ISPSoft;

ISPSoft shall have terminated its 401(k) Plan, as provided by Section 4.19
of the merger agreement;

any 'parachute payments' shall have been approved by the percentage of
holders of shares of ISPSoft capital stock as required by law as described
in Section 4.18 of the merger agreement; and

DSET shall have received the Escrow Agreement, duly executed by each of the
indemnification representative and the escrow agent.

In addition, the obligation of ISPSoft to effect the merger is subject to
the satisfaction or waiver of the following conditions:

the shares of DSET common stock issued in connection with the merger shall
have been authorized for listing on Nasdaq upon official notice of
issuance;

DSET shall have effected all of the registrations, filings and notices
referred to in Section 4.2 of the merger agreement which are required on
the part of DSET, except for any which if not obtained or effected would
not have a material adverse effect on DSET or a material adverse effect on
the ability of the parties to consummate the transactions contemplated by
the merger agreement;

the representations and warranties of DSET set forth in the first sentence
of Section 3.1 and Section 3.3 of the merger agreement and any
representations and warranties of DSET set forth in the merger agreement
that are qualified as to materiality shall be true and correct, and the
representations and warranties of DSET set forth in the merger agreement
that are not so qualified (other than those set forth in Section 3.1 and
Section 3.3 of the merger agreement) shall be true and correct in all
material respects, in each case as of the date of the merger agreement and
as of the effective time of the merger as though made as of the effective
time of the merger, except to the extent such representations and
warranties are specifically made as of a particular date or as of the date
of the merger agreement (in which case such representations and warranties
shall be true and correct as of such date);

DSET shall have performed or complied in all material respects with its
agreements and covenants required to be performed or complied with under
the merger agreement as of or prior to the effective time of the merger;

no legal proceeding shall be pending or threatened wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of any of the transactions contemplated by the merger
agreement, (ii) cause any of the transactions contemplated by the merger
agreement to be rescinded following consummation or (iii) have a material
adverse effect on DSET, and no such judgment, order, decree, stipulation or
injunction shall be in effect;

DSET shall have delivered to ISPSoft a certificate to the effect that each
of the conditions specified in clause (b) of Section 5.1 and clauses (a)
through (e) (insofar as clause (e) relates to legal proceedings involving
DSET) of Section 5.3 of the merger agreement is satisfied in all respects;

DSET shall have delivered to Lucent and Signal Lake the new Promissory
Notes;

ISPSoft shall have received from counsel to DSET an appropriate opinion of
counsel with respect to the matters agreed upon, addressed to ISPSoft and
dated as of the closing date of the merger;

the shareholders of DSET shall have elected, effective upon closing of the
merger each of Mr. Sugla and two individuals mutually acceptable to each of
DSET and ISPSoft to DSET's board of directors, with terms of such two
individuals expiring at DSET's next Annual Meeting of Shareholders;
provided, however, that each of such individuals may stand for re-election;

ISPSoft shall have received from DSET an executed Board Observer Rights
Letter, in form and substance mutually agreeable to each of Lucent and
DSET, providing certain board of director observer rights to Lucent through
December 31, 2002;

ISPSoft shall have received such other certificates and instruments
(including without limitation certificates of good standing of DSET in its
jurisdiction of organization, certified charter documents, certificates as
to the incumbency of officers and the adoption of authorizing resolutions)
as it shall reasonably request in connection with the closing of the
merger.

TERMINATION; BREAKUP FEES

The merger agreement may be terminated at any time prior to the effective
time of the merger as follows:

the parties may terminate the merger agreement by mutual written consent;

either party may terminate the merger agreement by giving written notice to
the other party in the event such other party is in breach, with certain
exceptions, of any representation, warranty or covenant contained in the
merger agreement, and such breach is not cured within 20 days following
delivery of written notice of such breach. Upon such termination, the
breaching party shall pay a termination fee equal to $2,000,000 plus
certain documentable expenses of the non-breaching party;

either party may terminate the merger agreement by giving written notice to
the other party at any time after their respective shareholders have voted
on and failed to approve the merger agreement and the merger. If such
failure to receive shareholder approval is caused by a breach of previously
executed voting agreements to vote in favor of the merger agreement and the
merger, the party failing to obtain such requisite shareholder approval
shall pay a termination fee equal to $2,000,000 plus certain documentable
expenses of the non-breaching party;

ISPSoft may terminate the merger agreement by giving written notice to DSET
in the event DSET enters into any agreement or understanding with another
party with respect to any business combination between DSET and another
person or entity and, in connection therewith, DSET terminates the merger
agreement. Upon such termination, DSET shall pay ISPSoft a termination fee
equal to $2,000,000 plus certain documentable expenses of the non-breaching
party;

ISPSoft may terminate the merger agreement by giving written notice to DSET
in the event ISPSoft accepts certain company superior offers. Upon such
termination, ISPSoft shall pay DSET a termination fee equal to $2,000,000
plus certain documentable expenses of the non-breaching party;

either party may terminate the merger agreement by giving written notice to
the other party if the closing of the merger shall not have occurred on or
before December 31, 2001 by reason of the failure of any condition
precedent under the merger agreement (unless the failure results primarily
from a breach by the party seeking to terminate the merger agreement of any
representation, warranty or covenant contained in the merger agreement), in
which case, the breaching party shall pay a termination fee equal to
$2,000,000 plus certain documentable expenses of the non-breaching party;
provided, however, that such December 31, 2001 date shall be extended one
day for each day after July 15, 2001 that ISPSoft has not provided to DSET
audited financial statements in form and substance sufficient for filing
with this registration statement on Form S-4;

if any party terminates the merger agreement, all obligations of the
parties thereunder shall terminate without any liability of any party to
any other party. Except as set forth above and except for any liability of
any party for willful breaches of the merger agreement; or

notwithstanding the termination of the merger agreement for any reason, the
terms of any confidentiality agreement between the Parties shall continue
in accordance with its terms.

AMENDMENT AND WAIVER

Generally, the boards of directors of DSET and ISPSoft may amend the merger
agreement at any time prior to the effective time by mutual agreement. However,
after the shareholders of ISPSoft or DSET approve the merger, any amendment will
be restricted by the New Jersey

Business Corporation Act, and no amendment shall be made which by law requires
further approval by such shareholders without such approval. Amendments must be
in writing and signed by all parties and waivers must be in writing and signed
by the waiving party.

OTHER AGREEMENTS

VOTING AGREEMENTS

Contemporaneously with the execution of the merger agreement by each of DSET
and ISPSoft, holders of at least 90% of the capital stock of ISPSoft as of the
date of the merger agreement agreed: (i) to vote all of their shares of ISPSoft
capital stock that are beneficially owned by him, her or it in favor of the
adoption of the merger agreement and the approval of the merger, (ii) not to
vote any of such shares in favor of any other acquisition (whether by way of
merger, consolidation, share exchange, stock purchase or asset purchase) of all
or a majority of the outstanding capital stock or assets of ISPSoft, and (iii)
otherwise to use his, her or its commercially reasonable best efforts to obtain
the ISPSoft requisite shareholder approval of ISPSoft shareholders.

Also at such time, each of the executive officers and Directors of DSET
executed the merger agreement agreeing to vote all shares of common stock of
DSET that are beneficially owned by him, her or it in favor of the adoption of
the merger agreement and the approval of the merger and otherwise to use his,
her or its commercially reasonable best efforts to obtain the affirmative vote
of a majority of the votes represented by the outstanding common stock of DSET
entitled to vote on the merger agreement and the merger.

LOCK-UP AGREEMENTS

As a condition to the closing of the merger, all of the holders of shares of
ISPSoft capital stock must enter into lock-up agreements with DSET. Pursuant to
the lock-up agreements, the signing shareholders agree, with respect to the
shares of DSET common stock owned as a result of the transactions contemplated
by the merger agreement, not to sell, transfer, pledge or otherwise dispose of,
or reduce an interest in or risk relating to such shares in accordance with the
percentages set forth below:

20% of such shares shall be subject to lock-up for a period of 60 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 90 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 120 days
subsequent to the date of closing of the merger, subject to customary
exceptions;

20% of such shares shall be subject to lock-up for a period of 150 days
subsequent to the date of closing of the merger, subject to customary
exceptions; and

20% of such shares shall be subject to lock-up for a period of 180 days
subsequent to the date of closing of the merger, subject to customary
exceptions.

ESCROW AGREEMENT

DSET will deposit in escrow, with Commerce Bank, as escrow agent,
certificates representing ten percent of the shares of DSET common stock
issuable in the merger to the holders of ISPSoft capital stock for the purpose
of securing the indemnification obligations of the ISPSoft shareholders pursuant
to the merger agreement. Mr. Binay Sugla, ISPSoft's President and Chief
Executive Officer, shall serve as the indemnification representative on behalf
of such ISPSoft shareholders.

The escrow shares will be issued in the name of the escrow agent or its
nominee and may not be transferred or assigned while held in escrow, other than
by operation of law. DSET will pay all of the fees of the escrow agent for
services performed under the escrow agreement.

DSET and the ISPSoft shareholders whose shares are held in escrow agree to
jointly and severally indemnify the escrow agent for carrying out any duties
under the escrow agreement.

In the event DSET distributes any securities in respect to, or in exchange
for, the shares of DSET common stock by way of a stock dividend, stock split or
otherwise, such securities shall be issued in the name of the escrow agent or
its nominee and delivered to the escrow agent who shall hold such shares in
escrow. In the event DSET distributes cash dividends or property other than
securities, in respect to the shares held in escrow, such cash or property shall
be promptly distributed by the escrow agent to those for whom the DSET shares
are being held in escrow.

Under the escrow agreement, the escrow shares will be voted by the escrow
agent on behalf of the ISPSoft shareholders in accordance with instructions
received by the escrow agent from the indemnification representative. In the
absence of these instructions, the escrow agent will not vote the shares held in
escrow.

The escrow agent shall distribute the DSET shares held in escrow (1) in
accordance with a written instrument signed by DSET and the indemnification
representative or (2) in accordance with the written directive of a court. In
the event neither of the preceding occurs, the escrow agent shall distribute all
of the shares in escrow to the persons in whose names the shares are registered
after the passage of 12 months following the closing of the merger. If DSET
asserts an indemnification claim, some (but no more than fifty percent) of the
shares held in escrow, which amount shall be determined in accordance with the
terms of the escrow agreement, will remain in escrow and be distributed upon
resolution of the indemnification claim.

EMPLOYMENT AGREEMENT AND OFFER LETTERS OF EMPLOYMENT

Pursuant to the merger agreement, Mr. Binay Sugla shall receive an
employment agreement with DSET reasonably satisfactory to each such party.

Also pursuant to the merger agreement, the following ten current employees
of ISPSoft will become employees of DSET:

Raghvender Arni

Ramesh Balakrishan

Sukesh Garg

Ajita John

Hariharan Krishnan

Anand Desai

Edwin Park

Roshan Sequeira

Kumar Srinivasan

Ajay Wanchoo

DSET will provide each person with appropriate employment related documents
detailing the following:

a salary paid on a semi-monthly basis;

an annual cash bonus;

provisions for severance;

medical, dental, life and long-term disability insurance; and

vacation and other standard benefits.

By signing the employment documents, the employee acknowledges that the
terms of employment as offered by DSET do not constitute a significant
diminution of such employee's duties, title, power, office and responsibilities
in effect at ISPSoft prior to accepting employment with DSET or a material
reduction in the amount and manner of compensation in effect at ISPSoft prior to
accepting this offer.

Employment with DSET is contingent upon the employee signing an Invention
Assignment, Confidentiality and Non-Competition Agreement with DSET.

INVENTION, CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

DSET requires all of its employees to enter into an invention,
confidentiality and non-competition agreement upon commencement of employment.
Accordingly, all employees of ISPSoft hired by DSET must execute such an
agreement upon the closing of the merger.

Under the terms of this agreement, an employee agrees that all proprietary
information relating to DSET's business that is of a confidential nature is the
exclusive property of DSET and as such will not be disclosed to a person or
entity that is not employed by DSET without DSET's prior written approval. Upon
the request of DSET or upon an employee's termination, any proprietary
information reduced to a tangible form, and any copies thereof, will be
delivered to DSET by the employee. The employee's obligation not to use or
disclose and to return material extends to information, material and tangible
property of customers, suppliers and third parties who have disclosed the same
to DSET.

Pursuant to this agreement, the employee agrees to promptly disclose to DSET
all inventions, improvements, discoveries, methods, developments, software and
works of authorship, collectively referred to as inventions, created or reduced
to practice during the term of employment at DSET. Further, the employee agrees
to assign to DSET all right, title and interest in inventions, patents, patent
applications, copyrights and copyright applications. If the invention is made
during non-business hours, at a location other than DSET and without DSET's
tools, equipment or proprietary information, the employee need not assign
his/her interest in such invention.

For the duration of his or her employment and for one year thereafter, the
employee agrees not to:

own any interest in, lend to, hold any position in, or perform any work on
behalf of any entity, including on the employee's own behalf, that is
competitive with products developed, designed, produced or sold by DSET
during his/her employment at DSET;

divert, take away or attempt to take away clients, customers or accounts,
potential or otherwise, of DSET which were served or contacted while the
employee was employed by DSET; or

directly or indirectly recruit, solicit, or hire any employee of DSET or
cause, or attempt to cause, an employee of DSET to terminate or otherwise
cease his/her relationship with DSET.

The employee further agrees to represent that he/she is not bound by the
terms of any non-disclosure or non-compete agreement with another entity, other
than those disclosed in writing to DSET. Additionally, such employee agrees to
represent that, in carrying out the terms and duties of employment (1) he/she
will not violate any agreements prohibiting the disclosure of confidential
information of another entity and (2) he/she will not disclose or cause DSET to
use confidential information or material belonging to any other entity or
person.

LOAN TRANSACTION

On May 9, 2001, simultaneously with the execution of the first letter of
intent related to the merger, DSET loaned ISPSoft $500,000 pursuant to a secured
promissory note. The loan proceeds were to be used for ISPSoft's ongoing
operations. Principal and interest, which accrued at eight percent per year, was
payable on the earlier of (i) October 31, 2001, (ii) ISPSoft determining not to
enter into the merger, and (iii) the consummation by ISPSoft of an equity
financing after May 9, 2001 that resulted in gross proceeds to ISPSoft of at
least $2,000,000, exclusive of any proceeds received upon the conversion of any
promissory notes issued by ISPSoft. The parties also executed a security
agreement under which ISPSoft granted DSET a security interest in substantially
all of ISPSoft's assets. DSET also became party to an intercreditor agreement
with ISPSoft's other secured lenders under which DSET's security interest was
equal in priority to the security interests of the other secured lenders. When
ISPSoft initially terminated the negotiations concerning the merger on May 30,
2001, such note became payable. See 'The Merger -- Background of the Merger.'

On June 26, 2001, simultaneously with the execution of the Merger Agreement,
ISPSoft issued to DSET a $2,000,000 promissory note which replaced the $500,000
note. The remaining loan

amounts were to be loaned by DSET to ISPSoft as follows: $500,000 on June 26,
2001; $500,000 on July 26, 2001; and $500,000 on August 27, 2001. The loan
proceeds are to be used for ISPSoft's ongoing operations through the date of the
Closing. Principal and interest, which accrues at eight percent per year, is
payable on the earlier of (i) October 31, 2001, unless the failure to close the
merger is caused by the failure of DSET to obtain requisite shareholder
approval, in which case the note shall be payable on January 31, 2002; (ii)
ISPSoft being required to pay a break up fee as a result of ISPSoft's
termination of the merger agreement; and (iii) the consummation by ISPSoft of an
equity financing after June 26, 2001 that results in gross proceeds to ISPSoft
of at least $2,000,000, exclusive of any proceeds received upon the conversion
of any promissory notes issued by ISPSoft. The parties also executed an amended
and restated security agreement on substantially the same terms as the first
security agreement. The security interest granted to DSET is equal in priority
to the security interests of the other secured lenders of ISPSoft. Under the
terms of the amended and restated security agreement and the intercreditor
agreement, DSET cannot take any action to foreclose on the assets of ISPSoft
unless DSET provides 20 days notice of such action to the other lenders of
ISPSoft, unless any of ISPSoft's three primary lenders, Lucent Technologies
Inc., Signal Lake Venture Fund L.P. or SGM Capital Limited, consent to such
enforcement action.

On September 26, 2001, ISPSoft issued to DSET an additional promissory note
in the aggregate principal amount $750,000. Pursuant to the terms of such note,
DSET loaned to ISPSoft $250,000 on each of September 26, 2001, October 10, 2001
and October 24, 2001. The loan proceeds are to be used for ISPSoft's ongoing
operations through the date of the Closing. Principal and interest, which
accrues at eight percent per year, is payable on the earlier of (i)
November 30, 2001, unless the failure to close the merger is caused by the
failure of DSET to obtain requisite shareholder approval, in which case the note
shall be payable on January 31, 2002; (ii) ISPSoft being required to pay a break
up fee as a result of ISPSoft's termination of the merger agreement; and (iii)
the consummation by ISPSoft of an equity financing after September 26, 2001 that
results in gross proceeds to ISPSoft of at least $2,000,000, exclusive of any
proceeds received upon the conversion of any promissory notes issued by ISPSoft.
The parties also executed an amendment to the June 26, 2001 promissory note and
the amended and restated security agreement which changed the due date of the
June 26, 2001 note to November 30, 2001 and which secured DSET's interest under
the new note.

On November 5, 2001, ISPSoft issued to DSET an additional promissory note in
the aggregate principal amount of $850,000. Pursuant to the terms of such note,
DSET loaned to ISPSoft $275,000 on each of November 8, 2001 and November 21,
2001 and $300,000 on December 6, 2001. The loan proceeds are to be used for
ISPSoft's ongoing operations through the date of the Closing. Principal and
interest, which accrues at eight percent per year, is payable on the earlier of
(i) December 31, 2001, unless the failure to close the merger is caused by the
failure of DSET to obtain requisite shareholder approval, in which case the note
shall be payable on January 31, 2002; (ii) ISPSoft being required to pay a break
up fee as a result of ISPSoft's termination of the merger agreement; and
(iii) the consummation by ISPSoft of an equity financing after November 5, 2001
that results in gross proceeds to ISPSoft of at least $2,000,000, exclusive of
any proceeds received upon the conversion of any promissory notes issued by
ISPSoft. The parties also executed an amendment to each of the June 26, 2001
promissory note, the September 26, 2001 promissory note and the amended and
restated security agreement which changed the due date of each such note to
December 31, 2001 and which secured DSET's interest under the new note.

On December 19, 2001, ISPSoft issued to DSET an additional promissory note
in the principal amount of $250,000. Pursuant to the terms of such note, DSET
will loan to ISPSoft $250,000 on December 26, 2001. The loan proceeds are to be
used for ISPSoft's ongoing operations through the date of the Closing. Principal
and interest, which accrues at eight percent per year, is payable on the earlier
of (i) January 31, 2002, unless the failure to close the merger is caused by the
failure of DSET to obtain requisite shareholder approval, in which case the note
shall be payable on February 28, 2002; (ii) ISPSoft being required to pay a
break up fee as a result of ISPSoft's termination of the merger agreement; and
(iii) the consummation by ISPSoft of an equity financing after December 19, 2001
that results in gross proceeds to ISPSoft of at least $2,000,000, exclusive

of any proceeds received upon the conversion of any promissory notes issued by
ISPSoft. The parties also executed an amendment to each of the June 26, 2001
promissory note, the September 26, 2001 promissory note, the November 5, 2001
promissory note and the amended and restated security agreement which changed
the due date of each such note to January 31, 2002 and which secured DSET's
interest under the new note.

VALUE ADDED RESELLER AGREEMENT

On June 26, 2001, DSET and ISPSoft entered into a non-exclusive Value Added
Reseller Agreement covering North America pursuant to which DSET will market
ISPSoft's products in exchange for certain commission payments. DSET is also
obligated under the agreement to provide certain professional services to end
users.

<Page>
INFORMATION CONCERNING DSET

BUSINESS

GENERAL

DSET went public in March 1998 after 19 consecutive quarters of
profitability and was successful in maintaining rapid revenue and net income
growth during 1998, 1999 and through the first half of 2000.

Today DSET is a supplier of software and related services to a specific
segment of the telecommunications industry. DSET's software and services are
sold to phone companies that predominantly compete against the traditional
suppliers of local phone service to business and consumers.

A trend in the telecommunications industry over the past few years has been
to refer to phone companies as 'service providers' regardless of whether they
were offering local, long distance or Internet access. Many of these phone
companies are relatively new as a result of the Telecommunications Act of 1996.

These new phone companies (service providers) are competing with the
historical monopoly providers of local phone service (e.g., Verizon, PacBell,
BellSouth and SBC).

DSET refers to new phone companies, which is our targeted customer base, as
'competitive service providers', or CSPs.

There are many different types of CSPs including those that only offer
high-speed data connections, called Data Local Exchange Carriers (commonly known
as DLECs). Others offer local phone service, long distance, high speed data
services, web hosting and internet access and have been called Competitive Local
Exchange Carriers (commonly known as CLECs they also call themselves integrated
communication providers or ICPs). Cable companies have been offering local phone
service over their cables and so they too are a competitive service provider.
Utility companies are also trying to leverage their customer bases and offer
local phone services and, therefore, a division of a utility selling local phone
service could be called a competitive service provider.

Finally, all these CSPs are competing against the 'incumbents'. The
Incumbent Local Exchange Carrier is often referred to as an ILEC. The Regional
Bell Operating Companies that were formed by the breakup of AT&T in 1984 are the
major ILECs. There is another group of phone companies called the rural local
exchange carriers (RLECs). They have been providing local phone service to rural
and smaller metro areas. DSET estimates there are over 300 CSPs in the United
States.

DSET's software has been optimized to solve problems for the CSPs, not the
ILECs.

The challenge facing CSPs is that in order to 'turn-on' new phone service
(sometimes referred to as provisioning) for a new customer, they must lease
pieces of the telephone network (e.g., the local copper loop) that are owned by
the incumbent local exchange carriers. CSPs must also communicate to multiple
third party service bureaus that will ensure the CSP's new customers can keep
their current phone number, receive 911 services, as well as calling card or
caller identification services.

All of these tasks can be done by human beings. A CSP has the option of
mailing, faxing, phoning or overnighting an order to BellSouth, for example. Any
such effort takes significant time and energy.

BellSouth and the other incumbent local exchange carriers have made a Web
application available enabling CSPs to electronically submit forms directly into
the incumbent local exchange carriers' order processing system. This Web
application is an improvement, but once the order has been processed by the
incumbent local exchange carrier and a confirmation sent to the CSP, another
step of retyping the order is required, as the CSP has their own order
processing system which in turn coordinates with the service activation system,
the inventory system and the billing

<Page>
system. Allowing information to 'flow-through' these different systems untouched
by humans is a key goal for service providers and correspondingly, their
software suppliers.

The competitive challenge for a CSP is to 'turn-on' service for a new
customer in less than a week. DSET's electronic-bonding gateways (DSET's
software), integrated with an order processing system helps a CSP to achieve
this goal. Most CSPs still activate new services in 30-45 days.

DSET's electronic-bonding gateways (our software) and services are our
primary source of revenue. These related services include program management,
installation, integration with other related applications, testing, training,
technical support and software upgrades. These services are necessary to ensure
the software can be implemented successfully and continue to operate
effectively.

In the last year, as the telecommunications industry has undergone a
dramatic downturn, the fate of the competitive service provider market has been
called into question. DSET believes that a competitive service provider market
will emerge from these troubled times, but it will be much smaller than
originally anticipated.

Prior to developing and marketing products to CSPs, DSET was developing and
marketing software and related services that solved a different set of problems
for a different set of customers, but still in the telecommunications industry.

In the mid 1990's, DSET was developing and marketing a suite of software
'tools'. These software products (tools) enabled the user to build an
application.

This software was often referred to as 'toolkits' or 'application
development tools'. DSET was known as a toolkit supplier.

DSET sold these toolkits predominantly to the network equipment vendors
(e.g., Lucent, Hitachi, Siemens and Ciena). In turn the software engineers of
such network equipment vendors used the toolkits to build applications that they
embedded into their network equipment, which they in turn sold to the Regional
Bell Operating Companies.

These applications enabled the Regional Bell Operating Companies to remotely
maintain the network equipment from their Network Operations Center. The
application also allowed them to turn on (provision) a second or third line in a
customer's house or business. DSET's software solutions have always been
involved in some aspect of the provisioning process.

DSET's software had been optimized to support a certain industry standard
known as the Telecommunications Management Network ('TMN') Standard. The
technologies that were defined by this standard were essentially ignored by key
players in the telecommunications industry and the standard has become
effectively obsolete. DSET realized that since the Regional Bell Operating
Companies would not be implementing the TMN Standard in significant volume, DSET
needed to transition away from TMN based solutions into other software segments
that provided for future growth. DSET had already begun focusing on the
previously described electronic-bonding gateways starting back in June 1998 and
expected that the market for these new gateways would be robust unitl at least
2002 or 2003. This has all changed, thus perpetuating our merger with ISPSoft.

DSET successfully transitioned out of the application development tools
market segment. In 2000, DSET ceased new development activities on the toolkits
and trained a third party (NE Technologies, Inc.) on the software so that NE
Technologies, Inc. could provide ongoing technical support for DSET's customers
still on maintenance contracts.

DSET had also offered in 1998, 1999 and 2000 a set of applications for the
GR-303 market and the Local Service Management System (LSMS) market. DSET has
also successfully transitioned out of both of these small segments.

From DSET's perspective, these three product sets, either because of
technological obsolescence or competitive inroads did not hold the potential for
significant revenue growth and required DSET to transition out of them while
still honoring our contractual maintenance commitments with its customers.

<Page>
DSET began researching other segments of the provisioning market in August
2000 and concluded that it must once again diversify. DSET commenced identifying
and targeting potential partners, which resulted in its proposed merger with
ISPSoft. If the merger is successfully consummated, DSET would be able to sell
software solutions to any service provider anywhere in the world.

INDUSTRY

The telecommunications industry is one of the largest in the world. The
current relevant segment of the industry for DSET is the United States.

DSET has been tracking over 300 competitive service providers in the United
States. DSET has assumed that as a result of mergers, acquisitions, bankruptcies
and financial conditions, possibly 100-200 CSPs may survive over the next few
years. Currently only about 35 are traded publicly.

DSET believes that through a combination of its 'Pay As You Grow' and Rental
Program strategies or traditional, one-time license fee arrangements that the
software and services it offers have the potential to generate revenues of
$200,000 to $1,000,000 per CSP annually.

Adding variables such as phasing-in of gateways, competitive pressures and
funding support from venture capitalists or other capital sources, DSET believes
that over the next 24 months, there may be between $50,000,000 and $100,000,000
spent by CSPs for electronic bonding gateways and their related services.

The market for electronic-bonding gateways in Europe is believed to be two
years behind the market in the United States. Now with major changes underway in
the United States, DSET cannot predict if a market will materialize for its
gateways in Europe.

There are some regulatory issues in the United States that are being debated
in Congress that could have an effect on the industry and DSET's potential
markets. The Telecom Act of 1996 opened the door for the competitive service
providers to compete against the incumbent local exchange carriers for the local
phone service business, but it did not address the high-speed Internet access
issues.

Currently, the cable companies can sell high-speed Internet access over
their cable and they are not being required legally to let the CSPs have access
to this capability.

The Regional Bell Operating Companies are trying to sell digital subscriber
line technology running on their copper loops to provide high-speed Internet
access to compete with the cable companies. And, if they invest more dollars in
digital subscriber line (or any other technology) for high-speed internet access
for consumers, they may be required by the Federal Communications Commission to
permit the CSPs to lease the capability and resell it in competition with them
(as they do for local phone services).

The Tauzin-Dingell Bill which is being debated in the United States House of
Representatives, if approved by Congress, would provide protection for the
Regional Bell Operating Companies if they invested in the network to improve
high-speed Internet access across America.

DSET believes that if this happened, the remaining CSPs would most likely go
out of business.

For DSET, one of the advantages of merging with ISPSoft is that it would
have the ability to sell software and services to any service provider in the
world. ISPSoft's products are Internet Protocol (IP) based which is more
universally accepted, both domestically and internationally, by a wider audience
of communications providers and enterprise customers. In contrast, DSET's
existing product line is different for the United States and Canada and several
products involve multiple and/or different trading partner interfaces for
communications between the CSPs and incumbent local exchange carriers. Major
corporations are also looking to activate (provision) new services for their
employees, based on their IP Networks, or through the Internet. To be able to
sell to any customer in the world without constraint, is a major objective of
our merger and acquisition strategy.

<Page>
DSET's Products and Services

Products -- Electronic Bonding Gateways

DSET offers a family of five different electronic bonding gateways, trading
partner interfaces, integration to certain other operational support systems and
the related services to implement and support the products. Our suite of
gateways includes:

1. ezPre-Order

Our ezPreOrder solutions electronically retrieve from an incumbent local
exchange carrier's database important customer data such as name, address,
whether or not the customer's local loop can run digital subscriber line
services and other information that the CSP would like, prior to submitting an
actual order to the incumbent local exchange carrier.

2. ezLocal

After a customer and CSP agree on a bundle of services, it is necessary to
order local loops and directory assistance from the ILEC. With our ezLocal
gateway the ordering process is automated by interconnecting the CSPs order
management system with the appropriate system at the ILEC. In addition to
supporting local voice service, ezLocal can be used to order loops for DSL
service. This gateway also triggers the process to ensure that a customer can
keep their current phone number.

3. ezAccess

Our ezAccess gateway automates sending an order for high-capacity circuits
(e.g., T-1, DS-1) from the CSP to the ILEC. In early 2001 we completed a new
version of our ezAccess gateway that makes it possible for a CSP to receive
access service requests (ASRs) automatically when deployed in combination with
the order management system offered by one of our software partners. In October
2001, we released a new version of our ezAccess gateway which enhances its
features and functionality.

4. ezNumberPort

Our ezNumberPort gateway sends messages from the CSP to any of eight
regional number portability centers to ensure that new customers of the CSP do
not lose their original phone numbers. This is commonly referred to as local
number portability.

5. ezTroubleAdmin

Our ezTroubleAdmin gateway automates the flow of trouble-ticket information
between CSPs and the ILECs who provide the local loop. Automating the exchange
of such data expedites the resolution of problems that affect a CSP's customers,
but which may be caused by some failure in the ILEC's local loop. We now also
offer a Database Adapter with our ezTroubleAdmin gateway that makes it easy for
CSP to integrate the gateway with virtually any trouble-management system.

6. Trading Partner Interfaces

An integral part of our gateway solutions, is our full line of trading
partner interfaces that have been tailored for interconnection with a specific
trading partner. Each Regional Bell Operating Company has different interface
requirements and DSET constantly updates the CSP's trading partner interfaces,
to ensure that when they submit an order through the ezLocal gateway, it works
smoothly and does not get rejected. In October 2001, we became a certified
software vendor under a BellSouth program that will streamline the process of
interconnecting a CSP to BellSouth by means of DSET's ezPre-Order gateway and
ezLocal ordering gateway.

<Page>
7. Integration to OSS

We have partnered with Siebel Systems, the leading supplier of eBusiness
applications, to integrate our ezTroubleAdmin gateway with Siebel
eCommunications 2000.3. Designed specifically for the telecommunications
industry, Siebel eCommunications is a comprehensive family of eBusiness
applications, allowing organizations to manage, synchronize and coordinate all
customer touch points including the Web, call center, field organization and
distribution channels. In October 2001, we announced our support of Siebel 7,
the seventh major release of Siebel eBusiness Applications.

Additionally, selected gateways (ezLocal and ezAccess) are integrated to
MetaSolv, Inc.'s OSS solutions, known as the MetaSolv Solution.

Professional Services

As a complement to our gateway solutions, we offer a suite of related
services that can move our customers forward quickly and cost-effectively. These
services are provided by DSET, although customers can choose to have certain of
these services performed by a system integrator of their choice. We offer the
following services to our customers:

Implementation Services

1. Program Management

When a CSP purchases a DSET gateway, the customer is assigned an experienced
Program Manager who will serve as a post-sales point of contact. The Program
Manager has overall responsibility for the implementation of our products,
including planning, installation, training, program monitoring and the
successful completion of inter-operability testing.

2. Installation

Our field engineers are experienced and capable technicians who quickly
install the purchased gateway on the customer's hardware.

3. Configuration

Customizations of the product interfaces ensure that the gateways operate
smoothly in the customer's OSS.

4. Interoperability Testing (IOT)

Our field engineers also are responsible for Interoperability Testing
('IOT'). IOT simulates the operation of stand-alone or integrated gateway
products to ensure interoperability of the product with the customer's order
managment system and the trading partners (e.g., RBOC or service bureau).

5. Training

The goal of the DSET Training Group is to educate our customer's end users
in the proper use of our solutions. Training courses are available at our Plano,
Texas facility or at the customer's site.

Ongoing Maintenance Services

1. Change Management Services

ILEC's constantly make modifications to the business rules in their OMSs,
which in turn requires us to monitor those changes and update our respective
TPIs. In remaining compliant with the most recent specific ILEC and overall
industry changes, we provide Change Management

<Page>
Services to track and monitor the respective ILEC and industry changes. Our
services include such items as updates to maps, emergency patches, support for
new or enhanced functionality, and modifications and updates to our TPIs to
support ILEC changes. This service provides customers with the most efficient,
up-to-date interfaces available to the respective ILEC's networks.

2. Technical Support

Our technical support services include problem identification and
notification, work-around solutions, temporary software patches and bug fixes.
Depending upon the complexity of the problem, we provide technical support
solutions via electronic mail, website access, telephone or on-site support.
Such services are offered to all licensees of our products under maintenance
contracts, for which we typically charge between 15% and 30% annually of the
price of the products licensed by the customer.

3. Software Upgrades

We provide our annual maintenance customers with the option to receive
product upgrades, including new releases for no additional fee. Customers who
have not contracted for annual maintenance services may purchase software
upgrades for an additional fee.

Transitioning out of Selected Electronic-Bonding Gateways

DSET did not see the potential for significant additional sales for five
different gateways that addressed long distance, 911, calling card, caller
identification or complex translations of customer support records.

Of the five gateways, DSET has stopped selling, developing and maintaining
only the one for advanced complex customer service record translations. DSET is,
however, providing a level similar to competitive alternatives for customer
service records via its ezPreOrder gateway. We continue to provide support for
the four other gateways.

Transitioning out of Selected Application Development Tools/LSMS and GR303
Applications

In December 2000 and early January 2001, we completed our strategic plan to
move away from actively selling our application development tools, our LSMS and
our GR303 applications. We contracted with two separate groups -- NE
Technologies, Inc. and Chengdu TM Network Technology Co., Ltd. -- to continue
support, maintenance and licensing of the products worldwide.

NE Technologies, Inc.

We entered into agreements with NE Technologies, Inc. (www.netechinc.com) at
the end of 2000 to continue to market, sell, support and maintain the TMN Agent
Tool Suite and the TMN Manager++ Tool Suite worldwide, except for China, Taiwan
and Singapore. During 2000, we began the transfer of technologies and support
services to NE Technologies and trained NE Technologies engineers on our
systems. NE Technologies and DSET have worked closely to provide all pertinent
information and services to existing and new clients so that product support
continues uninterrupted. NE Technologies is located in Atlanta, GA with offices
in Bangalore, India.

Chengdu TM Network Technology Co., Ltd.

In January 2001, we completed the sale of our wholly owned subsidiary,
Chengdu DSET Science and Technology Development, Ltd. ('DSET Chengdu') to a
group represented by DSET's founder and former employee, S. Daniel Shia. As part
of this arrangement, Chengdu TM Network Technology Co., Ltd. acquired a license
for sales, support, development and maintenance of the TMS Agent Tool Suite and
TMN Manager++ Tool Suite within China, Taiwan and Singapore. As part of the
transaction, DSET acquired a minority equity interest in Chengdu TM Network
Technology.

<Page>
Technology

Our initial gateway products were built on our proprietary platform using
our tools and technologies. From our founding in 1989, we focused on creating
applications that could be distributed among many processors in order to solve
highly complex problems in the network management arena. We developed extensive
knowledge of requirements for multi-protocol and multi-vendor communications, as
well as real-time operating systems. In the early 1990's, we focused on creating
suites of tools that facilitate the development of solutions based upon the TMN
standard. Our engineers broadened their expertise in GDMO, CMIP, ASN.1 and OSI,
the key technologies underlying TMN, as well as a variety of other emerging
technologies.

As part of a multi-faceted effort to enable us to accelerate the pace of
gateway development and introduce new products offering increased functionality
and business benefits, we adopted the use of BEA Systems, Inc.'s WebLogic
Server'TM' in 2000 to support the implementation of Java Enterprise Edition
technology (J2EE) as the next generation platform ('NGP') for our gateway
products. We believe that migrating our products to NGP expands our potential
target market and benefits customers by lowering product development costs. We
have already implemented one of our gateways ezPreOrder on NGP, which is in
production at several customer sites.

We selected the BEA solution because it is the leading J2EE software
development environment optimized for creating and deploying Web-based
applications. The benefits of BEA's WebLogic Server and J2EE to us, our
customers, and investors include:

faster development of new features and complete new products because of the
rich suite of pre-built capabilities in the J2EE platform;

easy integration with a wide range of other J2EE-based software solutions;

products that are easily scalable;

extensive development community support; and

lower product development costs.

In addition to building gateways on the J2EE platform, we have incorporated
support for XML technology, a widely used communications interface, as part of
NGP. This provides us the opportunity to address interconnection solutions in
industries other than telecom and also provides for the flexibility to offer
XML-based solutions outside of the United States.

CUSTOMERS THROUGHOUT NORTH AMERICA

DSET has over 30 competitive service providers that have used its products
and services to implement trading partner networks. Below is a partial list:

<Table>
<Caption>
CLECS RURAL LECS CABLE UTILITIES DLEC
- ----- ---------- ----- --------- ----

Allegiance Telecom ALLTEL Cox Comm. Cavalier (Conectiv) Network Access
Bell Intrigna (Canada) CenturyTel RCN Telecom TXU Comm.
Birch Telecom Citizens Comm.
Broadview Networks Iowa Telecom
Business Telecom Madison River Comm.
Caprock (McLeod) TDS Metrocom
Choice One Comm.
CoreComm Comm.
CTSI
Fairpoint Comm.
Focal Comm.
McLeod
MPower Comm.
Net2000 Comm.
Network Plus
Network Telephone
New South
NuVox
WinFirst
</Table>

Since 1998, DSET has not had any single customer account for more than ten
percent of its annual revenues. However, DSET anticipates that its ongoing
results of operations in any given period will continue to depend to a
significant extent upon sales to a small number of customers.

<Page>
Sales and Marketing

In 2000, we sold our products and services mainly through our direct sales
organization in North America. As of October 2001, this sales force consisted of
8 people. During 2001, the sales cycle for our gateways averaged approximately
six to nine months.

New pricing plans were introduced to facilitate customer decision making in
this difficult economic environment and to build recurring revenue streams. In
mid-2001, we introduced a 'Pay As You Grow' pricing option to provide
alternatives to CSPs that are constrained by a lack of funding. Under this
pricing plan, a per transaction fee is calculated based on the customer's
estimated usage of the products over the next two to three years. The customer
is then charged only for his actual usage with a preset minimum monthly payment.
This pricing model has the effect of spreading our normal license fees over two
to three years, depending on customer usage. The customer has the option to
purchase a perpetual license to the software at anytime during the contract
period and a portion of the recurring payments made by him will be offset
against this purchase price.

In October 2001, DSET unveiled its newest product and services sales
program, whereby CSPs can obtain the use of DSET's software and related services
on a month-to-month rental plan, with a 90 day cancellation clause. DSET's
Rental Program is designed to lower CSP's perceived risk of buying software,
encouraging them to move forward with use of DSET solutions, while providing an
alternative way to reduce current cash outlays. By avoiding major capital
expenditures, CSPs can use their funds to generate additional revenue from such
areas as offering their customers IP-based virtual private networks obtained
through the use of ISPSoft's provisioning solutions.

The company has further expanded its pricing plans to include a monthly
subscription option, which allows the customer to pay a fixed monthly payment
for use of the software and related services for a period of up to three years.
At the end of such three year period of continued usage, the customer may
convert the subscription license to a perpetual license.

In December 2001, DSET and BizTelOne entered into an agreement pursuant to
which each company will contribute a variety of assets to create a
clearinghouse, called the 'American Communications Exchange' for the provision
of OSS interconnection services. Pursuant to the agreement, BizTelOne will be
DSET's exclusive Clearinghouse partner and BizTelOne will also have the right to
deploy DSET's other gateways in the Clearinghouse. Such Clearinghouse is
intended to provide CSPs with an alternative source to electronically submit
orders to ILECs at reduced costs.

Sales Objectives/Strategies

Our objective is to extend this leadership position in the interconnectivity
market segment for CSPs while expanding the types of applications we bring to
market for our current customers and new customers. Our key strategies are:

(1) continue to migrate our products to our NGP in order to provide enhanced
functionality in our products and speed development of new products;

(2) establish strategic alliances with system integrators and OMS and CRM
vendors that will result in either joint selling/marketing arrangements
or reseller agreements for the distribution of our gateways;

(3) continue searching for appropriate companies to acquire or merge with
that will broaden our product portfolio or expand our targeted customer
base;

(4) assist existing customers with implementing new gateways to increase
their productivity, and

(5) explore new uses for our existing products in the enterprise market.

<Page>
Outbound Marketing

We have implemented marketing initiatives to support the sales and
distribution of our products and services. These initiatives have been designed
to inform customers of the capabilities and benefits of our products and
services. Our marketing programs include on-site and Web-based seminars,
leveraging strategic partnerships, participation in industry trade shows and
forums, press relations, distribution of marketing materials and dissemination
of information concerning products and services through our website.

We have expanded our series of free interactive Web seminars with new
sessions on trouble-ticket and pre-order automation. We currently offer several
seminars that existing and prospective customers attend to learn the value of
our solutions in their business.

Strategic Partners

We have established several strategic relationships in order to leverage the
effectiveness of our sales force and enhance the productivity of our
professional service and product development organizations. These relationships
include partnerships and alliances with the following companies:

Order Management Systems (OMS) Vendors
-- MetaSolv
-- ADC Telecommunications (CommTech)

Customer Relationship Management (CRM) Systems Vendors
-- Siebel Systems

System Integrators
-- KPMG Consulting
-- Danet
-- BusinessEdge Solutions
-- Fathoms
-- Foxfire Consulting

Our sales and marketing strategy involves substantial risk. There can be no
assurance that we will be successful in implementing our strategy, that it will
lead to achievement of our objectives, or that some partners will not attempt to
partner with our competitors, or develop or acquire products, or services that
compete with our products or services. Any inability to maintain our strategic
relationships or to enter into additional strategic relationships may have a
material adverse effect on our business. If we are unable to implement our
strategy effectively, our business will be materially adversely affected. See
'Risk Factors' below.

RESEARCH AND PRODUCT DEVELOPMENT

In the past we have been an innovator and leader in the development of
telecommunications software, embracing new technologies and evolving industry
standards to meet the rapidly changing demands of customers and the marketplace.
While we expect that new applications will continue to be developed internally,
we may, based on timing and cost considerations, continue to acquire companies
or license technologies, products or applications to enhance or complement our
own technologies or product offerings.

In 2001, our research and development efforts will focus on: (1) migrating
our existing products to our Next Generation Platform (NGP); (2) continue
integrating our products to new third-party OMS and CRM providers; and (3)
developing new applications for new markets as the opportunities arise. We
believe this focus will maximize the features and operability of both our
existing and NGP-based gateways while also minimizing time to market for our
products and operational delays for customers. We employ highly qualified
engineers and utilize our development and program capabilities to efficiently
manage design and integration processes that shorten product introduction lead
times. Our main development center is located in Plano, Texas, with additional
engineers in New Jersey and California. Most of our research and development
personnel hold engineering and other advanced technical degrees. Our research
and development

<Page>
expenditures were approximately $6.2 million, $11.0 million and $18.5 million in
1998, 1999 and 2000, respectively, and $3.9 million in the quarter ended
March 31, 2001.

EMPLOYEES

As of June 30, 2001 DSET had a total of 122 employees. As a result of the
continued market issues, we have reduced our headcount by 68 people and as of
October 31, 2001 had 54 employees, of which 18 will be in engineering and
technical support, 10 in professional services, 8 in sales and marketing and 18
will be in administration, finance, network support and operations. Our future
performance depends significantly upon the continued efforts of our management,
key product and application engineers, and sales and support personnel.
Competition for personnel is intense and there can be no assurance that we will
be successful retaining such personnel in the future. None of our employees are
represented by a labor union or are subject to a collective bargaining
agreement. We have not experienced any work stoppages and consider employee
relations to be good.

COMPETITION

The market for our products and solutions is intensely competitive, subject
to rapid change, and significantly affected by third-party funding to our
potential clients, new product introductions and other market activities of
industry participants. To maintain and improve our competitive position, we must
continue to develop and introduce, on a timely and cost-effective basis,
enhanced products, features and services that keep pace with the evolving needs
of our customers. We believe that the principal competitive factors in the
market for our product solutions include:

the flow-through of information between trading partners;

Integration with other OSSs;

product price;

product functionality;

product quality and performance;

ability to install and implement solutions;

reliable customer support;

strength of core technology;

strong relationships with business partners and alliances; and

continued building of a base of satisfied and referable customers.

While there can be no assurance that we will be able to compete effectively
based upon such competitive factors, we believe that our products and services
differentiates us in the marketplace. Competition in the OSS interconnection
market comes from three sources: (1) other companies that focus on
interconnection products such as Quintessent and Nightfire; (2) OSS solution
companies that offer broader suites of products to CLECs for order management
and provisioning of services such as Telcordia Technologies, Sigma Systems and
Telution; and (3) system integrators or in-house development staffs of
telecommunications providers that build custom applications. We may also face
additional competition from companies that provide solutions on an outsourced
basis such as Illuminet, Telcordia Technologies and Quintessent.

INTELLECTUAL PROPERTY

Our success depends, in part, upon our proprietary technology, processes,
trade secrets, and other proprietary information, and our ability to protect
this information from unauthorized disclosure and use. We rely primarily on a
combination of copyright, trade secret and trademark laws, confidentiality
procedures, contractual provisions, and other similar measures to protect our
proprietary information. Currently, we own two issued patents, but we do not
believe they are critical to our ongoing operations. As part of our efforts to
protect our proprietary information,

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we typically enter into license agreements with our customers and nondisclosure
agreements with our employees, consultants, corporate partners, customers, and
prospective customers. These agreements generally contain restrictions on
disclosure, use, and transfer of our proprietary information. We also employ
various physical security measures to protect our software source codes,
technology, and other proprietary information.

Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy or otherwise obtain and use our products or technology that
we consider proprietary, and third parties may attempt to develop similar
technology independently.

Effective protection of intellectual property rights may be unavailable or
limited in certain countries. The laws of some foreign countries do not protect
our proprietary rights to the same extent as do the laws of the United States.
Overall, the protection of our proprietary rights may not be adequate and our
competitors may independently develop similar technology. There can be no
assurance that any of our copyrights or trademarks will not be challenged and
invalidated.

We are not aware that our products, trademarks, copyrights, or other
proprietary rights infringe the proprietary rights of third parties. Third
parties may assert infringement claims against us in the future with respect to
current or future products. Further, we expect that software product developers
will increasingly be subject to infringement claims as the number of products
and competitors in our industry segment grow and the functionality of products
in different industry segments overlaps. Although most of the components of our
products are either internally developed or licensed from third parties from
time to time, we hire or retain employees or consultants, including through
acquisition, who have worked for independent software vendors or other companies
developing products similar to those offered by us. Such prior employers may
claim that our products are based on their products and that we have
misappropriated their intellectual property. Any such claims, with or without
merit, could cause a significant diversion of management attention, result in
costly and protracted litigation, cause product shipment delays or require us to
enter into royalty or licensing agreements with such parties. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
us or at all, which would have a material adverse effect on our business.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW

GENERAL

DSET is a supplier of electronic-bonding gateways that enable CSPs to
implement electronic trading partner networks. A trading partner network plays a
critical role in lowering the cost of acquiring customers, reducing the amount
of time required to provision new phone services for customers, and minimizing
the time required to resolve service outages to ensure higher customer
satisfaction and less customer churn. The Telecommunications Act of 1996
encourages competition among providers of local phone services by requiring the
incumbent phone service provider to allow new CSPs to electronically
interconnect with the incumbents' operational support systems so the CSP can
lease portions of their networks and resell these capabilities to businesses and
consumers. Hundreds of CSPs are vying to win customers from the incumbents by
offering better pricing and service. With our solutions, CSPs can build trading
partner networks that assist in the 'provisioning' of phone services for new
customers in days rather than weeks. Our solutions can also help CSPs maintain
higher levels of customer satisfaction once they have succeeded in winning new
customers from the incumbents. Additionally, as a result of our announced plans
to merge with ISPSoft Inc., we have become a reseller of IP provisioning
solutions that facilitate the creation of virtual private networks ('VPNs') and
a variety of other services at a fraction of the cost and time of conventional
provisioning methods.

In the mid to late 1990's, we focused on providing software that enabled the
creation of applications that could be distributed among many processors in
order to solve highly complex problems in the network management arena. This
software was known as application development

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toolkits and was predominantly sold to network equipment vendors, both
domestically and internationally. Until 1999, substantially all of our revenues
had been derived from these application development toolkits and related
applications or services. These software solutions were optimized to support the
technologies recommended under the TMN standards established in the early
1990's. At the end of 2000, it was clear that the telecommunications industry
had turned away from supporting certain technology defined in the TMN
guidelines. We decided to discontinue directly selling application development
toolkits and related applications due to the expenses and the shrinking revenue
base associated with them. Both the toolkits and the related applications are
still sold and supported by a partner of ours, NE Technologies, Inc.

A major downturn in the telecommunications industry occurred in the second
half of the year 2000. This downturn reduced our revenues significantly
beginning in the third quarter of 2000 and continued to the most recent
quarter-end causing the losses in each of these quarters. This downturn was
brought about by the sudden withdrawal of available financing from almost all of
the traditional financing sources (vendors, lenders, private equity/venture
capital sources, public equity markets and large corporate partners) to our
current and potential customers. The CSPs have experienced this decrease in
funding due to concerns over their business models. This decrease in funding has
forced CSPs to stop spending on many capital projects, including establishing
trading partner networks, resulting in lower sales of our products and services.
Many of our targeted customers have already purchased billing and order
management systems but have decided to delay their purchases of gateways until
the funding climate improves and the order flow from their customers increases.
These purchasing delays not only occurred at large well-funded CSPs, but also at
start-up CSPs. Prior to this downturn, the new CSPs were successfully and
regularly obtaining large capital commitments allowing them to increase the size
and the pace of their infrastructure spending. This funding crisis also affected
our collection efforts since many customers either declared bankruptcy or
concluded that they did not have sufficient available cash to pay their
obligations to us. We believe that we have adequately reserved for potential
doubtful accounts, although no assurance can be made that additional customers
will not go bankrupt or have financial difficulties.

Our policy to assess the probability of collection consists of reviewing
public and private sources of financial information for all potential customers
(e.g., financial statements, periodic filings and press releases), inquiring of
management of the potential customer how they intend to pay for their purchase,
reviewing available information from credit rating agencies and if available,
contacting funding sources, reviewing recent announcements regarding completed
and proposed financing and discussing the potential customer's credit worthiness
with other suppliers.

Prior to the third quarter of 2000, our experience with the necessity for
creating allowances for bad debt had been good. Our ongoing credit assessment
procedures include maintaining contact with the customer regarding the status of
the receivable, reviewing all overdue outstanding balances and continuing to
review available public and private information regarding the customer's ability
to pay. The sudden market change beginning in the third quarter of 2000 resulted
in certain customers declaring bankruptcy as they had overextended their
available financing, others to reduce their capital expenditures and others to
state their intention not to pay their outstanding obligations.

We are currently offering transaction based payment plans and a rental
program with little cash due up front as a response to this downturn. We have
also reduced headcount and expenses in an effort to conserve cash and ultimately
return to profitability. We have utilized cash previously invested in marketable
securities to finance the losses brought about by the downturn.

Prior to our new 'Pay As You Grow' and rental programs, our license revenues
were derived from the sale of electronic-bonding gateways to CSPs under
contracts that provide for license fees. Prices for licenses of the CSP products
range from $115,000 to $500,000. The total price of a license sale to a customer
depends on the number of licensed products and the number of trading partners.

During the second quarter of 2001, we introduced a 'Pay as You Grow' pricing
option to provide alternatives to CSPs that are constrained by lack of funding.
The 'Pay As You Grow'

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model is a run time royalty model with a minimum monthly payment requirement.
The contractual minimum payment amounts are determined based on estimated
monthly usage by the customer at the beginning of the contract. The customer is
charged monthly based on actual usage of the software or the minimum contract
amount, whichever is more. Usage is defined as completed transactions for
provisioning services between a CSP and a trading partner. Therefore, revenue
will be recognized on a periodic basis as it becomes due in accordance with
AICPA Statement of Position ('SOP') 97-2. The pricing model has the effect of
spreading our normal license revenue over two to three years depending on
customer usage. This program has been offered to certain potential customers
beginning in the second quarter of 2001. No contracts have yet to be consummated
with this pricing model and no revenue has been recognized to date on this
basis.

In an effort to find the right financial model that could encourage CSPs to
once again start buying electronic bonding gateways, on October 4, 2001, we
announced a new program to assist CSPs. The new Gateway Rental Program provides
existing and prospective customers the ability to rent electronic bonding
gateways on a month-to-month basis, with a 90-day cancellation provision. The
program includes the use of the software, technical support, software upgrades
and change management services for a monthly charge that is roughly equivalent
to what they had been paying for the maintenance services only. Revenue is
recognized in the month in which customers use our software and services. The
Rental Program is our newest offering to CSPs, although no revenue has been
recognized to date.

In 2000, we entered into an agreement with NE Technologies, Inc. pursuant to
which NE Technologies, Inc. performs as a subcontractor for us with respect to
substantially all of the post contract customer support for network solutions to
which we were obligated through December 31, 2000. In connection with such
agreement, we receive a royalty of between fifteen and thirty percent for all
new business generated by NE Technologies, Inc. Such royalties amounted to
$371,000 for the nine months ending September 30, 2001. Commencing in 2001, we
receive and recognize royalty revenues from NE Technologies, Inc. relating to
their revenues from their business operations including application development
product suites license, maintenance, projects and other related services.

Our service revenues are comprised of fees derived from custom program
development, implementation, installation, training fees and maintenance. Our
custom program development services are generally individually negotiated and
contracted for on a fixed price basis. Prices for such projects vary depending
upon the size and scope of the project and estimated time and effort to
completion. Revenues from custom program development services are generally
recognized on a percentage of completion basis calculated as direct labor costs
are incurred in relation to estimated total direct labor costs at completion for
each project. The impact of revisions in percentage of completion estimates is
reflected in the period in which the revisions are made. Maintenance services,
for which we typically charge between 15% and 30% annually of the price of the
products licensed by the customer, may be purchased at the customer's option.
Maintenance fees are recognized as service revenue over the term of the
maintenance period, which is typically a 12-month term.

During fiscal 2000, we recorded a pre-tax restructuring charge of
approximately $601,600 for a headcount reduction of 71 employees and other costs
associated with the consolidation of our development centers into two rather
than three facilities. These restructuring actions occurred in our fourth fiscal
quarter and were taken to align our cost structure with the prevailing market
conditions.

In January 2001, we sold our subsidiary, Chengdu DSET Science and Technology
Co., Ltd. In accordance with Statement of Financial Accounting Standards
No. 121, 'Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of,' we recorded a pre-tax charge of $278,500 in the
fourth fiscal quarter of 2000 against the remaining investment in the
subsidiary.

In March 2001, we deemed it necessary to have an additional workforce
reduction in the United States and to close our Canadian subsidiary due to the
changing and unpredictable conditions in the marketplace, the discontinuance of
certain product lines and in an effort to

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conserve cash. We recorded an impairment charge of approximately $2.2 million
for the carrying value of certain licenses related to the Canadian market.
Headcount was reduced by 47 employees in the United States and Canada. Charges
relating to severance, other employee related costs and facility closure are
expected to total between $1.0 million to $1.5 million.

In June 2001, we discontinued one of our gateways and will provide technical
support for four others through a third-party in connection with cost
reductions. We reduced our headcount by approximately 70 employees. In October
2001, we further reduced our staff by approximately 60 employees.

For the years ended December 31, 2000 and 1999 and the nine months ended
September 30, 2001, we derived approximately 69.8% and 54.0% and 29.0%,
respectively, of our total revenues from license revenues and approximately
30.2%, 46.0% and 71.0%, respectively, of our total revenues from service
revenues. During the first nine months of 2001 total revenues were $8.0 million,
revenue generated from CSPs were approximately $6.4 million and revenues
generated from network equipment vendors for LNP solutions, application
development tools and related services were approximately $1.6 million. For the
year 2000, revenues generated from CSPs were approximately $32.1 million as
compared to $19.7 million in 1999. In 2000, revenues generated from network
equipment vendors for LNP solutions and related services were approximately $3.4
million and the legacy network application development tools and related
services business generated $11.5 million in revenue. In 1999, revenues
generated from LNP network equipment vendors and the network legacy business was
$24.9 million.

Our license revenues from CSPs are derived from the sale of
electronic-bonding gateways to CSPs under contracts that provide for one-time
fees for perpetual licenses. Additionally, in response to the industry lack of
funding we have added options to license the gateways and receive support
services under either the 'Pay As You Grow' or Rental Program models allowing
the CSP to spread out payments over longer periods of time. The total price of a
sale to a customer depends on the number of licensed gateways, number of trading
partners and breadth of services used.

Maintenance services, for which we typically charge between 15% and 30%
annually of the list price of the products licensed by the customer, may be
purchased at the customer's option. Maintenance fees are recognized as service
revenue over the term of the maintenance period, which is typically twelve
months.

We had three customers accounting for 12%, 11%, and 10% of revenues,
respectively, for the quarter ended September 30, 2001 and one customer which
accounted for 15% of revenues for the quarter ended September 30, 2000. We had
one customer which accounted for 22% of revenues for the nine months ended
September 30, 2001 and no customer, which accounted for more than 10% of
revenues for the nine months ended September 30, 2000. We had no single customer
accounting for more than ten percent of sales for the years ended December 31,
2000 or December 31, 1999. Sales to DSC Communications (now known as Alcatel)
accounted for approximately 17% of total revenues in the year ended
December 31, 1998. We anticipate that our results of operations in any given
period will continue to depend to a significant extent upon sales to a small
number of customers which typically occur near the end of each quarter. As a
result of this customer concentration, the timing of our sales cycle and the
uncertainty in our customers' ability to secure financing, our revenues from
quarter to quarter, financial condition and results of operations may be subject
to substantial period-to-period fluctuations.

Our costs of license revenues consist primarily of royalties paid to
third-party software companies and amortization of acquired technology. We
generally are not contractually obligated to make minimum royalty payments.
Costs of service revenues include primarily payroll, related benefit costs,
personnel, outside system integration and other operating expenses. Sales and
marketing expenses consist of salaries, commissions and bonuses paid to sales
and marketing personnel, as well as travel and promotional expenses. Research
and product development expenses encompass primarily software engineering
personnel costs, costs of third-party equipment, costs associated with customer
satisfaction and quality and software utilized for development purposes.
Research and product development expenses are generally charged to operations as
such

100

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costs are incurred. Our research and development projects are evaluated for
technological feasibility in order to determine whether they meet capitalization
requirements. General and administrative expenses are comprised of personnel
costs and occupancy costs for administrative, executive and finance personnel.
Bad debt and other charges primarily consists of reserves for bad debts and
other receivables. Restructuring and other charges primarily consists of asset
impairments, severances and other personnel related costs due in connection with
exiting certain activities.

During the year ended December 31, 1997, deferred stock compensation of
$876,000 was recorded for options granted during the year. This amount has been
amortized to compensation expense over the vesting period of the options (two to
four years). At December 31, 2000, the remaining unamortized deferred stock
compensation balance was $59,000. See Note 8 to the Consolidated Financial
Statements.

We primarily market and sell our products and services through a direct
sales force in North America.

We derive a portion of our revenues from international sales that
constituted approximately 6%, 7% and 15% of our total revenues in 2000, 1999 and
1998, respectively. DSET's international sales currently are United States
dollar-denominated. As a result, an increase in the value of the United States
dollar relative to foreign currencies could make DSET's products and services
less competitive in international markets.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2001 Compared to the Three Months Ended
September 30, 2000

Revenues. Total revenues decreased by 85.5% to $2.0 million in the third
quarter of 2001 from $13.9 million in the third quarter of 2000. License
revenues decreased by 97.7% to $230,000 in the third quarter of 2001 from $9.8
million in the third quarter of 2000. This decrease was attributable to a
downturn in the telecom industry, especially in our market niche, resulting in a
reduction in orders by prospective customers due to poor operating results of
the CSPs, and the absence of available funding from capital markets to these
prospective customers. Service revenues decreased 56.2% to $1.8 million in the
third quarter of 2001 from $4.1 million in the third quarter of 2000. This
decrease was attributable to a $600,000 decrease in tools maintenance revenue
for network solutions, a $300,000 decrease in other network solutions revenue, a
$250,000 decrease in LNP solutions percentage of completion revenue, and a
$60,000 decrease in LNP maintenance revenue, and a $1.1 million decrease in
gateway solutions service revenue. Revenues recorded using the percentage of
completion method of contract accounting amounted to $45,000 in the third
quarter of 2001 as compared to $1.8 million in the third quarter of 2000. The
percentage of completion method is used to recognize revenue the first time that
a gateway or other custom product is ordered. After the product has been
designed, engineered, programmed, tested, and accepted by the customer,
subsequent sales of the product to other customers are recognized as license
revenues because significant additional customization or modification is not
required. Gateway implementation service revenue decreased to $343,000 in the
three months ended September 30, 2001 as compared to $572,000 in the three
months ended September 30, 2000.

Gross profit. The Company's gross profit decreased 91.1% to $801,000 in the
third quarter of 2001 from $9.0 million in the third quarter of 2000. Gross
profit percentage for license revenues decreased to 43.0% in the third quarter
of 2001 from 84.1% in the third quarter of 2000 due to a lower sales volume
offset by lower fixed charges as a result of the decrease in the amortization of
acquired technology and capitalized software development costs. Gross profit
percentage for service revenues increased to 39.3% in the third quarter of 2001
from 18.3% in the third quarter of 2000. The increase in gross profit from
service revenues percentages was attributable to the reduction of staff, travel,
and contract labor in professional services.

Sales and marketing expenses. Sales and marketing expenses decreased 59.8%
to $1.3 million in the third quarter of 2001 from $3.2 million in the third
quarter of 2000. The decrease in sales and marketing expenses was mainly
attributable to a $750,000 decrease in commissions (due to reduced

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sales), a $600,000 decrease in personnel related expenses, a $400,000 decrease
in travel, a $80,000 decrease in sales meetings and a $70,000 reduction in
miscellaneous other expenses.

Research and product development expenses. Research and product development
expenses decreased 65.4% to $1.7 million in the third quarter of 2001 from $4.9
million in the third quarter of 2000. Personnel related expenses decreased by
$1.9 million, contract labor decreased by $700,000, depreciation and occupancy
and related costs decreased by $400,000 due to restructuring incurred in 2001,
and travel expense decreased by $200,000.

General and administrative expenses. General and administrative expenses
decreased 33.1% to $1.1 million in the third quarter of 2001 from $1.7 million
in the third quarter of 2000. The decrease in general and administrative
expenses was mainly due to a $450,000 decrease in recruiting costs, a $125,000
decrease in professional fees, and a $100,000 decrease in travel and related
expenses, offset by a $100,000 increase in occupancy and depreciation costs. Due
to the relocation of non-administrative personnel to the Company's Plano office,
administrative departments have absorbed a larger portion of the facilities
costs of the Bridgewater facility.

Bad debt expense. Bad debt expense decreased to approximately $1,000 in the
third quarter of 2001 from $4.9 million in the third quarter of 2000. The
components of bad debt expense were $350,000 due to concern for the customers'
ability to pay its obligations, offset by cash collections of $349,000 for
previously reserved balances. Bad debt expense as a percentage of sales was zero
in the third quarter of 2001 as compared to 35.5% in the corresponding period in
the previous year. The decrease is due to the significantly lower accounts
receivable balances and sales volume. The $4.9 million expense of the third
quarter of 2000 was composed of the uncertainty of funding for the CSPs ($2.1
million), a major customer declaring bankruptcy ($1.6 million) and the
settlement of a dispute with a customer with a reserve for future product
credits that may be granted to that customer ($1.2 million).

Amortization of goodwill and other intangibles. Amortization expense
decreased to $70,000 in the third quarter of 2001 from $106,000 in the third
quarter of 2000. The reduction is due to the asset impairments for goodwill and
other intangible assets recorded during 2001.

Restructuring and other charges. Restructuring and other charges in the
third quarter of 2001 were $4.6 million for the impaired asset portion of the
restructuring in the third quarter. There were $1.5 million in asset impairments
of intangible assets at the end of the third quarter, $1.4 million in surplus
fixed assets, $1.1 million in charges related to the rent in the Plano, Texas
office, $360,000 in impaired prepaid licenses, $150,000 in impaired leasehold
improvements, and $50,000 in other expenses.

Interest expense and other income (expense). Interest expense and other
income and expense increased to an income of $52,000 for the third quarter of
2001 from an expense of $43,000 for the third quarter of 2000 due to sublet
rental income of the third floor of the Bridgewater office in 2001.

Interest income and realized gains and losses on marketable securities.
Interest income decreased to approximately $469,000 in the third quarter of 2001
as compared to approximately $496,000 in the third quarter of 2000. This
decrease was due to lower principal balances in 2001 due to the funding of
operations and reduced interest rates due to the current economic climate offset
by an increase in realized gains from redemptions of marketable securities and
interest received on federal income tax refunds.

Income taxes. The Company recognized a tax provision of $125,000 for the
third quarter of 2001 as compared to a tax benefit of $2.1 million in the third
quarter of 2000. The 2001 rate differs substantially from the statutory rate due
to the Company's losses. The tax provision in the third quarter of 2001 relates
to the realized gains from redemptions of marketable securities and a change in
estimate for 2000's income taxes.

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Nine Months Ended September 30, 2001 Compared to the Nine Months Ended
September 30, 2000

Revenues. Total revenues decreased by 80.7% to $8.0 million in the nine
months ended September 30, 2001 from $41.7 million in the nine months ended
September 30, 2000. License revenues decreased by 92.2% to $2.3 million in the
nine months ended September 30, 2001 from $30.1 million in the nine months ended
September 30, 2000. This decrease was attributable to a drastic downturn in the
telecom industry, especially in our market niche, resulting in a reduction in
orders by prospective customers due to poor operating results of the CSPs and
the absence of available funding from capital markets to these prospective
customers. Service revenues decreased 50.8% to $5.7 million in the nine months
ended September 30, 2001 from $11.6 million in the nine months ended
September 30, 2000. This decrease was attributable to a $3.0 million decrease in
LNP custom projects and maintenance, a $2.2 million decrease in Network
Solutions revenue and a $700,000 decrease in Carrier Solutions service revenue.
The Company transitioned from the Network Solutions and LNP business in 2001 to
concentrate on the Carrier Solutions business. Revenues recorded using the
percentage of completion method of contract accounting amounted to $100,000 in
the nine months ended September 30, 2001 as compared to $6.2 million in the nine
months ended September 30, 2000 ($300,000 for Network Solutions; $2.5 million
for LSMS/LNP; and $3.4 million for Carrier Solutions). The percentage of
completion method is used to recognize revenue the first time that a gateway or
other custom product is ordered. After the product has been designed,
engineered, programmed, tested, and accepted by the customer, subsequent sales
of the product to other customers are recognized as license revenues because
significant additional customization or modification is not required. Trading
Partner Network implementation service revenue increased to $1.4 million in the
nine months ended September 30, 2001 as compared to $681,000 in the nine months
ended September 30, 2000. Maintenance for Gateways increased to $2.9 million in
the nine months ended September 30, 2001 as compared to $900,000 in the nine
months ended September 30, 2000.

Gross profit. The Company's gross profit decreased 92.6% to $2.3 million in
the nine months ended September 30, 2001 from $30.3 million in the nine months
ended September 30, 2000. Gross profit percentage for license revenues decreased
to 50.5% in the nine months ended September 30, 2001 from 89.2% in the nine
months ended September 30, 2000 due to a lower sales volume offset by less
amortization of acquired technology and capitalized software development costs.
Gross profit percentage for service revenues decreased to 18.8% in the nine
months ended September 30, 2001 from 30.0% in the nine months ended
September 30, 2000. The decrease in gross profit percentages was attributable to
lower sales as there are fixed expenses within service cost of goods sold.

Sales and marketing expenses. Sales and marketing expenses decreased 37.4%
to $6.0 million in the nine months ended September 30, 2001 from $9.5 million in
the nine months ended September 30, 2000. The decrease in sales and marketing
expenses was attributable to a $2.0 million reduction in commission expense due
to the reduction in sales activity, a $800,000 decrease in travel expenses, a
$500,000 decrease in personnel related costs, a $400,000 decrease in contract
labor, a $300,000 increase in depreciation and occupancy costs, and a $100,000
decrease in sales meeting costs.

Research and product development expenses. Research and product development
expenses decreased 31.2% to $8.6 million in the nine months ended September 30,
2001 from $12.5 million in the nine months ended September 30, 2000. The
decrease is mainly attributable to a $1.4 million decrease in personnel related
expenses, a $1.3 million decrease in contract labor, a $600,000 decrease in
occupancy and depreciation costs, a $300,000 decrease in travel expenses,
$100,000 decrease in equipment rental, and a $200,000 net decrease in other
expenses.

General and administrative expenses. General and administrative expenses
increased 1.9% to $4.4 million in the nine months ended September 30, 2001 from
$4.3 million in the nine months ended September 30, 2000. The increase in
general and administrative expenses was due to a $450,000 increase in occupancy
and depreciation costs, a $480,000 increase in personnel related costs, a
$200,000 increase in relocation costs, offset by a $940,000 decrease in
recruiting costs and a $100,000 decrease in other expenses. Due to the relative
reduction of non-administrative personnel,

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administrative departments have absorbed a larger portion of the facilities
costs of the Bridgewater facility.

Bad debt expense. Bad debt expense decreased to approximately $987,000 in
the nine months ended September 30, 2001 from approximately $5.8 million in the
nine months ended September 30, 2000. The decrease was due to the high volume of
allowances in year 2000, and the relatively low volume of sales and receivables
in 2001. The bad debt expenses recognized in the nine months ended
September 30, 2001 consisted of the following components: recognition of bad
debt expense due to customers that discontinued projects or stated their
intention not to pay ($497,000), a customer that did not fulfill its payment
program after resolving outstanding disputes ($252,000) and the declaration of
bankruptcy by two customers ($236,000). Bad debt expense as a percentage of
sales was 12.3% in the nine months ended September 30, 2001 as compared to 13.9%
in the corresponding period in the previous year. The $5.8 million expense of
2000 was composed of the uncertainty of funding for CSPs ($3.0 million), a major
customer declaring bankruptcy ($1.6 million) and settlement of a dispute with a
customer with a reserve for future credits that may be granted to that customer
($1.2 million).

Set forth below is a schedule comparing the company's bad debt expenses
recorded with the periods in which the corresponding revenue was recognized:

BAD DEBT EXPENSE RELATED TO QUARTER REVENUE RECOGNIZED
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
REVENUE RECOGNIZED
--------------------------------------------------------------------------
Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01
------ ------ ------ ------ ------ ------ ------ ------

Total revenue................... $9,118 $12,909 $15,126 $11,598 $16,234 $13,867 $5,343 $3,415
Total Q1 '01 bad debt expense... $ 101 $ 146 $ 55 $ -- $ 134 $ 4 $ -- $ --
Total Q2 '01 bad debt expense... $ 30 $ 63 $ 214 $ 4 $ 95 $ 96 $ 23 $ 20
Total Q3 '01 bad debt expense... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 1

<Caption>
REVENUE RECOGNIZED
-------------------------
Q2 '01 Q3 '01 TOTAL
------ ------ -----

Total revenue................... $2,616 $2,015 $92,241
Total Q1 '01 bad debt expense... $ -- $ -- $ 440
Total Q2 '01 bad debt expense... $ -- $ -- $ 545
Total Q3 '01 bad debt expense... $ -- $ -- $ 1
</Table>

Amortization of goodwill and other intangibles. Amortization expense
decreased to approximately $274,000 in the nine months ended September 30, 2001
as compared to $313,000 in the nine months ended September 30, 2000. The
reduction is due to the asset impairments for goodwill and other intangible
assets recorded during 2001.

Restructuring and other charges. Restructuring and other charges in the nine
months ended September 30, 2001 were $14.8 million. These changes were comprised
of asset impairments of $8.2 million, for the carrying value of certain software
licenses related to acquired technology and goodwill, $4.9 million for fixed
asset impairment and non-refundable future lease payments, and $1.7 million in
severance charges related to the March and June 2001 staffing reductions.

Interest expense and other income (expense). Interest expense and other
income (expense) decreased to $26,000 for the nine months ended September 30,
2001 from $139,000 for the nine months ended September 30, 2000 due to sublet
rental income of the third floor in the Bridgewater office in 2001.

Interest income and realized gains and losses on marketable securities.
Interest income and realized gains and losses on marketable securities decreased
to approximately $1.4 million in the nine months ended September 30, 2001 as
compared to approximately $1.5 million in the nine months ended September 30,
2000. This decrease was due to lower marketable security balances in 2001 due to
the funding of operations and reduced interest rates due to the current economic
climate offset by increased realized gains from redemptions of marketable
securities.

Income taxes. The Company's effective tax rate was approximately a provision
of 0.8% and a benefit of 78.5% for the nine months ended September 30, 2001 and
2000, respectively. The 2001 rate differs substantially from the statutory rate
due to a valuation allowance of approximately $8.2 million against the net
operating loss carryforwards. In making this assessment, the Company considered
the unpredictability of customers' funding and purchasing decisions. The
provision recorded in 2001 is the result of a change in estimate of the income
tax receivable as compared to when the return was actually prepared and to the
realized gains from redemptions of marketable

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securities. In the nine months ended September 30, 2000, the tax benefit on the
current period reflected research and development and foreign tax credits offset
by state income taxes.

Years Ended December 31, 2000 and 1999

Revenues. Total revenues increased 5.4% to $47.0 million in 2000 from $44.6
million in 1999. License revenues increased by 36.4% to $32.9 million in 2000
from $24.1 million in 1999. This increase was attributable to a $13.1 million
increase in the sales of carrier products, a $4.4 million decrease in network
solutions and a $100,000 increase in LSMS/LNP Solutions. Service revenues
decreased 30.9% to $14.2 million in 2000 from $20.5 million in 1999. This
decrease was attributable to lower percentage of completion revenue and a
reduction in the number of service orders from certain installed customers due
to financing issues at these customers. Revenues recorded using the percentage
of completion method of contract accounting amounted to $6.3 million or 13.4% of
total revenue in 2000 versus $14.3 million, or 32.1% of total revenue, in 1999.
This decrease was attributable to a $6.8 million decrease in network solutions
custom projects, a $2.6 million increase in LSMS/LNP solutions custom projects
and a $3.8 million decrease in carrier projects. In 1999 there were two major
gateways in development accounted for under the percentage of completion method
of accounting. Additionally, in 2000 there were less custom application projects
associated with the legacy business as compared to 1999.

Gross profit. Our gross profit decreased 10.7% to $31.9 million in 2000 from
$35.7 million in 1999. Gross profit percentage decreased to 67.8% of total
revenues in 2000 from 80.1% in 1999. Gross profit percentage for license
revenues decreased to 87.8% in 2000 from 92.4% in 1999 due to amortization of
acquired technology and increased royalty expenses. Gross profit percentage for
service revenues decreased to 21.6% in 2000 from 65.6% in 1999. This decrease
was attributable to a $2.8 million increase in personnel and related costs and a
$1.5 million increase in the use of system integrators to complete installation
services and lower sales volume. Implementations were much more costly due to
many orders coming at the same time resulting in the Company paying for the
learning curves of new employees, borrowed employees from other areas of
business and outside contractors.

Sales and marketing expenses. Sales and marketing expenses increased 1.3% to
$12.1 million in 2000 from $12.0 million in 1999 but decreased to 25.8% from
26.8% of total revenues. The small increase was attributable to a $900,000
increase in personnel costs (employees and outside consultants), offset by an
$800,000 decrease in commission expenses.

Research and product development expenses. Research and product development
expenses increased 67.2% to $18.5 million in 2000 from $11.0 million in 1999,
and increased from 24.8% to 39.3% of total revenues, respectively. The increase
in research and product development expenses was attributable to increased
personnel (employees and outside consultants) and related costs as well as the
expansion in a number of new products under development. Personnel related costs
increased by $3.5 million, outside consultant expenses increased by $1.9
million, other expense categories increased by $1.0 million and there was a $1.1
million increase in office space and related expenses due to the higher head
count.

General and administrative expenses. General and administrative expenses
increased 68.1% to $6.9 million in 2000 from $4.1 million in 1999, and increased
from 9.2% to 14.7% of total revenues. The increase in general and administrative
expenses was due to recruiting, personnel and related costs, and professional
fees. Personnel related costs increased by $400,000, legal and accounting
expenses increased by $800,000, recruiting expenses increased by $1.1 million
and other expenses increased by $500,000.

Bad debt expense and other charges. Bad debt expense and other charges
increased to approximately $13.4 million in 2000 from $665,000 in 1999.

An abrupt and significant downturn in the CSP market occurred in the second
half of 2000 due to the sudden withdrawal of additional financing to the CSPs.
The withdrawal of additional funding had an immediate and detrimental impact on
the CSPs as they have highly capital-intensive business models. Additionally,
many existing customers decided to reduce their expenses

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and preserve cash and as a result informed DSET that they would not honor their
obligations. Based upon DSET's credit analysis at the time of the contract
signing DSET believed that for these customers collection was probable in
accordance with SOP 97-2 and therefore DSET recognized the revenue. DSET's
history of write-offs was minimal prior to the third quarter of 2000. The
changes in the availability of financing in the second half of 2000 contrasted
with the environment of the first half of the year and the previous year when
these same companies were successfully and regularly obtaining large capital
commitments to complete and expand their business plans. DSET's collection
process, in place since 1999, continues from the credit assessment the Company
conducts prior to the contract signing through the delivery/installation of the
software and concludes upon the collection or ultimate disposition of the
receivable. A key element of the process includes ongoing participation by
sales, project management and accounting. As invoices approach their due date,
the Company increases participation by accounting, sales and project management
as necessary. It is an ongoing activity where senior management is kept
regularly updated on account status and issues and participates in regular
communication with top level management of the Company's customers.

Bad debt expense as a percentage of sales was 28.4% for the year ended
December 31, 2000 as compared to 1.5% for the same period of the preceding year.
This was due to the environment described in the preceding paragraph. Total
revenues were $47.0 million for the year ended December 31, 2000 as compared to
the $44.6 million for the year ended Decenber 31, 1999.

Set forth below is a schedule comparing the Company's bad debts recorded in
the year ended December 31, 2000 with the periods in which the corresponding
revenue was recognized:

DSET CORPORATION
BAD DEBT EXPENSE RELATED TO QUARTER REVENUE RECOGNIZED
(DOLLARS IN THOUSANDS)

<Table>
<Caption>
REVENUE RECOGNIZED
---------------------------------------------------------------------------------------
Q1 '99 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 TOTAL
------ ------ ------ ------ ------ ------ ------ ------ -----

Total revenue................... $7,476 $9,118 $12,909 $15,126 $11,598 $16,234 $13,867 $5,343 $91,671
Total Q1 '00 bad debt expense... $ 42 $ 52 $ 73 $ 86 $ -- $ -- $ -- $ -- $ 253
Total Q2 '00 bad debt expense... $ 82 $ 99 $ 141 $ 165 $ 126 $ -- $ -- $ -- $ 613
Total Q3 '00 bad debt expense... $ 96 $ 255 $ 67 $ 189 $ 2,585 $ 1,734 $ -- $ -- $ 4,926
Total Q4 '00 bad debt expense... $ 216 $ 277 $ 833 $ 7 $ 456 $ 3,253 $ 2,544 $ -- $ 7,586
</Table>

As noted in the chart above, the accounts receivable related to these bad
debt charges were the result of revenue recognized in earlier periods from 1999
through the third quarter of 2000, prior to the sudden major downturn in market
conditions in the telecommunications industry. At the time that the revenue was
recognized, DSET believed that collection of the receivables was probable based
on the financial status of the customer in that period. Revenue was invoiced
within standard credit terms, 30 to 90 days. DSET did not have any significant
bad debt experience prior to the third quarter of 2000. However, DSET regularly
reviewed individual overdue customer accounts and pursued collection as
appropriate.

DSET also settled a dispute with a customer related to network products and
wrote off certain accounts receivable in 2000 amounting to $1.2 million
inclusive of a reserve of $400,000 for product credits that may be granted to
that customer.

Restructuring and other charges. Restructuring and other charges totaled
$2.2 million in 2000 as compared to none in 1999. These charges included
employee severance and related personnel expenses of $602,000 as the result of
consolidation of our three development centers into two centers, a charge of
$1.3 million for the write-down of certain intangible assets associated with
products no longer being offered for sale or technology that will not be used in
our products going forward and a charge of $278,000 for the disposition of our
subsidiary in China (Chengdu DSET Science and Technology Co.).

Amortization of goodwill. Amortization expense increased to approximately
$419,000 in 2000 as compared to $200,000 in 1999. This increase was due to
amortization of goodwill from the Konark acquisition which occurred in September
1999.

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Interest expense and other income (expense). Interest expense and other
income and expense was $183,000 in 2000 and $179,000 in 1999.

Interest Income. Interest income decreased to $2.1 million in 2000 as
compared to $2.2 million for 1999. This decrease was due primarily to slightly
lower cash balances during the year.

Provision (benefit) for income taxes. In 2000, due to the net loss, there is
a 4.6% effective tax rate benefit while in 1999 there was an effective tax rate
of 33.3%. The 2000 rate differs substantially from the statutory rate due to a
valuation allowance of $6.9 million against the deferred tax assets. In making
this assessment, we considered, in particular, the unpredictability of both the
customers' funding and purchasing decisions. In 1999, the effective tax rate was
lower than the statutory tax rates due to the utilization of research and
development tax credits.

Years Ended December 31, 1999 and 1998

Revenues. Total revenues increased 52.4% to $44.6 million in 1999 from $29.3
million in 1998. License revenues increased by 47.4% to $24.1 million in 1999
from $16.3 million in 1998. This increase was attributable to an increase in the
sale of carrier-to-carrier products of $9.8 million offset by a $2.0 million
decrease in network solutions licenses. Service revenues increased 58.6% to
$20.5 million in 1999 from $13.0 million in 1998. This increase was attributable
to a $700,000 increase in network solutions services and a $6.8 million increase
in custom application development projects for OSS interconnection and LNP
solutions and fees from consulting services and training courses. Revenues
recorded using the percentage of completion method of contract accounting
amounted to $14.3 million or 32.1% of total revenue, in 1999 versus $7.9
million, or 27.1% of total revenue, in 1998.

Gross profit. Our gross profit increased 50.0% to $35.7 million in 1999 from
$23.8 million in 1998. Gross profit percentage decreased to 80.1% of total
revenues in 1999 from 81.3% in 1998. Gross profit percentage for license
revenues increased to 92.4% in 1999 from 89.1% in 1998 due to a reduction of
third-party software and sales of more internally developed products. Gross
profit percentage for service revenues decreased to 65.6% in 1999 from 71.5% in
1998. This decrease was attributable to a $1.0 million increased use of
consultants to complete custom development projects and amortization of acquired
technology which increased by $500,000, a $1.1 million increase in personnel and
related costs, a $300,000 increase in travel and a $300,000 increase in office
space related expenses.

Sales and marketing expenses. Sales and marketing expenses increased 30.9%
to $12.0 million in 1999 from $9.1 million in 1998 but decreased to 26.8% from
31.2% of total revenues. The increase in sales and marketing expenses in
absolute dollars was attributable to increased personnel and related costs of
$1.0 million, increased travel of $700,000 and increased other expenses of
$700,000 resulting from the increase in our sales force and an increase to
commission expense of $500,000 related to higher sales.

Research and product development expenses. Research and product development
expenses increased 77.1% to $11.0 million in 1999 from $6.2 million in 1998, and
increased from 21.3% to 24.8% of total revenues. The increase in research and
product development expenses both in absolute dollars and as a percentage of
total revenues was due to an increase in staffing and an expansion in the number
of new products under development. Personnel related expenses increased by $2.6
million, contract labor increased by $600,000, travel expenses increased by
$400,000 and net other expenses increased by $1.2 million.

General and administrative expenses. General and administrative expenses
increased 52.2% to $4.1 million in 1999 from $2.7 million in 1998, and remained
at 9.2% of total revenues. The increase in general and administrative expenses
in absolute dollars was due to a $200,000 increase in relocation costs, a
$300,000 increase in recruiting, a $300,000 increase in personnel related costs,
a $200,000 increase in legal and accounting services, a $200,000 increase in
contract labor and a $200,000 increase in office space related expenses.

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Bad debt expense and other charges. Bad debt expense and other charges
increased to approximately $665,000 in 1999 from $50,000 in 1998. The increase
was due in part to a dispute with a customer, as well as the overall increase in
gross accounts receivable from the prior year.

Amortization of goodwill and other intangibles. Amortization expense
increased to approximately $200,000 in 1999 as compared to $38,000 in 1998. This
was due primarily to amortization of goodwill from the Konark and NPL
acquisitions.

Interest expense and other income (expense). Interest expense and other
income and expense increased to $179,000 for 1999 from $120,000 for 1998,
reflecting higher interest cost incurred with the capital lease agreement and
other miscellaneous cost increases.

Interest income. Interest income increased to $2.2 million in 1999 as
compared to $1.8 million for 1998. This increase was due primarily to interest
earned on higher cash and short-term investment balances available as a result
of our initial public offering of our common stock in March 1998.

Provision for income taxes. Our effective tax rate was 33.3% and 34.8% for
1999 and 1998, respectively. In 1999, the effective tax rate was lower than the
statutory tax rates due to the utilization of research and development tax
credits. The decrease from 1998 to 1999 was due to increased utilization of the
research and development tax credits.

Liquidity and Capital Resources

Since our inception in 1989, we financed our operations primarily through
cash generated by operations and cash raised through our March 1998 initial
public offering. At September 30, 2001, our cash, cash equivalents and
marketable securities aggregated approximately $18.4 million, of which cash and
cash equivalents aggregated approximately $17.3 million and marketable
securities aggregated approximately $1.1 million. Marketable securities at
September 30, 2001 were comprised of fixed income government securities and
corporate bonds. Our working capital was $11.5 million and $35.3 million at
September 30, 2001 and December 31, 2000, respectively.

Accounts receivable, net, decreased to $839,000 at September 30, 2001 from
$6.2 million at December 31, 2000, primarily as a result of decreased sales and
the collection of outstanding receivables. Included in accounts receivable at
September 30, 2001 was $11.8 million for trade receivables and $1.9 million for
unbilled project revenue as compared to $16.1 million for trade receivables and
$2.9 million for unbilled project revenue at December 31, 2000. Two customers
accounted for 12% and 11% of gross accounts receivable at September 30, 2001.
The allowance for doubtful accounts was $12.7 million at September 30, 2001 as
compared to $12.3 million at December 31, 2000. Unbilled project revenue is the
excess amount of revenue recognized through percentage of completion that has
not been billed to the customer. Payment terms to customers are generally net
zero to net ninety days.

We bill our foreign customers in U.S. dollars at agreed-upon contractual
terms. Accounts receivable at September 30, 2001 includes approximately $60,000
from foreign customers.

Our capital expenditures were approximately $713,000 and $2,312,000 for the
nine months ended September 30, 2001 and 2000, respectively.

In June 1999, we entered into a five-year capital lease agreement at an
annual interest rate of 8.21% for equipment, furniture and fixtures at its new
office facilities. Assets recorded under this lease are included in fixed
assets. Annual lease payments approximate $180,000.

We made, in connection with our pending merger, a series of loans to ISPSoft
Inc. totaling $3,600,000 as of December 19, 2001, with an additional $250,000
committed for December 2001. ISPSoft, since its inception, has incurred
substantial losses and expects to incur operating losses for the foreseeable
future. Although ISPSoft has announced the commercial availability of certain
products, because of its limited operating history, ISPSoft cannot predict its
success in the marketplace. Additionally, ISPSoft may not be able to obtain
other sources of financing, if its merger with us is not completed. Accordingly,
we will be required to reassess the collectibility of these loans if our merger
with ISPSoft is not completed.

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The net proceeds received by us upon the consummation of our initial public
offering in March 1998, pending specific application, were invested in
short-term, investment-grade, interest-bearing instruments and have been used to
finance operations.

Our most recent reductions in staff and our additional restructuring
activities taken in October 2001 should reduce total monthly expenses by
approximately $800,000. These cost reduction measures should primarily reduce
monthly operating expenses for research and product development expenses by
approximately $270,000, sales and marketing expenses by approximately $230,000,
fixed cost of sales expenses by approximately $200,000 and other general and
administrative expenses by approximately $50,000. By the first quarter of 2002,
this lower spending is expected to reduce quarterly operating cash requirements
by approximately $2.3 million and should result in future total operating cash
expenses of between $3.0 million and $3.5 million per quarter. Assuming no
growth in revenues over current levels ($2.0 million in the third quarter of
2001), it is estimated that net operating cash requirements will be between $1.0
million and $1.5 million per quarter.

Our ability to improve our profitability and ability to generate positive
cash flows from operations will have a significant impact on the period through
which our existing cash will be sufficient to fund our operations. Based on our
plan, which contemplates the merger with ISPSoft and the resulting cash
requirements for operations, we believe that our existing available cash and
marketable securities may not be adequate to satisfy current and planned
operations for the next 12 months. Additionally, we expect that we will require
additional financing prior to our return to profitability or to fund an
acquisition. If we cannot sufficiently improve our profitability or raise more
funds at acceptable terms, we could be required to further reduce our capital
expenditures and reduce our workforce.

Acquisitions

On January 25, 1999, DSET Acquisition Corp., our wholly owned subsidiary,
acquired certain assets of NPL for $2.5 million. NPL was a New Jersey-based
company which specialized in software aimed at reducing the time necessary for a
CSP to provide prospective customers with sales proposals that clearly define a
CSP's current service offering compared to the incumbent local exchange
carrier's current service offering. These assets were impaired as of June 30,
2001.

On September 30, 1999, we purchased the capital stock of Konark and related
technologies owned by an affiliate of Konark for an aggregate of approximately
$3.3 million financed through cash paid at closing and certain deferred
payments. The purchase provided us with all rights to: (i) two
electronic-bonding gateways that we previously had been reselling; and (ii) a
new Electronic Access Ordering product. These assets were partially impaired as
of June 30, 2001 and totally impaired as of September 30, 2001.

In June 2000 and July 2000, we purchased an exclusive worldwide license for
various products from Daleen Technologies, Inc. for $2.5 million payable in
cash. A royalty will also be due based on future sales. In March 2001, due to
changing and unpredictable conditions in the marketplace and in an effort to
conserve cash, we decided to abandon this product line and will record an
impairment charge of approximately $2.2 million for the carrying value of this
license in 2001.

Recently Issued Accounting Standards

On June 15, 1998, the Financial Accounting Standards Board ('FASB') issued
Statement of Financial Accounting Standards No. 133 'Accounting for Derivatives
and Hedging Activities' ('SFAS 133'). SFAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000 (January 1, 2001 for
DSET). SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. To date, we have not invested in
derivative instruments and has not engaged in hedging activities. Accordingly,
the adoption of SFAS 133 will not have a significant effect on our results of
operations, cash flows or its financial position. In June 2000, the FASB issued
Statement of

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Financial Accounting Standards No. 138, 'Accounting for Certain Derivative
Instruments and Certain Hedging Activities' ('SFAS 138'). SFAS 138 addresses
certain issues related to the implementation of SFAS 133, but did not change the
basic accounting model of SFAS 133.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 'Revenue
Recognition in Financial Statements' ('SAB 101'). SAB 101 summarizes the SEC
staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements and became effective in the fourth quarter
of 2000. The adoption of SAB 101 did not have a material impact on our financial
statements.

In April 2000, the FASB issued FASB Interpretation No. 44, ('FIN 44')
'Accounting for Certain Transactions Involving Stock Compensation -- an
interpretation of APB Opinion No. 25' ('APB 25'). This interpretation, which is
effective from July 1, 2000, clarified the definition of employee for the
purpose of applying APB 25, the criteria for determining whether a plan
qualifies as a non-compensatory plan, the consequence of various modifications
to the terms of a previously fixed stock option award and the accounting for an
exchange of stock compensation awards in a business combination. The adoption of
FIN 44 did not have a material impact on our financial statements.

In July 2001, the FASB issued Statements of Financial Accounting Standard
No. 141, ('SFAS 141') 'Business Combinations' and No. 142, ('SFAS 142')
'Goodwill and Other Intangible Assets.' SFAS 141 supersedes APB Opinion No. 16,
'Business Combinations' and SFAS 38, 'Accounting for Preacquisition
Contingencies of Purchased Enterprises' and requires that all business
combinations be accounted for only by the purchase method and eliminating the
pooling-of-interests method. SFAS 141 is effective for all business combinations
completed after July 1, 2001. SFAS 142 supersedes APB No. 17, 'Intangible
Assets' and prohibits amortization of goodwill and other intangible assets that
have an indefinite life over a period of time. SFAS 142 is effective for all
fiscal years beginning after December 15, 2001. However, all goodwill and
intangible assets that are acquired after June 30, 2001 are immediately subject
to the SFAS 142. DSET will account for the acquisition of ISPSoft in accordance
with SFAS 141 and SFAS 142.

Upon DSET's adoption of SFAS 141 and 142, DSET does not expect to amortize
goodwill and other intangibles acquired after June 30, 2001, unless such
goodwill or other intangibles possesses a finite life.

The amortization of goodwill acquired before June 30, 2001 will be
discontinued at January 1, 2002.

For the nine months ended September 30, 2001, we recorded amortization
expense of $274,000.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting standards No. 143, 'Accounting for Asset Retirement
Obligations,' ('SFAS 143') which addresses financial accounting and reporting
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The statement applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development, and (or) the normal operation of a
long-lived asset, except for certain obligations of lessees. The effective date
for SFAS 143 is for financial statements issued for fiscal years beginning after
June 15, 2002. We do not expect that the adoption of the provisions of SFAS 143
will have a material impact on our results of operations or financial position.

In August 2001, SFAS 144, 'Accounting for the Impairment or Disposal of
Long-Lived Assets,' was issued, replacing SFAS 121, 'Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of' and
portions of APB Opinion 30, 'Reporting the Results of Operations.' SFAS 144
provides a single accounting model for long-lived assets to be disposed of and
changes the criteria to be met to classify an asset as held-for-sale. SFAS 144
retains the requirement of APB Opinion 30 to report discontinued operations
separately from continuing operations and extends that reporting to a component
of an entity that either has been disposed of or is classified as held-for-sale.
SFAS 144 is effective January 1, 2002 for us, and we are currently evaluating
the impact of this statement.

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European Monetary Union

On January 1, 1999, eleven of the fifteen member countries of the European
Union set fixed conversion rates between their existing currencies and the euro.
At such time, these participating countries adopted the euro as their common
legal currency. The eleven participating countries now issue sovereign debt
exclusively in euros and will redenominate outstanding sovereign debt. The
legacy currencies will continue to be used as legal tender through January 1,
2002, at which point the legacy currencies will be canceled and euro bills and
coins will be used for cash transactions in the participating countries.

We do not denominate our international revenues in foreign currencies. We
currently do not believe that the euro conversion will have a material impact on
our results of operations or financial condition.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We believe that we are not subject to a material impact to its financial
position or results of operations relating to market risk associated with
foreign currency rates or derivative securities.

We believe the market risk exposure with regard to marketable securities
held in the investment portfolio is limited to changes in quoted market prices
for such securities based upon changes in interest rates. Based upon the
composition of our marketable securities at September 30, 2001, we do not
believe an adverse change in quoted market prices would be material to our
results of operations.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is each person who will serve as a director or executive
officer of DSET following the merger.

Directors

<Table>
<Caption>
SERVED AS A
NAME AGE DIRECTOR SINCE POSITIONS WITH DSET
---- --- -------------- -------------------

William P. McHale, Jr. ...... 52 1997 Chief Executive Officer and Chairman of the Board
Jacob J. Goldberg............ 54 1999 Director
C. Daniel Yost............... 52 1999 Director
Andrew D. Lipman............. 49 1999 Director
Binay Sugla, Ph.D. .......... 41 2001 President and Director
Carl Pavarini................ 53 2001 Director
Arun Inam.................... 38 2001 Director
</Table>

This joint proxy statement/prospectus contains a proposal to amend DSET's
Amended and Restated Certificate of Incorporation to classify DSET's board of
directors into three classes with staggered terms. The proposal is discussed
below under 'Proposal to Amend DSET's Amended and Restated Certificate of
Incorporation to Provide for a Classified Board.' If the proposal to amend the
Amended and Restated Certificate of Incorporation to classify the board of
directors is adopted at the special meeting, two directors, one of whom will be
designated by DSET's board of directors subsequent to the merger, will serve a
term expiring at the 2002 annual meeting, two directors will serve a term
expiring at the 2003 annual meeting, and three directors will serve a term
expiring at the 2004 annual meeting, in each case until their respective
successors are duly elected and qualified or until their earlier resignation or
removal. Beginning with the 2002 annual meeting, members of the class whose term
expires at the meeting or their successors will be elected each year to serve a
three-year term until their successors have been elected and qualified or until
their earlier resignation or removal. If the proposal to amend DSET's Amended
and Restated Certificate of Incorporation is not adopted, all directors will be
elected to hold office until the 2002 annual meeting until their successors have
been elected and qualified or until their earlier resignation or renewal.
Currently, all directors of DSET hold office until the next annual meeting of
shareholders and until their successors shall have been duly elected and
qualified. There are no family relationships among any of the directors,
executive officers and key employees of DSET.

If the proposal to amend DSET's Amended and Restated Certificate of
Incorporation is adopted, Messrs. Pavarini and Inam will serve until the 2002
Annual Meeting, Messrs. Yost and Sugla will serve until the 2003 Annual Meeting
and Messrs. Goldberg, Lipman and McHale will serve until the 2004 Annual
Meeting.

Executive Officers

<Table>
<Caption>
NAME AGE POSITIONS WITH DSET
---- --- -------------------

Bruce M. Crowell.......................... 47 Vice President, Chief Financial Officer and
Secretary
Jeffrey S. Gill........................... 34 Vice President, Professional Services
</Table>

The principal occupations and business experience, for at least the past
five years, of each above named individual is as follows:

Mr. McHale joined DSET in January 1997 as President and Chief Operating
Officer and was elected to the Board of Directors in January 1997. In July 1997,
he became Chief Executive Officer and in June 2000 became Chairman of the Board.
Prior to joining DSET, Mr. McHale was Vice President of Sales and Marketing at
F3 Software Corporation from January 1995 to December 1996. From February 1991
to December 1994, Mr. McHale owned and operated a private firm where he
periodically provided senior management or consulting services. Mr. McHale also
served as President and Chief Executive Officer of each of Mitchell Management
Systems

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from November 1989 to January 1991, and Component Software Corporation from July
1992 to July 1994. Prior to that, Mr. McHale held various sales and marketing
positions at IBM, Wang Laboratories and Digital Equipment Corporation.

Mr. Goldberg has been a Director of DSET since March 1999. From August 1997
until his retirement in March 2000, Mr. Goldberg served as President of Telecom
Industry Services for Bell Atlantic. From January 1994 to August 1997, Mr.
Goldberg served as Vice President of Wholesale Markets for NYNEX overseeing
marketing, sales and customer service provided to NYNEX's wholesale customers.
Prior to that, from 1989 to December 1993, Mr. Goldberg served as Vice President
of Network Interconnection Marketing and Sales and Managing Director of access
markets at NYNEX. Mr. Goldberg serves on the board of directors of a number of
privately held companies.

Mr. Yost has been a Director of DSET since September 1999. Mr. Yost has over
26 years experience in telecommunications and business. Mr. Yost currently sits
on the board of directors of ADC Telecommunications Inc., a publicly traded
global supplier of transmission and networking systems for telecommunications
networks, Redstone Telecom, a publicly traded United Kingdom telecommunications
service, and Ace Cash Express Inc., a publicly traded provider of retail
financial services. Mr. Yost has served as President and Chief Operating Officer
of Allegiance Telecom, a publicly traded company, since February 1998. He was
elected to Allegiance Telecom's board in March 1998. Before joining Allegiance
Telecom, from July 1997 to February 1998, he served as President and Chief
Operating Officer at NETCOM On-Line Communication Services, Inc., a leading
Internet service provider. Mr. Yost managed all aspects of domestic operations,
including development and implementation of overall strategic direction. Prior
to that, from April 1994 to July 1997, Mr. Yost was President of the Southwest
region of AT&T Wireless Services, Inc. Mr. Yost has also served as President of
McCaw Cellular Communications/LIN Broadcasting in the Southwest region and was
President, General Manager, and founder of MetroCel Cellular Telephone Company.

Mr. Lipman has been a Director of DSET since November 1999. Mr. Lipman is
currently the Vice Chairman of the Washington D.C. law firm Swidler Berlin
Shereff Friedman, LLP, and a Senior Partner in the firm's Telecommunications
Group. Mr. Lipman has over twenty years of experience in the telecommunications
industry and has advised various Internet, technology, and telecommunications
companies establishing operations in Europe and Asia. Mr. Lipman also served as
Vice President of legal and regulatory affairs at Metropolitan Fiber Systems.
Mr. Lipman serves on the board of directors of several public companies,
including NuSkin International, a creator and distributor of personal care
products, The Management Network Group, Inc., a leading provider of consulting
services to the global telecommunications industry, and NHC Communications Inc.,
a leading manufacturer of physical-layer high-speed Switched Accessed Solutions.

Dr. Binay Sugla has been president, chief executive officer and a director
of ISPSoft since its inception in April 1999. Prior to founding ISPSoft,
Dr. Sugla was a Director of Network Services and Management at Bell
Laboratories. During a fifteen year career with Bell which started in 1985,
Dr. Sugla created numerous provisioning and similar technologies, including an
Internet protocol management program; a number of these technologies have been
deployed to carriers. Dr. Sugla received the Bell Labs President's Award for
Product Development. Dr. Sugla received his Ph.D. from the University of
Massachusetts at Amherst in 1985 and received a Bachelor of Technology degree
from IIT Kanpur in 1981.

Carl Pavarini is a professor at Rensselaer Polytechnic Institute's Lally
School of Management and Technology and visiting executive and adjunct professor
at the Stevens Institute of Technology School of Engineering. He has also taught
in the MBA program at the Columbia University Graduate School of Business. Prior
to becoming a professor, Dr. Pavarini worked at Lucent Technologies and AT&T,
where he worked for over fifteen years until his retirement in 1999. During his
tenure at Lucent and AT&T, Dr. Pavarini was a corporate officer and held
responsibility for a number of product divisions. Dr. Pavarini also worked for
over ten years in research and engineering development at AT&T Bell. Dr.
Pavarini holds a Ph.D. in systems

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engineering from Rensselaer Polytechnic Institute and has attended the MIT Sloan
Program for Senior Managers and the INSEAD International Management Program.

Arun Inam is a Managing Director at Signal Lake Venture Fund, which he
joined in February 2001. Prior to his tenure at Signal Lake, Dr. Inam was Vice
President for Global Strategy & New Ventures at Motorola, where he reported to
the President of the commercial, government, and industrial solutions sector.
Prior to joining Motorola in 1999, Dr. Inam spent six years as a senior
management consultant at Monitor Company and Braxton Associates. From 1985 to
1994, Dr. Inam conducted and managed research in high-speed electronics and
optics at Bell Communications Research (Bellcore). Dr. Inam holds a Ph.D. in
physics, and has studied at Rutgers, Carnegie Mellon, the University of Paris,
and at the Indian Institute of Technology.

Mr. Crowell joined DSET in August 1999, and currently serves as Vice
President and Chief Financial Officer. Prior to joining DSET, Mr. Crowell served
as a Vice President and Chief Financial Officer of EPL Technologies from January
1998 to July 1999. Prior to that, from January 1994 to January 1998, Mr. Crowell
served as Vice President and Chief Financial Officer for Datron Inc., a firm
specializing in aerospace and defense technologies. Mr. Crowell has 25 years of
corporate financial experience, including serving as the Chief Financial Officer
of 2 publicly-traded companies. Mr. Crowell has also served in various financial
capacities with companies specializing in systems integration and electronics,
including software applications for industries such as telecommunications and
aerospace.

Mr. Gill joined DSET in July 2000 as Vice President, Professional Services.
From February 2000 to July 2000, Mr. Gill served as Business Unit Vice President
of Cap Gemini Ernst & Young, managing all aspects of software development and
professional services, inclusive of new business growth, for a Fortune 10
telecommunications firm. From June 1998 to February 2000, Mr. Gill served as the
Program Director of Cap Gemini Telecommunications where he assumed
responsibility for the management of business requirements, software development
and quality assurance as well as all relevant financial corporate commitments.
From April 1997 to June 1998, Mr. Gill served as Engagement/Program Manager of
Beechwood Data Systems where he was accountable for all aspects of customer
satisfaction as well as P&L commitments to the corporation. From October 1995 to
April 1997, Mr. Gill served as Senior Project Manager of IMI Systems where he
performed project management duties for an enterprise wide MRP deployment at a
telecommunications manufacturing firm. Prior to that Mr. Gill served in various
capacities at AT&T where he had increasing project management responsibilities
in customer relationship management, billing and provisioning applications.

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DSET SUMMARY OF COMPENSATION IN FISCAL 2000, 1999, AND 1998

The following summary compensation table sets forth information concerning
compensation for services during the years ended December 31, 2000, 1999, and
1998 in all capacities awarded to or earned by each person who served as DSET's
Chief Executive Officer at any time during 2000 and each other executive officer
of DSET whose aggregate earnings exceeded $100,000 at the end of 2000
(collectively, the 'DSET Named Executives').

SUMMARY COMPENSATION TABLE

<Table>
<Caption>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (#)(1) ($)
--------------------------- ---- ---------- --------- ------------ ------ ------------

William P. McHale, Jr.(2) ... 2000 249,231 83,750 -- 75,000 7,542(4)
President. Chief Executive 1999 196,835 140,000 -- -- 7,419(5)
Officer and Chairman of the 1998 175,000 168,329 -- 200,000(3) 6,744(6)
Board
Paul R. Smith(7) ............ 2000 180,000 30,833 5,900(8) -- 7,156(9)
Senior Vice President, 1999 188,462 6,000 6,250(8) 25,000 15,128(10)
Strategic Planning and 1998 167,320 100,000 5,943(8) 20,000 7,901(11)
Product Development
Bruce M. Crowell(12) ........ 2000 199,808 53,083(13) -- 21,500 6,870(14)
Vice President, Chief 1999 73,077 18,892 -- 78,000 4,888(15)
Financial Officer and
Secretary
Phillip V. 2000 180,000 133,096(18) -- 41,500 558(19)
Cavallo(16)(17) ...........
Senior Vice President,
Sales and Marketing
Jimmy C. Jobe(16)(20) ....... 2000 180,000 15,000 -- -- 558(21)
Senior Vice President,
Product Development and
Product Management
Michael W. Smith(16)(22) .... 2000 144,616 15,000 -- -- 5,923(23)
Vice President, Customer
Satisfaction
Jeffrey S. Gill(24) ......... 2000 80,308 32,500 -- 56,000 126(25)
Vice President,
Professional Services
</Table>

- ---------

(1) All numbers set forth below are on a pre one-for-four reverse stock split
basis.

(2) Mr. McHale was elected Chairman of the Board in June 2000.

(3) In exchange for the cancellation of 93,300 options issued to Mr. McHale in
January 1997, such options were issued by DSET in October 1998 at an
exercise price of $6.875 per share.

(4) Includes contributions by DSET under the 401(k) Plan of $6,300 and
compensation relating to life insurance premiums paid on his behalf of
$1,242.

(5) Includes contributions by DSET under the 401(k) Plan of $6,000 and
compensation relating to life insurance premiums paid on his behalf of
$1,419.

(6) Includes contributions by DSET under the 401(k) Plan of $5,700 and
compensation relating to life insurance premiums paid on his behalf of
$1,044.

(7) Mr. P. Smith resigned from DSET effective March 1, 2001.

(8) Represents automobile allowance.

(9) Includes contributions by DSET under the 401(k) Plan of $6,300 and
compensation relating to life insurance premiums paid on his behalf of
$856.
(footnotes continued on next page)

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(footnotes continued from previous page)

(10) Includes contributions by DSET under the 401(k) Plan of $6,000, commissions
of $7,779 and compensation relating to life insurance premiums paid on his
behalf of $1,349.

(11) Includes contributions by DSET under the 401(k) Plan of $6,000 and
compensation relating to life insurance premiums paid on his behalf of
$1,901.

(12) Mr. Crowell joined DSET in August 1999 as Vice President, Chief Financial
Officer and Secretary.

(13) Includes relocation allowance of $29,646.

(14) Includes contributions by DSET under the 401(k) Plan of $6,240 and
compensation relating to life insurance premiums paid on his behalf of
$630.

(15) Includes contributions by DSET under the 401(k) Plan of $4,690 and
compensation relating to life insurance premiums paid on his behalf of
$198.

(16) Messrs. Cavallo, Jobe and Smith were elected to their respective positions
by the board of directors of DSET on May 24, 2000.

(17) Mr. Cavallo resigned from DSET effective December 29, 2000.

(18) Includes commissions of $115,596.

(19) Includes compensation relating to life insurance premiums paid on his
behalf of $558.

(20) Mr. Jobe left DSET effective July 13, 2001.

(21) Includes compensation related to life insurance premiums paid on his behalf
of $558.

(22) Mr. M. Smith resigned from DSET effective March 16, 2001.

(23) Includes contributions by DSET under the 401(k) Plan of $4,788 and
compensation relating to life insurance premiums paid on his behalf of
$1,135.

(24) Mr. Gill joined DSET in June 2000 as Vice President, Professional Services.

(25) Includes compensation related to life insurance premiums paid on his behalf
of $126.

DSET OPTION GRANTS IN 2000

The following table sets forth information concerning individual grants of
stock options made pursuant to DSET's 1998 Stock Plan during 2000 to each of the
DSET Named Executives. DSET has never granted any stock appreciation rights.

<Table>
<Caption>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------
POTENTIAL
REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL
SECURITIES PERCENT OF RATES OF STOCK
UNDERLYING TOTAL OPTIONS EXERCISE PRICE APPRECIATION
OPTIONS GRANTED TO OR BASE FOR OPTION TERM(3)
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#)(1) FISCAL YEAR(2) ($/SH) DATE 5% ($) 10% ($)
---- ------ -------------- ------ ---- ------ -------

William P. McHale, Jr......... 75,000 8.51% 33.375 2/11/10 1,574,202 3,989,337
Paul R. Smith................. -- -- -- -- -- --
Bruce M. Crowell.............. 21,500 2.44% 33.375 2/10/10 451,271 1,143,610
Phillip V. Cavallo............ 41,500 4.71% 33.375 2/10/10 871,058 2,207,453
Jimmy C. Jobe................. -- -- -- -- -- --
Michael W. Smith.............. -- -- -- -- -- --
Jeffrey S. Gill............... 56,000 6.3% 29.375 7/30/10 1,034,532 2,621,706
</Table>

- ---------

(1) Such options were granted pursuant to and in accordance with the 1998 Stock
Plan. All numbers set forth in the above table are on a pre one-for-four
reverse stock split basis.

(2) Based on an aggregate of 881,050 options granted to employees in 2000,
including options granted to the DSET Named Executives.
(footnotes continued on next page)

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(footnotes continued from previous page)

(3) Based on a grant date fair market value equal to the grant date exercise
price per share of the applicable option for each of the DSET Named
Executives and assumes no adjustments to the grant date exercise price.

AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES

The following table sets forth information concerning each exercise of
options during 2000 by each of the DSET Named Executives and the year-end value
of unexercised in-the-money options.

<Table>
<Caption>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
-----------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL
ACQUIRED VALUE YEAR-END (#) YEAR-END ($)(1)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- --- --- ------------- -------------

William P. McHale, Jr............ 45,390 1,243,544 171,708/242,912 $0/$0
Paul R. Smith.................... -- -- 71,015/32,500 $0/$0
Bruce M. Crowell................. -- -- 19,500/80,000 $0/$0
Phillip V. Cavallo............... -- -- 37,125/0 $0/$0
Jimmy C. Jobe.................... -- -- 20,000/60,000 $0/$0
Michael W. Smith................. -- -- 11,875/28,125 $0/$0
Jeffrey S. Gill.................. -- -- 0/56,000 $0/$0
</Table>

- ---------

(1) Based on a year-end fair market value of the underlying securities equal to
$1.797 less the exercise price payable for such shares, which calculation
results in a negative value. All share numbers set forth in the above table
are on a pre one-for-four reverse stock split basis.

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

ARRANGEMENTS

William P. McHale, Jr., President and Chief Executive Officer, entered into
an employment agreement with DSET in November 1998. He currently receives an
annual salary of 223,125 and is eligible for an annual bonus of up to $149,494,
the amount and payment of which is within the discretion of the Compensation
Committee. DSET also has agreed, subject to certain restrictions, to pay Mr.
McHale twelve months salary continuation in the event that Mr. McHale is
terminated without cause, and the equivalent of twelve months salary, payable in
a lump sum, in the event Mr. McHale is terminated without cause in connection
with a change in control of DSET. DSET has also agreed that, under certain
circumstances, stock options held by Mr. McHale shall accelerate in the event
Mr. McHale is terminated without cause in connection with a change in control of
DSET. See ' -- Certain Transactions' for a loan transaction between DSET and Mr.
McHale.

Bruce M. Crowell, Vice President, Chief Financial Officer and Secretary, has
been in this position with DSET since August 1999. Mr. Crowell is currently
entitled to an annual salary of $190,000 and is eligible for an annual bonus in
the amount of $57,500. DSET has also agreed, subject to certain restrictions, to
pay Mr. Crowell nine months salary continuation and benefits in the event that
Mr. Crowell is terminated without cause or upon a change in control. DSET has
also agreed that, under certain circumstances, stock options held by Mr. Crowell
shall accelerate in the event Mr. Crowell is terminated without cause in
connection with a change in control of DSET.

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Jeffrey S. Gill, Vice President, Professional Services joined DSET in July
2000. Mr. Gill is currently entitled to an annual salary of $180,000 and is
eligible for an annual bonus in the amount of $36,000. DSET has also agreed,
subject to certain restrictions, to pay Mr. Gill six months salary continuation
and benefits in the event that Mr. Gill is terminated without cause or upon a
change in control. DSET has also agreed that, under certain circumstances, stock
options held by Mr.Gill shall accelerate in the event Mr. Gill is terminated
without cause in connection with a change in control.

DSET has also agreed, subject to certain restrictions and other terms
specific to each agreement, to pay certain members of its management team salary
continuation in an amount ranging from three to six months and benefits in the
event that any one of them are terminated without cause or upon a change in
control. DSET has also agreed that, under certain circumstances, stock options
held by certain members of DSET's management team shall accelerate in the event
they are terminated without cause in connection with a change in control.

Each of DSET's executive officers has agreed to maintain the confidentiality
of company information and, for a period of time following the termination of
employment, not to solicit DSET's customers or employees. In addition, Mr.
McHale has agreed that during the term of his employment and thereafter for a
period of one year, he will not compete with DSET in any state or territory of
the United States, or any other country, where DSET does business by engaging in
any capacity in any business which is competitive with the business of DSET.

DSET has executed indemnification agreements with each of its executive
officers and Directors pursuant to which DSET has agreed to indemnify such party
to the full extent permitted by law, subject to certain exceptions, if such
party becomes subject to an action because such party is a Director, officer,
employee, agent or fiduciary of DSET.

DSET generally requires its employees to maintain the confidentiality of
company information and to assign inventions to DSET.

COMPENSATION OF DIRECTORS

Directors who are not employees or affiliates of DSET or its subsidiaries
(an 'Outside Director'), who currently consist of Mr. Lipman, Mr. Yost and Mr.
Goldberg, receive an annual stipend of $10,000 per year and $2,000 for each
meeting of the board of directors or committee meeting attended in person. In
addition, each director receives $2,000 for each conference call which lasts two
hours or more and $1,000 for each conference call under two hours in length. In
January 2001, Mr. Goldberg executed a Consulting Agreement with DSET pursuant to
which he will receive $56,000 during 2001 in connection with the performance of
certain consulting services. Beginning with the Annual Meeting of Shareholders
in 2001, effective with each re-election of an Outside Director, each such
Outside Director automatically shall be granted options to purchase 5,000 shares
of Common Stock, at an exercise price equal to the fair market value of the
Common Stock on the date of grant, exercisable over a three-year period. All
Directors are reimbursed for reasonable expenses incurred as a result of their
attendance at Board meetings. In addition, in January 2001, Mr. Goldberg
executed a consulting agreement with DSET pursuant to which he will receive
$56,000 in 2001 in connection with the performance of certain consulting
services. Such services will include, among other things, attending industry
shows and conferences, calling on customer accounts, and assisting with
marketing and strategic planning, all on behalf of DSET.

Pursuant to DSET's 1998 Stock Plan, DSET granted to Mr. Lipman options to
purchase 25,000 shares of common stock on November 15, 1999, at an exercise
price of $17.375 per share. The options vest to the extent of one-third of the
shares on each of November 15, 2000, 2001 and 2002. Pursuant to DSET's 1998
Stock Plan, DSET granted to Mr. Lipman options to purchase 5,000 shares of
common stock on August 9, 2000, at an exercise price of $25.375 per share. The
options vest to the extent of one-third of the shares on each of August 9, 2001,
2002 and 2003. Pursuant to DSET's 1998 Stock Plan, DSET granted to Mr. Lipman
options to purchase 5,000 shares of common stock on June 13, 2001, at an
exercise price of $.86 per share. The options vest to the extent of one-third of
the shares on each of June 13, 2002, 2003 and 2004. Pursuant to

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DSET's 1998 Stock Plan, DSET granted to Mr. Lipman options to purchase 22,500
shares of common stock on June 13, 2001, at an exercise price of $.86 per share.
The options vest to the extent of one-third of the shares on June 13, 2002 and
8 1/3% each quarter thereafter.

Pursuant to DSET's 1998 Stock Plan, DSET granted to Mr. Yost options to
purchase 25,000 shares of common stock on September 14, 1999, at an exercise
price of $12.28 per share. The options vest to the extent of one-third of the
shares on each of September 14, 2000, 2001 and 2002. Pursuant to DSET's 1998
Stock Plan, DSET granted to Mr. Yost options to purchase 5,000 shares of common
stock on August 9, 2000, at an exercise price of $25.375 per share. The options
vest to the extent of one-third of the shares on each of August 9, 2001, 2002
and 2003. Pursuant to DSET's 1998 Stock Plan, DSET granted to Mr. Yost options
to purchase 5,000 shares of common stock on June 13, 2001, at an exercise price
of $.86 per share. The options vest to the extent of one-third of the shares on
each of June 13, 2002, 2003 and 2004. Pursuant to DSET's 1998 Stock Plan, DSET
granted to Mr. Yost options to purchase 22,500 shares of common stock on
June 13, 2001, at an exercise price of $.86 per share. The options vest to the
extent of one-third of the shares on June 13, 2002 and 8 1/3% each quarter
thereafter.

Pursuant to DSET's 1998 Stock Plan, DSET granted to Mr. Goldberg options to
purchase 25,000 shares of common stock on March 9, 1999, at an exercise price of
$10.75 per share. The options vest to the extent of one-third of the shares on
each of March 9, 2000, 2001 and 2002. Pursuant to DSET's 1998 Stock Plan, DSET
granted to Mr. Goldberg options to purchase 5,000 shares of common stock on
August 9, 2000, at an exercise price of $25.375 per share. The options vest to
the extent of one-third of the shares on each of August 9, 2001, 2002 and 2003.
Pursuant to DSET's 1998 Stock Plan, DSET granted to Mr. Goldberg options to
purchase 5,000 shares of common stock on June 13, 2001, at an exercise price of
$.86 per share. The options vest to the extent of one-third of the shares on
each of June 13, 2002, 2003 and 2004. Pursuant to DSET's 1998 Stock Plan, DSET
granted to Mr. Goldberg options to purchase 22,500 shares of common stock on
June 13, 2001, at an exercise price of $.86 per share. The options vest to the
extent of one-third of the shares on June 13, 2002 and 8 1/3% each quarter
thereafter.

CERTAIN TRANSACTIONS

On November 17, 1998 and on August 18, 1999, DSET loaned $150,000 and
$102,728, respectively, to William P. McHale, Jr., DSET's President and Chief
Executive Officer, on an unsecured basis. Such loans carry an adjustable
interest rate based on the Merrill Lynch Institutional Funds Rate (6.35% per
annum at December 31, 2000). In 2000, DSET extended three additional loans to
Mr. McHale totaling $902,728 with a 6% interest rate per annum with one due
November 2000, one due May 2001 and one due October 2001. As of December 31,
2000, Mr. McHale paid $527,728 against these loans leaving an outstanding
balance of $627,728, inclusive of the two loans originating in November 1998 and
August 1999. On March 1, 2001, DSET and Mr. McHale entered into both a
promissory note and a pledge and security agreement in order to consolidate all
of the then outstanding loans by DSET to Mr. McHale. The promissory note charges
interest at 6%. 48 monthly payments of $4,363 each are due over a four year
period with a balloon payment of $550,000 at the end of the loan term. The
promissory note is secured through the pledge and security agreement which
includes as security Mr. McHale's residence in New Jersey, options to purchase
capital stock of DSET granted to Mr. McHale, Mr. McHale's 401k Account held with
DSET and the benefits of a severance agreement between DSET and Mr. McHale.

In January 2001, Mr. Goldberg executed a consulting agreement with DSET
pursuant to which he will receive $56,000 in 2001 in connection with the
performance of certain consulting services. This amount is in addition to Mr.
Goldberg's director compensation.

The board of directors of DSET has adopted a policy requiring that any
future transactions between DSET and its officers, directors, principal
shareholders and their affiliates be on terms no less favorable to DSET than
could be obtained from unrelated third parties and that any such transactions be
approved by a majority of the disinterested members of DSET's board of
directors.

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INFORMATION CONCERNING ISPSOFT

BUSINESS

OVERVIEW

ISPSoft is a development-stage company of approximately 36 employees
established in March 1999. ISPSoft provides software that helps
telecommunications service providers and other enterprises manage their Internet
protocol (or IP) networks and services. Its current products, which include the
Universal Provisioning Exchange software platform (UPX), the IPSec QOS VPN
application and the NCX router management application, were released this
quarter. These products can automatically set up IP virtual private networks in
response to customer requests. The UPX platform is relatively unique in that it
supports the activation of services over both network elements and servers.
Moreover, UPX is scalable and flexible to allow for the creation of new and
custom services within the same platform.

In addition, ISPSoft received development and distribution rights to a suite
of applications from Lucent Technologies, Inc. in connection with ISPSoft's
Series B Preferred Stock Financing. This application suite can help assure the
quality of telecommunications services by interpreting data collected from
various points in a customer's network, reporting on their performance and, in
some cases, correct behavior. When deployed in a customer's network operations
center, these applications will support the customer's network operators by
automating the functions of configuration, performance and fault management.

INDUSTRY BACKGROUND

One of the most difficult and most expensive challenges for
telecommunications service providers or enterprises is the development and
deployment of people, processes and software systems to operate the expensive
networks and services being built today. Moreover, it has become apparent to the
communications industry that its ability to offer high quality
telecommunications networks and services is heavily dependent upon the degree of
successful automation it can achieve in the operations of these networks and
services. Therefore, the operation support systems that help operate and manage
these services and the underlying infrastructure of network and computer
equipment are critical to enhanced revenues and profitability for the entire
industry.

Most operation support systems in place today are legacy systems that were
designed using now antiquated software technologies in response to well-defined
and structured demands of the circuit-switched telecommunications industry.
These operation support systems are inadequate to address the needs of the fast
evolving data networking paradigm that is rapidly replacing the circuit-switched
world of yesterday. Modern operation support systems need to be flexible,
relatively inexpensive, and easy to deploy and install. They also need to adapt
to the specific technologies they are managing. Though operation support systems
span a wide variety of software applications -- from billing, ordering,
provisioning/activation, and network management -- the applications that
arguably pose the biggest challenge are those that have to interface with
service providers as well as interact closely with the underlying networking
technologies. These applications include the areas of provisioning,
configuration, performance and fault management.

Provisioning, which is generally defined as the process of activating and
de-activating services to subscribers, is perhaps the most challenging
application to successfully automate in today's telecommunications industry.
Older networks had an organized way of turning on these services. With the
advent of new protocols (sets of instructions allowing more efficient
communication between systems) every three to four years, it has become
increasingly difficult to turn services on in multi-protocol networks. As a
result, provisioning systems, which take a long time to develop and deploy, have
remained focused at a single service and protocol and thus have become outdated.

With the rapid adoption of data services (such as e-mail, large file
transfers, and teleconferencing connections) and Internet protocol (the set of
instructions used to send data packets to their destination over the Internet),
the problem of provisioning services efficiently has

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become even worse. The need to develop a solution to this problem is made more
critical by virtue of the fact that Internet protocol has become the fastest
growing protocol in telecommunications today, and that most new networks and
services are being built or offered on Internet protocol.

ISPSOFT PRODUCTS AND SERVICES

ISPSoft is developing a suite of products to address these needs and provide
automatic provisioning and service assurance applications to telecommunications
service providers and enterprises. ISPSoft's first products, consisting of the
UPX platform, the IPSec QOS VPN application and the NCX router management
application, were released this quarter.

PRODUCTS AND SERVICES

UPX is a network-wide, policy-based, scalable platform for automatic
provisioning of services on Internet protocol networks. UPX, which will form the
basis of ISPSoft's future application suite, can be used to automate the
activation of Internet protocol services for carriers, enterprises and other
service providers. By using this new automated approach, service providers will
be able to activate services more rapidly for less cost.

UPX-IPSec QOS VPN, the first application released as part of the UPX line,
enables carriers to rapidly activate and deploy virtual private networks
globally across multi-vendor devices. The product has quality of service
capability to provide real time Internet protocol based services over broadband
networks. The product also incorporates various features to allow for secure
Internet protocol based communications.

NCX-Router Management, a currently available application, is a route
provisioner and network configurator. This product allows core Internet protocol
devices to be configured appropriately and allocate desired bandwidth to
different classes of traffic.

SALES AND MARKETING

ISPSoft has offices in Shrewsbury, New Jersey and San Jose, California.
Marketing efforts to date have been focused on attending trade shows such as
Supercomm, Networld+, Interop, ISPcon, VPNcon and promoting ISPSoft focus and
products through collateral and through personal calls and contacts. In
addition, ISPSoft has built a partnership program to promote unique solutions to
the marketplace.

To date, ISPSoft has not generated any revenues from its available products,
nor has it shipped any of these products to customers. However, ISPSoft plans to
initiate four trials of its available products during the first phase of its
marketing program. These trials include the installation of UPX and the IPSec
QOS VPN application into one large telecom service provider, one medium sized
competitive service provider, one management service provider and one major
equipment vendor. Pending successful completion of these customer trials,
ISPSoft will target carriers and large enterprises for adoption of ISPSoft's
products and services.

COMPETITION

ISPSoft's potential competition comes from four categories of industry
segments. The first class of competitors is the equipment vendors, such as
Cisco, Nortel, and Lucent. These vendors typically provide some management tools
with their equipment that would compete with ISPSoft's multi-vendor products.
The second group of competitors is the third-party established operations
support systems vendors such as Eftia, Vitria and Telecordia, each of whom could
leverage their existing markets to move into those markets targeted by ISPSoft.
New entrants to the marketplace that ISPSoft is currently targeting include
Orchestream, Syndesis and Goldwire. ISPSoft's competition also comes from
in-house systems that various large service providers such as MCI Worldcom and
AT&T have built for internal use.

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Further competitive factors affecting ISPSoft's market include brand name
recognition, product performance and functionality (such as service level
availability features, scalability, performance and ease of installation and
use), quality, price, customer service and support and the effectiveness of
sales and marketing efforts. Although ISPSoft believes that its products
currently compete favorably with respect to all of these factors, there is no
assurance that ISPSoft can maintain its competitive position against current and
potential competitors, especially those with significantly greater financial,
marketing, service, support, technical and other resources than ISPSoft.
ISPSoft's future success will depend significantly on its ability to continue to
enhance its existing products and introduce new products more rapidly and less
expensively than its existing and potential competitors and to persuade hardware
and software vendors to license ISPSoft's products rather than to develop their
own reliability products.

Many of ISPSoft's competitors have longer operating histories and have
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and a larger customer base, than
ISPSoft. ISPSoft's current and future competitors could introduce products with
more features, higher scalability, greater functionality and lower prices than
ISPSoft's products. These competitors could also bundle existing or new products
with other, more established products in order to compete with ISPSoft.
ISPSoft's focus on operations support systems products in the Internet protocol
area may be a disadvantage in competing with vendors that offer a broader range
of products. Moreover, as the automated provisioning market develops, a number
of companies with significantly greater resources than those of ISPSoft could
attempt to increase their presence in this market by acquiring or forming
strategic alliances with competitors or business partners of ISPSoft. Because
there are relatively low barriers to entry for the software market, ISPSoft
expects additional competition from other established and emerging companies.
Increased competition is likely to result in price reductions, reduced gross
margins and loss of market share, any of which could materially and adversely
affect ISPSoft's business, operating results and financial condition. Any
material reduction in the planned selling price of ISPSoft's products would
negatively affect gross margins and would require ISPSoft to increase software
unit sales in order to maintain and achieve future gross profits.

In addition, the automated provisioning market is characterized by rapid
technological advances, changes in customer requirements, frequent new product
introductions and enhancements and evolving industry standards in computer
hardware and software technology. The introduction of products embodying new
technologies and the emergence of new industry standards may render ISPSoft's
existing or planned products obsolete or unmarketable, particularly because the
market for reliability products is at an early state of development. There is no
assurance that ISPSoft will be able to compete successfully against current and
future competitors, and the failure to do so would seriously harm ISPSoft's
business, financial condition and results of operations.

PROPRIETARY RIGHTS

ISPSoft's success depends in part upon its proprietary technology. Although
ISPSoft has several patent applications pending, there is no assurance that any
issued patent will provide meaningful protection for ISPSoft's technology or
that any issued patent will provide ISPSoft with any competitive advantages or
will not be challenged by third parties. Moreover, there is no assurance that
ISPSoft will develop additional proprietary products or technologies that are
patentable or that the patents of others will not seriously harm ISPSoft's
ability to do business. Furthermore, there is no assurance that others will not
independently develop similar products, duplicate ISPSoft's products or design
around the patents issued to ISPSoft. As part of its confidentiality procedures,
ISPSoft generally enters into non-disclosure agreements with its employees,
consultants, distributors and corporate partners, and license agreements with
respect to its software, documentation and other proprietary information.
Despite these precautions, it may be possible for a third-party to copy or
otherwise obtain and use ISPSoft's products or technology without authorization,
or to develop similar technology independently. Policing unauthorized use of
ISPSoft's products is difficult and, although ISPSoft is unable to determine the
extent to which piracy of its software products exists, software piracy can be
expected to be a persistent problem.

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In selling its products, ISPSoft relies on 'shrink wrap' licenses for sales of
certain products that are not signed by licensees and, therefore, may be
unenforceable under the laws of certain jurisdictions. In addition, effective
protection of intellectual property rights is unavailable or limited in certain
foreign countries.

Additionally, ISPSoft relies on a combination of copyright, trademark and
trade secret laws, confidentiality procedures and licensing arrangements to
establish and protect its proprietary rights relating to its licensed and
internally developed products. There is no assurance that ISPSoft's protection
of its proprietary rights will be adequate or that ISPSoft's competitors will
not independently develop similar technology, duplicate ISPSoft's products or
design around any patents issued to ISPSoft or other intellectual property
rights.

EMPLOYEES

As of October 31, 2001, ISPSoft had 36 employees. Of the total, twenty-seven
were engaged in product development and engineering, three in sales and
marketing, four in customer service and support and two in administration and
finance. ISPSoft's future success depends in significant part upon the continued
service of its key technical and senior management personnel and its continuing
ability to attract and retain highly qualified technical and managerial
personnel. Recent economic conditions have eased competition for software
developers who are well-versed in general programming tasks but who do not
necessarily need to have core-networking skills. ISPSoft still faces intense
competition, however, with respect to experienced engineers with a significant
background in Internet protocol. There is no assurance that ISPSoft can retain
its key managerial and technical employees or that it can attract, assimilate or
retain other highly qualified technical and managerial personnel in the future.
None of ISPSoft's employees are represented by a labor union.

ISPSoft has not experienced any work stoppages and considers its relations
with its employees to be good.

FACILITIES

On July 6, 2000, ISPSoft entered into a five year Commercial Office Lease
with New Jersey - American Water Company, Inc., which expires on August 31,
2005. The lease provides for an extension option of five years, subject to
certain conditions. The base monthly rent under the lease is $21,641.67. ISPSoft
is also responsible for payment of certain operating expenses under the lease.
In accordance with provisions of the lease, ISPSoft will be able to assign its
interests under the lease to DSET as contemplated by the merger agreement.

ISPSoft is currently a party to a month to month lease for space in San
Jose, California.

ISPSOFT MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

ISPSoft commenced doing business in March 1999. ISPSoft is a provider of
software solutions that provision Internet Protocol (IP)-based services for
enterprise and service provider networks. ISPSoft's products and services
simplify the delivery of broadband services by automating the complex
labor-intensive processes of provisioning new services across multi-vendor
networks.

The primary thrust of ISPSoft Inc.'s research and development efforts since
inception has been the Universal Provisioning Exchange (UPX) software platform
that was introduced in July 2001 as ISPSoft's flagship product. UPX is being
developed for use in multiple applications. The material increases in
expenditures from 1999 to date reflect the increase in general and
administrative and software development (including external development
consultants) expenditures in an effort to bring the UPX product to market.

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ISPSoft plans to market and sell its automated provisioning products and
services through a combination of its field sales organization and indirect
distribution channels. As of September 30, 2001, no sales have been consummated.
ISPSoft will recognize revenue from software license agreements upon shipment of
the software if no significant future contractual obligations remain and
collection of the resulting receivable is probable. Maintenance and technical
support revenue will be recognized over the term of the agreement, typically 12
months. Consulting and training revenue will be recognized as services are
provided.

The following table sets forth ISPSoft's audited Statements of Operations
for the periods indicated:

<Table>
<Caption>
PERIOD FROM PERIOD FROM
INCEPTION INCEPTION
(MARCH 30, 1999 (MARCH 30, 1999
FOR THE YEAR ENDED THROUGH THROUGH
DECEMBER 31, 2000 DECEMBER 31, 1999) DECEMBER 31, 2000)
----------------- ------------------ ------------------

Revenues................................. $ -- $ -- $ --
Operating expenses
Software development................. 1,677,719 1,056,541 2,734,260
General and administrative........... 1,294,543 -- 1,294,543
Depreciation expense................. 26,912 -- 26,912
----------- ----------- -----------
Investment income........................ 87,004 -- 87,004
----------- ----------- -----------
Net loss................................. (2,912,170) (1,056,541) (3,968,711)
Dividends on Series B preferred stock.... (226,545) -- (226,545)
----------- ----------- -----------
Net loss applicable to common
stockholders........................... $(3,138,715) $(1,056,541) $(4,195,256)
----------- ----------- -----------
----------- ----------- -----------
</Table>

The following table sets forth ISPSoft's unaudited Statements of Operations
for the nine-month periods ended September 30, 2001 and 2000. The results of
operations for any period are not necessarily indicative of the results to be
expected for any future period.

<Table>
<Caption>
(UNAUDITED)
PERIOD FROM
(UNAUDITED) (UNAUDITED) INCEPTION
FOR THE NINE FOR THE NINE (MARCH 30, 1999
MONTHS ENDED MONTHS ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2001 2000 2001)
---- ---- -----

Revenues.......................................... $ -- $ -- $ --
Operating expenses
Software development.......................... 2,267,185 1,019,222 5,001,445
General and administrative.................... 2,017,068 710,648 3,311,611
Depreciation expense.......................... 51,991 18,087 78,903
----------- ----------- -----------
Other (expense) income
Interest expense.............................. (116,924) -- (116,924)
Investment income............................. 14,647 62,327 101,651
----------- ----------- -----------
Net loss.......................................... (4,438,521) (1,685,630) (8,407,232)
Dividends on Series B preferred stock............. (256,410) (144,767) (482,955)
----------- ----------- -----------
Net loss applicable to common stockholders........ $(4,694,931) $(1,830,397) $(8,890,187)
----------- ----------- -----------
----------- ----------- -----------
</Table>

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 2001

Operating Expenses

General and Administrative. For the first nine months of 2000 and 2001,
general and administrative expenses increased to $2,017,000 from $711,000,
representing an increase of $1,306,000. The increase in absolute dollars is
attributable to the costs associated with increased staffing and the related
costs required to manage and support ISPSoft's operations. The major components
of the increase include general and administrative expenses of approximately
$695,000

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and sales and marketing expenses of approximately $611,000. The general and
administrative staff remained at two employees while the sales and marketing
staff increased from zero to two employees at September 30, 2000 and
September 30, 2001 respectively.

Software Development. Software development expenses increased to $2,267,000
in the first nine months of fiscal 2001 from $1,019,000 in 2000, resulting in an
increase of $1,248,000. This increase was primarily attributable to the increase
in the software development staff and an increase in the use of external
development consultants. Since the second quarter of 2000, all ISPSoft's
relationships with external development consulting firms have been 'arm's
length' transactions. Prior to that, one consulting firm used in the second half
of 1999 and the first quarter of 2000 was a related party. ISPSoft does not have
any common ownership interests with its external development consultants. The
major components of the increase include software development payroll expenses
of approximately $1,317,000 offset by a decrease in external development
consulting expenses of approximately $69,000. The software development staff
increased from fifteen to twenty-seven employees while the external development
consulting staff increased from zero to six consultants at September 30, 2000
and September 30, 2001 respectively. Approximately 18% of ISPSoft's current
staffing is through consulting firms. This provides ISPSoft an economic benefit
in that after a specific period of time has lapsed (usually 3 months), ISPSoft
has the option of hiring these talented individuals at a significantly reduced
hiring fee. This results in substantial savings over the long term because it
affords ISPSoft the opportunity to evaluate candidates prior to hiring, thus
reducing employee turnover.

Non-Operating Items

Other Expense (Income), net. Other expense increased by $165,000 in the
first nine months of fiscal 2001 from income of $62,000 for the same period of
2000. This increase reflects the interest expense on obligations of
approximately $117,000 plus the decrease in interest income from financial
institutions and notes receivable of approximately $48,000.

Provision For Income Taxes. ISPSoft recorded no provision for domestic
income taxes for the first quarter of fiscal 2001 and no provision for the same
periods in the prior fiscal year because ISPSoft had taxable losses for which no
significant benefit was recognized.

Net Loss. Year to date Net Loss for the period ended September 30, 2001 was
(4,694,931), compared to net loss of (1,830,397) for the comparable nine month
period in the prior year.

The following table represents ISPSoft's unaudited Statements of Operations
for the three-month periods ended September 30, 2001 and 2000. The results of
operations for any quarter are not necessarily indicative of the results to be
expected for any future period.

<Table>
<Caption>
(UNAUDITED) (UNAUDITED)
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
---- ----

Revenues.................................................... $ -- $ --
Operating expenses
Software development.................................... 879,327 402,055
General and administrative.............................. 608,760 463,126
Depreciation expense.................................... 18,817 17,493
----------- ---------
Other (expense) income
Interest expense........................................ (64,824) --
Investment income....................................... 3,206 35,553
----------- ---------
Net loss.................................................... (1,568,522) (847,121)
Dividends on Series B preferred stock....................... (86,409) (81,777)
----------- ---------
Net loss applicable to common stockholders.................. $(1,654,931) $(928,898)
----------- ---------
----------- ---------
</Table>

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COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 2001

Operating Expenses

General and Administrative. For the third quarter of 2000 and 2001, general
and administrative expenses increased to $609,000 from $463,000, representing an
increase of $146,000. The increase is attributable to the costs associated with
increased staffing and the related costs required to manage and support
ISPSoft's operations. The major components of the increase include general and
administrative expenses of approximately $146,000. The general and
administrative staff remained at two employees while the sales and marketing
staff increased from zero to two employees at September 30, 2000 and
September 30, 2001 respectively.

Software Development. Software development expenses increased to $879,000 in
the third quarter of fiscal 2001 from $402,000 in the third quarter of fiscal
2000, resulting in an increase of $477,000. This increase was primarily
attributable to the increase in the software development staff and an increase
in the use of external development consultants. The major components of the
increase include software development payroll expenses of approximately $429,000
and an increase in external development consulting expenses of approximately
$48,000. The software development staff increased from fifteen to twenty-seven
employees while the external development consulting staff increased from zero to
six at September 30, 2000 and September 30, 2001 respectively.

Non-Operating Items

Other Expense (Income), net. Other expense increased by $97,000 in the third
quarter of fiscal 2001 from $36,000 income for the same period of 2000. This
increase reflects the interest expense on obligations of approximately $65,000
plus the decrease in interest income from financial institutions and notes
receivable of approximately $32,000.

Net Loss. Net Loss for the quarter ended September 30, 2001 was (1,654,931),
compared to net loss of ($928,898) for the comparable three month period in the
prior year.

COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1999 AND 2000

Operating Expenses

General and Administrative. As above, general and administrative expenses
include those expenses of sales and marketing. General and administrative
expenses increased $1,295,000 in fiscal 2000 from $0 in 1999. The increase in
absolute dollars is attributable to the costs associated with increased staffing
and the related costs required to manage and support ISPSoft's operations. The
major components of the increase include administrative expenses of
approximately $814,000 and sales and marketing expenses of approximately
$481,000. The administrative staff increased from one to three employees while
the sales and marketing staff increased from zero to four employees at
December 31, 1999 and December 31, 2000 respectively. In addition, depreciation
expense increased by $26,912 in fiscal 2000.

Software Development. Software development increased to $1,678,000 in fiscal
2000 from $1,056,541 in fiscal 1999. This increase was primarily attributable to
increased staffing and related expenses required to support product development
activities, including development of the UPX products introduced in July 2001.

Non-Operating Items

Investment Income. Investment income increased to $87,000 for fiscal 2000
from $0 for fiscal 1999. This increase reflects the interest earned on capital
invested by shareholders.

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Provision for Income Taxes. ISPSoft recorded no provision for income taxes
in fiscal 2000 or 1999 as ISPSoft incurred losses during the period.

Liquidity and Capital Resources

At December 31, 2000, ISPSoft had $394,000 in cash, cash equivalents and
temporary cash investments, as compared to $23,000 at December 31, 1999, an
increase of $371,000. This increase is primarily attributable to equity
investment by the shareholders in fiscal 2000.

Cash Flows From Operating Activities. Cash used in operations was $2,428,000
during fiscal 2000, which was a $2,431,000 increase from the prior year. This
increase is attributed principally to the loss from operations offset by an
increase in other current assets and an increase in depreciation and
amortization and accounts payable and accrued liabilities. During the comparable
period of fiscal 1999, cash used in operating activities was attributable to the
loss from operations plus decreases in accounts payable and accrued liabilities.

Cash Flows From Investing Activities and Financing Activities. Net cash used
by investing activities was $276,000 for fiscal 2000 which consisted of
purchases of property and equipment. Net cash used by investing activities was
$5,000 for fiscal 1999, which consisted of purchases of property and equipment.
Net cash provided by financing activities for fiscal 2000 was $3,075,000
primarily consisting of $4,000,000 from the sale of Series B preferred stock,
less the redemption of $1,000,000 of Series A preferred stock and proceeds from
a note receivable of $70,000. Net cash provided by financing activities for
fiscal 1999 was $25,000 consisting of proceeds from the sale of Series A
preferred stock of $20,000 and common stock of $5,000.

ISPSoft believes that cash, cash equivalents and temporary investments and
cash flows from operations will be sufficient to fund operations, purchases of
capital equipment and research and development programs currently planned at
least through the end of July; however, DSET has pledged to fund ISPSoft
$500,000 a month through closing. Should the merger between ISPSoft and DSET not
be consummated for certain reasons, there will be an adverse effect on ISPSoft's
ability to continue as a going concern. Additionally, ISPSoft may be obligated
to pay to DSET a termination fee of $2,000,000. If the merger is not
consummated, expenses incurred in connection with the proposed merger, including
the possible termination fee described above, could have a material adverse
effect on ISPSoft's results of operations and financial condition.

Business Environment

ISPSoft has incurred significant net losses since its inception and had an
accumulated deficit of approximately $8,890,000 as of September 30, 2001.
ISPSoft is subject to the risks inherent in the operation of a new business
enterprise, and there can be no assurance that ISPSoft will be able to
successfully address these risks.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We believe that we are not subject to a material impact to its financial
position or results of operations relating to market risk associated with
foreign currency rates or derivative securities.

We believe the market risk exposure with regard to marketable securities
held in the investment portfolio is limited to changes in quoted market prices
for such securities based upon changes in interest rates. Based upon the
composition of our marketable securities at March 31, 2001, we do not believe an
adverse change in quoted market prices would be material to our results of
operations.

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ISPSOFT MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

<Table>
<Caption>
NAME AGE POSITIONS WITH ISPSOFT
---- --- ----------------------

Anand Desai............................ 53 Executive Vice President, Sales and Marketing
Hariharan Krishnan..................... 26 Director
Stephen Socolof........................ 41 Director
Bart Stuck............................. 54 Director
Binay Sugla, Ph.D...................... 41 Chief Executive Officer, Director
</Table>

Anand Desai was a consultant to ISPSoft upon its founding in April 1999 and
since April 2000, he has served as the company's Executive Vice President of
Sales and Marketing. From 1998 to 2000, Mr. Desai was a Vice President of
Marketing at Lara Technology/Networks. Mr. Desai also held various senior
marketing and account management positions from 1981 to 1998 with Network
General, SUN Microsystems, IBM and Digital Equipment Corporation. Mr. Desai
received a Masters in Business Administration degree from Boston University in
1981, a Masters in Engineering degree from Boston University in 1979 and a
Bachelor of Science, Engineering degree from Bangalore University in 1977.

Hariharan (Hari) Krishnan has been a director of ISPSoft since October 2000
and he was a member of ISPSoft's founding team. Prior to founding ISPSoft, Hari
Krishnan was a Development Manager in Network and Systems Management at Bell
Laboratories, where he designed and implemented Internet protocol management
products for security, discovery, and instrumentation applications from 1997 to
1999. He earned an M.S. degree in Computer Science from the University of
California at Los Angeles in 1997 and a Bachelor of Technology degree from IIT
Madras in 1996.

Stephen J. Socolof has been a director of ISPSoft since April 2000.
Mr. Socolof is a Vice President in the New Ventures Group of Lucent
Technologies, which is a venture incubator that creates and launches new
ventures based on Bell Labs technologies. He joined Lucent in April 1996 to
create and build the New Ventures Group, which has now launched over 30
companies. He also serves on the boards of several other companies affiliated
with the New Ventures Group. Prior to joining Lucent, Mr. Socolof spent eight
years with the management consulting firm Booz, Allen & Hamilton in the firm's
innovation practice. Mr. Socolof received an M.B.A. degree from The Amos Tuck
School at Dartmouth College and a B.A. degree in economics and a B.S. degree in
mathematical sciences from Stanford University.

Bart Stuck has been a director of ISPSoft since April 2000, when ISPSoft
completed its Series B preferred stock financing. From 1999 to the present,
Dr. Stuck has been a partner at Signal Lake Venture Fund, L.P. From 1985 to
1999, Dr. Stuck was affiliated with Business Strategies, LLC, a consulting firm
founded by Dr. Stuck focusing on company stage network computing and
telecommunications business opportunities. From 1972 to 1984, Dr. Stuck worked
at Bell Laboratories, where he held a variety of positions. Dr. Stuck holds a
ScD in Electrical Engineering (Communications and Control Theory) from the
Massachusetts Institute of Technology. Dr. Stuck is a director of eight private
venture-backed companies.

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BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION

No executive officer of ISPSoft 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 ISPSoft Board.

DIRECTOR COMPENSATION

Except for grants of stock options, directors of ISPSoft do not generally
receive compensation for services provided as a director. ISPSoft also does not
pay compensation for committee participation or special assignments of the
ISPSoft Board. Non-employee ISPSoft Board members are eligible for option grants
pursuant to the provisions of ISPSoft's 2000 Stock Plan.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires ISPSoft's executive officers and
directors and persons who own more than ten percent of a registered class of
ISPSoft's equity securities ('10% Stockholders') to file with the Commission and
the National Association of Securities Dealers, Inc. reports of ownership on
Form 3 and reports on changes in ownership on Form 4 or Form 5. Such executive
officers, directors and 10% Stockholders are also required by Commission rules
to furnish ISPSoft with copies of all applicable Section 16(a) forms that they
file.

EXECUTIVE COMPENSATION

Binay Sugla is ISPSoft's President and Chief Executive Officer and Anand
Desai is ISPSoft's Executive Vice President, Sales (collectively, the 'Named
Officers'). Mr. Sugla joined ISPSoft in April 2000 and Mr. Desai joined ISPSoft
in August 2000 and became an officer in January 2001. Mr. Sugla earns a base
salary of $180,000 per year and he has purchased 1.4 million shares of ISPSoft
common stock for $140,000. Mr. Sugla paid $135,000 of this purchase price by
executing a promissory note in favor of ISPSoft. Mr. Sugla also holds options to
purchase 652,090 shares of common stock of ISPSoft.

Mr. Desai earns a base salary of $160,000 per year and ISPSoft granted
Mr. Desai 50,000 shares of common stock upon his starting with ISPSoft.
Mr. Desai may also exercise the right to purchase 595,230 shares of ISPSoft's
common stock.

EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS

Except as follows, none of the Named Officers have employment agreements
with ISPSoft, and their employment may be terminated at any time. ISPSoft has
entered into a Stock Option Agreement with Mr. Sugla, President and Chief
Executive Officer of ISPSoft, which provides for certain adjustments and rights
upon a merger of ISPSoft under certain circumstances. Mr. Sugla is waiving his
rights to such adjustments. ISPSoft has entered into a Stock Purchase Agreement
with Mr. Sugla, which provides that the vesting of Mr. Sugla's stock award under
the agreement will be accelerated by one year in the event a material change to
Mr. Sugla's terms of employment.

In connection with the merger, Mr. Sugla will enter into an employment
agreement with DSET. This employment agreement is contingent upon the
consummation of the merger and will become effective and replace Mr. Sugla's
previous agreements (described above) upon completion of the merger. For a
description of these employment agreements, see 'The Merger Agreement -- Other
Agreements -- Employment Agreement and Offer Letters of Employment' on page 83.

STOCK PLANS

Pursuant to the merger agreement, DSET will assume the outstanding options
to purchase shares of ISPSoft common stock. See 'The Merger
Agreement -- Consideration' on page 70 for a detailed description of the
assumption of these options. Each officer, employee or consultant who exercises
his or her ISPSoft options prior to the merger will receive shares of DSET
common

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stock upon completion of the merger. All ISPSoft officers and directors hold
outstanding ISPSoft options granted under ISPSoft's stock option plan. ISPSoft
has entered into a Stock Purchase Agreement with Mr. Sugla, which provides that
the vesting of Mr. Sugla's stock award under the agreement will be accelerated
by one year in the event a material change to Mr. Sugla's terms of employment.

ISPSOFT CERTAIN TRANSACTIONS

ISPSoft has issued outstanding promissory notes to the following entities
for the following principal amounts: (i) SGM Capital Limited, $300,000;
(ii) Lucent Technologies, Inc., $400,000; (iii) Signal Lake Venture Fund, LP,
$400,000; and (iv) DSET Corporation, $500,000. SGM Capital Limited, Lucent
Technologies, Inc. and Signal Lake Venture Fund, LP each own more than 5% of a
class of ISPSoft's securities. See 'Security Ownership of Certain Beneficial
Holders and Management of ISPSoft' on page 140. DSET will assume and repay
certain outstanding indebtedness due under these loans.

ISPSoft has issued a warrant to Anand Desai, ISPSoft's Executive Vice
President, Sales, for 200,000 shares of common stock with an exercise price of
$2.50 per share. Without further consideration, Mr. Desai and ISPSoft have
agreed that this warrant will expire unexercised prior to the closing of the
merger.

On April 19, 2000, ISPSoft entered into an Intellectual Property Agreement
with Lucent Technologies, Inc. Lucent Technologies, amongst other things, is
engaged in the business of developing software solutions for Internet service
providers to better manage their networks. Lucent agreed to license to ISPSoft
certain software applications relating to telecommunications services valued at
$200,000 in exchange for 2,000,000 shares of ISPSoft stock.

The agreement grants ISPSoft a royalty-free and paid up, worldwide,
non-transferable, perpetual license to use, modify, sell, lease or sublicense.
ISPSoft agrees to indemnify and save Lucent harmless from any and all claims,
suits, proceedings or demands by third parties to the extent such claims arise
out of the use of this software. ISPSoft also agrees not use Lucent's trade name
in connection with the software and will hold in confidence the source code and
technical information related to the software.

The software referred to above means Lucent's human and machine-readable
softwre code known as ISP Network Management Software, made up of the following
set of programs:

IP NETWORK CONFIGURATOR (IPNC). A program that automates most of the tasks
associated with setting up Internet routers (Internet routers direct information
flow).

NETWORK AND SERVICES ANOMALY DETECTOR (NSAD). A program for the up-front
detection of performance problems in networks and services.

FIT: EVENT CORRELATION LANGUAGE. A software program to isolate existing
problems in networks.

IP TOPOLOGY DISCOVERY. A program for detecting and identifying hardware such
as routers, servers, and firewalls in networks.

ABLE: ACTIVE MANAGEMENT FRAMEWORK. A distributed management-based technique
that greatly reduces the complexity of management software.

XNAMI: TOOLKIT FOR IMPLEMENTING DYNAMIC MIBS. A group of programs for
upgrading the functionality of the management support programs 'on the fly.'

NM VISUALIZATION TOOLKIT. A group of software programs to enable meaningful
3-D visualization of the data in network management programs.

EE-QOS BANDWIDTH BROKER. This program provides Quality Control of parameters
such as bandwidth for compliance with Service Level Agreements (SLA).

POLICY PLANNER. This program allows high-level planning and control of
various network management programs.

130

<Page>

SNMP-NAT. Program for the management of two or more private networks that
use the same address space from a single management station.

H.323 PROXY FOR FIREWALLS. H.323 is an International Telecommunication
Union's (ITU) recommendation for visual telephone systems and equipment (video
conferencing) over packet-based networks. The H.323 proxy application provides
interoperability between this system and IP-based Firewalls.

On January 29, 2001, ISPSoft entered into a Security Agreement with DSET,
Lucent Technologies, Inc., Signal Lake Venture Fund, L.P. and SGM Capital
Limited, as amended. Pursuant to such agreement, ISPSoft has pledged all of its
assets to secure loans made in connection with such agreement.

On January 29, 2001, ISPSoft entered into a Comprehensive Preferred Escrow
Agreement with DSI Technology Escrow Services, Inc., Lucent Technologies, Inc.,
Signal Lake Venture Fund, L.P. and SGM Capital Limited. Under this agreement, in
certain circumstances, certain of ISPSoft's assets, including source code, would
be released to the other parties to the agreement.

On June 26, 2001 ISPSoft and DSET entered into a secured promissory note
agreement which superceded and replaced a $500,000 loan made on May 9, 2001. The
promissory note agreement calls for four installments of $500,000, inclusive of
the original $500,000 loan of May 9, 2001, to be loaned from DSET to ISPSoft at
an interest rate of 8%. As of June 30, 2001 ISPSoft's loan balance to DSET was
$1 million plus accrued interest of $6,000. The final two installments of
$500,000 were made by DSET to ISPSoft in July and August 2001, respectively. As
of August 31, 2001, the entire loan amount of $2.0 million has been disbursed to
ISPSoft.

On September 26, 2001 ISPSoft issued to DSET an additional promissory note
in the aggregate principal amount of $750,000. Pursuant to the terms of such
note, DSET loaned to ISPSoft $250,000 on each of September 26, 2001,
October 10, 2001 and October 24, 2001.

On November 5, 2001 ISPSoft issued to DSET an additional promissory note in
the aggregate principal amount of $850,000. Pursuant to the terms of such note,
DSET loaned to ISPSoft $275,000 on each of November 8, 2001 and November 21,
2001 and $300,000 on December 6, 2001.

On December 19, 2001 ISPSoft issued to DSET an additional promissory note in
the principal amount of $250,000 to be disbursed to ISPSoft on December 26,
2001. All amounts under such notes are, or will be upon payment, secured. DSET
may disburse additional funds to ISPSoft prior to the consummation of the merger
pursuant to similar arrangements.

131

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following unaudited pro forma financial statements give effect to the
acquisition by DSET Corporation of ISPSoft Inc. in a transaction to be accounted
for as a purchase. The unaudited pro forma balance sheet is based on the
individual balance sheets of DSET Corporation and ISPSoft Inc. incorporated by
reference or appearing elsewhere in this joint proxy statement/prospectus and
has been prepared to reflect the acquisition by DSET Corporation of ISPSoft Inc.
as of September 30, 2001. The unaudited pro forma statement of operations is
based on the individual statements of operations of DSET Corporation and of
ISPSoft Inc. incorporated by reference or appearing elsewhere in the joint proxy
statement/prospectus and combines the results of operations of DSET Corporation
and ISPSoft Inc. (to be acquired by DSET Corporation on or about December 31,
2001) for the year ended December 31, 2000 and the nine months ended
September 30, 2001 as if the acquisition occurred on January 1, 2000. On
August 8, 2001 the Board of Directors of DSET declared a one-for-four reverse
stock split to holders of record as of the close of trading on August 21, 2001.
All references to number of shares and per share information in the unaudited
pro forma financial statements have been adjusted to reflect the stock split on
a retroactive basis.

DSET expects to incur merger-related pre-tax charges covering the costs of
the merger principally in the quarter in which the merger is consummated. Such
pre-tax charges, which are currently estimated to be in the range of $1.7
million, will primarily consist of the direct costs of the merger, including
fees to financial advisors, legal counsel and independent accountants and
printing and other fees and expenses relating to holding a meeting of
shareholders and preparing this joint proxy statement/prospectus. Moreover,
additional unanticipated expenses may be incurred in connection with this
transaction.

The unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the financial position or operating
results that would have been achieved if the merger had been consummated as of
the beginning of the periods presented, nor are they necessarily indicative of
future operating results or financial position of DSET. No material pro forma
adjustments are required to conform the financial reporting policies of DSET and
ISPSoft for the periods presented. However, on a prospective basis, DSET will
review the accounting practices of ISPSoft to ensure consistency with those of
DSET. The pro forma financial information does not give effect to any costs
savings which may result from the integration of DSET and ISPSoft operations,
nor are there any tax benefits that may result from operating losses of ISPSoft.

132

DSET CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 2001

<Table>
<Caption>
HISTORICAL PRO FORMA
------------------------- --------------------------------
DSET(1) ISPSOFT(1) ADJUSTMENTS(3) COMBINED
------- ---------- -------------- --------

ASSETS
Current assets:
Cash and cash equivalents............ $17,294,360 $ 133,365 $(2,350,000)(A) $15,077,725
Marketable securities................ 1,071,011 -- -- 1,071,011
Accounts receivable.................. 839,341 -- -- 839,341
Income Taxes receivable.............. 396,851 -- -- 396,851
Prepaid licenses..................... 923,685 -- -- 923,685
Prepaid expenses and other current
assets............................. 836,625 22,548 (300,000)(C) 559,173
----------- ----------- ----------- -----------
Total current assets............. 21,361,873 155,913 (2,650,000) 18,867,786
Acquired technology, net............. -- -- 4,500,000 (B) 4,500,000
Fixed assets, net.................... 2,421,391 348,902 -- 2,770,293
Goodwill, net........................ 28,507 -- 10,319,789 (B) 10,348,296
Loans to ISPSoft Inc. ............... 2,250,000 -- (2,250,000)(F) --
Other assets, net.................... 444,642 50,262 500,000 (B) 994,904
----------- ----------- ----------- -----------
Total assets..................... $26,506,413 $ 555,077 $10,419,789 $37,481,279
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses........................... $ 3,790,827 $ 511,639 $ 1,400,000 (C) $ --
-- -- 1,000,000 (D) 6,702,466
Accrued restructuring expenses....... 2,464,782 -- -- 2,464,782
Deferred revenues.................... 3,030,343 -- -- 3,030,343
Dividend payable..................... -- 482,955 (482,955)(E) --
Current portion of notes payable..... 484,466 3,575,000 (2,250,000)(F) 1,809,466
Current portion of capital lease
obligation......................... 138,367 6,483 -- 144,850
----------- ----------- ----------- -----------
Total current liabilities........ 9,908,785 4,576,077 (332,955) 14,151,907
----------- ----------- ----------- -----------
Deferred rent............................ 538,613 -- -- 538,613
Capital lease obligation................. 318,587 5,565 -- 324,152
----------- ----------- ----------- -----------
Total liabilities................ 10,765,985 4,581,642 (332,955) 15,014,672
----------- ----------- ----------- -----------
Redeemable preferred stock............... -- 4,000,000 (4,000,000)(G) --
Commitments and contingencies
Shareholders' equity:
Preferred stock...................... -- 1,200,000 (1,200,000)(G) --
Common stock......................... 50,146,240 1,256,717 (1,256,717)(G) --
-- -- 6,378,079 (H) --
-- -- 667,100 (I) 57,191,419
Note receivable...................... -- (135,000) -- (135,000)
Deferred stock compensation.......... (13,631) (458,095) (184,000)(B) --
458,095 (G) (197,631)
Accumulated deficit.................. (34,208,959) (8,890,187) 8,890,187 (G) (34,208,959)
Accumulated other comprehensive
income............................. 7,701 -- -- 7,701
less: Treasury stock................. (190,923) (1,000,000) 1,000,000 (G) (190,923)
----------- ----------- ----------- -----------
Total shareholders' equity....... 15,740,428 (8,026,565) 14,752,744 22,466,607
----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity........... $26,506,413 $ 555,077 $10,419,789 $37,481,279
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</Table>

See notes to Unaudited Pro Forma Financial Statements

133

DSET CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001

<Table>
<Caption>
HISTORICAL PRO FORMA
-------------------------- -----------------------------
DSET(1) ISPSOFT(1) ADJUSTMENTS(4) COMBINED
------- ---------- -------------- --------

Revenues:
License revenues.................... $ 2,337,019 $ -- $ -- $ 2,337,019
Service revenues.................... 5,709,521 -- -- 5,709,521
------------ ----------- --------- ------------
Total revenues.................. 8,046,540 -- -- 8,046,540
------------ ----------- --------- ------------
Cost of revenues:
License revenues.................... 1,156,874 -- -- 1,156,874
Service revenues.................... 4,638,762 -- -- 4,638,762
------------ ----------- --------- ------------
Total cost of revenues.......... 5,795,636 -- -- 5,795,636
------------ ----------- --------- ------------
Gross profit.................... 2,250,904 -- -- 2,250,904
------------ ----------- --------- ------------
Operating expenses:
Sales and marketing................. 5,951,936 -- -- 5,951,936
Research and product development.... 8,595,005 2,319,176 19,000 (K) 10,933,181
General and administrative.......... 4,383,867 2,017,068 100,000 (J) --
-- -- 19,000 (K) 6,519,935
Bad debt expense.................... 986,708 -- -- 986,708
Amortization of goodwill and other
intangibles....................... 273,581 -- -- 273,581
Restructuring and other charges..... 14,789,014 -- -- 14,789,014
------------ ----------- --------- ------------
Total operating expenses........ 34,980,111 4,336,244 138,000 39,454,355
------------ ----------- --------- ------------
Operating loss.................. (32,729,207) (4,336,244) (138,000) (37,203,451)
Interest expense and other income
(expense)............................. (26,043) (116,924) -- (142,967)
Interest income and realized gains and
losses on marketable securities....... 1,363,045 14,647 (153,000)(L) 1,224,692
------------ ----------- --------- ------------
Loss before income taxes................ (31,392,205) (4,438,521) (291,000) (36,121,726)
Provision for income taxes.............. 252,200 -- -- 252,200
------------ ----------- --------- ------------
Net loss................................ $(31,644,405) $(4,438,521) $(291,000) $(36,373,926)
------------ ----------- --------- ------------
------------ ----------- --------- ------------
Dividends on Series B preferred stock... -- (256,410) 256,410 (M) --
------------ ----------- --------- ------------
Net loss applicable to common
stockholders.......................... $(31,644,405) $(4,694,931) $ (34,590) $(36,373,926)
------------ ----------- --------- ------------
------------ ----------- --------- ------------
Net loss per common share -- basic and
diluted............................... $ (10.90) $ (7.02)
------------ ------------
------------ ------------
Weighted average number of common shares
and common equivalent shares
outstanding........................... 2,903,228 5,184,372
------------ ------------
------------ ------------
</Table>

See notes to Unaudited Pro Forma Financial Statements

134

DSET CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000

<Table>
<Caption>
HISTORICAL PRO FORMA
-------------------------- ------------------------------
DSET(1) ISPSOFT(1) ADJUSTMENTS(4) COMBINED
------- ---------- -------------- --------

Revenues:
License revenues................... $ 32,850,731 $ -- $ -- $ 32,850,731
Service revenues................... 14,191,535 -- -- 14,191,535
------------ ----------- --------- -------------
Total revenues................. 47,042,266 -- -- 47,042,266
------------ ----------- --------- -------------
Cost of revenues:
License revenues................... 3,990,728 -- -- 3,990,728
Service revenues................... 11,131,206 -- -- 11,131,206
------------ ----------- --------- -------------
Total cost of revenues......... 15,121,934 -- -- 15,121,934
------------ ----------- --------- -------------
Gross profit....................... 31,920,332 -- -- 31,920,332
------------ ----------- --------- -------------
Operating expenses:
Sales and marketing................ 12,128,855 -- -- 12,128,855
Research and product development... 18,467,309 1,704,631 57,000 (K) 20,228,940
General and administrative......... 6,925,389 1,294,543 400,000 (J) --
-- -- 57,000 (K) 8,676,932
Bad debt expense and other
charges.......................... 13,378,237 -- -- 13,378,237
Amortization of goodwill and other
intangibles...................... 418,736 -- -- 418,736
Restructuring and other charges.... 2,248,100 -- -- 2,248,100
------------ ----------- --------- -------------
Total operating expenses....... 53,566,626 2,999,174 514,000 57,079,800
------------ ----------- --------- -------------
Operating loss................. (21,646,294) (2,999,174) (514,000) (25,159,468)
Interest expense and other income
(expense)............................ (182,857) -- -- (182,857)
Interest income and realized gains and
losses on marketable securities...... 2,114,159 87,004 (204,000)(L) 1,997,163
------------ ----------- --------- -------------
Loss before income taxes............... (19,714,992) (2,912,170) (718,000) (23,345,162)
(Benefit) from income taxes............ (902,631) -- -- (902,631)
------------ ----------- --------- -------------
Net loss............................... $(18,812,361) $(2,912,170) $(718,000) $ (22,442,531)
------------ ----------- --------- -------------
------------ ----------- --------- -------------
Dividends on Series B preferred
stock................................ -- (226,545) 226,545 (M) --
------------ ----------- --------- -------------
Net loss applicable to common
stockholders......................... $(18,812,361) $(3,138,715) $(491,455) $ (22,442,531)
------------ ----------- --------- -------------
------------ ----------- --------- -------------
Net loss per common share -- basic and
diluted.............................. $ (6.61) $ (4.38)
------------ -------------
------------ -------------
Weighted average number of common
shares and common equivalent shares
outstanding.......................... 2,846,959 5,128,103
------------ -------------
------------ -------------
</Table>

See notes to Unaudited Pro Forma Financial Statements

135

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

1. These columns reflect the historical financial position and results of
operations of DSET and ISPSoft.

2. For the purpose of these pro forma financial statements, equity consideration
has been calculated based on Emerging Issues Task Force ('EITF') 99-12,
'Accounting for Formula Arrangements under EITF 95-19'. For this calculation,
DSET used the average market price for a few days before and after the merger
was agreed to and announced, June 26, 2001.

<Table>

Common shares of ISPSoft at September 30, 2001 (including
the preferred stock on an as-converted to common stock
basis).................................................... 24,619,144
Common stock exchange ratio per share....................... 0.087648
-----------
Equivalent DSET common shares............................... 2,157,838
DSET common stock to be issued to holders of Series B
Preferred Stock........................................... 123,306
-----------
Total DSET common shares to be issued................... 2,281,144
DSET common stock share price based on the average closing
price based on a few days before and after the merger was
agreed to and announced................................... $ 2.796
-----------
Sub-total -- DSET common stock equity consideration..... $ 6,378,079
ISPSoft common stock options to be replaced by DSET stock
options................................................... 2,722,510
DSET common stock exchange ratio per share.................. 0.087648
-----------
DSET common stock options resulting from the conversion of
ISP common stock options in the merger.................... 238,591
Estimated fair value per option............................. $ 2.796
-----------
Sub-total -- DSET common stock options equity
consideration......................................... $ 667,100
Cash consideration.......................................... $ 1,000,000
Liability for earn-out payments............................. $ 1,000,000
Estimated professional fees................................. $ 1,700,000
-----------
Sub-total -- Estimated payments......................... $10,745,179
Net liabilities of ISPSoft.................................. $ 2,083,610
Additional liabilities through consummation date............ $ 1,350,000
Assumption of Lucent Promissory Note........................ $ 400,000
Assumption of Signal Lake Promissory Note................... $ 400,000
Assumption of other Notes................................... $ 525,000
-----------
Sub-total -- Net liabilities of ISPSoft................. $ 4,758,610
Total Consideration..................................... $15,503,789
Pro forma adjustments relating to:
Acquired technology......................................... $(4,500,000)
Covenant not to compete..................................... $ (500,000)
Deferred stock compensation................................. $ (184,000)
-----------
Preliminary goodwill........................................ $10,319,789
-----------
</Table>

Upon closing of the merger, the total consideration will be allocated to the
specific identifiable tangible and intangible assets and liabilities of
ISPSoft after the completion of third-party appraisals during the allocation
period specified by Statement of Financial Accounting Standards No. 38,
'Accounting for Preacquisition Contingencies of Purchased Enterprises.' A
preliminary allocation of the purchase price has been made to certain
identifiable tangible and intangible assets based on information available to
the management of DSET at the date of the preparation of the accompanying pro
forma financial statements. The final purchase accounting allocation may also
include certain charges to net income relating to acquired technology.

136

3. The following adjustments were made to the balance sheet as of September 30,
2001 to give effect to the transaction:

A) Cash consideration to be paid by DSET.

B) To record the acquired technology, goodwill, covenant not to compete
and deferred stock compensation.

C) Estimated professional fees to financial advisors, legal counsel and
accountants totaling $1.7 million of which $300,000 has been
incurred through September 30, 2001 and recorded in prepaid expenses
and other current assets.

D) Additional consideration in cash or shares expected to be paid based
on future sales from ISPSoft products. In accordance with EITF
00-19, this is recorded as a liability due the fact that the number
of shares to be issued as of the announcement date is unknown.

E) Elimination of ISPSoft dividends accrued on Series B Preferred Stock
as these amounts will be converted to DSET common stock.

F) Elimination of amounts advanced by DSET to ISPSoft.

G) Elimination of the historical equity accounts of ISPSoft.

H) Total common stock equity consideration.

I) Total common stock options consideration.

4. The following adjustments were made to the income statement for the
nine-months ended September 30, 2001 and for the year ended December 31, 2000
to give effect to the transaction:

J) Amortization of the covenant not to compete is based on the
contractual useful life of fifteen months.

K) Amortization of deferred stock compensation is based upon the vesting
schedule of ISPSoft stock options that will be converted to DSET
stock options in the merger.

L) Reduction of interest income for the cash portion of the purchase
price, assuming an effective interest rate of 6% per annum, which
represents the average short-term interest earned on the Company's
investment balances.

M) Elimination of ISPSoft preferred stock dividends.

5. DSET has the option of issuing more shares to ISPSoft in order to qualify for
a tax-free reorganization credit. This determination will be made at the
consummation of the merger. In addition, DSET has the option of settling the
earn-out in shares (as opposed to cash settlement). This determination will
be made if and when such earn-out obligation is incurred. As a result, the
above pro forma EPS calculation may decrease based on the number of
additional shares that DSET issues to the shareholders of ISPSoft.

137

<Page>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
AND MANAGEMENT OF DSET

There were, as of December 7, 2001, approximately 65 holders of record and
approximately 4,000 beneficial holders of DSET's common stock. The following
table sets forth certain information, as of October 31, 2001, with respect to
holdings of DSET's common stock by (i) each person known by DSET to be the
beneficial owner of more than 5% of the total number of shares of common stock
outstanding as of such date, based on currently available Schedules 13D and 13G
filed with the SEC, (ii) each of DSET's directors and DSET Named Executives, and
(iii) all directors and officers as a group.

<Table>
<Caption>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(1) CLASS(2)
--------------------------------------- ------------ --------

(i) Certain Beneficial Owners:
FMR Corporation ........................................ 286,250 10.38%
82 Devonshire Street
Boston, MA 02109-3614
Martinson Family Foundation and Related Party .......... 260,400(3) 9.44%
1009 Lenox Drive
Lawrenceville, NJ 08648
Credit Suisse First Boston ............................. 199,637 7.24%
11 Madison Avenue
New York, NY 10010
S. Daniel Shia ......................................... 171,317(4) 6.21%
5553 Perugia Circle
San Jose, CA 95138

(ii) Directors and DSET Named Executives:
William P. McHale, Jr................................... 132,670(5) 4.63%
Jacob J. Goldberg....................................... 4,583(6) *
C. Daniel Yost.......................................... 4,583(7) *
Andrew D. Lipman........................................ 4,583(8) *
Bruce M. Crowell........................................ 20,954(9) *
Jeffrey S. Gill......................................... 4,325(10) *
(iii) All Directors and officers as a group (7 persons)..... 171,698(11) 5.93%
</Table>

- ---------

* Less than 1%

(1) Except as set forth in the footnotes to this table and subject to
applicable community property law, the persons named in the table have sole
voting and investment power with respect to all shares.

(2) Applicable percentage of ownership for each holder is based on 2,757,200
shares of common stock outstanding on October 31, 2001, excluding 150,200
shares of common stock held in treasury upon repurchase by DSET, plus any
common stock equivalents and presently exercisable stock options or
warrants held by each such holder, and options or warrants held by each
such holder which will become exercisable within 60 days after October 31,
2001.

(3) Includes 85,400 shares of common stock held by John H. Martinson and
175,000 shares of common stock held by the Martinson Family Foundation for
which Mr. Martinson serves as a trustee.

(4) Includes 12,302 shares of common stock held by Mr. Shia's wife.

(5) Includes 110,100 shares of common stock underlying options, which are or
may be exercisable as of October 31, 2001 or 60 days after such date.
Includes 4,002 shares held by Mr. McHale's wife and 639 shares held by Mr.
McHale's minor child.

(6) Includes 4,583 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or 60 days after such date.
(footnotes continued on next page)

138

<Page>
(footnotes continued from previous page)

(7) Includes 4,583 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or sixty days after such date.

(8) Includes 4,583 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or sixty days after such date.

(9) Includes 11,094 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or sixty days after such date.

(10) Includes 3,500 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or sixty days after such date.

(11) See Notes 5 through 10.

139

<Page>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
AND MANAGEMENT OF ISPSOFT

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of October 31, 2001 certain information
with respect to shares beneficially owned by (i) each person who is known by
ISPSoft to be the beneficial owner of more than 5% of ISPSoft's outstanding
shares of common stock, (ii) each of ISPSoft's directors, and the executive
officers named in the Summary Compensation Table, and (iii) all current
directors and executive officers as a group. Beneficial ownership has been
determined in accordance with Rule 13d-3 under the Exchange Act. Under this
rule, certain shares may be deemed to be beneficially owned by more than one
person (if, for example, persons share the power to vote or the power to dispose
of the shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire shares (for example, upon exercise
of an option or warrant) within 60 days of the date as of which the information
is provided; in computing the percentage ownership of any person, the amount of
shares is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of such acquisition rights. As a result,
the percentage of outstanding shares of any person as shown in the following
table does not necessarily reflect the person's actual voting power at any
particular date.

Unless otherwise indicated, the address for each listed shareholder is: c/o
ISPSoft Inc., 661 Shrewsbury Avenue, Shrewsbury, New Jersey 07702.

<Table>
<Caption>
AMOUNT
AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------------------ --------- --------

SGM Capital Limited(1) ..................................... 9,000,000 36.73%
Guiness Flight House, P.O. Box 290
Guernsey, GYI3RP, Singapore
Lucent Technologies, Inc.(2) ............................... 8,768,108 35.78%
Stephen Socolof
600 Mountain Avenue
Murray Hill, NJ 07974
Signal Lake Venture Fund, L.P.(3) .......................... 2,256,036 9.21%
Barton W. Stuck
578 Post Road East
Suite 667
Westport, CT 06880
Binay Sugla(4).............................................. 1,752,090 7.05%
Hariharan Krishnan(5)....................................... 1,029,010 4.19%
Anand Desai(6).............................................. 645,230 2.57%
All executive officers and directors as a group (5 14,450,474 56.71%
persons)..................................................
</Table>

- ---------

(1) The principal owners of SGM Capital Limited are GFT Directors Limited and
Finistere Directors Limited, which entities share voting powers of the
ISPSoft capital stock held of record by SGM Capital Limited. Keith
Turberville, Managing Director of SGM Capital Limited, exercises sole voting
control of the ISPSoft shares held by SGM. None of these entities or
individuals own or control any interest in ISPSoft other than that interest
held by SGM Capital Limited.

(2) Consists of 2,000,000 shares of common stock held of record by NV Partners
II LP and 6,586,674 shares of common stock issuable upon conversion of
Series B preferred stock held of record by NV Partners II LP. NV Partners
II LP is a wholly-owned subsidiary of Lucent Technologies, Inc. Mr. Socolof,
one of ISPSoft's directors, is an affiliate of NV Partners II LP. Mr.
Socolof disclaims beneficial ownership of these shares.

(footnotes continued on next page)

140

<Page>
(footnotes continued from previous page)

(3) Represents 2,195,558 shares of common stock issuable upon conversion of
Series B preferred stock held of record by Signal Lake Venture Fund, L.P.
Dr. Stuck, one of our directors, is a partner of Signal Lake. Barton W.
Stuck and Michael Weingarten share voting control of the ISPSoft shares
beneficially owned by Signal Lake. Dr. Stuck disclaims beneficial ownership
of Signal Lake's shares. The general partner of Signal Lake Venture Fund,
L.P. and the sole entity with voting powers of the ISPSoft capital stock
held of record by Signal Lake Venture Fund, L.P. is Signal Lake, LLC. The
managing members of Signal Lake, LLC are Michael E. Weingarten and The Stuck
Family Limited Partnership (which has Barton W. Stuck as its General
Partner). None of these entities, limited partners, or individuals own or
control any other interest in ISPSoft other than that interest held by
Signal Lake Venture Fund, L.P.

(4) Includes 352,090 shares issuable upon exercise of stock options exercisable
within 60 days of October 31, 2001.

(5) Includes 29,010 shares issuable upon exercise of stock options exercisable
within 60 days of October 31, 2001.

(6) Includes 595,230 shares issuable upon exercise of stock options exercisable
within 60 days of October 31, 2001.

141

<Page>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND
MANAGEMENT OF DSET FOLLOWING THE MERGER

The following table sets forth certain pro forma information as of October
31, 2001 as to the number of shares of DSET common stock that will be
beneficially owned, assuming consummation of the merger:

each person that beneficially owns more than 5% of the outstanding shares
of DSET common stock;

each director of DSET;

the Chief Executive Officer and the four other most highly compensated
executive officers of DSET; and

DSET executive officers and directors as a group.

Except as indicated by the notes to the following table, the holders listed
below will have sole voting power and investment power over the shares
beneficially held by them. The table below includes shares subject to options,
which will be exercisable within 60 days following October 31, 2001. All
percentages assume the issuance of 2,281,144 shares of DSET common stock in the
merger and that the options of the particular person or group in question and no
others, have been exercised.

<Table>
<Caption>
PRO FORMA BENEFICIAL
OWNERSHIP
----------------------------
NAME OF BENEFICIAL OWNER SHARES(1) PERCENT(2)
------------------------ --------- ----------

5% Beneficial Owners
Lucent Technologies, Inc ................................... 814,752(3) 16.17%
c/o Stephen Socolof
600 Mountain Avenue
Murray Hill, NJ 07974
SGM Capital Limited ........................................ 788,837 15.66%
Guiness Flight House, P.O. Box 290
Guernsey, GYI3RP, Singapore
FMR Corporation ............................................ 286,250 5.68%
82 Devonshire Street
Boston, MA 02109-3614
Signal Lake Venture Fund, L.P. ............................. 274,805(4) 5.45%
c/o Barton W. Stuck
578 Post Road East
Suite 667
Westport, CT 06880
Martinson Family Foundation and Related Party .............. 260,400(5) 5.17%
1009 Lenox Drive
Lawrenceville, NJ 08648
Directors and Named Executives
William P. McHale, Jr....................................... 132,670(6) 2.58%
Binay Sugla................................................. 153,711(7) 3.03%
Jacob J. Goldberg........................................... 4,583(8) *
C. Daniel Yost.............................................. 4,583(9) *
Andrew D. Lipman............................................ 4,583(10) *
Arun Inam................................................... -- *
Carl Pavarini............................................... -- *
Bruce M. Crowell............................................ 20,954(11) *
Jeffrey S. Gill............................................. 4,325(12) *
All directors and executive officers as a group (9 325,409(13) 6.25%
individuals)..............................................
</Table>

- ---------

* Less than 1%
(footnotes continued on next page)

142

<Page>
(footnotes continued from previous page)

(2) Applicable percentage of ownership for each holder is based on (a)
5,038,344 shares of common stock (2,757,200 shares of DSET common stock
outstanding as of October 31, 2001 plus 2,281,144 shares of DSET common
stock to be issued to ISPSoft shareholders upon consummation of the
merger), plus (b) any DSET common stock equivalents and presently
exercisable stock options or warrants held by each such holder, and options
or warrants held by each such holder which will become exercisable within
60 days after October 31, 2001.

(3) Includes 593,215 shares of common stock to be issued upon conversion of
shares of ISPSoft Series B preferred stock held of record by NV
Partners II LP and 46,240 additional shares of common stock to be issued in
connection with the merger. NV Partners II LP is a wholly-owned subsidiary
of Lucent.

(4) Includes 197,739 shares of common stock to be issued upon conversion of
shares of ISPSoft Series B preferred stock held by Signal Lake and 77,066
additional shares of common stock to be issued in connection with the
merger.

(5) Includes 85,400 shares of common stock held by John H. Martinson and
175,000 shares of common stock held by the Martinson Family Foundation for
which Mr. Martinson serves as a trustee.

(6) Includes 110,100 shares of common stock underlying options, which are or
may be exercisable as of October 31, 2001 or 60 days after such date.
Includes 4,002 shares held by Mr. McHale's wife and 639 shares held by Mr.
McHale's minor child.

(7) Includes 31,003 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or 60 days after such date.

(8) Includes 4,583 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or 60 days after such date.

(9) Includes 4,583 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or sixty days after such date.

(10) Includes 4,583 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or sixty days after such date.

(11) Includes 11,094 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or 60 days after such date.

(12) Includes 3,500 shares of common stock underlying options, which are or may
be exercisable as of October 31, 2001 or sixty days after such date.

(13) See Notes 6 through 12.

143

DESCRIPTION OF DSET CAPITAL STOCK

This section summarizes the terms of DSET's capital stock. Because this
summary does not address all of the information that may be important to you,
you should read the more detailed provisions of DSET's certificate of
incorporation and bylaws.

GENERAL

As of the date of this joint proxy statement/prospectus, DSET is authorized
to issue up to 10,000,000 shares of DSET common stock, no par value, and
5,000,000 shares of preferred stock, no par value. The issued and outstanding
shares of DSET common stock are, and the shares that DSET will issue in
connection with the merger will be, when authorized, approved, issued and
delivered subject to the terms of the merger agreement, fully paid and
nonassessable. As of December 7, 2001, approximately 2,757,200 shares of DSET
common stock were issued and outstanding, held by 65 shareholders of record, and
no shares of DSET preferred stock issued and outstanding.

DSET COMMON STOCK

Each holder of DSET common stock is entitled to one vote per share of DSET
common stock held of record by the holder. Holders of DSET common stock have no
preemptive, redemption or conversion rights. The holders of DSET common stock
are only entitled to receive dividends when and as declared by the DSET board
out of funds legally available for payments of dividends. Upon DSET's
liquidation, dissolution or winding up, the holders of DSET common stock may
share ratably in DSET's net assets after payment of liquidating distributions to
holders of DSET preferred stock, if any. The registrar and transfer agent for
the DSET common stock is The American Stock Transfer and Trust Company.

DSET PREFERRED STOCK

The DSET board has the power, without further vote of shareholders, to
authorize the issuance of up to 5,000,000 shares of DSET preferred stock and to
fix and determine the terms, limitations and relative rights and preferences of
any shares of DSET preferred stock. This power includes the authority to
establish voting, dividend, redemption, conversion, liquidation and other rights
of any such shares. Dividend, conversion, exchange and redemption provisions to
the extent that some or all of these features may be present when shares of DSET
preferred stock are issued, could have an adverse effect on the availability of
earnings for distribution to the holders of DSET common stock or for other
corporate purposes.

NEW JERSEY LAW AND BYLAW PROVISIONS

DSET is subject to the provisions of Section 14A:10A-1 through 14A:10A-6 of
the New Jersey Business Corporation Act. Section 14A:10A-4 prohibits a publicly
held New Jersey corporation from engaging in a 'business combination' with an
'interested shareholder' for a period of five years following that interested
shareholder's stock acquisition date, unless the business combination is
approved in a prescribed manner. A 'business combination' includes mergers,
asset sales and other transactions resulting in a financial benefit to the
interested shareholder. In general, an 'interested shareholder' is a person who,
together with affiliates and associates, owns, or within the prior five years
did own, ten percent or more of the corporation's voting stock.

DSET's bylaws provide that special meetings of the shareholders may be
called by a majority of the board of directors, the chairman of the board or the
president.

SHAREHOLDER RIGHTS PLAN

On July 20, 2001, the board of directors of DSET declared a dividend of one
right for each outstanding share of DSET's common stock to stockholders of
record at the close of business on July 31, 2001. Each such right entitles the
registered holder to purchase from DSET one one-

144

thousandth of a share of Series A Junior Participating Preferred Stock, no par
value per share, at a purchase price of $20.00 in cash, subject to adjustment.

Initially, the rights are not exercisable and will be attached to all
certificates representing outstanding shares of common stock, and no separate
rights certificates will be distributed. The rights will separate from the
common stock, and a distribution date will occur, upon the earlier of (i) 10
business days following the earlier of (a) the first date of a public
announcement that a person or group of affiliated or associated persons (an
'Acquiring Person') has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of DSET's outstanding shares of common stock or (b) the
first date on which an executive officer of DSET has actual knowledge that an
Acquiring Person has become such (the 'Stock Acquisition Date'), or (ii) 10
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 15% or more of the
outstanding shares of common stock. The distribution date may be deferred in
circumstances determined by DSET's board of directors. In addition, certain
inadvertent acquisitions will not trigger the occurrence of the distribution
date.

The rights are not exercisable until the distribution date and will expire
upon the close of business on July 20, 2011 unless earlier redeemed or exchanged
as described below. As soon as practicable after the distribution date, separate
rights certificates will be mailed to holders of record of the common stock as
of the close of business on the distribution date and, thereafter, the separate
rights certificates alone will represent the rights. Except as otherwise
determined by DSET's board of directors, and except for shares of common stock
issued upon exercise, conversion or exchange of then outstanding options,
convertible or exchangeable securities or other contingent obligations to issue
shares or pursuant to any employee benefit plan or arrangement, only shares of
DSET's common stock issued prior to the distribution date will be issued with
rights.

In the event that any person becomes an Acquiring Person, then, promptly
following the first occurrence of such event, each holder of a right, with
certain exceptions, shall thereafter have the right to receive, upon exercise,
that number of shares of common stock of DSET (or, in certain circumstances,
cash, property or other securities of DSET) which equals the exercise price of
the right divided by 50% of the current market price per share of common stock
at the date of the occurrence of such event. However, rights are not exercisable
following such event until such time as the rights are no longer redeemable by
DSET as described below. Notwithstanding any of the foregoing, following the
occurrence of such event, all rights that are, or under certain circumstances
were, beneficially owned by any Acquiring Person will be null and void.

For example, at an exercise price of $20 per Right, each right not owned by
an Acquiring Person (or by certain related parties) following such an event
would entitle its holder to purchase for $20 such number of shares of DSET's
common stock (or other consideration, as noted above) as equals $20 divided by
one-half of the current market price of the common stock. Assuming that such
common stock had a market price of $5 per share at such time, the holder of each
valid right would be entitled to purchase eight shares of DSET's common stock,
having a market value of 8 x $5, or $40, for $20.

In the event that, at any time after any person becomes an Acquiring Person,
(i) DSET is consolidated with, or merged with and into, another entity and DSET
is not the surviving entity of such consolidation or merger or if DSET is the
surviving entity, but shares of its outstanding common stock are changed or
exchanged for stock or securities (of any other person) or cash or any other
property, or (ii) more than 50% of DSET's assets or earning power is sold or
transferred, each holder of a right (except rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, that number of shares of common stock of the acquiring company which
equals the exercise price of the right divided by 50% of the current market
price of such common stock at the date of the occurrence of the event.

For example, at an exercise price of $20 per right, each valid right
following such an event would entitle its holder to purchase for $20 such number
of shares of common stock of the acquiring company as equals $20 divided by
one-half of the current market price of such common stock. Assuming that such
common stock had a market price of $5 per share at such time, the

145

holder of each valid right would be entitled to purchase eight shares of common
stock of the acquiring company, having a market value of 8 x $5, or $40, for
$20.

At any time after the occurrence of such an event, when no person owns a
majority of DSET's common stock, DSET's board of directors may exchange the
rights (other than rights owned by such Acquiring Person which have become
void), in whole or in part, at an exchange ratio of one share of common stock,
or one one-thousandth of a share of preferred stock (or of a share of a class or
series of DSET's preferred stock having equivalent rights, preferences and
privileges), per right (subject to adjustment).

The purchase price payable, and the number of units of preferred stock or
other securities or property issuable, upon exercise of the rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the preferred
stock, (ii) if holders of the preferred stock are granted certain rights or
warrants to subscribe for preferred stock or convertible securities at less than
the then-current market price of the preferred stock, or (iii) upon the
distribution to holders of the preferred stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings) or of subscription rights or warrants (other than those
referred to above). The number of rights associated with each share of DSET's
common stock is also subject to adjustment in the event of a stock split of the
common stock or a stock dividend on the common stock payable in common stock or
subdivisions, consolidations or combinations of the common stock occurring, in
any such case, prior to the distribution date.

Preferred stock purchasable upon exercise of the rights will not be
redeemable. Each share of preferred stock will be entitled to receive, when, as
and if declared by DSET's board of directors, a minimum preferential quarterly
dividend payment of $10 per share or, if greater, an aggregate dividend of 1000
times the dividend declared per share of DSET's common stock. In the event of
liquidation, the holders of the preferred stock will be entitled to a minimum
preferential liquidation payment of $1,000 per share, plus an amount equal to
accrued and unpaid dividends, and will be entitled to an aggregate payment of
1,000 times the payment made per share of common stock. Each share of preferred
stock will have 1,000 votes, voting together with the common stock. In the event
of any merger, consolidation or other transaction in which common stock is
changed or exchanged, each share of preferred stock will be entitled to receive
1,000 times the amount received per share of common stock. These rights are
protected by customary antidilution provisions. Because of the nature of the
preferred stock's dividend, liquidation and voting rights, the value of one
one-thousandth of a share of preferred stock purchasable upon exercise of each
Right should approximate the value of one share of common stock.

At any time prior to the earlier of the tenth business day (or such later
date as may be determined by DSET's board of directors) after the Stock
Acquisition Date, DSET may redeem the rights in whole, but not in part, at a
price of $0.001 per right, payable in cash or stock. Immediately upon the
redemption of the rights or such earlier time as established by DSET's board of
directors in the resolution ordering the redemption of the rights, the rights
will terminate and the only right of the holders of rights will be to receive
the redemption price. The rights may also be redeemable following certain other
circumstances specified in the rights agreement.

Until a right is exercised, the holder thereof, as such, will have no rights
as a stockholder of DSET, including, without limitation, the right to vote or to
receive dividends. Although the distribution of the rights should not be taxable
to stockholders or to DSET, stockholders may, depending upon the circumstances,
recognize taxable income in the event that the rights become exercisable for
common stock (or other consideration) of DSET or for common stock of the
acquiring company as set forth above.

Any provision of the rights agreement, other than the redemption price, may
be amended by DSET's board of directors prior to such time as the rights are no
longer redeemable. Once the rights are no longer redeemable, DSET's board of
director's authority to amend the rights is limited to correcting ambiguities or
defective or inconsistent provisions in a manner that does not adversely affect
the interest of holders of rights.

146

The rights are intended to protect the DSET's stockholders in the event of
an unfair or coercive offer to acquire DSET and to provide DSET's board of
directors with adequate time to evaluate unsolicited offers. The rights may have
anti-takeover effects. The rights will cause substantial dilution to a person or
group that attempts to acquire DSET without conditioning the offer on a
substantial number of rights being acquired. The rights, however, should not
affect any prospective offeror willing to make an offer at a fair price and
otherwise in the best interests of DSET and its stockholders, as determined by a
majority of DSET's board of directors. The rights should not interfere with any
merger or other business combination approved by DSET's board of directors.

On July 20, 2001, DSET filed a Certificate of Designations that sets forth
the rights and preferences of the preferred stock underlying the rights with the
New Jersey Secretary of State.

COMPARISON OF SHAREHOLDER RIGHTS

GENERAL

DSET and ISPSoft are corporations organized under the laws of New Jersey and
are therefore subject to the New Jersey Business Corporation Act. However, there
are differences in the charters and bylaws of DSET and ISPSoft.

CAPITALIZATION

DSET. DSET is authorized to issue 10,000,000 shares of common stock and
5,000,000 shares of preferred stock. On October 31, 2001, 2,757,200 shares of
DSET common stock were issued and outstanding and no shares of preferred stock
were issued and outstanding. DSET's board has the authority, without shareholder
approval, to issue shares of authorized preferred stock from time to time in one
or more series and to fix the rights and preferences, including voting rights,
of each series of preferred stock, which rights and preferences may be superior
to that of DSET common stock.

ISPSoft. ISPSoft's capitalization as of October 31, 2001 is as follows:

<Table>
<Caption>
ISSUED AND
CLASS AND SERIES OF STOCK AUTHORIZED OUTSTANDING
------------------------- ---------- -----------

Common............................................... 40,000,000 6,595,000
Series A Preferred................................... 12,000,000 9,000,000
Series B Preferred................................... 8,000,000 8,000,000
</Table>

VOTING RIGHTS

DSET. Each holder of DSET common stock is entitled to one vote for each
share and may not cumulate votes for the election of directors.

ISPSoft. Each holder of ISPSoft common stock is entitled one vote for each
share and may not cumulate votes for the election of directors. Each holder of
ISPSoft Series A and Series B preferred stock is entitled to the number of votes
equal to the whole number of shares of common stock into which the preferred
share is convertible. Until the earlier of (a) an initial public offering of
ISPSoft resulting in proceeds of at least $15,000,000 the purchase price of
which is not less than $2.50 per share and (b) the date on which less than
400,000 shares of preferred stock remain outstanding, holders of at least 20% of
such preferred shares must approve the following actions:

any amendment to the certificate of incorporation or bylaws that alters the
voting powers, preferences or other special rights of the preferred shares;

any authorization of, or any increase in the authorized amount of, any
class of shares or series of equity securities ranking on a parity with or
senior to the preferred stock in right of redemption, liquidation
preference, voting or dividends;

147

any redemption, repurchase, payment of dividends or other distributions
with respect to any shares of capital stock;

any merger, consolidation, liquidation or dissolution of ISPSoft;

any capital expenditures in excess of $250,000 in the aggregate or any
single expenditure of $125,000 in any 12 month period;

any material change in the business of ISPSoft; or

any mortgage, pledge or creation of any security interest in ISPSoft's
intellectual property or all or substantially all of ISPSoft's assets,
unless approved by ISPSoft's board of directors.

NUMBER AND CLASSIFICATION OF DIRECTORS

DSET. The DSET bylaws provide that the DSET board shall consist of such
number of directors as shall be fixed from time to time by action of the
shareholders or the board, but in no event less than one, with each director
serving a one-year term. The number of directors of DSET currently designated is
four, which number shall increase to seven upon consummation of the merger.

ISPSoft. The ISPSoft bylaws provide that the ISPSoft board shall consist of
not less than one and not more than ten members, the number of directors to be
determined from time to time by resolution of the board or by the shareholders
at the annual meeting, with each director serving a one-year term. The number of
directors of ISPSoft currently designated is five. The ISPSoft board consists of
one member designated by Lucent Technologies, Inc., one member designated by
Signal Lake Venture Fund, L.P., one member designated by the holders of its
Series A preferred stock, its Chief Executive Officer, and one member designated
by unanimous agreement of all of its shareholders. ISPSoft currently has four
directors and one vacancy.

REMOVAL OF DIRECTORS

DSET. Any director or the entire board may be removed from office, with or
without cause, at any time by affirmative vote of the holders of a majority of
the outstanding shares then entitled to vote at an election of directors.

ISPSoft. The board member designated by Lucent Technologies, Inc. may only
be removed by Lucent Technologies, Inc. The board member designated by Signal
Lake Venture Fund, L.P. may only be removed by Signal Lake Venture Fund, L.P.
The board member designated by the holders of ISPSoft Series A preferred stock
may only be removed by the holders of ISPSoft Series A preferred stock. The
board member who is ISPSoft's Chief Executive Officer may only be removed by a
majority of the board and the board member who is designated by the unanimous
agreement of all of the ISPSoft shareholders may be removed from office at any
time with or without cause by the affirmative vote of the holders of a majority
of the voting power of all the outstanding shares then entitled to vote at an
election of directors.

FILLING VACANCIES ON THE BOARD OF DIRECTORS

DSET. Vacancies occurring in the board may be filled by vote of a majority
of the directors then in office, whether or not less than a quorum. If there are
no directors in office, any shareholder may call a special meeting of
shareholders for the election of directors.

ISPSoft. Lucent Technologies, Inc., Signal Lake Venture Fund, L.P. and the
Series A preferred shareholders have the exclusive right to fill vacancies in
the board caused by the removal or resignation of their respective board
designees. Vacancies occurring in the board resulting from the resignation or
removal of the ISPSoft Chief Executive Officer or an increase in the number of
authorized directors may be filled by a majority of the directors then in
office, although less than a quorum, and each director so elected shall hold
office for the unexpired portion of the term of the director whose vacancy was
filled and until the director's successor shall have been duly elected. A
vacancy resulting from the resignation or removal of the board member who is
designated by the unanimous consent of all of the ISPSoft shareholders may only
be filled by the

148

unanimous consent of all of the ISPSoft shareholders then entitled to vote at an
election of directors.

CHARTER AMENDMENTS

DSET. The DSET charter provides that any amendment to Article Sixth of
DSET's charter must be approved by 66 2/3% of the voting power of all of the
shares entitled to vote for the election of directors, voting as a single class.
Any amendment to Article Seventh of DSET's charter must be approved by 80% of
the voting power of all shares entitled to vote for the election of directors,
voting as a single class. All other amendment to DSET's charter must be approved
by a majority of the outstanding capital stock of DSET.

ISPSoft. The ISPSoft charter may be amended by the affirmative vote of a
majority of the ISPSoft capital stock entitled to vote on such amendment, except
that the ISPSoft charter may not be amended: (i) in a manner materially adverse
to the holders of the Series A and Series B preferred stock without the approval
of a majority in interest of the Series A and Series preferred stock voting
together as a single class or (ii) in a manner that adversely affects the rights
or powers of one series of preferred stock without similarly adversely affecting
the rights or powers of each other series of preferred stock, without the
approval of the holders of a majority interest of the series of preferred stock
that is so adversely affected.

AMENDMENTS TO BYLAWS

DSET. The board has the power to adopt, amend or repeal the bylaws. Bylaws
adopted by the board may be repealed or changed and new bylaws made by the
affirmative vote of the holders of 66 2/3% of the voting power of all of the
then outstanding shares of capital stock of DSET entitled to vote generally in
the election of directors voting together as a single class, except that the
shareholders of DSET may not adopt, amend or repeal any provision of Article XI
of the bylaws without the affirmative vote of 80% of the voting power of all of
the then outstanding shares of capital stock of DSET entitled to vote generally
in the election of directors voting together as a single class. The DSET
shareholders may prescribe that any bylaw made by them shall not be altered,
amended or repealed by the board.

ISPSoft. The bylaws may be altered, amended or repealed by the ISPSoft
shareholders or the board. Any bylaw adopted, amended or repealed by the ISPSoft
shareholders may be amended or repealed by the board, unless the resolution of
the shareholders adopting such bylaw expressly reserves the right to amend or
repeal it to the shareholders.

ACTION BY WRITTEN CONSENT

DSET. DSET's charter provides that its shareholders may not take action by
written consent in lieu of a meeting.

ISPSoft. ISPSoft's bylaws provide that any action required or permitted to
be taken by shareholders may be taken by written consent in lieu of a meeting.

NOTICE OF SHAREHOLDER MEETINGS

DSET. DSET's bylaws require written notice of the hour, date and place of
each annual or special meeting of the shareholders. In the case of a special
meeting, shareholders must be informed of the purposes for which the meeting is
called. If a shareholder will attend the meeting in person or by proxy, or
provides a written waiver of the right to receive notice, notice of such meeting
is not necessary.

ISPSoft. ISPSoft's bylaws require written notice of the hour, date and place
of each meeting of the shareholders. If the shareholder will attend the meeting
in person or by proxy, or provides written waiver of the right to receive
notice, notice of such meeting is not necessary, except when the shareholder
attends the meeting to object to the transaction of any business on the grounds
the meeting was not lawfully called or convened.

149

RIGHT TO CALL SPECIAL MEETING OF SHAREHOLDERS

DSET. DSET's bylaws provide that a special meeting of the shareholders may
be called by the president, chairman of the board or a majority of the board.
The place, date and hour of any such special meeting shall be designated in the
notice, or waiver of notice, to be sent to shareholders.

ISPSoft. ISPSoft's bylaws provide that a special meeting of the shareholders
may be called by the president or the board. The place, date and hour of any
such special meeting shall be designated in the notice, or waiver of notice, to
be sent to shareholders.

LIMITATION OF PERSONAL LIABILITY OF DIRECTORS

The New Jersey Business Corporation Act provides that a corporation's
charter may include a provision limiting the personal liability of a director to
the corporation or its shareholders for monetary damage for breach of fiduciary
duty as a director. However, no such provision can eliminate or limit the
liability of a director for:

any breach of the director's duty of loyalty to the corporation or its
shareholders;

acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law;

willful or negligent violation of the laws governing the payment of
dividends or the purchase or redemption of stock; or

any transaction from which the director devised an improper personal
benefit.

DSET. DSET's charter and bylaws provide that a director will not be liable
to DSET or its shareholders for monetary damages for a breach of his or her
fiduciary duty as a director, subject to the exceptions in the New Jersey
Business Corporation Act cited above.

ISPSoft. ISPSoft's charter provides that a director will not be liable to
ISPSoft or its shareholders for monetary damages resulting from a breach of his
or her fiduciary duty as a director, subject to the exceptions in the New Jersey
Business Corporation Act cited above.

DIVIDENDS

DSET. DSET's board may declare and pay dividends upon shares of DSET common
stock, as provided by law, and subject to any preferential dividend rights of
any outstanding preferred stock. DSET's charter gives the board discretion to
establish dividend rights for any and all classes of preferred stock.

ISPSoft. ISPSoft's board may declare and pay dividends upon shares of
ISPSoft capital stock. Dividends on the common stock are subject to the
preferential dividend rights of the Series A and Series B preferred stock.
Dividends on the Series A preferred stock are subject to the preferential
dividend rights of the Series B preferred stock.

CONVERSION

DSET. Holders of DSET common stock have no right to convert their shares
into any other shares of capital stock of DSET or any other securities.

ISPSoft. Holders of ISPSoft common stock have no right to convert their
shares into any other shares of capital stock of ISPSoft or any other
securities. Holders of ISPSoft Series A and Series B preferred stock have the
right to convert their preferred stock into ISPSoft common stock, at the option
of the holder, at any time.

Holders of Series A and Series B preferred stock have the right to convert
their shares into a number of shares of common stock determined by dividing
$0.10 and $0.50, respectively, by the then current conversion price of such
shares, as calculated based on the provisions of the charter, which is currently
$0.10 and $0.50 per share, respectively. Shares of Series A and Series B
preferred stock automatically convert into common stock:

upon the request of 80% of the then outstanding Series B preferred stock;
and

150

upon the closing of a public offering of shares of common stock at a price
of at least $5.00 per share resulting in gross proceeds to ISPSoft of at
least $15,000,000.

LIQUIDATION

DSET. Upon dissolution or liquidation of DSET, whether voluntary or
involuntary, holders of DSET common stock will be entitled to receive all assets
of DSET available for distribution to its shareholders, subject to any
preferential rights of any then outstanding preferred stock.

ISPSoft. ISPSoft's charter provides that upon dissolution or liquidation of
ISPSoft, whether voluntary or involuntary, holders of ISPSoft common stock will
be entitled to receive all assets of ISPSoft available for distribution to its
shareholders, subject to the preferential rights of any then outstanding Series
A and Series B preferred stock. ISPSoft charter further provides that upon any
liquidation, dissolution or winding up of ISPSoft, no distribution shall be
made:

to the holders of common stock until the holders of the Series A preferred
stock have received $0.10 per share plus all declared and unpaid dividends
on such shares of Series A preferred stock; and

to the holders of the Series A preferred stock until the holders of the
Series B preferred stock have received $0.50 per share plus all declared
and unpaid dividends on such shares of Series B preferred stock.

RIGHTS IN AN ACQUISITION EVENT

DSET. The holders of DSET common and preferred stock have no rights
comparable to those of ISPSoft shareholders.

ISPSoft. ISPSoft's charter provides that if ISPSoft enters into any
transaction involving reorganization, merger, consolidation or sale, lease or
other disposition of all or substantially all of its assets in which the shares
of ISPSoft common stock are changed for or changed into other stock, securities
or assets, then each holder of Series A and Series B preferred stock shall
thereafter be entitled to receive upon such event the right to acquire and
receive, in lieu of or in addition to (as the case may be) the shares of common
stock immediately theretofore acquirable and receivable upon the conversion of
such holder's Series A or Series B preferred stock, such shares of stock,
securities or assets as such holder would have received in connection with such
transaction if such holder had converted its preferred stock immediately prior
to such transaction.

PROPOSAL TO AMEND DSET'S AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION TO PROVIDE FOR A CLASSIFIED BOARD

The board of directors of DSET is recommending a proposed amendment to
DSET's Amended and Restated Certificate of Incorporation that would classify
DSET's board of directors into three classes with staggered terms. Upon approval
of such staggered terms of office, DSET's board of directors will appropriately
amend DSET's bylaws with respect to the term of office of its board of
directors.

Because the directors of DSET will be directly affected by the staggered
board proposal, they may be deemed to have an interest in the outcome of such
proposal.

Under the proposed amendment, the board of directors will be divided into
three classes, each class to be as nearly equal in number as possible. If the
proposed amendment is adopted, two directors will serve a term expiring at the
2002 annual meeting, two directors will serve a term expiring at the 2003 annual
meeting, and three directors will serve a term expiring at the 2004 annual
meeting, in each case until their respective successors are duly elected and
qualified or until their earlier resignation or removal. Beginning with the 2002
annual meeting of shareholders, one class will be elected each year for a
three-year term and such staggered system will be applicable to every election
of directors thereafter. If this proposal is adopted, and upon consummation of
the merger, the following individuals shall serve as directors for the following
terms: Messrs. Pavarini and Inam shall serve a term expiring at the 2002 annual
meeting, Messrs. Yost and Sugla shall

151

serve a term expiring at the 2003 annual meeting and Messrs. Goldberg, Lipman
and McHale shall serve a term expiring at the 2004 annual meeting.

The proposed classified board amendment will significantly extend the time
required to effect a change in control of the board or management and may
discourage hostile takeover bids for DSET. Currently, a change in control of the
board can be made by shareholders holding a plurality of the votes cast at a
single annual meeting. If DSET implements a classified board of directors, it
will take at least two annual meetings for even a majority of shareholders to
make a change in control of the board of directors, because only a minority of
the directors will be elected at each meeting.

The classified board proposal is designed to assure continuity and stability
in the board's leadership and policies. While management has not experienced any
problems with such continuity and stability in the past, it wishes to ensure
that unanticipated future developments will not adversely affect such continuity
and stability. The board also believes that the classified board proposal will
assist the board in protecting the interests of DSET's shareholders in the event
of an unsolicited offer for DSET. This proposal could have the effect of
deterring certain third parties from initiating proxy contests or from acquiring
substantial blocks of DSET's common stock. Such proxy contests and acquisitions
of substantial blocks of shares tend to increase, at least temporarily, market
prices for the target company's stock. Consequently, if this proposal is
approved, DSET's shareholders could be deprived of temporary opportunities to
sell their shares at higher market prices. Moreover, by possibly deterring proxy
contests or acquisitions of substantial blocks of DSET's common stock, this
proposal might have the incidental effect of inhibiting certain changes in
incumbent management, some or all of whom may be replaced in the course of a
change in control.

The New Jersey Business Corporation Act provides that directors chosen to
fill vacancies on a classified board shall hold office until the next succeeding
annual meeting of shareholders, and until their successors are elected and
qualified. The New Jersey Business Corporation Act also provides that, unless
the certificate of incorporation provides otherwise, directors serving on a
classified board of directors may not be removed by the shareholder without
cause. The Board intends that the provisions of the New Jersey Business
Corporation Act regarding removal only for cause be applicable, and is not
proposing to address removal in the proposed amendment. Presently, all directors
of the Company are elected annually and all of the directors may be removed,
with or without cause, by a majority vote of the outstanding shares of common
stock. Under the New Jersey Business Corporation Act and the bylaws of DSET, any
vacancy occurring in the board of directors may be filled by the affirmative
vote of a majority of the remaining directors.

DSET's current charter and bylaws contain certain other provisions that may
also have an anti-takeover effect. DSET's charter currently allows the DSET
board of directors to issue shares of preferred stock and to fix and determine
the terms, limitations and relative rights and preferences of any such issued
shares. DSET's charter further provides that provisions of DSET's bylaws adopted
by DSET's board of directors may only be amended by a supermajority vote of the
shareholders. The charter further provides for the issuance of Series A Junior
Participating Preferred Stock in connection with the adoption by DSET of a
Shareholder Rights Plan on July 20, 2001. DSET's bylaws provide that special
meetings of shareholders may be called only by a majority of DSET's board of
directors, the chairman of DSET's board of directors or the president of DSET,
and DSET's charter provides that DSET's shareholders may not take any action by
written consent in lieu of a meeting. Such provisions are described herein under
the caption 'Description of DSET Capital Stock' beginning on page 144 and
'Comparison of Shareholder Rights' beginning on page 147. The current proposal
to provide for a classified board of directors is not part of a plan by DSET's
management to adopt a series of such anti-takeover measures. DSET's management
does not currently intend to propose other anti-takeover measures in future
proxy solicitations. Although the provisions of the New Jersey Business
Corporation Act permit cumulative voting, DSET has not implemented such voting
provisions in its charter or bylaws.

152

If the proposed amendment is approved, the text of Article Eighth of DSET's
Amended and Restated Certificate of Incorporation would read as set forth below:

EIGHTH:

1. Classes of Directors. The Board of Directors shall be and is divided into
three classes: Class I, Class II and Class III. No one class shall have more
than one director more than any other class. If a fraction is contained in the
quotient arrived at by dividing the authorized number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class III, and if such fraction is two-thirds, one of the extra directors shall
be a member of Class II and one of the extra directors shall be a member of
Class III, unless otherwise provided by resolution of the Board of Directors.

2. Terms of Office. Each director shall serve for a term ending on the date
of the third annual meeting following the annual meeting at which such director
was elected; provided, that each initial director in Class I shall serve for a
term expiring at the Corporation's annual meeting of shareholders held in 2002;
each initial director in Class II shall serve for a term expiring at the
Corporation's annual meeting of shareholders held in 2003; and each initial
director in Class III shall serve for a term expiring at the Corporation's
annual meeting of shareholders held in 2004; provided further, that the term of
each director shall continue until the election and qualification of his
successor and be subject to his earlier death, resignation or removal.

3. Allocation of Directors Among Classes in the Event of Increases or
Decreases in the Authorized Number of Directors. In the event of any increase or
decrease in the authorized number of directors, (i) each director then serving
as such shall nevertheless continue as a director of the class of which he is a
member until the expiration of his current term, subject to his earlier death,
resignation or removal and (ii) the newly created or eliminated directorships
resulting from such increase or decrease shall be apportioned by the Board of
Directors among the three classes of directors in accordance with the provisions
of Section 2 of this Article EIGHTH. To the extent possible, consistent with the
provisions of Section 2 of this Article EIGHTH, any newly created directorships
shall be added to those classes whose terms of office are to expire at the
latest dates following such allocation, and any newly eliminated directorships
shall be subtracted from those classes whose terms of offices are to expire at
the earliest dates following such allocation, unless otherwise provided from
time to time by resolution of the Board of Directors.

4. Amendments to Articles. Notwithstanding any other provisions of law, the
Corporation's Amended and Restated Certificate of Incorporation, as amended, or
the By-laws of the Corporation, and notwithstanding the fact that a lesser
percentage may be specified by law, the affirmative vote of the holders of at
least sixty-six and two-thirds (66 2/3%) of the votes which all the shareholders
would be entitled to cast in any annual election of directors or class of
directors shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article EIGHTH.

The Board of Directors unanimously approved and recommends a vote 'FOR'
adoption of the amendment to DSET's Amended and Restated Certificate of
Incorporation to provide for a classified Board.

PROPOSAL TO AMEND DSET'S 1998 STOCK PLAN

DSET's 1998 Stock Plan was adopted by our board of directors on
December 31, 1997 and was approved by the shareholders of DSET in
February 1998. The 1998 Stock Plan became effective immediately prior to
consummation of DSET's initial public offering in March 1998 and shall terminate
ten (10) years from such date. Those eligible to receive stock option grants or
stock purchase rights under the 1998 Stock Plan include DSET's employees,
non-employee directors and consultants. The 1998 Stock Option Plan was adopted
to

attract and retain the best available personnel for positions of
substantial responsibility;

provide additional incentives to employees, members of the board of
directors and consultants of DSET and its subsidiaries; and

153

promote the success of DSET's business.

Currently there are 875,000 shares of DSET common stock reserved for
issuance upon the exercise of options and/or stock purchase rights granted under
the 1998 Stock Plan.

The 1998 Stock Plan is administered by the Compensation Committee of the
board of directors of DSET. The Compensation Committee determines, among other
things, the

nature of the options to be granted;

persons, or grantees, who are to receive options;

number of shares to be subject to each option;

exercise price of the options; and

vesting schedule of the options.

The 1998 Stock Plan provides for the granting of options intended to qualify
as incentive stock options, or ISOs, as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the 'Code'), to employees of DSET and its
subsidiaries. The 1998 Stock Plan also provides for the granting of
non-statutory stock options, or NSOs, to employees, non-employee directors and
consultants who perform services for DSET or its subsidiaries. The exercise
price of all ISOs granted under the 1998 Stock Plan may not be less than the
fair market value of the shares at the time the option is granted. In addition,
no ISO may be granted to an employee who owns more than 10% of the total
combined voting power of all classes of stock of DSET or any of its subsidiary
corporations unless the exercise price as to that employee is at least 110% of
the fair market value of the stock at the time of the grant. To the extent that
options designated as ISOs become exercisable for the first time during any
calendar year for DSET common stock having a fair market value greater than
$100,000 (determined for each share as of the date of grant of the options
covering such shares), the portion of such options which exceeds such amount
shall be treated as NSOs. Options may be exercisable for a period of not more
than ten years from the date of grant, provided, however that the term of an ISO
granted to an employee who owns more than 10% of the total combined voting power
of all classes of stock of DSET or any of its subsidiary corporations may not
exceed five years. The exercise price of NSOs granted under the 1998 Stock Plan
may not be less than 85% of the fair market value per share of the common stock
on the date of grant. No NSO may be granted to a person who owns more than 10%
of the total combined voting power of all classes of stock of DSET or any of its
subsidiary corporations unless the exercise price to that person is at least
110% of the fair market value of the stock at the time of the grant. The
exercise price must be paid in full at the time an option is exercised, and at
the Compensation Committee's discretion, all or part of the exercise price may
be paid with previously owned shares or other approved methods of payment. An
option is exercisable as determined by the Compensation Committee.

Subject to the terms as specified in any option agreement, the following
timetable applies with respect to exercising outstanding vested options if a
grantee's employment or consulting relationship is terminated:

<Table>
<Caption>
REASON FOR TERMINATION
DURING TERM OF EMPLOYMENT
OR CONSULTING RELATIONSHIP LATEST EXERCISE DATE
-------------------------- --------------------

One year following termination by
Disability............................ grantee
One year following death by grantee's
Death................................. estate
90 days following termination by
Any other reason...................... grantee
</Table>

Options are not assignable or otherwise transferable except by will or the
laws of descent and distribution and shall be exercisable during the grantee's
lifetime only by the grantee.

The 1998 Stock Plan also permits the awarding of stock purchase rights at
not less than 50% of the fair market value of the shares as of the date offered.
The 1998 Stock Plan requires the execution of a restricted stock purchase
agreement in a form determined by the Compensation

154

Committee. Once a stock purchase right is exercised, the purchaser will have the
rights of a shareholder. The purchaser will be a shareholder when the purchase
is entered on DSET's records.

The 1998 Stock Plan provides that in the event of a

<Table>

reorganization; recapitalization;
stock split; stock dividend;
combination of or reclassification of or any other change in the corporate
shares; structure or shares of DSET,
</Table>

the board of directors shall make adjustments with respect to the shares that
may be issued under the 1998 Stock Plan and that are covered by outstanding
options, and in the option price per share.

The board of directors shall notify the grantee at least fifteen (15) days
prior to a dissolution or liquidation of DSET. The outstanding options, not
previously exercised, will terminate immediately prior to the consummation of
such proposed action. In the event of a merger or consolidation of DSET or the
sale of all or substantially all of DSET's assets (a 'merger'), the outstanding
options will be assumed or an equivalent option will be substituted by such
successor corporation or a parent or subsidiary of such successor corporation.
If such successor corporation does not agree to assume the outstanding options
or to substitute equivalent options, the board of directors will, in lieu of
such assumption or substitution, provide accelerated vesting of outstanding
options where the successor corporation does not assume outstanding options or
issue equivalent options. If the board of directors makes an option fully
exercisable in lieu of assumption or substitution, in the event of a merger, the
board of directors shall notify the grantee that the option will be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the option will terminate upon the expiration of such period. The option will be
considered assumed if, following the merger, the option confers the right to
purchase, for each share of DSET common stock subject to the option immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or property) received in the merger by holders of DSET common stock for each
share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares). If such consideration received in the
merger was not solely common stock of the successor corporation or its parent,
the board of directors may, with the consent of the successor corporation and
the participant, provide for the consideration to be received upon the exercise
of an option for each share of stock subject to the option to be solely common
stock of the successor corporation or its parent equal in fair market value to
the per share consideration received by holders of DSET common stock in the
merger or sale of assets.

The board of directors may at any time amend, alter, suspend or discontinue
the 1998 Stock Plan, but no such action will be made which would impair the
rights of any grantee under any grant previously made, without such grantee's
consent. In addition, to the extent necessary and desirable to comply with
Rule 16b-3 under the Exchange Act, or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the National
Association of Securities Dealers or an established stock exchange), DSET shall
obtain shareholder approval of any 1998 Stock Plan amendment in such a manner
and to such a degree as required. Any such amendment or termination of the 1998
Stock Plan is not permitted to affect options already granted and such options
will remain in full force and effect as if the 1998 Stock Plan had not been
amended or terminated, unless mutually agreed otherwise between the grantee and
the board of directors, which agreement must be in writing and signed by the
grantee and DSET.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to awards granted under the
1998 Stock Plan and with respect to the sale of common stock acquired under the
1998 Stock Plan. This summary is based on the federal tax laws in effect as of
the date of this joint proxy statement/prospectus. Changes to these laws could
alter the tax consequences described below.

155

Incentive Stock Options

In general, a participant will not recognize taxable income upon the grant
or exercise of an ISO. Instead, a participant will recognize taxable income with
respect to an ISO only upon the sale of common stock acquired through the
exercise of the option, ISO stock. The exercise of an ISO, however, may subject
the participant to the alternative minimum tax.

Generally, the tax consequences of selling ISO stock will vary depending on
the date on which it is sold. If the participant sells ISO stock more than two
years from the date the option was granted, the grant date, and more than one
year from the date the option was exercised, the exercise date, then the
participant will recognize long-term capital gain in an amount equal to the
excess of the sale price of the ISO stock over the exercise price.

If the participant sells ISO stock prior to satisfying the above waiting
periods, a disqualifying disposition, then all or a portion of the gain
recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO stock for more than
one year prior to the date of sale.

If a participant sells ISO stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO stock. This capital loss will be a
long-term capital loss if the participant has held the ISO stock for more than
one year prior to the date of sale.

Non-statutory Stock Options

As in the case of an ISO, a participant will not recognize taxable income
upon the grant of an NSO. Unlike the case of an ISO, however, a participant who
exercises an NSO generally will recognize ordinary compensation income in an
amount equal to the excess of the fair market value of the common stock acquired
through the exercise of the option, NSO stock, on the exercise date over the
exercise price.

With respect to any NSO stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
stock and the participant's tax basis in the NSO stock. This capital gain or
loss will be a long-term gain or loss if the participant has held the NSO stock
for more than one year prior to the date of the sale.

Other Stock-Based Awards

The tax consequences associated with any other stock-based award granted
under the 1998 Stock Plan will vary depending on the specific terms of such
award. Among the relevant factors are whether or not the award has a readily
ascertainable fair market value, whether or not the award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property to
be received by the participant under the award and the participant's holding
period and tax basis for the award or underlying common stock.

Tax Consequences to DSET

The grant of an award under the 1998 Stock Plan generally will have no tax
consequences to DSET. Moreover, in general, neither the exercise of an ISO nor
the sale of any common stock acquired under the 1998 Stock Plan will have any
tax consequences to DSET. DSET or its parent or subsidiary, as the case may be,
generally will be entitled to a business-expense deduction, however, with
respect to any ordinary compensation income recognized by a participant under
the 1998 Stock Plan, including as a result of the exercise of an NSO or a
disqualifying disposition. Any such deduction will be subject to the limitations
of Section 162(m) of the Code.

156

PREVIOUSLY GRANTED OPTIONS UNDER THE 1998 STOCK PLAN

As of November 30, 2001, DSET had granted options to purchase an aggregate
of 816,928(1) shares of DSET common stock under the 1998 Stock Plan at an
average exercise price of $50.865 per share.(2) As of November 30, 2001, 166,681
options to purchase shares of DSET common stock were vested and 8,155 options to
purchase shares of DSET common stock had been exercised under the 1998 Stock
Plan. The following table sets forth the options granted under the 1998 Stock
Plan to: (i) the DSET Named Executives; (ii) all current executive officers as a
group; (iii) each current director; (iv) all current directors who are not
executive officers as a group; (v) each associate of any of such directors,
executive officers or nominees; (vi) each person who has received or is to
receive 5% of such options or rights; and (vii) all employees, including all
current officers who are not executive officers, as a group:

<Table>
<Caption>
OPTIONS GRANTED(3)
THROUGH WEIGHTED AVERAGE(3)
NAME NOVEMBER 30, 2001 EXERCISE PRICE EXPIRATION DATE
---- ----------------- -------------- ---------------

William P. McHale, Jr.................. 118,750 $35.548 10/08/08 - 03/12/11
Bruce M. Crowell....................... 39,875 $44.431 08/09/09 - 01/12/11
Jeffrey S. Gill........................ 24,000 $72.083 07/30/10 - 01/12/11
All current executive officers as a
group (3 persons).................... 182,675 $42.289 10/08/08 - 03/12/11
All current directors who are not
executive officers as a group
(3 persons).......................... 43,125 $33.895 03/08/09 - 06/12/11
All employees, including all current
officers who are not executive
officers, as a group (45
persons)(4).......................... 119,884 $46.263 01/01/09 - 10/21/11
</Table>

As of November 30, 2001, the market value of DSET common stock underlying
the 1998 Stock Plan was $1.21 per share.

- ---------

(1) Of the options granted as of November 30, 2001, 463,163 of such options have
been canceled and may be reissued by DSET.

(2) Options are granted under the 1998 Stock Plan pursuant to various vesting
schedules. In general, such options vest over three and four year periods.

(3) All numbers reflect a one-for-four reverse stock split of DSET's common
stock effected August 21, 2001.

(4) All 48 of DSET's employees are eligible to participate in the 1998 Stock
Plan.

William P. McHale, Jr. is the only individual holding more than five-percent
(5%) of the total options issuable under the 1998 Stock Plan. Subsequent to the
adoption of the proposed amendments to the 1998 Stock Plan, as further discussed
below, William P. McHale, Jr. will hold more than five-percent (5%) of the total
options issuable under the 1998 Stock Plan.

1998 STOCK PLAN PROPOSAL

Shareholders are being asked to consider and vote upon proposed amendments
to the 1998 Stock Plan (i) to increase the maximum aggregate number of shares of
DSET common stock available for issuance under the 1998 Stock Plan from 875,000
shares to 1,125,000 shares and (ii) to ensure compliance with Section 162(m) of
the Internal Revenue Code by approving the continuance of the 1998 Stock Plan,
limiting the maximum number of shares of DSET common stock with respect to which
awards may be granted to any person under the 1998 Stock Plan to 250,000 per
calendar year, and making certain other conforming amendments.

The board of directors of DSET recognizes that equity incentives such as
stock options are critical to attracting, retaining and motivating qualified
employees and providing such employees with a meaningful opportunity to more
closely align their interests with those of DSET's shareholders. The current
condition of the financial markets and, more specifically, the
telecommunications industry, has made it increasingly difficult to retain
valuable employees. As of November 30, 2001 the average Exercise Price of the
345,634 options granted and outstanding

157

pursuant to the 1998 Stock Plan was $42.62 per share, or approximately 40 times
greater than the closing price of DSET underlying common stock as of
December 7, 2001. DSET believes that with this amount of disparity the
substantial majority of the options currently outstanding with employees no
longer achieves the basic goals of the 1998 Stock Plan: to retain valuable
employees and provide additional incentives to those employees to promote the
success of DSET's business. The board of directors believes that the proposed
increase in the number of shares of DSET common stock available for issuance
under DSET's 1998 Stock Plan is necessary to provide DSET with the flexibility
to issue options to new and current employees, including employees of ISPSoft to
be hired by DSET in connection with the merger, at exercise prices reflecting
the current market conditions so that DSET can continue to attract and retain
superior individuals, who by their ability and qualifications, may make
important contributions to DSET.

Under Section 162(m) of the Code, a publicly held corporation generally may
not claim a federal income tax deduction for annual compensation in excess of
$1 million paid to its chief executive officer or any of its four other most
highly compensated officers. Qualifying performance-based compensation, however,
is not subject to the deduction limit if certain requirements are met. DSET's
general policy is to preserve the federal income tax deductibility of
compensation paid to its executive officers. Accordingly, in light of Section
162(m) of the Code, to preserve such deductibility with respect to compensation
recognized by certain officers with respect to options granted under the 1998
Stock Plan, such options must meet the requirements of qualifying
performance-based compensation under Section 162(m) of the Code. The proposed
continuance of the 1998 Stock Plan and amendment to limit the maximum numbers of
shares of DSET common stock with respect to which awards may be granted to any
person under the 1998 Stock Plan to 250,000 per calendar year are necessary to
ensure compliance with Section 162(m) of the Code.

The board of directors of DSET unanimously approved and recommends a vote
'FOR' adoption of the amendments to DSET's 1998 Stock Plan (i) to increase the
maximum aggregate number of shares of DSET common stock available for issuance
under the 1998 Stock Plan from 875,000 shares to 1,125,000 shares and (ii) to
ensure compliance with Section 162(m) of the Internal Revenue Code by approving
the continuance of the 1998 Stock Plan, limiting the maximum number of shares of
DSET common stock with respect to which awards may be granted to any person
under the 1998 Stock Plan to 250,000 per calendar year, and making certain other
conforming amendments.

LEGAL MATTERS

The validity of the shares of DSET common stock to be issued in connection
with the merger will be passed upon for DSET by Hale and Dorr LLP, Princeton,
New Jersey. Certain legal matters with respect to the federal income tax
consequences of the merger will be passed upon for DSET by Hale and Dorr LLP,
Princeton, New Jersey and for ISPSoft by Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP, 610 Lincoln Street, Waltham, Massachusetts 02451.

EXPERTS

The consolidated financial statements of DSET Corporation as of December 31,
2000 and 1999 and for each of the three years in the period ended December 31,
2000 incorporated by reference in this Amendment No. 5 to this joint proxy
statement/prospectus on Form S-4 have been so included in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.

The financial statements of ISPSoft (a Development Stage Company) as of
December 31, 1999 and 2000 and for the period March 30, 1999 (date of inception)
to December 31, 1999 and for the year ended December 31, 2000 included in this
joint proxy statement/prospectus and have been so included in reliance on the
report of Amper, Politziner & Mattia, P.A. independent auditors, given on the
authority of said firm as experts in auditing and accounting.

158

INCORPORATION BY REFERENCE

We incorporate by reference in this prospectus the information contained in
the following documents:

the annual report on Form 10-K for the fiscal year ended December 31, 2000
of DSET Corporation, filed on April 2, 2001, as amended by DSET
Corporation's annual report on Form 10-K/A for such fiscal year, to
disclose information regarding the financial position, results of
operations and cash flows of DSET Corporation and its subsidiaries;

the quarterly report on Form 10-Q for the fiscal quarter ended March 31,
2001 of DSET Corporation filed on May 15, 2001, as amended by DSET
Corporation's quarterly report on Form 10-Q/A for such fiscal quarter, to
disclose information regarding the financial position, results of
operations and cash flows of DSET Corporation and its subsidiaries;

the quarterly report on Form 10-Q for the fiscal quarter ended June 30,
2001 of DSET Corporation filed on August 14, 2001, as amended by DSET
Corporation's quarterly report on Form 10-Q/A for such fiscal quarter, to
disclose information regarding the financial position, results of
operations and cash flows of DSET Corporation and its subsidiaries;

the current report on Form 8-K of DSET Corporation filed on July 25, 2001;
and

the quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2001 of DSET Corporation filed on November 14, 2001, as
amended by DSET Corporation's quarterly report on Form 10-Q/A for such
fiscal quarter, to disclose information regarding the financial position,
results of operations and cash flows of DSET Corporation and its
subsidiaries.

Copies of such Form 10-K/A and Form 10-Q/A for the quarter ended
September 30, 2001 have been delivered to you with this joint proxy
statement/prospectus and you may obtain copies of each of the above referenced
documents from us, free of cost, by contacting us at the address or telephone
number provided in 'Where You Can Find More Information.'

WHERE YOU CAN FIND MORE INFORMATION

DSET files annual, quarterly and special reports, and other information with
the SEC. You may read and copy any reports, statements or other information we
file at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from commercial document retrieval services and at the web site
maintained by the SEC at 'http://www.sec.gov.'

DSET filed with the SEC a registration statement on Form S-4 under the
Securities Act of 1933 to register with the SEC the DSET common stock issuable
pursuant to the merger agreement. This joint proxy statement/prospectus does not
contain all the information you can find in the registration statement or the
exhibits and schedules to the registration statement. For further information
with respect to DSET, ISPSoft and the DSET common stock, please refer to the
registration statement, including the exhibits and schedules. You can obtain the
additional information in the registration statement by contacting DSET at the
following address and telephone number:

DSET CORPORATION
1160 U.S. HIGHWAY 22 EAST
BRIDGEWATER, NJ 08807
ATTENTION: BRUCE M. CROWELL
TELEPHONE: (908) 526-7500

Statements contained in this joint proxy statement/prospectus about the
contents of any contract or other document are not necessarily complete, and we
refer you, in each case, to the copy of such contract or other document filed as
an exhibit to the registration statement.

To obtain timely delivery of requested documents prior to the special
meeting of DSET shareholders or the special meeting of ISPSoft shareholders, you
must request them no later than January 24, 2002, which is five business days
prior to the date of such meetings.

159

<Page>

FINANCIAL STATEMENTS OF ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)

<Table>
<Caption>
PAGE
----

For the Years Ended December 31, 1999 and 2000.
Independent Auditor's Report............................ F-2

Balance Sheets as of December 31, 1999 and 2000......... F-3
Statements of Operations for the year ended December 31,
2000, the period from inception (March 30, 1999) to
December 31, 1999 and for the period from inception
(March 30, 1999) to December 31, 2000.................. F-4

Statements of Stockholders' Equity (Deficiency) for the
period from inception (March 30, 1999) to December 31,
2000................................................... F-5

Statements of Cash Flows for the year ended December 31,
2000 the period from inception (March 30, 1999) to
December 31, 1999 and for the period from inception
(March 30, 1999) to December 31, 2000.................. F-6

Notes to Financial Statements........................... F-7

For the Nine Months Ending September 30, 2001 and 2000
(unaudited).

Balance Sheets as of September 30, 2001 and 2000
(unaudited)............................................ F-17

Statements of Operations for the nine months ended
September 30, 2001 and 2000 (unaudited) and for the
period from inception (March 30, 1999) to September 30,
2001 (unaudited)....................................... F-18

Statements of Stockholders' Equity (Deficiency) for the
period from inception (March 30, 1999) to September 30,
2001 (unaudited)....................................... F-19

Statements of Cash Flows for the nine months ended
September 30, 2001 and 2000 and for the period from
inception (March 30, 1999) to September 30, 2001
(unaudited)............................................ F-20

Notes to Financial Statements (unaudited)............... F-21
</Table>

F-1

<Page>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
ISPSOFT, INC.

We have audited the accompanying balance sheets of ISPSoft Inc. (a
Development Stage Company) as of December 31, 2000 and 1999, and the related
statements of operations, stockholders' equity (deficiency) and cash flows, for
the year ended December 31, 2000 and for the period March 30, 1999 (date of
inception) to December 31, 1999 and for the period from March 30, 1999 (date of
inception) to December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ISPSoft Inc. (a Development
Stage Company) as of December 31, 2000 and 1999, and the results of its
operations and its cash flows for the year ended December 31, 2000 and for the
period March 30, 1999 (date of inception) to December 31, 1999 and for the
period from March 30, 1999 (date of inception) to December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has losses from operations and has an
accumulated deficit, which raise substantial doubt about its ability to continue
as a going concern. Management's plans regarding those matters also are
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ AMPER, POLITZINER MATTIA P.A.

June 28, 2001
Edison, New Jersey

F-2

<Page>

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS

<Table>
<Caption>
DECEMBER 31,
-------------------------
2000 1999
---- ----

ASSETS
Current assets
Cash and cash equivalents............................... $ 394,236 $ 23,259
Prepaid expenses and other current assets............... 70,109 55,200
----------- -----------
464,345 78,459
Property and equipment, net................................. 270,780 5,165
Other assets................................................ 50,556 --
----------- -----------
$ 785,681 $ 83,624
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable........................................ $ 130,593 $ --
Accrued expenses and other current liabilities.......... 59,418 5,165
Dividend payable........................................ 226,545 --
Due to affiliate........................................ 40,000 --
Current portion of capital lease obligations............ 6,096 --
----------- -----------
462,652 5,165
Long-term portion of capital lease obligations.............. 10,854 --
----------- -----------
Total liabilities................................... 473,506 5,165

Series B Redeemable Convertible Preferred Stock, no par
value, 8,000,000 shares authorized, issued and outstanding
as of December 31, 2000, $4,226,545 liquidation preference
as of December 31, 2000................................... 4,000,000 --

Stockholder's equity (deficiency)
Common stock, no par value, 40,000,000 shares
authorized; 6,850,000 and 100,000 shares issued and
outstanding as of December 31, 2000 and 1999,
respectively.......................................... 680,000 5,000

Series A Convertible Preferred Stock, no par value,
12,000,000 shares authorized and issued, 9,000,000 and
12,000,000 shares outstanding as of December 31, 2000
and 1999, respectively, $900,000 and $1,200,000
liquidation preference as of December 31, 2000 and
1999, respectively.................................... 1,200,000 1,200,000
Note receivable............................................. (135,000) (70,000)
Deferred compensation....................................... (237,569) --
Deficit accumulated during the development stage............ (4,195,256) (1,056,541)
----------- -----------
(2,687,825) 78,459
Less treasury stock, Series A Convertible Preferred, at
cost, 3,000,000 shares.................................... (1,000,000) --
----------- -----------
Total stockholder's equity (deficiency)..................... $(3,687,825) $ 78,459
----------- -----------
$ 785,681 $ 83,624
----------- -----------
----------- -----------
</Table>

See accompanying notes to financial statements.

F-3

<Page>

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS

<Table>
<Caption>
PERIOD FROM PERIOD FROM
INCEPTION INCEPTION
(MARCH 30, 1999) (MARCH 30, 1999)
FOR THE YEAR ENDED THROUGH THROUGH
DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000
----------------- ----------------- -----------------

Revenues.................................. $ -- $ -- $ --
----------- ----------- -----------
Operating expenses
Software development costs............ 1,677,719 1,056,541 2,734,260
General and administrative............ 1,294,543 -- 1,294,543
Depreciation expense.................. 26,912 -- 26,912
----------- ----------- -----------
2,999,174 1,056,541 4,055,715
Investment income......................... 87,004 -- 87,004
----------- ----------- -----------
Net loss.................................. (2,912,170) (1,056,541) (3,968,711)
Dividends on Series B Preferred Stock..... (226,545) -- (226,545)
----------- ----------- -----------
Net loss applicable to common
stockholders'........................... $(3,138,715) $(1,056,541) $(4,195,256)
----------- ----------- -----------
----------- ----------- -----------
</Table>

See accompanying notes to financial statements.

F-4

<Page>

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD FROM MARCH 30, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 2000
<Table>
<Caption>

PREFERRED STOCK -- TREASURY STOCK --
COMMON STOCK SERIES A SERIES A
-------------------- ----------------------- ------------------------ NOTE DEFERRED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT RECEIVABLE COMPENSATION
------ ------ ------ ------ ------ ------ ---------- ------------

<Caption>
DEFICIT
ACCUMULATED TOTAL
DURING THE STOCKHOLDER'S
DEVELOPMENTAL EQUITY
STAGE (DEFICIENCY)
----- ------------

Original issuance of
common stock for
cash................. $ -- $ 5,000
Issuance of Series A
Convertible Preferred
Stock for cash, note
receivable, software
modules and
consulting
services............. -- $ 1,130,000
Net loss.............. (1,056,541) (1,056,541)
----------- -----------
Balance at
December 31, 1999.... (1,056,541) 78,459
Issuance of restricted
common stock for cash
and note
receivable........... -- 5,000
Issuance of common
stock for
intellectual
property............. -- 200,000
Redemption............ -- (1,000,000)
Payment on note
receivable........... -- 70,000
Issuance of restricted
common stock for
stock based
compensation......... -- --
Earned portion of
restricted stock
compensation......... -- 97,431
Net loss.............. (2,912,170) (2,912,170)
Preferred stock
dividends -- Series B (226,545) (226,545)
----------- -----------
Balance at
December 31, 2000.... $(4,195,256) $(3,687,825)
----------- -----------
----------- -----------
</Table>

See accompanying notes to financial statements.

F-5

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS

<Table>
<Caption>
PERIOD FROM PERIOD FROM
INCEPTION INCEPTION
FOR THE YEAR (MARCH 30, 1999) (MARCH 30, 1999)
ENDED THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2000 1999 2000
---- ---- ----

Cash flows used from operating activities
Net loss...................................... $(2,912,170) $(1,056,541) $(3,968,711)
Adjustments to reconcile net income to net
cash provided by operations
Depreciation.............................. 26,912 -- 26,912
Amortization of deferred compensation..... 97,431 -- 97,431
Stock issued for intellectual property.... 200,000 -- 200,000
Stock issued for consulting services...... -- 304,800 304,800
Stock issued for software modules......... -- 750,000 750,000
(Increase) in
Prepaid expenses and other assets......... (65,465) -- (65,465)
Increase in
Accounts payable.......................... 130,593 -- 130,593
Accrued expenses.......................... 54,253 5,165 59,418
Due to affiliate.......................... 40,000 -- 40,000
----------- ----------- -----------
Total adjustments..................... 483,724 1,059,965 1,543,689
----------- ----------- -----------
(2,428,446) 3,424 (2,425,022)
----------- ----------- -----------
Cash flows used for investing activities
Purchase of property and equipment............ (275,577) (5,165) (280,742)
----------- ----------- -----------
Cash flows from financing activities
Proceeds from issuance of Series A preferred
stock....................................... -- 20,000 20,000
Proceeds from issuance of Series B preferred
stock....................................... 4,000,000 -- 4,000,000
Proceeds from issuance of common stock........ 5,000 5,000 10,000
Redemption of Series A preferred stock........ (1,000,000) -- (1,000,000)
Proceeds received from notes receivable --
common stock................................ 70,000 -- 70,000
----------- ----------- -----------
3,075,000 25,000 3,100,000
----------- ----------- -----------
Net change in cash and cash equivalents........... 370,977 23,259 394,236
Cash and cash equivalents -- beginning............ 23,259 -- --
----------- ----------- -----------
Cash and cash equivalents -- ending............... $ 394,236 $ 23,259 $ 394,236
----------- ----------- -----------
----------- ----------- -----------
Supplemental disclosure of cash paid
Interest...................................... $ -- $ -- $ --
Income taxes.................................. -- -- --
Noncash investing and financing activities
Acquisition of equipment under a capital
lease....................................... 16,950 -- 16,950
Issuance of common stock for a note
receivable.................................. 135,000 70,000 205,000
Issuance of common stock to employees for
services.................................... 335,000 -- 335,000
Dividend payable on Series B preferred
stock....................................... 226,545 -- 226,545
</Table>

See accompanying notes to financial statements.

F-6

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- BUSINESS AND LIQUIDITY

ISPSoft Inc. (the 'Company') was incorporated on March 30, 1999, in the
State of New Jersey. The Company was formed to develop advanced provisioning and
management applications for the carrier-grade IP service providers and medium to
large scale enterprises. To date, the Company has devoted the majority of its
efforts in raising capital and developing technology. The Company is in the
development stage and, accordingly, the financial statements are presented in a
format prescribed for a development stage company.

The Company has incurred losses in the current period and has an accumulated
deficit at December 31, 2000. The Company's primary source of funds to date has
been through the issuance of securities. Management intends to continue to
pursue additional financing through the issuance of securities and devoting
resources to research and development of its technology. Management believes
that additional capital will be raised through the issuance of securities,
however, there can be no assurance that this will be completed. Without
additional capital, there may be a material adverse effect on the Company's
ability to continue as a going concern. Alternatively, management may elect to
complete a merger or sell the Company if additional capital cannot be raised.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern and do not include any adjustments that
might result from the outcome of this uncertainty.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DEVELOPMENT STAGE ENTERPRISE

Since inception, the Company has not commenced any formal business
operations. The Company is considered to be in the development stage and
therefore has adopted the accounting and reporting standards of Statement of
Financial Accounting Standards ('SFAS') No. 7, 'Accounting and Reporting by
Development Stage Enterprises.'

USE OF ESTIMATES

The preparation of financial statements, in accordance with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results may differ from those estimates.

CONCENTRATIONS OF CREDIT RISK

The Company maintains cash balances at financial institutions, which at
times are in excess of federally insured limits. The Company has not experienced
any losses in such accounts.

CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation.
Property and equipment are depreciated on a straight-line basis over the
estimated useful lives of the assets,

F-7

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

which range from five to seven years. Leasehold improvements are amortized over
the shorter of the estimated useful life or the life of the lease, which is ten
years.

STOCK-BASED COMPENSATION

SFAS No. 123, 'Accounting for Stock-based Compensation,' allows the Company
to account for its employee stock-based compensation plans under APB Opinion
No. 25, 'Accounting for Stock Issued to Employees,' and the related
interpretations. The Company accounts for stock-based compensation in accordance
with APB Opinion No. 25, and records deferred compensation for stock-based
compensation grants based on the excess of the market value of the commons tock
on the measurement date over the exercise price. The deferred compensation is
amortized to expense, on a straight line basis, over the vesting period of each
unit of stock-based compensation granted. If the exercise price of the
stock-based compensation is equal to or exceeds the market price of the
Company's stock on the date of grant, no compensation expense is recorded.

SOFTWARE DEVELOPMENT COSTS

Research and development, which includes purchased research and development
and internal costs incurred on the technology are expensed as incurred, in
accordance with the provisions of SFAS No. 86, 'Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed.' Pursuant to SFAS
No. 86, costs are capitalized when technological feasibility of the product is
established and costs incurred prior to the establishment of technological
feasibility are expensed as incurred as research and development costs. As of
December 31, 2000, the Company has not reached technological feasibility with
any of its products.

INCOME TAXES

The Company uses the liability method of accounting for income taxes. The
liability method measures deferred income taxes by applying enacted statutory
rates in effect at the balance sheet date to the differences between the tax
basis of assets and liabilities and their reported amounts in the financial
statements. The resulting deferred tax asset or liability is adjusted to reflect
changes in tax laws as the occur.

NOTE 3 -- PROPERTY AND EQUIPMENT

<Table>
<Caption>
DECEMBER 31,
-----------------
2000 1999
---- ----

Equipment................................................. $250,914 $5,165
Furniture and fixtures.................................... 40,318 --
Leasehold improvements.................................... 6,460 --
-------- ------
297,692 5,165
Less accumulated depreciation............................. 26,912 --
-------- ------
$270,780 $5,165
-------- ------
-------- ------
</Table>

Depreciation amounted to $26,912 and $0 for the periods ended December 31,
2000 and 1999, respectively.

Equipment recorded under capital leases of $19,905 is included in property
and equipment at December 31, 2000 ($17,914, net of accumulated depreciation).
Depreciation expense for the period ended December 31, 2000, related to the
equipment recorded under capital leases amounted to $1,991.

F-8

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- INCOME TAXES

Deferred tax attributes resulting from differences between financial
accounting amounts and tax basis of assets and liabilities at December 31,
follow:

<Table>
<Caption>
2000 1999
---- ----

Net operating loss carryforward...................... $ 1,296,000 $ 148,000
Deferred compensation................................ 39,000 --
Fixed assets, primarily software development cost.... 222,000 275,000
Research and development credits..................... 160,000 23,000
Other................................................ 20,000 --
Valuation allowance.................................. (1,737,000) (446,000)
----------- ---------
Net deferred tax asset............................... $ -- $ --
----------- ---------
----------- ---------
</Table>

The Company's income tax expense differs from income tax (benefit) computed
at the United States federal statutory rate due to the valuation allowance on
deferred tax assets.

Based on management's estimates, the Company has provided a valuation
allowance against its deferred tax assets. The Company believes uncertainty
exists in generating sufficient taxable income in the future to realize these
items, and accordingly, has established a valuation allowance.

At December 31, 2000, the Company has net operating loss carryforwards for
both federal and state income tax purposes of approximately $3,239,000. The net
operating loss carryforwards will expire beginning in 2006, if not utilized. The
Company's net operating loss carryforwards could be limited in circumstances
involving a significant change in equity ownership.

NOTE 5 -- CAPITAL LEASE OBLIGATIONS

During 2000 the Company entered into a capital lease obligation for computer
equipment. Minimum payments are $752 per month, including imputed interest of
21.2% per annum. The lease matures in April 2003, and is collateralized by the
related equipment, which had a net book value of $17,914 at December 31, 2000.

The following is a schedule of future minimum lease payments for the years
ending:

<Table>

2001........................................................ $ 9,024
2002........................................................ 9,024
2003........................................................ 3,008
-------
21,056
Less interest............................................... 4,106
-------
16,950
Less current portion........................................ 6,096
-------
$10,854
-------
-------
</Table>

NOTE 6 -- COMMON AND PREFERRED STOCK

The Company's Articles of Incorporation, as amended, authorize three classes
of stock: common, Series A Convertible Preferred and Series B Convertible
Redeemable Preferred, and designate the number of authorized shares to be
40,000,000 for common stock, 12,000,000 for Series A Convertible Preferred Stock
and 8,000,000 for Series B Convertible, Redeemable Preferred Stock.

Rights, preferences, and privileges of the various categories of stock are
as follows:

F-9

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Dividends. Holders of Series B Preferred Stock are entitled to receive,
when, and if declared by the Board of Directors out of funds legally available
for the purpose, cumulative dividends which shall accrue daily at a base rate of
8% per annum on the Liquidation Preference of such shares, $0.50 per share.

Liquidation Rights. In the event of a liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the order
of liquidation is as follows:

holders of Series B Preferred Stock are first entitled to receive the
Liquidation Preference of such shares, $0.50 per share, plus any accrued
but unpaid dividends;

holders of Series A Preferred Stock are then entitled to receive the
Liquidation Preference of such shares, $0.10 per share, plus accrued but
unpaid dividends;

any remainder is then to be distributed ratably amount holders of the
Company's common stock.

PREFERRED STOCK CONVERSION/REDEMPTION RIGHTS.

Conversion

Both the Series A and Series B Preferred Stock ('Preferred Stock') are
convertible at any time and from time to time, at the option of any holder of
shares of Preferred Stock, into such number of shares of Common Stock as is
determined by multiplying the number of shares to be converted by the
Liquidation Preference of each share to be converted ($0.10 per share for the
Series A Preferred Stock and $0.50 per share, plus accrued dividends (8% per
annum accruing daily) for the Series B Preferred Stock), and dividing by the
result by the Conversion Price then in effect (currently the same as the
Liquidation Preference, with weighted average anti-dilution adjustments). All
shares of Preferred Stock will be automatically converted at the closing of a
qualifying IPO or upon the written election of the holders of at least 80% of
the shares of outstanding Series B Preferred Stock.

Redemption

On or after April 19, 2004, the Company must redeem, at the written election
of the holders of at least a majority of the then outstanding shares of
Series B Preferred Stock, (i) on the date specified by the holders, 1/3 of all
Series B Preferred Stock outstanding on the date of such election, and (ii) on
the first anniversary of such date 1/2 of the shares of Series B Preferred Stock
outstanding on such date, and (iii) on the second anniversary of such date, all
of the remaining shares of Series B Preferred Stock. The redemption price for
each share to be redeemed shall be the Liquidation Preference for such shares
($0.50 per share, plus accrued dividends, 8% per annum accruing daily). Due to
the redemption feature, which is at the election of the holder, the Series B
Preferred Stock has been classified as temporary equity, which is a section
between liabilities and equity.

Voting

The holders of the shares of Series A Preferred Stock and Series B Preferred
Stock shall be entitled to vote on all matters submitted to the stockholders for
a vote together with the holders of the Common Stock voting together as a single
class, with each holder of Preferred Stock entitled to one vote for each shares
of Conversion Stock issuable upon conversion of the Preferred Stock held by such
holder at the time the vote is taken.

F-10

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7 -- STOCKHOLDERS' EQUITY

On April 15, 1999, ISPSoft as part of its initial capitalization issued
12,000,000 shares of Series A Preferred Stock to an investor, Agrawal Naresh for
a total of $1,200,000, comprised of software modules valued at $750,000,
consulting services valued at $360,000 and cash of $90,000. As part of the stock
purchase agreement, Mr. Naresh agreed to provide ISPSoft with certain software
modules, which were being developed by Computer Consultants, Inc., an unrelated
independent third party. Mr. Naresh acquired the modules from Computer
Consultants, Inc. on behalf of ISPSoft for $750,000 and all rights to the source
codes of these modules were transferrred to ISPSoft effective May 1, 1999.
Mr. Naresh also agreed to contract and reimburse Danucom, Inc. ('Danucom')
$360,000 for software development and consultancy services to be performed
during the period April 1999 through February 2000. Danucom provided invoices
for the time incurred at rates, which ranged from $60 to $100 per hour. The sole
shareholder of ISPSoft common at this time was a principal shareholder in
Danucom. On March 1, 2000, Mr. Naresh transferred his shares of ISPSoft to SGM
Capital Limited. Mr. Naresh is a principal in SGM Capital Limited. Accordingly,
the value assigned is based upon the cost incurred by Mr. Naresh. These amounts
were charged to operations in accordance with the provisions of SFAS 86.

On January 10, 2000, the Company issued 2,200,000 shares of restricted
common stock, valued at $0.10 per share, to various employees for no
consideration. As a result, the Company recorded deferred compensation of
$220,000, which is amortized over the three-year forfeiture period. Related
amortization expense amounted to approximately $70,000 for the year ended
December 31, 2000. The shares were fully vested upon issuance but are subject to
forfeiture during the following three-year period in the event of termination of
employment from the Company, for any reason, with or without cause. If the
termination occurs on or before the first anniversary from the grant date, 100%
of the shares are subject to forfeiture for no consideration. If the termination
occurs after the first anniversary from the grant date, the shares are subject
to forfeiture on a pro-rata basis, based on a 36-month vesting period. The
shares are held in escrow and released as they are no longer subject to
forfeiture. As of December 31, 2000 there have been no shares earned for
forfeited.

On April 19, 2000, the following transactions took place:

The Company's board of directors approved a 10-for-1 stock split for all
stockholders of record as of that date. All share and per share information
included in these financial statements have been restated to include the
effects of the stock split for all periods presented.

Lucent Technologies, an unrelated party at the time, invested $3,000,000 to
acquire 6,000,000 shares of Series B Redeemable Convertible Preferred Stock
and contributed intellectual property in exchange for 2,000,000 shares of
common stock (see Note 6). In addition Signal Lake Venture Fund, LP, an
unrelated party at the time, invested $1,000,000 to acquire 2,000,000
shares of Series B Redeemable Convertible Preferred Stock. ISPSoft and
Lucent mutually agreed to the value assigned to the intellectual property
of $200,000 prior to the consummation of Lucent's investment, which results
in a value of $.10 per common share. This amount was charged to operations
in accordance with the provisions of SFAS 86. All common stock transactions
on this date were also valued at $.10 per common share. Simultaneously, the
Company bought back 3,000,000 shares of Series A Preferred Stock from an
investor for $1,000,000. These shares are currently held in treasury.

The Company acquired intellectual property, valued at $200,000, in exchange
for 2,000,000 shares of common stock valued at $0.10 per share.

F-11

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company issued 1,400,000 shares of restricted common stock at $0.10 per
share for $5,000 in cash and a note receivable in the amount of $135,000.
The note bears interest at 7% per annum and payments of principal and
interest are due annually through April 2005. The shares were fully vested
upon issuance but are subject to forfeiture during the following three-year
period in the event of termination of employment from the Company, for any
reason, with or without cause. If the termination occurs on or before the
first anniversary from the grant date, 100% of the shares are subject to
forfeiture for no consideration. If the termination occurs after the first
anniversary from the grant date, the shares are subject to forfeiture on a
pro-rata basis, based on a 36-month vesting period. The shares are held in
escrow and released as they are no long subject to forfeiture. As of
December 31, 2000, there have been no shares earned or forfeited.

The Company issued 150,000 shares of restricted common stock, value at
$0.10 per share, in exchange for advisory services. As a result, the
Company recorded deferred compensation of $15,000, which is amortized over
the three-year forfeiture period. Related amortization expense amounted to
approximately $4,000 for the year ended December 31, 2000. These shares
were fully vested upon issuance but are subject to forfeiture during the
following three-year period in the event of termination as an advisor of
the Company, for any reason, with or without cause. If the termination
occurs on or before the first anniversary from the grant date, 100% of the
shares are subject to forfeiture for no consideration. If the termination
occurs after the first anniversary from the grant date, the shares are
subject to forfeiture on a pro-rata basis, based on a 36-month vesting
period. The shares are held in escrow and released as they are no long
subject to forfeiture. As of December 31, 2000, there have been no shares
earned or forfeited. Under the provisions of EITF 96-18, the measurement
date of the shares of restricted stock is the date the risk of forfeiture
lapses. The common shares are initially valued at $.10 per share, the fair
value at date of issuance and the Company recorded deferred compensation of
$15,000, which is being amortized over the service period of three years.
These shares will be subsequently remeasured each reporting period using
the then applicable valuation assumptions until the measurement date
occurs. Changes in the fair value of the shares will be recognized using
guidance in SFAS Interpretation 28.

The Company issued 1,000,000 shares of restricted common stock, valued at
$0.10 per share, to various employees for no consideration. As a result,
the Company recorded deferred compensation of $100,000, which is amortized
over the three-year forfeiture period. Related amortization expense
amounted to approximately $24,000 for the year ended December 31, 2000. The
shares were fully vested upon issuance but are subject to forfeiture during
the following three-year period in the event of termination of employment
from the Company, for any reason, with or without cause. If the termination
occurs on or before the first anniversary from the grant date, 100% of the
shares are subject to forfeiture for no consideration. If the termination
occurs after the first anniversary from the grant date, the shares are
subject to forfeiture on a pro-rata basis, based on a 36-month vesting
period. The shares are held in escrow and released as they are no longer
subject to forfeiture. As of December 31, 2000, there have been no shares
earned or forfeited.

WARRANTS

On August 11, 2000, the Company issued warrants, to an employee, to purchase
200,000 shares of the Company's common stock at an exercise price of $2.50.
These warrants will expire on August 11, 2004, however, in the event of an
initial public offering ('IPO'), the warrants will become null and void and no
longer exercisable as of the IPO date. The Company must notify the

F-12

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

holder of the warrant at least 15 days prior to the consumption of such an
event. As of December 31, 2000, there were no warrants exercised.

The pro forma effect of applying the fair value method in accordance with
SFAS No. 123, 'Accounting for Stock Based Compensation,' is immaterial to the
Company's net loss.

STOCK OPTION PLAN

In April 2000, the Company adopted a stock option plan providing for the
granting of stock options ('Options') to key employees to purchase shares of the
Company's common stock. Within certain limitations provided by the Stock Option
Plan, such options may include provisions regarding vesting, exercise price, the
amount of each grant and other terms as shall be approved by the board of
directors or by a committee designated by the board of directors. Such options
granted under the plan may included non-statutory options as well as incentive
stock options ('ISOs'), within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. The maximum number of shares with respect to
which options may be granted during any 12 month period to a participant is
100,000 shares. The Stock Option Plan, which permits up to 3,150,000 shares of
the Company's common stock to be issued, terminates on April 19, 2010. Under the
terms of the Stock Option Plan, each stock option shall have an exercise price
at least equal to 100% of the fair market value of a share on the date of grant,
or 110% of the fair market value of a share on the date of grant to an
individual who owns more than ten percent of the combined voting power of all
classes of outstanding stock of the Company. Each stock option shall expire on
the tenth anniversary of the date of grant, or five years in the case of an ISO
granted to a holder of more than ten percent of the combined voting power of all
classes of outstanding stock of the Company. Shares acquired under the Stock
Option Plan are subject to certain vesting and repurchase requirements.

No options have been granted under the Stock Option Plan.

NOTE 8 -- PURCHASED RESEARCH AND DEVELOPMENT

On April 15, 1999, the Company acquired from an investor, the right, title,
and interest to certain Software Modules, including copyrights, trademarks,
patents, object codes, source codes, enhancements and updates or other
modifications and user manuals. As consideration for this acquisition of the
Software Modules, the Company issued 7,500,000 shares of its Series A Preferred
Stock. The acquisition of the Software Modules is reflected in the accompanying
financial statements as research and development because technological
feasibility was not established and the Software Modules have no alternative
future use.

NOTE 9 -- OPERATING LEASES

The Company leases office space under a five-year lease expiring August 2005
with a renewal option for a five-year period. Monthly payments under the current
lease are approximately $22,000.

The following is a schedule by years of approximate future minimum rental
payments required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31, 2000:

F-13

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<Table>

2001........................................................ $ 264,000
2002........................................................ 264,000
2003........................................................ 264,000
2004........................................................ 264,000
2005........................................................ 175,000
----------
Total minimum payments required............................. $1,231,000
----------
----------
</Table>

Rent expense amounted to approximately $142,000 and $0 for the periods ended
December 31, 2000 and 1999, respectively.

NOTE 10 -- EMPLOYMENT AGREEMENT

The Company has entered into employment agreements with various key
management personnel. Each agreement can be terminated with 30 days written
notice. However, key personnel have received stock grants which are subject to
forfeiture if employment is terminated prior to the completion of three years of
service with the Company from the date of grant (see Note 7).

NOTE 11 -- RELATED PARTIES

The Company leased consultants from a consulting services company, which is
owned by one of the stockholders. The amount due to affiliates represents unpaid
billings for the consulting services, which are non-interest bearing and are due
on demand.

For the years ended December 31, 2000 and 1999, the Company incurred
consulting fees from this affiliate of approximately $132,000 and $305,000,
respectively.

NOTE 12 -- SUBSEQUENT EVENTS

BRIDGE FINANCING

In January through May 2001, the Company received unsecured temporary
financing of approximately $1,150,000 from various stockholders and
approximately $175,000 from other investors. The loans bear interest at the
Prime Rate plus 3%, and mature on July 31, 2001. In the event that the Company
consummates an equity financing on or prior to the maturity date, the balance
shall automatically convert into the securities of the Company of the class
issued in the equity financing by dividing the balance on the date of the
conversion by 80% of the price per share at which the subsequent securities are
sold in the offering.

STOCK PLAN

In April 2001, the Company adopted a stock plan providing for the direct
award or sale of the Company's common stock or for the granting of stock options
('Options') to purchase shares of the Company's common stock. Such options
granted under the plan may include Non-statutory Options as well as Incentive
Stock Options ('ISOs'), within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. Only employees, outside directors and
consultants shall be eligible for the grant of options or the direct award or
sale of shares. Only employees are eligible for the grant of ISOs. The aggregate
number of shares that may be issued under the Plan (upon exercise of options or
rights to acquire shares) shall not exceed 5,000,000 shares. Under the terms of
the Plan, the exercise price per share of ISOs shall not be less than one
hundred percent (100%) of the fair market value of a share on the date of grant,
or one hundred ten percent (110%) of the fair market value of a share on the
date of grant to an individual who owns more than ten percent of the combined
voting power of all classes of outstanding stock of the Company. The exercise
price of a Nonstatutory Option to purchase newly issued shares shall not be less
than

F-14

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the par value, if any, of such shares. The Board of Directors determines the
term for all Options granted, although the term cannot exceed ten years from the
date of grant, or five years in the case of an ISO granted to a holder of more
than ten percent of the combined voting power of all classes of outstanding
stock of the Company. Shares acquired under the plan are subject to certain
vesting and repurchase requirements.

Any right to acquire Shares under the Plan (other than an option) shall
automatically expire if not exercised by the purchaser within 30 days after the
Company communicated the grant of such right to the purchaser.

Subsequent to the adoption of the plan the Company granted approximately
1,181,000 options to various employees and consultants under this plan. Through
the date of this report none of these options have been exercised.

OPTION GRANTS
<Table>
<Caption>
FAIR VALUE OF
UNDERLYING
TYPE OF NUMBER OF PER SHARE SHARES OF
GRANT OPTION OPTION EXERCISE COMMON DEFERRED COMP.
DATE OPTIONEE RELATIONSHIP GRANT SHARES PRICE STOCK EXPENSE
---- -------- ------------ ----- ------ ----- ----- -------

8/11/00 Desai, Anand Employee Bonus 200,000 $2.50 $0.10 --
4/30/01 Sugla, Binay Employee Incentive 600,000 $0.10 $0.10 --
05/15/01 Arni, Ramakrishna Employee In Lieu of 9,120 $0.10 $0.54 4,013
Salary
05/15/01 Krishnamoorthy, Employee In Lieu of 9,120 $0.10 $0.54 4,013
Venkatesan Salary
05/15/01 DiCuollo, Patricia Employee In Lieu of 15,170 $0.10 $0.54 6,675
Salary
05/15/01 Park, Edwin Employee In Lieu of 12,090 $0.10 $0.54 5,320
Salary
05/15/01 Cohen, Malcolm Employee In Lieu of 18,150 $0.10 $0.54 7,986
Salary
05/15/01 Krishnaswamy, Employee In Lieu of 21,320 $0.10 $0.54 9,381
Sangeetha Salary
05/15/01 John, Ajita Employee In Lieu of 28,700 $0.10 $0.54 12,628
Salary
05/15/01 Balakrishnan, Employee In Lieu of 29,010 $0.10 $0.54 12,764
Ramesh Salary
05/15/01 Krishnan, Employee In Lieu of 29,010 $0.10 $0.54 12,764
Hariharan Salary
05/15/01 Nuthi, Ramesh Employee In Lieu of 30,550 $0.10 $0.54 13,442
Salary
05/15/01 Srinivasan, Kumar Employee In Lieu of 30,550 $0.10 $0.54 13,442
Salary
05/15/01 Krishnan, P. Employee In Lieu of 39,170 $0.10 $0.54 17,235
Salary
05/15/01 Desai, Anand Employee In Lieu of 45,230 $0.10 $0.54 19,901
Salary
05/15/01 Sugla, Binay Employee In Lieu of 52,090 $0.10 $0.54 22,920
Salary
--------- -------
369,280 162,483
--------- -------
--------- -------

AMORTIZATION
GRANT PERIOD
DATE (STRAIGHT LINE)
---- ---------------

8/11/00 --
4/30/01 1/2 vested immediately; and
remaining options upon earlier
of (i) April 30, 2009, or (ii)
the achievement the following
milestones: (a) 1/4 upon hire
of VP of Marketing, VP of
Engineering and CFO; and
(b) 1/4 upon achievement of
one million dollars
($1,000,000) in gross revenues
during a fiscal year
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
</Table>

(table continued on next page)

F-15

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(table continued from previous page)
<Table>
<Caption>
FAIR VALUE OF
UNDERLYING
TYPE OF NUMBER OF PER SHARE SHARES OF
GRANT OPTION OPTION EXERCISE COMMON DEFERRED COMP.
DATE OPTIONEE RELATIONSHIP GRANT SHARES PRICE STOCK EXPENSE
---- -------- ------------ ----- ------ ----- ----- -------

05/15/01 Arni, Ramakrishna Employee Incentive 6,000 $0.10 $0.54 2,640
05/15/01 Asher, Damayanthi Employee Incentive 2,000 $0.10 $0.54 880
05/15/01 Cao, Guoliang Employee Incentive 2,000 $0.10 $0.54 880
05/15/01 Cohen, Malcolm Employee Incentive 13,200 $0.10 $0.54 5,808
05/15/01 Desai, Anand Employee Incentive 550,000 $0.10 $0.54 242,000
05/15/01 DiCuollo, Patricia Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 Garg, Sukesh Employee Incentive 50,000 $0.10 $0.54 22,000
05/15/01 Komarov, Alexander Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 Krishnaswamy, Employee Incentive 5,000 $0.10 $0.54 2,200
Sangeetha
05/15/01 Krishnamoorthy, Employee Incentive 6,000 $0.10 $0.54 2,640
Venkatesan
05/15/01 Lewis, Steve Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 Park, Brian Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 Park, Edwin Employee Incentive 10,000 $0.10 $0.54 4,400
05/15/01 Pericherla, Employee Incentive 10,000 $0.10 $0.54 4,400
Krishnam
05/15/01 Rajasekharan, Employee Incentive 20,000 $0.10 $0.54 8,800
Senthilkumar
05/15/01 Srinivasan, Kumar Employee Incentive 25,000 $0.10 $0.54 11,000
05/15/01 Wanchoo, Ajay Employee Incentive 15,000 $0.10 $0.54 6,600
05/15/01 Wang, Steven S. Employee Incentive 15,000 $0.10 $0.54 6,600
05/15/01 Zafrulla, Mohamed Employee Incentive 3,000 $0.10 $0.54 1,320
R.
--------- -------
752,200 330,968
--------- -------
--------- -------
05/15/01 Kryla, Stan Consultant Consulting 35,200 $0.10 $0.54 17,600
Services
05/15/01 Mehra, Vivek Consultant Advisory 25,000 $0.10 $0.54 11,000
Services
--------- -------
60,200 28,600
--------- -------
--------- -------
Total Warrants 200,000
Total 4/31/01 Options 600,000
Total 5/15/01 Options 1,181,680

AMORTIZATION
GRANT PERIOD
DATE (STRAIGHT LINE)
---- ---------------

05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 2 months
05/15/01 4 years
</Table>

STOCK OPTIONS

In April 2001, the Company granted an additional 600,000 options to an
employee with an exercise price equal to the fair market value at that date.
Through the date of this report none of these options were exercised.

LETTER OF INTENT

In May 2001 the Company received $500,000 from an unrelated entity
contemplating a merger. The Company subsequently received another $500,000 from
the same entity in June 2001 and entered into a letter of intent to merge with
this entity.

F-16

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(UNAUDITED)

<Table>
<Caption>
SEPTEMBER 30,
-------------------------
2001 2000
---- ----

ASSETS
Current assets
Cash and cash equivalents............................... $ 133,365 $ 1,665,163
Prepaid expenses and other current assets............... 22,548 27,577
----------- -----------
155,913 1,692,740
Property and equipment, net................................. 348,902 214,046
Other assets................................................ 50,262 50,557
----------- -----------
$ 555,077 $ 1,957,343
----------- -----------
----------- -----------

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Notes payable........................................... $ 3,575,000 $ --
Accounts payable........................................ 210,251 160,155
Accrued expenses and other current liabilities.......... 301,388 3,517
Dividend payable........................................ 482,955 144,768
Due to affiliate........................................ -- 40,000
Current portion of capital lease obligations............ 6,483 5,783
----------- -----------
4,576,077 354,823
Long-term portion of capital lease obligations.............. 5,565 10,544
----------- -----------
Total liabilities................................... 4,581,642 364,767
Series B Redeemable Convertible Preferred Stock, no par
value, 8,000,000 shares authorized, issued and outstanding
as of September 30, 2001 and 2000, $4,482,955 and
$4,144,768 liquidation preference as of September 30, 2001
and 2000, respectively.................................... 4,000,000 4,000,000
Stockholders' equity (deficiency)
Common stock, no par value, 40,000,000 shares
authorized; 6,636,667 and 6,850,000 shares issued and
outstanding as of September 30, 2001 and 2000,
respectively.......................................... 658,667 680,000
Series A Convertible Preferred Stock, no par value,
12,000,000 shares authorized and issued, 9,000,000
shares outstanding as of September 30, 2001 and 2000,
$900,000 liquidation preference as of September 30,
2001 and 2000......................................... 1,200,000 1,200,000
Additional paid-in capital.............................. 598,050 --
Note receivable......................................... (135,000) (135,000)
Deferred compensation....................................... (458,095) (265,486)
Deficit accumulated during the development stage............ (8,890,187) (2,886,938)
----------- -----------
(7,026,565) (1,407,424)
Less treasury stock, Series A Convertible Preferred, at
cost, 3,000,000 shares.................................... (1,000,000) (1,000,000)
----------- -----------
Total stockholders' equity (deficiency)............. (8,026,565) (2,407,424)
----------- -----------
$ 555,077 $ 1,957,343
----------- -----------
----------- -----------
</Table>

See accompanying notes to financial statements.

F-17

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)

<Table>
<Caption>
PERIOD FROM
INCEPTION
FOR THE NINE FOR THE NINE (MARCH 30, 1999)
MONTHS ENDED MONTHS ENDED THROUGH
SEPTEMBER 30, 2001 SEPTEMBER 30, 2000 SEPTEMBER 30, 2001
------------------ ------------------ ------------------

Revenues.................................. $ -- $ -- $ --
----------- ----------- -----------
Operating expenses
Software development costs............ 2,267,185 1,019,222 5,001,445
General and administrative............ 2,017,068 710,648 3,311,611
Depreciation expense.................. 51,991 18,087 78,903
----------- ----------- -----------
4,336,244 1,747,957 8,391,959
Other (expense) income
Interest expense...................... (116,924) -- (116,924)
Investment income..................... 14,647 62,327 101,651
----------- ----------- -----------
Net loss.................................. (4,438,521) (1,685,630) (8,407,232)
Dividends on Series B Preferred Stock..... (256,410) (144,767) (482,955)
----------- ----------- -----------
Net loss applicable to common
Stockholders'........................... $(4,694,931) $(1,830,397) $(8,890,187)
----------- ----------- -----------
----------- ----------- -----------
</Table>

See accompanying notes to financial statements.

F-18

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD FROM MARCH 30, 1999 (DATE OF INCEPTION) TO SEPTEMBER 30, 2001
(UNAUDITED)
<Table>
<Caption>

PREFERRED STOCK TREASURY STOCK
COMMON STOCK SERIES A SERIES A ADDITIONAL
-------------------- ----------------------- ------------------------ PAID-IN NOTE
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE
------ ------ ------ ------ ------ ------ ------- ----------

Original issuance of
common stock for
cash................. 100,000 $ 5,000 -- $ -- -- $ -- $ -- $ --
Issuance of Series A
Convertible Preferred
Stock for cash, note
receivable, software
modules and
consulting
services............. -- -- 12,000,000 1,200,000 -- -- -- (70,000)
Net loss.............. -- -- -- -- -- -- -- --
--------- -------- ---------- ---------- ---------- ----------- -------- ---------
Balance at
December 31, 1999.... 100,000 5,000 12,000,000 1,200,000 -- -- -- (70,000)
Issuance of restricted
common stock for
stock based
compensation......... 3,350,000 335,000 -- -- -- -- -- --
Issuance of restricted
common stock for cash
and note
receivable........... 1,400,000 140,000 -- -- -- -- -- (135,000)
Issuance of common
stock for
intellectual
property............. 2,000,000 200,000 -- -- -- -- -- --
Redemption............ -- -- -- -- (3,000,000) (1,000,000) -- --
Earned portion of
restricted stock
compensation......... -- -- -- -- -- -- -- --
Payment on note
receivable........... -- -- -- -- -- -- -- 70,000
Net loss.............. -- -- -- -- -- -- -- --
Preferred stock
dividends -- Series
B.................... -- -- -- -- -- -- -- --
--------- -------- ---------- ---------- ---------- ----------- -------- ---------
Balance at
September 30, 2000... 6,850,000 680,000 12,000,000 1,200,000 (3,000,000) (1,000,000) -- (135,000)
Earned portion of
restricted stock
compensation......... -- -- -- -- -- -- -- --
Net loss.............. -- -- -- -- -- -- -- --
Preferred stock
dividends -- Series
B.................... -- -- -- -- -- -- -- --
--------- -------- ---------- ---------- ---------- ----------- -------- ---------
Balance at
December 31, 2000.... 6,850,000 680,000 12,000,000 1,200,000 (3,000,000) (1,000,000) -- (135,000)
Earned portion of
restricted stock
compensation......... -- -- -- -- -- -- -- --
Issuance of options
for consulting and
advisory services.... -- -- -- -- -- -- 28,600 --
Issuance of options... -- -- -- -- -- -- 571,100 --
Earned portion of
options.............. -- -- -- -- -- -- -- --
Forfeiture of
restricted stock..... (233,333) (23,333) -- -- -- -- -- --
Forfeiture of stock
options.............. -- -- -- -- -- -- (1,650) --
Options exercised..... 20,000 2,000 -- -- -- -- -- --
Net loss.............. -- -- -- -- -- -- -- --
Preferred stock
dividends -- Series
B.................... -- -- -- -- -- -- -- --
--------- -------- ---------- ---------- ---------- ----------- -------- ---------
Balance at
September 30, 2001... 6,636,667 $658,667 12,000,000 $1,200,000 (3,000,000) $(1,000,000) $598,050 $(135,000)
--------- -------- ---------- ---------- ---------- ----------- -------- ---------
--------- -------- ---------- ---------- ---------- ----------- -------- ---------

<Caption>
DEFICIT
ACCUMULATED TOTAL
DURING THE STOCKHOLDERS'
DEFERRED DEVELOPMENTAL EQUITY
COMPENSATION STAGE (DEFICIENCY)
------------ ----- ------------

Original issuance of
common stock for
cash................. $ -- $ -- $ 5,000
Issuance of Series A
Convertible Preferred
Stock for cash, note
receivable, software
modules and
consulting
services............. -- -- 1,130,000
Net loss.............. -- (1,056,541) (1,056,541)
--------- ----------- -----------
Balance at
December 31, 1999.... -- (1,056,541) 78,459
Issuance of restricted
common stock for
stock based
compensation......... (335,000) -- --
Issuance of restricted
common stock for cash
and note
receivable........... -- -- 5,000
Issuance of common
stock for
intellectual
property............. -- -- 200,000
Redemption............ -- -- (1,000,000)
Earned portion of
restricted stock
compensation......... 69,514 -- 69,514
Payment on note
receivable........... -- -- 70,000
Net loss.............. -- (1,685,630) (1,685,630)
Preferred stock
dividends -- Series
B.................... -- (144,767) (144,767)
--------- ----------- -----------
Balance at
September 30, 2000... (265,486) (2,886,938) (2,407,424)
Earned portion of
restricted stock
compensation......... 27,917 -- 27,917
Net loss.............. -- (1,226,540) (1,226,540)
Preferred stock
dividends -- Series
B.................... -- (81,778) (81,778)
--------- ----------- -----------
Balance at
December 31, 2000.... (237,569) (4,195,256) (3,687,825)
Earned portion of
restricted stock
compensation......... 80,972 -- 80,972
Issuance of options
for consulting and
advisory services.... (28,600) -- --
Issuance of options... (571,100) -- --
Earned portion of
options.............. 273,219 -- 273,219
Forfeiture of
restricted stock..... 23,333 -- --
Forfeiture of stock
options.............. 1,650 -- --
Options exercised..... -- -- 2000
Net loss.............. -- (4,438,521) (4,438,521)
Preferred stock
dividends -- Series
B.................... -- (256,410) (256,410)
--------- ----------- -----------
Balance at
September 30, 2001... $(458,095) $(8,890,187) $(8,026,565)
--------- ----------- -----------
--------- ----------- -----------
</Table>

See accompanying notes to financial statements.

F-19

<Page>
ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)

Cash flows used from operating activities
Net loss.............................. $(4,438,521) $(1,685,630) $(8,407,232)
----------- ----------- -----------
Adjustments to reconcile net income to
net cash provided by operations
Depreciation...................... 51,991 18,087 78,902
Amortization of deferred
compensation.................... 354,192 69,514 451,623
Stock issued for intellectual
property........................ -- 200,000 200,000
Stock issued for consulting
services........................ -- -- 304,800
Stock issued for software
modules......................... -- -- 750,000
Decrease (increase) in
Prepaid expenses and other assets... 47,855 (22,935) (17,610)
Increase in
Accounts payable.................. 79,658 160,155 210,251
Accrued expenses.................. 241,970 (1,648) 301,389
Due to affiliate.................. (40,000) 40,000 --
----------- ----------- -----------
Total adjustments............. 735,666 463,173 2,279,355
----------- ----------- -----------
(3,702,855) (1,222,456) (6,127,877)
----------- ----------- -----------
Cash flows used for investing activities
Purchase of property and equipment.... (130,113) (210,640) (410,855)
----------- ----------- -----------
Cash flows from financing activities
Proceeds from notes payable........... 3,575,000 -- 3,575,000
Proceeds from issuance of Series A
Preferred stock..................... -- -- 20,000
Proceeds from the sale of Series B
Preferred stock..................... -- 4,000,000 4,000,000
Capital lease payments................ (4,903) -- (4,903)
Proceeds from issuance of common
stock............................... 2,000 5,000 12,000
Redemption of Series A Preferred
stock............................... -- (1,000,000) (1,000,000)
Proceeds received from notes
receivable -- common stock.......... -- 70,000 70,000
----------- ----------- -----------
3,572,097 3,075,000 6,672,097
----------- ----------- -----------
Net change in cash and cash equivalents... (260,871) 1,641,904 133,365
Cash and cash equivalents -- beginning.... 394,236 23,259 --
----------- ----------- -----------
Cash and cash equivalents -- ending....... $ 133,365 $ 1,665,163 $ 133,365
----------- ----------- -----------
----------- ----------- -----------
Supplemental disclosure of cash paid
Interest.............................. $ -- $ -- $ --
Income taxes.......................... -- -- --
Noncash investing and financing activities
Acquisition of equipment under a
capital lease....................... -- 16,950 16,950
Issuance of common stock for a note
receivable.......................... -- 135,000 205,000
Issuance of common stock to employees
for services........................ -- 335,000 335,000
Dividend payable on Series B Preferred
stock............................... 256,410 144,767 482,955
</Table>

See accompanying notes to financial statements.

F-20

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 -- BUSINESS AND LIQUIDITY

ISPSoft Inc. (the 'Company') was incorporated on March 30, 1999, in the
State of New Jersey. The Company was formed to develop advanced provisioning and
management applications for carrier-grade IP service providers and medium to
large scale enterprises. To date, the Company has devoted the majority of its
efforts in raising capital and developing technology. The Company is in the
development stage and, accordingly, the financial statements are presented in a
format prescribed for a development stage company.

On June 26, 2001, the Company entered into an Agreement and Plan of Merger
with an unrelated entity. If the merger is not consummated, due to the Company
not fulfilling its commitments according to the agreement, the Company will be
assessed a termination fee of $2,000,000 plus certain documentable expenses of
the non-breaching party.

The Company has incurred losses in the current period and has an accumulated
deficit at September 30, 2001. The Company's primary source of funds to date has
been through the issuance of securities and borrowed funds. Management intends
to consummate the above mentioned merger and continue devoting resources to
research and development of its technology. Management believes that the merger
will be consummated, however, there can be no assurance that this will be
completed. Without additional capital, or the consummation of the above
mentioned merger, there may be a material adverse effect on the Company's
ability to continue as a going concern.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DEVELOPMENT STAGE ENTERPRISE

USE OF ESTIMATES

CONCENTRATIONS OF CREDIT RISK

The Company maintains cash balances at financial institutions, which at
times are in excess of federally insured limits. The Company has not experienced
any losses in such accounts.

CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

F-21

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation.
Property and equipment are depreciated on a straight-line basis over the
estimated useful lives of the assets, which range from five to seven years.
Leasehold improvements are amortized over the shorter of the estimated useful
life or the life of the lease, which is ten years.

STOCK-BASED COMPENSATION

SFAS No. 123, 'Accounting for Stock-based Compensation,' allows the Company
to account for its employee stock-based compensation plans under APB Opinion
No. 25 'Accounting for Stock Issued to Employees' and the related
interpretations. The Company accounts for stock-based compensation in accordance
with APB Opinion No. 25, and records deferred compensation for stock-based
compensation grants based on the excess of the market value of the common stock
on the measurement date over the exercise price. The deferred compensation is
amortized to expense, on a straight line basis, over the vesting period of each
unit of stock-based compensation granted. If the exercise price of the
stock-based compensation is equal to or exceeds the market price of the
Company's stock on the date of grant, no compensation expense is recorded.

SOFTWARE DEVELOPMENT COSTS

Research and development, which includes purchased research and development
and internal costs incurred on the technology are expensed as incurred, in
accordance with the provisions of SFAS No. 86, 'Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed.' Pursuant to SFAS
No. 86, costs are capitalized when technological feasibility of the product is
established and costs incurred prior to the establishment of technological
feasibility are expensed as incurred as research and development costs. On
September 30, 2001, the Company reached technological feasibility with one of
its products and accordingly commenced capitalization of related costs.

INCOME TAXES

NOTE 3 -- PROPERTY AND EQUIPMENT

<Table>
<Caption>
SEPTEMBER 30,
-------------------
2001 2000
---- ----

Equipment................................................... $371,242 $199,315
Furniture and fixtures...................................... 50,103 26,357
Leasehold improvements...................................... 6,461 6,461
-------- --------
427,806 232,133
Less accumulated depreciation............................... 78,904 18,087
-------- --------
$348,902 $214,046
-------- --------
-------- --------
</Table>

F-22

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

Depreciation amounted to $51,991 and $18,087 for the nine months ended
September 30, 2001 and 2000, respectively.

Equipment recorded under capital leases of $19,905 is included in property
and equipment at September 30, 2001 ($14,930 net of accumulated depreciation).
Depreciation expense for the nine months ended September 30, 2001, related to
the equipment recorded under capital leases amounted to $2,985.

NOTE 4 -- INCOME TAXES

Deferred tax attributes resulting from differences between financial
accounting amounts and tax basis of assets and liabilities at September 30,
follow:

<Table>
<Caption>
2001 2000
---- ----

Net operating loss carryforward............................. $3,064,000 $ 807,000
Deferred compensation....................................... 109,000 28,000
Fixed assets, primarily software development costs.......... 132,000 264,000
Research and development credits............................ 160,000 23,000
Other....................................................... 52,000 --
Valuation allowance......................................... (3,517,000) (1,122,000)
---------- -----------
Net deferred tax asset...................................... $ -- $ --
---------- -----------
---------- -----------
</Table>

The Company's income tax expense differs from income tax (benefit) computed
at the U.S. federal statutory rate due to the valuation allowance on deferred
tax assets.

At September 30, 2001, the Company has net operating loss carryforwards for
both federal and state income tax purposes of approximately $7,660,332. The net
operating loss carryforwards will expire beginning in 2006, if not utilized. The
Company's net operating loss carryforwards could be limited in circumstances
involving a significant change in equity ownership.

NOTE 5 -- NOTES PAYABLES

In January through June 2001, the Company received unsecured temporary
financing of approximately $1,150,000 from various stockholders and
approximately $175,000 from other investors. The loans bear interest at the
prime rate plus 3%, and mature on November 30, 2001. In the event that the
Company consummates an equity financing on or prior to the maturity date, the
balance shall automatically convert into the securities of the Company of the
class issued in the equity financing by dividing the balance on the date of the
conversion by 80% of the price per share at which the subsequent securities are
sold in the offering.

On June 26, 2001, simultaneously with the execution of the Merger Agreement
(see Note 1), the Company signed a $2,000,000 promissory note, to the acquiring
entity, which replaced a $500,000 note issued on May 9, 2001. The Company
received $1,000,000 in June 2001 and $500,000 in both July, 2001 and August,
2001. The note bears interest at 8% and matures on the earlier of (i)
October 31, 2001, unless the failure to close the transactions contemplated by
the Agreement and Plan of Merger is caused by the failure of the holder to
obtain shareholder approval, in which case the note shall be due and payable on
January 31, 2002, (ii) the date the Company determines not to enter into the
acquisition by the investing entity and the Company consummates an equity

F-23

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

financing that results in aggregate gross proceeds of at least $2,000,000. The
note is secured by all the assets of the Company.

On September 26, 2001, the Company signed a $750,000 promissory note, to the
acquiring entity. As of September 30, 2001, the Company had received $250,000.
The remaining balance of $500,000 is to be received in increments of $250,000 on
both October 10, 2001 and October 24, 2001. The note bears interest at 8% and
matures the earlier of (i) November 30, 2001, unless the failure to close the
transactions contemplated by the Agreement and the Plan of Merger is caused by
the failure of the holder to obtain proper shareholder approval, in which case
the note shall be due and payable on January 31, 2002, (ii) the date the Company
determines not to enter into the acquisition by the investing entity and the
Company consummates an equity financing that results in aggregate gross proceeds
of at least $2,000,000. The note is secured by all the assets of the Company.

NOTE 6 -- CAPITAL LEASE OBLIGATIONS

During 2000, the Company entered into a capital lease obligation for
computer equipment. Minimum payments are $752 per month, including imputed
interest of 21.2% per annum. The lease matures in April 2003, and is
collateralized by the related equipment, which had a net book value of $14,930
at September 30, 2001.

The following is a schedule of future minimum lease payments for the
12 months ending September 30,:

<Table>

2002....................................................... $ 8,273
2003....................................................... 6,017
-------
14,290
Less interest.............................................. 2,242
-------
12,048
Less current portion....................................... 6,483
-------
$ 5,565
-------
-------
</Table>

NOTE 7 -- COMMON AND PREFERRED STOCK

The Company's Articles of Incorporation, as amended, authorize three classes
of stock: common, Series A Convertible Preferred and Series B Convertible,
Redeemable Preferred, and designate the number of authorized shares to be
40,000,000 for common stock, 12,000,000 for Series A Convertible Preferred and
9,000,000 for Series B Convertible, Redeemable Preferred.

Rights, preferences, and privileges of the various categories of stock are
as follows:

Dividends. Holders of Series B Preferred Stock are entitled to receive,
when, and if declared by the Board of Directors out of funds legally
available for the purpose, cumulative dividends which shall accrue daily at
a base rate of 8% per annum on the Liquidation Preference of such shares,
$0.50 per share.

Liquidation Rights. In the event of a liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or
involuntary, the order of liquidation is as follows:

holders of Series B Preferred Stock are first entitled to receive the
Liquidation Preference of such shares, $0.50 per share, plus any
accrued but unpaid dividends,

holders of Series A Preferred Stock are then entitled to receive the
Liquidation Preference of such shares, $0.10 per share, plus accrued
but unpaid dividends,

F-24

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

any remainder is then to be distributed ratably among holders of the
Company's common stock.

PREFERRED STOCK CONVERSION/REDEMPTION RIGHTS:

Conversion

Both the Series A and Series B Preferred Stock ('Preferred Stock') are
convertible at any time and from time to time, at the option of any holder of
shares of Preferred Stock, into such number of shares of Common Stock as is
determined by multiplying the number of shares to be converted by the
Liquidation Preference of each share to be converted ($0.10 per share for the
Series A Preferred and $0.50 per share, plus accrued dividends (8% per annum
accruing daily) for the Series B Preferred), and dividing by the result by the
Conversion Price then in effect (currently the same as the Liquidation
Preference, with weighted average anti-dilution adjustments). All shares of
Preferred Stock will be automatically converted at the closing of a qualifying
IPO or upon the written election of the holders of at least 80% of the shares of
outstanding Series B Stock.

Redemption

On or after April 19, 2004, the Company must redeem, at the written election
of the holders of at least a majority of the then outstanding shares of
Series B Preferred Stock, (i) on the date specified by the holders, 1/3rd of all
Series B Preferred outstanding on the date of such election, and (ii) on the
first anniversary of such date 1/2 of the shares of Series B Preferred
outstanding on such date, and (iii) on the second anniversary of such date, all
of the remaining shares of Series B Preferred Stock. The redemption price for
each share to be redeemed shall be the Liquidation Preference for such shares
($0.50 per share, plus accrued dividends, 8% per annum accruing daily). Due to
the redemption feature, which is at the election of the holder, the Series B
Preferred Stock has been classified as temporary equity, which is a section
between liabilities and equity.

Voting

The holders of the shares of Series A Preferred Stock and Series B Preferred
Stock shall be entitled to vote on all matters submitted to the stockholders for
a vote together with the holders of the Common Stock voting together as a single
class, with each holder of Preferred Stock entitled to one vote for each share
of Conversion Stock issuable upon conversion of the Preferred Stock held by such
holder at the time the vote is taken.

NOTE 8 -- STOCKHOLDERS' EQUITY

On April 15, 1999, ISPSoft as part of its initial capitalization issued
12,000,000 shares of Series A Preferred Stock to an investor, Agrawal Naresh for
a total of $1,200,000, comprised of software modules valued at $750,000,
consulting services valued at $360,000 and cash of $90,000. As part of the stock
purchase agreement, Mr. Naresh agreed to provide ISPSoft with certain software
modules, which were being developed by Computer Consultants, Inc., an unrelated
independent third party. Mr. Naresh acquired the modules from Computer
Consultants, Inc. on behalf of ISPSoft for $750,000 and all rights to the source
codes of these modules were transferred to ISPSoft effective May 1, 1999. Mr.
Naresh also agreed to contract and reimburse Danucom, Inc. ('Danucom') $360,000
for software development and consultancy services to be performed during the
period April 1999 through February 2000. Danucom provided invoices for the time
incurred at rates, which ranged from $60 to $100 per hour. The sole shareholder
of ISPSoft common at this

F-25

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

time was a principal shareholder in Danucom. On March 1, 2000, Mr. Naresh
transferred his shares of ISPSoft to SGM Capital Limited. Mr. Naresh is a
principal in this entity. Accordingly, the value assigned is based upon the cost
incurred by Mr. Naresh. These amounts were charged to operations in accordance
with the provisions of SFAS 86.

On January 10, 2000, the Company issued 2,200,000 shares of restricted
common stock, valued at $0.10 per share, to various employees for no
consideration. As a result the Company recorded deferred compensation of
$220,000, which is amortized over the three-year forfeiture period. Related
amortization expense amounted to approximately $55,000 and $52,000 for the nine
months ended September 30, 2001 and 2000, respectively. The shares were fully
vested upon issuance but are subject to forfeiture during the following
three-year period in the event of termination of employment from the Company,
for any reason, with or without cause. If the termination occurs on or before
the first anniversary from the grant date 100% of the shares are subject to
forfeiture for no consideration. If the termination occurs after the first
anniversary from the grant date the shares are subject to forfeiture on a
pro-rata basis, based on a 36-month vesting period. The shares are held in
escrow and released as they are no longer subject to forfeiture. As of
September 30, 2001 and 2000 there have been approximately 1,253,000 and -0-
shares earned, respectively, and no shares were forfeited.

On April 19, 2000, the following transaction took place:

The Company's Board of Directors approved a 10 for 1 stock split for all
stockholders of record as of that date. All share and per share information
included in these financial statements have been restated to include the
effects of the stock split for all periods presented.

Lucent Technologies, an unrelated party at the time, invested $3,000,000 to
acquire 6,000,000 shares of Series B Redeemable Convertible Preferred Stock
and contributed intellectual property in exchange for 2,000,000 shares of
common stock (see Note 9). In addition Signal Lake Venture Fund, LP, an
unrelated party at the time, invested $1,000,000 to acquire 2,000,000
shares of Series B Redeemable Convertible Preferred Stock. ISPSoft and
Lucent mutually agreed to the value assigned to the intellectual property
of $200,000 prior to the consummation of Lucent's investment, which results
in a value of $.10 per common share. This amount was charged to operations
in accordance with the provisions of SFAS 86. All common stock transactions
on this date were also valued at $.10 per common share. Simultaneously, the
Company bought back 3,000,000 shares of Series A Preferred Stock from an
investor for $1,000,000. These shares are currently held in treasury.

The Company issued 1,400,000 shares of restricted common stock at $0.10 per
share for $5,000 in cash and a note receivable in the amount of $135,000.
The note bears interest at 7% per annum and payments of principal and
interest are due annually through April 2005. The shares were fully vested
upon issuance but are subject to forfeiture during the following three-year
period in the event of termination of employment from the Company, for any
reason, with or without cause. If the termination occurs on or before the
first anniversary from the grant date 100% of the shares are subject to
forfeiture for no consideration. If the termination occurs after the first
anniversary from the grant date the shares are subject to forfeiture on a
pro-rata basis, based on a 36-month vesting period. The shares are held in
escrow and released as they are no longer subject to forfeiture. As of
September 30, 2001and 2000 there have been approximately 681,000 and -0-
shares earned, respectively, and no shares were forfeited.

The Company issued 150,000 shares of restricted common stock, valued at
$0.10 per share, in exchange for advisory services. As a result the Company
recorded deferred compensation

F-26

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

of $15,000, which is amortized over the three-year forfeiture period.
Related amortization expense amounted to approximately $3,800 and $2,200
for the nine months ended September 30, 2001 and 2000. The shares were
fully vested upon issuance but are subject to forfeiture during the
following three-year period in the event of termination as an advisor for
the Company, for any reason, with or without cause. If the termination
occurs on or before the first anniversary from the grant date 100% of the
shares are subject to forfeiture for no consideration. If the termination
occurs after the first anniversary from the grant date the shares are
subject to forfeiture on a pro-rata basis, based on a 36-month vesting
period. The shares are held in escrow and released as they are no longer
subject to forfeiture. As of September 30, 2001 and 2000 there have been
approximately 73,000 and -0- shares earned, respectively, and no shares
were forfeited. Under the provisions of EITF 96-18, the measurement date of
the shares of restricted stock is the date the risk of forfeiture lapses.
The common shares are initially valued at $.10 per share, the fair value at
date of issuance and the Company recorded deferred compensation of $15,000,
which is being amortized over the service period of three years. These
shares will be subsequently remeasured each reporting period using the then
applicable valuation assumptions until the measurement date occurs. Changes
in the fair value of the shares will be recognized using guidance in SFAS
Interpretation 28.

The Company issued 1,000,000 shares of restricted common stock, valued at
$0.10 per share, to various employees for no consideration. As a result the
Company recorded deferred compensation of $100,000, which is amortized over
the three-year forfeiture period. Related amortization expense amounted to
approximately $22,000 and $15,000 for the nine months ended September 30,
2001 and 2000. The shares were fully vested upon issuance but are subject
to forfeiture during the following three-year period in the event of
termination of employment from the Company, for any reason, with or without
cause. If the termination occurs on or before the first anniversary from
the grant date 100% of the shares are subject to forfeiture for no
consideration. If the termination occurs after the first anniversary from
the grant date the shares are subject to forfeiture on a pro-rata basis,
based on a 36-month vesting period. The shares are held in escrow and
released as they are no longer subject to forfeiture. As of September 30,
2001 and 2000 there have been approximately 487,000 and -0- shares earned
and 233,000 and -0- shares were forfeited, respectively.

WARRANTS

On August 11, 2000, the Company issued warrants, to an employee, to purchase
200,000 shares of the Company's common stock at an exercise price of $2.50.
These warrants will expire on August 11, 2004, however, in the event of an
initial public offering ('IPO') the warrants will become null and void and no
longer exercisable as of the IPO date. The Company must notify the holder of the
warrant at least 15 days prior to the consumption of such an event. As of
September 30, 2001, there were no warrants exercised.

The proforma effect of applying the fair value method in accordance with
SFAS No. 123 'Accounting for Stock Based Compensation' is immaterial to the
Company's net loss.

STOCK OPTION PLAN

F-27

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

by the Board of Directors or by a committee designated by the Board of
Directors. Such options granted under the Plan may include Non-statutory Options
as well as Incentive Stock Options ('ISOs'), within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended. The maximum number of shares
with respect to which options may be granted during any 12 month period to a
participant is one hundred thousand shares (100,000). The Stock Option Plan,
which permits up to 3,150,000 shares of the Company's common stock to be issued,
terminates on April 19, 2010. Under the terms of the Plan, each stock option
shall have an exercise price at least equal to one hundred percent (100%) of the
fair market value of a share on the date of grant, or one hundred ten percent
(110%) of the fair market value of a share on the date of grant to an individual
who owns more than 10% of the combined voting power of all classes of
outstanding stock of the Company. Each stock option shall expire on the tenth
anniversary of the date of grant, or five years in the case of an ISO granted to
a holder of more than 10% of the combined voting power of all classes of
outstanding stock of the Company. Shares acquired under the Plan are subject to
certain vesting and repurchase requirements.

No options have been granted under the Stock Option Plan.

STOCK PLAN

In April 2001, the Company adopted a stock plan providing for the direct
award or sale of the Company's common stock or for the granting of stock options
('Options') to purchase shares of the Company's common stock. Such options
granted under the Plan may include Non-statutory Options as well as Incentive
Stock Options ('ISOs'), within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. Only employees, outside directors and
consultants shall be eligible for the grant of options or the direct award or
sale of shares. Only employees are eligible for the grant of ISOs. The aggregate
number of shares that may be issued under the Plan (upon exercise of options or
rights to acquire shares) shall not exceed 5,000,000 shares. Under the terms of
the Plan, the exercise price per share of ISOs shall not be less than one
hundred percent (100%) of the fair market value of a share on the date of grant,
or one hundred ten percent (110%) of the fair market value of a share on the
date of grant to an individual who owns more than 10% of the combined voting
power of all classes of outstanding stock of the Company. The exercise price of
a Nonstatutory Option to purchase newly issued shares shall not be less than the
par value, if any, of such shares. The Board of Directors determines the term
for all Options granted, although the term cannot exceed ten years from the date
of grant, or five years in the case of an ISO granted to a holder of more than
10% of the combined voting power of all classes of outstanding stock of the
Company. Shares acquired under the Plan are subject to certain vesting and
repurchase requirements.

Any right to acquire shares under the Plan (other than an option) shall
automatically expire if not exercised by the purchaser within 30 days after the
Company communicated the grant of such right to the purchaser.

On May 15, 2001, the following transaction took place under the Plan:

The Company granted approximately 369,000 options to various employees, to
purchase shares of the Company's common stock at an exercise price of $0.10
per share, in exchange for their services. As a result, the Company has
recorded compensation expense of $162,000 in relation to these options.
These options will expire on May 14, 2011. As of September 30, 2001, all of
these options were vested and 20,000 options were exercised and 19,000 were
forfeited.

The Company granted approximately 752,000 options to various employees, to
purchase shares of the Company's common stock at an exercise price of $0.10
per share. As a result,

F-28

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

the Company recorded deferred compensation of $331,000 which is amortized
over the four year vesting period. Amortization for the period ended
September 30, 2001 was approximately $89,000. These options will expire on
May 14, 2011. As of September 30, 2001, approximately 5,500 of these
options were vested, 3,750 were forfeited and no options were exercised.

The proforma effect of applying the fair value method in accordance with
SFAS No. 123 'Accounting for Stock Based Compensation' is immaterial to the
Company's net loss.

The Company granted approximately 60,000 options to an advisor and
consultant, to purchase shares of the Company's common stock at an exercise
price of $0.10 per share. As a result the Company recorded consulting fees
of $17,600 and deferred compensation of $11,000, which is amortized over
the four year vesting period. These options will expire on May 14, 2011. As
of September 30, 2001, approximately 35,000 of these options were vested
and no options were exercised or forfeited.

STOCK OPTIONS

On April 30, 2001, the Company granted 600,000 options to an employee with
an exercise price equal to the fair market value at that date. These options
will expire on April 30, 2011. As of September 30, 2001, 300,000 of these
options were vested and none of these options were exercised.

The proforma effect of applying the fair value method in accordance with
SFAS No. 123 'Accounting for Stock Based Compensation' is immaterial to the
Company's net loss.

On July 20, 2001 the company granted approximately 370,000 options to
various employees, to purchase shares of the Company's common stock at an
exercise price of $.10 per share. As a result, the company recorded deferred
compensation of 48,100 which is amortized over the four year vesting period.
Amortization for the period ended September 30, 2001 was approximately $2,000.
These options will expire on July 19, 2011. As of September 30, 2001, none of
these options were vested, exercised or forfeited.

The proforma effect of applying the fair value method in accordance with
SFAS No. 123 'Accounting for Stock Based Compensation' is immaterial to the
Company's net loss.

On September 20, 2001 the company granted approximately 600,000 options to
various employees, to purchase shares of the Company's common stock at an
exercise of $.10 per share. As a result, the company recorded deferred
compensation of 30,000 which is amortized over the four year vesting period.
Amortization for the period ended September 30, 2001 was approximately $300.
These options will expire on September 19, 2011. As of September 30, 2001, none
of these options were vested, exercised or forfeited.

The proforma effect of applying the fair value method in accordance with
SFAS No. 123 'Accounting for Stock Based Compensation' is immaterial to the
Company's net loss.

F-29

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

08/11/00 A. Desai Employee Bonus $200,000 $2.50 $0.10 --
04/30/01 B. Sugla Employee Incentive 600,000 $0.10 $0.10 --
05/15/01 R. Arni Employee In Lieu of 9,120 $0.10 $0.54 4,013
Salary
05/15/01 V. Krishnamoorthy Employee In Lieu of 9,120 $0.10 $0.54 4,013
Salary
05/15/01 P. DiCuollo Employee In Lieu of 15,170 $0.10 $0.54 6,675
Salary
05/15/01 E. Park Employee In Lieu of 12,090 $0.10 $0.54 5,320
Salary
05/15/01 M. Cohen Employee In Lieu of 18,150 $0.10 $0.54 7,986
Salary
05/15/01 S. Krishnaswamy Employee In Lieu of 21,320 $0.10 $0.54 9,381
Salary
05/15/01 A. John Employee In Lieu of 28,700 $0.10 $0.54 12,628
Salary
05/15/01 R. Balakrishnan Employee In Lieu of 29,010 $0.10 $0.54 12,764
Salary
05/15/01 H. Krishnan Employee In Lieu of 29,010 $0.10 $0.54 12,764
Salary
05/15/01 R. Nuthi Employee In Lieu of 30,550 $0.10 $0.54 13,442
Salary
05/15/01 K. Srinivasan Employee In Lieu of 30,550 $0.10 $0.54 13,442
Salary
05/15/01 P. Krishnan Employee In Lieu of 39,170 $0.10 $0.54 17,235
Salary
05/15/01 A. Desai Employee In Lieu of 45,230 $0.10 $0.54 19,901
Salary
05/15/01 B. Sugla Employee In Lieu of 52,090 $0.10 $0.54 22,920
Salary
--------- -------
369,280 162,483
--------- -------
--------- -------

AMORTIZATION
GRANT PERIOD
DATE (STRAIGHT LINE)
---- ---------------

08/11/00 --
04/30/01 1/2vested immedi-
ately; and remain-
ing options upon
earlier of (i)
April 30, 2009, or
(ii) the achieve-
ment the following
milestones:
(a) 1/4 upon
hire of VP of
Marketing, VP of
Engineering and
CFO; and (b) 1/4
upon achievement
of one million
dollars
($1,000,000) in
gross revenues
during a fiscal
year
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
05/15/01 2 months
</Table>

FAIR VALUE OF
UNDERLYING
TYPE OF NUMBER OF PER SHARE SHARES OF
GRANT OPTION OPTION EXERCISE COMMON DEFERRED COMP.
DATE OPTIONEE RELATIONSHIP GRANT SHARES PRICE STOCK EXPENSE
---- -------- ------------ ----- ------ ----- ----- -------

05/15/01 R. Arni Employee Incentive 6,000 $0.10 $0.54 2,640
05/15/01 D. Asher Employee Incentive 2,000 $0.10 $0.54 880
05/15/01 G. Cao Employee Incentive 2,000 $0.10 $0.54 880
05/15/01 M. Cohen Employee Incentive 13,200 $0.10 $0.54 5,808
05/15/01 A. Desai Employee Incentive 550,000 $0.10 $0.54 242,000
05/15/01 P. DiCuollo Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 S. Garg Employee Incentive 50,000 $0.10 $0.54 22,000
05/15/01 A. Komarov Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 S. Krishnaswamy Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 V. Krishnamoorthy Employee Incentive 6,000 $0.10 $0.54 2,640
05/15/01 S. Lewis Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 B. Park Employee Incentive 5,000 $0.10 $0.54 2,200
05/15/01 E. Park Employee Incentive 10,000 $0.10 $0.54 4,400

AMORTIZATION
GRANT PERIOD
DATE (STRAIGHT LINE)
---- ---------------

(table continued on next page)

F-30

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

05/15/01 K. Pericherla Employee Incentive 10,000 $0.10 $0.54 4,400
05/15/01 S. Rajasekharan Employee Incentive 20,000 $0.10 $0.54 8,800
05/15/01 K. Srinivasan Employee Incentive 25,000 $0.10 $0.54 11,000
05/15/01 A. Wanchoo Employee Incentive 15,000 $0.10 $0.54 6,600
05/15/01 S. Wang Employee Incentive 15,000 $0.10 $0.54 6,600
05/15/01 M. Zafrulla Employee Incentive 3,000 $0.10 $0.54 1,320
--------- -------
752,200 330,968
--------- -------
--------- -------
05/15/01 S. Kryla Consultant Consulting 35,200 $0.10 $0.54 17,600
Svs.
05/15/01 V. Mehra Consultant Advisory 25,000 $0.10 $0.54 11,000
Svs.
--------- -------
60,200 28,600
--------- -------
--------- -------
7/20/2001 R. Arni Employee Incentive 18,000 $0.10 $0.23 2,340
7/20/2001 D. Asher Employee Incentive 7,000 $0.10 $0.23 910
7/20/2001 D. Bencher Employee Incentive 30,000 $0.10 $0.23 3,900
7/20/2001 G. Cao Employee Incentive 18,000 $0.10 $0.23 2,340
7/20/2001 B. Das Employee Incentive 15,000 $0.10 $0.23 1,950
7/20/2001 P. Dicuollo Employee Incentive 5,000 $0.10 $0.23 650
7/20/2001 S. Garg Employee Incentive 25,000 $0.10 $0.23 3,250
7/20/2001 A. John Employee Incentive 25,000 $0.10 $0.23 3,250
7/20/2001 A. Komarov Employee Incentive 7,000 $0.10 $0.23 910
7/20/2001 V. Krishnmoorthy Employee Incentive 18,000 $0.10 $0.23 2,340
7/20/2001 S. Krishnaswamy Employee Incentive 7,000 $0.10 $0.23 910
7/20/2001 M. Kumar Employee Incentive 5,000 $0.10 $0.23 650
7/20/2001 S. Lewis Employee Incentive 7,000 $0.10 $0.23 910
7/20/2001 P. Narayanan Employee Incentive 5,000 $0.10 $0.23 650
7/20/2001 R. Nuthi Employee Incentive 25,000 $0.10 $0.23 3,250
7/20/2001 E. Park Employee Incentive 20,000 $0.10 $0.23 2,600
7/20/2001 K. Pericherla Employee Incentive 10,000 $0.10 $0.23 1,300
7/20/2001 S. Rajasekharan Employee Incentive 10,000 $0.10 $0.23 1,300
7/20/2001 V. Ravula Employee Incentive 6,000 $0.10 $0.23 780
7/20/2001 R. Sequeria Employee Incentive 10,000 $0.10 $0.23 1,300
7/20/2001 M. Singh Employee Incentive 10,000 $0.10 $0.23 1,300
7/20/2001 K. Srinivasan Employee Incentive 50,000 $0.10 $0.23 6,500
7/20/2001 A. Wanchoo Employee Incentive 20,000 $0.10 $0.23 2,600
7/20/2001 S. Wang Employee Incentive 10,000 $0.10 $0.23 1,300
7/20/2001 M. Zafrulla Employee Incentive 7,000 $0.10 $0.23 910
--------- -------
370,000 48,100
--------- -------
--------- -------
9/20/2001 T. Warren Employee Incentive 300,000 $0.10 $0.15 15,000
9/20/2001 M. Davis Employee Incentive 300,000 $0.10 $0.15 15,000
--------- -------
600,000 30,000
--------- -------
--------- -------

Total Warrants 200,000
---------
Total 4/31/01 Options 600,000
Total 5/15/01 Options 1,181,680
Total 7/20/01 Options 370,000
Total 9/20/01 600,000
---------
Total Options 2,751,680
---------
---------

AMORTIZATION
GRANT PERIOD
DATE (STRAIGHT LINE)
---- ---------------

05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 4 years
05/15/01 2 months
05/15/01 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
7/20/200 4 years
9/20/200 4 years
9/20/200 4 years
</Table>

NOTE 9 -- PURCHASED RESEARCH AND DEVELOPMENT

F-31

ISPSOFT INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

Stock. The acquisition of the Software Modules is reflected in the accompanying
financial statements as research and development because technological
feasibility was not established and the Software Modules have no alternative
future use.

NOTE 10 -- OPERATING LEASES

The Company leases office space under a five-year lease expiring August
2005, with a renewal option for a five-year period. Monthly payments under the
current lease are approximately $22,000.

<Table>
<Caption>
FOR THE PERIODS
ENDING SEPTEMBER 30,
--------------------

2002.................................................. $ 264,000
2003.................................................. 264,000
2004.................................................. 264,000
2005.................................................. 220,000
----------
Total minimum payments required....................... $1,012,000
----------
----------
</Table>

Rent expense amounted to approximately $220,478 and $63,382 for the nine
months ended September 30, 2001 and 2000, respectively.

NOTE 11 -- EMPLOYMENT AGREEMENT

NOTE 12 -- RELATED PARTIES

The Company leased consultants from a consulting services Company which is
owned by one of the stockholder's. The amount due to affiliates represents
unpaid billings for the consulting services, which are non-interest bearing and
are due on demand.

For the nine months ended September 30, 2001 and 2000, the Company incurred
consulting fees from this affiliate of approximately $0 and $132,000,
respectively.

NOTE 13 -- SUBSEQUENT EVENT

On November 5, 2001, the Company issued to the acquiring entity an
additional promissory note in the amount of $850,000. The Company received
$275,000 upon signing of the note with the remaining balance to be received in
increments of $275,000 and $300,000 on November 21, 2001 and December 6, 2001,
respectively. The note bears interest at 8% and matures the earlier of (i)
December 31, 2001, unless the failure to close the transactions contemplated by
the Agreement and the Plan of Merger is caused by the failure of the holder to
obtain proper shareholder approval, in which case the note shall be due and
payable on January 31, 2002, (ii) the date the Company determines not to enter
into the acquisition by the investing entity and the Company consummates an
equity financing that results in aggregate gross proceeds of at least
$2,000,000. The note is secured by all the assets of the Company.

In addition on November 5, 2001, the Company amended the due dates under
paragraph (a) of the promissory notes dated June 26, 2001 and September 26, 2001
from October 31, 2001 and November 30, 2001, respectively to December 31, 2001.

F-32

<Page>
ANNEXES

<Page>
ANNEX A

AGREEMENT AND PLAN OF MERGER
BETWEEN
DSET CORPORATION
AND
ISPSOFT INC.
JUNE 26, 2001

<Page>
TABLE OF CONTENTS

<Table>
<Caption>
PAGE
----

ARTICLE I THE MERGER. A-1
1.1 The Merger.................................................. A-1
1.2 The Closing................................................. A-1
1.3 Actions at the Closing...................................... A-1
1.4 Additional Action........................................... A-2
1.5 Conversion of Shares........................................ A-2
1.6 Dissenting Shares........................................... A-3
1.7 Fractional Shares........................................... A-3
1.8 Options and Warrants........................................ A-3
1.9 Escrow...................................................... A-4
1.10 Notes Payable............................................... A-4
1.11 Per Common Share Earn Out Payment........................... A-4
1.12 Reduction in Purchase Price................................. A-6
1.13 Certificate of Incorporation and By-laws.................... A-6
1.14 Adjustments to Merger Consideration......................... A-6
1.15 No Further Rights........................................... A-6
1.16 Closing of Transfer Books................................... A-6
1.17 Combination and Subdivision of Shares....................... A-6

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY....... A-6
2.1 Organization, Qualification and Corporate Power............. A-7
2.2 Capitalization.............................................. A-7
2.3 Authorization of Transaction................................ A-8
2.4 Noncontravention............................................ A-8
2.5 No Subsidiaries............................................. A-8
2.6 Financial Statements........................................ A-8
2.7 Absence of Certain Changes.................................. A-9
2.8 Undisclosed Liabilities..................................... A-9
2.9 Tax Matters................................................. A-9
2.10 Assets...................................................... A-11
2.11 Owned Real Property......................................... A-11
2.12 Intellectual Property....................................... A-11
2.13 Contracts................................................... A-12
2.14 Accounts Receivable......................................... A-13
2.15 Powers of Attorney.......................................... A-13
2.16 Insurance................................................... A-13
2.17 Litigation.................................................. A-13
2.18 Warranties.................................................. A-13
2.19 Employees................................................... A-14
2.20 Employee Benefits........................................... A-14
2.21 Environmental Matters....................................... A-16
2.22 Legal Compliance............................................ A-16
2.23 Customers and Suppliers..................................... A-16
2.24 Permits..................................................... A-17
2.25 Certain Business Relationships With Affiliates.............. A-17
2.26 Brokers' Fees............................................... A-17
</Table>

<Page>

<Table>
<Caption>
PAGE
----

2.27 Books and Records........................................... A-17
2.28 Disclosure.................................................. A-17

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER........ A-17
3.1 Organization, Qualification and Corporate Power............. A-17
3.2 Capitalization.............................................. A-18
3.3 Authorization of Transaction................................ A-18
3.4 Noncontravention............................................ A-18
3.5 Reports and Financial Statements............................ A-18
3.6 Absence of Material Adverse Change.......................... A-19
3.7 Litigation.................................................. A-19
3.8 Qualification of the Merger as a Reorganization............. A-19
3.9 Brokers' Fees............................................... A-19
3.10 Disclosure.................................................. A-19
3.11 Nasdaq Listing.............................................. A-19

ARTICLE IV COVENANTS........................................... A-19
4.1 Closing Efforts............................................. A-19
4.2 Governmental and Third-Party Notices and Consents........... A-20
4.3 Special Meeting, Prospectus/Proxy Statement and Registration
Statement................................................. A-20
4.4 Operation of Business....................................... A-21
4.5 Access to Information....................................... A-22
4.6 Notice of Breaches.......................................... A-22
4.7 Exclusivity................................................. A-23
4.8 Expenses.................................................... A-23
4.9 Indemnification............................................. A-24
4.10 Listing of Merger Shares.................................... A-24
4.11 Audited Financial Statements................................ A-24
4.12 Extension of Notes Payable.................................. A-24
4.13 Section 16 Relief........................................... A-24
4.14 Benefit Arrangements........................................ A-25
4.15 Plan of Reorganization...................................... A-25
4.16 Comfort Letter.............................................. A-25
4.17 Parachute Payments.......................................... A-25
4.18 Company 401(k) Plan......................................... A-25

ARTICLE V CONDITIONS TO CONSUMMATION OF MERGER................. A-25
5.1 Conditions to Each Party's Obligations...................... A-25
5.2 Conditions to Obligations of the Buyer...................... A-25
5.3 Conditions to Obligations of the Company.................... A-28

ARTICLE VI INDEMNIFICATION..................................... A-29
6.1 Indemnification by the Company Shareholders................. A-29
6.2 Indemnification by the Buyer................................ A-29
6.3 Indemnification Claims...................................... A-29
6.4 Survival of Representations and Warranties.................. A-32
6.5 Limitations................................................. A-32
</Table>

<Page>

<Table>
<Caption>
PAGE
----

ARTICLE VII TERMINATION........................................ A-33
7.1 Termination of Agreement.................................... A-33
7.2 Effect of Termination....................................... A-34
7.3 Termination Fee............................................. A-34

ARTICLE VIII DEFINITIONS....................................... A-34

ARTICLE IX MISCELLANEOUS....................................... A-37
9.1 Press Releases and Announcements............................ A-37
9.2 No Third Party Beneficiaries................................ A-37
9.3 Entire Agreement............................................ A-37
9.4 Succession and Assignment................................... A-37
9.5 Counterparts and Facsimile Signature........................ A-37
9.6 Headings.................................................... A-37
9.7 Notices..................................................... A-37
9.8 Governing Law............................................... A-38
9.9 Amendments and Waivers...................................... A-38
9.10 Severability................................................ A-38
9.11 Submission to Jurisdiction.................................. A-38
9.12 Construction................................................ A-38
</Table>

<Table>

Exhibit A -- Escrow Agreement
Exhibit B -- New Promissory Note
Exhibit C -- Opinion of Counsel to the Company
Exhibit D -- Opinion of Counsel to the Buyer
</Table>

iii

<Page>

AGREEMENT AND PLAN OF MERGER

Agreement entered into as of June 26, 2001 between DSET Corporation, a New
Jersey corporation (the 'Buyer'), and ISPsoft Inc., a New Jersey corporation
(the 'Company'). The Buyer and the Company are each referred to herein
individually as a 'Party' and collectively as the 'Parties.'

This Agreement contemplates a merger of the Company into the Buyer. In such
merger, the shareholders of the Company will receive common stock of the Buyer
and cash in exchange for their capital stock of the Company.

The Parties intend that for federal income tax purposes the merger qualify
as a reorganization under the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the 'Code').

Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.

ARTICLE I
THE MERGER

1.1 The Merger. Upon and subject to the terms and conditions of this
Agreement, the Company shall merge with and into the Buyer (with such merger
referred to herein as the 'Merger') at the Effective Time (as defined below).
From and after the Effective Time, the separate corporate existence of the
Company shall cease and the Buyer shall continue as the surviving corporation in
the Merger (the 'Surviving Corporation'). The 'Effective Time' shall be the time
at which the Buyer files a Certificate of Merger or other appropriate documents
prepared and executed in accordance with Section 14A:10-4.1 of the New Jersey
Business Corporation Act (the 'NJBCA') with the Secretary of State of the State
of New Jersey. The Merger shall have the effects set forth in Section 14A:10-6
of the NJBCA.

1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the 'Closing') shall take place at the offices of Hale and Dorr LLP
in Princeton, New Jersey, commencing at 9:00 a.m. local time on August 31, 2001,
or, if all of the conditions to the obligations of the Parties to consummate the
transactions contemplated hereby have not been satisfied or waived by such date,
on such mutually agreeable later date as soon as practicable (and in any event
not later than three (3) business days) after the satisfaction or waiver of all
conditions (excluding the delivery of any documents to be delivered at the
Closing by any of the Parties) set forth in Article V hereof (the 'Closing
Date').

1.3 Actions at the Closing. At or immediately prior to the Closing:

(a) the Company shall deliver to the Buyer the various certificates,
instruments and documents referred to in Section 5.2;

(b) the Buyer shall deliver to the Company the various certificates,
instruments and documents referred to in Section 5.3;

(d) each of the shareholders of record of the Company immediately prior
to the Effective Time (the 'Company Shareholders') shall deliver to the
Buyer the certificate(s) (or affidavit of loss and indemnification with
respect thereto) representing his, her or its Company Shares (as defined
below);

(e) the Buyer shall deliver certificates for the Initial Payment Shares
(as defined below) to each Company Shareholder in accordance with
Section 1.5;

(f) the Buyer shall assume and then discharge certain liabilities of the
Company as set forth in Section 1.10 below; and

(g) the Buyer shall pay to the holders of Preferred Stock the
consideration as set forth in Section 1.5(b) below.

A-1

<Page>
1.4 Additional Action. The Surviving Corporation may, at any time after the
Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of the Company, in order to consummate the
transactions contemplated by this Agreement.

1.5 Conversion of Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of any Party or the holder of any of the
following securities:

(a) Each share of common stock, no par value per share, of the Company
('Common Shares') issued and outstanding immediately prior to the Effective
Time (other than Common Shares owned beneficially by the Buyer, Dissenting
Shares (as defined below) and Common Shares held in the Company's treasury)
(the 'Initial Common Shares') shall be converted into and represent the
right to receive (subject to the provisions of Section 1.9): (i) such number
of shares of common stock, no par value per share, of the Buyer ('Buyer
Common Stock') as is equal to the Common Conversion Ratio (as defined
below); and (ii) for each Initial Common Share that was also issued and
outstanding as of the Closing (the 'Closing Date Common Shares'), the Per
Common Share Earn Out Payment as set forth in Section 1.11 below;

(b) Each share of Series A Preferred Stock, no par value per share and
Series B Preferred Stock, no par value per share, of the Company
(collectively, the 'Preferred Shares'; and, together with the Common Shares,
the 'Company Shares') issued and outstanding immediately prior to the
Effective Time (other than Preferred Shares owned beneficially by the Buyer,
Dissenting Shares and Preferred Shares held in the Company's treasury) shall
be converted into and represent the right to receive (subject to the
provisions of Section 1.9) such number of shares of Buyer Common Stock as is
equal to the Preferred Conversion Ratio (as defined below). The holders of
the Series B Preferred Stock also shall be paid the following: to Lucent
Technologies Inc. ('Lucent') a cash payment of $1,000,000 and that number of
shares of the Buyer's Common Stock as shall equal $150,000 divided by the
Average Sales Price; and (ii) to Signal Lake Venture Fund L.P. ('Signal
Lake') that number of shares of the Buyer's Common Stock as shall equal
$250,000 divided by the Average Sales Price. Any cash or stock amounts
received under the previous sentence shall not be made subject to the Escrow
Agreement;

(c) The 'Common Conversion Ratio' shall be the result obtained by
dividing (i) $7,000,000 minus any amounts to be deducted pursuant to
Section 1.12 hereof by (ii) the number of Initial Common Shares (after
giving effect to the conversion into Common Shares of all outstanding
Preferred Shares and other than Common Shares beneficially owned by the
Buyer), and dividing such amount by (iii) the average of the last reported
sale prices per share of the Buyer Common Stock on the Nasdaq National
Market ('Nasdaq') over the ten (10) consecutive trading days immediately
prior to the day prior to the date hereof (the 'Average Sales Price'). The
'Preferred Conversion Ratio' shall be the result obtained by multiplying the
Common Conversion Ratio by the number of Common Shares into which each
Preferred Share is convertible immediately prior to the Effective Time. Each
of the Common Conversion Ratio and the Preferred Conversion Ratio shall be
subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split or similar event affecting the Buyer Common
Stock between the beginning of such ten-day period and the Effective Time.
Company Shareholders shall be entitled to receive immediately at the
Closing, ninety percent (90%) of the shares of Buyer Common Stock into which
their Company Shares were converted pursuant to this Section 1.5, rounded up
to the nearest whole number (the 'Initial Payment Shares'); the remaining
ten percent (10%) of the shares of Buyer Common Stock into which their
Company Shares were converted pursuant to this Section 1.5, rounded to the
nearest whole number (the 'Escrow Shares'), shall be deposited in escrow
pursuant to Section 1.9 and shall be held and disposed of in accordance with
the terms of an escrow agreement, the form of which is attached hereto as
Exhibit A (the 'Escrow Agreement'). The Initial Payment Shares and the
Escrow Shares shall together be referred to herein as the 'Merger Shares',
and the Merger Shares and the Per Common Share Earn Out Payments (as defined
in Section 1.11) shall collectively be referred to herein as the 'Merger
Consideration';

(d) Each Company Share held in the Company's treasury immediately prior
to the Effective Time and each Company Share owned beneficially by the Buyer
shall be cancelled and retired without payment of any consideration
therefor; and

A-2

<Page>
(e) Each of the shares of Buyer Common Stock to be issued in exchange
for Common Shares pursuant to this Section 1.5 shall have the same
restrictions on transfer and requirements of forfeiture, if any, as did the
respective Common Shares.

1.6 Dissenting Shares.

(a) For purposes of this Agreement, 'Dissenting Shares' means Company Shares
held as of the Effective Time by a Company Shareholder who has not voted such
Company Shares in favor of the adoption of this Agreement and the Merger and
with respect to which appraisal shall have been duly demanded and perfected in
accordance with Chapter 11 of the NJBCA and not effectively withdrawn or
forfeited prior to the Effective Time. Dissenting Shares shall not be converted
into or represent the right to receive Merger Consideration, unless such Company
Shareholder shall have forfeited his, her or its right to appraisal under the
NJBCA or properly withdrawn, his, her or its demand for appraisal. If such
Company Shareholder has so forfeited or withdrawn his, her or its right to
appraisal of Dissenting Shares, then (i) as of the occurrence of such event,
such holder's Dissenting Shares shall cease to be Dissenting Shares and shall be
converted into and represent the right to receive the Merger Consideration
issuable or payable in respect of such Company Shares pursuant to Section 1.5
and Section 1.11, and (ii) promptly following the occurrence of such event, the
Buyer shall deliver to such Company Shareholder a certificate representing
ninety percent (90%) of the Merger Shares to which such holder is entitled
pursuant to Section 1.5 (which shares shall be considered Initial Payment Shares
for all purposes of this Agreement) and shall deliver to the Escrow Agent, as
defined in the Escrow Agreement, a certificate representing the remaining ten
percent (10%) of the Merger Shares to which such holder is entitled pursuant to
Section 1.5 (which shares shall be considered Escrow Shares for all purposes of
this Agreement). Such Company Shareholder shall further be entitled to and shall
receive such amounts as set forth and in accordance with Section 1.11.

(b) The Company shall give the Buyer (i) prompt notice of any written
demands for appraisal of any Company Shares, withdrawals of such demands, and
any other instruments that relate to such demands received by the Company and
(ii) the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the NJBCA. The Company shall not, except with the
prior written consent of the Buyer, make any payment with respect to any demands
for appraisal of Company Shares or offer to settle or settle any such demands.

1.7 Fractional Shares. No certificates or scrip representing fractional
shares shall be issued to former Company Shareholders upon the surrender for
exchange of the share certificates that, immediately prior to the Effective
Time, represented Company Shares (the 'Certificates'). Each former Company
Shareholder that would have been entitled to receive a fractional share shall,
upon proper surrender of such person's Certificates, receive shares of Buyer
Common Stock rounded up to the nearest whole number.

1.8 Options and Warrants.

(a) As of the Effective Time, all options to purchase Common Shares issued
by the Company pursuant to the Company's 2000 Stock Plan (the 'Option Plan') or
otherwise ('Options'), whether vested or unvested, and the Option Plan, insofar
as it relates to Options outstanding under such Plan as of the Closing, shall be
assumed by the Buyer. At the Effective Time, the Company assigns and the Buyer
assumes any right of repurchase set forth in any agreement which grants options
to purchase Common Shares. Immediately after the Effective Time, each Option
outstanding immediately prior to the Effective Time (an 'Outstanding Option')
shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Option at the Effective Time, such
number of shares of Buyer Common Stock as is equal to the number of Common
Shares subject to the unexercised portion of such Option multiplied by the
Common Conversion Ratio (with any fraction resulting from such multiplication to
be rounded down to the nearest whole number). The exercise price per share of
each such assumed Option shall be equal to the exercise price of such Option
immediately prior to the Effective Time, divided by the Common Conversion Ratio
(rounded up to the nearest whole cent). The term, exercisability, vesting
schedule, status as an 'incentive stock option' under Section 422 of the Code,
if applicable and if permitted by law, and all of the other terms of the Options
shall otherwise remain unchanged.

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(b) As soon as practicable after the Effective Time, the Surviving
Corporation shall deliver to the holders of Options appropriate notices setting
forth such holders' rights pursuant to such Options, as amended by this
Section 1.8, and the agreements evidencing such Options shall continue in effect
on the same terms and conditions (subject to the amendments provided for in this
Section 1.8 and such notice).

(c) The Buyer shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Buyer Common Stock for delivery upon
exercise of the Options assumed in accordance with this Section 1.8. Within
ninety (90) days after the Effective Time, the Buyer shall file a Registration
Statement on Form S-8 (or any successor form) under the Securities Act of 1933
(as amended, the 'Securities Act') with respect to all shares of Buyer Common
Stock subject to such Options that may be registered on a Form S-8, and shall
use commercially reasonable efforts to maintain the effectiveness of such
registration statement for so long as such Options remain outstanding and cause
such shares to be accepted for listing on Nasdaq.

(d) The Company shall cause the termination, as of the Effective Time, of
any warrants (the 'Warrants') which remain unexercised.

(e) The Company shall obtain, prior to the Closing, the consent from each
holder of an Option or a Warrant to the amendment (in the case of Options) or
termination (in the case of Warrants) of such Option or Warrant pursuant to this
Section 1.8 (unless such consent is not required under the terms of the
applicable agreement, instrument or plan).

1.9 Escrow.

(a) On the Closing Date, the Buyer shall deliver to the Escrow Agent a
certificate (issued in the name of the Escrow Agent or its nominee) representing
the Escrow Shares, as described in Section 1.5 for the purpose of securing the
indemnification obligations of the Indemnifying Shareholders (as defined in
Section 6.1) set forth in this Agreement. The Escrow Shares shall be referred to
herein as the 'Escrow Amount.' The Escrow Amount shall be held by the Escrow
Agent under the Escrow Agreement pursuant to the terms thereof. The Escrow
Amount shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party, and shall be held and disbursed solely for the purposes and in accordance
with the terms of the Escrow Agreement.

(b) The adoption of this Agreement and the approval of the Merger by the
Company Shareholders shall constitute approval of the Escrow Agreement and of
all of the arrangements relating thereto, including without limitation the
placement of the Escrow Amount in escrow and the appointment of the
Representative.

1.10 Notes Payable. At the Closing, the Buyer shall assume certain
liabilities pursuant to the Merger and issue to Lucent and Signal Lake
promissory notes, the form of which is attached hereto as Exhibit B (the 'New
Promissory Notes'), in the aggregate principal amount of $800,000 in exchange
for the cancellation of the promissory notes of the Company to Lucent and Signal
Lake in the aggregate principal amount of $800,000. At the Closing, the Buyer
shall further assume certain additional liabilities pursuant to the Merger and
subsequently pay to all other holders of notes payable of the Company (other
than Lucent and Signal Lake) an aggregate cash payment of up to $525,000, which
amount shall equal the amount of all outstanding principal to the date of
Closing of those certain notes payable to each such other holder (collectively,
the 'Other Notes Payable'). Any amounts paid under this Section 1.10 shall not
be made subject to the Escrow Agreement. Lucent, Signal Lake and each of the
Other Notes Payable holders shall, on the date of Closing, deliver to the Buyer
its respective note, canceled in full (including the cancellation of any accrued
interest thereon). The principal amount of each note outstanding as of the date
of this Agreement is set forth on Section 1.10 of the Disclosure Schedule.
Notwithstanding the foregoing and in lieu of the right to receive any cash
payment under this Section 1.10 in connection with the promissory notes of the
Company to SGM Capital Limited ('SGM') in the aggregate principal amount of
$300,000 (the 'SGM Note'), SGM shall have the option to receive a New Promissory
Note in exchange for the SGM Note. Such option may be exercised by written
notification from SGM to the Buyer at least thirty (30) days prior to the
closing.

1.11 Per Common Share Earn Out Payment. Except for those Closing Date Common
Shares held by Lucent, which shares shall not be included in any calculation
under this Section 1.11, the Buyer shall

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pay a per share amount on each Closing Date Common Share (the 'Per Common Share
Earn Out Payment') at such times and upon the happening of such events as
follows:

(a) a Per Common Share Earn Out Payment shall be made on or before
December 31, 2001 (which date of payment shall be at the discretion of the
Buyer, provided such date is not later than January 1, 2002 (the 'First
Payment Date')) in an amount equal to $250,000 divided by the number of
Closing Date Common Shares if, prior to Closing, Seller has achieved more
than $500,000 in recognized revenues, net of related returns at any time,
for sales of Seller's products or services listed on Schedule 1.11, as such
products and services may be modified or enhanced by Seller during such
period;

(b) a Per Common Share Earn Out Payment shall be made on or before March
31, 2002 (which date of payment shall be at the discretion of the Buyer,
provided such date is not later than March 31, 2002 (the 'Second Payment
Date')) in an amount equal to $250,000 divided by the number of Closing Date
Common Shares if, for the period beginning on the date of the execution of
this Agreement and ending on December 31, 2001, the Seller (for the period
beginning on the date of this execution of the Agreement and ending on the
date of Closing) and the Surviving Company (for the period beginning on the
date of Closing and ending on December 31, 2001) collectively achieve more
than $3,000,000 in recognized revenues, net of related returns at any time,
for sales of Seller's products or services listed on Schedule 1.11, as such
products or services may thereafter modified or enhanced by Seller or the
Surviving Company;

(c) a Per Common Share Earn Out Payment shall be made on or before
September 30, 2002 (which date of payment shall be at the discretion of the
Buyer, provided such date is not later than September 30, 2002 (the 'Third
Payment Date' and together with the First Payment Date and the Second
Payment Date, the 'Payment Dates')) in an amount equal to $500,000 divided
by the number of Closing Date Common Shares if, for the period beginning
January 1, 2002 and ending on June 30, 2002 the Surviving Company achieves
more than $4,000,000 in recognized revenues, net of related returns at any
time, for sales of Seller's products or services listed on Schedule 1.11, as
such products or services may thereafter be modified or enhanced by Seller
or the Surviving Company;

(d) at the option of the Buyer, any Per Common Share Earn Out Payment
payable pursuant to this Section 1.11 may be paid by the Buyer in shares of
Buyer Common Stock calculated as follows: the dollar amount of the
applicable Per Common Share Earn Out Payment divided by the average of the
last reported sales prices per share of the Buyer Common Stock on Nasdaq
over the ten (10) consecutive trading days immediately prior to the end of
the applicable earn out period;

(e) for purposes of sub-paragraph (a), (b) and (c) of this
Section 1.11, recognized revenues and related returns shall be determined in
accordance with the generally accepted accounting principles ('GAAP');

(f) in determining any of the amounts calculated under this
Section 1.11, Mr Binay Sugla, as representative (the 'Representative') of
the holders of Closing Date Common Shares, shall be entitled to receive from
the Surviving Company, not less than thirty (30) days prior to the
applicable Payment Date, a copy of the calculations (the 'Calculations')
made in determining whether or not the Surviving Company was required to
make a respective Per Common Share Earn Out Payment. Unless the
Representative notifies the Surviving Company in writing within ten (10)
days of the Representative's receipt of the Calculations of any disagreement
with the Calculations, the Calculations shall be final and binding. If the
Representative notifies the Surviving Company of any disagreement with the
Calculations within such ten (10) day period and such disagreement cannot be
satisfactorily resolved within an additional period of thirty (30) days, the
disagreement as to the Calculations shall be submitted for final
determination to an accounting firm (other than the accounting firm then
used by the Surviving Company) jointly selected by the Surviving Company and
the Representative which shall be a 'Big 5' accounting firm or firm of
similar national reputation ('Appeal Accountants'); or, if they are unable
to agree to the Appeal Accountants, each shall select a 'Big 5' accounting
firm or firm of similar national reputation and the two firms so selected
shall designate the Appeal Accountants. Both parties shall be bound by the
determination of the Appeal Accountants and the cost of such expenses shall
be shared equally

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between the Buyer and the holders of Closing Date Common Shares (such amount
to the withheld pro-rata from any payment then due to such holders of
Closing Date Common Shares or to be retained from the Escrow Amount as
defined below). The Appeal Accountants shall render their final
determination with respect to the resolution of such disputes which shall be
binding on the Surviving Company and such holders of Closing Date Common
Shares and deliver copies thereof to each such party.

1.12 Reduction in Purchase Price. In the event that: (i) there is any amount
owing to Signal Lake pursuant to that certain Exclusive Financial Services
Agreement, dated April 12, 2001 by and between the Company and Signal Lake (the
'Signal Lake Agency Arrangement'); or (ii) the legal and accounting fees and
expenses referenced in Section 4.8 of this Agreement exceed $300,000, all such
amounts shall reduce amounts to be received by the holders of Company Shares
under this Agreement or pursuant to the terms of the Escrow Agreement, pro-rata
with respect to the number of Company Shares held. Notwithstanding the
foregoing, this Section 1.12 not in any way affect the rights of the Company,
its shareholders and Signal Lake to determine the amount owed to Signal Lake, if
any, under the Signal Lake Agency Arrangement.

1.13 Certificate of Incorporation and By-laws.

(a) The Certificate of Incorporation of the Surviving Corporation
immediately following the Effective Time shall be the same as the Certificate of
Incorporation of the Buyer immediately prior to the Effective Time.

(b) The By-laws of the Surviving Corporation immediately following the
Effective Time shall be the same as the By-laws of the Buyer immediately prior
to the Effective Time.

1.14 Adjustments to Merger Consideration. Not withstanding any other
provision in this Agreement, if, on the date of Closing, the Buyer reasonably
concludes that the aggregate fair market value of the shares of Buyer Common
Stock to be issued pursuant to Section 1.5 of this Agreement will be less than
forty-five percent (45%) of all consideration payable for the Company Shares,
then the amount of non-stock consideration to be paid by Buyer pursuant to
Section 1.11 for such Company Shares shall be decreased and substituted with
such number of shares of Buyer Common Stock as shall result in the aggregate
fair market value of all shares, as so revised, of Buyer Common Stock to be
issued pursuant to Section 1.5 and Section 1.11 of this Agreement being equal to
forty-five percent (45%) of all consideration payable for the Company Shares.
The purpose of this Section 1.14 is to preserve the status of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, and this
Section 1.14 shall be construed consistently with such purpose.

1.15 No Further Rights. From and after the Effective Time, no Company Shares
shall be deemed to be outstanding, and holders of Certificates shall cease to
have any rights with respect thereto, except as provided herein or by law.

1.16 Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of Company Shares shall
thereafter be made. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be cancelled and exchanged for Initial
Payment Shares in accordance with Section 1.5, subject to Section 1.9 and to
applicable law in the case of Dissenting Shares.

1.17 Combination and Subdivision of Shares. To the extent the Buyer
implements any stock split (whether forward or reverse) between the date hereof
and the Effective Time, the number of shares to be the delivered to the Company
Shareholders under this Article I and the number of shares subject to options
and the applicable option prices under Section 1.8 hereof shall take into
account such stock split.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Buyer that the statements
contained in this Article II are true and correct, except as set forth on the
disclosure schedule provided by the Company to the Buyer on the date hereof and
accepted in writing by the Buyer (the 'Disclosure Schedule'). The

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Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article II, and the
disclosures in any paragraph of the Disclosure Schedule shall qualify only the
corresponding paragraph in this Article II and any other section hereof where it
is clear, upon a reading of such disclosure without any independent knowledge on
the part of the reader regarding the matter disclosed, that the disclosure is
intended to apply to such other section. For purposes of this Article II, the
phrase 'to the knowledge of the Company' or any phrase of similar import shall
be deemed to refer to the actual or constructive knowledge of the executive
officers of the Company and members of the Company's Board of Directors.

2.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of New Jersey. The Company is duly
qualified to conduct business and is in corporate and tax good standing under
the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified or in good standing, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect (as defined below). The Company has all requisite
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The Company has
furnished to the Buyer complete and accurate copies of its Certificate of
Incorporation and By-laws. The Company is not in default under or in violation
of any provision of its Certificate of Incorporation or By-laws. For purposes of
this Agreement, 'Company Material Adverse Effect' means a material adverse
effect on the assets, business, condition (financial or otherwise), or results
of operations of the Company.

2.2 Capitalization. The authorized capital stock of the Company consists of
(a) 40,000,000 Common Shares, of which, as of the date of this Agreement,
6,850,000 shares were issued and outstanding and none of which shares were held
in the treasury of the Company and (b) 20,000,000 Preferred Shares, of which
(i) 12,000,000 shares have been designated as Series A Convertible Preferred
Stock, of which, as of the date of this Agreement, 9,000,000 shares were issued
and outstanding and (ii) 8,000,000 shares have been designated as Series B
Convertible Preferred Stock, of which, as of the date of this Agreement,
8,000,000 shares were issued and outstanding. Section 2.2 of the Disclosure
Schedule sets forth a complete and accurate list of (i) all Shareholders of the
Company, indicating the number and class or series of Company Shares held by
each shareholder and (for Company Shares other than Common Shares) the number of
Common Shares (if any) into which such Company Shares are convertible, (ii) all
Outstanding Options and Warrants, indicating (A) the holder thereof, (B) the
number and class or series of Company Shares subject to each Option and Warrant
and (for Company Shares other than Common Shares) the number of Common Shares
(if any) into which such Company Shares are convertible, (C) the exercise price,
date of grant, vesting schedule and expiration date for each Option or Warrant,
and (D) any terms regarding the acceleration of vesting, (iii) any restrictions
on transfer, provisions of forfeiture or similar provisions to which any such
securities are subject; and (iv) all stock option plans and other stock or
equity-related plans of the Company. All of the issued and outstanding Company
Shares are, and all Company Shares that may be issued upon exercise of Options
or Warrants will be (upon issuance in accordance with their terms), duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights. Other than the Options and Warrants listed on Section 2.2 of the
Disclosure Schedule, there are no outstanding or authorized options, warrants,
rights, agreements or commitments to which the Company is a party or which are
binding upon the Company providing for the issuance or redemption of any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company. There are no
agreements to which the Company is a party or by which it is bound with respect
to the voting (including without limitation voting trusts or proxies),
registration under the Securities Act, or sale or transfer (including without
limitation agreements relating to pre-emptive rights, rights of first refusal,
co-sale rights or 'drag-along' rights) of any securities of the Company. To the
knowledge of the Company, except as set forth on Section 2.2 of the Disclosure
Schedule, there are no agreements among other parties, to which the Company is
not a party and by which it is not bound, with respect to the voting (including
without limitation voting trusts or proxies) or sale or transfer (including
without limitation agreements relating to rights of first refusal, co-sale
rights or 'drag-along' rights) of any

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securities of the Company. All of the issued and outstanding Company Shares were
issued in compliance with applicable federal and state securities laws.

2.3 Authorization of Transaction. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by the Company of this Agreement and,
subject to the adoption of this Agreement and the approval of the Merger by a
majority of the votes represented by the outstanding Company Shares entitled to
vote on this Agreement and the Merger (the 'Company Requisite Shareholder
Approval'), the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of the Company. Without limiting the generality of the foregoing,
the Board of Directors of the Company, at a meeting duly called and held, by the
unanimous vote of all directors (i) determined that the Merger is fair and in
the best interests of the Company and its Shareholders, (ii) adopted this
Agreement in accordance with the provisions of the NJBCA, and (iii) directed
that this Agreement and the Merger be submitted to the shareholders of the
Company for their adoption and approval and resolved to recommend that the
shareholders of the Company vote in favor of the adoption of this Agreement and
the approval of the Merger. This Agreement has been duly and validly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.

2.4 Noncontravention. Subject to the filing of the Certificate of Merger as
required by the NJBCA, neither the execution and delivery by the Company of this
Agreement, nor the consummation by the Company of the transactions contemplated
hereby, will (a) conflict with or violate any provision of the Certificate of
Incorporation or By-laws of the Company or the charter, (b) require on the part
of the Company any filing with, or any permit, authorization, consent or
approval of, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (a
'Governmental Entity'), (c) except as set forth on Section 2.4 of the Disclosure
Schedule, conflict with, result in a material breach of, constitute (with or
without due notice or lapse of time or both) a material default under, result in
the acceleration of obligations under, create in any party the right to
terminate, modify or cancel, or require any notice, consent or waiver under, any
material contract or instrument to which the Company is a party or by which the
Company is bound or to which any of their assets is subject, (d) result in the
imposition of any Security Interest (as defined below) upon any assets of the
Company, or (e) violate, in any material respect, any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
properties or assets. For purposes of this Agreement: 'Security Interest' means
any mortgage, pledge, security interest, encumbrance, charge or other lien
(whether arising by contract or by operation of law), other than
(i) mechanic's, materialmen's, and similar liens, (ii) liens arising under
worker's compensation, unemployment insurance, social security, retirement, and
similar legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the Ordinary Course of
Business (as defined below) of the Company and not material to the Company; and
'Ordinary Course of Business' means the ordinary course of the Company's
business, consistent with past custom and practice (including with respect to
frequency and amount).

2.5 No Subsidiaries. The Company does not own, and has never owned, of
record or beneficially, and does not control and has never controlled, any
direct or indirect equity or other interest, or any right (contingent or
otherwise) to acquire the same, in any corporation, partnership, limited
liability company, joint venture, association or other entity (a 'Subsidiary').
The Company is not, and has never been, a member of (and no part of the
Company's business is or has ever been conducted through) any partnership, nor
is the Company nor has the Company ever been a participant in any joint venture
or similar arrangement. There are no contractual obligations of the Company to
provide funds to, or make any investment in (whether in the form of a loan,
capital contribution or otherwise), any other person.

2.6 Financial Statements. The Company has provided to the Buyer (a) the
unaudited consolidated balance sheets and statements of income, changes in
shareholders' equity and cash flows of the Company as of and for each of the
last three (3) fiscal years; and (b) the unaudited consolidated balance sheet
and statements of income, changes in shareholders' equity and cash flows as of
and for the four (4) months ended as of April 30, 2001 (the 'Most Recent Balance
Sheet Date'). Such financial statements (collectively, the 'Financial
Statements') have been prepared in accordance with United

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States GAAP applied on a consistent basis throughout the periods covered
thereby, fairly present the financial condition, results of operations and cash
flows of the Company as of the respective dates thereof and for the periods
referred to therein and are consistent with the books and records of the
Company; provided, however, that the Financial Statements referred to in
clause (b) above are subject to normal recurring year-end adjustments (which
will not be material) and do not include footnotes.

2.7 Absence of Certain Changes. Since the Most Recent Balance Sheet Date,
(a) there has occurred no event or development which has had, or could
reasonably be expected to have in the future, a Company Material Adverse Effect,
and (b) the Company has not taken any of the actions set forth in
paragraphs (a) through (n) of Section 4.4.

2.8 Undisclosed Liabilities. The Company has no liability (whether known or
unknown, whether absolute or contingent, whether liquidated or unliquidated and
whether due or to become due), except for (a) liabilities shown on the balance
sheet referred to in clause (b) of Section 2.6 (the 'Most Recent Balance
Sheet'), (b) liabilities which have arisen since the Most Recent Balance Sheet
Date in the Ordinary Course of Business and which are similar in nature and
amount to the liabilities which arose during the comparable period of time in
the immediately preceding fiscal period and (c) contractual and other
liabilities incurred in the Ordinary Course of Business which are not required
by GAAP to be reflected on a balance sheet.

2.9 Tax Matters.

(a) For purposes of this Agreement, the following terms shall have the
following meanings:

(i) 'Taxes' means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income, gross
receipts, ad valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, unemployment
insurance, social security, business license, business organization,
environmental, workers compensation, payroll, profits, license, lease,
service, service use, severance, stamp, occupation, windfall profits,
customs, duties, franchise and other taxes imposed by the United States of
America or any state, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such government, and
any interest, fines, penalties, assessments or additions to tax resulting
from, attributable to or incurred in connection with any tax or any contest
or dispute thereof.

(ii) 'Tax Returns' means all reports, returns, declarations, statements,
forms or other information required to be supplied to a Governmental Entity
or to any person in connection with Taxes and any associated schedules or
work papers produced in connection with such items.

(b) The Company has properly filed on a timely basis all Tax Returns that it
was required to file, and all such Tax Returns were complete and accurate in all
respects. The Company is not and has never been a member of a group of
corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns. The Company has paid on a timely basis and in
the manner prescribed by law all Taxes that were due and payable. The unpaid
Taxes of the Company for tax periods through the Most Recent Balance Sheet Date
do not exceed the accruals and reserves for Taxes (excluding accruals and
reserves for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the Most Recent Balance Sheet (rather than in
any notes thereto) and will not exceed those accruals and reserves as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of the Company in the Ordinary Course of Business in filing
its Tax Returns. The Company has no actual or potential liability for any Tax
obligation of any taxpayer (including without limitation any shareholder of the
Company, affiliated group of corporations or other entities that included the
Company during a prior period) other than the Company. All Taxes that the
Company is or was required by law to withhold or collect have been duly withheld
or collected and, to the extent required, have been properly paid to the
appropriate Governmental Entity.

(c) The Company has delivered to the Buyer or made available to the Buyer
complete and accurate copies of all Tax Returns of the Company together with all
related examination reports and statements of deficiency for all periods not
closed under the applicable statute of limitations. No examination or audit of
any Tax Return of the Company by any Governmental Entity has been threatened or,
to the

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knowledge of the Company, is currently in progress or contemplated. The Company
has not been informed by any jurisdiction that the jurisdiction believes that
the Company was required to file any Tax Return that was not filed, and the
Company does not know of any basis upon which a jurisdiction could assert such a
position. The Company has not waived any statute of limitations with respect to
Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency. The Company has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662. The Company is not a
party to any Tax allocation, sharing, or indemnification agreement.

(d) The Company: (i) is not a 'consenting corporation' within the meaning of
Section 341(f) of the Code, and none of the assets of the Company are subject to
an election under Section 341(f) of the Code; (ii) has not been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the
Code; (iii) has not made any payments, is not obligated to make any payments,
and is not a party to any agreement, contract, arrangement or plan that could
obligate it to make any payments that may be treated as an 'excess parachute
payment' under Section 280G of the Code (without regard to Section 280G(b)(4)
thereto); (iv) has no actual or potential liability for any Taxes of any person
(other than the Company) under Treasury Regulation Section 1.1502-6 (or any
similar provision of federal, state, local, or foreign law), or as a transferee
or successor, by contract, or otherwise; and (v) is not and has not been
required to make a basis reduction pursuant to Treasury Regulation
Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b).

(e) None of the assets of the Company: (i) is property that is required to
be treated as being owned by any other person pursuant to the provisions of
former Section 168(f)(8) of the Code; (ii) is 'tax-exempt use property' within
the meaning of Section 168(h) of the Code; or (iii) directly or indirectly
secures any debt the interest on which is tax exempt under Section 103(a) of the
Code.

(f) The Company has not undergone, has not agreed to undergo, and is not
required to undergo (nor will it be required as a result of the transactions
contemplated in this Agreement to undergo) a change in its method of accounting
resulting in an adjustment to its taxable income pursuant to Section 481 of the
Code. The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the Closing Date
under Code Section 481(c) (or any corresponding or similar provision of state,
local or foreign income Tax law); (ii) 'closing agreement' as described in Code
Section 7121 (or any corresponding or similar provision of state, local or
foreign income Tax law) executed on or prior to the Closing Date;
(iii) deferred intercompany gain or any excess loss account described in
Treasury Regulations under Code Section 1502 (or any corresponding or similar
provision of state, local or foreign income Tax law); (iv) installment sale or
open transaction disposition made on or prior to the Closing Date; or
(v) prepaid amount received on or prior to the Closing Date.

(g) The Company has not taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under
Section 368(a) of the Code. The Company is not aware of any agreement, plan or
other circumstance that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code.

(h) Except for Taxes not yet due, there are (and as of immediately following
the Closing there will be) no Liens on the assets of the Company relating to or
attributable to Taxes.

(i) The Company has not participated in or cooperated with, nor will it,
prior to the Closing Date, participate in or cooperate with, an international
boycott within the meaning of Code Section 999.

(j) The tax bases of the assets of the Company for purposes of determining
future amortization, depreciation and other federal income tax deductions is
accurately reflected on the Company's Tax books and records.

(k) The Company has not distributed to its shareholders or security holders
stock or securities of a controlled corporation, nor have stock or securities of
the Company been distributed, in a transaction to which Section 355 of the Code
applies (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that could otherwise constitute part of a 'plan' or 'series of
related transactions' (within

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the meaning of Section 355(e) of the Code) that includes the transaction
contemplated by this Agreement.

(l) The Company has not incurred (or been allocated) an 'overall foreign
loss' as defined in Section 904(f)(2) of the Code which has not been previously
recaptured in full as provided in Sections 904(f)(l) and/or 904(f)(3) of the
Code.

(m) The Company is not a party to a gain recognition agreement under
Section 367 of the Code.

2.10 Assets. The Company owns or leases all tangible assets necessary for
the conduct of its businesses as presently conducted and as presently proposed
to be conducted. Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used. Except as set forth in Section
2.10 of the Disclosure Schedule, no asset of the Company (tangible or
intangible) is subject to any Security Interest; and, with respect to any leased
property, the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold, and the
Company is not aware of any Security Interest, easement, covenant or other
restriction applicable to the real property subject to such lease, except for
recorded easements, covenants and other restrictions which do not materially
impair the current uses or the occupancy by the Company of the property subject
thereto.

2.11 Owned Real Property. The Company does not own any real property.

2.12 Intellectual Property.

(a) Except as set forth on Section 2.12 of the Disclosure Schedule, the
Company owns or has the right to use all Intellectual Property (as defined
below) reasonably necessary (i) to use, manufacture, market and distribute the
products manufactured, marketed, sold or licensed, and to provide the services
provided, by the Company to other parties (together, the 'Customer
Deliverables') or (ii) to operate the Company's internal systems that are
material to the business or operations of the Company, including, without
limitation, computer hardware systems, software applications and embedded
systems (the 'Internal Systems'; the Intellectual Property owned by or licensed
to the Company and incorporated in or underlying the Customer Deliverables or
the Internal Systems is referred to herein as the 'Company Intellectual
Property') in each case, as presently conducted by the Company. Except as set
forth on Section 2.12 of the Disclosure Schedule, each item of Company
Intellectual Property will be owned or available for use by the Surviving
Corporation immediately following the Closing on substantially identical terms
and conditions as it was immediately prior to the Closing. Except as set forth
on Section 2.12 of the Disclosure Schedule, the Company has taken reasonable
measures to protect the proprietary nature of each item of Company Intellectual
Property. To the knowledge of the Company as of the date of this Agreement or
Closing, as applicable: (a) no other person or entity has any rights to any of
the Company Intellectual Property owned by the Company (except pursuant to
agreements or licenses specified on Section 2.12(c) of the Disclosure Schedule);
and (b) no other person or entity is infringing, violating or misappropriating
any of the Company Intellectual Property. For purposes of this Agreement,
'Intellectual Property' means all (i) patents and patent applications,
(ii) copyrights and registrations thereof, (iii) mask works and registrations
and applications for registration thereof, (iv) computer software, data and
documentation, (v) trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice, know-how,
manufacturing and production processes and techniques, research and development
information, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information, (vi) trademarks, service marks, trade names,
domain names and applications and registrations therefor, (vii) other
proprietary rights relating to any of the foregoing and (viii) licenses to any
third party intellectual property. Section 2.12(a) of the Disclosure Schedule
lists each patent, patent application, copyright registration or application
therefor, mask work registration or application therefor, and trademark, service
mark and domain name registration or application therefor of the Company.

(b) None of the Customer Deliverables, or the marketing, distribution,
provision or use thereof, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any person or entity.
To the knowledge of the Company, none of the Internal Systems, or the use
thereof, infringes

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or violates, or constitutes a misappropriation of, any Intellectual Property
rights of any person or entity. Section 2.12(b) of the Disclosure Schedule lists
any complaint, claim or notice, or written threat thereof, received by the
Company alleging any such infringement, violation or misappropriation; and the
Company has provided to the Buyer complete and accurate copies of all written
documentation in the possession of the Company relating to any such complaint,
claim, notice or threat. The Company has provided to the Buyer complete and
accurate copies of all written documentation in the Company's possession
relating to claims or disputes known to the Company concerning any Company
Intellectual Property.

(c) Section 2.12(c) of the Disclosure Schedule identifies each license or
other agreement (or type of license or other agreement) pursuant to which the
Company has licensed, distributed or otherwise granted any rights to any third
party with respect to, any Company Intellectual Property.

(d) Section 2.12(d) of the Disclosure Schedule identifies each item of
Company Intellectual Property that is owned by a party other than the Company,
and the license or agreement pursuant to which the Company uses it (excluding
off-the-shelf software programs licensed by the Company pursuant to generally
commercially available licenses).

(e) The Company has not disclosed the source code for any of the software
owned by the Company (the 'Software') or other confidential information
constituting, embodied in or pertaining to the Software to any person or entity,
except pursuant to the agreements listed on Section 2.12(e) of the Disclosure
Schedule, and the Company has taken reasonable measure to prevent disclosure of
such source code.

(f) All of the copyrightable materials (including Software) incorporated in
or bundled with the Customer Deliverables have been created by employees of the
Company within the scope of their employment by the Company or by independent
contractors of the Company who have executed agreements expressly assigning all
right, title and interest in such copyrightable materials to the Company. No
portion of such copyrightable materials was jointly developed with any third
party.

(g) To the knowledge of the Company, the Customer Deliverables and the
Internal Systems are free from significant defects or programming errors and
conform in all material respects to the written documentation and specifications
therefor.

2.13 Contracts.

(a) Section 2.13 of the Disclosure Schedule lists the following agreements
(written or oral) to which the Company is a party as of the date of this
Agreement:

(i) any agreement (or group of related agreements) for the lease of
personal property from or to third parties providing for lease payments in
excess of $5,000 per annum or having a remaining term longer than twelve
(12) months;

(ii) any agreement (or group of related agreements) for the purchase or
sale of products or for the furnishing or receipt of services (A) which
calls for performance over a period of more than one (1) year, (B) which
involves more than the sum of $5,000, or (C) in which the Company has
granted manufacturing rights, 'most favored nation' pricing provisions or
marketing or distribution rights relating to any products or territory or
has agreed to purchase a minimum quantity of goods or services or has agreed
to purchase goods or services exclusively from a certain party;

(iii) any agreement establishing a partnership or joint venture;

(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) involving
more than $5,000 or under which it has imposed (or may impose) a Security
Interest on any of its assets, tangible or intangible;

(v) any agreement concerning confidentiality or noncompetition;

(vi) any employment or consulting agreement;

(vii) any agreement involving any officer, director or shareholder of
the Company or any affiliate (an 'Affiliate'), as defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the 'Exchange Act'),
thereof;

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(viii) any agreement under which the consequences of a default or
termination would reasonably be expected to have a Company Material Adverse
Effect;

(ix) any agreement which contains any provisions requiring the Company
to indemnify any other party thereto (excluding indemnities contained in
agreements for the purchase, sale or license of products entered into in the
Ordinary Course of Business); and

(x) any other agreement (or group of related agreements) either
involving more than $5,000 or not entered into in the Ordinary Course of
Business.

(b) The Company has delivered to the Buyer a complete and accurate copy of
each agreement listed on Section 2.12 or Section 2.13 of the Disclosure
Schedule. With respect to each agreement so listed: (i) the agreement is legal,
valid, binding and enforceable and in full force and effect; (ii) subject to
compliance with any assignment provisions set forth on Section 2.13 of the
Disclosure Schedule, the agreement will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
and (iii) neither the Company nor, to the knowledge of the Company, any other
party, is in breach or violation of, or default under, any such agreement, and
no event has occurred, is pending or, to the knowledge of the Company, is
threatened, which, after the giving of notice, with lapse of time, or otherwise,
would constitute a breach or default by the Company or, to the knowledge of the
Company, any other party under such contract, except to the extent such breach,
violation or default would not have a Company Material Adverse Effect.

2.14 Accounts Receivable. All accounts receivable of the Company reflected
on the Most Recent Balance Sheet are valid receivables subject to no setoffs or
counterclaims and are current and collectible (within ninety (90) days after the
date on which it first became due and payable), net of the applicable reserve
for bad debts on the Most Recent Balance Sheet. All accounts receivable
reflected in the financial or accounting records of the Company that have arisen
since the Most Recent Balance Sheet Date are valid receivables subject to no
setoffs or counterclaims and are collectible (within ninety (90) days after the
date on which it first became due and payable), net of a reserve for bad debts
in an amount proportionate to the reserve shown on the Most Recent Balance
Sheet.

2.15 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.

2.16 Insurance. Section 2.16 of the Disclosure Schedule lists each insurance
policy (including fire, theft, casualty, general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which the
Company is a party. Such insurance policies are of the type and in amounts
customarily carried by organizations conducting businesses or owning assets
similar to those of the Company. There is no material claim pending under any
such policy as to which coverage has been questioned, denied or disputed by the
underwriter of such policy. All premiums due and payable under all such policies
have been paid, the Company is not liable for retroactive premiums or similar
payments, and the Company is otherwise in compliance in all material respects
with the terms of such policies. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any such policy.
Except as set forth on Section 2.16 of the Disclosure Schedule, each such policy
will continue to be enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect
immediately prior to the Closing.

2.17 Litigation. There is no action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity or before any arbitrator (a 'Legal
Proceeding') which is pending or has been threatened in writing against the
Company which (a) seeks either damages in excess of $50,000 or equitable relief
or (b) in any manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement.

2.18 Warranties. No product or service manufactured, sold, leased, licensed
or delivered by the Company is subject to any guaranty, warranty, right of
return, right of credit or other indemnity other than (i) the applicable
standard terms and conditions of sale or lease of the Company, which are set
forth on Section 2.18 of the Disclosure Schedule and (ii) manufacturers'
warranties for which the Company has any liability.

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2.19 Employees.

(a) Section 2.19 of the Disclosure Schedule contains a list of all employees
of the Company, along with the position and the annual rate of compensation of
each such person. Each such employee has entered into a
confidentiality/assignment of inventions agreement with the Company, a copy of
which has previously been delivered to the Buyer. Section 2.19 of the Disclosure
Schedule contains a list of all employees of the Company who are a party to a
non-competition agreement with the Company; copies of such agreements have
previously been delivered to the Buyer. To the knowledge of the Company, no key
employee or group of employees has any plans to terminate employment with the
Company.

(b) The Company is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices or other collective bargaining disputes. The Company has no
knowledge of any organizational effort made or threatened, either currently or
within the past two (2) years, by or on behalf of any labor union with respect
to employees of the Company.

(c) Any employee of or consultant to the Company who is not a citizen of the
United States at the time of such employment or consulting relationship has or
had at all required times the proper documentation in order to be so employed or
to provide services at his or her respective work site.

2.20 Employee Benefits.

(a) For purposes of this Agreement, the following terms shall have the
following meanings:

(i) 'Employee Benefit Plan' means any 'employee pension benefit plan'
(as defined in Section 3(2) of ERISA), any 'employee welfare benefit plan'
(as defined in Section 3(1) of ERISA), and any other written or oral plan,
agreement or arrangement involving direct or indirect compensation,
including without limitation insurance coverage, severance benefits,
disability benefits, deferred compensation, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation.

(ii) 'ERISA' means the Employee Retirement Income Security Act of 1974,
as amended.

(iii) 'ERISA Affiliate' means any entity which is, or at any applicable
time was, a member of (1) a controlled group of corporations (as defined in
Section 414(b) of the Code), (2) a group of trades or businesses under
common control (as defined in Section 414(c) of the Code), or (3) an
affiliated service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes or
included the Company.

(b) Section 2.20(b) of the Disclosure Schedule contains a complete and
accurate list of all Employee Benefit Plans maintained, or contributed to, by
the Company or any ERISA Affiliate. Complete and accurate copies of (i) all
Employee Benefit Plans which have been reduced to writing, (ii) written
summaries of all unwritten Employee Benefit Plans, (iii) all related trust
agreements, insurance contracts and summary plan descriptions, and (iv) all
annual reports filed on IRS Form 5500, 5500C or 5500R and (for all funded plans)
all plan financial statements for the last five (5) plan years for each Employee
Benefit Plan, have been delivered to the Buyer. Each Employee Benefit Plan has
been administered in all material respects in accordance with its terms and each
of the Company and the ERISA Affiliates has in all material respects met its
obligations with respect to such Employee Benefit Plan and has made all required
contributions thereto. The Company, each ERISA Affiliate and each Employee
Benefit Plan are in compliance in all material respects with the currently
applicable provisions of ERISA and the Code and the regulations thereunder
(including without limitation Section 4980B of the Code, Subtitle K, Chapter 100
of the Code and Sections 601 through 608 and Section 701 et seq. of ERISA). All
filings and reports as to each Employee Benefit Plan required to have been
submitted to the Internal Revenue Service or to the United States Department of
Labor have been duly submitted.

(c) There are no Legal Proceedings (except claims for benefits payable in
the normal operation of the Employee Benefit Plans and proceedings with respect
to qualified domestic relations orders) against or involving any Employee
Benefit Plan or asserting any rights or claims to benefits under any Employee
Benefit Plan that could give rise to any material liability.

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(d) All the Employee Benefit Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such Employee Benefit Plans are qualified and
the plans and the trusts related thereto are exempt from federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code, no such
determination letter has been revoked and revocation has not been threatened,
and no such Employee Benefit Plan has been amended or operated since the date of
its most recent determination letter or application therefor in any respect, and
no act or omission has occurred, that would adversely affect its qualification
or materially increase its cost. Each Employee Benefit Plan which is required to
satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has been tested for
compliance with, and satisfies the requirements of, Section 401(k)(3) and
Section 401(m)(2) of the Code for each plan year ending prior to the Closing
Date.

(e) Neither the Company nor any ERISA Affiliate has ever maintained an
Employee Benefit Plan subject to Section 412 of the Code or Title IV of ERISA.

(f) At no time has the Company or any ERISA Affiliate been obligated to
contribute to any 'multiemployer plan' (as defined in Section 4001(a)(3) of
ERISA).

(g) There are no unfunded obligations under any Employee Benefit Plan
providing benefits after termination of employment to any employee of the
Company (or to any beneficiary of any such employee), including but not limited
to retiree health coverage and deferred compensation, but excluding continuation
of health coverage required to be continued under Section 4980B of the Code or
other applicable law and insurance conversion privileges under state law. The
assets of each Employee Benefit Plan which is funded are reported at their fair
market value on the books and records of such Employee Benefit Plan.

(h) No act or omission has occurred and no condition exists with respect to
any Employee Benefit Plan maintained by the Company or any ERISA Affiliate that
would subject the Company or any ERISA Affiliate to (i) any material fine,
penalty, tax or liability of any kind imposed under ERISA or the Code or
(ii) any contractual indemnification or contribution obligation protecting any
fiduciary, insurer or service provider with respect to any Employee Benefit
Plan.

(i) No Employee Benefit Plan is funded by, associated with or related to a
'voluntary employee's beneficiary association' within the meaning of
Section 501(c)(9) of the Code.

(j) Each Employee Benefit Plan is amendable and terminable unilaterally by
the Company at any time without liability to the Company as a result thereof and
no Employee Benefit Plan, plan documentation or agreement, summary plan
description or other written communication distributed generally to employees by
its terms prohibits the Company from amending or terminating any such Employee
Benefit Plan.

(k) Section 2.20(k) of the Disclosure Schedule discloses each:
(i) agreement with any shareholder, director, executive officer or other key
employee of the Company (A) the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
the Company of the nature of any of the transactions contemplated by this
Agreement, (B) providing any term of employment or compensation guarantee or
(C) providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee; (ii) agreement,
plan or arrangement under which any person may receive payments from the Company
that may be subject to the tax imposed by Section 4999 of the Code or included
in the determination of such person's 'parachute payment' under Section 280G of
the Code; and (iii) agreement or plan binding the Company, including without
limitation any stock option plan, stock appreciation right plan, restricted
stock plan, stock purchase plan, severance benefit plan or Employee Benefit
Plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.

(l) Section 2.20(l) of the Disclosure Schedule sets forth the policy of the
Company with respect to accrued vacation, accrued sick time and earned time-off
and the amount of such liabilities as of April 30, 2001.

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2.21 Environmental Matters.

(a) The Company has complied with all applicable Environmental Laws (as
defined below). There is no pending or, to the knowledge of the Company,
threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding, or investigation, inquiry or information request by
any Governmental Entity, relating to any Environmental Law involving the
Company. For purposes of this Agreement, 'Environmental Law' means any federal,
state or local law, statute, rule or regulation or the common law relating to
the environment or occupational health and safety, including without limitation
any statute, regulation, administrative decision or order pertaining to
(i) treatment, storage, disposal, generation and transportation of industrial,
toxic or hazardous materials or substances or solid or hazardous waste;
(ii) air, water and noise pollution; (iii) groundwater and soil contamination;
(iv) the release or threatened release into the environment of industrial, toxic
or hazardous materials or substances, or solid or hazardous waste, including
without limitation emissions, discharges, injections, spills, escapes or dumping
of pollutants, contaminants or chemicals; (v) the protection of wild life,
marine life and wetlands, including without limitation all endangered and
threatened species; (vi) storage tanks, vessels, containers, abandoned or
discarded barrels, and other closed receptacles; (vii) health and safety of
employees and other persons; and (viii) manufacturing, processing, using,
distributing, treating, storing, disposing, transporting or handling of
materials regulated under any law as pollutants, contaminants, toxic or
hazardous materials or substances or oil or petroleum products or solid or
hazardous waste. As used above, the terms 'release' and 'environment' shall have
the meaning set forth in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ('CERCLA').

(b) There have been no releases of any Materials of Environmental Concern
(as defined below) into the environment at any parcel of real property or any
facility formerly or currently owned, operated or controlled by the Company.
With respect to any such releases of Materials of Environmental Concern, the
Company has given all required notices to Governmental Entities (copies of which
have been provided to the Buyer). The Company is not aware of any releases of
Materials of Environmental Concern at parcels of real property or facilities
other than those owned, operated or controlled by the Company that could
reasonably be expected to have an impact on the real property or facilities
owned, operated or controlled by the Company. For purposes of this Agreement,
'Materials of Environmental Concern' means any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the Resource
Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum
products or any other material subject to regulation under any Environmental
Law.

(c) Set forth on Section 2.21(c) of the Disclosure Schedule is a list of all
documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Company (whether conducted by or on
behalf of the Company or a third party, and whether done at the initiative of
the Company or directed by a Governmental Entity or other third party) which the
Company has possession of or access to. A complete and accurate copy of each
such document has been provided to the Buyer.

(d) The Company is not aware of any material environmental liability of any
solid or hazardous waste transporter or treatment, storage or disposal facility
that has been used by the Company.

2.22 Legal Compliance. The Company, and the conduct and operations of its
business, is in compliance with each applicable law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, except for any violations or defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.

2.23 Customers and Suppliers. Section 2.23 of the Disclosure Schedule sets
forth a list of (a) each customer that accounted for more than one percent (1%)
of the consolidated revenues of the Company during the last full fiscal year or
the interim period through the Most Recent Balance Sheet Date and the amount of
revenues accounted for by such customer during each such period and (b) each
supplier that is the sole supplier of any significant product to the Company. No
such customer or supplier has indicated within the past year that it will stop,
or decrease the rate of, buying products or supplying products, as applicable,
to the Company. No unfilled customer order or commitment obligating the

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Company to process, manufacture or deliver products or perform services will
result in a loss to the Company upon completion of performance. No purchase
order or commitment of the Company is in excess of normal requirements, nor are
prices provided therein in excess of current market prices for the products or
services to be provided thereunder.

2.24 Permits. The Company is in possession of all material permits,
licenses, registrations, certificates, orders or approvals from any Governmental
Entity (including without limitation those issued or required under
Environmental Laws and those relating to the occupancy or use of owned or leased
real property) necessary for the Company to own, lease and otherwise hold and
operate its properties and other assets and to carry on its business as it is
now being conducted and as currently proposed to be conducted, except for those
the absence of which, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect
('Permits'). Each such Permit is in full force and effect and, to the knowledge
of the Company, no suspension or cancellation of such Permit is threatened and
there is no basis for believing that such Permit will not be renewable upon
expiration. Each such Permit will continue in full force and effect immediately
following the Closing.

2.25 Certain Business Relationships With Affiliates. No Affiliate of the
Company (a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company, or (c) owes any money to, or is owed any money by, the Company.
Section 2.25 of the Disclosure Schedule describes any transactions or
relationships between the Company and any Affiliate thereof which have occurred
or existed since December 31, 1999.

2.26 Brokers' Fees. Except pursuant to the Signal Lake Agency Arrangement,
the Company has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement. The amount payable to Signal Lake pursuant to the Signal Lake Agency
Arrangement shall be paid entirely by the holders of the Company Shares as set
forth in Section 1.12 of this Agreement.

2.27 Books and Records. The minute books and other similar records of the
Company contains complete and accurate records of all actions taken at any
meetings of the Company's shareholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. The books and records of the Company accurately reflect in all material
respects the assets, liabilities, business, financial condition and results of
operations of the Company and have been maintained in accordance with good
business and bookkeeping practices.

2.28 Disclosure. No representation or warranty by the Company contained in
this Agreement, and no statement contained in the Disclosure Schedule or any
other document, certificate or other instrument delivered or to be delivered by
or on behalf of the Company pursuant to this Agreement, contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading.
The Company has disclosed to the Buyer all material information relating to the
business of the Company or the transactions contemplated by this Agreement.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Company as follows:

3.1 Organization, Qualification and Corporate Power. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. The Buyer is duly qualified to
conduct business and is in corporate good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the
failure to be so qualified or in good standing would not have a Buyer
Material Adverse Effect (as defined below). The Buyer has all requisite
corporate power and authority to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. The Buyer
has furnished or made available to the Company complete and accurate copies
of its Certificate of Incorporation and By-laws. For purposes of this

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Agreement, 'Buyer Material Adverse Effect' means a material adverse effect
on the assets, business, condition (financial or otherwise), results of
operations of the Buyer and its subsidiaries, taken as a whole.

3.2 Capitalization. The authorized capital stock of the Buyer consists
of (a) 40,000,000 shares of Buyer Common Stock, no par value, of which
11,629,419 shares were issued and outstanding as of June 19, 2001, and
(b) 5,000,000 shares of Preferred Stock, no par value per share, of which no
shares are issued or outstanding. All of the issued and outstanding shares
of Buyer Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. All of the Merger Shares
will be, when issued in accordance with this Agreement, duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights.
The Buyer is currently considering the adoption of a Shareholder Protection
Plan, in such form as the Buyer's Board of Directors may approve in its sole
discretion. The Buyer provides no assurance that it will adopt such a plan
in a timely manner, or at all.

3.3 Authorization of Transaction. The Buyer has all requisite power and
authority to execute and deliver this Agreement and the Escrow Agreement and
to perform its obligations hereunder and thereunder. The execution and
delivery by the Buyer of this Agreement and, subject to the adoption of this
Agreement and the approval of the Merger by a majority of the votes
represented by the outstanding shares of the Buyer's Common Stock entitled
to vote on this Agreement and the Merger, the consummation by the Buyer of
the transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of the Buyer. Without limiting
the generality of the foregoing, the Board of Directors of the Buyer, at a
meeting duly called and held, by the unanimous vote of all directors
(i) determined that the Merger is fair and in the best interests of the
Buyer and its shareholders, (ii) adopted this Agreement in accordance with
the provisions of the NJBCA, and (iii) directed that this Agreement and the
Merger be submitted to the shareholders of the Buyer for their adoption and
approval and resolved to recommend that the shareholders of the Buyer vote
in favor of the adoption of this Agreement and the approval of the Merger.
This Agreement has been duly and validly executed and delivered by the Buyer
and constitutes a valid and binding obligation of the Buyer, enforceable
against them in accordance with its terms.

3.4 Noncontravention. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws,
the Exchange Act and the filing of the Certificate of Merger as required by
the NJBCA, neither the execution and delivery by the Buyer of the Agreement
or the Escrow Agreement, nor the consummation by the Buyer of the
transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the charter or By-laws of the Buyer, (b) require on
the part of the Buyer any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, (c) conflict with, result in a
material breach of, constitute (with or without due notice or lapse of time
or both) a material default under, result in the acceleration of obligations
under, create in any party any right to terminate, modify or cancel, or
require any notice, consent or waiver under, any material contract or
instrument to which the Buyer is a party or by which the Buyer is bound or
to which any of its assets are subject, except for (i) any conflict, breach,
default, acceleration, termination, modification or cancellation which would
not adversely affect the consummation of the transactions contemplated
hereby or (ii) any notice, consent or waiver the absence of which would not
adversely affect the consummation of the transactions contemplated hereby,
or (d) violate in any material respect any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or any of its properties
or assets.

3.5 Reports and Financial Statements. The Buyer has previously furnished
or made available to the Company complete and accurate copies, as amended or
supplemented, of its (a) Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, as filed with the Securities and Exchange
Commission (the 'SEC'), and (b) all other reports filed by the Buyer under
Section 13 or subsections (a) or (c) of Section 14 of the Exchange Act with
the SEC since December 31, 2000 (such reports are collectively referred to
herein as the 'Buyer Reports'). The Buyer Reports constitute all of the
documents required to be filed by the Buyer under Section 13 or subsections

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(a) or (c) of Section 14 of the Exchange Act with the SEC from December 31,
2000 through the date of this Agreement. The Buyer Reports complied in all
material respects with the requirements of the Exchange Act and the rules
and regulations thereunder when filed. As of their respective dates, the
Buyer Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited financial statements and unaudited
interim financial statements of the Buyer included in the Buyer Reports
(i) complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto when filed, (ii) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act),
(iii) fairly present the consolidated financial condition, results of
operations and cash flows of the Buyer as of the respective dates thereof
and for the periods referred to therein, and (iv) are consistent with the
books and records of the Buyer.

3.6 Absence of Material Adverse Change. Since March 31, 2001, there has
occurred no event or development which has had, or could reasonably be
expected to have in the future, a Buyer Material Adverse Effect.

3.7 Litigation. Except as disclosed in the Buyer Reports, as of the date
of this Agreement, there is no Legal Proceeding which is pending or, to the
Buyer's knowledge, threatened against the Buyer or any subsidiary of the
Buyer which, if determined adversely to the Buyer or such subsidiary, could
have, individually or in the aggregate, a Buyer Material Adverse Effect or
which in any manner challenges or seeks to prevent, enjoin, alter or delay
the transactions contemplated by this Agreement.

3.8 Qualification of the Merger as a Reorganization. To the knowledge of
the Buyer, neither the Buyer nor any of its Affiliates has through the date
of this Agreement taken or agreed to take any action that would prevent the
Merger from constituting a transaction qualifying as a reorganization under
Section 368(a) of the Code. Notwithstanding any provision in this Agreement
to the contrary, the Buyer makes no representation or warranty with respect
to the tax characterization of the transactions contemplated by the
Agreement and the Company Shareholders agree and acknowledge that they are
relying solely on their own advisers with resect to the tax treatment of the
transactions contemplated by the Agreement.

3.9 Brokers' Fees. Other than amounts payable to Kaufman Brothers, L.P.,
for services provided in connection with the Agreement, the Buyer does not
have any liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by
this Agreement.

3.10 Disclosure. No representation or warranty by the Buyer contained in
this Agreement, and no statement contained in any document, certificate or
other instrument delivered or to be delivered by or on behalf of the Buyer
at Closing pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading. The
Buyer has disclosed to the Company or in the Buyer's periodic and other
filings with the SEC all material information relating to the business of
the Buyer or the transactions contemplated by this Agreement.

3.11 Nasdaq Listing. The Buyer has not received any communication from
Nasdaq that the Buyer's Common Stock is subject to delisting or withdrawal
from such market.

ARTICLE IV
COVENANTS

4.1 Closing Efforts. Each of the Parties shall use its best efforts, to the
extent commercially reasonable ('Reasonable Best Efforts'), to take all actions
and to do all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including without limitation using
its Reasonable Best Efforts to ensure that (i) its representations and
warranties remain true and

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correct in all material respects through the Closing Date and (ii) the
conditions to the obligations of the other Parties to consummate the Merger are
satisfied.

4.2 Governmental and Third-Party Notices and Consents.

(a) Each Party shall use its Reasonable Best Efforts to obtain, at its
expense, all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement.

(b) The Company shall use its Reasonable Best Efforts to obtain, at its
expense, all such waivers, consents or approvals from third parties, and to give
all such notices to third parties, as are required to be listed on Section 2.4
of the Disclosure Schedule.

4.3 Special Meeting, Prospectus/Proxy Statement and Registration Statement.

(a) The Company shall use its Reasonable Best Efforts to obtain, as promptly
as practicable, the Company Requisite Shareholder Approval, either at a special
meeting of shareholders or pursuant to a written shareholder consent, in
accordance with the applicable requirements of the NJBCA. The Buyer shall use
its Reasonable Best Efforts to obtain, as promptly as practicable, the approval
of the Merger by the shareholders of the Buyer at a special meeting of the
shareholders of the Buyer, as required by the rules of the Nasdaq Stock Market,
in accordance with the applicable requirements of the NJBCA. In connection
therewith, the Buyer shall prepare, with the assistance and cooperation of the
Company, a Registration Statement on Form S-4 (the 'Registration Statement').
The Registration Statement shall include a prospectus/proxy statement to be used
for the purpose of offering the Merger Shares to the shareholders of the
Company, soliciting proxies or written consents from the shareholders of the
Company for the purpose of obtaining the Company Requisite Shareholder Approval,
and soliciting proxies from the shareholders of the Buyer for the purpose of
obtaining the approval of the Merger by the shareholders of the Buyer (such
prospectus/proxy statement, together with any accompanying letter to
shareholders, notice of meeting and form of proxy or written consent, shall be
referred to herein as the 'Prospectus/Proxy Statement'). The summary of the
Merger in the Prospectus/Proxy Statement shall include a summary of the terms
relating to the indemnification obligations of the Company Shareholders, the
escrow arrangements and the authority of the Representative, and a statement
that the adoption of this Agreement by the shareholders of the Company shall
constitute approval of such terms. The Buyer shall file the Registration
Statement with the SEC and shall, with the assistance of the Company, promptly
respond to any SEC comments on the Registration Statement and shall otherwise
use its Reasonable Best Efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable. Promptly
following such time as the Registration Statement is declared effective, the
Company shall distribute the Prospectus/Proxy Statement to its shareholders and
the Buyer shall distribute the Prospectus/Proxy Statement to its shareholders.

(b) The Company, acting through its Board of Directors, shall include in the
Prospectus/Proxy Statement the unanimous recommendation of its Board of
Directors that the shareholders of the Company vote in favor of the adoption of
this Agreement and the approval of the Merger. Notwithstanding the foregoing,
the obligations set forth in the foregoing sentence shall not apply (and the
Board of Directors shall be permitted to modify or withdraw any such
recommendation previously made) if the Company receives an unsolicited offer to
acquire (whether by merger, consolidation, share exchange, stock purchase, asset
purchase or otherwise) all of the outstanding capital stock or all or
substantially all of the assets of the Company, which the Board of Directors
reasonably concludes, after consultation with its advisors, would, if
consummated, constitute a transaction which is more favorable, from a financial
point of view, to the Company Shareholders than the Merger (a 'Company Superior
Offer').

(c) The Buyer, acting through its Board of Directors, shall include in the
Prospectus/Proxy Statement the recommendation of its Board of Directors that the
shareholders of the Buyer vote in favor of the approval of the Merger.

(d) The Buyer shall ensure that the Registration Statement does not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the

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statements therein not misleading (provided that the Buyer shall not be
responsible for the accuracy or completeness of any information relating to the
Company or furnished by the Company in writing for inclusion in the Registration
Statement).

(e) The Company shall ensure that the Prospectus/Proxy Statement does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading (provided that the Company shall not
be responsible for the accuracy or completeness of any information relating to
the Buyer or furnished by the Buyer in writing for inclusion in the
Prospectus/Proxy Statement).

(f) Holders of at least ninety-seven percent (97%) of the Company's capital
stock as of the date of this Agreement shall agree (i) to vote all Company
Shares that are beneficially owned by him, her or it in favor of the adoption of
this Agreement and the approval of the Merger, (ii) not to vote any Company
Shares in favor of any other acquisition (whether by way of merger,
consolidation, share exchange, stock purchase or asset purchase) of all or a
majority of the outstanding capital stock or assets of the Company and
(iii) otherwise to use his, her or its Reasonable Best Efforts to obtain the
Company Requisite Shareholder Approval.

(g) Each of the executive officers and Directors of the Buyer agree to vote
all shares of Common Stock of the Buyer that are beneficially owned by him, her
or it in favor of the adoption of the Agreement and the approval of the Merger
and otherwise to use his, her or its Reasonable Best Efforts to obtain the
affirmative vote of a majority of the votes represented by the outstanding Buyer
Common Stock entitled to vote on this Agreement and the Merger (the 'Buyer
Requisite Shareholder Approval').

4.4 Operation of Business. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, the Company
shall conduct its operations in the Ordinary Course of Business and in
compliance with all applicable laws and regulations and, to the extent
consistent therewith, use its Reasonable Best Efforts to preserve intact its
current business organization, keep its physical assets in good working
condition, pay all normal and recurring installments of bank debt, leases,
contracted obligations and other amounts due third parties, if any, as they
become due, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it to the end that its goodwill and ongoing business
shall not be impaired in any material respect. Without limiting the generality
of the foregoing, prior to the Effective Time, the Company shall not, without
the written consent of the Buyer, which consent shall not be unreasonably
withheld or delayed:

(a) issue or sell, or redeem or repurchase, any stock or other
securities of the Company or any rights, warrants or options to acquire any
such stock or other securities (except pursuant to the conversion or
exercise of convertible securities or Options or Warrants outstanding on the
date hereof), or amend any of the terms of (including without limitation the
vesting of) any such convertible securities or Options or Warrants;

(b) split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock;

(c) create, incur or assume any new bank debt, leases, loans,
encumbrances, liens, attachments, contractual obligations or other
indebtedness other than in the Ordinary Course of Business; assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person
or entity; or make any loans, advances or capital contributions to, or
investments in, any other person or entity;

(d) enter into, adopt or amend any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described in
Section 2.20(k) or (except for normal increases in the Ordinary Course of
Business for Non-Affiliates and except for the reinstatement to previous
levels of the salaries of employees who recently took salary reductions on a
voluntary basis to conserve cash and whose names and prior salary amounts
are set forth on Section 2.20 of the Disclosure Schedule) increase the
salary or any other payments, disbursements or distributions in any manner
or form to shareholders, members, directors, officers, employees or current

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independent contractors (or related parties thereto) of the Company or
affiliated or related entities, or changes in the cash or cash equivalent
accounts of the Company (except for existing payment obligations listed on
Section 2.20 of the Disclosure Schedule); and the Company shall not hire
additional employees or consultants without the express written consent of
the Buyer, except for the replacement of terminated employees or consultants
(in which event the Company shall notify the Buyer in writing of such
hiring, which notice shall include the name of the employee or consultant,
the terms of employment or engagement and the name of the individual who has
been so replaced; provided, however, that the Company may not grant options
or similar incentive compensation to any newly hired employees or
consultants, whether or not such individuals are replacing terminated
employees or consultants, without the Buyer's express written consent);

(e) acquire, sell, lease, license or dispose of any assets or property
(including without limitation any shares or other equity interests in or
securities of a Subsidiary or any corporation, partnership, association or
other business organization or division thereof), other than purchases and
sales of assets in the Ordinary Course of Business;

(f) mortgage or pledge any of its property or assets or subject any such
property or assets to any Security Interest;

(g) discharge or satisfy any Security Interest or pay any obligation or
liability other than in the Ordinary Course of Business;

(h) amend its charter, by-laws or other organizational documents;

(i) change in any material respect its accounting or Tax reporting
methods, principles or practices, except insofar as may be required by a
generally applicable change in GAAP or the Code, provided, however, that any
change in method or procedure for billing, collection or recording of client
accounts receivable must be approved in writing in advance by the Buyer;

(j) enter into, amend, terminate, take or omit to take any action that
would constitute a violation of or default under, or waive any rights under,
any material contract or agreement, including, without limitation, any bank
debt or leases of property, or enter into any distribution agreement, value
added reseller agreement or other reseller arrangement;

(k) make or commit to make any capital expenditure in excess of $5,000
per item or $25,000 in the aggregate;

(l) institute or settle any Legal Proceeding;

(m) take any action or fail to take any action permitted by this
Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of the Company
set forth in this Agreement becoming untrue or (ii) any of the conditions to
the Merger set forth in Article V not being satisfied; or

(n) agree in writing or otherwise to take any of the foregoing actions.

4.5 Access to Information.

(a) The Company shall permit representatives of the Buyer to have full
access (at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Company) to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company.

(b) Within fifteen (15) days after the end of each month ending prior to the
Closing, beginning with May 2001, the Company shall furnish to the Buyer an
unaudited income statement for such month and a balance sheet as of the end of
such month, prepared on a basis consistent with the Financial Statements. Such
financial statements shall present fairly the financial condition and results of
operations of the Company on a consolidated basis as of the dates thereof and
for the periods covered thereby, and shall be consistent with the books and
records of the Company.

4.6 Notice of Breaches.

(a) From the date of this Agreement until the Effective Time, the Company
shall promptly deliver to the Buyer supplemental information concerning events
or circumstances occurring subsequent to the date hereof which would render any
representation, warranty or statement in this Agreement or the

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Disclosure Schedule inaccurate or incomplete in any material respect at any time
after the date of this Agreement until the Closing Date. No such supplemental
information shall be deemed to cure any misrepresentation or breach of warranty
or constitute an amendment of any representation, warranty or statement in this
Agreement or the Disclosure Schedule; provided that if such supplemental
information relates to an event or circumstance occurring subsequent to the date
hereof in the Ordinary Course of Business (without breach of Section 4.4) and if
the Buyer would have the right to terminate this Agreement pursuant to Section
7.1(b) as a result of the information so disclosed and it does not exercise such
right prior to the Effective Time, then such supplemental information shall
constitute an amendment of the representation, warranty or statement to which it
relates for purposes of Article VI of this Agreement.

(b) From the date of this Agreement until the Effective Time, the Buyer
shall promptly deliver to the Company supplemental information concerning events
or circumstances occurring subsequent to the date hereof which would render any
representation or warranty in this Agreement inaccurate or incomplete in any
material respect at any time after the date of this Agreement until the Closing
Date. No such supplemental information shall be deemed to cure any
misrepresentation or breach of warranty or constitute an amendment of any
representation or warranty in this Agreement; provided that if such supplemental
information relates to an event or circumstance occurring subsequent to the date
hereof in the Ordinary Course of Business and if the Company would have the
right to terminate this Agreement pursuant to Section 7.1(c) as a result of the
information so disclosed and it does not exercise such right prior to the
Effective Time, then such supplemental information shall constitute an amendment
of the representation or warranty to which it relates for purposes of Article VI
of this Agreement.

4.7 Exclusivity.

(a) The Company shall not, and the Company shall require each of its
officers, directors, employees, representatives and agents not to, directly or
indirectly, (i) initiate, solicit, encourage or otherwise facilitate any
inquiry, proposal, offer or discussion with any party (other than the Buyer)
concerning any merger, reorganization, consolidation, recapitalization, business
combination, liquidation, dissolution, share exchange, sale of stock, sale of
material assets or similar business transaction involving the Company or any
division of the Company, (ii) furnish any non-public information concerning the
business, properties or assets of the Company or any division of the Company to
any party (other than the Buyer and other than information provided to potential
commercial partners or customers in the Ordinary Course of Business) or
(iii) engage in discussions or negotiations with any party (other than the
Buyer) concerning any such transaction. Notwithstanding the foregoing, prior to
the obtaining of the Company Requisite Stockholder Approval, the Company may
furnish non-public information concerning the business, properties or assets of
the Company to another party, and may engage in discussions or negotiations with
such party, if (x) the Company first executes a confidentiality agreement with
such party which is substantially similar the confidentiality agreement between
the Company and the Buyer, (y) the Board of Directors of the Company reasonably
concludes, after consultation with its outside legal counsel, that the fiduciary
duties of the Board of Directors under applicable law require the Company to do
so, and (z) the contact with such party was not solicited by the Company.

(b) The Company shall immediately notify any party with which discussions or
negotiations of the nature described in paragraph (a) above were pending that
the Company is terminating such discussions or negotiations. If the Company
receives any inquiry, proposal or offer of the nature described in paragraph (a)
above, the Company shall, within one (1) business day after such receipt, notify
the Buyer of such inquiry, proposal or offer, including the identity of the
other party and the terms of such inquiry, proposal or offer. If the Company
makes a determination under the final sentence of paragraph (a) above that it is
permitted to furnish non-public information or to engage in discussions or
negotiations with another party, the Company shall, within one business day
after such determination, notify the Buyer in writing of such determination and
the basis therefor, and shall keep the Buyer informed, on a current basis, of
the status of such discussions or negotiations and the terms being discussed or
negotiated.

4.8 Expenses. (a) Except as set forth in Article VI, Article VII and the
Escrow Agreement, each of the Parties shall bear its own costs and expenses
(including legal fees and expenses) incurred in

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connection with this Agreement and the transactions contemplated hereby;
provided, however, that if the Merger is consummated: (i) the Buyer shall assume
an aggregate of $300,000 in legal and accounting fees and expenses of the
Company in connection with the Merger (which amounts shall be paid directly by
the Buyer to such professionals at Closing upon receipt of final invoices at
Closing); and provided, further, that any such fees and expenses in excess of
$300,000 shall be paid by the holders of the Company Shares as set forth in
Section 1.12 of this Agreement; and (ii) any amounts owed under the Signal Lake
Agency Arrangement shall be paid by the holders of the Company Shares as set
forth in Section 1.12 of this Agreement. In addition, all costs and expenses of
filing the Registration Statement and causing such Registration Statement to be
effective shall be borne by the Buyer.

(b) Notwithstanding any provisions of law imposing the burden of such Taxes
on the Company, the Buyer, or the Company Shareholders, as the case may be, each
of the Company Shareholders and the Buyer shall be responsible for and shall pay
one-half of (a) all sales, use and transfer Taxes, and (b) all governmental
charges, if any, arising in connection with the Merger hereunder. If the Company
Shareholders shall fail to pay such amounts on a timely basis, the Buyer may pay
such amounts to the appropriate Governmental Entity or authorities, and the
Buyer shall be entitled to indemnification pursuant to Section 6.1(e) hereof.

4.9 Indemnification. The Buyer shall not, for a period of three (3) years
after the Effective Time, take any action to alter or impair any exculpatory or
indemnification provisions now existing in the Certificate of Incorporation or
By-laws of the Company for the benefit of any individual who served as a
director or officer of the Company at any time prior to the Effective Time,
except for any changes which may be required to conform with changes in
applicable law and any changes which do not affect the application of such
provisions to acts or omissions of such individuals prior to the Effective Time.

4.10 Listing of Merger Shares. The Buyer shall use commercially reasonable
efforts to list the Merger Shares and the shares subject to the registration
statement filed pursuant to Section 1.8(c) on Nasdaq.

4.11 Audited Financial Statements. The Company shall provide to the Buyer in
a timely manner, for inclusion in the Registration Statement, audited financial
statements in conformity with Regulation S-X.

4.12 Extension of Notes Payable. The Company shall take all actions
necessary to extend the maturity date of the obligations of the Company under
any of the notes payable set forth under Section 1.10 of this Agreement to the
date of Closing.

4.13 Section 16 Relief. Provided that the Company delivers to the Buyer the
Section 16 Information (as defined below) in a timely fashion, the Board of
Directors of the Buyer, or a committee of two or more Non-Employee Directors
thereof (as such term is defined for purposes of Rule 16b-3 under the Exchange
Act), shall adopt resolutions prior to the consummation of the Merger providing
that the receipt by the Company Insiders (as defined below) of the Buyer Common
Stock upon conversion of the Company Shares, and of options for Buyer Common
Stock upon conversion of the Options, in each case pursuant to the transactions
contemplated hereby and to the extent such securities are listed in the
Section 16 Information, are intended to be exempt from liability pursuant to
Section 16(b) under the Exchange Act. Such resolutions shall comply with the
approval conditions of Rule 16b-3 under the Exchange Act for purposes of such
Section 16(b) exemption, including, but not limited to, specifying the name of
the Company Insiders, the number of securities to be acquired or disposed of for
each such person, the material terms of any derivative securities, and that the
approval is intended to make the receipt of such securities exempt pursuant to
Rule 13b-3(d). 'Section 16 Information' shall mean information regarding the
Company Insiders, the number of shares of the Company Shares held by each such
Company Insider and expected to be exchanged for Buyer Common Stock in
connection with the Merger, and the number and description of the Options held
by each such Company Insider and expected to be converted into options for Buyer
Common Stock in connection with the Merger. 'Company Insiders' shall mean those
officers and directors of the Company who are reasonably expected to be subject
to the reporting requirement of Section 16(b) of the Exchange Act with respect
to Parent and who are listed in the Section 16 Information.

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4.14 Benefit Arrangements. The Buyer and Company agree that the Buyer will
provide benefits to Company employees following the Effective Time that are
substantially identical to the benefits currently provided to similarly situated
employees of the Buyer and which are set forth in reasonable detail on
Section 4.15 of the Disclosure Schedule for each such employee. From and after
the Effective Time, the Buyer shall, to the extent permitted by law, grant all
employees credit for all service (to the same extent as service with the Buyer
is taken into account with respect to similarly situated employees of the Buyer)
with Company prior to the Effective Time for (i) eligibility and vesting
purposes and (ii) for purposes of vacation accrual after the Effective Time as
if such service with Company was service with the Buyer.

4.15 Plan of Reorganization. This Agreement is intended to constitute a
'plan of reorganization' within the meaning of Section 1.368-2(g) of the income
tax regulations promulgated under the Code. From and after the date of this
Agreement and until the Closing Date, each party hereto shall use its
commercially reasonable efforts to cause the Merger to qualify, and will not
knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken which action or failure to act could
prevent the Merger from qualifying as a reorganization under the provisions of
Section 368(a) of the Code. Following the Closing Date, the Buyer shall not
knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken, which action or failure to act could
cause the Merger to fail to qualify as a reorganization under Section 368(a) of
the Code.

4.16 Comfort Letter. The Buyer shall have received a 'comfort letter' dated
as of a date not more than two (2) days prior to the date that the Registration
Statement is declared effective and shall have received a subsequent similar
letter dated as of a date not more than two (2) days prior to the Effective
Time, from Amper, Politziner & Mattia, P.A., auditors for the Company, addressed
to the Buyer in a customary form reasonably satisfactory to the Buyer.

4.17 Parachute Payments. Prior to the Effective Time, the Company shall
submit to a stockholder vote the right of any 'disqualified individual' (as
defined in Section 280G(c) of the Code) to receive any and all payments that
could be deemed 'parachute payments' under Section 280G(b) of the Code, in a
manner that satisfies the stockholder approval requirements for the small
business exemption of Code Section 280G(b)(5).

4.18 Company 401(k) Plan. If so requested by the Buyer, the Company shall
adopt an amendment to its 401(k) plan ( the 'Company 401(k) Plan') providing
that said plan shall terminate one business day prior to the Closing Date.

ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER

5.1 Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the Merger are subject to the satisfaction of the
following conditions:

(a) this Agreement and the Merger shall have received the Company
Requisite Shareholder Approval and the Buyer Requisite Shareholder Approval;
and

(b) the Registration Statement shall have become effective in accordance
with the provisions of the Securities Act, and there shall not be in effect
any stop order suspending the effectiveness of the Registration Statement or
any proceedings seeking such a stop order.

5.2 Conditions to Obligations of the Buyer. The obligation of the Buyer to
consummate the Merger is subject to the satisfaction (or waiver by the Buyer) of
the following additional conditions:

(a) the number of Dissenting Shares shall not exceed three percent (3%)
of the number of outstanding Common Shares as of the Effective Time
(calculated after giving effect to the conversion into Common Shares of all
outstanding Preferred Shares);

(b) the Company shall have obtained (and shall have provided copies
thereof to the Buyer) all of the waivers, permits, consents, approvals or
other authorizations, and effected all of the registrations, filings and
notices, referred to in Section 4.2 which are required on the part of the
Company, except where failure to do so would not result in a Company
Material Adverse Effect or

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materially impair the ability of the Parties to consummate the transactions
contemplated by this Agreement;

(c) the representations and warranties of the Company set forth in the
first sentence of Section 2.1 and in Section 2.3 and any representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality shall be true and correct in all respects, and all other
representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects, in each case as of the
date of this Agreement and as of the Effective Time as though made as of the
Effective Time, except to the extent such representations and warranties are
specifically made as of a particular date or as of the date of this
Agreement (in which case such representations and warranties shall be true
and correct as of such date);

(d) the Company shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Effective Time;

(e) no Legal Proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would
(i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation or (iii) have a Company Material
Adverse Effect, and no such judgment, order, decree, stipulation or
injunction shall be in effect;

(f) the Company shall have delivered to the Buyer a certificate (the
'Company Certificate') to the effect that each of the conditions specified
in clause (a) of Section 5.1 (with respect to the Company Requisite
Shareholder Approval) and clauses (a) through (e) (insofar as clause (e)
relates to Legal Proceedings involving the Company) of this Section 5.2 is
satisfied in all respects;

(g) the Buyer shall have received from counsel to the Company an opinion
with respect to the matters set forth in Exhibit C attached hereto,
addressed to the Buyer and dated as of the Closing Date;

(h) the Buyer shall have received from each of Lucent and Signal Lake a
written waiver of any of their respective liquidation preferences, rights to
payments under Section 1.11 of this Agreement and their respective rights to
convert or otherwise exchange their Preferred Shares into Common Shares;

(i) the Buyer shall have received executed UCC-3 termination statements
with respect to the security interests granted to Lucent, Signal Lake and
SGM;

(j) the Comprehensive Preferred Escrow Agreement dated January 29, 2001
among the Company, DSI Technology Escrow Services, Inc., Signal Lake, SGM
and Lucent shall be terminated in writing effective as of the Closing;

(k) the Buyer shall have received from Binay Sugla a written waiver of
Section 4(e) of that certain Stock Option Agreement dated April 30, 2001
with respect to the transactions contemplated hereby;

(l) the Buyer shall have received from Anand Desai written confirmation
of the termination of that certain warrant issued by the Company to Mr.
Desai to purchase 200,000 Common Shares at an exercise price of $2.50 per
share;

(m) that certain VAR Agreement executed by each of the Parties on or
about the date of this Agreement shall be in full force and effect at
Closing pursuant to its terms;

(n) the Buyer shall have received an executed employment agreement from
Mr. Binay Sugla and executed offer letters from such other employees of the
Company as are set forth on Section 5.2(i) of the Disclosure Schedule,
providing for, among other things: (i) usual and customary invention
agreement, non-competition and non-solicitation provisions; (ii) an annual
base salary; and (iii) benefits as provided to other similarly situated
executives of the Buyer; which employment agreements shall be in such form
as is reasonably satisfactory to the Buyer and each respective employee;

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(o) Each of the employees set forth on Section 5.2(j) of the Disclosure
Schedule shall remain as employees of the Surviving Corporation on the
Closing Date and in capacities substantially similar to those of each such
employee with the Company prior to the Merger;

(p) the Buyer shall have received executed invention assignment,
non-competition and non-solicitation provisions from each of the employees
retained by the Buyer or otherwise reasonably selected by the Buyer, in form
and substance reasonably satisfactory to each of the Buyer and the Company;

(q) the Buyer shall have received a fairness opinion from its investment
banker with respect to the fairness, from a financial point of view, of the
Merger to the shareholders of the Buyer;

(r) the Buyer shall have received executed lock-up agreements, in form
and substance reasonably satisfactory to the Buyer from each of the holders
of Company Shares providing for the lock-up all Merger Shares to be received
by each such holder as follows;

(i) twenty percent (20%) of such shares shall be subject to lock-up
for a period of sixty (60) days subsequent to the date of Closing,
subject to customary exceptions; and

(ii) twenty percent (20%) of such shares shall be subject to lock-up
for a period of ninety (90) days subsequent to the date of Closing,
subject to customary exceptions;

(iii) twenty percent (20%) of such shares shall be subject to lock-up
for a period of one hundred and twenty (120) days subsequent to the date
of Closing, subject to customary exceptions;

(iv) twenty percent (20%) of such shares shall be subject to lock-up
for a period of one hundred and fifty (150) days subsequent to the date
of Closing, subject to customary exceptions; and

(v) twenty percent (20%) of such shares shall be subject to lock-up
for a period of one hundred and eighty (180) days subsequent to the date
of Closing, subject to customary exceptions.

(s) the Buyer shall have received from each of the Lucent, Signal Lake
and the holders of each of the Other Notes Payable the original notes
referenced in Section 1.10 of this Agreement, duly canceled, with respect to
all principal and interest thereunder;

(t) the Buyer shall have received the duly executed receipt of Signal
Lake indicating that all obligations owed to Signal Lake under the Signal
Lake Agency Arrangement have been satisfied in full;

(u) the Buyer shall have received from the Company a copy of a letter of
non-applicability addressed to the Company from the Department of
Environmental Protection of the State of New Jersey with respect to the
Merger;

(v) the Buyer shall have received executed agreements from each of the
Company Shareholders receiving Merger Shares acknowledging and agreeing that
such Merger Shares are subject to the restrictions on transfer and
requirements of forfeiture referenced in Section 1.5(e) of this Agreement
and as set forth on Section 2.2 of the Disclosure Schedule;

(w) the Buyer shall have received such other certificates and
instruments (including without limitation certificates of Tax and other good
standing of the Company in its jurisdiction of organization and the various
foreign jurisdictions in which it is qualified, certified charter documents,
certificates as to the incumbency of officers and the adoption of
authorizing resolutions) as it shall reasonably request in connection with
the Closing;

(x) The Company Shareholders shall have delivered to the Buyer properly
executed statements in a form reasonably acceptable to the Buyer for
purposes of satisfying the Buyer's obligations under Treasury Regulation
Section 1.1445-2(b);

(y) Notwithstanding any other provision in this Agreement, the Buyer
shall have the right to withhold Taxes from any payments to be made
hereunder (including any payments to be made under the Escrow Agreement) if
such withholding is required by law and to collect Forms W-8 or W-9, as
applicable, from the Company Shareholders;

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(z) the Company shall have terminated the Company 401(k) Plan, as
provided by Section 4.19;

(aa) any 'parachute payments' shall have been approved by the percentage
of holders of Company Shares as required by law as described in
Section 4.18; and

(bb) The Buyer shall have received the Escrow Agreement, duly executed
by each of the Indemnification Representative and the Escrow Agent, as
defined therein.

5.3 Conditions to Obligations of the Company. The obligation of the Company
to consummate the Merger is subject to the satisfaction of the following
additional conditions:

(a) the Merger Shares shall have been authorized for listing on Nasdaq
upon official notice of issuance;

(b) the Buyer shall have effected all of the registrations, filings and
notices referred to in Section 4.2 which are required on the part of the
Buyer, except for any which if not obtained or effected would not have a
Buyer Material Adverse Effect or a material adverse effect on the ability of
the Parties to consummate the transactions contemplated by this Agreement;

(c) the representations and warranties of the Buyer set forth in the
first sentence of Section 3.1 and Section 3.3 and any representations and
warranties of the Buyer set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of the Buyer set forth in this Agreement that are not so
qualified (other than those set forth in Section 3.1 and Section 3.3) shall
be true and correct in all material respects, in each case as of the date of
this Agreement and as of the Effective Time as though made as of the
Effective Time, except to the extent such representations and warranties are
specifically made as of a particular date or as of the date of this
Agreement (in which case such representations and warranties shall be true
and correct as of such date);

(d) the Buyer shall have performed or complied in all material respects
its agreements and covenants required to be performed or complied with under
this Agreement as of or prior to the Effective Time;

(e) no Legal Proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would
(i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation or (iii) have a Buyer Material
Adverse Effect, and no such judgment, order, decree, stipulation or
injunction shall be in effect;

(f) the Buyer shall have delivered to the Company a certificate (the
'Buyer Certificate') to the effect that each of the conditions specified in
clause (b) of Section 5.1 and clauses (a) through (e) (insofar as clause (e)
relates to Legal Proceedings involving the Buyer) of this Section 5.3 is
satisfied in all respects;

(g) the Buyer shall have delivered to Lucent and Signal Lake (and SGM,
if applicable) the New Promissory Notes;

(h) the Company shall have received from counsel to the Buyer an opinion
with respect to the matters set forth in Exhibit D attached hereto,
addressed to the Company and dated as of the Closing Date;

(i) the shareholders of the Buyer shall have elected, effective upon
Closing each of Mr. Binay Sugla and two individuals mutually acceptable to
each of the Buyer and the Company to the Buyer's Board of Directors, with
terms expiring at the Buyer's next Annual Meeting of Shareholders; provided,
however, that each of such individuals may stand for re-election;

(j) the Company shall have received from Buyer an executed Board
Observer Rights Letter, in form and substance mutually agreeable to each of
Lucent and the Buyer, providing certain Board of Director observer rights to
Lucent through December 31, 2002;

(k) the Company shall have received confirmation from the Buyer that the
Buyer's Common Stock continues to be listed on Nasdaq and that the Buyer has
not received notice from Nasdaq that such shares are subject to delisting or
withdrawal, unless the Buyer has adopted a plan reasonably expected to
prevent such delisting, which plan shall be acceptable to the Company;

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(l) the Company shall have received such other certificates and
instruments (including without limitation certificates of good standing of
the Buyer in its jurisdiction of organization, certified charter documents,
certificates as to the incumbency of officers and the adoption of
authorizing resolutions) as it shall reasonably request in connection with
the Closing.

ARTICLE VI
INDEMNIFICATION

6.1 Indemnification by the Company Shareholders. The Company Shareholders
receiving the Merger Shares pursuant to Section 1.5 (the 'Indemnifying
Shareholders') shall indemnify the Buyer in respect of, and hold it harmless
against, any and all debts, obligations and other liabilities (whether absolute,
accrued, contingent, fixed or otherwise, or whether known or unknown, or due or
to become due or otherwise), monetary damages, fines, fees, penalties, interest
obligations, Taxes, deficiencies, losses and expenses (including without
limitation amounts paid in settlement, interest, court costs, costs of
investigators, fees and expenses of attorneys, accountants, financial advisors
and other experts, and other expenses of litigation) ('Damages') incurred or
suffered by the Surviving Corporation or the Buyer or any Affiliate thereof
resulting from, relating to or constituting:

(a) any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of the Company contained in this Agreement or the
Company Certificate;

(b) any failure of any Company Shareholder to have good, valid and
marketable title to the issued and outstanding Company Shares issued in the
name of such Company Shareholder, free and clear of all Security Interests;

(c) any claim by a shareholder or former shareholder of the Company, or
any other person or entity, seeking to assert, or based upon: (i) ownership
or rights to ownership of any shares of stock of the Company; (ii) any
rights of a shareholder (other than the right to receive the Merger Shares
pursuant to this Agreement or appraisal rights under the applicable
provisions of the NJBCA), including any option, preemptive rights or rights
to notice or to vote; (iii) any rights under the Certificate of
Incorporation or By-laws of the Company; or (iv) any claim that his, her or
its shares were wrongfully repurchased by the Company;

(d) any amount referenced under the caption 'Reduction in Purchase
Price' under Section 1.12 of this Agreement to the extent that such amount
is not deducted from the purchase price at the Closing;

(e) any amount paid by the Buyer under Section 4.8(b) because of the
failure of the Company Shareholders to pay such amount;

(f) any amount paid to employees or consultants of the Company for
liabilities or claims made in connection with the termination of such
person's employment or consulting arrangement with the Company, which
termination occurred during the period beginning on the date that is six (6)
months prior to the date of this Agreement and ending at the Effective Time;

(g) any accounts payable that are more than thirty (30) days past due on
the date of Closing; or

(h) any amounts owed to Signal Lake other than amounts owed pursuant to
the Signal Lake Agency Arrangement which are otherwise accounted for under
this Agreement.

6.2 Indemnification by the Buyer. The Buyer shall indemnify the Indemnifying
Shareholders in respect of, and hold them harmless against, any and all Damages
incurred or suffered by the Indemnifying Shareholders resulting from, relating
to or constituting any misrepresentation, breach of warranty or failure to
perform any covenant or agreement of the Buyer contained in this Agreement or
the Buyer Certificate.

6.3 Indemnification Claims.

(a) A party entitled, or seeking to assert rights, to indemnification under
this Article VI (an 'Indemnified Party') shall give written notification to the
party from whom indemnification is sought (an 'Indemnifying Party') of the
commencement of any suit or proceeding relating to a third party

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claim for which indemnification pursuant to this Article VI may be sought. Such
notification shall be given within twenty (20) business days after receipt by
the Indemnified Party of notice of such suit or proceeding, and shall describe
in reasonable detail (to the extent known by the Indemnified Party) the facts
constituting the basis for such suit or proceeding and the amount of the claimed
damages; provided, however, that no delay on the part of the Indemnified Party
in notifying the Indemnifying Party shall relieve the Indemnifying Party of any
liability or obligation hereunder except to the extent of any damage, prejudice
or liability caused by or arising out of such failure. Within twenty (20)
business days after delivery of such notification, the Indemnifying Party may,
upon written notice thereof to the Indemnified Party, assume control of the
defense of such suit or proceeding with counsel reasonably satisfactory to the
Indemnified Party; provided that (i) the Indemnifying Party may only assume
control of such defense if (A) it acknowledges in writing to the Indemnified
Party that any damages, fines, costs or other liabilities that may be assessed
against the Indemnified Party in connection with such suit or proceeding
constitute Damages for which the Indemnified Party shall be indemnified pursuant
to this Article VI and (B) the ad damnum is less than or equal to the amount of
Damages for which the Indemnifying Party is liable under this Article VI,
(ii) the Indemnifying Party may not assume control of the defense of a suit or
proceeding involving criminal liability or in which equitable relief is sought
against the Indemnified Party and (iii) the Indemnifying Party may not assume
control of the defense of any suit or proceeding of any nature with respect to
Taxes. If the Indemnifying Party does not so assume control of such defense, the
Indemnified Party shall control such defense. The party not controlling such
defense (the 'Non-controlling Party') may participate therein at its own
expense; provided that if the Indemnifying Party assumes control of such defense
and the Indemnified Party reasonably concludes that the Indemnifying Party and
the Indemnified Party have conflicting interests or different defenses available
with respect to such suit or proceeding, the reasonable fees and expenses of
counsel to the Indemnified Party shall be considered 'Damages' for purposes of
this Agreement. The party controlling such defense (the 'Controlling Party')
shall keep the Non-controlling Party advised of the status of such suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the Non-controlling Party with respect thereto. The
Non-controlling Party shall furnish the Controlling Party with such information
as it may have with respect to such suit or proceeding (including copies of any
summons, complaint or other pleading which may have been served on such party
and any written claim, demand, invoice, billing or other document evidencing or
asserting the same) and shall otherwise cooperate with and assist the
Controlling Party in the defense of such suit or proceeding. The Indemnifying
Party shall not agree to any settlement of, or the entry of any judgment arising
from, any such suit or proceeding without the prior written consent of the
Indemnified Party, which shall not be unreasonably withheld or delayed; provided
that the consent of the Indemnified Party shall not be required if the
Indemnifying Party agrees in writing to pay any amounts payable pursuant to such
settlement or judgment and such settlement or judgment includes a complete
release of the Indemnified Party from further liability and has no other adverse
effect on the Indemnified Party. The Indemnified Party shall not agree to any
settlement of, or the entry of any judgment arising from, any such suit or
proceeding without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld or delayed.

(b) In order to seek indemnification under this Article VI, an Indemnified
Party shall give written notification (a 'Claim Notice') to the Indemnifying
Party which contains (i) a description and the amount (the 'Claimed Amount') of
any Damages incurred or reasonably expected to be incurred by the Indemnified
Party, (ii) a statement that the Indemnified Party is entitled to
indemnification under this Article VI for such Damages and a reasonable
explanation of the basis therefor, and (iii) a demand for payment (in the manner
provided in paragraph (c) below) in the amount of such Damages. If the
Indemnified Party is the Buyer, the Indemnifying Party shall deliver a copy of
the Claim Notice to the Escrow Agent.

(c) Within twenty (20) business days after delivery of a Claim Notice, the
Indemnifying Party shall deliver to the Indemnified Party a written response
(the 'Response') in which the Indemnifying Party shall: (i) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in which
case the Response shall be accompanied by a payment by the Indemnifying Party to
the Indemnified Party of the Claimed Amount, by check or by wire transfer;
provided that if the Indemnified Party is the Buyer, the Indemnifying Party and
the Indemnified Party shall deliver to the Escrow Agent, within

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three (3) days following the delivery of the Response, a written notice executed
by both parties instructing the Escrow Agent to distribute to the Buyer such
portion of the Escrow Amount as shall have an aggregate Value (as defined below)
equal to the Claimed Amount), (ii) agree that the Indemnified Party is entitled
to receive part, but not all, of the Claimed Amount (the 'Agreed Amount') (in
which case the Response shall be accompanied by a payment by the Indemnifying
Party to the Indemnified Party of the Agreed Amount, by check or by wire
transfer; provided that if the Indemnified Party is the Buyer, the Indemnifying
Party and the Indemnified Party shall deliver to the Escrow Agent, within three
(3) days following the delivery of the Response, a written notice executed by
both parties instructing the Escrow Agent to distribute to the Buyer such
portion of the Escrow Amount as have an aggregate Value equal to the Agreed
Amount) or (iii) dispute that the Indemnified Party is entitled to receive any
of the Claimed Amount. If the Indemnifying Party in the Response disputes its
liability for all or part of the Claimed Amount, the Indemnifying Party and the
Indemnified Party shall follow the procedures set forth in Section 6.3(d) for
the resolution of such dispute (a 'Dispute'). For purposes of this Article VI,
the 'Value' shall be the amount of cash delivered and the value of any Escrow
Shares delivered in satisfaction of an indemnity claim, which Escrow Shares
shall be valued at the average of the last reported sale prices per share of the
Buyer Common Stock on Nasdaq over the ten (10) consecutive trading days ending
on the date such shares are delivered in satisfaction of a claim (subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Buyer Common Stock since the
beginning of such 10-day period), multiplied by the number of such Escrow
Shares.

(d) During the 60-day period following the delivery of a Response that
reflects a Dispute, the Indemnifying Party and the Indemnified Party shall use
good faith efforts to resolve the Dispute. If the Dispute is not resolved within
such 60-day period, the Indemnifying Party and the Indemnified Party shall
discuss in good faith the submission of the Dispute to a mutually acceptable
alternative dispute resolution procedure (which may be non-binding or binding
upon the parties, as they agree in advance) (the 'ADR Procedure'). In the event
the Indemnifying Party and the Indemnified Party agree upon an ADR Procedure,
such parties shall, in consultation with the chosen dispute resolution service
(the 'ADR Service'), promptly agree upon a format and timetable for the ADR
Procedure, agree upon the rules applicable to the ADR Procedure, and promptly
undertake the ADR Procedure. The provisions of this Section 6.3(d) shall not
obligate the Indemnifying Party and the Indemnified Party to pursue an ADR
Procedure or prevent either such party from pursuing the Dispute in a court of
competent jurisdiction; provided that, if the Indemnifying Party and the
Indemnified Party agree to pursue an ADR Procedure, neither the Indemnifying
Party nor the Indemnified Party may commence litigation or seek other remedies
with respect to the Dispute prior to the completion of such ADR Procedure. Any
ADR Procedure undertaken by the Indemnifying Party and the Indemnified Party
shall be considered a compromise negotiation for purposes of federal and state
rules of evidence, and all statements, offers, opinions and disclosures (whether
written or oral) made in the course of the ADR Procedure by or on behalf of the
Indemnifying Party, the Indemnified Party or the ADR Service shall be treated as
confidential and, where appropriate, as privileged work product. Such
statements, offers, opinions and disclosures shall not be discoverable or
admissible for any purposes in any litigation or other proceeding relating to
the Dispute (provided that this sentence shall not be construed to exclude from
discovery or admission any matter that is otherwise discoverable or admissible).
The fees and expenses of any ADR Service used by the Indemnifying Party and the
Indemnified Party shall be shared equally by the Indemnifying Party and the
Indemnified Party. If the Indemnified Party is the Buyer, the Indemnifying Party
and the Indemnified Party shall deliver to the Escrow Agent, promptly following
the resolution of the Dispute (whether by mutual agreement, pursuant to an ADR
Procedure, as a result of a judicial decision or otherwise), a written notice
executed by both parties instructing the Escrow Agent as to what (if any)
portion of the Escrow Amount shall be distributed to the Buyer (which notice
shall be consistent with the terms of the resolution of the Dispute).

(e) Notwithstanding the other provisions of this Section 6.3, if a third
party asserts (other than by means of a lawsuit) that an Indemnified Party is
liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this Article VI, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled

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to satisfy such obligation, without prior notice to or consent from the
Indemnifying Party, (ii) such Indemnified Party may subsequently make a claim
for indemnification in accordance with the provisions of this Article VI, and
(iii) such Indemnified Party shall be reimbursed, in accordance with the
provisions of this Article VI, for any such Damages for which it is entitled to
indemnification pursuant to this Article VI (subject to the right of the
Indemnifying Party to dispute the Indemnified Party's entitlement to
indemnification, or the amount for which it is entitled to indemnification,
under the terms of this Article VI).

(f) For purposes of this Section 6.3 and the last two sentences of
Section 6.4, (i) if the Indemnifying Shareholders comprise the Indemnifying
Party, any references to the Indemnifying Party (except provisions relating to
an obligation to make or a right to receive any payments provided for in
Section 6.3 or Section 6.4) shall be deemed to refer to the Representative, and
(ii) if the Indemnifying Shareholders comprise the Indemnified Party, any
references to the Indemnified Party (except provisions relating to an obligation
to make or a right to receive any payments provided for in Section 6.3 or
Section 6.4) shall be deemed to refer to the Representative. The Representative
shall have full power and authority on behalf of each Indemnifying Shareholder
to take any and all actions on behalf of, execute any and all instruments on
behalf of, and execute or waive any and all rights of, the Indemnifying
Shareholders under this Article VI. The Representative shall have no liability
to any Indemnifying Shareholder for any action taken or omitted on behalf of the
Indemnifying Shareholders pursuant to this Article VI.

6.4 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement, the Company Certificate or the Buyer
Certificate shall (a) survive the Closing and any investigation at any time made
by or on behalf of an Indemnified Party and (b) shall expire on the date one (1)
year following the Closing Date, provided, however, that the representations and
warranties set forth in Section 2.9 shall survive until the expiration of the
statutes of limitations applicable to the matters covered by such Section. If an
Indemnified Party delivers to an Indemnifying Party, before expiration of a
representation or warranty, either a Claim Notice based upon a breach of such
representation or warranty, or a notice that, as a result a legal proceeding
instituted by or written claim made by a third party, the Indemnified Party
reasonably expects to incur Damages as a result of a breach of such
representation or warranty (an 'Expected Claim Notice'), then such
representation or warranty shall survive until, but only for purposes of, the
resolution of the matter covered by such notice. If the legal proceeding or
written claim with respect to which an Expected Claim Notice has been given is
definitively withdrawn or resolved in favor of the Indemnified Party, the
Indemnified Party shall promptly so notify the Indemnifying Party; and if the
Indemnified Party has delivered a copy of the Expected Claim Notice to the
Escrow Agent and any portion of the Escrow Amount has been retained in escrow
after the Termination Date (as defined in the Escrow Agreement) with respect to
such Expected Claim Notice, the Indemnifying Party and the Indemnified Party
shall promptly deliver to the Escrow Agent a written notice executed by both
parties instructing the Escrow Agent to distribute such retained Escrow Amount
to the Indemnifying Shareholders in accordance with the terms of the Escrow
Agreement.

6.5 Limitations.

(a) Notwithstanding anything to the contrary herein, (i) any Claims made by
the buyer under this Article VI shall be made solely against the Escrow Amount
by a claim filed against the Representative and not the Indemnifying
Shareholders, (ii) the aggregate liability of the Indemnifying Shareholders
(through the Representative), on the one hand, and the Buyer, on the other hand,
for Damages under this Article VI shall not exceed the Escrow Amount as
established at Closing; and (iii) there shall be no right to indemnification
pursuant to this Article VI unless and until Claim Notices identifying aggregate
Damages in excess of $100,000 (the 'Threshold Amount') have been delivered to an
Indemnifying Party, in which event the Indemnified Party shall be entitled to
recover all such amounts including the Threshold Amount; provided that the
limitations set forth in clauses (ii) and (iii) above shall not apply to (A) a
claim pursuant to Section 6.1(a) relating to a breach of the representations and
warranties set forth in Sections 2.1, 2.2, 2.3, or 2.9 (or the portion of the
Company Certificate relating thereto), Section 6.1(b), Section 6.1(c),
Section 6.1(d), Section 6.1(e) or to a breach of the covenants set forth in
Sections 4.8 or (B) a claim pursuant to Section 6.2 relating to a breach of the
representations and

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warranties set forth in Sections 3.1, 3.2, 3.3 (or the portion of the Buyer
Certificate relating thereto); provided further that the Escrow Amount shall not
be subject to adjustment for any change in value of the Escrow Amount and that
any decrease in the value of the Escrow Amount as a result of a decrease in the
price per share of the Buyer Common Stock on Nasdaq after the date of this
Agreement shall not require any of the Indemnifying Shareholders to contribute
additional Merger Shares to the Escrow.

(b) With respect to claims against the Indemnifying Shareholders pursuant to
this Article VI, except with respect to claims based on fraud, or claims based
upon Section 6.5(a)(A) or (B) of this Agreement, after the Closing, Buyer's sole
remedy shall be the right to collect part or all of the Escrow Amount, as
applicable, pursuant to the terms of the Escrow Agreement.

(c) No Indemnifying Shareholder shall have any right of contribution against
the Company or the Surviving Corporation with respect to any breach by the
Company of any of its representations, warranties, covenants or agreements.

ARTICLE VII
TERMINATION

7.1 Termination of Agreement. The Parties may terminate this Agreement prior
to the Effective Time (whether before or after receipt of the Company Requisite
Shareholder Approval and/or the Buyer Requisite Shareholder Approval), as
provided below:

(a) the Parties may terminate this Agreement by mutual written consent;

(b) the Buyer may terminate this Agreement by giving written notice to
the Company in the event the Company is in breach of any representation,
warranty or covenant contained in this Agreement, and such breach,
individually or in combination with any other such breach, (i) would cause
the conditions set forth in clauses (c) or (d) of Section 5.2 not to be
satisfied and (ii) is not cured within twenty (20) days following delivery
by the Buyer to the Company of written notice of such breach. Upon such
termination, the Company shall pay the Termination Fee set forth in
Section 7.3 of this Agreement;

(c) the Company may terminate this Agreement by giving written notice to
the Buyer in the event the Buyer is in breach of any representation,
warranty or covenant contained in this Agreement, and such breach,
individually or in combination with any other such breach, (i) would cause
the conditions set forth in clauses (c) or (d) of Section 5.3 not to be
satisfied and (ii) is not cured within twenty (20) days following delivery
by the Company to the Buyer of written notice of such breach. Upon such
termination, the Buyer shall pay the Company the Termination Fee;

(d) any Party may terminate this Agreement by giving written notice to
the other Party at any time after their respective shareholders have voted
on whether to approve this Agreement and the Merger in the event this
Agreement and the Merger failed to receive the Company Requisite Shareholder
Approval, with respect to the Company, or the Buyer Requisite Shareholder
Approval, with respect to the Buyer. If such failure to receive the Company
Requisite Shareholder Approval or the Buyer Requisite Shareholder Approval,
as applicable, is caused by a breach of Section 4.3(f) or (g) of this
Agreement, the party failing to obtain such requisite shareholder approval
shall pay the Termination Fee;

(e) the Company may terminate this Agreement by giving written notice to
the Buyer in the event the Buyer enters into any agreement or understanding
with another party with respect to any business combination between the
Buyer and another other person or entity and, in connection therewith, the
Buyer terminates this Agreement. Upon such termination, the Buyer shall pay
the Company the Termination Fee;

(f) the Company may terminate this Agreement by giving written notice to
the Buyer in the event the Company accepts a Company Superior Offer. Upon
such termination, the Company shall pay the Buyer a Termination Fee;

(g) Either Party may terminate this Agreement by giving written notice
to the other Party if the Closing shall not have occurred on or before
October 31, 2001 by reason of the failure of any condition precedent under
this Agreement (unless the failure results primarily from a breach by the

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Party seeking to terminate this Agreement of any representation, warranty or
covenant contained in this Agreement), in which case, the breaching Party
shall pay the Termination Fee; provided, however, that such October 31, 2001
date shall be extended one (1) day for each day after July 15, 2001 that the
Company has not provided to the Buyer audited financial statements in form
and substance sufficient for filing with the Registration Statement.

7.2 Effect of Termination.

(a) If any Party terminates this Agreement pursuant to Section 7.1, all
obligations of the Parties hereunder shall terminate without any liability
of any Party to any other Party (except for any liability of any Party for
willful breaches of this Agreement and for any required payments of the
Termination Fee).

(b) If any Party terminates this Agreement for any reason other than as
set forth in Section 7.1, such Party shall pay to the other Party the
Termination Fee.

(c) Notwithstanding the termination of this Agreement for any reason,
the terms of any confidentiality agreement between the Parties shall
continue in accordance with its terms.

7.3 Termination Fee. In the event a Party is required to pay a termination
fee pursuant to Section 7.1 or Section 7.2(b) above, such termination fee shall
equal $2,000,000 plus the amount of all direct documentable expenses incurred by
the non-terminating Party in connection with this Agreement (the 'Termination
Fee').

ARTICLE VIII
DEFINITIONS

For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.

<Table>
<Caption>
DEFINED TERM SECTION
- ------------ -------

ADR Procedure. 6.3(d)
ADR Service................................................. 6.3(d)
Affiliate................................................... 2.13(a)(vii)
Agreed Amount............................................... 6.3(c)
Appeal Accountants.......................................... 1.11(f)
Average Sales Price......................................... 1.5(c)
Buyer....................................................... Introduction
Buyer Certificate........................................... 5.3(f)
Buyer Common Stock.......................................... 1.5(a)
Buyer Material Adverse Effect............................... 3.1
Buyer Reports............................................... 3.5
Buyer Requisite Shareholder Approval........................ 4.3(g)
Calculations................................................ 1.11(f)
CERCLA...................................................... 2.21(a)
Certificates................................................ 1.7
Claim Notice................................................ 6.3(b)
Claimed Amount.............................................. 6.3(b)
Closing..................................................... 1.2
closing agreement........................................... 2.9(f)
Closing Date................................................ 1.2
Code........................................................ Introduction
comfort letter.............................................. 4.17
Common Conversion Ratio..................................... 1.5(c)
Common Shares............................................... 1.5(a)
Company..................................................... Introduction
Company 401(k) Plan......................................... 4.19
Company Certificate......................................... 5.2(f)
</Table>

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<Page>

<Table>
<Caption>
DEFINED TERM SECTION
- ------------ -------

Company Intellectual Property............................... 2.12(a)
Company Insiders............................................ 4.14
Company Material Adverse Effect............................. 2.1
Company Requisite Shareholder Approval...................... 2.3
Company Shares.............................................. 1.5(b)
Company Shareholder......................................... 1.3(d)
Company Superior Offer...................................... 4.3(b)
consenting corporation...................................... 2.9(d)
Controlling Party........................................... 6.3(a)
Customer Deliverables....................................... 2.12(a)
Damages..................................................... 6.1
Disclosure Schedule......................................... Article II
Dispute..................................................... 6.3(c)
disqualified individual..................................... 4.18
Dissenting Shares........................................... 1.6(a)
drag-along.................................................. 2.2
Effective Time.............................................. 1.1
Employee Benefit Plan....................................... 2.20(a)(i)
employee pension benefit plan............................... 2.20(a)(i)
employee welfare benefit plan............................... 2.20(a)(i)
environment................................................. 2.21(a)
Environmental Law........................................... 2.21(a)
ERISA....................................................... 2.20(a)(ii)
ERISA Affiliate............................................. 2.20(a)(iii)
Escrow Agent................................................ 1.6(a)
Escrow Agreement............................................ 1.5(d)
Escrow Amount............................................... 1.9(a)
Escrow Shares............................................... 1.5(c)
excess parachute payment.................................... 2.9(d)
Closing Date Common Shares.................................. 1.5(a)
Expected Claim Notice....................................... 6.4
Exchange Act................................................ 2.13(a)(vii)
Financial Statements........................................ 2.6
First Payment Date.......................................... 1.11(a)
GAAP........................................................ 1.11(e)
Governmental Entity......................................... 2.4
incentive stock option...................................... 1.8(a)
Indemnified Party........................................... 6.3(a)
Indemnifying Party.......................................... 6.3(a)
Indemnifying Shareholders................................... 6.1
Initial Common Shares....................................... 1.5(a)
Initial Payment Shares...................................... 1.5(c)
Intellectual Property....................................... 2.12(a)
Internal Systems............................................ 2.12(a)
Legal Proceeding............................................ 2.17
Lucent...................................................... 1.5(b)
Materials of Environmental Concern.......................... 2.21(b)
Merger...................................................... 1.1
Merger Consideration........................................ 1.5(c)
Merger Shares............................................... 1.5(c)
most favored nation......................................... 2.13(a)(ii)
Most Recent Balance Sheet................................... 2.8
Most Recent Balance Sheet Date.............................. 2.6
</Table>

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<Page>

<Table>
<Caption>
DEFINED TERM SECTION
- ------------ -------

multiemployer plan.......................................... 2.20(f)
NASDAQ...................................................... 1.5(c)
New Promissory Note......................................... 1.10
NJBCA....................................................... 1.1
Non-controlling Party....................................... 6.3(a)
Option Plan................................................. 1.8(a)
Options..................................................... 1.8(a)
Ordinary Course of Business................................. 2.4
Other Notes Payable......................................... 1.10
Outstanding Option.......................................... 1.8(a)
overall foreign loss........................................ 2.9(m)
parachute payment........................................... 2.20(k)
Party or Parties............................................ Introduction
Payment Dates............................................... 1.11(c)
Per Common Share Earn Out Payment........................... 1.11
Permits..................................................... 2.24
plan........................................................ 2.9(l)
plan of reorganization...................................... 4.16
Preferred Conversion Ratio.................................. 1.5(c)
Preferred Shares............................................ 1.5(b)
Prospectus/Proxy Statement.................................. 4.3(a)
Reasonable Best Efforts..................................... 4.1
Reduction in Purchase Price................................. 6.1(d)
Registration Statement...................................... 4.3(a)
release..................................................... 2.21(a)
Representative.............................................. 1.11(f)
Response.................................................... 6.3(c)
SEC......................................................... 3.5
Second Payment Date......................................... 1.11(b)
Section 16 Information...................................... 4.14
Securities Act.............................................. 1.8(c)
Security Interest........................................... 2.4
series of related transactions.............................. 2.9(l)
SGM......................................................... 1.10
Signal Lake................................................. 1.5(b)
Signal Lake Agency Arrangement.............................. 1.13
Software.................................................... 2.12(e)
Subsidiary.................................................. 2.5
Surviving Corporation....................................... 1.1
Taxes....................................................... 2.9(a)(i)
tax exempt use property..................................... 2.9(e)
Tax Returns................................................. 2.9(a)(ii)
Termination Fee............................................. 7.3
Third Payment Date.......................................... 1.11(c)
Threshold Amount............................................ 6.5(a)
to the knowledge of the Company............................. Article II
Value....................................................... 6.3(c)
voluntary employee's beneficiary association................ 2.20(I)
Warrants.................................................... 1.8(d)
</Table>

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<Page>
ARTICLE IX
MISCELLANEOUS

9.1 Press Releases and Announcements. No Party shall issue any press release
or public announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties; provided, however, that any
Party may make any public disclosure it believes in good faith is required by
applicable law, regulation or stock market rule (in which case the disclosing
Party shall use reasonable efforts to advise the other Parties and provide them
with a copy of the proposed disclosure prior to making the disclosure).

9.2 No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any person other than the Parties and their respective
successors and permitted assigns; provided, however, that the provisions in
Article I concerning issuance of the Merger Consideration is intended for the
benefit of the Company Shareholders and the provisions in Section 4.9 concerning
indemnification are intended for the benefit of the individuals specified
therein and their successors and assigns.

9.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof; provided that the
Confidentiality Agreement dated April 3, 2001 between the Buyer and the Company
shall remain in effect in accordance with its terms.

9.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Party.

9.5 Counterparts and Facsimile Signature. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement may
be executed by facsimile signature.

9.6 Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

9.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered four (4)
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one (1) business day after it is sent for next
business day delivery via a reputable nationwide overnight courier service, in
each case to the intended recipient as set forth below:

If to the Buyer:

Mr. William P. McHale, Jr.
DSET Corporation
1160 U.S. Highway 22 East
Bridgewater, NJ 08807

Copy to:

William J. Thomas, Esq.
Hale and Dorr LLP
650 College Road East, 4th Floor
Princeton, NJ 08540

If to the Company:

Mr. Binay Sugla
c/o DSET Corporation
1160 U.S. Highway 22 East
Bridgewater, NJ 08807

Copy to:

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Robert C. Sepucha, Jr., Esq.
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
610 Lincoln Street
Waltham, Massachusetts 02451

Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.

9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New Jersey without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the application of
laws of any jurisdictions other than those of the State of New Jersey.

9.9 Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Effective Time; provided, however, that
any amendment effected subsequent to the Company Requisite Shareholder Approval
or the Buyer Requisite Shareholder Approval shall be subject to any restrictions
contained in the NJBCA. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by all of the Parties. No
waiver of any right or remedy hereunder shall be valid unless the same shall be
in writing and signed by the Party giving such waiver. No waiver by any Party
with respect to any default, misrepresentation or breach of warranty or covenant
hereunder shall be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.

9.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.

9.11 Submission to Jurisdiction. Each of the Parties (a) submits to the
jurisdiction of any state or federal court sitting in New Jersey in any action
or proceeding arising out of or relating to this Agreement, (b) agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court, and (c) agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required
of any other Party with respect thereto. Any Party may make service on another
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in
Section 9.7. Nothing in this Section 9.11, however, shall affect the right of
any Party to serve legal process in any other manner permitted by law.

9.12 Construction.

(a) The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.

(b) Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.

* * * * * *

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<Page>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

DSET CORPORATION

By /s/ WILLIAM P. MCHALE, JR.
..................................

WILLIAM P. MCHALE, JR.
TITLE: PRESIDENT AND CHIEF
EXECUTIVE OFFICER

ISPSOFT INC.

By /s/ BINAY SUGLA
...................................

BINAY SUGLA
TITLE: PRESIDENT AND CHIEF
EXECUTIVE OFFICER

The undersigned, being the duly elected Secretary of the Buyer, hereby
certifies that this Agreement has been adopted by a majority of the votes
represented by the outstanding shares of capital stock of the Buyer entitled to
vote on this Agreement.

.....................................
SECRETARY

The undersigned, being the duly elected Secretary of the Company, hereby
certifies that this Agreement has been adopted by a majority of the votes
represented by the outstanding Company Shares entitled to vote on this
Agreement.

.....................................
SECRETARY

The following shareholders of the Company hereby execute this Agreement for
the limited purpose of agreeing to and becoming bound by the provisions of
Section 4.3(f).

.....................................
[NAME]

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<Page>
The following shareholders of the Buyer hereby execute this Agreement for
the limited purpose of agreeing to and becoming bound by the provisions of
Section 4.3(g).

.....................................
[NAME]

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<Page>

EXHIBIT A

ESCROW AGREEMENT

This Escrow Agreement is entered into as of [ ], 2001, by and among
DSET Corporation, a New Jersey corporation (the 'Buyer'), Binay Sugla (the
'Indemnification Representative') and Commerce Bank (the 'Escrow Agent').

WHEREAS, the Buyer and ISPsoft, Inc., a New Jersey corporation (the
'Company'), have entered into an Agreement and Plan of Merger dated as of June
26, 2001 (the 'Merger Agreement') by and between the Company and the Buyer,
pursuant to which the Company will be merged (the 'Merger') with and into the
Buyer at which time the separate corporate existence of the Company shall cease
and the Buyer shall continue as the surviving corporation in the Merger; and

WHEREAS, the Merger Agreement provides that an escrow account will be
established to secure the indemnification obligations of the shareholders of the
Company receiving Merger Shares (as defined in Section 1.5(c) of the Merger
Agreement) pursuant to Section 1.5 of the Merger Agreement (collectively, the
'Indemnifying Shareholders') to the Buyer; and

WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained;

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Consent of Indemnifying Shareholders. The Indemnifying Shareholders have,
either by virtue of their approval of the Merger Agreement or through the
execution of an instrument to such effect, consented to: (a) the establishment
of this escrow to secure the Indemnifying Shareholders' indemnification
obligations under Article VI of the Merger Agreement in the manner set forth
herein; (b) the appointment of the Indemnification Representative as their
representative for purposes of this Agreement and as attorney-in-fact and agent
for and on behalf of each Indemnifying Shareholder, and the taking by the
Indemnification Representative of any and all actions and the making of any
decisions required or permitted to be taken or made by the Indemnification
Representative under this Agreement and (c) all of the other terms, conditions
and limitations in this Escrow Agreement.

2. Escrow and Indemnification.

(a) Establishment of Escrow. Simultaneously with the execution of this
Agreement, the Buyer shall deposit with the Escrow Agent a certificate for
[ ] shares of common stock of the Buyer, as determined pursuant to
Section 1.5 of the Merger Agreement, issued in the name of the Escrow Agent or
its nominee. The Escrow Agent hereby acknowledges receipt of such stock
certificate. The shares deposited with the Escrow Agent pursuant to the first
sentence of this Section 2(a) are referred to herein as the 'Escrow Shares.' The
Escrow Shares shall be referred to herein as the 'Escrow Amount'. The Escrow
Amount shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party hereto. The Escrow Agent agrees to hold the Escrow Amount in an escrow
account (the 'Escrow Account'), subject to the terms and conditions of this
Agreement.

(b) Indemnification. The Indemnifying Shareholders have agreed in
Article VI of the Merger Agreement to indemnify and hold harmless the Buyer from
and against specified Damages (as defined in Section 6.1 of the Merger
Agreement). The Escrow Amount shall be the payment source for such indemnity
obligations of the Indemnifying Shareholders, subject to the limitations, and in
the manner provided, in this Agreement.

(c) Dividends, Etc. Any securities distributed in respect of or in exchange
for any of the Escrow Shares, whether by way of stock dividends, stock splits or
otherwise, shall be issued in the name of the Escrow Agent or its nominee, and
shall be delivered to the Escrow Agent, who shall hold such securities in the
Escrow Account. Such securities shall be considered Escrow Shares for purposes
hereof. Any cash dividends or property (other than securities) distributed in
respect of the Escrow Shares shall promptly be distributed by the Escrow Agent
to the Indemnifying Shareholders in accordance with Section 3(c).

<Page>

(d) Tax Matters. Except for applicable tax information reporting, the Escrow
Agent shall not be responsible for any tax reporting. Neither Buyer nor the
Escrow Agent makes any representation or warranty hereunder as to the tax
treatment to the Indemnifying Shareholders of any amounts distributed to them
pursuant to this Agreement, and neither the Buyer nor the Escrow Agent shall
have any liability or obligation to any of the Indemnifying Shareholders with
respect thereto. This Section 2(e) shall survive notwithstanding any termination
of this Agreement or the resignation of the Escrow Agent.

(e) Voting of Shares. The Indemnification Representative shall have the
right, in his sole discretion, on behalf of the Indemnifying Shareholders, to
direct the Escrow Agent in writing as to the exercise of any voting rights
pertaining to the Escrow Shares, and the Escrow Agent shall comply with any such
written instructions. In the absence of such instructions, the Escrow Agent
shall not vote any of the Escrow Shares. The Indemnification Representative
shall have no obligation to solicit consents or proxies from the Indemnifying
Shareholders for purposes of any such vote.

(f) Transferability. The respective interests of the Indemnifying
Shareholders in the Escrow Amount shall not be assignable or transferable, other
than by operation of law. Notice of any such assignment or transfer by operation
of law shall be given to the Escrow Agent and the Buyer, and no such assignment
or transfer shall be valid until such notice is given.

3. Distribution of Escrow Amount.

(a) The Escrow Agent shall distribute the Escrow Amount only in accordance
with (i) a written instrument delivered to the Escrow Agent that is executed by
both the Buyer and the Indemnification Representative and that instructs the
Escrow Agent as to the distribution of some or all of the Escrow Amount,
(ii) an order of a court of competent jurisdiction, a copy of which is delivered
to the Escrow Agent by either the Buyer or the Indemnification Representative,
that instructs the Escrow Agent as to the distribution of some or all of the
Escrow Amount, or (iii) the provisions of Section 3(b) hereof.

(b) Within five business days after the first anniversary of the Closing
Date (as defined in Section 1.2 of the Merger Agreement) (the 'Termination
Date'), the Escrow Agent shall distribute to the Indemnifying Shareholders all
of the Escrow Amount then held in escrow, registered in the name of or otherwise
allocable to the Indemnifying Shareholders. Notwithstanding the foregoing, if
the Buyer has previously delivered to the Escrow Agent a copy of a Claim Notice
(as defined in Section 6.3(b) of the Merger Agreement) and the Escrow Agent has
not received written notice of the resolution of the claim covered thereby, or
if the Buyer has previously delivered to the Escrow Agent a copy of an Expected
Claim Notice (as defined in Section 6.4 of the Merger Agreement) and the Escrow
Agent has not received written notice of the resolution of the anticipated claim
covered thereby, the Escrow Agent shall retain in escrow after the Termination
Date such number of Escrow Shares as collectively have a Value (as defined in
Section 4 below) equal to the Claimed Amount covered by such Claim Notice or
equal to the estimated amount of Damages set forth in such Expected Claim
Notice, as the case may be. Any Escrow Amount so retained in escrow shall be
distributed only in accordance with the terms of clauses (i) or (ii) of
Section 3(a) hereof.

(c) Any distribution of all or a portion of the Escrow Amount to the
Indemnifying Shareholders shall be made by delivery of stock certificates issued
in the names of the Indemnifying Shareholders covering such percentage of the
Escrow Shares being distributed, as is calculated in accordance with the
percentages set forth opposite such Indemnifying Shareholders' respective names
on Attachment A attached hereto; provided, however, that the Escrow Agent shall
withhold the distribution of the portion of the Escrow Amount otherwise
distributable to an Indemnifying Shareholder who has not, according to a written
notice provided by the Buyer to the Escrow Agent, prior to such distribution,
surrendered pursuant to the terms of the Merger Agreement his, her or its stock
certificates formerly representing shares of stock of the Company. Any such
withheld Escrow Amount shall be delivered to the Buyer promptly after the
Termination Date, and shall be delivered by the Buyer to the Indemnifying
Shareholders to whom such Escrow Amount would have otherwise been distributed
upon surrender of their Company stock certificates. Distributions to the
Indemnifying Shareholders shall be made by mailing stock certificates to such
Shareholders at their respective addresses shown on Attachment A (or such other
address as may be provided in writing to the Escrow Agent by any such
Shareholder). No fractional Escrow Shares shall be distributed to Indemnifying
Shareholders pursuant to this Agreement.

<Page>

Instead, the number of shares that each Indemnifying Shareholder shall receive
shall be rounded up or down to the nearest whole number (provided that the
Indemnification Representative shall have the authority to effect such rounding
in such a manner that the total number of whole Escrow Shares to be distributed
equals the number of Escrow Shares then held in the Escrow Account).

4. Valuation of Escrow Shares. For purposes of this Agreement, the term
'Value' shall mean the average of the last reported sale prices per share of the
common stock of the Buyer Common Stock on the Nasdaq National Market over the
ten (10) consecutive trading days ending on the date such shares are delivered
in satisfaction of a claim, multiplied by the number of such Escrow Shares.

5. Fees and Expenses of Escrow Agent. The Buyer, on the one hand, and the
Indemnifying Shareholders, on the other hand, shall each pay one-half of the
fees of the Escrow Agent for the services to be rendered by the Escrow Agent
hereunder.

6. Limitation of Escrow Agent's Liability.

(a) The Escrow Agent shall incur no liability with respect to any action
taken or suffered by it in reliance upon any notice, direction, instruction,
consent, statement or other documents believed by it to be genuine and duly
authorized, nor for other action or inaction except its own willful misconduct
or gross negligence. The Escrow Agent shall not be responsible for the validity
or sufficiency of this Agreement. In all questions arising under this Escrow
Agreement, the Escrow Agent may rely on the advice of counsel, and the Escrow
Agent shall not be liable to anyone for anything done, omitted or suffered in
good faith by the Escrow Agent based on such advice. The Escrow Agent shall not
be required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner reasonably
satisfactory to it. In no event shall the Escrow Agent be liable for indirect,
punitive, special or consequential damages.

(b) The Buyer and the Indemnifying Shareholders hereby, jointly and
severally, agree to indemnify the Escrow Agent for, and hold it harmless
against, any loss, liability or expense incurred without gross negligence or
willful misconduct on the part of Escrow Agent, arising out of or in connection
with its carrying out of its duties hereunder. The Buyer, on the one hand, and
the Indemnifying Shareholders, on the other hand, shall each be liable for
one-half of such amounts.

7. Liability and Authority of Indemnification Representative; Successors and
Assignees.

(a) The Indemnification Representative shall incur no liability to the
Indemnifying Shareholders with respect to any action taken or suffered by him in
reliance upon any note, direction, instruction, consent, statement or other
documents believed by him to be genuinely and duly authorized, nor for other
action or inaction except his own willful misconduct or gross negligence. The
Indemnification Representative may, in all questions arising under this Escrow
Agreement, rely on the advice of counsel and the Indemnification Representative
shall not be liable to the Indemnifying Shareholders for anything done, omitted
or suffered in good faith by the Indemnification Representative based on such
advice.

(b) In the event of the death or permanent disability of the Indemnification
Representative, or his or her resignation as the Indemnification Representative,
a successor Indemnification Representative shall be elected by a majority vote
of the Indemnifying Shareholders, with each such Indemnifying Shareholder (or
his, her or its successors or assigns) to be given a vote equal to the number of
votes represented by the shares of stock of the Company held by such
Indemnifying Shareholder immediately prior to the effective time of the Merger.
Each successor Indemnification Representative shall have all of the power,
authority, rights and privileges conferred by this Agreement upon the original
Indemnification Representative, and the term 'Indemnification Representative' as
used herein shall be deemed to include successor Indemnification
Representatives.

(c) The Indemnification Representative shall have full power and authority
to represent the Indemnifying Shareholders, and their successors, with respect
to all matters arising under this Agreement and all actions taken by the
Indemnification Representative hereunder shall be binding upon the Indemnifying
Shareholders, and their successors, as if expressly confirmed and ratified in
writing by each of them. Without limiting the generality of the foregoing, the
Indemnification Representative shall have full power and authority to interpret
all of the terms and provisions of this Agreement, to compromise any claims
asserted hereunder and to authorize any release of the Escrow

<Page>

Amount to be made with respect thereto, on behalf of the Indemnifying
Shareholders and their successors. All actions to be taken by the
Indemnification Representative hereunder shall be evidenced by, and taken upon,
written direction.

(d) The Escrow Agent may rely on the Indemnification Representative as the
exclusive agent of the Indemnifying Shareholders under this Agreement and shall
incur no liability to any party with respect to any action taken or suffered by
it in reliance thereon.

8. Amounts Payable by Indemnifying Shareholders. The amounts payable by the
Indemnifying Shareholders under this Agreement (i.e., the fees of the Escrow
Agent payable pursuant to Section 5 and the indemnification obligations pursuant
to Section 6(b) hereof) shall be payable solely as follows. The Escrow Agent
shall notify the Indemnification Representative of any such amount payable by
the Indemnifying Shareholders as soon as it becomes aware that any such amount
is payable, with a copy of such notice to the Buyer. On the sixth business day
after the delivery of such notice, the Escrow Agent shall sell such number of
Escrow Shares (up to the number of Escrow Shares then available in the Escrow
Account), subject to compliance with all applicable securities laws, as is
necessary to raise such amount, and shall be entitled to apply the proceeds of
such sale in satisfaction of such indemnification obligations of the
Indemnifying Shareholders; provided that if the Buyer delivers to the Escrow
Agent (with a copy to the Indemnification Representative), within five business
days after delivery of such notice by the Indemnification Representative, a
written notice contesting the legitimacy or reasonableness of such amount, then
the Escrow Agent shall not pay such amount payable or sell Escrow Shares to
raise the disputed portion of such claimed amount except in accordance with the
terms of clauses (i) or (ii) of Section 3(a).

9. Termination. This Agreement shall terminate upon the distribution by the
Escrow Agent of all of the Escrow Amount in accordance with this Agreement;
provided that the provisions of Sections 6, 7 and 2(e) shall survive such
termination.

10. Notices. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered two business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid, or one business day after it is
sent via a reputable nationwide overnight courier service.

If to the Buyer:

Mr. Bruce M. Crowell
DSET Corporation
1160 US Highway 22 East
Bridgewater, NJ 08807

Copy to:

William J. Thomas, Esq.
Hale and Dorr LLP
650 College Road East, 4th Floor
Princeton, NJ 08540

If to the Indemnification Representative:

Mr. Binay Sugla
661 Shrewsbury Avenue
Shrewsbury, NJ 07702

Copy to:

Robert C. Sepucha, Jr., Esq.
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
610 Lincoln Street
Waltham, Massachusetts 02451

<Page>

If to the Escrow Agent:

Commerce Bank
[address]
[address]

Copy to:

[ ]
[ ]

Any party may give any notice, instruction or communication in connection with
this Agreement using any other means (including personal delivery, telecopy or
ordinary mail), but no such notice, instruction or communication shall be deemed
to have been delivered unless and until it is actually received by the party to
whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 10.

11. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Escrow Agreement, not less than
60 days prior to the date when such resignation shall take effect. The Buyer may
appoint a successor Escrow Agent without the consent of the Indemnification
Representative so long as such successor is a bank with assets of at least $500
million, and may appoint any other successor Escrow Agent with the consent of
the Indemnification Representative, which shall not be unreasonably withheld.
If, within such notice period, the Buyer provides to the Escrow Agent written
instructions with respect to the appointment of a successor Escrow Agent and
directions for the transfer of any of the Escrow Amount then held by the Escrow
Agent to such successor, the Escrow Agent shall act in accordance with such
instructions and promptly transfer such Escrow Amount to such designated
successor. If no successor Escrow Agent is named as provided in this Section 11
prior to the date on which the resignation of the Escrow Agent is to properly
take effect, the Escrow Agent may apply to a court of competent jurisdiction for
appointment of a successor Escrow Agent.

12. Removal and Replacement of Indemnification Representative. The holders
of at least two-thirds ( 2/3) in interest of the Escrow Shares may replace the
Indemnification Representative upon not less than ten (10) days' prior written
notice to the Buyer. If Binay Sugla (or any successor Indemnification
Representative) is no longer able or willing to serve as the Indemnification
Representative, a new Indemnification Representative shall be chosen by the
holders of at least two-thirds ( 2/3) in interest of the Escrow Shares.

13. General.

(a) Governing Law; Assigns. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New Jersey
without regard to conflict-of-law principles and shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns.

(b) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

(c) Entire Agreement. Except for those provisions of the Merger Agreement
referenced herein, this Agreement constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement
and supersedes all prior agreements or understandings, written or oral, between
the parties with respect to the subject matter hereof.

(d) Waivers. No waiver by any party hereto of any condition or of any breach
of any provision of this Escrow Agreement shall be effective unless in writing.
No waiver by any party of any such condition or breach, in any one instance,
shall be deemed to be a further or continuing waiver of any such condition or
breach or a waiver of any other condition or breach of any other provision
contained herein.

(e) Amendment. This Agreement may be amended only with the written consent
of the Buyer, the Escrow Agent and the Indemnification Representative.

<Page>

(f) Consent to Jurisdiction and Service. The parties hereby absolutely and
irrevocably consent and submit to the jurisdiction of the courts in the State of
New Jersey and of any Federal court located in said State in connection with any
actions or proceedings brought against any party hereto by the Escrow Agent
arising out of or relating to this Escrow Agreement. In any such action or
proceeding, the parties hereby absolutely and irrevocably waive personal service
of any summons, complaint, declaration or other process and hereby absolutely
and irrevocably agree that the service thereof may be made by certified or
registered first-class mail directed to such party, at their respective
addresses in accordance with Section 10 hereof.

* * * * * *

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

BUYER:

DSET CORPORATION

By:
.................................
Name:
Title:

INDEMNIFICATION REPRESENTATIVE:

By:
.................................
Name:

ESCROW AGENT:

By: .................................

<Page>

AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER

THIS AMENDMENT NO. 1 (this 'Amendment') dated as of the 26th day of
September 2001 (the 'Effective Date') by and between DSET Corporation, a New
Jersey corporation ('DSET'), and ISPSoft Inc., a New Jersey corporation
('ISPSoft').

WITNESSETH:

WHEREAS, DSET and ISPSoft are parties to an Agreement and Plan of Merger
dated as of June 26, 2001 (the 'Merger Agreement'); and

WHEREAS,, the parties desire to amend the terms of the Merger Agreement in
accordance with the terms herewith.

NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:

1. Amendments.

(a) Each reference to the date 'October 31, 2001' in Paragraph 7.1(g) of
Article VII of the Merger Agreement shall hereinafter be a reference to
the date 'November 30, 2001'.

(b) Paragraph 3.11 of Article III of the Merger Agreement is hereby deleted
in its entirety and shall be of no further force or effect.

'the Company shall have obtained all authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of
the United States or of any state that are required in connection with
the lawful issuance of the Buyer Common Stock pursuant to this
agreement, and all such authorizations, approvals, or permits shall be
effective.'

(d) The following sentence is hereby added to the end of Paragraph 3.6 of
Article III of the Merger Agreement in its entirety:

'As used in this Agreement, the term 'Buyer Material Adverse Effect'
or words of similar meaning with respect to the Buyer or its business
shall not encompass, directly or indirectly, any change in Buyer's
business plan or ongoing operations that are effected pursuant to
Resolutions duly adopted by the requisite majority of Buyer's Board of
Directors, including, but not limited to, Buyer's exit from its
existing or historical gateway business, whether in whole or in part,
or other duly adopted changes to Buyer's business plan or ongoing
operations made in response to then current economic conditions and
customer concerns at the time of such changes.'

2. Reference to and Effect on Merger Agreement.

(a) On and after the Effective Date, each reference to the Merger Agreement
shall mean and be a reference to the Merger Agreement as amended hereby.
No reference to this Amendment need be made in any instrument or
document at any time referring to the Merger Agreement.

(b) Except as expressly amended by this Amendment, the Merger Agreement
shall remain in full force and effect.

3. Governing Law. This Amendment shall be governed by and its provisions
construed and enforced with the internal laws of the State of New Jersey without
reference to its principles regarding conflicts of laws.

4. Counterparts. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute a single instrument.

<Page>

IN WITNESS WHEREOF, each of DSET and ISPSoft has caused this Amendment to be
executed and attested by its duly authorized officers as of the day and year
first above written.

DSET CORPORATION

By: /s/ WILLIAM P. MCHALE, JR.
..................................
WILLIAM P. MCHALE, JR., PRESIDENT
AND CHIEF EXECUTIVE OFFICER

ISPSOFT INC.

By: /s/ BINAY SUGLA
..................................
BINAY SUGLA, PRESIDENT
AND CHIEF EXECUTIVE OFFICER

<Page>

AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER

THIS AMENDMENT NO. 2 (this 'Amendment No. 2') dated as of the 30th day of
October 2001 (the 'Effective Date') by and between DSET Corporation, a New
Jersey corporation ('DSET'), and ISPSoft Inc., a New Jersey corporation
('ISPSoft').

WITNESSETH:

WHEREAS, DSET and ISPSoft are parties to an Agreement and Plan of Merger
dated as of June 26, 2001 (the 'Merger Agreement'), as amended pursuant to the
terms of that certain Amendment No. 1 to the Agreement and Plan of Merger dated
September 26, 2001 ('Amendment No. 1'); and

WHEREAS, the parties desire to further amend the terms of the Merger
Agreement, as amended, in accordance with the terms herewith.

NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:

1. Amendment.

(a) Each reference to the date 'October 31, 2001' in Paragraph 7.1(g) of
Article VII of the Merger Agreement, as previously amended to a
reference to November 30, 2001, pursuant to the terms of Amendment No.
1, shall hereinafter be a reference to the date 'December 31, 2001'.

2. Reference to and Effect on Merger Agreement.

(a) On and after the Effective Date, each reference to the Merger Agreement
and to Amendment No. 1 shall mean and be a reference to the Merger
Agreement, as previously amended, and to Amendment No. 1, respectively,
as amended hereby. No reference to this Amendment No. 2 need be made in
any instrument or document at any time referring to the Merger
Agreement, as amended.

(b) Except as expressly amended by this Amendment No. 2, the Merger
Agreement, as amended, shall remain in full force and effect.

3. Governing Law. This Amendment No. 2 shall be governed by and its
provisions construed and enforced with the internal laws of the State of
New Jersey without reference to its principles regarding conflicts of
laws.

4. Counterparts. This Amendment No. 2 may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.

<Page>

IN WITNESS WHEREOF, each of DSET and ISPSoft has caused this Amendment No. 2
to be executed and attested by its duly authorized officers as of the day and
year first above written.

DSET CORPORATION

By: /s/ William P. McHale
..................................
WILLIAM P. MCHALE, JR., PRESIDENT
AND CHIEF EXECUTIVE OFFICER

ISPSOFT INC.

By: /s/ BINAY SUGLA
..................................
BINAY SUGLA, PRESIDENT
AND CHIEF EXECUTIVE OFFICER

<Page>
AMENDMENT NO. 3 TO AGREEMENT AND PLAN OF MERGER

THIS AMENDMENT NO. 3 (this 'Amendment No. 3') dated as of the 6th day of
November 2001 (the 'Effective Date') by and among DSET Corporation, a New Jersey
corporation ('DSET'), DSET Merger Corporation, a New Jersey corporation and a
wholly owned subsidiary of DSET (the 'Merger Subsidiary'), and ISPSoft Inc., a
New Jersey corporation ('ISPSoft').

WITNESSETH:

WHEREAS, DSET and ISPSoft are parties to an Agreement and Plan of Merger
dated as of June 26, 2001 (the 'Merger Agreement'), as amended pursuant to the
terms of that certain Amendment No. 1 to Agreement and Plan of Merger dated
September 26, 2001 and as further amended pursuant to the terms of that certain
Amendment No. 2 to Agreement and Plan of Merger dated October 31, 2001.

WHEREAS, the parties desire to further amend the terms of the Merger
Agreement, as amended, in accordance with the terms herewith, in order to revise
the form of merger from that of a direct merger of ISPSoft with and into DSET to
that of an integrated two-step merger whereby: (i) the Merger Subsidiary is
merged with and into ISPSoft; and (ii) immediately thereafter, the resulting
combined entity is then merged with and into DSET.

NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:

1. Amendment.

(a) The following Section 1.0 is hereby added to the Merger Agreement in its
entirety as follows:

'Notwithstanding anything in this Agreement to the contrary, the Merger
shall be effected through the creation of a wholly owned subsidiary of
the Buyer (the 'Merger Subsidiary') and the merger of such Merger
Subsidiary with and into the Company (the 'Initial Merger'), thereby
creating a transitory combined entity (the 'Interim Company'). The
Initial Merger then shall be immediately followed by a merger of the
Interim Company with and into the Buyer (the 'Final Merger'). It is the
intention of the Parties and the Merger Subsidiary that the Initial
Merger be mutually interdependent with and a condition precedent to the
Final Merger and, immediately upon consummation of the Initial Merger,
that the Final Merger shall, through a binding commitment, be effected
without delay and without the further approval, authorization or
direction from or by any of the Parties or the Merger Subsidiary. It is
the further intention of the Parties and the Merger Subsidiary that upon
consummation of the Initial Merger and the Final Merger that there be
achieved a single end result of one combined operating company and that
the then current holders of capital stock of the Company, holders of
securities convertible into or exchangeable for such capital stock and
holders of Company debt (collectively, the 'Holders') receive
substantially the same economic benefit and/or ownership interest in the
Buyer as such Holders would have received had the Company been merged
directly with and into the Buyer as contemplated by this Agreement upon
its initial execution on June 26, 2001.'

(b) The following Section 1.18 is hereby added to the Merger Agreement in
its entirety as follows:

'Notwithstanding any other provision in this Agreement to the contrary,
including Section 1.14 of this Agreement, the Buyer shall not pay any
Per Common Share Earn Out Payment in Buyer Common Stock to the extent
that payment of the Per Common Share Earn Out Payment in Buyer Common
Stock would result in the holder of Company Shares being in 'control' of
DSET after such payment is made. For purposes of this provision, the
term control shall have the meaning ascribed to it in Sections
368(a)(2)(H)(i) and 304(c) of the

<Page>
Code. This provision shall be construed consistent with the treatment of
the Merger as a reorganization within the meaning of Section
368(a)(1)(A) of the Code.'

2. Reference to and Effect on Merger Agreement.

(a) On and after the Effective Date, each reference to the Merger Agreement,
as amended, shall mean and be a reference to the Merger Agreement, as
previously amended and as amended hereby. No reference to this Amendment
No. 3 need be made in any instrument or document at any time referring
to the Merger Agreement, as amended.

(b) Except as expressly amended by this Amendment No. 3, the Merger
Agreement, as amended, shall remain in full force and effect.

3. Governing Law. This Amendment No. 3 shall be governed by and its
provisions construed and enforced with the internal laws of the State of
New Jersey without reference to its principles regarding conflicts of
laws.

4. Counterparts. This Amendment No. 3 may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.

* * * * * *

<Page>
IN WITNESS WHEREOF, each of DSET Corporation, DSET Merger Corporation and
ISPSoft Inc. has caused this Amendment No. 3 to be executed and attested by its
duly authorized officers as of the day and year first above written.

DSET CORPORATION

By: /s/ William P. McHale
..................................
WILLIAM P. MCHALE, JR., PRESIDENT
AND CHIEF EXECUTIVE OFFICER

DSET MERGER CORPORATION

By: /s/ William P. McHale
..................................
WILLIAM P. MCHALE, JR., PRESIDENT
AND CHIEF EXECUTIVE OFFICER

ISPSOFT INC.

By: /s/ BINAY SUGLA
..................................
BINAY SUGLA, PRESIDENT
AND CHIEF EXECUTIVE OFFICER

ANNEX B

PROPOSED AMENDMENT TO DSET'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

EIGHTH: 1. Classes of Directors. The Board of Directors shall be and is
divided into three classes: Class I, Class II and Class III. No one class shall
have more than one director more than any other class. If a fraction is
contained in the quotient arrived at by dividing the authorized number of
directors by three, then, if such fraction is one-third, the extra director
shall be a member of Class III, and if such fraction is two-thirds, one of the
extra directors shall be a member of Class II and one of the extra directors
shall be a member of Class III, unless otherwise provided by resolution of the
Board of Directors.

2. Terms of Office. Each director shall serve for a term ending on the date
of the third annual meeting following the annual meeting at which such director
was elected; provided, that each initial director in Class I shall serve for a
term expiring at the Corporation's annual meeting of stockholders held in 2002;
each initial director in Class II shall serve for a term expiring at the
Corporation's annual meeting of stockholders held in 2003; and each initial
director in Class III shall serve for a term expiring at the Corporation's
annual meeting of stockholders held in 2004; provided further, that the term of
each director shall continue until the election and qualification of his
successor and be subject to his earlier death, resignation or removal.

4. Amendments to Article. Notwithstanding any other provisions of law, the
Corporation's Amended and Restated Certificate of Incorporation, as amended, or
the By-laws of the Corporation, and notwithstanding the fact that a lesser
percentage may be specified by law, the affirmative vote of the holders of at
least sixty six and two-thirds percent (66 2/3%) of the votes which all the
stockholders would be entitled to cast in any annual election of directors or
class of directors shall be required to amend or repeal, or to adopt any
provision inconsistent with, this Article EIGHTH.

B-1

ANNEX C

[Kaufman Bros., L.P.]

June 25, 2001

To the Board of Directors of
DSET CORPORATION
1160 US Highway 22 E
Bridgewater, NJ 08807

Gentlemen:

We understand that DSET Corporation (the 'Company') is contemplating a
transaction pursuant to which the Company would acquire all of the outstanding
shares of capital stock of ISPsoft, Inc. ('ISP'). The transaction will be
effected through a merger (the 'Merger') of ISP with and into the Company
pursuant to which, among other things, (i) each outstanding share of ISP Common
Stock (other than treasury shares and shares held by the Company and its
affiliates) shall be converted into the right to receive (a) [.3599] shares of
the Company's Common Stock, and (b) contingent cash payments or shares of the
Company's Common Stock aggregating up to $1,000,000 if ISP and/or the Company
(in respect of periods following consummation of the Merger) achieve certain
levels of recognized revenue, net of related returns, by certain specified
dates, (ii) each outstanding share of ISP Preferred Stock (other than shares
held by the Company and its affiliates) shall be converted into the right to
receive [.3599] shares of the Company's Common Stock for each share of ISP
Common Stock into which such ISP Preferred Stock is convertible immediately
prior to the Merger, (iii) each outstanding option to purchase shares of ISP
Common Stock shall be converted into an option to purchase the number of shares
of the Company's Common Stock obtained by multiplying the number of shares of
ISP Common Stock subject to such option by [.3599], at an exercise price
determined by dividing the exercise price of such option by [.3599] , and (iv)
all outstanding warrants to purchase shares of ISP Common Stock shall be
terminated. Ten percent of the shares of the Company's Common Stock issuable in
respect of shares of ISP Common Stock and ISP Preferred Stock in connection with
the Merger will be held in escrow to secure indemnification obligations of the
stockholders of ISP to the Company. The Company will also pay an aggregate of
approximately $650,000 in satisfaction of certain notes payable of ISP, issue
$800,000 of new notes to certain note holders of ISP in satisfaction of certain
notes payable of ISP, and shall pay an aggregate of $1,000,000 and issue an
aggregate of 554,870 shares of the Company's Common Stock to certain holders of
ISP's Preferred Stock in consideration for their agreement to waive certain
rights as set forth in the proposed Agreement and Plan of Merger. The
consideration payable by the Company in the Merger is subject to reduction under
certain circumstances. The terms and conditions of the Merger are more fully
described in the proposed Agreement and Plan of Merger between the Company and
ISP (the 'Merger Agreement').

In connection with your review and analysis of the Merger, you have
requested our opinion, as investment bankers, as to the fairness, from a
financial point of view, to the stockholders of the Company of the consideration
to be paid by the Company in the Merger.

Kaufman Bros., L.P., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of securities, private placements of securities of public and
private companies and valuations for corporate and other purposes. We have acted
as financial advisor to the Company with respect to the Merger for which we have
received fees and will receive additional fees, contingent upon consummation of
the Merger.

In conducting our analysis and arriving at our opinion as expressed herein,
we have, among other things:

reviewed a draft of the Merger Agreement, dated June 21, 2001;

reviewed the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001 as filed with the Securities and Exchange
Commission;

C-1

reviewed certain internal information relating to the Company provided to
us by management of the Company, including historical financial information
and financial forecasts;

reviewed certain internal information relating to ISP provided to us by
ISP's management, including historical financial information and financial
forecasts;

held discussions with the Company's and ISP's respective managements
regarding the respective businesses, operations and prospects of the
Company and ISP;

visited ISP's facilities in Shrewsbury, New Jersey;

reviewed the historical trading prices and volumes of the Company's Common
Stock;

reviewed certain publicly available information concerning certain other
companies engaged in businesses which we believe to be reasonably
comparable to ISP;

reviewed information concerning certain other business transactions which
we believe to be reasonably comparable to the Merger;

performed various valuation analyses as we deemed appropriate using
generally accepted analytical methodologies; and

performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.

In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us in arriving at
our opinion, and upon the assurances of the managements of the Company and ISP
that they are not aware of any information that would make the information
provided to us incomplete or misleading. We have not attempted to independently
verify such information, and have not made, obtained or been provided with any
independent evaluation or appraisal of the properties and facilities or of any
of the assets or liabilities (contingent or otherwise) of the Company or ISP.
With respect to financial forecasts, we were advised by the managements of the
Company and ISP, and we have assumed, without independent investigation, that
they were reasonably prepared and reflect the best currently available estimates
and judgment as to the expected future financial performance of the Company and
ISP. We have also assumed, with your permission and without independent
investigation, that:

the Merger will be consummated in accordance with the terms set forth in
the draft of the Merger Agreement, dated June 21, 2001, without any
amendment thereto and without any waiver by any of the parties of any of
the conditions to their respective obligations; and

all regulatory and other approvals and third party consents required for
consummation of the Merger will be obtained without material cost to the
Company or ISP.

Our opinion is necessarily based upon financial, economic, market and other
conditions as they exist, and the information available to us, as of the date
hereof. We disclaim any undertakings or obligation to advise any person of any
change in any fact or matter affecting our opinion which may come or be brought
to our attention after the date hereof. Although we evaluated the consideration
to be paid by the Company in the Merger from a financial point of view, we were
not asked to and did not recommend the specific consideration payable in the
Merger, which was determined through negotiations between the Company and ISP.

In the ordinary course of our business, we may hold and actively trade
securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.

Our opinion does not constitute a recommendation as to any action the Board
of Directors or any stockholder of the Company should take in connection with
the Merger or any aspect thereof and is not a recommendation to any person on
how such person should vote in his or her consideration of the Merger. Our
opinion relates solely to the fairness, as of the date hereof, from a financial
point of view, to the stockholders of the Company of the consideration to be
paid by the Company in the Merger. We express no opinion herein as to the
structure, terms or effect of any other aspect of the Merger, the merits of the
underlying decision of the Company to enter into the Merger or any other
transactions or business strategies discussed by the Board of Directors of the
Company as alternatives to the Merger.

C-2

This opinion has been prepared at the request of, and for the information
of, the Board of Directors of the Company for its use in evaluating the
fairness, from a financial point of view, to the stockholders of the Company of
the consideration to be paid by the Company in the Merger. It may not be used
for any other purpose, published, reproduced, summarized, described or referred
to or given to any other person or otherwise made public without our prior
written consent.

Based upon and subject to the foregoing, it is our opinion, as investment
bankers, that, as of the date hereof, the consideration to be paid by the
Company in the Merger is fair, from a financial point of view, to the
stockholders of the Company.

Very truly yours,

/s/ KAUFMAN BROS., L.P.

C-3

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ANNEX D

NEW JERSEY STATUTES ANNOTATED
TITLE 14A CORPORATIONS, GENERAL
CHAPTER 11 RIGHTS OF DISSENTING SHAREHOLDERS

14A:11-1. RIGHT OF SHAREHOLDERS TO DISSENT.

(1) Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions

(a) Any plan of merger or consolidation to which the corporation is a
party, provided that, unless the certificate of incorporation otherwise
provides

(i) a shareholder shall not have the right to dissent from any plan
of merger or consolidation with respect to shares

(A) of a class or series which is listed on a national securities
exchange or is held of record by not less than 1,000 holders on the
record date fixed to determine the shareholders entitled to vote upon
the plan of merger or consolidation; or

(B) for which, pursuant to the plan of merger or consolidation,
he will receive (x) cash, (y) shares, obligations or other securities
which, upon consummation of the merger or consolidation, will either
be listed on a national securities exchange or held of record by not
less than 1,000 holders, or (z) cash and such securities;

(ii) a shareholder of a surviving corporation shall not have the
right to dissent from a plan of merger, if the merger did not require for
its approval the vote of such shareholders as provided in section
14A:10-5.1 or in subsection 14A:10-3(4), 14A:10-7(2) or 14A:10-7(4); or

(b) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation not in the usual or regular
course of business as conducted by such corporation, other than a transfer
pursuant to subsection (4) of N.J.S. 14A:10-11, provided that, unless the
certificate of incorporation otherwise provides, the shareholder shall not
have the right to dissent

(i) with respect to shares of a class or series which, at the record
date fixed to determine the shareholders entitled to vote upon such
transaction, is listed on a national securities exchange or is held of
record by not less than 1,000 holders; or

(ii) from a transaction pursuant to a plan of dissolution of the
corporation which provides for distribution of substantially all of its
net assets to shareholders in accordance with their respective interests
within one year after the date of such transaction, where such
transaction is wholly for

(A) cash; or

(B) shares, obligations or other securities which, upon
consummation of the plan of dissolution will either be listed on a
national securities exchange or held of record by not less than 1,000
holders; or

(iii) from a sale pursuant to an order of a court having
jurisdiction.

(2) Any shareholder of a domestic corporation shall have the right to
dissent with respect to any shares owned by him which are to be acquired
pursuant to section 14A:10-9.

(3) A shareholder may not dissent as to less than all of the shares owned
beneficially by him and with respect to which a right of dissent exists. A
nominee or fiduciary may not dissent on behalf of any beneficial owner as to
less than all of the shares of such owner with respect to which the right of
dissent exists.

(4) A corporation may provide in its certificate of incorporation that
holders of all its shares, or of a particular class or series thereof, shall
have the right to dissent from specified corporate actions in

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addition to those enumerated in subsection 14A:11-1(1), in which case the
exercise of such right of dissent shall be governed by the provisions of this
Chapter.

14A:11-2. NOTICE OF DISSENT, DEMAND FOR PAYMENT, ENDORESEMENT OF
CERTIFICATES.

(1) Whenever a vote is to be taken, either at a meeting of shareholders or
upon written consents in lieu of a meeting pursuant to section 14A:5-6, upon a
proposed corporate action from which a shareholder may dissent under section
14A:11-1, any shareholder electing to dissent from such action shall file with
the corporation before the taking of the vote of the shareholders on such
corporate action, or within the time specified in paragraph 14A:5-6(2)(b) or
14A:5-6(2)(c), as the case may be, if no meeting of shareholders is to be held,
a written notice of such dissent stating that he intends to demand payment for
his shares if the action is taken.

(2) Within 10 days after the date on which such corporate action takes
effect, the corporation, or, in the case of a merger or consolidation, the
surviving or new corporation, shall give written notice of the effective date of
such corporate action, by certified mail to each shareholder who filed written
notice of dissent pursuant to subsection 14A:11-2(1), except any who voted for
or consented in writing to the proposed action.

(3) Within 20 days after the mailing of such notice, any shareholder to whom
the corporation was required to give such notice and who has filed a written
notice of dissent pursuant to this section may make written demand on the
corporation, or, in the case of a merger or consolidation, on the surviving or
new corporation, for the payment of the fair value of his shares.

(4) Whenever a corporation is to be merged pursuant to section 14A:10-5.1 or
subsection 14A:10-7(4) and shareholder approval is not required under
subsections 14A:10-5.1(5) and 14A:10-5.1(6), a shareholder who has the right to
dissent pursuant to section 14A:11-1 may, not later than 20 days after a copy or
summary of the plan of such merger and the statement required by subsection
14A:10-5.1(2) is mailed to such shareholder, make written demand on the
corporation or on the surviving corporation, for the payment of the fair value
of his shares.

(5) Whenever all the shares, or all the shares of a class or series, are to
be acquired by another corporation pursuant to section 14A:10-9, a shareholder
of the corporation whose shares are to be acquired may, not later than 20 days
after the mailing of notice by the acquiring corporation pursuant to paragraph
14A:10-9(3)(b), make written demand on the acquiring corporation for the payment
of the fair value of his shares.

(6) Not later than 20 days after demanding payment for his shares pursuant
to this section, the shareholder shall submit the certificate or certificates
representing his shares to the corporation upon which such demand has been made
for notation thereon that such demand has been made, whereupon such certificate
or certificates shall be returned to him. If shares represented by a certificate
on which notation has been made shall be transferred, each new certificate
issued therefor shall bear similar notation, together with the name of the
original dissenting holder of such shares, and a transferee of such shares shall
acquire by such transfer no rights in the corporation other than those which the
original dissenting shareholder had after making a demand for payment of the
fair value thereof.

(7) Every notice or other communication required to be given or made by a
corporation to any shareholder pursuant to this Chapter shall inform such
shareholder of all dates prior to which action must be taken by such shareholder
in order to perfect his rights as a dissenting shareholder under this Chapter.

14A:11-3. 'DISSENTING SHAREHOLDER' DEFINED, DATE FOR DETERMINATION OF FAIR
VALUE.

(1) A shareholder who has made demand for the payment of his shares in the
manner prescribed by subsection 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) is
hereafter in this Chapter referred to as a 'dissenting shareholder.'

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(2) Upon making such demand, the dissenting shareholder shall cease to have
any of the rights of a shareholder except the right to be paid the fair value of
his shares and any other rights of a dissenting shareholder under this Chapter.

(3) 'Fair value' as used in this Chapter shall be determined

(a) As of the day prior to the day of the meeting of shareholders at
which the proposed action was approved or as of the day prior to the day
specified by the corporation for the tabulation of consents to such action
if no meeting of shareholders was held; or

(b) In the case of a merger pursuant to section 14A:10-5.1 or subsection
14A:10-7(4) in which shareholder approval is not required, as of the day
prior to the day on which the board of directors approved the plan of
merger; or

(c) In the case of an acquisition of all the shares or all the shares of
a class or series by another corporation pursuant to section 14A:10-9, as of
the day prior to the day on which the board of directors of the acquiring
corporation authorized the acquisition, or, if a shareholder vote was taken
pursuant to section 14A:10-12, as of the day provided in paragraph 14A:11-
3(3)(a).

In all cases, 'fair value' shall exclude any appreciation or depreciation
resulting from the proposed action.

14A:11-4. TERMINATION OF RIGHT OF SHAREHOLDER TO BE PAID THE FAIR VALUE OF HIS
SHARES.

(1) The right of a dissenting shareholder to be paid the fair value of his
shares under this Chapter shall cease if

(a) he has failed to present his certificates for notation as provided
by subsection 14A:11-2(6), unless a court having jurisdiction, for good and
sufficient cause shown, shall otherwise direct;

(b) his demand for payment is withdrawn with the written consent of the
corporation;

(c) the fair value of the shares is not agreed upon as provided in this
Chapter and no action for the determination of fair value by the Superior
Court is commenced within the time provided in this Chapter;

(d) the Superior Court determines that the shareholder is not entitled
to payment for his shares;

(e) the proposed corporate action is abandoned or rescinded; or

(f) a court having jurisdiction permanently enjoins or sets aside the
corporate action.

(2) In any case provided for in subsection 14A:11-4(1), the rights of the
dissenting shareholder as a shareholder shall be reinstated as of the date of
the making of a demand for payment pursuant to subsections 14A:11-2(3),
14A:11-2(4) or 14A:11-2(5) without prejudice to any corporate action which has
taken place during the interim period. In such event, he shall be entitled to
any intervening preemptive rights and the right to payment of any intervening
dividend or other distribution, or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu thereof,
at the election of the board, the fair value thereof in cash as of the time of
such expiration or completion.

14A:11-5. RIGHTS OF DISSENTING SHAREHOLDER.

(1) A dissenting shareholder may not withdraw his demand for payment of the
fair value of his shares without the written consent of the corporation.

(2) The enforcement by a dissenting shareholder of his right to receive
payment for his shares shall exclude the enforcement by such dissenting
shareholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in subsection 14A:11-4(2) and except that
this subsection shall not exclude the right of such dissenting shareholder to
bring or maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is ultra vires, unlawful or fraudulent as to such
dissenting shareholder.

D-3

<Page>
14A:11-6. DETERMINATION OF FAIR VALUE BY AGREEMENT.

(1) Not later than 10 days after the expiration of the period within which
shareholders may make written demand to be paid the fair value of their shares,
the corporation upon which such demand has been made pursuant to subsections
14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) shall mail to each dissenting
shareholder the balance sheet and the surplus statement of the corporation whose
shares he holds, as of the latest available date which shall not be earlier than
12 months prior to the making of such offer and a profit and loss statement or
statements for not less than a 12-month period ended on the date of such balance
sheet or, if the corporation was not in existence for such 12-month period, for
the portion thereof during which it was in existence. The corporation may
accompany such mailing with a written offer to pay each dissenting shareholder
for his shares at a specified price deemed by such corporation to be the fair
value thereof. Such offer shall be made at the same price per share to all
dissenting shareholders of the same class, or, if divided into series, of the
same series.

(2) If, not later than 30 days after the expiration of the 10-day period
limited by subsection 14A:11-6(1), the fair value of the shares is agreed upon
between any dissenting shareholder and the corporation, payment therefor shall
be made upon surrender of the certificate or certificates representing such
shares.

14A:11-7. PROCEDURE ON FAILURE TO AGREE UPON FAIR VALUE, COMMENCEMENT OF ACTION
TO DETERMINE FAIR VALUE.

(1) If the fair value of the shares is not agreed upon within the 30-day
period limited by subsection 14A:11-6(2), the dissenting shareholder may serve
upon the corporation upon which such demand has been made pursuant to
subsections 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) a written demand that it
commence an action in the Superior Court for the determination of the fair value
of the shares. Such demand shall be served not later than 30 days after the
expiration of the 30-day period so limited and such action shall be commenced by
the corporation not later than 30 days after receipt by the corporation of such
demand, but nothing herein shall prevent the corporation from commencing such
action at any earlier time.

(2) If a corporation fails to commence the action as provided in subsection
14A:11-7(1), a dissenting shareholder may do so in the name of the corporation,
not later than 60 days after the expiration of the time limited by subsection
14A:11-7(1) in which the corporation may commence such an action.

14A:11-8. ACTION TO DETERMINE FAIR VALUE, JURSIDICTION OF COURT, APPOINTMENT OF
APPRAISER.

In any action to determine the fair value of shares pursuant to this
Chapter:

(a) The Superior Court shall have jurisdiction and may proceed in the
action in a summary manner or otherwise;

(b) All dissenting shareholders, wherever residing, except those who
have agreed with the corporation upon the price to be paid for their shares,
shall be made parties thereto as an action against their shares quasi in
rem;

(c) The court in its discretion may appoint an appraiser to receive
evidence and report to the court on the question of fair value, who shall
have such power and authority as shall be specified in the order of his
appointment; and

(d) The court shall render judgment against the corporation and in favor
of each shareholder who is a party to the action for the amount of the fair
value of his shares.

14A:11-9. JUDGEMENT IN ACTION TO DETERMINE FAIR VALUE.

(1) A judgment for the payment of the fair value of shares shall be payable
upon surrender to the corporation of the certificate or certificates
representing such shares.

D-4

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(2) The judgment shall include an allowance for interest at such rate as the
court finds to be equitable, from the date of the dissenting shareholder's
demand for payment under subsections 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) to
the day of payment. If the court finds that the refusal of any dissenting
shareholder to accept any offer of payment, made by the corporation under
section 14A:11-6, was arbitrary, vexatious or otherwise not in good faith, no
interest shall be allowed to him.

14A:11-10. COSTS AND EXPENSES OF ACTION.

The costs and expenses of bringing an action pursuant to section 14A:11-8
shall be determined by the court and shall be apportioned and assessed as the
court may find equitable upon the parties or any of them. Such expenses shall
include reasonable compensation for and reasonable expenses of the appraiser, if
any, but shall exclude the fees and expenses of counsel for and experts employed
by any party; but if the court finds that the offer of payment made by the
corporation under section 14A:11-6 was not made in good faith, or if no such
offer was made, the court in its discretion may award to any dissenting
shareholder who is a party to the action reasonable fees and expenses of his
counsel and of any experts employed by the dissenting shareholder.

14A: 11-11. DISPOSITION OF SHARES ACQUIRED BY CORPORATION.

(1) The shares of a dissenting shareholder in a transaction described in
subsection 14A:11-1(1) shall become reacquired by the corporation which issued
them or by the surviving corporation, as the case may be, upon the payment of
the fair value of shares.

(2) (Deleted by amendment, P.L.1995, c. 279.)

(3) In an acquisition of shares pursuant to section 14A:10-9 or section
14A:10-13, the shares of a dissenting shareholder shall become the property of
the acquiring corporation upon the payment by the acquiring corporation of the
fair value of such shares. Such payment may be made, with the consent of the
acquiring corporation, by the corporation which issued the shares, in which case
the shares so paid for shall become reacquired by the corporation which issued
them and shall be cancelled.

D-5

ANNEX E

DSET CORPORATION
1998 STOCK PLAN, AS AMENDED

1. Purposes of the Plan. The purposes of this Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, non-Employee members of the Board
and Consultants of the Company and its Subsidiaries and to promote the success
of the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or non-statutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder. Stock purchase rights may also be
granted under the Plan.

2. Certain Definitions. As used herein, the following definitions shall
apply:

(a) 'Administrator' means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.

(b) 'Board' means the Board of Directors of the Company.

(d) 'Committee' means the Committee appointed by the Board of Directors
in accordance with paragraph (a) of Section 4 of the Plan.

(e) 'Common Stock' means the Common Stock, without par value, of the
Company.

(f) 'Company' means DSET Corporation, a New Jersey corporation.

(g) 'Consultant' means any person, including an advisor, who is engaged
by the Company or any Parent or subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.

(h) 'Continuous Status as an Employee' means the absence of any
interruption or termination of the employment relationship by the Company or
any Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any
other leave of absence approved by the Board, provided that such leave is
for a period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or
(iv) transfers between locations of the Company or between the Company, its
Subsidiaries or its successor.

(i) 'Employee' means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The
payment of a director's fee by the Company shall not be sufficient to
constitute 'employment' by the Company.

(j) 'Exchange Act' means the Securities Exchange Act of 1934, as
amended.

(k) 'Fair Market Value' means, as of any date, the value of Common Stock
determined as follows:

(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq
National Market, its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted
on such system or exchange for the last market trading day prior to the
time of determination as reported in the Wall Street Journal or such
other source as the Administrator deems reliable; or

(ii) If the Common Stock is quoted on Nasdaq (but not on the National
Market System thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall
be the mean between the high and low asked prices for the Common Stock;
or

E-1

(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Administrator.

(l) 'Incentive Stock Option' means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

(m) 'Nonstatutory Stock Option' means an Option not intended to qualify
as an Incentive Stock Option.

(n) 'Option' means a stock option granted pursuant to the Plan.

(o) 'Optioned Stock' means the Common Stock subject to an Option.

(p) 'Optionee' means an Employee or Consultant who receives an Option.

(q) 'Parent' means a 'parent corporation,' whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(r) 'Plan' means this 1998 Stock Plan.

(s) 'Restricted Stock' means shares of Common Stock acquired pursuant to
a grant of stock purchase rights under Section 11 below.

(t) 'Share' means a share of the Common Stock, as adjusted in accordance
with Section 13 of the Plan.

(u) 'Subsidiary' means a 'subsidiary corporation,' whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan.

(a) Number of Shares. Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of shares which may be optioned and sold under the
Plan is 1,125,000 shares of Common Stock. The shares may be authorized, but
unissued, or reacquired Common Stock.

If an option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.

(b) Per-Participant Limit. Subject to adjustment under Section 13, the
maximum number of shares of Common Stock with respect to which awards may be
granted to any person under the Plan shall be 250,000 per calendar year. The
per-participant limit described in this Section 3(b) shall be construed and
applied consistently with Section 162(m) of the Code.

4. Administration of the Plan.

(a) Procedure.

(i) Administration With Respect to Directors and Officers. With
respect to grants of Options or stock purchase rights to Employees who
are also officers or directors of the Company, the Plan shall be
administered by (A) the Board if the Board may administer the Plan in
compliance with Rule 16b-3 promulgated under the Exchange Act or any
successor thereto ('Rule 16b-3'), or (B) a Committee designated by the
Board to administer the Plan, which Committee shall be constituted in
such a manner as to permit the Plan to comply with Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies, however caused, and
remove all members of the Committee and thereafter directly administer
the Plan, all to the extent permitted by Rule 16b-3 with respect to a
plan intended to qualify thereunder.

(ii) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to directors,
non-director officers and Employees who are neither directors nor
officers.

(iii) Administration With Respect to Consultants and Other Employees.
With respect to grants of Options or stock purchase rights to Employees
who are neither directors nor officers

E-2

of the Company or to Consultants, the Plan shall be administered by (A)
the Board, if the Board may administer the Plan in compliance with Rule
16b-3, or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the legal requirements
relating to the administration of incentive stock option plans, if any,
of New Jersey corporate law and applicable securities laws and of the
Code (the 'Applicable Laws'). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by
the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
the Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan and
in the case of a Committee, the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:

(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(k) of the Plan;

(ii) to select the officers, Consultants and Employees to whom
Options and stock purchase rights may from time to time be granted
hereunder;

(iii) to determine whether and to what extent Options and stock
purchase rights or any combination thereof, are granted hereunder;

(iv) to determine the number of shares of Common Stock to be covered
by each such award granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation or waiver
of forfeiture restrictions regarding any Option or other award and/or the
shares of Common Stock relating thereto, based in each case on such
factors as the Administrator shall determine, in its sole discretion);

(vii) to determine whether and under what circumstances an Option may
be settled in cash under subsection 9(f) instead of Common Stock;

(viii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining the
amount, if any, of any deemed earnings on any deferred amount during any
deferral period);

(ix) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by
such Option shall have declined since the date the Option was granted;
and

(x) to determine the terms and restrictions applicable to stock
purchase rights and the Restricted Stock purchased by exercising such
stock purchase rights.

(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options.

5. Eligibility.

(a) Nonstatutory Stock Options may be granted to Employees and Consultants.
Incentive Stock Options may be granted only to Employees. An Employee or
Consultant who has been granted an Option may, if he is otherwise eligible, be
granted an additional Option or Options.

(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any optionee during any calendar
year (under all

E-3

plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options shall be treated as Nonstatutory Stock Options.

(c) For purposes of Section 5(b), Incentive Stock Options shall be taken
into account in the order in which they were granted, and the Fair Market Value
of the Shares shall be determined as of the time the Option with respect to such
Shares is granted.

(d) The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.

6. Term of Plan. The Plan shall become effective upon the effectiveness of
the Company's Registration Statement (Reg. No. 333-43827) filed with the
Securities and Exchange Commission, provided the Plan has been previously
adopted by the Board of Directors and approved by the shareholders of the
Company as described in Section 19 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 15 of the Plan.

7. Term of Option. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.

8. Option Exercise Price and Consideration.

(a) The per share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.

(B) granted to any Employee, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option

(A) granted to a person who, at the time of the grant of such Option,
owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.

(B) granted to any person, the per Share exercise price shall be no
less than 85% of the Fair Market Value per Share on the date of grant.

(b) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised, (6) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, (7) by

E-4

delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement, (8)
any combination of the foregoing methods of payment, or (9) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.

9. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number
of Shares which thereafter may be available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.

(b) Termination of Employment. In the event of termination of an Optionee's
consulting relationship or Continuous Status as an Employee with the Company (as
the case may be), such Optionee may, but only within ninety (90) days (or such
other period of time as is determined by the Board, with such determination in
the case of an Incentive Stock Option being made at the time of grant of the
Option and not exceeding ninety (90) days) after the date of such termination
(but in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), exercise his Option to the extent that
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

(c) Disability of Optionee. Notwithstanding the provisions of Section 9(b)
above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within twelve (12) months from the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.

(d) Death of Optionee. In the event of the death of an Optionee, the Option
may be exercised, at any time within twelve (12) months following the date of
death (but in no event later than the expiration date of the term of such Option
as set forth in the Option Agreement), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee was entitled to exercise the Option at the date
of death. To the extent that Optionee was not entitled to exercise the Option at
the date of termination, or if Optionee does not

E-5

exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.

(e) Rule 16b-3. Options granted to persons subject to Section 16(b) of the
Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.

(f) Buyout Provisions. The Administrator may at any time offer to buy out
for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

10. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. The terms of the Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.

11. Stock Purchase Rights.

(a) Rights to Purchase. Stock purchase rights may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it will
offer stock purchase rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid (which price shall not be less than 50% of the Fair Market
Value of the Shares as of the date of the offer), and the time within which such
person must accept such offer, which shall in no event exceed thirty (30) days
from the date upon which the Administrator made the determination to grant the
stock purchase right. The offer shall be accepted by execution of a Restricted
Stock purchase agreement in the form determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock purchase
agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at such rate as the Committee may determine.

(c) Other Provisions. The Restricted Stock purchase agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion. In addition, the
provisions of Restricted Stock purchase agreements need not be the same with
respect to each purchaser.

(d) Rights as a Shareholder. Once the stock purchase right is exercised, the
purchaser shall have the rights equivalent to those of a shareholder, and shall
be a shareholder when his or her purchase is entered upon the records of the
duly authorized transfer agent of the Company. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
purchase right is exercised, except as provided in Section 13 of the Plan.

12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option or stock purchase right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing to
have the Company withhold from the Shares to be issued upon exercise of the
Option, or the Shares to be issued in connection with the stock purchase right,
if any, that number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined (the 'Tax Date').

E-6

All elections by an Optionee to have Shares withheld for this purpose shall
be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:

(a) the election must be made on or prior to the applicable Tax Date;

(b) once made, the election shall be irrevocable as to the particular
Shares of the Option or right as to which the election is made;

(d) if the Optionee is subject to Rule 16b-3, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

In the event the election to have Shares withheld is made by an Optionee and
the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option or stock purchase right is
exercised but such Optionee shall be unconditionally obligated to tender back to
the Company the proper number of Shares on the Tax Date.

13. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, the per-participant limit set
forth in Section 3(b) and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per share of Common Stock covered by each
such outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been 'effected without receipt of consideration.'
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.

In the event of the proposed dissolution or liquidation of the Company, the
Board shall notify the Optionee at least fifteen (15) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
will terminate immediately prior to the consummation of such proposed action. In
the event of a merger or consolidation of the Company with or into another
corporation or the sale of all or substantially all of the Company's assets
(hereinafter, a 'merger'), the Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation. In the event that such successor corporation does
not agree to assume the Option or to substitute an equivalent option, the Board
shall, in lieu of such assumption or substitution, provide for the Optionee to
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. If the Board
makes an Option fully exercisable in lieu of assumption or substitution in the
event of a merger, the Board shall notify the Optionee that the Option shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option will terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger, the Option or right confers the right to purchase, for
each Share of stock subject to the Option immediately prior to the merger, the
consideration (whether stock, cash, or other securities or property) received in
the merger by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger
was not solely common stock of the successor corporation or its Parent, the
Board may, with the consent of the successor corporation and the participant,
provide for the consideration to be received upon the exercise of the Option,
for each Share of stock subject to the Option, to be solely common

E-7

stock of the successor corporation or its Parent equal in Fair Market Value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.

14. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.

15. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, provided that (i) no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent, and (ii)
to the extent required by Section 162(m) of the Code, no award granted after the
date of such amendment that is intended to comply with Section 162(m) of the
Code shall become exercisable, realizable, or vested, as applicable to such
award, unless and until such amendment shall have been approved by the Company's
shareholders as required by Section 162(m) of the Code (including the vote
required under Section 162(m)). In addition, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422
of the Code (or any other applicable law or regulation, including the
requirements of the NASD or an established stock exchange), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a
degree as required.

(b) Effect of Amendment or Termination. Any such amendment or termination of
the Plan shall not affect Options already granted and such Options shall remain
in full force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.

16. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

17. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

18. Agreements. Options and stock purchase rights shall be evidenced by
written agreements in such form as the Board shall approve from time to time.

19. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.

20. Information to Optionees. The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.

E-8

<Page>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Seventh of the DSET Amended and Restated Certificate of
Incorporation provides that no director of our company shall be personally
liable for any monetary damages for any breach of fiduciary duty as a director,
except to the extent that the New Jersey Business Corporation Act prohibits the
elimination or limitation of liability of directors for breach of fiduciary
duty.

Article Seventh of the DSET Amended and Restated Certificate of
Incorporation provides that no director or officer shall be personally liable to
DSET or its shareholders for damages for breach of any duty owed to DSET or its
shareholders, except that this provision shall not relieve a director or officer
from liability for any breach of duty based on an act or omission (a) in breach
of such person's duty of loyalty to DSET or its shareholders, (b) not in good
faith or involving a knowing violation of law, or (c) resulting in receipt by
such person of an improper personal benefit. No amendment to, expiration of or
repeal of Article Seventh shall have any effect on the liability or alleged
liability of any director or officer of DSET for or with respect to any acts or
omissions of such director or officer occurring prior to such amendment,
expiration or repeal.

Section 14A:3-5 of the New Jersey Business Corporation Act provides that a
corporation has the power to indemnify a director, officer, employee, or agent
of the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.

DSET maintains a general liability insurance policy, which covers certain
liabilities of directors and officers of DSET arising out of claims based on
acts or omissions in their capacities as directors or officers.

II-1

<Page>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
- ----------- -----------

*2.1 -- Agreement and Plan of Merger, dated as of June 26, 2001, as amended each of
September 26, 2001, October 30, 2001 and November 6, 2001, by and among DSET
and ISPSoft Inc., together with form of escrow agreement by and among DSET,
Commerce Bank and Binay Sugla, as Indemnification Representative.(1)
3.1 -- Amended and Restated Certificate of Incorporation of DSET.(2)
3.2 -- Amended and Restated By-laws of DSET.(2)
4.1 -- 1993 Stock Option Plan of DSET, as amended.(2)
4.2 -- 1998 Stock Plan of DSET.(2)
**4.3 -- 2000 Stock Plan of ISPSoft.
4.4 -- Shareholder Rights Plan of DSET.(3)
4.5 -- 1998 Stock Plan of DSET, as amended (4)
**5.1 -- Opinion of Hale and Dorr LLP.
'D'8.1 -- Opinion of Hale and Dorr LLP with respect to certain tax matters.
'D'8.2 -- Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
with respect to certain tax matters.
10.1 -- Corporate Revolving and Term Loan Agreement between Manufacturers and
Traders Trust Company and DSET dated August 5, 1997.(2)
10.2 -- Form of Indemnification Agreement executed by each of DSET's directors and
executive officers.(2)
10.3 -- Employment Agreement dated January 1, 1998 between DSET and
William P. McHale, Jr.(2)
10.4 -- DSET Corporation 401(k) Plan.(2)
10.5 -- Lease Agreement dated December 31, 1998 between Advance/GLBI L.L.C. and
DSET.(5)
10.6 -- Form of Severance Agreement executed with each of DSET's executive
officers.(6)
10.7 -- Form of Senior Executive Change in Control Agreement executed with each of
DSET's executive officers.(6)
10.8 -- 2001 Employee Stock Purchase Plan of DSET.(8)
**10.9 -- Secured Promissory Note issued by ISPSoft to DSET dated as of May 9, 2001.
**10.10 -- Security Agreement dated May 7, 2001 by and between ISPSoft and DSET.
**10.11 -- Secured Promissory Note issued by ISPSoft to DSET dated as of June 26, 2001.
**10.12 -- Amended and Restated Security Agreement dated June 26, 2001 by and between
ISPSoft and DSET.
**10.13 -- Amendment dated September 26, 2001 to Secured Promissory Note issued by
ISPSoft to DSET dated as of June 26, 2001 and the Amended and Restated
Security Agreement dated June 26, 2001 by and between ISPSoft and DSET.
**10.14 -- Secured Promissory Note issued by ISPSoft to DSET dated as of September 26,
2001.
**10.15 -- Amendment dated November 5, 2001 to Secured Promissory Notes issued by
ISPSoft to DSET dated as of June 26, 2001 and September 26, 2001 and the
Amended and Restated Security Agreement dated June 26, 2001 by and between
ISPSoft and DSET.
**10.16 -- Secured Promissory Note issued by ISPSoft to DSET dated as of November 5,
2001.
'D'10.17 -- Secured Promissory Note issued by ISPSoft to DSET dated as of December 19,
2001.
'D'10.18 -- Amendment dated December 19, 2001 to Secured Promissory Notes issued by
ISPSoft to DSET dated as of June 26, 2001, September 26, 2001 and
November 5, 2001 and the Amended and Restated Security Agreement dated
June 26, 2001 by and between ISPSoft and DSET.
**23.1 -- Consent of Hale and Dorr LLP (included in Exhibit 5.1).
'D'23.2 -- Consent of PricewaterhouseCoopers LLP.
'D'23.3 -- Consent of Amper, Politziner & Mattia, P.A.
'D'23.4 -- Consent of Kaufman Bros. L.P.
'D'23.5 -- Consent of Hale and Dorr LLP (included in Exhibit 8.1).
'D'23.6 -- Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.
(included in Exhibit 8.2).
**23.7 -- Consent of Carl Pavarini.
**23.8 -- Consent of Arun Inam.
</Table>

(table continued on next page)

II-2

<Page>
(table continued from previous page)

<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
- ----------- -----------

**24.1 -- Power of Attorney with respect to DSET.
99.1 -- Fairness Opinion of Kaufman Bros. L.P.(7)
'D'99.2 -- Form of Proxy Card of DSET.
'D'99.3 -- Form of Proxy Card of ISPSoft Inc.
</Table>

- ---------

'D' Filed herewith.

* DSET agrees to furnish supplementally a copy of any omitted schedules to this
agreement to the Securities and Exchange Commission upon its request.

** Previously filed.

(1) Attached as Annex A to the joint proxy statement/prospectus.

(2) Incorporated by reference to DSET's Registration Statement on Form S-1 (File
Number 333-43827) which became effective on March 12, 1998.

(3) Incorporated by reference to DSET's Current Report on Form 8-K dated
July 25, 2001.

(4) Attached as Annex E to this joint proxy statement/prospectus.

(5) Incorporated by reference to DSET's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999.

(6) Incorporated by reference to DSET's Annual Report on Form 10-K for the year
ended December 31, 2000, as amended by DSET's Form 10-K/A for such fiscal
year.

(7)Attached as Annex C to the joint proxy statement/prospectus.

(8) Incorporated by reference to DSET's Definitive Proxy Materials filed with
the Securities and Exchange Commission on April 30, 2000.

(b) Financial Statement Schedules

ITEM 22. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represents a fundamental change in the
information set forth in the Registration Statements.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b),
if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate
offering price set forth in the 'Calculation of Registration
Fee' table in the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

(2) That, for the purpose of determining liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

II-3

<Page>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.

(5) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to this registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

(7) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report, to securityholders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to
be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.

(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this registration statement through
the date of responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and DSET
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Bridgewater, State of New Jersey on the 19th day of December, 2001.

DSET CORPORATION

By: /s/ WILLIAM P. MCHALE, JR.
..................................
WILLIAM P. MCHALE, JR.
PRESIDENT AND CHIEF EXECUTIVE
OFFICER

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.

<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----

/s/ WILLIAM P. MCHALE, JR. Chairman of the Board, President December 19, 2001
......................................... and Chief Executive Officer
WILLIAM P. MCHALE, JR. (Principal Executive Officer

/s/ BRUCE M. CROWELL Vice President, Chief Financial December 19, 2001
......................................... Officer and Secretary (Principal
BRUCE M. CROWELL Financial and Accounting Officer)

* Vice President, Professional December 19, 2001
......................................... Services
JEFFREY S. GILL

* Director December 19, 2001
.........................................
JACOB J. GOLDBERG

* Director December 19, 2001
.........................................
C. DANIEL YOST

* Director December 19, 2001
.........................................
ANDREW D. LIPMAN

</Table>

* By his signature set forth below the undersigned, pursuant to duly and
authorized powers of attorney filed with the Securities and Exchange
Commission, has signed this Amendment to the Registration Statement on behalf
of the persons indicated.

By: /s/ BRUCE M. CROWELL
.........................................
BRUCE M. CROWELL
(ATTORNEY-IN-FACT)

II-5

EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
----------- -----------

*2.1 -- Agreement and Plan of Merger, dated as of June 26, 2001,
as amended each of September 26, 2001, October 30, 2001
and November 6, 2001, by and among DSET and ISPSoft Inc.,
together with form of escrow agreement by and among DSET,
Commerce Bank and Binay Sugla, as Indemnification
Representative.(1)
3.1 -- Amended and Restated Certificate of Incorporation of
DSET.(2)
3.2 -- Amended and Restated By-laws of DSET.(2)
4.1 -- 1993 Stock Option Plan of DSET, as amended.(2)
4.2 -- 1998 Stock Plan of DSET.(2)
**4.3 -- 2000 Stock Plan of ISPSoft.
4.4 -- Shareholder Rights Plan of DSET.(3)
4.5 -- 1998 Stock Plan of DSET, as Amended (4)
**5.1 -- Opinion of Hale and Dorr LLP.
'D'8.1 -- Opinion of Hale and Dorr LLP with respect to certain tax
matters.
'D'8.2 -- Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP with respect to certain tax matters.
10.1 -- Corporate Revolving and Term Loan Agreement between
Manufacturers and Traders Trust Company and DSET dated
August 5, 1997.(2)
10.2 -- Form of Indemnification Agreement executed by each of
DSET's directors and executive officers.(2)
10.3 -- Employment Agreement dated January 1, 1998 between DSET
and William P. McHale, Jr.(2)
10.4 -- DSET Corporation 401(k) Plan.(2)
10.5 -- Lease Agreement dated December 31, 1998 between
Advance/GLBI L.L.C. and DSET.(5)
10.6 -- Form of Severance Agreement executed with each of DSET's
executive officers.(6)
10.7 -- Form of Senior Executive Change in Control Agreement
executed with each of DSET's executive officers.(6)
10.8 -- 2001 Employee Stock Purchase Plan of DSET.(8)
**10.9 -- Secured Promissory Note issued by ISPSoft to DSET dated
as of May 9, 2001.
**10.10 -- Security Agreement dated May 7, 2001 by and between
ISPSoft and DSET.
**10.11 -- Secured Promissory Note issued by ISPSoft to DSET dated
as of June 26, 2001.
**10.12 -- Amended and Restated Security Agreement dated June 26,
2001 by and between ISPSoft and DSET.
**10.13 -- Amendment dated September 26, 2001 to Secured Promissory
Note issued by ISPSoft to DSET dated as of June 26, 2001
and the Amended and Restated Security Agreement dated
June 26, 2001 by and between ISPSoft and DSET.
**10.14 -- Secured Promissory Note issued by ISPSoft to DSET dated
as of September 26, 2001.
**10.15 -- Amendment dated November 5, 2001 to Secured Promissory
Notes issued by ISPSoft to DSET dated as of June 26, 2001
and September 26, 2001 and the Amended and Restated
Security Agreement dated June 26, 2001 by and between
ISPSoft and DSET.
**10.16 -- Secured Promissory Note issued by ISPSoft to DSET dated
as of November 5, 2001.
'D'10.17 -- Secured promissory note issued by ISPSoft to DSET dated
as of December 19, 2001.
'D'10.18 -- Amendment dated December 19, 2001 to Secured Promissory
Notes issued by ISPSoft to DSET dated as of June 26, 2001,
September 26, 2001 and November 5, 2001 and the Amended
and Restated Security Agreement dated June 26, 2001 by and
between ISPSoft and DSET.
**23.1 -- Consent of Hale and Dorr LLP (included in Exhibit 5.1).
'D'23.2 -- Consent of PricewaterhouseCoopers LLP.
'D'23.3 -- Consent of Amper, Politziner & Mattia, P.A.
'D'23.4 -- Consent of Kaufman Bros. L.P.
'D'23.5 -- Consent of Hale and Dorr LLP (included in Exhibit 8.1).
'D'23.6 -- Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP (included in Exhibit 8.2).
**23.7 -- Consent of Carl Pavarini.
**23.8 -- Consent of Arun Inam.
**24.1 -- Power of Attorney with respect to DSET.
99.1 -- Fairness Opinion of Kaufman Bros. L.P.(7)
'D'99.2 -- Form of Proxy Card of DSET.
'D'99.3 -- Form of Proxy Card of ISPSoft Inc.
</Table>

- ---------

'D' Filed herewith.

(footnotes continued on next page)

(footnotes continued from previous page)

* DSET agrees to furnish supplementally a copy of any omitted schedules to this
agreement to the Securities and Exchange Commission upon its request.

** Previously filed.

(1) Attached as Annex A to the joint proxy statement/prospectus.

(2) Incorporated by reference to DSET's Registration Statement on Form S-1 (File
Number 333-43827) which became effective on March 12, 1998.

(3) Incorporated by reference to DSET's Current Report on Form 8-K dated
July 25, 2001.

(4) Attached as Annex E to this joint proxy statement/prospectus.

(5) Incorporated by reference to DSET's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999.

(6) Incorporated by reference to DSET's Annual Report on Form 10-K for the year
ended December 31, 2000, as amended by DSET's Form 10-K/A for such fiscal
year.

(7) Attached as Annex C to the joint proxy statement/prospectus.

(8) Incorporated by reference to DSET's Definitive Proxy Materials filed with
the Securities and Exchange Commission on April 30, 2000.

STATEMENT OF DIFFERENCES

The trademark symbol shall be expressed as..................................'TM'
The section symbol shall be expressed as....................................'SS'
The dagger symbol shall be expressed as......................................'D'