SCHEDULE 14A
(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

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

DSET CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
- --------------------------------------------------------------------------------

(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------

DSET CORPORATION
1011 US HIGHWAY 22
BRIDGEWATER, NJ 08807

May 4, 1999

To Our Shareholders:

You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of DSET Corporation at 1:00 P.M., local time, on Thursday, June 10, 1999, at the
Somerset Hills Hotel, 200 Liberty Corner Road, Warren, New Jersey.

The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented at the meeting.

It is important that your shares be represented at this meeting to ensure
the presence of a quorum. Whether or not you plan to attend the meeting, we hope
that you will have your shares represented by signing, dating and returning your
proxy in the enclosed envelope, which requires no postage if mailed in the
United States, AS SOON AS POSSIBLE. Your shares will be voted in accordance with
the instructions you have given in your proxy.

Thank you for your continued support.

Sincerely,

/s/ William P. McHale, Jr.
William P. McHale, Jr.
PRESIDENT AND
CHIEF EXECUTIVE OFFICER

DSET CORPORATION
1011 US HIGHWAY 22
BRIDGEWATER, NJ 08807

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 1999

The Annual Meeting of Shareholders (the "Meeting") of DSET CORPORATION, a
New Jersey corporation (the "Company"), will be held at the Somerset Hills
Hotel, 200 Liberty Corner Road, Warren, New Jersey, on Thursday, June 10, 1999,
at 1:00 P.M., local time, for the following purposes:

(1) To elect five directors to serve until the next Annual Meeting of
Shareholders and until their respective successors shall have been duly
elected and qualified;

(2) To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 1999; and

(3) To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.

Holders of Common Stock of record at the close of business on April 16,
1999 are entitled to notice of and to vote at the Meeting, or any adjournment or
adjournments thereof. A complete list of such shareholders will be open to the
examination of any shareholder at the Meeting. The Meeting may be adjourned from
time to time without notice other than by announcement at the Meeting.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES WILL ENSURE A QUORUM
AND SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION. EACH PROXY GRANTED MAY
BE REVOKED BY THE SHAREHOLDER APPOINTING SUCH PROXY AT ANY TIME BEFORE IT IS
VOTED. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE
REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY CARD SHOULD BE
SIGNED AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED.

By Order of the Board of Directors,

/s/ Stephen Van Houten
Stephen Van Houten
ASSISTANT SECRETARY

Bridgewater, New Jersey
May 4, 1999

THE COMPANY'S 1998 ANNUAL REPORT ACCOMPANIES THE PROXY STATEMENT.

DSET CORPORATION
1011 US HIGHWAY 22
BRIDGEWATER, NJ 08807

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

PROXY STATEMENT

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

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of DSET Corporation (the "Company") of proxies to be
voted at the Annual Meeting of Shareholders of the Company to be held on
Thursday, June 10, 1999 (the "Meeting") at the Somerset Hills Hotel, 200 Liberty
Corner Road, Warren, New Jersey at 1:00 P.M., local time, and at any adjournment
or adjournments thereof. Holders of record of shares of Common Stock, no par
value ("Common Stock"), as of the close of business on April 16, 1999, will be
entitled to notice of and to vote at the Meeting and any adjournment or
adjournments thereof. As of that date, there were 10,341,984 shares of Common
Stock issued and outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote on any matter presented at the Meeting. The number of votes
entitled to be cast at the Meeting is 10,341,984.

If proxies in the accompanying form are properly executed and returned, the
Common Stock represented thereby will be voted in the manner specified therein.
If not otherwise specified, the shares of Common Stock represented by the
proxies will be voted (i) FOR the election of the five nominees named below as
Directors, (ii) FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors for the year ending December
31, 1999 and (iii) in the discretion of the persons named in the enclosed form
of proxy, on any other proposals which may properly come before the Meeting or
any adjournment or adjournments thereof. Any Shareholder who has submitted a
proxy may revoke it at any time before it is voted, by written notice addressed
to and received by the Assistant Secretary of the Company, by submitting a duly
executed proxy bearing a later date or by electing to vote in person at the
Meeting. The mere presence at the Meeting of the person appointing a proxy does
not, however, revoke the appointment.

The presence, in person or by proxy, of holders of shares of Common Stock
having a majority of the votes entitled to be cast at the Meeting shall
constitute a quorum. The affirmative vote by the holders of a plurality of the
shares of Common Stock represented at the Meeting is required for the election
of Directors, provided a quorum is present in person or by proxy. All actions
proposed herein other than the election of Directors may be taken upon the
affirmative vote of Shareholders possessing a majority of the shares of Common
Stock represented at the Meeting, provided a quorum is present in person or by
proxy.

Abstentions are included in the shares present at the Meeting for purposes
of determining whether a quorum is present, and are counted as a vote against
for purposes of determining whether a proposal is approved. Broker non-votes
(when shares are represented at the Meeting by a proxy specifically conferring
only limited authority to vote on certain matters and no authority to vote on
other matters) are included in the determination of the number of shares
represented at the Meeting for purposes of determining whether a quorum is
present but are not counted for purposes of determining whether a proposal has
been approved and thus have no effect on the outcome.

This Proxy Statement, together with the related proxy card, is being mailed
to the Shareholders of the Company on or about May 4, 1999. The Annual Report to
Shareholders of the Company for the year ended December 31, 1998, including
financial statements (the "Annual Report"), is being mailed together with this
Proxy Statement to all Shareholders of record as of April 16, 1999. In addition,
the Company has provided brokers, dealers, banks, voting trustees and their
nominees, at the Company's expense, with additional copies of the Annual Report
so that such record holders could supply such materials to beneficial owners as
of April 16, 1999.

ELECTION OF DIRECTORS

At the Meeting, five Directors are to be elected (which number shall
constitute the entire Board of Directors of the Company) to hold office until
the next Annual Meeting of Shareholders and until their successors shall have
been elected and qualified.

It is the intention of the persons named in the enclosed form of proxy to
vote the shares of Common Stock represented thereby, unless otherwise specified
in the proxy, for the election as Directors of the persons whose names and
biographies appear below. All of the persons whose names and biographies appear
below are at present Directors of the Company. In the event any of the nominees
should become unavailable or unable to serve as a Director, it is intended that
votes will be cast for a substitute nominee designated by the Board of
Directors. The Board of Directors has no reason to believe that the nominees
named will be unable to serve if elected. Each of the nominees has consented to
being named in this Proxy Statement and to serve if elected.

The current Board of Directors and nominees for election to the Board are
as follows:

SERVED AS A POSITIONS WITH
NAME AGE DIRECTOR SINCE THE COMPANY
- ---- --- -------------- --------------

William P. McHale, Jr................ 50 1997 President, Chief Executive Officer
and Director

S. Daniel Shia....................... 47 1989 Chairman of the Board, Chief
Technical Officer and Director

Bruce R. Evans....................... 40 1995 Director

John C. Thibault..................... 45 1998 Director

Jacob J. Goldberg.................... 52 1999 Director

The principal occupations and business experience, for at least the past
five years, of each nominee are as follows:

MR. MCHALE joined the Company 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. Mr. McHale also serves on the
Board of Directors of TMN Tools, S.A., the Company's European joint venture.
Prior to joining the Company, 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 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. SHIA founded the Company and currently serves as its Chairman of the
Board and Chief Technical Officer. Mr. Shia served as President from the
Company's founding in 1989 until January 1997. Mr. Shia also served as Chief
Executive Officer from 1989 until July 1997. Prior to founding the Company, Mr.
Shia served as a consultant to Bellcore from October 1985 to January 1989 where
he developed OSI protocols and a distributed network management system for a
high performance metropolitan area network. From 1983 to October 1985, Mr. Shia
was a consultant to AT&T Bell Laboratories.

MR. EVANS has been a Director of the Company since December 1995. Since
1991, Mr. Evans has been a general partner with Summit Partners, a venture
capital firm, where he has been employed since 1986. Mr. Evans serves as a
director of Pediatrix Medical Group, Inc., Omtool Ltd. and several
privately-held companies.

MR. THIBAULT has been a Director of the Company since June 1998. Since
January 1994, Mr. Thibault has served as President and CEO of GeoTel
Communications Corporation. From April 1991 to October 1993, Mr.

-2-

Thibault served as President and CEO of Coral Network Corporation, a supplier of
high-performance, fault-tolerant networking products. Prior to that, from April
1988 to April 1991 Mr. Thibault was an officer of Motorola, Inc. and senior vice
president and general manager of Motorola's Codex product division. Prior to
joining Motorola, Mr. Thibault held a variety of positions with Wang
Laboratories.

MR. GOLDBERG has been a Director of the Company since March 1999. Since
August 1997, Mr. Goldberg has 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.

All Directors 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 the Company.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE
NOMINEES FOR THE BOARD OF DIRECTORS.

COMMITTEES AND MEETINGS OF THE BOARD

The Board of Directors has a Compensation Committee (the "Compensation
Committee"), which approves salaries and incentive compensation for executive
officers of the Company and which administers the Company's stock option plans,
and an Audit Committee, which reviews the results and scope of the audit and
other services provided by the Company's independent accountants. The
Compensation Committee currently consists of Bruce R. Evans, S. Daniel Shia and
John C. Thibault. The Compensation Committee was reconstituted in December 1997
and August 1998 and held two meetings in 1998. The Audit Committee currently
consists of Jacob J. Goldberg and John C. Thibault. The Audit Committee was
established in December 1997 and held no meetings in 1998. During 1998, there
were seven meetings of the Board of Directors and one action by written consent
of Directors. Each incumbent Director attended at least 75% of the aggregate of
all meetings of the Board of Directors held during the period in which they
served as a Director and the total number of meetings held by the committee on
which they served during the period, if applicable.

COMPENSATION OF DIRECTORS

Directors who are not employees or affiliates of the Company or its
subsidiaries, who currently consist of Mr. Thibault 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. All Directors are reimbursed for
reasonable expenses incurred in attending Board meetings.

Pursuant to the Company's 1993 Stock Option Plan, the Company granted to
Elizabeth K. Adams, a former Director, options to purchase 21,000 shares of
Common Stock on July 25, 1997 at an exercise price of $4.00 per share. Of such
options, 7,000 shares have vested and 7,000 shares will vest on each of July 25,
1999 and July 25, 2000.

Pursuant to the Company's 1998 Stock Plan, the Company granted to Mr.
Thibault options to purchase 25,000 shares of Common Stock on June 8, 1998 at an
exercise price of $15.375 per share. The options vest to the extent of one-third
of the shares on each of June 8, 1999, 2000 and 2001.

Pursuant to the Company's 1998 Stock Plan, the Company 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.

Mr. Evans does not currently hold options to purchase shares of the
Company's Common Stock.

-3-

EXECUTIVE OFFICERS

The following table identifies the current executive officers of the
Company:

CAPACITIES IN IN CURRENT
NAME AGE WHICH SERVED POSITION SINCE
- ---- --- ------------- --------------

William P. McHale, Jr.................. 50 President, Chief Executive January 1997
Officer and Director (Chief Executive Officer
since July 1997)

S. Daniel Shia......................... 47 Chairman of the Board, July 1997
Chief Technical Officer and
Director

Paul R. Smith(1)....................... 52 Senior Vice President, February 1999
Worldwide Sales Network
Solutions

Susan M. Boykas(2)..................... 40 Acting Chief Financial February 1999
Officer

Vincent J. Sheu(3)..................... 46 Vice President, Carrier October 1998
Solutions

Victor W. Mak(4)....................... 38 Vice President, Network October 1998
Solutions
- -----------

(1) Mr. Smith joined the Company in September 1992, and currently serves as
Senior Vice President Worldwide Sales Network Solutions. Prior to
joining the Company, from 1987 to 1992, Mr. Smith founded and directed
The Center for Strategic Communications, a marketing consulting firm
serving the telecommunications, health-care and computer industries.
Prior to that, Mr. Smith served in various engineering, marketing,
sales, product management, strategic planning and business development
positions with AT&T Bell Laboratories and AT&T Network Systems from
1968 to 1987.

(2) Ms. Boykas joined the Company in February 1999 and currently serves as
Acting Chief Financial Officer. Since April 1992, Ms. Boykas has served
as the Principal of Boykas Associates, Inc., a consulting firm
providing short and long term outsourced chief financial officer
services primarily to technology-based companies. Prior to that, from
1989 through April 1992, Ms. Boykas served as the Chief Financial
Officer and Controller of The Museum Company. From 1981 through 1989,
Ms. Boykas served in the audit division of Price Waterhouse. Ms. Boykas
holds a BS in accounting from Fordham University and is a certified
public accountant.

(3) Mr. Sheu joined the Company in August 1995, and currently serves as
Vice President, Carrier Solutions. Mr. Sheu served as the Company's
Director of Professional Services from August 1995 to April 1997. Mr.
Sheu was promoted to Vice President of Professional Services in April
1997 and became Vice President of Carrier Solutions in October 1998.
Prior to joining the Company, Mr. Sheu served as a senior manager for
DSC Telecom L.P. from January 1992 to August 1995.

(4) Mr. Mak joined the Company in April 1994, and currently serves as Vice
President, Network Solutions. Mr. Mak served the Company as an
Engineering Manager from April 1994 to April 1996, and as Director of
Engineering from April 1996 to April 1997. Mr. Mak was promoted to Vice
President of Engineering in April 1997 and became Vice President of
Network Solutions in October 1998. Prior to joining the Company, Mr.
Mak worked as a research scientist for Bellcore from 1987 to 1994.

-4-

Executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified. None
of the Company's executive officers is related to any other executive officer or
to any Director of the Company.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's Directors, officers and shareholders who
beneficially own more than 10% of any class of equity securities of the Company
registered pursuant to Section 12 of the Exchange Act to file initial reports of
ownership and reports of changes in ownership with respect to the Company's
equity securities with the Securities and Exchange Commission (the "SEC"). All
reporting persons are required by SEC regulation to furnish the Company with
copies of all reports that such reporting persons file with the SEC pursuant to
Section 16(a).

Based solely on the Company's review of the copies of such forms received
by the Company and upon written representations of the Company's reporting
persons received by the Company, William P. McHale, Jr., President and Chief
Executive Officer, John C. Thibault, a member of the Board of Directors, and
Vincent J. Sheu, Vice President, Carrier Solutions, did not report on a timely
basis certain transactions. In particular, Mr. McHale failed to timely report on
a Form 4 the cancellation on October 8, 1998 of options to purchase 93,300
shares of Common Stock at an exercise price of $4.00 per share and the receipt
of options to purchase 200,000 shares of Common Stock at an exercise price of
$6.875 per share on such date. Mr. McHale filed such information on a Form 5
with the SEC on February 5, 1999. Mr. Thibault failed to timely report on a Form
3 his election on June 8, 1998 to the Board of Directors and his receipt on such
date of options to purchase 25,000 shares of Common Stock at an exercise price
of $15.375 per share. Mr. Thibault filed such information on a Form 5 with the
SEC on February 16, 1999. Mr. Sheu failed to timely report on a Form 5 the grant
on December 31, 1998 of options to purchase 25,000 shares of Common Stock at an
exercise price of $10.375 per share on such date. Mr. Sheu filed such
information on a Form 5 with the SEC on April 22, 1999.

In response to such late filings, the Company has recently developed a new
procedure through which it will monitor the transactions that trigger the
Section 16(a) reporting requirements of its applicable reporting persons.

-5-

EXECUTIVE COMPENSATION

SUMMARY OF COMPENSATION IN FISCAL 1998 AND 1997

The following Summary Compensation Table sets forth information concerning
compensation for services in all capacities awarded to, earned by or paid to
each person who served as the Company's Chief Executive Officer at any time
during 1998 and each other executive officer of the Company whose aggregate cash
compensation exceeded $100,000 at the end of 1998 (collectively, the "Named
Executives") during the years ended December 31, 1997 and 1998.

SUMMARY COMPENSATION TABLE

- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
------------------------------------------------------------
OTHER SECURITIES ALL OTHER
SALARY BONUS ANNUAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR COMPEN- OPTIONS
SATION

(A)
($) ($) ($) (#) ($)
(B) (C) (D) (E) (G) (I)
- -------------------------------------------------------------------------------------------------------------------------------

William P. McHale, Jr.(1).......... 1998 175,000 68,329 -- 200,000(2) 6,744(4)
President and 1997 157,500 -- -- 364,950(3) 45,171(5)
Chief Executive Officer

S. Daniel Shia..................... 1998 200,000 100,000 5,800(6) -- 7,218(7)
Chairman of the Board and 1997 198,462 70,165 5,800(6) 12,100 6,805(8)
Chief Technical Officer

Paul R. Smith...................... 1998 167,320 68,750 5,943(6) 20,000 7,901(9)
Senior Vice President 1997 120,412 89,521 4,100(6) 20,808 6,660(10)
Worldwide Sales Network
Solutions

Vincent J. Sheu.................... 1998 134,856 42,556 -- 100,000 6,766(11)
Vice President, Carrier 1997 123,707 16,978 -- 28,151 4,412(12)
Solutions

Victor W. Mak...................... 1998 144,800 34,953 -- 20,000 6,317(13)
Vice President, Network 1997 117,236 12,452 -- 23,409 5,439(14)
Solutions
- -----------

(1) Mr. McHale joined the Company in January 1997.

(2) In exchange for the cancellation of 93,300 options issued to Mr. McHale
in January 1997, such options were issued by the Company in October
1998 at an exercise price of $6.875 per share.

(3) Includes 93,300 options that were cancelled by the Company in October
1998. The 93,300 cancelled options were initially granted in January
1997 at an exercise price of $4.00 per share.

(4) Includes contributions by the Company under the 401(k) Plan of $5,700
and compensation relating to life insurance premiums paid on his behalf
of $1,044.

(5) Includes relocation allowance of $44,446 and compensation relating to
life insurance premiums paid on his behalf of $725.

-6-

(6) Represents automobile allowance.

(7) Includes contributions by the Company under the 401(k) Plan of $6,000
and compensation relating to life insurance premiums paid on his behalf
of $1,218.

(8) Includes contributions by the Company under the 401(k) Plan of $5,700
and compensation relating to life insurance premiums paid on his behalf
of $1,105.

(9) Includes contributions by the Company under the 401(k) Plan of $6,000
and compensation relating to life insurance premiums paid on his behalf
of $1,901.

(10) Includes contributions by the Company under the 401(k) Plan of $5,700
and compensation relating to life insurance premiums paid on his behalf
of $960.

(11) Includes contributions by the Company under the 401(k) Plan of $6,000
and compensation relating to life insurance premiums paid on his behalf
of $766.

(12) Includes contributions by the Company under the 401(k) Plan of $4,080
and compensation relating to life insurance premiums paid on his behalf
of $332.

(13) Includes contributions by the Company under the 401(k) Plan of $6,000
and compensation relating to life insurance premiums paid on his behalf
of $317.

(14) Includes contributions by the Company under the 401(k) Plan of $5,214
and compensation relating to life insurance premiums paid on his behalf
of $225.

-7-

OPTION GRANTS IN 1998

The following table sets forth information concerning individual grants of
stock options made pursuant to the Company's 1993 Stock Option Plan and 1998
Stock Plan during 1998 to each of the Named Executives. The Company has never
granted any stock appreciation rights.

OPTION GRANTS IN LAST FISCAL YEAR

- -----------------------------------------------------------------------------------------------------------------------
Individual Grants

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

POTENTIAL REALIZABLE VALUE
PERCENT OF AT
NUMBER OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK
UNDERLYING GRANTED TO EXERCISE OR PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN BASE PRICE OPTION
GRANTED FISCAL EXPIRATION TERM (4)
---------------------------
NAME (#)(1) YEAR (3) ($/Sh) DATE 5%($) 10%($)
(A) (B) (C) (D) (E) (F) (G)
- -----------------------------------------------------------------------------------------------------------------------

William P. McHale, Jr........ 200,000(2) 23.3% 6.875 10/7/08 864,730 2,191,396

S. Daniel Shia............... -- -- -- -- -- --

Paul R. Smith................ 15,000 1.8% 13.00 2/9/08 122,634 310,780
5,000 0.6% 15.00 3/10/08 47,167 119,531

Vincent J. Sheu.............. 30,000 3.5% 13.00 2/9/08 245,269 621,560
45,000 5.3% 15.00 3/10/08 424,504 1,075,776
25,000 2.9% 10.375 12/30/08 163,120 413,377

Victor W. Mak................ 15,000 1.8% 13.00 2/9/08 122,634 310,780
5,000 0.6% 15.00 3/10/08 47,167 119,531
- -----------

(1) Such options were granted pursuant to the Company's 1993 Stock Option
Plan (the "1993 Plan") or the Company's 1998 Stock Plan (the "1998
Plan"). See "Stock Option Plans."

(2) In exchange for the cancellation of 93,300 options issued to Mr. McHale
in January 1997, such options were issued in October 1998 at an
exercise price of $6.875 per share.

(3) Based on an aggregate of 857,000 options granted to employees in 1998,
including options granted to Named Executives.

(4) 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 Named
Executives and assumes no adjustments to the grant date exercise price.

STOCK OPTION PLANS

The 1993 Plan was adopted by the Board of Directors and became effective on
September 15, 1993. The 1993 Plan was approved by the Shareholders of the
Company on September 10, 1994. As of February 28, 1999, a total of 1,893,377
shares were reserved for issuance upon the exercise of options granted under the
1993 Plan. Those eligible to receive stock option grants under the 1993 Plan
include employees, officers, Directors and

-8-

consultants. The 1993 Plan is administered by the Compensation Committee of the
Board of Directors of the Company. Upon consummation of the Company's initial
public offering in April 1998 (the "IPO"), no further grants were made under the
1993 Plan.

Subject to the provisions of the 1993 Plan, the administrator of the 1993
Plan has the discretion to determine the optionees, the type of options to be
granted (incentive stock options ("ISOs") or non-qualified stock options
("NQSOs")), the vesting provisions, the terms of the grants and such other
related provisions as are consistent with the 1993 Plan. The exercise price of
an option may not be less than the fair market value per share of the Common
Stock on the date of grant or, in the case of any optionee who owns 10% or more
of the total combined voting power of all classes of stock of the Company, not
less than 110% of the fair market value per share on the date of grant. The 1993
Plan provides that upon listing on the Nasdaq National Market, the fair market
value shall be the closing price for Common Stock of the Company on the last
trading day prior to the grant date.

The options terminate not more than ten years from the date of grant,
subject to earlier termination on the optionee's death, disability or
termination of employment with the Company, but provide that the term of any
options granted to a holder of more than 10% of the total combined voting power
of all classes of stock of the Company may be no longer than five years.
Generally, options under the 1993 Plan vest over four years from the date of
grant. Options are not assignable or otherwise transferable except by will or by
the laws of descent and distribution. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the surviving
corporation, or the sale of all or substantially all of the Company's assets in
which the successor corporation does not assume outstanding options or issue
substantially equivalent options, all outstanding options accelerate and become
exercisable in full for a period of at least ten days.

At the Board of Directors' discretion, the Company (or the Company's
assignees) may reserve a right of first refusal to purchase any shares of stock
that may be purchased upon the exercise of options granted under the 1993 Plan
that an optionee may propose to transfer to a third party. In addition, the
Company may reserve a right to repurchase all shares held by an optionee upon
the optionee's termination of employment or service with the Company, for any
reason, within a specified time as determined by the Board of Directors at the
time of grant. The Company may repurchase such terminated optionee's shares at
(i) the optionee's original purchase price (provided that the right to
repurchase at such price shall lapse at the rate of 20% per year from the date
of grant), (ii) the fair market value of such shares as determined by the Board
of Directors in good faith or (iii) a price determined by formula or other
provision set forth in the grant of stock options.

The 1998 Plan was adopted by the Board of Directors on December 31, 1997
and was approved by the Shareholders of the Company in February 1998. The 1998
Plan became effective on the date of the consummation of the IPO and shall
terminate ten years from such date. A total of 1,800,000 shares are reserved for
issuance upon the exercise of options and/or stock purchase rights granted under
the 1998 Plan, 477,500 of which had been granted as of February 28, 1999. Those
eligible to receive stock option grants or stock purchase rights under the 1998
Plan include employees, non-employee Directors and consultants. The 1998 Plan is
administered by the Compensation Committee of the Board of Directors of the
Company.

Subject to the provisions of the 1998 Plan, the administrator of the 1998
Plan shall have the discretion to determine the optionees and/or grantees, the
type of options to be granted ("ISOs" or "NQSOs"), the vesting provisions, the
terms of the grants and such other related provisions as are consistent with the
1998 Plan. The exercise price of an ISO may not be less than the fair market
value per share of the Common Stock on the date of grant or, in the case of an
optionee who beneficially owns 10% or more of the outstanding capital stock of
the Company, not less than 110% of the fair market value per share on the date
of grant. The exercise price of a NQSO may not be less than 85% of the fair
market value per share of the Common Stock on the date of grant or, in the case
of an optionee who beneficially owns 10% or more of the outstanding capital
stock of the Company, not less than 110% of the fair market value per share on
the date of grant. The purchase price of shares issued pursuant to stock
purchase rights may not be less than 50% of the fair market value of such shares
as of the offer date of such rights.

-9-

years. Options are not assignable or otherwise transferable except by will or
the laws of descent and distribution. 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 in which the successor corporation
does not assume outstanding options or issue equivalent options, the Board of
Directors of the Company is required to provide accelerated vesting of
outstanding options.

AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES

The following table sets forth information concerning each exercise of
options during 1998 by each of the Named Executives and the year end value of
unexercised in-the-money options.

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

- --------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL FISCAL
SHARES YEAR-END YEAR-END
ACQUIRED ON VALUE (#) ($) (1)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
- --------------------------------------------------------------------------------------------------------------------------

William P. McHale, Jr........... 56,250 714,937 67,912/347,488 472,876/1,720,111(2)

S. Daniel Shia.................. 157,500 1,798,762 700,507/195,050 6,466,384/1,604,074

Paul R. Smith................... -- -- 79,343/49,154 716,604/222,804

Vincent J. Sheu................. 11,250 108,197 9,149/129,076 70,845/222,951

Victor W. Mak................... -- -- 119,682/39,205 1,132,745/139,286
- -----------

(1) Based on a year end fair market value of the underlying securities
equal to $10.375, less the exercise price payable for such shares.

(2) Includes 200,000 options issued by the Company in October 1998 at an
exercise price of $6.875 per share. Such options were issued in
exchange for the cancellation of 93,300 options issued to Mr. McHale in
January 1997.

-10-

OPTION REPRICINGS IN 1998

10-YEAR OPTION REPRICINGS

- --------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF PRICE OF LENGTH OF
SECURITIES STOCK AT ORIGINAL
UNDERLYING TIME OF EXERCISE PRICE OPTION TERM
OPTIONS REPRICING AT TIME OF NEW REMAINING AT
REPRICED OR OR REPRICING OR EXERCISE DATE OF
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE REPRICING OR
(#) ($) (#) ($) AMENDMENT
(A) (B) (C) (D) (E) (F) (G)
- --------------------------------------------------------------------------------------------------------------------------

William P. McHale, Jr. 10/8/98 200,000(1) 6.875 4.00 6.875 8 yrs. 9 mos.

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

(1) In exchange for the cancellation of 93,300 options issued to Mr. McHale
in January 1997, such options were issued by the Company in October
1998.

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 the Company in November 1998. He currently receives
an annual salary of $175,000 and is eligible for an annual bonus of up to
$140,000, the amount and payment of which is within the discretion of the
Compensation Committee of the Board of Directors. The Company 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 the
Company. See "Certain Relationships and Related Transactions" for a loan
transaction between the Company and Mr. McHale.

S. Daniel Shia, Chairman of the Board and Chief Technical Officer, entered
into a five-year employment agreement with the Company commencing October 1,
1996. Under such agreement, he is currently entitled to an annual salary of
$200,000. Mr. Shia is eligible for an annual bonus, the amount and payment of
which is within the discretion of the Compensation Committee of the Board of
Directors provided that Mr. Shia shall receive a minimum bonus equal to 50% of
his annual salary multiplied by a percentage equal to the Company's actual
pre-tax profit divided by the budgeted pre-tax profit for the applicable year.
The Company also has agreed, subject to certain restrictions, to pay Mr. Shia
the equivalent of two years salary in the event Mr. Shia is terminated without
cause.

Paul A. Lipari, the Company's former Chief Financial Officer, Treasurer and
Secretary resigned his positions from the Company on February 17, 1999.

Each of the Company'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 the Company's customers or employees.
In addition, each of Messrs. McHale and Shia has agreed that during the term of
his employment and thereafter for a period of two years, with respect to Mr.
Shia, and one year, with respect to Mr. McHale, such person will not compete
with the Company in any state or territory of the United States, or any other
country, where the Company does business by engaging in any capacity in any
business which is competitive with the business of the Company.

The Company has executed indemnification agreements with each of its
executive officers and Directors pursuant to which the Company 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 the Company.

-11-

The Company generally requires its employees to maintain the
confidentiality of Company information and to assign inventions to the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of, and during 1998 consisted of, Bruce
R. Evans, S. Daniel Shia and John C. Thibault. There are no, and during 1998
there were no, Compensation Committee Interlocks.

In December 1995, the Company sold an aggregate of 676,361 shares of Series
A Stock at an aggregate purchase price of $10.0 million to Summit Ventures IV,
L.P. and Summit Investors II, L.P. (collectively, "Summit"). The Company,
pursuant to the Preferred Stock purchase agreement with Summit (the "Summit
Agreement"), repurchased an aggregate of 3,043,625 shares of Common Stock from
certain existing shareholders of the Company for an aggregate of $10.0 million.
Among such shareholders, the Company repurchased from Mr. Shia and certain of
his relatives an aggregate of 1,031,472 shares of Common Stock. All shares of
Series A Stock outstanding as of the consummation of the IPO were automatically
converted into an aggregate of 3,043,625 shares of Common Stock. In connection
with such Series A Stock transaction, Bruce R. Evans, a general partner of
Summit, was elected to the Company's Board of Directors as Summit's designee. In
September 1996, the Company, pursuant to certain covenants in the Summit
Agreement, issued to Summit, for no additional consideration, warrants (the
"Summit Warrants") to purchase up to a maximum of 185,331 shares of Common
Stock.

The shares of Common Stock issued pursuant to the conversion of the Series
A Stock and the shares of Common Stock issuable upon the exercise of the Summit
Warrants are entitled to certain registration rights. Pursuant to the Summit
Agreement, at any time, the holders of at least 25% of the aggregate of the
Common Stock issued upon the conversion of the Series A Stock and the Common
Stock otherwise held by Summit (including the shares issuable upon the exercise
of the Summit Warrants) (the "Registrable Securities") have the right, subject
to certain restrictions set forth in the Summit Agreement, to require that the
Company register the Registrable Securities requested by such holders at the
Company's expense (on no more than two occasions) under the Securities Act of
1933, as amended (the "Securities Act"). The Company is not, however, required
to register any Registrable Securities unless such shares represent at least 25%
of the Registrable Securities, or, if less than 25%, if the anticipated
aggregate offering price exceeds $5.0 million.

The holders of Registrable Securities have the right to an unlimited number
of registrations on Form S-3. Also pursuant to the Summit Agreement, if, at any
time, the Company proposes to register any of its Common Stock under the
Securities Act for sale to the public, the holders of the Registrable Securities
have unlimited piggyback registration rights at the Company's expense, subject
to certain restrictions set forth in the Summit Agreement.

-12-

PERFORMANCE GRAPH

The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return on the Nasdaq Composite
Index and a Peer Group (capitalization weighted) for the period beginning on the
date on which the SEC declared effective the Company's Form 8-A Registration
Statement pursuant to Section 12 of the Exchange Act and ending on the last day
of the Company's last completed fiscal year.

COMPARISON OF CUMULATIVE TOTAL RETURN(1)(2)(3)

Among the Company, the Nasdaq Composite Index
and a Peer Group Index(4)
(Capitalization Weighted)

[PERFORMANCE GRAPH GOES HERE]

Base Period
Company/Index Name March 12, 1998 March 31, 1998 June 30, 1998 September 30, 1998 December 31, 1998
- -------------------------- ---------------- ---------------- --------------- -------------------- -------------------

DSET Corporation............. $ 100.00 $ 116.80 $ 94.53 $ 53.13 $ 64.84

Nasdaq Composite Index....... 100.00 104.06 107.41 96.02 124.30

Peer Group Index............. 100.00 103.83 108.92 79.21 106.91
- -----------

(1) Graph assumes $100 invested on March 12, 1998 in the Company's Common
Stock, the Nasdaq Composite Index and the Peer Group Index
(capitalization weighted).

(2) Cumulative total return assumes reinvestment of dividends.

(3) Year ended December 31.

(4) The Company has constructed a Peer Group Index consisting of Vertel,
Evolving Systems, Micromuse, TTI Team Telecom, Architel and Concord
Communications. The Company believes that these companies most closely
resemble the Company's business mix and that their performance is
representative of the industry.

-13-

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee has furnished the following report:

The Company's executive compensation policy is designed to attract and
retain highly qualified individuals for its executive positions and to provide
incentives for such executives to achieve maximum Company performance by
aligning the executives' interest with that of shareholders by basing a portion
of compensation on corporate performance.

Each of the Named Executives have executed employment agreements which
establishes salaries and other terms of employment. The Compensation Committee,
however, generally reviews and determines base salary levels for executive
officers of the Company at or about the start of the fiscal year and determines
actual bonuses after the end of the fiscal year based upon Company and
individual performance.

The Company's executive officer compensation program is comprised of base
salary, discretionary annual cash bonuses, stock options and various other
benefits, including medical insurance and a 401(k) Plan, which are generally
available to all employees of the Company.

Salaries, whether established pursuant to contract or otherwise, are
established in accordance with industry standards through review of publicly
available information concerning the compensation of officers of comparable
companies. Consideration is also given to relative responsibility, seniority,
individual experience and performance. Salary increases are generally made based
on increases in the industry for similar companies with similar performance
profiles and/or attainment of certain division or Company goals.

Bonuses are paid on a quarterly or on an annual basis and are
discretionary. The amount of bonus is based on criteria which are designed to
effectively measure a particular executive's attainment of goals which relate to
his or her duties and responsibilities as well as overall Company performance.
In general, the annual incentive bonus is based on operational and financial
results of the Company and focuses on the contribution to these results of a
business unit or division, and the executive's individual performance in
achieving the results.

The stock option program is designed to relate executives' long-term
interests to shareholders' long-term interests. In general, stock option awards
are granted if warranted by the Company's growth and profitability. Stock
options are awarded on the basis of individual performance and/or the
achievement of internal strategic objectives.

On October 8, 1998, the Compensation Committee unanimously approved
offering the current Chief Executive Officer new stock options to purchase
200,000 shares of the Company's Common Stock at an exercise price of $6.875 per
share (the "New Options") in exchange for the cancellation of 93,300 options
issued to the Chief Executive Officer at $4.00 per share in January 1997 (the
"Old Options"). The Old Options vested upon the earlier of July 30, 2007 or the
date upon which the Company achieved certain earnings milestones. The Company
issued the New Options in order to pursue its commitment to increase the overall
compensation package of the Chief Executive Officer as compared to chief
executive officers of comparable companies, and to increase the short-term
incentive compensation of the Chief Executive Officer. In addition, the Company
offered the New Options as part of its commitment to retain key officers and
employees, particularly in light of the highly competitive labor market for such
personnel.

Based on review of available information, the Committee believes that the
current Chief Executive Officer's total annual compensation is reasonable and
appropriate given the size, complexity and historical performance of the
Company's business, the Company's position as compared to its peers in the
industry, and the specific challenges faced by the Company during the year, such
as the completion of the Company's initial public offering, changes in the
market for telecommunications network management solutions and services and
other industry factors. No specific weight was assigned to any of the criteria
relative to the Chief Executive Officer's compensation.

Compensation Committee Members:

Bruce R. Evans, S. Daniel Shia and John C. Thibault

-14-

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

There were, as of March 15, 1999, approximately 96 holders of record and
2,022 beneficial holders of the Company's Common Stock. The following table sets
forth certain information, as of March 15, 1999, with respect to holdings of the
Company's Common Stock by (i) each person known by the Company to be the
beneficial owner of more than 5% of the total number of shares of Common Stock
outstanding as of such date, (ii) each of the Company's Directors (which
includes all nominees) and Named Executives, and (iii) all Directors and
officers as a group.

AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(1) OF CLASS(2)
- ------------------------------------ -------------------- --------

(i) Certain Beneficial Owners:
Summit Partners
600 Atlantic Avenue, Suite 2800
Boston, Massachusetts 02210........................ 1,172,922(3) 11.2%
(ii) Directors (which includes all nominees) and
Named Executives:
William P. McHale, Jr.................................. 86,417(4) *
S. Daniel Shia......................................... 1,481,213(5) 14.0
Bruce R. Evans......................................... 1,172,922(6) 11.2
Elizabeth K. Adams..................................... 7,000(7) *
John C. Thibault....................................... -- *
Jacob J. Goldberg...................................... -- *
Paul R. Smith.......................................... 288,271(8) 2.7
Vincent J. Sheu........................................ 44,616(9) *
Victor W. Mak.......................................... 163,686(10) 1.5
(iii) All Directors and officers as a
group (9 persons)............................. 3,244,125(11) 29.4%
- -----------

* 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
10,336,196 shares of Common Stock outstanding on March 15, 1999, 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 March
15, 1999.

(3) Includes 1,036,776 shares held by Summit Ventures IV, L.P. and 43,480
shares held by Summit Investors II, L.P. Also includes 88,746 shares
and 3,920 shares purchasable upon exercise of warrants exercisable as
of March 15, 1999 or sixty days thereafter held by Summit Ventures IV,
L.P. and Summit Investors II, L.P., respectively. Excludes an aggregate
of 92,665 shares underlying warrants exercisable thereafter. The
address of both entities is 600 Atlantic Avenue, Suite 2800, Boston,
Massachusetts 02210. The respective general partners of these entities
exercise sole voting and investment power with respect to the shares
owned by such parties. See Note 6 for information relating to such
general partners.

(4) Includes 67,912 shares of Common Stock underlying options which are or
may be exercisable as of March 15, 1999 or 60 days after such date.
Also includes 16,005 shares held by Mr. McHale's wife and 2,500 shares
held by Mr. McHale's children.

-15-

(5) Consists of 1,108,560 shares held by Mr. Shia and 237,668 shares
purchasable upon the exercise of options held by Mr. Shia which are
exercisable as of March 15, 1999 or sixty days thereafter. Also
includes 134,985 shares held by Mr. Shia's wife.

(6) Represents the shares beneficially owned by Summit Ventures IV, L.P.
and Summit Investors II, L.P. See Note 3 above. Mr. Evans is a general
partner of Summit Investors II, L.P. and is a general partner of
Stamps, Woodsum & Co. IV, which is the general partner of Summit
Partners IV, L.P., which is the general partner of Summit Ventures IV,
L.P. The general partners of Stamps, Woodsum & Co. IV are E. Roe
Stamps, IV, Stephen G. Woodsum, Gregory M. Avis, Martin J. Mannion,
John A. Genest, Ernest K. Jacquet, Bruce R. Evans, Walter G. Kortschak,
Thomas S. Roberts and Joseph F. Trustey. Each of such general partners
disclaims beneficial ownership of the shares held by Summit Ventures
IV, L.P., except to the extent of their respective pecuniary interest
therein. Mr. Evans may be deemed to share voting and investment power
with respect to all shares held by the partnerships. Mr. Evans
expressly disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest therein.

(7) Includes 7,000 shares of Common Stock underlying options which are or
may be exercisable as of March 15, 1999 or 60 days after such date. Ms.
Adams resigned as a Director of the Company effective April 30, 1999.

(8) Includes 97,297 shares of Common Stock underlying options which are or
may be exercisable as of March 15, 1999 or 60 days after such date.

(9) Includes 34,947 shares of Common Stock underlying options which are or
may be exercisable as of March 15, 1999 or 60 days after such date.

(10) Includes 133,024 shares of Common Stock underlying options which are or
may be exercisable as of March 15, 1999 or 60 days after such date.

(11) See Notes 4 through 10.

-16-

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Evans was appointed to the Board of Directors as the designee of
Summit. See "Compensation Committee Interlocks and Insider Participation."

On July 22, 1997, the Company loaned $100,000 to Paul A. Lipari, the
Company's former Chief Financial Officer, Treasurer and Secretary, on an
unsecured basis, at an adjustable interest rate (initially 5.37% per annum).
Such loan was due and payable on July 22, 2002. Mr. Lipari paid the outstanding
balance of such loan from the net proceeds received by Mr. Lipari, as a Selling
Shareholder, upon the consummation of the IPO.

On November 17, 1998, the Company loaned $150,000 to William P. McHale,
Jr., the Company's President and Chief Executive Officer, on an unsecured basis,
at an adjustable interest rate (initially 5.13% per annum). Such loan is due and
payable on May 16, 2000.

The Board of Directors of the Company has adopted a policy requiring that
any future transactions between the Company and its officers, Directors,
principal shareholders and their affiliates be on terms no less favorable to the
Company than could be obtained from unrelated third parties and that any such
transactions be approved by a majority of the disinterested members of the
Company's Board of Directors.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors of the Company intends, subject to Shareholder
approval, to retain PricewaterhouseCoopers LLP as independent auditors of the
Company for the year ending December 31, 1999. PricewaterhouseCoopers LLP also
served as independent auditors of the Company for 1998. Neither the firm nor any
of its members has any direct or indirect financial interest in or any
connection with the Company in any capacity other than as auditors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 1999.

One or more representatives of PricewaterhouseCoopers LLP is expected to
attend the Meeting and have an opportunity to make a statement and/or respond to
appropriate questions from Shareholders.

SHAREHOLDERS' PROPOSALS

Shareholders who wish to submit proposals for inclusion in the Company's
proxy statement and form of proxy relating to the 2000 Annual Meeting of
Shareholders must advise the Assistant Secretary of the Company of such
proposals in writing by January 11, 2000.

OTHER MATTERS

The Board of Directors is not aware of any matter to be presented for
action at the Meeting other than the matters referred to above and does not
intend to bring any other matters before the Meeting. However, if other matters
should come before the Meeting, it is intended that holders of the proxies will
vote thereon in their discretion.

GENERAL

The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company, whose notice of meeting is attached to this Proxy
Statement, and the entire cost of such solicitation will be borne by the
Company.

-17-

In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by Directors, officers and other employees of
the Company who will not be specially compensated for these services. The
Company will also request that brokers, nominees, custodians and other
fiduciaries forward soliciting materials to the beneficial owners of shares held
of record by such brokers, nominees, custodians and other fiduciaries. The
Company will reimburse such persons for their reasonable expenses in connection
therewith.

Certain information contained in this Proxy Statement relating to the
occupations and security holdings of Directors and officers of the Company is
based upon information received from the individual Directors and officers.

DSET CORPORATION WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1998, INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS SHAREHOLDERS OF
RECORD ON APRIL 16, 1999, AND TO EACH BENEFICIAL SHAREHOLDER ON THAT DATE UPON
WRITTEN REQUEST MADE TO STEPHEN VAN HOUTEN, ASSISTANT SECRETARY, DSET
CORPORATION, 1011 US HIGHWAY 22, BRIDGEWATER, NEW JERSEY 08807. A REASONABLE FEE
WILL BE CHARGED FOR COPIES OF REQUESTED EXHIBITS.

PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE
APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.

By Order of the Board of Directors,

/s/ Stephen Van Houten
Stephen Van Houten,
ASSISTANT SECRETARY
Bridgewater, New Jersey
May 4, 1999

-18-

DSET CORPORATION

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS

The undersigned hereby constitutes and appoints William P. McHale, Jr. and
Stephen Van Houten, and each of them, his or her true and lawful agent and proxy
with full power of substitution in each, to represent and to vote on behalf of
the undersigned all of the shares of DSET Corporation (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at the Somerset Hills Hotel, 200 Liberty Corner Road, Warren,
New Jersey at 1:00 P.M., local time, on Thursday, June 10, 1999, and at any
adjournment or adjournments thereof, upon the following proposals more fully
described in the Notice of Annual Meeting of Shareholders and Proxy Statement
for the Meeting (receipt of which is hereby acknowledged).

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)

PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED

A [X] Please mark your votes as in this example.

1. ELECTION OF FOR WITHHELD Nominees:
DIRECTORS. [ ] [ ] William P. McHale, Jr.
VOTE FOR all the nominees listed at right; S. Daniel Shia
except vote withheld from the following Bruce R. Evans
nominees(s) (if any) John C. Thibault
Jacob J. Goldberg
- ---------------------------------

2. APPROVAL OF PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR ENDING DECEMBER
31, 1999.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

3. In his or her discretion, the proxy is authorized to vote upon other matters
as may properly come before the Meeting.

I will I will not
[ ] [ ]
attend the Meeting.

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

Signature of Shareholder Signature of Shareholder Dated:
--------- ------- --------
IF HELD JOINTLY

NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS THE NAME APPEARS HEREON. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF THE SIGNER IS A
CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY DULY AUTHORIZED
OFFICER, GIVING FULL TITLE AS SUCH. IF THE SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.