Document:

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                                                                   EXHIBIT 10.16

                                 [cadence logo]

                         SOFTWARE OEM LICENSE AGREEMENT

                                     BETWEEN

                               PDF SOLUTIONS, INC.

                                       AND

                          CADENCE DESIGN SYSTEMS, INC.

                          EFFECTIVE DATE: July 7, 2000

                                  AGREEMENT NO.

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                                      INDEX

<TABLE>
<CAPTION>
Section  Description                                                        Page
-------  -----------                                                        ----
<S>      <C>                                                                <C>
         RECITAL...........................................................   3

1.0      DEFINITIONS.......................................................   3

2.0      APPOINTMENT.......................................................   5

3.0      DELIVERY AND ACCEPTANCE...........................................   5

4.0      LICENSE GRANT.....................................................   5

5.0      MAINTENANCE, TRAINING AND ENHANCEMENTS............................   6

6.0      MARKETING AND PROMOTION...........................................   7

7.0      FEES..............................................................   7

8.0      SOURCE CODE ESCROW................................................   8

9.0      PROTECTION OF CONFIDENTIAL INFORMATION............................   8

10.0     WARRANTY AND INDEMNIFICATION......................................   9

11.0     TERM AND TERMINATION .............................................  10

12.0     GENERAL...........................................................  10
</TABLE>

EXHIBITS:

Exhibit A   - Products and Designated Equipment
Exhibit B   - Maintenance and Support Services
Exhibit C   - Fees and Payment
Exhibit D   - Software Deposit Agreement
Exhibit E   - Cadence standard form of license agreement
Exhibit F   - Trademark Specifications

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                                 [cadence logo]

                         SOFTWARE OEM LICENSE AGREEMENT

                          Effective Date: July 7, 2000

                                  Agreement No:

This Software OEM License Agreement ("Agreement") is entered into effective as
of the date set forth above by and among, on the one hand, CADENCE DESIGN
SYSTEMS, INC., a Delaware corporation having a principal place of business at
555 River Oaks Parkway, San Jose, California 95134, and CADENCE DESIGN SYSTEMS
(IRELAND) LIMITED, a corporation organized and existing under the laws of
Ireland having a place of business at Block U, East Point Business Park, Dublin
3, Ireland (collectively with its Subsidiaries, as defined below, "Cadence"),
and, on the other hand, PDF Solutions, Inc., a California corporation, having a
principal place of business at 333 W. San Carlos Street, Suite 700, San Jose CA
95110 ("VENDOR").

WHEREAS Cadence develops and markets software application programs used in the
electronic design automation industry for the computer-aided engineering,
design, co-verification, simulation, and layout of advanced electronic circuits,
printed circuit boards and electronic systems and subsystems; and

WHEREAS Vendor has developed certain computer programs and desires to grant
Cadence rights to commercially exploit such programs on a world-wide basis in
combination with certain software and systems which Cadence develops and/or
distributes; and

WHEREAS Cadence is willing, subject to the terms of this Agreement, to market,
distribute and sublicense Vendor's programs as stand alone products, or in
combination or for use with the software and systems which Cadence develops or
distributes;

NOW THEREFORE in consideration of the mutual promises herein contained the
parties hereby agree as follows:

1.0 DEFINITIONS.

        In addition to the terms defined elsewhere in this Agreement, the
following terms have the following meanings:

        1.1 "Ancillary Work" means any software code written by or for Cadence
(and not by Vendor) for the purpose of tightly integrating the Licensed Work as
an integral and functioning part of Cadence's product framework environment
and/or to meet unique requirements of an End User, or provide new or improved
features, functionality or enhancements to the Licensed Work.

        1.2 "Cadence" means Cadence and its world-wide Subsidiaries and the
successors and assigns of any of them.

        1.3 "Designated Equipment" means computer hardware contained in one of
the equipment product families listed on Exhibit A and all improved and enhanced
versions of such equipment, and also including the operating system environment
with which Cadence's products operate. At the request of either party from time
to time, the parties shall amend Exhibit A to reflect expansions and extensions
of the product families there represented and will in good faith negotiate the
inclusion of additional product lines.

        1.4 "Documentation" means all data sheets, user manuals and/or education
and training materials in human or machine readable form, and all Maintenance
Modifications and Enhancements thereto which: (i) document the design or details
of the Product(s); and/or (ii) explain the capabilities of the Product(s);
and/or (iii)

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provide operating instructions for using the Product(s).

        1.5 "End User" means an entity that acquires the Licensed Work for its
internal production use.

        1.6 "Enhancement" means any modification(s), revision(s), upgrade(s) or
addition(s) to a Product made by or on behalf of Vendor (other than a
Maintenance Modification) that improves its function, adds new function(s) or
substantially enhances its performance, including, without limitation, new
versions of the Products. Enhancements shall include updates to the
Documentation.

        1.7 "Error(s)" means any malfunction or defect in the Products and/or a
mistake in the Documentation that prevents the Product from correctly operating
in substantial conformance with its functional specifications, including,
without limitation, any significant deviation from commonly accepted standards
for normal and correct operation of computer programs, even if not explicitly
mentioned in the Documentation, e.g., any case where the Product, in any
significant respect, abnormally ceases function, produces incorrect or
misleading information or erroneously interprets information given to it, and
similar deviations.

        1.8 "Fees" means the fees that Cadence shall pay to Vendor for the
rights granted hereunder, as more specifically described in Section 7 below.

        1.9 "Licensed Work(s)" means the Products and Documentation
collectively.

        1.10 "Maintenance Modification" means any modification(s), revision(s)
or addition(s) to the Products necessary to: (i) correct Errors; or (ii) support
new releases of the Designated Equipment or subsequent revisions of its
operating system; or (iii) update a Product to ensure its continuing
compatibility with versions of Cadence's product(s) it is intended to be used
with, if any; or (iv) other modification(s) or addition(s) which are not
Enhancements. Maintenance Modifications shall include correction to
Documentation.

        1.11 "Marketing Agent(s)" means those distributors, dealers, resellers,
representatives, affiliates or Subsidiaries with whom Cadence enters into a
contractual relationship for the express purpose of engaging such entity to
market to End-Users the Licensed Work or other Cadence products which include
the Licensed Works.

        1.12 "Net Maintenance Revenues" means the portion of gross revenues
recognized by Cadence that is directly attributable to the sale of maintenance
services directly related and apportioned to the Licensed Works, net of
Marketing Agent commissions, refunds, commodity taxes, value added taxes, sales
taxes, and provision for bad debt. Net Maintenance Revenues specifically
excludes revenues recognized by Cadence from the sale or provision of
maintenance services related to or in connection with Licensed Works that are
provided to persons for evaluation or demonstration purposes only.

        1.13 "Net Product Revenues" means the portion of gross revenues
recognized by Cadence that is directly attributable to the sale or license of
the Licensed Works, net of Marketing Agent commissions, returns, commodity
taxes, value added taxes, sales taxes, and provision for bad debt. Net Product
Revenues specifically excludes revenues recognized by Cadence from any Licensed
Works that are provided to persons for evaluation or demonstration purposes
only.

        1.14 "Product(s)" means the Vendor software product(s), in object code
form, as specified in Exhibit A, including any Maintenance Modifications and/or
Enhancements thereto.

        1.15 "Subsidiary" means a corporation, limited liability company,
partnership, joint venture, company, unincorporated association or other entity
in which more than fifty percent (50%) of the outstanding shares, securities or
other ownership interest (representing the right to vote for the election of
directors or other managing authority or the right to make the decisions for
such entity, as applicable) is, now or hereafter, owned or controlled, directly
or indirectly, by a party hereto. Such corporation, company or other entity
shall be deemed to be a Subsidiary only so long as such ownership or control
exists.

        1.16 "Term" means the initial term and any renewal term of this
Agreement as specified in Section

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11.1 below.

2.0 APPOINTMENT.

        2.1 Subject to the terms and conditions if this Agreement, Vendor hereby
appoints Cadence as its non-exclusive OEM for the delivery of Licensed Works to
End Users world-wide, and Cadence hereby accepts such appointment.
Notwithstanding the foregoing, during the Term of this Agreement, Cadence is
hereby authorized to distribute the Licensed Work known as "Circuit Surfer" on
an exclusive basis provided however, that Vendor retains the right to license
Circuit Surfer to those customer sites where (1) Cadence's Analog Design
Environment (or other replacement name for the product currently called "Analog
Artist")product is not installed and there is no reasonable liklihood for the
license of Analog Design Environment for a period of ninety (90) days from the
date that PDF notifies Cadence of the opportunity as specified in 6.2, or (2)
such license of Circuit Surfer is made solely in connection with and solely
during the period of time during which Vendor is providing yield improvement
services to a customer

        2.2 Cadence shall arrange for delivery of Licensed Works to the End
Users and providing End Users maintenance support of Licensed Works, through
Cadence's usual channels for distribution and maintenance. Cadence will pay
Vendor the license and maintenance fees as more fully described in Section 7.

3.0 DELIVERY AND ACCEPTANCE.

        3.1 Initial Delivery, Acceptance Tests and Corrections. For the initial
Licensed Work, each additional Licensed Work and each major revision thereof,
Vendor shall deliver to Cadence a copy of the Licensed Work in accordance with
the delivery schedule mutually agreed upon by the parties. Cadence shall have
sixty (60) days after the initial delivery of the Product to perform such tests
Cadence deems reasonably necessary to determine whether such version meets the
specifications and performance standards represented by Vendor and is capable of
performing repetitively in a variety of situations without failure (the
"Acceptance Standards"). Cadence shall promptly notify Vendor if Cadence
determines that the Product does not meet the Acceptance Standards. Vendor shall
then have thirty (30) days to modify or improve such Product version, at
Vendor's expense, so that it performs in accordance with the Acceptance
Standards and to redeliver it to Cadence. Cadence shall have a second sixty (60)
day test period to reconduct the acceptance tests. Failure of the Product to
meet the Acceptance Standards shall constitute a material breach by Vendor.

        3.2 Acceptance Date. If and when the acceptance tests establish that the
Product is performing in accordance with the Acceptance Standards, Cadence shall
promptly notify Vendor in writing that it accepts that Product version (the
"Acceptance Date"). Within ten (10) days of the Acceptance Date Vendor shall
deliver to Cadence: (i) one (1) reproducible master copy of the Product, and
(ii) a camera ready hard copy of the Documentation, with a collation guide for
printing and reproduction together with an electronic soft copy of the
Documentation in FrameMaker, Word, PostScript format or as otherwise specified
by Cadence. Vendor shall deliver the Licensed Works to Cadence on such media and
format as Cadence specifies. It is the intent of the parties that Vendor shall
provide Cadence a "golden master" copy of the Licensed Work from which Cadence
can thenceforth replicate, without intervention or assistance from Vendor,
additional copies of the Products and Documentation as necessary to exercise the
grants of Section 4.

        3.3 Test Plan. Vendor and Cadence shall use reasonable efforts to
develop as soon as possible following the execution of this Agreement a test
plan and quality assurance plan necessary for the development of the acceptance
tests to verify a Product's conformance to the Acceptance Standards.

4.0 LICENSE GRANT.

        4.1 Distribution License. Subject to the terms and conditions of this
Agreement, Vendor hereby grants Cadence a
*********************************************** license **********************,

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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        for the Term of this Agreement, to
*********************************************
********************************************************************************
********************************************************************************
*********************************. A copy of Cadence's current form of license
agreement is attached hereto as Exhibit E.

        ************************************************************************
**************************************************************, Vendor hereby
grants to Cadence the **********************************************************
license to *********************************************************************
********************************************************************************
************************************************************.

        4.2 Internal Use License. Vendor hereby grants Cadence and its Marketing
Agents a ***********************************************************************
license to internally use the Licensed Works for the purposes of technical
support, quality assurance, manufacturing, testing, demonstration, training,
marketing and other tasks incidental to and reasonably necessary in connection
with: (a) carrying out the distribution activities of Section 4.1; and (b)
supporting End Users in their use of the Products sublicensed to them by Cadence
and/or its Marketing Agent(s). The internal use described in the preceding
sentence shall be at no charge or Fee to Cadence.

        4.3 Ownership. Title to and ownership of the Licensed Works shall not be
modified by this Agreement and shall at all times remain with Vendor or Vendor's
suppliers. Title to and ownership of all derivative works made by Cadence,
including Ancillary Works and modifications thereof, shall be held exclusively
by Cadence. Vendor and its suppliers, shall have no rights in, or license to use
any Ancillary Works in any manner without the express prior written permission
of Cadence.

        4.4 **********. Subject to Section 2.1 above, the licenses granted to
Cadence hereunder are ********** with respect to Vendors Circuit Surfer product;

5.0 MAINTENANCE, TRAINING AND ENHANCEMENTS.

        5.1 Maintenance and Training Services. Vendor will provide Cadence with
the maintenance and training services described on Exhibit B hereto. All
references to Exhibit B include Exhibit B-1 if applicable. Vendor's maintenance
and support obligations hereunder and under Exhibit B shall survive termination
of this Agreement for whatever reason for a period of two years. The maintenance
and support obligations of Vendor following the termination or expiration of
this Agreement are for wind-down purposes only, and accordingly shall consist of
the error corrections and second level telephone support as provided for in
Exhibit B. Such continuing obligations will not include any upgrades to the
Licensed Works.

        5.2 Maintenance Modifications, Enhancements. Within thirty (30) days
after the execution of this Agreement, each party shall designate, and notify
the other party in writing of, a company representative; both persons together
shall comprise a steering committee ("Steering Committee") whose function shall
be to evaluate the functionality and overall performance of the Licensed Works
and Products and determine the need for additional functionality, features,
Maintenance Modifications and Enhancements with respect thereto in a mutually
agreed upon schedule. The Steering Committee shall meet at least once each
calendar quarter during the Term of this Agreement in the performance of its
functions. Vendor shall develop all Maintenance Modifications and Enhancements
so agreed upon by the Steering Committee. Vendor shall provide Cadence, at no
charge, all Maintenance Modifications and Enhancements of the Licensed Works and
related Documentation created by or for

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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Vendor during the term of this Agreement on or before the date Vendor's first
release of such Maintenance Modifications and/or Enhancements to any of its
other distributors, OEM's, marketing partners or end customers. Such Maintenance
Modifications and Enhancements shall, upon their availability, automatically
become part of the Licensed Work(s) for the purpose of this Agreement.

5.3 Directed Development and Services. The steering Committee shall also
determine enhancements, new features and services that benefit Cadence customers
but may not benefit non-Cadence users of Circuit Surfer. During the first year
of this Agreement, a Vendor software engineer will work at Cadence's research
and development facility agreed upon by the parties at least twenty (20) hours
per week for the purposes of performing the development work described in this
section. The parties intend that the majority of the development efforts during
the first year of the term of this Agreement will be directed toward integrating
the Licensed Works with the Cadence Product. Fees for such development and
services are specified in Exhibit C.

6.0 MARKETING AND PROMOTION.

        6.1 Control of Marketing. The means by which Cadence markets and
distributes the Licensed Work shall be in Cadence's sole discretion and control,
including without limitation the methods of pricing, marketing, naming,
packaging, labeling, advertising, and collection of fees. Cadence may distribute
the Licensed Work world-wide through any combination of direct marketing,
Marketing Agents, original equipment manufacturers, and other means, and either
alone or in combination with other products.

        6.2 Referral of Inquiries. *********************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************************************.

        6.3 CADENCE MAKES NO WARRANTY OR REPRESENTATION CONCERNING THE SUCCESS
OF SUCH MARKETING AND DISTRIBUTION EFFORTS. VENDOR AGREES THAT CADENCE SHALL IN
NO CIRCUMSTANCES BE LIABLE TO VENDOR FOR ANY LOST PROFITS, OR FOR ANY OTHER
INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES ARISING UNDER ANY LEGAL THEORY OUT
OF OR IN CONNECTION WITH THIS AGREEMENT.

        6.4 Sales Support. Vendor agrees to provide Cadence sufficient sales and
technical support, as mutually agreed upon by the parties, including but not
limited to Vendor personnel proficient in the performance, use, implementation
and modification of the Licensed Works and Products (collectively, "Sales
Support"), as Cadence may reasonably require with respect to the traning of its
Marketing Agent(s) to sell and market sublicenses to the Licensed Works and/or
Products to customers and/or potential End Users hereunder. Such Sales Support
shall be at no charge to Cadence.

        6.5 Marketing Support. Vendor agrees to provide Cadence sufficient
marketing training, as mutually agreed upon by the parties, such that Cadence
can support ("Marketing Support") marketing events (e.g., industry conferences,
business/trade shows, marketing seminars, presentations and/or demonstration for
key customers or strategic accounts). Such Marketing Support shall be at no
charge to Cadence.

        6.6 Trademarks and Copyrights. Vendor hereby grants to Cadence
********************************* license to use the trademarks and logos set
forth on Exhibit F (the "Trademarks") in connection with the manufacture,
distribution, license and promotion of the Licensed Works. However, Vendor
agrees that Cadence need not use the Trademarks and may, in its discretion,
market and distribute the Products under Cadence's own trademarks. If Cadence
uses the Trademarks, then the use of such Trademarks shall conform with all
trademark

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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specifications of Vendor for such Trademarks, which specifications are attached
hereto as Exhibit F. If Cadence manufactures the Products, then Cadence shall
cause the manufacture of the Products to conform to the reasonable quality
standards of Vendor for the manufacture of the Products and Vendor may review
the Products manufactured by Cadence, upon reasonable notice to Cadence, to make
sure that such quality standards are met. Except for the use of the Trademarks
however, the packaging design, and advertising for the Licensed Products shall
be within the discretion and control of Cadence. Vendor represents and warrants
to Cadence that it is not aware and has not received notice of any infringement
or claim of infringement of any Trademark upon any rights of any third party
anywhere in the world. Cadence shall replicate Vendor's copyright notices (as
they appear or as designated by Vendor) in any Product and Documentation
reproduced under this Agreement. Use of Vendor's Trademarks shall inure to the
benefit of Vendor.

        6.7 Drop Shipment. If Cadence does not manufacture the Products and
Vendor drop ships the Products, then the drop shipment box on Exhibit A shall be
checked.

7.0 FEES.

        7.1 Amount. Cadence shall pay to Vendor Fees on revenues from the
Licensed Work distributed by Cadence to End Users or Marketing Agents, as
applicable, under the terms of Exhibit C hereto.

        7.2 Payments, Quarterly Reports. Fees shall be remitted on a ***** basis
within ********** following the end of Cadence's ********** during which Cadence
recognized revenues for the Licensed Work to which the Fee payment applies.
Cadence will deliver written reports to Vendor within *************** after the
last day of each ********** stating: (i) the amount of Net Product Revenues
recognized during the *****; and (ii) the amount of Net Maintenance Revenues
recognized during that same *****, and (iii) the resulting Fees due. Cadence
will enclose with the report the Fee payment so calculated.

        7.3 Records and Audit. Cadence agrees that it shall maintain records
sufficient to establish the Fees payable pursuant to this Section 7. Vendor may,
with prior written notice and during normal business hours, have independent
certified public accountants acceptable to Cadence examine, at Vendor's expense,
Cadence's records relating to the Fees payable pursuant to this Agreement. Such
accountants must agree in advance in writing to maintain in confidence and not
to disclose to any party any information obtained during the course of such
examination, other than a disclosure to Vendor of the amounts of Fees that
should have been paid for the period covered by the examination. Any errors
discovered during such examination shall be corrected by the appropriate party.
In no event shall any such adjustment be made more than two (2) years after the
end of the period in error. The audit right contained in this Section may not be
exercised more than once during any 12 month period.

8.0 SOURCE CODE ESCROW.

        8.1 Deposit. Within ten (10) days of the Acceptance Date, Vendor shall,
at Vendor's expense, place the complete Licensed Work source code ("Source Code
Materials") into escrow with an independent third party escrow holder. The form
of escrow deposit agreement to be used is attached hereto as Exhibit D.
Throughout the Term of this Agreement, Vendor shall update the Source Code
Materials at least once every six months to include Maintenance Modifications
and Enhancements, so that the deposit at all times reflects the most current
version of the Licensed Work distributed by Cadence hereunder.

        8.2 Release Event. If Vendor materially breaches its obligations under
this Agreement, including, without limitation, its obligations under Exhibit B
(all as more fully set forth in the escrow deposit agreement), Cadence may
retrieve the Source Code Materials and use same to fulfill Vendors obligations
hereunder respecting the Licensed Work and otherwise continue to exercise the
license grants of Section 5. If the source code is released from escrow Cadence
may (i) fully exercise its source code license rights granted in Section 4.1
hereof, solely for purposes fulfilling Vendor's support and maintenance
obligations hereunder regarding the Licensed Work, and (ii) if the release event
occurred during the Term, continue to exercise the license grants of Section 4
as if this Agreement continued in full force and effect for the full Term
(initial or then applicable renewal) as if such Term

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
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had continued. Upon release of the source code from escrow all other terms and
conditions of this Agreement shall continue to apply, including Cadence's
obligation to pay product and maintenance fees. The license to the source code
granted herein shall be irrevocable but shall expire five years after the
occurrence of a release event

        8.3 Escrow Termination. The escrow shall continue and survive on its own
terms independent of the existence of this Agreement and shall terminate on the
fifth (5th) anniversary of the termination of this Agreement, if no release
event has occurred prior thereto, or such other date as mutually agreed upon by
the parties in writing.

9.0 PROTECTION OF CONFIDENTIAL INFORMATION.

        9.1 The parties acknowledge that: (i) Licensed Work in the case of
Vendor; and (ii) Ancillary Works in the case of Cadence; and/or (iii) any other
information which the parties desire to exchange to conduct the activities
contemplated by this Agreement, which the revealing party ("Discloser") holds in
confidence or received from a third party under confidentiality obligations
("Proprietary Materials"), are confidential information of the Discloser. Except
as permitted under this Agreement, the receiving party ("Recipient") shall treat
Discloser's Proprietary Materials that are prominently marked with a notice in
human readable form noting their confidential nature, with the same standard of
care that Recipient uses to safeguard its own proprietary materials from
unauthorized access, use, disclosure or dissemination. Proprietary Materials
disclosed orally or visually shall be identified as confidential prior to the
discussion or presentation, then furnished to Recipient in tangible form within
thirty (30) days thereof and marked as confidential.

        9.2 Recipient's obligations respecting Discloser's Proprietary Materials
shall terminate with respect to any part thereof which Recipient can establish
by documentary evidence: (i; (ii) now or hereafter may be in the public domain
by acts not attributable to Recipient; (iii) was rightfully in the possession of
or known to Recipient prior to its receipt from Discloser under this Agreement;
(iv) is or becomes available without restriction to Recipient from a source
independent of Discloser who was in lawful possession of same and authorized to
disclose it to Recipient without restriction; or (v) is agreed to be
unrestricted by Discloser in writing.

        9.3 Nothing herein shall restrict Recipient's right to disclose the
Proprietary Materials where such disclosure is required by written order of a
judicial, legislative, or administrative authority of competent jurisdiction, or
is necessary to establish its rights under this Agreement, provided, however
that, in each case, Recipient will, if practicable, first notify Discloser of
such need or requirement and cooperate with Discloser, at Discloser's expense,
in limiting the scope of the proposed disclosure. Recipient will assist
Discloser, at Discloser's expense, in taking all reasonable steps for obtaining
further appropriate means of limiting the scope of the required disclosure of
Discloser's Proprietary Materials.

        9.4 Within ten (10) days of the earlier of (i) receipt of Discloser's
written request for return of same (other than the Licensed Work), or (ii) the
termination or expiration of this Agreement (except as and to the extent
otherwise provided herein); Recipient shall return all Discloser's Proprietary
Materials along with Recipient's certification that to the best of its knowledge
all Discloser's Proprietary Materials have either been returned or destroyed and
no Discloser Proprietary Materials, or copies thereof, remain in the possession
of Recipient, its employees or agents; provided, however, that Cadence as
Recipient may retain such of Vendor's Proprietary Materials as Cadence may
reasonably require to provide the support and maintenance obligations of Vendor
for the Licensed Works to its customers. Recipient's obligations set forth in
this Section 9 shall terminate on the ********************** of the termination
or expiration of this Agreement, excluding those obligations with respect to the
source code placed in escrow pursuant to Section 8 above which shall terminate
on the ************ of the termination or expiration of this Agreement.

        9.5 Equitable Relief. Each party acknowledges that unauthorized
disclosure or use of the Proprietary Materials may cause irreparable harm to the
other party for which recovery of money damages would be inadequate, and the
other party shall therefore be entitled to obtain timely injunctive relief to
protect the other party rights under this Agreement in addition to any and all
remedies available at law.

* Certain information on this page has been omitted and filed separately with
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10.0 WARRANTY AND INDEMNIFICATION.

        10.1 Vendor warrants and represents that: (i) it has the right and power
to enter into this Agreement, and that doing so does not violate or conflict
with any other Vendor obligations; and (ii) Vendor shall not assume any
obligation or restriction which would, in any way, interfere, be inconsistent
with or present a conflict of interest concerning the rights granted to Cadence
hereunder or the services to be performed by Vendor under this Agreement.

        10.2 Vendor warrants and represents that: (i) the Licensed Works and
Vendor's services which are the subject matter of this Agreement are the
original product of Vendor and Vendor is the sole and exclusive owner of the
Licensed Works; and (ii) that no portion of such items, or their distribution or
use is protected by or infringes any third party(ies)'s US patent, patent
applications, copyright, trade secret, trademark.

        10.3 Vendor warrants and represents that the Licensed Works, and all
Maintenance Modifications and Enhancements thereto shall conform to and perform
in accordance with Vendor's published specifications therefor.

        10.4 Vendor warrants and represents that the Licensed Work is designed
to be used prior to, during and after the calendar year 2000 A.D., and that the
Licensed Work will operate during each such time period without error relating
to date data, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than one
century. Without limiting the forgoing, Vendor represents and warrants that (i)
the Licensed Work will properly manage and manipulate data involving dates,
including single-century and multi-century formulas, and will not abnormally
end, or cause an abnormally ending scenario, within the application or generate
incorrect values or invalid results involving such dates; and (ii) the Licensed
Work has been designed to ensure year 2000 compatibility, including, without
limitation, date data century recognition, calculations which accommodate same
century and multiple century formulas and date values, and date data interface
values that reflect the century, and (iii) the Licensed Work provides that all
date-related user interface functionalities and data fields include the
indication of the century, and that all date-related data interface
functionalities include the indication of the century, and (iv) handle all leap
years, including, without limitation, the year 2000 leap year, correctly. Vendor
shall promptly advise Cadence of any breach of the above warranty.

        10.5 Vendor agrees to indemnify and hold Cadence, its Marketing Agents
and End Users entirely harmless from any and all losses, costs, claims, damages,
settlements and judgments, including, without limitation, any expenses and
attorneys' fees, arising out of or related in any way to any breach or alleged
breach of any of the above warranties. Cadence agrees to defend and indemnify
Vendor from and against any and all losses, costs, claims, damages, settlements
and judgments, including without limitation, any expenses and attorneys' fees
arising out of any action brought against Vendor alleging that a Cadence
software product utilized with the Licensed Work infringes any US patent,
copyright or trade secret. If any claim or action is commenced against a party
entitled to indemnification under this Section, (a "Claim"), such party shall
give written notice to the other party within ten (10) days of notice of such
Claim. If such party receiving notice is obligated under this Section to defend
the party against such Claim, then the indemnifying party shall take control of
the defense and investigation of the Claim, using such attorneys and other
assistance as it selects in its discretion. The indemnified party shall
cooperate in all reasonable respects in such investigation and defense,
including trial and any appeals, provided that such party may also participate,
at its own expense, in such defense. No settlement of a Claim that involves a
remedy other than payment of money by indemnifying party shall be agreed to and
entered without the consent of the indemnified party, which consent shall not be
unreasonably withheld.

        10.6 except as expressly set forth in this section 10, the Licensed
works, enhancements, maintenance modifications, and services provided by vendor
are provided "as is," and to the maximum extent permitted by applicable law,
vendor disclaims all other warranties, express and implied, including without
limitation warranties of merchantability, fitness for a particular purpose (even
if vendor is advised of such purpose) and non-infringement.

        10.7 EXCEPT FOR A BREACH OF AN OBLIGATION OF CONFIDENTIALITY, TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, UNDER NO CIRCUMSTANCES SHALL

                                       10
<PAGE>   11

EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT
OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT, OR ITS SUBJECT MATTER,
INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF PROFITS OR REVENUES, OR THE
COST OF PROCUREMENT OF SUBSTITUTE GOODS AND/OR SERVICES, REGARDLESS OF THE LEGAL
OR EQUITABLE BASIS FOR SUCH DAMAGES, WHETHER IN CONTRACT, TORT OR OTHERWISE,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. COSTS
AND EXPENSES ASSOCIATED WITH ANY CLAIM FOR WHICH A PARTY HAS AN OBLIGATION TO
INDMENIFY THE OTHER PARTY PURSUANT TO SECTION 10.5 SHALL NOT BE CONSIDERED
CONSEQUENTIAL DAMAGES

11.0 TERM AND TERMINATION.

        11.1 Term. The initial term of this Agreement shall be for a period
commencing upon the effective date first set forth above and ending three (3)
years thereafter. This Agreement shall subsequently automatically renew, and
thereafter re-renew for additional terms of one (1) year each unless terminated
by either party, providing the other one-hundred eighty (180) days written
notice prior to the end of the then current term.

        11.2 Termination. This Agreement may be terminated at any time:

                11.2.2 For Cause. By either party at any time immediately upon
written notice to the other party in the event the other party fails to observe
or perform a material obligation of this Agreement (a "Default"), which Default
is not cured within thirty (30) days after the non-defaulting party has given
written notice of the Default and demanded its cure.

        11.3 Effect of Termination. Upon non-renewal or termination of this
Agreement for any reason, all rights and licenses previously granted to End
Users shall continue in full force and effect and Vendor shall (continue to
provide Cadence all Licensed Work and support services necessary to enable
Cadence and Marketing Agents to fulfill its continuing obligations to End User's
respecting the Licensed Work for a period of two years following such
termination. The maintenance and support obligations of Vendor following the
termination or expiration of this Agreement are for wind-down purposes only, and
accordingly shall consist of the error corrections and second level telephone
support as provided for in Exhibit B. Such continuing obligations will not
include any upgrades to the Licensed Works.

        11.4 Survival. The provisions of Sections 4.2, 4.3, 4.5 (and Exhibit E),
5.1 (and Exhibit B), 6.3, 7(until all amounts due and owing have been paid), 8
(and other provisions of this Agreement (including Exhibits) as contemplated
therein), 9, 10, 11.3 (and the provisions of Section 7 to the extent
applicable), 11.4 and 12, along with any other provision which by its terms
continues after termination, shall survive the termination of this Agreement.

12.0 GENERAL.

        12.1 Relationship. The relationship between the parties under this
Agreement is that of independent contractors, and nothing contained in this
Agreement shall be construed to constitute either party as an agent, partner, or
joint venturer of the other.

        12.2 Rights. Nothing in this Agreement shall be construed as prohibiting
or restricting: (i) either partyfrom independently developing or acquiring
products which are competitive, irrespective of the similarity to or
substitutability for theother party's products; or (ii) the rights which the
parties have outside the scope of this Agreement; or (iii) the rights of either
party to make, have made, use, lease, license, sell or otherwise dispose of any
particular product(s) not herein described subject to the restrictions set forth
in Section 9.

        12.3 Notices. All notices, demands or consents required or permitted
hereunder shall be delivered in writing to the respective parties at the
addresses set forth above, and, in the case of Cadence, to the attention of the
General Counsel, or at such other address as shall have been given to the other
party in writing for the purposes of

                                       11
<PAGE>   12

this clause. Such notices shall be deemed effective upon the earliest to occur
of: (i) actual delivery; or (ii) five (5) calendar days after mailing (airmail
for international mailings), addressed and postage prepaid, return receipt
requested (except for international mailings); or (iii) one (1) day after
transmission by fax, if to Cadence to (408) 944-0215, and if to Vendor, to
(408)280-7915.

        12.4 Assignment. Neither this Agreement nor any rights hereunder, in
whole or in part, shall be assignable or otherwise transferable by either party
without the express written consent of the other party. However, the foregoing
notwithstanding, an assignment by either party in connection with the transfer
of all, or a substantial portions of its assets, product lines or businesses, or
by reason of acquisition, merger, consolidation or operation of law shall not
require consent. Subject to the above, this Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto.

        12.5 Severability, Waiver or Amendment. If any Agreement provision is
determined by a court of competent jurisdiction to be contrary to law, the
remaining provisions of this Agreement will continue in effect. No waiver,
amendment or modification of any provision hereof shall be effective unless in
writing and signed by the party against whom such waiver, amendment or
modification is sought to be enforced. No failure or delay by either party in
exercising any right, power or remedy hereunder shall operate as a waiver of any
such right, power or remedy.

        12.6 Rights and Remedies Cumulative. Except as expressly provided
herein, the rights and remedies provided in this Agreement shall be cumulative
and not exclusive of any other rights or remedies provided at law, in equity or
otherwise.

        12.7 Government Provisions. When the Licensed Works are to be furnished
to the United States Government, or, to an End User for use on a subcontract
under a United States Government prime contract (collectively a "Government
Contract"), Vendor agrees to comply with provisions that are contained in the
Government Contract, insofar as Cadence is required by law or regulations to
flow down or otherwise make such provisions applicable to Vendor as a
supplier/subcontractor of Cadence.

        12.8 Excusable Delays; Force Majeure. Neither party shall be responsible
for any delay in or failure to deliver or perform any obligations which is due
to circumstances beyond that party's reasonable control. In the event of any
such failure or delay, the time of performance shall be extended for a period
equal to the time lost by reason of the delay.

        12.9 Governing Law. This Agreement is made under, governed by, and shall
be construed in accordance with the laws of the state of California, excluding
its choice of laws rule, as applied to contracts between California corporations
entered into and to be performed entirely in California. The prevailing party in
any judicial action brought to enforce or interpret this Agreement or for relief
for its breach shall be entitled to recover its costs and its reasonable
attorneys' fees incurred to prosecute or defend such action.

        12.10 Entire Agreement. The provisions of this Agreement and the
Exhibits hereto, which are incorporated herein by this reference, except for
Exhibit D which is a separate agreement, constitute the entire agreement between
the parties in connection with the subject matter hereof and supersede all prior
and contemporaneous agreements, understanding, negotiations and discussions,
whether oral or written, between the parties hereto with respect to the subject
matter hereof.

        12.11 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.

        12.12 Export. Vendor will notify Cadence from time to time of all export
classifications for the Licensed Works (including ECCNs) and all unusual export
requirements of which they are aware. Each party will comply with all applicable
laws in the performance of this Agreement.

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                                       12
<PAGE>   13

        IN WITNESS WHEREOF the parties have entered into this Agreement
effective as of the year and date first set forth above.

CADENCE DESIGN SYSTEMS, INC.                VENDOR:

By: /s/ R.L. SMITH MCKEITHEN                 By: /s/ P.S. MELMAN
   --------------------------------             --------------------------------

Name:   R.L. Smith McKeithen                 Name:   P.S. Melman
     ------------------------------               ------------------------------

Title:  Sr. V.P. & General Counsel           Title:  Chief Financial Officer
      -----------------------------                -----------------------------

Date:   July 7, 2000                         Date:   July 7, 2000
     ------------------------------               ------------------------------

CADENCE DESIGN SYSTEMS (IRELAND) LIMITED

By: /s/ R.L. SMITH MCKEITHEN
   --------------------------------

Name:   R.L. Smith McKeithen
     ------------------------------

Title:  Director
      -----------------------------

Date:   July 7, 2000
     ------------------------------

                                       13
<PAGE>   14

                                    EXHIBIT A

                        PRODUCTS AND DESIGNATED EQUIPMENT

REF: Software OEM Agreement
Dated:
================================================================================

1. DESCRIPTION OF PRODUCTS AND DOCUMENTATION.

<TABLE>
<CAPTION>
Product Name         Description
------------         -----------
<S>                  <C>
Circuit Surfer       Circuit Surfer is a software program for the analysis and
                     optimization of parametric yield/performance issues in
                     analog and mixed/signal circuits.
</TABLE>

        1.1 New Products. If Vendor develops or commercially offers a program
("New Product") that may be complementary to either the above Products or other
programs marketed by Cadence, Vendor will use commercially reasonable efforts to
give Cadence the right of first refusal to market the New Product pursuant to
this Agreement. In addition, Vendor agrees to use reasonable efforts to
preferentially select Cadence for the distribution of such New Products. In the
event the New Product is one which Cadence desires to include in its program
offerings, the parties shall negotiate in good faith to include the New
Product(s) at mutually agreeable prices.

2. DESIGNATED EQUIPMENT.

        The Products shall operate on the following equipment product families
and operating system version level on which the programs that Cadence offers on
such equipment operate: Solarisx.x, HPUXx.x, and operating system version level
on which Cadence programs may operate currently and in the future.
****************************
*********************************.

3. DROP SHIPMENT.

[ ] If the box is checked the parties agree that Vendor will drop ship the
Products to End Users (or Marketing Agents, as applicable) worldwide, as
designated by Cadence from time to time, and at no charge to Cadence.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       14
<PAGE>   15

                                    EXHIBIT B

                        MAINTENANCE AND SUPPORT SERVICES

REF: Software OEM Agreement
Dated:
================================================================================

1.0 MAINTENANCE.

        1.1 FOR CADENCE.

                1.1.1 Error Correction. Vendor will use its commercially
reasonable efforts to provide a Maintenance Modification to correct any Errors
in the Licensed Works reported by Cadence. Such response shall include as
appropriate: (i) reviewing the Error with Cadence; and (ii) gathering additional
information about the Error; and (iii) analyzing the Error to determine its
cause; and (iv) providing an Error solution if already known; and (v) where
required providing a Maintenance Modification. Maintenance Modifications will be
delivered promptly to Cadence at no additional cost. Vendor shall provide
Cadence with an estimate of how long it will take to correct the Error(s)
reported by Cadence and shall keep Cadence informed of the progress of the
problem resolution.

                1.1.2 Error Classification & Response: Cadence will notify
Vendor when Errors are discovered. Cadence and Vendor will classify Errors by
severity as: "Fatal ", preventing a Product from performing any useful work; or
"Severe Impact ", disables major function(s); or "Degraded Operations ", Errors
disabling non-essential functions; or "Minor ", all other Errors. Vendor's
response remedy shall be in three levels defined as follows: (i) Level 1,
Cadence's receipt of Vendor's written confirmation acknowledging Vendor's
receipt of the Error report; and (ii) Level 2, Cadence's receipt of Vendor's
patch, workaround or temporary fix including Documentation changes; and (iii)
Level 3, Cadence's receipt of Vendor's official fix or update, including
applicable Documentation changes. The response/correction timetable shall be as
follows, wherein a day shall be considered to be a workday. Vendor shall use
commercially reasonable efforts to meet the timeframes set forth below.

                          Response/Correction Timetable

<TABLE>
<CAPTION>
Severity              Level 1      Level 2              Level 3
--------              -------      -------              -------
<S>                   <C>          <C>                  <C>
Fatal                 *****        ***************      **********
Severe Impact         *****        ***************      **********
Degraded Operations   *****        ***************      **********
Minor                 *****        ***************      **********
</TABLE>

                1.1.3 Telephone Support: Provide reasonable telephone support to
Cadence on an as-needed basis. Vendor shall maintain a telephone hotline service
to enable Cadence to obtain a quick response to any Errors with the Licensed
Work. Service Hot lines, at a minimum, must be attended during the hours from
9:00 a.m. to 5:00 p.m. Pacific Standard Time, Monday through Friday excluding
standard Vendor holidays.

                1.1.4 Fees for Such maintenance services shall be specified in
Exhibit C.

                1.1.5 Vendor shall use reasonable efforts to provide to Cadence
sufficient advance notice of any planned Maintenance Modification or
Enhancements to the Products(s)

        1.2 FOR END USERS:

                1.2.1 Vendor agrees to support its existing end users until such
time as Cadence and Vendor put a support plan in place and transition such
customers to Cadence.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       15
<PAGE>   16

        1.2.2 After 2.1 is satisfied, or such other date as mutually agreed upon
by the parties in writing, Cadence shall be responsible for providing "first
line" maintenance and support services directly to End Users in accordance with
the terms and conditions of the End User Software Maintenance Agreement attached
hereto as Exhibit B1. During this time, Vendor shall continue to provide "second
line" maintenance and support services to Cadence, consistent with the terms and
conditions of Section 1.1 of this Exhibit B, and such other maintenance and
support services as Cadence may reasonably require in order to fulfill and
satisfy its maintenance and support obligations to End Users.

2.0 TRAINING.

        2.1 Cadence Internal. During the Term of this Agreement, Vendor shall
provide training to Cadence and its Marketing Agents' personnel. Such training
shall cover, without limitation, the following topics in detail: (i)
installation and configuration procedures, (ii) operating, usage and performance
characteristics of the Product, (iii) Error diagnosis and isolation. Such
training shall be without charge to Cadence, shall consist of at least one
courses per release, and shall be conducted at such facilities with such
schedule as is mutually agreeable, except however Cadence shall reimburse Vendor
for its out of pocket costs for the instructor's travel, lodging and meal
expenses for training held at Cadence's facilities. Additionally, if any of the
foregoing topics are covered in regularly scheduled classes held at Vendor's
facilities, then Cadence or its Marketing Agents' personnel who are engaged in
the marketing, sales, integration or support of the Products may attend any such
course(s) at no charge, provided however Cadence shall be responsible for the
travel and living expenses of its course attendees.

        2.2 End User training. Cadence shall be responsible for selling and
delivering End User training in a manner consistent with other Cadence products.
Cadence may desire to contract PDF to do the training. PDF will provide the
training material and reasonable consultation necessary for Cadence to develop a
production customer training class.

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                                       16
<PAGE>   17

                                    EXHIBIT C

                                FEES AND PAYMENT

REF: Software OEM Agreement
Dated:
================================================================================

1. FEES.

        Cadence shall pay Vendor the following amounts in Fees:

<TABLE>
<CAPTION>
------ ----------------- -----------
 YEAR    LICENSE FEES     DATE DUE
------ ----------------- -----------
<S>    <C>               <C>
   1    ***************    *****
          **********       *****

------ ----------------- -----------
   2    ***************    *****
          **********       *****

------ ----------------- -----------
   3    ***************    *****
          **********       *****

------ ----------------- -----------
</TABLE>

*Payment terms of **********.

        1.2 Maintenance Fees. Cadence shall pay to Vendor the fees for the
maintenance and support services set forth on Exhibit B, in accordance with the
schedule set forth below:

<TABLE>
<CAPTION>
------ ------------------ -----------
 YEAR   MAINTENANCE FEES   DATE DUE
------ ------------------ -----------
<S>    <C>                <C>
   1     ***************    *****
           **********       *****

------ ------------------ -----------
   2     ***************    *****
           **********       *****

------ ------------------ -----------
   3     ***************    *****
           **********       *****

------ ------------------ -----------
   4     ***************    *****
           **********       *****

------ ------------------ -----------
   5     ***************    *****
           **********       *****

------ ------------------ -----------
</TABLE>

*Payment terms of **********.

* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       17
<PAGE>   18

        1.3 Development Fees. Cadence shall pay to Vendor the following minimum
fees for development services that may be provided by Vendor under Section 5.2
of the Agreement:

<TABLE>
<CAPTION>
------ -------------------------- -----------
 YEAR   MINIMUM DEVELOPMENT FEES   DATE DUE
------ -------------------------- -----------
<S>    <C>                        <C>
   1         ***************        *****
               **********           *****

------ -------------------------- -----------
   2         ***************        *****
               **********           *****

------ -------------------------- -----------
   3         ***************        *****
               **********           *****

------ -------------------------- -----------
</TABLE>

*Payment terms of **********.

         ***********************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************************************.

        1.3 Prices. The parties agree that Cadence shall be free to determine
its prices to its customers.

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* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                       18
<PAGE>   19

                                    EXHIBIT D

                           SOFTWARE DEPOSIT AGREEMENT

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                       19
<PAGE>   20

                                    EXHIBIT E
                       STANDARD FORM OF LICENSE AGREEMENT

                                       20
<PAGE>   21

                                    EXHIBIT F

                            TRADEMARK SPECIFICATIONS

REF:  Software OEM Agreement
Dated:
================================================================================

1. TRADEMARK SPECIFICATIONS.

The following are the trademark specifications for the Trademarks:
______________________ of Vendor.

        [CONTENT TO BE PROVIDED BY VENDOR IN DIFFERENT SIZES AND SCALED]

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                                       21STOCK EXCHANGE AGREEMENT

                  This Stock Exchange Agreement (the "AGREEMENT") dated as of
the __ day of August 2000, is by and amongst Watchout!, Inc., a Utah corporation
(hereinafter referred to as "Buyer" ) and Cavalcade of Sports Networks, Inc., a,
Nevada corporation, (hereinafter referred to as the "Seller" or "Shareholder")
and Cormax Business Solutions, Ltd., an Alberta corporation, (hereinafter
referred to as the "Company"). WHEREAS, the respective Board of Directors of
Buyer and Seller deem the acquisition by Buyer of all of the issued and
outstanding capital stock of the Company on the terms set forth in this
Agreement to be desirable, generally to the welfare and advantage of each, and
in the best interests of the shareholders of each;

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants herein contained, and for the purpose of
prescribing the terms and conditions of such acquisition, the mode of carrying
it into effect, and such other details and provisions as are necessary or
desirable, the parties hereto hereby represent, warrant, covenant and agree as
follows:

                                    ARTICLE I
                                PLAN OF AGREEMENT

                  1.01 Number of Shares. Subject to the further conditions of
this Agreement and the truth of the representations and warranties provided
herein, the Seller agrees to transfer to Buyer at the Closing a total of 1,000
shares of common stock (the "Shares"), said Shares representing all of the
issued and outstanding shares of common stock of the Company owned by the
Company duly endorsed for transfer in exchange for a total of 25,100,000 in the
common stock of the Buyer which is valued at $.30 per share for this agreement
for a total of $7,530,000 shares of common stock. The shares of the Buyer to be
issued to the Shareholders will be restricted securities as that term is defined
under the Securities Act of 1933, as amended.

                                        1

<PAGE>

                                   ARTICLE II

            REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY

         The Company and the Shareholder represent and warrant to Buyer that:

                  2.01 Incorporation, Common Stock, Etc. Company is a
corporation duly organized and existing in good standing under the laws of the
Province of Alberta. Attached hereto as Exhibit 2.01 is a copy of the Company's
Articles of Incorporation. Company has full corporate power and authority to
carry on its business as it is now being conducted and to own and operate its
assets, businesses and properties. Company has unlimited authorized no par value
capital stock, of which 1,000 shares are issued and outstanding. There are and
at the Closing will be no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments or agreements calling for or
requiring issuance or transfer, sale or other disposition of any shares of
capital stock of the Company or calling for or requiring the issuance of any
securities or rights convertible into or exchangeable (including on a contingent
basis) for shares of capital stock. All of the outstanding shares of the Company
are duly authorized, validly issued, fully paid and non-assessable. There are no
dividends due, to be paid or are in arrears with respect to any of the capital
stock of Company.

                  2.02 Company Financial Statements. Attached hereto as Schedule
2.02 are the most recent financial statements for the Company dated August 30,
2000. The Company Balance Sheet and Income Statement present fairly the
financial position of the Company as of the dates set forth in the financial
statements. The Balance Sheet has been prepared in conformity with generally
accepted accounting principles. There has been no material change in the
financial condition of the Company since the date of the financial statements.
All liabilities of the Company are set forth in the financial statements and
there are no undisclosed liabilities of any kind or nature.

                                        2

<PAGE>

         The Company further agrees to provide the Buyer within 60 days of
closing with certified financial statements in conformity with Securities and
Exchange Commission reporting requirements. If the Company is unable to provide
the required certified financial statements or, the certified financial
statements reflect a material change in the financial condition of the Company
from that which was represented in the August 30, 2000 financial statements,
then in that event the Buyer may, in its sole and absolute discretion and in
addition to any remedies available at law, rescind this Agreement.

                  2.03 Litigation. Except as set forth on exhibit 2.03, there
are no actions, suits, proceedings, or investigations pending or, to the best of
its knowledge, threatened or contemplated against Company at law or in equity,
before any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, domestic or foreign. The Company
is not subject to any outstanding judgments or operating under or subject to or
in default with respect to any order, writ, injunction or decree of any court or
federal, state, municipal or other governmental department, commission, board,
agency or instrumentality, domestic or foreign.

                  2.04 Compliance with Laws. The Company has complied in all
material respects with all laws, regulations, orders, domestic and foreign, and
neither the present uses by Company of its properties nor the conduct of its
business violate any such laws, regulations, orders or requirements, and except
as set forth in Schedule 2.04 (if applicable) the Company has not received any
notice of any claim or assertion that it is not so in compliance.

                  2.05 Indebtedness. Except as set forth in the Company Balance
Sheet, Company has not executed any instruments, entered into any agreements or
arrangements pursuant to which the Company has borrowed any money, incurred or
guaranteed any indebtedness or established any line of credit which represents a
liability of the Company as of the date thereof.

                                        3

<PAGE>

                  2.06 No Material Adverse Change. Since the Company Balance
Sheet Date, there has not been any material adverse change in the condition,
financial or otherwise, of the Company or in its business taken as a whole; nor
has there been any material transaction entered into by the Company. The Company
has not incurred any material obligations, contingent or otherwise except for
legal and accounting fees and expenses in connection with the transactions
contemplated by this Agreement. There has not been any damage, destruction or
loss, whether or not covered by insurance adversely affecting the Company's
business, property or assets; nor has the Company (a) created or incurred any
indebtedness; (b) issued, sold, purchased, redeemed or granted any shares of
Company Common Stock or any other securities of Company or any options, warrants
or other rights to purchase any shares of Company Common Stock except as between
and amongst its current shareholders; (c) amended its Certificate of
Incorporation or bylaws, (d) paid any obligation or liability other than
obligations or liabilities reflected in its Balance Sheet dated as of the
Company Balance Sheet Date or incurred any liabilities except for legal and
accounting fees and disbursements incurred in the ordinary course of business or
in connection with this Agreement and the transactions contemplated hereby.

                  2.07 No Defaults. Neither the execution nor delivery of this
Agreement nor the consummation of the contemplated transaction are events which,
of themselves or with the giving of notice or passage of time or both, could
constitute a violation of or conflict with or result in any breach of or default
under the terms, conditions or provisions of any judgment, law or regulation or
of the Company's Certificate of Incorporation or Bylaws, or of any agreement or
instrument to which Company is a party or by which it is bound; or could result
in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever on the property or assets of Company; and no consent of any third
party except as expressly contemplated herein is

                                        4

<PAGE>

required for the consummation of this Agreement by Company.

                  2.08 Corporate Action of Company. The Board of Directors of
the Company has duly authorized the execution and delivery of this Agreement.
Subject to the approval of the stockholders of the Company as provided herein,
this Agreement constitutes a valid, legal and binding agreement of Company and
is enforceable in accordance with its terms.

                  2.09 Liabilities. As of the Company Balance Sheet Date, the
Company has incurred no other liabilities except in the ordinary course of
business. 2.10 Taxes. Except as set forth on Schedule 2.10, all federal, state,
and local tax returns, reports and declarations of estimated tax or estimated
tax deposit forms required to be filed by Company have been duly filed; the
Company has paid all taxes which have become due pursuant to such returns or
pursuant to any assessment received by it, and has paid all installments of
estimated taxes due; and all taxes, levies and other assessments which Company
is required by law to withhold or to collect have been duly withheld and
collected and have been paid over to the proper governmental authorities.
Company has no knowledge of any tax deficiency which has been or might be
asserted against Company which would materially and adversely affect the
business or operations of Company. At Closing, the Company shall provide Buyer
with copies of all tax returns, of any kind or nature, filed by Company,
together with all accounting information.

                  2.11 Title to Property; Leases. Company has good and
defensible title in fee simple to, or valid and enforceable leasehold estates
in, all properties and assets, which are material to its continued operations,
free and clear of all liens, encumbrances, charges or restrictions or are not
materially significant or important in relation to its operations and business.
All of such leases and subleases under which Company is the lessor or sublessor,
lessee or sublessee of properties or assets or under which

                                        5

<PAGE>

Company holds properties or assets as lessee or sublessee are in full force and
effect. Company is not in default in respect of any of the terms or provisions
of any of such leases or subleases, and no claim has been asserted by anyone
adverse to their respective rights as lessor, sublessor, lessee or sublessee
under any of the leases or subleases mentioned above, or affecting or
questioning their respective rights to continued possession of the leased or
subleased premises or assets under any such lease or sublease; and Company
either owns or leases all such properties as are necessary to its operations as
now conducted.

                  2.12 Licenses. Except that the Company has not filed as a
foreign corporation doing business in Maryland, the Company has obtained all
required licenses, permits or other governmental authorization for the conduct
of its business as now being conducted.

                  2.13 Bank Accounts. Attached hereto as schedule 2.13 is a
listing of all bank accounts and account numbers which are currently held by
Company. 2.14 Contracts and Commitments. Except as set forth in Exhibit 2.14,
there are no contracts nor commitments of Company requiring any future payment
to an officer, director, employee, agent or shareholder of Company. Also
attached and marked as Exhibit 2.14 is a list of all current Company employees
and the salary of each.

                  2.15 Representations True and Correct. This Agreement and the
Schedules and Exhibits attached hereto do not contain any untrue statement of a
material fact concerning Company or omits any material fact concerning Company
which is necessary in order to make the statements therein not misleading. All
of the representations and warranties contained herein (including all statements
contained in any certificate or other instrument delivered by or on behalf of
the Shareholders pursuant hereto or in connection with the transactions
contemplated hereby) shall survive the Closing.

                                        6

<PAGE>

                  2.16 Retirement Plans. Company has no pension plan, profit
sharing or similar employee benefit plan. 2.17 Intellectual Property Rights.
Attached hereto as Exhibit 2.17 is a list of all trademarks, trade names,
copyrights, patents, common law proprietary claims which are owned by the
Company together with copies of any official notice from any issuing governing
organization. The Company has proprietary common law property rights, or will
obtain necessary consents within 14 days to the E commerce Platform Source Codes
as set forth in the attached exhibits.

                  2.18 Contracts and Commitments. The Company has signed
contracts of $1.3 million and commitments under review and consideration
totaling in excess of $1 million.

                  2.19 Indemnification. The Company and the Shareholders jointly
and individually shall indemnify and hold Buyer, its officers and directors,
harmless of and in respect of:

         (1) Any damage or loss resulting from any loss, any liability of any
kind or nature which is not set forth in the financial statements, damage,
misrepresentation, breach of warranty or non-fulfillment on the part of Company
under this Agreement or from any misrepresentation or omission from any
certificates or other instruments furnished to Company pursuant to this
Agreement.

         (2) All actions, suits, proceedings, demands assessments, judgments,
costs and expenses incident to any of the foregoing including reasonable
attorney's fees and all costs incurred by Buyer to enforce this agreement
against Company.

                                   ARTICLE III
                     REPRESENTATIONS AND WARRANTIES OF Buyer

         Buyer represents and warrants to the Shareholder and Company that:

                  3.01 Incorporation, Common Stock, Etc. Buyer is a corporation

                                        7

<PAGE>

duly organized and existing in good standing under the laws of the State of
Utah. The Buyer has full corporate power and authority to carry on its business
as it is now being conducted and to own and operate its assets, businesses and
properties. The Buyer has authorized capital stock consisting of 50 million
shares of Common Stock, par value $.001 per share, of which 24,583,202 will be
outstanding as of August 31, 2000 shares are issued and outstanding. All of the
outstanding shares of the Company are duly authorized, validly issued, fully
paid and non-assessable. There are no dividends due, to be paid or are in
arrears with respect to any of the capital stock of Company.

                  3.02 Buyer Financial Statements. Attached hereto as Schedule
3.02 are the most recent financial statements for the Buyer dated as of June 30,
2000 as filed with the Securities and Exchange Commission. The Buyer Balance
Sheet and Income Statement present fairly the financial position of Buyer as of
the dates set forth in the financial statements. The Balance Sheet has been
prepared in conformity with generally accepted accounting principles. There has
been no material change in the financial condition of the Buyer since the date
of the financial statements. All liabilities of the Buyer are set forth in the
financial statements and there are no undisclosed liabilities of any kind or
nature.

                  3.03 Litigation. Except for the Bader litigation, which Buyer
has provided information to Seller, there are no actions, suits, proceedings, or
investigations pending or, to the best of its knowledge, threatened or
contemplated against Buyer at law or in equity, before any federal, state,
municipal or other governmental department, commission, board, agency or
instrumentality, domestic or foreign. The Buyer is not subject to any
outstanding judgments or operating under or subject to or in default with
respect to any order, writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board,

                                        8

<PAGE>

agency or instrumentality, domestic or foreign.

                  3.04 Compliance with Laws. The Buyer has complied in all
material respects with all laws, regulations, orders, domestic and foreign, and
neither the present uses by Buyer of its properties nor the conduct of its
business violate any such laws, regulations, orders or requirements, and the
Buyer has not received any notice of any claim or assertion that it is not so in
compliance.

               3.05 No Defaults. Neither the execution nor delivery of this
Agreement nor the consummation of the contemplated transaction are events which,
of themselves or with the giving of notice or passage of time or both, could
constitute a violation of or conflict with or result in any breach of or default
under the terms, conditions or provisions of any judgment, law or regulation or
of Buyer's Certificate of Incorporation or Bylaws, or of any agreement or
instrument to which Buyer is a party or by which it is bound; or could result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever on the property or assets of Buyer; and no consent of any third party
except as expressly contemplated herein is required for the consummation of this
Agreement by Buyer.

                  3.06 Corporate Action of Buyer. The Board of Directors of the
Buyer has duly authorized the execution and delivery of this Agreement. This
Agreement constitutes a valid, legal and binding agreement of Buyer and is
enforceable in accordance with its terms.

                  3.07 Taxes. Except as set forth on Schedule 3.07, all federal,
state, and local tax returns, reports and declarations of estimated tax or
estimated tax deposit forms required to be filed by Buyer have been duly filed;
Buyer has paid all taxes which have become due pursuant to such returns or
pursuant to any assessment received by it, and has paid all installments of
estimated taxes due; and all taxes, levies and other assessments which Buyer is
required by law to withhold or to collect have been

                                        9

<PAGE>

duly withheld and collected and have been paid over to the proper governmental
authorities. Buyer has no knowledge of any tax deficiency which has been or
might be asserted against Buyer which would materially and adversely affect the
business or operations of Buyer.

                  3.08 Title to Property; Leases. Buyer has good and defensible
title in fee simple to, or valid and enforceable leasehold estates in, all
properties and assets, which are material to its continued operations, free and
clear of all liens, encumbrances, charges or restrictions except as set forth in
the attached Schedule 3.08 or are not materially significant or important in
relation to its operations and business. All of such leases and subleases under
which Buyer is the lessor or sublessor, lessee or sublessee of properties or
assets or under which Buyer holds properties or assets as lessee or sublessee
are in full force and effect. Buyer is not in default in respect of any of the
terms or provisions of any of such leases or subleases, and no claim has been
asserted by anyone adverse to their respective rights as lessor, sublessor,
lessee or sublessee under any of the leases or subleases mentioned above, or
affecting or questioning their respective rights to continued possession of the
leased or subleased premises or assets under any such lease or sublease; and
Buyer either owns or leases all such properties as are necessary to its
operations as now conducted.

                  3.09 Representations True and Correct. This Agreement and the
Schedules and Exhibits attached hereto do not contain any untrue statement of a
material fact concerning Buyer or omits any material fact concerning Buyer which
is necessary in order to make the statements therein not misleading. All of the
representations and warranties contained herein (including all statements
contained in any certificate or other instrument delivered by or on behalf of
the Buyer) shall survive the closing.

                  3.10 Indemnification. Buyer shall indemnify and hold Company,
its officers and directors, harmless of and in respect of:

                                       10

<PAGE>

                  (1) Any damage or loss resulting from any loss, liability,
damage, misrepresentation, breach of warranty or non-fulfillment on the part of
Buyer under this agreement or from any misrepresentation or omission from any
certificates or other instrument furnished to Company pursuant to this
agreement.

                  (2) All actions, suits, proceedings, demands assessments,
judgments, costs and expenses incident to any of the foregoing including
reasonable attorney's fees and all costs incurred by Company to enforce this
agreement against Buyer.

                                   ARTICLE IV

                REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER

         The Shareholder owns 100% of the issued and outstanding shares of stock
of Company. The Shares are owned free and clear of any liens or encumbrances and
that the Shareholder is free to transfer the Shares without the consent of any
third party.

                                    ARTICLE V
                 CONDITIONS TO THE OBLIGATIONS OF BUYER TO CLOSE

         The obligations of Buyer under this Agreement are, at the option of
Buyer, subject to the fulfillment of the following conditions at, or prior to,
the closing date:

                  5.01 Representations, Warranties and Covenants. All representa
tions and warranties of Company contained in this Agreement and in any
statement, certificate, schedule or other document delivered by Company pursuant
hereto or in connection herewith shall have been true and accurate in all
respects as of the date when made and as of the Closing Date.

                  5.02 Covenants, Etc. Company shall have substantially
performed and complied with each and every covenant, agreement and condition
required by this Agreement to be performed or complied with by them prior to, or
at, the Closing Date.

                                       11

<PAGE>

                  5.03 Certificate. Company shall have delivered to Buyer a
certificate of the President and Secretary of Company, dated the Closing Date,
certifying to the fulfillment of the conditions set forth in 5.01 and 5.02.

                  5.04 Proceedings. No action or proceedings shall have been
instituted or threatened against the Company which could materially adversely
affect the business of the Company. No action or proceedings shall have been
instituted or threatened against any of the parties to this Agreement or their
directors or officers before any court or governmental agency to restrain,
prohibit or obtain substantial damages in respect of this Agreement or the
consummation of the transactions contemplated hereby.

                  5.05 Corporate Documents. Prior to Closing the Company shall
furnish to Buyer copies of the Certificate of Incorporation of Company and each
amendment thereto, if any, which shall be certified by a proper state official;
one copy of the By-Laws and minutes of Company by its secretary or an assistant
secretary as being currently in effect, and a certificate of good standing
issued by the proper state officials of each state in which Company transacts
business and is required to qualify.

                  5.06 Document & Production. This Agreement is expressly
conditioned on Company providing all identified schedules and exhibits within 14
days of closing.

                                   ARTICLE VI
                   CONDITIONS TO THE OBLIGATIONS OF THE SELLER

         The obligations of the Seller is subject to the fulfillment of the
following conditions at or prior to the Closing Date:

                  6.01 Representations, Warranties and Covenants. All repre
sentations and warranties of Buyer contained in this Agreement and in any
statement, certificate, schedule or other document delivered pursuant hereto,

                                        12

<PAGE>

or in connection herewith, shall have been true and accurate in all respects as
of the date when made and as of the Closing Date.

                  6.02 Covenants, Etc. Buyer shall have substantially performed
and complied with each and every covenant, agreement and condition required by
this Agreement to be performed or complied with by it prior to, or at, the
Closing Date.

                  6.03 Proceedings. No action or proceedings shall have been
instituted or threatened against Buyer which could materially and adversely
affect the business of Buyer. No actions or proceedings shall have been
instituted or threatened against any of the parties to this Agreement, or their
directors or officers before any court or governmental agency to restrain,
prohibit or obtain substantial damages in respect to this Agreement or the
consummation of the transactions contemplated hereby.

                  5.06 Document & Production. This Agreement is expressly
conditioned on Buyer providing all identified schedules and exhibits within 14
days of closing.

                                   ARTICLE VII
                           CONDITIONS FOLLOWING CLOSING

         Pursuant to Article II of this Agreement, the Seller has represented to
the Buyer that the Company will secure contracts for sales totaling $2 million
within the next 180 days.

                                   ARTICLE VIII
                             MISCELLANEOUS PROVISIONS

                   8.01 Abandonment of Agreement. This Agreement may be
terminated and the transactions hereby contemplated abandoned at any time prior
to the Closing Date, whether before or after the approval and adoption hereof by
the shareholders of each Company by (a) the mutual consent of the Board of
Directors of Company and Buyer or (b) the Board of Directors of the Company if
any condition to its obligations provided in this Agreement has not

                                        13

<PAGE>

been met at the time such condition is to be met and has not been waived by it,
or (c) by the Board of Directors of Buyer, if any condition to its obligations
provided in this Agreement has not been met at the time such condition is to be
met and has not been waived by it.

                  8.02 Liabilities. In the event this Agreement is terminated
pursuant to Section 8.01, no party hereto shall have any liability to the other
and each party shall bear their own costs incurred.

                  8.03 Assignments. This Agreement may not be assigned except
with the written consent of the nonassigning party. Notwithstanding the
foregoing, the rights of the Shareholders to receive the Shares shall be freely
assignable.

                   8.04 Survival of Representations and Warranties. Company and
Buyer agree all representations and warranties contained herein or made
hereunder shall survive the Closing, except that any breach disclosed in writing
to either party prior to Closing is waived by such party if it elects to close
notwithstanding such breach.

                  8.05 Notices. All notices, demands and other communications
which may or are required to be given pursuant to this Agreement shall be given
or made when personally delivered or when deposited in the United States Mail,
first class, postage pre-paid, addressed as follows: If to Company to: c/o
Richard Greene 2455 East Sunrise Blvd. Suite 905 Sunrise, Florida 33304
or to such other address as Company may, from time to time, designate by
Notice to Buyer

If to Buyer to:                             2865 S Eagle Road, PMB 393
                                            Newtown, PA 18940

                                            With a copy to:

                                                         14

<PAGE>

                                            FARBER AND KLEIN
                                            23123 State Road Seven #350B
                                            Boca Raton, Florida 33428

or to such other addresses as Buyer may, from time to time, designate by notice
to Company.

                   8.06 Closing. The closing date for the contemplated
transaction shall be on or before September 1, 2000 . 8.07 Entire Agreement.
This Agreement constitutes the entire agreement between the parties and
supersedes and cancels any and all prior agreements between the parties relating
to its subject matter. The representations, warranties, covenants and conditions
of the obligations of the parties hereto may not be orally amended, modified or
altered, but may be amended, modified or altered in a writing signed by each of
the parties, whether before or after the meeting of shareholders of Company
contemplated herein.

                  8.08 Captions. The captions of Articles and Sections of
Articles hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.

                  8.09 Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Florida and
jurisdiction for any dispute shall be in Florida.

                   8.10 Waivers. Any failure of either party hereto to comply
with any of its obligations or agreements, or to fulfill conditions herein
contained may be waived in writing by the other party. No waiver by any party of
any condition or the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation, or warranty of this Agreement.

                  8.11 Counterparts. This Agreement may be executed in several

                                        15

<PAGE>

counterparts and all so executed shall constitute one agreement, binding upon
all of the parties hereto, notwithstanding that not all of the parties are
signatory to the original or the same counterpart.

                  8.12 Successors. The terms covenants and conditions of the
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, legal representatives, successors and assigns.

                  8.13 Binding Agreement. This Agreement represents the entire
agreement among the parties hereto with respect to the matters described herein
and is binding upon and shall inure to the benefit of the parties hereto and
their legal representatives. This Agreement may not be assigned and, except as
stated herein, may not be altered or amended except in writing executed by the
party to be charged.

                  8.14 Tax Free Exchange. It is the intent of the respective
parties that this Agreement be treated as a tax free exchange under the Section
368 of the Internal Revenue Code.

                   8.15 Delivery of Documents. The Closing of this transaction
is specifically contingent upon delivery of all documents by the respective
parties.

              The Remainder of this Space Left Intentionally Blank.

                                       16

<PAGE>

         This Agreement entered into the date first entered above.

WATCHOUT! INC.                                   WITNESS:

---------------------------------           ---------------------------
BY: Mel Broussard
    Its President                           ---------------------------

CAVALCADE OF SPORTS NETWORKS, INC.

---------------------------------           ---------------------------
BY:  Todd Violette
     Its president                          ---------------------------

                                        17

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