<PAGE>

THIS OPTION AND THE WARRANTS, SHARES OF COMMON STOCK AND SHARES OF PREFERRED
STOCK ISSUABLE UPON EXERCISE OF THIS OPTION AND THE WARRANTS AND CONVERSION OF
THE PREFERRED STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE TRANSFERRED IN VIOLATION OF ANY
APPLICABLE SECURITIES LAWS. THIS OPTION IS ALSO SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 3 HEREOF. THIS LEGEND SHALL BE ENDORSED UPON ANY
OPTION ISSUED IN EXCHANGE FOR THIS OPTION AND, UNLESS SUCH SECURITIES HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, ON ANY WARRANTS, SHARES OF COMMON STOCK OR
SHARES OF PREFERRED STOCK ISSUABLE UPON EXERCISE OF THIS OPTION AND THE WARRANTS
OR UPON CONVERSION OF THE PREFERRED STOCK.

                     OPTION TO PURCHASE UNITS CONSISTING OF
                          WARRANTS AND PREFERRED STOCK

                                       OF

                                 PREDICT IT INC.

         This is to certify that, FOR VALUE RECEIVED, Commonwealth Associates,
L.P. or assigns ("Holder"), is entitled to purchase, subject to the provisions
of this Option, from Predict It Inc., a Delaware corporation (the "Company"),
Eight and six-tenths (8.6) Units, each Unit consisting of (a) 10,000 fully paid,
validly issued and non-assessable shares (the "Preferred Shares") of Series B
Convertible Preferred Stock of the Company ("Preferred Stock"), each share of
Preferred Stock convertible into 10 shares of common stock, par value $.O1 per
share (the "Common Stock") and (b) 7-year warrants (the "Warrants") to purchase
100,000 shares of Common Stock at an exercise price of $1.50 per share of Common
Stock, at an exercise price of $100,000 per Unit (the "Exercise Price"). The
number of Preferred Shares, the conversion rate of the Preferred Stock and the
number of shares of Common Stock issuable upon exercise and the exercise price
of the Warrants are subject to adjustment upon the occurrence of certain events
as set forth in Section 5 hereof.

         This Option is exercisable at any time or from time to time during the
seven year period commencing on the date hereof and terminating at 5:00 p.m. New
York City time on April 14, 2007 (the "Exercise Period"). The aggregate number
shares of Common Stock issuable upon exercise of the Warrants and conversion of
the Preferred Stock deliverable upon exercise of this Option, as adjusted from
time to time, are hereinafter sometimes referred to as "Underlying Shares." This
Option was originally issued pursuant to an Agency Agreement (the "Agency
Agreement") dated April 14, 2000 between the Company and Commonwealth
Associates, L.P. ("Commonwealth"), for nominal consideration.

         The shares of Preferred Stock issuable upon exercise of this Option are
to be authorized and issued pursuant to the provisions of a Certificate of
Designations, Preferences and Rights of Series B Convertible Preferred Stock
(the "Certificate of Designation") filed with the Secretary of State


<PAGE>


of the State of Delaware on April 11, 2000. The Warrants issuable upon exercise
of this Option are to be authorized and issued pursuant to that certain Warrant
Agreement, dated April 14, 2000, between the Company and Commonwealth (the
"Warrant Agreement").

         (1) EXERCISE OF OPTION.

              (a) The rights represented by this Option may be exercised at any
time during the Exercise Period, in whole or in part, by (i) the surrender of
this Option (with the purchase form at the end hereof properly executed) at the
principal executive office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company); and (ii) payment to the
Company of the exercise price then in effect for the number of Units specified
in the above-mentioned purchase form together with applicable stock transfer
taxes, if any. This Option shall be deemed to have been exercised, in whole or
in part to the extent specified, immediately prior to the close of business on
the date this Option is surrendered and payment is made in accordance with the
foregoing provisions of this Section 1, and the person or persons in whose name
or names the certificates for the Preferred Shares and Warrants shall be
issuable upon such exercise shall become the holder or holders of record of such
Preferred Shares and Warrants at that time and date. The certificates for the
Preferred Shares and Warrants so purchased shall be delivered to the Holder as
soon as practicable but not later than seven (7) days after the rights
represented by this Option shall have been so exercised. If this Option should
be exercised in part only, the Company shall, upon surrender of this Option for
cancellation, execute and deliver a new Option evidencing the rights of the
Holder thereof to purchase the balance of the Units purchasable thereunder.

              (b) At any time during the Exercise Period, the Holder may, at its
option, exchange this Option, in whole or in part (an "Option Exchange"), into
the number of Units determined in accordance with this Section (b), by
surrendering this Option at the principal office of the Company or at the office
of its stock transfer agent, if any, accompanied by a notice stating such
Holder's intent to effect such exchange, the number of Units subject to the
Option Exchange and the date on which the Holder requests that such Option
Exchange occur (the "Notice of Exchange"). The Option Exchange shall take place
on the date specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the Preferred Shares and Warrants issuable upon such Option
Exchange and, if applicable, a new Option of like tenor evidencing the balance
of the Units remaining subject to this Option, shall be issued as of the
Exchange Date and delivered to the Holder within seven (7) days following the
Exchange Date. In connection with any Option Exchange, this Option shall
represent the right to subscribe for and acquire the number of Units (rounded to
the next highest integer) equal to (x) the number of Units specified by the
Holder in its Notice of Exchange up to the maximum number of Units subject to
this Option (the "Total Number") less (y) the number of Units equal to the
quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price by (B) the Fair Market Value of a Unit. "Fair Market
Value of a Unit" shall by the sum of the

                                        2


<PAGE>


current market value of the Underlying Shares represented by such Unit (as
adjusted in accordance with Section 5 hereof) less the exercise price associated
with the exercise of the Warrants which are part of such Unit. The current
market value of the Underlying Shares of Common Stock shall be determined as
follows:

              (i) If the Common Stock is listed on a national securities
              exchange or admitted to unlisted trading privileges on such
              exchange or listed for trading on the Nasdaq National Market
              System ("NMS"), the current market value shall be the average of
              the last reported sale price on such exchange or system for the 10
              trading days prior to the Exchange Date; provided that if no sale
              is made on a day within such period or no closing sale price is
              quoted, that day's market value shall be the average of the
              closing bid and asked prices for such day on such exchange or
              system; or

              (ii) If the Common Stock is not so listed or admitted to unlisted
              trading privileges, but is traded on the Nasdaq SmallCap Market,
              the current market value shall be the average of the closing bid
              and asked prices for the 10 trading days prior to the Exchange
              Date on such market and if the Common Stock is not so traded, the
              current market value shall be the mean of the last reported bid
              and asked prices reported by the NASD Electronic Bulletin Board
              for the 10 trading days prior to the Exchange Date; or

              (iii) If the Common Stock is not so listed or admitted to unlisted
              trading privileges and bid and asked prices are not so reported,
              the current market value shall be an amount determined in a
              reasonable manner by the Board of Directors of the Company.

         (2) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Option such number of shares of
its Preferred Stock and the number of shares of Common Stock as shall be
required for issuance and delivery upon exercise of this Option in full and the
exercise in full of the Warrants and conversion of all the shares of Preferred
Stock issuable upon exercise of this Option.

         (3) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF OPTION. This Option is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Preferred
Stock and Warrants purchasable hereunder. This Option may be assigned or
transferred only to a direct or indirect affiliate of Commonwealth or an
employee of or consultant to Commonwealth (a "Permitted Transferee"). Upon
surrender of this Option to the Company at its principal office or at the office
of its stock transfer agent, if any, with the Assignment Form annexed hereto
duly executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Option in the name of the Permitted
Transferee named in such instrument


                                       3

<PAGE>


of assignment and this Option shall promptly be canceled. This Option may be
divided or combined with other Options which carry the same rights upon
presentation hereof at the principal office of the Company or at the office of
its stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Options are to be issued and signed by the
Holder hereof. The term "Option" as used herein includes any Options into which
this Option may be divided or exchanged. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Option,
and (in the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Option, if
mutilated, the Company will execute and deliver a new Option of like tenor and
date. Any such new Option executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not this Option so
lost, stolen, destroyed, or mutilated shall be at any time enforceable by
anyone.

         (4) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Option and
are not enforceable against the Company except to the extent set forth herein.

         (5) ANTI-DILUTION PROVISIONS.

              (a) Upon exercise of this Option, the terms of the shares of
Preferred Stock and Warrants issuable hereunder shall be adjusted to give effect
to any anti-dilution adjustments which would have been made pursuant to Section
6 of the Certificate of Designation or Section 8 of the Warrant Agreement, as
the case may be, if such shares of Preferred Stock and Warrants had been issued
on the date hereof it being the intent of the parties that the shares of
Preferred Stock and Warrants issuable upon exercise of this Option shall be
convertible into or exercisable for the number of shares of Common Stock or such
other securities, and at an exercise price, as the holder hereof would have
received had this Option been exercised and the Preferred Stock and Warrants
been issued on the date hereof.

              (b) In case the Company shall hereafter (i) declare a dividend or
make a distribution on its outstanding shares of Preferred Stock in shares of
Preferred Stock, (ii) subdivide or reclassify its outstanding shares of
Preferred Stock into a greater number of shares, (iii) combine or reclassify its
outstanding shares of Preferred Stock into a smaller number of shares, (iv)
effect any other reclassification, capital reorganization or change of
outstanding shares of Preferred Stock, (v) consolidate or merge the Company with
or into another corporation (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which does not result in
any reclassification, capital reorganization or other change of outstanding
shares of Preferred Stock) or (vi) sell, lease or convey to another corporation
all or substantially all of the property of the Company (collectively, a
"Transaction"), the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that upon exercise of this Option the
Holder shall receive the kind and amount of securities and property which would
have been received by such

                                        4


<PAGE>


Holder had this Option been exercised, and, if applicable, the Preferred Stock
converted and the Warrants exercised, immediately prior to such Transaction and
the Holder received the benefits conferred on the holders of such securities and
property as a result of such Transaction. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Option.

              (c) If any event or condition occurs as to which other provisions
of this Section 5 are not strictly applicable or if strictly applicable would
not fairly protect the exercise or purchase rights of Options and the Preferred
Stock and Warrants issuable hereunder in accordance with the essential intent
and principles of such provisions, or which might materially and adversely
affect the exercise or purchase rights of the Holder hereunder, then the Company
shall make an adjustment in the application of such provisions, or if necessary
the applicable provisions of the Preferred Stock and Warrants, so as to preserve
without dilution the rights of the Holder. In no event shall any adjustment
under this paragraph 5 have the effect of increasing the Exercise Price of this
Option.

         (6) NOTICES.

              (a) Whenever this Option shall be adjusted as required by the
provisions of the foregoing Section, the Company shall forthwith file in the
custody of its Secretary or an Assistant Secretary at its principal office and
with its stock transfer agent, if any, an officer's certificate showing the
adjustments determined as herein provided, setting forth in reasonable detail
the facts requiring such adjustment and the manner of computing such adjustment.
Each such officer's certificate shall be made available at all reasonable times
for inspection by the Holder and the Company shall, forthwith after each such
adjustment, mail a copy by certified mail of such certificate to the Holder or
any such holder.

              (b) So long as this Option shall be outstanding, (i) if the
Company shall pay any dividend or make any distribution upon the Preferred Stock
or Common Stock or (ii) if the Company shall offer to the holders of Preferred
Stock or Common Stock for subscription or purchase by them any share of any
class or any other rights, (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, or (iv) if the Company is required to notify
the holders of Preferred Stock pursuant to the terms of the Certificate of
Designation or the holders of warrants pursuant to the terms of the Warrant
Agreement or for any reason determines to notify the holders of Preferred Stock
or such warrants, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder, in the case of (i), (ii) or (iii) above, at least
fifteen days prior the date specified in (x) or (y) below, as the case may be, a
notice containing a brief description of the proposed action and stating the
date on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to

                                        5


<PAGE>


be fixed, as of which the holders of Preferred Stock or other securities shall
receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up or in the case of (iv) on the date such notice is sent to the holders
of Preferred Stock or warrants.

         (7) REGISTRATION UNDER THE SECURITIES ACT OF 1933. The Company agrees
to register the Underlying Shares for resale under the Securities Act of 1933,
as amended (the "Act") on the terms and subject to the conditions set forth in
Article IV of the Subscription Agreement between the Company and each of the
investors in the offering contemplated by the Agency Agreement, which
Subscription Agreement is included as Exhibit A to the Confidential Private
Placement Memorandum, dated March 13, 2000, prepared by the Company in
connection with such offering, it being the intent of the parties that the
holder of this Option shall have all the rights of a holder of Securities under
Article IV of the Subscription Agreement and that the Underlying Shares shall be
treated as "Reserved Shares" under Article IV of the Subscription Agreement.

              GOVERNING LAW. This Option shall be governed by and in accordance
with the laws of the State of New York, without giving effect to the principles
of conflicts of law thereof.

                                              PREDICT IT INC.

                                              By: /s/ Andrew P. Merkatz
                                                 ----------------------------
                                              Name:  Andrew P. Merkatz
                                              Title: President and Chief
                                                     Executive Officer

 Dated: April 14, 2000



                                        6


<PAGE>


                                  PURCHASE FORM
                                  -------------

                                                            Dated___________

              The undersigned hereby irrevocably elects to exercise the within
Option to the extent of purchasing _____ Units and hereby

          / / makes payment of $ _____________ in payment of the actual exercise
price thereof

           or

          / / elects to effect an Option Exchange in accordance with Section
1(b) on [DATE].



                     INSTRUCTIONS FOR REGISTRATION OF UNITS
                     --------------------------------------

Name
    ----------------------------------------
 (Please typewrite or print in block letters)

Address
       -------------------------------------

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


<PAGE>


                                 ASSIGNMENT FORM
                                 ---------------

              FOR VALUE RECEIVED, _____________________ hereby sells, assigns
and transfers unto


Name
    -----------------------------------------
(Please typewrite or print in block letters)



Address
       ---------------------------------------

the right to purchase Preferred Stock and Warrants represented by this Option to
the extent of       Units as to which such right is exercisable and does hereby
irrevocably constitute and appoint                as Attorney, to transfer the
same on the books of the Company with full power of substitution in the
premises.

Date
    -------------------------------
Signature
         --------------------------