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                               STATE OF DELAWARE

                        OFFICE OF THE SECRETARY OF STATE

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

         I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "PREDICT IT INC.", FILED IN THIS OFFICE ON THE TENTH DAY OF
APRIL, A.D. 2000, AT 4:30 O'CLOCK P.M.

         A FILE COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.

                [SEAL OF THE SECRETARY OF THE STATE OF DELAWARE]

                                          /s/ Edward J. Freel
                                          --------------------------------------
                                          Edward J. Freel, Secretary of State

2578786 8100                                            AUTHENTICATION: 0374349

001184150                                                         DATE: 04/11/00

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                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                       AND RIGHTS OF SERIES B CONVERTIBLE
                                PREFERRED STOCK

                                      -OF-

                                PREDICT IT INC.

         Predict It Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), by its President and Secretary, does
hereby certify that, pursuant to authority conferred upon the Board of Directors
by Article Fourth of the Certificate of Incorporation, as amended, of the
Company, authorizing a class of 5,000,000 shares of preferred stock of the
Company, the Board of Directors of the Company, by unanimous written consent,
has duly adopted resolutions providing for the issuance out of such class of a
series of up to 1,440,000 shares of Series B Convertible Preferred Stock and
setting forth the voting powers, designation, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions thereof, with resolution is as follows:

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Certification
of Incorporation, as amended, there be, and hereby is, created out of the class
of 5,000,000 shares of preferred stock of the Company authorized in Article
Fourth of its Articles of Incorporation, as amended, a series of preferred stock
of the Company with the following voting powers, designation, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions:

         1. Designation and Number of Shares. 1,440,000 shares of preferred
stock (the "Shares") are hereby designated as Series B Convertible Preferred
Stock (the "Series B Preferred Stock").

         2. Liquidation. Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary ("Liquidation"), the holders of record
of the shares of the Series B Preferred Stock shall be entitled to receive,
before and in preference to any distribution or payment of assets of the Company
or the proceeds thereof may be made or set apart for the holders of Common Stock
of the Company, par value $0.01 per share (the "Common Stock") or any other
security junior to the Series B Preferred Stock in respect of distributions upon
Liquidation out of the assets of the Company legally available for distribution
to its stockholders, an amount in cash equal to the $30.00 per share (subject to
adjustment if the Series B Preferred Stock has been adjusted pursuant to
Paragraph 6 hereof) (the "Liquidation Amount") plus an

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amount equal to accrued and unpaid dividends on each share of Series B Preferred
Stock on the date fixed for the distribution of assets of the Company (the
"Liquidation Preference"). The merger or sale of all or substantially all of the
assets of the Company and the resulting conversion of the Series B Preferred
Stock into Common Stock pursuant to Section 4(B) shall not be deemed a
Liquidation.

         3. Dividends. Subject to the rights of any other series of Preferred
Stock that may from time to time come into existence, the holders of shares of
Series B Preferred Stock shall be entitled to receive dividends, out of any
assets legally available therefor, ratably with any declaration or payment of
any dividend with holders of the Series A Preferred Stock, Common Stock or other
junior securities of the Corporation, when, as and if declared by the Board of
Directors, based on the number of shares of Common Stock into which each share
of Series B Convertible Preferred Stock is then convertible.

         4. Conversion Rights. Each holder of record of shares of the Series B
Preferred Stock shall have the right to convert all or any part of such holder's
share of Series B Preferred Stock into Common Stock as follows:

         (A) Optional Conversion. Subject to and upon compliance with the
provisions of this Section 4, the holder of any shares of Series B Preferred
Stock shall have the right at such holder's option, at any time or from time to
time, to convert any of such shares of Series B Preferred Stock into the number
of fully paid and nonassessable shares of Common Stock (the "Conversion Shares")
as is determined pursuant to Section (4)(c) below.

         (B) Automatic Conversion. Each outstanding share of Series B Preferred
Stock shall automatically be converted, without any further act of the
Corporation or its stockholders, into fully paid and nonassessable shares of
Common Stock at the Conversion Price then in effect upon: (1) the closing of a
public offering or private placement of the Company's securities raising gross
proceeds in excess of $15 million at a per share price of more than $4.00, as
adjusted, for any stock split, stock dividend, recapitalization or other similar
transactions (a "Qualified Offering"); (ii) the closing of a merger or
consolidation of the Company with or into another entity or a sale of all or
substantially all of the assets of the Company or the purchase by a single
entity or person or group of affiliated entities or persons of more than 50% of
the voting stock of the Company; or (iii) at such time as the closing bid or
sales price, as applicable, for the Common Stock of the Company has equaled at
least four times the Conversion Price for a period of 20 consecutive trading
days, provided that the Common Stock of the Company is trading on a national
securities exchange, the Nasdaq SmallCap or National Market System, and the
Conversion Shares are fully registered for resale and not subject to any lock-up
provisions.

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         (C) Conversion Price. Each share of the Series B Preferred Stock shall
be convertible into that number of fully paid and non-assessable shares of
Common Stock of the Company equal to $10.00 divided by the conversion price in
effect at the time of conversion (the "Conversion Price"), determined as
hereinafter provided. The Conversion Price shall initially be $1.00 per share.
The number of shares of Common Stock into which each share of Preferred Stock is
convertible is herein referred to as the "Conversion Rate" and the number of
shares of Common Stock into which all the outstanding shares of the Series B
Preferred Stock are convertible into are referred to herein as the "Conversion
Shares." The Conversion Price shall be subject to adjustment as set forth in
Section 6 hereof.

         (D) Mechanics of Conversion. Before any holder of Series B Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Company or of any transfer agent for the Series B Preferred
Stock, and shall give written notice to the Company at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. The Company shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series B Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Conversion shall be deemed to have been effected on the date when delivery of
notice of an election to convert and certificates for shares is made or on the
date of the occurrence of the event specified in Section 5(B), as the case may
be, and such date is referred to herein as the "Conversion Date." All Common
Stock which may be issued upon conversion of the Series B Preferred Stock will,
upon issuance, be duly issued, fully paid and non-assessable and free from all
taxes, liens, and charges with respect to the issuance thereof. At all times
that any shares of Series B Preferred Stock are outstanding, the Company shall
have authorized and shall have reserved for the purpose of issuance upon such
conversion into Common Stock of all Series B Preferred Stock, a sufficient
number of shares of Common Stock to provide for the conversion of all
outstanding shares of Series B Preferred Stock at the then effective Conversion
Rate. Without limiting the generality of the foregoing, if, at any time, the
Conversion Price is decreased, the number of shares of Common Stock authorized
and reserved for issuance upon the conversion of the Series B Preferred Stock
shall be proportionately increased.

         5. Priority. The Company may issue, in the future, without the consent
of holders of the Series B Preferred Stock, other series of preferred stock
which rank junior to the Series B Preferred Stock as to dividend and/or
liquidation rights. In accordance with Paragraph 7(C) hereof, the consent of the
holders of a majority of the outstanding shares of the Series B

                                 -3-

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Preferred Stock is required for the issuance of any series of preferred
stock which is senior or pari passu as to dividend and/or liquidation
rights to the Series B Preferred Stock.

         6. Anti-Dilution Provisions. The Conversion Price in effect at any time
and the number and kind of securities issuable upon the conversion of the Series
B Preferred Stock shall be subject to adjustment from time to time upon the
happening of certain events as follows:

         (A) In case the Company shall hereafter (i) declare a dividend or make
a distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Conversion Price in
effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by multiplying the
Conversion Price by a fraction, the denominator of which shall be the number of
shares of Common Stock outstanding after giving effect to such action, and the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such action. Such adjustment shall be made successively
whenever any event listed above shall occur.

         (B) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (the "Subscription Price") (or having a conversion
price per share) less than the current market price on such record date, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the date of such issuance by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding on the record date mentioned
below and the number of additional shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered (or the
aggregate conversion price of the convertible securities so offered) would
purchase at such current market price per share of the Common Stock, and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of additional shares of Common
Stock offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such rights or warrants are issued and shall become
effective -4-

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immediately after the record date for the determination of shareholders entitled
to receive such rights or warrants; and to the extent that shares of Common
Stock are not delivered (or securities convertible into Common Stock are not
delivered) after the expiration of such rights or warrants the Conversion Price
shall be readjusted to the Conversion Price which would then be in effect had
the adjustments made upon the issuance of such rights or warrants been made upon
the basis of delivery of only the number of shares of Common Stock (or
securities convertible into Common Stock) actually delivered.

         (C) In case the Company shall hereafter distribute to the holders of
its Common Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions and dividends or distributions referred to in
Subsection (A) above) or subscription rights or warrants (excluding those
referred to in Subsection (B) above), then in each such case the Conversion
Price in effect thereafter shall be deteremined by multiplying the Conversion
Price in effect immediately prior thereto by a fraction, the numerator of which
shall be a total number of shares of Common Stock outstanding multiplied by the
current market price (as defined in Subsection (H) below) per share of Common
Stock, less the fair market value (as determined by the Company's Board of
Directors) of said assets or evidences of indebtedness so distributed or of such
rights or warrants, and the denominator of which shall be the total number of
shares of Common Stock outstanding multiplied by such current market price per
share of Common Stock. Such adjustment shall be made successively whenever such
record date is fixed. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive such
distribution.

         (D) In case the Company shall hereafter issue shares of its Common
Stock (excluding shares issued (i) in any of the transactions described in
Subsection (A) above, (ii) upon exercise of options granted to the Company's
officers, directors, employees and consultants under a plan or plans adopted by
the Company's Board of Directors and approved by its shareholders, if such
shares would otherwise be included in this Subsection (D), (but only to the
extent that the aggregate number of shares excluded hereby and issued after the
date hereof, shall not exceed 20% of the Company's Common Stock outstanding, on
a fully diluted basis, at the time of any issuance), (iii) upon exercise of
options, warrants, convertible securities and convertible debentures outstanding
as of the final closing of the Offering (as defined in the Agency Agreement
between the Company and Commonwealth Associates, L.P., dated April , 2000), (iv)
to shareholders of any corporation which merges into the Company in proportion
to their

                                  - 5 -

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stock holdings of such corporation immediately prior to such merger, upon such
merger, (v) in a private placement through Commonwealth Associates, L.P., as
placement agent, or upon exercise or conversion of any securities issued in or
in connection with such a private placement (including agent, consulting or
advisory warrants), (vi) in a private placement where the Offering Price (as
defined below) is at least 90% of the current market price, (vii) issued in a
bona fide public offering pursuant to a firm commitment underwriting, or (viii)
issued in connection with an acquisition of a business or technology which has
been approved by a majority of the Company's outside directors but only if no
adjustment is required pursuant to any other specific subsection of this Section
6 (without regard to Subsection (I) below) with respect to the transaction
giving rise to such rights) for a consideration per share (the "Offering Price")
less than the current market price, the Conversion Price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares and the number of shares of Common Stock which the aggregate
consideration received for the issuance of such additional shares would purchase
at such current market price per share of Common Stock, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.

         (E) In case the Company shall hereafter issue any securities
convertible into or exchangeable for its Common Stock (excluding securities
issued in transactions described in Subsections (B), (C) and (D)(i) through
(viii) above) for a consideration per share of Common Stock (the "Exchange
Price") initially deliverable upon conversion or exchange of such securities
(determined as provided in Subsection (G) below) less than the current market
price, the Conversion Price shall be adjusted immediately thereafter so that it
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately prior to the
issuance of such securities and the number of shares of Common Stock which the
aggregate consideration received for such securities would purchase at such
current market price per share of Common Stock, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
prior to such issuance and the maximum number of shares of Common Stock of the
Company deliverable upon conversion of

                                     -6-

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or in exchange for such securities at the initial conversion or exchange price
or rate. Such adjustment shall be made successively whenever such an issuance is
made.

         (F) Whenever the Conversion Price is adjusted pursuant to Subsections
(A), (B), (C), (D) and (E) above and (J) below, the number of Conversion Shares
issuable upon conversion of the Series B Preferred Stock shall simultaneously be
adjusted by multiplying the number of Conversion Shares initially issuable upon
conversion of the Series B Preferred Stock by the Conversion Price in effect on
the date hereof and dividing the product so obtained by the Conversion Price, as
adjusted.

         (G) For purposes of any computation respecting consideration received
pursuant to Subsections (D) and (E) above and (J) below, the following shall
apply.

                  (i) in the case of the issuance of shares of Common Stock for
         cash, the consideration shall be the amount of such cash, provided that
         in no case shall any deduction be made for any commissions, discounts
         or other expenses incurred by the Company for any underwriting of the
         issue or otherwise in connection therewith;

                  (ii) in the case of the issuance of shares of Common Stock for
         a consideration in whole or in part other than cash, the consideration
         other than cash shall be deemed to be the fair market value thereof as
         determined in good faith by the Board of Directors of the Company
         (irrespective of the accounting treatment thereof), whose determination
         shall be conclusive; and

                  (iii) in the case of the issuance of securities convertible
         into or exchangeable for shares of Common Stock, the aggregate
         consideration received therefor shall be deemed to be the consideration
         received by the Company for the issuance of such securities plus the
         additional minimum consideration, if any, to be received by the Company
         upon the conversion or exchange thereof (the consideration in each case
         to be determined in the same manner as provided in clauses (A) and (B)
         of this Subsection (G)). Upon the expiration or termination of any such
         securities convertible into or exchangeable for shares of Common Stock,
         the Conversion Price shall be automatically readjusted to the
         Conversion Price that would have been obtained had such convertible or
         exchangeable securities not been issued.

                                       -7-

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         (H) For the purpose of any computation under Subsection (C) above, the
current market price per share of Common Stock at any date 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, the current market price per share of Common Stock at
                  any date shall be the higher of (a) the average of the last
                  reported sales prices of the Common Stock on such exchange for
                  the 20 consecutive trading days before such date, and (b) the
                  last reported sales price on the trading day immediately
                  preceding such date; provided that if no such sale is made on
                  a day within such period or no closing sale price is quoted,
                  that day's market price 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 price per share of Common Stock on
                  any date shall be the higher of (a) the average of the closing
                  bid and asked prices for the 20 consecutive trading days
                  before such date on such market, and (b) the last reported bid
                  price on the trading day immediately preceding such date on
                  such market, and if the Common Stock is not so traded, the
                  current market price per shares of Common Stock on any date
                  shall be the higher of (x) the mean of the last reported bid
                  and asked prices reported by the NASD Over the Counter
                  Bulletin Board for the 20 consecutive trading days before such
                  date, and (y) the last reported bid price on the trading day
                  immediately preceding such date reported by the NASD Over the
                  Counter Bulletin Board; 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 price per share of Common Stock
                  on any date shall be an amount

                                     -8-

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                  determined in a reasonable manner by the Board of Directors of
                  the Company.

         (I) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments which by reason of this
Subsection (I) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made hereunder. All
calculations under this Section 6 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. Anything in this Section 6
to the contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the Conversion Price, in addition to those
required by this Section 6, as it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in shares of Common Stock,
or any subdivision, reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any Federal Income tax liability to the
holders of Common Stock or securities convertible into Common Stock.

         (J) Notwithstanding the provisions of this Section 6, in the event that
the Company shall at any time issue securities under Subsections (B), (D) or (E)
(other than securities issued in transactions described in subsection (D)(i)
through (viii) above) having an Offering Price, Subscription Price or Exchange
Price less than the Conversion Price, then the Conversion Price shall be
immediately reset to equal such lower Offering Price, Subscription Price or
Exchange Price. Furthermore, in the event that the average closing bid or sales
price, as applicable, of the Common Stock for the 20 consecutive trading days
immediately prior to the second anniversary of the final closing of the Private
Placement is less than the Conversion Price, the Conversion Price shall be
immediately reset to equal such average closing bid or sales price, as
applicable.

         (K) No adjustment under Subsections (B), (C), (D) or (E) shall be
required for issuances below the current market price if either (i) the current
market price is at least 300% of the Conversion Price then in effect and (ii) a
registration statement covering the Conversion Shares is in effect and remains
in effect for the 90 days after such issuance or Rule 144(k) under the
Securities Act of 1933, as amended (the "Act") is available for resale of all of
the Conversion Shares. Furthermore, no adjustment under Subsections (B), (C),
(D), (E) or (J) shall be required unless either (i) the shareholders of the
Company have approved the terms of this Designation or

                                     -9-

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(ii) such adjustments will not result in a violation of any qualitative listing
criteria of The Nasdaq Stock Market, Inc.

         (L) Whenever the Conversion Price is adjusted, as herein provided, the
Company shall promptly but no later than 10 days after any request for such an
adjustment by the Holder, cause a notice setting forth the adjusted Conversion
Price and adjusted number of Conversion Shares issuable upon exercise of each
share of Series B Preferred Stock, and, if requested, information describing the
transactions giving rise to such adjustments, to be mailed to the Holders at
their last addresses appearing in the Share Register, and shall cause a
certified copy thereof to be mailed to its transfer agent, if any. The Company
may retain a firm of independent certified public accountants selected by the
Board of Directors (who may be the regular accountants employed by the Company)
to make any computation required by this Section 6, and a certificate signed by
such firm shall be conclusive evidence of the correctness of such adjustment,
absent manifest error.

         (M) In the event that at any time, as a result of an adjustment made
pursuant to Subsection (A) above, the Holders of the Series B Preferred Stock
thereafter shall become entitled to receive any shares of the Company, other
than Common Stock, thereafter the number of such other shares so receivable upon
conversion of the Series B Preferred Stock shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Subsections (A) to (J),
inclusive above.

         7. Voting Rights

         (A) In addition to any other rights provided for herein or by law, the
holders of Series B Preferred Stock shall be entitled to vote, together with the
holders of Common Stock as one class, on all matters as to which holders of
Common Stock shall be entitled to vote, in the same manner and with the same
effect as such Common Stock holders. In any such vote each share of Series B
Preferred Stock shall entitle the holder thereof to the number of votes per
share that equals the number of whole shares of Common Stock into which each
such share of Series B Preferred Stock is then convertible, calculated to the
nearest whole share.

                                  -10-

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         (B) In the event the holders of the Series B Preferred Stock are
required to vote as a class, the affirmative vote of holders of not less than a
majority of the outstanding shares of Series B Preferred Stock shall be required
to approve each such matter to be voted upon and if any matter is approved by
such requisite percentage of holders of Series B Preferred Stock, such matter
shall bind all holders of Series B Preferred Stock.

         (C) So long as any shares of Series B Preferred Stock remain
outstanding, the consent of the holders of a majority of the then outstanding
Series B Preferred Stock, voting as one class, together with any other series of
preferred stock then entitled to vote on such matter, regardless of series,
either expressed in writing or at a meeting called for that purpose, shall be
necessary to permit, effect or validate the creation and issuance of any series
of preferred stock of the Company which is senior or pari passu as to
liquidation and/or dividend rights to the Series B Preferred Stock.

         (D) So long as any shares of Series B Preferred Stock remain
outstanding, the consent of a majority of the holders of the then outstanding
Series B Preferred Stock, voting as one class, either expressed in writing or at
a meeting called for that purpose, shall be necessary to repeal, amend or
otherwise change this Certificate of Designation, Preferences and Rights or the
Articles of Incorporation of the Company, as amended, in a manner which would
alter or change the powers, preferences, rights privileges, restrictions and
conditions of the Series B Preferred Stock so as to adversely affect the
Preferred Stock.

         (E) Each share of the Series B Preferred Stock shall entitle the holder
thereof to one vote on all matters to be voted on by the holders of the Series B
Preferred Stock, as set forth above.

         8. Covenants of Company. The Company covenants and agrees that, so long
as the Shares are outstanding, it will perform the obligations set forth in this
Section 8:

         (A) Maintenance of Existence. The Company will do or cause to be done
all things reasonably necessary to preserve and keep in full force and effect
its corporate existence, rights and franchises and comply with all laws
applicable to the Company, except where the failure to comply would not have a
material adverse effect on the Company;

                                  -11-

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         (B) Maintenance of Property. The Company will at all times maintain,
preserve, protect and keep its property used or useful in the conduct of its
business in good repair, working order and condition, and from time to time make
all needful and proper repairs, renewals, replacements and improvements thereto
as shall be reasonably required in the conduct of its business;

         (C) Insurance. The Company will, to the extent necessary for the
operation of its business, keep adequately insured by financially sound
reputable insurers, all property of a character usually insured by similar
corporation and carry such other insurance as is usually carried by similar
corporations

         (D) Books and Records. The Company will at all times keep true and
correct books, records and accounts reflecting all of its business affairs and
transactions in accordance with GAAP; and;

         9. Rank

         The Series B Preferred Stock shall rank: (i) junior to any other class
or series of capital stock of the Corporation hereafter created specifically
ranking by its terms senior to the Series B Preferred Stock (the "Senior
Securities"); (ii) prior to all of the Corporation's Common Stock; (iii) prior
to any class or series of capital stock of the Corporation hereafter created not
specifically ranking by its terms senior to or on parity with the Series B
Preferred Stock (collectively, with the Common Stock, "Junior Securities"); and
(iv) on parity with the Series A Preferred Stock of the Corporation and any
class or series of capital stock of the Corporation hereafter specifically
ranking by its terms on parity with the Series B Preferred Stock (the "Parity
Securities"), in each case as to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation.

         (10) Miscellaneous.

         (A) There is no sinking fund with respect to the Series B Preferred
Stock.

         (B) The shares of the Series B Preferred Stock shall not have any
preferences, voting powers or relative, participating, optional, preemptive or
other special rights except as set forth

                                -12-

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         (C) The holders of the Series B Preferred Stock shall be entitled to
receive all communications sent by the Company to the holders of the Common
Stock.

         IN WITNESS WHEREOF: Predict It Inc. has caused this Certificate to be
signed by its Chief Executive Officer, on this 10th day of April, 2000, and such
person hereby affirms under penalty of perjury that this Certificate is the act,
and deed of Predict It Inc. and that the facts stated herein are true and
correct.

                                  PREDICT IT INC.

By: /s/ Andrew Merkatz;

    Andrew Merkatz
    Chief Executive Officer

Attest:

/s/ Robert Jacob, SVP

Robert Jacob
Senior Vice President<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
         --------------------------

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