COMMON STOCK PURCHASE WARRANT

NEITHER THIS WARRANT NOR ANY SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF

THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT

BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE

OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH

ACT EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION AVAILABLE UNDER SUCH ACT

AND, IF REQUESTED, DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO

THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

INTERACTIVE MOTORSPORTS AND ENTERTAINMENT CORPORATION

COMMON STOCK PURCHASE WARRANT

No. 1 Dated: December 31, 2004

Interactive Motorsports and Entertainment Corporation, an Indiana

corporation (the "Company," which term includes any corporation which shall

succeed to or assume the obligations of the Company hereunder), for value

received, hereby certifies that Dolphin Direct Equity Partners, LP, a Delaware

limited partnership (the "Purchaser"), and its registered successors and

permitted assigns (each such successor and assignee, together with the

Purchaser, the "Holder"), is entitled to purchase from the Company up to an

aggregate number of duly authorized, validly issued, fully paid and

nonassessable shares of Common Stock, par value $0.001 per share, of the Company

("Common Stock") equal to the Warrant Shares Amount at a purchase price per

share (the "Warrant Price") equal to $0.10, subject to the terms, conditions and

adjustments set forth below. This Common Stock Purchase Warrant (this "Warrant,"

which term includes all other Common Stock Purchase Warrants issued in

substitution therefor) is being issued to the Purchaser in connection with the

Asset Purchase Agreement. Capitalized terms used in this Warrant and not

otherwise defined herein are defined in Section 15 hereof.

1. Exercise of Warrant.

1.1 Time and Manner of Exercise.

(a) This Warrant shall be exercisable, in whole or in part, at any time,

and from time to time, following the date hereof up until 11:59 p.m., New York

time, on the fifth (5th)anniversary of the date hereof (such time and date, the

"Expiration Date").

(b) Subject to the terms and conditions set forth herein, this Warrant may

be exercised by the Holder, to the extent then exercisable, in whole or in part,

during normal business hours on any Business Day, by surrender of this Warrant

to the Company at its principal office, accompanied by a subscription in

substantially the form attached to this Warrant as Exhibit A duly executed by

the Holder and

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accompanied by payment, by check payable to the order of the Company or by wire

transfer to such account of the Company as the Company shall direct, in the

amount obtained by multiplying (i) the number of shares of Common Stock

designated in such subscription (up to the amount of shares to which the Holder

is entitled to receive at such time upon exercise of this Warrant) by (ii) the

Warrant Price, and the Holder shall thereupon be entitled to receive the full

number of duly authorized, validly issued, fully paid and nonassessable shares

of Common Stock so purchased upon such exercise.

(c) Alternatively, this Warrant may be exercised in the manner set forth in

the preceding paragraph by surrendering this Warrant in exchange for such number

of shares of Common Stock equal to the product of (i) the number of shares of

Common Stock as to which this Warrant is being exercised, multiplied by (ii) a

fraction, the numerator of which is the Market Price (as defined below) of a

share of Common Stock minus the Warrant Price and the denominator of which is

the Market Price for a share of Common Stock (a "Cashless Exercise"). Solely for

the purposes of this Section 1, the "Market Price" shall be calculated either

(A) on the date on which the form of subscription attached hereto is deemed to

have been given to the Company (the "Notice Date") or (B) as the average of the

Market Price for each of the five trading days immediately preceding the Notice

Date, whichever of (A) or (B) results in a greater Market Price; provided,

however, that a Cashless Exercise may only be employed by the Holder if the

Common Stock shall then be publicly quoted in the manner contemplated in the

next sentence. As used herein, the phrase "Market Price" at any date shall be

deemed to be the last reported sale price, or, in case no such reported sale

takes place on such day, the average of the last reported sale prices for the

last three trading days, in either case as officially reported by the principal

securities exchange on which the Common Stock is listed or admitted to trading,

or, if the Common Stock is not listed or admitted to trading on any national

securities exchange, the average closing sale price as furnished by the NASD

through The Nasdaq Stock Market, Inc. ("Nasdaq") or by the OTC Electronic

Bulletin Board or similar organization if Nasdaq is no longer reporting such

information or if the Common Stock is not publicly quoted, as determined in good

faith by resolution of the Board of Directors of the Company, based on the best

information available to it.

1.2 When Exercise Effective. Each exercise of this Warrant shall be deemed

to have been effected immediately prior to the close of business on the Business

Day on which this Warrant shall have been surrendered to the Company as provided

in Section 1.1 hereof. At such time, the Person or Persons, in whose name or

names any certificate or certificates for shares of Common Stock shall be

issuable upon such exercise as provided in Section 1.3 hereof, shall be deemed

to have become the Holder or Holders of record thereof.

1.3 Delivery of Stock Certificates, Etc. As soon as practicable after each

exercise of this Warrant, in whole or in part, and in any event within five

Business Days thereafter, the Company, at its expense (including the payment by

it of any applicable issue taxes), will cause to be issued in the name of, and

delivered to, the Holder or as such Holder (upon payment by such Holder of any

applicable transfer taxes) may direct,

(a) a certificate or certificates for the number of duly authorized,

validly issued, fully paid and nonassessable shares of Common Stock to which

such Holder shall be entitled upon

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such exercise plus, in lieu of any fractional share to which such Holder would

otherwise be entitled, cash in an amount determined in accordance with the

provisions of Section 4 hereof, and

(b) in case such exercise is in part only, a new Warrant of like tenor,

calling in the aggregate on the face thereof for the number of shares of Common

Stock equal to the number of such shares which such Holder would be entitled to

receive at such time upon exercise of this Warrant, after giving effect to such

recent exercise.

2. Adjustments.

2.1 Change in Warrant Shares Amount and Warrant Price. The Warrant Shares

Amount and the Warrant Price shall be subject to adjustment from time to time as

follows:

(a) The "Warrant Shares Amount" shall initially equal 5,161,500.

(b) In case at any time or from time to time the Company shall (i) take a

record of the holders of its Common Stock for the purpose of entitling them to

receive a dividend payable in, or other distribution of, its Common Stock, (ii)

subdivide its outstanding shares of any class or series of Common Stock into a

larger number of any class or series of shares of Common Stock, or (iii) combine

its outstanding shares of any class or series of Common Stock into a smaller

number of shares of any class or series of Common Stock, or (iv) increase or

decrease the number of shares of its capital stock in a reclassification of the

Common Stock (including any such reclassification in connection with a merger,

consolidation or other business combination in which the Company is the

surviving corporation), then in each instance (A) the Warrant Shares Amount in

effect immediately prior to the record date for such dividend or the effective

date of such subdivision or combination shall be adjusted so that the Holder of

this Warrant shall thereafter be entitled to receive the kind and number of

shares of Common Stock that the Holder would have owned or have been entitled to

receive after the happening of any of the events described above, had this

Warrant been exercised immediately prior to the happening of such event or any

record date with respect thereto and (B) the Warrant Price shall be adjusted so

that the aggregate amount payable by the Holder to the Company upon exercise of

this Warrant in full immediately prior to such event shall equal the aggregate

amount payable by the Holder to the Company upon exercise of this Warrant in

full immediately after such event. An adjustment made pursuant to this Section

2.1(b) shall become effective immediately after the effective date of such

event.

(c) Except as provided herein, if the Company shall consolidate or merge

with another corporation, and the Company is the surviving corporation, then the

Holder of this Warrant shall have the right to receive upon exercise of this

Warrant, the number of shares of Common Stock and other property that such

Holder would have been entitled to receive upon or as a result of such

consolidation or merger had this Warrant been exercisable and exercised

immediately prior to such event.

(d) The adjustments required by the preceding subsections of this Section

2.1 shall be made whenever and as often as any specified event requiring an

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adjustment shall occur. For the purpose of any adjustment, any specified event

shall be deemed to have occurred at the close of business on the date of its

occurrence.

(e) In computing adjustments under this Section 2, fractional interests in

Common Stock shall be taken into account to the nearest one-thousandth of a

share.

(f) If the Company shall take a record of the holders of its Common Stock

for the purpose of entitling them to receive a dividend or distribution or

subscription or purchase rights and shall, thereafter and before the

distribution to stockholders thereof, legally abandon its plan to pay or deliver

such dividend, distribution, subscription or purchase rights, then thereafter no

adjustment shall be required by reason of the taking of such record and any such

adjustment previously made in respect thereof shall be rescinded and annulled.

2.2 Notice of Adjustment. Whenever the Warrant Shares Amount is adjusted,

as provided in Section 2.1, the Company shall promptly mail to the Holder

written notice of such adjustment or adjustments and shall deliver to the Holder

a certificate of the chief executive officer or chief financial officer of the

Company setting forth the number of shares of Common Stock issuable, and the

Warrant Price payable, upon the exercise of this Warrant after such adjustment,

setting forth a brief statement of the facts requiring such adjustment and

setting forth the computation by which such adjustment was made; provided that

in the case of any increase in the Warrant Shares Amount pursuant to Section

2.1(a), such written notice of such adjustment and related officer's certificate

shall be delivered to the Holder within five (5) Business Days following the end

of the month with respect to which such adjustment occurred.

2.3 Notice of Certain Corporate Action. In case the Company shall propose

(a) to pay any dividend payable in securities of any class to the holders of the

Common Stock or to make any other distribution to the holders of the Common

Stock, or (b) to offer the holders of the Common Stock rights to subscribe for

or to purchase any securities convertible into shares of Common Stock or shares

of stock of any class or any other securities, rights or options, or (c) to

effect any capital reorganization, consolidation or merger, then, in each such

case, the Company shall give the Holders of this Warrant a written notice of

such proposed action, which shall specify the date on which a record is to be

taken for the purposes of such dividend, distribution or rights, or the date

such issuance is to take place and the date of participation therein by the

holders of Common Stock, if any, is to be fixed, and shall be reasonably

necessary to indicate the effect of such action on the Common Stock and the

number and kind of any other shares of stock and other property, if any, after

giving effect to any adjustment which will be required as a result of such

action. Such notice shall be so given in the case of any action covered by

clause (a) or (b) above at least ten (10) days prior to the record date for

determining holders of the Common Stock for purposes of such action and, in the

case of any other such action, at least twenty (20) Business Days prior to the

date of the taking of such proposed action or the date of participation therein

by the holders of Common Stock, whichever shall be the earlier.

2.4 Statement on Warrant Certificates. Irrespective of any adjustment in

the number or kind of shares issuable upon the exercise of this Warrant, Warrant

certificates theretofore or thereafter issued may continue to express the same

number and kind of shares as are stated in the Warrant certificates initially

issued.

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2.5 Notice to Holders of Dissolution, Liquidation or Winding Up.

Notwithstanding any other provision herein, in the event that, at any time after

the date hereof and prior to the expiration of this Warrant and the termination

of the rights of the Holder, there shall be a voluntary or involuntary

dissolution, liquidation or winding up of the Company, then the Company shall

mail to the Holder at the earliest practicable time (and, in any event, not less

than ten (10) days before any date set for definitive action) written notice of

the date on which such dissolution, liquidation or winding up shall take place,

as the case may be. Such notice shall also specify the date as of which the

holders of the shares of record of Common Stock issuable upon exercise of this

Warrant shall be entitled to exchange their shares for securities, money or

other property deliverable upon such dissolution, liquidation or winding up, as

the case may be, on which date the Holder shall be entitled to receive upon

surrender of this Warrant, the cash or other property that the Holder would have

been entitled to receive had this Warrant been exercisable and exercised

immediately prior to such dissolution, liquidation or winding up and any and all

rights of the Holder to exercise this Warrant shall terminate. In case of any

such voluntary or involuntary dissolution, liquidation or winding up of the

Company, the Company shall, after receipt of the surrendered Warrant, make

payment in appropriate amount to such Person or Persons as it may be directed in

writing by the Holder surrendering the Warrant.

3. No Dilution or Impairment. The Company will not, by amendment of its

certificate of incorporation or through any consolidation, merger,

reorganization, transfer of assets, dissolution, issue or sale of securities or

any other voluntary action, avoid or seek to avoid the observance or performance

of any of the terms of this Warrant, but will at all times in good faith assist

in the carrying out of all such terms and in the taking of all such actions as

may be reasonably necessary or appropriate in order to protect the rights of the

holder of this Warrant against dilution or other impairment. Without limiting

the generality of the foregoing, the Company (a) will not permit the par value

of any share of stock receivable upon the exercise of this Warrant to exceed the

amount payable therefor upon such exercise, and (b) will take all such action as

may be necessary or appropriate (including, without limitation, making

appropriate transfers from the Company's additional paid-in capital to its

stated capital) in order that the Company may validly and legally issue fully

paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

4. Fractional Interests. The Company shall not be required to issue

fractional shares of Common Stock upon the exercise of this Warrant. If any

fraction of shares of Common Stock would be issuable upon the exercise of this

Warrant (or specified portion thereof), the Company shall pay an amount in cash

equal to the fair market value (as determined in good faith by the Company's

Board of Directors) of one (1) share of Common Stock on the Business Day

immediately preceding the date this Warrant is presented for exercise,

multiplied by such fraction.

5. Reservation of Stock, Etc. The Company shall at all times reserve and

keep available, solely for issuance and delivery upon exercise of this Warrant,

the number of shares of Common Stock from time to time issuable upon full

exercise of this Warrant. All shares of Common Stock issuable upon exercise of

this Warrant shall be duly authorized and, when issued upon such exercise, shall

be validly issued, fully paid and nonassessable with no liability on the part of

the holder thereof.

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6. Registration and Transfer of Warrants, Etc.

6.1 Restrictions on Transfer of Warrants and Common Stock. This Warrant and

the Common Stock issuable upon exercise hereof may not be sold, transferred or

otherwise disposed of unless registered under the Securities Act of 1933 (the

"Securities Act"), and any applicable state securities laws or pursuant to

available exemptions from such registration, provided that the seller, if

requested by Company, delivers to the Company an opinion of counsel reasonably

satisfactory to the Company confirming the availability of such exemption.

Unless the shares of Common Stock issuable upon exercise hereof have been

registered under the Securities Act, upon exercise of this Warrant and the

issuance of any of the shares of Common Stock, all certificates representing

such securities shall bear on the face thereof substantially the following

legend:

"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED

FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE

ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH

RESPECT TO THE SECURITIES UNDER SUCH ACT EXCEPT

PURSUANT TO AN EXEMPTION FROM REGISTRATION AVAILABLE

UNDER SUCH ACT AND, IF REQUESTED, DELIVERY OF AN

OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE

COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

6.2 Warrant Register; Ownership of Warrants. The Company shall keep at its

principal office a register in which the Company shall provide for the

registration of this Warrant and the registration of transfers of this Warrant.

The Company may treat the Person in whose name this Warrant is registered on

such register as the owner thereof for all other purposes, and the Company shall

not be affected by any notice to the contrary, except that, if and when this

Warrant is accompanied by an instrument of assignment in substantially the form

attached hereto as Exhibit B, the Company may (but shall not be obligated to)

treat the bearer thereof as the owner of this Warrant for all purposes. This

Warrant, if properly assigned, may be exercised by a new Holder without a new

Warrant first having been issued.

6.3 Transfer and Exchange of Warrants. Upon surrender of this Warrant for

registration of transfer or for exchange to the Company at its principal office,

the Company at its expense shall execute and deliver in exchange therefor a new

Warrant or Warrants of like tenor, in the name of the Holder or as the Holder

(upon payment by the Holder of any applicable transfer taxes) may direct,

calling in the aggregate on the face or faces thereof for the number of shares

of Common Stock called for on the face or faces of the Warrant or Warrants so

surrendered.

6.4 Replacement of Warrants. Upon receipt of evidence reasonably

satisfactory to the Company of the loss, theft, destruction or mutilation of

this Warrant, and upon delivery to the Company of an indemnity agreement

reasonably acceptable to the Company, the Company at its expense shall execute

and deliver, in lieu thereof, a new Warrant of like tenor.

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7. Remedies. The Company stipulates that the remedies at law of the Holder

of this Warrant, in the event of any default or threatened default by the

Company in the performance of or compliance with any of the terms of this

Warrant, are not and will not be adequate and that, to the fullest extent

permitted by law, such terms may be specifically enforced by a decree for the

specific performance of any agreement contained herein or by an injunction

against a violation of any of the terms hereof or otherwise.

8. No Rights or Liabilities a