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                                                                     EXHIBIT 4.3

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT dated as of May 14, 2001 ("SECURITY
AGREEMENT"), is made by INTERNET PICTURES CORPORATION, a Delaware corporation
("GRANTOR"), in favor of IMAGE INVESTOR PORTFOLIO, a separate series of MEMPHIS
ANGELS, LLC, a Delaware limited liability company ("SECURED PARTY").

                                    RECITALS

         A. Secured Party has made and has agreed to make certain advances of
money and to extend certain financial accommodation to Grantor as evidenced by
that certain Convertible Promissory Note (the "NOTE") dated as of the date
hereof executed by Grantor in favor of Secured Party (collectively, the
"LOANS").

         B. Secured Party is willing to make the Loans to Grantor, but only upon
the condition, among others, that Grantor shall have executed and delivered to
Secured Party this Security Agreement.

                                    AGREEMENT

         NOW, THEREFORE, in order to induce Secured Party to make the Loans and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Grantor hereby
represents, warrants, covenants and agrees as follows:

         1. DEFINED TERMS. When used in this Security Agreement the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and plural forms of the terms defined):

         "COLLATERAL" shall have the meaning assigned to such term in Section 2
of this Security Agreement.

         "CONTRACTS" means all contracts (including any customer, vendor,
supplier, service or maintenance contract), leases, licenses, undertakings,
purchase orders, permits, franchise agreements or other agreements (other than
any right evidenced by Chattel Paper, Documents or Instruments), whether in
written or electronic form, in or under which Grantor now holds or hereafter
acquires any right, title or interest, including, without limitation, with
respect to an Account, any agreement relating to the terms of payment or the
terms of performance thereof.

         "COPYRIGHT LICENSE" means any agreement, whether in written or
electronic form, in which Grantor now holds or hereafter acquires any interest,
granting any right in or to any Copyright or Copyright registration (whether
Grantor is the licensee or the licensor thereunder) including, without
limitation, licenses pursuant to which Grantor has obtained the exclusive right
to use a copyright owned by a third party.

         "COPYRIGHTS" means all of the following now owned or hereafter acquired
or created (as a work for hire for the benefit of Grantor) by Grantor or in
which Grantor now holds or hereafter acquires or receives any right or interest,
in whole or in part: (a) all copyrights, whether registered or unregistered,



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held pursuant to the laws of the United States, any State thereof or any other
country; (b) registrations, applications, recordings and proceedings in the
United States Copyright Office or in any similar office or agency of the United
States, any State thereof or any other country; (c) any continuations, renewals
or extensions thereof; (d) any registrations to be issued in any pending
applications, and shall include any right or interest in and to work protectable
by any of the foregoing which are presently or in the future owned, created or
authorized (as a work for hire for the benefit of Grantor) or acquired by
Grantor, in whole or in part; (e) prior versions of works covered by copyright
and all works based upon, derived from or incorporating such works; (f) income,
royalties, damages, claims and payments now and hereafter due and/or payable
with respect to copyrights, including, without limitation, damages, claims and
recoveries for past, present or future infringement; (g) rights to sue for past,
present and future infringements of any copyright; and (h) any other rights
corresponding to any of the foregoing rights throughout the world.

         "EVENT OF DEFAULT" means (i) any failure by Grantor forthwith to pay or
perform any of the Secured Obligations within the cure period, if any,
applicable thereto, (ii) any report, information or notice made to, obtained or
received by Secured Party at any time after the date hereof indicating that
Secured Party's security interest is not prior to all other security interests
or other interests reflected in such report, information or notice, (iii) any
breach by Grantor of any warranty, representation, or covenant set forth herein,
and (iv) any "Event of Default" as defined in the Note.

         "LICENSE" means any Copyright License, Patent License, Trademark
License or other license of rights or interests, whether in-bound or out-bound,
whether in written or electronic form, now or hereafter owned or acquired or
received by Grantor or in which Grantor now holds or hereafter acquires or
receives any right or interest, and shall include any renewals or extensions of
any of the foregoing thereof.

         "LIEN" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.

         "PATENT LICENSE" means any agreement, whether in written or electronic
form, in which Grantor now holds or hereafter acquires any interest, granting
any right with respect to any invention on which a Patent is in existence
(whether Grantor is the licensee or the licensor thereunder).

         "PATENTS" means all of the following in which Grantor now holds or
hereafter acquires any interest: (a) all letters patent of the United States or
any other country, all registrations and recordings thereof and all applications
for letters patent of the United States or any other country, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country; (b)all reissues, divisions,
continuations, renewals, continuations-in-part or extensions thereof; (c) all
petty patents, divisionals and patents of addition; (d) all patents to issue in
any such applications; (e) income, royalties, damages, claims and payments now
and hereafter due and/or payable with respect to patents, including, without


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limitation, damages, claims and recoveries for past, present or future
infringement; and (f) rights to sue for past, present and future infringements
of any patent.

         "PERMITTED LIEN" shall have the meaning set forth in that certain
Securities Purchase Agreement dated of even date herewith between Grantor and
Secured Party (the "PURCHASE AGREEMENT").

         "REVISED ARTICLE 9" has the meaning set forth in Section 3.

         "SECURED OBLIGATIONS" means (a) the obligation of Grantor to repay
Secured Party all of the unpaid principal amount of, and accrued interest on
(including any interest that accrues after the commencement of bankruptcy), the
Loans, (b) the obligation of Grantor to pay any fees, costs and expenses of
Secured Party under the Note or under Section 7(d) hereof and (c) all other
indebtedness, liabilities and obligations of Grantor to Secured Party, whether
now existing or hereafter incurred, and whether created under, arising out of or
in connection with any Document (as defined in the Purchase Agreement) or any
other written agreement or otherwise.

         "SECURITY AGREEMENT" means this Security Agreement and all Schedules
hereto, as the same may from time to time be amended, modified, supplemented or
restated.

         "TRADEMARK LICENSE" means any agreement, whether in written or
electronic form, in which Grantor now holds or hereafter acquires any interest,
granting any right in and to any Trademark or Trademark registration (whether
Grantor is the licensee or the licensor thereunder).

         "TRADEMARKS" means any of the following in which Grantor now holds or
hereafter acquires any interest: (a) any trademarks, tradenames, corporate
names, company names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof and any applications in connection therewith, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country (collectively, the "MARKS"); (b)
any reissues, extensions or renewals thereof; (c) the goodwill of the business
symbolized by or associated with the Marks; (d) income, royalties, damages,
claims and payments now and hereafter due and/or payable with respect to the
Marks, including, without limitation, damages, claims and recoveries for past,
present or future infringement; and (e) rights to sue for past, present and
future infringements of the Marks.

         "UCC" means the Uniform Commercial Code as the same may from time to
time be in effect in the State of Delaware (and each reference in this Security
Agreement to an Article thereof (denoted as a Division of the UCC as adopted and
in effect in the State of Delaware) shall refer to that Article (or Division, as
applicable) as from time to time in effect, which in the case of Article 9 shall
include and refer to Revised Article 9 from and after the date Revised Article 9
shall become effective in the State of Delaware); PROVIDED, HOWEVER, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Secured Party's security interest in any

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Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Delaware, the term "UCC" shall mean the
Uniform Commercial Code (including the Articles thereof) as in effect at such
time in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.

         In addition, the following terms shall be defined terms having the
meaning set forth for such terms in the UCC: "Account" (including
health-care-insurance receivables), "Account Debtor", "Chattel Paper" (including
tangible and electronic chattel paper), "Commercial Tort Claims", "Commodity
Account", "Deposit Account", "Documents", "Equipment" (including all accessions
and additions thereto), "Fixtures", "General Intangible" (including payment
intangibles and software), "Instrument", "Intellectual Property", "Inventory"
(including all goods held for sale or lease or to be furnished under a contract
of service, and including returns and repossessions), "Investment Property"
(including securities and securities entitlements), "Letter-of-Credit Right"
(whether or not the letter of credit is evidenced by a writing), "Payment
Intangibles", "Proceeds", "Promissory Notes", "Securities Account", and
"Supporting Obligations". Each of the foregoing defined terms shall include all
of such items now owned, or hereafter acquired, by Grantor.

         All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings given to them in the Purchase Agreement.

         2. GRANT OF SECURITY INTEREST. As collateral security for the full,
prompt, complete and final payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all the Secured Obligations and in
order to induce Secured Party to cause the Loans to be made, Grantor hereby
assigns, conveys, mortgages, pledges, hypothecates and transfers to Secured
Party, and hereby grants to Secured Party, a security interest in all of
Grantor's right, title and interest in, to and under the following, whether now
owned or hereafter acquired, (all of which being collectively referred to herein
as the "COLLATERAL"):

                  (a) All Accounts of Grantor;

                  (b) All Chattel Paper of Grantor;

                  (c) All Commercial Tort Claims of Grantor;

                  (d) All Contracts of Grantor;

                  (e) All Deposit Accounts of Grantor;

                  (f) All Documents of Grantor;

                  (g) All Equipment of Grantor;

                  (h) All Fixtures of Grantor;

                  (i) All General Intangibles of Grantor, including, without
limitation, Payment Intangibles, all Copyrights, Patents, Trademarks, Licenses,
designs, drawings, technical information, marketing plans, customer lists, trade


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secrets, proprietary or confidential information, inventions (whether or not
patentable), procedures, know-how, models and data;

                  (j) All Instruments of Grantor, including, without limitation,
Promissory Notes;

                  (k) All Inventory of Grantor;

                  (l) All Investment Property of Grantor;

                  (m) All Letter-of Credit Rights of Grantor;

                  (n) All Supporting Obligations of Grantor;

                  (o) All property of Grantor held by Secured Party, or any
other party for whom Secured Party is acting as agent hereunder, including,
without limitation, all property of every-description now or hereafter in the
possession or custody of or in transit to Secured Party or such other party for
any purpose, including, without limitation, safekeeping, collection or pledge,
for the account of Grantor, or as to which Grantor may have any right or power;

                  (p) All other goods and personal property of Grantor, wherever
located, whether tangible or intangible, and whether now owned or hereafter
acquired, existing, leased or consigned by or to Grantor; and

                  (q) To the extent not otherwise included, all Proceeds of each
of the foregoing and all accessions to, substitutions and replacements for and
rents, profits and products of each of the foregoing.

         Notwithstanding the above, Grantor's interest in the assets described
in Exhibit "A" attached hereto and incorporated herein by reference shall not
constitute Collateral.

         This Security Agreement also does not include any obligation described
above which is secured by a consensual lien on real property.

         3. REVISED ARTICLE 9. The parties acknowledge that revised Article 9 of
the Uniform Commercial Code in the form approved by the American Law Institute
and the National Conference of Commissioners on Uniform State Law and contained
in the 1999 official text of Revised Article 9 ("REVISED ARTICLE 9") has been
adopted in the States of California, Tennessee and Delaware and elsewhere and
hereby agree to the following provisions of this Security Agreement in
anticipation of the possible application thereof, in one or more jurisdictions,
to the transactions contemplated hereby.

                  (a) In applying the law of any jurisdiction in which Revised
Article 9 is in effect, the Collateral is all assets of Grantor described in
Section 2, whether or not within the scope of Revised Article 9. The Collateral
shall include the following categories of assets as defined in Revised Article
9: goods (including inventory, equipment and any accessions thereto),
instruments (including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, general intangibles (including payment on
intangibles and software), supporting obligations and any and all proceeds of



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any thereof, wherever located, whether now owned or hereafter acquired. If
Grantor shall at any time, whether or not Revised Article 9 is in effect in any
particular jurisdiction, acquire a commercial tort claim, as defined in Revised
Article 9, Grantor shall promptly notify Secured Party in a writing signed by
Grantor of the brief details thereof and grant to Secured Party in such writing
a security interest therein and in the proceeds thereof, all upon the terms of
this Security Agreement, with such writing to be in form and substance
reasonably satisfactory to Secured Party.

                  (b) Secured Party may at any time and from time to time file
financing statements, continuation statements (including "in lieu" continuation
statements) and amendments thereto that describe the Collateral as all assets of
Grantor or words of similar effect and which contain any other information
required by Part 5 of Revised Article 9 for the sufficiency or filing office
acceptance of any financing statement, continuation statement or amendment,
including whether Grantor is an organization, the type of organization and any
organization identification number issued to Grantor. Grantor agrees to furnish
any such information to Secured Party promptly upon request. Any such financing
statements, continuation statements or amendments may be signed by Secured Party
on behalf of Grantor and may be filed at any time in any jurisdiction whether or
not Revised Article 9 is then in effect in that jurisdiction.

                  (c) Grantor shall at any time and from time to time, whether
or not Revised Article 9 is in effect in any particular jurisdiction, take such
steps as Secured Party may reasonably request for Secured Party (i) to obtain an
acknowledgment, in form and substance reasonably satisfactory to Secured Party,
of any bailee having possession of any of the Collateral that the bailee holds
such Collateral for Secured Party, (ii) to obtain "control" of any investment
property, deposit accounts, letter-of-credit rights or electronic chatter paper
(as such terms are defined in Revised Article 9 with corresponding provisions in
Rev. ss.ss. 9-104, 9-105, 9-106 and 9-107 relating to what constitutes "control"
for such items of Collateral), with any agreements establishing control to be in
form and substance reasonably satisfactory to Secured Party, and (iii) otherwise
to insure the continued perfection and priority of Secured Party's security
interest in any of the Collateral and of the preservation of its rights therein,
whether in anticipation of or following the effectiveness of Revised Article 9
in any jurisdiction.

                  (d) Nothing contained in this Section 3 shall be construed to
narrow the scope of Secured Party's security interest in any of the Collateral
or the perfection or priority thereof or to impair or otherwise limit any of the
rights, powers, privileges or remedies of Secured Party hereunder except (and
then only to the extent) mandated by Revised Article 9 to the extent then
applicable.

         4. RIGHTS OF SECURED PARTY; COLLECTION OF ACCOUNTS.

                  (a) Notwithstanding anything contained in this Security
Agreement to the contrary, Grantor expressly agrees that it shall remain liable
under each of its Contracts and each of its Licenses to observe and perform all
the conditions and obligations to be observed and performed by it thereunder and
that it shall perform all of its duties and obligations thereunder, all in



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accordance with and pursuant to the terms and provisions of each such Contract
or License. Secured Party shall not have any obligation or liability under any
Contract or License by reason of or arising out of this Security Agreement or
the granting to Secured Party of a lien therein or the receipt by Secured Party
of any payment relating to any Contract or License pursuant hereto, nor shall
Secured Party be required or obligated in any manner to perform or fulfill any
of the obligations of Grantor under or pursuant to any Contract or License, or
to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party
under any Contract or License, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

                  (b) Secured Party authorizes Grantor to collect its Accounts,
provided that such collection is performed in a prudent and businesslike manner,
and Secured Party may, upon the occurrence and during the continuation of any
Event of Default and without notice, limit or terminate said authority at any
time. Upon the occurrence and during the continuance of any Event of Default, at
the request of Secured Party, Grantor shall deliver all original and other
documents evidencing and relating to the performance of labor or service which
created such Accounts, including, without limitation, all original orders,
invoices and shipping receipts.

                  (c) Secured Party may at any time, upon the occurrence and
during the continuance of any Event of Default, without notifying Grantor of its
intention to do so, notify Account Debtors of Grantor, parties to the Contracts
of Grantor, obligors in respect of Instruments of Grantor and obligors in
respect of Chattel Paper of Grantor that the Accounts and the right, title and
interest of Grantor in and under such Contracts, Instruments and Chattel Paper
have been assigned to Secured Party and that payments shall be made directly to
Secured Party. Upon the request of Secured Party, Grantor shall so notify such
Account Debtors, parties to such Contracts, obligors in respect of such
Instruments and obligors in respect of such Chattel Paper. Upon the occurrence
and during the continuance of any Event of Default, Secured Party may, in its
name or in the name of others, communicate with such Account Debtors, parties to
such Contracts, obligors in respect of such Instruments and obligors in respect
of such Chattel Paper to verify with such parties, to Secured Party's
satisfaction, the existence, amount and terms of any such Accounts, Contracts,
Instruments or Chattel Paper.

         5. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and
warrants to Secured Party that:

                  (a) Except for the security interest granted to Secured Party
under this Security Agreement and Permitted Liens, Grantor is the sole legal and
equitable owner or, has the power to transfer or, as to Intellectual Property
licensed from other persons, is a permitted licensee of each item of the
Collateral in which it purports to grant a security interest hereunder, having
good and marketable title thereto or the power to transfer, free and clear of
any and all Liens except for Permitted Liens.

                  (b) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or
any part of the Collateral exists, except such as may have been filed by Grantor
in favor of Secured Party pursuant to this Security Agreement except for
Permitted Liens.



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                  (c) This Security Agreement creates a legal and valid security
interest on and in all of the Collateral in which Grantor now has rights and all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken. Accordingly, Secured Party has a fully
perfected first priority security interest in all of the Collateral in which
Grantor now has rights subject only to Permitted Liens. This Security Agreement
will create a legal and valid and fully perfected first priority security
interest in the Collateral in which Grantor later acquires rights, when Grantor
acquires those rights subject only to Permitted Liens and additional filings to
be made with the United States Copyright Office and/or Patent and Trademark
Office as are necessary to perfect Secured Party's security interest in
subsequent ownership rights and interests of Grantor in Copyrights, Patents,
Trademarks and Licenses.

                  (d) Grantor's taxpayer identification number is, and chief
executive office, principal place of business, and the place where Grantor
maintains its records concerning the Collateral are presently located at the
address set forth on the signature page hereof. If Grantor is a corporation,
limited liability company, limited partnership, corporate trust or other
registered organization, the State (or if not a state, the other jurisdiction)
under whose law such registered organization was organized is set forth on the
signature page hereof. The Collateral, other than Deposit Accounts, Securities
Accounts, Commodity Accounts and motor vehicles and other mobile goods of the
type contemplated in Section 9103(3)(a) of the UCC, is presently located at such
address and at such additional addresses set forth on Schedule A attached
hereto. Grantor shall not change its taxpayer identification number,
jurisdiction of organization or such chief executive office, principal place of
business or remove or cause to be removed, the records concerning the Collateral
from those premises without prior written notice to Secured Party or as
otherwise expressly permitted by the Purchase Agreement.

                  (e) All Collateral of Grantor existing as of the date hereof
with respect to which a security interest may be perfected by the Secured
Party's taking possession thereof, including, without limitation, all Chattel
Paper, Instruments or Investment Property comprising certificated securities is
set forth on Schedule B attached hereto. All action necessary or desirable to
protect and perfect such security interest in each item set forth on Schedule B,
including the delivery of all originals thereof, duly endorsed to Secured Party,
has been duly taken. The security interest of Secured Party in Grantor's
Collateral listed on Schedule B is prior in right and interest to all other
Liens (other than Permitted Liens) and is enforceable as such against creditors
of and purchasers from Grantor.

                  (f) The name and address of each depository institution at
which Grantor maintains any Deposit Account and the account number and account
name of each such Deposit Account is listed on Schedule C attached hereto. The
name and address of each securities intermediary or commodity intermediary at
which Grantor maintains any Securities Account or Commodity Account and the
account number and account name is listed on Schedule C attached hereto. Grantor
agrees to amend Schedule C from time to time within five (5) business days after
opening any additional Deposit Account, Securities Account or Commodity Account,
or closing or changing the account name or number on any existing Deposit
Account, Securities Account, or Commodity Account.

                  (g) Grantor is the sole holder of record and the sole
beneficial owner of all certificated securities and uncertificated securities
pledged to Secured Party by Grantor under Section 2 of this Security Agreement,


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free and clear of any adverse claim, as defined in Section 8102(a)(1) of the
UCC, except for the Lien created in favor of Secured Party by this Security
Agreement.

                  (h) None of the Investment Property of Grantor has been
transferred in violation of the securities registration, securities disclosure
or similar laws of any jurisdiction to which such transfer may be subject.

                  (i) All Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks and Trademark Licenses now owned, held or in which Grantor
otherwise has any interest are listed on Schedule D attached hereto. Grantor
shall amend Schedule D from time to time within twenty (20) business days after
the filing of any application for a Patent, Trademark or Copyright or the
issuance of any Patent or registration of any Trademark or Copyright to reflect
any additions to or deletions from this list. Except as set forth on Schedule D,
none of the Patents, Trademarks or Copyrights has been licensed to any third
party.

         6. COVENANTS. Grantor covenants and agrees with Secured Party that from
and after the date of this Security Agreement and until the Secured Obligations
have been performed and paid in full:

                  6.1 DISPOSITION OF COLLATERAL. Grantor shall not sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so, other than (a) the sale of Inventory, (b) the granting of
non-exclusive Licenses and (c) the disposal of worn-out or obsolete Equipment,
all in the ordinary course of Grantor's business.

                  6.2 CHANGE OF JURISDICTION OF ORGANIZATION, RELOCATION OF
BUSINESS OR COLLATERAL. Grantor shall not change its jurisdiction of
organization, relocate its chief executive office, principal place of business
or its records, or allow the relocation of any Collateral (except as allowed
pursuant to Section 6.1 immediately above) from such address(es) provided to
Secured Party pursuant to Section 5(d) above without thirty (30) days prior
written notice to Secured Party.

                  6.3 LIMITATION ON LIENS ON COLLATERAL. Grantor shall not,
directly or indirectly, create, permit or suffer to exist, and shall defend the
Collateral against and take such other action as is necessary to remove, any
Lien on the Collateral, except (a) Permitted Liens and (b) the Lien granted to
Secured Party under this Security Agreement. Grantor shall further defend the
right, title and interest of Secured Party in and to any of Grantor's rights
under the Chattel Paper, Contracts, Documents, General Intangibles, Instruments
and Investment Property and to the Equipment and Inventory and in and to the
Proceeds thereof against the claims and demands of all persons whomsoever.

                  6.4 LIMITATIONS ON MODIFICATIONS OF ACCOUNTS, ETC. Upon the
occurrence and during the continuance of any Event of Default, Grantor shall
not, without Secured Party's prior written consent, grant any extension of the
time of payment of any of the Accounts, Chattel Paper, Instruments or amounts
due under any Contract or Document, compromise, compound or settle the same for
less than the full amount thereof, release, wholly or partly, any person liable


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for the payment thereof, or allow any credit or discount whatsoever thereon
other than trade discounts and rebates granted in the ordinary course of
Grantor's business.

                  6.5 INSURANCE. Maintain insurance policies insuring the
Collateral against loss or damage from such risks and in such amounts and forms
and with such companies as are customarily maintained by businesses similar to
Grantor.

                  6.6 TAXES, ASSESSMENTS, ETC. Grantor shall pay promptly when
due all property and other taxes, assessments and government charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment, Fixtures or Inventory, except to the extent
the validity thereof is being contested in good faith and adequate reserves are
being maintained in connection therewith.

                  6.7 MAINTENANCE OF RECORDS. Grantor shall keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral.
Grantor shall not create any Chattel Paper without placing a legend on the
Chattel Paper acceptable to Secured Party indicating that Secured Party has a
security interest in the Chattel Paper.

                  6.8 RESERVED.

                  6.9 NOTIFICATION REGARDING CHANGES IN INTELLECTUAL PROPERTY.
Grantor shall promptly advise Secured Party of any subsequent ownership right or
interest of the Grantor in or to any Copyright, Patent, Trademark or License not
specified on Schedule D hereto and shall permit Secured Party to amend such
Schedule, as necessary, to reflect any addition or deletion to such ownership
rights.

                  6.10 DEFENSE OF INTELLECTUAL PROPERTY. Grantor shall (i)
protect, defend and maintain the validity and enforceability of the Copyrights,
Patents and Trademarks, (ii) use its best efforts to detect infringements of the
Copyrights, Patents and Trademarks and promptly advise Secured Party in writing
of material infringements detected and (iii) not allow any Copyrights, Patents
or Trademarks to be abandoned, forfeited or dedicated to the public without the
written consent of Secured Party.

                  6.11 FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time
and from time to time, upon the written request of Secured Party, and at the
sole expense of Grantor, Grantor shall promptly and duly execute and deliver any
and all such further instruments and documents and take such further action as
Secured Party may reasonably deem necessary or desirable to obtain the full
benefits of this Security Agreement, including, without limitation, (a) using
its best efforts to secure all consents and approvals necessary or appropriate
for the grant of a security interest to Secured Party in any Contract held by
Grantor or in which Grantor has any right or interest not heretofore assigned,
(b) executing, delivering and causing to be filed any financing or continuation
statements (including "in lieu" continuation statements) under the UCC with
respect to the security interests granted hereby, (c) filing or cooperating with
Secured Party in filing any forms or other documents required to be recorded
with the United States Patent and Trademark Office, United States Copyright
Office, or any actions, filings, recordings or registrations in any foreign
jurisdiction or under any international treaty, required to secure or protect
Secured Party's interest in Grantor's Collateral, (d) transferring Grantor's


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Collateral to Secured Party's possession (if a security interest in such
Collateral can be perfected by possession), (e) at Secured Party's reasonable
request, placing the interest of Secured Party as lienholder on the certificate
of title (or similar evidence of ownership) of any vehicle, watercraft or other
Equipment constituting Collateral owned by Grantor which is covered by a
certificate of title (or similar evidence of ownership), (f) executing and
delivering and causing the applicable depository institution, securities
intermediary, commodity intermediary or issuer or nominated party under a letter
of credit to execute and deliver a collateral control agreement with respect to
each new Deposit Account, Securities Account or Commodity Account or
Letter-of-Credit Right in or to which Grantor has any right or interest in order
to perfect the security interest created hereunder in favor of Secured Party
(including giving Secured Party "control" over such Collateral within the
meaning of the applicable provisions of Article 8 and Article 9 of the UCC), (g)
at Secured Party's reasonable request, executing and delivering or causing to be
delivered written notice to insurers of Secured Party's security interest in, or
claim in or under, any policy of insurance (including unearned premiums) and (g)
at Secured Party's reasonable request, using its best efforts to obtain
acknowledgments from bailees having possession of any Collateral and waivers of
liens from landlords and mortgagees of any location where any of the Collateral
may from time to time be stored or located. Grantor also hereby authorizes
Secured Party to file any such financing or continuation statement (including
"in lieu" continuation statements) without the signature of Grantor. If any
amount payable under or in connection with any of the Collateral is or shall
become evidenced by any Instrument, such Instrument, other than checks and notes
received in the ordinary course of business and any Instrument in the
outstanding or stated amount of less than $25,000, shall be duly endorsed in a
manner reasonably satisfactory to Secured Party and delivered to Secured Party
promptly and in any event within five (5) business days of Grantor's receipt
thereof.

         7. RIGHTS AND REMEDIES UPON DEFAULT.

                  (a) After any Event of Default shall have occurred and while
such Event of Default is continuing, Secured Party may exercise in addition to
all other rights and remedies granted to it under this Security Agreement, the
Note, the Purchase Agreement and under any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, Grantor expressly agrees that in any such event Secured Party,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon Grantor or any other person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the UCC and other applicable law), may (i) reclaim, take
possession, recover, store, maintain, finish, repair, prepare for sale or lease,
shop, advertise for sale or lease and sell or lease (in the manner provided
herein) the Collateral, and in connection with the liquidation of the Collateral
and collection of the accounts receivable pledged as Collateral, use any
Trademark, Copyright, or process used or owned by Grantor and (ii) forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, assign, give an option or options to
purchase or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of Secured
Party's offices or elsewhere at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. To the
extent Grantor has the right to do so, Grantor authorizes Secured Party, on the
terms set forth in this Section 7 to enter the premises where the Collateral is
located, to take possession of the Collateral, or any part of it, and to pay,
purchase or compromise any encumbrance, charge, or lien which, in the opinion of
Secured Party, appears to be prior or superior to its security interest. Secured


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<PAGE>   12


Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption Grantor hereby releases. Grantor further
agrees, at Secured Party's request, to assemble its Collateral and make it
available to the Secured Party at places which Secured Party shall reasonably
select, whether at Grantor's premises or elsewhere. Secured Party shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale as provided in Section 7(f), below, with Grantor remaining
liable for any deficiency remaining unpaid after such application, and only
after so paying over such net proceeds and after the payment by Secured Party of
any other amount required by any provision of law, need Secured Party account
for the surplus, if any, to Grantor. To the maximum extent permitted by
applicable law, Grantor waives all claims, damages, and demands against Secured
Party arising out of the repossession, retention or sale of the Collateral.
Grantor agrees that Secured Party need not give more than ten (10) days' notice
of the time and place of any public sale or of the time after which a private
sale may take place and that such notice is reasonable notification of such
matters. Grantor shall remain liable for any deficiency if the proceeds of any
sale or disposition of its Collateral are insufficient to pay all amounts to
which Secured Party is entitled from Grantor, Grantor also being liable for the
attorney costs of any attorneys employed by Secured Party to collect such
deficiency.

         (b) As to any Collateral constituting certificated securities or
uncertificated securities, if, at any time when Secured Party shall determine to
exercise its right to sell the whole or any part of such Collateral hereunder,
such Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under Securities Act of 1933, as amended
(as so amended the "ACT"), Secured Party may, in its discretion (subject only to
applicable requirements of law), sell such Collateral or part thereof by private
sale in such manner and under such circumstances as Secured Party may deem
necessary or advisable, but subject to the other requirements of this Section
7(b), and shall not be required to effect such registration or cause the same to
be effected. Without limiting the generality of the foregoing, in any such event
Secured Party may, in its sole discretion, (i) in accordance with applicable
securities laws, proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Collateral or part
thereof could be or shall have been filed under the Act; (ii) approach and
negotiate with a single possible purchaser to effect such sale; and (iii)
restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a view
to the distribution or sale of such Collateral or part thereof. In addition to a
private sale as provided above in this Section 7(b), if any of such Collateral
shall not be freely distributable to the public without registration under the
Act at the time of any proposed sale hereunder, then Secured Party shall not be
required to effect such registration or cause the same to be effected but may,
in its sole discretion (subject only to applicable requirements of law), require
that any sale hereunder (including a sale at auction) be conducted subject to
such restrictions as Secured Party may, in its sole discretion, deem necessary
or appropriate in order that such sale (notwithstanding any failure so to
register) may be effected in compliance with the Bankruptcy Code and other laws
affecting the enforcement of creditors' rights and the Act and all applicable
state securities laws.



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<PAGE>   13

                  (c) Grantor agrees that in any sale of any of such Collateral,
whether at a foreclosure sale or otherwise, Secured Party is hereby authorized
to comply with any limitation or restriction in connection with such sale as it
may be advised by counsel is necessary in order to avoid any violation of
applicable law (including compliance with such procedures as may restrict the
number of prospective bidders and purchasers, require that such prospective
bidders and purchasers have certain qualifications and restrict such prospective
bidders and purchasers to persons who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or resale of such Collateral), or in order to obtain any required
approval of the sale or of the purchaser by any governmental authority, and
Grantor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall Secured Party be liable nor accountable to Grantor for any discount
allowed by the reason of the fact that such Collateral is sold in compliance
with any such limitation or restriction.

                  (d) Grantor also agrees to pay all fees, costs and expenses of
Secured Party, including, without limitation, reasonable attorneys' fees,
incurred in connection with the enforcement of any of its rights and remedies
hereunder.

                  (e) Grantor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.

                  (f) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by Secured Party in
the following order of priorities:

                  FIRST, to Secured Party in an amount sufficient to pay in full
the reasonable costs of Secured Party in connection with such sale, disposition
or other realization, including all fees, costs, expenses, liabilities and
advances incurred or made by Secured Party in connection therewith, including,
without limitation, reasonable attorneys' fees;

                  SECOND, to Secured Party in an amount equal to the then unpaid
Secured Obligations; and

                  FINALLY, upon payment in full of the Secured Obligations, to
Grantor or its representatives, in accordance with the UCC or as a court of
competent jurisdiction may direct.

         8. INDEMNITY. Grantor agrees to defend, indemnify and hold harmless
Secured Party and its officers, employees, and agents against (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Security
Agreement and (b) all losses or expenses in any way suffered, incurred, or paid
by Secured Party as a result of or in any way arising out of, following or
consequential to transactions between Secured Party and Grantor, whether under
this Security Agreement or otherwise (including without limitation, reasonable
attorneys fees and expenses), except for losses arising from or out of Secured
Party's gross negligence or willful misconduct.

         9. LIMITATION ON SECURED PARTY'S DUTY IN RESPECT OF COLLATERAL. Secured
Party shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it takes such action as Grantor requests
in writing, but failure of Secured Party to comply with any such request shall
not in itself be deemed a failure to act reasonably, and no failure of Secured



                                      A-13
<PAGE>   14

Party to do any act not so requested shall be deemed a failure to act
reasonably.

         10. REINSTATEMENT. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Grantor for liquidation or reorganization, should Grantor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Grantor's
property and assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

         11. MISCELLANEOUS.

                  11.1 NO WAIVER; CUMULATIVE REMEDIES.

                  (a) Secured Party shall not by any act, delay, omission or
otherwise be deemed to have waived any of its respective rights or remedies
hereunder, nor shall any single or partial exercise of any right or remedy
hereunder on any one occasion preclude the further exercise thereof or the
exercise of any other right or remedy.

                  (b) The rights and remedies hereunder provided are cumulative
and may be exercised singly or concurrently, and are not exclusive of any rights
and remedies provided by law.

                  (c) None of the terms or provisions of this Security Agreement
may be waived, altered, modified or amended except by an instrument in writing,
duly executed by Grantor and Secured Party.

                  11.2 TERMINATION OF THIS SECURITY AGREEMENT. Subject to
Section 10 hereof, this Security Agreement shall terminate upon the payment and
performance in full of the Secured Obligations.

                  11.3 SUCCESSOR AND ASSIGNS. This Security Agreement and all
obligations of Grantor hereunder shall be binding upon the successors and
assigns of Grantor, and shall, together with the rights and remedies of Secured
Party hereunder, inure to the benefit of Secured Party, any future holder of any
of the indebtedness and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Secured Obligations or any
portion thereof or interest therein shall in any manner affect the lien granted
to Secured Party hereunder.



                                      A-14
<PAGE>   15

                  11.4 GOVERNING LAW. In all respects, including all matters of
construction, validity and performance, this Security Agreement and the Secured
Obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware applicable to contracts
made and performed in such state, without regard to the principles thereof
regarding conflict of laws, except to the extent that the UCC provides for the
application of the law of Grantor's State.

         IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.

ADDRESS OF GRANTOR                          INTERNET PICTURES CORPORATION

3160 Crow Canyon Road                       By: _______________________________
San Ramon, California  94583                Name:
                                            Title:

TAXPAYER IDENTIFICATION NUMBER OF           JURISDICTION OF ORGANIZATION OF
GRANTOR                                     GRANTOR

52-2213841                                  DELAWARE

ACCEPTED AND ACKNOWLEDGED BY:

IMAGE INVESTOR PORTFOLIO,
a separate series of

MEMPHIS ANGELS, LLC,
a Delaware limited liability company


By:  PARADIGM CAPITAL EQUITY PARTNERS, LLC,
       Its Manager

      By:  PARADIGM HOLDINGS,
               Its Managing Member

           By: ________________________________
           Name:
           Title:








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