Document:

<PAGE>   1
                                                                     EXHIBIT 4.6

                          GUARANTOR SECURITY AGREEMENT

         THIS GUARANTOR SECURITY AGREEMENT (this "AGREEMENT") is made as of May
14, 2001, by and between INTERACTIVE PICTURES CORPORATION, a Tennessee
corporation (the "GRANTOR"), with an address at 1009 Commerce Park Dr., Oak
Ridge, TN 37830, and IMAGE INVESTOR PORTFOLIO, a separate series of MEMPHIS
ANGELS, LLC, a Delaware limited liability company ("LENDER"), with an address at
6410 Poplar Avenue, Suite 395, Memphis, Tennessee 38119.

         WHEREAS, INTERNET PICTURES CORPORATION, a Delaware corporation (the
"BORROWER"), has executed that certain Securities Purchase Agreement dated as
May 14, 2001 between the Borrower and the Lender (together will all amendments,
extensions and replacements thereto or therefrom time to time (the "PURCHASE
AGREEMENT") and that certain Convertible Promissory Note dated as May 14, 2001
made in favor of the Lender (together with all amendments, extensions, renewals,
substitutions and replacements thereto or thereof from time to time, the
"NOTE");

         WHEREAS, the Grantor is a wholly-owned Subsidiary of the Borrower;

         WHEREAS, Grantor has executed that certain Guaranty and Suretyship
Agreement dated as of the date hereof (together with all amendments, extensions,
renewals, substitutions and replacements thereto or thereof from time to time,
the "GUARANTY") by Grantor in favor of the Lender to secure the repayment of all
Obligations incurred by the Borrower under the Note and the other Documents (as
defined in the Purchase Agreement);

         WHEREAS, to secure the obligations and liabilities of the Grantor under
the Guaranty and to further secure the repayment of the Obligations (as defined
in the Guaranty), Grantor has agreed to assign and pledge to the Lender, and to
grant to the Lender a lien and security interest on and in, certain property of
the Grantor; and

         NOW, THEREFORE, the Grantor and the Lender, for good and valuable
consideration, the receipt and sufficiency of which the parties hereby
acknowledge, and intending to be legally bound, hereby agree as follows:

         1. DEFINITIONS.

         In addition to the other terms defined in this Section 1, initially
capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to them in the Guaranty.

            (A) "COLLATERAL" means and shall include all of the Grantor's right,
title and interest in, to and under the following, all whether now owned or
hereafter acquired:

               (A) All Accounts of Grantor;

               (B) All Chattel Paper of Grantor;

                                       1
<PAGE>   2

               (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
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 B attached hereto and incorporated herein by reference shall not
constitute Collateral.

         The Collateral also does not include any obligation described above
which is secured by a consensual lien on real property.

                                       2

<PAGE>   3

            (B) "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.

            (C) "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.

            (D) "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, 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.

            (E) "DOCUMENTS" shall mean the Documents as defined in the Purchase
Agreement.

            (F) "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.

            (G) "NOTE" is defined in the Preamble of this Agreement.

            (H) "OBLIGATIONS" shall mean the "Obligations" as defined in the
Guaranty and the indebtedness, obligations and liabilities of the Grantor,
whether now existing or hereafter arising or created, evidenced by and set forth
in the Guaranty and this Agreement.

                                       3
<PAGE>   4

            (I) "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).

            (J) "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 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.

            (K) "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").

            (L) "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).

            (M) "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.

            (N) "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

                                       4
<PAGE>   5

priority of Secured Party's security interest in any 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.

     2. GRANT OF SECURITY INTEREST. To secure the complete payment and
performance of the Obligations, the Grantor, as debtor, hereby assigns and
grants to the Lender, as Secured Party, a continuing first priority lien on and
security interest in the Collateral.

     3. REVISED ARTICLE 9. The parties acknowledge that revised Article 9 of the
UCC in the form or substantially in the form approved in 1998 by the American
Law Institute and the National Conference of Commissioners on Uniform State Law
("REVISED ARTICLE 9") has been adopted in the States of California, Tennessee,
Delaware and elsewhere and hereby agree to the following provisions of this
Agreement in anticipation of the possible application thereof, in one or more
jurisdictions, to the transactions contemplated hereby. Upon such application of
Revised Article 9 to the transactions contemplated hereby, all references in
this Agreement to sections of the UCC shall be deemed to refer to the equivalent
corresponding sections of Revised Article 9.

          (A) ATTACHMENT. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the Collateral is all assets of the Grantor,
whether or not within the scope of Revised Article 9. The Collateral shall
include, without limitation, 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
any thereof, wherever located, whether now owned or hereafter acquired. If the
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, the Grantor shall immediately notify the Lender in a writing signed
by the Grantor of the brief details thereof and grant to the Lender in such
writing a security interest therein and in the proceeds thereof, all

                                       5
<PAGE>   6

upon the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Lender.

          (B) PERFECTION BY FILING. The Lender may at any time and from time to
time file financing statements, continuation statements and amendments thereto
that describe the Collateral as all assets of the 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 the Grantor is
an organization, the type of organization and any organization identification
number issued to the Grantor. The Grantor agrees to furnish any such information
to the Lender promptly upon request. Any such financing statements, continuation
statements or amendments may be signed by the Lender on behalf of the 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) OTHER PERFECTION, ETC. The 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 the Lender may reasonably request for the
Lender (a) to obtain an acknowledgement, in form and substance satisfactory to
the Lender, of any bailee having possession of any of the Collateral that the
bailee holds such Collateral for the Lender, (b) 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. 9104, 9105, 9106 and 9107 relating to what constitutes
"control" for such items of Collateral), with any agreements establishing
control to be in form and substance satisfactory to the Lender, and (c)
otherwise to insure the continued perfection and priority of the Lender's
security interest in any of the Collateral and of the preservation of its rights
therein, whether in anticipation and following the effectiveness of Revised
Article 9 in any jurisdiction.

          (D) SAVINGS CLAUSE. Nothing contained in this Section 3 shall be
construed to narrow the scope of the Lender'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 the Lender hereunder except
(and then only to the extent) mandated by Revised Article 9 to the extent then
applicable.

     4. CHANGE IN NAME OR LOCATIONS. The Grantor hereby agrees that if the
location of any material Collateral changes from the locations listed on Exhibit
A hereto and made part hereof, or if the Grantor changes its name or form of
organization, or establishes a name in which it plans to do business that is not
listed as a tradename on Exhibit A hereto, the Grantor will as promptly as
practicable notify the Lender in writing of the additions or changes. As of the
date hereof, the Grantor's chief executive office is as shown on Exhibit A
hereto.

     5. REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL. Except
as disclosed in or permitted under the Guaranty, the Grantor represents,
warrants and covenants to the Lender as follows:

          (A) The Grantor has not made any prior agreement for the sale, pledge,
encumbrance, assignment or other disposition of any of the Collateral which is
currently

                                       6
<PAGE>   7

effective and the Collateral is free from all encumbrances and rights of setoff
of any kind other than Permitted Liens.

          (B) The Grantor will take all commercially reasonable actions to
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein.

          (C) Each account and general intangible, if included in the definition
of Collateral, is genuine and enforceable in accordance with its terms and the
Grantor will take all commercially reasonable actions to defend the same against
all claims, demands, setoffs and counterclaims at any time asserted.

          (D) At the time any account or general intangible becomes subject to
this Agreement, such account or general intangible will be a good and valid
account representing a bona fide sale of goods or services by the Grantor and
such goods will have been shipped to the respective account debtor or the
services will have been performed for the respective account debtor to the
extent necessary thereunder to enforce payment of such account or general
intangible against the respective accounts debtors, and no such account or
general intangible will be subject to any claim for credit, allowance or
adjustment by any account debtor or any setoff, defense or counterclaim.

          (E) From time to time and at all reasonable times Grantor will allow
the Lender, with reasonable prior notice so long as an Event of Default does not
exist, by or through any of its officers, agents, attorneys, or accountants to
examine or inspect the Collateral, notify (at any time after the occurrence and
during the continuance of an Event of Default) account debtors of the Lender's
security interest in accounts and obtain valuations and audits of the
Collateral, wherever located, at Grantor's expense once annually and at any time
during an Event of Default, and if more than once annually (other than during an
Event of Default) at the Lender's expense.

          (F) The Grantor shall do, obtain, make, execute and deliver all such
additional and further acts, things, deeds, assurances and instruments as the
Lender may reasonably require to vest in and assure to the Lender its rights
hereunder and in or to the Collateral, and the proceeds thereof, including, but
not limited to, waivers from landlords, warehousemen and mortgagees, provided
that the Grantor shall not be required to use more than commercially reasonable
efforts to obtain any consent or waiver from third parties required pursuant to
this clause (f).

          (G) The Grantor shall keep the Collateral in good order and repair at
all times, ordinary wear and tear and obsolescence excepted, and immediately
notify Lender of an event causing a material loss or decline in value of the
Collateral whether or not covered by insurance and the amount of such loss or
depreciation.

          (H) The Grantor shall use or permit the Collateral to be used only in
accordance with all applicable federal, state, county and municipal laws and
regulations.

          (I) The Grantor shall have and maintain insurance at all times with
respect to all Collateral as required under the Guaranty. The policies of all
such casualty insurance shall

                                       7
<PAGE>   8

contain standard Lender's Loss Payable Clauses issued in favor of the Lender
under which all losses thereunder shall be paid to the Lender. Such policies
shall expressly provide that the requisite insurance cannot be altered or
canceled without at least sixty (60) days prior written notice to the Lender and
shall insure the Lender notwithstanding the act or neglect of the Grantor. Upon
demand of the Lender, the Grantor shall furnish the Lender with duplicate
original policies of insurance or such other evidence of insurance as the Lender
may reasonably require. In the event the Grantor fails to maintain insurance as
herein provided, the Lender may, at its option, obtain such insurance and the
Grantor shall pay to the Lender, on demand, the cost thereof. Proceeds of
insurance may be applied by the Lender to reduce the Obligations or to repair or
replace Collateral, all in the Lender's sole discretion

     6. NEGATIVE PLEDGE; NO TRANSFER. The Grantor will not hereafter without
prior written consent of the Lender sell, offer to sell, pledge, encumber,
assign or otherwise dispose of any of the Collateral or permit or suffer to
exist any Lien thereon, except (a) to the Lender, (b) a Permitted Lien, or (c)
for sales of inventory and collections of accounts in the Grantor's ordinary
course of business. The Grantor will not make or enter into any agreement (other
than with the Lender) for the benefit of any Person not to grant Liens, except
for such agreements existing on the date hereof and set forth on Schedule 6 of
this Agreement. The Grantor will not use any portion of the Collateral in any
manner inconsistent with this Agreement or with the terms and conditions of any
policy of insurance thereon.

     7. COVENANTS FOR ACCOUNTS. If accounts are included in the definition of
Collateral:

          (A) The Grantor will, on reasonable demand of the Lender, make
notations on its books and records showing the security interest of the Lender,
and make available to the Lender, shipping and delivery receipts evidencing the
shipment of the goods that gave rise to an account, completion certificates or
other proof of the satisfactory performance of services that gave rise to an
account, a copy of the invoice for each account and copies of any written
contract or order from which an account arose. The Grantor shall promptly notify
the Lender if an account in excess of $10,000 becomes evidenced or secured by an
instrument or chattel paper and upon request of the Lender, will promptly
deliver any such instrument or chattel paper to the Lender, including without
limitation, any letter of credit delivered to the Grantor to support a shipment
of inventory by the Grantor.

          (B) The Grantor will within 30 days advise the Lender whenever an
account debtor refuses to retain or returns any goods from the sale of which an
account arose in excess of $50,000 and will comply with any reasonable
instructions that the Lender may give regarding the sale or other disposition of
such returns.

          (C) The Grantor will notify the Lender on a monthly basis of any
accounts which arise out of contracts with the United States or any department,
agency or instrumentality thereof, and will, upon the request of the Lender,
execute any instruments and take any steps reasonably required by the Lender so
that all monies due and to become due under such contract shall be assigned to
the Lender and notice thereof given to and acknowledged by the appropriate
government agency or authority under the Federal Assignment of Claims Act of
1940, as amended, or other applicable Law.

                                       8
<PAGE>   9

          (D) Upon the occurrence and during the continuance of an Event of
Default, and upon prior notice to the Grantor (unless an Event of Default of the
type described in Section 10(b) or (c) of the Note has occurred, in which case
no such notice shall be required), the Lender may notify any persons who are
indebted to the Grantor on any Collateral consisting of accounts or general
intangibles of the assignment thereof to the Lender and may direct such account
debtors to make payment directly to the Lender of the amounts due. Upon the
occurrence and during the continuance of an Event of Default, at the request of
the Lender, the Grantor will direct any persons who are indebted to the Grantor
on any Collateral consisting of accounts or general intangibles to make payment
directly to the Lender. The Lender is authorized to give receipts to such
account debtors for any such payments and the account debtors will be protected
in making such payments to the Lender.

     8. FURTHER ASSURANCES. At the request of the Lender, the Grantor will join
with the Lender in executing one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form satisfactory to the
Lender and will pay the cost of preparing and filing the same in all
jurisdictions in which such filing is deemed by the Lender to be necessary or
desirable. A carbon, photographic or other copy of this Agreement or of a UCC-1
financing statement may be filed as and in lieu of a UCC-1 financing statement.

     9. EVENTS OF DEFAULT. The Grantor shall, at the option of the Lender, be in
default under this Agreement upon the happening of any of the following events
or conditions (each, an "EVENT OF DEFAULT"): (a) the failure by the Grantor to
perform any of its obligations under this Agreement which failure has not been
cured within 20 days after written notice from the Lender to the Grantor, (b) an
Event of Default (as defined in the Note) under the Note, (c) an Event of
Default (as defined in the Guaranty), (d) material falsity, material inaccuracy
or material breach by the Grantor of any written warranty, representation or
statement made or furnished to the Lender by or on behalf of the Grantor; or (e)
the failure of the Lender to have a perfected first priority security interest
in the Collateral (excluding perfection of security interests in vehicles or
other mobile equipment covered by a certificate of title, the perfection of
which under applicable law requires notation of such security interest on, or
physical delivery of, such certificate, unless (i) such failure results from the
negligence acts or omissions of the Lender, (ii) no other person has a perfected
security interest in such Collateral, and (iii) no other Event of Default
exists.

     10. REMEDIES. Upon the occurrence of an Event of Default described in
Sections 10(b) or (c) of the Note, all Obligations secured hereby shall become
immediately due and payable, without presentment, demand, notice, declaration,
protest or other requirements of any kind, all which are expressly waived by the
Grantor. Upon the occurrence and continuance of an Event of Default other than
as described in Sections 10(b) or (c) of the Note, the Lender may provide
written notice to the Grantor stating that an Event of Default has occurred and
declaring all Obligations secured hereby immediately due and payable, without
further notice, presentment, demand, declaration, protest, or other requirements
of any kind, all which are expressly waived by the Grantor. Upon the occurrence
and continuance of an Event of Default, and irrespective of whether the
Obligations have been declared due and payable pursuant to the immediately
preceding sentence, the Lender will have, in addition to all rights and remedies
provided for herein or in the other Documents or by any applicable law or in
equity, all the remedies of a secured party under the Uniform Commercial Code.

                                       9

<PAGE>   10

     11. POWER OF ATTORNEY.

          (A) The Grantor does hereby make, constitute and appoint any officer
or agent of the Lender as the Grantor's true and lawful attorney-in-fact, with
power to endorse the name of the Grantor or any of the Grantor's officers or
agents upon any notes, checks, drafts, money orders, or other instruments of
payment or Collateral that may come into the possession of the Lender if full or
part payment of amounts owed to the Lender granting to the Grantor's said
attorney full power to do any and all things necessary to be done in and about
the premises as fully and with the same effect as the Grantor might or could do,
including the right to sign, for the Grantor, UCC-1 financing statements and
UCC-2 or UCC-3 Statements of Change and to sue for, compromise, settle and
release all claims and disputes with respect to the Collateral. The Grantor
hereby ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest, and is
irrevocable for the life of this Agreement and the Documents, and until all the
Obligations are satisfied in full.

          (B) Notwithstanding anything in the Documents to the contrary, the
Lender will not exercise any rights under the power of attorney provided in
Section 11(a), above, unless an Event of Default has occurred and is continuing.

     12. PAYMENT OF EXPENSES. In the event that the Grantor fails to do so on a
timely basis, the Lender may, at its option, discharge taxes, liens, security
interests or such other encumbrances as may attach to the Collateral, may pay
for required insurance on the Collateral and may pay for the maintenance,
appraisal or reappraisal, and preservation of the Collateral, as reasonably
determined by the Lender to be necessary. The Grantor will reimburse the Lender
on demand for any payment so made or any expense incurred by the Lender pursuant
to the foregoing authorization, and the Collateral also will secure any advances
or payments so made or expenses so incurred by the Lender.

     13. NOTICES. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing and will be
effective upon receipt if delivered personally to such party, or upon receipt if
sent by facsimile transmission with confirmation of delivery, or one Business
Day after deposit with a nationally recognized overnight courier service, to the
address set forth above or to such other address as any party may give to the
other in writing for such purpose.

     14. PRESERVATION OF RIGHTS. No delay or omission on the part of the Lender
to exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power or any acquiescence
therein, nor will the action or inaction of the Lender impair any right or power
arising hereunder. The Lender's rights and remedies hereunder are cumulative and
not exclusive of any other rights or remedies which the Lender may have under
other agreements, at law or in equity.

     15. ILLEGALITY. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

                                       10

<PAGE>   11

     16. CHANGES IN WRITING. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by the Grantor
therefrom, will in any event be effective unless the same is in writing and
signed by the Lender and, in the case of any modification or amendment, by the
Grantor, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Grantor in any case will entitle the Grantor to any other or further notice or
demand in the same, similar or other circumstance.

     17. ENTIRE AGREEMENT. This Agreement (including the Riders hereto and the
other documents and instruments referred to herein) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.

     18. COUNTERPARTS. This Agreement may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument.

     19. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure
to the benefit of the Grantor and the Lender and their respective heirs,
executors, administrators, successors and assigns; provided, however, that the
Grantor may not assign this Agreement in whole or in part without the prior
written consent of the Lender.

     20. INTERPRETATION. In this Agreement, unless the Lender and the Grantor
otherwise agree in writing, the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the word "or"
shall be deemed to include "and/or", the words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections) or exhibits are
to those of this Agreement unless otherwise indicated. Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. If this Agreement is
executed by more than one Grantor, the obligations of such persons or entities
will be joint and several.

     21. INDEMNITY. The Grantor agrees to indemnify each of the Lender, its
directors, officers and employees and each legal entity, if any, who controls
the Lender (the "INDEMNIFIED PARTIES") and to hold each Indemnified Party
harmless from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, all reasonable fees of counsel with
whom any Indemnified Party may consult and all expenses of litigation or
preparation therefor) which any Indemnified Party may incur or which may be
asserted against any Indemnified Party by an third person, entity or
governmental authority as a result of the execution of or performance under this
Agreement; provided, however, that the foregoing indemnity agreement shall not
apply to claims, damages, losses, liabilities and expenses solely attributable
to an Indemnified Party's gross negligence or willful misconduct. The indemnity
agreement contained in this Section shall survive the termination of this
Agreement. The Grantor may participate at its expense in the defense of any such
claim.

                                       11
<PAGE>   12

     22. RIGHTS OF SET-OFF. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default,
the Lender is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the Grantor or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by the Lender (including, without
limitation, by branches and agencies of the Lender wherever located) to or for
the credit or the account of the Grantor against and on account of the
Obligations and liabilities of the Grantor to the Lender under this Agreement or
under any of the other Documents, including, without limitation, all other
claims of any nature or description arising out of or connected with this
Agreement or any other Loan Document, irrespective of whether or not the Lender
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.

     23. NATURE OF OBLIGATIONS. The obligations of the Grantor under this
Agreement, and the grant of security interests hereunder to the Lender shall be
continuing, unconditional, irrevocable and absolute and shall be independent of
any obligations of, and any security interests granted by, the Borrower or any
other Person and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by any of the following matters and
no right or remedy of the Lender, shall be in any way prejudiced or adversely
affected by any of the following matters (whether or not the Lender shall make
any reservation of rights against, give or attempt to give any notice to, or
request or obtain any further assent of the Grantor with respect to any of the
following matters):

          (A) any extension, renewal, settlement, compromise, waiver or release
in respect of any of the Obligations or any other obligation of the Borrower
under the Note, the Purchase Agreement, any other Loan Document, or any other
document, instrument or agreement evidencing or securing the Obligations;

          (B) any modification or amendment of or supplement to the Note, the
Purchase Agreement, any other Loan Document, or any other document, instrument
or agreement evidencing or securing the Obligations;

          (C) any modification, amendment, waiver, release, compromise,
non-perfection or invalidity of any direct or indirect security, or of any
guarantee or other liability of any third party, for any of the Obligations or
any other obligation of the Borrower under the Note, the Purchase Agreement, any
other Loan Document, or any other document, instrument or agreement evidencing
or securing the Obligations;

          (D) any change in the partnership or corporate existence, structure or
ownership of the Grantor or Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or the Grantor
or their respective assets (irrespective of any release or deferral of the
liability of any Guarantor to pay all or any part of the Obligations or any of
the Borrower's or the Grantor's other obligations under the Note, the Purchase
Agreement, any other Loan Document, or any other document, instrument or
agreement evidencing or securing the Obligations;

                                       12
<PAGE>   13

          (E) the existence of any claim, set-off or other rights which the
Grantor or the Borrower may have at any time against the Borrower, the Lender,
or any other Person, whether or not arising in connection with this Agreement,
the Obligations, the Note, the Purchase Agreement, any other Loan Document, or
any other document, instrument or agreement evidencing or securing the
Obligations;

          (F) any invalidity or unenforceability relating to or against the
Borrower for any reason of the Note, the Purchase Agreement, any other Loan
Document, or any other document, instrument or agreement evidencing or securing
the Obligations, or any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower of the Obligations or any other amount
payable by the Borrower under the Note, the Purchase Agreement, or any other
document, instrument or agreement evidencing or securing the Obligations;

          (G) any invalidity or unenforceability relating to or against the
Grantor for any reason of its obligations and liabilities under the Note, the
Purchase Agreement, any other Loan Document, or any other document, instrument
or agreement evidencing or securing the Obligations;

          (H) any other act or failure to act or delay of any kind by the
Borrower, the Lender, or any other Person or any other circumstance whatsoever
that might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of the obligations of the Grantor under this Agreement;

          (I) the existence of, or any execution on or attachment of, or any
failure by the Lender, (voluntarily or otherwise) to resort to, any other
security or any other rights held or hereafter held or to be held by the Lender
to secure any or all of the Obligations or other obligations of the Borrower
under the Note, the Purchase Agreement, any other Loan Document, or any other
document, instrument or agreement evidencing or securing the Obligations or any
judgment obtained by the Lender;

          (J) any demand for payment of any of the Obligations is rescinded by
the Lender, and any of the Obligations continued;

          (K) the refusal or failure (whether intentional, negligent or
otherwise) of the Lender, or any agent of the Lender, to protect, secure,
perfect, continue, maintain or insure any Lien at any time held by it as
security for the Obligations or any other obligations of the Borrower under the
Note, the Purchase Agreement, any other Loan Document, or any other document,
instrument or agreement evidencing or securing the Obligations or any property
subject thereto; or

          (L) the termination of the Commitments or the refusal of the Lender to
provide further credit or other financial accommodations to the Borrower.

     24. GOVERNING LAW.

     THIS AGREEMENT HAS BEEN DELIVERED TO AND ACCEPTED BY THE LENDER AND WILL BE
DEEMED TO BE MADE IN THE STATE OF DELAWARE.

                                       13
<PAGE>   14

THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCEPT
THAT THE LAWS OF THE STATE WHERE ANY COLLATERAL IS LOCATED (IF DIFFERENT FROM
THE STATE OF DELAWARE) SHALL GOVERN THE CREATION, PERFECTION AND FORECLOSURE OF
THE LIENS CREATED HEREUNDER ON SUCH PROPERTY OR ANY INTEREST THEREIN.

     25. CHOICE OF FORUM.

     THE GRANTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT OF DELAWARE, AND CONSENTS THAT ALL SERVICE OF PROCESS
BE SENT PREPAID BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE DIRECTED TO
THE GRANTOR AT THE GRANTOR'S ADDRESS SET FORTH HEREIN AND SERVICE SO MADE WILL
BE DEEMED TO BE COMPLETED ON THE BUSINESS DAY AFTER DEPOSIT WITH SUCH COURIER;
PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT WILL PREVENT THE LENDER FROM
BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS
AGAINST THE GRANTOR INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY
OF THE GRANTOR WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC
JURISDICTION. THE LENDER AND THE GRANTOR AGREE THAT THE VENUE PROVIDED ABOVE IS
THE MOST CONVENIENT FORUM FOR BOTH THE LENDER AND THE GRANTOR. THE GRANTOR
WAIVES ANY OBJECTION TO VENUE AND ANY OBJECTION BASED ON A MORE CONVENIENT FORUM
IN ANY ACTION INSTITUTED UNDER THIS AGREEMENT.

     26. WAIVER OF JURY TRIAL.

     EACH OF THE GRANTOR AND THE LENDER IRREVOCABLY WAIVES ANY AND ALL RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE
RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE GRANTOR
AND THE LENDER ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY

                             [Signatures to Follow]

                                       14
<PAGE>   15

         WITNESS the due execution of this Agreement as of the date first
written above.

                                         INTERACTIVE PICTURES CORPORATION

                                         By:
                                            ------------------------------------
                                         Name:
                                         Title:

                                         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:

ATTACHMENTS, SCHEDULES AND EXHIBITS:

Schedule 1   Names and Locations

                          GUARANTOR SECURITY AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   16

                                    EXHIBIT B

                      ASSETS EXCLUDED FROM THE "COLLATERAL"

The following assets (being those assets intended to be transferred by Internet
Pictures Corporation to Homestore.com, Inc. in connection with the transactions
contemplated by that certain Non-Binding Term Sheet executed in or about March,
2001 by Internet Pictures Corporation and Homestore.com, Inc.) shall be excluded
from the "Collateral":

Desktops/Laptops/Projectors

<TABLE>
<CAPTION>
ASSIGNED TO         MACHINE NAME   SERIAL NUMBER #    HARDWARE TYPE   MODEL           TYPE
<S>                 <C>            <C>                <C>             <C>             <C>
Riette Burdick      Rburdick       6919BW43A494       DESKTOP         Compaq Deskpro  Prof. Wkstn.
Bill Miles          Bmiles         3J9CCL34S00S       LAPTOP          Compaq Armada   1750
</TABLE>

Canadian Servers

<TABLE>
<CAPTION>
Server Name           Model              Type       Serial             Proc            RAM       HD
<S>                   <C>                <C>        <C>                <C>             <C>       <C>
Bamtrack              Compaq Proliant    PL1850R    D943CNH1K658       1 x P3 500      640MB     1 x 9.1GB, 1 x 18.2GB
Callisto              Compaq Proliant    PL1850R    D948CNH1L418       2 x P3 500      512MB     2 x 9.1GB
Cluster1              Compaq Proliant    PL1600R    D845BWV10974       2 x P2 400      512MB     2 x 4GB
Cluster2              Compaq Proliant    PL1600R    D919BWV10173       2 x P2 400      512MB     2 x 4GB, 1 x 18.2GB
Ganymede              Compaq Proliant    PL1850R    D951CNH1L073       2 x P3 500      512MB     2 x 9.1GB
Io                    Compaq Proliant    PL1850R    D951CNH1K957       2 x P3 500      512MB     2 x 9.1GB
JFTP3                 Compaq Proliant    PL1850R    D948CNH1L485       1 x P3 500      256MB     2 x 9.1GB
Jupiter               Compaq Proliant    PL1600     D840BWV10944       2 x P2 400      1024MB    1 x 18.2GB, 1 x 9.1GB
Orders                Compaq Proliant    PL800      D914CDG10060       2 x P2 350      512MB     2 x 9.1GB
TO_Cumberland         Compaq Proliant    PL1850     D949CNH1K324       1 x P3 500      128MB     2 x 9.1GB
TO_Fax                Compaq Proliant    PL800      D931CNL1A251       1 x P3 500      128MB     1 x 4GB, 1 x 9.1GB
TO-Canadiens          Compaq Proliant    PL1850R    D948CNH1L463       2 x P3 500      896MB     2 x 18.2GB
TO-Controller         Compaq Proliant    PL1850R    D941CNH1K600       1 x P3 500      128MB     2 x 9.1GB
TO-Dumoine            Compaq Proliant    PL1850R    D942CNH1K016       1 x P3 500      256MB     3 x 18.2GB
TO-Fileserver         Compaq Proliant    PL3000     D825BR241569       1 x P2 300      128MB     7 x 18.2GB
TO-Flames             Sun Ultra 10       Ultra 10   91400173           Sparc 440       128MB     1 X 8.5 GB
TO-MapleLeaf          Sun Ultra 10       Ultra 10   90887341           Sparc 440       512MB     1 X 8.5 GB
TO-Oilers             Compaq Proliant    PL1850R    D948CNH1L450       1 x P3 500      384MB     2 x 9.1GB
XML1                  Compaq Proliant    PL800      D921CDH10085       1 x P2 450      256MB     1 x 4GB, 1 x 9.1GB
</TABLE>

6 SHARED SERVICES

3 MERCURY

<PAGE>   17

Canadian Furniture

Call Center                 154 Stations (incl. Chairs)

IT                          18 Stations (Incl. Chairs)

Reporting                   7 Stations (incl. Chairs)

Administration Room         6 Stations (incl. Chairs)

Training Room               11 Stations (incl. Chairs)

2 Team Rooms                2 tables
                            16 chairs

Kitchen                     4 tables
                            20 chairs
                            Appliances

Large Conference Room Table
                            12 Chairs

Executive Boardroom         1 Table
                            8 Chairs

Reception Area              Front Desk (incl. Table and 2 chairs)

Offices                     12 Full

Incomplete Offices          6 Partial

Leasehold Improvements (6th Floor)

<TABLE>
<CAPTION>
ACQUISITION
DATE            INVOICE#                   DESCRIPTION
<S>             <C>        <C>
26-Feb-99                  Office renovation from V & A Properties
4-Mar-99                   ABCO Ornamental Iron Works
18-May-99                  V & A Properties office renovation
22-Sep-00       OU1025     Chubb: Alarm system
22-Sep-00       3213       Strategic: Cabling installation
17-Jan-00       9Y3124     Chubb: Alarm system
22-Sep-00       OU1024     Chubb: Alarm system
10-Nov-99       9962       Freeman Design renovation
22-Sep-00       19938      Ampere: UPS installation
22-Sep-00       3218       Strategic: Cabling installation
17-Jan-00       2547       Elite Construction renovation Holdback
18-Nov-99       2533       Elite Construction renovation
6-Dec-99        2546       Elite Construction renovation
</TABLE>

<PAGE>   18

Global Centre Assets

<TABLE>
<CAPTION>
MANF.                         QTY               MODEL           SERIAL NUMBERS LOCATION
<S>                           <C>               <C>             <C>
WEB LOGIC ASSETS
F5                                              BigIP HA+            bip02491sGC
                                                BigIP HA+            bip02492sGC

Sun                                             Netra T1              940A2886GC
                                                Netra T1              942A2491GC
                                                Netra T1              942A2666GC
                                                Netra T1              942A1104GC

Sun                                             Enterprise 2          920H3505GC
                                                Enterprise 2          920H34F7GC
                                                Enterprise 2          920H34F0GC
                                                Enterprise 2          920H34FCGC

TOURS CLUSTER ASSETS
Network Engines                                 Blazer                    9640GC
                                                                          9637GC
                                                                          9630GC
                                                                          9638GC
                                                                          9636GC
                                                                          9635GC
                                                                          9646GC
                                                                          9647GC
                                                                          7171GC
                                                                          7158GC
                                                                          7172GC
                                                                          7232GC

Network Appliance                               F760                     23974GC

Network Appliance                               Disk Trays               76697GC
                                                                         73213GC
                                                                       1110821GC
                                                                       1319043GC
                                                                       1319287GC
                                                                       1319066GC
</TABLE>
<PAGE>   19

Software

ASPECT

ADOBE PHOTOSHOP

WEB LOGIC
INVOICE # 129283

Web Logic Development Seats
Web Logic Application Server
Web Logic Application Server
Web Logic App Cluster
TOTAL

OTHER

UUNET

BELLNEXIA<PAGE>   1
                                                                     EXHIBIT 4.7

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

                          INTERNET PICTURES CORPORATION

                          TRANCHE A WARRANT TO PURCHASE

                      SERIES B CONVERTIBLE PREFERRED STOCK

NO. PW-____                                                        May 14, 2001

                            VOID AFTER MAY 14, 2006

         THIS CERTIFIES THAT, for value received, IMAGE INVESTOR PORTFOLIO, a
separate series of MEMPHIS ANGELS, LLC, a Delaware limited liability company, or
assigns (the "HOLDER" or "PURCHASER"), is entitled to subscribe for and purchase
at the Exercise Price (defined below) from INTERNET PICTURES CORPORATION, a
Delaware corporation, with its principal office at 1009 Commerce Park Dr., Oak
Ridge, TN 37830 (the "COMPANY") up to ____________ shares of Series B
Convertible Preferred Stock of the Company (the "SERIES B PREFERRED STOCK"), as
provided herein.

         This Warrant is being issued in connection with the Securities Purchase
Agreement, dated as of the date hereof by and between the Company and Image
Investor Portfolio, a separate series of Memphis Angels, LLC, a Delaware limited
liability company (the "PURCHASE AGREEMENT"). This Warrant shall initially
entitle the Holder to subscribe for and purchase ______ shares of Series B
Preferred Stock. Upon consummation of the Second Closing (as defined in the
Purchase Agreement), this Warrant shall entitle the Holder to subscribe for and
purchase _______ shares of Series B Preferred Stock.

         1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:

         "EXERCISE PERIOD" shall mean the time period commencing with the date
of this Warrant and ending five years later.

         "EXERCISE PRICE" shall mean $_____ per share, subject to adjustment
pursuant to Section 4.2 below.

         "EXERCISE SHARES" shall mean the shares of the Company's Series B
Preferred Stock issuable upon exercise of this Warrant, subject to adjustment
pursuant to the terms herein, including but not limited to adjustment pursuant
to Section 4.2 below.

                                       1
<PAGE>   2

         "MAJORITY WARRANT HOLDERS" shall mean the holders (the "HOLDERS") of
warrants issued in connection with the Purchase Agreement (the "WARRANTS")
representing the right to acquire more than fifty percent (50%) of the Series B
Preferred Stock underlying all of the then-outstanding Warrants.

         2. EXERCISE OF WARRANT.

         2.1. OPTIONAL EXERCISE. Provided that all filings of the Holder, if
any, to be made under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, as required with respect to such Purchaser by Section 6.3 of the
Purchase Agreement have been made and related waiting periods applicable to the
Holder have expired or have been terminated early, the rights represented by
this Warrant may be exercised in whole or in part at any time during the
Exercise Period, by delivery of the following to the Company at its address set
forth above (or at such other address as it may designate by notice in writing
to the Holder):

                  (a) An executed Notice of Exercise in the form attached
hereto;

                  (b) Payment of the Exercise Price either (i) in cash, by check
or by wire transfer in accordance with the Purchase Agreement, or (ii) by
cancellation of indebtedness; and

                  (c) This Warrant.

         Upon the exercise of the rights represented by this Warrant, a
certificate or certificates for the Exercise Shares so purchased, registered in
the name of the Holder or persons designated by the Holder, if the Holder so
requests, shall be issued and delivered to the Holder within five (5) business
day after the rights represented by this Warrant shall have been so exercised.

                  The person in whose name any certificate or certificates for
Exercise Shares are to be issued upon exercise of this Warrant shall be deemed
to have become the holder of record of such shares on the date on which this
Warrant was surrendered and payment of the Exercise Price was made, irrespective
of the date of delivery of such certificate or certificates, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

         2.2. NET EXERCISE. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Series B
Preferred Stock is greater than the Exercise Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant by payment of cash, the
Holder may elect (the "CONVERSION RIGHT") to receive shares equal to the value
(as determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise in which event the Company shall issue
to the Holder a number of shares of Series B Preferred Stock computed using the
following formula:

                                       2
<PAGE>   3

                                            X = Y (A-B)
                                                -------
                                                    A

                  Where  X = the number of shares of Series B Preferred Stock
                             to be issued to the Holder

                  Y =        the number of shares of Series B Preferred Stock
                             purchasable under the Warrant or, if only a portion
                             of the Warrant is being exercised, the portion of
                             the Warrant being canceled (at the date of such
                             calculation)

                  A =        the fair market value of one share of the Company's
                             Series B Preferred Stock (at the date of such
                             calculation)

                  B =        Exercise Price (as adjusted to the date of such
                             calculation)

                  For purposes of the above calculation, the fair market value
of one share of Series B Preferred Stock shall be the product of (i) the average
daily Market Price (as defined below) during the period of the most recent 10
days, ending on the last business day before the effective date of exercise of
the Conversion Right, on which the national securities exchanges were open for
trading and (ii) the number of shares of the Common Stock (as defined herein)
into which each Exercise Share is convertible on such date. If the Common Stock
is traded on a national securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the National Market System (the
"NATIONAL MARKET SYSTEM") of the Nasdaq, the Market Price as of a specified day
shall be the last reported sale price of Common Stock on such exchange or on the
National Market System on such date or if no such sale is made on such day, the
mean of the closing bid and asked prices for such day on such exchange or on the
National Market System. If the Common Stock is not so listed or admitted to
unlisted trading privileges, the Market Price as of a specified day shall be the
mean of the last bid and asked prices reported on such date (x) by the Nasdaq or
(y) if reports are unavailable under clause (x) above by the National Quotation
Bureau Incorporated. If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and ask prices are not reported, the Market
Price as of a specified day shall be determined in good faith by the Board of
Directors of the Company.

         2.3. LIMITATION ON EXERCISE OF WARRANTS.

                  (a) Notwithstanding anything to the contrary contained herein
and except as set forth in clause (c) below, the Holder agrees that, to enable
the Company to comply with Nasdaq Rule 4350(i), or any successor or similar
rule, the Company shall be prohibited from issuing a number of shares of
Preferred Stock upon conversion of the Promissory Note and exercise of the
Warrants in excess of the prescribed amount under such rule (the "NASDAQ CAP"),
and the Company shall be required and allowed to limit the number of Exercise
Shares issued by the Company to the Holder to the Holder's Pro Rata Amount (as
defined below).

                                       3
<PAGE>   4

                  (b) Prior to the Stockholder Approval, the Holder shall be
entitled to convert that amount of its Notes and to exercise that amount of its
Warrants equal to the Holder's pro rata share of the Nasdaq Cap (the
"PURCHASER'S PRO RATA AMOUNT").

                  (c) This Section 2.3 shall terminate and be of no force and
effect in the event (i) Stockholder Approval is obtained or (ii) Nasdaq shall
have granted an exception to its requirement of the receipt of stockholder
approval under its Rule 4350(i).

         3. COVENANTS OF THE COMPANY.

         3.1. COVENANTS AS TO EXERCISE SHARES. The Company covenants and agrees
that all Exercise Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. The Company further covenants and
agrees that the Company will at all times during the Exercise Period, have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Series B Preferred Stock to provide for the exercise of the rights
represented by this Warrant. If at any time during the Exercise Period the
number of authorized but unissued shares of Series B Preferred Stock shall not
be sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series B Preferred Stock to such number of
shares as shall be sufficient for such purposes.

         3.2. NO IMPAIRMENT. Except and to the extent as waived or consented to
by the Majority Warrant Holders, the Company will not, by amendment of its
Certificate of Incorporation or any certificates of designation thereto or
through any reorganization, transfer of assets, consolidation, merger,
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 to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the exercise rights of the Holder against impairment.

         3.3. NOTICES OF RECORD DATE. In the event of any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in previous
quarters) or other distribution, the Company shall mail to the Holder, at least
thirty (30) days prior to the date specified herein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend or
distribution.

         3.4. NOTICE OF EXPIRATION. If this Warrant has not been fully exercised
on or before the date thirty (30) days prior to the end of the Exercise Period,
the Company shall thereafter provide Holder with at least thirty (30) days
advance written notice of the date on which this Warrant is to expire. If the
Company fails to provide such notice, the Exercise Period shall be extended
until the date thirty (30) days after the date said notice is provided to
Holder.

                                       4
<PAGE>   5

         4.       DISPOSITION OF WARRANT AND EXERCISE SHARES, ADJUSTMENT OF
                  EXERCISE PRICE AND EFFECT OF ORGANIC CHANGES.

         4.1.     DISPOSITION OF WARRANT AND EXERCISE SHARES.

                  (a) The Holder agrees not to make any disposition of all or
any part of the Warrant, Exercise Shares or Common Stock underlying the Exercise
Shares in any event unless and until:

                           (i) There is then in effect a registration statement
under the Act covering such proposed disposition and such disposition is made in
accordance with said registration statement; or

                           (ii) (a) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144.

                  (b) Notwithstanding the provisions of paragraphs (a)(i) and
(a)(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder that is (A) a partnership transferring to
its partners or former partners in accordance with partnership interests, (B) a
corporation transferring to a wholly owned subsidiary or a parent corporation
that owns all of the capital stock of the Holder, (C) a limited liability
company transferring to its members or former members in accordance with their
interest in the limited liability company, or (D) an individual transferring to
the Holder's family member or trust for the benefit of an individual Holder.

         4.2. ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the
outstanding Series B Preferred Stock of the Company by reason of stock
dividends, splits, recapitalizations, reclassifications, combinations or
exchanges of shares, separations, reorganizations, liquidations, or the like,
the number and class of shares available under the Warrant in the aggregate and
the Exercise Price shall be correspondingly adjusted to give the Holder of the
Warrant, on exercise for the same aggregate Exercise Price, the total number,
class, and kind of shares as the Holder would have owned had the Warrant been
exercised prior to the event and had the Holder continued to hold such shares
until after the event requiring adjustment. The form of this Warrant need not be
changed because of any adjustment in the number of Exercise Shares subject to
this Warrant.

         4.3. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any recapitalization, reclassification or reorganization of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of the Company's Series
B Preferred Stock shall be entitled to receive stock, securities, or other
assets or property (an "ORGANIC CHANGE"), then, as a condition of such Organic
Change, lawful and adequate provisions shall be made by the Company whereby the
Holder hereof shall thereafter have the right to purchase and receive (in lieu

                                       5
<PAGE>   6

of the shares of the Series B Preferred Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby) such shares of stock, securities or other assets or property
as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Series B Preferred Stock equal to the number of
shares of such stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby. In the event of any Organic Change,
appropriate provision shall be made by the Company with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the
Exercise Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. The Company will not effect any such consolidation, merger or sale
unless, prior to the consummation thereof, the successor corporation (if other
than the Company) resulting from such consolidation or the corporation
purchasing such assets shall assume by written instrument reasonably
satisfactory in form and substance to the Majority Warrant Holders to expressly
assume the due and punctual performance and observation of each and every
covenant and condition of this Warrant, executed and mailed or delivered to the
registered Holder hereof at the last address of such Holder appearing on the
books of the Company, the obligation to deliver to such Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase.

         4.4. CERTAIN EVENTS. If any change in the outstanding Series B
Preferred Stock of the Company or any other event occurs as to which the other
provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of the Holder of the
Warrant in accordance with such provisions, then the Board of Directors of the
Company shall make an adjustment in the number and class of shares available
under the Warrant, the Exercise Price or the application of such provisions, so
as to protect such purchase rights as aforesaid. The adjustment shall be such as
to give the Holder of the Warrant upon exercise for the same aggregate Exercise
Price the total number, class and kind of shares as he would have owned had the
Warrant been exercised prior to the event and had he continued to hold such
shares until after the event requiring adjustment.

         5. FRACTIONAL SHARES. Fractional shares may be issued upon the exercise
of this Warrant. Any reference contained herein to Exercise Shares or shares of
Common Stock shall be deemed to include fractional shares to the extent thereof.
The size of all fractional shares shall be rounded to four decimal places.

         6. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company.

         7. TRANSFER OF WARRANT. Subject to applicable laws, this Warrant and
all rights hereunder are transferable, by the Holder in person or by duly
authorized attorney, upon delivery of this Warrant and the form of assignment

                                       6
<PAGE>   7

attached hereto to any Permitted Transferee (as defined in the Purchase
Agreement).

         8. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.

         9. NOTICES, ETC. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address listed on the signature page and to Holder at the address listed
on the signature page hereto. The Company or Holder may designate by ten (10)
days advance written notice to the other parties hereto a change of address that
notices may be sent.

         10. AMENDMENT AND WAIVER. Any term in this Warrant may be amended or
waived with the written consent of the Company and the Majority Warrant Holders.
Holder acknowledges that because this Warrant may be amended with the consent of
the Majority Warrant Holders, the Holder's rights hereunder may be amended or
waived without the Holder's consent.

         11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.

         12. GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of Delaware.

                            [SIGNATURE PAGE FOLLOWS]

                                       7
<PAGE>   8

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer as of May 14, 2001.

                          INTERNET PICTURES CORPORATION

                          By: _________________________________________________
                          Name:
                          Title:

                          Address: 3160 Crow Canyon Road
                                   San Ramon, CA  94583

FOR NOTICE ONLY:

HOLDER:

IMAGE INVESTOR PORTFOLIO,
a separate series of
MEMPHIS ANGELS, LLC
c/o Paradigm Capital Equity Partners, LLC
6410 Poplar Avenue, Suite 395
Memphis, TN  38119
Attn:  Warner B. Rodda, Esq., General Counsel
Facsimile:  (901) 763-3230

                    TRANCHE A WARRANT ($20.00 EXERCISE PRICE)
                                 SIGNATURE PAGE

                                       8
<PAGE>   9

                               NOTICE OF EXERCISE

TO:  INTERNET PICTURES CORPORATION

         (1) [ ] The undersigned hereby elects to purchase ________ shares of
the Series B Preferred Stock of INTERNET PICTURES CORPORATION pursuant to the
terms of the attached Warrant, and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if any.

             [ ] The undersigned hereby elects to purchase ________ shares of
the Series B Preferred Stock of INTERNET PICTURES CORPORATION pursuant to the
terms of the net exercise provisions set forth in Section 2.2 of the attached
Warrant, and shall tender payment of all applicable transfer taxes, if any.

         (2) [ ] Please issue a certificate or certificates representing said
shares of Series B Preferred Stock in the name of the undersigned or in such
other name as is specified below:

                                             ------------------------
                                                     (Name)

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

                                             ------------------------
                                                   (Address)

-----------------------                           ----------------------------
(Date)                                            (Signature)

                                                  ----------------------------
                                                  (Print name)

                                       1
<PAGE>   10

                                 ASSIGNMENT FORM

                        (To assign the foregoing
                        Warrant, execute this form and
                        supply required information. Do
                        not use this form to purchase
                        shares.)

         FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

Name:
       ------------------------------------------------------------------------
                                 (Please Print)

Address:
          ---------------------------------------------------------------------
                                 (Please Print)

Dated:
       -----------------

Holder's
Signature:
           ------------------------------------------------------------

Holder's
Address:
         --------------------------------------------------------------

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

                                       2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00026-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00026-of-00352.parquet"}]]