EXHIBIT 4.8

                               SECURITY AGREEMENT


        SECURITY  AGREEMENT,   dated  as  of  May  11,  2000,  between  SITESTAR
CORPORATION,  a Nevada  corporation  (the  "Company"),  and the secured  parties
signatory  hereto  and  their  respective  endorsees,  transferees  and  assigns
(collectively, the "Secured Party").


                              W I T N E S S E T H:

        WHEREAS, pursuant to a Secured Convertible Debenture Purchase Agreement,
dated the date  hereof  among  Company  and the  Secured  Party  (the  "Purchase
Agreement"),  Company has agreed to issue to the  Secured  Party and the Secured
Party has agreed to  purchase  from  Company an  aggregate  principal  amount of
$500,000 of Company's 12% Secured  Convertible  Debentures  (the  "Debentures"),
which are  convertible  into shares of Company's  Class A Common  Stock,  no par
value (the "Common Stock"); and

        WHEREAS,   in  order  to  induce  the  Secured  Party  to  purchase  the
Debentures,  Company has agreed to execute and deliver to the Secured Party this
Agreement  for the  benefit  of the  Secured  Party  and to  grant to it a first
priority  security  interest in certain property of Company to secure the prompt
payment, performance and discharge in full of all of Company's obligations under
the Debentures.

        NOW, THEREFORE,  in consideration of the agreements herein contained and
for other good and valuable consideration,  the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

        1. Certain Definitions.  As used in this Agreement,  the following terms
shall  have  the  meanings  set  forth in this  Section  1.  Terms  used but not
otherwise  defined in this  Agreement  that are  defined in Article 9 of the UCC
(such as  "general  intangibles"  and  "proceeds")  shall  have  the  respective
meanings given such terms in Article 9 of the UCC.

               (a) "Warrants"  means the Company's  Class A Warrants,  entitling
the holders thereof to purchase an aggregate of 250,000shares of Common Stock.

               (b) "Collateral"  means the collateral in which the Secured Party
is granted a security  interest by this  Agreement  and which shall  include the
following,  whether presently owned or existing or hereafter  acquired or coming
into existence,  and all additions and accessions  thereto and all substitutions
and  replacements  thereof,  and all  proceeds,  products and accounts  thereof,
including,  without  limitation,  all proceeds  from the sale or transfer of the
Collateral  and of  insurance  covering  the  same  and of any  tort  claims  in
connection therewith:

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               (i) All Goods of the Company, including, without limitations, all
          machinery,  equipment,  computers, motor vehicles, trucks, appliances,
          furniture,  special  and  general  tools,  fixtures,  test and quality
          control  devices  and other  equipment  of every  kind and  nature and
          wherever situated,  together with all documents of title and documents
          representing   the  same,  all  additions  and   accessions   thereto,
          replacements therefor, all parts therefor, and all substitutes for any
          of the  foregoing  and all other  items used and useful in  connection
          with  the   Company's   businesses   and  all   improvements   thereto
          (collectively, the "Equipment"); and

               (ii) All Inventory of the Company; and

               (iii)  All  of  the   Company's   contract   rights  and  general
          intangibles, including, without limitation, all partnership interests,
          stock  or  other   securities,   licenses,   distribution   and  other
          agreements,  computer software development rights, leases, franchises,
          customer  lists,  quality  control  procedures,   grants  and  rights,
          goodwill,  trademarks,  service  marks,  trade  styles,  trade  names,
          patents, patent applications, copyrights, deposit accounts, and income
          tax refunds (collectively, the "General Intangibles"); and

               (iv) All  Receivables  of the  Company  including  all  insurance
          proceeds,  and rights to refunds or indemnification  whatsoever owing,
          together with all instruments, all documents of title representing any
          of the foregoing,  all rights in any merchandising,  goods, equipment,
          motor vehicles and trucks which any of the same may represent, and all
          right, title, security and guaranties with respect to each Receivable,
          including any right of stoppage in transit; and

               (v)  All of the  Company's  documents,  instruments  and  chattel
          paper, files,  records,  books of account,  business papers,  computer
          programs  and  the  products  and  proceeds  of all  of the  foregoing
          Collateral set forth in clauses (i)-(iv) above.

               (c) "Company"  shall mean,  collectively,  Company and all of the
subsidiaries of Company.

               (d)  "Obligations"  means all of the Company's  obligations under
this Agreement,  the Debentures and the Warrants,  in each case,  whether now or
hereafter existing,  voluntary or involuntary,  direct or indirect,  absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and  whether  or not from  time to time  decreased  or  extinguished  and  later
increased,  created or incurred,  and all or any portion of such  obligations or
liabilities  that are paid,  to the  extent  all or any part of such  payment is
avoided  or  recovered  directly  or  indirectly  from  the  Secured  Party as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.

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<PAGE>

               (e) INTENTIONALLY OMITTED.

               (f) INTENTIONALLY OMITTED.

               (g) "Two  Thirds-in-Interest"  means  one or more of the  secured
party signatories hereto holding in excess of 66.66% of the aggregate  principal
amount of the Debentures outstanding, determined on a cumulative basis.

               (h) "UCC" means the Uniform  Commercial  Code,  as  currently  in
effect in the State of New York.

        2. Grant of Security Interest. As an inducement for the Secured Party to
purchase  the  Debentures  and  to  secure  the  complete  and  timely  payment,
performance  and  discharge  in  full,  as  the  case  may  be,  of  all  of the
Obligations,  the Company  hereby,  unconditionally  and  irrevocably,  pledges,
grants and hypothecates to the Secured Party, a continuing security interest in,
a first lien upon and a right of set-off  against  all of the  Company's  right,
title and interest of whatsoever  kind and nature in and to the Collateral  (the
"Security Interest").

         3.  Representations,   Warranties,  Covenants  and  Agreements  of  the
Company.  The Company represents and warrants to, and covenants and agrees with,
the Secured Party as follows:

               (a) The Company has the requisite  corporate  power and authority
to  enter  into  this  Agreement  and  otherwise  to carry  out its  obligations
thereunder.  The  execution,  delivery  and  performance  by the Company of this
Agreement and the filings  contemplated therein have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company.

               (b) The Company  represents  and warrants that it has no place of
business or offices where its  respective  books of account and records are kept
(other than  temporarily  at the offices of its  attorneys  or  accountants)  or
places where Collateral is stored or located,  except as set forth on Schedule A
attached hereto;


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<PAGE>

               (c) Except as specified in Schedule 3(c), the Company is the sole
owner of the  Collateral  (except  for  non-exclusive  licenses  granted  by the
Company  in the  ordinary  course of  business),  free and  clear of any  liens,
security interests,  encumbrances,  rights or claims, and is fully authorized to
grant the  Security  Interest in and to pledge the  Collateral.  There is not on
file in any governmental or regulatory authority,  agency or recording office an
effective financing  statement,  security agreement,  license or transfer or any
notice of any of the  foregoing  (other than those that have been filed in favor
of the Secured Party  pursuant to this  Agreement)  covering or affecting any of
the  Collateral.  So long as this  Agreement  shall be in effect  and other than
pursuant  to Section 11 hereof,  the  Company  shall not  execute  and shall not
knowingly  permit to be on file in any such office or agency any such  financing
statement  or other  document  or  instrument  (except  to the  extent  filed or
recorded in favor of the Secured Party pursuant to the terms of this Agreement).

               (d) Except as specified in Schedule  3(d),  no written  claim has
been  received  that  any  Collateral  or the  Company's  use of any  Collateral
violates  the rights of any third party.  There has been no adverse  decision to
the  Company's  claim of  ownership  rights  in or  exclusive  rights to use the
Collateral in any  jurisdiction  or to the Company's  right to keep and maintain
such Collateral in full force and effect,  and there is no proceeding  involving
said rights pending or, to the best knowledge of the Company,  threatened before
any court,  judicial body,  administrative or regulatory  agency,  arbitrator or
other governmental authority.

               (e) The Company shall at all times  maintain its books of account
and records relating to the Collateral at its principal place of business at the
locations  set forth on  Schedule A attached  hereto and may not  relocate  such
books of account and records or  tangible  Collateral  unless it delivers to the
Secured Party at least 30 days prior to such  relocation  (i) written  notice of
such  relocation  and the new location  thereof (which must be within the United
States)  and (ii)  evidence  that  appropriate  financing  statements  and other
necessary documents have been filed and recorded and other steps have been taken
to perfect the Security  Interest to create in favor of the Secured Party valid,
perfected and continuing first priority liens in the Collateral.

               (f) This Agreement  creates in favor of the Secured Party a valid
security interest in the Collateral  securing the payment and performance of the
Obligations and, upon making the filings described in the immediately  following
sentence,  a perfected  first  priority  security  interest in such  Collateral.
Except for the filing of financing  statements  on Form UCC-1 under the UCC with
the jurisdictions  indicated on Schedule B, attached hereto, no authorization or
approval of or filing with or notice to any governmental authority or regulatory
body  located in the United  States of  America is  required  either (i) for the
grant by the Company of, or the  effectiveness of, the Security Interest granted
hereby or for the execution,  delivery and  performance of this Agreement by the
Company or (ii) for the  perfection  of or exercise by the Secured  Party of its
rights and remedies hereunder.

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<PAGE>

               (g) On the date of execution of this Agreement,  the Company will
deliver to the Secured Party one or more  executed UCC  financing  statements on
UCC-1 under the UCC with  respect to the  Security  Interest for filing with the
jurisdictions  indicated  on  Schedule  B,  attached  hereto  and in such  other
jurisdictions as may be requested by the Secured Party.

               (h) The  execution,  delivery and  performance  of this Agreement
does not  conflict  with or cause a breach or default,  or an event that with or
without the  passage of time or notice,  shall  constitute  a breach or default,
under any  agreement  to which the Company is a party or by which the Company is
bound.  No  consent  (including,  without  limitation,  from  stock  holders  or
creditors  of the Company) is required for the Company to enter into and perform
its obligations hereunder.

               (i) The  Company  shall  at all  times  maintain  the  liens  and
Security  Interest  provided for hereunder as valid and perfected first priority
liens and security  interests in the  Collateral  in favor of the Secured  Party
until this  Agreement and the Security  Interest  hereunder  shall be terminated
pursuant to Section 11. The Company hereby agrees to defend the same against any
and all persons.  The Company shall safeguard and protect all Collateral for the
account of the Secured Party.  At the request of the Secured Party,  the Company
will sign and deliver to the Secured  Party at any time or from time to time one
or more  financing  statements  pursuant  to the UCC  (or any  other  applicable
statute) in form  reasonably  satisfactory to the Secured Party and will pay the
cost of filing the same in all public offices  wherever  filing is, or is deemed
by the Secured  Party to be,  necessary  or  desirable  to effect the rights and
obligations  provided  for  herein.  Without  limiting  the  generality  of  the
foregoing,  the Company shall pay all fees, taxes and other amounts necessary to
maintain the Collateral  and the Security  Interest  hereunder,  and the Company
shall  obtain and furnish to the Secured  Party from time to time,  upon demand,
such  releases  and liens which may be required to maintain  the priority of the
Security Interest hereunder.

               (j) The Company will not transfer, pledge, hypothecate, encumber,
license  (except  for  non-exclusive  licenses  granted  by the  Company  in the
ordinary course of business),  sell (except Inventory in the ordinary course) or
otherwise dispose of any of the Collateral  without the prior written consent of
the Secured Party.

               (k) The Company shall keep and preserve its Equipment,  Inventory
and other tangible Collateral in good condition,  repair and order and shall not
operate or locate any such  Collateral  (or cause to be  operated or located) in
any area excluded from insurance coverage.

               (l)  The  Company  shall,  within  ten  (10)  days  of  obtaining
knowledge thereof,  advise the Secured Party promptly,  in sufficient detail, of
any  substantial  change in the  Collateral,  and of the occurrence of any event
which would have a material  adverse effect on the value of the Collateral or on
the Secured Party's security interest therein.

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<PAGE>

               (m) The Company shall promptly execute and deliver to the Secured
Party such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take
such further  action as the Secured  Party may from time to time request and may
in its sole  discretion  deem  necessary  to  perfect,  protect or  enforce  its
security interest in the Collateral.

               (n)  The  Company   shall  permit  the  Secured   Party  and  its
representatives  and agents to inspect the  Collateral at any time,  and to make
copies of  records  pertaining  to the  Collateral  as may be  requested  by the
Secured Party from time to time.

               (o) The  Company  will take all  steps  reasonably  necessary  to
diligently pursue and seek to preserve,  enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.

               (p) The  Company  shall  promptly  notify  the  Secured  Party in
sufficient detail upon becoming aware of any attachment,  garnishment, execution
or  other  legal  process  levied  against  any  Collateral  and  of  any  other
information  received by the Company that may materially affect the value of the
Collateral,  the  Security  Interest  or the rights and  remedies of the Secured
Party hereunder.

               (q) All information  heretofore,  herein or hereafter supplied to
the Secured Party by or on behalf of the Company with respect to the  Collateral
is accurate and complete in all material respects as of the date furnished.

               (r)  Schedule A,  attached  hereto  contains a list of all of the
subsidiaries of Company.

         4.    Defaults.  The following events shall be "Events of Default":

               (a)    The  occurrence  of an Event of Default (as defined in the
Debentures) under the Debentures;

               (b)  Any  representation  or  warranty  of the  Company  in  this
Agreement or in the Intellectual Property Security Agreement shall prove to have
been incorrect in any material respect when made;

               (c) The  failure by the  Company to observe or perform any of its
obligations  for ten (10) days after  receipt  by the  Company of notice of such
failure from the Secured Party; and

               (d)    Any breach or default under the Warrants.

         5. Duty To Hold In Trust.  Upon the  occurrence of any Event of Default
and at any  time  thereafter,  the  Company  shall,  upon  receipt  by it of any
revenue, income or other sums subject to the Security Interest,  whether payable
pursuant to the Debentures or otherwise,  or of any check,  draft,  note,  trade
acceptance  or other  instrument  evidencing  an obligation to pay any such sum,
hold the same in trust for the  Secured  Party and shall  forthwith  endorse and
transfer  any such  sums or  instruments,  or both,  to the  Secured  Party  for
application to the satisfaction of the Obligations.

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<PAGE>

         6. Rights and Remedies  Upon Default.  Upon  occurrence of any Event of
Default and at any time  thereafter,  the Secured  Party shall have the right to
exercise all of the remedies  conferred  hereunder and under the  Debentures and
the Warrants,  and the Secured Party shall have all the rights and remedies of a
secured  party  under the UCC and/or any other  applicable  law  (including  the
Uniform  Commercial  Code of any  jurisdiction  in which any  Collateral is then
located).  Without limitation, the Secured Party shall have the following rights
and powers:

               (a) The Secured Party shall have the right to take  possession of
the Collateral and, for that purpose,  enter, with the aid and assistance of any
person,  any premises where the  Collateral,  or any part thereof,  is or may be
placed and remove the same,  and the Company shall  assemble the  Collateral and
make it available to the Secured  Party at places which the Secured  Party shall
reasonably  select,  whether at the Company's  premises or  elsewhere,  and make
available to the Secured Party,  without rent,  all of the Company's  respective
premises and facilities  for the purpose of the Secured Party taking  possession
of, removing or putting the Collateral in saleable or disposable form.

               (b) The  Secured  Party  shall  have  the  right to  operate  the
business of the Company using the Collateral and shall have the right to assign,
sell,  lease  or  otherwise  dispose  of and  deliver  all or  any  part  of the
Collateral,  at public or  private  sale or  otherwise,  either  with or without
special  conditions  or  stipulations,  for  cash  or on  credit  or for  future
delivery,  in such parcel or parcels and at such time or times and at such place
or places,  and upon such terms and  conditions  as the  Secured  Party may deem
commercially reasonable,  all without (except as shall be required by applicable
statute  and cannot be  waived)  advertisement  or demand  upon or notice to the
Company  or right of  redemption  of the  Company,  which are  hereby  expressly
waived. Upon each such sale, lease,  assignment or other transfer of Collateral,
the Secured  Party may,  unless  prohibited  by  applicable  law which cannot be
waived,  purchase all or any part of the  Collateral  being sold,  free from and
discharged  of all  trusts,  claims,  right of  redemption  and  equities of the
Company, which are hereby waived and released.

        7.  Applications  of Proceeds.  The proceeds of any such sale,  lease or
other  disposition of the Collateral  hereunder  shall be applied first,  to the
expenses of retaking,  holding,  storing,  processing  and  preparing  for sale,
selling, and the like (including,  without limitation, any taxes, fees and other
costs  incurred in connection  therewith) of the  Collateral,  to the reasonable
attorneys'  fees and expenses  incurred by the Secured  Party in  enforcing  its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral,  and then to satisfaction of the Obligations,  and to the payment of
any other  amounts  required by  applicable  law,  after which the Secured Party
shall pay to the  Company any surplus  proceeds.  If, upon the sale,  license or
other  disposition of the Collateral,  the proceeds  thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled,  secured parties


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<PAGE>

signatory  hereto will be entitled  to their pro rata  portion of such  proceeds
(determined  by  reference  to the  aggregate  principal  amount  of  Debentures
outstanding,  determined on a cumulative  basis), and the Company will be liable
for the deficiency, together with interest thereon, at the rate of 17% per annum
(the "Default Rate"),  and the reasonable fees of any attorneys  employed by the
Secured Party to collect such deficiency.  To the extent permitted by applicable
law,  the  Company  waives all claims,  damages and demands  against the Secured
Party  arising  out of the  repossession,  removal,  retention  or  sale  of the
Collateral,  unless due to the gross  negligence  or willful  misconduct  of the
Secured Party.

        8. Costs and Expenses. The Company agrees to pay all out-of-pocket fees,
costs and expenses  incurred in connection with any filing  required  hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or  termination  statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable  opinion of the Secured
Party  might  prejudice,  imperil  or  otherwise  affect the  Collateral  or the
Security  Interest  therein.  The Company  will also,  upon  demand,  pay to the
Secured  Party the  amount of any and all  reasonable  expenses,  including  the
reasonable fees and expenses of its counsel and of any experts and agents, which
the  Secured  Party may incur in  connection  with (i) the  enforcement  of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other  realization  upon,  any of the  Collateral,  or (iii) the  exercise or
enforcement  of any of the rights of the  Secured  Party  under the  Debentures.
Until so paid, any fees payable hereunder shall be added to the principal amount
of the Debentures and shall bear interest at the Default Rate.

        9.  Responsibility  for Collateral.  The Company assumes all liabilities
and responsibility in connection with all Collateral, and the obligations of the
Company  hereunder or under the  Debentures  and the Warrants shall in no way be
affected or  diminished by reason of the loss,  destruction,  damage or theft of
any of the Collateral or its unavailability for any reason.


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        10. Security Interest Absolute.  All rights of the Secured Party and all
Obligations  of the  Company  hereunder,  shall be absolute  and  unconditional,
irrespective of: (a) any lack of validity or  enforceability  of this Agreement,
the  Debentures,  the Warrants or any agreement  entered into in connection with
the  foregoing,  or any portion  hereof or thereof;  (b) any change in the time,
manner or place of  payment or  performance  of, or in any other term of, all or
any of the  Obligations,  or any other  amendment or waiver of or any consent to
any departure from the Debentures,  the Warrants or any other agreement  entered
into  in  connection   with  the  foregoing;   (c)  any  exchange,   release  or
nonperfection of any of the Collateral, or any release or amendment or waiver of
or consent to departure from any other  collateral for, or any guaranty,  or any
other security, for all or any of the Obligations; (d) any action by the Secured
Party to obtain,  adjust, settle and cancel in its sole discretion any insurance
claims or matters made or arising in connection with the Collateral;  or (e) any
other  circumstance  which might  otherwise  constitute  any legal or  equitable
defense  available  to the  Company,  or a  discharge  of all or any part of the
Security Interest granted hereby. Until the Obligations shall have been paid and
performed in full,  the rights of the Secured  Party shall  continue even if the
Obligations  are barred  for any  reason,  including,  without  limitation,  the
running of the statute of  limitations  or  bankruptcy.  The  Company  expressly
waives presentment, protest, notice of protest, demand, notice of nonpayment and
demand  for  performance.  In the  event  that at any time any  transfer  of any
Collateral  or any  payment  received by the Secured  Party  hereunder  shall be
deemed  by final  order  of a court of  competent  jurisdiction  to have  been a
voidable preference or fraudulent  conveyance under the bankruptcy or insolvency
laws of the United  States,  or shall be deemed to be otherwise due to any party
other than the Secured Party, then, in any such event, the Company's obligations
hereunder  shall  survive  cancellation  of this  Agreement,  and  shall  not be
discharged or satisfied by any prior payment thereof and/or cancellation of this
Agreement,  but  shall  remain a valid and  binding  obligation  enforceable  in
accordance with the terms and provisions hereof. The Company waives all right to
require the Secured  Party to proceed  against any other  person or to apply any
Collateral  which the Secured Party may hold at any time, or to marshal  assets,
or to pursue any other remedy.  The Company waives any defense arising by reason
of the  application  of the statute of  limitations  to any  obligation  secured
hereby.

        11. Term of Agreement and Subordination of Security  Interest.  (a) This
Agreement  and the Security  Interest  shall  terminate on the date on which all
payments under the Debentures  have been made in full and all other  Obligations
have been paid or discharged.  Notwithstanding the foregoing and anything to the
contrary  contained  herein,  in no event shall this  Agreement  or the Security
Interest  terminate  prior to the date that an  Underlying  Shares  Registration
Statement is first declared effective by the Securities and Exchange Commission.

               (b)    INTENTIONALLY OMITTED.

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<PAGE>

               (c) Upon any  termination  of the Security  Interest  pursuant to
this  Section  11, the Secured  Party,  at the request and at the expense of the
Company,  will  join  in  executing  an  appropriate  amendment  or  termination
statement (as the case may be) with respect to any financing  statement executed
and filed pursuant to this Agreement.

         12. Power of Attorney;  Further Assurances.  (a) The Company authorizes
the Secured  Party,  and does hereby  make,  constitute  and appoint it, and its
respective  officers,   agents,   successors  or  assigns  with  full  power  of
substitution, as the Company's true and lawful attorney-in-fact,  with power, in
its own name or in the name of the Company,  to, after the occurrence and during
the continuance of an Event of Default, (i) endorse any notes,  checks,  drafts,
money orders, or other instruments of payment (including  payments payable under
or in respect of any policy of insurance) in respect of the Collateral  that may
come into  possession  of the  Secured  Party;  (ii) to sign and endorse any UCC
financing  statement or any invoice,  freight or express  bill,  bill of lading,
storage  or   warehouse   receipts,   drafts   against   debtors,   assignments,
verifications  and notices in  connection  with  accounts,  and other  documents
relating to the Collateral;  (iii) to pay or discharge  taxes,  liens,  security
interests or other  encumbrances  at any time levied or placed on or  threatened
against the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and sue for monies due in respect of the Collateral;  and (v) generally,  to do,
at the option of the Secured Party, and at the Company's  expense,  at any time,
or from  time to  time,  all acts and  things  which  the  Secured  Party  deems
necessary to protect,  preserve and realize upon the Collateral and the Security
Interest  granted therein in order to effect the intent of this  Agreement,  the
Debentures and the Warrants all as fully and effectually as the Company might or
could do; and the Company 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  shall  be  irrevocable  for the  term of this  Agreement  and
thereafter as long as any of the Obligations  shall be  outstanding,  subject to
termination under Section 11.

               (b) On a  continuing  basis,  the  Company  will  make,  execute,
acknowledge,  deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction,  including,  without  limitation,  the
jurisdictions  indicated on Schedule B, attached hereto,  all such  instruments,
and take all such action as may reasonably be deemed necessary or advisable,  or
as reasonably  requested by the Secured Party, to perfect the Security  Interest
granted  hereunder  and  otherwise  to carry out the intent and purposes of this
Agreement,  or for assuring  and  confirming  to the Secured  Party the grant or
perfection of a security interest in all the Collateral.

               (c) The Company hereby irrevocably  appoints the Secured Party as
the Company's  attorney-in-fact,  with full  authority in the place and stead of
the  Company  and in the name of the  Company,  from time to time in the Secured
Party's  discretion,  to take any action and to execute any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement,  including  the  filing,  in its  sole  discretion,  of  one or  more
financing or continuation statements and amendments thereto,  relative to any of
the Collateral without the signature of the Company where permitted by law.

                                       10
<PAGE>

        13. Notices.  All notices,  requests,  demands and other  communications
hereunder shall be in writing,  with copies to all the other parties hereto, and
shall be deemed to have been duly  given  when (i) if  delivered  by hand,  upon
receipt,  (ii) if sent by facsimile,  upon receipt of proof of sending  thereof,
(iii) if sent by  nationally  recognized  overnight  delivery  service  (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified  mail,  return receipt  requested,  postage  prepaid,  four days after
posting in the U.S. mails, in each case if delivered to the following addresses:

        If to the Company:          16133 Ventura Boulevard
                                    Suite 635
                                    Encino, CA 91436

        If to the Secured  Party,  to the  address set forth below such  Secured
Party's name on the signatures pages hereto.

        14.  Other  Security.  To the  extent  that the  Obligations  are now or
hereafter  secured by property  other than the  Collateral or by the  guarantee,
endorsement or property of any other person, firm,  corporation or other entity,
then the Secured Party shall have the right, in its sole discretion,  to pursue,
relinquish,  subordinate,  modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured  Party's rights and
remedies hereunder.

        15.  Actions by the Secured  Party.  Any action  required  or  permitted
hereunder to be taken by or on behalf of the secured  parties  signatory  hereto
shall,  for  such  action  to  be  valid,   require  the  approval  of  the  Two
Thirds-in-Interest prior to the taking of such action. If the consent,  approval
or disapproval of the secured parties  signatory hereto is required or permitted
pursuant to this Agreement,  such consent, approval or disapproval shall only be
valid if given by the Two Thirds-in-Interest.

        16.    Miscellaneous.

               (a) No course of dealing  between  the  Company  and the  Secured
Party, nor any failure to exercise, nor any delay in exercising,  on the part of
the  Secured  Party,  any  right,  power or  privilege  hereunder  or under  the
Debentures  shall operate as a waiver  thereof;  nor shall any single or partial
exercise of any right, power or privilege  hereunder or thereunder  preclude any
other or further exercise  thereof or the exercise of any other right,  power or
privilege.

               (b) All of the  rights and  remedies  of the  Secured  Party with
respect to the Collateral, whether established hereby or by the Debentures or by
any other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.

                                       11
<PAGE>

               (c)  This  Agreement  constitutes  the  entire  agreement  of the
parties with respect to the subject  matter  hereof and is intended to supersede
all prior  negotiations,  understandings  and agreements  with respect  thereto.
Except  as  specifically  set  forth in this  Agreement,  no  provision  of this
Agreement may be modified or amended except by a written agreement  specifically
referring to this Agreement and signed by the parties hereto.

               (d) In the event that any provision of this  Agreement is held to
be invalid,  prohibited or  unenforceable  in any  jurisdiction  for any reason,
unless such  provision  is narrowed by  judicial  construction,  this  Agreement
shall, as to such jurisdiction,  be construed as if such invalid,  prohibited or
unenforceable  provision had been more  narrowly  drawn so as not to be invalid,
prohibited or unenforceable. If, notwithstanding the foregoing, any provision of
this  Agreement  is held  to be  invalid,  prohibited  or  unenforceable  in any
jurisdiction,  such provision, as to such jurisdiction,  shall be ineffective to
the  extent  of  such  invalidity,   prohibition  or  unenforceability   without
invalidating the remaining  portion of such provision or the other provisions of
this  Agreement  and without  affecting the validity or  enforceability  of such
provision or the other provisions of this Agreement in any other jurisdiction.

               (e) No waiver of any breach or  default  or any right  under this
Agreement  shall be  considered  valid unless in writing and signed by the party
giving  such  waiver,  and no such  waiver  shall  be  deemed  a  waiver  of any
subsequent breach or default or right,  whether of the same or similar nature or
otherwise.

               (f) This Agreement shall be binding upon and inure to the benefit
of each party hereto and its successors and assigns.

               (g) Each party  shall take such  further  action and  execute and
deliver such further  documents as may be necessary or  appropriate  in order to
carry out the provisions and purposes of this Agreement.

               (h) This Agreement shall be construed in accordance with the laws
of the State of New York,  except to the  extent  the  validity,  perfection  or
enforcement  of a security  interest  hereunder  in  respect  of any  particular
Collateral which are governed by a jurisdiction other than the State of New York
in which case such law shall  govern.  Each of the  parties  hereto  irrevocably
submit to the  exclusive  jurisdiction  of any New York  State or United  States
Federal court sitting in Nassau county over any action or proceeding arising out
of or relating to this  Agreement,  and the parties  hereto  hereby  irrevocably
agree that all claims in respect of such action or  proceeding  may be heard and
determined  in such New York State or Federal  court.  The parties  hereto agree
that a final  judgment in any such action or proceeding  shall be conclusive and
may be enforced in other  jurisdictions  by suit on the judgment or in any other
manner  provided by law. The parties hereto further waive any objection to venue
in the State of New York and any  objection  to an action or  proceeding  in the
State of New York on the basis of forum non convenient.

                                       12
<PAGE>

               (i) EACH  PARTY  HERETO  HEREBY  AGREES TO WAIVE  ITS  RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL  ENCOMPASSING
OF ANY  DISPUTES  THAT MAY BE FILED IN ANY COURT AND THAT  RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT,  INCLUDING WITHOUT  LIMITATION  CONTRACT CLAIMS,  TORT
CLAIMS,  BREACH OF DUTY CLAIMS AND ALL OTHER  COMMON LAW AND  STATUTORY  CLAIMS.
EACH PARTY HERETO  ACKNOWLEDGES  THAT THIS WAIVER IS A MATERIAL  INDUCEMENT  FOR
EACH PARTY TO ENTER INTO A BUSINESS  RELATIONSHIP,  THAT EACH PARTY HAS  ALREADY
RELIED ON THIS WAIVER IN ENTERING  INTO THIS  AGREEMENT AND THAT EACH PARTY WILL
CONTINUE TO RELY ON THIS WAIVER IN THEIR  RELATED  FUTURE  DEALINGS.  EACH PARTY
FURTHER  WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL,  AND THAT SUCH PARTY KNOWINGLY AND  VOLUNTARILY  WAIVED ITS RIGHTS TO A
JURY TRIAL  FOLLOWING SUCH  CONSULTATION.  THIS WAIVER IS  IRREVOCABLE,  MEANING
THAT,  NOTWITHSTANDING  ANYTHING HEREIN TO THE CONTRARY,  IT MAY NOT BE MODIFIED
EITHER  ORALLY OR IN  WRITING,  AND THIS WAIVER  SHALL  APPLY TO ANY  SUBSEQUENT
AMENDMENTS,  RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE
EVENT OF A LITIGATION,  THIS  AGREEMENT  MAY BE FILED AS A WRITTEN  CONSENT TO A
TRIAL BY THE COURT.

               (j) This Agreement may be executed in any number of counterparts,
each of which when so  executed  shall be deemed to be an original  and,  all of
which taken together shall  constitute one and the same Agreement.  In the event
that any signature is delivered by facsimile transmission,  such signature shall
create a valid  binding  obligation  of the party  executing (or on whose behalf
such  signature is executed)  the same with the same force and effect as if such
facsimile signature were the original thereof.

                              * * * * * * * * * * *




                                       13
<PAGE>


               IN WITNESS WHEREOF,  the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.

                             SITESTAR CORPORATION

                                   /s/ Clinton J. Sallee
                             By: -----------------------------
                             Name:  Clinton J. Sallee
                             Title:    President & CEO


                             NEW MILLENNIUM CAPITAL PARTNERS II, LLC
                             By:        FIRST STREET MANAGER II, LLC

                                   /s/ Glenn A. Arbeitman
                             By: -----------------------------
                             Name:      Glenn A. Arbeitman
                             Title:     Manager

                             155 First Street, Suite B
                             Mineola, New York 11501
                             Facsimile No.: 516-739-7115

                             Debentures Purchase Price:          $350,000

                             AJW PARTNERS, LLC

                             By:         SMS GROUP, LLC

                                   /s/ Corey S. Ribotsky
                             By: -----------------------------
                             Name:      Corey S. Ribotsky
                             Title:     Manager

                             155 First Street, Suite B
                             Mineola, New York 11501
                             Facsimile No.: 516-739-7115

                             Debentures Purchase Price:          $150,000




                                       14
<PAGE>


                                   SCHEDULE A


Principal Place of Business of the Company:
16133 Ventura Boulevard
Suite 635
Encino, California  91436



Locations Where Collateral is Located or Stored:
16133 Ventura Boulevard
Suite 635
Encino, California  91436

29 West Main Streeet
Martinsville, Virginia  24112


List of subsidiaries of the Company:
Neocom Microspecialists, Inc.
Greattools.com
Soccersite.com
Holland-American.com



                                       15
<PAGE>



                                          SCHEDULE B

Jurisdictions:








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