Document:

SECURITY AGREEMENT

1.     Identification.

     This  Security  Agreement  (the  "Agreement"), dated as of May 23, 2005, is
entered  into by and between GTC Telecom Corp., a Nevada corporation ("Debtor"),
and  Barbara Mittman, as collateral agent acting in the manner and to the extent
described  in  the  Collateral  Agent  Agreement  defined below (the "Collateral
Agent"),  for  the  benefit  of  the  parties  identified  on  Schedule A hereto
(collectively,  the  "Lenders").

2.     Recitals.

     2.1     The  Lenders have made or are making loans to Debtor (the "Loans").
It  is  beneficial  to  Debtor  that  the  Loans  were  made and are being made.

     2.2     The  Loans  are  evidenced  by certain convertible promissory notes
(each  a  "Convertible  Note")  issued  by  Debtor  on or about the date of this
Agreement  pursuant to subscription agreements (each a "Subscription Agreement")
to  which  Debtor  and Lenders are parties.  The Notes are further identified on
Schedule  A  hereto  and  were  and  will be executed by Debtor as "Borrower" or
"Debtor"  for  the  benefit  of each Lender as the "Holder" or "Lender" thereof.

     2.3     In  consideration  of  the  Loans made by Lenders to Debtor and for
other  good  and  valuable consideration, and as security for the performance by
Debtor  of  its obligations under the Notes and as security for the repayment of
the  Loans and all other sums due from Debtor to Lenders arising under the Notes
presently  outstanding  or  to  be  outstanding  in  the  future,  Subscription
Agreements,  and  any  other  agreement between or among them (collectively, the
"Obligations"), Debtor, for good and valuable consideration, receipt of which is
acknowledged,  has  agreed  to grant to the Collateral Agent, for the benefit of
the  Lenders, a security interest in the Collateral (as such term is hereinafter
defined),  on  the  terms  and  conditions  hereinafter  set forth.  Obligations
include all future advances by Lenders to Debtor advanced on a pro rata basis by
all  Lenders  on  substantially  the  same  terms.

     2.4     The  Lenders  have  appointed  Barbara  Mittman as Collateral Agent
pursuant  to  that  certain Collateral Agent Agreement dated at or about May 23,
2005  ("Collateral  Agent  Agreement"),  among the Lenders and Collateral Agent.

     2.5     The  following  defined  terms  which  are  defined  in the Uniform
Commercial  Code  in effect in the State of New York on the date hereof are used
herein  as  so  defined:  Accounts, Chattel Paper, Documents, Equipment, General
Intangibles,  Instruments,  Inventory  and  Proceeds.

3.     Grant  of  General  Security  Interest  in  Collateral.

     3.1  As  security  for  the Obligations of Debtor, Debtor hereby grants the
Collateral  Agent,  for  the  benefit of the Lenders, a security interest in the
Collateral.

     3.2  "Collateral"  shall  mean  all  of  the  following property of Debtor:

     (A)     All  now  owned and hereafter acquired right, title and interest of
Debtor  in, to and in respect of all Accounts, Goods, real or personal property,
all  present  and  future  books  and  records relating to the foregoing and all
products  and  Proceeds  of  the  foregoing,  and  as  set  forth  below:

          (i)  Accounts:  All  now owned and hereafter acquired right, title and
     interest  of  Debtor  in,  to and in respect of all: Accounts, interests in
     goods  represented  by  Accounts,  returned, reclaimed or repossessed goods
     with  respect  thereto  and  rights  as  an unpaid vendor; contract rights;
     Chattel  Paper; investment property; General Intangibles (including but not
     limited  to,  tax  and duty claims and refunds, registered and unregistered
     patents,  trademarks,  service marks, certificates, copyrights trade names,
     applications  for  the  foregoing,  trade  secrets,  goodwill,  processes,
     drawings,  blueprints,  customer  lists,  licenses,  whether as licensor or
     licensee,  chooses  in  action  and  other  claims, and existing and future
     leasehold  interests  in  equipment,  real estate and fixtures); Documents;
     Instruments;  letters  of  credit, bankers' acceptances or guaranties; cash
     moneys,  deposits; securities, bank accounts, deposit accounts, credits and
     other property now or hereafter owned or held in any capacity by Debtor, as
     well  as its affiliates, agreements or property securing or relating to any
     of  the  items  referred  to  above;

          (ii)  Goods:  All  now  owned  and hereafter acquired right, title and
     interest  of  Debtor  in,  to  and  in respect of goods, including, but not
     limited  to:

               (a)  All  Inventory,  wherever  located,  whether  now  owned  or
          hereafter acquired, of whatever kind, nature or description, including
          all  raw  materials, work-in-process, finished goods, and materials to
          be used or consumed in Debtor' business; finished goods, timber cut or
          to  be  cut,  oil,  gas, hydrocarbons, and minerals extracted or to be
          extracted,  and all names or marks affixed to or to be affixed thereto
          for  purposes  of  selling same by the seller, manufacturer, lessor or
          licensor  thereof and all Inventory which may be returned to Debtor by
          its customers or repossessed by Debtor and all of Debtor' right, title
          and  interest in and to the foregoing (including all of Debtor' rights
          as  a  seller  of  goods);

               (b)  All  Equipment  and  fixtures, wherever located, whether now
          owned  or  hereafter  acquired,  including,  without  limitation,  all
          machinery,  motor  vehicles,  furniture  and fixtures, and any and all
          additions,  substitutions,  replacements  (including spare parts), and
          accessions  thereof and thereto (including, but not limited to Debtor'
          rights  to  acquire  any  of  the  foregoing, whether by exercise of a
          purchase  option  or  otherwise);

          (iii)  Property: All now owned and hereafter acquired right, title and
     interests  of  Debtor  in,  to and in respect of any real or other personal
     property  in  or  upon  which  Debtor  has or may hereafter have a security
     interest,  lien  or  right  of  setoff;

          (iv)  Books  and  Records:  All  present  and future books and records
     relating  to  any  of the above including, without limitation, all computer
     programs,  printed  output  and computer readable data in the possession or
     control  of  the  Debtor, any computer service bureau or other third party;
     and

          (v)  Products and Proceeds: All products and Proceeds of the foregoing
     in  whatever  form and wherever located, including, without limitation, all
     insurance  proceeds  and  all  claims  against  third  parties  for loss or
     destruction  of  or  damage  to  any  of  the  foregoing.

     (B)     All  now  owned and hereafter acquired right, title and interest of
Debtor  in,  to  and  in  respect  of  the  following:

          (i)  the  shares  of stock, partnership interests, member interests or
     other equity interests at any time and from time to time acquired by Debtor
     of any and all entities now or hereafter existing, all or a portion of such
     stock  or other equity interests which are acquired by such entities at any
     time  (such entities, together with the existing issuers, being hereinafter
     referred  to  collectively  as  the "Pledged Issuers" and individually as a
     "Pledged  Issuer"),  the certificates representing such shares, partnership
     interests,  member  interests  or  other  interests  all  options and other
     rights,  contractual  or  otherwise,  in respect thereof and all dividends,
     distributions,  cash,  instruments,  investment property and other property
     from  time to time received, receivable or otherwise distributed in respect
     of  or  in  exchange  for any or all of such shares, partnership interests,
     member  interests  or  other  interests;

          (ii)  all  additional  shares  of stock, partnership interests, member
     interests  or  other equity interests from time to time acquired by Debtor,
     of  any  Pledged  Issuer,  the  certificates  representing  such additional
     shares,  all options and other rights, contractual or otherwise, in respect
     thereof  and  all  dividends,  distributions, cash, instruments, investment
     property  and  other  property  from  time  to time received, receivable or
     otherwise  distributed  in respect of or in exchange for any or all of such
     additional  shares,  interests  or  equity;  and

          (iii)  all security entitlements of Debtor in, and all Proceeds of any
     and  all  of  the  foregoing  in  each case, whether now owned or hereafter
     acquired  by  Debtor and howsoever its interest therein may arise or appear
     (whether  by  ownership,  security  interest,  lien,  claim  or otherwise).

3.3     The  Collateral  Agent  is  hereby  specifically  authorized,  after the
Maturity Date (defined in the Notes) accelerated or otherwise, or after an Event
of Default (as defined herein) and the expiration of any applicable cure period,
to transfer any Collateral into the name of the Collateral Agent and to take any
and  all  action deemed advisable to the Collateral Agent to remove any transfer
restrictions  affecting  the  Collateral.

4.     Perfection  of  Security  Interest.

     4.1     Debtor  shall  prepare, execute and deliver to the Collateral Agent
UCC-1  Financing  Statements.  The Collateral Agent is instructed to prepare and
file  at  Debtor's  cost and expense, financing statements in such jurisdictions
deemed  advisable  to the Collateral Agent, including but not limited to Nevada.
The  Financing  Statements  are deemed to have been filed for the benefit of the
Collateral  Agent  and  Lenders  identified  on  Schedule  A  hereto.

     4.2       All  other  certificates  and instruments constituting Collateral
from  time  to  time  required to be pledged to Collateral Agent pursuant to the
terms  hereof  (the  "Additional  Collateral")  shall be delivered to Collateral
Agent  promptly  upon  receipt  thereof  by  or  on  behalf of Debtor.  All such
certificates  and  instruments shall be held by or on behalf of Collateral Agent
pursuant  hereto  and  shall  be  delivered  in  suitable  form  for transfer by
delivery,  or  shall  be accompanied by duly executed instruments of transfer or
assignment  or undated stock powers executed in blank, all in form and substance
satisfactory  to Collateral Agent.  If any Collateral consists of uncertificated
securities,  unless  the  immediately  following sentence is applicable thereto,
Debtor  shall  cause  Collateral  Agent  (or  its  custodian,  nominee  or other
designee)  to become the registered holder thereof, or cause each issuer of such
securities  to  agree  that  it  will  comply  with  instructions  originated by
Collateral  Agent  with  respect  to  such securities without further consent by
Debtor.  If  any  Collateral  consists  of  security  entitlements, Debtor shall
transfer  such  security  entitlements  to  Collateral  Agent (or its custodian,
nominee  or  other  designee) or cause the applicable securities intermediary to
agree  that  it  will comply with entitlement orders by Collateral Agent without
further  consent  by  Debtor.

     4.3     Within  five (5) days after the receipt by Debtor of any Additional
Collateral,  a  Pledge  Amendment, duly executed by Debtor, in substantially the
form  of Annex I hereto (a "Pledge Amendment"), shall be delivered to Collateral
Agent  in  respect  of  the Additional Collateral to be pledged pursuant to this
Agreement.  Debtor  hereby  authorizes  Collateral  Agent  to attach each Pledge
Amendment  to  this  Agreement  and  agrees that all certificates or instruments
listed  on  any  Pledge  Amendment  delivered  to Collateral Agent shall for all
purposes  hereunder  constitute  Collateral.

     4.4     If  Debtor  shall receive, by virtue of Debtor being or having been
an  owner  of  any  Collateral,  any  (i)  stock certificate (including, without
limitation,  any  certificate  representing  a stock dividend or distribution in
connection  with any increase or reduction of capital, reclassification, merger,
consolidation,  sale  of assets, combination of shares, stock split, spin-off or
split-off),  promissory  note or other instrument, (ii) option or right, whether
as  an  addition  to,  substitution  for, or in exchange for, any Collateral, or
otherwise,  (iii)  dividends payable in cash (except such dividends permitted to
be  retained by Debtor pursuant to Section 5.2 hereof) or in securities or other
property  or  (iv) dividends or other distributions in connection with a partial
or  total  liquidation  or  dissolution  or  in  connection  with a reduction of
capital,  capital  surplus  or  paid-in surplus, Debtor shall receive such stock
certificate, promissory note, instrument, option, right, payment or distribution
in  trust  for the benefit of Collateral Agent, shall segregate it from Debtor's
other  property and shall deliver it forthwith to Collateral Agent, in the exact
form  received,  with  any necessary endorsement and/or appropriate stock powers
duly  executed  in  blank,  to  be held by Collateral Agent as Collateral and as
further  collateral  security  for  the  Obligations.

5.     Distribution  on  Liquidation.

     5.1     If any sum is paid as a liquidating distribution on or with respect
to  the  Collateral,  Debtor  shall  deliver  same to the Collateral Agent to be
applied  to  the  Obligations,  then  due,  in  accordance with the terms of the
Convertible  Notes.

     5.2     So long as no Event of Default exists, Debtor shall be entitled (i)
to  exercise all voting power pertaining to any of the Collateral, provided such
exercise is not contrary to the interests of the Lenders and does not impair the
Collateral  and  (ii)  may  receive  and  retain any and all dividends, interest
payments  or  other  distributions  paid  in  respect  of  the  Collateral.

     5.3.  Upon  the  occurrence  and  during  the  continuation  of an Event of
Default,  all  rights  of  Debtor,  upon  notice  given  by Collateral Agent, to
exercise  the  voting  power  and  receive payments, which it would otherwise be
entitled  to  pursuant  to  Section  5.2,  shall cease and all such rights shall
thereupon become vested in Collateral Agent, which shall thereupon have the sole
right  to  exercise  such  voting  power  and  receive  such  payments.

     5.4  All  dividends,  distributions,  interest and other payments which are
received  by  Debtor contrary to the provisions of Section 5.3 shall be received
in  trust  for  the  benefit of Collateral Agent, shall be segregated from other
funds  of  Debtor,  and  shall  be  forthwith  paid  over to Collateral Agent as
Collateral  in  the  exact  form  received with any necessary endorsement and/or
appropriate  stock powers duly executed in blank, to be held by Collateral Agent
as  Collateral  and  as  further  collateral  security  for  the  Obligations.

6.     Further  Action  By  Debtor;  Covenants  and  Warranties.

     6.1     Collateral  Agent  at  all  times  shall  have a perfected security
interest in the Collateral.  Subject to the security interests described herein,
Debtor  has and will continue to have full title to the Collateral free from any
liens,  leases,  encumbrances,  judgments  or  other claims.  Collateral Agent's
security  interest in the Collateral constitutes and will continue to constitute
a  first, prior and indefeasible security interest in favor of Collateral Agent.
Debtor  will  do  all acts and things, and will execute and file all instruments
(including,  but  not  limited  to,  security  agreements, financing statements,
continuation  statements,  etc.)  reasonably  requested  by  Collateral Agent to
establish,  maintain  and continue the perfected security interest of Collateral
Agent in the Collateral, and will promptly on demand, pay all costs and expenses
of  filing  and recording, including the costs of any searches reasonably deemed
necessary  by  Collateral Agent from time to time to establish and determine the
validity  and  the  continuing  priority  of the security interest of Collateral
Agent,  and  also  pay  all  other  claims  and  charges that, in the opinion of
Collateral  Agent,  exercised in good faith, are reasonably likely to materially
prejudice,  imperil  or otherwise affect the Collateral or Collateral Agent's or
Lenders'  security  interests  therein.

     6.2     Other  than  in  the  ordinary  course  of business, and except for
Collateral which is substituted by assets of identical or greater value or which
has  become  obsolete  or  is of inconsequential in value, Debtor will not sell,
transfer, assign or pledge those items of Collateral (or allow any such items to
be sold, transferred, assigned or pledged), without the prior written consent of
Collateral  Agent  other  than  a  transfer  of the Collateral to a wholly-owned
subsidiary  on  prior  notice  to  Collateral Agent, and provided the Collateral
remains subject to the security interest herein described.  Although Proceeds of
Collateral  are  covered  by this Agreement, this shall not be construed to mean
that Collateral Agent consents to any sale of the Collateral, except as provided
herein.  Sales of Collateral in the ordinary course of business shall be free of
the security interest of Lenders and Collateral Agent and Lenders and Collateral
Agent  shall  promptly  execute  such  documents  (including  without limitation
releases and termination statements) as may be required by Debtor to evidence or
effectuate  the  same.

     6.3     Debtor  will,  at  all reasonable times and upon reasonable notice,
allow  Collateral  Agent  or its representatives free and complete access to the
Collateral  and  all  of  Debtor's  records  which  in  any  way  relate  to the
Collateral,  for  such inspection and examination as Collateral Agent reasonably
deems  necessary.

     6.4     Debtor,  at its sole cost and expense, will protect and defend this
Security Agreement, all of the rights of Collateral Agent and Lenders hereunder,
and  the  Collateral  against  the  claims  and  demands  of  all other persons.

     6.5     Debtor will promptly notify Collateral Agent of any levy, distraint
or  other  seizure  by legal process or otherwise of any part of the Collateral,
and  of any threatened or filed claims or proceedings that are reasonably likely
to  affect  or  impair any of the rights of Collateral Agent under this Security
Agreement  in  any  material  respect.

     6.6     Debtor,  at  its  own  expense,  will  obtain and maintain in force
insurance  policies covering losses or damage to those items of Collateral which
constitute physical personal property.  The insurance policies to be obtained by
Debtor  shall  be in form and amounts reasonably acceptable to Collateral Agent.
Debtor  shall make the Collateral Agent first a loss payee thereon to the extent
of its interest in the Collateral. Collateral Agent is hereby irrevocably (until
the  Obligations are paid in full) appointed Debtor' attorney-in-fact to endorse
any  check  or  draft that may be payable to Debtor so that Collateral Agent may
collect the proceeds payable for any loss under such insurance.  The proceeds of
such insurance (subject to the rights of senior secured parties), less any costs
and  expenses  incurred  or  paid by Collateral Agent in the collection thereof,
shall  be  applied  either  toward  the cost of the repair or replacement of the
items damaged or destroyed, or on account of any sums secured hereby, whether or
not  then  due  or  payable.

     6.7     Collateral  Agent may, at its option, and without any obligation to
do  so,  pay,  perform  and  discharge  any and all amounts, costs, expenses and
liabilities  herein  agreed  to  be  paid or performed by Debtor.  Upon Debtor's
failure  to  do  so,  all amounts expended by Collateral Agent in so doing shall
become  part of the Obligations secured hereby, and shall be immediately due and
payable by Debtor to Collateral Agent upon demand and shall bear interest at the
lesser  of  15%  per  annum  or  the highest legal amount from the dates of such
expenditures  until  paid.

     6.8 Upon the request of Collateral Agent, Debtor will furnish to Collateral
Agent  within  five (5) business days thereafter, or to any proposed assignee of
this  Security Agreement, a written statement in form reasonably satisfactory to
Collateral  Agent, duly acknowledged, certifying the amount of the principal and
interest  and  any  other  sum  then owing under the Obligations, whether to its
knowledge  any  claims,  offsets  or  defenses  exist against the Obligations or
against this Security Agreement, or any of the terms and provisions of any other
agreement  of Debtor securing the Obligations. In connection with any assignment
by  Collateral  Agent  of this Security Agreement, Debtor hereby agrees to cause
the  insurance  policies  required hereby to be carried by Debtor, if any, to be
endorsed in form satisfactory to Collateral Agent or to such assignee, with loss
payable  clauses in favor of such assignee, and to cause such endorsements to be
delivered  to  Collateral  Agent  within  ten  (10)  calendar days after request
therefor  by  Collateral  Agent.

     6.9     Debtor  will,  at  its  own  expense,  make,  execute,  endorse,
acknowledge,  file and/or deliver to the Collateral Agent from time to time such
vouchers,  invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other  reasonable  assurances  or instruments and take further steps relating to
the  Collateral  and  other  property or rights covered by the security interest
hereby  granted,  as  the Collateral Agent may reasonably require to perfect its
security  interest  hereunder.

     6.10     Debtor  represents  and  warrants  that  it is the true and lawful
exclusive owner of the Collateral, free and clear of any liens and encumbrances.

     6.11     Debtor  hereby  agrees not to divest itself of any right under the
Collateral  except  as  permitted  herein  absent  prior written approval of the
Collateral  Agent,  except  to  a subsidiary organized and located in the United
States  on  prior  notice  to  Collateral  Agent provided the Collateral remains
subject  to  the  security  interest  herein  described.

     6.12     Debtor  shall  cause each Subsidiary of Debtor not in existence on
the  date  hereof to execute and deliver to Collateral Agent promptly and in any
event  within  10  days  after  the  formation,  acquisition or change in status
thereof  (A)  a  guaranty  guaranteeing  the  Obligations and (B) a security and
pledge  agreement  substantially in the form of this Agreement together with (x)
certificates  evidencing  all  of  the capital stock of any entity owned by such
Subsidiary,  (y)  undated  stock  powers  executed  in  blank  with  signature
guaranteed,  and  (z)  such opinion of counsel and such approving certificate of
such  Subsidiary  as  Collateral  Agent  may  reasonably  request  in respect of
complying  with  any legend on any such certificate or any other matter relating
to  such  shares  and  (E)  such other agreements, instruments, approvals, legal
opinions or other documents reasonably requested by Collateral Agent in order to
create,  perfect,  establish the first priority of or otherwise protect any lien
purported  to  be covered by any such pledge and security agreement or otherwise
to  effect  the  intent  that  all  property and assets of such Subsidiary shall
become  Collateral  for  the  Obligations.  For  purposes  of  this  Agreement,
"Subsidiary"  means,  with  respect  to any entity at any date, any corporation,
limited  or  general  partnership,  limited  liability  company,  trust, estate,
association,  joint  venture or other business entity) of which more than 50% of
(A)  the  outstanding  capital  stock  having  (in the absence of contingencies)
ordinary  voting  power  to  elect a majority of the board of directors or other
managing  body  of  such  entity,  (B)  in  the case of a partnership or limited
liability company, the interest in the capital or profits of such partnership or
limited  liability  company  or (C) in the case of a trust, estate, association,
joint  venture  or  other entity, the beneficial interest in such trust, estate,
association  or other entity business is, at the time of determination, owned or
controlled  directly  or  indirectly through one or more intermediaries, by such
entity.

7.     Power  of  Attorney.

     After  the  occurrence  and  during the uncured continuation of an Event of
Default as defined in Section 9 below, Debtor hereby irrevocably constitutes and
appoints  the  Collateral  Agent as the true and lawful attorney of Debtor, with
full  power of substitution, in the place and stead of Debtor and in the name of
Debtor  or  otherwise, at any time or times, in the discretion of the Collateral
Agent,  to  take  any action and to execute any instrument or document which the
Collateral  Agent  may deem necessary or advisable to accomplish the purposes of
this  Agreement.  This  power  of  attorney  is  coupled with an interest and is
irrevocable  until  the  Obligations  are  satisfied.

8.     Performance  By  The  Collateral  Agent.

     If  Debtor  fails  to  perform  any  material  covenant, agreement, duty or
obligation  of  Debtor under this Agreement, the Collateral Agent may, after any
applicable  cure  period, at any time or times in its discretion, take action to
effect  performance  of  such  obligation.  All  reasonable  expenses  of  the
Collateral  Agent  incurred in connection with the foregoing authorization shall
be  payable  by  Debtor  as provided in Paragraph 12.1 hereof.  No discretionary
right,  remedy  or  power granted to the Collateral Agent under any part of this
Agreement  shall be deemed to impose any obligation whatsoever on the Collateral
Agent  with  respect  thereto, such rights, remedies and powers being solely for
the  protection  of  the  Collateral  Agent.

9.     Event  of  Default.

     An  event  of default ("Event of Default") shall be deemed to have occurred
hereunder  upon  the occurrence of any event of default as defined and described
in this Agreement, in the Notes, Subscription Agreement, and any other agreement
to which Debtor and a Lender are parties.   Upon and after any Event of Default,
after  the  applicable  cure period, if any, any or all of the Obligations shall
become  immediately  due  and payable at the option of the Collateral Agent, for
the  benefit  of the Lenders, and the Collateral Agent may dispose of Collateral
as  provided  below.  A  default  by  Debtor  of any of its material obligations
pursuant  to  this Agreement shall be an Event of Default hereunder and an event
of  default  as  defined  in  the  Notes,  and  Subscription  Agreement.

10.     Disposition  of  Collateral.

     Upon  and  after  any  Event  of  Default  which  is  then  continuing,

     10.1     The  Collateral Agent may exercise its rights with respect to each
and  every  component  of the Collateral, without regard to the existence of any
other  security  or source of payment for the Obligations.  In addition to other
rights  and  remedies  provided  for  herein  or  otherwise available to it, the
Collateral  Agent  shall  have  all  of  the  rights and remedies of a lender on
default  under  the  Uniform  Commercial Code then in effect in the State of New
York.

     10.2     If  any  notice  to  Debtor  of  the  sale or other disposition of
Collateral  is  required  by  then  applicable law, five business (5) days prior
written  notice  (which Debtor agrees is reasonable notice within the meaning of
Section 9.612(a) of the Uniform Commercial Code) shall be given to Debtor of the
time  and  place  of any sale of Collateral which Debtor hereby agrees may be by
private sale.  The rights granted in this Section are in addition to any and all
rights  available  to  Collateral  Agent  under  the  Uniform  Commercial  Code.

     10.3     The  Collateral  Agent  is  authorized,  at  any such sale, if the
Collateral  Agent  deems  it  advisable  to  do  so, in order to comply with any
applicable securities laws, to restrict the prospective bidders or purchasers to
persons  who  will  represent  and  agree,  among  other  things,  that they are
purchasing  the  Collateral for their own account for investment, and not with a
view  to  the distribution or resale thereof, or otherwise to restrict such sale
in  such  other  manner  as  the Collateral Agent deems advisable to ensure such
compliance.  Sales  made  subject  to  such restrictions shall be deemed to have
been  made  in  a  commercially  reasonable  manner.

     10.4     All  proceeds  received by the Collateral Agent for the benefit of
the  Lenders  in  respect  of  any  sale,  collection  or  other  enforcement or
disposition  of  Collateral,  shall  be  applied (after deduction of any amounts
payable  to  the Collateral Agent pursuant to Paragraph 12.1 hereof) against the
Obligations  pro  rata among the Lenders in proportion to their interests in the
Obligations.   Upon payment in full of all Obligations, Debtor shall be entitled
to  the  return  of  all  Collateral, including cash, which has not been used or
applied  toward  the  payment  of  Obligations or used or applied to any and all
costs  or  expenses  of  the  Collateral  Agent  incurred in connection with the
liquidation  of  the  Collateral  (unless  another  person  is  legally entitled
thereto).  Any  assignment of Collateral by the Collateral Agent to Debtor shall
be  without  representation  or  warranty  of  any  nature whatsoever and wholly
without  recourse.  To  the  extent allowed by law, each Lender may purchase the
Collateral  and pay for such purchase by offsetting up to such Lender's pro rata
portion  of  the  purchase price with sums owed to such Lender by Debtor arising
under  the  Obligations  or  any  other  source.

11.     Waiver of Automatic Stay.   Debtor acknowledges and agrees that should a
proceeding  under  any  bankruptcy  or insolvency law be commenced by or against
Debtor,  or if any of the Collateral should become the subject of any bankruptcy
or insolvency proceeding, then the Collateral Agent should be entitled to, among
other  relief to which the Collateral Agent or Lenders may be entitled under the
Note,  Subscription  Agreement  and  any  other  agreement  to which the Debtor,
Lenders  or Collateral Agent are parties, (collectively "Loan Documents") and/or
applicable  law,  an  order  from  the  court granting immediate relief from the
automatic  stay pursuant to 11 U.S.C. Section 362 to permit the Collateral Agent
to exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable  law.  Debtor  EXPRESSLY  WAIVES  THE  BENEFIT  OF THE AUTOMATIC STAY
IMPOSED  BY  11  U.S.C. SECTION 362.  FURTHERMORE, Debtor EXPRESSLY ACKNOWLEDGES
AND  AGREES  THAT  NEITHER  11  U.S.C.  SECTION 362 NOR ANY OTHER SECTION OF THE
BANKRUPTCY  CODE  OR  OTHER  STATUTE  OR RULE (INCLUDING, WITHOUT LIMITATION, 11
U.S.C.  SECTION  105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY
WAY  THE  ABILITY  OF  THE  COLLATERAL  AGENT  TO  ENFORCE ANY OF ITS RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.  Debtor hereby consents
to any motion for relief from stay which may be filed by the Collateral Agent in
any  bankruptcy  or  insolvency  proceeding  initiated by or against Debtor, and
further  agrees  not  to  file any opposition to any motion for relief from stay
filed  by the Collateral Agent.  Debtor represents, acknowledges and agrees that
this provision is a specific and material aspect of this Agreement, and that the
Collateral  Agent  would not agree to the terms of this Agreement if this waiver
were  not a part of this Agreement.  Debtor further represents, acknowledges and
agrees  that  this waiver is knowingly, intelligently and voluntarily made, that
neither  the  Collateral Agent nor any person acting on behalf of the Collateral
Agent  has  made any representations to induce this waiver, that Debtor has been
represented  (or  has  had  the opportunity to be represented) in the signing of
this  Agreement  and  in  the making of this waiver by independent legal counsel
selected  by  Debtor  and  that  Debtor  has had the opportunity to discuss this
waiver  with  counsel.   Debtor further agrees that any bankruptcy or insolvency
proceeding  initiated by Debtor will only be brought in the Federal Court within
the  Southern  District  of  New  York.

12.     Miscellaneous.

     12.1     Expenses.  Debtor  shall  pay  to the Collateral Agent, on demand,
the  amount  of  any and all reasonable expenses, including, without limitation,
attorneys'  fees,  legal  expenses and brokers' fees, which the Collateral Agent
may  incur  in  connection  with  (a)  sale,  collection or other enforcement or
disposition  of  Collateral;  (b)  exercise  or  enforcement  of any the rights,
remedies  or  powers of the Collateral Agent hereunder or with respect to any or
all  of  the  Obligations  upon  breach  or threatened breach; or (c) failure by
Debtor  to  perform  and observe any agreements of Debtor contained herein which
are  performed  by  the  Collateral  Agent.

     12.2     Waivers,  Amendment  and  Remedies.  No  course  of dealing by the
Collateral Agent and no failure by the Collateral Agent to exercise, or delay by
the  Collateral  Agent in exercising, any right, remedy or power hereunder shall
operate  as  a  waiver  thereof, and no single or partial exercise thereof shall
preclude  any  other  or  further  exercise thereof or the exercise of any other
right,  remedy  or power of the Collateral Agent.  No amendment, modification or
waiver  of  any  provision  of this Agreement and no consent to any departure by
Debtor  therefrom,  shall,  in  any  event,  be  effective unless contained in a
writing signed by the Collateral Agent, and then such waiver or consent shall be
effective  only  in the specific instance and for the specific purpose for which
given.  The  rights,  remedies  and  powers  of  the  Collateral Agent, not only
hereunder,  but also under any instruments and agreements evidencing or securing
the Obligations and under applicable law are cumulative, and may be exercised by
the Collateral Agent from time to time in such order as the Collateral Agent may
elect.

     12.3     Notices.  All  notices  or  other  communications  given  or  made
hereunder  shall  be  in  writing  and  shall  be personally delivered or deemed
delivered  the  first  business  day  after being faxed (provided that a copy is
delivered  by  first class mail) to the party to receive the same at its address
set forth below or to such other address as either party shall hereafter give to
the  other  by  notice  duly  made  under  this  Section:

To  Debtor:               GTC  Telecom  Corp.
                          3151  Airway  Avenue,  Suite  P-3
                          Costa  Mesa,  CA  92626
                          Attn:  Vi  Bui,  Esq.
                          Fax:  (714)  549-7707

To Lenders:               To the addresses and telecopier numbers set forth
                          on  Schedule  A

To the Collateral Agent:  Barbara  R.  Mittman
                          Grushko  &  Mittman,  P.C.
                          551  Fifth  Avenue,  Suite  1601
                          New  York,  New  York  10176
                          Fax:  (212)  697-3575

Any  party  may  change  its  address  by written notice in accordance with this
paragraph.

     12.4     Term;  Binding  Effect.  This  Agreement  shall (a) remain in full
force  and  effect  until  payment  and  satisfaction  in  full  of  all  of the
Obligations;  (b)  be  binding  upon  Debtor,  and  its successors and permitted
assigns;  and  (c) inure to the benefit of the Collateral Agent, for the benefit
of  the Lenders and their respective successors and assigns.  All the rights and
benefits  granted  by  Debtor  to  the  Collateral Agent and Lenders in the Loan
Documents  and  other agreements and documents delivered in connection therewith
are  deemed  granted  to  both  the  Collateral  Agent  and  Lenders.

     12.5     Captions.  The  captions  of  Paragraphs, Articles and Sections in
this  Agreement  have been included for convenience of reference only, and shall
not  define  or  limit  the  provisions  hereof  and  have  no  legal  or  other
significance  whatsoever.

     12.6     Governing  Law;  Venue;  Severability.  This  Agreement  shall  be
governed  by  and construed in accordance with the laws of the State of New York
without  regard  to  conflicts  of  laws  principles  that  would  result in the
application  of  the  substantive  laws  of  another jurisdiction, except to the
extent that the perfection of the security interest granted hereby in respect of
any  item of Collateral may be governed by the law of another jurisdiction.  Any
legal  action or proceeding against Debtor with respect to this Agreement may be
brought  in  the courts in the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
Debtor  hereby  irrevocably  accepts  for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.  Debtor
hereby  irrevocably waives any objection which they may now or hereafter have to
the  laying  of venue of any of the aforesaid actions or proceedings arising out
of  or  in  connection  with  this Agreement brought in the aforesaid courts and
hereby  further  irrevocably waives and agrees not to plead or claim in any such
court  that  any  such  action  or proceeding brought in any such court has been
brought  in  an  inconvenient forum.  If any provision of this Agreement, or the
application  thereof  to  any  person  or  circumstance,  is  held invalid, such
invalidity  shall  not  affect  any  other  provisions which can be given effect
without  the  invalid  provision  or application, and to this end the provisions
hereof  shall  be  severable and the remaining, valid provisions shall remain of
full  force  and  effect.

     12.7     Entire Agreement.  This Agreement contains the entire agreement of
the  parties  and  supersedes  all  other agreements and understandings, oral or
written,  with  respect  to  the  matters  contained  herein.

     12.8     Counterparts/Execution.  This  Agreement  may  be  executed in any
number  of  counterparts  and  by  the  different signatories hereto on separate
counterparts,  each of which, when so executed, shall be deemed an original, but
all  such  counterparts  shall constitute but one and the same instrument.  This
Agreement  may  be  executed  by  facsimile signature and delivered by facsimile
transmission.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>
IN  WITNESS  WHEREOF,  the undersigned have executed and delivered this Security
Agreement,  as  of  the  date  first  written  above.

"DEBTOR"                              "THE  COLLATERAL  AGENT"
GTC  TELECOM  CORP.                    BARBARA  R.  MITTMAN
a  Nevada  corporation

By: /s/ S. Paul Sandhu                /s/ Barbara R. Mittman
Its: CEO

                             APPROVED BY "LENDERS":

/s/ Signature Illegible                 /s/ Jeffrey M. Haas
______________________________________  ______________________________
ALPHA  CAPITAL  AKTIENGESELLSCHAFT      DCOFI  MASTER  LDC
"Subscriber"                            "Subscriber"

/s/ Steven Geduld
_______________________________________
SCG  CAPITAL,  LLC
"Subscriber"

/s/ Murry Todd                          Welhelm Unger, Officer
_______________________________________ _______________________________
SILVER  OAK  INVESTMENTS,  INC.         ELLIS  INTERNATIONAL  LTD.
"Subscriber"                            "Subscriber"

        THIS SECURITY AGREEMENT MAY BE SIGNED BY FACSIMILE SIGNATURE AND
                 DELIVERED BY CONFIRMED FACSIMILE TRANSMISSION.COLLATERAL AGENT AGREEMENT

     COLLATERAL  AGENT  AGREEMENT  (this  "Agreement") dated as of May 23, 2005,
among Barbara R. Mittman (the "Collateral Agent"), and the parties identified on
Schedule  A  hereto  (each,  individually,  a  "Lender"  and  collectively,  the
"Lenders"),  who hold or will acquire convertible promissory notes issued and to
be  issued  by  GTC  Telecom Corp. ("Debtor"), a Nevada corporation, at about or
prior  to  the  date  of  this Agreement as described in the Security Agreements
referred  to  in  Section  1(a)  below  (collectively  herein  the  "Notes").

     WHEREAS,  the  Lenders  have  made,  are making and will be making loans to
Debtor  to  be  secured  by  certain  collateral;  and

     WHEREAS,  it is desirable to provide for the orderly administration of such
collateral  by  requiring  each  Lender to appoint the Collateral Agent, and the
Collateral  Agent has agreed to accept such appointment and to receive, hold and
deliver  such  collateral,  all  upon  the  terms  and subject to the conditions
hereinafter  set  forth;  and

     WHEREAS,  it  is desirable to allocate the enforcement of certain rights of
the  Lenders  under  the  Notes  for  the  orderly  administration  thereof.

     NOW,  THEREFORE,  in consideration of the premises set forth herein and for
other  good  and  valuable  consideration,  the parties hereto agree as follows:

     1.     Collateral.

     (a)     Contemporaneously with the execution and delivery of this Agreement
by  the  Collateral  Agent and the Lenders, (i) the Collateral Agent has or will
have  entered  into a Security Agreement between the Collateral Agent and Debtor
and  between  the Collateral Agent and the subsidiaries of the Debtor identified
on  Schedule  B  hereto  (each  a  "Subsidiary")  (each a "Security Agreement"),
regarding  the  grant  of  a  security  interest  in  assets owned by Debtor and
Subsidiary  (such assets are referred to herein and in the Security Agreement as
the  "Collateral") to the Collateral Agent, for the benefit of the Lenders, (ii)
Subsidiary  will  be  delivering  a  Guaranty  Agreement (the "Guaranty") to the
Collateral  Agent  with  Subsidiary guaranteeing the obligations of Debtor under
the  Notes,  Subscription Agreement, such Guaranty, this Agreement and all other
agreements  described  in  the  foregoing  agreements  (collectively,  "Borrower
Documents"),  and  (iii) Debtor is issuing the Notes and in the future may issue
additional  Notes  to  the  Lenders.

     (b)     For purposes solely of perfection of the security interests granted
to  the  Collateral  Agent,  as  agent  on behalf of the Lenders, and on its own
behalf  under  the  Borrower Documents, the Collateral Agent hereby acknowledges
that  any Collateral held by the Collateral Agent is held for the benefit of the
Lenders  in  accordance  with  this  Agreement  and  the Borrower Documents.  No
reference to the Borrower Documents or any other instrument or document shall be
deemed  to  incorporate any term or provision thereof into this Agreement unless
expressly  so  provided.

     (c)  The  Collateral Agent is to distribute in accordance with the Borrower
Documents  any  proceeds received from the Collateral which are distributable to
the  Lenders  in  proportion to their respective interests in the Obligations as
defined  in  the  Borrower  Documents.

2.     Appointment  of  the  Collateral  Agent.

     The  Lenders  hereby appoint the Collateral Agent (and the Collateral Agent
hereby  accepts  such  appointment)  to  take  any  action  including,  without
limitation,  the  registration  of  any Collateral in the name of the Collateral
Agent  or its nominees prior to or during the continuance of an Event of Default
(as  defined  in the Borrower Documents), the exercise of voting rights upon the
occurrence and during the continuance of an Event of Default, the application of
any  cash  collateral  received  by  the  Collateral Agent to the payment of the
Obligations, the making of any demand under the Borrower Documents, the exercise
of any remedies given to the Collateral Agent pursuant to the Borrower Documents
and  the exercise of any authority pursuant to the appointment of the Collateral
Agent  as  an  attorney-in-fact  pursuant  to  the  Security  Agreement that the
Collateral  Agent  deems  necessary  or  proper  for  the  administration of the
Collateral  pursuant  to  the  Borrower  Documents.  Upon  disposition  of  the
Collateral in accordance with the Borrower Documents, the Collateral Agent shall
promptly  distribute  any  cash or Collateral in accordance with Section 10.4 of
the  Security Agreement.  Lenders must notify Collateral Agent in writing of the
issuance  of  Notes  to  Lenders  by  Debtor.  The  Collateral Agent will not be
required to act hereunder in connection with Notes the issuance of which was not
disclosed  in  writing  to the Collateral Agent nor will the Collateral Agent be
required  to  act on behalf of any assignee of Notes without the written consent
of  Collateral  Agent.

     3.     Action  by  the  Majority  in  Interest.

     (a)     Certain  Actions.  Each  of  the  Lenders covenants and agrees that
only  a  Majority  in  Interest shall have the right, but not the obligation, to
undertake  the following actions (it being expressly understood that less than a
Majority  in  Interest hereby expressly waive the following rights that they may
otherwise  have  under  the  Borrower  Documents):

     (i)     Acceleration.  If  an Event of Default occurs, after the applicable
cure  period,  if any, a Majority in Interest may, on behalf of all the Lenders,
instruct  the  Collateral Agent to provide to Debtor and/or Subsidiary notice to
cure  such default and/or declare the unpaid principal amount of the Notes to be
due  and  payable,  together  with  any and all accrued interest thereon and all
costs  payable  pursuant  to  such  Notes;

     (ii)     Enforcement.  Upon  the  occurrence  of any Event of Default after
the  applicable  cure  period,  if  any, a Majority in Interest may instruct the
Collateral  Agent  to proceed to protect, exercise and enforce, on behalf of all
the  Lenders,  their  rights  and  remedies under the Borrower Documents against
Debtor and Subsidiary, and such other rights and remedies as are provided by law
or  equity;

     (iii)     Waiver of Past Defaults.  A Majority in Interest may instruct the
Collateral  Agent  to waive any Event of Default by written notice to Debtor and
Subsidiary,  and  the  other  Lenders;  and

     (iv)     Amendment.  A  Majority  in  Interest  may instruct the Collateral
Agent  to  waive,  amend,  supplement  or  modify  any  term, condition or other
provision in the Notes or Borrower Documents in accordance with the terms of the
Notes  or  Borrower  Documents  so long as such waiver, amendment, supplement or
modification  is  made  with respect to all of the Notes and with the same force
and  effect  with  respect  to  each  of  the  Lenders.

     (b)     Permitted  Subordination.  A  Majority in Interest may instruct the
Collateral  Agent  to  agree  to subordinate any Collateral to any claim and may
enter  into  any  agreement  with  Debtor  and  Subsidiary  to  evidence  such
subordination;  provided,  however,  that  subsequent to any such subordination,
each  Note  shall  remain  pari  passu with the other Notes held by the Lenders.

     (c)     Further  Actions.  A  Majority  in  Interest  may  instruct  the
Collateral  Agent  to  take  any action that it may take under this Agreement by
instructing the Collateral Agent in writing to take such action on behalf of all
the  Lenders.

     (d)     Majority  in  Interest.  For  so  long  as  any  obligations remain
outstanding  on  the Notes, Majority in Interest shall mean Lenders who hold not
less  than seventy-five percent (75%) of the outstanding principal amount of the
Notes.

4.     Power  of  Attorney.

     (a)     To  effectuate  the terms and provisions hereof, the Lenders hereby
appoint the Collateral Agent as their attorney-in-fact (and the Collateral Agent
hereby  accepts such appointment) for the purpose of carrying out the provisions
of this Agreement including, without limitation, taking any action on behalf of,
or  at  the instruction of, the Majority in Interest at the written direction of
the  Majority  in Interest and executing any consent authorized pursuant to this
Agreement and taking any action and executing any instrument that the Collateral
Agent  may  deem  necessary or advisable (and lawful) to accomplish the purposes
hereof.

     (b)     All acts done under the foregoing authorization are hereby ratified
and approved and neither the Collateral Agent nor any designee nor agent thereof
shall  be  liable  for  any  acts  of  commission  or omission, for any error of
judgment,  for any mistake of fact or law except for acts of gross negligence or
willful  misconduct.

     (c)     This  power  of  attorney,  being  coupled  with  an  interest,  is
irrevocable  while  this  Agreement  remains  in  effect.

     5.     Expenses of the Collateral Agent.  The Lenders shall pay any and all
costs  and  expenses  incurred  by  the Collateral Agent, all waivers, releases,
discharges,  satisfactions,  modifications and amendments of this Agreement, the
administration  and  holding  of  the  Collateral,  insurance  expenses, and the
enforcement, protection and adjudication of the parties' rights hereunder by the
Collateral  Agent,  including, without limitation, the reasonable disbursements,
expenses and fees of the attorneys the Collateral Agent may retain, if any, each
of  the  foregoing  in  proportion  to  their  holdings  of  the  Notes.

     6.     Reliance  on  Documents  and Experts.  The Collateral Agent shall be
entitled  to  rely  upon any notice, consent, certificate, affidavit, statement,
paper,  document,  writing  or  communication  (which may be by telegram, cable,
telex,  telecopier, or telephone) reasonably believed by it to be genuine and to
have  been  signed,  sent  or  made  by  the  proper person or persons, and upon
opinions and advice of its own legal counsel, independent public accountants and
other  experts  selected  by  the  Collateral  Agent.

     7.     Duties  of  the  Collateral  Agent;  Standard  of  Care.

     (a)     The Collateral Agent's only duties are those expressly set forth in
this  Agreement,  and the Collateral Agent hereby is authorized to perform those
duties  in  accordance  with  commercially reasonable practices.  The Collateral
Agent  may  exercise or otherwise enforce any of its rights, powers, privileges,
remedies and interests under this Agreement and applicable law or perform any of
its  duties  under  this  Agreement  by  or  through  its  officers,  employees,
attorneys,  or  agents.

     (b)     The  Collateral  Agent shall act in good faith and with that degree
of  care  that  an  ordinarily prudent person in a like position would use under
similar  circumstances.

     (c)     Any  funds  held  by  the  Collateral  Agent  hereunder need not be
segregated  from  other  funds  except  to  the  extent  required  by  law.  The
Collateral  Agent shall be under no liability for interest on any funds received
by  it  hereunder.

     8.     Resignation.  The  Collateral  Agent may resign and be discharged of
its duties hereunder at any time by giving written notice of such resignation to
the  other  parties hereto, stating the date such resignation is to take effect.
Within  five (5) days of the giving of such notice, a successor collateral agent
shall  be  appointed by the Majority in Interest; provided, however, that if the
Lenders  are  unable  so  to agree upon a successor within such time period, and
notify  the Collateral Agent during such period of the identity of the successor
collateral  agent,  the successor collateral agent may be a person designated by
the  Collateral  Agent,  and any and all fees of such successor collateral agent
shall  be the joint and several obligation of the Lenders.  The Collateral Agent
shall continue to serve until the effective date of the resignation or until its
successor  accepts  the  appointment  and  receives  the  Collateral held by the
Collateral  Agent  but shall not be obligated to take any action hereunder.  The
Collateral  Agent may deposit any Collateral with the Supreme Court of the State
of  New  York for New York County or any such other court in New York State that
accepts  such  Collateral.

     9.     Exculpation.  The  Collateral  Agent  and  its  officers, employees,
attorneys  and  agents, shall not incur any liability whatsoever for the holding
or  delivery  of  documents or the taking of any other action in accordance with
the  terms  and  provisions  of  this  Agreement,  for  any  mistake or error in
judgment,  for  compliance  with  any applicable law or any attachment, order or
other directive of any court or other authority (irrespective of any conflicting
term  or  provision  of this Agreement), or for any act or omission of any other
person engaged by the Collateral Agent in connection with this Agreement, unless
occasioned  by  the  exculpated  person's  own  gross  negligence  or  willful
misconduct;  and  each party hereto hereby waives any and all claims and actions
whatsoever  against  the Collateral Agent and its officers, employees, attorneys
and  agents,  arising  out of or related directly or indirectly to any or all of
the  foregoing  acts,  omissions  and  circumstances.

     10.     Indemnification.  The  Lenders hereby agree to indemnify, reimburse
and  hold  harmless the Collateral Agent and its directors, officers, employees,
attorneys  and  agents,  jointly  and  severally,  from  and against any and all
claims,  liabilities, losses and expenses that may be imposed upon, incurred by,
or  asserted  against  any  of  them,  arising  out  of  or  related directly or
indirectly to this Agreement or the Collateral, except such as are occasioned by
the  indemnified  person's  own  gross  negligence  or  willful  misconduct.

     11.     Miscellaneous.

     (a)     Rights  and  Remedies Not Waived.  No act, omission or delay by the
Collateral  Agent shall constitute a waiver of the Collateral Agent's rights and
remedies  hereunder or otherwise.  No single or partial waiver by the Collateral
Agent of any default hereunder or right or remedy that it may have shall operate
as  a waiver of any other default, right or remedy or of the same default, right
or  remedy  on  a  future  occasion.

     (b)     Governing  Law.  This Agreement shall be governed by, and construed
in  accordance  with,  the  laws  of  the  State  of  New York without regard to
conflicts  of  laws that would result in the application of the substantive laws
of  another  jurisdiction.

     (c)     Waiver  of  Jury  Trial  and  Setoff; Consent to Jurisdiction; Etc.

     (i)     In any litigation in any court with respect to, in connection with,
or  arising  out  of  this  Agreement  or  any  instrument or document delivered
pursuant  to  this  Agreement,  or  the  validity,  protection,  interpretation,
collection  or  enforcement  hereof  or  thereof,  or any other claim or dispute
howsoever  arising,  between the Collateral Agent and the Lenders or any Lender,
then  each  Lender,  to  the fullest extent it may legally do so, (A) waives the
right  to  interpose  any  setoff,  recoupment,  counterclaim  or cross-claim in
connection  with any such litigation, irrespective of the nature of such setoff,
recoupment,  counterclaim  or  cross-claim,  unless  such  setoff,  recoupment,
counterclaim  or  cross-claim  could not, by reason of any applicable federal or
state  procedural  laws,  be interposed, pleaded or alleged in any other action;
and  (B)  WAIVES  TRIAL  BY  JURY IN CONNECTION WITH ANY SUCH LITIGATION AND ANY
RIGHT  IT  MAY  HAVE  TO  CLAIM  OR  RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY,  PUNITIVE  OR  CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION  TO,  ACTUAL  DAMAGES.  EACH LENDER AGREES THAT THIS SECTION 11(C) IS A
SPECIFIC  AND  MATERIAL  ASPECT  OF  THIS  AGREEMENT  AND  ACKNOWLEDGE  THAT THE
COLLATERAL  AGENT  WOULD NOT ENTER THIS AGREEMENT IF THIS SECTION 11(C) WERE NOT
PART  OF  THIS  AGREEMENT.

     (ii)     Each  Lender irrevocably consents to the exclusive jurisdiction of
any  State  or Federal Court located within the County of New York, State of New
York,  in connection with any action or proceeding arising out of or relating to
this  Agreement  or  any  document  or  instrument  delivered  pursuant  to this
Agreement  or  otherwise.  In  any  such  litigation, each Lender waives, to the
fullest  extent  it  may  effectively  do  so,  personal service of any summons,
complaint  or  other  process  and agree that the service thereof may be made by
certified  or  registered mail directed to such Lender at its address for notice
determined  in accordance with Section 11(e) hereof.  Each Lender hereby waives,
to  the  fullest  extent  it  may  effectively  do so, the defenses of forum non
conveniens  and  improper  venue.

     (d)     Admissibility  of  this Agreement.  Each of the Lenders agrees that
any  copy  of  this  Agreement  signed  by  it and transmitted by telecopier for
delivery to the Collateral Agent shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is  in  existence.

     (e)     Address  for  Notices.  Any notice or other communication under the
provisions  of this Agreement shall be given in writing and delivered in person,
by  reputable  overnight  courier  or  delivery  service,  by  facsimile machine
(receipt  confirmed)  with  a  copy  sent  by  first  class  mail on the date of
transmissions,  or  by  registered  or certified mail, return receipt requested,
directed  to  such  party's  addresses set forth below (or to any new address of
which any party hereto shall have informed the others by the giving of notice in
the  manner  provided  herein):

     In  the  case  of  the  Collateral  Agent,  to  her  at:

     Barbara  R.  Mittman
     551  Fifth  Avenue,  Suite  1601
     New York,  New  York  10176
     Fax:  (212)  697-3575

     In  the  case  of  the  Lenders,  to:

     To  the  address  and  telecopier  number  set  forth  on
     Schedule  A  hereto.

     In  the  case  of  Debtor  and  Subsidiaries,  to:

     c/o  GTC  Telecom  Corp.
     3151  Airway  Avenue,  Suite  P-3
     Costa  Mesa,  CA  92626
     Attn:  Vi  Bui,  Esq.
     Fax:  (714)  549-7707

     (f)     Amendments  and  Modification;  Additional  Lender.  No  provision
hereof  shall  be  modified,  altered,  waived  or  limited  except  by  written
instrument  expressly  referring  to  this  Agreement and to such provision, and
executed  by  the  parties hereto.  Any transferee of a Note who acquires a Note
after  the  date hereof will become a party hereto by signing the signature page
and  sending  an  executed  copy  of  this Agreement to the Collateral Agent and
receiving  a  signed  acknowledgement  from  the  Collateral  Agent.

     (g)     Fee.  Upon  the  occurrence  of  an  Event  of Default, the Lenders
collectively  shall pay the Collateral Agent the sum of $10,000 to apply against
an  hourly  fee  of  $350  to be paid to the Collateral Agent by the Lenders for
services  rendered  pursuant  to  this  Agreement.  All  payments  due  to  the
Collateral Agent under this Agreement including reimbursements must be paid when
billed.  The  Collateral  Agent  may  refuse  to  act  on  behalf  of  or make a
distribution  to  any  Lender  who  is not current in payments to the Collateral
Agent.  Payments  required pursuant to this Agreement shall be pari passu to the
Lenders'  interests  in the Notes.  The Collateral Agent is hereby authorized to
deduct  any  sums  due  the  Collateral  Agent from Collateral in the Collateral
Agent's  possession.

     (h)      Counterparts/Execution.  This  Agreement  may  be  executed in any
number  of  counterparts  and  by  the  different signatories hereto on separate
counterparts,  each of which, when so executed, shall be deemed an original, but
all  such  counterparts  shall constitute but one and the same instrument.  This
Agreement  may  be  executed  by  facsimile signature and delivered by facsimile
transmission.

     (i)     Successors  and  Assigns.  Whenever  in this Agreement reference is
made  to  any  party,  such reference shall be deemed to include the successors,
assigns,  heirs  and  legal  representatives of such party.  No party hereto may
transfer  any  rights  under  this Agreement, unless the transferee agrees to be
bound  by, and comply with all of the terms and provisions of this Agreement, as
if  an  original  signatory  hereto  on  the  date  hereof.

     (j)     Captions:  Certain  Definitions.  The  captions  of  the  various
sections  and  paragraphs  of  this  Agreement  have  been inserted only for the
purposes  of  convenience;  such  captions  are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the  provisions  of this Agreement.  As used in this Agreement the term "person"
shall  mean  and  include  an  individual,  a  partnership,  a  joint venture, a
corporation,  a  limited  liability  company,  a  trust,  an  unincorporated
organization  and  a  government  or  any  department  or  agency  thereof.

     (k)     Severability.  In  the  event  that  any  term or provision of this
Agreement  shall  be  finally  determined  to be superseded, invalid, illegal or
otherwise  unenforceable  pursuant  to  applicable  law  by  an authority having
jurisdiction  and venue, that determination shall not impair or otherwise affect
the  validity, legality or enforceability (i) by or before that authority of the
remaining  terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority  of  any  of  the  terms  and  provisions  of  this  Agreement.

     (l)     Entire  Agreement.  This Agreement contains the entire agreement of
the  parties  and  supersedes  all  other agreements and understandings, oral or
written,  with  respect  to  the  matters  contained  herein.

     (m)     Schedules.  The  Collateral Agent is authorized to annex hereto any
schedules  referred  to  herein.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>
IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this Collateral Agent
Agreement  to  be  signed,  by  their  respective  duly  authorized  officers or
directly,  as  of  the  date  first  written  above.

                                    "LENDERS"

/s/ Signature Illegible                 /s/ Jeffrey M. Haas
______________________________________  ______________________________
ALPHA  CAPITAL  AKTIENGESELLSCHAFT      DCOFI  MASTER  LDC
"Subscriber"                            "Subscriber"

/s/ Steven Geduld
_______________________________________
SCG  CAPITAL,  LLC
"Subscriber"

/s/ Murry Todd                          Welhelm Unger, Officer
_______________________________________ _______________________________
SILVER  OAK  INVESTMENTS,  INC.         ELLIS  INTERNATIONAL  LTD.
"Subscriber"                            "Subscriber"

                                            /s/ Barbara R. Mittman
                                                       BARBARA R. MITTMAN
                                            Collateral  Agent

Acknowledged:

GTC  TELECOM  CORP.

By: /s/ S. Paul Sandhu
     S.  Paul  Sandhu,  CEO

CURBSIDE  COMMUNICATIONS,  INC.           PERFEXA  SOLUTIONS,  INC.
A  Nevada  corporation                    A  Nevada  corporation

By:  /s/ Paul Sandhu                       By:/s/ Paul Sandhu
Its: CEO                                   Its:CEO

     THIS COLLATERAL AGENT AGREEMENT MAY BE SIGNED BY FACSIMILE SIGNATURE AND
                 DELIVERED BY CONFIRMED FACSIMILE TRANSMISSION.

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