UNCONDITIONAL CONTINUING GUARANTY

                                (LOAN AGREEMENT)

         THIS  UNCONDITIONAL  CONTINUING  GUARANTY (this "GUARANTY") is made and
entered into as of September 4, 1996, by and between  Siemens  Stromberg-Carlson
("LENDER"),  whose  principal  place of business is located at 900 Broken  Sound
Parkway,  Boca  Raton,  Florida  33487 and GST USA,  Inc.  ("GUARANTOR"),  whose
address is 4317 Northeast Thurston Way, Vancouver, Washington 98662.

         1. GUARANTY.  In order to induce Lender, and in consideration  thereof,
to enter into that  certain  Loan and  Security  Agreement  dated as of the date
hereof (the "AGREEMENT"),  with GST Switchco,  Inc. ("BORROWER") and, subject to
Section  2  below,   Guarantor   unconditionally,   absolutely  and  irrevocably
guarantees  the  punctual  payment  when due,  whether  at stated  maturity,  by
acceleration  or  otherwise,  of all  obligations  of Borrower  now or hereafter
existing   to  Lender   under  the   Agreement   and  the  Note   (collectively,
"OBLIGATIONS"),  including,  but not limited to, the  repayment to Lender of all
sums  presently  due and owing,  and all sums that in the future  become due and
owing,  from Borrower to Lender  arising under the  Agreement.  All  capitalized
terms not otherwise  defined  herein shall have the same meaning as set forth in
the Agreement.

         2.  LIMITATION ON GUARANTOR'S  LIABILITY.  Guarantor's  liability under
this  Guaranty  shall be limited to the sum of (a) the lesser of (i)  fifty-five
percent (55%) of the principal and interest  outstanding under Loans, other than
Loans used by  Borrower  to finance  the  acquisition  Cable or (ii)  Forty-Five
Million  Dollars  ($45,000,000),  and  (b) one  hundred  percent  (100%)  of the
outstanding  principal and interest under Loans used to finance the  acquisition
of Cable and all reasonable  attorneys' fees and costs incurred by Lender in the
enforcement of the Agreement or this Guaranty.

         3. OBLIGATIONS.  The Obligations  include any and all loans,  advances,
indebtedness  and  other  obligations  owed by  Borrower  to  Lender  under  the
Agreement  of every  description,  whether now  existing or  hereafter  arising,
whether direct or indirect, fixed or contingent or liquidated or unliquidated.

         4.  ATTORNEY'S  FEES. If Lender incurs  attorney's fees relating to the
enforcement of this  Guaranty,  Guarantor  agrees to pay Lender such  reasonable
attorney's  fees  plus all  reasonable  costs  and  expenses  relating  thereto.
Guarantor  agrees to pay Lender's  reasonable  attorney's  fees  relating to any
action,  suit,  counterclaim,   post-judgment  motions,  bankruptcy  litigation,
appeal, arbitration or mediation relating to the enforcement of this Guaranty.

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         5. WAIVERS.

            5.1. SCOPE OF RISK DEFENSES. Lender may at any time and from time to
time,  without  notice or the consent of  Guarantor,  and without  affecting  or
impairing the liability of Guarantor  hereunder,  do any of the  following:  (i)
renew,  modify,  or extend  (including  extensions beyond the original term) any
Obligations  of  Borrower,  of  its  customers,  of any  co-guarantors  (whether
hereunder  or under a  separate  instrument)  or of any other  party at any time
directly or contingently  liable for the payment of any said  Obligations;  (ii)
accept partial payments of said Obligations;  (iii) settle,  discharge,  release
(by operation of law or otherwise),  compound,  compromise, collect or liquidate
any of said Obligations and the security therefor in any manner; (iv) consent to
the  transfer or sale of  security,  or (v) bid and  purchase at any sale of any
security;  or (vi) change the terms of the Obligations,  including  increases or
decreases in payments or any interest rate adjustments.

            5.2.  PRIMARY  OBLIGATION  DEFENSES.  Guarantor waives any rights to
require Lender to (i) proceed against  Borrower or any other guarantor or party;
(ii)  proceed  against or exhaust any security  held from  Borrower or any other
guarantor;  or (iii)  pursue  any other  remedy in  Lender's  power  whatsoever.
Guarantor  waives any defense based on or arising out of any defense of Borrower
in respect of the Obligations,  whether such defense arises by operation of law,
bankruptcy of Borrower or otherwise,  including without limitation,  any defense
based on or arising out of any disability of Borrower or the unenforceability of
the  Obligations  from any  cause.  Guarantor  waives any  defense  based on any
applicable statute of limitations or statute of frauds.

            5.3.  COMMERCIALLY  REASONABLE SALE AND ANTI-DEFICIENCY LAWS. Lender
may, at Lender's  election,  foreclose on any security  held by Lender by one or
more judicial or nonjudicial sales, whether or not every aspect of any such sale
is  commercially  reasonable,  or exercise any other right or remedy  Lender may
have against  Borrower,  or any security,  without affecting or impairing in any
way the liability of Guarantor  except to the extent the  Obligations  have been
paid.  Guarantor  waives any defense arising out of any such election by Lender,
even  though  such  election  operates  to  impair  or  extinguish  any right of
reimbursement or subrogation or other right or remedy of Lender against Borrower
or any  security.  In the absence of agreeing to the waivers  contained  in this
Section  5.3,  Guarantor  may have the  right of  subrogation  or  reimbursement
against  Borrower.  For example,  if Lender elects to foreclose,  by nonjudicial
sale,  any deeds of trust  securing  any  indebtedness  of  Borrower  to Lender,
causing  Guarantor to lose any such rights or create  defenses to enforcement of
this Guaranty, Guarantor gives up any such potential defenses by agreeing to the
waivers  contained in this  Section 5.3.  Guarantor  also  expressly  waives any
defense or benefit  that may be  derived  from any "one form of action"  rule or
anti-deficiency  statute and all  suretyship  defenses it would  otherwise  have
under the laws of any state.

            5.4.  DISCLOSURE  DEFENSES.  Guarantor expressly waives all set-offs
and  counterclaims  and waives all  notices,  protests  and  demands  including,
without limitation,


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notice  of  default  in the  payment  of rents or in the  performance  or in the
observance of any of the terms, provisions, covenants or conditions contained in
any agreement between Lender and Borrower.

            5.5.  IMPAIRMENT OF COLLATERAL  DEFENSE.  Guarantor expressly agrees
that the validity of this Guaranty and the obligations of Guarantor shall not be
terminated,  affected or impaired by reason of the waiving, delaying, exercising
or  non-exercising  of any of Lender's rights against  Borrower  pursuant to the
Agreement or against  Guarantor by reason of this Guaranty or as a result of the
substitution,  release,  repossession,  sale,  disposition or destruction of any
collateral or of the items leased or to be leased to Borrower.  Guarantor  shall
not be released or discharged,  either in whole or in part, by Lender's  failure
or delay (a) to perfect or continue the  perfection of any security  interest in
any  property  which  secures  the  Obligations  of Borrower to Lender or (b) to
protect the property covered by such security interest.

            5.6.  GUARANTOR'S  RIGHT TO REVOKE.  Guarantor  expressly waives the
right to revoke or terminate  this  Guaranty,  including any statutory  right of
revocation under the laws of any state.

         6.  FINANCIAL   CONDITION  OF  BORROWER.   Guarantor  (a)  assumes  all
responsibility for being and keeping informed of Borrower's  financial condition
and assets and of all other circumstances bearing upon the risk of nonpayment of
the  Obligations  and the nature,  scope and extent of the risks which Guarantor
assumes and incurs  hereunder  and (b) agrees that Lender  shall have no duty to
advise  Guarantor of  information  known to it regarding such  circumstances  or
risks.

         7.  SUBROGATION.  If an Event of Default has occurred and is continuing
under the  Agreement,  Guarantor  shall not  exercise  any  rights  which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise,  until all of the Obligations shall have been paid in full and the
obligation  of Lender  under the  Agreement  to make Loans shall have expired or
been  terminated.  If an Event of Default has  occurred and is  continuing,  any
amount that is paid to  Guarantor on account of such  subrogation  rights at any
time  prior  to the  later  of the  payment  in full of the  Obligations  or the
expiration  or  termination  of the  obligation of Lender under the Agreement to
make Loans,  shall be held in trust for the benefit of Lender and paid forthwith
to Lender to either,  in Lender's sole  discretion,  (x) be credited and applied
upon the Obligations, whether matured or unmatured, in accordance with the terms
of the  Agreement  or (y) be held  by  Lender  as  collateral  security  for any
Obligations thereafter existing. If (i) Guarantor makes payment to Lender of all
or any part of the  Obligations,  (ii) all the  Obligations are paid in full and
(iii) the  obligation of Lender under the Agreement to make Loans has expired or
terminated,  Lender  will,  at  Guarantor's  request,  execute  and  deliver  to
Guarantor appropriate documents,  without recourse and without representation or
warranty,  necessary to evidence the transfer by  subrogation to Guarantor of an
interest in the Obligations resulting from such payment by Guarantor.

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         8.  RECOVERY OF  PREFERENCES.  If a claim of a preference  payment or a
claim of  fraudulent  transfer is made upon Lender at any time for  repayment or
recovery of any amount(s) or other value received by Lender, from any source, in
payment of or on  account of any of the  Obligations  guaranteed  hereunder  and
Lessor repays or otherwise  becomes  liable for all or any part of such claim by
reason of (i) any judgment,  decree or order of any court or administrative body
having  competent  jurisdiction or (ii) any settlement or compromise of any such
claim,  Guarantor  shall  remain  liable to Lender  hereunder  for the amount so
repaid or for which  Lender is  otherwise  liable to the same  extent as if such
amount(s) had never been  received by Lender,  notwithstanding  any  termination
hereof.

         9. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender as of the Effective Date that:

            9.1. It is a corporation  duly  organized,  validly  existing and in
good  standing  under  the  laws  of  the  country,  state  or  province  of its
incorporation;

            9.2. It is duly  qualified to do business and is in good standing in
each  jurisdiction  where the failure to qualify  would have a material  adverse
effect on the  business,  condition  (financial  or  otherwise) or operations of
Guarantor (a "MATERIAL ADVERSE EFFECT");

            9.3. It has the requisite power and authority to own its properties,
to carry on its business as now  conducted or as presently  contemplated  and to
own, operate and maintain such properties;

            9.4. It has the power to execute, deliver and perform this Guaranty;

            9.5. The execution, delivery and performance of this Guaranty:

                 9.5.1.  has  been  duly  authorized  by  Guarantor's  Board  of
Directors and, if necessary, Guarantor's shareholders;

                 9.5.2.  do not violate (a) any provision of law or any rules or
regulations applicable to Guarantor or its business, (b) Guarantor's Articles of
Incorporation  or  Bylaws,  (c)  any  applicable  order  of  any  court  or  any
governmental authority or (d) any indenture, agreement for borrowed money, bond,
note or other similar  instrument or any other agreement to which Guarantor is a
party or by which Guarantor or any of Guarantor's  property is bound, where such
violation would have a Material Adverse Effect;

                 9.5.3.  do  not  conflict  with,  result  in  a  breach  of  or
constitute  (with  due  notice  or lapse of time or both) a  default  under  any
indenture,  agreement for borrowed money,  bond,  note or similar  instrument or
material agreement to which Guarantor is a party or by which Guarantor or any of
Guarantor's  property is bound in a manner  which would have a Material  Adverse
Effect;

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                 9.5.4.  do not result in the creation or imposition of any Lien
of any nature  whatsoever  upon any property or assets of Guarantor,  which Lien
would have a Material Adverse Effect;

                 9.5.5.  constitutes  a legal,  valid and binding  obligation of
Guarantor enforceable against Guarantor in accordance with its respective terms,
subject,  as  to  enforcement,  to  applicable  or  bankruptcy,  reorganization,
insolvency  and  similar  laws  affecting  creditors'  rights  generally  and to
moratorium laws from time to time in effect; and

                 9.5.6.   do  not  as  of  the  execution   hereof  require  any
governmental  consent,  filing,  registration  or approval  where the failure to
receive such requirement would have a Material Adverse Effect;

            9.6. Guarantor has furnished to Lender a Balance Sheet of Guarantor,
dated as of March 31, 1996 (the "BALANCE SHEET"),  attached hereto as EXHIBIT A.
As of the Effective Date, (a) the Balance Sheet fairly represents such company's
assets,  liabilities and financial  condition as of such date according to GAAP;
(b) there are no material representations or omissions from the Balance Sheet or
any other facts or circumstances not reflected in the Balance Sheet which are or
may be  material;  and (c)  there  has been no  material  adverse  change in the
condition  (financial  or  otherwise),  operations or properties of such company
since the date of the Balance Sheet.

            9.7. There are no actions, suits at law or in equity or by or before
any  governmental  instrumentality  or  other  agency  now  pending,  or to  the
knowledge of Guarantor,  threatened  against Guarantor or affecting any property
or rights of  Guarantor  as to which  there is a  reasonable  possibility  of an
adverse determination which, if adversely  determined,  would in individually or
in the  aggregate  materially  impair  the  right of  Guarantor  to carry on its
business or would have any Material Adverse Effect;

            9.8.  Guarantor  has filed or caused to be filed all federal,  state
and local tax  returns  which are  required  to be filed as paid or caused to be
paid all taxes as shown on such returns or on any  assessment  received by it to
the extent  that such taxes have become  due,  except  such  taxes,  the amount,
applicability  or  validity  of  which  are  being  contested  in good  faith by
appropriate proceedings with respect to which the Guarantor shall have set aside
on its books adequate reserves which respect to such taxes and required by GAAP,
where the  failure to file such  returns or pay such taxes would have a Material
Adverse Effect;

            9.9.  Guarantor  is not  in  default,  which  default  would  have a
Material  Adverse Effect:  (a) with respect to any judgment,  writ,  injunction,
decree, rule or regulation of any governmental  instrumentality or other agency,
or (b) in the performance,  observance or fulfillment of any of the obligations,
covenants or  conditions  contained in any material  agreement or  instrument to
which Guarantor is a party or by which its assets are bound;

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            9.10.  Guarantor has obtained any and all licenses,  authorizations,
certificates,  and approvals of any federal, state or local governmental agency,
authority or  instrumentality  having  jurisdiction over Guarantor  required for
Guarantor to conduct its business as now conducted, where the lack thereof would
have a Material Adverse Effect;

            9.11.  Guarantor's  operations  comply in all material respects with
all applicable federal, state or local laws and regulations where the failure to
so comply would have a Material  Adverse Effect.  To the knowledge of Guarantor,
none of the  properties  owned,  leased,  used or operated by  Guarantor  or the
operation of business of Guarantor is subject to any judicial or  administrative
proceeding  alleging  the  violation  of any  federal,  state or local laws,  or
regulations or ordinances,  including,  without limitation,  any communications,
utilities,  environmental,  health or safety statute, regulation or order, which
violation would have a Material Adverse Effect;

            9.12.  To the  knowledge of  Guarantor,  none of the  operations  or
business  of  Guarantor  is the  subject of any  federal or state  investigation
evaluating  whether  any  material  Remedial  Action is needed to  respond  to a
Release of any Contaminant into the indoor or outdoor environment. Guarantor has
not filed any notice under any federal or state law  indicating  past or present
treatment,  storage or disposal of a hazardous  waste or  reporting a Release of
any Contaminate into the indoor or outdoor  environment.  There is no contingent
liability of Guarantor of which  Guarantor has  knowledge or  reasonably  should
have knowledge in connection with any Release of any Contaminant into the indoor
or outdoor environment which would have a Material Adverse Effect;

            9.13.  Guarantor and its ERISA  Affiliates (i) have fulfilled  their
obligations  under any  applicable the minimum  funding  standards of ERISA with
respect to each employment  benefit plan subject to ERISA,  are in compliance in
all  material  respects  with the  applicable  provisions  of ERISA and have not
incurred any liability to the PBGC or any such plan under Title IV of ERISA; and
(ii) no  "prohibitive  transaction"  or  "reportable  event",  as such terms are
defined in ERISA,  has occurred with respect to any such plan, where the failure
to comply with the foregoing would have a Material Adverse Effect;

            9.14.  Guarantor  is not an  "investment  company"  as that  term is
defined in, and is not otherwise  subject to regulation  under,  the  Investment
Company  Act of 1940.  Guarantor  is not a  "holding  company"  as that  term is
defined  in, and is not  otherwise  subject to  regulation  under,  the  "Public
Utility Holding Company Act of 1935;" and

            9.15.  Guarantor  is  not  engaged  principally,  or as  one  of its
important  activities  in the  business of  extending  credit for the purpose of
purchasing  or carrying any margin stock  (within the meaning of Regulation G of
the Board of Governors of the Federal  Reserve Network of the Unites States) and
no part of the  proceeds of the Loans will be used to purchase or carry any such
margin  stock or to extend  credit to others for the  purpose of  purchasing  or
carrying  any  such  margin  stock  or for  the  purpose  that  violates,  or is
inconsistent  with,  the  provisions  of Regulation G, T, U or X of the Board of
Governors.

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         10. AFFIRMATIVE  COVENANTS.  Guarantor covenants and agrees with Lender
that so long as the Agreement  and this  Guaranty  shall remain in effect or any
Obligations  to Lender  hereunder or under any of the other Loan  Documents  are
unpaid:

             10.1.   Guarantor   shall   preserve  and  maintain  its  corporate
existence,  rights,  franchises  and  privileges  in  the  jurisdiction  of  its
organization,  and qualify and remain qualified as a foreign  corporation in all
jurisdictions  in which such  qualification is necessary in view of its business
operations and property.

             10.2. Guarantor shall comply in all material respects with all laws
and regulations  applicable to it and shall obtain and maintain all governmental
consents, filings,  registrations and approvals where the failure to do so would
have a Material Adverse Effect.

             10.3. Guarantor shall at all times maintain in good repair, working
order and condition,  excepting ordinary wear and tear and obsolescence,  all of
its  properties  material to its operations  and make all  appropriate  repairs,
replacements and renewals  thereof,  in each case consistent with sound business
practice where the failure to do so would have a Material Adverse Effect.

             10.4.  Guarantor  shall:  (a)  maintain in full force and effect on
such of its properties, including real property and personal property, insurance
against such risks and in such amounts as is  customarily  maintained by similar
businesses  of similar  size and (b)  maintain  in full force and effect  public
liability  insurance  against  claims for  personal  injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned,  occupied or  controlled  by Guarantor in such amounts as is  customarily
maintained by similar business of similar size.

             10.5.  Guarantor  shall  pay  and  discharge  promptly  all  taxes,
assessments  and  governmental  charges  or levies  imposed  upon it or upon its
income or profits or in respect of its property  before the same shall become in
default,  as well as all lawful  claims for labor,  materials  and  supplies  or
otherwise which, if unpaid, might become a Lien upon such properties or any part
thereof;  PROVIDED,  HOWEVER,  that  Guarantor  shall not be required to pay and
discharge  or to cause  to be paid and  discharged  any  such  tax,  assessment,
charge,  levy or claim so long as (i) the  validity or amount  thereof  shall be
contested  in good  faith by  appropriate  proceedings  diligently  pursued  and
Guarantor  shall set aside on its books such  reserves  as are  required by GAAP
with respect to any such tax, assessment, charge, levy or claim so contested and
(ii) Guarantor's failure to do so would not have a Material Adverse Effect.

             10.6. Guarantor shall furnish to Lender:

                   10.6.1.  within five (5) days after any periodic filings with
the U.S.  Securities  and Exchange  Commission by GST  Telecommunications,  Inc.
("GST") with respect to the end of each Fiscal Year, copies of such filing;

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                   10.6.2. within five (5) days after any corresponding periodic
filings with the U.S.  Securities and Exchange Commission by GST with respect to
the end of each  Fiscal  Year,  an annual  unaudited  balance  sheet and  income
statement  for  Guarantor  for such fiscal year,  which balance sheet and income
statement shall fairly represent  Guarantor's assets,  liabilities and financial
condition  as of such date  according  to GAAP and  shall  indicate  the  equity
contributions made by Guarantor's shareholders as of such date according to GAAP
and shall  contain no  misrepresentations  or  omissions  of any other  facts or
circumstances which are material;

                   10.6.3. within five (5) days after any corresponding periodic
filing with the Securities  and Exchange  Commission by GST with respect to each
of the first three financial  quarters of each Fiscal Year, an unaudited balance
sheet and income  statement for Guarantor as of the end of each such quarter and
for the then elapsed portion of such Fiscal Year, which balance sheet and income
statement shall fairly represent  Guarantor's assets,  liabilities and financial
condition  as of such date  according  to GAAP and  shall  indicate  the  equity
contributions   made  by   Guarantor's   shareholders   and  shall   contain  no
misrepresentations  or omissions of any other facts or  circumstances as of such
date according to GAAP which are material;

                   10.6.4.  Concurrently with the financial  materials  provided
pursuant to Section  10.6.2 and  Section  10.6.3  above,  (i) a  certificate  of
Guarantor  to the  effect  that such  materials  present  fairly  the  financial
position and results of  operations  of  Guarantor,  subject to normal  year-end
audit  adjustments  and (ii) with respect to the  financial  materials  provided
pursuant to Section  10.6.3,  a certificate  constituting  a bridge between such
materials  and the assets and  liabilities  of GST, in each case executed on its
behalf by its Chief Financial  Officer,  Chief  Accounting  Officer or Treasurer
("BRIDGE  CERTIFICATE").  Guarantor  represents  and  warrants  that the  Bridge
Certificate shall be accurate in all material respects.

                   10.6.5. Immediately upon obtaining knowledge of any condition
or event which either constitutes and Event of Default or which, after notice or
lapse  of time  or  both,  would  constitute  an  Event  of  Default,  or  which
constitutes a breach of any covenant herein, or which renders any representation
or warranty  contained herein  materially false or misleading,  a certificate of
Guarantor,  signed  by  an  authorized  officer  of  Guarantor,   specifying  in
reasonable detail the nature and period of existence thereof and what corrective
action Guarantor has taken or proposes to take with respect thereto;

                   10.6.6.  Concurrent  with providing the financial  statements
referred to in Section 10.6.1,  a certificate of Guarantor,  executed for and on
its behalf by an authorized  officer of  Guarantor,  stating that there does not
exist any  condition  or event which either  constitutes  an Event of Default or
which,  after  notice  or lapse of time or both,  would  constitute  an Event of
Default or which constitutes a breach of any covenant hereunder or which renders
any representation or warranty herein materially false or misleading; and

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                   10.6.7.  Promptly  from time to time such  other  information
regarding the operations and condition  (financial or otherwise) of Guarantor or
its business as Lender may reasonably request.

             10.7.  Guarantor  shall give Lender  prompt  written  notice of the
following: (a) all events of defaults or any event that would become an event of
default  upon  notice  or  lapse  of time  or both  under  any of the  terms  or
provisions of any note, or of any other evidence of indebtedness or agreement or
contract  governing  the  borrowing  of money,  of  Guarantor  that would have a
Material Adverse Effect;  (b) any levy,  attachment,  execution or other process
against any of the property or assets,  real or personal of Guarantor that would
have a Material  Adverse  Effect;  (c) the filing or commencement of any action,
suit or  proceeding by or before any court or any federal,  state,  municipal or
other governmental department,  commission,  instrumentality or agency which, if
adversely   determined  against   Guarantor,   would  materially  impair  either
Guarantor's  right to carry on its business  substantially  as now  conducted or
contemplated or result in a Material  Adverse  Effect;  and (d) any other matter
which has resulted in or which Guarantor  reasonably  believes will result in, a
Material Adverse Effect.

             10.8. If Guarantor shall receive notice:  (a) that violation of any
federal,  state or local environmental law regulation may have been committed or
is about to be committed by Guarantor that would have a Material Adverse Effect;
(b) that any  administrative or judicial complaint or order has been filed or is
about to be filed against Guarantor alleging violations of any federal, state or
local  environmental law or regulation or requiring Guarantor to take any action
in  connection  with any Release of any  Contaminant  into the outdoor or indoor
environment,  which  violation or Release would have a Material  Adverse Effect;
(c) from a federal, state or local governmental agency or private party alleging
that Guarantor may be liable or responsible for costs associated with a response
to or  clean-up  of a Release or of any  Contaminant  into the indoor or outdoor
environment or any damages caused thereby which  liability would have a Material
Adverse Effect; or (d) of the enactment or promulgation of any federal, state or
local environmental law or regulation;  which may result in any Material Adverse
Effect,  then  Guarantor  shall provide Lender with a copy of such notice within
fifteen (15) days of its receipt thereof.

         11. NEGATIVE COVENANTS

             11.1.  Guarantor  covenants  and agrees with Lender that so long as
the Agreement and this Guaranty shall remain in effect or the Obligations  under
the Agreement or under any of the Loan  Documents  shall be unpaid,  without the
prior written  consent of Lender,  Guarantor shall not: (a) consolidate or merge
with any other person unless Guarantor or an affiliate is the surviving  entity;
(b) sublease,  transfer or otherwise  dispose of all or substantially all of its
assets in any  transaction or series of related  transactions,  except for sales
and  subleases  in  the  ordinary  course  of  business,   which  shall  include
disposition  of assets that are obsolete,  surplus or replaced;  (c)  liquidate,
dissolve  or  effect  a  recapitalization  or  reorganization  in  any  form  of
transaction;  or (d) become subject to any agreement or

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<PAGE>
instrument  which by its terms would restrict  Guarantor's  rights or ability to
perform any of its obligations to Lender pursuant to the terms of this Guaranty.

             11.2.  Guarantor  covenants  and agrees with Lender that so long as
the Agreement and this Guaranty shall remain in effect or the Obligations  under
the Agreement or under any of the Loan  Documents  shall be unpaid,  without the
prior written  consent of Lender,  Guarantor  shall not and shall not permit any
Affiliate of Guarantor to, create,  incur, assume or suffer to exist any lien on
any of Guarantor's or such  Affiliate's  assets unless all amounts due under the
Loan  Documents  are directly  secured  equally and ratably with or prior to the
obligation  secured  by  such  lien;  provided,   however,  that  the  foregoing
limitation  shall not apply to the liens listed in (a) clause (i) through  (vii)
of Section  4.09 of the Senior Notes  Indenture,  dated as of December 19, 1995,
among GST, the  Guarantor  and United  States Trust  Company of New York and (b)
clauses (i) through (vii) of Section 4.10 of the  Convertible  Notes  Indenture,
dated as of December  19, 1995,  among GST,  Guarantor  and United  States Trust
Company of New York.

         12.  BINDING  ON  SUCCESSORS  AND  ASSIGNS.  This  Guaranty  shall bind
Guarantor's   respective  heirs,   administrators,   personal   representatives,
successors  and assigns,  and shall inure to the benefit of Lender's  successors
and assigns, including,  without limitation, any party to whom Lender may assign
the Agreement; and Guarantor hereby waives notice of any such assignment. All of
Lender's rights are cumulative and not alternative.

         13.  MISCELLANEOUS.  This Guaranty contains the entire agreement of the
parties hereto and no other oral or written agreement exists.  This Guaranty may
not be amended or modified  except by a writing  signed by Lender and Guarantor.
This Guaranty is a valid and subsisting  legal instrument and no provision which
may be deemed  unenforceable  shall in any way invalidate any other provision or
provisions,  all of which shall remain in full force and effect.  No invalidity,
irregularity or  unenforceability  of all or any part of the Obligations nor any
other  circumstance  which might be a legal defense of a guarantor shall affect,
impair or be a defense to this Guaranty. Each of the persons who has signed this
or any other  Guaranty  has  unconditionally  delivered  it to  Lender,  and the
failure  to sign  this or any  other  Guaranty  by any  other  person  shall not
discharge the liability of any signer.

         14.  CHOICE OF LAW AND FORUM.  THIS  GUARANTY  SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK
INCLUDING ALL MATTERS OF CONSTRUCTION,  VALIDITY AND PERFORMANCE,  AND GUARANTOR
AGREES TO SUBMIT TO THE  JURISDICTION  OF THE STATE AND/OR FEDERAL COURTS IN THE
STATE OF NEW YORK.  GUARANTOR  HEREBY  WAIVES  THE RIGHT TO TRIAL BY JURY OF ANY
MATTERS ARISING OUT OF THIS GUARANTY OR THE CONDUCT OF THE RELATIONSHIP  BETWEEN
LENDER AND GUARANTOR.

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         IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered as of the date first above written.

                                      GST USA, INC.



                                      By:  /s/ John Warta
                                           ------------------------------------
                                               John Warta
                                               President and
                                               Chief Executive Officer


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