As amended through
                                                                January 14, 1997

                          GST TELECOMMUNICATIONS, INC.

                             1996 STOCK OPTION PLAN

         1.       PURPOSE OF THE PLAN.

                  This 1996 Stock  Option  Plan (the  "Plan") is  intended as an
incentive,  to retain in the employ of and as  consultants  and  advisors to GST
TELECOMMUNICATIONS,  INC., a Canadian  corporation  with its principal office at
4317 N.E.  Thurston Way,  Vancouver,  Washington  98662 (the  "Company") and any
Subsidiary  of the Company,  within the meaning of Section  425(f) of the United
States  Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  persons of
training, experience and ability, to attract new employees,  directors, advisors
and consultants whose services are considered  valuable,  to encourage the sense
of  proprietorship  and to stimulate the active  interest of such persons in the
development and financial success of the Company and its Subsidiaries.

                  It is further  intended that certain options granted  pursuant
to the Plan shall  constitute  incentive  stock  options  within the  meaning of
Section 422 of the Code (the  "Incentive  Options")  while certain other options
granted  pursuant  to  the  Plan  shall  be  nonqualified   stock  options  (the
"Nonqualified   Options").   Incentive  Options  and  Nonqualified  Options  are
hereinafter referred to collectively as "Options."

                  The Company  intends  that the Plan meet the  requirements  of
Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange  Act") and that  transactions of the type specified in
subparagraphs  (c) to (f)  inclusive of Rule 16b-3 by officers and  directors of
the Company  pursuant to the Plan will be exempt from the  operation  of Section
16(b) of the Exchange Act. In all cases, the terms,  provisions,  conditions and
limitations of the Plan shall be construed and  interpreted  consistent with the
Company's intent as stated in this Section 1.

         2.       ADMINISTRATION OF THE PLAN.

                  The Board of  Directors  of the Company  (the  "Board")  shall
appoint and maintain as administrator of the Plan a Committee (the  "Committee")
consisting  of two or more  Non-Employee  Directors  (as such term is defined in
Rule  16b-3),  which shall serve at the  pleasure of the Board.  The  Committee,
subject to  Sections 3 and 5 hereof,  shall  have full  power and  authority  to
designate  recipients  of Options,  to  determine  the terms and  conditions  of
respective
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Option  agreements (which need not be identical) and to interpret the provisions
and  supervise the  administration  of the Plan.  The  Committee  shall have the
authority, without limitation, to designate which Options granted under the Plan
shall be  Incentive  Options and which  shall be  Nonqualified  Options.  To the
extent any Option does not qualify as an Incentive Option, it shall constitute a
separate Nonqualified Option.

                  Subject to the  provisions of the Plan,  the  Committee  shall
interpret the Plan and all Options granted under the Plan, shall make such rules
as it deems necessary for the proper  administration of the Plan, shall make all
other  determinations  necessary or advisable for the administration of the Plan
and  shall  correct  any  defects  or  supply  any  omission  or  reconcile  any
inconsistency in the Plan or in any Options granted under the Plan in the manner
and to the extent that the  Committee  deems  desirable to carry into effect the
Plan or any Options.  The act or  determination  of a majority of the  Committee
shall be the act or  determination  of the Committee and any decision reduced to
writing  and  signed  by all of the  members  of the  Committee  shall  be fully
effective as if it had been made by a majority at a meeting  duly held.  Subject
to the  provisions of the Plan,  any action taken or  determination  made by the
Committee  pursuant  to  this  and the  other  Sections  of the  Plan  shall  be
conclusive on all parties.

                  In the event that for any reason  the  Committee  is unable to
act or if the  Committee  at the time of any grant,  award or other  acquisition
under the Plan of Options or Stock does not consist of two or more  Non-Employee
Directors,  then any such grant,  award or other  acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3.

         3.       DESIGNATION OF OPTIONEES.

                  The  persons  eligible  for   participation  in  the  Plan  as
recipients of Options (the "Optionees")  shall include  employees,  officers and
directors of, and  consultants  and advisors to, the Company or any  Subsidiary;
provided that Incentive  Options may only be granted to employees of the Company
and the Subsidiaries.  In selecting Optionees,  and in determining the number of
shares to be covered by each Option  granted to  Optionees,  the  Committee  may
consider  the  office  or  position  held  by the  Optionee  or  the  Optionee's
relationship to the Company,  the Optionee's  degree of  responsibility  for and
contribution  to the growth and  success of the Company or any  Subsidiary,  the
Optionee's length of service,  age, promotions,  potential and any other factors
that the  Committee may consider  relevant.  An Optionee who has been granted an
Option  hereunder  may be  granted  an  additional  Option  or  Options,  if the
Committee shall so determine.


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         4.       STOCK RESERVED FOR THE PLAN.

                  Subject to adjustment as provided in Section 7 hereof, a total
of 400,000 shares of the Company's  Common Shares (the "Stock") shall be subject
to the Plan.  The shares of Stock  subject to the Plan shall consist of unissued
shares or previously  issued shares held by any  Subsidiary of the Company,  and
such amount of shares of Stock shall be and is hereby reserved for such purpose.
Any of such  shares of Stock that may remain  unsold and that are not subject to
outstanding  Options at the  termination  of the Plan shall cease to be reserved
for the  purposes  of the Plan,  but until  termination  of the Plan the Company
shall at all times  reserve a  sufficient  number of shares of Stock to meet the
requirements of the Plan.  Should any Option expire or be cancelled prior to its
exercise  in full or should the number of shares of Stock to be  delivered  upon
the exercise in full of an Option be reduced for any reason, the shares of Stock
theretofore  subject to such Option may be subject to future  Options  under the
Plan.

         5.       TERMS AND CONDITIONS OF OPTIONS.

                  Options  granted  under  the  Plan  shall  be  subject  to the
following conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

                           (a) OPTION PRICE. The purchase price of each share of
Stock purchasable under an Incentive Option shall be determined by the Committee
at the time of grant,  but shall not be less than 100% of the Fair Market  Value
(as  defined  below) of such share of Stock on the date the  Option is  granted;
PROVIDED,  HOWEVER,  that with  respect  to an  Optionee  who,  at the time such
Incentive  Option is granted,  owns (within the meaning of Section 424(d) of the
Code) more than 10% of the total  combined  voting power of all classes of stock
of the Company or of any Subsidiary, the purchase price per share of Stock shall
be at least  110% of the Fair  Market  Value  per  share of Stock on the date of
grant.  The  purchase  price  of  each  share  of  Stock   purchasable  under  a
Nonqualified  Option shall not be less than 80% of the Fair Market Value of such
share of Stock on the date the Option is  granted;  PROVIDED,  HOWEVER,  that an
Optionee who is a Canadian  taxpayer may require  that any  Nonqualified  Option
granted to him provide for the purchase of shares of Stock upon exercise thereof
at a price  equal to the Fair  Market  Value  per  share of Stock on the date of
grant.  The  exercise  price for each Option shall be subject to  adjustment  as
provided  in Section 7 below.  Fair  Market  Value  means the  closing  price of
publicly  traded  shares  of Stock on the  principal  United  States  securities
exchange  on which  shares of Stock are  listed  (if the  shares of Stock are so
listed),  or on the NASDAQ  Stock  Market (if the shares of Stock are  regularly
quoted on the NASDAQ Stock  Market),  or, if not so listed or regularly  quoted,
the mean between the closing bid and asked prices of publicly  traded  shares of
Stock in the


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over-the-counter  market,  or,  if  such  bid  and  asked  prices  shall  not be
available,  as reported by any nationally  recognized quotation service selected
by the Company,  or as determined by the Committee in a manner  consistent  with
the  provisions  of the Code.  Anything  in this  Section  5(a) to the  contrary
notwithstanding,  in no event  shall the  purchase  price of a share of Stock be
less than the minimum price  permitted  under rules and policies of the American
Stock Exchange and the Vancouver Stock Exchange.

                           (b) OPTION  TERM.  The term of each  Option  shall be
fixed by the Committee,  but no Option shall be exercisable more than five years
after the date such Option is granted.

                           (c)  EXERCISABILITY.  Subject to Section 5(j) hereof,
Options shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant.

                           (d) METHOD OF  EXERCISE.  Options to the extent  then
exercisable  may be  exercised in whole or in part at any time during the option
period, by giving written notice to the Company  specifying the number of shares
of Stock to be purchased,  accompanied by payment in full of the purchase price,
in  cash,  by  check  or  such  other  instrument  as may be  acceptable  to the
Committee. As determined by the Committee,  in its sole discretion,  at or after
grant, payment in full or in part may also be made in the form of Stock owned by
the  Optionee  (based on the Fair  Market  Value of the Stock on the trading day
before the Option is  exercised).  An Optionee shall have the right to dividends
and other rights of a stockholder with respect to shares of Stock purchased upon
exercise  of an  Option  after (i) the  Optionee  has  given  written  notice of
exercise and has paid in full for such shares and (ii) becomes a stockholder  of
record with respect thereto.

                           (e)  NON-TRANSFERABILITY OF OPTIONS.  Options are not
transferable  and may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons  entitled thereto under his will or the
laws of descent and  distribution.  Any attempt to transfer,  assign,  pledge or
otherwise dispose of, or to subject to execution, attachment or similar process,
any Option  contrary to the provisions  hereof shall be void and ineffective and
shall give no right to the purported transferee.

                           (f) TERMINATION BY DEATH. Unless otherwise determined
by the Committee at grant,  if any Optionee's  employment with or service to the
Company  or any  Subsidiary  terminates  by  reason  of death,  the  Option  may
thereafter be exercised,  to the extent then exercisable (or on such accelerated
basis  as the  Committee  shall  determine  at or  after  grant),  by the  legal
representative of the estate or by the legatee of the Optionee under the will of
the Optionee, for a period of one year after the


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date of such death or until the  expiration of the stated term of such Option as
provided under the Plan, whichever period is shorter.

                           (g)  TERMINATION  BY  REASON  OF  DISABILITY.  Unless
otherwise  determined by the Committee at grant,  if any  Optionee's  employment
with or service to the Company or any  Subsidiary  terminates by reason of total
and permanent  disability,  any Option held by such  Optionee may  thereafter be
exercised,  to the extent it was  exercisable at the time of termination  due to
Disability (or on such accelerated  basis as the Committee shall determine at or
after  grant),  but may not be  exercised  after 30 days  after the date of such
termination  of  employment  or service or the  expiration of the stated term of
such  Option,  whichever  period is shorter;  provided,  however,  that,  if the
Optionee  dies within such 30 day period,  any  unexercised  Option held by such
Optionee  shall  thereafter  be  exercisable  to  the  extent  to  which  it was
exercisable at the time of death for a period of one year after the date of such
death or for the stated term of such Option, whichever period is shorter.

                           (h)  TERMINATION  BY  REASON  OF  RETIREMENT.  Unless
otherwise  determined by the Committee at grant,  if any  Optionee's  employment
with or service to the Company or any Subsidiary  terminates by reason of Normal
or Early  Retirement (as such terms are defined below),  any Option held by such
Optionee may  thereafter  be exercised to the extent it was  exercisable  at the
time of such  Retirement (or on such  accelerated  basis as the Committee  shall
determine at or after grant),  but may not be exercised  after 30 days after the
date of such  termination  of  employment  or service or the  expiration  of the
stated term of such  Option,  whichever  period is shorter;  provided,  however,
that, if the Optionee  dies within such 30 day period,  any  unexercised  Option
held by such Optionee shall thereafter be exercisable, to the extent to which it
was exercisable at the time of death, for a period of one year after the date of
such death or for the stated term of such Option, whichever period is shorter.

                  For purposes of this paragraph (h),  Normal  Retirement  shall
mean retirement from active  employment with the Company or any Subsidiary on or
after  the  normal  retirement  date  specified  in the  applicable  Company  or
Subsidiary  pension plan or if no such pension  plan,  age 65. Early  Retirement
shall mean retirement from active  employment with the Company or any Subsidiary
pursuant  to the  early  retirement  provisions  of the  applicable  Company  or
Subsidiary pension plan or if no such pension plan, age 55.

                           (i) OTHER TERMINATION. Unless otherwise determined by
the  Committee at grant,  if any  Optionee's  employment  with or service to the
Company or any Subsidiary terminates for any reason other than death, Disability
or Normal or Early Retirement, the Option shall thereupon terminate, except that
the portion of any


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<PAGE>

Option that was exercisable on the date of such termination of employment may be
exercised for the lesser of 30 days after the date of termination or the balance
of such Option's term if the  Optionee's  employment or service with the Company
or any Subsidiary is terminated by the Company or such Subsidiary  without cause
(the  determination  as to whether  termination  was for cause to be made by the
Committee).  The  transfer  of an  Optionee  from the employ of the Company to a
Subsidiary,  or vice versa,  or from one  Subsidiary  to  another,  shall not be
deemed to constitute a termination of employment for purposes of the Plan.

                           (j) LIMIT ON VALUE OF INCENTIVE OPTION. The aggregate
Fair Market Value, determined as of the date the Incentive Option is granted, of
Stock for which  Incentive  Options  are  exercisable  for the first time by any
Optionee  during any calendar year under the Plan (and/or any other stock option
plans of the Company or any Subsidiary) shall not exceed $100,000.

                           (k) TRANSFER OF INCENTIVE  OPTION  SHARES.  The stock
option agreement  evidencing any Incentive Options granted under this Plan shall
provide that if the Optionee makes a disposition,  within the meaning of Section
424(c)  of the Code and  regulations  promulgated  thereunder,  of any  share or
shares of Stock issued to him upon exercise of an Incentive Option granted under
the Plan within the two-year period  commencing on the day after the date of the
grant of such Incentive Option or within a one-year period commencing on the day
after  the date of  transfer  of the  share or  shares  to him  pursuant  to the
exercise  of  such  Incentive  Option,  he  shall,  within  10 days  after  such
disposition,  notify the Company thereof and immediately  deliver to the Company
any amount of United States federal income tax withholding required by law.

                           (l)  LIMITATION  ON OPTIONS  HELD BY ONE PERSON.  The
aggregate  number of shares of Stock  subject to options  held by any one person
shall not exceed that number of shares as equals 5% of the outstanding shares of
the Company.

         6.       TERM OF PLAN.

                  No Option  shall be granted  pursuant  to the Plan on or after
January 5, 2006, but Options theretofore granted may extend beyond that date.

         7.       CAPITAL CHANGE OF THE COMPANY.

                  In the  event of any  merger,  reorganization,  consolidation,
recapitalization,  stock  dividend,  or  other  change  in  corporate  structure
affecting  the Stock,  the  Committee  shall make an  appropriate  and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number  and option  price of shares  subject to  outstanding  Options
granted under the Plan, to the end that after such event each Optionee's


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proportionate  interest shall be maintained as immediately before the occurrence
of such event.

         8.       PURCHASE FOR INVESTMENT.

                  Unless the  Options  and shares  covered by the Plan have been
registered  under the United  States  Securities  Act of 1933,  as amended  (the
"Securities  Act"),  or the Company has  determined  that such  registration  is
unnecessary,  each person exercising an Option under the Plan may be required by
the Company to give a representation  in writing that he is acquiring the shares
for his own  account  for  investment  and not  with a view  to,  or for sale in
connection with, the distribution of any part thereof.

         9.       TAXES.

                  The  Company  may  make  such   provisions   as  it  may  deem
appropriate,  consistent  with  applicable  law, in connection  with any Options
granted under the Plan with respect to the  withholding  of any United States or
Canadian taxes or any other tax matters.

         10.      EFFECTIVE DATE OF PLAN.

                  The Plan shall be  effective  on  January  5,  1996,  provided
however  that the Plan shall  subsequently  be approved by majority  vote of the
Company's shareholders not later than January 4, 1997.

         11.      AMENDMENT AND TERMINATION.

                  The Board may amend,  suspend,  or terminate the Plan,  except
that no  amendment  shall be made that would  impair the rights of any  Optionee
under any Option  theretofore  granted  without his consent,  and except that no
amendment shall be made which,  without the approval of the  shareholders of the
Company would:

                           (a) materially increase the number of shares that may
be issued under the Plan, except as is provided in Section 7;

                           (b) materially  increase the benefits accruing to the
Optionees under the Plan;

                           (c)  materially   modify  the   requirements   as  to
eligibility for participation in the Plan;

                           (d)  decrease  the  exercise  price  of an  Incentive
Option to less than 100% of the Fair Market Value per share of Stock on the date
of grant thereof or the exercise price of a Nonqualified Option to less than 80%
of the Fair Market Value per share of Stock on the date of grant thereof; or


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<PAGE>

                           (e)  extend  the  term  of  any  Option  beyond  that
provided for in Section 5(b).

                  The  Committee  may amend the terms of any Option  theretofore
granted, prospectively or retroactively,  but no such amendment shall impair the
rights of any Optionee  without his consent.  The Committee may also  substitute
new Options for previously  granted  Options,  including  options  granted under
other plans applicable to the participant and previously  granted Options having
higher option prices, upon such terms as the Committee may deem appropriate.

         12.      GOVERNMENT REGULATIONS.

                  The Plan, and the grant and exercise of Options hereunder, and
the  obligation  of the Company to sell and deliver  shares under such  Options,
shall be subject to all  applicable  laws,  rules and  regulations,  and to such
approvals  by  any  governmental   agencies  or  national  securities  exchanges
(including the American Stock Exchange and Vancouver  Stock  Exchange) as may be
required.

         13.      GENERAL PROVISIONS.

                           (a)  CERTIFICATES.  All  certificates  for  shares of
Stock delivered under the Plan shall be subject to such stop transfer orders and
other  restrictions  as the  Committee  may  deem  advisable  under  the  rules,
regulations and other requirements of the Securities and Exchange Commission, or
other  securities  commission  having  jurisdiction,   any  applicable  Federal,
provincial or state  securities  law, any stock exchange upon which the Stock is
then listed and the  Committee may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions.

                           (b)  EMPLOYMENT  MATTERS.  The  adoption  of the Plan
shall not confer upon any Optionee of the Company or any  Subsidiary,  any right
to  continued  employment  or,  in the case of an  Optionee  who is a  director,
continued service as a director,  with the Company or a Subsidiary,  as the case
may be, nor shall it  interfere  in any way with the right of the Company or any
Subsidiary to terminate the employment of any of its  employees,  the service of
any of its directors or the retention of any of its  consultants  or advisors at
any time.

                           (c)  LIMITATION OF LIABILITY.  No member of the Board
or the Committee,  or any officer or employee of the Company acting on behalf of
the  Board  or the  Committee,  shall  be  personally  liable  for  any  action,
determination, or interpretation taken or made in good faith with respect to the
Plan,  and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by


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law, be fully  indemnified  and  protected by the Company in respect of any such
action, determination or interpretation.

                           (d) REGISTRATION OF STOCK.  Notwithstanding any other
provision in the Plan, no Option may be exercised  unless and until the Stock to
be issued upon the exercise thereof has been registered under the Securities Act
and applicable  state  securities laws, or are, in the opinion of counsel to the
Company,  exempt from such  registration in the United States or exempt from the
prospectus   and   registration   requirements   under   applicable   provincial
legislation.  The Company shall not be under any  obligation  to register  under
applicable  federal  or state  securities  laws any Stock to be issued  upon the
exercise  of an  Option  granted  hereunder,  or to comply  with an  appropriate
exemption from registration under such laws or the laws of any province in order
to permit  the  exercise  of an Option  and the  issuance  and sale of the Stock
subject to such Option however,  the Company may in its sole discretion register
such Stock at such time as the Company shall  determine.  If the Company chooses
to comply with such an exemption from  registration,  the Stock issued under the
Plan may, at the direction of the  Committee,  bear an  appropriate  restrictive
legend restricting the transfer or pledge of the Stock represented  thereby, and
the  Committee  may also give  appropriate  stop  transfer  instructions  to the
Company's transfer agents.

                          GST TELECOMMUNICATIONS, INC.
                                 January 5, 1996



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