EMPLOYMENT AGREEMENT

                  THIS  EMPLOYMENT  AGREEMENT made this 11th day of March,  1997
("Effective  Date"),  by and between GST USA, INC., a Delaware  corporation (the
"Corporation")  with its principal office at 4317 N.E. Thurston Way,  Vancouver,
Washington  98662,  and JOSEPH BASILE,  residing at 14201  Secluded Lane,  North
Potomac, Maryland 20878 (the "Executive").

                              W I T N E S S E T H :
                              - - - - - - - - - -

                  WHEREAS,  the  Corporation  desires to employ  Executive,  and
Executive  desires to undertake such  employment,  upon the terms and subject to
the conditions of this Agreement;

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:

                  1.       EMPLOYMENT  OF  EXECUTIVE.   The  Corporation  hereby
employs  Executive  as its Chief  Operating  Officer to  perform  the duties and
responsibilities incident to such position,  subject at all times to the control
and direction of the Board of Directors of the Corporation (the "Board") and the
Chief  Executive  Officer of the  Corporation  (the "CEO").  Executive  shall be
elected the President  and Chief  Operating  Officer of GST  Telecommunications,
Inc. ("GST") contemporaneously with the execution and delivery of this Agreement
and shall  continue to be elected and employed as such  throughout  the Term (as
hereinafter  defined),  subject at all times to the control and direction of the
Board of Directors of GST (the "GST Board") and the Chief  Executive  Officer of
GST ("GST CEO").


<PAGE>
                  2.       ACCEPTANCE  OF   EMPLOYMENT;   TIME  AND   ATTENTION.
Executive  accepts such  employment  and throughout the period of his employment
hereunder  shall  devote  his  full  time,  attention,   knowledge  and  skills,
faithfully,  diligently  and to the best of his ability,  in  furtherance of the
business of the Corporation, its parent corporation, GST, and GST's subsidiaries
(collectively,   the  "GST   Companies"),   and  will  perform  the  duties  and
responsibilities assigned to him pursuant to Paragraph 1 hereof, subject, at all
times,  to the  direction  and  control  of the Board and the CEO.  As the Chief
Operating  Officer of the Corporation and President and Chief Operating  Officer
of GST,  Executive  shall perform such specific  duties and shall  exercise such
specific authority related to the management of the day-to-day operations of the
Corporation  and GST  consistent  with  such  positions  as may be  assigned  to
Executive  from  time to time by the  Board  and  the CEO  with  respect  to his
position(s)  with the Corporation and as may be assigned to him by the GST Board
and the GST CEO with respect to his positions with GST.  Executive  shall at all
times be subject to,  observe and carry out such rules,  regulations,  policies,
directions  and  restrictions  as the  GST  Companies  shall  from  time to time
establish,  provided  that  they are not  inconsistent  with  the  terms of this
Agreement.  During the period of his employment hereunder,  Executive shall not,
directly or  indirectly,  accept  employment  or  compensation  from, or perform
services  of any  nature  for,  any  business  enterprise  other  than  the  GST
Companies.  Executive  shall be elected to such offices of the GST  Companies as
may from time to time be  determined  by the GST  Board.  During  the  period of
Executive's employment hereunder, he shall not be entitled to



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<PAGE>
additional compensation for serving in any offices of the GST Companies to which
he is elected or appointed. While it is anticipated that Executive's duties will
primarily be performed in Vancouver,  Washington,  Executive will be required to
travel on a regular basis to perform such duties,  including without limitation,
to other offices of the GST Companies.

                  3.       TERM. Except as otherwise  provided herein,  the term
of Executive's  employment hereunder shall commence on the date hereof and shall
continue to and include the day  preceding  the fifth  anniversary  date thereof
("Term").

                  4.       COMPENSATION.   As  compensation   for  his  services
hereunder,  the Corporation shall pay to Executive (i) a base salary at the rate
of $250,000 per annum,  or such greater amount as may be determined from time to
time  by  the  GST  Board  based  upon  annual  reviews  of the  performance  of
Executive's  duties hereunder,  payable in equal installments no less frequently
than  semi-monthly;  and (ii)  incentive  compensation,  in such  amount (not to
exceed 60% of Executive's  then current base salary) as is determined by the GST
Board (or the Compensation Committee thereof) in its sole discretion, based upon
the  achievement  by  the  GST  Companies  of  the  Performance  Objectives  (as
hereinafter defined). For the purposes of this Agreement, Performance Objectives
shall mean those objectives  relating to the operations of the GST Companies for
each  six-month  period  during  the term  hereof  (each a  "Measuring  Period")
mutually  determined  by the GST CEO and  Executive.  The GST CEO and  Executive
shall use their  best  efforts  and  negotiate  in good faith to  determine  the
Performance  Objectives for each Measuring Period, which Performance  Objectives
for any Measuring Period shall be no



                                       -3-
<PAGE>
less stringent than those for the immediately  preceding  Measuring Period.  All
compensation  paid to  Executive  shall be  subject  to  withholding  and  other
employment taxes imposed by applicable law.

                  5.       STOCK  OPTIONS.  The  Corporation  is causing  GST to
grant to Executive on the date hereof  pursuant to the stock option plans of GST
the following  options:  (i) a five-year  option (the "Firm Option") to purchase
150,000  Common  Shares,  without par value (the  "Common  Shares") of GST at an
exercise  price of $10.00 per Common  Share,  which shall be  exercisable  as to
50,000 Common Shares from and after the first  anniversary of the date of grant,
as to an additional  50,000 Common Shares from and after the second  anniversary
of the date of grant,  and as to the  remaining  50,000  Common  Shares from and
after the third  anniversary of the date of grant;  (ii) a five-year option (the
"Trading Price  Option") to purchase  150,000 Common Shares at an exercise price
of $10.00 per Common Share,  which shall be exercisable  (a) as to 50,000 Common
Shares,  subsequent  to the time  that the Fair  Market  Value  (as such term is
hereinafter  defined) of the Common  Shares  exceeds  $13.75 for 20  consecutive
trading  days,  but in no event  earlier than March 11,  1998;  (b) as to 50,000
Common  Shares,  subsequent to the time that the Fair Market Value of the Common
Shares exceeds  $16.50 for 20 consecutive  trading days, but in no event earlier
than  March  11,  1999;  and  (c)  as to the  remaining  50,000  Common  Shares,
subsequent to the time that the Fair Market Value of the Common  Shares  exceeds
$20.00 for 20  consecutive  trading days, but in no event earlier than March 11,
2000;  and (iii) a five-year  option to  purchase  150,000  Common  Shares at an
exercise price of $10.00 per Common Share ("Performance Option"), which shall be
exercisable in the



                                       -4-
<PAGE>
same  installments as the Firm Option,  but whose exercise shall also be subject
to the  achievement of the  Performance  Objectives.  To the extent  permissible
under  applicable  provisions  of the Internal  Revenue Code of 1986, as amended
("Code"),  each of the  above  options  shall be  granted  so as to  qualify  as
incentive stock options (within the meaning of the Code).

                  6.       CHANGE  OF  CONTROL.  In the  event  of a  Change  of
Control  (as such term is  hereinafter  defined),  (i) the Firm  Option  and the
Performance Option shall become exercisable in full (without regard to the terms
under which they were  originally  granted)  and (ii) the Trading  Price  Option
shall become  exercisable as to those portions  thereof the exercise of which is
predicated  upon the  attainment by the Common Shares of a Fair Market Value not
greater  than the  valuation  accorded  the  Common  Shares  in the  transaction
resulting  in such Change of  Control.  By way of  illustration,  if in a merger
resulting in a Change of Control,  the Common Shares were valued at $18.00,  the
Trading  Price Option would become  exercisable  (to the extent not  theretofore
exercisable) as to 100,000 Common Shares.  In the case of a Change of Control in
which  the  Common  Shares  are not  valued,  e.g.,  a  transaction  of the type
identified  in  clause  (3)  below,   the  Trading  Price  Option  shall  become
exercisable in full. For the purposes of this Agreement, (a) a Change of Control
means (1) the direct or indirect sale, lease,  exchange or other transfer of all
or substantially all (50% or more) of the assets of GST or of the Corporation to
any  person or entity or group of  persons  or  entities  acting in concert as a
partnership  or other group (a "Group of Persons")  excluding the GST Companies,
(2) the merger, consolidation or other business



                                       -5-
<PAGE>
combination  of either or both of GST and the  Corporation  with or into another
corporation with the effect that the shareholders of GST or the Corporation,  as
the  case may be,  immediately  following  the  merger,  consolidation  or other
business combination,  hold 50% or less of the combined voting power of the then
outstanding   securities   of  the   surviving   corporation   of  such  merger,
consolidation  or other business  combination  ordinarily (and apart from rights
accruing under special  circumstances)  having the right to vote in the election
of directors of such surviving entity,  (3) the replacement of a majority of the
GST Board,  of any committee of the GST Board,  of the Board or any committee of
the Board in any given year as compared to the directors who constituted the GST
Board, such committee of the GST Board, the Board or such committee of the Board
at the beginning of such year, and such replacement shall not have been approved
by the GST  Board  or the  Board,  as the  case may be,  as  constituted  at the
beginning of such year, or (4) a person or Group of Persons  shall,  as a result
of a tender or exchange  offer,  open  market  purchases,  privately  negotiated
purchases or otherwise,  have become the beneficial owner (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended,) of securities
of GST or of the  Corporation  representing  50% or more of the combined  voting
power of the then  outstanding  securities of such  corporation  ordinarily (and
apart from rights accruing under special circumstances) having the right to vote
in the election of directors;  and (b) Fair Market Value means the closing price
of the  Common  Shares on the U.S.  national  securities  exchange  on which the
Common Shares are listed (if the shares are so listed) or on the



                                       -6-
<PAGE>
NASDAQ  National  Market or Small Cap Market (if the Common Shares are regularly
quoted on the NASDAQ National Market or Small Cap Market),  or, if not so listed
or regularly  quoted or if there is no such closing price,  the mean between the
closing bid and asked prices of the Common Shares in the over-the-counter market
or on such exchange or on NASDAQ,  or, if such bid and asked prices shall not be
available,  as reported by any nationally  recognized quotation service selected
by the Corporation.  On the date hereof, the Common Shares are listed and traded
on the American Stock Exchange and the Vancouver Stock Exchange.

                  7.       ADDITIONAL BENEFITS.  In addition to such base salary
and any incentive compensation and bonuses awarded Executive he (and his family)
shall be entitled to participate  from and after the date hereof,  to the extent
he is (and they are) eligible  under the terms and  conditions  thereof,  in any
profit sharing, pension,  retirement,  hospitalization,  insurance,  disability,
medical  service and insurance,  stock option,  bonus or other employee  benefit
plan  available to the executive  officers of the GST  Companies  that may be in
effect from time to time during the period of Executive's  employment hereunder.
The GST  Companies  shall be under no  obligation  to  institute or continue the
existence of any such employee benefit plan.

                  8.       LOAN TO  EXECUTIVE.  Executive  is the  owner  of his
primary residence located at the address set forth in the introductory paragraph
of this  Agreement  (the  "Primary  Residence").  Executive  shall  use his best
efforts to sell the Primary  Residence as promptly as practicable after June 30,
1997.  During  the period  commencing  on the date  hereof  and ending  when the
Primary Residence



                                       -7-
<PAGE>
is sold, the  Corporation  shall make available to Executive a loan in an amount
not to exceed $100,000 (the "Relocation  Loan"),  the proceeds of which shall be
utilized by  Executive  to purchase a new primary  residence  in the  Vancouver,
Washington area (the "New Primary  Residence"),  to pay the downpayment  thereon
and to pay the costs of ownership of the New Primary Residence,  e.g., mortgage,
insurance  and  maintenance  costs and taxes  based  upon  ownership  of the New
Primary  Residence (the "New  Residence  Costs").  The Relocation  Loan shall be
disbursed from time to time as requested in writing by Executive. The Relocation
Loan  shall be due and  payable  on the third  anniversary  of the date  hereof,
provided  that it shall be prepaid to the extent of the  proceeds of sale of the
Primary  Residence  and of the proceeds of sale of Common  Shares  acquired upon
exercise of any of the options referred to in Paragraph 5 hereof. The Relocation
Loan shall bear interest at the rate of 6% per annum and shall be evidenced by a
promissory note  substantially in the form of Exhibit A hereto made by Executive
to the Corporation.

                  9.       RELOCATION   EXPENSES.   The  Corporation  shall  pay
directly  or  reimburse   Executive  for  the  following  expenses  relating  to
Executive's relocation to the Vancouver,  Washington area: (i) reasonable moving
and storage costs,  e.g., normal shipping  services,  including up to 30 days of
temporary storage, packing, delivery, shipment of up to two vehicles,  unpacking
and furniture set-up, but not shipment of boats, crating of antiques,  paintings
or  collections,  storage  in  excess of 30 days;  and (ii)  costs not to exceed
$2,500  per month  for (a) a  suitable  temporary  residence  in the  Vancouver,
Washington area for Executive and his family, until



                                       -8-
<PAGE>
such time as Executive and his family occupy the New Primary Residence,  and (b)
New Residence Costs,  for a period  commencing on July 1, 1997 and ending on the
earlier to occur of (1) the sale of the Primary Residence, or (2) June 30, 1998.

                  10.      REIMBURSEMENT  OF  EXPENSES.  The  Corporation  shall
reimburse  Executive in accordance with applicable policies of the GST Companies
for all expenses  reasonably  incurred by him in connection with the performance
of his  duties  hereunder  and the  business  of the  GST  Companies,  upon  the
submission to the  Corporation of appropriate  receipts or vouchers and approval
thereof by the Chief Accounting Officer of the Corporation, which approval shall
not be  unreasonably  withheld or delayed.  Executive  shall also be entitled to
receive a  non-accountable  expense allowance of $400 per month to reimburse him
for the cost and  expense  of  operating  and  maintaining  a motor  vehicle  in
furtherance of the services rendered by him hereunder,  which costs and expenses
may include  without  limitation,  vehicle  loan and lease  payments,  insurance
premiums, gasoline and repair expenditures and other similar charges.

                  11.      VACATION.  Executive shall be entitled to four weeks'
paid  vacation  in  respect  of each  12-month  period  during  the  term of his
employment  hereunder,  such vacation to be taken at times mutually agreeable to
Executive and the CEO.  Vacation time shall not be cumulative  from one 12-month
period to the next, but Executive shall receive vacation pay at his then current
salary rate for any vacation time not taken by him.

                  12.      D & O INSURANCE  COVERAGE.  The Corporation shall use
its best efforts to cause GST to obtain and maintain, at GST's cost


                                       -9-
<PAGE>
and expense,  directors'  and  officers'  liability  insurance  coverage for the
directors and officers of GST and the Corporation,  including Executive. Nothing
herein shall be deemed to require GST to provide such  coverage for Executive if
it is not then providing such coverage  generally to its directors and officers.
Executive  shall not be required to serve in any office of the GST  Companies if
such coverage is not applicable to his service in such office.

                  13.      RESTRICTIVE   COVENANT.   In   consideration  of  his
employment hereunder,  Executive agrees that during the period of his employment
hereunder  and, in the event of  termination  of this Agreement (i) by Executive
otherwise than for Employer  Breach (as such term is defined  herein) or (ii) by
the Corporation for Cause (as such term is defined herein), for a further period
ending one year after such  termination,  he will not (a) directly or indirectly
own, manage, operate, join, control,  participate in, invest in, or otherwise be
connected  with,  in any  manner,  whether as an  officer,  director,  employee,
partner,  investor  or  otherwise,  any  business  entity that is engaged in the
design,  development,  construction  or operation  of alternate  access or other
telecommunications    networks,    in   providing   long   distance   or   other
telecommunications services or in any other business in which the GST Companies,
or any of them, are engaged  during such period (each, a "Competing  Business"),
within  the  United  States of  America  (1) in all  locations  in which the GST
Companies,  or any of them,  are doing  business,  and (2) in all  locations  in
respect of which at the time of such  termination the GST Companies are actively
planning  for and/or  pursuing a  business  opportunity,  whether or not the GST
Companies, or any of them, theretofore have submitted any bids, provided that if
such



                                      -10-
<PAGE>
Competing  Business is in competition  with a business of the GST Companies that
has commenced  operations,  the revenues from such business of the GST Companies
must have represented at least 10% of the combined revenues of the GST Companies
during the 12-month period preceding such termination of this Agreement. For the
purposes of this  Agreement,  the GST  Companies  will be deemed to be "actively
planning and/or pursuing a business  opportunity," if any such opportunity is at
a given point in time under active consideration by management of one or more of
the GST Companies and the GST Companies  have expended not less than $100,000 in
connection  with such  opportunity;  (b) for  himself  or on behalf of any other
person,  partnership,  corporation  or entity,  call on any  customer of the GST
Companies for the purpose of  soliciting,  diverting or taking away any customer
from the GST Companies; or (c) induce,  influence or seek to induce or influence
any  person  engaged  as  an  employee,  representative,  agent  or  independent
contractor  by the  GST  Companies,  or any of  them,  to  terminate  his or her
relationship  with the GST Companies,  or any of them.  Nothing herein contained
shall be deemed to prohibit Executive from (x) investing his funds in securities
of an issuer if the  securities  of such  issuer  are  listed  for  trading on a
national  securities exchange or are traded in the  over-the-counter  market and
Executive's  holdings  therein  represent  less than 2% of the  total  number of
shares or principal amount of the securities of such issuer outstanding,  or (y)
owning securities, regardless of amount, of GST.

                  Executive  acknowledges  that the provisions of this Paragraph
13 are reasonable and necessary for the protection of the



                                      -11-
<PAGE>
GST  Companies,  and that each  provision,  and the  period or  periods of time,
geographic areas and types and scope of restrictions on the activities specified
herein are, and are intended to be,  divisible.  In the event that any provision
of this Paragraph 13,  including any sentence,  clause or part hereof,  shall be
deemed contrary to law or invalid or  unenforceable in any respect by a court of
competent  jurisdiction,  the remaining  provisions  shall not be affected,  but
shall,  subject to the discretion of such court, remain in full force and effect
and any invalid and  unenforceable  provisions shall be deemed,  without further
action on the part of the parties hereto,  modified,  amended and limited to the
extent necessary to render the same valid and enforceable.

                  14.      CONFIDENTIAL  INFORMATION.  Executive shall hold in a
fiduciary  capacity  for the  benefit  of the  GST  Companies  all  information,
knowledge  and data  relating  to or  concerned  with their  operations,  sales,
business and affairs, and he shall not, at any time use, disclose or divulge any
such information,  knowledge or data to any person,  firm or corporation (unless
the GST Companies no longer treat such information as  confidential)  other than
to the GST Companies or their designees and employees or except as may otherwise
be required in  connection  with the business and affairs of the GST  Companies;
PROVIDED, HOWEVER, that Executive may use, disclose or divulge such information,
knowledge  or data (i) that is or  becomes  generally  available  to the  public
through no wrongful act on  Executive's  part;  (ii) that was known to Executive
prior  to  the  date  hereof;  (iii)  that  Executive  can  demonstrate,  to the
reasonable satisfaction of the GST Companies, was independently



                                      -12-


<PAGE>
developed  by him or (iv) to the extent  required by  applicable  court order or
laws, rules and regulations.

                  15.      EQUITABLE RELIEF. The parties hereto acknowledge that
Executive's  services  are  unique  and  that,  in the  event of a  breach  or a
threatened  breach by Executive of Paragraphs 13 or 14 hereof,  the  Corporation
will not have an adequate remedy at law.  Accordingly,  in the event of any such
breach or threatened  breach by Executive,  the Corporation shall be entitled to
such equitable and injunctive  relief as may be available to restrain  Executive
and  any  business,  firm,  partnership,   individual,   corporation  or  entity
participating  in such breach or  threatened  breach from the  violation  of the
provisions  hereof.  Nothing  herein  shall  be  construed  as  prohibiting  the
Corporation  from pursuing any other remedies  available at law or in equity for
such breach or  threatened  breach,  including  the  recovery of damages and the
immediate termination of the employment of Executive hereunder.

                  16.      TRANSITION  PERIOD.  During the period  commencing on
the date hereof and ending on June 30, 1997, Executive's duties shall permit him
to visit his  family  at the  Primary  Residence  for at least two days in every
14-day period,  the reasonable round trip costs of such visit to be borne by the
Corporation.

                  17.      DEATH.  In the event of  termination  of  Executive's
employment hereunder by reason of his death, the Corporation shall pay a benefit
(the  "Benefit  Payment") to such person or persons as Executive  shall,  at his
option,  from time to time  designate  by written  instrument  delivered  to the
Corporation, each subsequent designation to revoke all prior designations, or if
no such designation is made, to Executive's estate (the "Payment



                                      -13-
<PAGE>
Beneficiary").  The  Benefit  Payment  shall  be in an  amount  equal to one and
one-half times Executive's then current annual base salary, and shall be payable
to the Payment Beneficiary in equal quarterly  installments over a period of one
and one-half  years,  provided that if the GST Companies,  or any of them,  then
maintain a life insurance  policy on the life of Executive  under which they are
the  beneficiary,  the  amount of the death  benefit  payable  thereunder,  to a
maximum amount equal to the Benefit  Payment,  less  installments of the Benefit
Payment  theretofore  paid,  shall  be paid to the  Payment  Beneficiary  on the
Benefit Payment  installment  payment date next succeeding the date on which the
GST  Companies  receive such death  benefit  proceeds  and the  remainder of the
Benefit  Payment,  if any,  shall be paid in  equal  quarterly  installments  as
provided above.

                  18.      DISABILITY.  In the event that during the term of his
employment by the  Corporation  Executive shall become Disabled (as such term is
hereinafter  defined)  he shall  continue to receive the full amount of the base
salary to which he was theretofore  entitled for a period of six months after he
shall be deemed to have become Disabled (the "First Disability Payment Period").
If the First Disability  Payment Period shall end prior to the third anniversary
of the Effective Date,  Executive thereafter shall be entitled to receive salary
at an annual rate equal to one-half of his then current annual base salary for a
further period ending on the earlier of (i) one year thereafter, or (ii) the day
preceding the third  anniversary of the Effective  Date (the "Second  Disability
Payment Period").  Upon the expiration of the Second Disability  Payment Period,
Executive  shall not be entitled  to receive any further  payments on account of
his base salary until he shall



                                      -14-
<PAGE>
cease to be Disabled  and shall have resumed his duties  hereunder  and provided
that the  Corporation  shall not have  theretofore  terminated this Agreement as
hereinafter   provided.   The  Corporation  may  terminate  this  Agreement  and
Executive's  employment hereunder at any time after Executive is Disabled,  upon
at least 10 days' prior written notice; provided, however, that such termination
shall not affect the  Corporation's  obligations  to make  payments to Executive
during the First  Disability  Payment  Period or the Second  Disability  Payment
Period.  For the purposes of this  Agreement,  Executive shall be deemed to have
become Disabled when (x) by reason of physical or mental  incapacity,  Executive
is not able to  perform a  substantial  portion of his  duties  hereunder  for a
period of 135 consecutive days or for 135 days in any consecutive 225-day period
or (y) when Executive's  physician or a physician  designated by the Corporation
shall have determined that Executive shall not be able, by reason of physical or
mental incapacity,  to perform a substantial portion of his duties hereunder. In
the event that  Executive  shall  dispute any  determination  of his  Disability
pursuant  to  clauses  (x) or (y)  above,  Executive  shall  not be deemed to be
Disabled unless and until three physicians qualified to practice medicine in the
United  States of  America,  one to be selected  by the  Corporation,  one to be
selected by Executive and the third to be selected by the designated physicians,
have  determined (by a majority  vote) that Executive is Disabled.  If Executive
shall  receive  benefits  under  any  disability  policy  maintained  by the GST
Companies,  the Corporation  shall be entitled to deduct the amount equal to the
benefits so received from base



                                      -15-
<PAGE>
salary  that they  otherwise  would have been  required to pay to  Executive  as
provided above.

                  The  foregoing   provisions   regarding  disability  shall  be
adjusted during the term hereof to match the most favorable  disability benefits
provided to any other senior executive of the GST Companies.

                  19.      TERMINATION  FOR CAUSE.  The  Corporation  may at any
time upon  written  notice to Executive  terminate  Executive's  employment  for
Cause. For purposes of this Agreement, the following shall constitute Cause: (i)
the willful and repeated  failure of  Executive  to perform any material  duties
hereunder or gross  negligence of Executive in the  performance  of such duties,
and if such failure or gross negligence is susceptible of cure by Executive, the
failure to effect such cure within 20 days after written  notice of such failure
or gross  negligence  is given to  Executive;  (ii)  excessive use of alcohol or
illegal drugs interfering with the performance of Executive's  duties hereunder;
(iii)  theft,  embezzlement,  fraud,  misappropriation  of funds,  other acts of
dishonesty or the  violation of any law or ethical rule relating to  Executive's
employment by the  Corporation;  (iv) the  conviction of a felony or other crime
involving  moral  turpitude by Executive;  or (v) the breach by Executive of any
other material provision of this Agreement, and if such breach is susceptible of
cure by Executive,  the failure to effect such cure within 30 days after written
notice of such breach is given to Executive.  For purposes of this Agreement, an
action shall be considered  "willful" if it is done intentionally,  purposely or
knowingly,   distinguished  from  an  act  done  carelessly,   thoughtlessly  or
inadvertently. In



                                      -16-
<PAGE>
any such  event,  Executive  shall be entitled to receive his base salary to and
including the date of termination.

                  20.      PERFORMANCE OBJECTIVES  TERMINATION.  The Corporation
may also  terminate  this  Agreement  if the GST  Companies  fail to achieve the
Performance Objectives for any two consecutive Measuring Periods during the Term
and the Corporation or GST has given written notice to Executive of such failure
within 90 days after the end of the second of such two Measuring Periods. In any
such event, (i) the Corporation shall pay to Executive, as liquidated damages, a
sum  equal to 75% of his then  current  annual  base  salary  (the  "Termination
Payment") in a single  payment within 10 days after such  termination;  and (ii)
the Firm Option  thereupon  shall become  exercisable in full (without regard to
the  anniversaries on which such options are  exercisable).  Upon receipt of the
Termination Payment,  Executive shall deliver to the Corporation his resignation
as an officer and director of the Corporation and GST.

                  21.      TERMINATION FOR EMPLOYER  BREACH.  Executive may upon
written notice to the  Corporation  terminate this Agreement (a termination  for
"Employer Breach") in the event of the breach by the Corporation of any material
provision of this Agreement, including without limitation, a breach by either of
the  Corporation or GST of Paragraph 1 hereof or a breach by the  Corporation of
Paragraph 4 hereof,  and if such breach is  susceptible  of cure, the failure to
effect such cure within 30 days after written  notice of such breach is given to
the  Corporation.  The  termination  of this Agreement by Executive by reason of
Employer Breach shall not



                                      -17-
<PAGE>
constitute  a waiver by Executive  of any of his rights to  compensation  of any
kind hereunder.

                  22.      INSURANCE POLICIES.  The GST Companies shall have the
right from time to time to purchase,  increase,  modify or  terminate  insurance
policies on the life of Executive for the benefit of the GST Companies,  in such
amounts  as the GST  Companies  shall  determine  in their sole  discretion.  In
connection  therewith,  Executive  shall,  at such  place or  places  as the GST
Companies may reasonably direct,  submit himself to physical  examinations on an
annual basis (or more  frequently)  should an insurer or prospective  insurer so
require,  and execute and deliver such  documents as the GST  Companies may deem
necessary to obtain such insurance policies.

                  23.      SURVIVAL OF  PROVISIONS.  Neither the  termination of
this  Agreement,  nor of Executive's  employment  hereunder,  shall terminate or
affect in any manner any  provision  of this  Agreement  that is intended by its
terms to survive such termination.

                  24.      ENTIRE   AGREEMENT;    AMENDMENT.    This   Agreement
constitutes  the entire  agreement  of the parties  hereto  with  respect to the
subject matter hereof,  and any other prior agreement  between the GST Companies
and Executive with respect to the subject matter hereof is hereby superseded and
terminated  effective  immediately and shall be without further force or effect.
No amendment  or  modification  hereto shall be valid or binding  unless made in
writing and signed by the party against whom enforcement thereof is sought.

                  25.      NOTICES. Any notice required, permitted or desired to
be given pursuant to any of the provisions of this Agreement  shall be deemed to
have been sufficiently given or served for all



                                      -18-
<PAGE>
purposes if delivered in person or by responsible  overnight delivery service or
sent by certified mail,  return receipt  requested,  postage and fees prepaid as
follows:

                           If to the  Corporation,  at  its  address  set  forth
                           above,  ATTENTION:  Chief Executive  Officer,  with a
                           copy to:

                           Olshan Grundman Frome & Rosenzweig LLP
                           505 Park Avenue
                           New York, New York  10022
                           Attention: Stephen Irwin, Esq.

                           If to Executive,  at his address set forth above with
                           a copy to:

                           Kirkpatrick & Lockhart LLP
                           1800 Massachusetts Avenue, N.W.
                           Washington, D.C.  20036
                           Attention: Cary J. Meer, Esq.

Any of the  parties  hereto  may at any time and from  time to time  change  the
address to which notice shall be sent  hereunder by notice to the other  parties
given  under  this  Paragraph  25.  The date of the  giving of any  notice  hand
delivered or delivered by responsible overnight carrier shall be the date of its
delivery  and of any  notice  sent by mail shall be the date five days after the
date of the posting in the mail.

                  26.      NO   ASSIGNMENT;   BINDING   EFFECT.   Neither   this
Agreement,  nor the right to receive any payments hereunder,  may be assigned by
Executive  or the  Corporation  without the prior  written  consent of the other
party  hereto.  This  Agreement  shall be  binding  upon  Executive,  his heirs,
executors  and  administrators  and upon the  Corporation,  its  successors  and
permitted assigns.

                  27.      WAIVERS.  No course of  dealing  nor any delay on the
part of the  Corporation or Executive in exercising any rights  hereunder  shall
operate as a waiver of any such rights. No waiver



                                      -19-
<PAGE>
of any default or breach of this Agreement  shall be deemed a continuing  waiver
or a waiver of any other breach or default.

                  28.      INVALIDITY. If any clause, paragraph, section or part
of this Agreement shall be held or declared to be void, invalid or illegal,  for
any reason,  by any court of competent  jurisdiction,  such  provision  shall be
ineffective  but shall not in any way  invalidate  or affect  any other  clause,
paragraph, section or part of this Agreement.

                  29.      FURTHER ASSURANCES. Each of the parties shall execute
such documents and take such other actions as may be reasonably requested by the
other  party to carry out the  provisions  and  purposes  of this  Agreement  in
accordance with its terms.

                  30.      ATTORNEYS' FEES. If any action, suit or proceeding is
filed by any party to  enforce or  rescind  this  Agreement  or  otherwise  with
respect to the subject  matter of this  Agreement,  the party  prevailing  on an
issue shall be entitled to recover  with  respect to such issue,  in addition to
costs,  reasonable  attorneys' fees incurred in preparation or in prosecution or
defense of such action,  suit or proceeding as fixed by the  arbitrator or trial
court,  and if any  appeal  is  taken  from the  decision  of the  trial  court,
reasonable attorneys' fees as fixed on appeal.

                  31.      GOVERNING  LAW.  This  Agreement  shall be  governed,
interpreted and construed in accordance with the terms of the State



                                      -20-
<PAGE>
of Delaware, except that body of law relating to choice of laws.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Employment  Agreement  to be duly  executed  as of the day and year first  above
written. GST USA, INC.

                                             By: /s/ John Warta
                                                --------------------------------
                                                Name:  John Warta
                                                Title: Chief Executive Officer
                                                      /s/ Joseph Basile
                                                ------------------------------
                                                          JOSEPH BASILE

THE FOREGOING AGREEMENT IS
CONSENTED TO AND ACKNOWLEDGED:

GST TELECOMMUNICATIONS, INC.

By:    /s/ John Warta
     ------------------------
     Name:  John Warta
     Title: Chairman and Chief Executive Officer



                                      -21-
<PAGE>

                                                                       EXHIBIT A

                        PROMISSORY NOTE (NON-NEGOTIABLE)

$100,000                                                   Vancouver, Washington
                                                                __________, 199_

                  For value  received,  the  undersigned  promises to pay to GST
USA, Inc. ("GUSA") on ____________,  200_ [THREE YEARS AFTER DATE] the principal
sum of One Hundred Thousand ($100,000) Dollars, or if less, the aggregate unpaid
principal sum of all advances (the "Advances") made by GUSA or its affiliates to
the maker of this Note in respect of the  Relocation  Loan pursuant to the terms
and conditions of a certain  Employment  Agreement  dated March 11, 1997 between
GUSA and the maker of this Note (the "Employment  Agreement").  Each advance and
interest thereon shall be payable by check, subject to collection,  to the order
of GUSA.

                  Each  Advance  shall  bear  interest  at the  rate of six (6%)
percent  per  annum  from the date  that it is made  until  the date  that it is
repaid.

                  This Note shall be prepaid to the extent of  proceeds  of sale
of the Primary  Residence and of any Common Shares acquired upon exercise of the
options described in Paragraph 5 of the Employment Agreement.

                  GUSA is hereby  authorized  to enter on the Schedule  attached
hereto the amount of each advance and each payment of principal thereon, without
any further  authorization on the part of the maker or any endorser or guarantor
of this Note, but GUSA's failure to make such entry shall not limit or otherwise
affect the obligations of the maker or any endorser or guarantor of this Note.

                                      -22-
<PAGE>
                  If this  Note is not paid in full when  due,  the  undersigned
hereby agrees to pay all costs and expenses of collection,  including reasonable
attorneys' fees.

                  This Note shall become  immediately  due and payable,  without
notice or demand,  upon the happening of any of the following events: the making
by the maker or any guarantor of this Note of an  assignment  for the benefit of
creditors,  or a trustee or receiver  being  appointed for the maker or any such
guarantor or for any property of any of them, or any proceeding  being commenced
by  or  against  the  maker  or  any  such  guarantor   under  any   bankruptcy,
reorganization,   arrangement  of  debt,   insolvency,   readjustment  of  debt,
receivership, liquidation or dissolution law or statute.

                  The  undersigned  and all  endorsers  and  guarantors  hereof,
jointly and severally waive presentment, demand for payment, notice of dishonor,
notice of protest and protest,  and all other  notices or demands in  connection
herewith and assent to any extension or  postponement  of the time of payment or
other  indulgence  or  release  of any party,  whether  by  operation  of law or
otherwise.

                  No delay by GUSA in  exercising  any power or right  hereunder
shall operate as a waiver of any power or right, nor shall any single or partial
exercise of any power or right preclude other or further  exercise  thereof,  or
the exercise of any other power or right  hereunder or otherwise;  and no waiver
whatever or  modification of the terms hereof shall be valid unless set forth in
writing and signed by the maker of this Note and GUSA. No waiver shall be deemed
a continuing waiver or waiver of any subsequent breach or default,  whether of a
similar or different nature, unless expressly so stated in writing.



                                      -23-
<PAGE>
                  This Note is made and  delivered  in and shall be  governed by
and construed in accordance with the laws of the State of Delaware,  except that
body of law relating to choice of laws.

                  All  capitalized  terms used herein and not otherwise  defined
shall have the meanings accorded them in the Employment Agreement.





                                                 ------------------------------
                                                 JOSEPH BASILE


                                      -24-
<PAGE>
                                SCHEDULE TO NOTE

Maker:  Joseph Basile                              Date of Note: _________, 199_

                                                Unpaid
                           Amount of           Principal
          Amount of        Principal          Balance of         Name of Person
Date       Advance          Repaid               Note            Making Notation

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                                      -25-