GST TELECOMMUNICATIONS, INC.

                        1996 EMPLOYEE STOCK PURCHASE PLAN


     The following are the  provisions of the 1996 Employee  Stock Purchase Plan
of GST Telecommunications, Inc.

     1. Purpose. The purpose of the Plan is to provide eligible employees of the
Company and its  Designated  Subsidiaries  with an  opportunity  to share in the
fortunes of the Company by acquiring or increasing  their holdings of the Common
Shares of the Company,  at a discount,  through  accumulated payroll deductions.
The Plan is also  designed  to  encourage  eligible  employees  to remain in the
employ of the Company.  It is the intention of the Company that the Plan qualify
as an  "Employee  Stock  Purchase  Plan"  under  Section  423 of the  Code.  The
provisions of the Plan shall, accordingly, be construed so as to extend or limit
participation in a manner consistent with the requirements of Section 423 of the
Code.

     2. Definitions.

          (a)  "Board"  shall mean the Board of  Directors  of the  Company or a
     committee thereof duly authorized to administer the Plan in accordance with
     Section 13 hereof.

          (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (c)  "Common  Shares"  shall mean the Common  Shares of the Company as
     more fully described in Section 25 hereof.

          (d)  "Company"  shall mean GST  Telecommunications,  Inc., a federally
     chartered  Canadian  corporation,  with its principal  offices at 4317 N.E.
     Thurston Way, Vancouver, Washington 98662.

          (e)  "Compensation"  shall mean all regular gross earnings,  including
     payments for overtime,  shift premium,  incentive  compensation,  incentive
     payments, bonuses, commissions or other compensation.

          (f)  "Continuous  Status as an Employee" shall mean the absence of any
     interruption or termination of service as an Employee. Continuous Status as
     an Employee  shall not be considered  interrupted in the case of a leave of
     absence  agreed to in writing by the Company,  provided  that such leave is
     for a period of not more than 90 days or  reemployment  upon the expiration
     of such leave is guaranteed by contract or statute.




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          (g) "Designated  Subsidiaries"  shall mean the Subsidiaries  that have
     been  designated  by the Board from time to time in its sole  discretion as
     eligible to participate in the Plan.

          (h) "Dollars" or "$" shall mean U.S. Dollars.

          (i) "Employee" shall have the meaning set forth in Section 3 hereof.

          (j) "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
     amended.

          (k) "Exercise Date" shall mean the last day of each Offering Period of
     the  Plan if such  date is a  regular  business  day or the  first  regular
     business day  thereafter.  A different date may be set by resolution of the
     Board.

          (l) "Fair  Market  Value" of the  Common  Shares on a given date shall
     mean the closing  price of publicly  traded  Common Shares on the principal
     United States securities exchange on which the Common Shares are listed (if
     the Common  Shares are so listed),  or on the Nasdaq  Stock  Market (if the
     Common Shares 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 Common Shares in the 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 Board in a manner  consistent  with the provisions of the
     Code.

          (m) "Offering  Date" shall mean the first day of each Offering  Period
     of the Plan if such date is a  regular  business  day or the first  regular
     business day  thereafter.  A different date may be set by resolution of the
     Board.

          (n)  "Offering  Period"  shall have the meaning set forth in Section 4
     hereof.

          (o) "Option" shall mean an option granted to a Participant to purchase
     Common Shares under the Plan.

          (p) "Participant" shall mean an Employee who participates in this Plan
     in accordance with Section 5 hereof.

          (q) "Plan" shall mean the 1996  Employee  Stock  Purchase  Plan of the
     Company.

          (r) "Reserves" shall have the meaning set forth in Section 18 hereof.

          (s) "SEC" shall mean the Securities and Exchange Commission.


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          (t)  "Securities  Act"  shall  mean the  Securities  Act of  1933,  as
     amended.

          (u)  "Subsidiary"  shall mean a corporation of which not less than 50%
     of the voting  shares are held by the Company or a  Subsidiary,  whether or
     not such  corporation  now exists or is hereafter  organized or acquired by
     the Company or a Subsidiary.

     3. Eligibility.

          (a) Any  person who is  regularly  in the  employ of the  Company  (an
     "Employee")  or any of its Designated  Subsidiaries  is eligible to receive
     Options  except (a) employees  whose  customary  employment is less than 20
     hours per week and (b)  employees  whose  customary  employment is not more
     than five months in any calendar year.

          (b) Any  provisions  of the Plan to the contrary  notwithstanding,  no
     Employee  shall be granted an Option (i) if,  immediately  after the grant,
     such  Employee (or any other person whose stock would be attributed to such
     Employee  pursuant to Section  425(d) of the Code)  would own stock  and/or
     hold  outstanding  Options to purchase  stock  possessing 5% or more of the
     total combined voting power or value of all classes of stock of the Company
     or of any  subsidiary  of the  Company,  or (ii) that permits his rights to
     purchase  stock under all employee  stock  purchase  plans (as described in
     Section 423 of the Code) of the Company and its subsidiaries to accrue at a
     rate that exceeds $25,000 of Fair Market Value of such stock (determined at
     the time such  Option is  granted)  for each  calendar  year in which  such
     Option is outstanding at any time.

     4. Offering Periods.

          (a)  The  Plan  shall  be  implemented  by one  offering  during  each
     six-month  period  (each an  "Offering  Period").  Offering  Periods  shall
     commence on or about April 1 and  October 1 of each year as  determined  by
     the Board; provided, however, that the first Offering Period under the Plan
     may be less than six months.

          (b) The Board shall have the power to change the  duration of Offering
     Periods with respect to future offerings  without  shareholder  approval if
     such change is announced at least 15 days prior to the scheduled  beginning
     of the first Offering Period to be affected.

     5. Participation.

          (a) An Employee may become a  Participant  in the Plan by completing a
     subscription  agreement  authorizing payroll deduction on the form provided
     by the Company and filing it with


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     the Company's  Human  Resources  Manager on or prior to an Offering Date or
     such other date as may be specified by the Board.

          (b) Payroll  deductions for a Participant  shall commence on the first
     payroll  following  the Offering Date and shall end on the Exercise Date of
     the  Offering  Period to which such  authorization  is  applicable,  unless
     sooner terminated by the Participant as provided in Section 10 hereof.

     6. Payroll Deductions.

          (a) At the time a Participant  files his  subscription  agreement,  he
     shall  elect to have  payroll  deductions  made on each  payday  during the
     Offering Period in an amount not exceeding 10% of the Compensation  that he
     receives on each payday  during the Offering  Period,  and the aggregate of
     such payroll  deductions during the Offering Period shall not exceed 10% of
     his aggregate Compensation during such Offering Period.

          (b) The total number of Common  Shares  purchased  by any  Participant
     shall in no event  exceed,  in any  Offering  Period,  the number of Common
     Shares that  $12,500  could  purchase at the Fair Market  Value of a Common
     Share on the Offering Date.

          (c) All payroll  deductions made by a Participant shall be credited to
     his  account  under the Plan.  A  Participant  may not make any  additional
     payments into such account.

          (d) A Participant  may discontinue  his  participation  in the Plan as
     provided in Section 10 hereof,  or may decrease (but not increase) the rate
     of his payroll deductions one time during the Offering Period by completing
     or  filing  with  the  Human  Resources   Manager  of  the  Company  a  new
     authorization for payroll deduction.  The change in rate shall be effective
     15 days  following the  Company's  receipt of the new  authorization.  If a
     Participant decreases the rate of his payroll deductions more than one time
     during  an  Offering  Period,  such  Participant  will  be  deemed  to have
     terminated  his  participation  in the Plan in  accordance  with Section 10
     hereof.

     7. Grant of Option.

          (a) On the Offering Date of each  Offering  Period,  each  Participant
     shall be granted an Option to purchase (at the per share  Option  price) up
     to a number of Common  Shares  determined  by dividing  such  Participant's
     payroll  deductions to be accumulated  during such Offering  Period (not to
     exceed an  amount  equal to 10% of his  Compensation  as of the date of the
     commencement of the applicable  Offering Period) by the lower of (i) 85% of
     the Fair Market Value of a Common Share on the Offering  Date,  or (ii) 85%
     of the Fair Market Value of a Common Share on the Exercise  Date;  provided
     that in no event shall an Employee be permitted to


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<PAGE>



     purchase  during any  Offering  Period more than a number of Common  Shares
     determined  by dividing  $12,500 by the Fair Market Value of a Common Share
     on the Offering  Date,  and provided  further that such  purchase  shall be
     subject to the limitations  set forth in Sections 3(b) and 12 hereof.  Fair
     Market Value of a share of the Company's  Common Shares shall be determined
     as provided in Section 7(b) hereof.

          (b) The option price per Common Share of the Shares offered in a given
     Offering  Period shall be the lower of: (i) 85% of the Fair Market Value of
     a Common Share on the Offering  Date;  or (ii) 85% of the Fair Market Value
     of a Common Share on the Exercise Date.

     8.  Exercise of Option.  Unless a  Participant  withdraws  from the Plan as
provided in Section 10 hereof,  his Option shall be exercised  automatically  on
the Exercise Date of the Offering  Period and the maximum  number of full Common
Shares  subject to such  Option  shall be  purchased  for him at the  applicable
option price with the accumulated payroll deductions in his account.  The Common
Shares  purchased  upon  exercise of an Option  hereunder  shall be deemed to be
transferred to the  Participant on the Exercise  Date.  During his lifetime,  an
Option  to  purchase  Common  Shares   hereunder  is  exercisable  only  by  the
Participant to whom such Option is granted.

     9. Delivery.  Common Shares  purchased  upon exercise of the  Participants'
Options shall be  represented by one or more global  certificates  registered in
the name of a custodian from time to time selected by the Committee.  Beneficial
interests in the global  certificate(s)  will be shown on, and transfers thereof
will be effected  through records  maintained by the Human Resources  Manager of
the Company.  Upon request of a  Participant,  the Company shall arrange for the
delivery to such Participant of a certificate  representing the number of Common
Shares  requested  by such  participant;  provided  that  such  Participant  has
purchased  at  least  that  number  of  Common  Shares  pursuant  to  the  Plan.
Certificated  Common Shares  delivered to a Participant  shall not  constitute a
portion  of the  global  certificates.  In the  case  of a  Participant  who has
requested  that  certificated  Common  Shares  be  delivered  to him,  any  cash
remaining to the credit of such  Participant's  account that is  insufficient to
purchase a full share of a Common Share of the Company shall be returned to said
Participant. In addition, no fractional Common Shares shall be delivered to such
Participant;  he shall instead receive the cash value of such fractional  Common
Shares.

     10. Withdrawal; Termination of Employment.

          (a) An  employee's  participation  in the  Plan may be  terminated  by
     signing  and  delivering  to the Human  Resources  Manager of the Company a
     notice of withdrawal from the Plan. Such


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<PAGE>



     withdrawal  may be elected at any time  prior to the  Exercise  Date of the
     applicable Offering Period.

          (b)  Any  withdrawal  from  a  given  Offering  Period   automatically
     terminates  the  Participant's  interest in that  offering.  A  Participant
     withdrawing  from an offering must wait at least 90 days until  executing a
     subscription agreement for subsequent offerings.

          (c) A  Participant  may withdraw all but not less than all the payroll
     deductions  credited to his account under the Plan at any time prior to the
     Exercise  Date of the  Offering  Period  by  giving  written  notice to the
     Company.  All of  the  Participant's  payroll  deductions  credited  to his
     account  shall be paid to him  promptly  after  receipt  of his  notice  of
     withdrawal  and his Option for the current  period  shall be  automatically
     terminated,  and no further  payroll  deductions for the purchase of Common
     Shares shall be made during the Offering Period.

          (d) Upon  termination  of the  Participant's  Continuous  Status as an
     Employee prior to the Exercise Date of the Offering  Period for any reason,
     including  retirement  or death,  the  payroll  deductions  credited to his
     account  shall be  returned  to him or,  in the case of his  death,  to the
     person or persons  entitled  thereto under Section 14, and his Option shall
     be automatically terminated.

          (e) In the event an Employee  fails to remain in Continuous  Status as
     an  Employee  of the  Company  for at least 20 hours  per week  during  the
     Offering Period in which the employee is a Participant,  he shall be deemed
     to have  elected  to  withdraw  from the Plan  and the  payroll  deductions
     credited to his account shall be returned to him and his Option terminated.

          (f) A Participant may discontinue his  participation  in the Plan, and
     may  decrease  but not  increase  the rate of payroll  deductions  one time
     during the Offering Period. Payroll deductions commence on the first payday
     following the  beginning of the  employee's  participation  in the Offering
     Period, and continue at the same rate until terminated or decreased.

     11.  Interest.  No interest  shall  accrue on the payroll  deductions  of a
Participant in the Plan.

     12. Stock.

          (a) The maximum  number of Common Shares that shall be made  available
     for sale  under the Plan  shall be  500,000,  subject  to  adjustment  upon
     changes in  capitalization of the Company as provided in Section 18 hereof.
     If the total  number of Common  Shares that would  otherwise  be subject to
     Options granted  pursuant to Section 7(a) hereof on the Offering Date of an
     Offering Period

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<PAGE>



     exceeds the number of Common  Shares then  available  under the Plan (after
     deduction of all Common Shares for which Options have been exercised or are
     then  outstanding),  the Company  shall make a pro rata  allocation  of the
     Common Shares remaining  available for Option grants in as uniform a manner
     as shall be practicable and as it shall determine to be equitable.  In such
     event,  the Company  shall give  written  notice of such  reduction  of the
     number of Common Shares subject to the Option to each Participant  affected
     thereby  and shall  similarly  reduce  the rate of payroll  deductions,  if
     necessary.

          (b) The  Participant  shall have no interest or voting right in Common
     Shares covered by his Option until such Option has been exercised.

          (c) Common  Shares to be  delivered  to a  Participant  under the Plan
     shall be registered in the form of one or more global  certificates  in the
     name of the Committee.  Upon request of a Participant,  Common Shares shall
     be  registered  in the  name  of the  Participant  or in  the  name  of the
     Participant  and his  spouse,  in  which  event  they  shall no  longer  be
     evidenced by the global certificates.

     13.  Administration.  The Plan  shall  be  administered  by the  Board or a
committee of members of the Board  appointed by the Board.  The  administration,
interpretation or application of the Plan by the Board or its committee shall be
final,  conclusive and binding upon all  Participants.  Members of the Board who
are eligible Employees are permitted to participate in the Plan, provided that:

          (a) Members of the Board who are eligible to  participate  in the Plan
     may not vote on any matter affecting the  administration of the Plan or the
     grant of any Option.

          (b) If a Committee is established to administer the Plan, no member of
     the Board who is eligible to participate in the Plan may be a member of the
     Committee.

     14. Designation of Beneficiary.

          (a) A Participant may file a written  designation of a beneficiary who
     is to receive any Common Shares and cash,  if any,  from the  Participant's
     account under the Plan in the event of such Participant's  death subsequent
     to the end of the Offering  Period but prior to entry of such Common Shares
     on the records  maintained by the  Company's  Human  Resources  Manager and
     delivery to him of such cash. In addition, a Participant may file a written
     designation  of  a  beneficiary  who  is  to  receive  any  cash  from  the
     Participant's  account  under the Plan in the  event of such  Participant's
     death prior to the Exercise Date of the Offering Period.


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<PAGE>




          (b) Such  designation of beneficiary may be changed by the Participant
     at any time by written  notice.  In the event of the death of a Participant
     and in the absence of a beneficiary  validly  designated under the Plan who
     is  living  at the time of such  Participant's  death,  the  Company  shall
     deliver such Common Shares and/or cash to the executor or  administrator of
     the estate of the Participant,  or if no such executor or administrator has
     been  appointed  (to the  knowledge of the  Company),  the Company,  in its
     discretion,  may deliver such Common Shares and/or cash to the spouse or to
     any  one or more  dependents  or  relatives  of the  Participant,  or if no
     spouse,  dependent or relative is known to the Company,  then to such other
     person as the Company may designate.

     15. Transferability. Neither payroll deductions credited to a Participant's
account,  nor any  rights  with  regard to the  exercise  of an  Option,  may be
assigned,  transferred,  pledged or otherwise disposed of in any way (other than
by will,  the laws of descent  and  distribution  or as  provided  in Section 14
hereof) by the Participant. Any such attempt at assignment,  transfer, pledge or
other  disposition  shall be without  affect,  except that the Company may treat
such act as an election to withdraw funds in accordance with Section 10 hereof.

     16. Use of Funds.  All payroll  deductions  received or held by the Company
under the Plan may be used by the Company  for any  corporate  purpose,  and the
Company shall not be obligated to segregate such payroll deductions.

     17. Reports.  Individual accounts shall be maintained for each Participant.
Statements  of account  shall be given to  Participants  promptly  following the
Exercise  Date,  which  statements  shall  set  forth  the  amounts  of  payroll
deductions,  the per share purchase price, the number of Common Shares purchased
and the remaining cash balance, if any.

     18.  Adjustments  Upon Changes in  Capitalization.  Subject to any required
action by the  shareholders of the Company,  the number of Common Shares covered
by each Option that has not yet been  exercised  and the number of Common Shares
that  have been  authorized  for  issuance  under the Plan but have not yet been
placed under option  (collectively,  the  "Reserves"),  as well as the price per
Common Share  covered by each Option that has not yet been  exercised,  shall be
proportionately  adjusted  for any  increase or decrease in the number of issued
Common Shares resulting from a stock split, reverse stock split, stock dividend,
combination or  reclassification  of the Common Shares, or any other increase or
decrease  in  the  number  of  Common  Shares   effected   without   receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as

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expressly  provided  herein,  no issue by the  Company of shares of stock of any
class,  or  securities  convertible  into  shares of stock of any  class,  shall
affect,  and no adjustment by reason  thereof shall be made with respect to, the
number or price of shares of Common Shares subject to an Option.

     19. Effect of Liquidation,  Dissolution,  Sale of Assets or Merger.  In the
event of the proposed  dissolution or  liquidation  of the Company,  all Options
shall terminate  immediately  prior to the consummation of such proposed action,
unless  otherwise  provided by the Board.  The Board may, in the exercise of its
sole discretion in such  instances,  declare that all Options shall terminate as
of a date fixed by the Board and give each Participant the right to exercise his
Option  as to all or any part  thereof,  including  shares as to which an Option
would not  otherwise be  exercisable.  In the event of a proposed sale of all or
substantially  all of the assets of the  Company,  or the merger of the  Company
with or into another  corporation,  an Option shall be assumed or an  equivalent
Option  shall be  substituted  by such  successor  corporation  or a  parent  or
subsidiary  of such  successor  corporation.  In the event  that such  successor
corporation refuses to assume the Options or to substitute an equivalent option,
the Board shall,  in lieu of such  assumption or  substitution,  provide for the
Participant  to have the right to exercise the Options in full,  including as to
Common Shares that would not otherwise then be  purchasable.  If the Board makes
an Option fully  exercisable in lieu of assumption or  substitution in the event
of a merger or sale of assets,  the Board shall notify the Participant  that the
Option shall be fully exercisable for a period of 30 days after the date of such
notice, and the Option shall terminate upon the expiration of such period.

     The Board may, if it so determines in the exercise of its sole  discretion,
also make provisions for adjusting the Reserves, as well as the price per Common
Share covered by each outstanding  Option, in the event that the Company effects
one or  more  reorganizations,  recapitalizations,  rights  offerings  or  other
increases or reductions of its  outstanding  Common Shares,  and in the event of
the Company being consolidated with or merged into any other corporation.

     20. Amendment or Termination.  The Board may at any time terminate or amend
the Plan.  Except as  provided  in Section  18, no such  termination  can affect
Options previously  granted,  nor may an amendment make any change in any Option
theretofore  granted which adversely affects the rights of any Participant,  nor
may an amendment  be made  without  prior  approval of the  shareholders  of the
Company (obtained in a manner consistent with the provisions of the Code and all
other applicable law) if such amendment would:

          (a) Increase the number of Common  Shares that may be issued under the
     Plan;


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<PAGE>




          (b)  Permit  payroll  deductions  at a rate  in  excess  of 10% of the
     Participant's Compensation;

          (c) Change the  designation  of the  employees (or class of employees)
     eligible for participation in the Plan; or

          (d) If the Company has a class of equity  securities  registered under
     Section 12 of the  Exchange Act at the time of such  amendment,  materially
     increase the benefits that may accrue to Participants under the Plan.

          (e) To the extent  necessary  and  desirable to comply with Rule 16b-3
     under  the  Exchange  Act,  or with  Section  423 of the Code (or any other
     applicable law or  regulation,  including  requirements  of the NASD or any
     established stock exchange),  the Company shall obtain stockholder approval
     of any amendment to the Plan in the requisite manner.

     21. Notices.  All notices or other  communications  by a Participant to the
Company under or in  connection  with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location,  or by
the person, designated by the Company for the receipt thereof.

     22. Shareholder Approval.  The Plan was approved by the affirmative vote of
the  holders of a majority of the  outstanding  Common  Shares at the  Company's
Annual Meeting of Shareholders held on February 15, 1996.

     23.  Conditions Upon Issuance of Common Shares.  Common Shares shall not be
issued  with  respect to an Option  unless the  exercise  of such Option and the
issuance and delivery of such Common Shares  pursuant  thereto shall comply with
all  applicable  provisions  of law,  domestic  or foreign,  including,  without
limitation,  the  Securities  Act, the Exchange  Act, the rules and  regulations
promulgated  thereunder,  and the  requirements of any stock exchange upon which
the  Common  Shares  may then be  listed,  and shall be  further  subject to the
approval of counsel for the Company with respect to such compliance.

     As a condition  to the  exercise of an Option,  the Company may require the
person  exercising  such Option to represent and warrant at the time of any such
exercise  that the Common Shares are being  purchased  only for  investment  and
without any present  intention to sell or  distribute  such Common Shares if, in
the opinion of counsel for the Company, such a representation is required by any
of the aforementioned applicable provisions of law.

     24.  Restrictions on Resale.  Certain officers and directors of the Company
may be deemed to be  "affiliates"  of the Company as that term is defined  under
the Securities  Act.  Common Shares  acquired under the Plan by an affiliate may
only be re-


                                      -10-

<PAGE>


offered or resold pursuant to an effective registration statement or pursuant to
Rule 144  promulgated  under the  Securities  Act or another  exemption from the
registration  requirements  of the Securities  Act. Such reoffers or resales may
not be made in reliance on the  Registration  Statement filed in connection with
the offer to Participants of the Common Shares issuable hereunder.

     25. Securities to be Purchased. The security to be purchased under the Plan
is Common Shares,  without par value, of the Company. Each Common Share entitles
the holder to one vote on matters submitted to a vote of the stockholders, a pro
rata share of such  dividends as may be declared on the Common  Shares and a pro
rata share of assets remaining available for distribution to stockholders upon a
liquidation of the Company.  The Common Shares are not  convertible  and have no
preemptive rights. While the Board has authority, within certain limitations, to
issue shares of preference  stock that would have one or more  preferences  over
the Common Shares, no preference stock is currently  outstanding and the Company
has no present plans to issue any preference stock.

     26. Term of Plan. The Plan became  effective on February 15, 1996 and shall
continue in effect for a term of 20 years unless sooner terminated under Section
20.



                                      -11-