AGREEMENT AND PLAN OF MERGER



                                  By and Among


               Call America Business Communications Corporation

             Call America Business Communications of Fresno, Inc.

          Call America Business Communications of Bakersfield, Inc.

                 The Selling Shareholders listed in Exhibit A

                          GST Newco of California, Inc.

                                       and

                          GST Telecommunications, Inc.










         ------------------------------------------------------------

                         Dated as of September 26, 1996

         ------------------------------------------------------------




<PAGE>



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

<TABLE>
<CAPTION>
                                    ARTICLE I
                      TRANSACTIONS AND TERMS OF THE MERGER

      <C>  <S>                                                              <C>
      1.1  Merger............................................................2
      1.2  Time and Place of Closing; Escrow.................................2
      1.3  Effective Time....................................................2
      1.4  Charter...........................................................3
      1.5  Bylaws............................................................3
      1.6  Directors and Officers............................................3
      1.7  Conversion of Shares..............................................3
      1.8  Anti-Dilution Provisions..........................................4
      1.9  Fractional Shares.................................................4
      1.10  Post-Closing Consideration.......................................5

                                   ARTICLE II
                               EXCHANGE OF SHARES

      2.1  Exchange Procedures...............................................5
      2.2  Rights of Former Shareholders of each of the Call
               America Companies.............................................6

                                   ARTICLE III
                      REPRESENTATIONS AND WARRANTIES OF THE
                     CALL AMERICA COMPANIES AND THE SELLERS

      3.1  Corporate Organization; Requisite Authority to
               Conduct Business; Articles of Incorporation and
               By-Laws.......................................................6
      3.2  Capitalization and Shareholdings..................................7
      3.3  Subsidiaries, Etc.................................................7
      3.4  Authority Relative to and Validity of Agreements..................7
      3.5  Required Filings and Consents; No Conflict........................8
      3.6  Financial Statements and Net Revenues.............................9
      3.7  No Undisclosed Liabilities........................................9
      3.8  Absence of Certain Changes and Events.............................9
      3.9  Taxes and Tax Returns............................................10
      3.10  Employee Benefit Plans..........................................12
      3.11  Title to Property...............................................12
      3.12  Trademarks, Patents and Copyrights..............................13
      3.13  Legal Proceedings, Claims, Investigations, etc..................14
      3.14  Insurance.......................................................14
      3.15  Material Contracts..............................................15
      3.16  Certain Transactions............................................15
      3.17  Broker..........................................................15
      3.18  Environmental Matters...........................................16
      3.19  Illegal Payments................................................16
      3.20  Statements True and Correct.....................................17
      3.21  Accounting, Tax and Regulatory Matters..........................17
</TABLE>


                                       -i-

<PAGE>



                                                                            Page
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<TABLE>
<CAPTION>
                                   ARTICLE IV
                 REPRESENTATIONS AND WARRANTIES OF THE SELLERS

      <C>  <S>                                                              <C>
      4.1  Capitalization...................................................17
      4.2  Authority Relative to and Validity of Agreements.................18
      4.3  Required Filings and Consents; No Conflict.......................18
      4.4  Broker...........................................................19
      4.5  Investment.......................................................19

                                    ARTICLE V
                 REPRESENTATIONS AND WARRANTIES OF THE BUYER

      5.1  Corporate Organization; Requisite Authority to
               Conduct Business; Articles of Incorporation and
               By-Laws......................................................20
      5.2  Authority Relative to and Validity of Agreements.................20
      5.3  Required Filings; Consents.......................................21
      5.4  Capitalization...................................................22
      5.5  SEC Reports and Financial Statements.............................22
      5.6  No Undisclosed Liabilities.......................................23
      5.8  Legal Proceedings, Claims, Investigations, etc...................23
      5.9  Vote Required....................................................23
      5.10  Statements True and Correct.....................................23
      5.11  Accounting, Tax and Regulatory Matters..........................24
      Section 5.12  No Prior Activities.....................................24

                                   ARTICLE VI
                COVENANTS OF THE CALL AMERICA AND GST COMPANIES

      6.1  Covenants of the Call America Companies Regarding
               Conduct of Business Operations Pending the
               Closing......................................................24
      6.2  No Other Negotiations............................................26
      6.3  Conduct of Business of GST.......................................26

                                   ARTICLE VII
                              ADDITIONAL COVENANTS

      7.1  Covenants of the Call America Companies, the
               Sellers and the GST Companies................................27
      7.2  Tax Treatment....................................................28
      7.3  Employee Benefits and Contracts..................................29
      7.4  Guarantee of Performance.........................................29
      7.5  FABRIK Communications, Inc.......................................29
      7.6  Stock Exchange Listing...........................................29
      7.7      Certain Regulatory Approvals.................................30
      7.8      Certain Agreements regarding the Shares......................30

                                  ARTICLE VIII
                       CONDITIONS PRECEDENT TO OBLIGATIONS
                 OF THE CALL AMERICA COMPANIES AND THE SELLERS

      8.1  Representations and Warranties True..............................30
</TABLE>

                                      -ii-

<PAGE>


<TABLE>
                                                                            Page
                                                                            ----
      <C>  <S>                                                              <C>
      8.2  Performance of Covenants.........................................31
      8.3  No Proceedings...................................................31
      8.4  Escrow Agreement.................................................31
      8.5  Employment Agreements............................................31
      8.6  Registration Rights Agreement....................................31
      8.7  Consents and Approvals...........................................31
      8.8  Opinions of Counsel..............................................31
      8.9  Tax Matters......................................................32
      8.10 Material Changes.................................................32
      8.11 Release of Loan Guarantees.......................................33
      8.12 Listing of Shares................................................33

                                   ARTICLE IX
                             CONDITIONS PRECEDENT TO
                        OBLIGATIONS OF THE GST COMPANIES

      9.1  Representation and Warranties True...............................33
      9.2  Performance of Covenants.........................................33
      9.3  No Proceedings...................................................33
      9.4  Consents and Approvals...........................................34
      9.5  Escrow Agreement.................................................34
      9.6  Employment Agreements............................................34
      9.7  Registration Rights Agreement....................................34
      9.8  Non-Competition Agreements.......................................34
      9.9  Resignation of Officers and Directors............................34
      9.10  Opinion of Counsel..............................................34
      9.11  Material Changes................................................35
      9.12  Waivers.........................................................35

                                    ARTICLE X
                                 INDEMNIFICATION

      10.1  Indemnification by the Sellers..................................35
      10.2  Indemnification by the Buyer....................................35
      10.3  Special Indemnification for Tax Matters.........................36
      10.4  Survival........................................................37
      10.5  Limitations.....................................................37
      10.6  Third Party Claims..............................................38
      10.7  Reduction for Insurance.........................................39
      10.8  Termination of Indemnification..................................39

                                   ARTICLE XI
                        TERMINATION, AMENDMENT AND WAIVER

      11.1  Termination.....................................................40
      11.2  Effect of Termination...........................................41
      11.3  Amendment.......................................................41
      11.4  Extension; Waiver...............................................41
</TABLE>


                                 -iii-

<PAGE>

                                                                            Page
                                                                            ----
                                   ARTICLE XII
                                  MISCELLANEOUS
<TABLE>
      <C>  <S>                                                              <C>
      12.1  Expenses........................................................41
      12.2  Notices.........................................................41
      12.3  Entire Agreement................................................42
      12.4  Binding Effect, Benefits, Assignments...........................42
      12.5  Applicable Law..................................................42
      12.6  Jurisdiction....................................................43
      12.7  Headings........................................................43
      12.8  Counterparts....................................................43
      12.9  Definitions.....................................................43



EXHIBITS

      A        List of Sellers
      B        Escrow Agreement
      C        Registration Rights Agreement
      D        Employment Agreement
      E        Non-Competition

</TABLE>
                                      -iv-


<PAGE>

                          AGREEMENT AND PLAN OF MERGER


     THIS  AGREEMENT  AND PLAN OF MERGER (the  "Agreement")  is made and entered
into as of September 26, 1996, by and among Call America Business Communications
Corporation,  a California  corporation ("Call America"),  Call America Business
Communications  of Fresno,  Inc., a California  corporation ("CA Fresno"),  Call
America Business  Communications of Bakersfield,  Inc., a California corporation
("CA   Bakersfield"),   each  of  the   persons   listed  in  Exhibit  A  hereto
(individually,  a  "Seller"  and  collectively,  the  "Sellers"),  GST  Newco of
California,  Inc., a Delaware corporation  ("Sub"), and GST  Telecommunications,
Inc., a federally chartered Canadian corporation (the "Buyer" or "GST").

     Call America, CA Fresno and CA Bakersfield are individually a "Call America
Company"  and  collectively  the  "Call  America  Companies."  The Call  America
Companies  are  affiliated  entities  which are under the common  ownership  and
control of the Sellers.

     Sub and GST are  collectively  the "GST  Companies".  Sub is a newly-formed
corporation  which is a wholly-owned  subsidiary of GST. GST is a public company
whose shares of Common Stock are traded on the Amex.

                                    PREAMBLE

     GST, GST Net, Inc., Call America and the Sellers are parties to a letter of
intent dated July 17, 1996,  which sets forth the principal terms and conditions
involving a proposed business combination of GST and Call America. The Boards of
Directors of the Call America Companies and the GST Companies are of the opinion
that the transactions  described herein are in the best interests of the parties
and their respective  shareholders.  This Agreement provides for the acquisition
of  the  Call  America  Companies  by  GST  pursuant  to  a  merger  whereby  CA
Bakersfield,  CA Fresno and Sub will merge  with and into Call  America.  At the
effective  time of the Merger,  the  outstanding  shares of the capital stock of
each of the Call America  Companies shall be converted into the right to receive
shares  of the  common  stock of GST.  As a result,  the  Sellers  shall  become
shareholders of GST and the Call America  Companies shall conduct their business
and operations as a wholly-owned subsidiary of GST.

     The  transactions  described in this  Agreement  have been  approved by the
Sellers,  who constitute all of the shareholders of the Call America  Companies,
and by GST, the sole  shareholder  of Sub; and are subject to obtaining  certain



<PAGE>

regulatory approvals, and the satisfaction of certain other conditions described
in this Agreement.

     It is the intention of the parties to this  Agreement that the Merger shall
qualify for federal income tax purposes as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code.

     Certain  terms used in this  Agreement  are defined in Section 12.9 of this
Agreement.

     NOW,  THEREFORE,  in consideration of the above and the mutual  warranties,
representations,  covenants,  and agreements set forth herein, the parties agree
as follows:


                                    ARTICLE I
                      TRANSACTIONS AND TERMS OF THE MERGER

     Section 1.1 Merger.  Subject to the terms and conditions of this Agreement,
at the  Effective  Time (as  defined  in Section  1.3  hereof),  CA  Fresno,  CA
Bakersfield  and Sub shall be merged with and into Call  America,  in accordance
with the  provisions of Section 1108 of the CGCL and Section 252 of the DGCL and
with the effect provided in Section 1107 of the CGCL and Sections 259 and 261 of
the DGCL (each a "Merger" and collectively, the "Merger"). Call America shall be
the  Surviving  Corporation  of the  Merger,  and  it  shall  be a  wholly-owned
subsidiary of GST and shall be governed by the Laws of the State of  California.
The Merger shall be consummated  pursuant to the terms of this Agreement,  which
has been approved and adopted by the  respective  Boards of Directors of each of
the Call America Companies, each of the GST Companies and the Sellers.

     Section 1.2 Time and Place of Closing; Escrow.

     (a) The closing of the  transactions  contemplated  hereby (the  "Closing")
will take place at 9:00 A.M.  on the date that the  Effective  Time (as  defined
below)  occurs,  or at such  other time as the  parties,  acting  through  their
authorized officers, may mutually agree.

     (b) The  Closing  shall  be held at the  office  of GST's  counsel,  Olshan
Grundman Frome and Rosenzweig LLP, 505 Park Avenue, New York, New York.

     Section 1.3 Effective Time. The Merger and other transactions  contemplated
by this  Agreement  shall  become  effective  on the  date  and at the  time the
Agreement of Merger reflecting the Merger,  together with officers' certificates
attached  thereto and such  additional  documents  as may be required by Section
1103 of the  CGCL,  are  filed  with the  Secretary  of  State  of the  State of



                                       2
<PAGE>

California, and the documents required by Section 252 of the DGCL are filed with
the Secretary of State of the State of Delaware (the "Effective Time").  Subject
to the  terms  and  satisfaction  of all  conditions  hereof,  unless  otherwise
mutually  agreed  upon in writing by  authorized  officers  of each  party,  the
Effective  Time shall occur,  and the Merger  Documents  shall be filed,  on the
second  business  day  following  the  later  of (i) the  date  that  all of the
conditions  to  Closing  specified  in  Articles  VIII and IX  hereof  have been
satisfied or waived and (ii) the  effective  date  (including  expiration of any
applicable  waiting  period)  of the last  required  Consent  of any  Regulatory
Authority  having authority over and approving or exempting the Merger and which
is listed on Schedule 3.5.

     Section 1.4  Charter.  The  Articles of  Incorporation  of Call  America in
effect  immediately  prior to the  Effective  Time shall be the  Certificate  of
Incorporation of the Surviving Corporation until otherwise amended or repealed.

     Section 1.5 Bylaws.  The Bylaws of Call America in effect immediately prior
to the  Effective  Time shall be the Bylaws of the Surviving  Corporation  until
otherwise amended or repealed.

     Section 1.6  Directors  and  Officers.  The  directors and officers of Call
America in office  immediately  prior to the Effective Time,  together with such
additional  persons as may thereafter be elected,  shall serve as the respective
directors and officers of the Surviving Corporation from and after the Effective
Time in accordance with the Bylaws of the Surviving Corporation.

     Section 1.7 Conversion of Shares. Subject to the provisions of this Section
1.7 through  Section  1.9, at the  Effective  Time,  by virtue of the Merger and
without any action on the part of the Call America Companies,  the GST Companies
or the  shareholders  of any of the  foregoing,  the  shares of the  constituent
corporations to the Merger shall be converted as follows:

          (a) Each share of GST Capital Stock issued and outstanding immediately
     prior to the Effective  Time shall remain issued and  outstanding  from and
     after the Effective Time.

          (b)  Each  share  of  Common  Stock  of  Sub  issued  and  outstanding
     immediately prior to the Effective Time shall cease to be outstanding,  and
     shall be  converted  into an  aggregate of 100 shares of fully paid and non
     assessable  common stock of the  Surviving  Corporation  from and after the
     Effective Time.

          (c) All of the shares of Common  Stock of the Call  America  Companies
     issued and  outstanding at the Effective  Time (the "Call  American  Common
     Stock")  shall  cease to be  outstanding  and  shall be  converted  into an



                                       3
<PAGE>

     aggregate of 1,307,692  shares of fully paid and  nonassessable  GST Common
     Stock (the "Consideration") plus the Post-Closing Consideration (as defined
     in  Section  1.10),  if  any.  The   Consideration   and  the  Post-Closing
     Consideration  shall be allocated among the Call America Companies and each
     of the Sellers in accordance  with the  percentage  set forth opposite each
     Seller's  name in Exhibit A hereto.  A portion of the  Consideration  to be
     delivered to the Escrow Agent for distribution to the Sellers under Section
     2.1  hereof,  consisting  of 130,000  shares (the  "Escrow  Shares") of GST
     Common  Stock  (such  portion  to be  allocated  among all the  Sellers  in
     accordance  with the  percentages  set forth opposite each Seller's name in
     Exhibit A hereto),  shall be deposited with the Escrow Agent, to be held as
     collateral for the indemnification  obligations of the Sellers contained in
     Article X hereof,  and applied  pursuant to the terms and provisions of the
     Escrow Agreement in respect of the Sellers' obligations pursuant to Section
     10.1 hereof.

     Section 1.8 Anti-Dilution  Provisions.  In the event GST changes the number
of shares of GST Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend,  or similar  recapitalization with
respect  to such  stock and the  record  date  therefor  (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization  for which a record date is not established)  shall be prior to
the Effective Time, the  Consideration and Post-Closing  Consideration  shall be
adjusted to reflect the same ownership  percentage in GST as such  Consideration
and Post-Closing  Consideration would have represented immediately prior to such
stock split, stock dividend or similar recapitalization.

     Section 1.9 Fractional Shares.  Notwithstanding any other provision of this
Agreement, each holder of shares of Call America Common Stock exchanged pursuant
to the Merger who would  otherwise have been entitled to receive a fraction of a
share of GST Common Stock (after taking into account all certificates  delivered
by such holder) shall receive,  in lieu thereof,  cash (without  interest) in an
amount equal to such fractional  part of a share of GST Common Stock  multiplied
by the market value of one share of GST Common Stock at the Effective  Time. The
market value of one share of GST Common Stock at the Effective Time shall be the
last sale price of GST Common  Stock on the Amex (as reported by The Wall Street
Journal or, if not reported thereby, any other authoritative source) on the last
trading day  preceding  the  Effective  Time. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of any
fractional shares.




                                       4
<PAGE>

     Section 1.10 Post-Closing  Consideration.  (a) If the average closing sales
price of GST Common Stock for the Measurement Period (as hereinafter defined) is
less than $12.50 per share,  then up to 114,489 shares of GST Common Stock shall
be distributed  to the Sellers as promptly as  practicable  after the end of the
Measurement   Period   pursuant   to   Section   1.7(c)  as  the   "Post-Closing
Consideration".  The  precise  number of shares of GST Common  Stock which shall
constitute the Post-Closing  Consideration shall be equal to: (i) the difference
between (x) $12.50,  and (y) the greater of the average  closing  sales price of
GST Common Stock for the  Measurement  Period and $11.25,  (ii) divided by 1.25,
(iii) times 114,489.

     (b) The "Measurement Period" for purposes of Section 1.10 shall mean the 10
consecutive  trading day period  ending two trading days prior to the date which
is 180 days after the  Effective  Time.  The "average  closing  sales price" for
purposes  of this  Section  1.10 shall mean the  average  last sale price of GST
Common  Stock on the Amex (as  reported  by the Wall  Street  Journal or, if not
reported  thereby,  by any other  authoritative  source) for the 10 trading days
during the Measurement Period.

     (c) In the event GST  changes  the  number  of shares of GST  Common  Stock
issued  and  outstanding  after the  Effective  Time but prior to the end of the
Measurement  Period as a result of a stock  split,  stock  dividend,  or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock  dividend) or the effective date thereof (in the case of a stock
split or similar  recapitalization  for which a record date is not  established)
shall  be  prior  to  the  end  of  the  Measurement  Period,  the  Post-Closing
Consideration shall be adjusted to reflect the same ownership  percentage in GST
as such Post-Closing  Consideration would have represented  immediately prior to
such stock split, stock dividend or similar recapitalization.

                                   ARTICLE II
                               EXCHANGE OF SHARES

     Section 2.1 Exchange  Procedures.  The conversion of shares of Call America
Common Stock into GST Common Stock as provided for by this Agreement shall occur
automatically  at the  Effective  Time  without  further  action by the  holders
thereof.  Until  surrendered,  each certificate that prior to the Effective Time
represented  shares of Call America  Common Stock will be deemed to evidence the
right to receive  the number of shares of GST Common  Stock into which such Call
America  Common  Stock has been  converted.  At the  Closing,  each  holder of a
certificate or certificates  theretofore  representing a share or shares of Call
America  Common Stock shall be entitled to receive from GST, in exchange for and
upon  the  surrender  of  all  of  such  holder's  Call  America   Common  Stock
certificates  duly  endorsed,  the number of shares of GST Common Stock to which
the holder of such  certificates is entitled  pursuant to Section 1.7(c) of this



                                       5
<PAGE>

Agreement  (less the number of shares of GST Common  Stock  being  deposited  in
escrow pursuant to this Agreement),  together with all undelivered  dividends or
distributions in respect of such shares (without  interest  thereon) pursuant to
Section 2.2 of this Agreement.  Stock  certificates  for fractions of GST Common
Stock shall not be issued in the Merger and such fractional  interests shall not
entitle the owners  thereof to vote,  to receive  dividends  or to exercise  any
other right of a stockholder with respect to such fractional interest.

     Section  2.2  Rights of  Former  Shareholders  of each of the Call  America
Companies.  At the Effective  Time, the stock transfer books of each of the Call
America  Companies  shall be closed as to  holders of Common  Stock  immediately
prior to the  Effective  Time and no transfer of Common Stock by any such holder
shall   thereafter  be  made  or  recognized.   Whenever  a  dividend  or  other
distribution  is  declared by GST on the GST Common  Stock,  the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other  distributions  on all shares of GST Common Stock issuable  pursuant to
this Agreement,  but no dividend or other distribution payable to the holders of
record of GST Common Stock as of any time subsequent to the Effective Time shall
be  delivered  to the holder of any  certificate  representing  shares of Common
Stock  of any of the  Call  America  Companies  issued  and  outstanding  at the
Effective Time until such holder  surrenders  such  certificate  for exchange as
provided in Section  2.1 of this  Agreement.  However,  upon  surrender  of such
certificate, both the GST Common Stock certificate and any undelivered dividends
or other  distributions and cash payments payable hereunder  (without  interest)
shall be  delivered  and paid with  respect  to each share  represented  by such
certificate.

                                   ARTICLE III
                      REPRESENTATIONS AND WARRANTIES OF THE
                     CALL AMERICA COMPANIES AND THE SELLERS

     Each of the Call  America  Companies  and each of the  Sellers  jointly and
severally hereby represent and warrant to the Buyer as follows:

     Section  3.1  Corporate   Organization;   Requisite  Authority  to  Conduct
Business;  Articles  of  Incorporation  and  By-Laws.  Each of the Call  America
Companies is a corporation duly organized, validly existing and in good standing
under the laws of the State of  California.  Call America has provided the Buyer
with true and complete  copies of the articles of  incorporation  of each of the
Call  America  Companies  (certified  by the  Secretary of State of the State of
California) and By-laws of each of the Call America Companies  (certified by the
respective  Secretary of each of the Call America Companies) as in effect on the
date hereof.  Prior to the Closing, the minute books of each of the Call America
Companies  will be  delivered  to the Buyer,  and will contain true and complete



                                       6
<PAGE>

records  of all  meetings  and  consents  in lieu of meeting of each of the Call
America Companies' Board of Directors and of each of the Call America Companies'
shareholders  since the  incorporation  of each such  entity,  which  accurately
reflect in all material  respects all  transactions  referred to in such minutes
and  consents in lieu of meeting.  Each of the Call  America  Companies  has all
corporate  power and authority to own,  operate and lease its  properties and to
carry on its  business  as the same is now  being  conducted,  except  where the
failure  to have such  power and  authority  would not have a  Material  Adverse
Effect on the Call America  Companies taken as a whole. Each of the Call America
Companies is duly  qualified or licensed to do business and is in good  standing
as a foreign  corporation  in every  jurisdiction  in which the  conduct  of its
business  or the  ownership  or leasing of its  properties  requires it to be so
qualified or  licensed,  except where the failure to be so qualified or licensed
would not have a Material Adverse Effect on the Call America  Companies taken as
a  whole.   Schedule  3.1  hereto  contains  a  listing  of  each  such  foreign
jurisdiction with respect to each of the Companies.

     Section 3.2  Capitalization  and  Shareholdings.  The authorized and issued
stock of each of the Call  America  Companies  is listed in  Schedule  3.2.  The
Sellers  own all of the  shares  of  Common  Stock of each of the  Call  America
Companies free and clear of all liens, claims or encumbrances.  The Sellers have
full right,  power,  legal  capacity  and  authority to transfer and deliver the
shares of Common  Stock of each of the Call America  Companies  pursuant to this
Agreement.  The  capital  stock of each of the Call  America  Companies  is duly
authorized  and all issued capital stock has been duly and validly issued and is
fully paid and non-assessable.  Except as disclosed in Schedule 3.2, none of the
Call America  Companies has outstanding,  and is not bound by or subject to, any
Rights,  and no shares of capital stock of any of the Call America Companies are
reserved for issuance for any purpose.

     Section 3.3  Subsidiaries,  Etc.  None of the Call America  Companies  owns
(directly or indirectly)  any Rights in any  corporation,  partnership,  limited
liability  company,  joint  venture,  association  or other  entity,  except  as
disclosed in Schedule 3.3.

     Section 3.4 Authority  Relative to and Validity of Agreements.  Each of the
Call America  Companies  has full  corporate  power and authority to execute and
deliver  this  Agreement  and to  assume  and  perform  all  of its  obligations
hereunder.  The  execution  and  delivery of this  Agreement by each of the Call
America  Companies and the performance by each of the Call America  Companies of
its obligations  hereunder has been duly  authorized by its respective  Board of
Directors and  shareholders  and no further  authorization on the part of any of
the Call America  Companies is necessary to authorize the execution and delivery
by it of, and the performance of its obligations  under, this Agreement.  Except
as  disclosed  on Schedule  3.4  hereto,  there are no  corporate,  contractual,



                                       7
<PAGE>

statutory or other  restrictions of any kind upon the power and authority of any
of the Call  America  Companies  to execute and deliver  this  Agreement  and to
consummate  the  transactions  contemplated  hereunder,  and no  Consent  by any
Regulatory  Authority  is necessary  to make this  Agreement a valid  instrument
binding upon each of the Call America  Companies in  accordance  with its terms,
except any Consents  that may be required by the  Canadian  federal law and FCC,
state telecommunication and state utility regulations,  and Consents and filings
under  the CGCL and the DGCL or where any such  restriction  or the  failure  to
obtain  such  Consents  would  not have a  Material  Adverse  Effect on the Call
America  Companies  taken as a whole.  This Agreement has been duly executed and
delivered by each of the Call America  Companies and constitutes a legal,  valid
and binding  obligation of each of the Call America  Companies,  enforceable  in
accordance with their terms, except (i) as such enforceability may be limited by
or subject to any bankruptcy,  insolvency,  reorganization,  moratorium or other
similar laws affecting creditors' rights generally, (ii) as such obligations are
subject to general  principles of equity and (iii) as rights to indemnity may be
limited by federal or state securities laws or by public policy.

     Section 3.5 Required Filings and Consents; No Conflict. Except as disclosed
on Schedule  3.5,  none of the Call America  Companies is required to submit any
notice,  report or other filing with any Regulatory Authority in connection with
the execution,  delivery or performance  of this  Agreement,  except any filings
that may be required  under the CGL, the DGCL and Canadian  Federal law and FCC,
state  utility and  telecommunication  regulations,  or where failure to so file
would not have a Material Adverse Effect on the Call America  Companies taken as
a whole.  The execution,  delivery and  performance of this Agreement by each of
the Call America Companies and the consummation of the transactions contemplated
hereby do not and will not (a)  conflict  with or violate  any law,  regulation,
judgment,  order or decree binding upon any of the Call America  Companies,  (b)
conflict with or violate any provision of its respective  charter or Bylaws,  or
(c) except as  disclosed in Schedule  3.5 hereto,  conflict  with or result in a
breach of any  condition or provision  of, or  constitute  a Default  under,  or
result in the creation or imposition  of any Lien upon any  properties or assets
of any of the Call  America  Companies  pursuant  to,  or cause  or  permit  the
acceleration prior to maturity of any amounts owing under, any Contract to which
any of the Call America Companies is a party or which is binding upon any of the
Call America Companies or by which any of its properties are bound, except where
such conflict,  violation,  breach or default would not have a Material  Adverse
Effect on the Call America  Companies taken as a whole. The execution,  delivery
and performance of this Agreement by each of the Call America  Companies and the
consummation of the transactions contemplated hereby will not result in the loss
of any Permit possessed by any of the Call America  Companies or give a right of
termination  to any party to any  agreement or other  instrument to which any of



                                       8
<PAGE>

the Call  America  Companies  is a party or by which any of its  properties  are
bound except where such loss or right would not have a Material  Adverse  Effect
on the Call America Companies taken as a whole.

     Section 3.6 Financial  Statements  and Net  Revenues.  (a) Call America has
heretofore  delivered  to Buyer (i) a balance  sheet of each of the Call America
Companies at December 31, 1995 and December 31, 1994, and related  statements of
income and retained earnings and changes in cash flows for the years then ended,
all of which have been  certified by Glenn,  Burdette,  Phillips & Bryson,  Call
America's  independent  auditors,  and (ii) a balance  sheet of each of the Call
America  Companies at June 30, 1996 and related statement of income and retained
earnings and changes in cash flows for the quarter and six months then ended, as
certified by the  Controller  of Call America  (collectively,  together with the
notes  thereto,  the "Call  America  Financial  Statements").  The Call  America
Financial  Statements  have been  prepared  in  accordance  with  United  States
generally accepted  accounting  principles ("U.S. GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated  therein or in
the notes thereto) and fairly present the financial position of the Call America
Companies,  taken as a whole, as of the respective dates thereof and the results
of operations  of the Call America  Companies,  taken as whole,  for the periods
indicated,  except as disclosed  on Schedule  3.6 and except that the  unaudited
interim  financial  statements  are  subject  to normal and  recurring  year end
adjustments which are not expected to be material in amount.

     Section 3.7 No Undisclosed Liabilities.  None of the Call America Companies
has any Liability except:

          (a) as disclosed on Schedule 3.7;

          (b) those set forth or reflected in the financial statements delivered
     to Buyer in  accordance  with  Section  3.6 and that  have not been paid or
     discharged since the date thereof;

          (c) those arising  under  agreements  or other  commitments  expressly
     identified in any Schedule hereto; and

          (d) liabilities arising in the ordinary and usual course of business.

     Section 3.8 Absence of Certain  Changes and Events.  Except as disclosed or
reflected in the Call America  Financial  Statements or on Schedule  3.8,  since
June 30, 1996,  through the date hereof there has not been,  with respect to any
of the  Call  America  Companies,  (i) any  Material  Adverse  Effect;  (ii) any
material  strike,  picketing,  work  slowdown  or labor  disturbance;  (iii) any
material damage,  destruction or loss (whether or not covered by insurance) with



                                       9
<PAGE>

respect to any  material  assets or  properties;  (iv) any  redemption  or other
acquisition  of  Common  Stock  of any  of the  Call  America  Companies  or any
declaration or payment of any dividend or other  distribution in cash,  stock or
property  with respect  thereto;  (v) any entry into any material  commitment or
transaction   (including,   without   limitation,   any   borrowing  or  capital
expenditure) other than in the ordinary course of business or as contemplated by
this  Agreement;  (vi) any transfer of, or rights  granted  under,  any material
leases, licenses,  agreements,  patents,  trademarks, trade names, or copyrights
other than those  transferred or granted in the ordinary  course of business and
consistent  with  past  practice;  (vii)  any  Lien on any  material  assets  or
properties  except  in the  ordinary  course of  business;  any  payment  of any
Liabilities other than Liabilities  currently due; any cancellation of any debts
or claims or forgiveness  of amounts owed to any of the Call America  Companies;
or (viii) any change in accounting  principles or methods (except insofar as may
have been required by a change in U.S.  GAAP).  Except as disclosed or reflected
in the Call America  Financial  Statements  or on Schedule  3.8,  since June 30,
1996,  through the date hereof each of the Call America  Companies has conducted
its business only in the ordinary  course and in a manner  consistent  with past
practice and has not made any material  change in the conduct of its  respective
business or  operations.  Except as  disclosed  or reflected in the Call America
Financial  Statements or on Schedule 3.8, without limiting the generality of the
foregoing, since June 30, 1996, through the date hereof none of the Call America
Companies has made any payments  (except in the ordinary  course of business and
in amounts and in a manner  consistent  with past  practice)  under any Employee
Benefit Plan (as hereinafter defined) or to any employee, independent contractor
or consultant,  entered into any new Employee Benefit Plan or any new consulting
agreement,  granted or  established  any awards under any such Employee  Benefit
Plan or agreement,  in any such case providing for payments of more than $10,000
or adopted or otherwise amended any of the foregoing.

     Section 3.9 Taxes and Tax Returns. (a) For purposes of this Agreement,  (i)
the  term  "Taxes"  shall  mean  all  taxes,  charges,  fees,  levies  or  other
assessments,  including,  without limitation,  income,  gross receipts,  excise,
property,  sales,  license,  payroll and franchise taxes,  imposed by the United
States,  or any state,  local or foreign  government  or  subdivision  or agency
thereof  whether  computed on a unitary,  combined or any other basis;  and such
term shall  include any interest and penalties or additions to tax; and (ii) the
term "Tax Return" shall mean any report, return or other information required to
be filed with,  supplied to or otherwise made available to a taxing authority in
connection with Taxes.

     (b) Except as disclosed on Schedule 3.9, each of the Call America Companies
has (i) duly filed  with the  appropriate  taxing  authorities  all Tax  Returns



                                       10
<PAGE>

required  to be filed by or with  respect  to its  respective  business,  or are
properly on extension and all such duly filed Tax Returns are true,  correct and
complete  in all  material  respects,  and  (ii)  paid in full or made  adequate
provisions  for on its respective  balance sheet (in accordance  with U.S. GAAP)
all Taxes shown to be due on such Tax  Returns.  Except as disclosed on Schedule
3.9,  there are no liens for Taxes  upon the  assets of any of the Call  America
Companies  except for statutory  liens for current Taxes not yet due and payable
or which may thereafter be paid without  penalty or are being  contested in good
faith.  Except as disclosed on Schedule 3.9, none of the Call America  Companies
has  received  any  notice  of  audit,  is not  undergoing  any audit of its Tax
Returns,  or has received any notice of deficiency or assessment from any taxing
authority with respect to liability for Taxes of its  respective  business which
has not been fully paid or finally settled. Except as disclosed on Schedule 3.9,
there have been no waivers of statutes of limitations by any of the Call America
Companies  with respect to any Tax Returns.  None of the Call America  Companies
has filed a request with the Internal  Revenue Service for changes in accounting
methods  within the last two years which change would effect the  accounting for
tax purposes, directly or indirectly, of its respective business.

     (c) Except as disclosed on Schedule 3.9, none of the Call America Companies
has  executed  an  extension  or waiver of any  statute  of  limitations  on the
assessment or collection of any Tax due (excluding  such statutes that relate to
years  currently  under  examination  by the Internal  Revenue  Service or other
applicable taxing authorities) that is currently in effect.

     (d) Except as disclosed on Schedule 3.9, the  provision for Taxes,  if any,
due or to become  due for any of the Call  America  Companies  for the period or
periods through and including the date of the respective Call America  Financial
Statements  that has been made and is reflected on such financial  statements is
sufficient to cover all such Taxes.

     (e) Deferred taxes, if any, of each of the Call America Companies  included
in the Call America  Financial  Statements have been computed in accordance with
GAAP.

     (f) None of the Call America  Companies is a party to any Tax allocation or
Tax sharing  agreement and none of the Call America  Companies has been a member
of an affiliated  group filing a  consolidated  federal income Tax Return or has
any Liability for Taxes of any Person under Treasury Regulation Section 1.1502-6
(or any similar  provision of state,  local or foreign  Law) as a transferee  or
successor or by Contract or otherwise.

     (g) None of the Call America Companies has made any payments,  is obligated
to make any payments,  or is a party to any Contract  that could  obligate it to



                                       11
<PAGE>

make any payments that would be disallowed as a deduction  under Section 280G or
162(m) of the Internal Revenue Code.

     Section 3.10 Employee  Benefit Plans.  Schedule 3.10 comprises a listing of
each bonus,  stock option,  stock purchase,  benefit,  profit sharing,  savings,
retirement,  liability,  insurance,  incentive, deferred compensation, and other
similar  fringe or employee  benefit  plans,  programs or  arrangements  for the
benefit of or  relating  to,  any  employee  of, or  independent  contractor  or
consultant  to,  and  all  other  compensation  practices,  policies,  terms  or
conditions,  whether  written or unwritten (the "Employee  Benefit Plans") which
each of the Call America Companies presently maintains, to which any of the Call
America Companies  presently  contributes or under which any of the Call America
Companies  has any  liability  and which  relate  to  employees  or  independent
contractors  of any of the  Call  America  Companies.  Except  as  disclosed  on
Schedule 3.10,  each of the Employee  Benefit Plans  administered by each of the
Call  America  Companies  have been  administered  in all  material  respects in
accordance with all  requirements of applicable law and terms of each such plan.
Each  Employee  Benefit  Plan that is required to be qualified  under ERISA,  or
registered  or  approved  by a  Regulatory  Authority,  has  been so  qualified,
registered or approved by the appropriate  governmental  agency or authority and
such  qualification,  registration  or approval has not been revoked.  Except as
disclosed on Schedule 3.10, all contributions  (including  premiums) required by
law or  contract  to have  been  made or  accrued  by each of the  Call  America
Companies  under or with  respect to  Employee  Benefit  Plans have been paid or
accrued by each of the Call  America  Companies  or will be paid in the ordinary
course within 90 days.  Except as disclosed on Schedule 3.10,  without  limiting
the  foregoing,  there are no unfunded  liabilities  under any Employee  Benefit
Plan.  Except as disclosed on Schedule 3.10, none of the Call America  Companies
has  received  notice of any  investigations,  litigation  or other  enforcement
actions  against it with respect to any of the Employee  Benefit Plans.  To Call
America's Knowledge,  there are no pending actions, suits or claims by former or
present employees of any of the Call America Companies (or their  beneficiaries)
with  respect to Employee  Benefit  Plans or the assets or  fiduciaries  thereof
(other than routine claims for benefits).

     Section 3.11 Title to Property. Each of the Call America Companies has good
title, or valid leasehold or usage rights (in the case of leased  property),  to
all real property and all personal property owned or leased by it or used in the
operation  of its  respective  business,  free and  clear  of all  encumbrances,
excluding (i) encumbrances  disclosed or reflected in the Call America Financial
Statements,  (ii) Liens for taxes, fees, levies, imposts, duties or governmental
charges of any kind which are not yet delinquent or are being  contested in good
faith by appropriate  proceedings  which suspend the collection  thereof;  (iii)



                                       12
<PAGE>

Liens for mechanics, materialmen,  laborers, employees, suppliers or other which
are not yet  delinquent  or are being  contested  in good  faith by  appropriate
proceedings; (iv) Liens created in the ordinary course of business in connection
with the leasing or financing  of office,  computer  and related  equipment  and
supplies;  (v) the  rights of third  parties  in and to such  real and  personal
property  pursuant  to the  terms of any  lease  agreement  or  other  agreement
pursuant to which the Companies are entitled to lease or utilize such  property;
(vi)  easements  and  similar   encumbrances   ordinarily   created  for  fuller
utilization  and  enjoyment of property;  and (vii) Liens or defects in title or
leasehold  rights that either  individually  or in the aggregate do not and will
not have a Material  Adverse  Effect on the Call  America  Companies  taken as a
whole. All of such owned or leased property with a value in excess of $20,000 is
listed on Schedule 3.11 hereto.

     Section 3.12 Trademarks, Patents and Copyrights. (a) Except as disclosed on
Schedule 3.12 hereto, Call America owns or has the right to use all Intellectual
Property used in the conduct of the businesses of the Call America  Companies as
being  conducted  as of the date  hereof,  except  where the  failure  to own or
possess such right would not have a Material  Adverse Effect on the Call America
Companies  taken as a whole.  Schedule  3.12 hereto  lists each  patent,  patent
right,  patent  application,  tradename  registration,  trademark  registration,
copyright registration,  copyright application,  source and object code owned by
each of the Call America Companies;

     (b) The  execution,  delivery and  performance  of this  Agreement  and the
consummation  of the  transactions  contemplated  hereby will not  constitute  a
material  breach  of  any  instrument  or  agreement  governing  any  rights  to
Intellectual  Property of any of the Call America Companies,  will not cause the
forfeiture or  termination  or give rise to a right of forfeiture or termination
of any  Intellectual  Property  of any of the  Call  America  Companies  that is
material to the Call America Companies taken as a whole or materially impair the
right of any of the Call  America  Companies  to use any  Intellectual  Property
currently  being used by the Call  America  Companies  in their  business or any
portion thereof;

     (c) Neither the manufacture,  marketing,  license,  sale or intended use of
any product  currently  licensed or sold by any of the Call America Companies or
currently under  development by any of the Call America  Companies  violates any
license or  agreement  between any of the Call America  Companies  and any third
party relating to such product or infringes any  intellectual  property right of
any other  party,  except  where such  violation  or  infringement  would have a
Material  Adverse Effect on the Call American  Companies  taken as a whole,  and
there is no pending or, to the  Knowledge of Call America,  threatened  claim or
litigation contesting the validity,  ownership or right to use, sell, license or
dispose of any Intellectual  Property, nor has any of the Call America Companies



                                       13
<PAGE>

received any notice  asserting  that any  Intellectual  Property or the proposed
use, sale,  license or disposition  thereof  conflicts or will conflict with the
rights of any other  party,  except to the  extent  such  claim,  litigation  or
conflict would not have a Material Adverse Effect on the Call America  Companies
taken as a whole; and

     (d) Except as disclosed in Schedule  3.12 hereto,  to the Knowledge of Call
America,  no current or prior  officers,  employees or consultants of any of the
Call America Companies claim an ownership interest in any Intellectual  Property
as a result of having been involved in the  development  of such property  while
employed by or consulting to any of the Call America Companies or otherwise.

     Section 3.13 Legal  Proceedings,  Claims,  Investigations,  etc.  Except as
disclosed on Schedule 3.13, there is no litigation  pending, or to the Knowledge
of Call America,  threatened,  against any of the Call America Companies,  or to
Knowledge of Call America, any director, officer or employee thereof relating to
their respective  business that would have a Material Adverse Effect on the Call
America  Companies taken as a whole.  Except as disclosed on Schedule 3.13, none
of the Call America  Companies  has been informed of any violation of or default
under, any laws,  ordinances,  regulations,  judgments,  injunctions,  orders or
decrees (including without  limitation,  any immigration laws or regulations) of
any court,  governmental  department,  commission,  agency,  instrumentality  or
arbitrator  applicable  to the business of each of the Call  America  Companies.
None of the  Companies  is  currently  subject  to any Order  that  would have a
Material Adverse Effect on the Call America Companies taken as a whole.

     Section 3.14  Insurance.  Schedule  3.14 hereto sets forth a list and brief
description of all existing  insurance  policies  maintained by each of the Call
America Companies pertaining to its business properties, personnel or assets. To
the Knowledge of Call America,  none of the Call America Companies is in Default
with respect to any provision  contained in any insurance policy that would have
a Material  Adverse Effect on the Call America  Companies taken as a whole,  and
has failed to give any notice or present any claim under any insurance policy in
due and timely  fashion  that would have a Material  Adverse  Effect on the Call
America  Companies  taken as a whole.  Prior to the Closing,  all such  policies
shall have been  delivered  to the Buyer and shall  continue to be in full force
and effect.  All payments  with respect to such policies are current and none of
the Call America  Companies  has received any notice  threatening  a suspension,
revocation,   modification   or   cancellation  of  any  such  policy  which  if
implemented,  would have a Material Adverse Effect on the Call America Companies
taken as a whole.



                                       14
<PAGE>

     Section 3.15 Material  Contracts.  (a) Except as set forth in Schedule 3.15
hereto,  none of the Call  America  Companies  is a party to and is bound by any
Contract  which has a term in excess of one year and will  result in payments in
excess of $15,000 over any 12 month period other than (i) Contracts entered into
in the ordinary course of business with vendors and customers and (ii) Contracts
cancelable  upon not more than 30 days' notice.  Each of the Contracts set forth
in Schedule  3.15 hereto to which any of the Call America  Companies is a party,
is valid and existing, in full force and effect and there is no Default or claim
of  Default  against  any  of the  Call  America  Companies  or  any  notice  of
termination with respect thereto,  except where such invalidity or default would
not have a Material  Adverse  Effect on the Call  America  Companies  taken as a
whole.  Copies of all the written documents and a synopsis of all oral contracts
and  commitments  described in Schedule  3.15 hereto have  heretofore  been made
available to the Buyer and are true and complete and include all  amendments and
supplements thereto and modifications thereof to and including the date hereof.

     (b) Except as set forth in Schedule  3.15 hereto,  none of the Call America
Companies is a party to any (i) Contract with any consultant,  executive officer
or other key  employee  the  benefits of which are  contingent,  or the terms of
which  are  materially   altered,   upon  the  occurrence  of  the  transactions
contemplated by this Agreement, or (ii) benefit plan, including any stock option
plan,  any of the  benefits  of which will be  increased,  or the vesting of the
benefits of which will be  accelerated,  by the  occurrence of the  transactions
contemplated by this Agreement.

     Section 3.16 Certain  Transactions.  Except as disclosed on Schedule  3.16,
none of the  Call  America  Companies,  nor any  officer,  director  or,  to the
Knowledge of Call  America,  any employee of any of the Call America  Companies,
nor any member of any such person's immediate family is presently a party to any
material  transaction  with any of the Call  America  Companies  relating to its
respective  business  including  without  limitation,   any  Contract  or  other
arrangement  (i) providing for the furnishing of services by, (ii) providing for
the rental of real or  personal  property  from,  or (iii)  otherwise  requiring
payments to (other than for services as officers,  directors or employees of any
of the Call America Companies), any such person or any corporation, partnership,
trust or other entity in which any such person has a  substantial  interest as a
stockholder, officer, director, trustee or partner.

     Section 3.17 Broker. Except for the engagement by GST of the Clark Company,
whose fees are to be paid solely by GST, no broker,  finder or investment banker
is entitled to any  brokerage or finder's fee or other  commission in connection
with the transactions  contemplated  hereby based on the arrangements made by or
on behalf of any of the Call America Companies or the Sellers.



                                       15
<PAGE>

     Section 3.18 Environmental  Matters. (a) None of the Call America Companies
is the subject of, or being  threatened to be the subject of (i) any enforcement
proceeding,  or (ii) to Call America's  Knowledge any investigation,  brought in
either case under any Environmental  Law, at any time in effect or (iii) to Call
America's   Knowledge   any  third  party  claim  for   liability   relating  to
environmental  conditions on  properties  of any of the Call America  Companies.
None of the Call America  Companies  has been  notified  that it must obtain any
permits and licenses or file  documents for the operation of its business  under
federal,   state  and  local  laws  relating  to  pollution  protection  of  the
environment.  None of the  Call  America  Companies  has  been  notified  of any
conditions on its respective properties which will give rise to any Liabilities,
under any  Environmental  Law,  or as the result of any claim of any third party
with respect to any Environmental Law. For the purposes of this Section 3.18, an
investigation shall include,  but is not limited to, any written notice received
by any of the Call  America  Companies  which  relates  to the onsite or offsite
disposal,  release,  discharge or spill of any waste, waste water,  pollutant or
contaminants.

     (b) Except as  disclosed  on Schedule  3.18,  there are no toxic  wastes or
other toxic or hazardous  substances  or materials,  pollutants or  contaminants
which any of the Call America  Companies  (or, to the Knowledge of Call America,
any previous  occupant of any of the Call  America  Companies'  facilities)  has
used, stored or otherwise held in or on any of the facilities of any of the Call
America  Companies  which,  are present at or have migrated from the facilities,
whether  contained in ambient air, surface water,  groundwater,  land surface or
subsurface  strata in any such case that would have a Material Adverse Effect on
the Call America  Companies taken as a whole. None of the Call America Companies
has disposed of or arranged (by Contract or  otherwise)  for the disposal of any
material or  substance  that was  generated  or used by any of the Call  America
Companies  at any off-site  location  that has been or is listed or proposed for
inclusion on any list promulgated by any Regulatory Authority for the purpose of
identifying sites which pose a danger to health and safety.  Except as disclosed
on Schedule 3.18, there have been no environmental studies, reports and analyses
made or prepared in the last five years relating to the facilities of any of the
Call America  Companies.  None of the Call America  Companies  has installed any
underground storage tanks in any of its facilities and, to the Knowledge of Call
America, none of such facilities contain any underground storage tanks.

     Section 3.19 Illegal  Payments.  None of the Call  America  Companies  has,
directly or  indirectly,  paid or delivered any fee,  commission or other sum of
money  or  item  of  property,  however  characterized,  to any  finder,  agent,
government  official or other party,  in the United States or any other country,
which is in any manner  related to their  respective  businesses or  operations,
which any of the Call America  Companies  knows or has reason to believe to have



                                       16
<PAGE>

been  illegal  under  any  Laws  or  the  laws  of  any  other  country   having
jurisdiction.  None of the Call America Companies has participated,  directly or
indirectly, in any boycotts affecting any of its actual or potential customers.

     Section 3.20 Statements  True and Correct.  Except as disclosed on Schedule
3.20, no statement, certificate, instrument, or other writing furnished or to be
furnished  by any of the Call  America  Companies,  any Seller or any  Affiliate
thereof to any of the GST  Companies  pursuant  to this  Agreement  or any other
document,  agreement,  or instrument referred to herein contains or will contain
any untrue  statement  of  material  fact or will omit to state a material  fact
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not misleading.  None of the information supplied or to be
supplied  by any of the Call  America  Companies  or any  Affiliate  thereof for
inclusion  in any  documents  to be  filed  by a  Call  America  Company  or any
Affiliate  thereof  with  any  Regulatory   Authority  in  connection  with  the
transactions  contemplated  hereby,  will, at the respective time such documents
are filed,  be false or misleading with respect to any material fact, or omit to
state any material fact  necessary to make the statements  therein,  in light of
the circumstances under which they were made, not misleading. All documents that
any of the Call America Companies or Affiliate thereof is responsible for filing
with any Regulatory  Authority in connection with the transactions  contemplated
hereby will comply as to form in all material  respects  with the  provisions of
applicable Law.

     Section  3.21  Accounting,  Tax and  Regulatory  Matters.  None of the Call
America Companies,  or, to the Knowledge of Call America,  any Affiliate thereof
has taken any action that is reasonably likely to (i) prevent any of the Mergers
from qualifying as a reorganization  within the meaning of Section 368(a) of the
Internal  Revenue  Code,  or (ii)  materially  impede  or delay  receipt  of any
Consents of Regulatory Authorities or result in the imposition of a condition or
restriction  which could  materially  adversely  impact the economic or business
benefits of the transaction contemplated by this Agreement.

                                   ARTICLE IV
                 REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     Each  Seller  hereby  severally  represents  and  warrants  to the Buyer as
follows:

     Section  4.1  Capitalization.  Except  for  restrictions  contained  in the
Shareholders'  Agreement (the  "Shareholders'  Agreement") dated May 28, 1996 by
and among Jerry Linthicum ("Linthicum"), Jeffrey Buckingham and F. Scott Hindes,
such  Seller  owns the  shares  of  Common  Stock  of each of the  Call  America
Companies set forth opposite his name in Exhibit A, free and clear of all Liens.



                                       17
<PAGE>

Such Seller has full right,  power, legal capacity and authority to transfer and
deliver such shares pursuant to this Agreement.

     Section 4.2 Authority  Relative to and Validity of Agreements.  Such Seller
has full power and authority to execute and deliver this  Agreement,  the Escrow
Agreement,  the  Registration  Rights  Agreement in the form attached  hereto as
Exhibit C (the "Registration Rights Agreement"), the Employment Agreement in the
form attached  hereto as Exhibit D (the  "Employment  Agreement")  to which such
Seller is a party and the  Non-Competition  Agreement  to which such Seller is a
party  in  the  form  attached   hereto  as  Exhibit  E  (the   "Non-Competition
Agreements"),  and to assume and perform all of his  obligations  hereunder  and
thereunder.  There are no  contractual,  statutory or other  restrictions of any
kind upon the power and  authority  of such Seller to execute  and deliver  this
Agreement,   the  Escrow  Agreement,  the  Registration  Rights  Agreement,  the
Employment  Agreement  to which such  Seller is a party and the  Non-Competition
Agreement  to which such Seller is a party and to  consummate  the  transactions
contemplated  hereunder and thereunder and except  Consents that may be required
by Canadian  federal law,  FCC and state  telecommunications  and state  utility
regulations  and  filings  that may be  required  by the CGCL and the  DCGL,  no
action,  waiver or consent by any Regulatory Authority is necessary to make this
Agreement,   the  Escrow  Agreement,  the  Registration  Rights  Agreement,  the
Employment  Agreement  to which such  Seller is a party and the  Non-Competition
Agreements to which such Seller is a party, a valid instrument binding upon such
Seller in  accordance  with its terms,  except where such failure to obtain such
Consent or where such  restriction  would not have a Material  Adverse Effect on
the Call  America  Companies  taken as a whole.  This  Agreement  has been  duly
executed and delivered by such Seller and constitutes, and the Escrow Agreement,
the Registration Rights Agreement, the Employment Agreement to which such Seller
is a party and the  Non-Competition  Agreement  to which such Seller is a party,
when executed and  delivered by such Seller in accordance  with their terms will
constitute,  legal, valid and binding obligations of such Seller, enforceable in
accordance with their terms, except (i) as such enforceability may be limited by
or subject to any bankruptcy,  insolvency,  reorganization,  moratorium or other
similar laws affecting creditors' rights generally, (ii) as such obligations are
subject to general  principles of equity and (iii) as rights to indemnity may be
limited by federal or state securities laws or by public policy.

     Section 4.3 Required Filings and Consents; No Conflict. Except as disclosed
on Schedule  4.3,  such Seller is not  required to submit any notice,  report or
other filing with any  Regulatory  Authority in connection  with the  execution,
delivery  or  performance  of  this  Agreement,   the  Escrow   Agreement,   the
Registration Rights Agreement,  the Employment Agreement to which such Seller is
a party and the  Non-Competition  Agreements  to which  such  Seller is a party,
except  under  the  CGCL,  the  DGCL,  FCC,   Canadian  federal  law  and  state



                                       18
<PAGE>

telecommunication  and state utility  regulations where the failure to so submit
would not have a Material Adverse Effect on the Call America  Companies taken as
a whole. The execution,  delivery and performance of this Agreement,  the Escrow
Agreement,  the Registration Rights Agreement, the Employment Agreement to which
such Seller is a party and the Non-Competition Agreement to which such Seller is
a party by such Seller and the  consummation  of the  transactions  contemplated
hereby and thereby do not and will not (a) conflict  with or violate any Law, or
(b) except as disclosed on Schedule  4.3,  conflict with or result in a material
breach of any condition or provision of, or constitute a material Default under,
or result in the  creation  or  imposition  of any Lien upon any  properties  or
assets of such Seller pursuant to, or cause or permit the acceleration  prior to
maturity  of any amounts  owing  under,  any  Contract to which such Seller is a
party or which is binding upon such Seller or by which any of his properties are
bound, except where such conflict, violation, breach or default would not have a
Material  Adverse  Effect on the Call America  Companies  taken as a whole.  The
execution, delivery and performance of this Agreement, the Escrow Agreement, the
Registration Rights Agreement,  the Employment Agreement to which such Seller is
a party and the  Non-Competition  Agreement  to which such  Seller is a party by
such Seller and the  consummation of the  transactions  contemplated  hereby and
thereby  will not result in the loss of any Permit  possessed  by such Seller or
give a right of termination to any party to any agreement or other instrument to
which such Seller is a party or by which any of his properties are bound, except
where such loss or right  would not have a Material  Adverse  Effect on the Call
America Companies taken as a whole.

     Section 4.4 Broker.  Except for the engagement of the Clark Company by GST,
whose fees are to be paid solely by GST, no broker,  finder or investment banker
is entitled to any  brokerage or finder's fee or other  commission in connection
with the transactions  contemplated  hereby based on the arrangements made by or
on behalf of such Seller.

     Section 4.5 Investment.  Such Seller is acquiring the consideration  solely
for his own account as an investment and not with a view to any  distribution or
resale  thereof  within the meanings of such terms under the  Securities  Act of
1933, as amended (the "Securities Act"). Such Seller is an "accredited investor"
as defined in Rule 501(a)  promulgated under the Securities Act. Such Seller has
been advised by the Buyer that the  Consideration  to be acquired by such Seller
has not been registered under the Securities Act, or applicable state securities
laws,  that such  Consideration  will be  acquired  by such  Seller  pursuant to
exemptions  from  the  registration  requirements  of  these  laws  and that the
reliance by the Buyer on these exemptions is predicated in part on such Seller's
representations  contained  in this  Agreement.  Such Seller has been advised by
Buyer that the  certificate or  certificates  representing  Consideration  to be
acquired by such Seller under this Agreement shall contain a legend stating that



                                       19
<PAGE>

the shares represented thereby have not been registered under the Securities Act
and referring to applicable restrictions on transferability.

     Section 4.6. Certain Sellers.  Carolyn C. Hindes and Theodore B. Hindes are
not employees of any of the Call America Companies.

                                    ARTICLE V
                 REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The  Buyer  hereby  represents  and  warrants  to each of the Call  America
Companies and the Sellers as follows:

     Section  5.1  Corporate   Organization;   Requisite  Authority  to  Conduct
Business;  Articles of  Incorporation  and By-Laws.  Sub is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware;  GST is a corporation  duly  organized,  validly  existing and in good
standing  under the federal  laws of Canada.  The Buyer has provided the Sellers
with true and complete copies of the certificate of incorporation  (certified by
the  Secretary  of State of the  State  of  Delaware  in the case of Sub and the
Director appointed under the Canada Business Corporation Act in the case of GST)
and By-laws of each of the GST Companies  (certified by the respective Secretary
of each of the GST  Companies) as in effect on the date hereof.  Each of the GST
Companies  has all corporate  power and authority to own,  operate and lease its
properties  and to carry on its  business  as the same is now  being  conducted,
except  where the  failure  to have such  power and  authority  would not have a
Material  Adverse Effect on any of the GST Companies.  Each of the GST Companies
is duly  qualified  or  licensed  to do  business  and is in good  standing as a
foreign  corporation in every  jurisdiction in which the conduct of its business
or the ownership or leasing of its properties  requires it to be so qualified or
licensed, except where the failure to be so qualified or licensed would not have
a Material Adverse Effect on the GST Companies.

     Section 5.2 Authority  Relative to and Validity of Agreements.  Each of the
GST Companies has full corporate power and authority to execute and deliver this
Agreement,  the Escrow Agreement and the Registration  Rights Agreement,  as the
case may be, to assume and perform its obligations  hereunder and thereunder and
to consummate the transactions  contemplated  hereby and thereby.  The execution
and  delivery  of  each  of  this  Agreement,   the  Escrow  Agreement  and  the
Registration  Rights  Agreement and the performance by each of the GST Companies
of its  obligations  hereunder  and  thereunder  has been  duly  authorized  and
approved  by its  respective  Board of  Directors,  as the  case may be,  and no
further action on the part of any of the GST Companies is necessary to authorize
the  execution  and delivery by it of, and the  performance  of its  obligations



                                       20
<PAGE>

under,  this  Agreement,  the  Escrow  Agreement  and  the  Registration  Rights
Agreement. There are no corporate, contractual,  statutory or other restrictions
of any kind upon the power and  authority of any of the GST Companies to execute
and deliver this Agreement,  the Escrow  Agreement and the  Registration  Rights
Agreement  and  to  consummate  the  transactions   contemplated  hereunder  and
thereunder and no Consent by any Regulatory  Authority is necessary to make this
Agreement,  the Escrow Agreement and the  Registration  Rights Agreement a valid
instrument  binding upon each of the GST Companies in accordance with its terms,
except any Consents that may be required by FCC and state telecommunications and
state  utilities  regulations  and  Consents and filings that may be required by
Canadian  federal law, the CGCL or the DGCL, or where any such  restrictions  or
the failure to obtain such Consents would not have a Material  Adverse Effect on
the GST  Companies.  This Agreement has been duly executed and delivered by each
of the  GST  Companies  and  constitutes,  and  the  Escrow  Agreement  and  the
Registration  Rights  Agreement will, when executed and delivered by each of the
Call  America  Companies  and the  Sellers in  accordance  with their terms will
constitute,  legal, valid and binding  obligations of each of the GST Companies,
enforceable  against  them in  accordance  with its  terms,  except  (i) as such
enforceability  may be  limited by or  subject  to any  bankruptcy,  insolvency,
reorganization,  moratorium or other similar laws  affecting  creditors'  rights
generally,  (ii) as such obligations are subject to general principles of equity
and (iii) as rights to indemnity  may be limited by federal or state  securities
laws or by public policy.

     Section  5.3  Required  Filings;  Consents.  Except  for  an  Amex  listing
application  with  respect to the  Consideration,  none of the GST  Companies is
required  to submit  any  notice,  report or other  filing  with any  Regulatory
Authority in connection  with the  execution,  delivery or  performance  of this
Agreement,  the Escrow Agreement and the Registration  Rights Agreement,  except
any filings that may be required under the CGCL, the DGCL, Canadian federal law,
the FCC and state  telecommunications  and state utilities  regulations or where
failure to so file would not have a Material Adverse Effect on the GST Companies
taken as a whole. The execution, delivery and performance or this Agreement, the
Escrow  Agreement  and  the  Registration  Rights  Agreement  by each of the GST
Companies party thereto and the  consummation of the  transactions  contemplated
hereby and thereby does not and will not (a)  conflict  with or violate any law,
regulation, judgment, order or decree binding upon any of the GST Companies, (b)
conflict with or violate any provision of its respective  charter or Bylaws,  or
(c) conflict  with or result in a breach of any  condition  or provision  of, or
constitute a Default under,  or result in the creation or imposition of any Lien
upon any properties or assets of any of the GST Companies  pursuant to, or cause
or permit the  acceleration  prior to maturity of any amounts  owing under,  any
Contract to which any of the GST  Companies  is a party or which is binding upon
any of the GST  Companies or by which any of its  properties  are bound,  except



                                       21
<PAGE>

where such  conflict,  violation,  breach on  default  would not have a Material
Adverse Effect on the GST Companies. The execution,  delivery and performance of
this Agreement by each of the GST Companies  party thereto and the  consummation
of the  transactions  contemplated  hereby  will not  result  in the loss of any
Permit  possessed by any of the GST Companies or give a right of  termination to
any party to any agreement or other instrument to which any of the GST Companies
is a party or by which any of its properties are bound except where such loss or
right would not have a Material  Adverse Effect on the GST Companies  taken as a
whole.

     Section  5.4  Capitalization.  (a)  The  authorized  capital  stock  of GST
consists of (i) an unlimited  number of GST Common  Shares,  21,170,923 of which
are issued and outstanding as of June 30, 1996, and (ii)  10,000,000  Preference
Shares,  none of which are issued and  outstanding.  The capital stock of GST is
duly  authorized  and all issued  capital stock has been duly and validly issued
and is  fully  paid  and  nonassessable  and  free  of  preemptive  rights.  The
Consideration  is duly  authorized and when issued in accordance  with the terms
and  conditions  of this  Agreement  shall be  validly  issued,  fully  paid and
nonassessable.  The  Consideration  is not subject to any  preemptive  rights or
other  similar  restrictions.  Except  as set  forth  in  the  SEC  Reports  (as
hereinafter  defined),  as of May  31,  1996  none  of  the  GST  Companies  had
outstanding, or was bound by or subject to, any Rights, and no shares of capital
stock of any of the GST Companies were reserved for issuance for any purpose.

     (b) The authorized  capital stock of Sub consists of 1,000 shares of common
stock,  100 of which are issued and  outstanding  as of the date hereof.  All of
such issued shares are owned beneficially and of record by GST.

     Section 5.5 SEC Reports and  Financial  Statements.  GST has filed with the
Securities  and  Exchange  Commission  (the  "SEC"),  and  has  heretofore  made
available  to the  Sellers  true and  complete  copies  of all  forms,  reports,
schedules,  statements  and  other  documents  required  to be filed by it since
January 1, 1995 under the  Securities  Act and the  Securities  Exchange  Act of
1934, as amended (the  "Exchange  Act") (as such  documents have been amended or
supplemented since the time of their filing,  collectively,  the "SEC Reports").
As of their respective dates, the SEC Reports (including without limitation, any
financial  statements  or  schedules  included  therein) (a) did not contain any
untrue  statement of a material fact required to be stated  therein or necessary
in order to make the statements  therein,  in light of the  circumstances  under
which they were made, not misleading,  and (b) complied in all material respects
with the applicable  requirements of the Securities Act and Exchange Act (as the
case may be) and all applicable  rules and  regulations  of the SEC  promulgated
thereunder.  Each of the consolidated  financial  statements included in the SEC



                                       22
<PAGE>

Reports  have  been  prepared  from,  and are in  accordance  with the books and
records of GST,  comply in all  material  respects  with  applicable  accounting
requirements  and with  the  published  rules  and  regulations  of the SEC with
respect  thereto,  have been prepared in accordance  with U.S. GAAP applied on a
consistent  basis during the periods involved (except as may be indicated in the
notes  thereto)  and fairly  present in all material  respects the  consolidated
financial  position  of GST and its  consolidated  subsidiaries  as of the  date
thereof and their consolidated results of operations and cash flows (and changes
in financial position, if any) for the periods presented therein.

     Section 5.6 No  Undisclosed  Liabilities.  Except as  described  in the SEC
Reports,  GST has no  Liabilities,  except as incurred in the ordinary course of
business, that would have a Material Adverse Effect on GST.

     Section 5.7 Broker.  Except for the engagement by GST of the Clark Company,
whose fees are to be paid solely by GST, no broker,  finder or investment banker
is entitled to any  brokerage or finder's fee or other  commission in connection
with the transactions contemplated hereby based upon the arrangements made by or
on behalf of any of the GST Companies.

     Section 5.8 Legal  Proceedings,  Claims,  Investigations,  etc. There is no
litigation pending, or to the Knowledge of GST,  threatened,  against any of the
GST Companies, or to Knowledge of GST, any director, officer or employee thereof
relating to their respective  business that would have a Material Adverse Effect
on the GST  Companies.  None of the  GST  Companies  has  been  informed  of any
violation of or default under,  any laws,  ordinances,  regulations,  judgments,
injunctions,  orders or decrees (including without  limitation,  any immigration
laws or regulations) of any court, governmental department,  commission, agency,
instrumentality  or  arbitrator  applicable  to the  business of each of the GST
Companies.  None of the GST  Companies  is  currently  subject to any Order that
would have a Material Adverse Effect on the GST Companies.

     Section 5.9 Vote  Required.  The vote of the holders of GST's capital stock
is not  required to approve the  issuance of the GST Common Stock in the Merger;
nor is it required to approve the Merger.

     Section  5.10  Statements  True and  Correct.  No  statement,  certificate,
instrument,  or other  writing  furnished  or to be  furnished by any of the GST
Companies to any of the Call America  Companies or the Sellers  pursuant to this
Agreement or any other  document,  agreement,  or instrument  referred to herein
contains or will contain any untrue  statement of material  fact or will omit to
state a material fact necessary to make the statements  therein, in light of the
circumstances  under  which  they  were  made,  not  misleading.   None  of  the



                                       23
<PAGE>

information supplied or to be supplied by any of the GST Companies for inclusion
in any documents to be filed by a GST Company with any  Regulatory  Authority in
connection with the transactions  contemplated  hereby,  will, at the respective
time such  documents  are  filed,  be false or  misleading  with  respect to any
material  fact,  or omit to  state  any  material  fact  necessary  to make  the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading.  All documents that any of the GST Companies is responsible for
filing  with any  Regulatory  Authority  in  connection  with  the  transactions
contemplated  hereby will comply as to form in all  material  respects  with the
provisions of applicable Law.

     Section  5.11  Accounting,  Tax  and  Regulatory  Matters.  None of the GST
Companies,  or, to the  Knowledge  of GST, any  Affiliate  thereof has taken any
action  that  is  reasonably  likely  to (i)  prevent  any of the  Mergers  from
qualifying a reorganization within the meaning of Section 368(a) of the Internal
Revenue  Code,  or (ii)  materially  impede or delay  receipt of any Consents of
Regulatory Authorities or result in the imposition of a condition or restriction
which could materially adversely impact the economic or business benefits of the
transaction contemplated by this Agreement.

     Section  5.12 No Prior  Activities.  Except  for  obligations  incurred  in
connection  with  its  incorporation  or  organization  or the  negotiation  and
consummation of this Agreement and the transactions contemplated hereby, Sub has
neither  incurred any  obligation  or  liability  nor engaged in any business or
activity  of any  type or kind  whatsoever  or  entered  into any  agreement  or
arrangement with any person.

                                   ARTICLE VI
                COVENANTS OF THE CALL AMERICA AND GST COMPANIES

     Section 6.1 Covenants of the Call America  Companies  Regarding  Conduct of
Business  Operations  Pending the Closing.  Except as disclosed on Schedule 6.1,
each of the Call America Companies covenants and agrees that between the date of
this  Agreement and the Closing Date,  each of the Call America  Companies  will
carry on its business in the ordinary  course and consistent with past practice,
will use its best efforts to (i) preserve its respective  business  organization
intact, (ii) retain the services of its respective present employees,  and (iii)
preserve the good will of its respective suppliers and customers,  and will not,
except in the ordinary course of business,  purchase,  sell, lease or dispose of
any  property  or  assets  or  incur  any  liability  or enter  into  any  other
extraordinary  transaction.  Except as  disclosed  on  Schedule  6.1,  by way of
amplification  and not  limitation,  none of the Call America  Companies  shall,
between the date of this Agreement and the Closing Date, directly or indirectly,
do any of the following without the prior written consent of the Buyer:



                                       24
<PAGE>

     (a) (i) issue, sell, pledge,  dispose of, encumber,  authorize,  or propose
the issuance,  sale,  pledge,  disposition,  encumbrance or authorization of any
shares of its capital stock of any class, or any options, warrants,  convertible
securities  or other  rights of any kind to acquire  any  shares of its  capital
stock,  or any other  ownership  interest;  (ii)  amend or  propose to amend its
Articles  of  Incorporation;  (iii)  split,  combine  or  reclassify  any of its
outstanding  shares,  or  declare,  set  aside  or pay  any  dividend  or  other
distribution payable in cash, stock, property or otherwise with respect thereto;
or (iv) redeem, purchase or otherwise acquire any shares of its capital stock;

     (b) (i) make any acquisition (by merger,  consolidation,  or acquisition of
stock or assets) of any corporation,  partnership or other business organization
or division  thereof;  (ii) except in the  ordinary  course of business and in a
manner consistent with past practice,  sell, pledge,  dispose of, or encumber or
authorize or propose the sale, pledge,  disposition or encumbrance of any of its
assets;  (iii)  other  than  under  any  existing  credit  facility,  incur  any
indebtedness for borrowed money, assume, guarantee,  endorse or otherwise become
responsible for the obligations of any other  individual,  partnership,  firm or
corporation, or make any loans or advances to any individual, partnership, firm,
or corporation,  or enter into any contract or agreement to do so, except in the
ordinary  course of business and consistent  with past practice;  (iv) authorize
any single capital expenditure or series of related capital expenditures each of
which is in excess of $50,000; or (v) release or assign any indebtedness owed to
it or any claims  held by it,  except in the  ordinary  course of  business  and
consistent with past practice;

     (c) take any action other than in the ordinary  course of business and in a
manner  consistent with past practice with respect to the grant of any severance
or  termination  pay  (otherwise  than pursuant to its policies in effect on the
date  hereof) or with  respect to any  increase  of benefits  payable  under its
severance or termination pay policies in effect on the date hereof;

     (d) make any  payments  (except in the  ordinary  course of business and in
amounts  and in a manner  consistent  with past  practice)  under  any  Employee
Benefit Plan to any employee,  independent contractor or consultant,  enter into
any new  Employee  Benefit  Plan  or any  new  consulting  agreement,  grant  or
establish any awards under such Employee Benefit Plan or agreement,  in any such
case  providing  for payments or awards having a fair market value of more than,
$10,000, or adopt or otherwise amend any of the foregoing;

     (e)  change  any  accounting  policies  or  procedures  (including  without
limitation  its  procedures  with  respect to the payment of accounts  payable),



                                       25
<PAGE>

other than such changes deemed necessary to comply with U.S. GAAP or required as
a result of a change in law;

     (f) enter into or terminate any material  contract or agreement or make any
material change in any of its material  contracts or agreements,  other than (i)
Contracts  entered  into,  and  amendments  thereof,  in the ordinary  course of
business,  (ii) relating to  indebtedness  incurred in clause  (b)(iii) above or
(iii) agreements, if any, relating to the transactions contemplated hereby;

     (g) enter into any contract or commitment  for network  capacity  services,
switching equipment or services in excess of $50,000; or

     (h) take,  or agree in writing or otherwise to take,  any of the  foregoing
actions or any action which would make any of its  representations or warranties
contained in this  Agreement  untrue or incorrect in any material  respect as of
the date when made or, except for the representations  and warranties  contained
in Section 3.8 hereof, as of a future date.

     Section 6.2 No Other  Negotiations.  Each of the Call America Companies and
the Sellers agrees that until the termination of this Agreement  pursuant to the
provisions  of Article XI hereof  (the  "Termination  Date"),  neither  the Call
America Companies nor the Sellers will, nor will it permit any of its affiliates
(including any officers,  directors,  employees,  financial  advisors,  brokers,
stockholders  or any other person acting on their behalf) to, (i) enter into any
agreement  with a third  party with  respect  to the  acquisition,  directly  or
indirectly,  of shares or other securities of any of the Call America  Companies
or a material part of their  respective  assets,  (ii) enter into discussions or
negotiations with a third party regarding such an agreement,  or (iii) provide a
third party with  general  access to their books,  records or employees  for the
purpose of enabling such third party to conduct a due diligence investigation of
the legal, financial or business condition of them.

     Section  6.3 Conduct of Business  of GST.  Except as  contemplated  by this
Agreement, during the period from the date hereof to the Closing Date, GST will,
and will cause each of its  subsidiaries  to, conduct their  operations  with no
less  diligence  and  effort  than  would  be  applied  in the  absence  of this
Agreement,  seek to preserve  intact its current  business  organizations,  keep
available  the service of its current  officers and  employees  and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that  goodwill and ongoing  businesses  shall be unimpaired at the
Closing  Date.  Without  limiting the  generality  of the  foregoing,  except as
otherwise  expressly  provided in this  Agreement,  prior to the  Closing  Date,



                                       26
<PAGE>

neither GST nor any of its subsidiaries  will, without the prior written consent
of Call America:

          (a)  knowingly  take any  action  that  would  result in a failure  to
     maintain the trading of the GST Common Stock on the Amex;

          (b) adopt or propose to adopt any amendment to its charter  documents,
     which would have an adverse impact on the  consummation of the transactions
     contemplated by this Agreement or the value of the Consideration;

          (c) take, or agree in writing or otherwise to take, any of the actions
     described  in Sections  6.3(a)  through  6.3(b)  hereof or any action which
     would make any of the  representations  or  warranties  of GST contained in
     this Agreement untrue or incorrect.

                                   ARTICLE VII
                              ADDITIONAL COVENANTS

     Section 7.1  Covenants of the Call America  Companies,  the Sellers and the
GST  Companies.  Each of the Call  America  Companies,  the  Sellers and the GST
Companies covenants and agrees:

     (a)  Reasonable  Efforts.  To  proceed  diligently  and use its  reasonable
efforts to take or cause to be taken all  actions  and to do or cause to be done
all things  necessary,  proper and  advisable  to  consummate  the  transactions
contemplated  by this  Agreement,  including  the  execution and delivery of the
Escrow  Agreement,   the  Registration  Rights  Agreement,  the  Non-Competition
Agreements and the Employment  Agreement and  satisfaction  of all conditions to
the Merger;  provided,  however, that no party shall be required to pay money to
any third party for the purpose of obtaining any Consent to the transaction.

     (b)  Compliance.  Subject to Section 7.7 hereof,  to comply in all material
respects with all applicable  rules and regulations of any Regulatory  Authority
in connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby; to use all reasonable efforts to obtain in
a timely  manner all necessary  waivers,  consents and approvals and to take, or
cause to be taken,  all other actions and to do, or cause to be done,  all other
things  necessary,  proper or  advisable  to  consummate  and make  effective as
promptly  as  practicable  the  transactions  contemplated  by  this  Agreement;
provided,  however,  that no party  shall be  required to pay money to any third
party for the purpose of obtaining any Consent to the transaction.

     (c) Notice. To give prompt notice to the other party of (i) the occurrence,
or failure to occur, of any event whose occurrence or failure to occur, would be
likely to cause any representation or warranty contained in this Agreement to be


                                       27
<PAGE>

untrue or incorrect  in any material  respect as of the date hereof or as of the
Closing Date,  and (ii) any material  failure on its part, or on the part of any
of its officers,  directors,  employees or agents, to comply with or satisfy any
covenant,  condition  or  agreement  to be  complied  with  or  satisfied  by it
hereunder;  provided,  however,  that the  delivery of any such notice shall not
limit  or  otherwise  affect  the  remedies  available  hereunder  to the  party
receiving such notice.

     (d)  Access.  To cause  its  affiliates,  officers,  directors,  employees,
auditors and agents to afford the  officers,  employees  and agents of the other
party hereto complete access at all reasonable times and upon reasonable  notice
to its  properties,  offices and other  facilities and to all books and records,
and shall furnish such other party with all financial,  operating and other data
and  information  as the other party through its officers,  employees or agents,
may  reasonably  request,  provided  that the party  providing  such  access and
furnishing  such data and information to the other party incurs no cost in doing
so.

     (e)  Confidentiality.  All access and information  obtained or furnished in
connection with the transactions contemplated by this Agreement shall be subject
to the terms and  conditions of those certain  Confidentiality  Agreements  (the
"Confidentiality  Agreements")  dated July 17, 1996, by and between GST and Call
America.

     (f) Announcements.  That all announcements,  reports,  statements and press
releases  to the  public,  the  trade or the  press  or any  other  third  party
concerning  the  transactions  contemplated  by this  Agreement  (including  any
disclosure  by GST of the  transaction  or any  information  or  financial  data
relating to the Call  America  Companies in any filing with the  Securities  and
Exchange  Commission)  shall be mutually agreed to by Call America and the Buyer
before the issuance or the making thereof and, subject to the advice of counsel,
no party shall issue any such announcement,  report, statement or press releases
or make any such public statement prior to such mutual agreement,  except as may
be required by law. Copies of any such announcement, report, statements or press
release,  including any  announcement  or  disclosure  required by law or by any
Governmental  Authority,  shall be delivered to each of the parties hereto prior
to release.

     Section 7.2 Tax Treatment. Each of the parties hereto undertakes and agrees
to use its reasonable  efforts to cause the Merger,  and to take no action which
would  cause  any  of  the  Mergers   not,  to  qualify  for   treatment   as  a
"reorganization"  within the meaning of Section  368(a) of the Internal  Revenue
Code for federal income tax purposes. On or before the Closing Date, GST and Sub
shall execute and deliver to Call America a tax  certificate  in a form mutually
agreed upon by the parties hereto (the "GST Tax Certificate"), which GST and Sub



                                       28
<PAGE>

acknowledge  is a condition to the ability of Call  America's  counsel to render
the tax opinion contemplated by Section 8.9.

     Section 7.3 Employee Benefits and Contracts.  Following the Effective Time,
GST  shall  provide  all  employees  of the Call  America  Companies  (including
officers of the Call America  Companies  who become  employees of the  Surviving
Corporation)  employee  benefits under employee benefit and welfare plans (other
than stock option or other plans involving the potential  issuance of GST Common
Stock),  on terms and conditions  which when taken as a whole are  substantially
similar to those currently provided by GST to its similarly situated  employees.
For purposes of participation, vesting and (except in the case of GST retirement
plans) benefit  accrual under GST's employee  benefit plans,  the service of the
employees of the GST Companies  prior to the Effective  Time shall be treated as
service with GST.  GST also shall cause the  Surviving  Corporation  to honor in
accordance  with their terms all  employment,  severance,  consulting  and other
compensation  Contracts  disclosed  in  Schedule  3.15  between  any of the Call
America  Companies  and any  current or former  director,  officer,  or employee
thereof,  and all provisions for vested  benefits or other vested amounts earned
or accrued through the Effective Time under the Employee Benefit Plans.

     Section 7.4 Guarantee of Performance. GST hereby guarantees the performance
by Sub of its obligations under this Agreement.

     Section 7.5 FABRIK  Communications,  Inc. Following the Effective Time, the
Surviving  Corporation  shall, and GST and Jeffrey Buckingham (for as long as he
is employed by the  Surviving  Corporation)  agree to use their best  efforts to
cause the Surviving  Corporation to, (i) comply with the terms and conditions of
that certain  Services  Agreement  between FABRIK and Call America dated October
21, 1994, (ii) not take any act, or omit to take any action,  which would result
in a Default  thereunder or which would give rise to or constitute a Termination
Event (as such term is defined in the Stock  Purchase  Agreement  between FABRIK
and Call  America  (the "FABRIK  Agreement"))  or  otherwise  cause the Purchase
Option (as defined in the FABRIK  Agreement)  to become  exercisable,  (iii) not
sell,  assign,  or transfer  the shares of common  stock of FABRIK (the  "FABRIK
Shares") owned by the Surviving Corporation, or grant any rights to acquire such
shares  to any  person  and (iv) not take any act,  or omit to take any  action,
which would create any lien, charge or encumbrance on the FABRIK Shares.

     Section 7.6 Stock Exchange Listing. GST shall use all reasonable efforts to
cause the shares of GST Common  Stock to be issued in the Merger to be  approved
for listing on the Amex,  subject to official  notice of issuance,  prior to the
Closing Date.



                                       29
<PAGE>

     Section 7.7 Certain  Regulatory  Approvals.  GST and GST Sub  covenant  and
agree to  proceed  diligently  and use their  reasonable  efforts to obtain in a
timely manner all necessary waivers,  consents and approvals with respect of the
FCC  and  state   telecommunications  and  utilities  regulations  in  order  to
consummate and make effective the transactions contemplated by this Agreement.

     Section 7.8 Certain Agreements regarding the Shares (a) Each of the Sellers
shall  waive any all  pre-emptive  rights to  purchase  the  Shares of the other
Sellers under all agreements and arrangements,  including,  without  limitation,
the  Buy/Sell  Agreement  by and among  certain of the Sellers and Call  America
dated April 18, 1989 and the  Shareholders'  Agreement,  and the Sellers who are
parties to the Shareholders'  Agreement shall cause the Shareholders'  Agreement
to be terminated and null and void before the Closing Date.

     (b) The  Sellers  and the Call  America  Companies  shall  obtain from Mark
Scully,  without any cost to the Call America  Companies,  the waiver of any and
all  rights,   including,   without  limitation  pursuant  to  the  acceleration
paragraphs  of the  Promissory  Notes  dated May 1, 1995 from  Private  Exchange
Network,  CA Fresno and CA Bakersfield to Mark Scully,  to (i) acquire shares of
GST  Common  Stock in  connection  with the  transactions  contemplated  by this
Agreement  or  (ii)  participate  in  the  transactions   contemplated  by  this
Agreement,  except for the payment in cash of the unpaid  principal  and accrued
and unpaid  interest  on such Notes to the extent that such  amounts  become due
thereunder.

     Section 7.9 Certain  Insurance  Policies.  Call  America  will use its best
efforts to transfer on or before the Closing  Date,  at no cost to Call America,
the life insurance policies for the benefit of the Sellers set forth on Schedule
3.14(1), provided however, that each Seller to whom such a policy is transferred
shall be  responsible  for the  payment  of  premiums  and all  other  costs and
expenses relating to such insurance policy after the Closing Date.  

                                  ARTICLE VIII
                      CONDITIONS PRECEDENT TO OBLIGATIONS
                 OF THE CALL AMERICA COMPANIES AND THE SELLERS

     The  obligations  of the Call  America  Companies  and  Sellers  under this
Agreement  are subject to the  satisfaction,  on or prior to the  Closing  Date,
unless waived in writing, of each of the following conditions:

     Section 8.1  Representations  and Warranties True. The  representations and
warranties of each of the GST  Companies  contained in this  Agreement  shall be
true and correct in all material respects as of the date when made and at and as
of the Closing Date,  except as and to the extent that the facts and  conditions
upon which such  representations and warranties are based are expressly required



                                       30
<PAGE>

or permitted to be changed by the terms  hereof,  with the same force and effect
as if made on and as of the Closing Date, and Call America shall have received a
certificate  to that  effect  and as to the  matters  set forth in  Section  8.2
hereof, dated the Closing Date, from the President or Chief Executive Officer of
GST.

     Section 8.2 Performance of Covenants.  Each of the GST Companies shall have
performed or complied in all material  respects with all agreements,  conditions
and covenants  required by this Agreement to be performed or complied with by it
on or before the Closing Date.

     Section 8.3 No Proceedings.  No statute, rule or regulation shall have been
enacted and no preliminary or permanent  injunction or other order  (including a
temporary  restraining  order) of any  state,  federal  or local  court or other
governmental  agency or of any  foreign  jurisdiction  shall have been issued or
entered  and  remain  in  effect  which   prohibits  the   consummation  of  the
transactions  which are the subject of this Agreement or prohibits the Merger or
operation of the business of any of the GST Companies.

     Section 8.4 Escrow Agreement. The Escrow Agreement shall have been executed
by the parties thereto.

     Section 8.5 Employment Agreements. The Employment Agreement shall have been
executed by the parties thereto.

     Section  8.6  Registration   Rights  Agreement.   The  Registration  Rights
Agreement shall have been executed by the parties thereto.

     Section 8.7 Consents and Approvals. All filings and registrations with, and
notifications to, all federal, state, local and foreign authorities required for
consummation of the transactions  contemplated by this Agreement shall have been
made,  and all consents,  approvals and  authorizations  of all federal,  state,
local and  foreign  authorities  and parties to  material  contracts,  licenses,
agreements  or  instruments   required  for  consummation  of  the  transactions
contemplated  by this  Agreement  the  absence  of which  would  have a Material
Adverse Effect on the Call America  Companies taken as a whole,  shall have been
received and shall be in full force and effect.

     Section 8.8 Opinions of Counsel.  Call  America and the Sellers  shall have
received the opinion, dated the Closing Date in form reasonably  satisfactory to
Call  America,  of (i)  O'Neill  and  Company,  Canadian  counsel  to the Buyer,
substantially to the effect that the  Consideration has been duly authorized and
validly  issued and is fully-paid  and  nonassessable  and (ii) Olshan  Grundman
Frome & Rosenzweig LLP,  counsel to the Buyer (which opinion shall be limited to
the United States federal law, DGCL and the laws of the State of New York and to



                                       31
<PAGE>

the extent that the laws of any other state or  jurisdiction  or the  commercial
laws of Delaware  are  applicable,  such counsel is entitled to assume that such
laws are the same as the laws of the  State of New  York)  substantially  to the
effect that:  (a) each of the GST  Companies is a  corporation  duly  organized,
validly  existing and in good  standing  under the laws of its  jurisdiction  of
incorporation;  (b) each of the GST Companies  has the corporate  power to enter
into this  Agreement,  the Escrow  Agreement,  the Employment  Agreement and the
Registration  Rights  Agreement,  as the  case  may be,  and to  consummate  the
transactions  contemplated hereby and thereby; (c) the execution and delivery of
this  Agreement,   the  Escrow  Agreement,  the  Employment  Agreement  and  the
Registration  Rights  Agreement,   and  the  consummation  of  the  transactions
contemplated  hereby and  thereby  have been duly  authorized  by all  requisite
corporate  action on the part of each of the GST  Companies  as the case may be;
(d) each of this Agreement,  the Escrow Agreement,  the Employment Agreement and
the Registration Rights Agreement,  has been duly executed and delivered by each
of the GST Companies, as the case may be, and (assuming that each is a valid and
binding  obligation  of the  other  parties  thereto)  is a  valid  and  binding
obligation  of each of the GST  Companies  enforceable  against  each of them in
accordance with its terms, subject to customary exceptions;  and (e) none of the
execution,  delivery or performance of this Agreement, the Escrow Agreement, the
Employment  Agreement and the  Registration  Rights Agreement by each of the GST
Companies, as the case may be, and the consummation by each of the GST Companies
of the transactions herein and therein contemplated,  conflict with or result in
a breach of, or default under, their respective certificates of incorporation or
bylaws or, to such counsel's knowledge,  any material indenture,  mortgage, deed
of trust,  voting trust  agreement,  stockholders  agreement,  note agreement or
other material agreement or other material  instrument to which any of them is a
party or by which  any of them is bound  or to which  any of their  property  is
subject.

     Section  8.9 Tax  Matters.  The Sellers  shall have  received an opinion or
other advice of counsel and/or accountants,  in form reasonably  satisfactory to
the Sellers (the "Tax Opinion"), to the effect that, for U.S. federal income tax
purposes,  the  exchange  in the  Merger  of  Common  Stock of the Call  America
Companies  for  GST  Common  Stock  will  not  give  rise to gain or loss to the
shareholders of any of the Call America  Companies with respect to such exchange
(except to the extent of any cash received).

     Section 8.10 Material  Changes.  Since April 1, 1996,  there shall not have
been  any  Material  Adverse  Change  in  the  business,  operations,  financial
condition,  assets,  liabilities,  prospects or regulatory status of GST and its
subsidiaries,  taken as a whole;  provided,  however, that the incurrence by GST



                                       32
<PAGE>

and  its  subsidiaries  of  losses  from  operations  shall  not,  taken  alone,
constitute any such Material Adverse Change.

     Section 8.11 Release of Loan Guarantees.  As of the Closing Date, GST shall
have  obtained  the  release of the Sellers  listed on  Schedule  8.11 hereto as
guarantors of the loans described therein, and there shall be delivered to those
Sellers  documentation  to that effect which is satisfactory to them in form and
substance.

     Section 8.12 Listing of Shares.  The shares of GST Common Stock issuable to
the Sellers pursuant to this Agreement shall have been authorized for listing on
the Amex, subject to official notice of issuance.

                                   ARTICLE IX
                             CONDITIONS PRECEDENT TO
                        OBLIGATIONS OF THE GST COMPANIES

     The  obligations  of the GST Companies  under this Agreement are subject to
the satisfaction,  on or prior to the Closing Date, unless waived in writing, of
each of the following conditions:

     Section 9.1  Representation  and Warranties True. The  representations  and
warranties of each of the Call America  Companies  and the Sellers  contained in
this Agreement shall be true and correct in all material respects as of the date
when made and at and as of the Closing Date (except for the  representations and
warranties  contained  in  Section  3.8  hereof,  which need only to be true and
correct as of the date  hereof),  except as and to the extent that the facts and
conditions  upon  which  such  representations  and  warranties  are  based  are
expressly  required or permitted to be changed by the terms hereof with the same
force and effect as if made on and as of the Closing  Date,  and the Buyer shall
have  received a  certificate  to that effect and as to the matters set forth in
Section  9.2  hereof,  dated  the  Closing  Date,  from the  President  or Chief
Executive Officer of Call America and from each of the Sellers.

     Section 9.2  Performance of Covenants.  Each of the Call America  Companies
and the Sellers shall have  performed or complied in all material  respects with
all  agreements,  conditions  and  covenants  required by this  Agreement  to be
performed or complied with by them on or before the Closing Date.

     Section 9.3 No Proceedings.  No statute, rule or regulation shall have been
enacted and no preliminary or permanent  injunction or other order  (including a
temporary  restraining  order) of any  state,  federal  or local  court or other
governmental  agency or of any  foreign  jurisdiction  shall have been issued or
entered  and  remain  in  effect  which   prohibits  the   consummation  of  the
transactions  which are the subject of this Agreement or prohibits the Merger or



                                       33
<PAGE>

operation of the business of any of the Call America Companies.

     Section 9.4 Consents and Approvals. All filings and registrations with, and
notifications to, all federal, state, local and foreign authorities required for
consummation of the transactions  contemplated by this Agreement shall have been
made,  and all consents,  approvals and  authorizations  of all federal,  state,
local and  foreign  authorities  and parties to  material  contracts,  licenses,
agreements  or  instruments   required  for  consummation  of  the  transactions
contemplated  by this  Agreement,  the  absence  of which  would have a Material
Adverse  Effect on the GST  Companies  shall have been  received and shall be in
full force and effect.

     Section 9.5 Escrow Agreement. The Escrow Agreement shall have been executed
by the parties thereto.

     Section 9.6 Employment Agreements. The Employment Agreement shall have been
executed by the parties thereto.

     Section  9.7  Registration   Rights  Agreement.   The  Registration  Rights
Agreement shall have been executed by the parties hereto.

     Section 9.8  Non-Competition  Agreements.  Each of the  Sellers  other than
Jeffrey Buckingham, Theodore B. Hindes and Carolyn C. Hindes shall have executed
a non-competition agreement substantially in the form of Annex D hereto.

     Section 9.9 Resignation of Officers and Directors.  GST shall have received
the  resignation  of each of the  officers  and  directors  of Call  America  as
required by GST.

     Section 9.10 Opinion of Counsel.  The Buyer shall have received the opinion
of Gibson,  Dunn & Crutcher LLP,  counsel to the Call America  Companies  (which
opinion shall be limited to the United States  federal law, DGCL and the laws of
the State of  California  and to the extent  that the laws of any other state or
jurisdiction or the commercial laws of Delaware are applicable,  such counsel is
entitled  to  assume  that  such  laws are the same as the laws of the  State of
California),  dated the Closing Date,  in form  reasonably  satisfactory  to the
Buyer,  substantially to the effect that: (i) each of the Call America Companies
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California; (ii) each of the Call America Companies has the
corporate power to enter into this Agreement and to consummate the  transactions
contemplated  hereby; (iii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby has been duly authorized by
all  requisite  corporate  action  taken on the part of each of the Call America
Companies  party  thereto;  (iv)  this  Agreement  has been  duly  executed  and



                                       34
<PAGE>

delivered by each of the Call America Companies and (assuming that it is a valid
and  binding  obligation  of the other  parties  thereto) is a valid and binding
obligation  of each of the Call America  Companies  enforceable  against each of
them in  accordance  with its terms,  subject to customary  exceptions;  (v) the
shares  of  Common  Stock  of  each  of the  Call  America  Companies  are  duly
authorized,  validly issued, fully paid and nonassessable,  and (vi) none of the
execution, delivery or performance of this Agreement by each of the Call America
Companies of the transactions  herein and therein  contemplated,  to the best of
such  counsel's  knowledge,  conflict  with or result in a breach of, or default
under, their respective Certificates of Incorporation or Bylaws or any Contracts
identified with an asterisk on Schedule 3.15 hereto.

     Section 9.11 Material Changes.  Except as disclosed on Schedule 9.11, since
May 1,  1996,  there  shall not have  been any  Material  Adverse  Change in the
business,  operations,  financial condition,  assets, liabilities,  prospects or
regulatory status of the Call America Companies, taken as a whole.

     Section 9.12 Waivers. The Sellers and the Call America Companies shall have
obtained  the  waivers  contemplated  by  Section  7.8 (b) and  there  shall  be
delivered to GST  documentation  to that effect which is  satisfactory to GST in
form and substance.

                                    ARTICLE X
                                 INDEMNIFICATION

     Section  10.1  Indemnification  by the  Sellers.  Subject to the limits set
forth in this Article X, the Sellers agree, jointly and severally, to indemnify,
defend and hold the Buyer and each of its directors  and officers  harmless from
and against any and all loss,  liability,  damage, costs and expenses (including
interest, penalties and attorneys' fees) (collectively, "Losses") that the Buyer
or any of its affiliates may incur or become subject to arising out of or due to
(i) the claims of any broker or finder  engaged by the Sellers (other than those
of the Clark Company  which shall borne  entirely by GST) and (ii) any breach of
any  representation  or the breach of any  warranty  of any of the Call  America
Companies  or any  Seller  contained  in  Article  III  or  Article  IV of  this
Agreement.  The Sellers will reimburse the Buyer and each controlling person for
any legal or any other expenses  reasonably  incurred by them in connection with
investigating  or  defending  any  such  loss,  claim,   liability,   action  or
proceeding.

     Section 10.2  Indemnification by the Buyer. Subject to the limits set forth
in this  Article X, the Buyer agrees to  indemnify,  defend and hold each Seller
harmless  from and against any and all Losses that the Seller or its  affiliates
may incur or become  subject to  arising  out of or due to (i) the claims of any
broker or finder  engaged  by any of the GST  Companies;  (ii) any breach of any



                                       35
<PAGE>

representation  or the  breach  of any  warranty  of  any of the  GST  Companies
contained in Article V of this Agreement; (iii) any tax liability of the Sellers
incurred in  connection  with the Merger;  (iv) any  personal  injury,  death or
property damage attributable to products manufactured,  processed or sold by any
of the Call  America  Companies  and which are sold to any third party after the
Closing Date and (v) any breach of the covenant of the GST  Companies  contained
in  Section  7.5 of this  Agreement  unless  such  breach is  caused by  Jeffrey
Buckingham. The Buyer will reimburse the Sellers for any legal or other expenses
reasonably  incurred by them in connection with  investigating  or defending any
such loss, claim, liability, action or proceeding.

     Section 10.3 Special Indemnification for Tax Matters.

     (a) The GST  Companies  understand  and  acknowledge  that the  Sellers are
entering into the transactions contemplated hereby on the understanding that the
conditions set forth in Treasury Regulation ss.ss.  1.367(a)-3T(c)(l)(i),  (ii),
(iii) and (iv)(A) will be satisfied  with respect to each merger  comprising the
Merger and with  respect to each  Seller,  as  applicable,  that  following  the
Closing,  Buyer will cause  Call  America,  as  successor  to each Call  America
Company,  to comply with the reporting  requirements of Treasury  Regulation ss.
1.367(a)-3T(c)(4),  and that following the Closing the GST Companies will comply
with such other  requirements  as may be  necessary in order to ensure that each
merger  constitutes a  "reorganization"  within the meaning of Section 368(a) of
the Internal  Revenue Code. The GST Companies hereby agree to indemnify and hold
harmless  each Seller from and against any cost,  expense,  liability  and other
damages,  including,  but not limited to, attorneys and accountants fees, taxes,
interest  and  penalties,  arising  from or as a result of any of the Mergers of
Sub,  CA  Bakersfield  and CA  Fresno  into  Call  America  and the  Merger  not
qualifying  as a  "reorganization"  within the meaning of Section  368(a) of the
Code by reason of (a) the  failure  to  satisfy  the  requirements  of  Treasury
Regulation  ss.  1.367(a)-3T(c)(l)(i),  (ii) or (iii),  (b) the treatment of any
Seller as a  "five-percent  transferee  shareholder,"  as  defined  in  Treasury
Regulation ss. 1.367(a)-3T(c)(6)(ii),  (c) the failure of Call America on behalf
of each Call America Company,  to file on a timely basis and in a correct manner
the statement  described in Treasury Regulation ss.  1.367(a)-3T(c)(4),  (d) the
failure  by the GST  Companies,  on  behalf  of each  Seller,  to file  with the
Internal Revenue Service in a timely and correct manner the information required
by Treasury Regulation ss. 1.6038B-1T,  or (e) the failure of any such merger to
satisfy the requirements for a "reorganization"  as defined in Section 368(a) of
the Internal Revenue Code by virtue of any action or inaction of any GST Company
and, following the Effective Time, Call America.

     (b) The  indemnification  provided  under  this  Section  10.3 shall not be
reduced by any tax benefit arising from an increase in the tax basis of a Seller



                                       36
<PAGE>

in such Seller's  shares of GST Common Stock received in the Merger by virtue of
a merger not  constituting  a  "reorganization"  within  the  meaning of Section
368(a) of the Internal Revenue Code unless and until such benefit is realized in
the form of a refund or a reduction in taxes otherwise actually payable.

     Section 10.4 Survival.  The  representations  and warranties of each of the
Call America  Companies and the Sellers set forth in Articles III and IV of this
Agreement  shall survive the Closing until the first  anniversary of the Closing
Date.  The  representations  and  warranties  of the GST  Companies set forth in
Article  V  of  this  Agreement  shall  survive  the  closing  until  the  first
anniversary  of the Closing Date.  The  covenants and  agreements of the parties
shall not survive the Closing Date,  except for the covenants and agreements set
forth under this Article X and Sections 7.3 and 7.5.

     Section 10.5 Limitations.  (a) No party shall assert, and no party shall be
liable for,  any claim  against  the other for  indemnification  hereunder  with
respect  to any  inaccuracy  or  breach  of  such  warranties,  representations,
covenants  or  agreements  unless and until the amount of all such claims  shall
exceed on a cumulative basis $75,000, and then only to the extent such claim for
indemnification  exceeds  that  amount;  provided,  however,  that a  claim  for
indemnification  hereunder with respect to any breach of the covenants contained
in Section 7.5 shall not be subject to any threshold.

     (b) All  representations and warranties made by the parties herein shall be
deemed  to  have  been  relied  upon  notwithstanding  any  investigation.   The
liability,  including expenses, of the Sellers pursuant to Section 10.1 shall be
limited to the return to GST of the Escrow  Shares.  No Seller shall be directly
liable  to GST or any other  indemnified  party  for any  indemnification  under
Section 10.1 and GST  acknowledges  that the indemnified  parties' sole recourse
for any Losses for which they are entitled to indemnification under Section 10.1
shall be the return of the Escrow  Shares.  For  purposes of this Article X, the
fair market  value of one share of GST Common  Stock shall be the closing  sales
price of a share of GST Common Stock on the AMEX (as reported by The Wall Street
Journal or, if not reported thereby, by any other  authoritative  source) on the
date of the Effective Time (the "Effective  Date").  In the event GST or another
party to be indemnified pursuant to Section 10.1 suffers any Losses for which it
is  entitled  to  indemnification,  the  Escrow  Agent  shall,  subject  to  the
procedures  set  forth  in the  Escrow  Agreement,  deliver  to the  party to be
indemnified out of escrow the lesser of: (a) the number of the Escrow Shares (in
whole shares) that has an aggregate market value  (determined as provided above)
most nearly equal to the amount of the Losses thus to be  satisfied,  or (b) all
of the Escrow Shares.  If any  distribution  referred to in this Section 10.5(b)



                                       37
<PAGE>

involves  fewer than all of the Escrow  Shares,  it shall be allocated  pro rata
against the Escrow Shares therein based on the Escrow Shares  beneficially owned
by each Seller. The liability, including expenses, of the GST Companies pursuant
to Sections  10.2 and 10.3 shall not exceed the fair market  value of the Escrow
Shares on the Effective Date and shall be payable in cash.

     (c) Buyer  acknowledges  and agrees that,  from and after the Closing,  its
sole and  exclusive  remedy with  respect to any and all claims  relating to the
subject  matter  of this  Agreement  shall be  pursuant  to the  indemnification
provisions  set forth in this  Article X. In  furtherance  of and subject to the
foregoing,  Buyer hereby waives, from and after the Closing Date, to the fullest
extent permitted under applicable law, any and all rights,  claims and causes of
action (other than claims of, or causes of action  arising from,  fraud) it, the
GST  Companies,  or any of their  subsidiaries  may  have  against  the  Sellers
relating to the subject matter of this  Agreement  arising under or based on any
Federal,  state  or  local  statute,  law,  ordinance,  rule  or  regulation  or
otherwise.

     Section  10.6 Third Party  Claims.  In order for a party (the  "indemnified
party") to be entitled to any indemnification  provided for under this Agreement
in respect of,  arising out of, or involving a claim or demand or written notice
made by any third party  against the  indemnified  party (a "Third Party Claim")
after the Closing  Date,  such  indemnified  party must notify the  indemnifying
party (the  "indemnifying  party") in writing  and in  reasonable  detail of the
Third Party  Claim  within 30 business  days after  receipt by such  indemnified
party of written  notice of the Third Party Claim;  provided that the failure of
any  indemnified  party to give  timely  notice  shall not  affect  his right of
indemnification  hereunder  except  to the  extent  the  indemnifying  party has
actually been prejudiced or damaged thereby (except that the indemnifying  party
shall not be liable for any expenses  during the period in which the indemnified
party  failed  to give  notice).  If a Third  Party  Claim  is made  against  an
indemnified party, the indemnifying  party shall be entitled,  if it so chooses,
to assume the defense thereof with counsel  selected by the  indemnifying  party
(which counsel shall be reasonably  satisfactory to the indemnified  party).  If
the  indemnifying  party  assumes  the  defense  of a  Third  Party  Claim,  the
indemnified   party  will  cooperate  in  all   reasonable   respects  with  the
indemnifying party in connection with such defense,  and shall have the right to
participate  in  such  defense  with  counsel  selected  by  it.  The  fees  and
disbursements  of  such  counsel,  however,  shall  be at  the  expense  of  the
indemnified party; provided, however, that, in the case of any Third Party Claim
of which the indemnifying  party has not employed counsel to assume the defense,
the fees and  disbursements  of such  counsel  shall  be at the  expense  of the
indemnifying party.



                                       38
<PAGE>

     The indemnified party shall deliver to the indemnifying  party, within five
business  days after the  indemnified  party's  receipt  thereof,  copies of all
notices and documents (including court papers) received by the indemnified party
relating to the Third Party Claim. If the  indemnifying  party chooses to defend
or prosecute any Third Party Claim,  all the parties  hereto shall  cooperate in
the defense or prosecution thereof. Such cooperation shall include the retention
and (upon the  indemnifying  party's  request) the provision to the indemnifying
party of records and  information  which are  reasonably  relevant to such Third
Party Claim,  and making employees  available on a mutually  convenient basis to
provide  additional   information  and  explanation  of  any  material  provided
hereunder.  Whether or not the indemnifying party shall have assumed the defense
of a Third Party Claim, the indemnified party shall not admit any liability with
respect to, or settle,  compromise or discharge,  such Third Party Claim without
the  indemnifying  party's prior  written  consent  (which  consent shall not be
unreasonably withheld).

     In the event GST or any of the persons entitled to indemnification pursuant
to Section 10.1 is an  "indemnified  party" with respect to a third party claim,
no Escrow  Shares  shall be released by the Escrow  Agent in  settlement  of any
indemnification  obligation unless and until a final,  non-appealable settlement
or judgment is reached with respect to such claim.

     Section  10.7   Reduction  for   Insurance.   The  gross  amount  which  an
indemnifying  party is liable to,  for,  or on behalf of the  indemnified  party
pursuant  to  this  Article  X  (the  "Indemnifiable  Loss")  shall  be  reduced
(including,  without  limitation,   retroactively)  by  any  insurance  proceeds
actually  recovered  by or on behalf of such  indemnified  party  related to the
Indemnifiable  Loss. If an  indemnified  party shall have received or shall have
had paid on its behalf an indemnity payment in respect of an Indemnifiable  Loss
and shall  subsequently  receive  directly or indirectly  insurance  proceeds in
respect of such  Indemnifiable  Loss, then such  indemnified  party shall pay to
such indemnifying  party the net amount of such insurance  proceeds or, if less,
the amount of such indemnity payment.

     Section 10.8 Termination of  Indemnification.  The obligations to indemnify
and hold  harmless a party hereto (i) pursuant to Sections  10.1 and 10.2 hereof
shall  terminate  one year after the Closing  Date and (ii)  pursuant to Section
10.3 hereof shall  terminate at the time the applicable  statutes of limitations
with respect to the Tax  liabilities  in question  expire  (giving effect to any
extension thereof);  provided,  however,  that such obligations to indemnify and
hold  harmless  shall not  terminate  with  respect  to any item as to which the
person to be  indemnified  or the related  party hereto  shall have,  before the
expiration of the  applicable  period,  previously  made a claim by delivering a



                                       39
<PAGE>

notice  (stating  in  reasonable   detail  the  basis  of  such  claim)  to  the
indemnifying party.

                                   ARTICLE XI
                        TERMINATION, AMENDMENT AND WAIVER

     Section  11.1  Termination.  This  Agreement  may  be  terminated  and  the
transactions  contemplated by this Agreement  abandoned at any time prior to the
Closing:

          (a) By mutual written consent of GST and Call America;

          (b) By either GST or Call America if the transactions  contemplated by
     this  Agreement  shall not have been  consummated  on or before January 31,
     1997.

          (c) by Call  America  if (i)  there  shall  have  been a breach of any
     representation  or  warranty  on the  part of GST or Sub set  forth in this
     Agreement,  or if any  representation  or warranty of GST or Sub shall have
     become untrue, in either case such that the conditions set forth in Section
     8.1 would be  incapable  of being  satisfied  by  January  31,  1997 (or as
     otherwise extended) or (ii) there shall have been a breach by GST or Sub of
     any of their respective covenants or agreements hereunder having a Material
     Adverse  Effect on GST or materially  adversely  affecting  (or  materially
     delaying) the  consummation of the Merger,  and GST or Sub, as the case may
     be, has not cured such breach  within 20 business days after notice by Call
     America thereof, provided that Call America has not materially breached any
     of its obligations hereunder.

          (d) by GST if (i) there shall have been a breach of any representation
     or warranty  on the part of the Call  America  Companies  set forth in this
     Agreement,  or if  any  representation  or  warranty  of the  Call  America
     Companies shall have become untrue, in either case such that the conditions
     set forth in Section 9.1 hereof would be  incapable  of being  satisfied by
     January 31, 1997 (or as otherwise extended),  or (ii) there shall have been
     a breach by the Call  America  Companies of their  covenants or  agreements
     hereunder  having a Material  Adverse Effect on the Call America  Companies
     taken as a whole or materially adversely affecting (or materially delaying)
     the  consummation  of the Merger,  and the Call America  Companies have not
     cured  such  breach  within 20  business  days  after  notice by GST or Sub
     thereof,  provided that neither GST nor Sub has materially  breached any of
     their respective obligations hereunder.

          (e) By either GST or Call America if a court of competent jurisdiction
     or Regulatory  Authority shall have issued a final,  non-appealable  order,
     decree or ruling or taken any other action (which  order,  decree or ruling
     the  parties  hereto  shall use their best  efforts to lift),  in each case



                                       40
<PAGE>

     permanently  restraining,  enjoining  or otherwise  prohibiting  any of the
     transactions contemplated by this Agreement.

     Section 11.2 Effect of  Termination.  The  termination of this Agreement in
accordance  with Section 11.1 hereof shall have no effect on whatever rights and
remedies  the  parties  hereto may have  against  one another as a result of any
breach of this Agreement.

     Section  11.3  Amendment.  This  Agreement  may be amended  by the  written
agreement of the parties hereto.

     Section 11.4  Extension;  Waiver.  At any time prior to the Effective Time,
each party  hereto may (i)  extend  the time for the  performance  of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations  and  warranties of the other party  contained  herein or in any
document,  certificate  or  writing  delivered  pursuant  hereto or (iii)  waive
compliance by the other party with any of the agreements or conditions contained
herein.  Any agreement on the part of any party hereto to any such  extension or
waiver  shall be valid  only if set  forth in  writing  signed on behalf of such
party. The failure of a party hereto to assert any of its rights hereunder shall
not constitute a waiver of such rights.

                                   ARTICLE XII
                                  MISCELLANEOUS

     Section 12.1 Expenses.  All costs and expenses  incurred in connection with
this  Agreement and the  transactions  contemplated  hereby shall be paid by the
party  incurring  such costs and expenses  (except that Call America  shall also
bear  the  costs  and  expenses  of the  Sellers,  if  any),  regardless  of the
termination  of this  Agreement or the failure to  consummate  the  transactions
contemplated hereby .

     Section   12.2   Notices.   All  notices,   requests,   demands  and  other
communications  which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered personally
or by facsimile transmission, in either case with receipt acknowledged, or three
days after being sent by registered or certified mail, return receipt requested,
postage prepaid:

          (a) If to any of the GST Companies to:

                  GST Telecommunications, Inc.
                  4317 N.E. Thurston Way
                  Vancouver, Washington 98662
                  Attention:  John Warta


                                       41
<PAGE>


                  with a copy to:

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

          (b) If to the Sellers or any of the Call America Companies to:

                  Call America Business Communications, Inc.
                  4251 South Higuera
                  Suite 800
                  San Luis Obispo, California 93401
                  Attention:  Jeffrey Buckingham

                  with a copy to:

                  Gibson, Dunn & Crutcher
                  333 South Grand Avenue
                  Los Angeles, California 90071-3197
                  Attention: Bradford P. Weirick, Esq.

or to such other address as any party shall have  specified by notice in writing
to the other in compliance with this Section 12.2.

     Section 12.3 Entire  Agreement.  This  Agreement  (including the Schedules,
letter  agreements  and  other  documents  delivered  as  of  the  date  hereof)
constitutes  the entire  agreement  among the parties hereto with respect to the
subject  matter  hereof  and  thereof  and  supersedes  all  prior   agreements,
representations and understandings among the parties hereto including the letter
of intent  dated July 17,  1996 among the parties  hereto  except as provided in
Section 7.1(e) with respect to the Confidentiality Agreements.

     Section 12.4 Binding Effect,  Benefits,  Assignments.  This Agreement shall
inure to the  benefit  of and be  binding  upon the  parties  hereto  and  their
respective  successors  and  assigns;  nothing in this  Agreement,  expressed or
implied,  is  intended  to confer on any other  person,  other than the  parties
hereto  or their  respective  successors  and  assigns,  any  rights,  remedies,
obligations or liabilities under or by reason of this Agreement.  This Agreement
may not be  assigned  without  the prior  written  consent of the other  parties
hereto,  except  that  GST  may  assign  this  Agreement  to any  of its  direct
wholly-owned subsidiaries.

     Section 12.5 Applicable Law. This Agreement and the legal relations between
the parties  hereto shall be governed by and  construed in  accordance  with the
laws of the State of Delaware, without regard to principles of conflicts of law.



                                       42
<PAGE>

     Section 12.6  Jurisdiction.  (a) Any controversy or claim arising out of or
relating  to  this  Agreement,  or the  breach  thereof,  shall  be  settled  by
arbitration  in  Denver,  Colorado,  administered  by the  American  Arbitration
Association in accordance with its applicable  rules,  and judgment on the award
rendered  by the  arbitrator  may be  entered in any court  having  jurisdiction
thereof.  The  arbitration  shall be conducted  before a panel of three  neutral
arbitrators,  all of whom shall be members of the  Colorado  state bar  actively
engaged  in the  practice  of law or  retired  members  of the state or  federal
judiciary. Call America and GST shall bear equally the cost of such arbitration.

     (b) Notwithstanding  the provisions of Section 12.6(a),  the parties hereto
shall have the right to seek and obtain from a court of competent jurisdiction a
temporary restraining order, injunction, specific performance or other equitable
relief to enforce the provisions of this Agreement.

     Section 12.7  Headings.  The headings  and captions in this  Agreement  are
included for purposes of convenience  only and shall not affect the construction
or interpretation of any of its provisions.

     Section 12.8 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts,  each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

     Section 12.9 Definitions.

     (a) Except as otherwise  provided herein,  the capitalized  terms set forth
below shall have the following meanings:

     "Affiliate"  of a Person  shall mean:  (i) any other  Person  directly,  or
indirectly  through one or more  intermediaries,  controlling,  controlled by or
under  common  control with such Person;  (ii) any officer,  director,  partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting  interest of such  Person;  or (iii) any other  Person for which a Person
described in clause (ii) acts in any such capacity.

     "Agreement"  shall mean this  Agreement  and Plan of Merger,  including the
Exhibits,  schedules,  letter agreements and other documents delivered as of the
date hereof, delivered pursuant hereto and incorporated herein by reference.

     "Agreement  of  Merger"  shall  mean  the  Merger  Agreement  in a form not
inconsistent  with the terms of this Agreement and to be mutually agreed upon by
the parties  hereto and to be filed with the  Secretary of State of the State of
California  relating  to the  Merger  as  contemplated  by  Section  1.1 of this
Agreement and/or the Certificate of Merger in a form not  inconsistent  with the
terms of this Agreement and to be mutually agreed upon by the parties hereto and



                                       43
<PAGE>

to be filed with the Secretary of State of the State of Delaware relating to the
Merger as contemplated by Section 1.1 of this Agreement.

     "Amex" shall mean the American  Stock  Exchange,  or such other  securities
exchange or market system where the GST Common Stock may be primarily traded.

     "Assets" of a Person shall mean all of the assets,  properties,  businesses
and rights of such  Person of every kind,  nature,  character  and  description,
whether real, personal or mixed, tangible or intangible,  accrued or contingent,
or  otherwise  relating to or utilized in such  Person's  business,  directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such  Person,  and  whether  or not  owned in the name of such  Person or any
Affiliate of such Person and wherever located.

     "CGCL" shall mean the California General Corporation Law.

     "Closing Date" shall mean the date on which the Closing occurs.

     "Consent"  shall  mean any  consent,  approval,  authorization,  clearance,
exemption,  waiver,  or  similar  affirmation  by  any  Person  pursuant  to any
Contract, Law, Order, or Permit.

     "Contract"   shall  mean  any  written  or  oral  agreement,   arrangement,
authorization, commitment, contract, franchise agreement, indenture, instrument,
lease,  license,  obligation,  plan,  practice,  restriction,  understanding  or
undertaking of any kind or character, or other document to which any Person is a
party or that is binding on any Person or its capital stock, Assets or business.

     "Default"  shall mean (i) any breach or violation  of or default  under any
Contract,  Order or  Permit,  (ii) any  occurrence  of any  event  that with the
passage  of time or the giving of notice or both  would  constitute  a breach or
violation of or default under any Contract, Order or Permit, or (iii) any giving
of notice  giving  rise to a right to  terminate  or revoke,  change the current
terms of, or renegotiate,  or to accelerate,  increase,  or impose any Liability
under, any Contract, Order or Permit.

     "DGCL" shall mean the Delaware General Corporation Law.

     "Environmental   Laws"  shall  mean  all  Laws  relating  to  pollution  or
protection of human health or the environment  (including  ambient air,  surface
water,   ground  water,  land  surface  or  subsurface  strata)  and  which  are
administered,  interpreted  or  enforced  by  the  United  States  Environmental
Protection  Agency and state and local  agencies  with  jurisdiction  over,  and



                                       44
<PAGE>

including  common law in respect of, pollution or protection of the environment,
including the Comprehensive  Environmental  Response  Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq.  ("CERCLA"),  the Resource  Conservation
and Recovery Act, as amended,  42 U.S.C. 6901 et seq.  ("RCRA"),  and other Laws
relating  to  emissions,  discharges,  releases  or  threatened  releases of any
Hazardous  Material,  or  otherwise  relating  to the  manufacture,  processing,
distribution,  use, treatment,  storage, disposal,  transport or handling of any
Hazardous Material.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended.

     "Escrow Agent" shall mean

     "Escrow  Agreement"  shall  mean the  Escrow  Agreement  by and  among  the
Sellers, GST, and the Escrow Agent, substantially in the form of Exhibit B.

     "FABRIK" shall mean FABRIK Communications, Inc.

     "FCC"  shall mean  Chapter 5 of Title 47 of the United  States Code and the
rules and regulations promulgated thereunder.

     "GST Capital Stock" shall mean, collectively,  the GST Common Stock and any
other class or series of capital stock of GST.

     "GST Common Stock" shall mean the no par value common stock of GST.

     "Hazardous  Material"  shall mean (i) any  hazardous  substance,  hazardous
material,  hazardous  waste,  regulated  substance or toxic  substance (as those
terms are defined by any applicable  Environmental Laws) and (ii) any chemicals,
pollutants,   contaminants,   petroleum,   petroleum   products,   or  oil  (and
specifically   shall   include   asbestos   requiring   abatement,   removal  or
encapsulation  pursuant to the requirements of governmental  authorities and any
polychlorinated biphenyls).

     "Intellectual   Property"   shall  mean  all   worldwide   industrial   and
intellectual  copyrights,  patents,  trademarks,  service marks,  service names,
trade names,  technology rights and licenses,  computer software  (including any
source or object  codes  therefor  or  documentation  relating  thereto),  trade
secrets,  franchises,  know-how,  inventions,  and other  intellectual  property
rights used in the business of the Call America  Companies or the GST Companies,
as the case may be.

     "Internal  Revenue  Code" shall mean the Internal  Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.



                                       45
<PAGE>

     "Knowledge" as used with respect to a Person (including  references to such
Person being aware of a particular matter) shall mean those facts that are known
by the Chairman, President and Chief Financial Officer of such Person.

     "Law"  shall  mean any  code,  law,  ordinance,  regulation,  reporting  or
licensing  requirement,  rule, or statute  applicable to a Person or its Assets,
Liabilities or business, including those promulgated, interpreted or enforced by
any Regulatory Authority.

     "Liability"  shall  mean any  direct or  indirect,  primary  or  secondary,
liability,  indebtedness,  obligation, penalty, cost or expense (including costs
of  investigation,  collection  and  defense),  claim,  deficiency,  guaranty or
endorsement  of or by any  Person  (other  than  endorsements  of notes,  bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type,  whether accrued,  absolute or contingent,  liquidated or
unliquidated, matured or unmatured, or otherwise.

     "Lien"  shall  mean any  conditional  sale  agreement,  default  of  title,
easement,   encroachment,   encumbrance,   hypothecation,   infringement,  lien,
mortgage, pledge, reservation,  restriction,  security interest, title retention
or other security arrangement, or any adverse right or interest, charge,or claim
of any nature  whatsoever  of,on,  or with  respect to any  property or property
interest,  other  than (i)  Liens  for  current  property  Taxes not yet due and
payable,  and (iii) Liens which do not materially  impair the use of or title to
the Assets subject to such Lien.

     "Litigation" shall mean any action,  arbitration,  cause of action,  claim,
complaint, criminal prosecution or demand letter, or notice (written or oral) by
any Person of  governmental  or other  examination  or  investigation,  hearing,
inquiry, administrative or other proceeding alleging potential Liability, or any
Regulatory  Authority or other federal,  state or local  governmental  agency or
department  requesting  information  relating  to  or  affecting  a  Party,  its
business,  its Assets  (including  Contracts related to it), or the transactions
contemplated by this Agreement.

     "Material  Adverse  Effect"  on a party  shall  mean an  event,  change  or
occurrence  which,  individually  or together  with any other  event,  change or
occurrence,  has a  material  adverse  impact  on (i) the  financial  condition,
business, or results of operations of such party and its Subsidiaries,  taken as
a whole, or (ii) the ability of such party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions  contemplated by
this Agreement,  provided that "material  adverse impact" shall not be deemed to
include  the  impact  of  (a)  changes  in  Laws  of  general  applicability  or
interpretations  thereof by courts or governmental  authorities,  (b) changes in
generally accepted accounting  principles or regulatory  accounting  principles,
(c) actions and omissions of a party (or any of its subsidiaries) taken with the



                                       46
<PAGE>

prior  informed  written  Consent  of the other  party in  contemplation  of the
transactions   contemplated   hereby,  and  (z)  the  Merger  on  the  operating
performance  of the  Parties,  including  expenses  incurred  by the  parties in
consummating the transactions contemplated by this Agreement.

     "Merger   Documents"  shall  mean  the  documents  to  be  filed  with  the
Secretaries  of State of the  States of  California  and  Delaware  pursuant  to
Section 1.1 and the first sentence of Section 1.3 hereof.

     "Order"  shall  mean  any   administrative   decision  or  award,   decree,
injunction,  judgment, order,  quasi-judicial decision or award, ruling, or writ
of any federal,  state, local or foreign or other court,  arbitrator,  mediator,
tribunal, administrative agency or Regulatory Authority.

     "Permit" shall mean any federal,  state,  local,  and foreign  governmental
approval,  authorization,  certificate,  easement,  filing, franchise,  license,
notice,  permit,  or right to which  any  Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities,  Assets or
business.

     "Person"  shall  mean  a  natural  person  or  any  legal,   commercial  or
governmental  entity,  such  as,  but not  limited  to, a  corporation,  general
partnership,  joint venture,  limited  partnership,  limited liability  company,
trust, business association,  group acting in concert, or any person acting in a
representative capacity.

     "Regulatory Authorities" shall mean,  collectively,  the Amex, the SEC, the
Federal Trade Commission,  the United States Department of Justice,  the Federal
Communications  Commission, and all other federal, state, county, local or other
foreign  or  domestic   governmental   or  regulatory   agencies,   authorities,
instrumentalities,  commissions,  boards or bodies having  jurisdiction over the
Parties and their respective Subsidiaries.

     "Rights"  shall  mean  all  arrangements,  calls,  commitments,  Contracts,
options,  rights to subscribe  to,  scrip,  understandings,  warrants,  or other
binding  obligations of any character  whatsoever  relating to, or securities or
rights  convertible  into or exchangeable  for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.

     "Subsidiaries"  shall mean all those corporations,  associations,  or other
business  entities of which the entity in  question  either (i) owns or controls
50% or more of the outstanding  equity  securities either directly or through an
unbroken  chain of entities  as to each of which 50% or more of the  outstanding
equity securities is owned directly or indirectly by its parent (provided, there
shall not be included any such entity the equity  securities  of which are owned




                                       47
<PAGE>

or controlled  in a fiduciary  capacity),  or (ii) in the case of  partnerships,
serves as a general partner.

     "Surviving   Corporation"   shall  mean  Call  America  as  the   surviving
corporation resulting from the Merger.

     "Tax Return" shall mean any report,  return,  information  return, or other
information  required to be supplied to a taxing  authority in  connection  with
Taxes,  including  any return of an affiliated or combined or unitary group that
includes a Party or its Subsidiaries.

     "Tax" or "Taxes" shall mean any federal,  state, county,  local, or foreign
income, profits,  franchise,  gross receipts,  payroll, sales, employment,  use,
property, withholding, excise, occupancy, and other taxes, assessments, charges,
fares, or impositions,  including  interest,  penalties,  and additions  imposed
thereon or with respect thereto.

     (b) The terms set forth below shall have the meanings  ascribed  thereto in
the referenced sections:

            Call America Financial Statements               Section 3.6
            Call America Common Stock                       Section 1.7(c)
            Closing                                         Section 1.2
            Confidentiality Agreements                      Section 7.1(e)
            Consideration                                   Section 1.7(c)
            Effective Date                                  Section 10.5(b)
            Effective Time                                  Section 1.3
            Employee Benefit Plans                          Section 3.10
            Employment Agreement                            Section 4.2
            Escrow Shares                                   Section 1.7(c)
            FABRIK Agreement                                Section 7.5
            GST Surviving Conditions Precedent              Section 1.2(b)
            GST Tax Certificate                             Section 7.2
            Indemnifiable Loss                              Section 10.7
            indemnified party                               Section 10.6
            indemnifying party                              Section 10.6
            Merger                                          Section 1.1
            Non-Competition Agreements                      Section 4.2
            Post-Closing Consideration                      Section 1.10(a)
            Registration Rights Agreement                   Section 4.2
            Representative                                  Section 1.2(a)
            SEC                                             Section 5.5
            SEC Reports                                     Section 5.5
            Seller Surviving Conditions Precedent           Section 1.2(b)
            Shareholders' Agreement                         Section 4.1
            Tax Opinion                                     Section 8.9
            Termination Date                                Section 6.2
            Third Party Claim                               Section 10.6
            U.S. GAAP                                       Section 3.6(a)

     (c) Any  singular  term in this  Agreement  shall be deemed to include  the
plural,  and any  plural  term  the  singular.  Whenever  the  words  "include,"



                                       48
<PAGE>

"includes"  or  "including"  are used in this  Agreement,  they  shall be deemed
followed by the words "without limitation."



                                       49
<PAGE>




     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year hereinabove first set forth.

                                    GST TELECOMMUNICATIONS, INC.



                                    By: /s/ Stephen Irwin
                                        ----------------------------------------
                                        Name: Stephen Irwin
                                        Title: Secretary


                                    CALL AMERICA BUSINESS
                                    COMMUNICATIONS CORP.



                                    By: /s/ Jeffrey C. Buckingham
                                        ----------------------------------------
                                        Name: Jeffrey C. Buckingham
                                        Title: President


                                    GST NEWCO OF CALIFORNIA, INC.



                                    By: /s/ Stephen Irwin
                                        ----------------------------------------
                                        Name: Stephen Irwin
                                        Title: President


                                    CALL AMERICA BUSINESS COMMUNICATIONS
                                    OF FRESNO, INC.



                                    By: /s/ Jeffrey C. Buckingham
                                        ----------------------------------------
                                        Name: Jeffrey C. Buckingham
                                        Title: President


                                    CALL AMERICA BUSINESS COMMUNICATIONS
                                    OF BAKERSFIELD, INC.



                                    By: /s/ Jeffrey C. Buckingham
                                        ----------------------------------------
                                        Name: Jeffrey C. Buckingham
                                        Title: President


                                       50
<PAGE>

SELLERS:


/s/ Jeffrey C. Buckingham
----------------------------------------
Name: Jeffrey C. Buckingham


/s/ F. Scott Hindes
----------------------------------------
Name: F. Scott Hindes
      Trustee U/A dated 2/14/84

/s/ Jerry A. Linthicum
----------------------------------------
Name: Jerry A. Linthicum


/s/ Carolyn C. Hindes
----------------------------------------
Name: Carolyn C. Hindes


/s/ Theodore B. Hindes
----------------------------------------
Name: Theodore B. Hindes


CONSENTED AND AGREED:

/s/ Joan E. Buckingham
----------------------------------------
Joan E. Buckingham

/s/ Euleta F. Linthicum
----------------------------------------
Euleta F. Linthicum


100609.10

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