<PAGE>
______________________________________________________________________________
       
       
       
                                U.S.$8,000,000
                                       
                                       
                             BRIDGE LOAN AGREEMENT
                                       
                           Dated as of May 16, 1997
                                       
                             STAR DIGITEL LIMITED
                                       
                                  AS BORROWER
                                       
                                      and
                                       
                           THE TORONTO-DOMINION BANK
                                       
                                   AS LENDER
                                       
                                       
                                       
       ________________________________________________________________

<PAGE>
       
                        TABLE OF CONTENTS
                                
                               
                                                            PAGE
ARTICLE I

              DEFINITIONS AND ACCOUNTING TERMS                1
SECTION 1.01.  Certain Defined Terms                          1
SECTION 1.02.  Computation of Time Periods                   11
SECTION 1.03.  Accounting Terms                              11

ARTICLE II

              AMOUNTS AND TERMS OF THE ADVANCES              11
SECTION 2.01.  The Advances                                  11
SECTION 2.02.  Making the Advances                           12
SECTION 2.03.  Fees                                          12
SECTION 2.04.  Repayment                                     12
SECTION 2.05.  Interest                                      13
SECTION 2.06.  Optional Prepayments                          13
SECTION 2.07.  Increased Costs                               14
SECTION 2.08.  Illegality                                    15
SECTION 2.09.  Payments and Computations                     15
SECTION 2.10.  Taxes                                         16
SECTION 2.11.  Use of Proceeds                               17

ARTICLE III

           CONDITIONS TO EFFECTIVENESS AND LENDING           17
SECTION 3.01.  Conditions Precedent to Effectiveness of 
               Section 2.01                                  17
SECTION 3.02.  Conditions Precedent to Each Borrowing        20

ARTICLE IV

              REPRESENTATIONS AND WARRANTIES                 20
SECTION 4.01.  Representations and Warranties of the 
               Borrower                                      20

ARTICLE V

                COVENANTS OF THE BORROWER                    23
SECTION 5.01.  Affirmative Covenants                         23

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                                                            PAGE

SECTION 5.02.  Negative Covenants                            26

ARTICLE VI

                     EVENTS OF DEFAULT                       29
SECTION 6.01.  Events of Default                             29

ARTICLE VII

                        MISCELLANEOUS                        32
SECTION 7.01.  Amendments, Etc.                              32
SECTION 7.02.  Notices, Etc.                                 32
SECTION 7.03.  No Waiver; Remedies                           32
SECTION 7.04.  Costs and Expenses                            33
SECTION 7.05.  Right of Set-off                              34
SECTION 7.06.  Binding Effect                                34
SECTION 7.07.  Governing Law                                 34
SECTION 7.08.  Execution in Counterparts                     34
SECTION 7.09.  Consent to Jurisdiction                       35
SECTION 7.10.  Judgment Currency                             35
SECTION 7.11.  Waiver of Jury Trial                          36




SCHEDULES

Schedule 4.01(o)        -    Shares
Schedule 5.02(a)(iii)   -    Existing Liens


EXHIBITS

Exhibit A                -    Form of Promissory Note
Exhibit B                -    Form of Notice of Borrowing
Exhibit C-1              -    Form of Guaranty from STHL
Exhibit C-2              -    Form of Guaranty from VCFC


<PAGE>

                           Dated as of May 16, 1997
                                       
                                       
         STAR DIGITEL LIMITED, a company organized under the laws of Hong 
Kong (the "BORROWER") and THE TORONTO-DOMINION BANK ("TORONTO DOMINION"), as 
the lender (the "LENDER") agree as follows:

                            ARTICLE I
                                
                DEFINITIONS AND ACCOUNTING TERMS
                                
         SECTION 1.01.  CERTAIN DEFINED TERMS.  As used in this Agreement, 
the following terms shall have the following meanings (such meanings to be 
equally applicable to both the singular and plural forms of the terms 
defined):

         "ADVANCE" has the meaning specified in Section 2.01.
     
         "AFFILIATE" means, as to any Person, any other Person that, directly 
     or indirectly, controls, is controlled by or is under common control 
     with such Person or is a director or officer of such Person.  For 
     purposes of this definition, the term "control" (including the terms 
     "controlling", "controlled by" and "under common control with") of a 
     Person means the possession, direct or indirect, of the power to vote 5% 
     or more of the Voting Stock of such Person or to direct or cause the 
     direction of the management and policies of such Person, whether through 
     the ownership of Voting Stock, by contract or otherwise.

         "APPLICABLE MARGIN" means, as of any date of determination, (a) 
     during the period from the Effective Date to the Initial Maturity Date, 
     2.25% and, subject to the Extension pursuant to Section 2.04(b), (b) 
     during the period thereafter until the Final Maturity Date, 2.50%.

         "BORROWER" has the meaning specified in the preamble to this 
     Agreement.

         "BORROWING" means a borrowing consisting of Advances made on the 
     same day by the Lender.

         "BUSINESS DAY" means a day of the year on which banks are not 
     required or authorized by law to close in Hong Kong and Singapore and, 
     if the applicable Business Day relates to any Advance, on which dealings 
     are carried on in the London interbank market.

         "CASH EQUIVALENTS" means (a) securities with maturities of one year 
     or less from the date of acquisition issued or fully guaranteed or 
     insured by the government of the 

<PAGE>

     United States of America or any agency or instrumentality thereof; (b) 
     demand deposits, certificates of deposit, acceptances, and Eurodollar 
     time deposits with maturities of one year or less from the date of 
     acquisition and overnight bank deposits of any commercial bank 
     incorporated under the laws of the United States of America or any state 
     thereof and having, or having a direct or indirect parent corporation 
     that has, a long-term debt rating of at least "A" from Standard & Poor's 
     Ratings Group or a long-term debt rating of at least "A-2" from Moody's 
     Investors Service, Inc.; (c) repurchase obligations with a term not more 
     than 30 days for the underlying securities of the types described in 
     clause (a) above and with a counterparty that has a long-term debt 
     rating described in clause (b) above; and (d) commercial paper of a 
     United States of America issuer maturing no more than 270 days from the 
     date of creation thereof and currently having the highest rating 
     obtainable from either Standard & Poor's Ratings Group or Moody's 
     Investors Service, Inc.

         "CELL SITE" means any transmitting/receiving station for wireless 
     telephony.

         "COMMITMENT" has the meaning specified in Section 2.01.

         "COMPLIANCE CERTIFICATE" means a compliance certificate in the form 
     and substance acceptable to the Lender signed on behalf of the Borrower 
     by a senior financial officer of the Borrower.

         "CONSOLIDATED" means, with respect to any Person, the consolidation 
     of accounts in accordance with U.S. GAAP for such Person.

         "DEBT" of any Person means, without duplication, (a) all 
     indebtedness of such Person for borrowed money, (b) all obligations of 
     such Person for the deferred purchase price of property or services 
     (other than trade payables not overdue by more than 60 days incurred in 
     the ordinary course of such Person's business), (c) all obligations of 
     such Person evidenced by notes, bonds, debentures or other similar 
     instruments, (d) all obligations of such Person created or arising under 
     any conditional sale or other title retention agreement with respect to 
     property acquired by such Person (even though the rights and remedies of 
     the seller or lender under such agreement in the event of default are 
     limited to repossession or sale of such property), (e) all obligations 
     of such Person as lessee under leases that have been or should be, in 
     accordance with  U.S. GAAP for such Person, recorded as Finance Leases, 
     (f) all obligations, contingent or otherwise, of such Person in respect 
     of acceptances, letters of credit or similar extensions of credit, 
     (g) all obligations of such Person in respect of Hedge Agreements, 
     (h) all Debt of others referred to in clauses (a) through (g) above or 
     clause (i) below guaranteed directly or indirectly in any manner by such 
     Person, or in effect guaranteed directly or indirectly by such Person 
     through an agreement (1) to pay or purchase such Debt or to advance or 
     supply funds for the payment or purchase of such Debt, (2) to purchase, 
     sell or lease (as lessee or lessor) property, or to purchase or sell 
     services, primarily for the purpose of enabling the debtor to make 
     payment of such Debt or to assure the holder of such Debt against loss, 
     (3) to supply funds to or in any other manner invest in the debtor 
     (including 

<PAGE>

     any agreement to pay for property or services irrespective of whether 
     such property is received or such services are rendered) or 
     (4) otherwise to assure a creditor against loss, and (i) all Debt 
     referred to in clauses (a) through (h) above secured by (or for which 
     the holder of such Debt has an existing right, contingent or otherwise, 
     to be secured by) any Lien on property (including, without limitation, 
     accounts and contract rights) owned by such Person, even though such 
     Person has not assumed or become liable for the payment of such Debt.
     
         "DEFAULT" means any Event of Default or any event that would 
     constitute an Event of Default but for the requirement that notice be 
     given or time elapse or both.

         "DOLLAR" or "$" means the lawful currency of the United States of 
     America.

         "EFFECTIVE DATE" has the meaning specified in Section 3.01.

         "ELECTION DATE" has the meaning specified in the Section 2.04(b).

         "ENVIRONMENTAL ACTION" means any action, suit, demand, demand 
     letter, claim, notice of non-compliance or violation, notice of 
     liability or potential liability, investigation, proceeding, consent 
     order or consent agreement relating in any way to any Environmental Law, 
     Environmental Permit or Hazardous Materials or arising from alleged 
     injury or threat of injury to health, safety or the environment, 
     including, without limitation, (a) by any governmental or regulatory 
     authority for enforcement, cleanup, removal, response, remedial or other 
     actions or damages and (b) by any governmental or regulatory authority 
     or any third party for damages, contribution, indemnification, cost 
     recovery, compensation or injunctive relief.

         "ENVIRONMENTAL LAW" means any federal, state, local or foreign 
     statute, law, ordinance, rule, regulation, code, order, judgment, decree 
     or judicial or agency interpretation, policy or guidance relating to 
     pollution or protection of the environment, health, safety or natural 
     resources, including, without limitation, those relating to the use, 
     handling, transportation, treatment, storage, disposal, release or 
     discharge of Hazardous Materials.

         "ENVIRONMENTAL PERMIT" means any permit, approval, identification 
     number, license or other authorization required under any Environmental 
     Law.

         "ERISA" means the Employee Retirement Income Security Act of 1974, 
     as amended from time to time, and the regulations promulgated and 
     rulings issued thereunder from time to time in effect.

         "ERISA AFFILIATE" means any Person that for purposes of Title IV of 
     ERISA is a member of the Borrower's controlled group, or under common 
     control with the Borrower, within the meaning of Section 414 of the 
     Internal Revenue Code.


<PAGE>

         "ERISA EVENT" means (a) (i) the occurrence of a reportable event, 
     within the meaning of Section 4043 of ERISA, with respect to any Plan 
     unless the 30-day notice requirement with respect to such event has been 
     waived by the PBGC, or (ii) the requirements of clause (1) of Section 
     4043(b) of ERISA (without regard to clause (2) of such Section) are met 
     with a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, 
     of a Plan, and an event described in paragraph (9), (10), (11), (12) or 
     (13) of Section 4043(c) of ERISA is reasonably expected to occur with 
     respect to such Plan within the following 30 days; (b) the application 
     for a minimum funding waiver with respect to a Plan; (c) the provision 
     by the administrator of any Plan of a notice of intent to terminate such 
     Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice 
     with respect to a plan amendment referred to in Section 4041(e) of 
     ERISA); (d) the cessation of operations at a facility of the Borrower or 
     any ERISA Affiliate in the circumstances described in Section 4062(e) of 
     ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from a 
     Multiple Employer Plan during a plan year for which it was a substantial 
     employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions 
     for the imposition of a lien under Section 302(f) of ERISA shall have 
     been met with respect to any Plan; (g) the adoption of an amendment to a 
     Plan requiring the provision of security to such Plan pursuant to 
     Section 307 of ERISA; or (h) the institution by the PBGC of proceedings 
     to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence 
     of any event or condition described in Section 4042 of ERISA that 
     constitutes grounds for the termination of, or the appointment of a 
     trustee to administer, a Plan.

         "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

         "EXTENSION" means the extension of the maturity of the Note pursuant 
     to Section 2.04(b).

         "EXTENSION FEE" has the meaning specified in Section 2.03(b).
          
         "FAIR MARKET VALUE" means, with respect to any property or asset 
     (including, without limitation, shares of capital stock) of any Person 
     on any date of determination, the value of the consideration obtainable 
     in a sale of such property or asset in the open market on such date 
     assuming an arm's-length sale that has been arranged without duress or 
     compulsion between a willing seller and a willing and knowledgeable 
     purchaser in a commercially reasonable manner over a reasonable period 
     of time under all conditions necessary or desirable for a fair sale 
     (taking into account the nature and characteristics of such property or 
     asset).

         "FACILITY" has the meaning specified in Section 2.01.

         "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest 
     rate per annum equal for each day during such period to the weighted 
     average of the rates on overnight Federal funds transactions with 
     members of the Federal Reserve System arranged by Federal funds brokers, 
     as published for such day (or, if such day is not a Business Day, 



<PAGE>

     for the next preceding Business Day) by the Federal Reserve Bank of 
     New York, or, if such rate is not so published for any day that is a 
     Business Day, the average of the quotations for such day on such 
     transactions received by the Lender from three Federal funds brokers of 
     recognized standing selected by it.

         "FINAL MATURITY DATE" means the Initial Maturity Date, or if the 
     Extension is exercised by the Borrower in accordance with Section 
     2.04(b), May 11, 1998.

         "FINANCE LEASES" means all leases that have or should be, in 
     accordance with  U.S. GAAP, recorded as capital leases or finance 
     leases, as the case may be.

         "GUARANTORS" means, collectively, STHL and VCFC.

         "GUARANTIES" means, collectively, the STHL Guaranty and the VCFC 
     Guaranty.

         "HAZARDOUS MATERIALS" means (a) petroleum and petroleum products, 
     byproducts or breakdown products, radioactive materials, 
     asbestos-containing materials, polychlorinated biphenyls and radon gas 
     and (b) any other chemicals, materials or substances designated, 
     classified or regulated as hazardous or toxic or as a pollutant or 
     contaminant under any Environmental Law.

         "HEDGE AGREEMENTS" means interest rate swap, cap or collar 
     agreements, interest rate future or option contracts, currency swap 
     agreements, currency future or option contracts and other similar 
     agreements.

         "INITIAL MATURITY DATE" means November 12, 1997.

         "INTEREST PERIOD" means, for each Advance comprising part of the 
     same Borrowing, the period commencing on the date of such Advance and 
     ending on the last day of the period selected by the Borrower pursuant 
     to the provisions below and, thereafter, each subsequent period 
     commencing on the last day of the immediately preceding Interest Period 
     and ending on the last day of the period selected by the Borrower 
     pursuant to the provisions below.  The duration of each such Interest 
     Period shall be one month upon notice received by the Lender not later 
     than 11:00 A.M. (Singapore time) on the third Business Day prior to the 
     first day of such Interest Period, select; PROVIDED, HOWEVER, that:
     
                   (i)   the Borrower may not select any Interest Period that 
          ends after the Final Maturity Date;

                   (ii)  Interest Periods commencing on the same date for 
          Advances comprising part of the same Borrowing shall be of the 
          same duration;

                   (iii) a maximum of three Borrowings shall be made available
          to the Borrower during any Interest Period; and

<PAGE>
          
                   (iv)  whenever the last day of any Interest Period would 
          otherwise occur on a day other than a Business Day, the last day of 
          such Interest Period shall be extended to occur on the next 
          succeeding Business Day, PROVIDED, HOWEVER, that, if such extension 
          would cause the last day of such Interest Period to occur in the
          next following calendar month, the last day of such Interest Period 
          shall occur on the next preceding Business Day; and
          
         "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as 
     amended from time to time, and the regulations promulgated and rulings 
     issued thereunder.

         "IWC" means International Wireless Communications, Inc., a Delaware 
     Corporation.

         "IWC PLEDGE AGREEMENT" has the meaning specified in Section 
     3.01(h)(iv).

         "LENDER" has the meaning specified in the preamble to this Agreement.

         "LENDER'S ACCOUNT" means the account of the Lender's Account 
     maintained by the Lender at Bank of America, New York Branch with its 
     office at 1 World Trade Center, 10th Floor, New York, NY, 10048-1191, 
     USA, Account No. 6550 2-97469 CHIPS 361042.

         "LENDING OFFICE" means, with respect to the Lender, Toronto-Dominion 
     (South East Asia) Limited, 1 Temasek Avenue, #15-02 Millenia Tower, 
     Singapore 039192.

         "LIBOR" means, for any Interest Period for each LIBOR Advance 
     subject to Section 2.07, (a) the British Bankers Association settlement 
     rate for such Interest Period for deposits in Dollars at or about 11:00 
     A.M. (London time) on the second Business Day prior to the first day of 
     such Interest Period, as shown on the Telerate Page 3750 (or such other 
     page which replaces that page for the purposes of displaying offered 
     rates for banks in the London interbank market in Dollars on that 
     service) on the Telerate Service on such day; (b) if no rate appears on 
     the Telerate Page 3750 (or other page which replaces that page for the 
     purpose of displaying offered rates for banks in the London interbank 
     market in Dollars on that service) for Dollars or for the relevant 
     Interest Period, "LIBOR" shall be the arithmetic mean, rounded upward to 
     the nearest whole multiple of 1/16 of 1% per annum, if such arithmetic 
     mean is not such multiple, of the rates for such Interest Period for 
     deposits in Dollars at or about 11:00 A.M. (London time) on the first 
     day of such Interest Period as shown on the LIBP page on the Reuters' 
     Service on that day; or (c) if no rate appears on either service 
     referred in clause (a) or (b) above, "LIBOR" shall be the arithmetic 
     mean, rounded upward to the nearest whole multiple of 1/16 of 1% per 
     annum, if such arithmetic mean is not such multiple, of the rates at 
     which deposits in Dollars of that amount for such Interest Period was 
     offered by Toronto Dominion to prime banks in the London interbank 
     market at or about 11:00 A.M. (London time) on the second Business day 
     prior to the first day of such period.


<PAGE>

         "LIEN" means any lien, security interest or other charge or 
     encumbrance of any kind, or any other type of preferential arrangement, 
     including, without limitation, the lien or retained security title of a 
     conditional vendor and any easement, right of way or other encumbrance 
     on title to real property.

         "LOAN DOCUMENTS" means, collectively, this Agreement, the Note, the 
     Guaranties, and the IWC Pledge Agreement.

         "LOAN PARTIES" means, collectively, the Borrower, IWC and the 
     Guarantors.

         "MATERIAL ADVERSE CHANGE" means any material adverse change in the 
     business, condition (financial or otherwise), operations, performance, 
     properties or prospects of any Loan Party or any of its Subsidiaries.

         "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the 
     business, condition (financial or otherwise), operations, performance, 
     properties or prospects of any Loan Party and its Subsidiaries taken as 
     a whole, (b) the rights and remedies of the Lender under any Loan 
     Document or (c) the ability of any Loan Party to perform its obligations 
     under any Loan Document.

         "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in 
     Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA 
     Affiliate is making or accruing an obligation to make contributions, or 
     has within any of the preceding five plan years made or accrued an 
     obligation to make contributions.

         "MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in 
     Section 4001(a)(15) of ERISA, that (a) is maintained for employees of 
     the Borrower or any ERISA Affiliate and at least one Person other than 
     the Borrower and the ERISA Affiliates or (b) was so maintained and in 
     respect of which the Borrower or any ERISA Affiliate could have 
     liability under Section 4064 or 4069 of ERISA in the event such plan has 
     been or were to be terminated.

         "NET CASH PROCEEDS" means, with respect to any sale, lease, transfer 
     or other disposition of any asset or the sale or the issuance of any 
     Debt or capital stock or other ownership or profit interest, any 
     securities convertible into or exchangeable for capital stock or other 
     ownership or profit interest or any warrants, rights, options or other 
     securities to acquire capital stock or other ownership or profit 
     interest by any Person, the aggregate amount of cash received from time 
     to time (whether as initial consideration or through payment or 
     disposition of deferred consideration) by or on behalf of such Person in 
     connection with such transaction after deducting therefrom only (without 
     duplication) (a) reasonable and customary brokerage commissions, 
     underwriting fees and discounts, legal fees, finder's fees and other 
     similar fees and commissions and (b) the amount of taxes payable in 
     connection with or as a result of such transaction and (c) the amount of 
     any Debt secured by a Lien on such asset that, by the terms of such 
     transaction, is 


<PAGE>

     required to be repaid upon such disposition, in each case to the extent, 
     but only to the extent, that the amount so deducted are, at the time of 
     receipt of such cash, actually paid to a Person that is not an Affiliate 
     of such Person or any Loan Party and are properly attributable to such 
     transaction or to the asset that is subject thereof.

         "NOTE" means a promissory note of the Borrower payable to the order 
     of the Lender, in substantially the form of Exhibit A hereto, evidencing 
     the aggregate indebtedness of the Borrower to the Lender resulting from 
     the Advances made by the Lender.

         "NOTICE OF BORROWING" has the meaning specified in Section 2.02.

         "OBLIGATION" means, with respect to any Person, any payment, 
     performance or other obligation of such Person of any kind, including, 
     without limitation, any liability of such Person on any claim, whether 
     or not the right of any creditor to payment in respect of such claim is 
     reduced to judgment, liquidated, unliquidated, fixed, contingent, 
     matured, disputed, undisputed, legal, equitable, secured or unsecured, 
     and whether or not such claim is discharged, stayed or otherwise 
     affected by any proceeding referred to in Section 4.01(g).

         "OPERATING LEASES" means all leases that have or should be, in 
     accordance with  U.S. GAAP, recorded as operating leases.

         "PBGC" means the Pension Benefit Guaranty Corporation (or any 
     successor).

         "PERMITTED DEBT" means, with the respect to the Borrower and its 
     Subsidiaries, (a) Debt of the Borrower under the Loan Documents and (b) 
     the indorsement of negotiable instruments for deposit or collection or 
     similar transaction in the ordinary course of business.

         "PERMITTED INVESTMENTS" means, with respect to the Borrower, 
     (a) investments in Cash Equivalents; (b) extensions of trade credit to 
     the customers of the Borrower or any of its Subsidiaries, as the case 
     may be, in the ordinary course of business consistent with the 
     Borrower's or such Subsidiary's past practice; (c) purchases of 
     inventory occurring in the ordinary course of business consistent with 
     the Borrower's or such Subsidiary's past practice; (d) purchases of 
     assets in connection with Section 5.02(a)(ii); (e) negotiable 
     instruments held for collection, except to the extent that they would 
     constitute investments in Affiliates; (f) outstanding travel, moving and 
     other like advances to officers, employees and consultants; (g) lease, 
     utility and other similar deposits; or stock, obligations or securities 
     received in settlement of debts owing to the Borrower or a Subsidiary as 
     a result of foreclosure, perfection or enforcement of any Lien, in each 
     of the foregoing cases in the ordinary course of business of the 
     Borrower or any of its Subsidiaries, as the case may be; (h) sales of 
     goods or services on trade credit terms consistent with the Borrower's 
     and its Subsidiaries' past practices or as otherwise consistent with 
     trade credit terms in common use in the industry; (i) loans or advances 
     to 

<PAGE>

     vendors or contractors of the Borrower that do not exceed an aggregate 
     amount at any time outstanding of $1,000,000 (or the equivalent in any 
     other currency); and (j) loans or capital contributions made in cash or 
     other assets in respect of the Borrower's total amount of investment in 
     any Subsidiary organized as a Sino-foreign cooperative joint venture 
     under the "Law of the People's Republic of China on Sino-Foreign 
     Cooperative Joint Ventures," as re-enacted, amended or extended from 
     time to time.

         "PERMITTED LIENS" means such of the following as to which no 
     enforcement, collection, execution, levy or foreclosure proceeding shall 
     have been commenced: (a) Liens for taxes, assessments and governmental 
     charges or levies to the extent not required to be paid under 
     Section 5.01(f); (b) Liens imposed by law, such as materialmen's, 
     mechanics', carriers', workmen's and repairmen's Liens and other similar 
     Liens arising in the ordinary course of business securing obligations 
     that are not overdue for a period of more than 30 days; (c) pledges or 
     deposits to secure obligations under workers' compensation laws or 
     similar legislation or to secure public or statutory obligations; and 
     (d) easements, rights of way and other encumbrances on title to real 
     property that do not render title to the property encumbered thereby 
     unmarketable or materially adversely affect the use of such property for 
     its present purposes.

         "PERSON" means an individual, partnership, corporation (including a 
     business trust), joint stock company, trust, unincorporated association, 
     joint venture, limited liability company or other entity, or a 
     government or any political subdivision or agency thereof.

         "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

         "REFINANCING" has the meaning specified in Section 3.01(h)(ix).
          
         "SHAREHOLDERS" means, collectively, STHL, IWC and Vanguard China, 
     Inc., a Delaware corporation.

         "SHARES" means, with respect to the Borrower, capital stock or any 
     warrants, rights or options to acquire any such capital stock of the 
     Borrower.

         "SINGLE EMPLOYER PLAN" means a single employer plan, as defined in 
     Section 4001(a)(15) of ERISA, that (a) is maintained for employees of 
     the Borrower or any ERISA Affiliate and no Person other than the 
     Borrower and the ERISA Affiliates or (b) was so maintained and in 
     respect of which the Borrower or any ERISA Affiliate could have 
     liability under Section 4069 of ERISA in the event such plan has been or 
     were to be terminated.

         "STHL" means Star Telecom Holding Limited, a corporation organized 
     under the laws of Hong Kong.

         "STHL GUARANTY" has the meaning specified in Section 3.01(h)(ii).


<PAGE>

         "SUBSIDIARY" of any Person means any corporation, partnership, joint 
     venture, limited liability company, trust or estate of which (or in 
     which) more than 50% of (a) the issued and outstanding capital stock 
     having ordinary voting power to elect a majority of the Board of 
     Directors of such corporation (irrespective of whether at the time 
     capital stock of any other class or classes of such corporation shall or 
     might have voting power upon the occurrence of any contingency), (b) the 
     interest in the capital or profits of such limited liability company, 
     partnership or joint venture or (c) the beneficial interest in such 
     trust or estate is at the time directly or indirectly owned or 
     controlled by such Person, by such Person and one or more of its other 
     Subsidiaries or by one or more of such Person's other Subsidiaries.

         "TERMINATION DATE" means the earlier of the 30th day immediately 
     following the Effective Date and the date of termination in whole of the 
     Commitments pursuant to Section 6.01.

         "TORONTO DOMINION" has the meaning specified in the preamble to this 
     Agreement.

         "U.S. GAAP" has the meaning specified in Section 1.03.

         "VCFC" means Vanguard Cellular Financial Corp., a North Carolina 
     corporation.

         "VCFC GUARANTY" has the meaning specified in Section 3.01(h)(iii).

         "VOTING STOCK" means capital stock issued by a corporation, or 
     equivalent interests in any other Person, the holders of which are 
     ordinarily, in the absence of contingencies, entitled to vote for the 
     election of directors (or persons performing similar functions) of such 
     Person, even if the right so to vote has been suspended by the happening 
     of such a contingency.
     
         SECTION 1.02.  COMPUTATION OF TIME PERIODS.  In this Agreement in 
the computation of periods of time from a specified date to a later specified 
date, the word "from" means "from and including" and the words "to" and 
"until" each mean "to but excluding".

         SECTION 1.03.  ACCOUNTING TERMS.  All accounting terms not 
specifically defined herein shall be construed in accordance with generally 
accepted accounting principles consistent with those applied in the 
preparation of the financial statements referred to in Section 4.01(e) ("U.S. 
GAAP").

                           ARTICLE II
                                
                AMOUNTS AND TERMS OF THE ADVANCES


<PAGE>

                                
         SECTION 2.01.  THE ADVANCES.  The Lender agrees, on the terms and 
conditions hereinafter set forth, to make advances (the "ADVANCES") to the 
Borrower from time to time on any Business Day during the period from the 
Effective Date until the Termination Date in an aggregate amount not to 
exceed at any time outstanding $8,000,000 (the "FACILITY" or, as the date 
hereof, the "COMMITMENT").  Each Borrowing shall be in an aggregate amount of 
$2,000,000 or an integral multiple of $1,000,000 in excess thereof.  Each 
Borrowing shall consist of Advances made on the same day by the Lender.  The 
Borrower acknowledges and agrees that the Lender shall not provide more than 
three Borrowings under the Facility.

         SECTION 2.02.  MAKING THE ADVANCES.

         (a)  Each Borrowing shall be made on notice from the Borrower, which 
notice shall be received by the Lender, not later than 11:00 A.M. (Singapore 
time) on the third Business Day prior to the date of the proposed Borrowing.  
Such notice (each, a "NOTICE OF BORROWING") shall be irrevocable and binding 
on the Borrower, and shall be given in writing, in substantially the form of 
Exhibit B hereto, specifying therein the requested (i) date of such 
Borrowing, (ii) the aggregate amount of such Borrowing, and (iii) the initial 
Interest Period for each such Advance.  No later than 11:00 A.M. (Singapore 
time) on the date of such Borrowing, and upon fulfillment of the applicable 
conditions set forth in Article III, the Lender shall make available, in 
immediately available funds by crediting an account at Societe Generale, New 
York Branch, Account No. 00150231, for the account of the Borrower (or such 
other account which may be specified to the Lender in writing) for further 
credit to Societe Generale, Hong Kong Branch, Account No. 
081-842-02-34002-0081-01-7 in the amount of such Borrowing, net of any fees, 
expenses or other amounts owing to any Lender by the Borrower on the date of 
such Borrowing.

         (b)  The Borrower shall indemnify the Lender against any loss, cost 
or expense incurred by the Lender as a result of any failure to fulfill on or 
before the date specified in such Notice of Borrowing for such Borrowing the 
applicable conditions set forth in Article III, including, without 
limitation, any loss, cost or expense incurred by reason of the liquidation 
or reemployment of deposits or other funds acquired by the Lender to fund 
such Borrowing when such Borrowing, as a result of such failure, is not made 
on such date.  A certification as to such amounts, submitted by the Lender, 
shall be conclusive and binding for all purposes, absent manifest error.

         SECTION 2.03.  FEES.

         (a)  COMMITMENT FEE.  The Borrower agrees to pay the Lender for its 
account a commitment fee on the unused portion of the Facility from the date 
hereof until the Termination Date at a rate per annum equal to 0.5% per 
annum, payable in arrears, on the Termination Date.

         (b)  EXTENSION FEE.  Subject to Section 2.04(b), the Borrower agrees 
to pay the Lender for its account an extension fee equal to $100,000 (the 
"EXTENSION FEE") at the Extension Date.


<PAGE>

         SECTION 2.04.  REPAYMENT.

         (a)  Subject to Section 2.04(b), the Borrower shall repay to the 
Lender on the Final Maturity Date the aggregate principal amount of the 
Advances then outstanding.

         (b)  The Borrower may, at any time prior to the 30th day preceding 
the Initial Maturity Date, request in writing that the maturity of the Note 
be extended to the Final Maturity Date (the "EXTENSION").  Within 14 days of 
such request, the Lender shall notify the Borrower of its decision, which 
shall be in its sole discretion, with respect to the Extension (such day 
being the "ELECTION DATE").  If, as of the Election Date, the Lender elects 
to extend the maturity of the Note, the Note shall be extended to the Final 
Maturity Date, PROVIDED that at the date of such Election Date (i) the Note 
is outstanding, (ii) no Default or Event of Default shall have occurred and 
be continuing and (iii) all fees, expenses and other payments due to the 
Lender in connection with the Extension or otherwise shall be paid in full in 
cash.

         SECTION 2.05.  INTEREST.

         (a)  SCHEDULED INTEREST.  The Borrower shall pay interest on the 
unpaid principal amount of the Advance owing to the Lender from the date of 
such Advance until such principal amount shall be paid in full, at a rate per 
annum equal at all times during each Interest Period for such Advance to the 
sum of (i) LIBOR for such Interest Period for such Advance PLUS (ii) the 
Applicable Margin in effect from time to time, payable in arrears on the last 
day of such Interest Period.

         (b)  DEFAULT INTEREST.  Upon the occurrence and during the 
continuance of an Event of Default, the Borrower shall pay, on demand, 
(i) the interest on the unpaid principal amount of each Advance owing to the 
Lender, payable in arrears on the dates referred to in clause (a) above, at a 
rate per annum equal at all times to 2% per annum above the rate per annum 
required to be paid on such Advance pursuant to clause (a) above and (ii) to 
the fullest extent permitted by law, the interest on the amount of any 
interest, fee or other amount payable hereunder that is not paid when due, 
from the date such amount shall be due until such amount shall be paid in 
full, at a rate per annum equal at all times to 2% per annum above the rate 
per annum required to be paid on the Advances pursuant to clause (a) above 
during such period.

         (c)  NOTICE OF INTEREST RATE.  Promptly after receipt of a Notice of 
Borrowing pursuant to Section 2.02(a), the Lender shall give notice to the 
Borrower and the applicable interest rate determined by the Lender for 
purposes of clause (a) above.

         SECTION 2.06.  OPTIONAL PREPAYMENTS.

         (a)  The Borrower may, upon at least 30 Business Days' notice to the 
Lender stating the proposed date and aggregate principal amount of the 
prepayment, and if such notice is given the Borrower shall, prepay the 
outstanding principal amount of the Advances comprising part of the same 
Borrowing in whole or on part, together with accrued interest to the date of 
such prepayment on the principal amount prepaid; PROVIDED, HOWEVER, that 
(x) each partial 


<PAGE>

prepayment shall be in an aggregate principal amount of $2,000,000 or an 
integral multiple of $100,000 in excess thereof and (y) the Borrower shall be 
obligated to reimburse the Lender in respect thereof pursuant to 
Section 7.04(c).

         (b)  MANDATORY.
     
              (i)  Upon the sale, lease, transfer or other disposition of any 
     assets of the Borrower or any of its Subsidiaries (other than under 
     clauses (i) and (ii) of Section 5.02(k)), the Borrower shall prepay the 
     then aggregate unpaid principal amount of Advances in an amount equal to 
     the lesser of (A) the then outstanding principal amount of such Advances 
     and (B) the amount of such Net Proceeds from such sale, lease, transfer 
     or other disposition, in either case together with accrued interest to 
     the date of such prepayment on the principal amount prepaid and all 
     fees, expenses and other payments due to the Lender under the Loan 
     Documents.

              (ii) Upon receipt by the Borrower or any of its Subsidiaries of 
     the Net Proceeds from (A) the incurrence or issuance by the Borrower or 
     any of its Subsidiaries of any Debt or (B) the sale or issuance by the 
     Borrower or any of its Subsidiaries of any capital stock, any securities 
     convertible into or exchangeable for capital stock, any securities 
     convertible into or exchangeable for capital stock or any warrants, 
     rights or options to acquire capital stock, debt or equity securities, 
     the Borrower shall prepay the then outstanding principal amount of the 
     Advances, together with accrued interest to the date of such prepayment 
     on the principal amount prepaid and all fees, expenses and other 
     payments due to the Lender under the Loan Documents.
     
         SECTION 2.07.  INCREASED COSTS.

         (a)  If, due to either (i) the introduction of or any change in or 
in the interpretation of any law or regulation or (ii) the compliance with 
any guideline or request from any central bank or other governmental 
authority (whether or not having the force of law), there shall be any 
increase in the cost to the Lender of agreeing to make or making, funding or 
maintaining Advances (excluding for purposes of this Section 2.07 any such 
increased costs resulting from (i) Taxes or Other Taxes (as to which Section 
2.10 shall govern) and (ii) changes in the basis of taxation of overall net 
income or overall gross income by the United States or by the foreign 
jurisdiction or state under the laws of which the Lender is organized or has 
its Lending Office or any political subdivision thereof), then the Borrower 
shall from time to time, upon demand by the Lender, pay to the Lender 
additional amounts sufficient to compensate the Lender for such increased 
cost.  A certificate as to the amount of such increased cost, submitted to 
the Borrower by the Lender, shall be conclusive and binding for all purposes, 
absent manifest error.

         (b)  If the Lender determines that compliance with any law or 
regulation or any guideline or request from any central bank or other 
governmental authority (whether or not having the force of law) affects or 
would affect the amount of capital required or expected to be maintained by 
the Lender or any corporation controlling the Lender and that the amount of 
such 


<PAGE>

capital is increased by or based upon the existence of the Lender's 
commitment to lend hereunder and other commitments of this type, then, upon 
demand by the Lender, the Borrower shall pay to the Lender, from time to time 
as specified by the Lender, additional amounts sufficient to compensate the 
Lender or such corporation in the light of such circumstances, to the extent 
that the Lender reasonably determines such increase in capital to be 
allocable to the existence of the Lender's commitment to lend hereunder.  A 
certificate as to such amounts submitted to the Borrower by the Lender shall 
be conclusive and binding for all purposes, absent manifest error.

         SECTION 2.08.  ILLEGALITY.  Notwithstanding any other provision of 
this Agreement, if the Lender shall notify the Borrower that the introduction 
of or any change in or in the interpretation of any law or regulation makes 
it unlawful, or any central bank or other governmental authority asserts that 
it is unlawful, for the Lender or its Lending Office to perform its 
obligations hereunder to make Advances or to fund or maintain Advances 
hereunder, the obligation of the Lender to make, fund or maintain Advances 
shall be suspended until the Lender shall notify the Borrower that the 
circumstances causing such suspension no longer exist.

         SECTION 2.09.  PAYMENTS AND COMPUTATIONS.

         (a)  The Borrower shall make each payment hereunder and under the 
Notes only and exclusively in Dollars and in immediately available funds not 
later than the time specified herein or therein therefor, or if no time is 
specified, by not later than 11:00 A.M. (Singapore time) on the day when due 
for the account of the Lender at the Lender's Account (or such other account 
which may be specified to the Borrower in writing).

         (b)  All computations of interest and fees shall be made by the 
Lender on the basis of a year of 360 days, in each case for the actual number 
of days (including the first day but excluding the last day) occurring in the 
period for which such interest or fees are payable.  Each determination by 
the Lender. of an interest rate or fee hereunder and under the Note shall be 
conclusive and binding for all purposes, absent manifest error.

         (c)  Whenever any payment hereunder or under the Note shall be 
stated to be due on a day other than a Business Day, such payment shall be 
made on the next succeeding Business Day, and such extension of time shall in 
such case be included in the computation of payment of interest or any fee, 
as the case may be; PROVIDED, HOWEVER, that, if such extension would cause 
payment of interest on or principal of Advances to be made in the next 
following calendar month, such payment shall be made on the next preceding 
Business Day.

         (d)  The Borrower hereby authorizes the Lender, if and to the extent 
payment owed to the Lender is not made when due hereunder or under the Note 
held by the Lender, to charge from time to time against any or all of the 
Borrower's accounts with the Lender any amount so due.

         (e)  To the fullest extent permitted by law, the Borrower shall make 
all payments hereunder and under the Note regardless of any defense or 
counterclaim, including, without limitation, any defense or counterclaim 
based on any law, rule or policy which is now or 

<PAGE>

hereafter promulgated by any governmental authority or regulatory body and 
which may adversely affect the Borrower's obligation to make, or the right of 
the holder of the Note to receive, such payments.

         (f)  The obligation of the Borrower to make payments hereunder and 
under the Note in Dollars when due in accordance with this Section 2.09 is 
absolute.

         SECTION 2.10.  TAXES.

         (a)  Any and all payments by the Borrower hereunder or under the 
Note shall be made, in accordance with Section 2.10, free and clear of and 
without deduction for any and all present or future taxes, levies, imposts, 
deductions, charges or withholdings, and all liabilities with respect 
thereto, EXCLUDING taxes imposed on its overall net income, and franchise 
taxes imposed on it in lieu of net income taxes, by the jurisdiction under 
the laws of which the Lender is organized or has its Lending Office or any 
political subdivision thereof (all such non-excluded taxes, levies, imposts, 
deductions, charges, withholdings and liabilities in respect of payments 
hereunder or under the Note being hereinafter referred to as "TAXES").  If 
the Borrower shall be required by law to deduct any Taxes from or in respect 
of any sum payable hereunder or under the Note to the Lender, (i) the sum 
payable shall be increased as may be necessary so that after making all 
required deductions (including deductions applicable to additional sums 
payable under this Section 2.10) the Lender receives an amount equal to the 
sum it would have received had no such deductions been made, (ii) the 
Borrower shall make such deductions and (iii) the Borrower shall pay the full 
amount deducted to the relevant taxation authority or other authority in 
accordance with applicable law.

         (b)  In addition, the Borrower shall pay any present or future stamp 
or documentary taxes or any other excise or property taxes, charges or 
similar levies that arise from any payment made hereunder or under the Note 
or from the execution, delivery or registration of, performing under, or 
otherwise with respect to, this Agreement or the Note (hereinafter referred 
to as "OTHER TAXES").

         (c)  The Borrower shall indemnify the Lender for and hold it 
harmless against the full amount of Taxes or Other Taxes (including, without 
limitation, taxes of any kind imposed by any jurisdiction on amounts payable 
under this Section 2.10) imposed on or paid by the Lender and any liability 
(including penalties, additions to tax, interest and expenses) arising 
therefrom or with respect thereto.  This indemnification shall be made within 
30 days from the date the Lender makes written demand therefor.

         (d)  Within 30 days after the date of any payment of Taxes, the 
Borrower shall furnish to the Lender, at its address referred to in 
Section 7.02, the original or a certified copy of a receipt evidencing such 
payment.  In the case of any payment hereunder or under the Note by or on 
behalf of the Borrower through an account or branch outside the United States 
or by or on behalf of the Borrower by a payor that is not a United States 
person, if the Borrower determines that no Taxes are payable in respect 
thereof, the Borrower shall furnish, or shall cause such payor to furnish, to 
the Lender, an opinion of counsel acceptable to the Lender stating that such 

<PAGE>

payment is exempt from Taxes.  For purposes of this clause (d) and 
clause (e), the terms "UNITED STATES" and "UNITED STATES PERSON" shall have 
the meanings specified in Section 7701 of the Internal Revenue Code.

         (e)  Without prejudice to the survival of any other agreement of the 
Borrower hereunder, the agreements and obligations of the Borrower contained 
in this Section 2.10 shall survive the payment in full of all amounts due 
hereunder and under the Note.

         SECTION 2.11.  USE OF PROCEEDS.  The proceeds of the Advances shall 
be available (and the Borrower agrees that it shall use such proceeds) solely 
for general corporate purposes of the Borrower.

                           ARTICLE III
                                
             CONDITIONS TO EFFECTIVENESS AND LENDING
                                
         SECTION 3.01.  CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECTION 
2.01.  Section 2.01 of this Agreement shall become effective on and as of the 
first date (the "EFFECTIVE DATE") on which the following conditions precedent 
have been satisfied:

         (a)  There shall have occurred no Material Adverse Change since 
December 31, 1996.

         (b)  There shall exist no action, suit, investigation, litigation or 
proceeding affecting the Loan Parties or any of their Subsidiaries pending or 
threatened before any court, governmental agency or arbitrator that (i) could 
be reasonably likely to have a Material Adverse Effect or (ii) purports to 
affect the legality, validity or enforceability of this Agreement or the Note 
or the consummation of the transactions contemplated hereby.

         (c)  The Lender shall have completed a due diligence investigation 
of the Loan Parties and their Subsidiaries in scope, and with results, 
satisfactory to the Lender; without limiting the generality of the foregoing, 
the Lender shall have been given such access to the management, records, 
books of account, contracts and properties of the Loan Parties and its 
Subsidiaries as it shall have requested.

         (d)  All governmental and third party consents and approvals 
necessary in connection with the transactions contemplated hereby shall have 
been obtained (without the imposition of any conditions that are not 
acceptable to the Lender) and shall remain in effect, and no law or 
regulation shall be applicable in the reasonable judgment of the Lender that 
restrains, prevents or imposes materially adverse conditions upon the 
transactions contemplated hereby.

         (e)  The Borrower shall have paid all reasonable accrued fees and 
expenses of the Lender (including the accrued fees and expenses of counsel to 
the Lender).


<PAGE>

         (g)  On the Effective Date, (i) the representations and warranties 
shall be true and correct in all material respects on and as of such date 
(other than any such representation and warranties that, by their terms, 
refer to a specific date other than the Effective Date, in which case such 
specific date); and (ii) no event shall have occurred and shall be continuing 
that constitutes a Default.

         (h)  The Lender shall have received on or before the Effective Date 
the following, each dated such day, in form and substance satisfactory to the 
Lender and in sufficient copies for the Lender:

         (i)  The Note to the order of the Lender.
     
         (ii) A guaranty of STHL, substantially in the form of Exhibit C-1 
     hereto, as amended, supplemented or otherwise modified from time to time 
     in accordance with its terms and with the terms of the other Loan 
     Documents (the "STHL GUARANTY"), duly executed and delivered by STHL.

         (iii) A guaranty of VCFC, substantially in the form of Exhibit C-2 
     hereto, as amended, supplemented or otherwise modified from time to time 
     in accordance with its terms and with the terms of the other Loan 
     Documents (the "VCFC GUARANTY"), duly executed and delivered by VCFC. 
     Subject to the terms of the VCFC Guaranty, VCFC shall be subrogated to 
     the rights of the Lender resulting from the VCFC Guaranty.

         (iv)  Certified copies of the resolutions of the Board of Directors 
     of each Loan Party approving the Loan Documents to which it is a party, 
     and of all documents evidencing other necessary corporate action and 
     governmental approvals, if any, with respect thereto.

         (v)   A certificate of each Loan Party, signed on behalf of such 
     Loan Party by its President or a Vice President and the Secretary or 
     Assistant Secretary (the statements made in which certificate shall be 
     true on and as of the date of the Effective Date), certifying as to: (A) 
     true and complete copies of the charter and by-laws of such Loan Party 
     as in effect on the dates the resolutions specified in clause (ii) and 
     were adopted and the absence of any amendments to the charter or by-laws 
     since such dates; (B) the due incorporation and good standing of such 
     Loan Party in its respective jurisdiction of incorporation and the 
     absence of any proceeding for the dissolution or liquidation of such 
     Loan Party; (C) the truth of the representations and warranties made by 
     such Loan Party in each Loan Document to which it is a party; (D) in the 
     case of the Borrower the absence of any Event of Default or a Default; 
     and (E) in the case of the Borrower the satisfaction of all conditions 
     precedent by such Loan Party.

         (vi)  A signed copy of a certificate of the Secretary or an 
     Assistant Secretary or other appropriate officer of each Loan Party 
     certifying the names and true signatures of the officers of such Loan 
     Party authorized to sign each Loan Document to which such Loan Party is 
     a party, and the other documents to be delivered hereunder or thereunder.

<PAGE>

     
         (vii) (A) A favorable opinion of Winthrop, Stimson, Putnam & 
     Roberts, special New York counsel for the Borrower;
     
               (B)  a favorable opinion of S. H. Chan & Co., special Hong 
          Kong counsel for the Borrower;
          
               (C)  a favorable opinion of S. H. Chan & Co., special Hong 
          Kong counsel for STHL;
          
               (D)  a favorable opinion of Latham & Watkins, special New 
          York counsel to VCFC; and
          
               (E)  a favorable opinion of Anthony Dillon, Vice President-Law
          for VCFC.

         (viii) A favorable opinion of Shearman & Sterling, counsel for the 
     Lender, in form and substance satisfactory to the Lender.
     
         (ix) Evidence, in form and substance satisfactory to the Lender, 
     that the Borrower shall use its best efforts to complete an offering and 
     sale of debt or equity securities of the Borrower or other financing 
     transactions referred to in Section 2.06(b), for the purpose of 
     refinancing the Facility (the "REFINANCING"), which shall yield an 
     amount sufficient to prepay the aggregate unpaid principal amount of the 
     Advances in full PLUS accrued interest thereon to the date of repayment 
     and all other amounts payable under the Loan Documents in accordance 
     with Section 2.06(b).
     
         (x)  Such other approvals, opinions or documents as the Lender may 
     reasonably request.
     
         SECTION 3.02.  CONDITIONS PRECEDENT TO EACH BORROWING. The 
obligation of the Lender to make an Advance on the occasion of each Borrowing 
shall be subject to the conditions precedent that the Effective Date shall 
have occurred and on the date of such Borrowing (a) the following statements 
shall be true (and each of the giving of the applicable Notice of Borrowing 
and the acceptance by the Borrower of the proceeds of such Borrowing shall 
constitute a representation and warranty by the Borrower that on the date of 
such Borrowing such statements are true):

         (i)  the representations and warranties contained herein are correct 
     on and as of the date of such Borrowing, before and after giving effect 
     to such Borrowing and to the application of the proceeds therefrom, as 
     though made on and as of such date, and
     
         (ii) no event has occurred and is continuing, or would result from 
     such Borrowing or from the application of the proceeds therefrom, that 
     constitutes a Default;

<PAGE>

     
and (b) the Lender shall have received such other approvals, opinions or 
documents as the Lender may reasonably request.

                           ARTICLE IV
                                
                 REPRESENTATIONS AND WARRANTIES
                                
         SECTION 4.01.  REPRESENTATIONS AND WARRANTIES OF THE BORROWER.  The 
Borrower represents and warrants as follows:

         (a)  DUE INCORPORATION, ETC.   Each of the Borrower and its 
Subsidiaries (i) is duly organized, validly existing and in good standing 
under the laws of the jurisdiction of its organization, (ii) is duly 
authorized to do business in which it owns or leases property or assets or in 
which the conduct of its business requires it to be so authorized, and (iii) 
has all requisite power and authority (A) to own or hold under lease and to 
operate all of its property and assets and (B) to execute, deliver and 
perform all its obligations under each Loan Document to which it is or will 
be a party.

         (b)  CORPORATE POWER, ETC.  Each of the Borrower and its 
Subsidiaries has full corporate power and authority to enter into, deliver 
and perform its obligations under each Loan Document to which it is or will 
be a party and to consummate each of the transactions contemplated hereby and 
thereby, and has taken all necessary corporate action to authorize the 
execution, delivery and performance by it of each Loan Document to which it 
is or will be a party.  Each Loan Document to which any of the Borrower and 
its Subsidiaries is or will be a party constitutes the legal, valid and 
binding obligation of the Borrower or such Subsidiary, enforceable against 
such the Borrower or such Subsidiary in accordance with its terms, except as 
enforcement may be limited by bankruptcy, insolvency, reorganization, 
moratorium or similar laws now or hereafter in effect affecting the 
enforcement of creditors' rights generally and by general principles of 
equity (regardless of whether enforcement is sought in a proceeding in equity 
or at law).

         (c)  NO CONFLICT.  Neither the execution and delivery of any Loan 
Document to which any of the Borrower and its Subsidiaries is a party nor the 
performance by the Borrower or such Subsidiary of its obligations thereunder, 
nor the consummation of the transactions contemplated thereby will, 
(i) conflict with the charter or by-laws of any of the Borrower or its 
Subsidiaries, or (ii) conflict with or result in a breach of, or constitute a 
default under, or result in the creation or imposition of any Lien upon any 
of the property or assets of the Borrower or such Subsidiary under, any 
applicable laws (including, without limitation, Regulation X issued by the 
Board of Governors of the Federal Reserve System) or any indenture, mortgage, 
deed of trust or other instrument or agreement to which the Borrower or such 
Subsidiary may be or become a party or by which it may be or become bound or 
to which any of the property or assets of the Borrower or such Subsidiary may 
be subject.


<PAGE>

         (d)  APPROVALS, ETC.  No order, license, consent, authorization or 
approval of, or exemption by, or notice to or registration with, any 
governmental authority or regulatory body, and no filing, recording, 
publication or registration in any public office or any other place, is 
required in connection with the execution, delivery and performance by each 
of the Borrower and its Subsidiaries of any Loan Document to which it is or 
will be a party, or for the legality, validity, binding effect or 
enforceability thereof.

         (e)  FINANCIAL STATEMENTS.  The balance sheets of the Borrower as at 
December 31, 1996, and the related statements of income and cash flows of the 
Borrower for the fiscal year then ended, accompanied by an opinion of the 
independent chartered or public accountants of the Borrower, copies of which 
have been furnished to the Lender, fairly present the financial condition of 
the Borrower as at such date and the results of the operations thereof for 
the period ended on such date.  All such financial statements, including the 
related schedules and notes thereto, have been prepared in accordance with  
U.S. GAAP for the Borrower applied consistently throughout the periods 
involved.

         (f)  NO MATERIAL ADVERSE EFFECT.  Since December 31, 1996, there has 
been no, nor has there been threatened any, Material Adverse Effect (or any 
development involving a prospective Material Adverse Effect).

         (g)  LITIGATION, ETC.  There is no pending or threatened litigation, 
investigation, action or proceeding of or before any court, arbitrator or 
governmental agency (including any Environmental Action) binding upon or 
affecting any of the Borrower or its Subsidiaries respective properties and 
assets that (i) may cause a Material Adverse Effect to occur or (ii) purports 
to affect the legality, validity or enforceability of any Loan Document.

         (h)  NO VIOLATION, ETC.  Each of the Borrower and its Subsidiaries 
is not in violation of, nor does the execution by the Borrower or such 
Subsidiary of the Loan Documents to which such it is a party or the 
consummation of the transactions contemplated thereby result in the violation 
of, (i) any term of its charter or by-laws or (ii) any term of any other 
agreement or instrument to which it is a party or by which it is bound in any 
respect, which has or could be reasonably expected to have a Material Adverse 
Effect.

         (i)  DEBT.  At the time of and immediately after giving effect to 
the Advances, there is no Debt other than Debt permitted under 
Section 5.02(b).

         (j)  MARGIN STOCK.  Each of the Borrower and its Subsidiaries is not 
engaged in the business of extending credit for the purpose of purchasing or 
carrying margin stock within the meaning of Regulations G, T and X issued by 
the Board of Governors of the Federal Reserve System; and no part of the 
proceeds of the Facility will be used to purchase or carry any margin stock 
or extend credit to others for the purpose of purchasing or carrying any 
margin stock.


<PAGE>

         (k)  USE OF PROCEEDS.  No proceeds of the Facility will be used to 
acquire any equity security of a class which is registered pursuant to 
Section 12 of the U.S. Securities Exchange Act of 1934, as amended.

         (l)  INVESTMENT COMPANY ACT AND PUBLIC UTILITY HOLDING COMPANY ACT.  
Each of the Borrower and its Subsidiaries is not, and is not directly or 
indirectly controlled by any Person which is, required to register as an 
"investment company" within the meaning of the U.S. Investment Company Act of 
1940, as amended. Neither the Borrower nor any of its Subsidiaries is a 
"holding company" or a "subsidiary" or an "affiliate" of a "holding company" 
or a "public utility" within the meaning of the U.S. Public Utility Holding 
Company Act of 1935, as amended.

         (m)  TAXES.  Each of the Borrower and its Subsidiaries has filed all 
tax returns required to be filed by it and has paid all taxes, assessments, 
fees and other charges (including interest and penalties) due with respect to 
the years covered by such returns, except for any such failures to file or to 
pay such amounts which, in the aggregate, would not have a Material Adverse 
Effect.

         (n)  ENVIRONMENTAL LAWS.  The operations and properties of each of 
the Borrower and its Subsidiaries comply in all material respects with all 
Environmental Laws, all necessary Environmental Permits have been obtained 
and are in effect for the operations and properties of the Borrower and its 
Subsidiaries, EXCEPT for such Environmental Permits where the failure to 
obtain the same, in the aggregate, could not be reasonably expected to have a 
Material Adverse Effect.

         (o)  SHAREHOLDERS.  Set forth on Schedule 4.01(o) hereto is a 
complete and accurate list of the owners of 100% of the Shares as of the date 
hereof, specifying therein the number of Shares owned or controlled by each 
of the Shareholders.

                            ARTICLE V
                                
                    COVENANTS OF THE BORROWER
                                
         SECTION 5.01.  AFFIRMATIVE COVENANTS.  Each of the Borrower and its 
Subsidiaries covenants and agrees (except in the case of covenants that do 
not include the Borrower or any of its Subsidiaries) that so long as the 
Lender shall have any Obligation under Section 2.01 or any amount is owing 
under any Loan Document, unless the Lender shall otherwise consent in 
writing, the Borrower shall and shall cause each of its Subsidiaries to:

         (a)  CORPORATE EXISTENCE.  Preserve and maintain in full force and 
effect its corporate existence, rights (charter and statutory), franchises 
and privileges and qualify and remain qualified, as a corporation in good 
standing in each jurisdiction in which such qualification is from time to 
time necessary or desirable in view of its business and operations or the 
ownership of its properties, except for such jurisdictions where the failure 
to so qualify would 

<PAGE>

not have a Material Adverse Effect; PROVIDED, HOWEVER, that neither the 
Borrower nor any of its Subsidiaries shall be required to preserve any right, 
privilege or franchise if the Board of Directors thereof shall determine in 
good faith that such right, privilege or franchise is no longer useful in the 
conduct of the business of the Borrower or such Subsidiary, as the case may 
be, and the loss thereof is not disadvantageous in any material respect to 
the Lender.

         (b)  COMPLIANCE WITH LAWS.  Comply in all material respects with all 
applicable laws, rules, regulations and orders, such compliance to include, 
without limitation, compliance with ERISA.

         (c)  MAINTENANCE OF PROPERTY; INSURANCE.  Preserve and maintain all 
of its properties, owned or leased, that are used or useful in the conduct of 
its business in good working order and condition, ordinary wear and tear 
excepted; and maintain insurance with financially sound and reputable 
insurers in such amounts and against such risks, as are usually and 
customarily insured by companies engaged in a similar business with respect 
to properties of a similar character.

         (d)  KEEPING OF BOOKS.  Keep proper books of record and accounts, in 
which full and correct entries shall be made of all financial transactions 
and the assets and business of the Borrower and its Subsidiaries in 
accordance with generally accepted accounting principles in effect from time 
to time or as otherwise required by applicable rules and regulations of any 
governmental agency or regulatory authority having jurisdiction over the 
Borrower and any of its Subsidiaries.

         (e)  ACCESS TO RECORDS.  Provide the Lender and its authorized 
advisors and representatives reasonable access to all books, records, offices 
and other facilities and properties of the Borrower and its Subsidiaries upon 
reasonable notice, and allow the Lender or its authorized advisors or 
representatives (as the case may be) to make such examinations thereof and 
copies of and abstracts from such books and records as the Lender or its 
authorized advisors or representatives (as the case may be) may reasonably 
request.

         (f)  PAYMENT OF TAXES, ETC.  Pay and discharge before the same shall 
become delinquent (i) all taxes, assessments and governmental charges or 
levies imposed upon it or upon its property and (ii) all lawful claims that, 
if unpaid, might become a lien upon its property; PROVIDED, HOWEVER, that 
neither the Borrower nor any of its Subsidiaries  shall be required to pay or 
discharge any such tax, assessment, charge or claim that is being contested 
in good faith and by proper proceedings and as to which appropriate reserves 
are being maintained, unless and until any Lien resulting therefrom attaches 
to its property and becomes enforceable against its other creditors.

         (g)  TRANSACTIONS WITH AFFILIATES.  Conduct, and cause each of its 
Subsidiaries to conduct, all transactions otherwise permitted under the Loan 
Documents with any of their Affiliates on terms that are fair and reasonable 
and no less favorable to the Borrower or any of its Subsidiaries than it 
would obtain in a comparable arm's-length transaction with a Person not an 
Affiliate.


<PAGE>

         (h)  FINANCIAL STATEMENTS, ETC.
     
         (i)  as soon as available and in any event within 45 days after the 
     end of each quarter of each fiscal year of the Borrower and its 
     Subsidiaries, furnish to the Lender and the Guarantors, without cost to 
     the Lender or the Guarantors, (A) quarterly unaudited Consolidated 
     balance sheets, statements of income and cash flows of the Borrower and 
     its Subsidiaries, all in reasonable detail and duly certified (subject 
     to normal year-end audit adjustments) by senior financial officer of the 
     Borrower as having been prepared in accordance with  U.S.  GAAP for the 
     Borrower and (B) a Compliance Certificate of the Borrower dated as of 
     the last day of such quarter, executed by such senior financial officer;
     
         (ii) as soon as available and in any event within 90 days after the 
     end of each fiscal year of the Borrower and its Subsidiaries, furnish to 
     the Lender and the Guarantors, without cost to the Lender or the 
     Guarantors, (A) a copy of the annual audit report for such fiscal year 
     for the Borrower and its Subsidiaries, including therein Consolidated 
     balance sheets, statements of income and cash flows for such year 
     certified by independent chartered or public accountants satisfactory to 
     the Lender and (B) a Compliance Certificate of the Borrower dated as of 
     the last day of such year, executed by a senior financial officer 
     thereof;
     
         (iii) furnish to the Lender and the Guarantors, without cost to the 
     Lender or the Guarantors, copies of all (A) documents and certificates 
     delivered to any other lender or holder of Debt promptly after delivery 
     thereof to such other lender or holder of Debt, and (B) reports which 
     the Borrower or any of its Subsidiaries sends to any of its security 
     holders, and copies of all reports and registration statements which the 
     Borrower or any of its Subsidiaries files with the Securities and 
     Exchange Commission or any national securities exchange; and
     
         (iv) furnish to the Lender and the Guarantors, without cost to the 
     Lender or the Guarantors, any other information with respect to the 
     financial condition, business and property of the Borrower and its 
     Subsidiaries, as the Lender may from time to time reasonably request.
     
         (i)  NOTICE OF DEFAULTS.  Promptly upon any officer of any of the 
Borrower or its Subsidiaries obtaining knowledge thereof, give notice to the 
Lender and the Guarantors, (i) of any development, including, without 
limitation, any litigation, investigation or proceeding affecting the 
Borrower or such Subsidiary, which has a Material Adverse Effect, could 
reasonably be expected to have a Material Adverse Effect or, in the case of 
any litigation, investigation or other proceeding, which could, if adversely 
decided, reasonably be expected to have a Material Adverse Effect and (ii) of 
a Default or Event of Default under the Loan Documents, each such notice 
being in the form of an officers' certificate, signed by an authorized 
officer of the Borrower or such Subsidiary, specifying the nature and period 
of existence of any 

<PAGE>

such event and what action the Borrower or such Subsidiary, has taken, is 
taking or proposes to take with respect thereto.

         (j)  REFINANCING.  Use its best efforts to complete the Refinancing 
prior to the Final Maturity Date, which Refinancing shall yield an amount 
sufficient to repay the aggregate unpaid principal amount of the Advances in 
full PLUS accrued interest thereon to the date of repayment and all other 
amounts payable under the Loan Documents.

         (k)  COMPLIANCE WITH ENVIRONMENTAL LAWS.  Comply with all 
Environmental Laws and Environmental Permits applicable to its operations and 
properties, noncompliance with which could have a Material Adverse Effect; 
obtain and renew all Environmental Permits necessary for its operations and 
properties; and conduct any investigation, study, sampling and testing, and 
undertake any cleanup, removal, remedial or other action necessary to remove 
and clean up Hazardous Materials from any of its properties, in accordance 
with the requirements of all applicable Environmental Laws; PROVIDED, 
HOWEVER, that the Borrower or any of its Subsidiaries shall not be required 
to undertake any such cleanup, removal, remedial or other action to the 
extent that its obligation to do so is being contested in good faith and by 
proper proceedings and appropriate reserves are being maintained with respect 
to such circumstances.

    SECTION 5.02.  NEGATIVE COVENANTS.  Each of the Borrower and its 
Subsidiaries covenants and agrees (except in the case of covenants that do 
not include the Borrower or any of its Subsidiaries) that so long as the 
Lender shall have any obligation under Section 2.01 or any amount is owing 
under any Loan Document, unless the Lender shall otherwise consent in 
writing, the Borrower shall not and shall cause each of its Subsidiaries not 
to:

         (a)  LIENS, ETC.  Create or suffer to exist, or permit any of its 
Subsidiaries to create or suffer to exist, any Lien on or with respect to any 
of its properties, whether now owned or hereafter acquired, or assign, or 
permit any of its Subsidiaries to assign, any right to receive income, other 
than:

         (i)  Permitted Liens,
     
         (ii) purchase money Liens upon or in any real property or equipment 
     acquired or held by the Borrower or any Subsidiary in the ordinary 
     course of business to secure the purchase price of such property or 
     equipment or to secure Debt incurred solely for the purpose of financing 
     the acquisition of such property or equipment, or Liens existing on such 
     property or equipment at the time of its acquisition (other than any 
     such Liens created in contemplation of such acquisition that were not 
     incurred to finance the acquisition of such property) or extensions, 
     renewals or replacements of any of the foregoing for the same or a 
     lesser amount, PROVIDED, HOWEVER, that no such Lien shall extend to or 
     cover any properties of any character other than the real property or 
     equipment being acquired, and no such extension, renewal or replacement 
     shall extend to or cover any properties not theretofore subject to the 
     Lien being extended, renewed or replaced, PROVIDED FURTHER that the 
     aggregate principal amount of the indebtedness secured by the Liens 
     referred to in this clause (ii) shall not exceed $150,000,000 (or the 
     equivalent in any other currency) at any time outstanding,

<PAGE>

         (iii) the Liens existing on the Effective Date and described on 
     Schedule 5.02(a)(iii) hereto,
     
         (iv) Liens arising in connection with Finance Leases permitted under 
     Section 5.02(b)(iv); and
     
         (v)  the replacement, extension or renewal of any Lien permitted by 
     clause (iii) above upon or in the same property therefore subject 
     thereto or the replacement, extension or renewal (without increase in 
     the amount or change in any direct or contingent obligor)of the Debt 
     secured thereby.
     
         (b)  DEBT.  Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur or suffer to
exist, any Debt other than:

         (i)   Permitted Debt;
     
         (ii)  Debt Secured by Liens permitted by Section 5.02(a)(ii) not to 
     exceed $150,000,000 (or the equivalent in any other currency) at anytime 
     outstanding;
     
         (iii) Debt secured by Liens permitted by Section 5.02(a)(iii); 
     and
     
         (iv)  Finance Leases not to exceed in the aggregate $100,000,000 (or 
     the equivalent thereof in any other currency;
     
         (c)  LEASE OBLIGATIONS.  Create, incur, assume or suffer to exist, 
any obligations (other than Operating Leases of the Borrower or any of its 
Subsidiaries in respect of any Cell Sites) as lessee (i) for the rental or 
hire of real or personal property in connection with any sale and leaseback 
transaction, or (ii) for the rental or hire of other real or personal 
property of any kind under leases or agreements to lease including Finance 
Lease having an original term of one year or more that would cause the direct 
and contingent liabilities of the Borrower and its Subsidiaries, on a 
Consolidated basis, in respect of all such obligations to exceed $10,000,000 
(or the equivalent in any other currency payable in any period of 12 
consecutive months.

         (d)  MERGERS, ETC.  Merge into or consolidate with any Person or 
permit any Person to merge into it, or permit any of its Subsidiaries to do 
so, except that any Subsidiary of the Borrower may merge into or consolidate 
with any other Subsidiary of the Borrower provided that, in the case of any 
such merger or consolidation, the Person formed by such merger or 
consolidation shall be a wholly-owed Subsidiary of the Borrower; PROVIDED, 
HOWEVER, that in each case, immediately after giving effect thereto, no event 
shall occur and be continuing that constitutes a Default.

         (e)  INVESTMENTS, LOANS, ADVANCES.  Make any advance, loan, or 
extension of credit to, or make any acquisitions or investments (whether by 
way of transfers of property, contributions to capital, acquisitions of 
stock, securities, evidences of indebtedness or otherwise)

<PAGE>

in, or purchase any stock, bonds, notes, debentures or other securities of, 
any other Person, except for Permitted Investments.

         (f)  OPERATE OTHER THAN IN ORDINARY COURSE.  Operate its business, 
other than in the usual and ordinary course and other than that which is 
consistent with the past practice established by the Borrower or such 
Subsidiary, as the case may be.

         (g)  DIVIDENDS, ETC.  (i) Declare or make any dividend payment or 
other distribution of assets, property, cash, rights, obligations or 
securities (on account of any shares of capital stock of the Borrower or such 
Subsidiary, or (ii) purchase, redeem, retire, defease or otherwise acquire 
for value any shares of any class of the capital stock of the Borrower or 
such Subsidiary as the case may be, or any warrants, rights or options to 
acquire any such shares, now or hereafter outstanding; PROVIDED that nothing 
in this Section 5.02(g) shall be deemed to prohibit cash dividends paid to 
the Borrower by its wholly-owned Subsidiaries the proceeds of which are used 
to repay the aggregate principal amount of Advances then outstanding.

         (h)  MERGER OR CONSOLIDATION.  Merge into or consolidate with, or 
convey, transfer, lease or otherwise dispose of (whether in one transaction 
or in a series of transactions) all or substantially all of its assets 
(whether now owned or hereafter acquired) to, or acquire all or substantially 
all of the assets of, any Person, except that nothing in this Section 5.02(h) 
shall prohibit (i) any direct or indirect wholly-owned Subsidiary of the 
Borrower from merging into or consolidating with, or disposing of assets to, 
or acquiring assets of, any other wholly-owned direct or indirect Subsidiary 
of the Borrower, (ii) any Subsidiary of the Borrower from merging into or 
disposing of assets to the Borrower and (iii) sales of assets otherwise 
permitted under Section 5.02(k).

         (i)  RESTRICTION ON PAYMENTS AND TRANSFERS.  Other than Liens 
permitted under Section 5.02(a), create or otherwise cause or suffer to exist 
or to become effective any consensual encumbrance or restriction on the 
Borrower's or such Subsidiary's ability to (i) pay dividends or make 
distributions of the Borrower's or such Subsidiaries' capital stock, as the 
case may be, (ii) pay any debt owed to the Borrower or such Subsidiary, 
(iii) make loans or advances to the Borrower or such Subsidiary or 
(iv) transfer assets to, or create Liens in favor of, the Borrower or such 
Subsidiary, as the case may be.

         (j)  AMENDMENTS OR WAIVERS.  Amend, modify or change in any manner, 
or waive any rights of the Borrower or any of its Subsidiaries pursuant to 
the charter or by-laws (or other organizational documents) thereof, which, in 
the reasonable judgment of the Lender, could adversely affect the Refinancing 
or the Lender's rights and benefits under the Loan Documents and the 
documents delivered pursuant thereto.

         (k)  SALES, ETC. OF ASSETS.  Sell, lease, transfer or otherwise 
dispose of any assets, except for:


<PAGE>

         (i)  sales, leases, transfers and other dispositions of assets in 
     the ordinary course of business by the Borrower and such Subsidiary of 
     inventory consistent with the practice of the Borrower and such 
     Subsidiaries as of the date hereof;
     
         (ii) sales, leases, transfers and other dispositions of assets no 
     longer useful in the conduct of its business, or the business of its 
     Subsidiaries, consistent with its practice on the date hereof, the Fair 
     Market Value of such assets not to exceed in the aggregate for Borrower 
     and its Subsidiaries $1,000,000 (or the equivalent in any other 
     currency);
     
         (iii)     the sale of any assets for Fair Market Value for cash to 
     the extent the Net Cash Proceeds of such sales are used to repay the 
     outstanding aggregate unpaid principal amount of the Advances Loan as 
     required under Section 2.06(b).
     
         (l)  MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES.  Sell or otherwise 
dispose of any shares of capital stock of any Subsidiary or any warrants, 
rights or options to acquire such capital stock or permit any Subsidiary to 
issue, sell or otherwise dispose of any shares of its capital stock or the 
capital stock of any other Subsidiary or any warrants, rights or options to 
acquire such capital stock except (i) in accordance with Section 5.02(g) and 
(ii) to the extent that the Net Cash Proceeds of such sale or disposition are 
used to repay the outstanding aggregate unpaid principal amount of the Loan 
as required under Section 2.06(b).

         (m)  TRANSACTIONS WITH AFFILIATES.  Enter into any transaction or 
agreement with any Affiliate, except any transaction or agreement which is in 
the ordinary course of the Borrower's or such Subsidiary's business and which 
is upon fair and reasonable terms not less favorable to the Borrower or such 
Subsidiary than it would obtain in an arm's-length transaction with a Person 
not an Affiliate.

         (n)  ISSUANCE OF CAPITAL STOCK.  Issue any capital stock or any 
warrants, rights or options to acquire any such capital stock, except for the 
issuance of capital stock by the Borrower pursuant to the Refinancing to the 
extent the Net Cash Proceeds of such issuance are used to repay the 
outstanding aggregate unpaid principal amount of the Loan as required under 
Section 2.06(b).

         (o)  INVESTMENT COMPANY.  Be or become an investment company subject 
to the registration requirements under the Investment Company Act of 1940, as 
amended.

                           ARTICLE VI
                                
                        EVENTS OF DEFAULT
                                
         SECTION 6.01.  EVENTS OF DEFAULT.  If any of the following events 
("EVENTS OF DEFAULT") shall occur and be continuing:

         (a)  The Borrower, or subject to the Guaranties, the Guarantors, 
shall fail to 

<PAGE>

pay the principal of the Note or interest on the Advances when due or any 
Loan Party shall fail to pay any other amount payable under principal 
interest other fees any Loan Document within 3 days after the same shall 
become due and payable; or

         (b)  Any representation or warranty made by any Loan Party (or any 
of their respective officers) under or in connection any Loan Document shall 
prove to have been incorrect in any material respect when made and such 
failure shall remain unremedied for 30 days after the earlier of the date on 
which (i) an officer of the Borrower becomes aware of such failure or (ii) 
written notice thereof shall have been given to the Borrower by the Lender; or

         (c)  (i) The Borrower shall fail to perform or observe (A) any term, 
covenant or agreement contained in Section 2.11, 5.01(a), (b) or (j) or 5.02; 
or (B) any other term, covenant or agreement contained in this Agreement or 
any other Loan Document to which it is a party (excluding any term, covenant 
or agreement covered by Section 6.01(a)), if any such failure shall remain 
unremedied for 10 days after written notice thereof shall have been given to 
the Borrower by the Lender, or (ii) any other Loan Party shall fail to 
perform or observe any term, covenant or agreement contained in any Loan 
Document to which it is a party (excluding any term, covenant or agreement 
covered by Section 6.01(a)), if any such failure shall remain unremedied for 
10 days after written notice thereof shall have been given to the Borrower by 
the Lender; or

         (d)  (i)  Any Loan Party or any of its Subsidiaries shall fail to 
pay any principal of, premium or interest on, or other amount payable in 
respect of, any Debt which is outstanding in a principal amount of at least 
$5,000,000 (or the equivalent in any other currency) in the aggregate (but 
excluding Debt evidenced by the Note) of such Person when the same becomes 
due and payable (whether by scheduled maturity, required prepayment, 
acceleration, demand or otherwise) and such failure shall continue after the 
applicable grace period, if any, specified in the agreement or instrument 
relating to such Debt; (ii) or any other default or Event of Default (as 
defined in such agreement or instrument) shall occur (or any other event or 
condition shall exist under applicable law of any relevant jurisdiction, 
which shall have an analogous effect under such agreement or instrument) 
relating to such Debt; or (iii) any other event shall occur or condition 
shall exist under any agreement or instrument relating to any such Debt and 
shall continue after the applicable grace period, if any, specified in such 
agreement or instrument, if the effect of such event or condition is to 
accelerate, or to permit the acceleration of, the maturity of such Debt or 
otherwise cause, or permit the holder thereof to cause, such Debt to mature; 
or any such Debt shall be declared to be due and payable, or required to be 
prepaid or redeemed (other than by a regularly scheduled required prepayment 
or redemption), purchased or defeased, or an offer to prepay, redeem, 
purchase or defease such Debt shall be required to be made, in each case 
prior to the stated maturity thereof; or

         (e)  Any Loan Party shall generally not pay its debts as such debts 
become due, or shall admit in writing its inability to pay its debts 
generally, or shall make a general assignment for the benefit of creditors; 
or any proceeding shall be instituted by or against any Loan Party or any of 
its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking 
liquidation, winding up, reorganization, arrangement, adjustment, protection, 
relief, or composition of it or its debt under any law relating to 
bankruptcy, insolvency or reorganization 

<PAGE>

or relief of debtors, or seeking the entry of an order for relief or the 
appointment of a receiver, trustee, or other similar official for it or for 
any substantial part of its property; or seeking a warrant of attachment, 
execution or similar process against any substantial part of its property 
and, in the case of any such proceeding instituted against it (but not 
instituted by it), either such proceeding shall remain undismissed or 
unstayed for a period of 30 days, or any of the actions sought in such 
proceeding (including, without limitation, the entry of an order for relief 
against, or the appointment of a receiver, trustee, custodian or other 
similar official for, or for any substantial part of, its property) shall 
occur; or any Loan Party shall take corporate action to authorize any of the 
actions set forth above in this subsection (e); or

         (f)  Any judgment or order for the payment of money in excess of 
$5,000,000 (or the equivalent thereof in any other currency) with respect to 
any of the Borrower and its Subsidiaries or any other Loan Party, and either 
(i) an enforcement proceeding shall have been commenced by any creditor upon 
such judgment or order or (ii) there shall have been a period of 10 
consecutive days during which a stay of enforcement of such judgment or 
order, by reason of a pending appeal or otherwise, shall not be in effect; or

         (g)  Any non-monetary judgment or order shall be rendered against 
any Loan Party or any of its Subsidiaries that could be reasonably likely to 
have a Material Adverse Effect, and there shall be any period of 10 
consecutive days during which a stay of enforcement or such judgment or 
order, by reason of a pending appeal or otherwise, shall not be in effect; or

         (h)  Any provision of any Loan Document after delivery thereof shall 
for any reason cease to be valid and binding on any Loan Party thereto or 
such Loan Party shall so state in writing; provided, however, that such event 
could have a Material Adverse Effect; or

         (i)  Any Loan Party or any of its ERISA Affiliates shall incur, or 
in the reasonable discretion of the Lender, shall be reasonably likely to 
incur liability as a result of one or more of the following: (i) the 
occurrence of any ERISA Event; (ii) the partial or complete withdrawal of 
such Loan Party or any of its ERISA Affiliates from a Multiemployer Plan; or 
(iii) the reorganization or termination of the Multiemployer Pan, which 
liability has or could reasonably be expected to result in a Material Adverse 
Effect; or

         (j)  The Shareholders (other than Vanguard China, Inc.) shall own, 
directly or indirectly, less than 75% of the Voting Stock of the Borrower or 
shall cease to direct or cause the direction of the management and policies 
of the Borrower, whether through Voting Stock, by contract or otherwise; or

         (k)  There shall occur in the judgment of the Lender any Material 
Adverse Change;

then, and in any such event, (i) the Lender may, by notice to the Borrower, 
declare its obligation to make Advances to be terminated, whereupon the same 
shall forthwith terminate, and (ii) the Lender may by notice to the Borrower, 
declare the Note, all interest thereon and all other amounts payable under 
this Agreement to be forthwith due and payable, whereupon the Note, all such 
interest and all such other amounts shall become and be forthwith due and 
payable, without 

<PAGE>

presentment, demand, protest or further notice of any kind, all of which are 
hereby expressly waived by the Borrower; PROVIDED, HOWEVER, that upon an 
Event of Default under Section 6.01(e) or (f) with respect to any Loan Party, 
(A) the obligation of the Lender to make Advances shall automatically 
terminate and (B) the Note, all such interest and all such amounts shall 
automatically become and be due and payable, without presentment, demand, 
protest or any notice of any kind, all of which are hereby expressly waived 
by each Loan Party.

                           ARTICLE VII
                                
                          MISCELLANEOUS
                                
         SECTION 7.01.  AMENDMENTS, ETC.  No amendment or waiver of any 
provision of hereunder or under the Note, nor consent to any departure by any 
party hereto therefrom, shall in any event be effective unless the same shall 
be in writing and signed by the Lender, and the Lender shall have received 
the consent in writing of the Guarantors, and then such waiver or consent 
shall be effective only in the specific instance and for the specific purpose 
for which given.

         SECTION 7.02.  NOTICES, ETC.  All notices and other communications 
provided for hereunder shall be in writing (including telegraphic, telecopy, 
telex or cable communication) and mailed, telegraphed, telecopied, telexed, 
cabled or delivered, if to the Borrower, at its address at 12th Floor, Sun 
Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong, Attention: Mr. Alfred 
Shao, Telecopier No. (852) 2343-5693; if to the Lender, at its address at 1 
Temasek Avenue #15-02 Millenia Tower, Singapore 039192, Attention:  Mrs. 
Mabel Sim, or if to the Guarantors at the addresses set forth in the 
respective Guaranties or, as to each party, at such other address as shall be 
designated by such party in a written notice to the other party.  All such 
notices and communications shall, when mailed, telecopied, telegraphed, 
telexed or cabled, be effective when deposited in the mails, telecopied, 
delivered to the telegraph company, confirmed by telex answerback or 
delivered to the cable company, respectively, addressed as aforesaid, except 
that notices to the Lender pursuant to the provisions of Article II shall not 
be effective until received by the Lender.

         SECTION 7.03.  NO WAIVER; REMEDIES.  No failure on the part of the 
Lender to exercise, and no delay in exercising, any right hereunder or under 
any Loan Document shall operate as a waiver thereof; nor shall any single or 
partial exercise of any such right preclude any other or further exercise 
thereof or the exercise of any other right.  The remedies herein provided are 
cumulative and not exclusive of any remedies provided by law.

         SECTION 7.04.  COSTS AND EXPENSES.

         (a)  The Borrower agrees to pay on demand all reasonable costs and 
expenses of the Lender in connection with the preparation, execution, 
delivery, administration, modification and amendment of the Loan Documents 
and the other documents to be delivered hereunder, including, without 
limitation, (A) all due diligence, transportation, computer,


<PAGE>

duplication, appraisal, consultant, and audit expenses and (B) the reasonable 
fees and expenses of counsel for the Lender with respect thereto and with 
respect to advising the Lender as to its rights and responsibilities under 
the Loan Documents. The Borrower further agrees to pay on demand all 
reasonable costs and expenses of the Lender, if any (including, without 
limitation, reasonable counsel fees and expenses), in connection with the 
enforcement (whether through negotiations, legal proceedings or otherwise) of 
the Loan Documents and the other documents to be delivered hereunder, 
including, without limitation, reasonable fees and expenses of counsel for 
the Lender in connection with the enforcement of rights under this 
Section 7.04(a).

         (b)  The Borrower agrees to indemnify and hold harmless the Lender 
and its Affiliates and their officers, directors, employees, agents and 
advisors (each, an "INDEMNIFIED PARTY") from and against any and all claims, 
damages, losses, liabilities and expenses (including, without limitation, 
reasonable fees and expenses of counsel) that may be incurred by or asserted 
or awarded against any Indemnified Party, in each case arising out of or in 
connection with or by reason of (including, without limitation, in connection 
with any investigation, litigation or proceeding or preparation of a defense 
in connection therewith) the Note, this Agreement, any of the transactions 
contemplated herein or the actual or proposed use of the proceeds of the 
Advances or, except to the extent such claim, damage, loss, liability or 
expense is found in a final, non-appealable judgment by a court of competent 
jurisdiction to have resulted from such Indemnified Party's gross negligence 
or willful misconduct.  In the case of an investigation, litigation or other 
proceeding to which the indemnity in this Section 7.04(b) applies, such 
indemnity shall be effective whether or not such investigation, litigation or 
proceeding is brought by any Loan Party, its directors, shareholders or 
creditors or an Indemnified Party or any other Person or any Indemnified 
Party is otherwise a party thereto and whether or not the transactions 
contemplated hereby are consummated.

         (c)  If any payment of principal of any Advance is made by the 
Borrower or any other Loan Party to or for the account of a Lender other than 
on the last day of the Interest Period for such Advance, as a result of a 
payment, acceleration of the maturity of the Notes pursuant to Section 6.01 
or for any other reason, the Borrower shall, upon demand by the Lender, pay 
to the Lender for its account any amounts required to compensate the Lender 
for any additional losses, costs or expenses that it may reasonably incur as 
a result of such payment, including, without limitation, any loss (including 
loss of anticipated profits), cost or expense incurred by reason of the 
liquidation or reemployment of deposits or other funds acquired by the Lender 
to fund or maintain such Advance.

         (d)  Without prejudice to the survival of any other agreement of the 
Borrower hereunder, the agreements and obligations of the Borrower contained 
in Sections 2.07, 2.10 and 7.04 shall survive the payment in full of 
principal, interest and all other amounts payable hereunder and under the 
Note.

         SECTION 7.05.  RIGHT OF SET-OFF.  Upon the occurrence and during the 
continuance of any Event of Default, the Lender or any of its Affiliates is 
hereby authorized at any time and from time to time, to the fullest extent 
permitted by law, to set off and apply any and all deposits (general or 
special, time or demand, provisional or final) at any time held and 

<PAGE>

other indebtedness at any time owing by the Lender or such Affiliate to or 
for the credit or the account of the Borrower against any and all of the 
obligations of the Borrower now or hereafter existing under the Loan 
Documents, whether or not the Lender shall have made any demand thereunder 
and although such obligations may be unmatured.  The Lender agrees promptly 
to notify the Borrower after any such set-off and application, PROVIDED that 
the failure to give such notice shall not affect the validity of such set-off 
and application.  The rights of the Lender and its Affiliates under this 
Section 7.05 are in addition to other rights and remedies (including, without 
limitation, other rights of set-off) that the Lender and its Affiliates may 
have.

         SECTION 7.06.  BINDING EFFECT.  This Agreement shall become 
effective (other than Section 2.01, which shall only become effective upon 
satisfaction of the conditions precedent set forth in Section 3.01) when it 
shall have been executed by the Borrower and the Lender and thereafter shall 
be binding upon and inure to the benefit of the Borrower and the Lender and 
their respective successors and assigns, except that no Loan Party shall have 
the right to assign or otherwise transfer all or any part of its rights or 
obligations hereunder or any interest herein.  The Lender may assign or sell 
participations in or to all or a portion of its rights and obligations under 
the Loan Documents.

         SECTION 7.07.  GOVERNING LAW.  This Agreement and the Note shall be 
governed by, and construed in accordance with, the laws of the State of 
New York.

         SECTION 7.08.  EXECUTION IN COUNTERPARTS.  This Agreement may be 
executed in any number of counterparts and by different parties thereto in 
separate counterparts, each of which when so executed shall be deemed to be 
an original and all of which taken together shall constitute one and the same 
agreement.

         SECTION 7.09.  CONSENT TO JURISDICTION.

         (a)  Each of the parties hereto hereby irrevocably and 
unconditionally submits, for itself and its property, to the nonexclusive 
jurisdiction of any New York State court or federal court of the United 
States of America sitting in New York City, and any appellate court from any 
thereof, in any action or proceeding arising out of or relating to this 
Agreement or the Note, or for recognition or enforcement of any judgment, and 
each of the parties hereto hereby irrevocably and unconditionally agrees that 
all claims in respect of any such action or proceeding may be heard and 
determined in any such New York State court or, to the extent permitted by 
law, in such federal court.  Each of the Parties agrees that process served 
either personally or by registered mail, return receipt requested, shall, to 
the extent permitted by law, constitute adequate service of process in any 
such proceeding.  Without limiting the foregoing, the parties hereto hereby 
appoint, in the case of any such action or proceeding brought in the courts 
of or in the State of New York, CT Corporation System, with offices on the 
date hereof at 1633 Broadway, New York, New York 10019, to receive, for them 
and on their behalf, service of process in the State of New York with respect 
thereto, PROVIDED that any party hereto may appoint any other person, with 
offices in the State of New York to replace such agent for service of process 
upon delivery to each other Loan Party notice thereof. Each of the parties 
hereto agrees that a final judgment in any such action or proceeding shall be 
conclusive and may be enforced in other 

<PAGE>

jurisdictions by suit on the judgment or in any other manner provided by law. 
Nothing in this Agreement shall affect any right that any party may 
otherwise have to bring any action or proceeding relating to this Agreement 
or the Note in the courts of any jurisdiction.

         (b)  Each of the parties hereto irrevocably and unconditionally 
waives, to the fullest extent it may legally and effectively do so, any 
objection that it may now or hereafter have to the laying of venue of any 
suit, action or proceeding arising out of or relating to this Agreement or 
the Note in any New York State or federal court.  Each of the parties hereto 
hereby irrevocably waives, to the fullest extent permitted by law, the 
defense of an inconvenient forum to the maintenance of such action or 
proceeding in any such court.

<PAGE>


         SECTION 7.10.  JUDGMENT CURRENCY.  If any sum due from the Borrower  
hereunder, under the Note or any order or judgment given or made in relation 
thereto has to be converted from the currency (the "FIRST CURRENCY") in which 
the same is payable hereunder, thereunder or under such order or judgment 
into another currency (the "SECOND CURRENCY") for the purpose of (a) making 
or filing a claim or proof against the Borrower, (b) obtaining an order or 
judgment in any court or other tribunal or (c) enforcing any order to 
judgment given or made in relation thereto, the Borrower shall indemnify and 
hold harmless each of the persons to whom such sum is due from and against 
any loss suffered or incurred as a result of any discrepancy between (i) the 
rate of exchange used for such purpose to convert the sum in question from 
the first currency into the second currency and (ii) the rate or rates of 
exchange at which such person may in the ordinary course of business purchase 
the first currency with the second currency upon receipt of a sum paid to it 
in satisfaction, in whole or in part, of any such order, judgment, claim or 
proof.

         SECTION 7.11.  WAIVER OF JURY TRIAL.  EACH OF THE BORROWER AND THE 
LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, 
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) 
ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, ANY DOCUMENT 
DELIVERED UNDER THE LOAN DOCUMENTS, ANY ADVANCE OR THE ACTIONS OF THE LENDER 
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR 
THEREOF.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to 
be executed by their respective officers thereunto duly authorized, as of the 
date first above written.

                                  STAR DIGITEL LIMITED



                                  By
                                    -------------------------------------
                                      Title:

                                  THE TORONTO-DOMINION BANK



                                  By
                                    -------------------------------------
                                      Title:



<PAGE>


                         PROMISSORY NOTE
                                
                                

$8,000,000                                      Dated:  May 16, 1997


         FOR VALUE RECEIVED, the undersigned, STAR DIGITEL LIMITED, a  
corporation organized under the laws of Hong Kong (the "BORROWER"), HEREBY 
PROMISES TO PAY to the order of THE TORONTO-DOMINION BANK (the "LENDER") on 
May 16, 1997 (or if the maturity of this Promissory Note is extended to a 
later date pursuant to Section 2.04(b) of the Bridge Loan Agreement referred 
to below, on such later date) the principal amount of EIGHT MILLION DOLLARS 
($8,000,000) or, if less, the aggregate unpaid principal amount of the 
Advances (as defined below) made by the Lender to the Borrower pursuant to 
the Bridge Loan Agreement (referred to below); capitalized terms that are not 
defined herein having the respective meanings specified in the Bridge Loan 
Agreement) which is outstanding on May 16, 1997 or such later date, as the 
case may be.

         The Borrower promises to pay interest on the principal amount of 
each Advance from the date of such Advance until such principal amount is 
paid in full, at such interest rates, and payable at such times, as are 
specified in the Bridge Loan Agreement.

         Both principal and interest are payable in the lawful money of the 
United States of America to the Lender at Bank of America, New York Branch, 
in immediately available funds.  Such payments shall be made by wire transfer 
to the account of the Lender at Bank of America, New York Branch with its 
office at 1 World Trade Center, 10th Floor, New York, NY, 10048-1191, USA, 
Account No. 6550 2-97469 CHIPS 361042, or such other account as the Lender 
may designate.  The Lender is authorized but not required to record the date 
and amount of each Advance owing to it and the date and amount of each 
principal payment on the schedule annexed hereto and made a part hereof, or 
on a continuation thereof which shall be attached hereto and made a part 
hereof, and any such recordation shall, in the absence of manifest error, 
constitute PRIMA FACIE evidence of the accuracy of the information so 
recorded.  Prior to any transfer of this Promissory Note, the Lender shall 
record the foregoing on such schedule or continuation thereof; PROVIDED, 
HOWEVER, that the Lender's so to record shall not limit the obligations of 
the Borrower hereunder and under the Bridge Loan Agreement to repay the 
actual outstanding principal of and interest on each Advance.

         This Promissory Note is the Note referred to in, and is entitled to 
the benefits of, (a) the Bridge Loan Agreement dated as of May 16, 1997 (the 
"BRIDGE LOAN AGREEMENT") between the Borrower and the Lender, (b) the IWC 
Pledge Agreement, (c) the STHL Guaranty, and (d) the VCFC Guaranty.  The 
Bridge Loan Agreement, among other things, (i) provides for the making of 
advances (the "ADVANCES") by the Lender to the Borrower in an aggregate 
amount not to exceed at any time outstanding the U.S. Dollar amount first 
above mentioned, the 

<PAGE>

indebtedness of the Borrower resulting from each such Advance being evidenced 
by this Promissory Note, and (ii) contains provisions for acceleration of the 
maturity hereof upon the happening of certain stated events and also for 
prepayments on account of principal hereof prior to the maturity hereof upon 
the terms and conditions therein specified.

         This Promissory Note shall be governed by, and construed in 
accordance with, the law of the State of New York.

                                  STAR DIGITEL LIMITED



                                  By:
                                     -----------------------------------
                                       Name:
                                       Title:
       
<PAGE>

                                       
                        LOAN AND PAYMENTS OF PRINCIPAL
                                       
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DATE         ADVANCE          OR PREPAID         BALANCE         MADE BY
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<PAGE>


                            EXHIBIT B
                                
                       NOTICE OF BORROWING
                                
                                
                                
                                  [Date]


The Toronto-Dominion Bank
1 Temasek Avenue
#15-02 Millenia Tower
Singapore 039192
Attention:  Mabel Sim


Ladies and Gentlemen:

         The undersigned, STAR DIGITEL LIMITED refers to the Bridge Loan 
Agreement, dated as of _______________, 1997 (the "BRIDGE LOAN AGREEMENT", 
the terms defined therein being used herein as therein defined), among the 
undersigned and The Toronto Dominion Bank, and hereby gives you notice, 
irrevocably, pursuant to Section 2.02 of the Bridge Loan Agreement that the 
undersigned hereby requests a Borrowing under the Bridge Loan Agreement, and 
in that connection sets forth below the information relating to Bridge (the 
"PROPOSED BORROWING") as required by Section 2.02(a) of the Bridge Loan 
Agreement:

         (i)   The Business Day of the Proposed Borrowing is 
     _______________, 19__. 
     
         (ii)  The amount of the Proposed Borrowing is $__________.
     
         (iii) The initial Interest Period for each Advance made as of 
     part of the Proposed Borrowing is one month.
     
         The undersigned hereby certifies that the following statements are 
true on the date hereof, and will be true on the date of the Proposed 
Borrowing:

         (A)  the representations and warranties contained in the Bridge Loan 
     Agreement are correct, before and after giving effect to the Proposed 
     Borrowing and the application of the proceeds therefrom, as through made 
     on and as of such date (other than any such representations or 
     warranties that, by their terms, refer to a specific date other than the 
     date of the Proposed Borrowing in which case, as of such specific date); 
     and

         (B)  no event has occurred and is continuing, or would result from 
     such Proposed Loan, or the application of proceeds therefrom, which 
     constitutes a Default.
     
                                  Very truly yours,


<PAGE>

                                  STAR DIGITEL LIMITED



                                  By:
                                     -----------------------------------
                                       Name:
                                       Title:
<PAGE>

                                     EXHIBIT C-1

                              FORM OF GUARANTY FROM STHL


     GUARANTY dated May 16, 1997 made by STAR TELECOM HOLDING LIMITED, a
corporation organized under the laws of Hong Kong, (the "Guarantor"), in favor
of the Lender (as defined in the Credit Agreement referred to below).

     PRELIMINARY STATEMENT. The Lender is party to the Bridge Loan 
Agreement, dated as of May 16, 1997 (said Agreement, as it may hereafter 
be amended, supplemented or otherwise modified from time to time, being 
the "Credit Agreement") with STAR DIGITEL LIMITED, a corporation 
organized under the laws of Hong Kong (the "Borrower"). It is a 
condition precedent to the making of Advances under the Credit Agreement 
that the Guarantor shall have executed and delivered this Guaranty. 
Capitalized terms used but not defined herein shall have the meaning 
ascribed to such terms in the Credit Agreement.

     NOW, THEREFORE, in consideration of the premises and in order to 
induce the Lender to make Advances under the Credit Agreement from time 
to time, the Guarantor hereby agrees as follows:

     Section 1.  GUARANTY.  The Guarantor hereby unconditionally and 
irrevocably guarantees the punctual payment when due, whether at stated 
maturity, by acceleration or otherwise, of (a) Advances under the Credit 
Agreement in an aggregate principal amount not to exceed $4,240,000 at 
any time outstanding and (b) the product of (x) the STHL Guaranteed 
Percentage (as defined below) and (y) the aggregate amount of all 
Obligations of the Borrower other than Advances under the Credit 
Agreement now or hereafter existing under the other Loan Documents, 
whether for interest, fees, expenses or otherwise (the sum of clause (a) 
and clause (b) above being the "Guaranteed Obligations"), and in 
addition agrees to pay any and all expenses (including reasonable 
counsel fees and expenses) incurred by the Lender in enforcing any 
rights under this Guaranty. Without limiting the generality of the 
foregoing, the Guarantor's liability shall extend to all amounts that 
constitute part of the Guaranteed Obligations and would be owed by the 
Borrower to the Lender under the Loan Documents but for the fact that 
they are unenforceable or not allowable due to the existence of a 
bankruptcy, reorganization or similar proceeding involving the Borrower. 
For the purpose of this Guaranty, the "STHL Guaranteed Percentage" 
means, at any date of determination, 53%.

     Section 2.  GUARANTY ABSOLUTE. The Guarantor guarantees the payment 
of the Guaranteed Obligations, which will be paid in accordance with the 
terms of the Loan Documents, regardless of any law, regulation or order 
now or hereafter in effect in any jurisdiction affecting any of such 
terms or the rights of the Lender with respect thereto. The Obligations 
of the Guarantor under this Guaranty are independent of the Guaranteed 
Obligations or any other Obligations of any other Loan Party under the 
Loan Documents, and a separate action or actions may be brought and 
prosecuted against the Guarantor to enforce this Guaranty, irrespective 
of whether any action is brought against the Borrower or any other Loan 
Party or 


                                      C1-1
<PAGE>

whether the Borrower or any other Loan Party is joined in any such 
action or actions. The liability of the Guarantor under this Guaranty 
shall be irrevocable, absolute and unconditional irrespective of, and 
the Guarantor hereby irrevocably waives any defenses it may now or 
hereafter have in any way relating to, any or all of the following:

          (a)  any lack of validity or enforceability of any Loan 
Document or any agreement or instrument relating thereto;

          (b)  any change in the time, manner or place of payment of, or 
in any other term of, all or any of the Guaranteed Obligations or any 
other Obligations of any other Loan Party under the Loan Documents, or 
any other amendment or waiver of or any consent to departure from any 
Loan Document; PROVIDED, HOWEVER, that any amendment to any Loan 
Documents other than the VCFC Guaranty and the IWC Pledge Agreement 
shall require the prior written consent of STHL;

          (c)  any taking, release or amendment or waiver of or consent 
to departure from any other guaranty, for all or any of the Guaranteed 
Obligations;

          (d)  any change, restructuring or termination of the corporate 
structure or existence of the Borrower or any of its Subsidiaries;

          (e)  any failure of the Lender to disclose to any Loan Party 
any information relating to the financial condition, operations, 
properties or prospects of any other Loan Party now or in the future 
known to the Lender (the Guarantor waiving any duty on the part of the 
Secured Parties to disclose such information); or

          (f)  any other circumstance (including, without limitation, any 
statute of limitations) or any existence of or reliance on any 
representation by the Lender that might otherwise constitute a defense 
available to, or a discharge of, any Loan Party or any other guarantor 
or surety.

This Guaranty shall continue to be effective or be reinstated, as the 
case may be, if at any time any payment of any of the Guaranteed 
Obligations is rescinded or must otherwise be returned by the Lender or 
any other Person upon the insolvency, bankruptcy or reorganization of 
any Loan Party or otherwise, all as though such payment had not been 
made.

      Section 3.  WAIVERS AND ACKNOWLEDGEMENTS.  (a) The Guarantor 
hereby waives promptness, diligence, notice of acceptance and any other 
notice with respect to any of the Guaranteed Obligations and this 
Guaranty and any requirement that the Lender protect, secure, perfect or 
insure any Lien or any property subject thereto or exhaust any right or 
take any action against any Loan Party or any other Person or any 
Collateral.

          (b) The Guarantor hereby waives any right to revoke this Guaranty,
and acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.


                                      C1-2
<PAGE>

          (c) The Guarantor acknowledges that it will receive 
substantial direct and indirect benefits from the financing arrangements 
contemplated by the Loan Documents and that the waivers set forth in 
this Section 3 are knowingly made in contemplation of such benefits.

     Section 4.  SUBROGATION.  The Guarantor will not exercise any 
rights that it may now or hereafter acquire against the Borrower or any 
other insider guarantor that arise from the existence, payment, 
performance or enforcement of the Guarantor's Obligations under this 
Guaranty or any other Loan Document, including, without limitation, any 
right of subrogation, reimbursement, exoneration, contribution or 
indemnification and any right to participate in any claim or remedy of 
the Lender against the Borrower or any other insider guarantor or any 
Collateral, whether or not such claim, remedy or right arises in equity 
or under contract, statute or common law, including, without limitation, 
the right to take or receive from the Borrower or any other insider 
guarantor, directly or indirectly, in cash or other property or by 
set-off or in any other manner, payment or security on account of such 
claim, remedy or right, unless and until all of the Obligations and all 
other amounts payable under this Guaranty shall have been paid in full 
in cash and the Commitment shall have expired or terminated.  If any 
amount shall be paid to the Guarantor in violation of the preceding 
sentence at any time prior to the later of the payment in full in cash 
of the Guaranteed Obligations and all other amounts payable under this 
Guaranty and the Termination Date, such amount shall be held in trust 
for the benefit of the Lender and shall forthwith be paid to the Lender 
to be credited and applied to the Guaranteed Obligations and all other 
amounts payable under this Guaranty, whether matured or unmatured, in 
accordance with the terms of the Loan Documents, or to be held as 
Collateral for any Guaranteed Obligations or other amounts payable under 
this Guaranty thereafter arising. If (i) the Guarantor shall make 
payment to the Lender of all or any part of the Guaranteed Obligations, 
(ii) all of the Guaranteed Obligations and all other amounts payable 
under this Guaranty shall be paid in full in cash and (iii) the 
Termination Date shall have occurred, the Lender will, at the 
Guarantor's request and expense, execute and deliver to the Guarantor 
appropriate documents, without recourse and without representation or 
warranty, necessary to evidence the transfer by subrogation to the 
Guarantor of an interest in the Guaranteed Obligations resulting from 
such payment by the Guarantor.

     Section 5.  PAYMENTS FREE AND CLEAR OF TAXES, ETC.  (a)  Any and 
all payments made by the Guarantor hereunder shall be made free and 
clear of and without deduction for any and all present or future Taxes. 
If the Guarantor shall be required by law to deduct any Taxes from or in 
respect of any sum payable hereunder to the Lender, (i) the sum payable 
shall be increased as may be necessary so that after making all required 
deductions (including deductions applicable to additional sums payable 
under this Section) the Lender receives an amount equal to the sum it 
would have received had no such deductions been made, (ii) the Guarantor 
shall make such deductions, and (iii) the Guarantor shall pay the full 
amount deducted to the relevant taxation authority or other authority in 
accordance with applicable law.

          (b)  In addition, the Guarantor shall pay any present or 
future Other Taxes in respect of all or any part of the Guaranteed 
Obligations.


                                     C1-3
<PAGE>

          (c)  The Guarantor will indemnify the Lender for the STHL 
Guaranteed Percentage of Taxes or Other Taxes (including, without 
limitation, any Taxes or Other Taxes imposed by any jurisdiction on 
amounts payable under this Section) paid by the Lender and any liability 
(including penalties, additions to tax, interest and expenses) arising 
therefrom or with respect thereto; the Guarantor shall have the right to 
contest in good faith such tax levied upon it; provided, however, that 
such contest shall in no way limit the Guarantor's Obligations 
hereunder. This indemnification shall be made within 30 days from the 
date the Lender makes written demand therefor.

          (d)  Within 30 days after the date of any payment of Taxes by 
or on behalf of the Guarantor, the Guarantor will furnish to the Lender, 
at its address referred to in the Credit Agreement, the original receipt 
of payment thereof or a certified copy of such receipt. In the case of 
any payment hereunder by or on behalf of the Guarantor through an 
account or branch outside the United States or on behalf of the 
Guarantor by a payor that is not a United States person, if the 
Guarantor determines that no Taxes are payable in respect thereof, the 
Guarantor shall, at the request of the Lender, furnish, or shall cause 
such payor to furnish, to the Lender, at such address, an opinion of 
counsel acceptable to the Lender stating that such payment is exempt 
from Taxes. For purposes of this subsection (d), the terms "United 
States" and "United States person" shall have the meanings specified in 
Section 7701 of the Internal Revenue Code.

          (e)  Without prejudice to the survival of any other agreement 
of the Guarantor hereunder or under any other Loan Document, the 
agreements and obligations of the Guarantor contained in this Section 5 
shall survive the payment in full of the Guaranteed Obligations and all 
other amounts payable under this Guaranty.

     Section 6.  REPRESENTATIONS AND WARRANTIES. The Guarantor hereby 
represents and warrants as follows:

          (a)  DUE INCORPORATION, ETC.  The Guarantor (i) is duly organized, 
validly existing and in good standing under the laws of the jurisdiction of 
its organization, (ii) is duly authorized to do business in each jurisdiction 
in which such authorization is required by law or in which the failure to be 
so authorized would not have material adverse effect on (x) the business, 
condition (financial or otherwise), operation, performance or properties of 
the Guarantor and its subsidiaries, taken as a whole, (y) the rights and 
remedies of the Lender under this Guaranty, or (z) the ability of the 
Guarantor to perform its obligations under this Guaranty (each, a "Material 
Adverse Effect"), and (iii) has all requisite power and authority (A) to own 
or hold under lease and to operate all of its property and assets and (B) to 
execute, deliver and perform all its obligations under each Loan Document to 
which it is or will be a party.

          (b)  CORPORATE POWER, ETC.  The Guarantor has full corporate 
power and authority to enter into, deliver and perform its obligations 
under each Loan Document to which it is a party and to consummate each 
of the transactions contemplated hereby and thereby, and has taken all 
necessary corporate action to authorize the execution, delivery and 
performance by it of each Loan Document to which it is a party. Each 
Loan Document to which the Guarantor is a party constitutes the legal, 
valid and binding obligation of the Guarantor, enforceable against the 

                                     C1-4
<PAGE>

Guarantor in accordance with its terms, except as enforcement may be 
limited by bankruptcy, insolvency, reorganization, moratorium or similar 
laws now or hereafter in effect affecting the enforcement of creditors' 
rights generally and by general principles of equity (regardless of 
whether enforcement is sought in a proceeding in equity or at law).

          (c)  NO CONFLICT.  Neither the execution and delivery of each 
Loan Document to which it is or will be a party nor the performance by 
the Guarantor of its obligations thereunder, nor the consummation of the 
transactions contemplated thereby, will (i) conflict with the 
Certificate of Incorporation or by-laws of the Guarantor, or (ii) 
conflict with or result in a breach of, or constitute a default under, 
or result in the creation or imposition of any Lien upon any property or 
assets of the Guarantor under, any applicable laws (including, without 
limitation, Regulation X issued by the Board of Governors of the Federal 
Reserve System) or any indenture, mortgage, deed of trust or other 
instrument or agreement to which the Guarantor may be or become a party 
or by which it may be or become bound or to which any of the property or 
assets of the Guarantor may be subject.

          (d)  APPROVALS. ETC.  No order, license, consent, 
authorization or approval of, or exemption by, or notice to or 
registration with, any governmental authority or regulatory body, and no 
filing, recording, publication or registration in any public office or 
any other place (other than, in each case, such filings as may be 
required under applicable securities laws), is required in connection 
with the execution, delivery and performance by the Guarantor of any 
Loan Document to which it is or will be a party, or for the legality, 
validity, binding effect or enforceability thereof.

          (e)  FINANCIAL STATEMENTS.  The Consolidated balance sheets of 
STIHL as at December 31, 1996, and the related Consolidated statements 
of income and cash flows of STIHL for the fiscal year then ended, 
accompanied by an opinion of the independent chartered or public 
accountants of STIHL, copies of which have been furnished to the Lender, 
fairly present the Consolidated financial condition of STIHL and its 
Subsidiaries as at such date and the results of the operations thereof 
for the period ended on such date. All such financial statements, 
including the related schedules and notes thereto, have been prepared in 
accordance with U.S. GAAP for STIHL applied consistently throughout the 
periods involved.

          (f)  NO MATERIAL ADVERSE EFFECT.  Since December 31, 1996, 
there has been no, nor, to the best of the Guarantor's knowledge, has 
there been any event which could reasonably be elected to have a, 
Material Adverse Effect.

          (g)  LITIGATION, ETC.  There is no pending or, to the best of 
the Guarantor's knowledge, threatened litigation, investigation, action 
or proceeding of or before any court, arbitrator or governmental agency 
(including any Environmental Action) binding upon or affecting any of 
the Guarantor or its Subsidiaries or their respective properties and 
assets that (i) could reasonably be expected to cause a Material Adverse 
Effect to occur or (ii) purports to affect the legality, validity or 
enforceability of any Loan Document to which the Guarantor is a party.


                                     C1-5
<PAGE>

          (h)  NO VIOLATION, ETC.  The Guarantor is not in violation of, 
nor does the execution by the Guarantor of the Loan Documents to which 
it is a party or the consummation of the transactions contemplated 
thereby result in the violation of, (i) any term of its charter or 
by-laws, (ii) the Shareholders Agreement, or (ii) any term of any other 
agreement or instrument to which it is a party or by which it is bound 
in any respect, which, in each case, has or could be reasonably expected 
to have a Material Adverse Effect.

          (i)  MARGIN STOCK.  The Guarantor is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock within
the meaning of Regulations G, T and X issued by the Board of Governors of the
Federal Reserve System.

          (j)  INVESTMENT COMPANY ACT AND PUBLIC UTILITY HOLDING COMPANY 
ACT. The Guarantor is not, and is not directly or indirectly controlled 
by any Person which is, required to register as an "investment company" 
within the meaning of the U.S. Investment Company Act of 1940, as 
amended. The Guarantor is not a "holding company" or a "subsidiary" or 
an "affiliate" of a "holding company" or a "public utility" within the 
meaning of the U.S. Public Utility Holding Company Act of 1935, as 
amended.

          (k)  TAXES.  The Guarantor has filed all tax returns required 
to be filed by it and has paid all taxes, assessments, fees and other 
charges (including interest and penalties) due with respect to the years 
covered by such returns, except for any such failures to file or to pay 
such amounts which, in the aggregate, would not have a Material Adverse 
Effect or which are being contested in good faith by appropriate 
proceedings.

          (l)  ENVIRONMENTAL LAWS.  The operations and properties of the
Guarantor comply in all material respects with all applicable Environmental
Laws, except where the failure to so comply could not be reasonably expected to
have a Material Adverse Effect, and all necessary Environmental Permits have
been obtained and are in effect for the operations and properties of the
Guarantor and its Subsidiaries, EXCEPT for such Environmental Permits where the
failure to obtain the came, in the aggregate, could not be reasonably expected
to have a Material Adverse Effect.

           (m)  CONDITIONS PRECEDENT.  Upon execution hereof and the 
other Loan Documents by all parties, there are no conditions precedent 
to the effectiveness of this Guaranty that have not been satisfied or 
waived.

           (n)  CREDIT ANALYSIS; OTHER INFORMATION.  The Guarantor has, 
independently and without reliance upon the Lender and based on such 
documents and information as it has deemed appropriate, made its own 
credit analysis and decision to enter into this Guaranty, and the 
Guarantor has established adequate means of obtaining from the Borrower 
on a continuing basis information pertaining to, and is now and on a 
continuing basis will be completely familiar with, the financial 
condition, operations, properties and prospects of the Borrower.


                                     C1-6
<PAGE>

     Section 7.  AFFIRMATIVE COVENANTS.  The Guarantor covenants and agrees 
that, so long as any part of the Guaranteed Obligations shall remain unpaid 
or the Lender shall have any Commitment, the Guarantor will, unless the 
Leader shall otherwise consent in writing:

          (a)  CORPORATE EXISTENCE.  Preserve and maintain in full force 
and effect its corporate existence, rights (charter and statutory), 
franchises and privileges and qualify and remain qualified, as a 
corporation in good standing in each jurisdiction in which such 
qualification is from time to time necessary, except for such 
jurisdictions where the failure to so qualify would not have a Material 
Adverse Effect; PROVIDED, HOWEVER, that the Guarantor shall not be 
required to preserve any right, privilege or franchise if the board of 
directors thereof shall determine in good faith that such right, 
privilege or franchise is no longer useful in the conduct of the 
business of the Guarantor, and the loss thereof is not disadvantageous 
in any material respect to the Lender.

          (b)  COMPLIANCE WITH LAWS.  Comply in an material respects 
with all applicable laws, rules, regulations and orders, such compliance 
to include, without limitation, compliance with ERISA, except where the 
failure to so comply would not have a Material Adverse Effect.

          (c)  INSURANCE.  Maintain insurance with financially sound and 
reputable insurers in such amounts and against such risks, as are 
usually and customarily insured by companies engaged in a similar 
business with respect to properties of a similar character.

          (d)  KEEPING OF BOOKS.  Keep proper books of record and 
accounts, in which full and correct entries shall be made of all 
financial transactions and the assets and business of the Guarantor in 
accordance with generally accepted accounting principles in effect from 
time to time or as otherwise required by applicable rules and 
regulations of any governmental agency or regulatory authority having 
jurisdiction over the Guarantor.

          (e)  ACCESS TO RECORDS.  Provide the Lender and its authorized 
advisors and representatives reasonable access to all books, records, 
offices and other facilities and properties of the Guarantor upon 
reasonable notice, and allow the Lender or its authorized advisors or 
representatives (as the case may be) to make such examinations thereof 
and copies of and abstracts from such books and records as the Lender or 
its authorized advisors or representatives (as the case may be) may 
reasonably request.

          (f)  PAYMENT OF TAXES, ETC.  Pay and discharge before the same 
shall become delinquent (i) all taxes, assessments and governmental 
charges or levies imposed upon it or upon its property and (ii) all 
lawful claims that, if unpaid, might become a lien upon its property; 
PROVIDED, HOWEVER, that Guarantor shall not be required to pay or 
discharge any such tax, assessment, charge or claim that is being 
contested in good faith and by proper proceedings and as to which 
appropriate reserves are being maintained, unless and until any Lien 
resulting therefrom attaches to its property and becomes enforceable 
against its other creditors.


                                     C1-7
<PAGE>

          (g)  REPORTING.  Furnish to the Lender at the request of the 
Lender, without cost to the Lender, copies of all documents and 
certificates delivered to any holder of Debt of the Guarantor promptly 
after delivery thereof to such Lender or holder of Debt.

          (h)  NOTICE OF DEFAULTS.  Promptly upon any officer of the 
Guarantor obtaining knowledge thereof, give notice to the Lender, (i) of 
any development, including, without limitation, any litigation, 
investigation or proceeding affecting the Guarantor, which has a 
Material Adverse Effect, could reasonably be expected to have a Material 
Adverse Effect or, in the case of any litigation, investigation or other 
proceeding, which could, if adversely decided, reasonably be expected to 
have a Material Adverse Effect.

          (i)  COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply with all 
Environmental Laws and Environmental Permits applicable to its 
operations and properties, noncompliance with which could have a 
Material Adverse Effect; obtain and renew all Environmental Permits 
necessary for its operations and properties; and conduct any 
investigation, study, sampling and testing, and undertake any cleanup, 
removal, remedial or other action necessary to remove and clean up 
Hazardous Materials from any of its properties, in accordance with the 
requirements of all applicable Environmental Laws; PROVIDED, HOWEVER, 
that the Guarantor shall not be required to undertake any such cleanup, 
removal, remedial or other action to the extent that its obligation to 
do so is being contested in good faith and by proper proceedings and 
appropriate reserves are being maintained with respect to such 
circumstances.

          (j)  PARI PASSU.  Ensure that the Guaranteed Obligations shall 
rank PARI PASSU with all present and future senior secured and unsecured 
Obligations of the Guarantor.

          (k)  REFINANCING.  Use its best efforts to cause the Borrower 
to complete the Refinancing prior to the Final Maturity Date, which 
Refinancing shall yield an amount sufficient to repay the aggregate 
unpaid principal amount of the Advances in full PLUS accrued interest 
thereon to the date of repayment and all other amounts payable under the 
Loan Documents.

     Section 8.  NEGATIVE COVENANT.  The Guarantor covenants and agrees that, 
so long as any part of the Guaranteed Obligations shall remain unpaid, or the 
Lender shall have any Commitment, the Guarantor will not, without the prior 
written consent of the Lender:

          (a)  MERGERS, ETC.  Merge into or consolidate with any Person, 
except after giving effect any such merger or consolidation, the 
corporation formed by such merger or consideration shall assume the 
Guarantor's obligations and the performance of the Guarantor's covenants 
under this Guaranty in a writing reasonably satisfactory in form and 
substance to the Lender.

          (b)  OPERATE OTHER THAN IN ORDINARY COURSE. Operate its 
business, other than in the usual and ordinary course and other than 
that which is consistent with the past practice established by the 
Guarantor.


                                     C1-8
<PAGE>

          (c)  NEGATIVE PLEDGE. Enter into or suffer to exist any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any of
its property or assets (including, without limitation, any Shares) other than
(i) in favor of the Lender or (ii) in respect of any Debt of the Guarantor
outstanding as of the date hereof.

          (d)  AMENDMENTS OR WAIVERS.  Amend, modify or change in any manner or
waive any of its rights pursuant to the charter or by-laws (or other
organizational documents) of the Guarantor, which, in the reasonable judgment of
the Lender, would adversely affect the Lender's rights and benefits under the
Loan Documents and the documents delivered pursuant thereto.

          (e)  INVESTMENT COMPANY.  Be or become an investment company subject
to the registration requirements under the Investment Company Act of 1940, as
amended.

          (f)  MAINTENANCE OF OWNERSHIP OF THE BORROWER.  Dispose of any 
shares of capital stock of the Borrower or any warrants, rights or 
options to acquire such capital stock, if, as a result of such disposal, 
STHL and IWC shall in the aggregate retain possession of, or the right, 
directly or indirectly, to vote less than 75% of the Shares or the 
ability to direct or to cause the direction of the management and 
policies of the Borrower, whether through the ownership of Shares, by 
contract or otherwise.

      Section 9.  AMENDMENTS, ETC.  No amendment or waiver of any 
provision of this Guaranty and no consent to any departure by the 
Guarantor therefrom shall in any event be effective unless the same 
shall be in writing and signed by the Lender, and then such waiver or 
consent shall be effective only in the specific instance and for the 
specific purpose for which given.

      Section 10. NOTICE, ETC.  All notices and other communications 
provided for hereunder shall be in writing (including telegraphic, 
telecopy or telex communication) and mailed, telegraphed, telecopied, 
telexed or delivered to it, at its address at 6th Floor, Star Telecom 
Tower, 414 Kwun Tong Road, Kowloon, Hong Kong Attention: Mr. Wong Kam Fu 
(Fax No. 852-2771-7421). All such notices and other communications 
shall, when mailed, telegraphed, telecopied or telexed, be effective 
when deposited in the mails, delivered to the telegraph company, 
transmitted by telecopier or confirmed by telex answerback, respectively.

      Section 11.  NO WAIVER; REMEDIES.  No failure on the part of the 
Lender to exercise, and no delay in exercising, any right hereunder 
shall operate as a waiver thereof; nor shall any single or partial 
exercise of any right hereunder preclude any other or further exercise 
thereof or the exercise of any other right. The remedies herein provided 
are cumulative and not exclusive of any remedies provided by law.

      Section 12.  RIGHT OF SET-OFF.  Upon (a) the occurrence and during 
the continuance of any Event of Default and (b) the making of the 
request or the granting of the consent specified by Section 6.01 of the 
Credit Agreement to authorize the Lender to declare the Note due and 
payable pursuant to the provisions of said Section 6.01, the Lender and 
any of its Affiliates is hereby authorized at any time and from time to 
time, to the fullest extent permitted by law, to set 



                                     C1-9
<PAGE>

off and apply any and all deposits (general or special, time or demand, 
provisional or final) at any time held and other indebtedness at any 
time owing by the Lender or such Affiliate to or for the credit or the 
account of the Guarantor against any and all of the Obligations of the 
Guarantor now or hereafter existing under this Guaranty, whether or not 
the Lender or such Affiliate shall have made any demand under this 
Guaranty and although such Obligations may be unmatured. The Lender 
agrees promptly to notify the Guarantor after any such set-off and 
application; PROVIDED, HOWEVER, that the failure to give such notice 
shall not affect the validity of such set-off and application. The 
rights of the Lender and its Affiliates under this Section are in 
addition to other rights and remedies (including, without limitation, 
other rights of set-off) that the Lender may have.

     Section 13.  INDEMNIFICATION.  Without limitation on any other 
Obligations of the Guarantor or remedies of the Lender under this 
Guaranty, the Guarantor shall, to the fullest extent permitted by law, 
indemnify, defend and save and hold harmless the Lender from and 
against, and shall pay on demand, any and all losses, liabilities, 
damages, costs, expenses and charges (including the reasonable fees and 
disbursements of the Lender's legal counsel) suffered or incurred by the 
Lender as a result of any failure of any Guaranteed Obligations to be 
the legal, valid and binding obligations of the Borrower enforceable 
against the Borrower in accordance with their terms.

     Section 14.  CONTINUING GUARANTY; ASSIGNMENTS UNDER THE CREDIT 
AGREEMENT.  This Guaranty is a continuing guaranty and shall (a) remain 
in full force and effect until the later of the payment in full in cash 
of the Guaranty Obligations and an other amounts payable under this 
Guaranty and the Termination Date, (b) be binding upon the Guarantor, 
its successors and assigns and (c) inure to the benefit of and be 
enforceable by the Lender and their successors, transferees and assigns. 
Without limiting the generality of the foregoing clause (c), the Lender 
may assign or otherwise transfer all or any portion of its rights and 
obligations under the Credit Agreement (including, without limitation, 
all or any portion of the Commitment, the Advances owing to it and the 
Note held by it) to any other Person, and such other Person shall 
thereupon become vested with all the benefits in respect thereof granted 
to the Lender herein or otherwise, in each case as and to the extent 
provided under the Credit Agreement.

     Section 15.  GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, 
ETC.  (a) This Guaranty shall be governed by, and construed in 
accordance with, the laws of the State of New York.

          (b)  The Guarantor hereby irrevocably and unconditionally 
submits, for itself and its property, to the nonexclusive jurisdiction 
of any New York State court or federal court of the United States of 
America sitting in New York City, and any appellate court from any 
thereof, in any action or proceeding arising out of or relating to this 
Guaranty, or for recognition or enforcement of any judgment, and the 
Guarantor hereby irrevocably and unconditionally agrees that all claims 
in respect of any such action or proceeding may be heard and determined 
in any such New York State court or, to the extent permitted by law, in 
such federal court. The Guarantor agrees that process served either 
personally or by registered mail, return receipt requested, shall, to 
the extent permitted by law, constitute adequate service of process in 
any 

                                     C1-10
<PAGE>

such proceeding. Without limiting the foregoing, the Guarantor hereby 
appoints, in the case of any such action or proceeding brought in the 
courts of or in the State of New York, CT Corporation System, with 
offices on the date hereof at 1633 Broadway, New York, New York 10019, 
to receive, for them and on their behalf, service of process in the 
State of New York with respect thereto, PROVIDED that the Guarantor may 
appoint any other person, with offices in the State of New York to 
replace such agent for service of process upon delivery to each other 
Loan Party notice thereof. The Guarantor agrees that a final judgment in 
any such action or proceeding shall be conclusive and may be enforced in 
other jurisdictions by suit on the judgment or in any other manner 
provided by law. Nothing in this Guaranty shall affect any right that 
any Loan Party may otherwise have to bring any action or proceeding 
relating to this Guaranty in the courts of any jurisdiction.

          (c)  The Guarantor hereto irrevocably and unconditionally 
waives, to the fullest extent it may legally and effectively do so, any 
objection that it may now or hereafter have to the laying of venue of 
any suit, action or proceeding arising out of or relating to this 
Guaranty in any New York State or federal court. The Guarantor hereto 
hereby irrevocably waives, to the fullest extent permitted by law, the 
defense of an inconvenient forum to the maintenance of such action or 
proceeding in any such court.

          (d)  If any sum due from the Guarantor under this Guaranty or 
any order or judgment given or made in relation thereto has to be 
converted from the currency (the "first currency") in which the same is 
payable hereunder or under such order or judgment into another currency 
(the "second currency") for the purpose of (a) making or filing a claim 
or proof against the Guarantor, (b) obtaining an order or judgment in 
any court or other tribunal or (c) enforcing any order to judgment given 
or made in relation thereto, the Guarantor shall indemnify and hold 
harmless each of the persons to whom such sum is due from and against 
any loss suffered or incurred as a result of any discrepancy between (i) 
the rate of exchange used for such purpose to convert the sum in 
question from the first currency into the second currency and (ii) the 
rate or rates of exchange at which such person may in the ordinary 
course of business purchase the first currency with the second currency 
upon receipt of a sum paid to it in satisfaction, in whole or in part, 
of any such order, judgment, claim or proof.

          (e)  The Guarantor hereby waives all right to trial by jury in 
any action, proceeding or counterclaim (whether based on contract, tort 
or otherwise) arising out of or relating to this Guaranty, any document 
delivered under this Guaranty, any Advance or the actions of the Lender 
in the negotiations, administration, performance or enforcement hereof.

                                     C1-11
<PAGE>


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

                               STAR TELECOM HOLDING LIMITED


                               By:       
                                   ------------------------------------
                                   Name:
                                   Title:



                                     C1-12
<PAGE>


                                     EXHIBIT C-2

                              FORM OF GUARANTY FROM VCFC


     GUARANTY dated May 16, 1997 made by VANGUARD CELLULAR FINANCIAL 
CORP., a North Carolina corporation (the "Guarantor"), in favor of the 
Lender (as defined in the Credit Agreement referred to below).

     PRELIMINARY STATEMENT.  The Lender is party to the Bridge Loan 
Agreement, dated as of May 16, 1997 (said Agreement, as it may hereafter 
be amended, supplemented or otherwise modified from time to time, being 
the "Credit Agreement") with STAR DIGITEL LIMITED, a corporation 
organized under the laws of Hong Kong (the "Borrower").  It is a 
condition precedent to the making of Advances under the Credit Agreement 
that the Guarantor shall have executed and delivered this Guaranty.  
Capitalized terms used but not defined herein shall have the meaning 
ascribed to such terms in the Credit Agreement.

     NOW, THEREFORE, in consideration of the premises and in order to 
induce the Lender to make Advances under the Credit Agreement from time 
to time, the Guarantor hereby agrees as follows:

     Section 1.  GUARANTY.  (a) The Guarantor hereby unconditionally and 
irrevocably guarantees the punctual payment when due, whether at stated 
maturity, by acceleration or otherwise, of the sum of (i) Advances under 
the Credit Agreement in an aggregate principal amount not to exceed 
$3,760,000 and (ii) the product of (x) the VCFC Guarantee Percentage (as 
defined below) and (y) the aggregate amount of all Obligations of the 
Borrower other than Advances under the Credit Agreement now or hereafter 
existing under the other Loan Documents, whether for interest, few, 
expenses or otherwise (the sum of clauses (i) and (ii) being the 
"Guaranteed Obligation"), and in addition agrees to pay any and all 
expenses (including reasonable counsel fees and expenses) incurred by 
the Lender in enforcing any rights under this Guaranty.  Without 
limiting the generality of the foregoing, the Guarantor's liability 
shall extend to all amounts that constitute part of the Guaranteed 
Obligations and would be owed by the Borrower to the Lender under the 
Loan Documents but for the fact that they are unenforceable or not 
allowable due to the existence of a bankruptcy, reorganization or 
similar proceeding involving the Borrower.  The "VCFC Guaranteed 
Percentage" means, at any date of determination, 47%.

          (b)  The liability of the Guarantor under this Guaranty shall 
not exceed the greater of (i) the net benefit realized by the Guarantor 
from the proceeds of the Advances made from time to time by the Borrower 
to the Guarantor or any Subsidiary of the Guarantor and (ii) the greater 
of (x) 95% of the Adjusted Net Assets of the Guarantor on the date of 
delivery hereof and (y) 95% of the Adjusted Net Assets of the Guarantor 
on the date of any payment hereunder. "Adjusted Net Assets" of the 
Guarantor at any date means the lesser of (x) the amount by which the 
fair value of the property of the Guarantor exceeds the total amount of 
liabilities, including, without limitation, contingent liabilities, but 
excluding liabilities under this Guaranty),

                                     C2-1
<PAGE>

of the Guarantor at such date and (y) the amount by which the present 
fair salable value of the assets of the Guarantor at such date exceeds 
the amount that will be required to pay the probable liability of the 
Guarantor on its debts, excluding debt in respect of this Guaranty, as 
they become absolute and matured.

     Section 2.  GUARANTY ABSOLUTE.  The Guarantor guarantees the 
payment of Guaranteed Obligations, which will be paid in accordance with 
the terms of the Loan Documents, regardless of any law, regulation or 
order now or hereafter in effect in any jurisdiction affecting any of 
such terms or the rights of the Lender with respect thereto.  The 
Obligations of the Guarantor under this Guaranty are independent of any 
Obligations of any other Loan Party under the Loan Document, and a 
separate action or actions may be brought and prosecuted against the 
Guarantor to enforce this Guaranty, irrespective of whether any action 
is brought against the Borrower or any other Loan Party or whether the 
Borrower or any other Loan Party is joined in any such action or 
actions.  The liability of the Guarantor under this Guaranty shall be 
irrevocable, absolute and unconditional irrespective of, and the 
Guarantor hereby irrevocably waives any defenses it may now or hereafter 
have in any way relating to, any or all of the following:

          (a)  any lack of validity or enforceability of any Loan 
Document or any agreement or instrument redating thereto;

          (b)  any change in the time, manner or place of payment of, or 
in any other term of, all or any of the Guaranteed Obligations or any 
other Obligations of any other Loan Party under the Loan Documents, or 
any other amendment or waiver of or any consent to departure from any 
Loan Document; PROVIDED, HOWEVER, that any amendment to or other 
modification of the Loan Documents (other than the STHL Guaranty and the 
IWC Pledge Agreement) shall require the prior written consent of VCFC;

          (c)  any taking, release or amendment or waiver of or consent 
to departure from any other guaranty, for all or any of the Guaranteed 
Obligations;

          (d)  any change, restructuring or termination of the corporate 
structure or existence of the Borrower or any of its Subsidiaries;

          (e)  any failure of the Lender to disclose to any Loan Party 
any information relating to the financial condition, operations, 
properties or prospects of any other Loan Party now or in the future 
known to the Lender (the Guarantor waiving any duty on the part of the 
Secured Parties to disclose such information); or

          (f)  any other circumstance (including, without limitation, 
any statute of limitations) or any existence of or reliance on any 
representation by the Lender that might otherwise constitute a defense 
available to, or a discharge of, any Loan Party or any other guarantor 
or surety.

This Guaranty shall continue to be effective or be reinstated, as the 
case may be, if at any time any payment of any of the Guaranteed 
Obligations is rescinded or must otherwise be returned by 

                                     C2-2
<PAGE>

the Lender or any other Person upon the insolvency, bankruptcy or 
reorganization of any Loan Party or otherwise, all as though such 
payment had not been made.

     Section 3.  WAIVERS AND ACKNOWLEDGMENTS.  (a) The Guarantor hereby 
waives promptness, diligence, notice of acceptance and any other notice 
with respect to any of the Guaranteed Obligations and this Guaranty and 
any requirement that the Lender protect, secure, perfect or insure any 
Lien or any property subject thereto or exhaust any right or take any 
action against any Loan Party or any other Person or any Collateral.

          (b)  The Guarantor hereby waives any right to revoke this 
Guaranty, and acknowledges that this Guaranty is continuing in nature 
and applies to all Guaranteed Obligations, whether existing now or in 
the future.

          (c)  The Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in this Section 3 are knowingly
made in contemplation of such benefits.

     Section 4.  SUBROGATION.  The Guarantor will not exercise any 
rights that it may now or hereafter acquire against the Borrower or any 
other insider guarantor that arise from the existence, payment, 
performance or enforcement of the Guarantor's Obligations under this 
Guaranty or any other Loan Document, including, without limitation, any 
right of subrogation, reimbursement, exoneration, contribution or 
indemnification and any right to participate in any claim or remedy of 
the Lender against the Borrower or any other insider guarantor or any 
Collateral, whether or not such claim, remedy or right arises in equity 
or under contract, statute or common law, including, without limitation, 
the right to take or receive from the Borrower or any other insider 
guarantor, directly or indirectly, in cash or other property or by 
set-off or in any other manner, payment or security on account of such 
claim, remedy or right, unless and until all of the Obligations and all 
other amounts payable under this Guaranty shall have been paid in full 
in cash and the Commitment shall have expired or terminated.  If any 
amount shall be paid to the Guarantor in violation of the preceding 
sentence at any time prior to the later of the payment in full in cash 
of the Guaranteed Obligations and all other amounts payable under this 
Guaranty and the Termination Date, such amount shall held in trust for 
the benefit of the Lender and shall forthwith be paid to the Lender to 
be credited and applied to the Guaranteed Obligations and all other 
amounts payable under this Gnaranq, whether matured or unmatured, in 
accordance with the terms of the Loan Documents, or to be held as 
Collateral for any Guaranteed Obligations or other amounts payable under 
this Guaranty thereafter arising.  If (i) the Guarantor shall make 
payment to the Lender of all or any part of the Guaranteed Obligations, 
(ii) all of the Guaranteed Obligations and all other amounts payable 
under this Guaranty shall be paid in full in cash and (iii) the 
Termination Date shall have occurred, the Lender will, at the 
Guarantor's request and expense, execute and deliver to the Guarantor 
appropriate documents, without recourse and without representation or 
warranty, necessary to evidence the transfer by subrogation to the 
Guarantor of an interest in the Guaranteed Obligations resulting from 
such payment by the Guarantor.



                                     C2-3
<PAGE>

     Section 5.  PAYMENTS FREE AND CLEAR OF TAXES, ETC.  (a) Any and all 
payments made by the Guarantor hereunder shall be made free and clear of 
and without deduction for any and all present or future Taxes.  If the 
Guarantor shall be required by law to deduct any Taxes from or in 
respect of any sum payable hereunder to the Lender, (i) the sum payable 
shall be increased as may be necessary so that after making all required 
deductions (including deductions applicable to additional sums payable 
under this Section) the Lender receives an amount equal to the sum it 
would have received had no such deductions been made, (ii) the Guarantor 
shall make such deductions and (iii) the Guarantor shall pay the full 
amount deducted to the relevant taxation authority or other authority in 
accordance with applicable law.

          (b)  In addition, the Guarantor agrees to pay any present or 
future Other Taxes in respect of all or any part of the Guaranteed 
Obligations.

          (c)  The Guarantor will indemnify the Lender for the VCFC 
Guaranteed Percentage of Taxes or Other Taxes (including, without 
limitation, any Taxes or Other Taxes imposed by any jurisdiction on 
amounts payable under this Section) paid by the Lender and any liability 
(including penalties, additions to tax, interest and expenses) arising 
therefrom or with respect thereto; the Guarantor shall have the right to 
contest in good faith such tax levied upon it; provided, however, that 
such contest shall in no way limit the Guarantor's Obligations 
hereunder.  This indemnification shall be made within 30 days from the 
date the Lender makes written demand therefor.

          (d)  Within 30 days after the date of any payment of Taxes by 
or on behalf of the Guarantor, the Guarantor will furnish to the Lender, 
at its address referred to in the Credit Agreement, the original receipt 
of payment thereof or a certified copy of such receipt or to the extent 
that a receipt is not given, other reasonable evidence of payment 
thereof.  In the case of any payment hereunder by or on behalf of the 
Guarantor through an account or branch outside the United States or on 
behalf of the Guarantor by a payer that is not a United States person, 
if the Guarantor determines that no Taxes are payable in respect 
thereof, the Guarantor shall, at the request of the Lender, furnish, or 
shall cause such payor to furnish, to the Lender, at such address, an 
opinion of counsel acceptable to the Lender stating that such payment is 
exempt from Taxes. For purposes of this subsection (d), the terms 
"United States" and "United States person" shall have the meanings 
specified in Section 7701 of the Internal Revenue Code.

          (e)  Without prejudice to the survival of any other agreement 
of the Guarantor hereunder or under any other Loan Document, the 
agreements and obligations of the Guarantor contained in this Section 5 
shall survive the payment in full of the Guaranteed Obligations and all 
other amounts payable under this Guaranty.

     Section 6.  REPRESENTATIONS AND WARRANTIES.  The Guarantor hereby 
represents and warrants as follows:

          (a)  DUE INCORPORATION, ETC.  The Guarantor (i) is duly organized,
valid existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is duly authorized to do business in each jurisdiction in
which such authorization is required by law or in which the failure to be so
authorized would not have material adverse effect on (x) the business, 


                                     C2-4
<PAGE>

condition (financial or otherwise), operation or properties of the 
Guarantor and its subsidiaries taken as a whole, (y) the rights and 
remedies of the Lender under this Guaranty, or (z) the ability of the 
Guarantor to perform its obligations under this Guaranty (each, a 
"Guarantor Material Adverse Effect"), and (iii) has all requisite power 
and authority (A) to own or hold under lease and to operate all of its 
property and assets and (B) to execute, deliver and perform all its 
obligations under each Loan Document to which it is or will be a party.

          (b)  CORPORATE POWER, ETC.  The Guarantor has full corporate 
power and authority to enter into, deliver and perform its obligations 
under each Loan Document to which it is a party and to consummate each 
of the transactions contemplated hereby and thereby, and has taken all 
necessary corporate action to authorize the execution, delivery and 
performance by it of each Loan Document to which it is a party.  Each 
Loan Document to which the Guarantor is a party constitutes the legal, 
valid and binding obligation of the Guarantor, enforceable against the 
Guarantor in accordance with its terms, except as enforcement may be 
limited by bankruptcy, insolvency, reorganization, moratorium or similar 
laws now or hereafter in effect affecting the enforcement of creditors' 
rights generally and by general principles of equity (regardless of 
whether enforcement is sought in a proceeding in equity or at law).

          (c)  NO CONFLICT.  Neither the execution and delivery of each 
Loan Document to which it is or will be a party nor the performance by 
the Guarantor of its obligations thereunder, nor the consummation of the 
transactions contemplated thereby, will (i) conflict with the Articles 
of Incorporation or bylaws of the Guarantor, or (ii) conflict with or 
result in a breach of, or constitute a default under, or result in the 
creation or imposition of any Lien upon any of the property or assets of 
the Guarantor under, any applicable laws (including, without limitation, 
Regulation X issued by the Board of Governors of the Federal Reserve 
System) or any indenture, mortgage, deed of trust or other instrument or 
agreement to which the Guarantor may be or become a party or by which it 
may be or become bound or to which any of the property or assets of the 
Guarantor may be subject.

          (d)  APPROVALS, ETC.  No order, license, consent, 
authorization or approval of, or exemption by, or notice to or 
registration with, any governmental authority or regulatory body, and no 
filing, recording, publication or registration in any public office or 
any other place (other than, in each case, such filings as may be 
required under applicable securities laws), is required in connection 
with the execution, delivery and performance by the Guarantor of any 
Loan Document to which it is a party, or for the legality, validity, 
binding effect or enforceability thereof.

          (e)  FINANCIAL STATEMENTS.  The Consolidated balance sheets of 
Vanguard Cellular Systems, Inc., a North Carolina corporation 
("Vanguard"), and Subsidiaries as of December 31, 1996, and the related 
Consolidated statements of income and cash flows of Vanguard for the 
fiscal year then ended, accompanied by an opinion of the independent 
chartered or public accountants of Vanguard, copies of which have been 
furnished to the Lender, fairly present the Consolidated financial 
condition of Vanguard and Subsidiaries as of such date and the results 
of the operations thereof for the period ended on such date. All such 
financial 

                                     C2-5
<PAGE>

statements, including the related schedules and notes thereto, have been 
prepared in accordance with U.S. GAAP for Vanguard applied consistently 
throughout the periods involved.

          (f)  NO GUARANTOR MATERIAL ADVERSE EFFECT.  Since December 31, 1996,
there has been no, nor, to the best of the Guarantor's knowledge, has there been
any event that could reasonably be elected to have a, Guarantor Material Adverse
Effect.

          (g)  LITIGATION, ETC.  There is no pending or, to the best of the
Guarantor's knowledge, threatened litigation, investigation, action or
proceeding of or before any court, arbitrator or governmental agency (including
any Environmental Action) binding upon or affecting any of the Guarantor or its
Subsidiaries or their respective properties and assets that (i) could reasonably
be expected to cause a Guarantor Material Adverse Effect to occur or
(ii) purports to affect the legality, validity or enforceability of any Loan
Document to which the Guarantor is a party.

          (h)  NO VIOLATION, ETC.  The Guarantor is not in violation of, nor
does the execution by the Guarantor of the Loan Documents to which it is a party
or the consummation of the transactions contemplated thereby result in the
violation of, (i) any term of its charter or bylaws, (ii) the Shareholders
Agreement, or (iii) any term of any other agreement or instrument to which it is
a party or by which it is bound in any respect, which, in each case, has or
could be reasonably expected to have a Guarantor Material Adverse Effect.

          (i)  MARGIN STOCKS.  The Guarantor is not engaged in the 
business of extending credit for the purpose of purchasing or carrying 
margin stock within the meaning of Regulations G, T and X issued by the 
Board of Governors of the Federal Reserve System.

          (j)  INVESTMENT COMPANY ACT AND PUBLIC UTILITY HOLDING COMPANY ACT. 
The Guarantor is not, and is not directly or indirectly controlled by any 
Person which is, required to register as an "investment company" in the 
meaning of the U.S. Investment Company Act of 1940, as amended.  The 
Guarantor is not a "holding company" or a "subsidiary" or an "affiliate" of a 
"holding company" or a "public utility" within the meaning of the U.S. Public 
Utility Holding Company Act of 1935, as amended.

          (k)  TAXES.  The Guarantor has filed all tax returns required 
to be filed by it and has paid all taxes, assessments, fees and other 
charges (including interest and penalties) due with respect to the years 
covered by such returns, except for any such failures to file or to pay 
such amounts which, in the aggregate, would not have a Guarantor 
Material Adverse Effect or which are being contested in good faith by 
appropriate proceedings.

          (l)  ENVIRONMENTAL LAWS.  The operations and properties of the 
Guarantor comply in all material respects with all applicable 
Environmental Laws, except where the failure to so comply could not be 
reasonably expected to have a Guarantor Material Adverse Effect, and all 
necessary Environmental Permits have been obtained and are in effect for 
the operations and properties of the Guarantor and its Subsidiaries, 
EXCEPT for such Environmental Permits where the failure to obtain the 
same, in the aggregate, could not be reasonably expected to have a 
Guarantor Material Adverse Effect.


                                     C2-6
<PAGE>

          (m)  CONDITIONS PRECEDENT.  Upon execution hereof and the other Loan
Documents by all of the parties thereto, there are no conditions precedent to
the effectiveness of this Guaranty that have not been satisfied or waived.

          (n)  CREDIT ANALYSIS; OTHER INFORMATION.  The Guarantor has, 
independently and without radiance upon the Lender and based on such 
documents and information as it has deemed appropriate, made its own 
credit analysis and decision to enter into this Guaranty, and the 
Guarantor has established adequate means of obtaining from the Borrower 
on a continuing basis information pertaining to, and is now and on a 
continuing basis will be completely familiar with, the financial 
condition, operations, properties and prospects of the Borrower.

     Section 7.  AFFIRMATIVE COVENANTS.  The Guarantor covenants and 
agrees that, so long as any part of the Guaranteed Obligations shall 
remain unpaid or the Lender shall have any Commitment, the Guarantor 
will, unless the Lender shall otherwise consent in writing:

          (a)  CORPORATE EXISTENCE.  Preserve and maintain in full force 
and effect its corporate existence, rights (charter and statutory), 
franchises and privileges and qualify and remain qualified, as a 
corporation in good standing in each jurisdiction in which such 
qualification is from time to time necessary, except for such 
jurisdictions where the failure to so qualify would not have a Guarantor 
Material Adverse Effect; PROVIDED, HOWEVER, that the Guarantor shall not 
be required to preserve any right, privilege or franchise if the board 
of directors thereof shall determine in good faith that such right, 
privilege or franchise is no longer useful in the conduct of the 
business of the Guarantor, and the loss thereof is not disadvantageous 
in any material respect to the Lender.

          (b)  COMPLIANCE WITH LAWS.  Comply in an material respects 
with all applicable laws, rules, regulations and orders, such compliance 
to include, without limitation, compliance with ERISA, except where the 
failure to so comply would not have a Guarantor Material Adverse Effect.

          (c)  INSURANCE.  Maintain insurance with financially sound and 
reputable insurers in such amounts and against such risks, as are 
usually and customarily insured by companies engaged in a similar 
business with respect to properties of a similar character.

          (d)  KEEPING OF BOOKS.  Keep proper books of record and 
accounts, in which full and correct entries shall be made of all 
financial transactions and the assets and business of the Guarantor in 
accordance with generally accepted accounting principles in effect from 
time to time or as otherwise required by applicable rules and 
regulations of any governmental agency or regulatory authority having 
jurisdiction over the Guarantor.

          (e)  ACCESS TO RECORDS.  Provide the Lender and its authorized
advisors and representatives reasonable access to all books, records, offices
and other facilities and properties of the Guarantor upon reasonable notice, and
allow the Lender or its authorized advisors or representatives (as the case may
be) to make such examinations thereof and copies of 


                                     C2-7
<PAGE>

and abstracts from such books and records as the Lender or its 
authorized advisors or representatives (as the case may be) may 
reasonably request.

          (f)  PAYMENT OF TAXES, ETC.  Pay and discharge before the same 
shall become delinquent (i) all taxes, assessments and governmental 
charges or levies imposed upon it or upon its properly and (ii) all 
lawful claims that, if unpaid, might become a lien upon its property; 
PROVIDED, HOWEVER, that Guarantor shall not be required to pay or 
discharge any such tax, assessment, charge or claim that is being 
contested good faith and by proper proceedings and as to which 
appropriate reserves are being maintained, unless and until any Lien 
(other than any Lien permitted under that certain Second Amended and 
Restated Loan Agreement, dated as of April 10, 1996, by and among 
Vanguard Cellular Operating Corp. and the financial institutions party 
thereto, as amended and modified (the "SENIOR CREDIT FACILITY")) 
resulting therefrom attaches to its property and becomes enforceable 
against its other creditors.

          (g)  REPORTING.  From time to time, furnish without cost to, 
at the request of, the Lender, copies of all documents and certificates 
delivered to any other lender or holder of Debt of the Guarantor 
promptly after such request.

          (h)  NOTICE OF DEFAULTS.  Promptly upon any officer of the 
Guarantor obtaining knowledge thereof, give notice to the Lender of any 
development, including, without limitation, any litigation, 
investigation or proceeding affecting the Guarantor, which has a 
Guarantor Material Adverse Effect, could reasonably be expected to have 
a Guarantor Material Adverse Effect or, in the case of any litigation, 
investigation or other proceeding, which could, if adversely decided, 
reasonably be expected to have a Guarantor Material Adverse Effect.

          (i)  COMPLIANCE WITH ENVIRONMENTAL LAWS.  Comply with all 
Environmental Laws and Environmental Permits applicable to its 
operations and properties, noncompliance with which could have a 
Guarantor Material Adverse Effect; obtain and renew all Environmental 
Permits necessary for its operations and properties; and conduct any 
investigation, study, sampling and testing, and undertake any cleanup, 
removal, remedial or other action necessary to remove and clean up 
Hazardous Materials from any of its properties, in accordance with the 
requirements of all applicable Environmental Laws; PROVIDED, HOWEVER, 
that the Guarantor shall not be required to undertake any such cleanup, 
removal, remedial or other action to the extent that its obligation to 
do so is being contested in good faith and by proper proceedings and 
appropriate reserves are being maintained with respect to such 
circumstances.

          (j)  PARI PASSU.  Ensure that the Guaranteed Obligations shall 
rank PARI PASSU with all present and future senior unsecured Obligations 
of the Guarantor.

     Section 8.  NEGATIVE COVENANTS.  The Guarantor covenants and agrees 
that, so long as any part of the Guaranteed Obligations shall remain 
unpaid, or the Lender shall have any Commitment, the Guarantor will not, 
without the prior written consent of the Lender:

          (a)  MERGERS, ETC.  Merge into or consolidate with any Person, 
if after giving effect any such merger or consolidation, the Guarantor's 
obligations under this Guaranty are not assumed by the corporation 
formed by such merger or consolidation, and evidence of 

                                     C2-8
<PAGE>

such assumption shall be evidenced in a writing reasonably satisfactory 
in form and substance to the Lender.

          (b)  OPERATE OTHER THAN IN ORDINARY COURSE.  Operate its 
business, other than in the usual and ordinary course and other than 
that which is consistent with the past practice established by the 
Guarantor.

          (c)  AMENDMENT OR WAIVER.  Amend, modify or change in any 
manner the charter or bylaws (or other organizational documents) of the 
Guarantor, which would materially adversely affect the Lender's rights 
and benefits under the Loan Documents and the documents delivered 
pursuant thereto.

          (d)  NEGATIVE PLEDGE.  Enter into or suffer to exist any 
agreement prohibiting or conditioning the creation or assumption of any 
Lien upon any of its property or assets (including, without limitation, 
any Shares) (i) other than in respect of any Debt of the Guarantor 
outstanding as of the date hereof and (ii) to the extent that the 
obligation under this Section 8(d) does not conflict with the Senior 
Credit Facility and all agreements related thereto.

     Section 9.  AMENDMENTS, ETC.  No amendment or waiver of any 
provision of this Guaranty and no consent to any departure by the 
Guarantor therefrom shall in any event be effective unless the same 
shall be in writing and signed by the Lender, and then such waiver or 
consent shall be effective only in the specific instance and for the 
specific purpose for which given.

     Section 10. NOTICES, ETC.  All notices and other communications 
provided for hereunder shall be in writing (including telegraphic, 
telecopy or telex communication) and mailed, telegraphed, telecopied, 
telexed or delivered to it, if to the Guarantor, at 2002 Pisgah Church 
Road, Greensboro, NC 27455, U.S.A., Attention: General Counsel, telecopy 
number:  1-910-545-2500, and if to the Lender, at 1 Temasek Avenue #15 
02 Millenia Tower, Singapore 039192, Attention: Mrs. Mabel Sim, or as to 
each party, at such other address or telecopy number as shall be 
designated by such party in a written notice to the other party in the 
manner set forth herein.  All such notices and other communications 
shall, when mailed, telegraphed, telecopied or telexed, be effective 
when deposited in the mails, delivered to the telegraph company, 
transmitted by telecopier or confirmed by telex answerback, respectively.

     Section 11.  NO WAIVER; REMEDIES.  No failure on the part of the 
Lender to exercise, and no delay in exercising, any right hereunder 
shall operate as a waiver thereof; nor shall any single or partial 
exercise of any right hereunder preclude any other or further exercise 
thereof or the exercise of any other right.  The remedies herein 
provided are cumulative not exclusive of any remedies provided by law.

     Section 12.  RIGHT OF SET-OFF.  Upon (a) the occurrence and during 
the continuance of any Event of Default and (b) the making of the 
request or the granting of the consent specified by Section 6.01 of the 
Credit Agreement to authorize the Lender to declare the Note due and 
payable pursuant to the provision of said Section 6.01, the Lender and 
any of its Affiliates is hereby authorized at any time and from time to 
time, to the fullest extent permitted 

                                     C2-9
<PAGE>

by law, to set off and apply any and all deposits (general or special, 
time or demand, provisional or final) at any time held and other 
indebtedness at any time owing by the Lender or such Affiliate to or for 
the credit or the account of the Guarantor against any and all of the 
Obligations of the Guarantor now or hereafter existing under this 
Guaranty, whether or not the Lender or such Affiliate shall have made 
any demand under this Guaranty and although such Obligations may be 
unmatured.  The Lender agrees promptly to notify the Guarantor after any 
such set-off and application; PROVIDED, HOWEVER, that the failure to 
give such notice shall not affect the validity of such set-off and 
application.  The rights of the Lender and its Affiliates under this 
Section are in addition to other rights and remedial (including, without 
limitation, other rights of set-off) that the Lender may have.

     Section 13.  INDEMNIFICATION.  Without limitation on any other 
Obligations of the Guarantor or remedies of the Lender under this 
Guaranty, the Guarantor shall, to the fullest extent permitted by law, 
indemnify, defend and save and hold harmless the Lender from and 
against, and shall pay on demand, any and all losses, liabilities, 
damages, costs, expenses and charges with respect to the Guaranteed 
Obligations suffered or incurred by the Lender (including the reasonable 
fees and disbursements of the Lender's legal counsel) as a result of any 
failure of any Guaranteed Obligations to be the legal, valid and binding 
obligations of the Borrower enforceable against the Borrower in 
accordance with their terms.

     Section 14.  CONTINUING GUARANTY; ASSIGNMENTS UNDER THE CREDIT 
AGREEMENT.  This Guaranty is a continuing guaranty and shall (a) remain 
in full force and effect until the later of the payment in full in cash 
of the Guaranteed Obligations and all other amounts payable under this 
Guaranty and the Termination Date, (b) be binding upon the Guarantor, 
its successors and assigns and (c) inure to the benefit of and be 
enforceable by the Lender and their successors, transferees and assigns. 
Without limiting the generality of the foregoing clause (c), the Lender 
may assign or otherwise transfer all or any portion of its rights and 
obligations under the Credit Agreement (including, without limitation, 
all or any portion of the Commitment, the Advances owing to it and the 
Note held by it) to any other Person, and such other Person shall 
thereupon become vested with all the benefits in respect thereof granted 
to the Lender herein or otherwise, in each case as and to the extent 
provided under the Credit Agreement.

     Section 15.  GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, 
ETC.  (a) This Guaranty shall be governed by, and construed in 
accordance with, the laws of the State of New York.

          (b)  The Guarantor hereby irrevocably and unconditionally 
submits, for itself and its property, to the nonexclusive jurisdiction 
of any New York State court or federal court of the United States of 
America sitting in New York City, and any appellate court from any 
thereof, in any action or proceeding arising out of or relating to this 
Guaranty, or for recognition or enforcement of any judgment, and the 
Guarantor hereby irrevocably and unconditionally agrees that all claims 
in respect of any such action or proceeding may be heard and determined 
in any such New York State court or, to the extent permitted by law, in 
such federal court.  The Guarantor agrees that process served either 
personally or by registered mail, return recent requested, shall, to the 
extent permitted by law, constitute adequate service of process in any 

                                     C2-10
<PAGE>

such proceeding. The Guarantor agrees that a final judgment in any such 
action or proceeding shall be conclusive and may be enforced in other 
jurisdictions by suit on the judgment or in any other manner provided by 
law.  Nothing in this Guaranty shall affect any right that any Loan 
Party may otherwise have to bring any action or proceeding relating to 
this Guaranty in the courts of any jurisdiction.

          (c)  The Guarantor hereto irrevocably and unconditionally 
waives, to the fullest extent it may legally and effectively do so, any 
objection that it may now or hereafter have to the laying of venue of 
any suit, action or proceeding arising out of or relating to this 
Guaranty in any New York State or federal court.

          (d)  The Guarantor hereto hereby irrevocably waives, to the 
fullest extent permitted by law, the defense of an inconvenient forum to 
the maintenance of such action or proceeding in any such court.

          (e)  The Guarantor hereby waives all right to trial by jury in 
any action, proceeding or counterclaim (whether based on contract, tort 
or otherwise) arising out of or relating to this Guaranty, any document 
delivered under this Guaranty, any Advance or the actions of the Lender 
in the negotiations, administration, performance or enforcement hereof.

                                     C2-11
<PAGE>

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

                               VANGUARD CELLULAR
                               FINANCIAL CORPORATION
               
               
               
                               By:      
                                  ---------------------------------
                                  Name:
                                  Title: