COMSAT CORPORATION
                     NON-EMPLOYEE DIRECTORS STOCK PLAN












           Adopted by the Board of Directors on January 15, 1988,
              and approved by the Shareholders on May 20, 1988






      Amendments adopted by the Board of Directors on March 16, 1990,
January 15, 1993 and February 16, 1996, and approved by the Shareholders on
                May 18, 1990, May 21, 1993 and May 17, 1996







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                            COMSAT CORPORATION
                     NON-EMPLOYEE DIRECTORS STOCK PLAN
                     ---------------------------------



     1.   Purpose.  The  purpose  of the plan  ("Plan")  is to  advance  the
interests of COMSAT  Corporation  ("Corporation")  and its  shareholders by
encouraging  increased share ownership by members of the Board of Directors
("Board") of the Corporation who are not employees of the  Corporation,  or
any of its subsidiaries.  The Plan does this by enhancing the Corporation's
ability  to  attract  and  retain the  services  of  experienced,  able and
knowledgeable  persons to serve as directors  and by  providing  additional
incentive  for  such  directors  to  make  a  maximum  contribution  to the
Corporation's  success through  continuing and increased share ownership in
the Corporation.

     2.   Administration.  The Plan shall be  administered  by the Board. In
addition to its duties with  respect to the Plan  stated  elsewhere  in the
Plan,  the Board shall have full  authority,  consistent  with the Plan, to
interpret the Plan, to promulgate such rules and  regulations  with respect
to the Plan as it deems  desirable  and to make  all  other  determinations
necessary or desirable for the  administration  of the Plan. All decisions,
determinations  and  interpretations of the Board shall be binding upon all
persons.

     3.   Shares Covered by the Plan. Under the Plan, grants of stock options
("Options")  and  retainer  awards  ("Retainer  Awards")  will  provide the
opportunity  for  eligible  members of the Board to  acquire  shares of the
Corporation's  common stock without par value ("Common  Stock").  Shares of
Common  Stock  which  may  be  delivered  on  exercise  of  Options  and in
satisfaction of Retainer Awards may be previously  issued shares reacquired
by the Corporation or authorized but previously unissued shares.

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     4.   Granting of Options.
          -------------------

          (a)  Eligible  Directors.  Each member of the Board who is not an
employee  of the  Corporation  or any  of its  subsidiaries  ("Non-Employee
Director")  shall be eligible to receive  Options in  accordance  with this
Section 4. As used herein,  the term "subsidiary"  means any corporation at
least  40%  of  whose  outstanding  voting  stock  is  owned,  directly  or
indirectly, by the Corporation.

          (b)  Automatic  Grants.  An Option to  purchase  2,000  shares of
Common  Stock  shall be granted  annually at a meeting of the Board held in
March (or the next  succeeding  meeting date if no March  meeting is held),
beginning in 1988, to each  Non-Employee  Director who was a director as of
the date of the Annual Meeting of Shareholders for the prior year, provided
the Non-Employee  Director continues in office after the Board meeting date
on which the Option is granted. Beginning in 1993, each annual Option grant
shall be for 4,000 shares of Common Stock.

          (c)     Option Agreement.  Each Option shall be evidenced by a
written instrument which shall state the terms and conditions of the grant,
not inconsistent with the Plan, as the Board in its sole discretion shall
determine and approve.

          (d) Option  Price.  The  purchase  price for each share of Common
Stock subject to an Option shall be 100% (50% for Options granted from 1990
to 1992)  of the fair  market  value  of the  Common  Stock on the date the
Option is granted.  For this purpose,  as well as other  purposes under the
Plan,  fair  market  value shall be deemed to be the average of the highest
and lowest  selling prices of Common Stock as reported under New York Stock
Exchange-Composite Transactions on the date on which the Option was granted
or, if there were no sales of Common  Stock on that date,  then on the next
preceding date on which there were sales.

          (e) Option Duration.  Each Option shall expire fifteen years (ten
years  for  Options  granted  in 1988 and  1989)  from the 

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date that it is granted,  except that in the instance  where a Non-Employee
Director  dies  within  the  15th  year  following  the date of grant of an
Option,  any  unexercised  portion  of  the  Option  will  continue  to  be
exercisable for one year following the date of death.

          (f)  Nontransferability.  An Option  shall be  nonassignable  and
nontransferable  by a Non-Employee  Director other than by will or the laws
of descent and  distribution.  An Option  shall be  exercisable  during the
Non-Employee Director's lifetime only by him or his guardian.

     5.   Option Exercises.
          ----------------

          (a) Exercise  Timing.  Except as provided in Section 5(c) or 5(d)
below, each Option shall become exercisable for 50% of the shares of Common
Stock covered by the Option after the  expiration of one year following the
date of grant and  exercisable for 100% of the shares covered by the Option
after the expiration of two years following the date of grant.

          (b) Method of Exercise. Exercise of each Option granted under the
Plan shall be by written  notice in the form and manner  determined  by the
Board.  Each notice of exercise  shall be  accompanied by the full purchase
price of the shares being purchased pursuant to the exercise.  Such payment
may be made in cash,  check,  shares of Common  Stock valued using the fair
market value as of the date of exercise or a combination thereof.

          (c)  Termination  of Board Service.  If a  Non-Employee  Director
granted an Option ceases to be a member of the Board,  any  unexercised  or
partially  exercised  Options held by such  Non-Employee  Director shall be
exercisable in accordance with the following provisions:

               (i) if termination of Board service is due to (A) retirement
          from the Board upon  reaching 72 years of age, (B)  expiration of
          the Non-Employee  Director's term as a Presidential  appointee to
          the Board, (C)

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          failure to stand for  reelection  to the Board  with the  Board's
          consent,  or (D)  resignation  from the  Board  with the  Board's
          consent,  all outstanding  Options shall become fully exercisable
          and shall continue in force for the duration of their  respective
          terms, or

               (ii)  if   termination   of  Board   service  is  due  to  a
          Non-Employee  Director's death, or in the event of a Non-Employee
          Director's  death  following  termination  of Board service for a
          reason  provided  in (i) above,  all  outstanding  Options  shall
          become fully exercisable and shall continue in force for one year
          following the date of death, or

               (iii) if  termination  of Board  service  is for any  reason
          other than one of the reasons provided in (i) and (ii) above, all
          outstanding Options shall terminate immediately.

          (d) Change in Control.  Each Option  granted under the Plan shall
immediately  vest and become fully  exercisable  upon the  occurrence  of a
"Change in  Control"  of the  Corporation.  For  purposes  of this Plan,  a
"Change in Control"  of the  Corporation  shall be deemed to have  occurred
upon the happening of any one of the following events:

               (i) the  acquisition  by any  individual,  entity  or  group
          (within  the  meaning of  Sections  13(d)(3)  or  14(d)(2) of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"))
          of  beneficial  ownership  (within  the  meaning  of  Rule  13d-3
          promulgated  under the Exchange  Act) of fifty  percent  (50%) or
          more of the combined voting power of the then outstanding  voting
          securities  of  the  Corporation;  provided,  however,  that  the
          following  acquisitions  shall not constitute a Change in Control
          for purposes of this  definition:  (A) any acquisitions of voting
          securities  of the  Corporation  by the  Corporation,  or (B) any

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          acquisitions  of  voting  securities  of the  Corporation  by any
          employee  benefit  or  stock  ownership  plan  or  related  trust
          sponsored or maintained by the Corporation for the benefit of its
          employees;

               (ii) any  change in the  composition  of the Board such that
          the individuals who, as of May 17, 1996, constitute those members
          of the Board who have been  elected  by the  shareholders  of the
          Corporation  in accordance  with the provisions of Section 303(a)
          of the  Communications  Satellite  Act of 1962,  as amended  (the
          "Incumbent  Directors"),  cease for any  reason to  constitute  a
          majority of the Board at any time;  provided,  however,  that any
          individual  becoming  a  director  subsequent  to such date whose
          election,  or nomination for election,  was approved by a vote of
          at least  three-fourths  (3/4) of the  then  Incumbent  Directors
          shall be considered as though such  individual  were an Incumbent
          Director;

               (iii) approval by the  shareholders  of the Corporation of a
          merger, share exchange, swap, consolidation,  recapitalization or
          other  business  combination  involving any other  corporation or
          entity (a "Transaction"), the effect of which would result in the
          combined voting  securities of the Corporation  immediately prior
          to the effectiveness of such Transaction  continuing to represent
          less than sixty percent (60%) of the combined voting power of the
          voting securities of the Corporation,  or of any surviving entity
          of, or parent  entity  following,  the  Transaction,  immediately
          after the effectiveness of the Transaction;

               (iv) approval by the  shareholders of the Corporation of (A)
          a complete liquidation or dissolution of the Corporation,  or (B)
          the sale or

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          disposition by the Corporation of all or substantially all of its
          assets  other than to a  corporation  or entity  with  respect to
          which following such sale or other  disposition  more than eighty
          percent  (80%) of the then  combined  voting  power of the voting
          securities  of  such   corporation  or  entity  is,   immediately
          following such sale or  disposition,  beneficially  owned (within
          the meaning of Rule 13d-3  promulgated under the Exchange Act) by
          all or substantially all of the individuals and entities who were
          the beneficial owners of the voting securities of the Corporation
          upon or immediately before such approval; or

               (v) any event  that  would be  required  to be  reported  in
          response to Item 6(e) or any successor thereto of Schedule 14A of
          Regulation  14A  promulgated  under the Exchange  Act;

     provided,  however,  that none of the events  described in clauses (i)
     through  (v) shall be deemed to  constitute  a Change in  Control  if,
     prior to the  occurrence of such event,  the Board adopts a resolution
     specifically   providing  that  the  event  shall  not  be  deemed  to
     constitute a Change in Control for purposes of the Plan.

     6.   Granting of Retainer Awards.
          ---------------------------

          (a) Automatic  Grants.  A Retainer  Award of 600 shares of Common
Stock shall be granted annually at the first meeting of the Board following
the Annual Meeting of  Shareholders  to each  Non-Employee  Director who is
serving as a director at such Board meeting. Non-Employee Directors who are
elected by the Board or appointed by the  President of the United States to
fill vacancies  between Annual  Meetings shall receive a prorated  Retainer
Award, payable at the time of election or appointment,  equal to the number
of shares of Common Stock  determined by multiplying (i) the number of full
months of service as a director  between

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election or appointment and the next Annual Meeting by (ii) the number 50.

          (b) Phantom  Stock Units.  A  Non-Employee  Director may elect to
defer the entire annual Retainer Award to which he or she is entitled under
Section 6(a) by filing a deferral election  ("Deferral  Election"),  in the
form  and  manner  prescribed  by the  Board,  by  December  15 of the year
immediately  preceding the year in which the Retainer Award otherwise would
be paid,  except  that a  Deferral  Election  with  respect  to a  prorated
Retainer  Award  shall  be  filed  at  such  time  following   election  or
appointment as the Board shall determine.  If a Non-Employee Director makes
a Deferral Election,  600 phantom stock units ("Phantom Stock Units") shall
be credited to an account  maintained for the director.  Each Phantom Stock
Unit shall be equivalent in value to a share of Common Stock.  Upon payment
of  a  dividend  on  the  Corporation's   Common  Stock,  the  Non-Employee
Director's  account shall be credited with  additional  Phantom Stock Units
equal to the  quotient  obtained by dividing (i) the amount of the dividend
the Corporation would have paid to the director as if the director had been
the record owner of the shares of Common Stock covered by the Phantom Stock
Units in the  director's  account on the record date for the payment of the
dividend by (ii) the fair market  value of the Common Stock on the dividend
payment date. Upon the Non-Employee Director's termination of Board service
for any reason,  the Non-Employee  Director shall receive payment in shares
of the  Corporation's  Common  Stock  equal to the number of whole  Phantom
Stock Units  credited to his  account,  plus cash in an amount equal to the
fair market  value of any  fractional  Phantom  Stock Unit  interests.  The
Phantom  Stock Units  credited to the  account of a  Non-Employee  Director
shall become immediately  payable, in the manner described in the preceding
sentence, upon the occurrence of a Change in Control.

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     7.   Adjustment Upon Changes in Capitalization.  If there is a change in
the  number or kind of  outstanding  shares of the  Corporation's  stock by
reason  of  a  stock  dividend,  stock  split,  recapitalization,   merger,
consolidation,  combination  or  other  similar  event,  or if  there  is a
distribution to shareholders of the Corporation's Common Stock other than a
cash dividend,  appropriate  adjustments  shall be made by the Board to the
number of shares  covered by the automatic  Option  grants  provided for in
Section 4(b) and by any outstanding  Options; the purchase price for shares
of Common  Stock  covered  by  outstanding  Options;  the  number of shares
covered by the automatic Retainer Award grants provided for in Section 6(a)
and by any outstanding Phantom Stock Units; and other relevant  provisions,
to the extent that the Board, in its sole discretion,  determines that such
change makes such adjustments necessary or equitable.

     8.   Tax Withholding.  Any exercise of an Option or payment of a
Retainer Award pursuant to the Plan shall be subject to withholding of income
tax, FICA tax or other taxes to the extent the Corporation is required to make
such withholding.

     9.   Laws and Regulations.  The Plan, the grant and exercise of
Options, the grant and deferral of Retainer Awards, and the obligation of the
Corporation to sell or deliver shares of Common Stock under the Plan shall be
subject to all applicable laws, regulations and rules.

     10.  Termination  and Amendment of the Plan. The Board may at any time
terminate  the Plan or may at any time or times amend the Plan or amend any
outstanding  Options or Phantom  Stock Units for the purpose of  satisfying
the  requirements  of any changes in applicable  laws or regulations or for
any other purpose which at the time may be permitted by law, provided that:

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               (i) no amendment of any outstanding Options or Phantom Stock
          Units shall  contain terms or  conditions  inconsistent  with the
          provisions of the Plan as determined by the Board; and

               (ii)  except as  provided  in Section  7, no such  amendment
          shall,   without  the  approval  of  the   shareholders   of  the
          Corporation:  (a)  increase  the number of shares of Common Stock
          for which each Option or Retainer  Award may be granted under the
          Plan;  (b)  increase the  frequency  of Option or Retainer  Award
          grants;  (c) reduce the price at which  Options may be granted or
          exercised  below the price  provided  for in  Section  4(d);  (d)
          extend  the period  during  which any  outstanding  Option may be
          exercised;  (e) shorten the  exercise  timing as provided  for in
          Section  5(a);  (f)  materially  increase  in any  other  way the
          benefits  accruing  to  Non-Employee  Directors;  (g) expand Plan
          eligibility beyond  Non-Employee  Directors;  or (h) disqualify a
          Non-Employee Director from being a "disinterested" administrator,
          as defined for the purposes of Rule 16b-3 (or any successor rule)
          under  the  Securities   Exchange  Act  of  1934,  of  any  other
          stock-based plan of the Corporation.

     11.  Effective Date. The Plan shall become  effective upon approval by
the  Board;  provided,  however,  that the Plan shall be  submitted  to the
shareholders of the  Corporation  for approval,  and if not approved by the
shareholders  within one year from the date of  approval by the Board shall
be of no force and effect.  Options  granted under the Plan before approval
of the Plan by the  shareholders  shall be granted subject to such approval
and shall not be exercisable before such approval.

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