EXHIBIT 10.8

[FIRST UNION LOGO]

                                 PROMISSORY NOTE

$5,000,000.00                                                     April 25, 1997


Optical Cable Corporation, a Virginia Corporation
5290 Concourse Drive
Roanoke, Virginia 24019
(Individually and collectively "Borrower")

First Union National Bank of Virginia
201 South Jefferson Street
Roanoke, Virginia 24011
(Hereinafter referred to as the "Bank")

                                IMPORTANT NOTICE

THIS NOTE CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER
OF  IMPORTANT  RIGHTS  YOU MAY HAVE AS A BORROWER  AND  ALLOWS  BANK TO OBTAIN A
JUDGMENT AGAINST YOU WITHOUT FURTHER NOTICE.

RENEWAL/MODIFICATION.  This Promissory Note renews, extends and/or modifies that
certain  Promissory Note dated March 13, 1996,  evidencing an original principal
indebtedness of $5,000,000.00. The Promissory Note is not a novation.

Borrower  promises  to pay to the order of Bank,  in lawful  money of the United
States of  America,  at its office  indicated  above or  wherever  else Bank may
specify, the sum of Five Million and No/100 Dollars  ($5,000,000.00) or such sum
as may be advanced and outstanding from time to time with interest on the unpaid
principal  balance at the rate and on the terms provided in this Promissory Note
(including all renewals, extensions or modifications hereof, this "Note").

SECURITY.  Borrower  has  granted  Bank a security  interest  in the  collateral
described  in the  Loan  Documents,  including,  but not  limited  to,  personal
property collateral described in that certain Security Agreement dated March 13,
1996.

INTEREST  RATE.  Interest shall accrue on the unpaid  principal  balance of each
Advance  (defined  herein)  under  this Note from the date such  Advance is made
available  to the Borrower at the LIBOR Market Index Rate plus 1.50% as the rate
may change from day to day in accord with changes in the LIBOR Market Index Rate
("Interest Rate").  "LIBOR Market Index Rate", for any day, is the rate (rounded
to the next higher 1/100 of 1%) for 1 month U.S.  dollar deposits as reported on
Telerate page 3750 as of 11:00 a.m.,  London time,  for such day,  provided,  if
such day is not a London business day, the immediately preceding London business
day (or if not so reported,  then as determined by Bank from another  recognized
source of Interbank quotation).

DEFAULT  RATE.  In addition to all other  rights  contained  in this Note,  if a
default in the payment of the Obligations  occurs,  all outstanding  Obligations
shall bear  interest  at the  Prime-Based  Rate plus 3%  ("Default  Rate").  The
Default Rate shall also apply from demand until the  Obligations or any judgment
thereon is paid in full.

INTEREST COMPUTATION. (Actual/360). Interest shall be computed on the basis of a
360-day year for the actual number of days in the interest  period  ("Actual/360
Computation").  The  Actual/360  Computation  determines  the  annual  effective
interest yield by taking the stated (nominal)  interest rate for a year's period
and then dividing said rate by 360 to determine the daily


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periodic rate to be applied for each day in the interest period.  Application of
the  Actual/360  Computation  produces an  annualized  effective  interest  rate
exceeding that of the nominal rate.

REPAYMENT  TERMS.  This Note  shall be due and  payable in  consecutive  monthly
payments of accrued interest only commencing on May 1, 1997, and on the same day
of each month thereafter until fully paid. In any event,  this Note shall be due
and payable in full, including all principal and accrued interest, on demand.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations  shall be applied to accrued interest and then
to principal. Upon the occurrence of a default in the payment of the Obligations
or a Default (as defined in the other Loan  Documents)  under any Loan Document,
monies  may be  applied  to  the  Obligations  in any  manner  or  order  deemed
appropriate by Bank.

If any  payment  received  by Bank under this Note or other  Loan  Documents  is
rescinded,  avoided or for any reason  returned  by Bank  because of any adverse
claim or threatened  action,  the returned  payment  shall remain  payable as an
obligation  of all persons  liable  under this Note or other Loan  Documents  as
though such payment had not been made.

LOAN DOCUMENTS AND OBLIGATIONS.  The term "Loan Documents" used in this Note and
other Loan  Documents  refers to all documents  executed in connection  with the
loan  evidenced  by this  Note and any prior  notes  which  evidence  all or any
portion of the loan evidenced by this Note, and may include, without limitation,
a commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements,  security agreements,  security  instruments,  financing statements,
mortgage  instruments,  letters of credit  and any  renewals  or  modifications,
whenever any of the foregoing are executed, but does not include swap agreements
(as defined in 11 U.S.C. ss. 101).

The term  "Obligations" used in this Note refers to any and all indebtedness and
other  obligations  under this Note, all other  obligations under any other Loan
Document(s),  and all  obligations  under any swap  agreements  as defined in 11
U.S.C. ss. 101 between Borrower and Bank whenever executed.

LATE CHARGE.  If any payments  are not timely made,  Borrower  shall also pay to
Bank a late charge equal to 5% of each payment past due for 8 or more days.

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.

If this Note is secured by  owner-occupied  residential  real  property  located
outside the state in which the office of Bank first shown above is located,  the
late charge laws of the state where the real  property is located shall apply to
this Note and the late charge shall be the highest amount  allowable  under such
laws.  If no amount is stated  thereunder,  the late charge  shall be 5% of each
payment past due for 10 or more days.

ATTORNEYS'  FEES AND OTHER  COLLECTION  COSTS.  Borrower shall pay all of Bank's
reasonable  expenses  incurred  to enforce or  collect  any of the  Obligations,
including, without limitation, reasonable arbitration,  paralegals',  attorneys'
and experts' fees and expenses,  whether  incurred without the commencement of a
suit,  in  any  trial,  arbitration,  or  administrative  proceeding,  or in any
appellate or bankruptcy proceeding.

USURY.  Regardless of any other  provision of this Note or other Loan Documents,
if for any reason the  effective  interest  should  exceed  the  maximum  lawful
interest, the effective interest shall be


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deemed  reduced  to, and shall be, such  maximum  lawful  interest,  and (i) the
amount  which  would be  excessive  interest  shall  be  deemed  applied  to the
reduction  of the  principal  balance  of this  Note and not to the  payment  of
interest,  and (ii) if the loan  evidenced  by this Note has been or is  thereby
paid in full,  the excess  shall be  returned  to the party  paying  same,  such
application to the principal  balance of this Note or the refunding of excess to
be a complete settlement and acquittance thereof.

DEMAND NOTE.  This is a demand Note and all  Obligations  hereunder shall become
immediately  due and payable upon demand.  In addition,  the  Obligations  shall
automatically become immediately due and payable if Borrower or any guarantor or
endorser of this Note  commences or has  commenced  against it a  bankruptcy  or
insolvency proceeding.

REMEDIES.  Upon the occurrence of a default in the payment of the Obligations or
a  Default  (as  defined  in the other  Loan  Documents)  under  any other  Loan
Document, Bank may at any time thereafter, take the following actions: BANK LIEN
AND SET-OFF. Exercise its right of set-off or to foreclose its security interest
or lien against  Borrower's  accounts without notice.  CUMULATIVE.  Exercise any
rights and remedies as provided under the Note and other Loan  Documents,  or as
provided by law or equity.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as bank may reasonably request from time to time,  including without limitation,
financial   statements  and  information   pertaining  to  Borrower's  financial
condition. Such information shall be true, complete, and accurate.

CONFESSION OF JUDGMENT. Each Borrower hereby duly constitutes and appoints Keith
Northern,  Gregory  Baugher (each of whom is an officer of Bank),  and Bank (its
successors and assigns)  through an officer duly authorized by Bank, as the true
and lawful attorneys-in-fact for Borrower (any of the foregoing may act), in any
and all of  Borrowers'  names,  place and stead,  and upon the  occurrence  of a
default  in the  payment  of the  Obligations  due under  this  Note to  confess
judgment  against  them or any of them,  in favor of Bank,  its  successors  and
assigns,  in accordance with 1950 Code of Virginia  Section 8.01-431 et seq., in
the Circuit Court for the City of Roanoke,  Virginia,  for all amounts owed with
respect  to  the  Obligations,  including,  without  limitation,  all  costs  of
collection,  attorneys' fees in the amount equal to 15% of the Obligations  then
outstanding  (which shall be deemed reasonable  attorneys' fees for the purposes
of this paragraph), and court costs, hereby ratifying and confirming the acts of
said  attorney-in-fact  as if done by Borrower.  Upon request of Bank,  Borrower
will  execute an  amendment or other  agreement  substituting  attorneys-in-fact
appointed to act for each Borrower hereunder.

LINE OF CREDIT ADVANCES.  Borrower may borrow, repay and reborrow,  and Bank may
advance and readvance  under this Note  respectively  from time to time (each an
"Advance"  and  together  the  "Advances"),  so long as the  total  indebtedness
outstanding  at any one time does not exceed the principal  amount stated on the
face of this Note.  Bank's  obligation  to make  Advances  under this Note shall
terminate  if a demand for  payment is made under this Note or if a Default  (as
defined in the other Loan  Documents)  under any Loan Document  occurs or in any
event,  on February 28, 1998 unless  renewed or extended by Bank in writing upon
such terms then  satisfactory to Bank. As of the date of each proposed  Advance,
Borrower shall be deemed to represent that each  representation made in the Loan
Documents is true as of such date.  30-Day Payout.  During the term of the Note,
Borrower agrees to pay down the outstanding  balance to a maximum of $100.00 for
30 consecutive days annually.

LOAN  AGREEMENT.  This Note is subject to the  provisions  of that  certain Loan
Agreement between Bank and Borrower of even date herewith.


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WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan  Documents  shall be valid unless in writing and signed by an officer
of Bank.  No  waiver  by Bank of any  Default  (as  defined  in the  other  Loan
Documents) shall operate as a waiver of any other Default or the same Default on
a future  occasion.  Neither  the  failure  nor any delay on the part of Bank in
exercising any right,  power, or remedy under this Note and other Loan Documents
shall  operate  as a waiver  thereof,  nor  shall a single or  partial  exercise
thereof  preclude any other or further  exercise  thereof or the exercise of any
other right, power or remedy.

Each Borrower or any person liable under this Note waives presentment,  protest,
notice of  dishonor,  notice of  intention  to  accelerate  maturity,  notice of
acceleration  of  maturity,  notice of sale and all other  notices  of any kind.
Further,  each agrees that Bank may extend,  modify or renew this Note or make a
novation  of the loan  evidenced  by this  Note for any  period  and  grant  any
releases,  compromises  or indulgences  with respect to any collateral  securing
this Note,  or with  respect to any other  Borrower or any other  person  liable
under this Note or other Loan  Documents,  all  without  notice to or consent of
each  Borrower  or each  person who may be liable  under this Note or other Loan
Documents and without  affecting the liability of Borrower or any person who may
be liable under this Note or other Loan Documents.

MISCELLANEOUS PROVISIONS.  ASSIGNMENT.  This Note and other Loan Documents shall
inure to the benefit of and be binding  upon the  parties  and their  respective
heirs, legal  representatives,  successors and assigns.  Bank's interests in and
rights under this Note and other Loan Documents are freely assignable,  in whole
or in part, by Bank. Borrower shall not assign its rights and interest hereunder
without the prior written consent of Bank, and any attempt by Borrower to assign
without Bank's prior written consent is null and void. Any assignment  shall not
release  Borrower  from  the  Obligations.  APPLICATION  LAW;  CONFLICT  BETWEEN
DOCUMENTS. This Note and other Loan Documents shall be governed by and construed
under the laws of the state  where Bank  first  shown  above is located  without
regard to that state's  conflict of laws  principles.  If the terms of this Note
should  conflict with the terms of the loan agreement or any  commitment  letter
that  survives  closing,  the  terms  of this  Note  shall  control.  BORROWER'S
ACCOUNTS.  Except as prohibited by law, Borrower grants Bank a security interest
in all of Borrower's accounts with Bank and any of its affiliates. JURISDICTION.
Borrower irrevocably agrees to non-exclusive  personal jurisdiction in the state
in which the office of Bank first shown above is located.  SEVERABILITY.  If any
provision of this Note or of the other Loan  Documents  shall be  prohibited  or
invalid under  applicable  law, such provision  shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such  provision  or the  remaining  provisions  of this  Note or  other  such
document.  NOTICES.  Any notices to Borrower shall be sufficiently  given, if in
writing and mailed or delivered to the  Borrower's  address  shown above or such
other  address as provided  hereunder,  and to Bank, if in writing and mailed or
delivered to Bank's office address shown above or such other address as Bank may
specify  in  writing  from time to time.  In the  event  that  Borrower  changes
Borrower's  address  at any time prior to the date the  Obligations  are paid in
full,  Borrower agrees to promptly give written notice of said change of address
by registered or certified mail, return receipt requested,  all charges prepaid.
PLURAL;  CAPTIONS. All references in the Loan Documents to Borrower,  guarantor,
person,  document or other nouns of reference  mean both the singular and plural
form,  as the case may be,  and the term  "person"  shall  mean any  individual,
person or entity.  The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or  interpretation of the Loan
Documents.  BINDING CONTRACT. Borrower by execution of and Bank by acceptance of
this Note  agree that each  party is bound to all terms and  provisions  of this
Note.  ADVANCES.  Bank in its sole discretion may make other Advances under this
Note pursuant hereto.  POSTING OF PAYMENTS.  All payments received during normal
banking hours after 2:00 p.m. local time at the office of Bank first shown above
shall be deemed  received  at the  opening of the next  banking  day.  JOINT AND
SEVERAL OBLIGATIONS. Each Borrower is jointly and severally obligated under this
Note. FEES AND TAXES. Borrower shall promptly pay all documentary,

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intangible recordation and/or similar taxes on this transaction whether assessed
at closing or arising from time to time.

ARBITRATION.  Upon  demand of any party  hereto,  whether  made  before or after
institution  of any  judicial  proceeding,  any  dispute,  claim or  controversy
arising out of, connected with or relating to this Note and other Loan Documents
("Disputes")  between or among parties to this Note shall be resolved by binding
arbitration as provided herein.  Institution of a judicial proceeding by a party
does not waive the right of that party to demand arbitration hereunder. Disputes
may include,  without  limitation,  tort claims,  counterclaims,  disputes as to
whether a matter is subject to  arbitration,  claims  brought as class  actions,
claims arising from Loan Documents executed in the future, or claims arising out
of or connected with the transaction reflected by this Note.

Arbitration  shall be conducted  under and governed by the Commercial  Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association  (the "AAA") and Title 9 of the U.S. Code. All arbitration  hearings
shall be conducted in the city in which the office of Bank first stated above is
located.  The  expedited  procedures  set  forth  in  Rule  51 et  seq.  of  the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00.  All
applicable  statutes of limitation  shall apply to any Dispute.  A judgment upon
the award may be entered in any court having jurisdiction.  The panel from which
all  arbitrators  are selected  shall be comprised  of licensed  attorneys.  The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction,  state or federal, of the state where
the hearing will be conducted or if such person is not  available to serve,  the
single  arbitrator may be a licensed  attorney.  Notwithstanding  the foregoing,
this  arbitration  provision does not apply to disputes under or related to swap
agreements.

PRESERVATION AND LIMITATION OF REMEDIES.  Notwithstanding  the preceding binding
arbitration provisions, Bank and Borrower agree to preserve, without diminution,
certain   remedies  that  any  party  hereto  may  employ  or  exercise  freely,
independently  or in  connection  with an  arbitration  proceeding  or  after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable:  (i) all rights to foreclose against any real
or personal  property or other  security by  exercising  a power of sale granted
under Loan  Documents or under  applicable  law or by judicial  foreclosure  and
sale,  including a proceeding to confirm the sale;  (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful  possession of personal  property,  (iii) obtaining  provisional or
ancillary remedies  including  injunctive  relief,  sequestration,  garnishment,
attachment,  appointment  of  receiver  and  filing  an  involuntary  bankruptcy
proceeding;  and (iv) when  applicable,  a judgment by  confession  of judgment.
Preservation  of these  remedies  does not limit the power of an  arbitrator  to
grant similar remedies that may be requested by a party in a Dispute.

Borrower  and Bank  agree  that  they  shall not have a remedy  of  punitive  or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary  damages that they have now or which may arise in
the future in  connection  with any  Dispute  whether the Dispute is resolved by
arbitration or judicially.

IN WITNESS  WHEREOF,  Borrower,  on the day and year first written  above,  have
caused this Note to be executed under seal, AND THIS NOTE IS DEEMED EFFECTIVE AS
OF FEBRUARY 28, 1997.

                           Optical Cable Corporation, a Virginia Corporation
                           Taxpayer Identification Number: 54-1237042

CORPORATE                  By: /s/ Robert Kopstein
SEAL                           --------------------------------
                               Robert Kopstein, President


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                             MODIFICATION NUMBER ONE
                             TO THE PROMISSORY NOTE

Optical Cable Corporation, a Virginia Corporation
5290 Concourse Drive
Roanoke, Virginia 24019
(Individually and collectively "Borrower")

First Union National Bank of Virginia
201 South Jefferson Street
Roanoke, Virginia 24011
(Hereinafter referred to as the "Bank")

                                IMPORTANT NOTICE

THIS AGREEMENT  CONTAINS A CONFESSION OF JUDGMENT  PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT  RIGHTS YOU MAY HAVE AS A BORROWER AND ALLOWS BANK TO OBTAIN
A JUDGMENT AGAINST YOU WITHOUT FURTHER NOTICE.

THIS  AGREEMENT is entered into as of  ___________________________,  1998 by and
between Bank and Borrower.

WHEREAS,  Bank is the holder of a  Promissory  Note  executed  and  delivered by
Borrower, dated April 25, 1997 in the original principal amount of $5,000,000.00
(the "Note"); and

WHEREAS,  Borrower  and Bank have  agreed to modify the terms of the  Promissory
Note.

NOW, THEREFORE, in consideration of the premises contained herein and other good
and valuable  consideration,  receipt and sufficiency of which is  acknowledged,
the parties agree as follows:

OUTSTANDING  BALANCE.  The total outstanding  unpaid principal balance under the
Note as of March 6, 1998 is $0.00. The parties  acknowledge that interest on the
obligation under the Note is paid through March 6, 1998.

MODIFICATIONS.

         1.   The Note is hereby modified by deleting the provisions in the Note
              establishing the repayment terms and substituting the following in
              their place and stead:

         REPAYMENT TERMS. All outstanding principal and accrued interest will be
         repaid in accordance  with the Services  Agreement.  In any event,  the
         Note shall be due and  payable in full,  including  all  principal  and
         accrued interest, on demand.

         LINE OF CREDIT ADVANCES.  Borrower may borrow, repay and reborrow,  and
         Bank may advance and readvance under the Note respectively from time to
         time until the  maturity  hereof  (each an  "Advance"  and together the
         "Advances"),  so long as the total indebtedness  outstanding at any one
         time does not exceed  the  principal  amount  stated on the face of the
         Note. Bank's obligation to make Advances under the Note shall terminate
         if a demand  for  payment  is made  under the Note or if a Default  (as
         defined in the other Loan Documents)  under any Loan Document occurs or
         in any event,  on February 29, 1999 unless  renewed or extended by Bank
         in writing upon such terms then satisfactory to Bank. As of the date of
         each proposed Advance,  Borrower shall be deemed to represent that each
         representation  made in the  Loan  Documents  is true as of such  date.
         SWEEP  PLUS.  Advances  under  the Note will be made from time to time,
         into the  specified  account  with  Bank  pursuant  to the  Sweep  Plus
         Services  Description and Deposit or Master  Agreement,  as applicable,
         (individually or collectively,  the "Services  Agreement") between Bank
         and Borrower and any modifications  thereto. No Advance(s) will be made
         (i) in an amount less than $1,000.00

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<PAGE>

         and each Advance will be made in  increments  of $1,000.00  (ii) if the
         Services  Agreement has been breached or  terminated,  or (iii) if this
         line of credit is not received.

ACKNOWLEDGEMENTS.  Borrower  acknowledges and represents that the Note and other
Loan Documents,  as amended hereby, are in full force and effect and are binding
upon it, its successors,  assigns, administrators and heirs without any defense,
counterclaim,  right or claim of set-off or of other sum due; that, after giving
effect to this  Agreement,  no default or event that with the passage of time or
giving of  notice  would  constitute  a default  under  the Loan  Documents  has
occurred;  that  all  representations  and  warranties  contained  in  the  Loan
Documents are true and correct as of this date;  that there have been no changes
in the ownership of any collateral  pledged to secure the Obligations  since the
dates of the instruments originally pledging such collateral;  and that Borrower
has taken all  necessary  action  (corporate  or  otherwise)  to  authorize  the
execution and delivery of this  Agreement.  This  Agreement  constitutes  only a
modification of an existing  obligation  owing by Borrower to Bank, and is not a
novation.

LIENS. Borrower  acknowledges and confirms the extent,  validity and priority of
the Bank's  security  interests  and liens in the  collateral  pledged,  if any,
pursuant to the Loan  Documents,  and agrees that such  security  interests  and
liens  shall  secure  the  Borrower's   Obligations   to  Bank,   including  any
modification  of the  Note or Loan  Agreement,  and  all  future  modifications,
extensions, renewals and/or replacements of the Loan Documents.

MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the  laws  of  the  applicable  state  as  originally  provided  in the  Loan
Documents,  without reference to that state's conflicts of laws principles. This
Agreement  and the other Loan  Documents  constitute  the sole  agreement of the
parties  with  respect to the  subject  matter  thereof and  supersede  all oral
negotiations  and prior writings with respect to the subject matter thereof.  No
amendment of this Agreement,  and no waiver of any one or more of the provisions
hereof shall be effective  unless set forth in writing and signed by the parties
hereto.  The illegality,  unenforceability  or inconsistency of any provision of
this   Agreement   shall  not  in  any  way  affect  or  impair  the   legality,
enforceability  or consistency of the remaining  provisions of this Agreement or
the other  Loan  Documents.  This  Agreement  and the other Loan  Documents  are
intended to be consistent.  However, in the event of any  inconsistencies  among
this Agreement and any of the Loan Documents,  the terms of this Agreement,  and
then the Note,  shall  control.  This Agreement may be executed in any number of
counterparts and by the different  parties on separate  counterparts.  Each such
counterpart  shall  be  deemed  an  original,  but all such  counterparts  shall
together constitute one and the same agreement.

DEFINITIONS.  The term "Loan  Documents"  used in this  Agreement and other Loan
Documents  refers to all  documents,  agreements,  and  instruments  executed in
connection  with any of the Obligations  (as defined  herein),  and may include,
without limitation,  modification  agreements, a commitment letter that survives
closing, a loan agreement,  any note, guaranty agreements,  security agreements,
security  instruments,  financing statements,  mortgage instruments,  letters of
credit and any  renewals or  modifications,  whenever any of the  foregoing  are
executed,  but does not include swap agreements (as defined in U.S.C.  ss. 101).
The term "Obligations" used in this Agreement refers to any and all indebtedness
and other  obligations of every kind and description of the Borrower to the Bank
or to any Bank affiliate,  whether or not under the Loan Documents,  and whether
such debts or obligations are primary or secondary, direct or indirect, absolute
or contingent,  sole, joint or several,  secured or unsecured,  due or to become
due, contractual,  including, without limitation, swap agreements (as defined in
11 U.S.C. ss. 101),  arising by tort,  arising by operation of law, by overdraft
or  otherwise,  or now or hereafter  existing,  including,  without  limitation,
principal,  interest, fees, late fees, expenses,  attorneys' fees and costs that
have  been or may  hereafter  be  contracted  or  incurred.  Terms  used in this
Agreement which are capitalized and not otherwise  defined herein shall have the
meanings ascribed to such terms in the Note and/or other Loan Documents.

Borrower  reaffirms  and  restates  the  following  with  respect to the Note as
modified herein:

CONFESSION OF JUDGMENT. Each Borrower hereby duly constitutes and appoints Keith
Northern, Gregory Baugher (each of whom is an officer of Bank), and Bank through
an officer duly  authorized  by Bank (any of the foregoing may act), as the true
and lawful  attorneys-in-fact  for them, in any or all of their names, place and
stead,  and upon the  occurrence of a default in the payment of the  Obligations
due under the Note to confess  judgment  against them or any of them in favor of
Bank,  before the Clerk of the Circuit Court for the City of Roanoke,  Virginia,
in  accordance  with 1950 Code of Virginia,  Section  8.01-431 et seq.,  and any
successor  statute,  for all amounts owed with respect to the Obligations  under
the pursuant to the Note including, without limitation, all costs of collection,

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attorneys'  fees in an amount equal to 15% of the Obligations  then  outstanding
(which  shall be deemed  reasonable  attorneys'  fees for the  purposes  of this
paragraph),  and court costs,  hereby  ratifying and confirming the acts of said
attorney-in-fact  as if done by themselves.  Upon request of Bank, each Borrower
will  execute an  amendment or other  agreement  substituting  attorneys-in-fact
appointed to act for each Borrower hereunder.

ARBITRATION.  Upon  demand of any party  hereto,  whether  made  before or after
institution  of any  judicial  proceeding,  any  dispute,  claim or  controversy
arising out of,  connection  with or relating to this  Agreement  and other Loan
Documents  ("Disputes")  between  or among  parties to this  Agreement  shall be
resolved by binding  arbitration as provided  herein.  Institution of a judicial
proceeding  by a party  does  not  waive  the  right  of that  party  to  demand
arbitration hereunder.  Disputes may include,  without limitation,  tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions,  claims  arising from Loan  Documents  executed in the
future, or claims arising out of or connected with the transaction  reflected by
this Agreement.

Arbitration  shall be conducted  under and governed by the Commercial  Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
(the "AAA") and Title 9 of the U.S.  Code.  All  arbitration  hearings  shall be
conducted in the city in which the office of Bank first stated above is located.
The expedited  procedures set forth in Rule 51 et seq. of the Arbitration  Rules
shall be  applicable  to  claims  of less  than  $1,000,000.00.  All  applicable
statutes of limitation shall apply to any Dispute. A judgment upon the award may
be  entered  in  any  court  having  jurisdiction.  The  panel  from  which  all
arbitrators  are selected shall be comprised of licensed  attorneys.  The single
arbitrator  selected for expedited  procedure  shall be a retired judge from the
highest court of general jurisdiction,  state or federal, of the state where the
hearing  will be  conducted  or if such person is not  available  to serve,  the
single  arbitrator may be a licensed  attorney.  Notwithstanding  the foregoing,
this  arbitration  provision does not apply to disputes under or related to swap
agreements.

PRESERVATION AND LIMITATION OF REMEDIES.  Notwithstanding  the preceding binding
arbitration provisions. Bank and Borrower agree to preserve, without diminution,
certain   remedies  that  any  party  hereto  may  employ  or  exercise  freely,
independently  or in  connection  with an  arbitration  proceeding  or  after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable:  (i) all rights to foreclose against any real
or personal  property or other  security by  exercising  a power of sale granted
under Loan  Documents or under  applicable  law or by judicial  foreclosure  and
sale,  including a proceeding to confirm the sale;  (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful  possession of personal  property;  (iii) obtaining  provisional or
ancillary remedies  including  injunctive  relief,  sequestration,  garnishment,
attachment,  appointment  of  receiver  and  filing  an  involuntary  bankruptcy
proceeding;  and (iv) when  applicable,  a judgment by  confession  of judgment.
Preservation  of these  remedies  does not limit the power of an  arbitrator  to
grant similar remedies that may be requested by a party in a Dispute.

Borrower  and Bank  agree  that  they  shall not have a remedy  of  punitive  or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or  exemplary  damages they have now or which may arise in the
future in  connection  with any  Dispute  whether  the  Dispute is  resolved  by
arbitration or judicially.

IN WITNESS  WHEREOF,  the undersigned  have signed and sealed this Agreement the
day and year first written above.

                           Optical Cable Corporation, a Virginia Corporation
                           Taxpayer Identification Number: 54-1237042

                                   Page 3 of 4

<PAGE>

CORPORATE                  By: /s/ Robert Kopstein
SEAL                           ------------------------------
                               Robert Kopstein, President

                           First Union National Bank

CORPORATE                  By: /s/ Susan K. Doyle
SEAL                           ------------------------------
                               Susan K. Doyle, Vice President

                                   Page 4 of 4


<PAGE>

[FIRST UNION LOGO]

                            FIRST UNION NATIONAL BANK
                 SWEEP PLUS LOAN/INVESTMENT SERVICES DESCRIPTION

1.   Bank shall  calculate  daily the "Net Cash  Position" in Borrower's  Demand
     Deposit Account (the "DDA").  The Net Cash Position is calculated using the
     opening  available  balance  in  the  DDA,  plus  any  maturing  investment
     principal and interest,  minus any outstanding  loan  principal,  minus the
     daily  presentment of checks and account holds, and minus any floor balance
     which has been established to cover Bank charges. Borrower agrees that Bank
     is authorized  to debit the DDA for the purpose of overnight  investment or
     borrowing as described in paragraphs 2 and 3 (the "Service").

2.   The  overnight  investment of a surplus Net Cash Position will occur if the
     investable  balance is equal to or greater  than the minimum  specified  by
     Bank for the instrument chosen by Borrower. Bank will deposit to the "Sweep
     Investment  Account" the maturing  principal plus interest each banking day
     so that the sum may be  included in the current  day's  investment  amount.
     Bank will  determine  the  interest  rate to be paid on a daily  basis,  in
     accordance with the applicable  investment tier and investment  instrument.
     Bank may periodically  change the rate differentials  between the tiers and
     the size and the  number of tiers.  Bank  reserves  the right to change the
     investment  instruments  and associated  minimum  investment  requirements.
     Investment  amounts will be rounded  downward to the nearest  $1,000.00 for
     investment purposes.

3.   The  overnight  borrowing  of a deficit  Net Cash  Position  will  occur in
     accordance  with a  designated  line of  credit  that Bank has  offered  to
     Borrower for daily working  capital  purposes.  Advances under this line of
     credit are hereby  authorized to be automatically  drawn by Bank on a daily
     basis with loan principal to be repaid as collected  funds create a surplus
     Net Cash  Position.  Loan interest will be charged to the DDA via ACH debit
     on the  frequency  designated  by Borrower  which shall be monthly,  unless
     otherwise  agreed to by Bank in  writing.  Loan  advances  in excess of the
     preapproved line of credit will not be permitted.  No Loan advances will be
     in an amount  less than  $1,000.00  and each Loan  advance  will be made in
     increments of $1,000.00.

4.   Bank will notify  Borrower as son as is practicable if the amount  required
     to fund the DDA excess the available  account  balance plus invested  funds
     plus available funds in the line of credit. Unless collected funds to cover
     the  deficiency  are  received  by 12:00  p.m.  Eastern  Time the next Bank
     business day, Bank, at its discretion, may either return all items received
     from the time of deficiency or extend the  overdraft.  The return of checks
     by Bank constitutes termination of this Service, and all items subsequently
     presented may, at Bank's sole discretion,  be returned.  Borrower  warrants
     that  individuals  who are  authorized to sign  Borrower's  checks are also
     authorized to create  overdrafts,  should Bank  exercise its  discretion by
     allowing  such  overdrafts.  Overdraft  charges will be billed on a monthly
     basis in accordance with bank's regular fee schedule.

5.   Borrower  will  provide  Bank  instructions  with  regard  to  the  Service
     including the transfer mechanism,  investment  vehicle,  borrowing vehicle,
     interest  charges,  item  processing,  stop payments and the disposition of
     information.  Borrower,  with the  acknowledgement of Bank, may change such
     instructions from time to time.


<PAGE>



[FIRST UNION LOGO]

                                 PROMISSORY NOTE

$10,000,000.00                                                    April 25, 1997


Optical Cable Corporation, a Virginia Corporation
5290 Concourse Drive
Roanoke, Virginia 24019
(Individually and collectively "Borrower")

First Union National Bank of Virginia
201 South Jefferson Street
Roanoke, Virginia 24011
(Hereinafter referred to as the "Bank")

                                IMPORTANT NOTICE

THIS NOTE CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER
OF  IMPORTANT  RIGHTS  YOU MAY HAVE AS A BORROWER  AND  ALLOWS  BANK TO OBTAIN A
JUDGMENT AGAINST YOU WITHOUT FURTHER NOTICE.

Borrower  promises  to pay to the order of Bank,  in lawful  money of the United
States of  America,  at its office  indicated  above or  wherever  else Bank may
specify, the sum of Ten Million and No/100 Dollars  ($10,000,000.00) or such sum
as may be advanced and outstanding from time to time with interest on the unpaid
principal  balance at the rate and on the terms provided in this Promissory Note
(including all renewals, extensions or modifications hereof, this "Note").

SECURITY.  Borrower  has  granted  Bank a security  interest  in the  collateral
described  in the  Loan  Documents,  including,  but not  limited  to,  personal
property collateral described in that certain Security Agreement dated March 13,
1996.

INTEREST  RATE.  Interest shall accrue on the unpaid  principal  balance of each
Advance  (defined  herein)  under  this Note from the date such  Advance is made
available  to the Borrower at the LIBOR Market Index Rate plus 1.50% as the rate
may change from day to day in accord with changes in the LIBOR Market Index Rate
("Interest Rate").  "LIBOR Market Index Rate", for any day, is the rate (rounded
to the next higher 1/100 of 1%) for 1 month U.S.  dollar deposits as reported on
Telerate page 3750 as of 11:00 a.m.,  London time,  for such day,  provided,  if
such day is not a London business day, the immediately preceding London business
day (or if not so reported,  then as determined by Bank from another  recognized
source of Interbank quotation).

DEFAULT  RATE.  In addition to all other  rights  contained  in this Note,  if a
default in the payment of the Obligations  occurs,  all outstanding  Obligations
shall bear  interest  at the  Prime-Based  Rate plus 3%  ("Default  Rate").  The
Default Rate shall also apply from demand until the  Obligations or any judgment
thereon is paid in full.

INTEREST COMPUTATION. (Actual/360). Interest shall be computed on the basis of a
360-day year for the actual number of days in the interest  period  ("Actual/360
Computation").  The  Actual/360  Computation  determines  the  annual  effective
interest yield by taking the stated (nominal)  interest rate for a year's period
and then dividing  said rate by 360 to determine  the daily  periodic rate to be
applied  for each day in the  interest  period.  Application  of the  Actual/360
Computation produces an annualized effective interest rate exceeding that of the
nominal rate.


<PAGE>



REPAYMENT  TERMS.  This Note  shall be due and  payable in  consecutive  monthly
payments of accrued interest only commencing on May 1, 1997, and on the same day
of each month thereafter until fully paid. In any event,  this Note shall be due
and payable in full, including all principal and accrued interest, on demand.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations  shall be applied to accrued interest and then
to principal. Upon the occurrence of a default in the payment of the Obligations
or a Default (as defined in the other Loan  Documents)  under any Loan Document,
monies  may be  applied  to  the  Obligations  in any  manner  or  order  deemed
appropriate by Bank.

If any  payment  received  by Bank under this Note or other  Loan  Documents  is
rescinded,  avoided or for any reason  returned  by Bank  because of any adverse
claim or threatened  action,  the returned  payment  shall remain  payable as an
obligation  of all persons  liable  under this Note or other Loan  Documents  as
though such payment had not been made.

LOAN DOCUMENTS AND OBLIGATIONS.  The term "Loan Documents" used in this Note and
other Loan  Documents  refers to all documents  executed in connection  with the
loan  evidenced  by this  Note and any prior  notes  which  evidence  all or any
portion of the loan evidenced by this Note, and may include, without limitation,
a commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements,  security agreements,  security  instruments,  financing statements,
mortgage  instruments,  letters of credit  and any  renewals  or  modifications,
whenever any of the foregoing are executed, but does not include swap agreements
(as defined in 11 U.S.C. ss. 101).

The term  "Obligations" used in this Note refers to any and all indebtedness and
other  obligations  under this Note, all other  obligations under any other Loan
Document(s),  and all  obligations  under any swap  agreements  as defined in 11
U.S.C. ss. 101 between Borrower and Bank whenever executed.

LATE CHARGE.  If any payments  are not timely made,  Borrower  shall also pay to
Bank a late charge equal to 5% of each payment past due for 8 or more days.

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.

If this Note is secured by  owner-occupied  residential  real  property  located
outside the state in which the office of Bank first shown above is located,  the
late charge laws of the state where the real  property is located shall apply to
this Note and the late charge shall be the highest amount  allowable  under such
laws.  If no amount is stated  thereunder,  the late charge  shall be 5% of each
payment past due for 10 or more days.

ATTORNEYS'  FEES AND OTHER  COLLECTION  COSTS.  Borrower shall pay all of Bank's
reasonable  expenses  incurred  to enforce or  collect  any of the  Obligations,
including, without limitation, reasonable arbitration,  paralegals',  attorneys'
and experts' fees and expenses,  whether  incurred without the commencement of a
suit,  in  any  trial,  arbitration,  or  administrative  proceeding,  or in any
appellate or bankruptcy proceeding.

USURY.  Regardless of any other  provision of this Note or other Loan Documents,
if for any reason the  effective  interest  should  exceed  the  maximum  lawful
interest,  the effective interest shall be deemed reduced to, and shall be, such
maximum lawful  interest,  and (i) the amount which would be excessive  interest
shall be deemed  applied to the reduction of the principal  balance of this Note
and not to the payment of interest,  and (ii) if the loan evidenced by this Note
has been or is thereby

                                     Page 2


<PAGE>



paid in full,  the excess  shall be  returned  to the party  paying  same,  such
application to the principal  balance of this Note or the refunding of excess to
be a complete settlement and acquittance thereof.

DEMAND NOTE.  This is a demand Note and all  Obligations  hereunder shall become
immediately  due and payable upon demand.  In addition,  the  Obligations  shall
automatically become immediately due and payable if Borrower or any guarantor or
endorser of this Note  commences or has  commenced  against it a  bankruptcy  or
insolvency proceeding.

REMEDIES.  Upon the occurrence of a default in the payment of the Obligations or
a  Default  (as  defined  in the other  Loan  Documents)  under  any other  Loan
Document, Bank may at any time thereafter, take the following actions: BANK LIEN
AND SET-OFF. Exercise its right of set-off or to foreclose its security interest
or lien against  Borrower's  accounts without notice.  CUMULATIVE.  Exercise any
rights and remedies as provided under the Note and other Loan  Documents,  or as
provided by law or equity.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as bank may reasonably request from time to time,  including without limitation,
financial   statements  and  information   pertaining  to  Borrower's  financial
condition. Such information shall be true, complete, and accurate.

CONFESSION OF JUDGMENT. Each Borrower hereby duly constitutes and appoints Keith
Northern,  Gregory  Baugher (each of whom is an officer of Bank),  and Bank (its
successors and assigns)  through an officer duly authorized by Bank, as the true
and lawful attorneys-in-fact for Borrower (any of the foregoing may act), in any
and all of  Borrowers'  names,  place and stead,  and upon the  occurrence  of a
default  in the  payment  of the  Obligations  due under  this  Note to  confess
judgment  against  them or any of them,  in favor of Bank,  its  successors  and
assigns,  in accordance with 1950 Code of Virginia  Section 8.01-431 et seq., in
the Circuit Court for the City of Roanoke,  Virginia,  for all amounts owed with
respect  to  the  Obligations,  including,  without  limitation,  all  costs  of
collection,  attorneys' fees in the amount equal to 15% of the Obligations  then
outstanding  (which shall be deemed reasonable  attorneys' fees for the purposes
of this paragraph), and court costs, hereby ratifying and confirming the acts of
said  attorney-in-fact  as if done by Borrower.  Upon request of Bank,  Borrower
will  execute an  amendment or other  agreement  substituting  attorneys-in-fact
appointed to act for each Borrower hereunder.

LINE OF CREDIT ADVANCES.  Borrower may borrow, repay and reborrow,  and Bank may
advance and readvance  under this Note  respectively  from time to time (each an
"Advance"  and  together  the  "Advances"),  so long as the  total  indebtedness
outstanding  at any one time does not exceed the principal  amount stated on the
face of this Note.  Bank's  obligation  to make  Advances  under this Note shall
terminate  if a demand for  payment is made under this Note or if a Default  (as
defined in the other Loan  Documents)  under any Loan Document  occurs or in any
event,  on February 28, 1998 unless  renewed or extended by Bank in writing upon
such terms then  satisfactory to Bank. As of the date of each proposed  Advance,
Borrower shall be deemed to represent that each  representation made in the Loan
Documents is true as of such date.

LOAN  AGREEMENT.  This Note is subject to the  provisions  of that  certain Loan
Agreement between Bank and Borrower of even date herewith.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan  Documents  shall be valid unless in writing and signed by an officer
of Bank.  No  waiver  by Bank of any  Default  (as  defined  in the  other  Loan
Documents) shall operate as a waiver of any other Default or the same Default on
a future  occasion.  Neither  the  failure  nor any delay on the part of Bank in
exercising any right, power, or remedy under this Note and other Loan Documents

                                     Page 3

<PAGE>

shall  operate  as a waiver  thereof,  nor  shall a single or  partial  exercise
thereof  preclude any other or further  exercise  thereof or the exercise of any
other right, power or remedy.

Each Borrower or any person liable under this Note waives presentment,  protest,
notice of  dishonor,  notice of  intention  to  accelerate  maturity,  notice of
acceleration  of  maturity,  notice of sale and all other  notices  of any kind.
Further,  each agrees that Bank may extend,  modify or renew this Note or make a
novation  of the loan  evidenced  by this  Note for any  period  and  grant  any
releases,  compromises  or indulgences  with respect to any collateral  securing
this Note,  or with  respect to any other  Borrower or any other  person  liable
under this Note or other Loan  Documents,  all  without  notice to or consent of
each  Borrower  or each  person who may be liable  under this Note or other Loan
Documents and without  affecting the liability of Borrower or any person who may
be liable under this Note or other Loan Documents.

MISCELLANEOUS PROVISIONS.  ASSIGNMENT.  This Note and other Loan Documents shall
inure to the benefit of and be binding  upon the  parties  and their  respective
heirs, legal  representatives,  successors and assigns.  Bank's interests in and
rights under this Note and other Loan Documents are freely assignable,  in whole
or in part, by Bank. Borrower shall not assign its rights and interest hereunder
without the prior written consent of Bank, and any attempt by Borrower to assign
without Bank's prior written consent is null and void. Any assignment  shall not
release  Borrower  from  the  Obligations.  APPLICATION  LAW;  CONFLICT  BETWEEN
DOCUMENTS. This Note and other Loan Documents shall be governed by and construed
under the laws of the state  where Bank  first  shown  above is located  without
regard to that state's  conflict of laws  principles.  If the terms of this Note
should  conflict with the terms of the loan agreement or any  commitment  letter
that  survives  closing,  the  terms  of this  Note  shall  control.  BORROWER'S
ACCOUNTS.  Except as prohibited by law, Borrower grants Bank a security interest
in all of Borrower's accounts with Bank and any of its affiliates. JURISDICTION.
Borrower irrevocably agrees to non-exclusive  personal jurisdiction in the state
in which the office of Bank first shown above is located.  SEVERABILITY.  If any
provision of this Note or of the other Loan  Documents  shall be  prohibited  or
invalid under  applicable  law, such provision  shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such  provision  or the  remaining  provisions  of this  Note or  other  such
document.  NOTICES.  Any notices to Borrower shall be sufficiently  given, if in
writing and mailed or delivered to the  Borrower's  address  shown above or such
other  address as provided  hereunder,  and to Bank, if in writing and mailed or
delivered to Bank's office address shown above or such other address as Bank may
specify  in  writing  from time to time.  In the  event  that  Borrower  changes
Borrower's  address  at any time prior to the date the  Obligations  are paid in
full,  Borrower agrees to promptly give written notice of said change of address
by registered or certified mail, return receipt requested,  all charges prepaid.
PLURAL;  CAPTIONS. All references in the Loan Documents to Borrower,  guarantor,
person,  document or other nouns of reference  mean both the singular and plural
form,  as the case may be,  and the term  "person"  shall  mean any  individual,
person or entity.  The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or  interpretation of the Loan
Documents.  BINDING CONTRACT. Borrower by execution of and Bank by acceptance of
this Note  agree that each  party is bound to all terms and  provisions  of this
Note.  ADVANCES.  Bank in its sole discretion may make other Advances under this
Note pursuant hereto.  POSTING OF PAYMENTS.  All payments received during normal
banking hours after 2:00 p.m. local time at the office of Bank first shown above
shall be deemed  received  at the  opening of the next  banking  day.  JOINT AND
SEVERAL OBLIGATIONS. Each Borrower is jointly and severally obligated under this
Note. FEES AND TAXES.  Borrower shall promptly pay all  documentary,  intangible
recordation and/or similar taxes on this transaction whether assessed at closing
or arising from time to time.

ARBITRATION.  Upon  demand of any party  hereto,  whether  made  before or after
institution  of any  judicial  proceeding,  any  dispute,  claim or  controversy
arising out of, connected with or relating to this Note and other Loan Documents
("Disputes") between or among parties to this Note shall be

                                     Page 4

<PAGE>

resolved by binding  arbitration as provided  herein.  Institution of a judicial
proceeding  by a party  does  not  waive  the  right  of that  party  to  demand
arbitration hereunder.  Disputes may include,  without limitation,  tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions,  claims  arising from Loan  Documents  executed in the
future, or claims arising out of or connected with the transaction  reflected by
this Note.

Arbitration  shall be conducted  under and governed by the Commercial  Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association  (the "AAA") and Title 9 of the U.S. Code. All arbitration  hearings
shall be conducted in the city in which the office of Bank first stated above is
located.  The  expedited  procedures  set  forth  in  Rule  51 et  seq.  of  the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00.  All
applicable  statutes of limitation  shall apply to any Dispute.  A judgment upon
the award may be entered in any court having jurisdiction.  The panel from which
all  arbitrators  are selected  shall be comprised  of licensed  attorneys.  The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction,  state or federal, of the state where
the hearing will be conducted or if such person is not  available to serve,  the
single  arbitrator may be a licensed  attorney.  Notwithstanding  the foregoing,
this  arbitration  provision does not apply to disputes under or related to swap
agreements.

PRESERVATION AND LIMITATION OF REMEDIES.  Notwithstanding  the preceding binding
arbitration provisions, Bank and Borrower agree to preserve, without diminution,
certain   remedies  that  any  party  hereto  may  employ  or  exercise  freely,
independently  or in  connection  with an  arbitration  proceeding  or  after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable:  (i) all rights to foreclose against any real
or personal  property or other  security by  exercising  a power of sale granted
under Loan  Documents or under  applicable  law or by judicial  foreclosure  and
sale,  including a proceeding to confirm the sale;  (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful  possession of personal  property,  (iii) obtaining  provisional or
ancillary remedies  including  injunctive  relief,  sequestration,  garnishment,
attachment,  appointment  of  receiver  and  filing  an  involuntary  bankruptcy
proceeding;  and (iv) when  applicable,  a judgment by  confession  of judgment.
Preservation  of these  remedies  does not limit the power of an  arbitrator  to
grant similar remedies that may be requested by a party in a Dispute.

Borrower  and Bank  agree  that  they  shall not have a remedy  of  punitive  or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary  damages that they have now or which may arise in
the future in  connection  with any  Dispute  whether the Dispute is resolved by
arbitration or judicially.

IN WITNESS  WHEREOF,  Borrower,  on the day and year first written  above,  have
caused this Note to be executed under seal.

                           Optical Cable Corporation, a Virginia Corporation
                           Taxpayer Identification Number: 54-1237042

CORPORATE                  By: /s/ Robert Kopstein
SEAL                           ----------------------------
                               Robert Kopstein, President

                                     Page 5


<PAGE>

                             MODIFICATION NUMBER ONE
                             TO THE PROMISSORY NOTE

Optical Cable Corporation, a Virginia Corporation
5290 Concourse Drive
Roanoke, Virginia 24019
(Individually and collectively "Borrower")

First Union National Bank of Virginia
201 South Jefferson Street
Roanoke, Virginia 24011
(Hereinafter referred to as the "Bank")

                                IMPORTANT NOTICE

THIS AGREEMENT  CONTAINS A CONFESSION OF JUDGMENT  PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT  RIGHTS YOU MAY HAVE AS A BORROWER AND ALLOWS BANK TO OBTAIN
A JUDGMENT AGAINST YOU WITHOUT FURTHER NOTICE.

THIS  AGREEMENT is entered into as of  ______________,  1998 by and between Bank
and Borrower.

WHEREAS,  Bank is the holder of a  Promissory  Note  executed  and  delivered by
Borrower,   dated  April  25,  1997  in  the   original   principal   amount  of
$10,000,000.00 (the "Note"); and

WHEREAS,  Borrower  and Bank have  agreed to modify the terms of the  Promissory
Note.

NOW, THEREFORE, in consideration of the premises contained herein and other good
and valuable  consideration,  receipt and sufficiency of which is  acknowledged,
the parties agree as follows:

OUTSTANDING  BALANCE.  The total outstanding  unpaid principal balance under the
Note as of March 6, 1998 is $0.00. The parties  acknowledge that interest on the
obligation under the Note is paid through March 6, 1998.

MODIFICATIONS.

         1.   The Note is hereby modified by deleting the provisions in the Note
              establishing the repayment terms and substituting the following in
              their place and stead:

         REPAYMENT  TERMS.  The Note  shall be due and  payable  in  consecutive
         monthly  payments of accrued interest only commencing on April 1, 1998,
         and on the same day each  month  thereafter  until fully  paid.  In any
         event,  the  Note  shall be due and  payable  in  full,  including  all
         principal and accrued interest, on demand.

         LINE OF CREDIT ADVANCES.  Borrower may borrow, repay and reborrow,  and
         Bank may advance and readvance under the Note respectively from time to
         time until the  maturity  hereof  (each an  "Advance"  and together the
         "Advances"),  so long as the total indebtedness  outstanding at any one
         time does not exceed  the  principal  amount  stated on the face of the
         Note. Bank's obligation to make Advances under the Note shall terminate
         if a demand  for  payment  is made  under the Note or if a Default  (as
         defined in the other Loan Documents)  under any Loan Document occurs or
         in any event,  on February 29, 1999 unless  renewed or extended by Bank
         in writing upon such terms then satisfactory to Bank. As of the date of
         each proposed Advance,  Borrower shall be deemed to represent that each
         representation  made in the  Loan  Documents  is true as of such  date.


                                   Page 1 of 4

<PAGE>


ACKNOWLEDGEMENTS.  Borrower  acknowledges and represents that the Note and other
Loan Documents,  as amended hereby, are in full force and effect and are binding
upon it, its successors,  assigns, administrators and heirs without any defense,
counterclaim,  right or claim of set-off or of other sum due; that, after giving
effect to this  Agreement,  no default or event that with the passage of time or
giving of  notice  would  constitute  a default  under  the Loan  Documents  has
occurred;  that  all  representations  and  warranties  contained  in  the  Loan
Documents are true and correct as of this date;  that there have been no changes
in the ownership of any collateral  pledged to secure the Obligations  since the
dates of the instruments originally pledging such collateral;  and that Borrower
has taken all  necessary  action  (corporate  or  otherwise)  to  authorize  the
execution and delivery of this  Agreement.  This  Agreement  constitutes  only a
modification of an existing  obligation  owing by Borrower to Bank, and is not a
novation.

LIENS. Borrower  acknowledges and confirms the extent,  validity and priority of
the Bank's  security  interests  and liens in the  collateral  pledged,  if any,
pursuant to the Loan  Documents,  and agrees that such  security  interests  and
liens  shall  secure  the  Borrower's   Obligations   to  Bank,   including  any
modification  of the  Note or Loan  Agreement,  and  all  future  modifications,
extensions, renewals and/or replacements of the Loan Documents.

MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the  laws  of  the  applicable  state  as  originally  provided  in the  Loan
Documents,  without reference to that state's conflicts of laws principles. This
Agreement  and the other Loan  Documents  constitute  the sole  agreement of the
parties  with  respect to the  subject  matter  thereof and  supersede  all oral
negotiations  and prior writings with respect to the subject matter thereof.  No
amendment of this Agreement,  and no waiver of any one or more of the provisions
hereof shall be effective  unless set forth in writing and signed by the parties
hereto.  The illegality,  unenforceability  or inconsistency of any provision of
this   Agreement   shall  not  in  any  way  affect  or  impair  the   legality,
enforceability  or consistency of the remaining  provisions of this Agreement or
the other  Loan  Documents.  This  Agreement  and the other Loan  Documents  are
intended to be consistent.  However, in the event of any  inconsistencies  among
this Agreement and any of the Loan Documents,  the terms of this Agreement,  and
then the Note,  shall  control.  This Agreement may be executed in any number of
counterparts and by the different  parties on separate  counterparts.  Each such
counterpart  shall  be  deemed  an  original,  but all such  counterparts  shall
together constitute one and the same agreement.

DEFINITIONS.  The term "Loan  Documents"  used in this  Agreement and other Loan
Documents  refers to all  documents,  agreements,  and  instruments  executed in
connection  with any of the Obligations  (as defined  herein),  and may include,
without limitation,  modification  agreements, a commitment letter that survives
closing, a loan agreement,  any note, guaranty agreements,  security agreements,
security  instruments,  financing statements,  mortgage instruments,  letters of
credit and any  renewals or  modifications,  whenever any of the  foregoing  are
executed,  but does not include swap agreements (as defined in U.S.C.  ss. 101).
The term "Obligations" used in this Agreement refers to any and all indebtedness
and other  obligations of every kind and description of the Borrower to the Bank
or to any Bank affiliate,  whether or not under the Loan Documents,  and whether
such debts or obligations are primary or secondary, direct or indirect, absolute
or contingent,  sole, joint or several,  secured or unsecured,  due or to become
due, contractual,  including, without limitation, swap agreements (as defined in
11 U.S.C. ss. 101),  arising by tort,  arising by operation of law, by overdraft
or  otherwise,  or now or hereafter  existing,  including,  without  limitation,
principal,  interest, fees, late fees, expenses,  attorneys' fees and costs that
have  been or may  hereafter  be  contracted  or  incurred.  Terms  used in this
Agreement which are capitalized and not otherwise  defined herein shall have the
meanings ascribed to such terms in the Note and/or other Loan Documents.

Borrower  reaffirms  and  restates  the  following  with  respect to the Note as
modified herein:

CONFESSION OF JUDGMENT. Each Borrower hereby duly constitutes and appoints Keith
Northern, Gregory Baugher (each of whom is an officer of Bank), and Bank through
an officer duly  authorized  by Bank (any of the foregoing may act), as the true
and lawful  attorneys-in-fact  for them, in any or all of their names, place and
stead,  and upon the  occurrence of a default in the payment of the  Obligations
due under the Note to confess  judgment  against them or any of them in favor of
Bank,  before the Clerk of the Circuit Court for the City of Roanoke,  Virginia,
in  accordance  with 1950 Code of Virginia,  Section  8.01-431 et seq.,  and any
successor  statute,  for all amounts owed with respect to the Obligations  under
the pursuant to the Note including, without limitation, all costs of collection,
attorneys'  fees in an amount equal to 15% of the Obligations  then  outstanding
(which  shall be deemed  reasonable  attorneys'  fees for the  purposes  of this
paragraph),  and court costs,  hereby  ratifying and confirming the acts of said


                                   Page 2 of 4

<PAGE>



attorney-in-fact  as if done by themselves.  Upon request of Bank, each Borrower
will  execute an  amendment or other  agreement  substituting  attorneys-in-fact
appointed to act for each Borrower hereunder.

ARBITRATION.  Upon  demand of any party  hereto,  whether  made  before or after
institution  of any  judicial  proceeding,  any  dispute,  claim or  controversy
arising out of,  connection  with or relating to this  Agreement  and other Loan
Documents  ("Disputes")  between  or among  parties to this  Agreement  shall be
resolved by binding  arbitration as provided  herein.  Institution of a judicial
proceeding  by a party  does  not  waive  the  right  of that  party  to  demand
arbitration hereunder.  Disputes may include,  without limitation,  tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions,  claims  arising from Loan  Documents  executed in the
future, or claims arising out of or connected with the transaction  reflected by
this Agreement.

Arbitration  shall be conducted  under and governed by the Commercial  Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
(the "AAA") and Title 9 of the U.S.  Code.  All  arbitration  hearings  shall be
conducted in the city in which the office of Bank first stated above is located.
The expedited  procedures set forth in Rule 51 et seq. of the Arbitration  Rules
shall be  applicable  to  claims  of less  than  $1,000,000.00.  All  applicable
statutes of limitation shall apply to any Dispute. A judgment upon the award may
be  entered  in  any  court  having  jurisdiction.  The  panel  from  which  all
arbitrators  are selected shall be comprised of licensed  attorneys.  The single
arbitrator  selected for expedited  procedure  shall be a retired judge from the
highest court of general jurisdiction,  state or federal, of the state where the
hearing  will be  conducted  or if such person is not  available  to serve,  the
single  arbitrator may be a licensed  attorney.  Notwithstanding  the foregoing,
this  arbitration  provision does not apply to disputes under or related to swap
agreements.

PRESERVATION AND LIMITATION OF REMEDIES.  Notwithstanding  the preceding binding
arbitration provisions. Bank and Borrower agree to preserve, without diminution,
certain   remedies  that  any  party  hereto  may  employ  or  exercise  freely,
independently  or in  connection  with an  arbitration  proceeding  or  after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable:  (i) all rights to foreclose against any real
or personal  property or other  security by  exercising  a power of sale granted
under Loan  Documents or under  applicable  law or by judicial  foreclosure  and
sale,  including a proceeding to confirm the sale;  (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful  possession of personal  property;  (iii) obtaining  provisional or
ancillary remedies  including  injunctive  relief,  sequestration,  garnishment,
attachment,  appointment  of  receiver  and  filing  an  involuntary  bankruptcy
proceeding;  and (iv) when  applicable,  a judgment by  confession  of judgment.
Preservation  of these  remedies  does not limit the power of an  arbitrator  to
grant similar remedies that may be requested by a party in a Dispute.

Borrower  and Bank  agree  that  they  shall not have a remedy  of  punitive  or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or  exemplary  damages they have now or which may arise in the
future in  connection  with any  Dispute  whether  the  Dispute is  resolved  by
arbitration or judicially.

IN WITNESS  WHEREOF,  the undersigned  have signed and sealed this Agreement the
day and year first written above.

                           Optical Cable Corporation
                           Taxpayer Identification Number: 54-1237042

                                   Page 3 of 4

<PAGE>

CORPORATE                  By: /s/ Robert Kopstein
SEAL                           ------------------------------
                               Robert Kopstein, President

                           First Union National Bank

CORPORATE                  By: /s/ Susan K. Doyle
SEAL                           ------------------------------
                               Susan K. Doyle, Vice President

                                   Page 4 of 4