OPTICAL CABLE CORPORATION

                          EMPLOYEE STOCK PURCHASE PLAN

                                FEBRUARY 23, 1998



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                            OPTICAL CABLE CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN

     Optical Cable Corporation hereby establishes,  effective February 23, 1998,
the Optical Cable  Corporation  Employee  Stock Purchase Plan for the benefit of
eligible employees of the Company and any future subsidiaries of the Company.




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                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS

1.1      "Administrator".......................................................1
1.2      "Authorized Leave of Absence".........................................1
1.3      "CEO".................................................................1
1.4      "Committee"...........................................................1
1.5      "Committee Representative"............................................1
1.6      "Company".............................................................1
1.7      "Company Stock".......................................................1
1.8      "Compensation"........................................................1
1.9      "Contributions".......................................................1
1.10     "Contribution Amount".................................................1
1.11     "Contribution Election"...............................................2
1.12     "Effective Date"......................................................2
1.13     "Employee"............................................................2
1.14     "Fair Market Value"...................................................2
1.15     "Investment Direction"................................................2
1.16     "Notice Date".........................................................2
1.17     "Participant".........................................................2
1.18     "Plan"................................................................2
1.19     "Plan Account"........................................................2
1.20     "Settlement Date".....................................................2
1.21     "Spouse"..............................................................3
1.22     "Termination of Employment"...........................................3
1.23     "Trade Date"..........................................................3
1.24     "Transfer Date".......................................................3


                                   ARTICLE II

                                  PARTICIPATION

2.1      Eligibility...........................................................3
2.2      Participation.........................................................3
2.3      Plan Account.  .......................................................3
2.4      Suspension of Participation...........................................3

                                   ARTICLE III

                            PARTICIPANT CONTRIBUTIONS

3.1      Contribution Election.................................................4



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3.2      Contribution Election Procedures......................................4
3.3      Transfers to Administrator............................................5
3.4      Notification of Administrator.........................................5

                                   ARTICLE IV

                  ADMINISTRATION OF PARTICIPANTS' PLAN ACCOUNTS

4.1      Plan Account Maintenance..............................................5
4.2      Trade Date............................................................5
4.3      Fees and Expenses.....................................................5
4.4      Voting................................................................5

                                    ARTICLE V

                              INVESTMENT DIRECTIONS

5.1      Purchase of Shares....................................................6
5.2      Reinvestment of Dividends.............................................6
5.3      Withdrawals by Participants...........................................6
5.4      Investment Direction Processing.......................................7

                                   ARTICLE VI

           DISTRIBUTION OF PLAN ACCOUNTS ON TERMINATION OF EMPLOYMENT

6.1      Notification of Administrator.........................................7
6.2      Investment Direction..................................................7
6.3      Death of Participant..................................................7
6.4      Failure or Inability to Provide an Investment Direction...............8

                                   ARTICLE VII

                                THE ADMINISTRATOR

7.1      Selection of Administrator............................................8
7.2      Administrator's Duties................................................8
7.3      Statements............................................................8

                                  ARTICLE VIII

                              CEO AND THE COMMITTEE

8.1      Authority and Responsibility of the CEO...............................8
8.2      Committee Membership..................................................8
8.3      Committee Structure...................................................9
8.4      Committee Actions.....................................................9
8.5      Compensation..........................................................9



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8.6      Responsibility and Authority of the Committee.........................9
8.7      Information to be Supplied by the Company.............................9
8.8      Committee Decisions Final............................................10

                          ARTICLE IX

                   AMENDMENT AND TERMINATION

9.1      Amendments...........................................................10
9.2      Plan Termination.....................................................10

                           ARTICLE X

                   MISCELLANEOUS PROVISIONS

10.1     No Assignment of Plan Account........................................10
10.2     Plan Does Not Affect Employment Rights...............................11
10.3     Deduction of Taxes from Amounts Payable..............................11
10.4     Source of Benefits...................................................11
10.5     Indemnification......................................................11
10.6     Limitation on Liability..............................................11
10.7     Gender and Number....................................................11
10.8     Invalidity of Certain Provisions.....................................11
10.9     Headings.............................................................12
10.10    Law Governing........................................................12




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                            OPTICAL CABLE CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN

                                    ARTICLE I

                                   DEFINITIONS

     The following sections of this Article I provide basic definitions of terms
used throughout the Plan, and whenever used herein in a capitalized form, except
as otherwise expressly provided, the terms shall be deemed to have the following
meanings:

     1.1  "Administrator"  means the Company's agent for  administering the Plan
which is A. G.  Edwards  & Sons,  Inc.  or such  other  successor  Administrator
appointed by the Committee from time to time.

     1.2  "Authorized  Leave of Absence"  means a person is still  considered an
employee of the Company under the Company's personnel  policies,  but the person
is not rendering services to the Company.

     1.3 "CEO" means the Chief Executive Officer of the Company.

     1.4 "Committee" means the committee  appointed pursuant to the terms of the
Plan to handle  ministerial  matters related to the operation and administration
of the Plan.

     1.5  "Committee  Representative"  means  the  individual  appointed  by the
Committee at the Company to perform  Committee  functions such as the receipt of
Contribution Elections and tax forms.

     1.6 "Company" means Optical Cable Corporation,  a Virginia corporation,  or
any successor corporation by merger, consolidation,  purchase, or otherwise, and
any subsidiaries, direct or indirect, thereof which elects to adopt the Plan.

     1.7 "Company Stock" means common stock of the Company.

     1.8 "Compensation" means regular salary or regular gross earnings excluding
bonuses,  back pay,  lump sum and  severance  paid to an Employee by the Company
prior to income or employment taxes or any other withholdings.

     1.9 "Contributions"  means an after-tax amount contributed by a Participant
from his Compensation and delivered by the Company to the Administrator.

     1.10 "Contribution  Amount" means the dollar amount which a Participant has
elected



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to be contributed to the Plan as a Contribution.

     1.11  "Contribution  Election"  means the election made by a Participant to
reduce his Compensation  each payroll period,  as designated by the Participant,
by the Contribution Amount.

     1.12  "Effective  Date" means  February 23,  1998,  the date upon which the
provisions of this document become effective. In general, the provisions of this
document only apply to Participants  who are Employees on or after the Effective
Date.

     1.13  "Employee"  means any person who renders  service to the Company as a
full-time employee or who is on an Authorized Leave of Absence.

     1.14 "Fair  Market  Value"  means the  market  price of the  Company  Stock
prevailing on the Nasdaq National Market (or any national  exchange on which the
Company  Stock may trade in the future) on the Trade Date,  or if a  transaction
involves  more than one purchase or sale,  the average  thereof as determined by
the Administrator.

     1.15 "Investment  Direction" means a written instruction from a Participant
to the Administrator to do one or more of the following financial transactions:

          (a)  sell  shares  of  Company  Stock  held in his  Plan  Account  and
     distribute the net cash proceeds to the Participant or his designee; and

          (b)  withdraw  shares  of  Company  Stock  from his Plan  Account  and
     transfer or distribute such shares as directed by the Participant.

     1.16  "Notice  Date" means the date which is fourteen  (14)  calendar  days
prior to a  scheduled  pay date for a payroll  period  for which a  Contribution
Election is to be effective.

     1.17 "Participant"  means an Employee who begins to participate in the Plan
after  completing the eligibility  requirements.  A Participant's  participation
continues until his Plan Account is distributed.

     1.18 "Plan" means the Optical Cable  Corporation  Employee  Stock  Purchase
Plan,  as herein set forth herein and as  hereafter  may be amended from time to
time.

     1.19 "Plan Account" means the record of a Participant's full and fractional
shares of Company Stock held by the Administrator.  A Participant's Plan Account
and the shares held in such account will be fully vested in the  Participant and
nonforfeitable by the Participant.

     1.20 "Settlement  Date" means the date on which the  transactions  from the
most recent  Trade Date are settled in  accordance  with  applicable  securities
laws.


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     1.21  "Spouse"  means a person who is alive and married to the  Participant
within the meaning of the laws of the State of the  Participant's  residence  as
evidenced  by a valid  marriage  certificate  or other proof  acceptable  to the
Committee.

     1.22  "Termination  of  Employment"  occurs  when a person  ceases to be an
Employee for any reason including death.

     1.23  "Trade  Date"  means the date on which the  Administrator  executes a
financial transaction pursuant to the Plan.

     1.24  "Transfer  Date"  means  the  date on  which  the  Company  transfers
Contributions made by Participants to the Administrator.

                                   ARTICLE II

                                  PARTICIPATION

     2.1  Eligibility.  Each  individual  who  is an  Employee  (other  than  an
individual  on an Authorized  Leave of Absence) on or after the  Effective  Date
shall be eligible to become a Participant.

     2.2 Participation.  For an Employee to become a Participant,  he must first
complete,  sign and return a form provided by the Committee which sets forth the
Employee's  Contribution Election and Investment  Direction.  Participation will
begin on the next  payroll  period  with  respect  to which such forms have been
received by the Committee Representative on or prior to its Notice Date.

     2.3 Plan  Account.  Unless a Participant  submits a written  request to the
Administration  specifying otherwise,  a Participant's Plan Account will be held
in his name only. A Participant may cause the Administrator to add his Spouse as
a co-owner of his Plan  Account and may  specify  the type of  ownership  (i.e.,
tenants in common,  joint tenants with rights of  survivorship or tenants by the
entireties).  The  Administrator,   at  its  sole  discretion,  shall  permit  a
Participant to add persons other than a  Participant's  Spouse as co-owners of a
Participant's Plan Account.

     2.4 Suspension of  Participation.  A  Participant's  Contribution  shall be
suspended as follows:

          (a)  If  a  Participant's   wages  are  subject  to  a  tax  levy,  no
     Contribution will be withheld until the levy is removed.

          (b) If a Participant's  wages are subject to a wage assignment  and/or


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     garnishment,  a  Contribution  will be withheld only if there is sufficient
     remaining Compensation to make the entire Contribution.

                                   ARTICLE III

                            PARTICIPANT CONTRIBUTIONS

     3.1 Contribution  Election. A Participant who desires to have Contributions
withheld  from his  Compensation  shall file a  Contribution  Election  with the
Committee Representative specifying a Contribution Amount of no less than twenty
dollars  ($20.00)  per  month  and  no  more  than  ten  percent  (10%)  of  his
Compensation  for his last payroll period for which payment has been made (or if
a new  Employee  with  no  previous  Compensation,  ten  percent  (10%)  of  the
Employee's  anticipated  Compensation  as  determined  by  the  Committee).  The
Contribution  Election  shall become  effective with respect to the next payroll
period if it is  received  by the  Committee  Representative  on or  before  the
applicable Notice Date.

     3.2 Contribution Election Procedures. A Participant's Contribution Election
shall  continue in effect  until the  earliest of the date (1) his  Contribution
Election  is  changed  in  accordance  with  Section  3.2(a)  hereof;   (2)  his
Termination  of  Employment;  or (3) his  Contribution  Election  is canceled in
accordance with Section 3.2(b) hereof.

          (a) Changing the Contribution  Election. A Participant may increase or
     decrease his  Contribution  Amount  (subject to the  percentage  limits set
     forth in Section 3.1) by delivering to the Committee  Representative  a new
     Contribution  Election on which is specified the new  Contribution  Amount.
     The  Contribution  Election shall become effective with respect to the next
     payroll  period if it is received  by the  Committee  Representative  on or
     before the applicable Notice Date. Any Contribution  Election which has not
     been  properly  completed  will be deemed not to have been  received by the
     Committee.

          (b) Canceling the  Contribution  Election.  A Participant  desiring to
     cancel his  existing  Contribution  Election  and  reduce his  Contribution
     Amount  to  zero  must  deliver  to  the  Committee  Representative  a  new
     Contribution  Election.  The  Contribution  Election shall become effective
     with respect to the next payroll  period if it is received by the Committee
     Representative on or before the applicable Notice Date.  Contributions held
     by the Company  with respect to a payroll  period  payment date before such
     Contribution  Election  becomes  effective  or  held  by the  Administrator
     pending investment shall not be affected by such Contribution Election. Any
     Participant  who has improperly  completed a Contribution  Election will be
     deemed not to have made a Contribution Election.


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     3.3  Transfers  to   Administrator.   The  Company  will  transfer  to  the
Administrator as soon as practical funds withheld from Participants  pursuant to
Contribution  Elections,  but a  Transfer  Date  shall in no event be later than
fifteen  (15) days  after  such  withholding.  No  interest  will be paid by the
Company on funds held by it pending transfer to the Administrator.

     3.4   Notification   of   Administrator.   The  Company   will  notify  the
Administrator  of  any  change  to  a  Participant's  Contribution  Election  or
eligibility  to  participate  in  the  Plan  on  or  about  the  time  the  next
Contribution   by  such   Participant   would  have  been   transferred  to  the
Administrator if no such change had occurred.

                                   ARTICLE IV

                  ADMINISTRATION OF PARTICIPANTS' PLAN ACCOUNTS

     4.1 Plan  Account  Maintenance.  The  Administrator  shall  cause  the Plan
Account for each  Participant  to reflect  transactions  in accordance  with the
terms of this Plan.  Fractional shares of Company Stock shall be recorded to the
third decimal point.

     4.2 Trade Date. The  Administrator  shall process  transactions to ensure a
Trade Date regularly  occurs as soon as practical  after each Transfer Date, but
in no event more than fifteen (15) days after each such Transfer Date. Financial
transactions  shall  be  posted  to a  Participant's  Plan  Account  as  of  the
Settlement   Date  and  based  upon  the  Trade  Date  values  provided  by  the
Administrator.

     4.3 Fees and Expenses. Except as hereinafter provided, Company will pay all
account maintenance fees and transactional fees or expenses. A Participant shall
pay all transactional fees and expenses  associated with a sale of Company Stock
and such fees and expenses  shall be netted against the proceeds of such sale by
the Administrator.

     4.4 Voting. The Administrator will vote any shares of Company Stock that it
holds in a  Participant's  Plan  Account in  accordance  with the  Participant's
directions, provided they are received in a timely manner in accordance with the
procedures  developed for this purpose by the  Administrator.  The Administrator
will  not  vote  the  shares  of  Company  Stock  held in a Plan  Account  for a
Participant from whom no voting  directions are received,  however,  such shares
may be counted towards determining whether a quorum is present at any meeting of
stockholders.


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                                    ARTICLE V

                              INVESTMENT DIRECTIONS

     5.1 Purchase of Shares.  The Administrator  will purchase shares of Company
Stock pursuant to a properly executed and delivered Contribution Election.

     5.2 Reinvestment of Dividends.

     (a) Cash Dividends - The Administrator will reinvest cash dividends paid on
shares of Company Stock held in each  Participant's Plan Account into additional
full or fractional shares of Company Stock.

     (b) Non-Cash  Dividends - Non-cash  dividends of Company Stock will be held
in the Plan  Account  of the  Participant.  Non-cash  dividends,  other  than of
Company Stock, shall be sold and reinvested in Company Stock.

     5.3 Withdrawals by Participants.

     (a)  Requirement - A Participant  may cause the  Administrator  to effect a
withdrawal  from his Plan Account in accordance  with the  provisions of Section
5.4 below.

     (b) Sources for  Withdrawal  - The  withdrawal  amount shall come only from
shares of Common Stock posted to his or her Plan Account.

     (c) Permitted  Frequency - There is no restriction on the number of times a
Participant may withdraw from his or her Plan Account.

     (d) Minimum Amount - There is no minimum amount for any type of withdrawal.

     (e)   Distribution   -  By  delivering  an  Investment   Direction  to  the
Administrator,  the Participant may cause the  Administrator  to either sell the
Company stock held in the Participant's Plan Account on the next scheduled Trade
Date and pay the Participant  for such shares,  and/or to make a distribution of
whole shares of Company Stock held in the  Participant's  Plan  Account.  If the
Administrator  sells any of the  Participant's  Company Stock, the Administrator
shall make payment of any cash to the Participant from the sale of Company stock
in the  Participant's  Plan Account within three (3) days of the Settlement Date
or  such  earlier  time  as  required  by  applicable  securities  laws.  If the
Administrator  makes a distribution  of any whole shares of Company Stock to the
Participant,   the   Administrator   shall  transfer  shares  or  deliver  share
certificates, as requested by a Participant, of any Company Stock withdrawn from
the Participant's Plan Account as soon as practical.


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     (f) Medium and Form of Payment - The medium of payment for  withdrawals  is
either cash or in whole shares of Company Stock. If no instructions  for payment
are  received,  the  certificates  will  be  issued  only  in  the  name  of the
Participant  and any co-owner of such  Participant's  Plan Account.  The form of
payment for withdrawals shall be a single installment.

     5.4 Investment Direction Processing.

     (a)  Application by  Participant - A Participant  must submit an Investment
Direction to the  Administrator to implement any withdraw  transaction set forth
in Section 5.3

     (b)  Approval by  Administrator  - The  Administrator  is  responsible  for
determining  that an Investment  Direction  conforms to the requirements of this
Plan.

     (c) Time of Processing - The  Administrator  shall  process all  Investment
Directions as soon as practical,  based on the Fair Market Value, if applicable,
as of the Trade Date to which it relates,  and, if applicable,  fund them on the
applicable Settlement Date.

     (d) Fractional Shares - Fractional shares shall be sold based upon the Fair
Market Value for the applicable Trade Date.

                                   ARTICLE VI

           DISTRIBUTION OF PLAN ACCOUNTS ON TERMINATION OF EMPLOYMENT

     6.1   Notification   of   Administrator.   The   Committee   or   Committee
Representative  shall promptly notify the Administrator  upon the Termination of
Employment of any Participant.

     6.2 Investment  Direction.  A Participant  shall have thirty (30) days from
the  date  of  the  Participant's  Termination  of  Employment  to  provide  the
Administrator  with  an  Investment   Direction  setting  forth  the  method  of
withdrawal from the Plan pursuant to Section 5.3.

     6.3 Death of Participant.

     (a) If the Participant dies leaving no living co-owner of the Participant's
Plan Account,  the  Administrator  shall,  after  receiving  notice  pursuant to
Section 6.1, distribute such Participant's Plan Account in a single distribution
of full  shares  of  Company  Stock  plus cash for any  fractional  share to his
estate.

     (b)  If  the  Participant  dies  and  there  is a  living  co-owner  of the
Participant's  Plan Account,  such co-owner shall have thirty (30) days from the
date of the Participant's  death to provide the Administrator with an Investment
Direction pursuant to Section 5.3 setting forth


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the method of withdraw  from the Plan for the portion of the balance of the Plan
Account to which the co-owner has ownership rights in accordance with applicable
law as if such co-owner were a Participant.

     6.4 Failure or Inability to Provide an Investment  Direction.  In the event
that the Administrator has received notice of the Termination of Employment of a
Participant  pursuant  to Section 6.1 and the  Administrator  does not receive a
valid Investment Direction from the Participant,  or from a co-owner in the case
of the  Participant's  death,  within  thirty  (30)  days  of the  Participant's
Termination of Employment, the Administrator shall distribute such Participant's
Plan Account in a distribution  of full shares of Company  Stock,  plus cash for
any fractional share, to such Participant and/or any co-owner in accordance with
applicable law, and/or such Participant's estate, as the case may be.

                                   ARTICLE VII

                                THE ADMINISTRATOR

     7.1 Selection of Administrator.  The Administrator  shall serve at the will
of  the   Committee  and  the  Committee  may  from  time  to  time  remove  the
Administrator with or without cause and shall appoint its successor.

     7.2 Administrator's  Duties. The powers, duties and responsibilities of the
Administrator  shall be as stated in this Plan. All Contributions  shall be paid
to the  Administrator,  and all Plan Accounts under the Plan shall be maintained
by the  Administrator.  The Company shall have no rights or claims of any nature
in or to the assets of a Plan Account.

     7.3  Statements.  The  Administrator  will issue  quarterly  statements  to
Participants  reflecting the full and fractional shares of Company Stock held in
his or her Plan Account.

                                  ARTICLE VIII

                              CEO AND THE COMMITTEE

     8.1  Authority  and  Responsibility  of the CEO. The CEO shall have overall
responsibility for the establishment, amendment and termination of the Plan. The
Committee  shall be delegated  such  responsibilities  as set forth herein or as
otherwise delegated by the CEO.

     8.2  Committee  Membership.  The  Committee  shall consist of not less than
three (3)  persons,  who shall be  appointed  by the CEO. In the absence of such
appointment of the


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Committee,  the CEO will be the  Committee.  Committee  members  shall remain in
office  at the will of the CEO and the CEO may from time to time  remove  any of
said members with or without cause and shall appoint their successors.

     8.3 Committee Structure. Any Employee may be a member of the Committee. Any
member of the Committee may resign by delivering his written  resignation to the
CEO,  and such  resignation  shall  become  effective  upon  the date  specified
therein. A member of the Committee who is an Employee shall  automatically cease
to be a member upon his Termination of Employment.  In the event of a vacancy in
membership,  the remaining  members shall  constitute  the Committee in question
with full  power to act until said  vacancy  is  filled.  The CEO may remove any
member of the Committee without cause.

     8.4 Committee  Actions.  The action of the Committee shall be determined by
the vote or other affirmative expression of a majority of its members.

     8.5  Compensation.  The  members  of  the  Committee  shall  serve  without
compensation for their services as such.

     8.6 Responsibility and Authority of the Committee.  The Committee on behalf
of the  Participants  will enforce the Plan in  accordance  with its  respective
terms and shall have the authority and discretion to, among other things:

          (a) Formulate, adopt, issue and apply procedures and rules and change,
     alter or amend  such  procedures  and rules as may be  consistent  with the
     terms of the Plan;

          (b) Exercise such  discretion as may be required to construe and apply
     the provisions of the Plan, subject only to the terms and conditions of the
     Plan; and

          (c)  Take  all  necessary  and  proper  acts as are  required  for the
     Committee to fulfill its duties and obligations under the Plan.

Notwithstanding  the foregoing,  it is intended that the Committee's  day-to-day
administrative responsibilities with respect to the Plan shall be ministerial in
nature only.

     8.7 Information to be Supplied by the Company.  The Company shall supply to
the  Committee,  within  a  reasonable  time of its  request,  the  names of all
Employees, their age, their date of hire, and the amount of Compensation paid to
each  Employee,  the names and dates of all Employees who incurred a Termination
of  Employment.  The Company shall provide to the Committee or its delegate such
other  information  as it shall from time to time need in the  discharge  of its
duties.  The Committee may rely conclusively on the information  certified to it
by an the Company.


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     8.8  Committee  Decisions  Final.  The decision of the Committee in matters
within its jurisdiction shall be final, binding, and conclusive upon the Company
and upon each Employee,  Participant,  Spouse, the Administrator and every other
person or party interested or concerned.

                                   ARTICLE IX

                            AMENDMENT AND TERMINATION

     9.1 Amendments.

     (a) Power to Amend - The CEO,  or the  Committee  as  provided  in  Section
9.1(b) below,  may amend,  modify,  change,  revise or discontinue  this Plan by
amendment at any time; provided, however, that no amendment shall:

          (1) increase the duties or  liabilities  of the  Administrator  or the
     Committee without its written consent; or

          (2) have the effect of  vesting in the  Company  any  interest  in any
     funds, securities or other property.

     (b) The Committee - The Committee may amend,  modify,  change or revise the
Plan by amendment if such amendment  could have been adopted under Paragraph (a)
hereof and it does not  materially  increase the duties and  obligations  of the
Company with respect to the Plan.

     9.2 Plan  Termination.  It is the  expectation  of the Company that it will
continue the Plan and the forwarding of  Contributions  hereunder  indefinitely,
but the continuation of the Plan and the forwarding of  Contributions  hereunder
is not assumed as a contractual obligation of the Company. The right is reserved
by the Company to terminate the Plan at any time. Upon  termination of the Plan,
all Plan  Accounts  will be  distributed  as if such  Participant  had elected a
withdrawal of shares of Company Stock.

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

     10.1 No Assignment of Plan Account.  Except to the extent  permitted by the
Administrator  in its sole  discretion,  shares of Company Stock credited to the
Plan Account of a  Participant  may not be assigned,  pledged as  collateral  or
otherwise  hypothecated.  A Participant who has an involuntary  transfer imposed
upon him or her will be deemed to have elected to withdraw such shares.


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     10.2 Plan Does Not Affect Employment  Rights. The Plan does not provide any
employment rights to any Employee.  The Company expressly  reserves the right to
discharge an Employee at any time, with or without cause,  without regard to the
effect such discharge would have upon the Employee's interest in the Plan.

     10.3 Deduction of Taxes from Amounts Payable.  The Administrator shall have
the power and authority to deduct from the amount to be distributed  such amount
as the Administrator deems proper to protect the Administrator against liability
for the payment of death, succession,  inheritance,  income, or other taxes, and
out of money so deducted, the Administrator may discharge any such liability and
pay the  amount  remaining  to the  Participant  or the  deceased  Participant's
estate, as the case may be.

     10.4 Source of Benefits.  All benefits payable under the Plan shall be paid
or  provided  for  solely  from the Plan  Account  and the  Company  assumes  no
liability or responsibility therefor.

     10.5  Indemnification.  To the extent  permitted  by law the Company  shall
indemnify and hold harmless the CEO and each member of the  Committee,  and each
officer   and   employee  of  the   Company  to  whom  are   delegated   duties,
responsibilities,  and  authority  with  respect to the Plan against all claims,
liabilities,  fines and penalties,  and all expenses  reasonably  incurred by or
imposed upon him  (including  but not limited to  reasonable  attorney  fees and
amounts  paid in any  settlement  relating to the Plan) by reason of his service
under  the  Plan  if he did not  act  dishonestly,  with  gross  negligence,  or
otherwise in knowing violation of the law under which such liability, loss, cost
or expense arises.  This indemnity shall not preclude such other  indemnities as
may be available under insurance  purchased or provided by the Company under any
bylaw,  agreement, or otherwise, to the extent permitted by law. Payments of any
indemnity,  expenses or fees under this Section shall be made solely from assets
of the Company.

     10.6 Limitation on Liability. No Company nor any agent or representative of
any  Company  who is an  employee,  officer,  or  director of the Company in any
manner guarantees the assets of the Plan against loss or depreciation and non of
them  shall  be  liable  (except  for  his  own  gross   negligence  or  willful
misconduct),  for any act or failure to act, done or omitted in good faith, with
respect  to the Plan.  The  Company,  the CEO and the  Committee  shall  have no
responsibility for any act of or failure to act by the Administrator.

     10.7 Gender and Number.  Except when the context indicates to the contrary,
when used herein,  masculine terms shall be deemed to include the feminine,  and
singular the plural.

     10.8 Invalidity of Certain Provisions.  If any provision of this Plan shall
be held invalid or unenforceable,  such invalidity or unenforceability shall not
affect any other provisions  hereof and the Plan shall be construed and enforced
as if such provisions, to the


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<PAGE>


extent invalid or unenforceable, had not been included.

     10.9 Headings. The headings or articles are included solely for convenience
of reference, and if there is any conflict between such headings and the text of
this Plan, the text shall control.

     10.10 Law Governing.  The Plan shall be construed and enforced according to
the laws of the Commonwealth of Virginia,  without regard to its rules regarding
conflict of laws.






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