Document:

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                                                                    EXHIBIT 10.7

                                 LOAN AGREEMENT

FIRST UNION NATIONAL BANK
201 S. JEFFERSON STREET
Roanoke, Virginia  24011
(Hereinafter referred to as the "Bank")

OPTICAL CABLE CORPORATION
5290 CONCOURSE DRIVE
ROANOKE, VIRGINIA  24019
(Individually and collectively, "Borrower")

This Loan Agreement  ("Agreement") is entered into this 10th day of March, 1999,
by and between Bank and OPTICAL CABLE CORPORATION, a corporation organized under
the laws of the State of Virginia.

Borrower has applied to Bank for a loan or loans (individually and collectively,
the "Loan")  evidenced by one or more  promissory note (whether one or more, the
"Note:) as follows:

     *  Working   Capital  Line  of  Credit  -  in  the   principal   amount  of
     $10,000,000.00  which is  evidenced  by the  Promissory  Note of even  date
     herewith  (the "Line of Credit  Note"),  under which  Borrower  may borrow,
     repay, and reborrow,  from time to time, so long as the total  indebtedness
     outstanding at any one time does not exceed the principal amount.  The Loan
     proceeds are to be used by Borrower solely for financing  working  capital.
     Bank's  obligation  to advance or  readvance  under the Line of Credit Note
     shall terminate if Borrower is in Default under the Line of Credit Note.

     * Line of Credit/Sweep + - in the principal amount of  $5,000,000.00  which
     is evidenced by the  Promissory  Note of even date  herewith  (the "Line of
     Credit Note"), under which Borrower may borrow,  repay, and reborrow,  from
     time to time, so long as the total indebtedness outstanding at any one time
     does not exceed the principal  amount.  The Loan proceeds are to be used by
     Borrower solely for financing working capital. Bank's obligation to advance
     or readvance  under the Line of Credit Note shall  terminate if Borrower is
     in Default under the Line of Credit Note.

The  Agreement  also  amends and  restates in its  entirety  that  certain  Loan
Agreement dated April 25, 1997.

This  Agreement  applies  to the loan and all Loan  Documents.  The terms  "Loan
Documents"  and  "Obligations,"  as used in this  Agreement,  are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As used
in this  Agreement as to Borrower,  "Subsidiary"  shall mean any  corporation of
which more than 50% of the issued and outstanding voting stock is owned directly
or indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C.  ss. 101,  except that the term  "debtor'  therein shall be
substituted by term "Borrower" herein.

Relying upon the covenants, agreements, representations and warranties contained
in this  Agreement,  Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions  set forth herein,  and Bank and Borrower agree as
follows:

REPRESENTATIONS.  Borrower  represents  that from the date of this Agreement and
until  final  payment  in full of the  Obligations:  ACCURATE  INFORMATION.  All
information now and hereafter furnished to Bank is and will be true, correct and
complete.  Any such information  relating to Borrower's financial condition will
accurately  reflect  Borrower's  financial  condition as of the date(s) thereof,
(including  all  contingent  liabilities  of every type,  and  Borrower  further
represents that its financial condition has not changed materially or

                                   Page 1 of 4
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adversely since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION.
The  execution,  delivery  and  performance  by Borrower and any  guarantor,  as
applicable,  of this  Agreement and other Loan  Documents to which it is a party
are within its power, have been duly authorized by all necessary action taken by
the duly authorized officers of Borrower and any guarantors and if necessary, by
making  appropriate  filings  with any  governmental  agency or unit and are the
legal,  binding,   valid  and  enforceable   obligations  of  Borrower  and  any
guarantors; and do not (i) contravene, or constitute (with or without the giving
of notice or lapse of time or both) a violation of any  provision of  applicable
law, a violation of the  organizational  documents of Borrower or any guarantor,
or a default under any agreement,  judgment,  injunction, order, decree or other
instrument binding upon or affecting  Borrower or any guarantor,  (ii) result in
the creation or  imposition  of any lien (other than the lien(s)  created by the
Loan Documents) on any of Borrower's or guarantor's  assets, or (iii) give cause
for the  acceleration  of any  obligations  of Borrower or any  guarantor to any
other creditor.  ASSET OWNERSHIP.  Borrower has good and marketable title to all
of the  properties  and assets  reflected  on the balance  sheets and  financial
statement supplied Bank by Borrower, and all such properties and assets are free
and clear of mortgages,  security deeds, pledges,  liens, charges, and all other
encumbrances,  except as  otherwise  disclosed  to Bank by  Borrower  in writing
("Permitted Liens"). To Borrower's knowledge,  no default has occurred under any
Permitted Liens and no claims or interest  adverse to Borrower's  present rights
in its properties and assets have arisen. DISCHARGE OF LIENS AND TAXES. Borrower
has duly  filed,  paid and/or  discharged  all taxes or other  claims  which may
become a lien on any of its  property or assets,  except to the extent that such
items are being  appropriately  contested in good faith and an adequate  reserve
for the payment thereof is being maintained. SUFFICIENCY OF CAPITAL. Borrower is
not, and after  consummation  of this  Agreement  and after giving effect to all
indebtedness incurred and liens created by Borrower in connection with the Loan,
will not be insolvent  within the meaning of 11 U.S.C.  ss. 101(32).  COMPLIANCE
WITH LAWS. Borrower is in compliance in all respects with all federal, state and
local laws,  rules and  regulations  applicable to its  properties,  operations,
business, and finances, including, without limitation, any federal or state laws
relating  to  liquor  (including  18  U.S.C.  ss.  3617 et  seq.)  or  narcotics
(including  21  U.S.C.  ss.  801 et seq.)  and/or  any  commercial  crimes;  all
applicable federal, state and local laws and regulations intended to protect the
environment; and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), if applicable.  ORGANIZATION AND AUTHORITY. Each corporate or limited
liability  company Borrower and any guarantor,  as applicable,  is duly created,
validly  existing  and in good  standing  under  the  laws of the  state  of its
organization,  and  has  all  powers,  governmental  licenses,   authorizations,
consents and approvals  required to operate its business as now conducted.  Each
corporate or limited  liability  company Borrower and any guarantor,  if any, is
duly  qualified,  licensed  and in  good  standing  in each  jurisdiction  where
qualification  or  licensing  is required  by the nature of its  business or the
character and location of its property,  business or customers, and in which the
failure  to so  qualify or be  licensed,  as the case may be, in the  aggregate,
could  have a  material  adverse  effect on the  business,  financial  position,
results  of  operations,  properties  or  prospects  of  Borrower  or  any  such
guarantor.  NO LITIGATION.  There are no pending or threatened suits,  claims or
demands  against  Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing.

AFFIRMATIVE COVENANTS.  Borrower agrees that from the date of this Agreement and
until final  payment in full of the  Obligations,  unless  Bank shall  otherwise
consent in writing: BUSINESS CONTINUITY.  Borrower shall conduct its business in
substantially  the same  manner and  locations  as such  business is now and has
previously  been  conducted.  MAINTAIN  PROPERTIES.   Borrower  shall  maintain,
preserve  and keep its property in good repair,  working  order and  conditions,
making all needed  replacements,  additions  and  improvements  thereto,  to the
extent  allowed by this  Agreement.  ACCESS TO BOOKS & RECORDS.  Borrower  shall
allow Bank, or its agents,  during normal business  hours,  access to the books,
records and such other documents of Borrower as Bank shall  reasonably  require,
and allow Bank to make copies  thereof at Bank's  expense.  INSURANCE.  Borrower
shall maintain  adequate  insurance  coverage with respect to its properties and
business  against  loss or damage of the  kinds and in the  amounts  customarily
insured  against by companies of established  reputation  engaged in the same or
similar businesses including,  without limitation,  commercial general liability
insurance,   workmen's   compensation   insurance,   and  business  interruption
insurance,  and upon all Collateral (as defined in the Loan Documents)  securing
the Obligations, such insurance as specified in the Loan Documents; all acquired
in such amounts and from such companies as Bank may reasonably  require.  NOTICE
OF DEFAULT AND OTHER NOTICES.  (a) Notice of Default.  Borrower shall furnish to
Bank immediately upon becoming aware of the existence of

                                   Page 2 of 4
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any  condition  or event  which  constitutes  a Default  (as defined in the Loan
Documents)  or any event  which,  upon the  giving of notice or lapse of time or
both, may become a Default,  written notice  specifying the nature and period of
existence  thereof and the action  which  Borrower is taking or proposes to take
with respect thereto. (b) Other Notices.  Borrower shall promptly notify Bank in
writing of (i) any material  adverse  change in its  financial  condition or its
business;  (ii) any  default  under any  material  agreement,  contract or other
instrument to which it is a party or by which any of its  properties  are bound,
or any acceleration of the maturity of any indebtedness owed by Borrower;  (iii)
any material  adverse  claim against or affecting  Borrower;  or any part of its
properties;  (iv) the  commencement  of,  any  material  determination  in,  any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower; and (v) at least thirty (30) days prior thereto, any
change in  Borrower's  name or  address  as shown  above,  and/or  any change in
Borrower's  structure.  COMPLIANCE WITH OTHER AGREEMENTS.  Borrower shall comply
with all terms and conditions  contained in this  Agreement,  and any other Loan
Documents, and swap agreements,  if applicable, as defined in the Note. Payments
of Debts.  Borrower  shall pay and  discharge  when due,  and before  subject to
penalty or further charge, and otherwise satisfy before maturity or delinquency,
all  obligations,  debts,  taxes,  and liabilities of whatever nature or amount,
except  those  which  Borrower  in good faith  disputes.  REPORTS  AND  PROXIES.
Borrower shall deliver to Bank,  promptly,  a copy of all financial  statements,
reports, notices, and proxy statements sent by Borrower to stockholders, and all
regular  or  periodic  reports  required  to  be  filed  by  Borrower  with  any
governmental agency or authority.  Other Financial  Information.  Borrower shall
deliver  promptly  such other  information  regarding  the  operation,  business
affairs,  and financial condition of Borrower which Bank may reasonably request.
ESTOPPEL CERTIFICATE.  Borrower, within fifteen (15) days after request by Bank,
will furnish a written  statement duly  acknowledged of the amount due under the
Loan and whether  offsets or defenses  exist  against the  Obligations.  DEPOSIT
RELATIONSHIP.  Borrower will maintain its primary  depository  relationship with
Bank. LIFE INSURANCE.  Maintain no less than  $2,000,000.00 of life insurance on
Robert Kopstein.

NEGATIVE  COVENANTS.  Borrower  agrees that from the date of this  Agreement and
until final  payment in full of the  Obligations,  unless  Bank shall  otherwise
consent  in  writing:  GOVERNMENT  INTERVENTION.  Borrower  shall not permit the
assertion  or  making  of any  seizure,  vesting  or  intervention  by or  under
authority of any government by which the management of Borrower or any guarantor
is displaced of its authority in the conduct of its respective  business or such
business is curtailed or materially impaired. PREPAYMENT OF OTHER DEBT. Borrower
shall not  retire  any  long-term  debt  entered  into prior to the date of this
Agreement  at a date in advance  of its legal  obligation  to do so.  DEFAULT ON
OTHER  CONTRACTS  OR  OBLIGATIONS.  Borrower  shall not default on any  material
contract  with or  obligations  when  due to a third  party  or  default  in the
performance of any obligation to a third party incurred for money borrowed in an
amount in excess of $100,000.00. JUDGMENT ENTERED. Borrower shall not permit the
entry of any monetary judgment or the assessment against,  the filing of any tax
lien against,  or the issuance of any writ of garnishment or attachment  against
any property of or debts due Borrower in an amount in excess of  $50,000.00  and
that is not  discharged  or  execution  is not  stayed  within 30 days of entry.
CHANGE OF CONTROL.  Borrower shall not make a material  change of ownership that
effectively  changes  control  of  Borrower.  GUARANTEES.   Borrower  shall  not
guarantee or otherwise become responsible for obligations of any other person or
entity. ENCUMBRANCES.  Borrower shall not create, assume, or permit to exist any
mortgage,   security  deed,  deed  of  trust,  pledge,  lien,  change  or  other
encumbrance on any of its assets, whether now owned or hereafter acquired, other
than:  (i) security  interests  required by the Loan  Documents;  (ii) liens for
taxes  contested  in good  faith;  (iii)  liens  accruing  by law  for  employee
benefits; or (iv) Permitted Liens. RETIRE OR REPURCHASE CAPITAL STOCK. Retire or
otherwise  acquire its capital stock in an amount  greater than  $15,000,000.00.
Any such  acquisition  of capital stock may be paid for from working  capital or
other sources deemed appropriate by the officers of the corporation.

FINANCIAL REPORTS.  Borrower agrees to the following provisions(s) from the date
of this  Agreement  and until final payment in full of the  Obligations,  unless
Bank shall otherwise consent in writing:  ANNUAL FINANCIAL STATEMENTS.  Borrower
shall  deliver to Bank,  within 120 days  after the close of each  fiscal  year,
audited financial statements  reflecting its operations during such fiscal year,
including,  without  limitation,  a balance sheet, profit and loss statement and
statement of cash flows, with supporting  schedules;  all in reasonable  detail,
prepared in conformity with generally accepted accounting principles, applied on
a

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basis  consistent with that of the preceding year. All such statements  shall be
examined by an independent  certified public accountant  acceptable to Bank. The
opinion of such independent  certified public accountant shall not be acceptable
to Bank if qualified due to any  limitation  in scope  imposed by Borrower.  Any
other   qualification  of  the  opinion  by  the  accountant  shall  render  the
acceptability of the financial  statements subject to Bank's approval.  PERIODIC
FINANCIAL  STATEMENTS.  Borrower  shall  deliver  to  Bank  quarterly  unaudited
management-prepared  financial  statements,  including,  without  limitation,  a
balance  sheet,  profit and loss  statement,  and statement of cash flows,  with
supporting schedules, as soon as available and in any event within 60 days after
the close of each such period; all in reasonable  detail.  Such statements shall
be  certified  as to their  correctness  by a  principal  financial  officer  of
Borrower.

CONDITONS  PRECEDENT.  The obligations of Bank to make the Loan and any advances
pursuant to this  Agreement are subject to the following  conditions  precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.

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

                                                     OPTICAL CABLE CORPORATION

Corporate                                            By: /s/ Robert Kopstein
Seal                                                    ------------------------
                                                         Robert Kopstein
                                                         President

                       TAXPAYER IDENTIFICATION NUMBER(S):

                                            OPTICAL CABLE CORPORATION 54-1237042

                                                     FIRST UNION NATIONAL BANK

                                                     By: /s/ Susan Doyle
                                                        ------------------------
                                                         Susan Doyle
                                                         Senior Vice President

49548

                                   Page 4 of 4
<PAGE>

                               December 15, 1999

Mr. Ken Harber, Vice President
Optical Cable Corporation
P. O. Box 11967
Roanoke, Virginia  24022-1967

Re:  Loan Agreement Dated April 25, 1997

Dear Ken:

     Per your phone conversation with Susan Doyle, you have advised First Union
of your desire to repurchase additional shares of common stock from working
capital and other sources deemed appropriate by the officers of the corporation.
Whereas the current loan agreement, as amended, limits the purchase to
$15,000,000, you have requested an amendment to the loan agreement to increase
this limit to $20,000,000.  Our consent to this increase is hereby granted.

     We will follow up this letter with a formal amendment to the loan
agreement.  Please have Mr. Kopstein sign the acknowledgement line below and
return to First Union.  A return envelope is provided for your convenience.
Should you have any questions, please feel free to contact me at 563-6667.

                                     Sincerely,

                                     /s/ William C. Moses

                                     William C. Moses
                                     Vice President

ACKNOWLEDGEMENT OF AMENDMENT:

Optical Cable Corporation

By:  /s/ Robert Kopstein           Date:  12/23/99
   -----------------------------         ---------------------------

cc:  Susan K. Doyle
<PAGE>

                                October 3, 2001

Mr. Neil Wilkin, Senior Vice President
Chief Financial Officer
Optical Cable Corporation
P. O. Box 11967
Roanoke, Virginia  24022-1967

Re:  Loan Agreement Dated March 10, 1999, $5,000,000 and $10,000,000 Promissory
     Notes Dated March 10, 1999, Security Agreements Dated March 13, 1996 and
     April 25, 1997 respectively, as renewed and amended (collectively, the
     "First Union Loan Documents")

Dear Neil:

     Thank you for meeting with Brenda Vaughan, Marvin Huffman and me last
Tuesday, September 25, 2001.  Prior to and during our meeting, we discussed
several important business and financial points concerning the financial
performance of Optical Cable Corporation ("Optical Cable") and compliance with
the First Union Loan Documents.

     You asked us to amend or waive two Events of Default that occurred and
remain outstanding since filing your 10Q on September 14, 2001 for the period
ending July 31, 2001.  First, by letter dated December 15, 1999, the limits of
repurchase of common stock were raised from $15,000,000 to $20,000,00.  It has
come to our attention the $20,000,000 limit was exceeded.  Second, the Loan
Agreement specifies the use of loan proceeds be limited to working capital
purposes.  Working capital purposes are limited to short term uses in the
ordinary course of business of Optical Cable, and do not include purchase of
common stock of the Company for the Treasury.  These Events of Default remain
outstanding.

     During our meeting we asked for information that would help us respond to
your request to waive the Events of Default.  Included in our information
request is a financial forecast for the quarter ending October 31, 2001, budget
for the first half of fiscal 2002 and year end, if possible, plus a precise
final count of the repurchased shares.  We have also determined that we need
monthly financial statements for August and September as well as for succeeding
months on an ongoing basis.

     Through the close of business October 1, 2001 the combined balance
outstanding on the $5 million and $10 million loans is $7,112,000.00.  The
balance of the $5 million Sweep+ line is $2,612,000.00 after transferring
$4,500,000 to the $10 million line.  The transfer was effective September 5,
2001.  Also, during our meeting you indicated the need for minimal additional
usage under the lines as the last stock redemption occurred on Friday, September
21, 2001.  According to our records there was a wire transfer in the amount of
<PAGE>

$272,800 to First Star Bank on September 26, which appears to be settlement of
the September 21, 2001 stock purchase.

     Since Events of Default remain outstanding, we are limiting the
availability under Optical Cable's lines to a level consistent with its working
capital needs.  Effective Thursday, October 4, 2001, the combined, total
outstanding under the two lines of credit is limited to $9,500,000.
Notwithstanding the outstanding defaults, First Union National Bank ("FUNB")
will permit a one time only use of up to $500,000 under the lines of credit for
purposes other than working capital purposes.  This non-working capital advance
shall be repaid as soon as possible.  We reserve all other rights under and in
connection with the First Union Loan Documents including the right to accelerate
obligations under the First Union Loan Documents.

     In consideration of First Union's agreement to permit continued usage of
the line as described above, please execute this letter to confirm that Optical
Cable does not have any defenses to the obligations under the First Union Loan
Documents, that Optical Cable does not hold any claims against First Union or
its officers, directors, employees or affiliates, and that Optical Cable waives
any claims it may have against First Union or its officers, directors, employees
or affiliates.

                                     Sincerely,

                                     /s/ Susan K. Doyle

                                     Susan K. Doyle
                                     Senior Vice President

By execution of this letter, Optical Cable Corporation acknowledges and agrees
to all terms of the foregoing letter.

Optical Cable Corporation

By:  /s/ Kenneth W. Harber
   ------------------------------

Name:  Kenneth W. Harber
      ---------------------------

Title:  VP Finance
      ---------------------------

Date:   10/4/2001
      ---------------------------
<PAGE>

October 30, 2001

Mr. Kenneth Harber, Vice President, Finance
Mr. Neil Wilkin, Senior Vice President & CFO
Optical Cable Corporation
P. O. Box 11967
Roanoke, Virginia 24022-1967

Re:  Loan Agreement Dated March 10, 1999, a letter modification to the Loan
Agreement dated December 15, 1999; letter agreement dated October 3, 2001,
$5,000,000 and $10,000,000 Promissory Notes Dated March 10, 1999; and Security
Agreements Dated March 13, 1996 and April 25, 1997 respectively, all as renewed
and amended (collectively, the "First Union Loan Documents")

Dear Ken and Neil:

Reference is made to the First Union Loan Documents cited above between Optical
Cable Corporation (the "Borrower") and First Union National Bank (the "Bank").
The First Union Loan Documents and all other documents executed and delivered in
connection therewith are collectively referred to herein as the "Loan
Documents".  All capitalized terms used but not defined herein shall have the
meanings assigned in the Loan Documents.

     (1)  The Loan Agreement dated March 10, 1999 provides:

               Borrower shall not "Retire or otherwise acquire its capital stock
               in an amount greater than $15,000,000."  This limitation was
               subsequently increased to $20,000,000 in a letter dated December
               15, 1999.

          Based on information provided by the Borrower, stock repurchased
          amounted to $24,179,403.26 through September 20, 2001, exceeding the
          $20,000,000 limitation on August 16, 2001.  The Borrower has requested
          the Bank's waiver of this violation and amendment of the limitation to
          $25,000,000.  The Bank does hereby waive the Borrower's defaults under
          this provision, subject to Borrower's execution of and return of this
          letter confirming its consent to the terms contained herein.  The Loan
          Agreement will be modified to provide that the Retire or Repurchase
          Capital Stock section in the Negative Covenants paragraph will be
          deleted in its entirety and replaced with the following:
<PAGE>

October 30, 2001
Page 2

          Retire or Repurchase Capital Stock.  Borrower shall not retire or
          otherwise acquire any of its capital stock at any time following
          September 20, 2001.  If Borrower reduces the combined outstanding
          obligations under both the $5,000,000 line of credit and the
          $10,000,000 line of credit to $0.00 for a period of 30 consecutive
          days, then Borrower may spend up to $820,596.74 to retire or acquire
          its capital stock.

     (2)  The Loan Agreement dated March 10, 1999 also provides the following
          requirement for each Line of Credit:

               "The Loan proceeds are to be used by Borrower solely for
               financing working capital."

          Based on the schedule of purchases provided by the Borrower, stock
          repurchased during the Borrower's third and fourth quarters of fiscal
          2001 (from July 11, 2001 through and including September 20, 2001)
          amounted to $7,711,164.62.  These purchases were largely financed
          through borrowings under the $10,000,000 line of credit and the
          $5,000,000 line of credit.  Borrower acknowledges that this is not a
          permitted use of the loan proceeds.  The Borrower has requested the
          Bank's waiver, and the Bank does hereby waive the Borrower's default
          under this provision, subject to Borrower's execution of and return of
          this letter.

These waivers are limited to the defaults recited above and shall not be
construed to be a waiver of any subsequent default under the referenced
provisions, or of any existing or future defaults under any other provision of
any Loan Document.

First Union will continue to limit the availability under Optical Cable's lines
to a level consistent with its working capital needs.  The limitation of the
combined availability under the $10,000,000 line of credit and the $5,000,000
line of credit to a maximum combined amount of $9,500,000 will continue for the
balance of the term of the lines of credit unless otherwise agreed to by Bank in
writing.  The purpose of each facility will continue to be Working Capital.
Working capital purposes are limited to short term uses in the ordinary course
of business of Optical Cable, and do not include purchase of common stock of the
Company for the Treasury.

The foregoing modifications will be incorporated in an amended and restated loan
agreement which will be executed by Bank and Borrower.

The Borrower, by signature below, represents and warrants that there exist no
defaults or event of default under the Loan Documents other than those
specifically waived herein, that the Loan Documents are in full force and
effect, and that Borrower does not have any defenses to its obligations under
the Loan Documents nor any claims against Bank.
<PAGE>

October 30, 2001
Page 3

Please evidence your acceptance of the terms of this waiver by signing and
returning to the Bank a copy of this letter bearing original authorized
signature of each of the parties indicated.

Sincerely,

Susan K. Doyle
Senior Vice President

By execution of this letter, Optical Cable Corporation acknowledges and agrees
to all terms of the foregoing letter.

Optical Cable Corporation

By:  /s/ Kenneth W. Harber
    --------------------------------

Name:  Kenneth W. Harber
     -------------------------------

Title:  VP Finance
      ------------------------------

Date:    11/13/01
      ------------------------------<PAGE>

                                                                    EXHIBIT 10.8
[FIRST UNION LOGO]

                               SECURITY AGREEMENT

                                                                  April 25, 1997

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

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

For value  received and to secure the payment and  performance of the Promissory
Note  executed by the Debtor of even date  herewith,  in the original  principal
amount  of  $10,000,000.00,  payable  to  Bank,  and any  extensions,  renewals,
modifications or novations thereof (the "Note"), this Security Agreement and the
other  Loan  Documents,  and any other  obligations  of  Debtor to Bank  however
created,  arising  or  evidenced,   whether  direct  or  indirect,  absolute  or
contingent,  now  existing or  hereafter  arising or  acquired,  including  swap
agreements (as defined in 11 U.S.C. ss. 101), future advances, and all costs and
expenses incurred by Bank to obtain, preserve,  perfect and enforce the security
interest  granted  herein and to  maintain,  preserve  and collect the  property
subject to the security  interest  (collectively,  "Obligations"), Debtor hereby
grants to Bank a  continuing  security  interest in and lien upon the  following
described property, now owned or hereafter acquired, any additions,  accessions,
or  substitutions  thereof and thereto  (including but not limited to investment
property and  security  entitlements),  and all cash and  non-cash  proceeds and
products thereof (collectively, "Collateral"):

All  accounts,  contract  rights,  inventory,  furniture,  fixtures,  machinery,
equipment and general intangibles now existing or hereafter arising and proceeds
and products thereof.

Debtor hereby represents and agrees that:

OWNERSHIP. Debtor owns the Collateral or Debtor will purchase and acquire rights
in the  Collateral  within ten days of the date advances are made under the Loan
Documents. If Collateral is being acquired with the proceeds of an advance under
the Loan Documents,  Debtor authorizes Bank to disburse proceeds directly to the
seller  of the  Collateral.  The  Collateral  is free and  clear  of all  liens,
security  interests,  and claims except those previously  reported in writing to
Bank,  and  Debtor  will  keep the  Collateral  free and clear  from all  liens,
security interests and claims, other than those granted to Bank.

NAME AND  OFFICES.  There has been no change in the name of Debtor,  or the name
under which Debtor conducts  business,  within the 5 years preceding the date of
execution  of this  Security  Agreement  and Debtor has not moved its  executive
offices or residence  within the 5 years preceding the date of execution of this
Security  Agreement  except as  previously  reported  in  writing  to Bank.  The
taxpayer identification number of Debtor as provided herein is correct.

TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims.  Debtor will not  transfer,  sell,  or lease
Collateral  (except in the ordinary  course of  business).  Debtor agrees to pay
promptly all taxes and assessments upon or for the use of Collateral and on this
Security Agreement.  At its option,  Bank may discharge taxes,  liens,  security
interests  or other  encumbrances  at any time  levied or placed on  Collateral.
Debtor agrees to reimburse  Bank, on demand,  for any such payment made by Bank.
Any amounts so paid shall be added to the Obligations.
<PAGE>

WAIVERS. Debtor waives presentment,  demand, protest, notice of dishonor, notice
of default, demand for payment, notice of intention to accelerate, and notice of
acceleration of maturity.  Debtor further agrees not to assert against Bank as a
defense (legal or equitable), as a set-off, as a counterclaim, or otherwise, any
claims  Debtor may have  against  any seller or lessor  that  provided  personal
property or services  relating to any part of the Collateral.  Debtor waives all
exemptions and homestead rights with regard to the Collateral. Debtor waives any
and all  rights  to  notice  or to  hearing  prior to  Bank's  taking  immediate
possession or control of any Collateral, and to any bond or security which might
be required by  applicable  law prior to the exercise of any of Bank's  remedies
against any Collateral.

EXTENSIONS, RELEASES. Debtor agrees that Bank may extend, renew or modify any of
the Obligations and grant any releases,  compromises or indulgences with respect
to any security for the Obligations, or with respect to any party liable for the
Obligations,  all without  notice to or consent of Debtor and without  affecting
the liability of Debtor or the enforceability of this Security Agreement.

NOTIFICATIONS  OF CHANGE.  Debtor  will  notify Bank in writing at least 30 days
prior to any change in: (i) Debtor's chief place of business  and/or  residence;
(ii)  Debtor's  name or  identity;  or (iii)  Debtor's  corporate/organizational
structure. Debtor will keep Collateral at the location(s) previously provided to
Bank until such time as Bank  provides  written  advance  consent to a change of
location.  Debtor  will bear the cost of  preparing  and  filing  any  documents
necessary to protect Bank's liens.

COLLATERAL  CONDITION AND LAWFUL USE.  Debtor  represents  that Collateral is in
good repair and condition and that Debtor shall use  reasonable  care to prevent
Collateral from being damaged or depreciating.  Debtor shall immediately  notify
Bank of any material loss or damage to  Collateral.  Debtor shall not permit any
item of  equipment  to become a fixture to real estate or an  accession to other
personal  property.  Debtor  represents it is in compliance in all respects with
all  federal,  state and local laws,  rules and  regulations  applicable  to its
properties,  Collateral,  operations,  business, and finances, including without
limitation,  any federal or state laws  relating to liquor  (including 18 U.S.C.
ss. 3617, et seq.) Or narcotics  (including 21 U.S.C.  ss. 801, et seq.) And all
applicable  federal,  state and local laws, and regulations  intended to protect
the environment.

RISK OF LOSS AND  INSURANCE.  Debtor shall bear all risk of loss with respect to
the  Collateral.  The injury to or loss of Collateral,  either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force casualty and hazard  insurance on Collateral  naming
Bank as loss payee. Such insurance is to be in form and amounts  satisfactory to
Bank.  All such  policies  shall  provide to Bank a minimum  of 30 days  written
notice of  cancellation.  Debtor shall furnish to Bank such  policies,  or other
evidence of such policies  satisfactory  to Bank.  Bank is  authorized,  but not
obligated,  to purchase  any or all  insurance  or "Single  Interest  Insurance"
protecting  such interest as Bank deems  appropriate  against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral,  all at its discretion,  and at Debtor's expense. In such event,
Debtor agrees to reimburse  Bank for the cost of such insurance and Bank may add
such cost to the  Obligations.  Debtor shall bear the risk of loss to the extent
of any  deficiency in the effective  insurance  coverage with respect to loss or
damage to any of the  Collateral.  Debtor hereby  assigns to Bank to proceeds of
all such  insurance and directs any insurer to make  payments  directly to Bank.
Debtor hereby appoints Bank its  attorney-in-fact,  which  appointment  shall be
irrevocable  and coupled with any interest  for so long as the  Obligations  are
unpaid,  to file proof of loss and/or any other forms  required to collect  from
any  insurer any amount due from any damage or  destruction  of  Collateral,  to
agree to and  find  Debtor  as to the  amount  of said  recovery,  to  designate
payee(s) of such recovery,  to grant releases to insurer,  to grant  subrogation
rights to any insurer, and to endorse any settlement check or draft.

                                     Page 2
<PAGE>

Debtor  agrees  not to  exercise  any of the  foregoing  powers  granted to Bank
without the Bank's prior written consent.

ADDITIONAL COLLATERAL. If at any time Collateral is unsatisfactory to Bank, then
on demand of Bank, Debtor shall immediately  furnish such additional  Collateral
satisfactory to Bank to be held by Bank as if originally  pledged  hereunder and
shall execute such additional  security  agreements and financing  statements as
requested by Bank.

FINANCING  STATEMENTS.  No financing  statement (other than any filed by Bank or
disclosed  above)  covering any of Collateral or proceeds  thereof is on file in
any public filing office.  This Security  Agreement,  or a copy thereof,  or any
financing  statement  executed  hereunder  may be recorded.  On request of Bank,
Debtor will execute one or more  financing  statements in form  satisfactory  to
Bank and will pay all costs and  expenses  of filing the same or of filing  this
Security Agreement in all public filing offices,  where filing is deemed by Bank
to be desirable.  Bank is authorized to file  financing  statements  relating to
Collateral  without Debtor's  signature where authorized by law. Debtor appoints
Bank as its  attorney-in-fact  to execute such documents necessary to accomplish
perfection  of Bank's  security  interest.  The  appointment  is coupled with an
interest and shall be irrevocable as long as any Obligations remain outstanding.
Debtor  further  agrees to take such other actions as might be requested for the
perfection,  continuation  and assignment,  in whole or in part, of the security
interests granted herein. If certificates are issued or outstanding as to any of
the Collateral,  Debtor will cause the security interests of Bank to be properly
protected, including perfection of notation thereon.

LANDLORD/MORTGAGE  WAIVERS.  Debtor shall cause each  mortgagee of real property
owned by Debtor and each landlord of real  property  leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord waives its rights, if any, in the Collateral

STOCK,  DIVIDENDS.  If, with respect to any security pledged hereunder,  a stock
dividend is declared,  any stock split made or right to subscribe is issued, all
the certificates for the shares representing such stock dividend, stock split or
right to subscribes will be immediately delivered, duly endorsed, to the Bank as
additional  collateral,  and any cash or non-cash proceeds and products thereof,
including  investment  property and security  entitlements  will be  immediately
delivered  to Bank.  If  Debtor  has  granted  to Bank a  security  interest  in
securities, Debtor acknowledges that such grant includes all investment property
and security entitlements,  now existing or hereafter arising,  relating to such
securities.  In addition, Debtor agrees to execute such notices and instructions
to securities intermediaries as Bank may reasonably request.

CONTRACTS,  CHATTEL PAPER, ACCOUNTS,  GENERAL INTANGIBLES.  Debtor warrants that
Collateral  consisting of contract rights,  chattel paper,  accounts, or general
intangibles is (i) genuine and  enforceable in accordance  with its terms except
as  limited  by  law;  (ii)  not  subject  to any  defense,  set-off,  claim  or
counterclaim  of a material  nature against Debtor except as to which Debtor has
notified Bank in writing;  and (iii) not subject to any other circumstances that
would impair the validity,  enforceability,  value, or amount of such Collateral
except as to which Debtor has notified Bank in writing.  Debtor shall not amend,
modify or supplement any lease, contract or agreement contained in Collateral or
waive any provision therein, without prior written consent of Bank.

ACCOUNT  INFORMATION.  From time to time,  at the Bank's  request,  Debtor shall
provide Bank with schedules  describing  all accounts and  contracts,  including
customers'  addresses,  credited or acquired by Debtor and at the Bank's request
shall execute and deliver  written  assignments of contracts and other documents
evidencing  such  accounts and contracts to Bank.  Together with each  schedule,
Debtor shall,  if requested by Bank,  furnish Bank with copies of Debtor's sales

                                     Page 3
<PAGE>

journals,  invoices,  customer  purchase orders or the equivalent,  and original
shipping  or  delivery  receipts  for all goods sold,  and Debtor  warrants  the
genuineness thereof.

ACCOUNT AND CONTRACT DEBTORS.  After a Default occurs, Bank shall have the right
to notify  the  account  and  contract  debtors  obligated  on any or all of the
Collateral to make payment thereof directly to Bank and Bank may take control of
all proceeds of any such Collateral, which rights Bank may exercise at any time.
The cost of such  collection  and  enforcement,  including  attorneys'  fees and
expenses,  shall be borne solely by Debtor  whether the same is incurred by Bank
or Debtor.  After a Default  occurs,  upon  demand of Bank,  Debtor  will,  upon
receipt  of all  checks,  drafts,  cash and  other  remittances  in  payment  on
Collateral,  deposit the same in a special  bank account  maintained  with Bank,
over which Bank also has the power of withdrawal.

If a Default  occurs,  no discount,  credit,  or allowance   shall be granted by
Debtor to any account or contract  debtor and no return of merchandise  shall be
accepted by Debtor without Bank's  consent.  Bank may, after Default,  settle or
adjust  disputes and claims directly with account  contract  debtors for amounts
and upon terms  that Bank  considers  advisable,  and in such  cases,  Bank will
credit the Obligations  with the net amounts  received by Bank,  after deducting
all of the expenses incurred by Bank. Debtor agrees to indemnify and defend Bank
and hold it harmless with respect to any claim or proceeding  arising out of any
matter related to collection of Collateral.

GOVERNMENT  CONTRACTS.  If any Collateral covered hereby arises from obligations
due  to  Debtor  from  any  governmental  unit  or  organization,  Debtor  shall
immediately  notify  Bank in writing  and  execute  all  documents  and take all
actions  demanded by Bank to ensure  recognition  by such  governmental  unit or
organization of the rights of Bank in the Collateral.

INVENTORY.  So long as no Default has  occurred,  Debtor shall have the right in
the regular course of business,  to process and sell Debtor's inventory,  unless
Bank shall hereafter  otherwise direct in writing.  Upon demand of Bank,  Debtor
will, upon receipt of all checks, drafts, ash and other remittances,  in payment
of Collateral sold,  deposit the same in a special bank account  maintained with
Bank, over which Bank also has the power of withdrawal. Debtor shall comply with
all federal, state, and local laws, regulations,  rulings, and orders applicable
to Debtor or its assets or  business,  in all  respects.  Without  limiting  the
generality of the previous  sentence,  Debtor shall comply with all requirements
of the federal Fair Labor  Standards  Act in the conduct of its business and the
production of inventory.  Debtor shall notify Bank  immediately of any violation
by Debtor of the Fair Labor  Standards Act, and a failure of Debtor to so notify
Bank shall  constitute  a  continuing  representation  that all  inventory  then
existing has been produced in compliance with the Fair Labor Standards Act.

INSTRUMENTS,  CHATTEL PAPER.  Any Collateral that is instruments,  chattel paper
and negotiable  documents will be properly  assigned to, deposited with and held
Bank, unless Bank shall hereafter  otherwise direct or consent in writing.  Bank
may, without notice,  before or after maturity of the Obligations,  exercise any
or all rights of collection,  conversion,  or exchange and other similar rights,
privileges and options  pertaining to  Collateral,  but shall have no duty to do
so.

COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral  pledged  except as set forth  herein;  and by way of
explanation and not by way of limitation,  Bank shall incur no liability for any
of the following:  (i) loss or depreciation of Collateral  (unless caused by its
willful  misconduct),  (ii) its  failure  to  present  any paper for  payment or
protest,  to protest or give  notice of  nonpayment,  or any other  notice  with
respect to any paper or Collateral, or (iii) its failure to present or surrender
for redemption,  conversion or exchange any bond, stock, paper or other security
whether in  connection  with any  merger,  consolidation,  recapitalization,  or
reorganization,  arising out of the refunding of the original  security,  or for
any other  reason,  or its failure to notify any party  hereto  that  Collateral
should be so presented or surrendered.

                                     Page 4
<PAGE>

TRANSFER OF  COLLATERAL.  The Bank may assign its right in the Collateral or any
part  thereof to any  assignee who shall  thereupon  become  vested with all the
powers and rights  herein  given to the Bank with  respect  to the  property  so
transferred and delivered, and the Bank shall thereafter be forever relieved and
fully   discharged   from  any  liability  with  respect  to  such  property  so
transferred,  but with respect to any property not so transferred the Bank shall
retain all rights and powers hereby given.

SUBSTITUTE COLLATERAL.  With prior written consent of Bank, other Collateral may
be  substituted  for the original  Collateral  herein in which event all rights,
duties,  obligations,  remedies and security  interests provided for, created or
granted shall apply fully to such substitute Collateral.

INSPECTION,  BOOKS AND  RECORDS.  Debtor  will at all times  keep  accurate  and
complete  records  covering  each item of  Collateral,  including  the  proceeds
therefrom.  Bank, or any of its agents, shall have the right, at intervals to be
determined  by Bank and  without  hindrance  or delay,  to inspect,  audit,  and
examine the Collateral and to make extracts from the books,  records,  journals,
orders, receipts, correspondence and other data relating to Collateral, Debtor's
business or any other transaction between the parties hereto. Debtor will at its
expense furnish Bank copies thereof upon request.

CROSS COLLATERALIZATION  LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor,  within the meaning of the Federal Consumer
Credit  Protection  Act, Bank  expressly  waives any security  interest  granted
herein in  Collateral  that Debtor uses as a principal  dwelling  and  household
goods.

ATTORNEY'S  FEES AND OTHER COSTS OF  COLLECTION.  Debtor shall pay all of Bank's
reasonable  expenses  incurred in enforcing this Agreement and in preserving and
liquidating  Collateral,  including but not limited to, 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.

DEFAULT.  If any of the  following  occurs,  a default  ("Default")  under  this
Security Agreement shall exist: (i) The failure of timely payment or performance
of any of the Obligations or a default under any Loan Document;  (ii) Any breach
of any  representation  or agreement  contained or referred to in this  Security
Agreement or other Loan Document;  (iii) Any loss, theft, substantial damage, or
destruction  of  Collateral  not  fully  covered  by  insurance,  or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss; any sale
(except the sale of inventory in the ordinary  course of  business),  lease,  or
encumbrance of any of collateral  without prior written  consent of Bank; or the
making of any levy,  seizure,  or attachment  on or of  Collateral  which is not
removed  within 10 days;  or (iv) the death of,  appointment  of  guardian  for,
dissolution  of,  termination of existence of, loss of good standing  status by,
appointment  of a receiver for,  assignment  for the benefit of creditors of, or
commencement  of any bankruptcy or insolvency  proceeding by or against  Debtor,
its Subsidiaries or Affiliates ("Affiliate" shall have the meaning as defined in
11 U.S.C.  ss. 101; and  "Subsidiary"  shall mean any  corporation of which more
than 50% of the  issued  and  outstanding  voting  stock is  owned  directly  or
indirectly by Debtor), if any, or any general partner of or the holder(s) of the
majority ownership interests in Debtor or any party to the Loan Documents.

REMEDIES ON DEFAULT  (INCLUDING POWER OF SALE). If a Default occurs,  all of the
Obligations shall be immediately due and payable,  without notice and Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code.  Without  limitation  thereto,  Bank shall have the  following  rights and
remedies:  (i) to take  immediate  possession of  Collateral,  without notice or
resort to legal  process,  and for such  purpose,  to enter upon any premises on
which  Collateral  or any part  thereof may be  situated  and to remove the same
therefrom,  or, at its option,  to render the Collateral  unusable or dispose of
said Collateral on Debtor's premises; (ii) to require

                                     Page 5
<PAGE>

Debtor to assemble the Collateral and make it available to Bank at a place to be
designated  by Bank;  (iii) to exercise  its right of set-off or bank lien as to
any monies of Debtors deposited in demand, checking, time, savings,  certificate
of deposit or other  accounts  of any nature  maintained  by Debtor with Bank or
Affiliates of Bank, without advance notice,  regardless of whether such accounts
are general or special; (iv) to dispose of Collateral,  as a unit or in parcels,
separately or with any real property interests also securing the Obligations, in
any county or place to be selected by Bank, at either private or public sale (at
which  public  sale  bank  may be the  purchaser)  with or  without  having  the
Collateral  physically present at said sale. Any notice of sale,  disposition or
other  action by Bank  required  by law and sent to Debtor at  Debtor's  address
shown  above,  or at such  other  address  of debtor as may from time to time be
shown on the  records  of  Bank,  at least 5 days  prior to such  action,  shall
constitute  reasonable  notice to Debtor.  Notice  shall be deemed given or sent
when mailed postage prepaid to Debtor's address as provided  herein.  Bank shall
be  entitled  to apply  the  proceeds  of any sale or other  disposition  of the
Collateral,  and the  payments  received  by  Bank  with  respect  to any of the
Collateral,  to the  Obligations in such order and manner as Bank may determine.
Collateral that is subject to rapid declines in value and is customarily sold in
recognized  markets  may be disposed of by Bank in a recognized  market for such
collateral without providing notice of sale.

REMEDIES  ARE  CUMULATIVE.  No failure on the part of Bank to  exercise,  and no
delay in exercising,  any right,  power or remedy  hereunder  shall operate as a
waiver thereof,  nor shall any single or partial  exercise by Bank or any right,
power or remedy hereunder  preclude any or other further exercise thereof or the
exercise  of any right,  power or  remedy.  The  remedies  herein  provided  are
cumulative and are not exclusive of any remedies  provided by law, in equity, or
in other Loan Documents.

MISCELLANEOUS.  (i) AMENDMENTS AND WAIVERS. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by an officer of Bank.  No waiver by Bank of any Default shall operate as
a waiver of any  other  Default  or of the same  Default  on a future  occasion.
Neither the failure of, nor any delay by, Bank in exercising any right, power or
privilege granted pursuant to this Security  Agreement shall operate as a waiver
thereof,  nor shall a single or partial  exercise  thereof preclude any other or
further exercise of any other right,  power or privilege.  (ii) ASSIGNMENT.  All
rights of Bank hereunder are freely  assignable,  in whole or in part, and shall
inure to the benefit of and be enforceable by Bank, its successors,  assigns and
affiliates.  Debtor shall not assign its rights and interest  hereunder  without
the prior written  consent of Bank,  and any attempt by Debtor to assign without
Bank's prior written consent is null and void. Any assignment  shall not release
Debtor from the  Obligations.  This  Security  Agreement  shall be binding  upon
Debtor,  and the heirs,  personal  representatives,  successors,  and assigns of
Debtor.  (iii)  APPLICABLE  LAW:  CONFLICT  BETWEEN  DOCUMENTS.   This  Security
Agreement  shall be  governed  by and  construed  under the laws of the state in
which the  office  of Bank as stated  above is  located  without  regard to that
state's  conflict of laws  principles.  If any terms of this Security  Agreement
conflict with the terms of any commitment letter or loan proposal,  the terms of
this Security  Agreement shall control.  (iv)  JURISDICTION.  Debtor irrevocably
agrees to non-exclusive  personal  jurisdiction in the state in which the office
of Bank as stated above is located.  (v) SEVERABILITY.  If any provision of this
Security  Agreement shall be prohibited by or invalid under applicable law, such
provision  shall be  ineffective  but only to the extent or such  prohibition or
invalidity,  without  invalidating  the  remainder  of  such  provision  or  the
remaining  provisions of this Security Agreement.  (vi) NOTICES.  Any notices to
Debtor shall be sufficiently given. If in writing and mailed or delivered to the
address of Debtor 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 the Debtor changes  Debtor's mailing address at any time prior to
the date the  Obligations  are paid in full,  Debtor  agrees  to  promptly  give
written notice of said change of address by registered or certified mail, return
receipt requested, all charges prepaid. (vii) CAPTIONS. The captions contained

                                     Page 6
<PAGE>

herein are  inserted  for  convenience  only and shall not affect the meaning or
interpretation of this Security Agreement or any provision  thereof.  The use of
the plural shall also mean the singular,  and vice versa, (viii) LOAN DOCUMENTS.
The term "Loan  Documents"  refers to all  documents,  whether now or  hereafter
existing,  executed in connection with the Obligations and may include,  without
limitation  and  whether  executed  by  Borrower,  Debtor or others,  commitment
letters,  loan  agreements,  guaranty  agreements,  other  security  agreements,
letters of credit, instruments, financing statements, mortgages, deeds of trust,
deeds  to  secure  debt,  and any  amendments  or  supplements  (excluding  swap
agreements as defined in 11 U.S.C.  ss. 101). (ix) JOINT AND SEVERAL  LIABILITY.
If more than one person has signed this  Security  Agreement,  such  parties are
jointly and  severally  obligated  hereunder.  (x) BINDING  CONTRACT.  Debtor by
execution and Bank by acceptance  of this  Security  Agreement,  agree that each
party is bound by all terms and provisions of this Security Agreement.

IN WITNESS WHEREOF,  Debtor, on the day and year first written above, has caused
this Security Agreement 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 7
<PAGE>

                               SECURITY AGREEMENT

                                                                  March 13, 1996
Optical Cable Corporation, a Virginia Corporation
5290 Concourse Drive
Roanoke, Virginia 24019
(Individually and collectively "Debtor")

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

To secure payment and performance of the Promissory Note executed by the Debtor
dated March 13, 1996, in the original principal amount of $5,000,000.00, payable
to Bank, and any extension, renewal, modification or novation thereof (the
"Note"), this Security Agreement and the other Loan Documents, and any other
obligation of Debtor to Bank however created, arising or evidenced, whether
direct or indirect, absolute or contingent, now existing or hereafter arising or
acquired, including swap agreements (as defined in 11 U.S.C. ss.101), future
advances, and all costs and expenses incurred by Bank to obtain, preserve,
perfect and enforce the security interest granted herein and to maintain,
preserve and collect the property subject to the security interest
(collectively, "Obligations").

Debtor hereby grants to Bank a continuing security interest in and lien upon the
following described property and any additions, accessions, or substitutions
thereof and thereto, and all proceeds and products thereof, including cash or
non-cash dividends (collectively, "Collateral"):

All accounts, contract rights, inventory, furniture, fixtures, machinery,
equipment, and general intangibles, now existing or hereafter arising and
proceeds and products thereof.

All books, records, files, computer programs, data processing records, computer
software, documents and other information, property, or general intangibles, at
any time evidencing, describing or pertaining to, and all containers and
packages for, the property described above.

All products and proceeds of any of the property described above in any form,
and all proceeds of such products including, without limitation, all cash and
credit balances, rents, revenues and profits from sale, lease or license of any
Collateral, all payments under any indemnity, warranty or guaranty with respect
to any of such property, all proceeds of fire or other insurance, including any
refunds or unearned premiums in connection with any cancellation, adjustment, or
termination of any Insurance policy, all proceeds obtained as a result of any
legal action or proceeding with respect to any of such property, and claims by
Debtor against third parties for loss or damage to, or destruction of, any of
such property.

Debtor hereby represents and agrees that:

                                        1
<PAGE>

OWNERSHIP. Debtor owns the Collateral or Debtor will purchase and acquire rights
in the Collateral within ten days of the date advances are made under the Note.
The Collateral is free and clear of all liens, security interests, and claims
except those previously reported in writing to Bank. Debtor will keep the
Collateral free and clear from all liens, security interests and claims, other
than those granted to Bank.

NAME AND OFFICES. There has been no change in the name of the Debtor, or the
name under which the Debtor conducts business, within the five years preceding
the date of execution of this Security Agreement and Debtor has not moved its
executive offices or residence within the five years preceding the date of
execution of this Security Agreement except as previously reported in writing to
Bank. The taxpayer identification number of Debtor as provided herein is
correct.

TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or lease
Collateral (except in the ordinary course of business). Debtor agrees to pay
promptly all taxes and assessments upon or for the use of Collateral and on this
Security Agreement. At its option, Bank may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on Collateral.
Debtor agrees to reimburse Bank, on demand, for any such payment made by Bank.
Any amounts so paid shall be added to the Obligations.

WAIVERS. Debtor waives presentment, demand, protect, notice of dishonor, notice
of default, demand for payment, notice of intention to accelerate, and notice of
acceleration of maturity. Debtor further agrees not to assert against Bank as a
defense (legal or equitable), as a set-off, as a personal property or services
relating to any part of the Collateral. Debtor waives all exemptions and
homestead rights with regard to the Collateral. Debtor waives any and all rights
to notice or to hearing prior to Bank's taking Immediate possession or control
of any Collateral, and to any bond or security which might be required by
applicable law prior to the exercise of any of Bank's remedies against any
Collateral.

EXTENSIONS, RELEASES. Debtor agrees that Bank may extend, renew or modify any of
the Obligations and grant any releases, compromises or indulgences with respect
to any security for the Obligations, or with respect to any party liable for the
Obligations, all without notice to or consent of Debtor and without affecting
the liability of the Debtor of the enforceability of this Security Agreement.

NOTIFICATIONS OF CHANGE. Debtor will notify Bank in writing at least thirty (30)
days prior to any change in: (i) Debtor's chief place of business and/or
residence; (ii) Debtor's name or identity; or (iii) Debtor's corporate
structure. Debtor will keep Collateral at the location(s) previously provided to
Bank until such time as Bank provides written advance consent to a change of
location. Debtor will bear the cost of preparing and filing any documents
necessary to protect Bank's liens.

COLLATERAL CONDITION AND LAWFUL USE. Debtor represents that Collateral is in
good repair and condition and that Debtor shall use reasonable care to prevent
Collateral from being damaged or depreciating. Debtor shall immediately notify
Bank of any material loss or damage to Collateral. Debtor shall not permit any
item of equipment to become a fixture to real estate or an accession to other

                                        2
<PAGE>

personal  property.  Debtor  represents it is in compliance in all respects with
all  federal,  state and local laws,  rules and  regulations  applicable  to its
properties,  Collateral,  operations, business, and finances, including, without
limitation,  any federal or state laws  relating to liquor  (including 18 U.S.C.
ss.3617,  et seq.) or narcotics  (including 21 U.S.C.  ss. 801, et seq.) and all
applicable  federal,  state and local laws, and regulations  intended to protect
the environment.

RISK OF LOSS AND INSURANCE. The Debtor shall bear all risk of loss with respect
to the Collateral. The injury to or loss of Collateral, either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force casualty and hazard insurance on Collateral. Such
insurance is to be in form and amounts satisfactory to Bank. All such policies
shall provide to Bank a minimum of thirty (30) days written notice of
cancellation; and all policies shall be payable to Bank. Debtor shall furnish to
Bank such policies, or other evidence of such policies satisfactory to Bank.
Bank is authorized, but not obligated, to purchase any or all insurance or
"Single interest insurance" protecting such interest as Bank deems appropriate
against such risks and for such coverage and for such amounts, including either
the loan amount or value of the Collateral at its discretion, all at Debtor's
expense. In such event, Debtor agrees to reimburse Bank for the cost of such
insurance and Bank may add such cost to the Obligations. Debtor shall bear the
risk of loss to the extent of any deficiency in the effective insurance coverage
with respect to loss or damage to any of the Collateral. Debtor hereby assigns
to Bank the proceeds of all such insurance and directs any insurer to make
payments directly to Bank. Debtor hereby appoints Bank its attorney-in-fact,
which appointment shall be irrevocable and coupled with an interest for so long
as the Obligations are unpaid, to file proof of loss and/or any other forms
required to collect from any insurer any amount due from any damage or
destruction of such recovery, to grant releases to insurer, to grant subrogation
rights to any Insurer, and to endorse any settlement check or draft. Debtor
agrees not to exercise any of the foregoing powers granted to Bank without the
Bank's prior written consent.

ADDITIONAL COLLATERAL. If at any time Collateral is unsatisfactory to Bank, then
on demand of Bank, Debtor shall immediately furnish such additional Collateral
satisfactory to Bank to be held by Bank as if originally pledged hereunder and
shall execute such additional security agreements and financing statements as
requested by Bank.

FINANCING STATEMENTS. No Financing Statement senior to the Bank's interest
(other than any filed by Bank) covering any of Collateral or proceeds thereof is
on file in any public filing office. This Security Agreement or a copy thereof,
or any Financing Statement executed hereunder may be recorded. On request of
Bank, Debtor will execute one or more Financing Statements in form satisfactory
to Bank and will pay all costs and expenses of filing the same or of filing this
Security Agreement in all public filing offices, where filing is deemed by Bank
to be desirable. Bank is authorized to file Financing Statements relating to
Collateral without Debtor's signature where necessary to accomplish perfection
of Bank's security interest. The appointment is coupled with an interest and

                                        3
<PAGE>

shall be irrevocable as long as any Obligations remain outstanding. Debtor
further agrees to take such other actions as might be requested for the
perfection, continuation and assignment, in whole or in part, of the security
interests granted herein.

LANDLORD/MORTGAGEE WAIVERS. Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real property leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord waives its rights, if any, in the Collateral.

STOCK, DIVIDENDS. If, with respect to any security pledged hereunder, a stock
dividend is declared, any stock split made or right to subscribe is issued, all
the certificates for the shares representing such stock dividend, stock split or
right to subscribe will be immediately delivered, duly endorsed, to the Bank as
additional collateral, and any cash or non-cash dividend will be immediately
delivered to Bank.

CONTRACTS, CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. Debtor warrants that
the Collateral consisting of contract rights, chattel paper, accounts, or
general intangibles is (a) genuine and enforceable in accordance with its terms
except as limited by law; (b) not subject to any defense, set-off, claim or
counterclaim of a material nature against Debtor except as to which Debtor has
notified Bank in writing; and (c) not subject to any other circumstances that
would impair the validity, enforceability or amount of such Collateral except as
to which Debtor has notified Bank in writing. Debtor shall not amend, modify or
supplement any lease, contract or agreement contained in the Collateral or waive
any provision therein, without prior written consent of Bank.

ACCOUNT INFORMATION. From time to time, at the Bank's request, Debtor shall
provide Bank with schedules describing all accounts and contracts, including
customers' addresses, credited or acquired by Debtor and at the Bank's request
shall execute and deliver written assignments of contracts and other documents
evidencing such accounts and contracts to Bank. Together with each schedule,
Debtor shall, if requested by Bank, furnish Bank with copies of Debtor's sales
journals, invoices, customer purchase orders or the equivalent, and original
shipping or delivery receipts for all goods sold, and Debtor warrants the
genuineness thereof.

ACCOUNT AND CONTRACT DEBTORS. Bank shall have the right to notify the account
and contract debtors obligated on any or all of the Collateral to make payment
thereof directly to Bank and Bank may take control of all proceeds of any such
Collateral, which rights Bank may exercise at any time. The cost of such
collection and enforcement, including attorneys' fees and expenses, shall be
borne solely by Debtor whether the same is incurred by Bank or Debtor. Upon
demand of Bank, Debtor will, upon receipt of all checks, drafts, cash and other
remittances in payment on Collateral, deposit the same in a special bank account
maintained with Bank, over which Bank also has the power of withdrawal.

If a Default occurs, no discount, credit, or allowance shall be granted by
Debtor to any account or contract debtor and no return of merchandise shall be
accepted by Debtor without Bank's consent. Bank may, after Default, settle or
adjust disputes and claims directly with account contract debtors for amounts
and upon terms that Bank considers advisable, and in such cases, Bank will
credit the Obligations with the net amounts received by Bank, after deducting

                                        4
<PAGE>

all of the expenses incurred by Bank. Debtor agrees to indemnify and defend Bank
and hold it harmless with respect to any claim or proceeding arising out of any
matter related to collection of the Collateral.

GOVERNMENT CONTRACTS. If any accounts receivable or proceeds of inventory
covered hereby arises from obligations due to the Debtor from any governmental
unit or organization, Debtor shall immediately notify Bank in writing and
execute all documents and take all actions demanded by Bank to ensure
recognition by such governmental unit or organization of the rights of Bank in
the Collateral.

FARM PRODUCTS. Debtor agrees to deliver to Bank a written list identifying all
points of delivery of, and identifying all potential buyers, commission
merchants, and selling agents to or through whom Debtor may sell farm products
secured by this Security Agreement.

LIVESTOCK. If the Collateral includes livestock, Debtor grants to Bank a
security interest in all increase, progeny and products thereof, all feed owned
by Debtor, all water privileges. all equipment used in feeding and handling said
livestock, and all rights, title and interest in and to all contracts and leases
covering lands for pasture and grazing purposes.

INVENTORY. So long as no Default has occurred, Debtor shall have the right in
the regular course of business, to process and sell Debtor's inventory, unless
Bank shall hereafter otherwise direct in writing. Upon demand of Bank, Debtor
will, upon receipt of all checks, drafts, cash and other remittances, in payment
of Collateral sold, deposit the same in a special bank account maintained with
Bank, over which Bank also has the power of withdrawal.

INSTRUMENTS, CHATTEL PAPER. Any Collateral that is instruments, chattel paper
and negotiable documents will be properly assigned to, deposited with and held
by Bank, unless Bank shall hereafter otherwise direct or consent in writing.
Bank may, without notice, before or after maturity of the Obligations, exercise
any or all rights of collection, conversion, or exchange and other similar
rights, privileges and options pertaining to the Collateral, but shall have no
duty to do so.

COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein; and by way or
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation f the Collateral (unless caused by
its willful misconduct), (ii) its failure to present any paper for payment or
protest, to protest or give notice of nonpayment, or any other notice with
respect to any paper or Collateral, or (iii) its failure to present or surrender
for redemption, conversion or exchange any bond, stock, paper or other security
whether in connection with any merger, consolidation, recapitalization, or
reorganization, arising out of the refunding of the original security, or for
any other reason, or its failure to notify any party hereto that the Collateral
should be so presented or surrendered.

TRANSFER OF COLLATERAL. The Bank may assign its rights in the Collateral or any
part thereof, to the assignee, as well as any subsequent holder hereof, who
shall thereupon become vested with all the powers and rights herein given to the
Bank with respect to the property so transferred and delivered, and the Bank

                                        5
<PAGE>

shall thereafter be forever relieved and fully discharged from any liability
with respect to such property so transferred, but with respect to any property
not so transferred the Bank shall retain all rights and powers hereby given.

SUBSTITUTE COLLATERAL. With prior written consent of Bank, other Collateral may
be substituted for the original Collateral herein in which event all rights,
duties, obligations, remedies and security interests provided for, created or
granted shall apply fully to such substitute Collateral.

INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom/ Ban, or any of its agents, shall have their right, at intervals to be
determined by Bank and without hindrance or delay, to inspect, audit, and
examine the Collateral and to make extracts from the books, records, journals,
orders, receipts, correspondence and other data relating to the Collateral,
Debtor's business or any other transaction between the parties hereto. Debtor
will at its expense furnish Bank copies thereof upon request.

CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan by Bank to Debtor, within the meaning of the Federal Consumer
Credit Protection Act, Bank expressly waives any security interest granted
herein in Collateral that Debtor uses as a principal dwelling and household
goods.

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Agreement and in preserving and
liquidating the Collateral including but not limited to, reasonable arbitration,
attorneys' and experts' fees and expenses, whether incurred without the
commencement of a suit or proceeding.

DEFAULT. A default ("Default") under this Security Agreement occurs upon: (a)
The failure of timely payment or performance of any of the Obligations or a
default under any Loan Document; (b) Any breach of any representation or
agreement contained or referred to in this Security Agreement or other Loan
Document; and/or (c) Any loss, theft, substantial damage, or destruction of the
Collateral not fully covered by insurance, or as to which insurance proceeds are
not permitted to Bank within thirty (30) days of the loss; any sale (except the
sale of inventory in the ordinary course of business), lease, or encumbrance of
any of the Collateral without prior written consent of Bank; or the making of
any levy, seizure, or attachment on or of the Collateral which is not removed
with ten (10) days.

REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs, all of the
Obligations shall be immediately due and payable, without notice and Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the following rights and
remedies: (a) To take immediate possession of the Collateral, without notice or
resort to legal process, and for such purpose, to enter upon any premises on
which the collateral or any part thereof may be situated and to remove the same
therefrom, or, at its option, to render the Collateral unusable or dispose of
said Collateral on Debtor's premises, (b) To require Debtor to assemble the
Collateral and make it available to Bank at a place to be designated by Bank,
(c) To exercise its right of set-off or security interest as to any monies of
Debtor deposited with Bank or affiliates of Bank, without notice, (d) To dispose
of Collateral, as a unit or in parcels, separately or with any real property
interests also securing the Obligations, in any county or place to be selected
by Bank, at either private or public sale (at which public sale bank may be the
purchaser) with or without having the Collateral physically present at said
sale. If the Collateral includes motor vehicles or household appliances, it is
agreed that disposition by private sale is commercially reasonable, but private

                                        6
<PAGE>

sale shall not be deemed to be Bank's exclusive remedy, it being understood that
Bank may elect to dispose of the Collateral in any other commercially reasonable
manner, (e) Any notice of sale, disposition or other action by Bank required by
law and sent to Debtor at Debtor's address shown above, or at such other address
of Debtor as may from time to time be shown on the records of Bank, at least
five (5) days prior to such action, shall constitute reasonable notice to
Debtor. Notice shall be deemed given or sent when mailed postage prepaid to
Debtor's address as provided herein, (f) Bank shall be entitled to apply the
proceeds of any sale or other disposition of the Collateral, and the payments
received by Bank with respect to any of the Collateral, to the Obligations in
such order and manner as Bank may determine, (g) Collateral that is subject to
rapid declines in value and is customarily sold in recognized markets may be
disposed of by Bank in a recognized market for such collateral without providing
notice of sale.

REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.

MISCELLANEOUS. (a) Amendments and Waivers. No waivers, amendments or
modifications of any provision of this Security Agreement shall be valid unless
in writing and signed by an officer of Bank. No waiver by Bank of any Default
shall operate as a waiver of any other Default or of the same Default on a
future occasion. Neither the failure of, nor any delay by, Bank in exercising
any right, power or privilege granted pursuant to this Security Agreement shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any other right, power or privilege.
(b) Assignment. All rights of Bank hereunder are freely assignable, in whole or
in part, and shall inure to the benefit of and be enforceable by Bank, its
successors, assigns and affiliates. Debtor shall not assign its rights and
interest hereunder without the prior written consent of Bank, and any attempt by
Debtor to assign without Bank's prior written consent is null and void. Any
assignment shall not release Debtor from the Obligations. This Security
Agreement shall be binding upon the Debtor, and the heirs, personal
representatives, successors, and assigns of Debtor. (c) Applicable Law; Conflict
Between Documents. This Security Agreement shall be governed by and construed
under the law of the state in which the office of Bank as stated above is
located without regard to that state's conflict of laws principles. If any terms
of this Security Agreement conflict with the terms of any commitment letter or
loan proposal, the terms of this Security Agreement shall control. (d)
Jurisdiction. Debtor irrevocably agrees to non-exclusive personal jurisdiction i
the state in which the office of Bank as stated above is located. (e)
Severability. If any provision of this Security Agreement shall be prohibited by
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 Security Agreement. (f)
Notices. Any notices to Debtor shall be sufficiently given, if in writing and
mailed or delivered to the address of Debtor 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 the Debtor changes Debtor's address
at any time prior to the date this Note is paid in full, Debtor agrees to

                                        7
<PAGE>

promptly  give  written  notice  of said  change of  address  by  registered  or
certified mail, return receipt requested, all charges prepaid. (g) Captions. The
captions contained herein are inserted for convenience only and shall not affect
the  meaning or  interpretation  of this  Security  Agreement  or any  provision
hereof. The use of the plural shall also mean the singular,  and vice versa. (h)
Loan Documents.  The term "Loan Documents"  refers to all documents  executed in
connection with the Obligations and may include, without limitation,  commitment
letters,  loan  agreements,  guaranty  agreements,  other  security  agreements,
letters of credit, instruments, financing statements, mortgages, deeds of trust,
deeds  to  secure  debt,  and any  amendments  or  supplements  (excluding  swap
agreements as defined in 11 U.S.C. ss. 101). (i) Joint and Several Liability. If
more than one  person has signed  this  Security  Agreement,  such  parties  are
jointly and  severally  obligated  hereunder.  (j) Binding  Contract.  Debtor by
execution and Bank by acceptance  of this  Security  Agreement,  agree that each
party is bound by all terms and provisions of this Security Agreement.

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 Security Agreement and other
Loan Documents ("Disputes") between or among parties to this Security 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 Security Agreement.

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. All
applicable statutes of limitation shall apply to any Dispute. A judgement 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 Debtor 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 Debtor shall have the right to proceed

                                        8
<PAGE>

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 or 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.

Debtor 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, Debtor, on the day and year first written above,
has caused this Agreement to be executed under seal.

Optical Cable Corporation, a Virginia Corporation

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

Taxpayer Identification Number:  54-1237042

                                        9

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