THIRD AMENDED AND RESTATED MASTER LINE OF CREDIT NOTE
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        THIS  THIRD  AMENDED AND  RESTATED  MASTER LINE  OF  CREDIT  NOTE  (this
"Agreement")  is entered  into as of this 15th day of August  1997,  by COMARCO,
INC., a corporation  organized  under the laws of the State of  California  (the
"Borrower") in favor of NATIONSBANK,  N.A., a national banking association,  its
successors and assigns (the "Lender").

                                    RECITALS
                                    --------
         A. The  Lender  made a  secured  revolving  loan (the  "Master  Line of
Credit") to the Borrower in the maximum  principal  amount of $8,000,000,  which
Master Line of Credit is evidenced  by that  certain  Master Line of Credit Note
(the  "Original  Master Line of Credit Note") dated  September 26, 1994 from the
Borrower to the Lender in the maximum principal amount of $8,000,000, as amended
and restated in its entirety  pursuant to the provisions of that certain Amended
and Restated Master Line of Credit Note dated October 31, 1995 from the Borrower
in favor of the Lender in the maximum principal amount of $8,000,000 (the "First
Replacement Master Line of Credit Note"), and as further amended and restated in
its  entirety  pursuant to the  provisions  of that certain  Second  Amended and
Restated  Master Line of Credit  Note dated August 30, 1996 from the Borrower in
favor of the Lender in the maximum  principal  amount of $8,000,000 (the "Second
Replacement Master Line of Credit Note").
         B. The Master  Line of Credit is  governed  by the  provisions  of that
certain Loan Agreement of even date with the Original Master Line of Credit Note
by and among the  Borrower,  the  Guarantors  named  therein and the Lender,  as
amended by that certain First  Amendment to Loan Agreement  dated  September 26,
1995 by and among the Borrower, the Guarantors named therein and the Lender, and
as further  amended by that certain  Second  Amendment to Loan  Agreement  dated
August 30,  1996, by and among the Borrower,  the  guarantors  named therein and
the Lender (the same as may be amended from time to time is hereafter called the
"Loan  Agreement").  All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Loan Agreement.
         C. The Borrower has requested  that the Lender extend the maturity date
of the Master  Line of Credit  and the  Lender  has agreed to on the  condition,
among others, that the Borrower execute and deliver this Agreement.
         NOW,  THEREFORE,  in  consideration  of the premises and other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the Lender and the Borrower covenant and agree as follows:
         1. The  Recitals.  The parties  hereto  acknowledge  and agree that the
above  Recitals  are  true and  correct  in all  respects  and that the same are
incorporated herein and made a part hereof by reference.
         2. The Master Line of Credit Note. The Second  Replacement  Master Line
of Credit Note is hereby amended and restated in its entirety as follows:

                           MASTER LINE OF CREDIT NOTE
                           --------------------------
         $8,000,000                                             McLean, Virginia
                  FOR  VALUE  RECEIVED, COMARCO, INC.,  a corporation  organized
         under the laws of the State of  California (the "Borrower")promises  to
         pay to the order of NATIONSBANK, N.A., a national banking  association,
         its successors  and assigns (the "Lender"), the  principal sum of EIGHT
         MILLION DOLLARS ($8,000,000) (the "Principal  Sum"), or so much thereof
         as has been or may be advanced or  readvanced to or for the account  of
         the   Borrower,  together with interest thereon at the  rate  or  rates
         hereinafter provided, in accordance with the following:

                  1.  Interest.  Except as otherwise  expressly set forth below,
         amounts outstanding hereunder shall bear interest at the Prime Rate (as
         hereinafter  defined,  plus  the  Additional  Percentage   (hereinafter
         defined).

                 For purposes  hereof,  the "Prime Rate" means the  fluctuating
         prime rate of interest established and declared by the Lender from time
         to time. The Prime Rate does not necessarily  represent the lowest rate
         of interest charged by the Lender to its borrowers.

                  For purposes hereof,  the "Additional  Percentage"  shall mean
         the  percentage   applicable  to  this  Note  in  accordance  with  the
         following:

                           (i) If the Borrower's  ratio of Total  Liabilities to
         Tangible  Net  Worth  is less  than or  equal  to  1.50  to  1.00,  the
         Additional Percentage shall be zero percent (0%);

                           (ii) If the Borrower's ratio of Total  Liabilities to
         Tangible Net Worth is greater than 1.50 to 1.00, but less than or equal
         to 2.00 to 1.00, the Additional  Percentage shall be one quarter of one
         percent (.25%); and

                           (iii) If the Borrower's ratio of Total Liabilities to
         Tangible  Net  Worth  is  greater  than  2.00 to 1.00,  the  Additional
         Percentage shall be one half of one percent (.50%).

         The initial  Additional  Percentage  shall be  calculated  based on the
         Borrower's  consolidated  financial  statements  for the quarter ending
         April  30, 1997.   Thereafter,  the  applicable  Additional  Percentage
         shall be  calculated  and adjusted  quarterly,  based on the  quarterly
         financial statements required to be submitted to the Lender pursuant to
         paragraph  4(a) of Article  VI of the Loan  Agreement.  Such  quarterly
         changes  shall be  effective  commencing  five (5)  Banking  Days after
         submission  by the Borrower of the required  financial  statements;  it
         being understood,  however,  that in the event the quarterly  financial
         statements are not submitted when due, the Applicable  Percentage shall
         be one-half of one percent  (.50%) until such  financials are submitted
         as required,  at which time the Applicable  Percentage (for the balance
         of the quarterly period) shall be determined as set forth above.

         In  addition,  so long as no event  of  default  or any  act,  event or
         condition  which,  with  notice or the  passage of time or both,  would
         constitute an event of default under any Loan Document has occurred and
         is  continuing,  the  Borrower  shall  have the  right  to  elect  that
         specified amounts advanced under this Note, bear interest for specified
         periods  (each  being  herein  referred  to as a  "LIBOR  Rate  Funding
         Period"),  at the LIBOR Rate, plus the Additional LIBOR Rate Percentage
         (as  hereinafter  defined) in effect at the  commencement  of the LIBOR
         Rate Funding Period.  Election by the Borrower of a LIBOR Rate interest
         rate as herein  provided  shall be made in a writing  delivered  to the
         Lender  not less than  three (3)  Banking  Days prior to the date of on
         which the LIBOR Rate is to begin, and shall specify (1) the banking day
         on which the LIBOR Rate is to be effective and the period for which the
         LIBOR Rate shall be  applicable  (which shall be only 30, 60, 90 or 180
         days and the  expiration  of which may not be later than the  "Maturity
         Date");  and (2) the  principal  amount of this Note  which  shall bear
         interest at the LIBOR Rate,  plus the Applicable  LIBOR Rate Percentage
         (each being herein referred to as a "LIBOR Rate Funding Segment").  The
         Borrower may not revoke any such election  without the Lender's written
         consent.  Upon the  expiration  of an  applicable  LIBOR  Rate  Funding
         Period,  unless notice of LIBOR Rate  election  from the Borrower,  the
         rate of interest  applicable to any LIBOR Rate Funding  Segment  (after
         the expiration thereof) shall  automatically  convert at the end of the
         applicable  LIBOR Rate  Funding  Period,  to the Prime  Rate,  plus the
         Applicable Percentage.

         For purposes hereof,  the "LIBOR Rate" shall mean the per annum rate of
         interest, as determined by the Lender in its sole discretion,  at which
         deposits in United States Dollars in an amount  approximately  equal to
         the  amount  for  which  the  rate is to be fixed  and with  maturities
         comparable to the interest period  selected by the Borrower,  to be the
         averages  of rates per annum for 11:00  a.m.  (London,  time),  two (2)
         Banking Days prior to the first day of such LIBOR Rate  Funding  Period
         for delivery on the first such day of such LIBOR Rate  Funding  Period,
         in amounts comparable to the applicable LIBOR Rate Funding Segment,  as
         adjusted for Federal  Reserve  Board reserve  requirements  and similar
         assessments, if any, imposed upon the Lender.

         For purposes hereof,  the "Additional LIBOR Rate Percentage" shall mean
         the  percentage   applicable  to  this  Note  in  accordance  with  the
         following:

                  (i) If the Borrower's  ratio of Total  Liabilities to Tangible
         Net Worth is less than or equal to 1.50 to 1.00, the  Additional  LIBOR
         Rate Percentage shall be one and one half percent (1.50%);

                  (ii) If the Borrower's ratio of Total  Liabilities to Tangible
         Net Worth is greater than 1.50 to 1.00,  but less than or equal to 2.00
         to 1.00, the Additional  LIBOR Rate  Percentage  shall be one and three
         quarters of one percent (1.75%); and

                  (iii) If the Borrower's ratio of Total Liabilities to Tangible
         Net Worth is  greater  than 2.00 to 1.00,  the  Additional  LIBOR  Rate
         Percentage shall be two percent (2.00%).

         The initial  Additional LIBOR Rate Percentage shall be calculated based
         on the  Borrower's  consolidated  financial  statements for the quarter
         ending  April  30,  1997.  Thereafter, the applicable  Additional LIBOR
         Rate  Percentage  shall  be  calculated  and  adjusted quarterly, based
         on the quarterly  financial  statements required to be submitted to the
         Lender  pursuant to paragraph 4(a) of Article VI of the Loan Agreement.
         Such quarterly  changes shall be effective  commencing five (5) Banking
         Days  after  submission  by  the  Borrower  of the  required  financial
         statements;  it  being  understood,  however,  that  in the  event  the
         quarterly  financial   statements  are  not  submitted  when  due,  the
         Applicable  LIBOR Rate  Percentage  shall be two percent  (2.00%) until
         such financial statements are submitted as required,  at which time the
         Applicable  LIBOR Rate  Percentage  (for the  balance of the  quarterly
         period)  shall  be  determined  as set  forth  above.  It is  expressly
         understood,  however, that once the additional LIBOR Rate Percentage is
         determined  in  connection  with  any  particular  LIBOR  Rate  Funding
         Segment,  such Additional  LIBOR Rate Percentage shall remain in effect
         for the period for which the applicable LIBOR Rate election is made.

                  All  interest  payable  under the terms of this Note  shall be
         calculated on the basis of a 360-day year and the actual number of days
         elapsed.

                  2. Payments and Maturity.  The unpaid Principal Sum,  together
         with interest  thereon at the rate or rates  provided  above,  shall be
         payable as follows:

                           (a) Except as otherwise  provided in this Note,  this
         Note shall be payable in successive monthly installments of accrued and
         unpaid interest only, on the last day of each month commencing July 31,
         1997, and on the last day of each month thereafter to maturity;

                           (b) Unless  sooner paid,  the unpaid  Principal  Sum,
         together with all accrued and unpaid interest  thereon shall be due and
         payable in full on May 31, 1999.

                           The fact that the balance hereunder may be reduced to
         zero from time to time pursuant to the Loan  Agreement  will not affect
         the  continuing  validity of this Note or the Loan  Agreement,  and the
         balance may be increased to the Principal Sum after any such  reduction
         to zero.

                  3.  Default  Interest.  Upon  the  occurrence  of an  Event of
         Default (as hereinafter  defined),  the unpaid Principal Sum shall bear
         interest  thereafter  at a rate two percent (2%) per annum in excess of
         the then highest current rate or rates of interest hereunder until such
         Event of Default is cured.

                  4.  Late  Charges.  If the  Borrower  shall  fail to make  any
         payment  under the terms of this Note  within  five (5) days  after the
         date such  payment  is due,  the  Borrower  shall pay to the  Lender on
         demand a late charge equal to five percent (5%) of such payment.

                  5. Application and Place of Payments.  All payments  hereunder
         shall be applied  first to the payment of any late charges and costs of
         collections  then due  hereunder,  second to the payment of accrued and
         unpaid interest then due hereunder, and the remainder, if any, shall be
         applied to the unpaid  Principal  Sum.  Notwithstanding  the foregoing,
         accrued and unpaid interest on amounts  outstanding  hereunder  bearing
         interest on a LIBOR Rate basis shall be due and payable on the last day
         of the applicable  LIBOR Rate Funding Period (as herein defined) and if
         such LIBOR Rate Funding  Period is longer than ninety (90) days, on the
         ninetieth (90th) day of each LIBOR Rate Funding Period. All payments on
         account of this Note shall be paid in lawful money of the United States
         of  America  in  immediately  available  funds on or before  11:00 a.m.
         (Washington,  D.C. time) at its principal office in McLean, Virginia or
         at such  other  times and places as the Lender may at any time and from
         time to time designate in writing to the Borrower.

                  6.  Prepayment.  The  Borrower  may  prepay  amounts  accruing
         interest  based on the  Prime  Rate,  in whole or in part,  at any time
         without notice to the Lender without premium or penalty.  No prepayment
         of any other amounts  outstanding  hereunder shall be permitted without
         the prior written consent of the Lender.

                  7. Loan Agreement and Other Loan  Documents.  This Note is the
         "Master Line of Credit Note"  described in a Loan Agreement dated as of
         September  26,  1994 by and among the  Borrower  and  Comarco  Wireless
         Technologies,  Inc.,  International Business Services,  Inc., Decisions
         and Designs,  Inc.,  LCTI,  Inc. (the  "Original  Guarantors")  and the
         Lender,  as amended by that certain First  Amendment to Loan  Agreement
         dated  September  26,  1995,  by and among the  Borrower,  the Original
         Guarantors  and the Lender,  as further  amended by that certain Second
         Amendment to Loan  Agreement  dated  August 30,  1996, by and among the
         Borrower,  the Original Guarantors,  Manufacturing Training Technology,
         Center,  Inc.  ("MTTCI"),  Comarco  Staffing,  Inc.  (formerly known as
         CoSource  Solutions,  Inc.)  ("CSI")  and the  Lender,  and as  further
         amended by that certain Third Amendment to Loan Agreement dated of even
         date  herewith  by and among the  Borrower,  the  Original  Guarantors,
         MTTCI, CSI, Comarco Systems, Inc., Comarco Wireless International, Inc.
         and the Lender (as amended, modified, restated,  substituted,  extended
         and renewed at any time and from time to time,  the "Loan  Agreement").
         The indebtedness  evidenced by this Note is included within the meaning
         of the term  "Obligations" as defined in the Security  Agreement.  This
         Note amends and restates in its entirety  that certain  Second  Amended
         and Restated  Master Line of Credit Note dated  August 30,  1996 in the
         maximum  principal  amount of $8,000,000  from the Borrower in favor of
         the Lender.  The term "Loan  Documents" as used in this Note shall mean
         collectively this Note, the Third Amended and Restated Guidance Line of
         Credit Note,  any  Acquisition  Term Note,  the Loan  Agreement and any
         other instrument, agreement, or document previously, simultaneously, or
         hereafter executed and delivered by the Borrower, the Guarantors and/or
         any  other  person,  singularly  or  jointly  with  any  other  person,
         evidencing, securing, guaranteeing, or in connection with the Principal
         Sum, this Note and/or the Loan Agreement.  All  capitalized  terms used
         herein and not otherwise  defined shall have the meanings given to such
         terms in the Loan Agreement.

                  8. Events of Default. The occurrence of any one or more of the
         following events shall constitute an event of default (individually, an
         "Event of Default" and collectively, the "Events of Default") under the
         terms of this Note:

                           (a) The failure of the  Borrower to pay to the Lender
         within  five (5) days of when due any and all  amounts  payable  by the
         Borrower to the Lender under the terms of this Note; or

                           (b) The occurrence of an event of default (as defined
         therein)  under  the  terms and  conditions  of any of the  other  Loan
         Documents, including, but not limited to the Loan Agreement.

                  9. Remedies.  Upon the  occurrence of an Event of Default,  at
         the option of the Lender,  all amounts  payable by the  Borrower to the
         Lender  under the terms of this Note shall  immediately  become due and
         payable by the Borrower to the Lender  without  notice to the Borrower,
         or any other  person,  and the  Lender  shall  have all of the  rights,
         powers, and remedies available under the terms of this Note, any of the
         other  Loan  Documents  and all  applicable  laws.  The  Borrower,  the
         Guarantors and all endorsers, guarantors, and other parties who may now
         or in the future be primarily or secondarily  liable for the payment of
         the  indebtedness   evidenced  by  this  Note  hereby  severally  waive
         presentment,  protest and demand,  notice of protest,  notice of demand
         and of dishonor and  non-payment of this Note and expressly  agree that
         this Note or any payment  hereunder  may be extended  from time to time
         without in any way affecting  the  liability of the  Borrower,  and any
         guarantors and endorsers.

                  10.  Expenses.  The Borrower  promises to pay to the Lender on
         demand by the Lender all costs and  expenses  incurred by the Lender in
         connection with the collection and enforcement of this Note, including,
         without  limitation,  reasonable  attorneys'  fees and expenses and all
         court costs.

                  11.  Notices.  Any notice,  request,  or demand to or upon the
         Borrower or the Lender shall be deemed to have been  properly  given or
         made when delivered in accordance with the Loan Agreement.

                  12. Miscellaneous. Each right, power, and remedy of the Lender
         as provided for in this Note or any of the other Loan Documents, or now
         or hereafter  existing under any  applicable law or otherwise  shall be
         cumulative  and  concurrent  and shall be in  addition  to every  other
         right,  power,  or remedy provided for in this Note or any of the other
         Loan Documents or now or hereafter  existing under any applicable  law,
         and the  exercise or beginning of the exercise by the Lender of any one
         or more of such  rights,  powers,  or remedies  shall not  preclude the
         simultaneous  or later  exercise by the Lender of any or all such other
         rights,  powers,  or  remedies.  No  failure  or delay by the Lender to
         insist upon the strict performance of any term, condition, covenant, or
         agreement  of  this  Note or any of the  other  Loan  Documents,  or to
         exercise any right,  power, or remedy consequent upon a breach thereof,
         shall  constitute a waiver of any such term,  condition,  covenant,  or
         agreement or of any such breach, or preclude the Lender from exercising
         any such right, power, or remedy at a later time or times. By accepting
         payment  after the due date of any  amount  payable  under the terms of
         this Note,  the Lender shall not be deemed to waive the right either to
         require prompt payment when due of all other amounts  payable under the
         terms of this Note or to declare an Event of Default for the failure to
         effect  such  prompt  payment  of any such other  amount.  No course of
         dealing or conduct shall be effective to amend, modify, waive, release,
         or change any provisions of this Note.

                  13.  Partial  Invalidity.  In the event any  provision of this
         Note (or any  part of any  provision)  is held by a court of  competent
         jurisdiction to be invalid,  illegal,  or unenforceable in any respect,
         such invalidity,  illegality,  or unenforceability shall not affect any
         other  provision (or remaining part of the affected  provision) of this
         Note; but this Note shall be construed as if such invalid,  illegal, or
         unenforceable  provision  (or part  thereof) had not been  contained in
         this  Note,  but  only  to  the  extent  it  is  invalid,  illegal,  or
         unenforceable.

                  14.   Captions.   The  captions   herein  set  forth  are  for
         convenience only and shall not be deemed to define,  limit, or describe
         the scope or intent of this Note.

                  15. Applicable Law. The Borrower  acknowledges and agrees that
         this  Note  shall  be  governed  by the  laws  of the  Commonwealth  of
         Virginia,  even  though for the  convenience  and at the request of the
         Borrower, this Note may be executed elsewhere.

                  16. Arbitration. Any controversy or claim between or among the
         parties  hereto  including  but not limited to those  arising out of or
         relating  to  this  Agreement  or any of the  other  Loan  Documents  ,
         including any claim based on or arising from any alleged tort, shall be
         determined  by  binding  arbitration  in  accordance  with the  Federal
         Arbitration Act (or if not applicable,  the applicable  state law), the
         rules of practice  and  procedure  for the  arbitration  of  commercial
         disputes  of  Judicial   Arbitration  and  Mediation   Services,   Inc.
         (J.A.M.S.) and the "special rules" set forth below. In the event of any
         inconsistency,  the special  rules  shall  control.  Judgment  upon any
         arbitration award may be entered in any court having jurisdiction.  Any
         party to this  agreement  may bring an action,  including  a summary or
         expedited proceeding, to compel arbitration of any controversy or claim
         to which this Agreement  applies in any court having  jurisdiction over
         such action.

                           (a) Special Rules. The arbitration shall be conducted
         in the  city of the  Borrower's  domicile  at time of this  Agreement's
         execution and administered by J.A.M.S.  who will appoint an arbitrator;
         if  J.A.M.S.  is unable or legally  precluded  from  administering  the
         arbitration,  then the American Arbitration Association will serve. All
         arbitration hearings will be commenced within 90 days of the demand for
         arbitration;  further,  the  arbitrator  shall only,  upon a showing of
         cause,  be permitted to extend the  commencement of such hearing for up
         to an additional 60 days.

                           (b) Reservation of Rights.  Nothing in this Agreement
         shall  be  deemed  to (i)  limit  the  applicability  of any  otherwise
         applicable  statutes of limitation or repose and any waivers  contained
         in this  Note  or (ii) be a  waiver  by the  Lender  of the  protection
         afforded to it by 12 U.S.C. Section 91 or any substantially  equivalent
         state law; or (iii) limit the right of the Lender (a) to exercise  self
         help remedies such as (but not limited to) setoff,  or (b) to foreclose
         against any real or personal property collateral, or (c) to obtain from
         a court provisional or ancillary  remedies such as (but not limited to)
         injunctive relief, writ of possession or the appointment of a receiver.
         Lender  may  exercise  such self  help  rights,  foreclosure  upon such
         property,  or obtain such  provisional  or ancillary  remedies  before,
         during or after the  pendency  of any  arbitration  proceeding  brought
         pursuant to this Agreement.  Neither the exercise of self help remedies
         nor the  institution  or  maintenance  of an action for  foreclosure or
         provisional  or  ancillary  remedies  shall  constitute a waiver of the
         right of any party,  including  the  claimant  in any such  action,  to
         arbitrate the merits of the controversy or claim occasioning  resort to
         such remedies.

         3.  Governing  Law,  Etc.  This  Agreement  shall  be  governed  by and
construed in accordance with the laws of the  Commonwealth of Virginia and shall
be deemed to be an instrument under seal pursuant to said law. The headings used
in this  Agreement are for the  convenience of the parties and shall not be used
to interpret or construe the provisions hereof.

         4. Not A  Novation.  It is  expressly  understood  and agreed  that the
indebtedness  evidenced by the Second Replacement Master Line of Credit Note has
not been  extinguished or discharged  hereby.  The Borrower and the Lender agree
that the  execution  of this  Agreement  is not  intended and shall not cause or
result in a novation with regard to the Second Replacement Master Line of Credit
Note.
         WITNESS the signature and seal of the Borrower by its duly  auathorized
officer as of the day and year first above written.

WITNESS OR ATTEST:                        COMARCO, INC.


______________________________            By:_____________________________(SEAL)
                                             Name:
                                             Title: