FOURTH AMENDEMENT TO LOAN AGREEMENT
                      -----------------------------------
                           
         THIS FOURTH  AMENDMENT TO LOAN AGREEMENT (this  "Agreement")  made this
21st  day  of  August,  1998  by and  among  (i)  COMARCO,  INC.,  a  California
corporation  (the  "Borrower"),  (ii)  COMARCO  WIRELESS  TECHNOLOGIES,  INC., a
Delaware  corporation,  INTERNATIONAL  BUSINESS  SERVICES,  INC.,  a District of
Columbia  corporation,  DECISIONS AND DESIGNS,  INC., a Virginia corporation and
LCTI, INC., a Maryland corporation (collectively,  the "Original Guarantors" and
each an "Original Guarantor"),  (iii) COMARCO SYSTEMS, INC. ("Comarco Systems"),
a California  corporation,  COMARCO STAFFING,  INC.  (formerly known as CoSource
Solutions,  Inc.)  ("CSI"),  a California  corporation,  MANUFACTURING  TRAINING
TECHNOLOGY CENTER, INC. ("MTTCI"), a California corporation and COMARCO WIRELESS
INTERNATIONAL, INC. ("CWI"), a Delaware corporation (Comarco Systems, CSI, MTTCI
and CWI,  together with the Original  Guarantors,  being  individually  called a
"Guarantor"  and  collectively,  the  "Guarantors")  and  NATIONSBANK,  N.A.,  a
national banking association, its successors and assigns (the "Bank").

                                    RECITALS
                                    --------

         A. The Borrower, the Original Guarantors and the Bank have entered into
that  certain  Loan  Agreement  dated  September  26, 1994 (the  "Original  Loan
Agreement"),  which  Original  Loan  Agreement was amended by that certain First
Amendment to Loan Agreement dated September 26, 1995, by and among the Borrower,
the Original  Guarantors  and the Bank,  and which  Original Loan  Agreement was
further amended by that certain Second  Amendment to Loan Agreement dated August
30, 1996 by and among the Borrower, the Original Guarantors,  MTTCI, CSI and the
Bank.  Comarco  Systems and CWI were added as  guarantors  to the Original  Loan
Agreement pursuant to that certain Third Amendment to Loan Agreement dated as of
August 15, 1997 by and among the Borrower,  the  Guarantors  and the Bank.  (The
Original Loan Agreement,  as thereafter  amended from time to time, is hereafter
called the "Loan Agreement").
         B.  The  Borrower  and the  Guarantors  have  requested  that  the Bank
consolidate  the Master  Line of Credit and the  Guidance  Line of Credit into a
single  Master  Line of Credit in the  maximum  principal  amount of Ten Million
Dollars   ($10,000,000)  to  be  used  by  the  Borrower  for  working  capital,
acquisitions and the other purposes  described  herein,  and the Bank has agreed
subject to the terms of this Agreement.
         C. All  capitalized  terms used herein and not otherwise  defined shall
have the meanings given to such terms in the Loan Agreement.
         NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein  contained,  and other good and valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged,  the Borrower,  the Guarantors and
the Bank hereby agree as follows:

         1. Recitals.  The parties hereto  acknowledge  and agree that the above
Recitals are true and correct in all respect and that the same are  incorporated
herein and made a part hereof by reference.

         2.  Definitions.  The definitions of "Loans",  "Master Line of Credit",
"Master  Line of Credit  Expiration  Date" and  "Notes"in  Article I of the Loan
Agreement are amended and restated in their entirety as follows

                  "Loans"  shall  mean  the  Master  Line of  Credit  (including
         acquisition loans made pursuant thereto).

                  "Master  Line of Credit"  shall  mean the line of  credit/term
         loan facility  granted to the Borrower  pursuant to this Agreement,  in
         the maximum principal amount of Ten Million Dollars ($10,000,000) or so
         much thereof as shall be advanced or re-advanced  and from time to time
         remain  unpaid,  as evidenced by the Master Line of Credit Note and the
         Acquisition Term Notes.

                  "Master Line of Credit Commitment  Expiration Date" shall mean
July 30, 2000.

                  "Notes"  shall  mean the  Master  Line of Credit  Note and all
Acquisition Term Notes, collectively.  From and after the effective date hereof,
the Loan Agreement  shall be interpreted  and construed to delete all references
to the Guidance Line of Credit and the Guidance Line of Credit Note.

         3. Commitment. From and after the effective date hereof, paragraph 1 of
Article II of the Loan  Agreement is hereby amended and restated in its entirety
as follows:
                  1. Commitment. Subject to and upon the terms and conditions of
         this  Agreement,  the Bank  agrees  that it will  extend  credit to the
         Borrower  for the  purposes  and in the  amounts  set  forth  herein as
         follows:

                           (a) Master Line of Credit.  The Bank shall  extend to
         the Borrower  the Master Line of Credit,  which shall be in the maximum
         principal  amount  of Ten  Million  Dollars  ($10,000,000),  or so much
         thereof as may be advanced or  readvanced  and from time to time remain
         unpaid,  and bear interest and be payable in accordance  with the terms
         of (i) a Fourth Amended and Restated  Master Line of Credit Note in the
         maximum principal amount of Ten Million Dollars  ($10,000,000) dated as
         of July 31, 1998 (together with all renewals, extensions, modifications
         and  substitutions  thereof or  therefor,  the  "Master  Line of Credit
         Note");  and (ii) any term notes  (each,  together  with all  renewals,
         extensions,  modifications and substitutions thereof or therefor, being
         herein  referred  to  as  an  "Acquisition  Term  Note")  executed  and
         delivered by the Borrower in  connection  with advances made by the Ban
         for acquisitions as herein  provided.  It is understood and agreed that
         the maximum  principal amount of availability  under the Master Line of
         Credit shall be reduced by the maximum principal amount of availability
         of any  Acquisition  Term  Notes  issued  pursuant  to this  Agreement,
         simultaneously  and automatically upon issuance of any Acquisition Term
         Note(s).  The  forms  of  the  Master  Line  of  Credit  Note  and  the
         Acquisition Term Note to be utilized are attached hereto as Exhibit B-1
         and B-2, respectively.

         4. Use of Loan Proceeds. In addition to the permitted uses described in
paragraph 2(a) of Article II of the Loan  Agreement,  the proceeds of the Master
Line of Credit may be used in connection with Exchange Contracts (as hereinafter
defined)  and the  issuance of Letters of Credit in the  ordinary  course of the
Borrower's  business;  provided,  however,  in no  event  whatsoever  shall  the
aggregate  face  amount of all such  Letters of Credit  outstanding  at any time
exceed Two Million Dollars ($2,000,000).

         5.  Foreign  Exchange.  Subject  to the  terms of this  Agreement,  the
Borrower may enter into foreign  exchange  contracts (the "Exchange  Contracts")
not to exceed an aggregate amount of $750,000 (the "Contract  Limit"),  pursuant
to which the Bank shall sell to or purchase from the Borrower  foreign  currency
on a spot or future basis. The Borrower shall not request any Exchange Contracts
at any time it is out of compliance with any of the provisions of this Agreement
or the Loan  Agreement.  All  Exchange  Contracts  must  provide for delivery of
settlement  on or before June 30, 2000.  The amount  available  under the Master
Line of  Credit at any time  shall be  reduced  by the  following  amounts  (the
"Foreign Exchange Reserve") on any given day (the "Determination  Date"): (i) on
all  outstanding  Exchange  Contracts  on which  delivery  is to be  effected or
settlement allowed more than two (2) Business Days after the Determination Date,
ten percent  (10%) of the gross amount of the Exchange  Contracts;  plus (ii) on
all  outstanding  Exchange  Contracts  on which  delivery  is to be  effected or
settlement  allowed within two (2) Business Days after the  Determination  Date,
one hundred percent (100%) of the gross amount of the Exchange Contracts.

         The Bank may, in its  discretion,  terminate the Exchange  Contracts at
any time (a) that an Event of Default  occurs or (b) that there is no sufficient
availability  under the  Master  Line of Credit and the  Borrower  does not have
available funds in its bank account to satisfy the Foreign Exchange Reserve.  If
the Bank  terminates  the  Exchange  Contracts,  and without  limitation  of any
applicable  indemnities,  the Borrower  agrees to reimburse the Bank for any and
all  fees,  costs  and  expenses  relating  thereto  or  arising  in  connection
therewith.

         The  Borrower  shall not permit the total gross  amount of all Exchange
Contracts on which delivery is to be effected and settlement  allowed in any two
(2) Business Day period to be more than  $750,000 (the  "Settlement  Limit") nor
shall the Borrower  permit the total gross  amount of all Exchange  Contracts to
which  the  Borrower  is a party,  outstanding  at any one time,  to exceed  the
Contract  Limit.  Notwithstanding  the above,  however,  the amount which may be
settled in any two (2) Business Day period may be increased above the Settlement
Limit up to, but in no event to exceed,  the amount of the Contract  Limit under
either of the following circumstances:

                  (i) if there is sufficient  availability under the Master Line
of Credit in the amount of the Foreign Exchange Reserve as of each Determination
Date,  provided  that the Bank in advance  shall  reserve the full amount of the
Foreign Exchange Reserve against the Master Line of Credit; or
                  (ii) if there is  insufficient  availability  under the Master
Line of Credit,  as to  settlements  within  any two (2)  Business  Day  period,
provided  that the Bank,  in its sole  discretion,  may:  (A) verify  good funds
overseas prior to crediting the Borrower's deposit account with the Bank (in the
case of the Borrower's  sale of foreign  currency);  or (B) debit the Borrower's
deposit account with the Bank prior to delivering  foreign currency overseas (in
the case of the Borrower's purchase of foreign currency).

         In the  case  of the  Borrower's  purchase  of  foreign  currency,  the
Borrower in advance shall instruct the Bank upon settlement  either to treat the
settlement amount as an advance under the Master Line of Credit, or to debit the
Borrower's account for the amount settled.

         The  Borrower  shall  execute  all  standard  from   applications   and
agreements of the Bank in connection  with the Exchange  Contracts and,  without
limiting any of the terms of such applications and agreements, the Borrower will
pay all standard  fees and charges of the Bank in  connection  with the Exchange
Contracts.

         Without  limiting any of the other terms of this  Agreement or any such
standard form  applications  and agreement of the Bank,  the Borrower  agrees to
indemnify  the Bank and hold it  harmless,  from and against any and all claims,
debts,   liabilities,   demands,   obligations,   actions,  costs  and  expenses
(including,  without  limitation,  attorneys'  fees  of  counsel  of the  Bank's
choice),  of every nature and description  which it may sustain or incur,  based
upon, arising out of, or in any way relating to any of the Exchange Contracts or
any transactions relating thereto or contemplated thereby.

         6. Letters of Credit.  Notwithstanding anything set forth in Article II
of the Loan  Agreement to the  contrary,  each Letter of Credit issued under the
Loan  Agreement  shall be issued under the Master Line of Credit.  No Letters of
Credit  shall be  required to be issued  after (or which  provide for a maturity
date after) the Master Line of Credit  Maturity Date. In the event that the Bank
issues any Letter(s) of Credit,  the maximum  amount of the credit  available in
connection with the Master Line of Credit shall be reduced by the face amount of
each Letter of Credit (so long as such Letter of Credit remains outstanding) and
any amounts drawn under any Letter of Credit shall be deemed  advanced under the
Master Line of Credit and shall bear interest and be payable in accordance  with
the terms of the  Master  Line of Credit  Note and shall be  secured to the same
extent and in the same manner as all other sums  advanced  under the Master Line
of Credit Note.  In addition,  the Borrower  agrees to pay the fees set forth in
paragraph  5(b) of Article II, of the Loan  Agreement  for each Letter of Credit
now or hereafter issued by the Bank.

         7.  Security.  As of the  effective  date  hereof,  the  provisions  of
paragraph 2 of Article  III, of the Loan  Agreement  are amended to provide that
the Loans shall be  unsecured,  unless and until the  Borrower's  ratio of Total
Liabilities  to Net Worth (as  calculated  in  accordance  with  paragraph  3 of
Article VII thereof) exceeds 2.0 to 1.0.

         8.  Financial  Covenants.  From and after the  effective  date  hereof,
paragraph 2 of Article VII of the Loan  Agreement is hereby amended and restated
in its entirety as follows:
                  2.  Tangible  Net  Worth.  The  Borrower  shall  at all  times
         maintain  Tangible Net Wroth of not less than Fifteen  Million  Dollars
         ($15,000,000).  For purposes of this Article VII,  "Tangible Net Worth"
         shall mean all capital  stock,  paid in capital and  retained  earnings
         less  all  treasury  stock,  amounts  due  from  officers,   directors,
         stockholders and members of their immediate families,  amounts due from
         affiliates,  investments  in  non-marketable  securities  or affiliated
         companies,  leasehold improvements,  goodwill,  non-compete agreements,
         capitalized  organization and development costs,  capitalized expenses,
         loan costs, patents, trademarks,  copyrights,  franchises, licenses and
         other intangible assets.

From and after the  effective  date hereof,  paragraphs 1 and 4 of Article VI of
the Loan  Agreement are deleted in their entirety.

         9. Year 2000.  The Borrower and each  Guarantor  hereby  represents and
warrants to the Bank that the Borrower and each Guarantor have:

                   (i) begun analyzing its operations and its  subsidiaries  and
affiliates  that could be  adversely  affected  by  failure to become  Year 2000
compliant (that is, that computer  applications,  imbedded  microchips and other
systems  will be able to  perform  date-sensitive  functions  prior to and after
December 31, 1999) and;
                  (ii)  developed a plan for becoming  Year 2000  compliant in a
timely  manner,  the  implementation  of which is on  schedule  in all  material
respects.  The  Borrower and each  Guarantor  reasonably  believes  that it will
become Year 2000 compliant for its operations and those of its  subsidiaries and
affiliates  on a timely basis except to the extent that a failure to do so could
not reasonably be expected to have a material  adverse effect upon the financial
condition  of  Borrower  or any  Guarantor.  The  Borrower  and  each  Guarantor
reasonably  believes  any  suppliers  and  vendors  that  are  material  to  the
operations  of  Borrower,  any  Guarantor  or  any  of  their  subsidiaries  and
affiliates  will be Year 2000  compliant  for their  own  computer  applications
except to the extent that a failure to do so could not reasonably be expected to
have a material  adverse effect upon the financial  condition of the Borrower or
any of the  Guarantors.  The  Borrower  will  promptly  notify Bank in the event
Borrower or any  Guarantor  determines  that any computer  application  which is
material  to  the  operations  of  Borrower  any  Guarantor,  or  any  of  their
subsidiaries  or any of their  material  vendors or suppliers  will not be fully
Year 2000  compliant on a timely  basis,  except to the extent that such failure
could not  reasonably  be  expected to have a material  adverse  effect upon the
financial condition of the Borrower or any of the Guarantors.

         10. Conditions Precedent.  This Agreement shall become effective on the
date  the  Bank  receives  the  following  documents,  each of  which  shall  be
satisfactory in form and substance to the Bank:
                  (a) The  Fourth  Replacement  Master  Line of Credit  Note (as
hereinafter defined) in the form of Exhibit B-1 attached hereto and incorporated
herein by reference,  payable to the order of the Bank in the maximum  principal
amount of Ten Million Dollars ($10,000,000);
                  (b) An  Amended  and  Restated  Continuing  and  Unconditional
Guaranty  in the form of Exhibit D attached  hereto and  incorporated  herein by
reference, issued and delivered by the Guarantors in favor of the Bank;
                   (c) Proof that the  Borrower  has paid all costs and expenses
to the Bank in connection with this Agreement,  including but not limited to all
the Bank's attorneys fees; and
                  (d) Such other information,  instruments, opinions, documents,
certificates and reports as the Bank may deem necessary.

         11. The Master Line of Credit Note. From and after the date hereto, all
references in the Loan  Agreement to the "Master Line of Credit Note" shall mean
that certain Fourth Amended and Restated Master Line of Credit Note of even date
herewith (the "Fourth Replacement Master Line of Credit Note") from the Borrower
in favor of the Bank in the  maximum  principal  amount of Ten  Million  Dollars
($10,000,000) in the form of Exhibit B-1 attached hereto. The Fourth Replacement
Master Line of Credit Note, consolidates,  increases, amends and restates in its
entirety  that certain  Third  Amended and  Restated  Master Line of Credit Note
dated August 15, 1997 (the "Third  Replacement Master Line of Credit Note") from
the  Borrower  in favor of the Bank in the  maximum  principal  amount  of Eight
Million  Dollars  ($8,000,000)  and that  certain  Third  Amended  and  Restated
Guidance Line of Credit Note  ("Restated  Guidance  Note") dated August 15, 1997
from the Borrower in favor of the Bank in the maximum  principal  amount of Five
Million Dollars ($5,000,000). The Borrower and the Bank agree that the execution
of this  Agreement  is not  intended and shall not cause or result in a novation
with regard to the Third Replacement  Master Line of Credit Note or the Restated
Guidance  Note.  The Fourth  Replacement  Master  Line of Credit  Note shall not
operate as a  novation  of any of the sums due or owing  under the Third  Master
Line of Credit Note or the  Restated  Guidance  Note or nullify,  discharge,  or
release any sums due or owing under the Third  Master Line of Credit Note or the
Restated Guidance Note or the continuing contractual relationship of the parties
hereto in accordance with the provisions of this Agreement.

         12. Rights and Remedies of the Bank.  From and after the effective date
hereof, the following is added to immediately after paragraph 2(e) of Article IX
of the Loan Agreement as paragraph 2 (f):
                  (f)  Liquidate  any  Exchange  Contracts  not yet  settled and
         demand that the Borrower  immediately  deposit cash with the Bank in an
         amount  sufficient  to cover  any  losses  incurred  by the Bank due to
         liquidation  of the Exchange  Contracts at the then  prevailing  market
         price.

         13. Replacement  Exhibit.  Exhibit "B-1" to the Loan Agreement is being
replaced in its entirety with Exhibit "B-1" attached hereto.  The Borrower shall
execute and deliver to the Bank on the date hereof the Fourth Replacement Master
Line of Credit  Note in  substitution  for and not  satisfaction  of,  the Third
Replacement  Master Line of Credit Note and the Third Replacement  Guidance Line
of Credit Note,  and the Fourth  Replacement  Master Note shall be the "Note" or
"Notes" for all purposes of the Loan Documents.

         14.  Counterparts.  This  Agreement  may be  executed  in any number of
duplicate  originals  or  counterparts,  each of  which  duplicate  original  or
counterpart  shall be deemed to be an  original  and all  taken  together  shall
constitute one and the same instrument.

         15. Loan  Documents;  Governing  Law; Etc. This Agreement is one of the
Loan Documents defined in the Loan Agreement and shall be governed and construed
in accordance with the laws of the  Commonwealth  of Virginia.  The headings and
captions in this  Agreement are for the  convenience of the parties only and are
not a part of this Agreement.

         16. Acknowledgments.  The Borrower and the Guarantors hereby confirm to
the Bank the  enforceability  and  validity  of each of the Loan  Documents.  In
addition,  the Borrower and each of the Guarantors hereby agree to the execution
and  delivery  of this  Agreement  and the terms and  provisions,  covenants  or
agreements contained in this Agreement shall not in any manner release,  impair,
lessen,  modify,  waive or otherwise  limit the liability and obligations of the
Borrower or any of the Guarantors  under the terms of any of the Loan Documents,
except as otherwise  specifically set forth in this Agreement.  The Borrower and
each Guarantor  hereby issue,  remake,  ratify and confirm the  representations,
warranties and covenants contained in the Loan Documents.
         17.  Modifications.  This Agreement may not be  supplemented,  changed,
waived,  discharged,   terminated,   modified  or  amended,  except  by  written
instrument executed by the parties.

                       [SIGNATURES ARE ON FOLLOWING PAGES]


<PAGE>


         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed and delivered under seal by their duly authorized  representative as of
the date and year first written above.

                                  THE BORROWER:
                                  ------------

WITNESS/ATTEST:             COMARCO, INC.


__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:

                            THE GUARANTORS:

WITNESS/ATTEST:             COMARCO WIRELESS TECHNOLOGIES, INC., a corporation
                            organized under the laws of the State of Delaware


__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:

WITNESS/ATTEST:             INTERNATIONAL BUSINESS SERVICES, INC., a corporation
                            organized under the laws of the District of Columbia


__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:

WITNESS/ATTEST:             DECISIONS AND DESIGNS, INC., a corporation organized
                            under the laws of the Commonwealth of Virginia


__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:


WITNESS/ATTEST:             LCTI,  INC., a corporation organized  under the laws
                            of the State of Maryland

__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:

WITNESS/ATTEST:             MANUFACTURING  TRAINING  TECHNOLOGY  CENTER, INC., a
                            corporation organized under the laws of the State of
                            California

__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:

WITNESS/ATTEST:             COMARCO SYSTEMS, INC., a corporation organized under
                            the laws of the State of California


__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:


WITNESS/ATTEST:             COMARCO  STAFFING,  INC.,  a  corporation  organized
                            under the laws of the State of California


__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:

WITNESS/ATTEST:             COMARCO WIRELESS INTERNATIONAL, INC., a  corporation
                            organized under the laws of the State of Delaware

__________________________  By:_________________________________(SEAL)
                               Name:
                               Title:



                            THE BANK:
                            ---------

WITNESS:                    NATIONSBANK, N.A.

________________________    By:_________________________________(SEAL)
                               Elaine T. Eaton
                               Senior Vice President