<PAGE>

                                      WARRANT

                            TO PURCHASE COMMON STOCK OF

                                  TROY GROUP, INC.
                          (SUCCESSOR TO TROY SYSTEMS INC.)

     This is to certify that Broadland Capital Partners or registered assigns,
is entitled to purchase from Troy Group, Inc., a Delaware corporation, up to
100,000 Stock Units, in whole or in part, at the purchase prices per Stock Unit
and, all on the terms and conditions and pursuant to the provisions hereinafter
provided, and pursuant to the provisions of a certain Consulting Agreement dated
October 1, 1997 and as amended as of December 30, 1998, June 8, 1999, October
11, 1999 and November 1, 1999, between Broadland Capital Partners ("Broadland")
and Troy Group, Inc., successor to Troy Systems Inc., a California corporation
(the "Consulting Agreement").

     This Warrant replaces a warrant to purchase 250,000 Stock Units of which
50,000 Stock Units were exercised on November 3, 1999 and 100,000 Stock Units
were exercised on October 11, 1999.  This Warrant is granted pursuant to the
Consulting Agreement in order to incentivise Broadland Capital Partners, through
its principal, Morgan Payne, to significantly assist the Company to achieve
three important corporate goals (collectively hereinafter referred to as the
"Goals") as follows:

     (a)  (this First Goal is deleted);

     (b)  (this Second Goal is deleted); and

     (c)  from September 1998 and until November 30, 2001, to acquire entities
          having an aggregate annual revenue of Fifteen Million Dollars
          ($15,000,000) (the "Third Goal").

     The nature of this Warrant is as follows:

          (i)   The Warrant shall be to purchase shares of the Company's common
                stock at a price of $3.50 per share (the "Warrant Price").

          (ii)  NUMBER OF STOCK UNITS SUBJECT TO WARRANT; This Warrant grants to
                Broadland the right to purchase up to 100,000 shares of the
                Company's common stock at the Warrant Price.

          (iii) The Warrant shall vest as follows:

     Warrants to Purchase 100,000 shares of Troy Common Stock shall be vested
     and exercisable as follows:


<TABLE>
<CAPTION>
     WARRANTS                  EXERCISE PRICE             VESTING
     --------                  --------------             -------
     <S>                       <C>                        <C>
     50,000                    $3.50/Share                At Closing of major or strategic acquisition
     25,000                    $3.50/Share                At Closing of minor or strategic acquisition
     10,000                    $3.50/Share                At Closing of minor acquisition
     15,000                    $3.50/Share                Other acquisition projects -- as negotiated
</TABLE>

          (iv)  The Warrants must be exercised within five (5) years after they
                vest or,

                                      1

<PAGE>


                thereafter, they shall expire and become null and void.

          (v)   At the time that a Change in Control of the Company occurs, this
                Warrant will vest immediately with respect to any unvested
                portion at that time and will remain exercisable with respect to
                such portion until five (5) years after the effective date of
                any such Change in Control.  In addition, if a Change in Control
                of the Company occurs, the Board of Directors, in its sole
                discretion and without the consent of Broadland, may determine
                that Broadland will receive, with respect to some or all of the
                unexercised Stock Units, as of the effective date of any such
                Change in Control of the Company, cash in an amount equal to the
                excess of the Fair Market Value of such Stock Units immediately
                prior to the effective date of such Change in Control of the
                Company over the exercise price per share of this Warrant.
                Notwithstanding the foregoing, no such vesting will occur in the
                event of a Change of Control if such vesting would adversely
                impact the availability of "pooling of interests" accounting
                treatment.

                                     DEFINITIONS

The terms defined in this Section, whenever used in this Warrant, shall, unless
the context otherwise requires, have the respective meanings hereinafter
specified.

     "Change in Control" of the Company will mean any of the following:

     (a)  the sale, lease, exchange or other transfer, directly or indirectly,
          of substantially all of the assets of the Company (in one transaction
          or in a series of related transactions) to a person or entity that is
          not controlled by the Company;

     (b)  the approval by the stockholders of the Company of any plan or
          proposal for the liquidation or dissolution of the Company;

     (c)  any person becomes after the effective date of the Plan the
          "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
          directly or indirectly, of (i) 20% or more, but less than 50%, of the
          combined voting power of the Company's outstanding securities
          ordinarily having the right to vote at elections of directors, unless
          the transaction resulting in such ownership has been approved in
          advance by the Continuity Directors, or (ii) 50% or more of the
          combined voting power of the Company's outstanding securities
          ordinarily having the right to vote at elections of directors
          (regardless of any approval by the Continuity Directors);

     (d)  a merger or consolidation to which the Company is a party if the
          stockholders of the Company immediately prior to effective date of
          such merger or consolidation have "beneficial ownership" (as defined
          in Rule 13d-3 under the Exchange Act), immediately following the
          effective date of such merger or consolidation, of securities of the
          surviving corporation representing (i) less than 80%, but more than
          50%, of the combined voting power of the surviving corporation's then
          outstanding securities ordinarily having the right to vote at
          elections of directors, unless such merger or consolidation has been
          approved in advance by the Continuity Directors, or (ii) 50% or less
          of the combined voting power of the surviving corporation's then
          outstanding securities ordinarily having the right to vote at
          elections of directors (regardless of any

                                      2

<PAGE>

          approval by the Continuity Directors); or

     (e)  the Continuity Directors cease for any reason to constitute at least a
          majority of the Board.

     Notwithstanding anything to the contrary, the transfer by a Dirk
Stockholder (as defined below) of shares of Common Stock or rights to acquire
shares of Common Stock to the following persons or entities, without
consideration in money or money's worth (such as by gift, bequest or devise),
and the exercise or conversion of any such transferred rights to acquire shares,
will not, in and of itself, be deemed to constitute a Change in Control for
purposes of this Warrant:  (i) transfers to any spouse, child, heir, legate or
successor of such Dirk Stockholder; (ii) transfers to any trust created for the
benefit of such Dirk Stockholder or any such spouse, child, heir, legate or
successor, and amendments of or distributions from any such trust; or (iii)
transfers to any other Dirk Stockholder.  A "Dirk Stockholder" will mean Patrick
J. Dirk, Mary J. Dirk, Brian P. Dirk, Suzanne M. Anderson, Kristine L. Gigerich,
Lorrie A. Brown, The Dirk 1997 Education Trust, The Dirk Family Trust UTD March
6, 1990 or The Dirk 1998 Alaska Trust.

     "Commission" shall mean the Securities and Exchange Commission, or any
     federal agency then administering the Securities Act.

     "Common Stock" shall mean the Company's authorized Common Stock as
     constituted on the date the Company first becomes a publicly owned entity,
     and any stock into which such Common Stock may thereafter be changed, and
     shall also include stock of the Company of any other class, which is not
     preferred as to dividends or assets over any other class of stock of the
     Company and which is not subject to redemption, issued to the holders of
     shares of Common Stock upon any reclassification thereof.

     "Company" shall mean Troy Group, Inc., a Delaware corporation and successor
     to Troy Systems Inc., a California corporation, and any successor
     corporation by merger, consolidation or otherwise.

     "Consultant" shall mean Broadland Capital Partners.

     "Consulting Agreement" shall mean the Consulting Agreement dated October 1,
     1997 between the Company and the Consultant pursuant to which this Warrant
     has been issued.

     "Continuity Directors" shall mean any individuals who are members of the
     Board and any individual who subsequently becomes a member of the Board
     whose election, or nomination for election by the Company's stockholders,
     was approved by a vote of at least a majority of the Continuity Directors
     (either by specific vote or by approval of the Company's proxy statement in
     which such individual is named as a nominee for director without objection
     to such nomination).

     "Current Warrant Price" per share of Common Stock, for the purpose of any
     provision of this Warrant at the date herein specified, shall mean the
     amount equal to the quotient resulting from dividing the purchase price per
     Stock Unit as provided above by the number of shares (including any
     fractional share) of Common Stock comprising a Stock Unit on such date.

     "Fair Market Value" means, with respect to the Company's Common Stock, as
     of any date:

                                      3

<PAGE>

     (a)  if the Common Stock is listed or admitted to unlisted trading
          privileges on any national securities exchange or is not so listed or
          admitted but transactions in the Common Stock are reported on the
          NASDAQ National Market System, the reported closing price of the
          Common Stock on such exchange or by the NASDAQ National Market System
          as of such date (or, if no shares were traded on such day, as of the
          next preceding day on which there was such a trade); or

     (b)  if the Common Stock is not so listed or admitted to unlisted trading
          privileges or reported on the NASDAQ National Market System, and bid
          and asked prices therefor in the over-the-counter market are reported
          by NASDAQ or National Quotation Bureau, Inc. (or any comparable
          reporting service), the mean of the closing bid and asked prices as of
          such date, as so reported by NASDAQ, or, if not so reported thereon,
          as reported by National Quotation Bureau, Inc. (or such comparable
          reporting service); or

     (c)  if the Common Stock is not so listed or admitted to unlisted trading
          privileges, or reported on the NASDAQ National Market System, and such
          bid and asked prices are not so reported by NASDAQ or National
          Quotation Bureau, Inc. (or any comparable reporting service), such
          price as the Company's Board of Directors determines in good faith in
          the exercise of its reasonable discretion.

     "Outstanding" when used with reference to Common Stock shall mean, at any
     date as of which the number of shares thereof is to be determined, all
     issued shares of Common Stock, except shares then owned or held by or for
     the account of the Company.

     "Person" shall mean an individual, a corporation, a partnership, a trust,
     an unincorporated organization or a government or any agency or political
     subdivision thereof.

     "Securities Act" shall mean the Securities Act of 1933, or any similar
     federal statute, and the rules and regulations of the Commission
     thereunder, all as the same shall be in effect at the time.

     "Stock Unit" shall mean one share of Common Stock as such stock was
     constituted on the date that the Company shall first become a publicly
     owned entity, and thereafter shall mean such number of shares (including
     any fractional shares) of Common Stock as shall result from the adjustments
     specified in Section III hereof.

     "Warrants" shall mean this Warrant dated October 1, 1997, originally issued
     by the Company, and all Warrants issued upon transfer, division or
     combination of, or in substitution for, any thereof. All Warrants shall at
     all times be identical as to terms and conditions and date, and any Warrant
     issued in exchange or substitution for any other Warrant shall bear the
     same expiration date as such other Warrant.

     "Warrant Price" shall mean $3.50 per share or, with respect to the portion
     of this Warrant that vests upon completion of the IPO, the IPO price.

     "Warrant Stock" shall mean the shares of Common Stock purchasable by the
     holders of the Warrants upon the exercise thereof.

                                      4

<PAGE>

                                     SECTION I.
                                EXERCISE OF WARRANT

A.   MANNER OF EXERCISE.  The rights represented by this Warrant may be
     exercised by the holder, in whole or in part (but not as to a fractional
     share), by written notice of exercise delivered to the Company accompanied
     by the surrender of this Warrant (properly endorsed if required) at the
     principal office of the Company and upon payment to it, by cash, certified
     check or bank draft, of the Warrant Price for such shares. In addition, the
     holder may elect to pay the full purchase price by receiving a number of
     shares of Common Stock computed using the following formula:

                                     X=Y (A-B)
                                     ----------
                                         A

     Where:     X=  the number of shares of Common Stock to be issued to
                    the holder.

                Y=  the number of shares of Common Stock as to which this
                    Warrant is being exercised.

                A=  the Fair Market Value of one share of Common Stock.

                B=  Warrant Price.

     The Company agrees that the Warrant Stock so purchased shall be and are
     deemed to be issued as of the close of business on the date on which this
     Warrant shall have been surrendered and payment made for such Warrant Stock
     as aforesaid. Certificates for the shares of the Warrant Stock so purchased
     shall be delivered to the holder within 15 days after the rights
     represented by this Warrant shall have been so exercised, and, unless this
     Warrant has expired, a new Warrant representing the number of Warrant
     Stock, if any, with respect to which this Warrant has not been exercised
     shall also be delivered to the holder within such time.

B.   PAYMENT OF TAXES, ETC.  All shares of Warrant Stock issuable upon the
     exercise of this Warrant shall be validly issued, fully paid and
     non--assessable, and the Company shall pay all expenses in connection with,
     and all taxes and other governmental charges that may be imposed in respect
     of, the issue or delivery thereof. The Company shall not be required,
     however, to pay any tax or other charge imposed in connection with any
     transfer involved in the issue of any certificate for shares of Warrant
     Stock in any name other than that of the registered holder of this Warrant,
     and in such case the Company shall not be required to issue or deliver any
     stock certificate until such tax or other charge has been paid or it has
     been established to the Company's satisfaction that no such tax or other
     charge is due.

C.   FRACTIONAL SHARES. The Company shall not be required to issue a fractional
     share of stock upon any exercise of any Warrant. As to any final fraction
     of a share which the holder of one or more Warrants, the rights under which
     are exercised in the same transaction, would otherwise be entitled to
     purchase upon such exercise, the Company shall pay a cash adjustment in
     respect of such final fraction in an amount equal to the same fraction of
     the Current Warrant Price per share of Common Stock on the business day
     which next precedes the day of exercise.

                                      5

<PAGE>

                                    SECTION II.
                         TRANSFER, DIVISION AND COMBINATION

     This Warrant and all rights hereunder are transferable, in whole or in
part, on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at its office in the City of Santa Ana, State of
California, or elsewhere in the State of California maintained for the purpose
pursuant to Section VIII, together with a written assignment of this Warrant
duly executed by the holder hereof or his agent or attorney and payment of funds
sufficient to pay any stock transfer taxes payable upon the making of such
transfer. Upon such surrender and payment the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in such instrument of assignment, and this Warrant shall
promptly be canceled. If and when this Warrant is assigned in blank, the Company
may (but shall not be obliged to) treat the bearer hereof as the absolute owner
of this Warrant for all purposes and the Company shall not be affected by any
notice to the contrary. A Warrant may be exercised by a new holder for the
purchase of shares of Common Stock without having a new Warrant issued.

     This Warrant may be divided or combined with other Warrants upon
presentation hereof at the principal executive office of the Company, or at the
aforesaid office or agency of the Company together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder hereof or his agent or attorney. Subject to compliance with
the preceding paragraph as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

     The Company shall pay all expenses, taxes (other than stock transfer taxes)
and other charges payable in connection with the preparation, issue and delivery
of Warrants under this Section.

     The Company agrees to maintain, at its aforesaid office, books for the
registration and transfer of the Warrants.

                                    SECTION III.
                     ADJUSTMENT OF STOCK UNIT OR EXERCISE PRICE

     Adjustments contemplated by this Section III will only be made with respect
to such events occurring after the closing of the IPO or the merger, as the case
may be. The number of shares of Common Stock comprising a Stock Unit of Warrant
Stock, or the price at which a Stock Unit of Warrant Stock may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time as
set forth in this Section.

A.   STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.  In case at any time or
     from time to time the Company shall

     (1)  take a record of the holders of its Common Stock for the purpose of
          entitling them to receive a dividend payable in, or other distribution
          of, Common Stock, or

     (2)  subdivide its outstanding shares of Common Stock into a larger number
          of shares of Common Stock, or

                                      6

<PAGE>

     (3)  combine its outstanding shares of Common Stock into a smaller number
          of shares of Common Stock

     then the number of shares of Common Stock comprising a Stock Unit of
     Warrant Stock immediately after the happening of any such event shall be
     adjusted so as to consist of the number of shares of Common Stock which a
     record holder of the number of shares Common Stock comprising a Stock Unit
     immediately prior to the happening of such event would own or be entitled
     to receive after the happening of such event.

B.   OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
     following provisions shall be applicable to the making of adjustments of
     the number of shares of Common Stock comprising a Stock Unit herein before
     provided for in this Section:

     (1)  TREASURY STOCK. The sale or other disposition of any issued shares of
          Common Stock owned or held by or for the account of the Company shall
          not be deemed an issuance thereof for any purpose of this Section
          except in the case of a dividend payable in, or other distribution of,
          such shares to holders of Common Stock of the Company, in which case
          an adjustment shall be made under Subsection A of this Section.

     (2)  FRACTIONAL INTERESTS. In computing adjustments under this Section,
          fractional interests in Common Stock shall be taken into account to
          the nearest one-thousandth of a share.

C.   MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS. Subject to the Board of
     Director's right to pay cash to the holder hereof upon a Change in Control,
     in case the Company shall merge or consolidate into another corporation, or
     shall sell, transfer or otherwise dispose of all or substantially all of
     its property, assets or business to another corporation and pursuant to the
     terms of such merger, consolidation or disposition of assets, shares of
     common stock of the successor or acquiring corporation are to be received
     by or distributed to the holders of Common Stock of the Company, then each
     holder of a Warrant shall have the right thereafter to receive, upon
     exercise of such Warrant, Stock Units each comprising the number of shares
     of common stock of the successor or acquiring corporation receivable upon
     or as a result of such merger, consolidation or disposition of assets by a
     holder of the number of shares of Common Stock comprising a Stock Unit
     immediately prior to such event. If pursuant to the terms of such merger,
     consolidation or disposition of assets, any cash, shares of stock or other
     securities or property of any nature whatsoever (including warrants or
     other subscription or purchase rights) are to be received by or distributed
     to the holders of Common Stock of the Company in addition to common stock
     of the successor or acquiring corporation, there shall be a reduction of
     the purchase price per Stock Unit equal to the amount applicable to the
     number of shares of Common Stock then comprising a Stock Unit of any such
     cash and of the fair value (as determined in good faith by the Board of
     Directors of the Company) of any and all such shares of stock or other
     securities or property to be received by or distributed to the holders of
     Common Stock of the Company.

     In case of the continuance of this Warrant following any such merger,
     consolidation or disposition of assets, the successor or acquiring
     corporation shall expressly assume the due and punctual observance and
     performance of each and every covenant and condition of this Warrant to be
     performed and observed by the Company and all of the obligations and
     liabilities hereunder, subject to such modifications as may be deemed
     appropriate (as determined by

                                      7


<PAGE>

     resolution of the Board of Directors of the Company) in order to provide
     for adjustments of Stock Units which shall be as nearly equivalent as
     practicable to the adjustments provided for in this Section. For the
     purposes of this Section "common stock of the successor or acquiring
     corporation" shall include stock of such corporation of any class,
     which is not preferred as to dividends or assets over any other class
     of stock of such corporation and which is not subject to redemption,
     and shall also include any evidences of indebtedness, shares of stock or
     other securities which are convertible into or exchangeable for any such
     stock, either immediately or upon the arrival of a specified date or the
     happening of a specified event, and any warrants or other rights to
     subscribe for or purchase any such stock. The foregoing provisions of this
     Subsection shall similarly apply to successive mergers, consolidations or
     dispositions of assets.

D.   OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from time to
     time the Company shall take any action affecting its Common Stock, other
     than an action described in any of the foregoing Subsections A to C,
     inclusive, of this Section, then, unless in the opinion of the Board of
     Directors of the Company such action will not have a materially adverse
     effect upon the rights of the holders of the Warrants, the number of shares
     of Common Stock or other stock comprising a Stock Unit, or the purchase
     price thereof, shall be adjusted in such manner and at such time as the
     Board of Directors of the Company may in good faith determine to be
     equitable in the circumstances.

                                    SECTION IV.
                             NOTICES TO WARRANT HOLDERS

NOTICE OF ADJUSTMENT OF STOCK UNIT OR EXERCISE PRICE.  Whenever the number of
shares of Common Stock comprising a Stock Unit, or the price at which a Stock
Unit may be purchased upon exercise of the Warrants, shall be adjusted pursuant
to Section III, the Company shall forthwith obtain a certificate signed by the
Company setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which the Board of Directors of the Company determined the fair
value of any evidences of indebtedness, shares of stock or, other securities
specifying the number of shares of Common Stock comprising a Stock Unit and (if
such adjustment was made pursuant to Section IIIC or Section IIID) describing
the number and kind of any other shares of stock comprising a Stock Unit, and
any change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly, and in any case within 45 days
after the making of such adjustment, cause a signed copy of such certificate to
be delivered to each holder of a Warrant in accordance with Section IX. The
Company shall keep at its office in Santa Ana, State of California, or elsewhere
in the State of California, maintained for the purpose pursuant to Section VIII,
copies of all such certificates and cause the same to be available for
inspection in said office during normal business hours by any holder of a
Warrant or any prospective purchaser of a Warrant designated by a holder
thereof.

                                     SECTION V.
                   RESERVATION AND AUTHORIZATION OF COMMON STOCK;
                 REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
                                     AUTHORITY

     The Company shall at all times reserve and keep available for issue upon
the exercise of Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to

                                      8

<PAGE>

permit the exercise in full of all outstanding Warrants. All shares of Common
Stock, which shall be so issuable, shall, when issued upon exercise of any
Warrant, be duly and validly issued and fully paid and non-assessable.

     Before taking any action which would result in an adjustment in the number
of shares of Common Stock comprising a Stock Unit or in the Current Warrant
Price per share of Common Stock, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

     If any shares of Common Stock required to be reserved for issue upon
exercise of Warrants require registration with any governmental authority under
any federal or state law before such shares may be so issued, the Company will
in good faith and as expeditiously as possible endeavor to cause such shares to
be duly registered.

                                    SECTION VI.
                 TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

     In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section III
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a business day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.

                                    SECTION VII.
                                 LOSS OR MUTILATION

     Upon receipt by the Company of evidence satisfactory to it (in the exercise
of reasonable discretion) of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and (in case of loss, theft or destruction) of
indemnity satisfactory to it (in the exercise of reasonable discretion), and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor.

                                   SECTION VIII.
                               OFFICE OF THE COMPANY

     As long as any of the Warrants remain outstanding, the Company shall
maintain an office in the City of Santa Ana, State of California, or elsewhere
in the State of California, where the Warrants may be presented for exercise,
transfer, division or combination as in this Warrant provided.

     Such office shall be the principal executive office of the Company
specified in Section IX unless and until the Company shall designate and
maintain some other office for such purposes and give written notice thereof to
the holders of all outstanding Warrants.

                                      9

<PAGE>

                                    SECTION IX.
                                 NOTICES GENERALLY

     Any notice, demand or delivery pursuant to the provisions hereof shall be
sufficiently given or made if sent by first class mail, postage prepaid,
addressed to any holder of a Warrant at his last known address appearing on the
books of the Company, or, except as herein otherwise expressly provided, to the
Company at its principal executive office, 2331 South Pullman Street, Santa Ana,
California 92705, Attention: Patrick J. Dirk, Chief Executive Officer, or such
other address as shall have been furnished to the party giving or making such
notice, demand or delivery.

                                     SECTION X.
                              LIMITATION OF LIABILITY

     No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.

                                     SECTION XI.

     This Warrant shall be governed by the laws of the State of Delaware.

     IN WITNESS WHEREOF, the Company has caused this second amended Warrant to
be duly executed and attested by its Secretary or an Assistant Secretary.

Dated as of November 30, 1999.     TROY GROUP, INC., successor to
                                   Troy Systems Inc.


                                   By:  /s/ Patrick J. Dirk
                                        -----------------------------------
                                        Patrick J. Dirk, Chairman and
                                        Chief Executive Officer


Attest:

/s/ Del Conrad
--------------------------------
Del Conrad, Chief Financial Officer and
Secretary

                                      10

<PAGE>


                                 SUBSCRIPTION FORM

                   (To be executed only upon exercise of Warrant)

     The undersigned registered owner of this Warranty irrevocably exercises
this Warrant for and purchases ________ of the number of Stock Units of TROY
SYSTEMS INC., purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________________________whose
address is ____________________________ and, if such Stock Unites shall not
include all of the Stock Units issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the Stock Units issuable
thereunder be delivered to the undersigned.


Dated:  _______________________         ____________________________________
                                        (Signature of Registered Owner)


                                        ____________________________________
                                        (Street Address)


                                        ____________________________________
                                        (City)      (State)    (Zip Code)


                                      11