OGARA CO /OH/, S-1/A, 1996-10-28

OGARA CO /OH/
S-1/A, 1996-10-28
MOTOR VEHICLES & PASSENGER CAR BODIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1996.

REGISTRATION NO. 333-11093
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------

AMENDMENT NO. 3

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------

THE O'GARA COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Ohio
(STATE OR OTHER JURISDICTION OF
INCORPORATION)
3711
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
31-1470817
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

9113 LeSaint Drive
Fairfield, Ohio 45014
(513) 874-2112

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

WILFRED T. O'GARA
CHIEF EXECUTIVE OFFICER
THE O'GARA COMPANY
9113 LESAINT DRIVE
FAIRFIELD, OHIO 45014
(513) 874-2112
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

TIMOTHY E. HOBERG, ESQ.
TAFT, STETTINIUS & HOLLISTER
1800 STAR BANK CENTER
425 WALNUT STREET
CINCINNATI, OHIO 45202-3957
(513) 381-2838
JONATHAN I. MARK, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005-1702
(212) 701-3000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 28, 1996

3,000,000 SHARES

THE O'GARA COMPANY
COMMON STOCK

OF THE 3,000,000 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE
"COMMON STOCK"), OFFERED HEREBY, 2,600,000 SHARES ARE BEING OFFERED BY THE
O'GARA COMPANY (THE "COMPANY") AND 400,000 SHARES ARE BEING OFFERED BY THE
SELLING SHAREHOLDERS. SEE "PRINCIPAL AND SELLING SHAREHOLDERS." THE COMPANY WILL
NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF SHARES BY THE SELLING
SHAREHOLDERS.

PRIOR TO THIS OFFERING THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON
STOCK. IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE
BETWEEN $12.00 AND $14.00 PER SHARE. SEE "UNDERWRITING" FOR THE FACTORS
CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING PRICE. THE COMMON STOCK
HAS BEEN APPROVED FOR LISTING ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"OGAR."

FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 8-14.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS* COMPANY+ SHAREHOLDERS+
<S> <C> <C> <C> <C>
Per Share..................... $ $ $ $
Total++....................... $ $ $ $
</TABLE>

- ---------------

* The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."

+ Before deducting estimated expenses of the offering of $1.5 million, all of
which will be paid by the Company. Of the proceeds to Company, approximately
$9.3 million will be used to finance certain distributions to existing
shareholders and to pay certain indebtedness of the Company to existing
shareholders. Of the proceeds to Selling Shareholders, $ relate to
shares beneficially owned by the Company's Chairman of the Board. See "Use of
Proceeds."

++ The Company has granted the Underwriters a 30-day option to purchase up to
450,000 additional shares of Common Stock on the same terms per share solely
to cover over-allotments, if any. If such option is exercised in full, the
total price to public will be $ , the total underwriting discounts
and commissions will be $ , and the total proceeds to Company will
be $ . See "Underwriting."
------------------------
The Common Stock is being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the delivery of certificates therefor
will be made at the offices of Dillon, Read & Co. Inc., New York, New York, on
or about , 1996. The Underwriters include:

DILLON, READ & CO. INC.
FURMAN SELZ
EQUITABLE SECURITIES CORPORATION

The date of this Prospectus is , 1996.
LOGO
<PAGE> 3

THE O'GARA COMPANY

FROM A WORLD LEADER IN VEHICLE ARMORING . . .

[Picture of the XM1114 Up-Armored HMMWV]

FOR THE MILITARY MARKET

XM1114 UP-ARMORED HMMWV: The Company provides fully integrated ballistic
and blast protected armoring systems and armoring kits for HMMWVs used by the
U.S. Military and other military customers worldwide.

[Drawings of components of armoring for the XM1114 Up-Armored HMMWV.
Drawings of the following components are shown surrounding a drawing of an
XM1114 Up-Armored HMMWV: Weapon Station Armor, Slant Back Cargo Shell, Rear
Partition with Access Door, Armor Doors and Glass, Mine Protection Kit,
Windshield Armor, Full Working Turret and Fully Armored Roof.]

[Picture of Chevrolet Suburban.]

FOR THE COMMERCIAL MARKET

CHEVROLET SUBURBAN: The Company designs and installs fully integrated
ballistic and blast protected armoring systems for the popular Chevrolet
Suburban and other commercial vehicles, which are sold worldwide to governments,
business executives, and other VIPs who are concerned about safety and security.

[Drawings of components of armoring for the Chevrolet Suburban. Drawings of
the following components are shown surrounding a drawing of a Chevrolet
Suburban: Cargo Door Armor, Transparent Armor, Perimeter Armor, Floor Armor,
Transparent Armor, and Roof Armor.]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

O'GARA-HESS & EISENHARDT(TM) AND COMPACT-M(TM) ARE TRADEMARKS OF THE COMPANY.
GENERAL MOTORS(TM), CHEVROLET(R), CADILLAC(R), GMC(TM), SUBURBAN(R) AND
OMEGA(TM) ARE TRADEMARKS OF GENERAL MOTORS CORPORATION. JEEP CHEROKEE(TM) IS A
TRADEMARK OF CHRYSLER CORPORATION AND JETTA(R) IS A REGISTERED TRADEMARK OF
VOLKSWAGENWERK A.G. MERCEDES BENZ(R) IS A REGISTERED TRADEMARK OF MERCEDES-BENZ
A.G. AND SL(R) AND DAIMLER-BENZ(R) ARE REGISTERED TRADEMARKS OF DAIMLER-BENZ.
AMSC(R) IS A REGISTERED TRADEMARK OF AMERICAN MOBILE SATELLITE CORPORATION.
BRINK'S(R) IS A REGISTERED TRADEMARK OF BRINK'S INCORPORATED. ALL OTHER
TRADEMARKS APPEARING IN THIS PROSPECTUS ARE THE PROPERTY OF THEIR RESPECTIVE
OWNERS.
<PAGE> 4

THE O'GARA COMPANY

. . . TO A FULLY INTEGRATED GLOBAL SECURITY COMPANY

SECURITY HARDWARE PRODUCTS GROUP

MILITARY PRODUCTS: In addition to the Up-Armored HMMWV and the HMMWV kits,
the Company also armors missile systems, military containers, aircraft, and
other tactical wheeled vehicles.

[Picture of XM1114 Up-Armored HMMWV.]

[Picture of Multiple Launch Rocket System firing.]

[Picture of 12 XM1114 Up-Armored HMMWVs lined up in front of the Company's
Fairfield, Ohio corporate headquarters.]

SECURITY SYSTEMS INTEGRATION GROUP

The Company offers fully integrated satellite communications systems and
site-specific security systems. Satellite products incorporate portable
terminals, mobile antennas, and proprietary smart card air-time billing
software, all on the INMARSAT network. The Company's site protection services
include comprehensive planning, design, hardware and software integration
services offered presently to Russian customers, such as embassies and large
corporations. The Company intends to expand services into other markets in the
near future.

[Picture of gentleman in the field using the Company's portable satellite
communications equipment.]

[Picture of woman in control room operating security systems computer
equipment.]

PROTECTING U.S. PRESIDENTS FOR 50 YEARS

In 1942, the Company was commissioned by the U.S. Secret Service to design
the first armored presidential limousine, first used by President Harry S.
Truman. Since that time, the Company's fully-armored presidential limousines
have protected every U.S. President, more than 60 international heads of state
and countless diplomats around the globe.

[Picture of armored presidential limousine.]

1948 -- Designed for Franklin Roosevelt and used until 1950, the "Sunshine
Special" was flown to Germany and used by President Truman at the historic
Potsdam debates.

[Picture of armored presidential limousine.]

1956 -- First used by President Dwight Eisenhower, the armored Cadillac's
size and weight (21 feet, 7,000 pounds) led to its being christened "The Queen
Mary II" after the famed British ocean liner.

[Picture of armored presidential limousine.]

1964 -- A group of experts including O'Gara representatives was assembled
to design a new presidential vehicle. The resulting limousine could resist
pistol and rifle attacks as well as grenades and small bombs.

[Picture of armored presidential limousine.]

1982 -- President Ronald Reagan loved seeing and being seen by crowds. His
1982 armored stretch Cadillac featured a raised roof and oversized windows for
maximum visibility.
<PAGE> 5

COMMERCIAL PRODUCTS: The Company designs and integrates armoring systems
on limousines, sedans, and sport utility vehicles for heads of state, business
executives, VIPs and their families worldwide. Presidential limousines built by
the Company have been used by every U.S. President since 1948.

[Picture of armored Mercedes S600 sedan.]

[Picture of armored Jeep Grand Cherokee.]

[Picture of armored Volkswagen Jetta.]

[Picture of armored Presidential Parade Car.]

[Picture of armored stretch limousine.]

SECURITY SERVICES GROUP

This group has been organized recently to offer businesses and individuals
security services such as background checks, business intelligence, country risk
assessments, airport/aircraft security support, and training for private
security agents and drivers. The Company intends to offer these services in
locations and to customers currently serviced by the Security Hardware Products
Group. The Company has appointed to its board of directors and senior management
team former FBI and CIA officials who will assist in the launch of the Security
Services Group.

[Picture of airport security guards and detection equipment.]

[Picture of four U.S. Secret Service personnel walking alongside an armored
Presidential limousine.]
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the Combined Financial
Statements of the Company, including the Notes thereto, appearing elsewhere in
this Prospectus. Unless otherwise indicated, (i) the financial statements of the
Company included in this Prospectus assume the completion of a reorganization
(the "Reorganization") of the Company completed on October 28, 1996 and present
the results of operations and financial condition of the Company as though the
Reorganization had been completed at the dates, or at the beginning of the
periods, presented; (ii) all information presented in this Prospectus assumes no
exercise of the Underwriters' over-allotment option and has been adjusted to
reflect the completion of the Reorganization; and (iii) references in this
Prospectus to the "Company" refer to The O'Gara Company and its subsidiaries on
a combined basis, giving effect to the completion of the Reorganization, and to
the Company and its predecessors in a historical sense. See "Corporate
Reorganization."

THE COMPANY

The O'Gara Company is a leading provider of fully integrated ballistic and
blast protected vehicle armoring systems for military, commercial and
governmental clients worldwide. Through O'Gara-Hess & Eisenhardt Armoring
Company ("OHE"), the Company currently is the primary provider of armoring
systems for High Mobility Multi-Purpose Wheeled Vehicles ("HMMWVs") used by the
U.S. Military and other armed forces worldwide. OHE also provides armored
commercial vehicles for heads of state, business executives and VIPs worldwide,
including presidential limousines used by every U.S. President since 1948.
Through O'Gara Satellite Networks Limited ("OSN"), the Company provides vital
communications systems for its clients by integrating proprietary hardware and
smart card billing software that operate on the International Maritime Satellite
("Inmarsat") network. In addition, the Company offers customized turn-key site
security systems to international customers.

Originally founded in 1876 as Sayers & Scovil, a manufacturer of
horse-drawn carriages, the Company evolved into a producer of specialized motor
vehicles. By the early 1900s, the Company changed its ownership and name to Hess
& Eisenhardt and focused on the development and construction of a broad range of
specialized consumer and commercial vehicles such as ambulances and hearses. In
the 1940s, the Company was commissioned by the U.S. Secret Service to design and
assemble the first armored presidential limousine, which was used by President
Harry S. Truman. In 1982, this business was acquired by certain members of the
O'Gara family, was subsequently renamed, and has focused on producing armored
vehicles for commercial and governmental clients around the world. In 1993, the
Company was awarded its first contract to up-armor the HMMWV for the U.S.
Military.

The Company's business today is increasingly being driven by the needs of
(i) worldwide military organizations to field a more versatile armored vehicle,
such as the HMMWV; (ii) governments to protect heads of state and diplomats from
terrorist attacks; (iii) multinational corporations to protect executives,
corporate assets and information in high risk countries; (iv) wealthy
individuals to secure themselves and their families from the growing threat of
kidnappings worldwide; (v) individuals to insulate themselves and their property
from planned criminal activity and random acts of violence; and (vi)
individuals, corporations and governments to obtain secure, remote or
independent telecommunications services.

To capitalize on these trends, the Company has realigned its activities
along three business lines: security hardware products, security systems
integration and security services. The Security Hardware Products Group
currently markets all of the Company's armoring products, including fully
integrated ballistic and blast protected armoring systems for military and
commercial vehicles, aircraft and missile container armor, and field installed
armoring systems. The Security Systems Integration Group offers planning,
design, and hardware and software integration services which are customized to
meet specific satellite communications or site protection needs of customers.
The Security Services Group intends to offer security-related services such as
security background clearances, business intelligence, country risk assessments,
airport/aircraft security support, and private security agent and driver
training. The Company believes that it enjoys strong name recognition and
reputation and that these factors, combined with its design, engineering and
production

3
<PAGE> 7

expertise, as well as its network of affiliations in the security industry, will
enable it to market successfully a broader array of security products and
services worldwide.

BUSINESS STRATEGY

The principal elements of the Company's business strategy are as follows:

Expand armored commercial vehicle sales in foreign markets. The Company
intends to expand its foreign market position as a leading provider of armored
commercial vehicles by leveraging its well recognized name, high quality
reputation and global network of customer relationships. To support this effort,
the Company has established manufacturing operations in Mexico, Brazil and
Russia, has increased its sales and marketing professionals from four at October
1995 to 19 at present and has increased its annual marketing budget from $0.7
million in 1995 to $1.8 million in 1996. The Company believes that these
efforts, coupled with the strong demand in these countries for armored
commercial vehicles, will enable it to penetrate effectively these markets. In
the future, the Company intends to establish manufacturing operations in
additional countries as it deems appropriate.

Expand foreign military sales. As the nature of armed conflicts changes
and worldwide military budgets are cut, the Company believes that expensive
heavily armored tracked vehicles will continue to be replaced by more versatile
and less expensive tactical wheeled vehicles ("TWVs"), such as the HMMWV. The
Company markets both factory assembled, fully armored ("Up-Armored") HMMWVs and
armor kits which may be added in the field to certain existing HMMWVs. There
currently exists an installed base of 130,000 HMMWVs, including 18,400 owned by
31 foreign countries. The Company estimates that approximately 12,000 of the
HMMWVs in use worldwide are suitable for its armor kits and believes a
significant opportunity exists to market aggressively these kits,
internationally as well as domestically. The Company also believes that those
countries currently utilizing HMMWVs are candidates for future sales of the
Up-Armored HMMWV. For example, the Company recently entered into contracts to
provide Up-Armored HMMWVs to two foreign countries, Luxembourg and Qatar.

Grow non-armoring security-related businesses. The Company's Security
Systems Integration Group intends to build upon its rapidly growing satellite
communications business and the physical site protection services it currently
offers in Russia by offering a broader array of products and services to
existing hardware customers and to buyers in new geographic markets. In
addition, the Company's Security Services Group intends to offer, either
directly or through subcontractors, additional security-related services such as
security background clearances, business intelligence, country risk assessments,
airport/aircraft security support, and private security agent and driver
training. The Company is adding Mr. William S. Sessions, the former Director of
the Federal Bureau of Investigation, as a director, and Mr. Hugh E. Price, the
former Deputy Director for Operations of the Central Intelligence Agency, as
President, Security Services Group and as a director. The Company believes the
addition of these individuals to its management team, along with their
reputation, experience and network of relationships, will enhance the Company's
ability to market these services worldwide.

Standardize production to improve efficiencies and reduce throughput
time. Since 1994, the Company has committed approximately $3.1 million to
engineering, tooling, and training to standardize its product design, armoring
components, and assembly line operations. Through the application of these
techniques, the number of employee work hours needed to produce the Up-Armored
HMMWV has been reduced from 465 to 265, and the number of components involved
from 800 to 550. These techniques are now being applied by the Company to the
production of certain commercial products, the first being the armored
GMC/Chevrolet Standard Suburban ("Standard Suburban"). Employee work hours
required to armor the Standard Suburban have been reduced from 1,200 to 650, and
the number of components involved from 350 to 200. The Company is currently
working to standardize its process of armoring a passenger sedan. As a result of
these efficiencies, the Company believes it will be better able to provide
immediate delivery of its armored commercial vehicles, which will increase
substantially their attractiveness and marketability in the U.S. as well as
abroad.

4
<PAGE> 8

Pursue strategic acquisition opportunities. The fragmented nature of the
global security industry provides ample opportunities for strategic
acquisitions. The Company believes it is positioned to consolidate companies in
the armoring, systems integration, security services, engineering and secured
satellite communications sectors of the industry. On August 15, 1996, the
Company entered into an agreement in principle to acquire Palmer Associates,
S.C., a provider of security services, such as driver training, background
investigation and due diligence reports, in Mexico City, Mexico, for cash
consideration of approximately $1.0 million, payable over two years. The Company
continues to review additional acquisition opportunities in each of these
sectors.

Pursue related growth opportunities. The Company believes it will have
additional opportunities for growth by providing safety component products to
the automotive market and by capitalizing on the increasing demand for
heightened security features in the private automobile market in the United
States.

RESULTS OF OPERATIONS

In 1995, the Company's net sales were $1.1 million lower than the prior
year due to an unanticipated six-month delay in the delivery of HMMWV chassis
from a supplier that led to the production of 116 fewer Up-Armored HMMWVs than
originally planned. During this period, it was necessary to maintain
manufacturing and engineering support personnel to ensure production deadlines
would be met once the chassis were delivered. These support costs of
approximately $0.6 million occurred without a corresponding increase in net
sales. Also, 1995 operating expenses included $0.4 million in new selling and
marketing expenses relating to the start-up of the Company's satellite
communication business. All these items contributed to the Company's loss of
$1.1 million for 1995.

For the six months ended June 30, 1996, net sales improved to $41.5
million, compared to $12.2 million for the six months ended June 30, 1995. The
primary reason for this growth was a U.S. Military request to accelerate the
production of Up-Armored HMMWVs. U.S. Military net sales for the six months
ended June 30, 1996 were $30.0 million, armored commercial vehicle net sales
were $7.6 million, and net sales of the Company's satellite communications
business (representing the bulk of the Security Systems Integration Group's net
sales) were $3.8 million, compared to $3.5 million, $8.1 million and $0.6
million, respectively, for the corresponding 1995 period. Income before income
taxes for the six months ended June 30, 1996 increased to $4.0 million compared
to a loss of $1.0 million for the six months ended June 30, 1995. In view of the
increased net sales from its acceleration of HMMWV production during the six
months ended June 30, 1996, the Company expects U.S. Military net sales for the
second half of 1996 to be lower than those for the first half. The Company
believes its commercial vehicle armoring and satellite communications businesses
will generate a greater percentage of the Company's future net sales. Increased
net sales are also expected to come from the Security Systems Integration Group
and Security Services Group.

The Company is incorporated in the State of Ohio and its principal
executive offices are located at 9113 LeSaint Drive, Fairfield, Ohio 45014. The
Company's telephone number is (513) 874-2112.

5
<PAGE> 9

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.............. 2,600,000 shares
Common Stock offered by the Selling
Shareholders................................... 400,000 shares
----------------
Total Common Stock offered.................. 3,000,000 shares
================

Common Stock to be outstanding after the
Offering....................................... 7,211,846 shares(1)

Use of proceeds by the Company................... To repay certain indebtedness of the
Company (approximately $13.9 million at
June 30, 1996, including approximately
$0.3 million to existing shareholders),
to finance certain distributions to
existing shareholders (estimated at $9.0
million), to acquire the Company's leased
Mexico City manufacturing facility
(approximately $1.3 million), to pay
initial installments for the acquisition
of Palmer Associates, S.C. (approximately
$0.8 million) and for general corporate
purposes, including potential
acquisitions and working capital
(approximately $4.9 million). See "Use of
Proceeds."

Nasdaq National Market symbol.................... OGAR
</TABLE>

- ---------------

(1) Excludes 180,000 shares issuable upon exercise of stock options to be
granted at the initial public offering price on the effective date of the
Registration Statement for the Offering under the Company's 1996 Stock
Option Plan. See "Management -- Stock Options."

RISK FACTORS

Any investment in the shares of Common Stock offered hereby involves a high
degree of risk. For a discussion of certain risks of an investment in the shares
of Common Stock offered hereby, see "Risk Factors" on pages 8 to 14.

6
<PAGE> 10

SUMMARY COMBINED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------ -------------------------------
PRO FORMA PRO FORMA
1993 1994 1995 1995(1) 1995 1996 1996(1)
------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................... $21,054 $33,912 $32,817 $32,817 $12,162 $41,521 $41,521
Cost of sales........................... 14,640 24,505 25,237 25,237 9,308 31,383 31,383
------- ------- ------- ------- ------- ------- -------
Gross profit.......................... 6,414 9,407 7,580 7,580 2,854 10,138 10,138
Operating expenses...................... 5,101 7,176 7,757 7,897 3,432 5,445 5,515
------- ------- ------- ------- ------- ------- -------
Operating income (loss)............... 1,312 2,231 (177) (317) (579) 4,693 4,623
Interest (expense)...................... (269) (410) (842) (185) (366) (613) (94)
Other income (expense), net............. (81) 60 (103) (103) (47) (78) (78)
------- ------- ------- ------- ------- ------- -------
Net income (loss)....................... $ 962 $ 1,880 $(1,122) $ (991) $ 4,002
======= ======= ======= ======= =======
PRO FORMA DATA:
Income (loss) before income taxes....... (605) 4,451

Provision (benefit) for income taxes.... (242) 1,780
------- -------
Net income (loss)....................... $ (363) $ 2,671
======= =======
Net income (loss) per share of
common stock.......................... $ (0.06) $ 0.40
======= =======
Weighted average shares of common stock
outstanding........................... 6,095,000 6,602,157
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
-----------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA(2) ADJUSTED(3)
------- ------------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).............................................. $ (616) $ 321 $ 19,206
Net property, plant and equipment...................................... 3,669 3,660 4,960
Total assets........................................................... 36,265 36,848 44,117
Total debt............................................................. 15,808 24,808 2,143
Shareholders' equity (deficit)......................................... 4,016 (4,055) 25,879
</TABLE>

- ---------------

(1) The pro forma information reflects the recognition of amortization on
intangible assets resulting from the purchase of Palmer Associates, S.C.,
the repayment of indebtedness (approximately $10.5 million at December 31,
1995 and $13.9 million at June 30, 1996) from the proceeds of the Offering
and the elimination of related interest expense (net of income taxes). In
addition, prior to the Offering, the Company's business historically has
been conducted by a group of corporations (the "Related Corporations")
affiliated by substantially common management and control. The most
significant of the Related Corporations elected to be treated as an S
Corporation for federal and state income tax purposes, and such Related
Corporation's income was allocable to its shareholders for income tax
purposes, rather than being taxed at the corporate level. As a result of the
Reorganization and the termination of the S Corporation status of this
Related Corporation, the Company is subject to corporate income taxation and
will file a consolidated tax return. The pro forma net income information
reflects the application of corporate income taxes to the Company's
consolidated income before income taxes at an effective tax rate of
approximately 40%, which represents the estimated combined federal and state
income tax rates. The pro forma information is presented as if such changes
had been effected on January 1 of the periods indicated. The weighted
average number of shares used in the calculation of pro forma net income per
share information reflects the issuance of such number of shares of Common
Stock offered hereby which would be necessary to generate net proceeds
sufficient to fund the repayment of indebtedness and the distribution of
undistributed S Corporation earnings through the time of the Offering. See
"Prior S Corporation Status," "Corporate Reorganization," "Selected
Unaudited Condensed Pro Forma Financial Data," and Notes 1, 2, 14 and 15 to
the Company's Combined Financial Statements.

(2) The pro forma combined balance sheet data gives effect to the distribution
of AAA Notes to existing shareholders from the AAA account in the amount of
$9.0 million, the recognition of a net-deferred tax asset of $0.9 million
resulting from the termination of one of the Related Corporation's S
Corporation status and the elimination of certain net liabilities of Limited
not acquired as part of the Reorganization. For further information and
definitions, see "Prior S Corporation Status," "Selected Unaudited Condensed
Pro Forma Financial Data," and Notes 2, 14 and 15 to the Combined Financial
Statements.

(3) Adjusted to reflect the Offering (assuming an initial public offering price
of $13.00 per share) and the use of the net proceeds therefrom after
deducting estimated underwriting discounts and expenses payable by the
Company in connection with the Offering. See "Use of Proceeds."

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RISK FACTORS

Any investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should consider carefully the following
factors in evaluating an investment in the shares of Common Stock.

SUBSTANTIAL DEPENDENCE ON U.S. MILITARY CONTRACTS AND EXCLUSIVE ARMORING
CONTRACT

Since August 1993, U.S. Military contracts have accounted for an increasing
portion of the Company's business, representing 28.5%, 50.1%, 45.6% and 72.4% of
net sales for 1993, 1994, 1995 and the six months ended June 30, 1996,
respectively. Prior to August 1993, the Company's business did not include
armoring military vehicles. The Company's U.S. Military contracts are funded in
annual increments and require subsequent authorization and appropriation which
may not occur or which may provide less than the total amount of the contract
due to budgetary or other considerations. The Company's current contracts for
669 HMMWVs (of which 426 had been shipped as of September 30, 1996) are
scheduled to be completed in early 1997. There can be no assurance that future
contracts will be received or as to the size of any contracts that are received.
Fluctuations in spending by the U.S. Government for national defense could
adversely affect the Company's ability to receive future contracts. Moreover,
Government contracts in general are cancelable unilaterally at the convenience
of the Government and a variety of international and/or domestic political
factors or decisions could result in the cancellation of the HMMWV armoring
project or a curtailing of its scope. The loss of, or a significant reduction
in, this business would have a material adverse effect on the Company's
financial condition, results of operations and cash flows. See "Business -- U.S.
Government Contracts."

AM General Corporation ("AM General") is the exclusive designer and
manufacturer of HMMWVs for the U.S. Military. Under an agreement which expires
in November 1998, the Company serves as the primary designer and integrator for
all of AM General's ballistic systems and as its primary armoring integrator on
all other programs. This agreement also establishes the Company as AM General's
primary subcontractor for providing armoring kits and parts, and requires AM
General to involve the Company in the design, development or procurement of any
other armoring systems. The Company's relationship with AM General has had, and
the Company believes will continue to have, a favorable impact on its business.
There can be no assurance that future contracts will be entered into with AM
General or as to the size of any such contracts. A substantial reduction in, or
termination of, the Company's business with AM General could have a material
adverse effect on the Company's financial condition, results of operations and
cash flows.

RISK OF U.S. GOVERNMENT SHUT DOWN

On several occasions during the U.S. Government's 1996 fiscal year, certain
operations essentially were "shut down" because of budget impasses between the
U.S. Congress and the White House. During these periods, payments to the Company
under its U.S. Military contracts were delayed. Future U.S. Government shut
downs, if sufficiently prolonged, could have a material adverse effect on the
Company's financial condition, results of operations and cash flows.

SINGLE AND PRIMARY SOURCE SUPPLIERS

The Up-Armored HMMWVs armored by the Company are manufactured under U.S.
Military contracts by AM General. Should AM General for any reason be unable to
deliver HMMWVs to the Company, as occurred during 1995, or should the U.S.
Military elect or be obligated to select a new HMMWV supplier, there could be a
material adverse effect on the Company's financial condition, results of
operations and cash flows.

The majority of the glass used by the Company in armoring its vehicles
currently is obtained from Pilkington Aerospace Limited. Should the Company at
some time find it necessary to select one or more additional or substitute
suppliers, delays could be encountered in obtaining product which meets the
Company's specifications.

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A majority of the Company's cost of armoring HMMWVs consists of components
which are purchased from various vendors and suppliers. Component prices are
generally negotiated based on, among other things, the Company's expected
manufacturing volume. There can be no assurance that the Company will be able to
predict accurately the anticipated manufacturing volume. As a result, the
Company may be subject to future cost increases which could have a material
adverse effect on the Company's financial condition, results of operations and
cash flows.

The transportable satellite telecommunications terminals marketed for the
Company by Magellan Systems Corporation, a wholly owned subsidiary of Orbital
Sciences Corp., under the microCOM-M name and marketed directly by the Company
under the Compact-M brand name are manufactured to Company specifications by a
single third party manufacturer, Glocom, Inc. ("Glocom"). If Glocom at some time
is unable to fulfill the Company's needs for such satellite terminals, the
Company may be unable to fill customer orders. Such an occurrence could have a
material adverse effect on the Company's financial condition, results of
operations and cash flows.

FLUCTUATIONS IN OPERATING RESULTS

Approximately 72.4% of the Company's net sales for the six months ended
June 30, 1996 were derived from U.S. Military contracts and an additional 6.2%
were derived from commercial contracts with U.S. governmental agencies or
foreign governments. These contracts generally are awarded on a periodic or
sporadic basis. The Company frequently receives substantial orders, and begins
to incur related expenses, in one quarter, the revenues from which will not be
received until one or more subsequent quarters. As a result, the Company
generally has significant fluctuations from time to time in its business.
Historically, these fluctuations have not been seasonal. Period-to-period
comparisons within a given year or between years may not be meaningful or
indicative of operating results over a full fiscal year. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
General."

RISKS ASSOCIATED WITH FIXED PRICE CONTRACTS

A substantial portion of the Company's projects are currently performed on
a fixed-price basis. The Company attempts to cover anticipated increases in
labor, material and service costs of long-term fixed-price contracts through an
estimation of such increases which is reflected in the original price. Despite
these attempts, however, the revenue, cost and gross profit realized on a
fixed-price contract will often vary from the estimated amounts due to
unforeseen conditions or changes in job conditions and variations in
productivity over the term of the contract. These variations and the risks
generally inherent in fixed-price contracts may result in the gross profits
realized by the Company being different from those originally estimated and may
result in the Company's experiencing reduced profitability or losses on
projects. Depending on the size of a contract, these variations from estimated
contract performance could have a material adverse effect on the Company's
results of operations for any quarter or year.

RISKS ASSOCIATED WITH PERCENTAGE-OF-COMPLETION ACCOUNTING

The Company's net sales from government contracts and most commercial
contracts are recognized using the percentage-of-completion method. Under this
method, estimated contract revenues are accrued based generally on the
percentage that costs to date bear to total estimated costs. Estimated contract
losses are recognized in full when determined. Accordingly, contract revenues
and total cost estimates are reviewed and revised periodically as the work
progresses and as change orders are approved, and adjustments based upon the
percentage of completion are reflected in contract revenues in the period when
such estimates are revised. To the extent that these adjustments result in an
increase, a reduction or an elimination of previously reported contract
revenues, the Company would recognize a credit or a charge against current
earnings, which could be material. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Impact on Operations."

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RISKS ASSOCIATED WITH BUSINESS STRATEGY

The Company's strategy is to become a fully integrated global security
company. Part of this strategy requires the establishment of new lines of
business by expanding the Company's Security Systems Integration Group and
developing the Security Services Group. Historically, the Company has not
generated revenues from these new lines of business. The Company's primary
business and experience historically has been in vehicle armoring. There can be
no assurance that the Company will be able to build or manage profitably these
businesses without substantial costs, delays or other problems, which could have
a material adverse effect upon the Company's financial condition, results of
operations and cash flows.

Certain of the services which it is expected will be provided by the
Company's Security Services Group are similar to activities carried on by O'Gara
Protective Services, a Nevada corporation ("OPS"), in which the shareholders of
OHE have approximately a 47% interest, but which is controlled by Mr. Edward F.
O'Gara, the brother of Mr. Thomas M. O'Gara, the Company's Chairman of the
Board, and Mr. Wilfred T. O'Gara, the Company's Chief Executive Officer. OPS has
asserted in litigation filed on October 9, 1996 that an agreement exists under
which performance of security services has been allocated to OPS and that it
would be a breach of this agreement if the Company were to begin offering the
services contemplated by the Company's Security Services Group. OPS' complaint
also asserts, among other claims, unfair competition, misuse of the name of OPS,
and breach of fiduciary obligation. See "Business -- Legal Proceedings." The
Company denies the assertions made by OPS. If OPS is successful in this
litigation, such an outcome would affect adversely the Company's ability to
offer the services contemplated to be provided by the Security Services Group.

As the Company's business develops and expands, the Company will need to
implement enhanced operational and financial systems and will require additional
employees, management and operational and financial resources. There can be no
assurance that the Company will successfully implement and maintain such
operational and financial systems or successfully obtain, integrate or utilize
the employees, management and operational and financial resources required to
manage a developing and expanding business. Failure to implement such systems
successfully and use such resources effectively could have a material adverse
effect on the Company's financial condition, results of operations and cash
flows.

The Company's business strategy requires substantial capital. In addition,
the expansion of the Company's business into related products and services may
require additional capital. Such capital may be obtained by borrowings under the
Company's credit facilities, through the issuance of long-term or short-term
indebtedness or through the issuance of equity securities in private or public
transactions. This could result in increased interest expense and/or dilution of
existing equity positions. There can be no assurance that acceptable capital
financing for future growth can be obtained on suitable terms, if at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

RISKS ASSOCIATED WITH ACQUISITION STRATEGY

A further part of the Company's strategy is to grow through the acquisition
of companies that will complement its existing operations or provide it with an
entry into markets it does not currently serve. Growth through acquisitions
involves substantial risks, including the risk of improper valuation of the
acquired business and the risk of inadequate integration. There can be no
assurance that suitable acquisition candidates will be available, that the
Company will be able to acquire or manage profitably such additional companies
or that future acquisitions will produce returns that justify the Company's
investments therein. In addition, the Company may compete for acquisition and
expansion opportunities with companies that have significantly greater resources
than the Company.

The Company may finance future acquisitions with cash from operations or
additional debt or equity financings. There can be no assurance that the Company
will be able to generate internal cash or obtain financing from external sources
or that, if available, such financing will be on terms acceptable to the
Company. The issuance of additional Common Stock to finance acquisitions may
result in substantial dilution to the purchasers of the Common Stock offered
hereby. Any debt financing may significantly increase the Company's leverage and
may involve restrictive covenants which limit the Company's operations. See

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<PAGE> 14

"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

If the Company is successful in acquiring additional businesses, the
Company may experience a period of rapid growth which could place significant
additional demands on the Company's management, resources and management
information systems. The Company's failure to manage any such rapid growth
effectively could have a material adverse effect on the Company's financial
condition, results of operations and cash flows.

COMPETITION

The markets in which the Company does or intends to do business are highly
competitive. There are a large number of companies, both public and private,
involved in one or more aspects of security hardware, security systems
integration and security services, as well as satellite telecommunications
services. Furthermore, the Company may encounter additional competition from
future industry entrants. Certain of the Company's current competitors have, and
new competitors may have, substantially greater financial and other resources
than the Company. There can be no assurance that the Company will continue to
develop and market products or services that will be accepted in the marketplace
or that it will be able to compete effectively in the future, either of which
could have a material adverse effect on the Company's financial condition,
results of operations and cash flows. See "Business -- Competition."

POLITICAL AND ECONOMIC RISKS

The Company has operations and assets in Brazil, Italy, Mexico and Russia.
In addition, the Company sells its products and services in other foreign
countries and is seeking to increase its level of international business
activity. Accordingly, the Company is subject to various risks, including U.S.
imposed embargoes of sales to specific countries, foreign currency restrictions,
exchange rate fluctuations, expropriation of assets, war, civil uprisings and
riots, government instability and legal systems of decrees, laws, regulations,
interpretations and court decisions which are not always fully developed and
which may be retroactively applied. The Company's operations in foreign
countries may be adversely affected in that certain governmental agencies in
such countries may interpret laws, regulations or court decisions in a manner
which might be considered inconsistent or inequitable in other countries. The
Company may be subject to unanticipated income taxes, excise duties, import
taxes, export taxes or other governmental assessments. There can be no assurance
that such risks will not result in a loss of business or other unexpected costs
which could have a material adverse effect on the Company's financial condition,
results of operations and cash flows. See "Business."

GOVERNMENT REGULATION

As a contractor with agencies of the U.S. Government, the Company is
obligated to comply with a variety of regulations governing certain aspects of
its operations and the workplace. Additionally, the Company's contracts give the
contracting agency the right to conduct audits of the Company's facilities and
operations, and such audits occur routinely. An audit involves a U.S.
Governmental agency's review of the Company's compliance with the prescribed
procedures established in connection with the government contract. The Company
also may be subject to investigations as a result of an audit or other causes.
Adverse findings in an audit or other investigation, including violations of
environmental or labor laws, could result in fines or other penalties, up to and
including disqualification as a U.S. Government contractor. In addition, U.S.
Government contracts may contain cost or performance incentives based on stated
targets or other criteria. Failure to meet these stated targets or criteria
could result in penalties or lost profits to the Company. Any or all of these
matters could have a material adverse effect on the Company's financial
condition, results of operations and cash flows.

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<PAGE> 15

prohibits all sales of military equipment to certain countries, including Cuba,
Iran, Iraq, Libya and China. There can be no assurance that such regulations
will not become more restrictive in the future, which could limit the Company's
ability to market its products internationally. See "Business -- U.S. Government
Regulation."

MANAGEMENT OF LABOR FORCE

Due to the nature of the Company's contracts, which are awarded
periodically and are not assured for future periods, the Company may need to
hire, lay-off and rehire workers. As a result, the Company may spend substantial
time and effort training and supervising new, essentially unskilled, personnel
hired to supplement its existing trained work force. There can be no assurance
that sufficient workers will be available at any time, or can be trained in
time, so as not to interfere with the Company's ability to accept large new
orders or to meet contractual delivery deadlines. Alternatively, if the Company
were to experience production delays, as occurred with respect to the Company's
HMMWV production in 1995, it may be necessary to maintain manufacturing and
engineering support personnel in order to meet contract deadlines once
production resumes. These matters could have a material adverse effect on the
Company's financial condition, results of operations and cash flows.

DEPENDENCE ON KEY PERSONNEL

The Company's operations are dependent on the continued efforts of its
executive officers and on its senior management, particularly Mr. Thomas M.
O'Gara, its Chairman of the Board, and Mr. Wilfred T. O'Gara, its Chief
Executive Officer. If the executive officers of the Company become unable or
decide not to continue in their present positions, or if a number of senior
managers fail to continue with the Company and the Company is unable to attract
and retain replacements, the Company's business could be adversely affected. See
"Management."

CONTROL BY MANAGEMENT

After the Offering, the Company's officers and directors will control
approximately 56% of the Company's outstanding Common Stock and will be able to
control most matters requiring approval by shareholders, including the election
of directors. In addition, the Board of Directors has the authority to issue
100,000 shares of undesignated preferred stock and to determine the rights,
preferences, privileges and restrictions of such shares without further action
by shareholders. Ohio law contains provisions that may discourage takeover bids
for the Company that have not been negotiated with the Board of Directors. Each
of these factors could have the effect of delaying or preventing a change in
control of the Company and, accordingly, could limit the price that investors
might be willing to pay for the Common Stock. See "Principal and Selling
Shareholders" and "Description of Capital Stock."

PRODUCT LIABILITY

Although the Company has never had a product liability claim made against
it, there can be no assurance that the Company will not be subject to claims of
liability in the future. The Company carries liability insurance in the amount
of $10.0 million; however, a successful claim could result in liability in
excess of coverage limits and have a material adverse effect on the Company's
financial condition, results of operations and cash flows.

NO PRIOR PUBLIC MARKET; DETERMINATION OF INITIAL OFFERING PRICE

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price of the Common Stock was determined by
negotiation among the Company, the Selling Shareholders and the Managing
Underwriters and may not be indicative of the market price for shares of the
Common Stock after the Offering.

Although the Common Stock has been approved for listing on the Nasdaq
National Market, no assurance can be given that an active market for the Common
Stock will develop or, if developed, will continue. If no active market
develops, it may be difficult for purchasers to resell their Common Stock. The
Managing

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<PAGE> 16

Underwriters have advised the Company that they intend to make a market for the
Common Stock, although they are under no obligation to do so. Were such market
making to be discontinued, investors would encounter difficulty effecting
purchase or sale transactions in the absence of alternative market makers. See
"Underwriting."

POSSIBLE VOLATILITY OF STOCK

The market price for the Common Stock may be highly volatile. The Company
believes that a variety of factors, including announcements by the Company or
its competitors, quarterly variations in financial results, trading volume,
general market trends and other factors, could cause the market price of the
Common Stock to fluctuate substantially. In addition, the stock market has
experienced extreme price and volume fluctuations that are often unrelated to
the operating performance of particular companies. These market fluctuations may
adversely affect the price of the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock, or the perception
that such sales could occur, could adversely affect prevailing market prices for
the Common Stock and may make it more difficult for the Company to sell shares
of Common Stock in the future at times and for prices that it deems appropriate.
Upon completion of the Offering, the Company will have 7,211,846 shares of
Common Stock outstanding (assuming no exercise of the Underwriters'
over-allotment option and no exercise of outstanding stock options). The
3,000,000 shares of Common Stock offered hereby will be freely tradeable without
restriction under the Securities Act of 1933, as amended (the "Securities Act").
The remaining 4,211,846 shares of outstanding Common Stock may not be resold
unless they are registered under the Securities Act or sold pursuant to an
applicable exemption from registration, including Rule 144 under the Securities
Act. All of the outstanding shares not offered hereby are subject to "lock-up"
agreements with the Underwriters expiring 180 days after the date of this
Prospectus and may be sold during that period only with the prior written
consent of Dillon, Read & Co. Inc. Dillon, Read & Co. Inc., in its sole
discretion, and at any time without prior notice, may release all or any portion
of the Common Stock subject to the lock-up agreements described herein. When
such lock-up restrictions lapse, the Common Stock may be sold in the public
market or otherwise disposed of in compliance with the Securities Act. See
"Shares Eligible for Future Sale."

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of the Common Stock offered hereby will experience immediate and
substantial dilution of $9.58 per share in the net tangible book value from the
initial public offering price per share (assuming an initial offering price of
$13.00 per share). See "Dilution."

ABSENCE OF DIVIDENDS

The Company does not anticipate paying any dividends on its Common Stock in
the foreseeable future. See "Dividend Policy."

POTENTIAL ANTI-TAKEOVER EFFECT AND POTENTIAL ADVERSE IMPACT ON MARKET PRICE OF
CERTAIN CHARTER AND CODE OF REGULATIONS PROVISIONS AND THE OHIO GENERAL
CORPORATION LAW

Certain provisions of the Company's Restated Articles of Incorporation and
Code of Regulations and of the Ohio Revised Code (the "Ohio GCL"), together or
separately, could discourage potential acquisition proposals, delay or prevent a
change in control of the Company and limit the price that certain investors
might be willing to pay in the future for the Common Stock.

Pursuant to the Company's Restated Articles of Incorporation, upon the
closing of the Offering, the Board of Directors of the Company will have
authority to issue up to 100,000 preferred shares without further shareholder
approval. Such preferred shares could have dividend, liquidation, conversion,
voting and other rights and privileges that are superior or senior to the Common
Stock. Issuance of preferred shares could

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<PAGE> 17

result in the dilution of the voting power of the Common Stock, adversely affect
holders of the Common Stock in the event of liquidation of the Company or delay,
defer or prevent a change in control of the Company.

In addition, Sections 1701.01 and 1701.831 of the Ohio GCL contains
provisions that require shareholder approval of any proposed "control share
acquisition" of any Ohio corporation at any of three ownership thresholds: 20%,
33 1/3% and 50%; and Chapter 1704 of the Ohio GCL contains provisions that
restrict certain business combinations and other transactions between an Ohio
corporation and interested shareholders. See "Description of Capital
Stock -- Provisions Affecting Business Combinations and Changes in Control."

BENEFITS OF THE OFFERING TO CURRENT SHAREHOLDERS

The Company intends to use approximately $9.0 million of the net proceeds
of the Offering to pay to the existing shareholders of OHE the principal of the
AAA Notes (as defined under "Prior S Corporation Status"). The principal amount
of the AAA Notes will be approximately equal to the accumulated earnings of OHE
on which taxes either have been paid or are payable by the existing
shareholders. In addition, the Selling Shareholders will receive directly a
portion of the proceeds of the Offering, the Offering will provide the existing
shareholders with liquidity through the creation of a public market and certain
of the existing shareholders will be released from guarantees (totalling $3.5
million at June 30, 1996) of Company indebtedness. See "Prior S Corporation
Status," "Use of Proceeds" and "Shares Eligible for Future Sale."

PRIOR S CORPORATION STATUS

Prior to October 28, 1996, the Company's business was conducted by a group
of companies affiliated by substantially common ownership and control (the
"Related Corporations"). The Company's armoring business was carried out
primarily by O'Gara-Hess & Eisenhardt Armoring Company, a Delaware corporation
("OHE"). Certain foreign armoring operations, and foreign sales for OHE, were
carried out by O'Gara-Hess & Eisenhardt Armoring Company Limited, an Irish
corporation ("Limited"), and its subsidiaries. Satellite communications
operations were carried out by O'Gara Satellite Networks Limited, an Irish
corporation ("OSN"), and its subsidiaries. On October 28, 1996, certain of these
companies and their businesses were reorganized and combined with the Company
(the "Reorganization"). See "Corporate Reorganization."

From December 19, 1988, the inception date of its first taxable year, until
October 28, 1996, OHE had elected to be treated as an S Corporation under the
Internal Revenue Code of 1986, as amended (the "Code"). In general, an S
Corporation is not treated as a separate taxable entity, and an S Corporation's
gains, income, losses and separately stated tax items are taxed to its
shareholders on a pro rata basis. Also since 1989, OHE had made periodic
distributions to its shareholders. The balance of taxed or taxable accumulated
earnings which was not distributed was reflected in an "accumulated adjustments
account" (the "AAA account"). As a result of the Reorganization, OHE's S
Corporation status terminated, and the Company made a distribution to the
existing shareholders of OHE of promissory notes (the "AAA Notes") in the
aggregate principal amount of $9.0 million, which is approximately equal to the
undistributed earnings in the AAA account on which the shareholders either have
paid or will be required to pay income taxes. The amount of the AAA Notes
includes an estimate of taxable income through October 28, 1996. A portion of
the proceeds of the Offering will be used to repay the AAA Notes. See "Use of
Proceeds." As a result of the completion of the Reorganization, the Company is
subject to federal and state income taxes.

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CORPORATE REORGANIZATION

Pursuant to various agreements dated August 23, 1996 among the Company,
OHE, Limited and the equity holders of OHE, Limited and OSN, the operations of
these corporations were reorganized and combined on October 28, 1996; OHE and
OSN became wholly owned subsidiaries of the Company, and OHE succeeded to the
business formerly carried out by Limited either directly or through subsidiary
corporations.

Prior to the Reorganization, equity interests in OHE and OSN, respectively,
were held beneficially by the individuals identified in the chart below. One
hundred percent of the equity interest in Limited was held by an Individual
Retirement Account (the "IRA") for the benefit of Thomas M. Letter. However, OHE
held an option to purchase 71% of Limited from the IRA for the amount of $7,600,
and Longline Leasing, Inc. (a Delaware corporation, established in December 1993
and owned by Thomas M. O'Gara, Wilfred T. O'Gara, Thomas M. Letter, Charles A.
Williams and Nicholas P. Carpinello ("Longline")) holds a similar option to
purchase 24% of Limited for the amount of $1,900.

In the Reorganization, the equity holders of OHE transferred their
ownership interests in OHE to the Company in exchange for Common Stock of the
Company. The equity holders of OSN then transferred their ownership interests in
OSN to the Company in exchange for shares of Common Stock. In addition, OHE
acquired certain selected assets and assumed certain selected liabilities of
Limited for consideration (including OHE's interest in O'Gara Overseas Services,
S.A. -- see "Certain Relationships and Related Party
Transactions -- Intercompany Notes and Accounts Payable/Receivable") which the
Board of Directors of the Company believes represented the fair value of such
assets and liabilities. Following these transactions, Limited has an estimated
book value of approximately $540,000. OHE's option to purchase 71% of Limited
from the IRA was transferred to Limited as part of the consideration for the
acquisition of assets from Limited.

The following chart illustrates the principal aspects of the
Reorganization, including equity ownerships before and after the Reorganization.

[Organizational Flow Chart]

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USE OF PROCEEDS

The net proceeds from the sale of the 2,600,000 shares of Common Stock
offered by the Company hereby (at an assumed initial public offering price of
$13.00 per share), after deducting estimated underwriting discounts and expenses
payable by the Company in connection with the Offering, are estimated to be
approximately $29.9 million ($35.4 million if the Underwriters' over-allotment
option is exercised in full). The Company will not receive any proceeds from the
shares of Common Stock sold by the Selling Shareholders. See "Principal and
Selling Shareholders."

The net proceeds to be received by the Company will be used as follows: (i)
to repay existing indebtedness (including notes payable of approximately $0.3
million to certain directors and officers) approximating $13.9 million at June
30, 1996; (ii) approximately $9.0 million to pay the principal amount of the AAA
Notes dividended to the existing shareholders of OHE in connection with the
termination of the S Corporation status of OHE; (iii) approximately $1.3 million
to exercise an option to purchase the Company's leased Mexico City manufacturing
facility (which is now leased from an unrelated third party); (iv) approximately
$0.8 million to pay the initial installments for the acquisition of Palmer
Associates, S.C.; and (v) the remaining $4.9 million for general corporate
purposes, including potential acquisitions and working capital. There can be no
assurance that such allocations will not be changed to respond to changes in the
Company's business or future conditions. The amounts actually expended for such
purposes may vary significantly and are subject to change at the Company's
discretion, depending upon certain factors, including economic conditions, the
competitive environment and strategic opportunities that may arise. See
"Business -- Business Strategy." Pending such uses, the Company intends to
invest the net proceeds from the Offering in short-term investment grade
instruments. The debt to be repaid includes amounts outstanding ($13.6 million
at June 30, 1996 and $12.9 million at September 30, 1996) under a credit line
with a commercial bank expiring November 1, 1996 bearing interest at the prime
rate on the first $12.5 million of borrowings and 1% in excess of the prime rate
on borrowings in excess of $12.5 million and amounts payable to certain of the
Company's directors, officers and shareholders. A portion of the credit line
($3.5 million at June 30, 1996) is guaranteed by certain of the shareholders of
OHE. See Note 5 to the Company's Combined Financial Statements.

Following the closing of the Offering and of an anticipated $30.0 million
new credit agreement, the Company anticipates that it will have approximately
$2.1 million of outstanding indebtedness and approximately $30.0 million in
additional funds available under such new credit agreement, which funds may be
used for general corporate purposes, including the financing of acquisitions of
companies that will complement the Company's existing operations or provide it
with an entry into new markets. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Business -- Business Strategy."

DIVIDEND POLICY

The Company anticipates that any future earnings will be retained to
finance the Company's operations and for the growth and development of its
business. Accordingly, the Company currently does not anticipate paying cash
dividends on its shares of Common Stock in the foreseeable future. The payment
of any future dividends will be subject to the discretion of the Board of
Directors of the Company and will depend on the Company's results of operations,
financial position and capital requirements, general business conditions,
restrictions imposed by financing arrangements, if any, legal restrictions on
the payment of dividends and other factors the Board of Directors deems
relevant.

16
<PAGE> 20

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of
the Company as of June 30, 1996 on an actual basis, pro forma as of such date to
reflect the transactions set forth in Note (1) hereto and pro forma as adjusted
as of such date to reflect the transactions set forth in Note (1) hereto and as
adjusted for the sale by the Company of 2,600,000 of the shares of Common Stock
offered hereby (assuming an initial offering price of $13.00 per share) and the
application of the net proceeds therefrom, after deducting estimated
underwriting discounts and expenses payable by the Company in connection with
the Offering. See "Use of Proceeds." The table should be read in conjunction
with the Company's Combined Financial Statements, including the Notes thereto,
contained elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED
------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt:
Line of credit...................................... $13,646 $ 13,646 $ --
Current portion of long-term debt................... 1,623 1,623 1,623
Notes payable -- shareholders....................... 269 269 --
------- -------- -------
Total short-term debt.......................... $15,538 $ 15,538 $ 1,623
======= ======== =======
Long-term debt........................................... $ 270 $ 9,270 $ 520
------- -------- -------
Shareholders' equity (deficit):
Preferred Stock, $.01 par value, 100,000 shares
authorized, no shares issued or outstanding....... -- -- --
Common Stock, $.01 par value; 25,000,000 shares
authorized, 4,611,846 shares outstanding;
7,211,846 shares outstanding, as adjusted(2)...... 15 14 72
Additional paid-in capital.......................... 2,731 261 30,137
Retained earnings (deficit)......................... 1,263 (4,336) (4,336)
Cumulative foreign currency translation
adjustment........................................ 6 6 6
------- -------- -------
Total shareholders' equity (deficit)........... 4,016 (4,055) 25,879
------- -------- -------
Total capitalization......................... $ 4,286 $ 5,215 $26,399
======= ======== =======
</TABLE>

- ---------------

(1) Assumes the following transactions occurred as of June 30, 1996: (i)
distributions to existing shareholders from the AAA account in the amount of
$9.0 million in AAA Notes; (ii) the recognition of a net deferred tax asset
of $0.9 million resulting from the termination of OHE's S Corporation
status; (iii) the elimination of certain net liabilities of Limited not
acquired as part of the Reorganization; and (iv) the reclassification of a
portion of the remaining retained deficit of OHE prior to OHE becoming a C
Corporation from retained deficit to additional paid in capital to the
extent available ($2.5 million). See "Prior S Corporation Status,"
"Corporate Reorganization" and "Use of Proceeds."

(2) Excludes 180,000 shares of Common Stock issuable upon exercise of options
under the Company's 1996 Stock Option Plan which will be granted at the time
of the closing of the Offering at the initial public offering price.

17
<PAGE> 21

DILUTION

The pro forma net tangible book value of the Company as of June 30, 1996,
giving effect to the Reorganization, related accounting adjustments and the
dividend of the $9.0 million principal amount of the AAA Notes to the Company's
existing shareholders (see "Prior S Corporation Status" and "Corporate
Reorganization"), was approximately $(4.3) million, or $(.93) per share of
Common Stock. Net tangible book value per share represents the Company's total
tangible assets less total liabilities, divided by the total number of shares of
Common Stock outstanding. After giving effect to the sale of the 2,600,000
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $13.00 per share (and deducting underwriting discounts
and estimated offering expenses payable by the Company), the pro forma as
adjusted net tangible book value of the Company as of June 30, 1996 would have
been approximately $24.7 million, or $3.42 per share. This represents an
immediate increase in net tangible book value of approximately $4.35 per share
to existing shareholders and an immediate dilution of $9.58 per share to new
investors purchasing shares in the Offering. See "Use of Proceeds." The
following table illustrates this per share dilution in net tangible book value
per share to new investors as of June 30, 1996:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............................. $13.00
Net tangible book value per share as of June 30, 1996................... $ 0.82
Decrease in net tangible book value per share attributable to the
Reorganization, related accounting adjustments and the dividend of the
AAA Notes.............................................................. (1.75)
------
Pro forma net tangible book value per share............................. (0.93)
------
Increase in net tangible book value per share attributable to new
investors.............................................................. 4.35
Pro forma as adjusted net tangible book value per share after the Offering... 3.42
------
Dilution per share to new investors.......................................... $ 9.58
======
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1996,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company for those shares and the average price per
share paid by the existing shareholders and by new investors purchasing shares
of Common Stock in the Offering (at an assumed initial offering price of $13.00
per share and without giving effect to estimated underwriting discounts and
commissions and estimated offering expenses payable by the Company):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders(1)(2)........ 4,611,846 63.9% $ 2,500,000 6.9% $ 0.54
New investors(2)................... 2,600,000 36.1 33,800,000 93.1 13.00
--------- ----- ---------- -----
Total......................... 7,211,846 100.0% $36,300,000 100.0%
========= ===== =========== =====
</TABLE>

- ---------------

(1) Excludes 180,000 shares of Common Stock issuable upon exercise of options
granted as of the closing of the Offering at the initial offering price
under the Company's 1996 Stock Option Plan. See "Management -- Stock
Options."

(2) Sales by the Selling Shareholders in the Offering will reduce the number of
shares of Common Stock held by existing shareholders to 4,211,846 shares or
58.4% (55.0% if the Underwriters' over-allotment option is exercised in
full) of the total number of shares of Common Stock outstanding after the
Offering, and will increase the number of shares of Common Stock held by new
investors after the Offering to 3,000,000 shares or 41.6% (45.0% if the
Underwriters' over-allotment option is exercised in full) of the total
number of shares of Common Stock outstanding after the Offering. See
"Principal and Selling Shareholders."

18
<PAGE> 22

SELECTED COMBINED FINANCIAL DATA

The selected historical combined financial data presented below as of
December 31, 1994 and 1995 and for each of the three years in the period ended
December 31, 1995 have been derived from the combined financial statements of
the Company which have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report included elsewhere herein. The
combined financial data as of December 31, 1991, 1992 and 1993 and as of June
30, 1996 and for the years ended December 31, 1991 and 1992 and for the six
month periods ended June 30, 1995 and 1996, are derived from the Company's
unaudited combined financial statements. In the opinion of management, the
six-month financial data reflect all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of such data and are not
necessarily indicative of results to be expected for the full year. The selected
combined financial data should be read in conjunction with the Combined
Financial Statements and Notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $17,562 $16,860 $21,054 $33,912 $32,817 $12,162 $41,521
Cost of sales...................... 12,926 11,511 14,640 24,505 25,237 9,308 31,383
------- ------- ------- ------- ------- ------- -------
Gross profit.................... 4,636 5,349 6,414 9,407 7,580 2,854 10,138
Selling and marketing expenses..... 2,398 2,432 1,932 2,736 3,628 1,353 2,159
General and administrative
expenses........................ 1,334 1,464 3,169 4,441 4,129 2,080 3,286
------- ------- ------- ------- ------- ------- -------
Operating income (loss)......... 904 1,453 1,312 2,231 (177) (579) 4,693
Interest (expense)................. (395) (481) (269) (410) (842) (366) (613)
Other income (expense), net........ (319) 92 (81) 60 (103) (47) (78)
------- ------- ------- ------- ------- ------- -------
Net income (loss)(1)............... $ 190 $ 1,064 $ 962 $ 1,880 $(1,122) $ (991) $ 4,002
======= ======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
--------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......... $(3,710) $(4,468) $(2,238) $(1,999) $(3,231) $(2,876) $ (616)
Net property, plant and
equipment....................... 2,398 2,236 2,622 2,945 3,171 2,785 3,669
Total assets....................... 9,914 10,504 11,372 19,243 27,817 17,844 36,265
Total debt......................... 6,439 4,715 4,752 7,900 12,372 8,592 15,808
Shareholders' equity (deficit)..... (2,705) (1,713) (1,023) 1,273 239 368 4,016
</TABLE>

- ---------------

(1) Prior to the Offering, the Company's business was conducted by a group of
corporations (the "Related Corporations") affiliated by substantially common
management and control. See "Corporate Reorganization." The most significant
of the Related Corporations had elected to be treated as an S Corporation
for federal and state income tax purposes, and such Related Corporation's
income was allocable to its shareholders for income tax purposes, rather
than being taxed at the corporate level. Accordingly, the Selected Combined
Financial Data do not contain a provision for income taxes. See "Prior S
Corporation Status," the Combined Statements of Operations and Notes 2, 14
and 15 to the Company's Combined Financial Statements.

19
<PAGE> 23

SELECTED UNAUDITED CONDENSED PRO FORMA FINANCIAL DATA

The selected unaudited condensed pro forma financial data have been derived
from the combined financial statements of the Company. The unaudited pro forma
statement of operations data for the fiscal year ended December 31, 1995 and the
six months ended June 30, 1996, give effect to (i) the Reorganization and OHE's
C Corporation election, (ii) the Company's filing a consolidated U.S. Federal
tax return, (iii) the reduction in interest expense related to the repayment of
certain existing debt from the proceeds of the Offering and (iv) the recognition
of amortization on intangible assets resulting from the purchase of Palmer
Associates, S.C. The Company's purchase of the leased Mexico City manufacturing
facility has no material impact on the pro forma statement of operations data.
The unaudited condensed pro forma balance sheet data give effect to such
transactions and to the Offering and the use of the net proceeds therefrom after
deducting underwriting discounts and estimated expenses payable by the Company
as if such transactions had occurred on June 30, 1996. See "Prior S Corporation
Status," "Corporate Reorganization" and "Use of Proceeds."

The selected unaudited condensed pro forma financial data and accompanying
notes should be read in conjunction with the Combined Financial Statements of
the Company and the Notes thereto appearing elsewhere herein. The unaudited pro
forma financial data are provided for informational purposes only and do not
purport to represent what the Company's financial position or results of
operations actually would have been had the transactions described therein been
completed as of the date or at the beginning of the periods indicated, or to
project the Company's financial position or results of operations at any future
date or for any future period.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 SIX MONTHS ENDED JUNE 30, 1996
------------------------------------ ------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- --------- ---------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Net sales.......................... $32,817 $32,817 $ 41,521 $41,521
Cost of sales...................... 25,237 25,237 31,383 31,383
------- ------- ------- -------
Gross profit..................... 7,580 7,580 10,138 10,138
Operating expenses................. 7,757 $ 140(2) 7,897 5,445 $ 70(2) 5,515
------- ----- ------- ------- ----- -------
Operating income (loss).......... (177) 140 (317) 4,693 70 4,623
Interest (expense)................. (842) (657)(3) (185) (613) (519)(3) (94)
Other income (expense), net........ (103) -- (103) (78) -- (78)
------- ----- ------- ------- ----- -------
Income (loss) before income
taxes.......................... $(1,122) $(517) (605) $ 4,002 $(449) 4,451
======= ===== ======= =====
Pro forma provision (benefit) for
income taxes(4).................. (242) 1,780
------- -------
Pro forma net income (loss)........ $ (363) $ 2,671
======= =======
Pro forma net income (loss) per
common share..................... $ (0.06) $ 0.40
======= =======
Pro forma weighted average
common shares outstanding(5)..... 6,095,000 6,602,157
</TABLE>

- ---------------

(1) The unaudited pro forma statement of operations data do not reflect certain
non-recurring items which will be incurred at the time of the Offering
including a non-cash expense, with a corresponding increase in additional
paid-in capital, of approximately $37,000 for certain sales of shares. In
addition, the Company will record a net deferred tax credit of $883,000 as a
result of the termination of OHE's S Corporation status. See "Prior S
Corporation Status," "Corporate Reorganization" and "Certain Relationships
and Related Party Transactions -- Exercise of Stock Options and Sale of
Shares."

(2) Adjustments reflect the recognition of amortization on intangible assets
resulting from the purchase of Palmer Associates, S.C.

(3) Adjustments reflect the reduction in interest expense related to the
repayment of certain existing debt from the proceeds of the Offering. See
"Use of Proceeds."

(4) Adjustments reflect the recording of federal and state income taxes at an
effective rate of 40% as if OHE had been a C Corporation and as if the
Company had filed a consolidated U.S. federal tax return during each such
period. See "Prior S Corporation Status" and "Corporate Reorganization."

(5) The pro forma weighted average common shares outstanding is based on the
weighted average common shares outstanding, using the treasury stock method,
for the applicable period, as adjusted for the number of Common Shares
required to be issued by the Company in the Offering to generate sufficient
net proceeds to repay debt and to fund the distribution of the AAA Notes to
the existing shareholders of OHE.

20
<PAGE> 24

<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------------------------------------
PRO FORMA OFFERING PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
---------- ----------- --------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Assets:
Cash...................................... $ 1,088 $ (27)(1) $ 1,061 $ 5,771(2) $ 6,832
Advances to shareholders.................. 383 -- 383 (252)(2) 131
Notes receivable --
shareholder and affiliate............... 550 -- 550 (550)(2) --
Deferred tax asset........................ -- 883(3) 883 -- 883
Other current assets...................... 29,342 (264)(1) 29,078 -- 29,078
---------- ----------- --------- ----------- -----------
Total current assets.................... 31,363 592 31,955 4,969 36,924
Property, plant and equipment, net........ 3,669 (9)(1) 3,660 1,300(2) 4,960
Other assets.............................. 1,233 -- 1,233 1,000(2) 2,233
---------- ----------- --------- ----------- -----------
Total assets............................ $ 36,265 $ 583 $36,848 $ 7,269 $ 44,117
======= ========= ======== ========= =========
Liabilities and shareholders' equity
(deficit):
Revolving lines of credit................. $ 13,646 $ -- $13,646 $ (13,646)(2) $ --
Notes payable -- shareholders............. 269 -- 269 (269)(2) --
Current portion of long-term debt......... 1,623 -- 1,623 -- 1,623
Other current liabilities................. 16,441 (346)(1) 16,095 -- 16,095
---------- ----------- --------- ----------- -----------
Total current liabilities............... 31,979 (346) 31,633 (13,915) 17,718
Notes payable -- shareholders............. -- 9,000(4) 9,000 (9,000)(2) --
Long-term debt............................ 270 -- 270 250(2) 520
Shareholders' equity (deficit)............ 4,016 (8,071)(5) (4,055) 29,934(2) 25,879
---------- ----------- --------- ----------- -----------
Total liabilities and shareholders'
equity............................... $ 36,265 $ 583 $36,848 $ 7,269 $ 44,117
======= ========= ======== ========= =========
</TABLE>

- ---------------

(1) Adjustments reflect the elimination of certain selected assets and
liabilities of Limited not acquired as part of the Reorganization. See
"Corporate Reorganization" and "Use of Proceeds."

(2) Adjustments reflect the Offering and the use of the net proceeds therefrom
after deducting underwriting discounts and estimated expenses payable by the
Company in connection with the Offering. See "Use of Proceeds."

(3) Adjustments reflect the recognition of a net deferred tax asset resulting
from the termination of OHE's S Corporation Status. See "Prior S Corporation
Status."

(4) Adjustments reflect the distribution of the AAA Notes to the existing
shareholders of OHE. The amount of the AAA Notes includes an estimate of
taxable income through October 28, 1996. A June 30, 1996 effective date
would have resulted in AAA Notes of approximately $7.6 million. See "Prior S
Corporation Status."

(5) Reflects adjustments to shareholders equity as follows (in thousands):

<TABLE>
<S> <C> <C>
Elimination of certain net liabilities of
Limited................................... $ 46
OHE AAA account distributions............... (9,000)
Recognition of net deferred tax asset....... 883
-------
$(8,071)
=======
</TABLE>

21
<PAGE> 25

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of results of operations and financial condition
is based upon and should be read in conjunction with the Company's Combined
Financial Statements and Notes thereto, the selected combined financial data and
other financial data appearing elsewhere in this Prospectus.

GENERAL

The Company is a leading provider of security hardware products and
integrated satellite communication systems to commercial and governmental
clients worldwide and is currently pursuing additional opportunities in the
security services area. The Company's primary products include the armoring of
commercial and military vehicles and the integration of satellite communications
hardware and software. In 1996, the Company began offering integrated site
protection security systems and plans to offer security services including
training, guard services, site surveys and security engineering documentation
systems.

IMPACT ON OPERATIONS

The Company's Combined Financial Statements have been or will be affected
by several factors, including: (i) revenue recognition, (ii) S Corporation
distributions and (iii) taxes on income in connection with the termination of
OHE's S Corporation status.

Revenue recognition. The Company's net sales from government contracts and
most commercial contracts are recognized using the percentage-of-completion
method calculated utilizing the cost-to-cost approach. Under this method,
estimated contract revenues are accrued based generally on the percentage that
costs to date bear to total estimated costs. Estimated contract losses are
recognized in full when determined. Accordingly, contract revenues and total
cost estimates are reviewed and revised periodically as the work progresses and
as change orders are approved, and adjustments based upon the percentage of
completion are reflected in contract revenues in the period when such estimates
are revised. To the extent that these adjustments result in an increase, a
reduction or an elimination of previously reported contract revenues, the
Company would recognize a credit or a charge against current earnings, which
could be material. Contract costs include all direct material and labor costs,
along with certain overhead costs allocated to contract production.

22
<PAGE> 26

Provisions for any estimated total contract losses on uncompleted contracts
are recorded in the period in which it is concluded that such losses will occur.
Changes in estimated total contract costs will result in revisions to contract
revenue. The revisions are recognized when determined.

Revenue related to telecommunications equipment and services is recognized
as equipment is shipped or as services are provided. Revenue and related direct
costs of brokered satellite time are recorded when payments are received from
customers.

S Corporation distributions. From 1988 when OHE elected S Corporation
status until October 28, 1996 when that status terminated, it had made
distributions from time to time to its shareholders for the purpose of funding
their income tax payments on the income generated by OHE, which income was
taxable to the shareholders whether or not distributed. In connection with the
Reorganization, OHE distributed to its shareholders a dividend of $9.0 million
in AAA Notes, which approximates the value of OHE's AAA account at the time of
the Reorganization. See "Prior S Corporation Status."

Taxes on income. During the time that OHE was treated as an S Corporation
under Subchapter S of the Code and comparable provisions of certain state tax
laws, it paid no federal income tax. On October 28, 1996, OHE terminated its S
Corporation status, with the result that the Company is responsible for federal
and state income taxes.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the items noted
as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Security hardware products:
Military............................... 28.5% 50.1% 45.6% 28.8% 72.4%
Commercial............................. 67.2 48.6 48.2 66.3 18.4
Security systems integration............. 4.3 1.3 6.2 4.9 9.2
Security services........................ -- -- -- -- --
----- ----- ----- ----- -----
Total net sales........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................ 69.5 72.3 76.9 76.5 75.6
----- ----- ----- ----- -----
Gross profit........................... 30.5% 27.7% 23.1% 23.5% 24.4%
Operating expenses:
Selling and marketing.................. 9.2 8.1 11.0 11.1 5.2
General and administrative............. 15.1 13.1 12.6 17.1 7.9
----- ----- ----- ----- -----
Operating income (loss).................. 6.2 6.5 (0.5) (4.7) 11.3
Other expense (income):
Interest expense....................... 1.2 1.2 2.6 3.0 1.5
Other, net............................. 0.4 (0.2) 0.3 0.4 0.2
----- ----- ----- ----- -----
Net income (loss)........................ 4.6% 5.5% (3.4)% (8.1)% 9.6%
===== ===== ===== ===== =====
</TABLE>

Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995

Net sales. Net sales for the six months ended June 30, 1996 were $41.5
million, an increase of $29.4 million or 241.4% compared to $12.2 million for
the six months ended June 30, 1995. The increase in net sales was primarily due
to an increase in costs incurred related to vehicles under the Up-Armored HMMWV
program. Net sales of military armoring products for the six months ended June
30, 1996 were $30.0 million, an increase of $26.5 million or 757.3%, compared to
$3.5 million for the six months ended June 30, 1995. Net sales of commercial
armoring products for the six months ended June 30, 1996 were $7.6 million, a
decrease of

23
<PAGE> 27

$0.4 million or 5.3%, compared to $8.1 million for the six months ended June 30,
1995. Net sales of the satellite communications business for the six months
ended June 30, 1996 were $3.8 million, an increase of $3.2 million or 548.5%,
compared to $0.6 million for the six months ended June 30, 1995.

Cost of sales. Cost of sales for the six months ended June 30, 1996 was
$31.4 million, an increase of $22.1 million or 237.2% compared to $9.3 million
for the six months ended June 30, 1995. The increase in cost of sales was due to
the increase in production levels. Gross profit as a percentage of net sales was
24.4% for the six months ended June 30, 1996 as compared to 23.5% for the six
months ended June 30, 1995. While this represents an improvement over the 23.1%
achieved in 1995, it is lower than the corresponding numbers achieved in 1993
and 1994. The Company anticipates that gross profit as a percentage of net sales
will remain lower than that historically achieved by the Company due to lower
margins associated with the Company's increased level of military net sales.

Selling and marketing. Selling and marketing expenses for the six months
ended June 30, 1996 were $2.2 million, an increase of $0.8 million or 59.6%,
compared to $1.4 million for the six months ended June 30, 1995. This increase
was primarily attributable to expenses associated with increases in personnel
and advertising to implement the Company's business strategy.

General and administrative. General and administrative expenses for the
six months ended June 30, 1996 were $3.3 million, an increase of $1.2 million or
58.1%, compared to $2.1 million for the six months ended June 30, 1995. This
increase in administrative expenses was due to the addition of professional
employees to support the increased level of business activity.

Interest expense. Interest expense for the six months ended June 30, 1996
was $0.6 million, an increase of $0.2 million or 67.5%, compared to $0.4 million
for the six months ended June 30, 1995. This increase in interest expense was
due to increased borrowings to finance increased production levels.

1995 Compared to 1994

Net sales. Net sales were $32.8 million for 1995, a decrease of $1.1
million or 3.2%, compared to $33.9 million for 1994. The decrease in net sales
was primarily due to the late delivery of HMMWV chassis by a supplier which
resulted in a six-month delay in the armoring of HMMWVs for the Department of
Defense ("DoD"). Such delay was principally responsible for a decrease in net
sales of military armoring products to $15.0 million for 1995, a decrease of
$2.0 million or 12.0%, compared to $17.0 million for 1994. Net sales of
commercial armoring products were $15.8 million for 1995, a decrease of $0.7
million or 4.0%, compared to $16.5 million for 1994. Net sales of the satellite
communications business were $2.0 million, an increase of $1.6 million or
358.3%, compared to $0.4 million for 1994.

Cost of sales. Cost of sales was $25.2 million for 1995, an increase of
$0.7 million or 3.0%, compared to $24.5 million for 1994. The increase in cost
of sales was primarily due to the absorption of manufacturing and material
overhead associated with the six-month delay in the armoring of the HMMWVs for
the DoD. Since production was expected to return to anticipated levels once the
delay period ended, the Company retained its manufacturing personnel and did not
temporarily reduce its head count. As a result of this delay and the increased
percentage of sales associated with military sales, which have a lower gross
profit margin than commercial sales, cost of sales as a percentage of net sales
increased to 76.9% for 1995 from 72.3% for 1994. In addition, engineering
expenses for OHE increased approximately $0.5 million to $1.1 million as a
result of the additional engineering requirements for the HMMWV contract.

Selling and marketing. Selling and marketing expenses were $3.6 million
for 1995, an increase of $0.9 million or 32.6%, compared to $2.7 million for
1994. This increase was primarily attributable to increased sales personnel and
travel expenses that were incurred to support OSN's growth.

General and administrative. General and administrative expenses were $4.1
million for 1995, a decrease of $0.3 million or 7.0%, compared to $4.4 million
for 1994. Increases in personnel costs were offset by lower travel and insurance
costs.

24
<PAGE> 28

Interest expense. Interest expense was $0.8 million for 1995, an increase
of $0.4 million or 105.4%, compared to $0.4 million for 1994. This increase in
interest expense was due to additional borrowings to finance working capital
growth and the HMMWV contract.

1994 Compared to 1993

Net sales. Net sales were $33.9 million for 1994, an increase of $12.9
million or 61.1%, compared to $21.1 million for 1993. The increase in net sales
was due to costs incurred relating to additional HMMWV production. Net sales of
military armoring products were $17.0 million for 1994, an increase of $11.0
million or 183.7%, compared to $6.0 million for 1993. Net sales of commercial
armoring products were $16.5 million for 1994, an increase of $2.3 million or
16.4%, compared to $14.2 million for 1993. Net sales of the satellite
communications business were $0.4 million for 1994, a decrease of $0.5 million
or 51.2%, compared to $0.9 million for 1993.

Cost of sales. Cost of sales was $24.5 million for 1994, an increase of
$9.9 million or 67.4%, compared to $14.6 million for 1993. This increase was due
to costs incurred relating to additional HMMWV production. Cost of sales as a
percentage of net sales increased to 72.3% for 1994 from 69.5% for 1993 due to
the increased percentage of sales associated with military sales, which have a
lower gross profit margin than commercial sales.

Selling and marketing. Selling and marketing expenses were $2.7 million
for 1994, an increase of $0.8 million or 41.6%, compared to $1.9 million for
1993. This increase was primarily attributable to increased personnel and travel
and promotion expenses.

General and administrative. General and administrative expenses were $4.4
million for 1994, an increase of $1.2 million or 40.1%, compared to $3.2 million
for 1993. This increase in general and administrative expenses was primarily due
to additional personnel to support the higher level of business activity and
increased travel related leasing expenses.

Interest expense. Interest expense was $0.4 million for 1994, an increase
of $0.1 million or 52.4%, compared to $0.3 million for 1993. This increase
resulted from the increase in interest rates for 1994 over 1993.

LIQUIDITY AND CAPITAL RESOURCES

General. The Company historically has met its operating cash needs by
utilizing borrowings under its credit arrangements to supplement cash provided
by cumulative net income and depreciation and amortization. The Company plans to
repay a significant portion of its existing bank debt with proceeds from the
Offering.

Existing credit agreements. The Company is party to various credit
arrangements aggregating $16.5 million principally with The Fifth Third Bank.
The Company currently has a $12.0 million revolving credit loan that matures
November 1, 1996 and a $4.0 million facility that matures on February 14, 1997.
Outstanding borrowings under these credit arrangements were approximately $13.6
million as of June 30, 1996 and $12.9 million as of September 30, 1996. These
credit arrangements bear interest at the prime rate, which was 8.25% at June 30,
1996, on the first $12.5 million in borrowings and 1% in excess of the prime
rate on borrowings in excess of $12.5 million. The remaining $0.5 million credit
arrangement is with a Brazilian bank to support the Company's Brazilian
subsidiary.

New credit agreement. The Company expects to enter into a new credit
agreement to replace the existing credit arrangements with The Fifth Third Bank.
The new credit agreement with The Fifth Third Bank and one other bank will
provide the Company with a $30.0 million, one year, revolving credit facility
together with a $4.5 million letter of credit facility that will provide the
Company with more favorable terms and conditions than the existing credit
arrangements. The new credit agreement is expected to bear interest at either
the prime rate or a floating rate based upon LIBOR plus 275 basis points, with a
1% per year charge for

25
<PAGE> 29

outstanding letters of credit. The facility will be secured by a lien on the
Company's assets and will include various financial covenants including minimum
tangible net worth of $20.0 million, total debt to tangible net worth not to
exceed 2.25 to 1, current ratio not to be less than 1.5 to 1, and debt service
coverage not to be less than 1.5 to 1. The facility also will limit the
Company's investment in overseas operations to $10.0 million and will provide
that any acquisition in excess of $2.0 million will be subject to lender
approval. The new credit agreement will not be guaranteed by any of the
Company's shareholders. The Company expects that the net proceeds of the
Offering, together with the new credit agreement, will be sufficient to fund the
Company's operations (without giving effect to additional acquisitions) for at
least the next 12 months.

Cash flows from operating activities. Net cash used in operating
activities was $2.3 million and $4.0 million for the years ended December 31,
1994 and 1995, respectively, and $0.9 million and $1.2 million for the six
months ended June 30, 1995 and 1996, respectively. In each period, except for
the six months ended June 30, 1995, the Company experienced a significant
aggregate net increase in receivables, vendor advances, costs in excess of
billings and inventories. These working capital requirements related to
increased production and sales in 1994 and for the first six months of 1996 and,
in 1995, a $3.4 million increase in advances to vendors.

Capital expenditures. Historically, the Company has limited its capital
expenditure requirements by leasing facilities and equipment from affiliated
entities. See "Certain Relationships and Related Party Transactions." Capital
expenditures totaled $0.8 million in the six months ended June 30, 1996, $0.6
million in 1995, $0.7 million in 1994 and $0.6 million in 1993. The Company
anticipates capital expenditures will total approximately $2.7 million in 1996,
including $1.2 million to purchase its leased Mexico City manufacturing
facility.

Cash flows from financing activities. Net cash provided by financing
activities of $3.6 million and $4.6 million for the years ended December 31,
1994 and 1995, respectively, and $0.8 million and $3.1 million for the six
months ended June 30, 1995 and 1996, respectively, was primarily from net
increases in borrowings under the Company's revolving lines of credit.

S Corporation distributions. OHE elected S Corporation status in 1988 and
historically made distributions to its shareholders for the purpose of paying
taxes on income generated by OHE which was taxable to the shareholders. On
October 28, 1996, OHE terminated its S Corporation status and distributed to its
shareholders a dividend of $9.0 million in AAA Notes, which approximated the
balance of OHE's AAA account. These AAA Notes will be paid with a portion of the
proceeds of this Offering. See "Prior S Corporation Status."

Foreign operations. The Company attempts to mitigate the risks of doing
business in developing countries by separately incorporating its operations in
certain such countries; having local partners in certain countries; entering
into contracts providing for payment in U.S. dollars instead of the local
currency where possible; maintaining reserves for credit losses; and maintaining
insurance on equipment to protect against losses related to political risks and
terrorism.

Backlog. The Company's backlog at December 31, 1995 and June 30, 1996 was
approximately $42.0 million and $39.0 million, respectively. Backlog consists of
net sales value for firm orders not previously included in net sales on the
basis of percentage of completion accounting. Because many factors affect the
conclusion of definitive agreements for contracts awarded and the production and
delivery of the Company's products, no assurance can be given as to whether or
when net sales will be recognized from the Company's backlog. Year-to-year
comparisons of backlog are not necessarily indicative of future operating
results.

Quarterly fluctuations. The Company's operations are not seasonal, but may
fluctuate on a quarterly basis as a result of the timing of contract costs. The
incurrence of contract costs and related production scheduling must be
responsive to specific customer delivery requirements which may involve the
acceleration of deliveries under a contract at a customer's request due to the
customer's urgent needs, such as occurred with the HMMWV contract in 1996. The
Company's liquidity may be affected by the payment terms of its U.S. Military
and certain foreign government contracts.

26
<PAGE> 30

INDUSTRY OVERVIEW

The Company's products and services are offered in two distinct areas of
the global security industry: (i) the market for add-on ("applique") armoring
systems for military vehicles and (ii) the commercial security market.

MILITARY MARKET OVERVIEW

The military market for vehicle armoring systems historically has focused
on providing opaque and transparent armor for heavy tracked vehicles such as
tanks and armored personnel carriers and for other weaponry such as helicopters
and missile systems. Recently, the market for ballistic and blast protected
armoring systems has experienced significant growth largely due to the changing
nature of military conflicts and shrinking military budgets. These changes have
led to an increased threat to wheeled vehicles used in their traditional roles
and the broadening of the use of wheeled vehicles into traditional combat roles.
The expanded use of more versatile tactical wheeled vehicles ("TWVs"), such as
the HMMWV, the Heavy Expanded Multipurpose Tactical Truck ("HEMTT") and the
Palletized Loading System ("PLS"), in the late 1980s and 1990s, have provided
the basis of a fleet of TWVs which will require significantly greater add-on
armoring protection.

Military conflicts increasingly require rapidly deployable forces and
equipment which are light, highly mobile and protected. For example, over the
past few years the U.S. Military and the United Nations have dispatched
peacekeeping forces to troubled situations in Bosnia, Somalia and Haiti. In
these conflicts, there are no defined "front lines," and engagements can arise
from all sides at any time. In addition, the nature of these conflicts, and in
particular the indiscriminate use of landmines of both the antipersonnel and
antitank type, have emphasized the risk from blast effects in addition to
ballistic weapons. Thus, the use of TWVs, which had historically operated behind
friendly lines with little need for armored protection, now requires integrated
armoring systems which protect against ballistic and blast effects to limit the
risks to their occupants. Armored TWVs, such as the Up-Armored HMMWV, have
played a crucial role in limiting risks to personnel and to limiting casualties
during such high risk military operations. Also, in these conflicts, the United
Nations traditionally has desired not to be perceived as an aggressor force and,
accordingly, has asked participating armed forces not to utilize heavy armored
vehicles. This has required highly protected "non-aggressive" vehicles for
peacekeeping operations worldwide. As a result of these developments, the market
for armoring systems for TWVs is increasing worldwide.

Growth in the use of armored TWVs has also been driven by worldwide cuts in
military budgets. For example, the U.S. Military is focusing its efforts on
reducing the use of expensive, fully armored tracked vehicles, such as the M1A1
tank and the Bradley armored personnel carrier, in favor of less expensive
(lower initial and operational costs), light armored wheeled vehicles. The
Tactical Wheeled Vehicle Investment Strategy prepared last year by the U.S.
Army's Program Executive Officer for Tactical Wheeled Vehicles presented several
scenarios for procurement of TWVs. The report concluded that the most
appropriate strategy to stabilize TWV fleet ages within economic useful lives
would make use of a balanced mix of programs for both new procurement and
remanufacture and would require approximately $385 million per year. The Company
believes that Up-Armored HMMWVs and kits for HMMWVs and other TWVs are an
integral part of this strategy.

Because of growing cooperation and standardization between U.S. and other
international armed forces, the Company expects international demand for
armoring systems for U.S. models of TWVs to rise and for foreign armed forces to
constitute a growing sector of the military market. There are currently over
130,000 HMMWVs operating with armies around the world and, therefore, a
significant natural market for both new up-armored TWVs and retrofit armored
kits is in place. Mexico, Saudi Arabia, Kuwait, the United Arab Emirates, Taiwan
and Thailand all currently rely upon the HMMWV as a primary light TWV. These
nations, and others with less reliance on the HMMWV, are facing the same trends
and share many of the same needs as the U.S. Military. As documented by the
number of vehicles and level of interest demonstrated at the

27
<PAGE> 31

EuroSatory land defense exhibition in Paris, armored light TWVs are growing in
importance for modern armies charged with peacekeeping and urban operations.

The market for medium and heavy TWVs with armoring systems is currently
less well developed. However, because modern militaries desire to operate heavy
TWVs independent of armored escort, U.S. and foreign militaries are currently
developing programs to acquire armored medium and heavy TWVs. Some contracts
call for retrofitting existing fleets with armor and blast protection packages,
while others require all new vehicle designs and armoring systems.

Other U.S. Military weapons systems, such as the Multiple Launch Rocket
System ("MLRS"), rely on armoring systems to protect vulnerable high technology
equipment. DoD expects the MLRS system to be deployed in the field until the
year 2025. Advanced armoring systems will be required to protect more highly
evolved and expensive systems. The success of the MLRS in Desert Storm has
increased interest in that system from friendly armed forces. Military armoring
systems are also required to protect aircraft and helicopters.

COMMERCIAL MARKET OVERVIEW

The private security industry, broadly defined, is comprised of thousands
of companies providing a broad variety of products and services, locally,
regionally, nationally, and in some cases worldwide. These products and services
are offered by private investigators, security guard companies, home alarm
monitoring companies, and armored commercial vehicle manufacturers, among many
other security related businesses (see table below). The Freedonia Group, Inc.,
an independent research organization, estimates that the U.S. private security
market had revenues of approximately $24.8 billion in 1994, and expects this
number to increase to $39.0 billion by the year 2000. Internationally, the
market for security equipment alone is estimated at $25.9 billion and is
expected to grow to $43.9 billion by the year 2000. To date, the Company has
concentrated its efforts in the vehicle armoring area of the private security
industry. No statistical data is available with regard to the size of this area
due to its highly fragmented nature and the lack of any relevant industry trade
groups.

SELECTED SECURITY PRODUCTS AND SERVICES

<TABLE>
<S> <C> <C>
Airport/Aircraft Security Support Driver Training Locksmiths
Armored Vehicles Drug Testing Private Investigators
Alarms Hardware/Monitoring Eavesdropping Detection Publishing/Market Research
Background Checks Executive/VIP Protection Security Storage
Consultants/Security Engineers Guard Dogs Security Agent Training
Contract Guards Hostage Negotiations Truth/Honesty Verification
Couriers (Security) Identification Badges Uniform Rentals
</TABLE>

Over the past 20 years, the proliferation of advanced weaponry, related
technologies and information has empowered the criminal element with the ability
to penetrate, steal, damage or destroy previously protected assets and
individuals. In the United States, for example, bombings have now replaced
murders as the fastest growing category of violent crime. Internationally, crime
rates have risen dramatically as greater affluence and social tensions in
developing nations have ignited violent criminal activity. For example,
according to Penn Associates, a leading security intelligence firm, murders have
doubled in Sao Paulo, Brazil to over 7,500 per year, and in the former Soviet
Union, several newly independent states have experienced crime rates which have
risen over 300% in the last three years. Worldwide, governments, organizations,
businesses and individuals are concerned about rapidly growing threats from (i)
terrorism, (ii) kidnapping, (iii) random acts of violence, (iv) urban
unrest/crime, and (v) crimes against business.

Terrorism. According to statistics compiled by the U.S. State Department,
individual acts of international terrorism grew 37% from 322 separate violent
incidents in 1994 to 440 in 1995. These acts included armed attacks, arson,
bombings, chemical attacks, firebombings, kidnapping and vandalism. Of these
terrorist attacks, 62% occurred in Europe, 21% in Latin America, and 10% in the
Middle East. Terrorist acts against businesses represented 332 or 75% of these
incidents in 1995, up from 127 or 39% in 1994, underscoring the

28
<PAGE> 32

need for multinational businesses to protect themselves and their employees from
these calculated assaults. Governments and organizations worldwide have also
increased security focus at public buildings during major sporting and cultural
events and at train stations and airports. Demand is increasing for
sophisticated event security and integrated building/complex security systems
comprised of people, technology, and hardware products to combat the threat of
terrorism.

Kidnapping. Kidnappings for ransom have been on the rise over the past few
years and, increasingly, the targets are local and foreign business executives.
According to Kroll Associates, Inc., an independent security research firm,
Latin America continues to report the highest number of these abductions per
year with approximately 6,500 incidents reported in 1995, including 3,600
incidents in Colombia and 1,450 in Mexico, while the Middle East/Africa, Asia
Pacific, Europe, and North America/Puerto Rico reported 375, 235, 160, and 50
kidnapping incidents, respectively, in 1995. In many countries, traditional
patterns of weak, inefficient and corrupt law enforcement and a significant
disparity in wealth distribution have motivated a surge in abductions as well as
underscoring the need for private security.

Random acts of violence, urban unrest and crime. Individuals are
increasingly seeking cost effective ways to insulate themselves from violent
threats while inside and away from their homes. These threats have been
heightened by the proliferation of firearms (for example, 30 U.S. states now
permit the carrying of concealed weapons) that has increased the presence of and
access to weaponry in public places. In addition, bombings in the U.S. have
increased dramatically. For example, non-incendiary bombings in the U.S. grew
55% from 1,573 in 1990 to 2,438 in 1994, according to the U.S. Bureau of
Alcohol, Tobacco and Firearms. Also, urban crime and gang activities have
increased the number of drive-by shootings, carjackings, bombings and
drug-related violence. Worldwide, political, economic, and social changes
resulting in the disenfranchisement of lower socio-economic groups and
organizations have led organized crime groups and criminal enterprises to expand
their numbers and ranges of activities.

Crimes against business. An increasing spectrum of risks for corporations
has emerged such as breaking and entering, theft, unauthorized computer access,
computer fraud, illegal wiretaps, telecommunications monitoring, hostage-taking,
money laundering, industrial espionage, vandalism and terrorism. These risks
have created new challenges for corporate security managers worldwide. As
multinational corporations establish offices and manufacturing facilities in
foreign and developing countries, this diversity of threats not previously
experienced requires corporate security managers to evaluate comprehensive
security programs for both their physical plants and corporate executives.

To respond to these threats, the number of security related firms has grown
and the range of advanced and highly engineered security products and support
services offered has increased as well. The technological sophistication of
security equipment has improved by utilizing advanced materials,
state-of-the-art technologies, engineering design techniques and better
production methods. Security companies have been able to develop stronger,
smaller and lighter protective products that can be sold separately or
integrated into commercial products commonly available today (such as
bulletproof vests, protective glass and home and auto security systems). In
addition, the prices for many hardware products have declined making certain
products more accessible to the broader commercial and public sectors. On the
service side, in addition to the major guard and other special security service
companies, a growing network of security professionals formerly affiliated with
government security forces have formed their own private companies advising
heads of state, corporations, organizations, and individuals on integrated
security hardware and service offerings. Overall, these products and services
will continue to be demanded by governments, organizations, corporations and
individuals seeking to protect their assets from the growing threats posed
worldwide.

29
<PAGE> 33

BUSINESS

The Company is a leading provider of fully integrated ballistic and blast
protected vehicle armoring systems for military, commercial and governmental
clients worldwide. Through OHE, the Company currently is the primary provider of
armoring systems for HMMWVs used by the U.S. Military and other armed forces
worldwide. OHE also provides armored commercial vehicles for heads of state,
business executives and VIPs worldwide, including presidential limousines used
by every U.S. President since 1948. Through OSN, the Company provides vital
communications systems for its clients by integrating proprietary hardware and
smart card billing software that operate on the Inmarsat network. In addition,
the Company offers customized turn-key site security systems to international
customers.

To capitalize on these trends, the Company has realigned its activities
along three business lines: security hardware products, security systems
integration and security services. The Security Hardware Products Group
currently markets all of the Company's armoring products, including fully
integrated ballistic and blast protected armored military and commercial
vehicles, aircraft and missile container armor, and field installed armoring
systems. The Security Systems Integration Group offers planning, design, and
hardware and software integration services which are customized to meet specific
satellite communications or site protection needs of customers. The Security
Services Group intends to offer security-related services such as security
background clearances, business intelligence, country risk assessments,
airport/aircraft security support, and private security agent and driver
training. The Company believes that it enjoys strong name recognition and
reputation and that these factors, combined with its design, engineering and
production expertise, as well as its network of affiliations in the security
industry will enable it to market successfully a broader array of security
products and services worldwide.

SECURITY METHODOLOGY

In essence, security involves the protection of an asset. That asset may be
human or material, tangible or intangible. The Company's strategy for business
growth is based upon a methodology for asset protection,

30
<PAGE> 34

known as the "Concentric Circles of Protection." This methodology integrates
intelligence, access control and protective hardware, as shown in the following
diagram:

CONCENTRIC CIRCLES OF PROTECTION

Intelligence <----------- Security Services Group

Access
Control <----------- Security Systems Integration
Group
Protective
Hardware <----------- Security Hardware Products
Group

Protected
Asset

Intelligence seeks to obtain prior warning of a possible attack to the
protected asset. Access Control seeks to limit the ability of an attacker to
strike. Protective Hardware seeks to defeat an attack once made. Communications
coordinates each of these elements. Thus, the Company's business groups are
organized to address each circle of protection, by providing the requisite
product and services necessary to meet the needs of the Concentric Circles of
Protection methodology.

BUSINESS STRATEGY

The principal elements of the Company's operating and growth strategy are
as follows:

Expand armored commercial vehicle sales in foreign markets. The Company
intends to expand its foreign market position as a leading provider of armored
commercial vehicles by leveraging its well recognized name, high quality
reputation and global network of customer relationships. To support this effort,
the Company has established manufacturing operations in Mexico, Brazil and
Russia, has increased its sales and marketing professionals from four at October
1985 to 19 at present and has increased its annual marketing budget from $0.7
million in 1995 to $1.8 million in 1996. The Company believes that these
efforts, coupled with the strong demand in these countries for armored
commercial vehicles, will enable it to penetrate effectively these markets. In
the future, the Company intends to establish manufacturing operations in
additional countries as it deems appropriate.

Expand foreign military sales. As the nature of armed conflicts changes and
worldwide military budgets are cut, the Company believes that expensive heavily
armored tracked vehicles will continue to be replaced by more versatile and less
expensive tactical wheeled vehicles ("TWVs"), such as the HMMWV. The Company
markets both factory assembled, fully armored ("Up-Armored") HMMWVs and armor
kits which may be added in the field to certain existing HMMWVs. There currently
exists an installed base of 130,000 HMMWVs, including 18,400 owned by 31 foreign
countries. The Company estimates that approximately 12,000 of the HMMWVs in use
worldwide are suitable for its armor kits and believes a significant opportunity
exists to market aggressively these kits, internationally as well as
domestically. The Company also believes that those countries currently utilizing
HMMWVs are candidates for future sales of the Up-Armored HMMWV. For example, the
Company recently entered into contracts to provide Up-Armored HMMWVs to two
foreign countries, Luxembourg and Qatar.

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<PAGE> 35

background clearances, business intelligence, country risk assessments,
airport/aircraft security support, and private security agent and driver
training. The Company is adding Mr. William S. Sessions, the former Director of
the Federal Bureau of Investigation, as a director, and Mr. Hugh E. Price, the
former Deputy Director for Operations of the Central Intelligence Agency, as
President, Security Services Group and as a director. The Company believes the
addition of these individuals to its management team, along with their
reputation, experience and network of relationships, will enhance the Company's
ability to market these services worldwide.

Standardize production to improve efficiencies and reduce throughput
time. Since 1994 the Company has committed approximately $3.1 million to
engineering, tooling, and training to standardize its product design, armoring
components, and assembly line operations. Through the application of these
techniques, the number of employee work hours needed to produce the Up-Armored
HMMWV has been reduced from 465 to 265, and the number of components involved
from 800 to 550. These techniques are now being applied by the Company to the
production of certain commercial products, the first being the Standard
Suburban. Employee work hours required to armor the Standard Suburban have been
reduced from 1,200 to 650, and the number of components involved from 350 to
200. The Company is currently working to standardize its process of armoring a
passenger sedan. As a result of these efficiencies, the Company believes it will
be better able to provide immediate delivery of its armored commercial vehicles,
which will increase substantially their attractiveness and marketability in the
U.S. as well as abroad.

RELATED GROWTH OPPORTUNITIES

Longer term, the Company believes that substantial opportunities for
additional growth exist in the following areas:

Automotive consumer safety market. Under a written memorandum of
understanding with International Electronics Engineering, a Luxembourg company
("IEE"), the Company has been appointed the distributor in the United States,
Canada, Mexico and Brazil for Passenger Presence Detection sensors manufactured
by IEE for the automotive industry. These sensors are designed to prevent
automotive airbags from inflating when an infant is in the front seat. The U.S.
National Highway Traffic Safety Administration has proposed new rules requiring
automakers to install airbag on/off switches and warning labels on car
dashboards until a "smart" system is installed which can disengage automatically
the airbag mechanism. The Company believes that IEE has the only such sensor
system which is currently in commercial production, although there can be no
assurance that competing products have not been, or will not be, developed. The
sensors have been developed by IEE in conjunction with a third party. The
Company's appointment is exclusive with respect to IEE, but not with respect to
the third party. Under the memorandum of understanding, IEE is responsible for
shipping the sensors to the Company and establishes the prices at which the
sensors are sold. The Company will seek to develop additional customers and will
receive commissions from IEE based upon sales of the sensors. The Company and
IEE are now engaged in discussions concerning the possible formation of a joint
venture which would engineer and manufacture the sensors and other IEE products
in the United States. The Company plans to enter the U.S. automotive consumer
safety market with this product in the near future and subsequently pursue other
markets for that and related products. The Company also intends to evaluate the
cost effectiveness of potential market opportunities for introducing other
consumer-oriented automotive safety products.

U.S. protected private passenger vehicle market. To date, the Company has
not targeted the private protected passenger vehicle market in the United
States. The Company believes that the level of violence,

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<PAGE> 36

particularly random bombings, drive-by shootings and carjackings, within the
United States will lead to greater demand for commercially available protected
automobiles. The Company feels that it is well suited to capitalize on this
demand by offering a locally installed protection package or kit, which may
consist of anti-intrusion glass or transparent armor, run flat tires,
inside/outside intercoms or special door lock devices. To penetrate this market,
the Company will need to develop an extensive sales, marketing, distribution and
dealer installation network which will permit it to generate volumes sufficient
to allow the offering of its products at prices attractive to potential
customers.

PRODUCTS AND SERVICES

The following table presents the net sales of the Company's principal
products and services for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Security Hardware Products Group......... $20,141 $33,466 $30,773 $11,570 $37,682
Security Systems Integration Group....... 913 446 2,044 592 3,839
Security Services Group.................. -- -- -- -- --
------- ------- ------- ------- -------
Total.......................... $21,054 $33,912 $32,817 $12,162 $41,521
======= ======= ======= ======= =======
</TABLE>

The Company's products and services are, or will be, focused on three
primary areas of global security. The Security Hardware Products Group markets
all the Company's armoring products, including fully integrated ballistic and
blast protected armoring systems for military vehicles, aircraft and missile
armor, field-installed armoring systems, and armored commercial vehicles. The
Security Systems Integration Group offers satellite communications systems and
site specific security systems in which hardware and software are integrated to
meet a customer's specific requirements. The Security Services Group, which is a
start-up operation, is designed to offer security-related services such as
security background clearances, business intelligence, country risk assessments,
airport/aircraft security support, and private security agent and driver
training. On August 15, 1996 the Company entered into an agreement in principle
to acquire Palmer Associates, S.C., a provider of security services, such as
driver training, background investigations and due diligence reports, in Mexico
City, Mexico. The acquisition is expected to close before the end of 1996.

Security Hardware Products Group

The following table provides net sales information about the products and
services of the Company's Security Hardware Products Group:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MILITARY PRODUCTS:
Up-Armored HMMWVs...................... $ 2,803 $15,222 $13,275 $ 2,961 $23,544
HMMWV Armor Kits....................... -- -- -- -- 5,599
Other Armor Systems.................... 3,188 1,772 1,680 544 905
------- ------- ------- ------- -------
5,991 16,994 14,955 3,505 30,048
ARMORED COMMERCIAL PRODUCTS:
Fully Armored Vehicles................. 11,572 11,265 11,024 5,598 4,842
Light Armored Vehicles 1,441 2,953 2,213 1,339 2,253
Other.................................. 1,137 2,254 2,581 1,128 539
------- ------- ------- ------- -------
14,150 16,472 15,818 8,065 7,634
------- ------- ------- ------- -------
Total.......................... $20,141 $33,466 $30,773 $11,570 $37,682
======= ======= ======= ======= =======
</TABLE>

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Military Products

Up-Armored HMMWVs. The Company is the prime contractor to the U.S.
Military for the supply of Up-Armored HMMWVs. The basic four door HMMWV chassis
are produced by AM General and shipped directly to the Company's facility where
perimeter armor and blast protection components are added. These Up-Armored
HMMWVs provide perimeter protection against 7.62 mm armor-piercing ammunition
(such as that fired by the AK-47 military assault rifle), overhead airburst
protection against a 155 mm shell, front underbody blast protection against a 12
lb. anti-tank mine, and rear underbody blast protection against a 4 lb.
anti-personnel mine. In addition, the Company installs other features designed
to enhance crew safety, comfort and performance, such as air conditioning,
weapon turrets and mounts, door locks and shock-absorbing seats. The customers
for this product are the U.S. Military as well as defense and peacekeeping
forces around the world. The Company charges its customers $85,000 to $100,000
for these ballistic and blast protective systems, which is in addition to the
cost of the vehicle. In addition to the products described above, the Company
supplies engineering design and prototype services to the U.S. Army Tank
Automotive Command primarily in support of the Up-Armored HMMWV Program. The
Company also supplies spare parts and logistics support for all of its military
programs.

HMMWV armor kits. The Company supplies field-installable armoring kits to
the U.S. Military. These kits are installable on HMMWVs which are currently in
the U.S. Military inventory as well as new HMMWV chassis that are delivered to
the Company's manufacturing facilities. Two kits are available. The two door
armor kit provides perimeter protection against 7.62 mm ball ammunition and
underbody blast protection against a 12 lb. anti-tank mine. The four door armor
kit provides the same perimeter and front underbody protection but adds rear
underbody blast protection against a 4 lb. antipersonnel mine. Potential
customers for this product are current owners of non-armored HMMWVs, which
include the U.S. Military as well as defense and peacekeeping forces around the
world. At present, over 130,000 HMMWVs have been sold worldwide, and the Company
estimates that approximately 12,000 of these HMMWVs may be suitable for kit
installation. These kits sell for $18,000 to $30,000, without installation.

Other armor systems. The Company markets armor sub-systems for certain
U.S. Military tracked vehicles, such as the M9ACE earth mover, and other TWVs
such as 2.5 ton and 5.0 ton trucks, for which the defined threat is from small
arms rounds, typically defined as 12.7 mm and less. The Company also produces
various armor systems as a subcontractor to larger defense contractors, such as
Lockheed Martin Corporation ("Lockheed Martin") and The Boeing Company. These
products include armor for containers for fuels and missile launchers, and for
pilot protection, and typically involve the use of materials or methods which
are unique to the Company.

Commercial Products

Fully armored vehicles (FAVs). The base vehicle that is converted into a
FAV may be a limousine, a large size sedan (such as a Cadillac or Mercedes Benz
S600), or a sport utility vehicle (such as the Standard Suburban) which is
purchased new from a dealership or directly from the factory. The armoring
process begins with disassembly of the new vehicle at the Company's production
facilities. This typically involves the removal of the interior trim, the seats,
the doors and all windows. The passenger compartment is then armored with both
opaque armor (metallic, fibrous and ceramic materials) and transparent armor
(glass/plastic laminate) and other features, such as run flat tires, are added.
Finally, the vehicle is reassembled as close to its original appearance as
possible. The designation of FAV normally connotes the ability of the completed
vehicle to protect against attacks from military assault rifles such as AK-47s
and M16s and from certain underbody explosives. Certain FAVs also are blast
protected. A blast-protected vehicle normally incorporates the ballistic and
underbody protection of an FAV but with proprietary materials and installation
methods that enable the vehicle occupants to survive a defined blast threat.
Typical types of protection defend against pipe bombs attached to the exterior
of the vehicle and non-directional charges of 20 kg of TNT detonated
approximately five meters from the vehicle. FAV armoring normally sells for
$50,000 to $200,000 in addition to the cost of the vehicle.

The FAV class of vehicle includes the Parade Car, a formal limousine used
predominately for high level, official functions by a president or other head of
state. This vehicle is usually of customized design based upon

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<PAGE> 38

a commercially available chassis which the Company essentially rebuilds from the
ground up. Since the threat of organized assassination attempts is greater for
heads of state, these vehicles normally incorporate more advanced armor and
sophisticated protection systems. In addition to the more protective opaque and
transparent armor systems, special features may include supplemental oxygen
systems, air purification systems to protect against chemical or biological
contamination, underbody fire suppressant systems, tear gas launchers,
anti-explosive self-sealing fuel tanks, electric deadbolt door locks, gun ports
and remote-starters with bomb scanning capability. Parade Cars normally sell for
$300,000 to in excess of $1.0 million, which includes the cost of the base
vehicle.

Light armored vehicles (LAVs). The armoring process for an LAV is similar
in all respects to that for an FAV except that the base vehicle is typically a
sedan or sport utility vehicle and substantially less total weight of armoring
is added. Typical base vehicles include the Volkswagon Jetta, the General Motors
Omega, the Mercedes Benz S600 and the Jeep Cherokee. The designation of LAV
connotes the ability of the completed vehicle to protect against attacks from
handguns, such as a 9 mm or .357 Magnum. The price of LAV armoring ranges from
$5,000 to $60,000 in addition to the cost of the vehicle.

Other. Other commercial products include specialty vehicles which are
custom built for a specific mission. Vehicle types that fall into this category
are Escort Cars (usually a convertible) and Chase Cars (usually a closed-top
vehicle) in which security personnel ride while in a head of state motorcade.
Also included in this business line are armor kits, normally designed for a
specific vehicle to be installed at a location outside of the Company's main
production facilities in Fairfield, Ohio or Torino, Italy. These armor kits
usually provide LAV levels of protection. The Company also provides technical
support, training and spare parts for all of its manufactured products. The
Company can service a customer's vehicle in any of the Company's facilities. In
certain instances, the Company will fly its technicians to the customer's
location.

Security Systems Integration Group

Satellite communication integration. The Company offers comprehensive
design and hardware and software integration services customized to meet
specific satellite communication requirements of its customers. This involves
the integration of portable satellite terminals, mobile antennas and
software-based air time. Usually these systems are designed for remote or
security intensive operations.

The portable satellite terminals, which are manufactured by third party
suppliers to Company specifications, allow the user to make voice and data
transmissions via satellite link anywhere in the world. Most terminal sales
consist of the Company's latest product manufactured by Glocom, which are
marketed for the Company by Magellan Systems Corporation under the microCOM-M
name and marketed by the Company directly under the Compact-M brand name. This
new terminal is the smallest product model currently available commercially and
is approximately the size of a lap top computer, weighing approximately five
pounds. The terminal operates on the Inmarsat-M network. The Company offers an
Inmarsat approved mobile "M" antenna system called the Voyager (developed
through a strategic alliance with Nera AS, a Norwegian company, and marketed by
the Company and Nera AS under a cooperative marketing agreement) that allows
vehicle occupants to make voice and data transmissions via satellite link while
the vehicle is in motion. The Company has developed a similar product that will
operate on the Inmarsat-B network and also will provide high speed data and
video capacity. The Company currently offers air time primarily through joint
ventures and block time agreements utilizing an internally developed and
proprietary "smart card" billing application. The "smart card" is a convenient
prepaid telephone calling card which a customer purchases from the Company and
which can be used only on the Company's systems. Most air time sales are made in
conjunction with the microCOM-M and Compact-M terminals.

Site protection systems integration. The Company is now offering
comprehensive planning, design and hardware and software integration services
customized to meet the requirements of customers for physical site protection.
Primarily intended for perimeter security around business facilities and plant
operations, the Company also offers its services to embassies, VIPs' homes and
public facilities. Generally, such a systems integration project begins with a
site survey, which identifies areas of vulnerability and recommends methods

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<PAGE> 39

for securing the entire area surveyed. Specific pieces of hardware are ordered
and installed, processes and procedures are outlined, engineering documentation
are provided and control centers are established. Although each job is unique,
the methodology used to develop the system is similar in most cases.

Standardized subsystem products. Currently, the Company does not offer
standardized subsystems. The Company intends to offer such "off the shelf"
products in the future in order to capitalize on time-sensitive requests from
customers. Examples of standardized subsystems are closed circuit television
monitoring systems, access control systems and pre-packaged intrusion and fire
detection systems. The Company may develop these subsystems itself or through
joint ventures, or may purchase or otherwise acquire the rights to market such
subsystems directly to the Company's customers.

Security Services Group

The Company intends to leverage its reputation in the armored vehicle
industry and its customer base to market an expanded range of security services
such as security background clearances, business intelligence, country risk
assessments, airport/aircraft security support, and private security agent and
driver training. The Company plans to offer such services first in countries in
which it is currently selling hardware products or providing security systems
integration and then expand into other geographic areas in which there is a
demonstrated need for such services, such as the Philippines and the Middle
East. At present, the Company is not generating meaningful revenues from the
services to be provided by the Security Services Group. However, on August 15,
1996, the Company entered into an agreement in principle to acquire Palmer
Associates, S.C., a provider of security services, such as driver training,
background investigation and due diligence reports, in Mexico City, Mexico, for
cash consideration of approximately $1.0 million, payable over two years. The
Company believes that this acquisition, when completed, will generate the first
meaningful revenues for its Security Services Group. The Company intends to
expand the services now offered by Palmer Associates, S.C., to include white
collar crime investigation and executive protection services. The addition of
Palmer Associates, S.C., should enable the Company to provide integrated
security products and services in the Mexican market.

CUSTOMERS

Security Hardware Products Group

Military. The Company's market for military hardware products is worldwide
in scope, including the U.S. Military and foreign defense forces. The Company's
major contracts for delivery of Up-Armored HMMWVs and armoring kits are with the
U.S. Army Tank Automotive Command ("TACOM"). Additionally, the Company provides
protected container systems, typically used to protect missile systems from
small arms fire, to the U.S. Missile Command ("MICOM") under a subcontract with
Lockheed Martin. The ability to obtain future U.S. military business will be
affected by future levels of defense spending and TACOM's budget. The Company
has sold Up-Armored HMMWVs to Qatar and Luxembourg, either directly or through
the Foreign Military Sales ("FMS") Program. In the future, the Company plans to
leverage the reputation earned by its Up-Armored HMMWVs in Bosnia, Somalia and
Haiti to expand its sales to foreign defense forces. See "-- U.S. Government
Contracts."

Commercial. The Company's armored commercial vehicle customers include
governmental and private buyers. U.S. and foreign governmental buyers purchase
both FAVs and LAVs. Governmental buyers also comprise the market for Parade
Cars. Typically, governmental buyers consist of ministries of foreign affairs,
defense and internal affairs and offices of presidential security. Such
customers are not constrained in their purchasing decisions by considerations
such as import duties and taxes. They are, therefore, free to search globally
for the best product. The procurement cycles of governmental buyers can range
from relatively rapid, when the vehicles are for the use of the head of state or
in a crisis mode, to prolonged bureaucratic bids and evaluations where the
procurement is for normally budgeted items. Over the past five years, the
Company has sold 31 Parade Cars to various governments and has sold FAVs and
LAVs to the governments or agencies of 33 foreign countries, and to 14
departments or agencies of the U.S. Government (including the Department of

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<PAGE> 40

State, the Drug Enforcement Agency, the Agency for International Development and
the General Services Administration).

The Company's private customers for armored commercial vehicles include
corporations and individuals. Private buyers are much more sensitive to cost (of
which import duties and taxes may be a substantial part) and, therefore, often
will buy a locally produced product if one exists. Local servicing of the
vehicle is also a critical concern to private buyers. Over the past five years,
the Company has sold FAVs or LAVs to more than 125 private customers, including
20 Fortune 500 companies.

Security Systems Integration Group

Satellite communication integration. Principal customers for satellite
communications services include private corporations and individuals,
governmental agencies, peacekeeping forces and disaster relief organizations
which operate in under-developed countries that lack a telecommunications
infrastructure, in rural areas of developed countries or in disaster scenarios
in which the traditional forms of telecommunications are rendered inoperable. To
date most of the Company's systems integration services customers have not been
purchasers of the Company's security hardware products. However, the Company is
actively marketing these services to security hardware purchasers and site
protection services customers. Increasingly, customers are demanding that the
satellite communication channels provided be secure. Depending on the level of
security desired, satellite communication systems can be implemented using a
variety of encryption methods up to and including fully secure U.S. Government
STU-III telephones. Most of the Company's satellite communication customers are
located outside of the United States because the U.S. Federal Communications
Commission does not permit private corporations or individuals to use in the
United States terminals which do not utilize the American Mobile Satellite Corp.
("AMSC") satellite network. The terminals marketed by the Company access the
Inmarsat network rather than the AMSC network.

Site protection systems integration. As of June 30, 1996, the Company had
secured three commercial contracts to provide integrated site protection
systems, all to customers in Russia. Currently the Company is marketing these
services to both governmental and commercial entities primarily in Russia.
Corporate and governmental buyers of integrated security systems normally
purchase through their corporate security officer, a governmental department
responsible for the particular facility's security, a facility manager or a
construction project manager. Purchases generally are made on project-specific
proposals and include the cost of the hardware, transportation costs to the
site, engineering integration and documentation.

Security Services Group

Although the Company currently has no contracts for its security services,
it plans to begin marketing these services to both businesses and governments in
the near future. Corporate or governmental buyers of security services usually
contract for such services through their security officers. Corporate security
officers, who are normally former members of a government agency themselves,
tend to purchase services based upon industry reputation for quality and
expertise, trust in the firm or individual they are buying the services from,
price and availability. Security services are charged out by the hour, day, week
or based upon a retainer schedule. In some cases, a project may be bid in its
entirety.

MARKETING AND SALES

Military marketing. The Company continues to position itself in the
marketplace as a commercial company with a military production capability and to
emphasize its ability to develop new products, or product adaptations, quickly
and more cost-effectively than traditional defense contractors. In marketing its
products to the military, the Company also places strong emphasis on its
superior anti-tank and anti-personnel mine protection for the occupants of TWVs.
The Company markets its military products through a combination of trade show
exhibitions, print advertising in military-related periodicals and direct
customer visits. The Company emphasizes the cross-marketing of military and
commercial products, which it believes strengthens the image of each product
group. The Company also has entered into a joint marketing agreement with AM
General, the manufacturer of the basic HMMWV, for sales in the military and
commercial arenas. This

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<PAGE> 41

agreement allows the Company to benefit from the AM General distribution network
and save on certain costs, such as exhibitions where AM General and the Company
otherwise would both show products.

Military sales. The Company's military sales activities are directed
toward identifying contract bid opportunities with various U.S. Government
agencies, private enterprises acting as prime contractors on government
contracts, sales through the FMS Program, and military sales directly to foreign
military organizations. The Company has one full-time business development
manager who is responsible for this activity and also has contractual
arrangements with several outside consultants who assist the business
development manager in his activities. The Company is in the process of adding
another full-time business development manager. Proposal preparation and
presentation for government projects is done by a proposal team which normally
consists of program managers who have specific project responsibilities, a
contracting officer, a cost accountant and various manufacturing and engineering
personnel.

Commercial marketing. The Company believes that, as a result of its long
history of successfully armoring vehicles, it enjoys excellent name recognition
and a strong reputation in its sector of the security industry. The central
element of the Company's commercial marketing strategy is to leverage its name
recognition and reputation by positioning the Company as a global provider of
one-stop security services and products. The Company believes that by
positioning itself in this manner it can capitalize on its existing customer
base, maximize the benefits of its long history of supplying security-related
products around the world, and leverage its leadership niche in the armored
commercial vehicle market. When entering a foreign market, the Company normally
seeks to penetrate the market with its strongest product offering, which in most
cases is armored vehicles. The Company tailors its marketing strategy to each
geographic area of the world and will often tailor its product offering by
country. There is strong cross-marketing of military and commercial products
which the Company believes strengthens the image of each product group. This is
accomplished through consistency of product literature, image and style; the
featuring of both product groups in advertising and exhibitions; and full
briefings to customers and potential customers that encompass the Company's
entire product line.

Commercial sales. On a worldwide basis, the Company employs 19 sales
professionals who operate out of Fairfield, Ohio; Washington, D.C.; Deer Park,
New York; Los Angeles, California; Moscow, Russia; Mexico City, Mexico; Sao
Paulo, Brazil; and Geneva, Switzerland. All sales personnel have a geographic
and/or product-specific responsibility. In most cases, sales personnel also
maintain and recruit sales agents or distributors for the Company's principal
product groups. The agents or distributors have a geographic and
product-specific agreement, and compensation in most cases is based upon a
commission arrangement. In some instances, particularly when commercial products
are sold to governments, the Company's salespersons will handle sales directly
with the ultimate customer without any involvement from an agent or distributor.
Sales personnel use a consultative approach when offering solutions to the
customer's security problems. Sales cycles for commercial products can range
from several months to a matter of days, depending upon the product and the
urgency associated with the security problem being addressed. Security products
which are readily available, such as the full armored Standard Suburban, allow
the Company to assist customers who have developed, or feel they have developed,
an immediate threat.

ENGINEERING AND DEVELOPMENT

The Company emphasizes engineering excellence and has an extensive
engineering staff. Design engineers use state-of-the-art two-dimensional and
three-dimensional computer aided design and engineering (CAD/CAE) systems in
conjunction with coordinate measuring machines to develop electronic models
which are generally converted to solid models or prototypes. Manufacturing
engineers concentrate on the ability of the Company to manufacture a product
design, on improvements in the production process and overall cost reductions
from better methods, fewer components and less expensive materials with equal or
superior quality and on materials handling issues. Applying these techniques, in
the last several years the Company has been able to produce savings in the time
and cost necessary to produce its armored vehicles. For example, the Company was
able to reduce the number of employee work hours needed to produce the Up-
Armored HMMWV from 465 to 265 and the number of components involved from 800 to
550. Employee

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work hours required to armor the Standard Suburban have been reduced from 1,200
to 650, and the number of components involved from 350 to 200.

Quality engineering is responsible for assuring that manufacturing and
design plans are consistent with a reliable, quality product that meets the
specifications of the customer. Quality engineers are also responsible for
identifying in-process quality inspection points in the work orders. The
Company's ballistic engineers, in conjunction with its design and manufacturing
engineers, develop new ballistic and blast protection systems that meet
ever-changing threats. Ballistic engineers are also responsible for the
ballistic testing required by customers, the assignment of ballistic
specifications to final products and the issuance of ballistic specifications
for internal quality control. Advanced engineering is responsible for new
product development in conjunction with design engineering, manufacturing
engineering and ballistic engineering. The Company's electrical engineers,
resident in the Deer Park, New York facility, are responsible for design
specifications for all satellite and secure communications products.

U.S. GOVERNMENT CONTRACTS

The Company serves as the U.S. Military's primary provider of armoring for
its HMMWV fleet. Under the initial contract in August 1993, TACOM engaged the
Company to armor fully 59 HMMWVs. A contract to armor an additional 100 vehicles
was executed in May 1994. See "-- Customers." As of March 1995 all of these 159
HMMWVs had been shipped.

In 1995, the HMMWV was redesigned to include a more powerful engine and
greater cargo space. In March 1995, TACOM engaged the Company to armor 309 of
the redesigned HMMWVs. This agreement included options for the armoring of up to
an additional 155 vehicles. In February 1996, TACOM requested an acceleration of
the production of Up-Armored HMMWVs previously ordered and subsequently
exercised options for the armoring by the Company of all 155 vehicles under
option. Of these vehicles, 16 were sold to Luxembourg under the FMS program. The
FMS Program is part of the U.S. Government's security assistance program which
provides equipment and services to more than 100 nations and international
organizations. The U.S. Government markets, procures and delivers military
equipment and services to such foreign entities. Funding is provided either
directly by the purchaser or with U.S.-granted foreign aid credits or loans. As
of September 30, 1996, the Company had shipped 403 of these 464 HMMWVs, with the
balance to be delivered by the end of 1996.

Under a July 1996 contract, TACOM engaged the Company to armor 72
additional HMMWVs. As of September 30, 1996, 23 of these vehicles had been
shipped.

On September 27, 1996, the Company was awarded a contract by TACOM for an
additional 133 Up-Armored HMMWVs. The contract includes options for the armoring
of up to 67 additional vehicles.

The Company also manufactures armoring kits that can be shipped to
customers and installed in HMMWVs on location. The Company installed 166 of such
kits for TACOM in its Fairfield facility during the first seven months of 1996
and has shipped 14 kits to the U.S. Army in Germany for purposes of providing
instruction to Army personnel concerning the installation process.

The U.S. Congress recently approved the U.S. Government's budget for fiscal
year 1997, which includes appropriations for the purchase of 127 additional
Up-Armored HMMWVs as well as substantial discretionary funds for the DoD. TACOM
has requested from the DoD funding for the purchase of an additional 233
Up-Armored HMMWVs. Although there can be no assurance that the DoD will honor
such request, or that the Company will be engaged to armor such vehicles, the
Company believes that it is well positioned to benefit from any additional U.S.
Military funding for Up-Armored HMMWVs.

The Company has provided to MICOM, as a subcontractor to Lockheed Martin,
armoring for certain missile weapons systems. The Company was first engaged in
September 1993 by Lockheed Martin to armor fuel systems of missiles. The Company
was last engaged by Lockheed Martin in June 1996 and believes that it is well
positioned for future engagements.

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COMPETITION

The markets for the Company's present and contemplated products and
services are highly competitive. However, in the vehicle armoring systems
business, the Company believes that its design, engineering and production
expertise in providing fully integrated ballistic and blast protected vehicles
gives it a competitive advantage over those competitors who provide protection
against only selected ballistic threats. In the market for military armoring
systems there are a large number of companies, such as Simula, Inc., that
provide specific armoring packages for TWVs (other than the HMMWV), helicopters
and selected other military applications. The Company believes that as the size
of the Up-Armored HMMWV requirement continues to grow, competition from major
defense contractors may increase. The principal competitive factors are price,
quality of engineering and design, production capability and capacity, ability
to meet delivery schedules and reputation in the industry.

The largest competitor on a worldwide basis in the production of armored
commercial vehicles is Mercedes-Benz Aktiengesellschaft ("MBZ") of Germany. MBZ
produces its own armored passenger vehicles based upon the S600 chassis, the new
Pullman Limousine and the S300 chassis. MBZ sells its product through its
worldwide dealer distribution system. In addition to MBZ, there are a number of
other vehicle armorers focused on their local foreign markets in Europe, the
Middle East and Latin America, armoring primarily locally manufactured
automobiles. U.S. based protected passenger automobile armorers include the
Pittston Company (owner of Brinks armored vehicles), Moloney Coachbuilders,
Inc., Safe Car, Inc., Rausch Enterprises, Inc. and Armet Armored Vehicles, Inc.
These and other companies compete for U.S. Department of State and Treasury
Department Secret Service contracts. Currently, the U.S. Department of State FAV
and LAV contracts are split among three companies, of which the Company is one.
The principal competitive factors are price, quality of engineering and design,
production capability and capacity, ability to delivery and reputation in the
industry.

With respect to satellite communication systems integration services, the
Company competes with many companies, including STN Atlas Elektronik GmbH,
Thrane & Thrane AS and Nera AS in both the portable terminal market and sales of
air time. The Company believes that the competitive factors in this portion of
its business include product reliability, the incorporation of advanced
technological features, price, ease of installation, availability and service.
With respect to secure custom communications systems integration services, the
Company competes with small and large communications systems integrators.

In the site protection systems integration and security services
businesses, the Company competes primarily with numerous local integrators and
also large suppliers of security-related equipment such as Westinghouse Electric
Corporation, The Wackenhut Corporation, Borg-Warner Security Corporation,
Pittway Corporation and ADT Inc. The principal competitive factors are the best
approach to solving the security problem, availability and the company or
individual reputation. Finally, the Company expects that its Security Services
Group will compete with major companies such as Pinkerton's, Inc., Kroll
Associates, Inc., ICTS International, N.V. and The Wackenhut Corporation and
numerous small consultant-type businesses. The principal competitive factors are
industry reputation for quality, expertise, trust in the individual firm, price
and availability.

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OPERATIONS, PROPERTIES AND FACILITIES

The Company's properties and facilities as of July 31, 1996 are as follows:

<TABLE>
<CAPTION>
NUMBER OF DATE SQUARE
LOCATION EMPLOYEES OPENED FOOTAGE STATUS
---------------------------------------- ------------- --------- -------- --------------
<S> <C> <C> <C> <C>
Fairfield, Ohio
9113 LeSaint Drive.................... 229(1) Dec. 86 130,000 owned
4175 Mulhauser Road................... 151(2) Mar. 96 70,000 leased
Deer Park, New York..................... 12 Feb. 95 4,000 leased
Mexico City, Mexico..................... 18 June 96 20,000 leased
Sao Paulo, Brazil....................... 16 Apr. 96 28,000 leased
Moscow, Russia.......................... 15 Jan. 96 2,700 leased
Torino, Italy........................... 16(3) Nov. 90 15,000 subcontractor
</TABLE>

- ---------------

(1) Including 25 full time temporary employees.

(2) Including 117 full time temporary employees.

(3) Subcontractor employees.

Fairfield, Ohio. The LeSaint Drive facility is the Company's headquarters
and houses senior management, accounting and sales offices, as well as providing
full production and assembly facilities for armored commercial vehicles, parts,
fabrication, painting and prototyping operations. This facility is financed
through tax-exempt debt and is pledged to secure the repayment of such debt. The
Mulhauser Road facility focuses primarily on the manufacturing and distribution
of Up-Armored HMMWVs and HMMWV armoring kits. This facility is currently leased
for a term expiring in March 1997. The Company has the right to renew the lease
on terms to be agreed upon by the parties. For accounting purposes, this lease
has been treated as an operating lease, and the Company has the option to
purchase the property at any time during the term of the lease at fair market
value as defined in the lease. See "Certain Relationships and Related Party
Transactions -- 4175 Mulhauser Road," In its Fairfield facilities, the Company
has a complete fabrication and machine shop equipped with a computer controlled
plasma cutter, a computer controlled press break, mills, automated grinders, a
robotic welder and two coordinate measuring machines, paint booths and ancillary
equipment for both military and commercial painting. The manufacture of the
Company's products follows these basic stages: receipt of raw materials and
usually a base vehicle which was originally manufactured by someone other than
the Company, the fabrication of subcomponents, installation of the subcomponents
and modification of the original vehicle as necessary to accept the
sub-assemblies, reinstallation of interior trim, paint and final road test.
Products manufactured for government programs must meet specific and rigorous
quality standards for workmanship, process and process control, raw materials,
procedures and testing. A U.S. Government quality assurance inspector is
resident in the Fairfield facility and monitors the Company's adherence to
government-mandated quality standards on a daily basis.

Deer Park, New York. This facility is used for administration, engineering
and sales for the Company's integrated portable and mobile satellite
communication systems and is currently leased for a term expiring in February
1997. For accounting purposes, this lease has been treated as an operating
lease.

Mexico City, Mexico. This facility is used for manufacturing and sales of
armored commercial vehicles and is currently leased under an agreement for a
term expiring in June 1997. For accounting purposes, this lease is treated as an
operating lease. The Company has an option to purchase this facility at a price
of approximately $1.3 million. The Company expects to exercise this option and
purchase the facility using a portion of the proceeds from the Offering. The
facilities in Mexico City, Mexico and Sao Paulo, Brazil are currently assembling
kits which have been engineered in the Fairfield facility. The Company expects
these facilities to have the capability to build a complete product line once
they have fully trained their production work forces.

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<PAGE> 45

Sao Paulo, Brazil. This facility is used for manufacturing and sales of
armored commercial vehicles and is currently leased for a term expiring in March
2000. For accounting purposes, this lease is treated as an operating lease.

Moscow, Russia. This facility is used for design and sales services by the
Company's security systems integration business. It is leased under an agreement
for a term expiring in December 1996. For accounting purposes, the lease is
treated as an operating lease.

Torino, Italy. This facility is owned by a subcontractor, but is
supervised by the Company's personnel and performs all aspects of manufacturing
specialty armored and unarmored commercial vehicles, from component fabrication
through final assembly. On occasion, the Torino subcontractor will act as a
vendor to the LeSaint Drive facility.

The Company's manufacturing capabilities include fully integrated
manufacturing programs which link production control, materials control, quality
control and accounting, thus allowing the Company to issue work orders, update
and track inventories, insert quality assurance procedures, schedule and track
production and report, on a daily basis, costs accumulated to a job. The Company
believes that its facilities are adequate for its present needs and that its
properties, including machinery and equipment, are generally in good condition,
well maintained and suitable for their intended current and foreseeable uses.

EMPLOYEES

As of July 31, 1996, the Company had 441 employees (including 164 temporary
employees), comprised of 43 in marketing and sales, 317 (including 161 temporary
employees) in manufacturing, 34 (including three temporary employees) in
engineering and 47 in general and administrative. The Company's employees are
not represented by any union and are not covered by any collective bargaining
agreements. The Company has not experienced any work stoppages or employee
related slowdowns and believes that its relationship with its employees is good.

U.S. GOVERNMENT REGULATION

As a contractor with agencies of the U.S. Government, the Company is
obligated to comply with a variety of regulations governing certain aspects of
its operations and the workplace. Additionally, the Company's contracts give the
contracting agency the right to conduct audits of the Company's facilities and
operations, and such audits occur routinely. An audit involves a governmental
agency's review of the Company's compliance with the prescribed procedures
established in connection with the government contract. The Company also may be
subject to investigations as a result of an audit or other causes. Adverse
findings in an audit or other investigation, including a violation of
environmental or labor laws, could result in fines or other penalties, up to and
including disqualification as a government contractor. In addition, government
contracts generally contain cost or performance incentives based on stated
targets or other criteria. Failure to meet these stated targets or criteria
could result in penalties or lost profits to the Company.

The Company is subject to federal licensing requirements with respect to
the sale in foreign countries of certain of its hardware products. Regulations
promulgated by the U.S. Commerce Department require the Company to obtain a
general destination license in connection with the sale of certain commercial
products in foreign countries, and certain U.S. State Department regulations
require the Company to file an export license in connection with sales of
military equipment in foreign countries. Furthermore, the U.S. State Department
prohibits all sales of militaryequipment to certain countries, including Cuba,
Iran, Iraq, Libya and China. There can be no assurance that such regulations
will not become more restrictive in the future, which could limit the Company's
ability to market its products internationally.

ENVIRONMENTAL MATTERS

The Company and its operations are subject to a number of federal, state
and local environmental laws, regulations and ordinances that govern activities
or operations that may have adverse environmental effects, such as discharges to
air and water, as well as handling, storage and disposal practices regarding
solid and hazardous materials, and impose liability for the cost of remediating,
and certain damages resulting from, sites of past releases of hazardous
materials. Environmental laws continue to change rapidly, and it is likely that
the

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<PAGE> 46

Company will be subject to increasingly stringent environmental standards in the
future. The Company believes that it currently conducts its activities and
operations in substantial compliance with applicable environmental laws. The
Company is implementing recommendations of an environmental consulting company
designed to address certain air pollution, hazardous waste, underground storage
tank and hazard communication matters. No notices of violation have been issued
to the Company by any regulatory agency with respect to environmental matters
which remain uncorrected. The Company believes that its potential liability
under the environmental laws, if any, would not have a material adverse effect,
individually or in the aggregate, on its results of operations or financial
condition. There can be no assurance in this regard, however, nor can there be
any assurance that environmental laws will not become more stringent in the
future or that the Company will not incur significant costs in the future to
comply with such environmental laws.

LEGAL PROCEEDINGS

Certain of the services which it is expected will be provided by the
Company's Security Services Group are similar to activities carried on by OPS,
in which the shareholders of OHE have approximately a 47% interest, but which is
controlled by Mr. Edward F. O'Gara, the brother of Mr. Thomas M. O'Gara and Mr.
Wilfred T. O'Gara. On October 9, 1996, OPS and Edward F. O'Gara filed a
complaint against the Company, OHE and Thomas M. O'Gara in the Federal District
Court for the Southern District of Ohio (O'Gara Protective Services, Inc., et
al. v. The O'Gara Company, et al., No. C-1-96-979). The complaint alleges: that
Thomas O'Gara and OHE agreed not to compete with OPS and that the Company's plan
to enter the security services market constitutes a breach of the agreement;
that Thomas M. O'Gara breached unspecified fiduciary duties which he owed to OPS
by virtue of his status as a director and significant shareholder of OPS; and
that the Company's plan to enter the security services market constitutes a
violation of the Lanham Act, which prohibits false advertising and use of an
established corporate name in such a manner as to confuse consumers, as well as
unfair competition in violation of the Ohio Deceptive Trade Practices Act and
common law. The plaintiffs are seeking a preliminary and permanent injunction
prohibiting OHE and Thomas M. O'Gara from using the name O'Gara "in connection
with the provision of security services, or from otherwise competing with OPS in
the market for security services" and an award to OPS of any profits earned by
OHE in connection with the provision of such services, as well as costs,
punitive damages and attorneys' fees. The Company denies the assertions made by
OPS in the complaint. The Company believes it has strong defenses to this action
and will contest the matter vigorously.

Other than as set forth above, the Company is not involved in any
litigation or legal proceedings at this time and is not aware of any material
litigation or proceeding threatened against it.

PATENTS, TRADEMARKS AND COPYRIGHTS

The Company currently has three issued U.S. patents and one pending patent
application relating to its armoring business. The Company currently has no
registered trademarks or copyrights. Although the Company does not believe that
its ability to compete in any of its product markets is dependent on its
patents, the Company does believe that the protection afforded by its recently
issued "Armoring Assembly" patent and its pending "Vehicle Mine Protection
Structure" patent application, both of which relate to vehicle underbody blast
protection, provides the Company with important technological advantages over
its competitors. Although the Company has protected its technologies to the
extent that it believes appropriate, there can be no assurance that the
Company's measures to protect its proprietary rights will deter or prevent
unauthorized use of the Company's technologies. In other countries, the
Company's proprietary rights may not be protected to the same extent as in the
United States.

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<PAGE> 47

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information as of September 30, 1996
concerning each of the Company's executive officers, directors and nominees for
director of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ ------------- -----------------------------------
<S> <C> <C>
Thomas M. O'Gara.............. 46 Chairman of the Board
Wilfred T. O'Gara............. 39 Chief Executive Officer and
Director
Gary W. Allen................. 42 Vice President -- Operations,
O'Gara-Hess & Eisenhardt Armoring
Company
Nicholas P. Carpinello........ 46 Executive Vice President, Secretary
and Treasurer
Richard L. Curotto............ 58 Vice President -- Worldwide Product
Development, O'Gara-Hess &
Eisenhardt Armoring Company
Michael J. Lennon............. 40 President, O'Gara-Hess & Eisenhardt
Armoring Company
Hugh E. Price................. 59 President, Security Services Group,
Director
Neil P. Saldin................ 49 President, O'Gara Satellite
Networks Limited
Raymond E. Mabus*............. 47 Nominee for Director
William S. Sessions*.......... 66 Nominee for Director
</TABLE>

- ---------------

* Upon the consummation of the Offering, these Nominees are expected to be
appointed to the Company's Board of Directors.

Thomas M. O'Gara is Chairman of the Board of the Company. Mr. O'Gara has
been Chairman of the Board of OHE since 1990 and was OHE's Chief Executive
Officer from 1990 until 1995. He has been a director of the Company since August
1996 and a director of OHE since 1988. Mr. O'Gara has been an executive of the
Company and its predecessors since 1975. From 1984 until 1986, Mr. O'Gara also
was Honorary Consul General for the Sultanate of Oman. Thomas M. O'Gara and
Wilfred T. O'Gara are brothers.

Wilfred T. O'Gara is Chief Executive Officer of the Company. He has been
associated with the Company and its predecessors since 1983. He has been Chief
Executive Officer of OHE since January 1996, was President and Chief Operating
Officer of OHE from 1991 through 1995 and was Vice President -- Sales and
Marketing from 1988 until 1991. He also has been Vice Chairman of O'Gara
Satellite Networks, Inc., a Delaware corporation and a wholly owned subsidiary
of OSN ("OSN, Inc."), since October 1995, having served as President of OSN,
Inc. from January 1995 through September 1995. Mr. O'Gara has been a director of
the Company since August 1996, a director of OHE since 1991 and a director of
OSN, Inc. since 1995.

Gary W. Allen is Vice President -- Operations of OHE, a position in which
he has served since 1994. From 1989 until 1994 Mr. Allen was Manager of Shop
Operations for the G.E. Aircraft Engines business of General Electric Company.
Mr. Allen held several other management positions in operations and
manufacturing with G.E. Aircraft Engines between 1984, when he joined that
business, and 1989.

Nicholas P. Carpinello is the Company's Executive Vice President, Chief
Financial Officer, Secretary and Treasurer. He has held these same positions
with OHE since 1993 and also has been Treasurer of OSN, Inc. since 1995. Mr.
Carpinello has been associated with the Company and its predecessors since 1984.
From

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<PAGE> 48

1975 until 1984, he was employed by Arthur Andersen LLP where he served as a
manager in the audit and small business consulting divisions.

Richard L. Curotto is Vice President -- Worldwide Product Development of
OHE, a position which he has held since 1992. Mr. Curotto joined OHE in
September 1990 as Vice-President -- Engineering. Prior to joining OHE Mr.
Curotto was an engineer, manager and executive with Stutz Motor Cars of America,
Inc., a company he cofounded in 1968.

Michael J. Lennon is President and Chief Operating Officer of OHE,
positions he has held since January 1996. Mr. Lennon joined OHE in February 1994
as Manager of Commercial and Military Programs; he became Vice President for
Sales, Marketing and Program Management in October 1994 and served OHE in that
capacity through 1995. Prior to joining OHE, Mr. Lennon had 15 years' experience
in manufacturing, quality control and marketing with General Electric Company,
which he joined in 1988. From 1990 to 1994, he was Manager of Advanced
Technology Marketing for their G.E. Aircraft Engines business.

Hugh E. Price is President, Security Services Group of the Company. During
1995 and 1996, prior to joining the Company, he was a consultant to various
businesses and organizations. Until his retirement in 1995, Mr. Price had been
employed by the Central Intelligence Agency since 1964. His positions with the
Agency included Deputy and Associate Deputy Director for Operations (1991-1995),
Chief and Deputy Chief for Counterintelligence (1988-1990) and Director of
Personnel (1986-1988). Mr. Price became a director of the Company on October 28,
1996.

Neil P. Saldin is President of OSN, a position he has held since 1995.
Since 1995 he also has been President of OGM Communications Limited, an Irish
corporation which is 49% owned by OSN. Prior to joining the Company in 1994, Mr.
Saldin had served since 1988 in a variety of executive capacities with Magnavox
Electronic Systems Company, most recently as Vice President, Commercial SatCom.
Mr. Saldin is an electrical engineer whose experience prior to 1988 includes a
number of management positions with companies in the communications software and
engineering businesses.

Raymond E. Mabus is currently Chairman of the Board of Mercatus, LLC, an
Austin, Texas venture capital and business consulting company and also manages a
family timber business. He served as the United States' Ambassador to the
Kingdom of Saudi Arabia from 1994 until 1996, as a consultant to Mobil
Telecommunications Technology from 1992 until 1994 and as Governor of the State
of Mississippi from 1988 until 1992.

William S. Sessions is a partner in the law firm of Sessions & Sessions,
L.C. and is a consultant to various public and private businesses. From 1987
until 1993, Mr. Sessions was Director of the Federal Bureau of Investigation. He
served as a United States District Judge for the Western District of Texas from
1974 until 1987. Mr Sessions is a director of Zenith National Insurance Company.

Directors of the Company are elected annually. Officers of the Company are
elected annually and serve at the discretion of the Board of Directors.

COMMITTEES OF THE BOARD OF DIRECTORS

Upon completion of the Offering, the Board will establish Audit and
Compensation Committees, each of which initially will consist of Messrs. Thomas
M. O'Gara, Mabus and Sessions. The Audit Committee will review the services
provided by the Company's independent auditors, consult with such auditors on
audits and proposed audits and review the need for internal auditing procedures
and the adequacy of internal controls. The Compensation Committee will
establish, review and approve compensation programs of the Company generally and
will set salaries and bonuses for officers and certain other salaried employees
of the Company.

DIRECTORS' COMPENSATION

Directors who are not employees of the Company will receive $10,000 plus
options to purchase 1,000 shares of Common Stock per year for serving as
directors and members of committees, plus $500 for each Board of Directors
meeting attended (including Board meetings held by telephone). Committee members
will

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<PAGE> 49

receive $500 per meeting attended, unless the meeting occurs on the same day as
a Board meeting, in which case no separate fee will be paid. Employee directors
will not be separately compensated for their services as directors.

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding the
compensation paid by the Company during fiscal year 1995, for services in all
capacities, to the Company's Chief Executive Officer and to each of the
Company's other four most highly compensated executive officers (collectively,
the "named executive officers"). The Company did not grant any stock options or
restricted stock awards to any of the named executive officers in fiscal year
1995.

1995 SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION SALARY(1) BONUS COMPENSATION(2) COMPENSATION(3)
- -------------------------------- -------- ------- --------------- ---------------
<S> <C> <C> <C> <C>
Thomas M. O'Gara $410,631 -- -- $ 601
Chairman of the Board
Wilfred T. O'Gara 140,550 -- -- 329
Chief Executive Officer
Nicholas P. Carpinello 97,070 $18,000 $15,501 406
Executive Vice President
Richard L. Curotto 98,433 17,000 -- 990
Vice President
Michael J. Lennon 89,977 20,000 -- 233
Vice President
</TABLE>

- ---------------

(1) Subsequent to the Offering, Messrs. Thomas M. O'Gara, Wilfred T. O'Gara,
Nicholas P. Carpinello, Richard L. Curotto and Michael J. Lennon will
receive annual salaries of $250,000, $230,000, $120,000, $110,000 and
$145,000, respectively (see "--Employment Agreements").

(2) For Nicholas P. Carpinello, represents compensation related to a
Company-provided car. Otherwise none, other than perquisites which did not
exceed 10% of salary and bonus for any named executive officer.

(3) Represents profit-sharing contributions to the Company's Retirement and
(401(k)) Thrift Savings Plan.

STOCK OPTIONS

The Company's 1996 Stock Option Plan (the "1996 Plan") will provide for the
grant, to employees and directors of the Company and its subsidiaries, of
options to purchase up to 400,000 shares of Common Stock and will be
administered either by the Board of Directors or by the Compensation Committee.
The 1996 Plan will provide that all exercise prices must equal at least 85% of
market value of the Common Stock on the date of grant and that options will
expire no later than ten years after grant. The 1996 Plan will provide for the
grant of both incentive stock options and nonqualified stock options. The
Company will grant options to purchase approximately 180,000 shares at the
public offering price to certain employees, including options for approximately
91,000 shares to certain executive officers, including options for the following
shares: Mr. Wilfred T. O'Gara, 17,000 shares; Mr. Nicholas P. Carpinello, 15,000
shares; Mr. Richard L. Curotto, 15,000 shares and Mr. Michael J. Lennon, 17,000
shares; plus options for 1,000 shares each to the Company's nonemployee
directors.

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<PAGE> 50

EMPLOYMENT AGREEMENTS

The Company (or OHE) has entered into employment agreements, for a term
commencing on September 1, 1996 and expiring on August 31, 1998, with Messrs.
Thomas M. O'Gara, Wilfred T. O'Gara, Nicholas P. Carpinello, Richard L. Curotto
and Michael J. Lennon, providing for annual compensation of $250,000, $230,000,
$120,000, $110,000 and $145,000, respectively, as well as with certain other
officers and employees. Each named executive officer also will be entitled to
participate in an annual bonus plan to be established by the Compensation
Committee and to receive 50% of such bonus in shares of Common Stock. Employment
may be terminated by the Company at any time with or without cause, provided
that in a case of termination without cause, the employee would be entitled to
receive compensation for the balance of the term of the agreement. Each of the
employment agreements restricts the named executive from competing with the
Company during the term of the agreement and for two years thereafter if
termination of employment is for cause or at the volition of the employee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company has never had a Compensation Committee or other committee of
the Board of Directors performing similar functions. Decisions concerning
compensation of executive officers of the Company were made by the Company's
Board of Directors. Following the Offering, the Company will establish a
Compensation Committee composed, initially, of Messrs. Thomas M. O'Gara, Mabus
and Sessions.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The Board of Directors of the Company has adopted a policy requiring that
after the Offering any transactions, including loans, between the Company and
its officers, directors, principal shareholders and their affiliates be on terms
no less favorable to the Company than could be obtained from unrelated third
parties and that any such transactions be approved by a majority of the
disinterested members of the Company's Board of Directors.

Described below are certain transactions and relationships between the
Company and certain of its officers, directors and shareholders which have
occurred during the last three fiscal years. Except with respect to interest
rates charged on certain of the inter-company notes and accounts
payable/receivable and to write-offs of obligations totalling approximately
$102,200 discussed below, the Company believes that the material terms of the
various transactions were as favorable as could have been obtained from
unrelated third parties.

CORPORATE REORGANIZATION

Pursuant to various agreements among the Company, OHE, Limited and the
equityholders of OHE, Limited and OSN, the operations of these corporations were
reorganized and combined on October 28, 1996. See "Corporate Reorganization."

LONGLINE LEASING/EXCEL ARMOR

General. Excel Armor Products, Inc. ("Excel Armor" and, together with
Longline, "Longline/Excel") is a Delaware corporation established in November
1993. All of the outstanding capital stock of each of Longline and Excel Armor
is owned by Messrs. Thomas M. O'Gara, (approximately 92%), Thomas M. Letter
(approximately 5%), Wilfred T. O'Gara, Charles A. Williams and Nicholas P.
Carpinello (approximately 1% each).

Lease agreements. OHE has a Master Equipment Lease with Longline, entered
into in July 1995, pursuant to which OHE leases various items of equipment from
Longline. As of June 30, 1996, OHE had approximately $1,250,000 of equipment
under lease for 12 and 36-month terms, beginning on various dates between July
1995 and April 1996, having aggregate minimum lease payments over the terms of
such leases of $1,014,924.

47
<PAGE> 51

Supplier arrangements. Since 1995, OHE has purchased the dual-hard steel
required for certain aspects of its vehicle armoring from Excel Armor, which
distributes the steel for Allegheny Ludlum Corporation, an unrelated third
party. Purchases by OHE from Excel Armor were $520,700 and $623,318 during 1995
and the first six months of 1996, respectively, and accounted for 90% and 98% of
Excel Armor's sales revenues for the same periods. In connection with these
purchases, OHE advanced $160,390 and $111,956 to Excel Armor during 1995 and the
first six months of 1996, respectively, to fund Excel Armor's initial purchase
commitments and guaranteed a $150,000 letter of credit furnished by Excel Armor
to the third party. The shareholders of Excel Armor will repay OHE's advances
prior to December 31, 1996. Currently, OHE is purchasing its dual-hard steel
directly from the third party. In August 1995, Excel Armor and OHE entered into
an agreement under which OHE manufactures certain parts needed by Excel Armor in
connection with a contract with a third party. The total contract price is
$129,000, of which OHE will receive $113,000.

Corporate aircraft. During 1993, OHE made payments aggregating $79,372 to
The August Group, a partnership in which Mr. Thomas M. O'Gara had a 25%
interest, for operating and other costs relating to a Learjet owned by The
August Group. In return, OHE was to have long-term use of the Learjet at
favorable flight rates. During the same period, OHE incurred $214,930 in flight
and pilot charges for use of the aircraft. During 1993, $42,746 of the operating
charge payments to The August Group, due to be refunded to OHE, was written off
on OHE's books. Mr. O'Gara sold his interest in the partnership in late 1993.

Effective January 1, 1994, OHE entered into a five year lease for a Hawker
jet owned by Longline. Financing for the jet had been provided to Longline by
means of a $1,100,000 loan from Cessna Finance Corporation to Mr. Thomas M.
O'Gara. OHE's agreement with Longline provided for deposit and rental payments
aggregating $1,634,000 over the term of the lease. This lease was cancelled
effective January 30, 1995.

In February 1995, OHE entered into a lease for a Gulfstream G-II aircraft
owned by Longline and Excel Armor as tenants in common. The Gulfstream aircraft
was purchased by Longline/Excel for a price of $4,060,000 (represented by an
exchange of the Hawker jet and new financing). In connection with the
cancellation of the Hawker lease, $400,493, representing the unamortized portion
of OHE's $504,000 deposit on that lease, was transferred as the deposit on the
Gulfstream lease. The Gulfstream lease had a non-cancelable ten year term and
initially provided for rental payments of $53,000 per month. Nonetheless the
Company paid rentals based on actual usage. In August 1996, the Gulfstream lease
was amended to provide for minimum lease payments of $35,200 per month.

In February 1995, OHE also entered into a supplemental agreement with
Longline/Excel pursuant to which Longline/Excel agreed to provide all aircraft
management (including insurance) for the Gulfstream aircraft and to charter it
to others when not in use by OHE. Pursuant to this arrangement, and in lieu of
the $53,000 per month rental payments then required by the lease, OHE paid
Longline/Excel $30,000 per month, plus $1,800 per hour of monthly use in excess
of 16.7 hours, and Longline/Excel was entitled to retain all revenues from the
charter operations. In connection with the August 1996 amendment to the
Gulfstream lease, this agreement was amended to allow OHE 23 hours of usage per
month and to provide for charges of $1,500 per hour thereafter. Longline/Excel
continues to retain all revenues from charter operations. During 1995 and for
the first six months of 1996, OHE expensed $414,160 and $200,033 (including
amortization of the deposit on the lease), respectively, to Longline/Excel in
connection with the agreements for Gulfstream aircraft.

INTERCOMPANY NOTES AND ACCOUNTS PAYABLE/RECEIVABLE

At June 30, 1996, in addition to intercompany balances in the normal course
of business, OHE was indebted to O'Gara Overseas Services, S.A. ("OOS"), for
money borrowed, in the amount of $90,015, representing principal of $88,685 and
accrued interest of $1,330 on a demand note bearing interest at 3.0% per annum.
OOS is a Swiss corporation owed 49% by O'Gara Overseas Services Trust ("OOS
Trust") and 51% by Limited. OOS Trust is an irrevocable trust, the income and
assets of which OHE is the sole beneficiary. This note will be repaid by the
Company from the proceeds of the Offering.

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<PAGE> 52

OOS holds a promissory note in the principal amount of $250,000 from Mr.
Thomas M. O'Gara, for money borrowed, which bears interest at the rate of 3.0%
per annum and is due on demand. At June 30, 1996, $274,315 in principal and
accrued interest was outstanding under this note.

OHE holds promissory notes, for money borrowed, in the principal amounts of
$100,000 and $130,000 from Mr. Thomas M. O'Gara. Each note bears interest at the
rate of 8.75% per annum and is due on December 31, 1996. At June 30, 1996,
$239,961 in principal and accrued interest was outstanding under these notes. In
addition, Mr. Thomas M. O'Gara is indebted, for money borrowed, to OHE for
$242,242 principal amount, which is not represented by a promissory note. Mr.
Thomas M. O'Gara will repay this indebtedness upon consummation of the Offering.

OSN holds a promissory note, for money borrowed, from Excel Metal Products,
Inc. ("Excel Metal"), a corporation wholly owned by Mr. Thomas M. O'Gara, in the
principal amount of $310,000, which bears interest at the rate of 8.5% and is
due on February 11, 1997. At June 30, 1996, $320,172 in principal and accrued
interest was outstanding pursuant to this note. Mr. Thomas M. O'Gara will cause
Excel Metal to repay this indebtedness upon consummation of the Offering.

In December 1993, the Company offset a long-term note in the amount of
$700,000 payable to Mr. Thomas M. O'Gara against a note receivable in the same
amount from Silver Springs Land and Cattle Company ("SSLCC"), a Nevada
corporation of which Thomas M. O'Gara is the President and sole shareholder. In
December 1993, $59,500 in accrued interest due from SSLCC was written off on the
books of OHE. In 1993, 1994 and 1995, OHE paid SSLCC $6,050, $55,203 and
$11,082, respectively, for the use of its facilities for corporate meetings. No
payments were made in the first six months of 1996, and the use of these
facilities by the Company has been discontinued.

Prior to August 1994, OHE was indebted to Letter International Limited
Irrevocable Trust in the amount of $1,260,000. Letter International Limited
Irrevocable Trust was a trust of which OHE was the sole beneficiary. At the same
time, the Trust was indebted in an equal amount to Mr. Thomas M. O'Gara. Mr.
Thomas M. O'Gara received from the Trust an assignment of the OHE's obligation
in satisfaction of the Trust's indebtedness to him. Mr. Thomas M. O'Gara then
agreed to the cancellation of this indebtedness of OHE in exchange for shares of
common stock of OHE equal to 21.5% of the shares of OHE outstanding, giving
effect to such transaction.

Through the services of Thomas M. Letter, OOS provides sales and marketing
services for OHE and OSN. During 1993, 1994, 1995 and the first six months of
1996, $247,744, $362,761, $377,144 and $155,772, respectively, were paid to OOS
for these services.

OPS has received, since its incorporation in 1988, certain medical and
general liability insurance coverage under OHE's insurance policies. These
insurance programs are paid for by OPS through monthly and annual premiums
established by OHE's insurance provider. These arrangements will be terminated
upon the consummation of the Offering.

4175 MULHAUSER ROAD

Building lease. OLG, Limited, an Ohio limited liability company owned by
Messrs. Thomas M. O'Gara, Wilfred T. O'Gara, Gary W. Allen, Richard Curotto,
Nicholas P. Carpinello and Michael J. Lennon, was formed in March 1996 for the
purpose of acquiring and leasing to OHE the manufacturing facility located at
4175 Mulhauser Road, Fairfield, Ohio. The building was purchased for
approximately $1.8 million and is leased to OHE for $468,000 (plus taxes,
insurance and maintenance costs) for a one-year period. OHE has an option to
renew the lease, with the annual base rent and renewal term to be negotiated
between the parties at the time the option is exercised. OHE also has an option
to purchase the building for its fair market value. See "Business -- Operations,
Properties and Facilities."

CONSULTING AGREEMENTS

Excel Metal. Excel Metal Products, Inc. ("Excel Metal") is a Delaware
corporation owned by Mr. Thomas M. O'Gara. OSN, Inc. has a consulting agreement
with Excel Metal pursuant to which Excel

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<PAGE> 53

Metal has provided management consulting services to OSN, Inc. during calendar
year 1996 for a fee of $6,000 per month plus reimbursement of expenses. The
arrangement will terminate upon consummation of the Offering.

William S. Sessions. Mr. William S. Sessions was a consultant to OHE from
January 1994 through April 1995, providing assistance in domestic sales
development for commercial armored products, and received compensation of $5,000
per month, plus reimbursement of expenses, for his services. Subsequent to the
Offering, Mr. Sessions will become a director of the Company.

Neil P. Saldin. Prior to becoming an officer of the Company, Mr. Saldin was
a consultant to OSN from October 1994 through September 1995. The consulting
services, which were managerial and related to the start up of OSN's operations,
were provided through a company controlled by Mr. Saldin, which was paid
$180,000.

Edward F. O'Gara. In 1993 OHE paid $120,000 to Mr. Edward F. O'Gara for
general domestic and international business consulting services. Mr. Edward F.
O'Gara is the brother of Messrs. Thomas M. O'Gara and Wilfred T. O'Gara. In
1994, 1995 and 1996, OHE guaranteed certain consulting agreements between
Longline or Excel Armor and Cirrus Systems, Inc., a Delaware corporation owned
by Mr. Edward F. O'Gara. Such agreements are for one year terms for a total of
$120,000 per year. Mr. Thomas M. O'Gara has agreed to indemnify OHE for any
claims made under such guarantees.

EXERCISE OF STOCK OPTIONS AND SALE OF SHARES

On August 23, 1996, Messrs. Thomas M. O'Gara, Wilfred T. O'Gara, Nicholas
P. Carpinello and Richard L. Curotto exercised options previously granted on
December 31, 1993 to purchase 138, 131, 91 and 85 shares of the Common Stock of
OHE, respectively, at a price of $1.00 per share. Giving effect to the
Reorganization, the corresponding numbers of shares of Common Stock of the
Company would be 37,667, 35,756, 24,838 and 23,201, respectively, at a price of
$0.0037 per share.

On August 23, 1996, Mr. Thomas M. O'Gara sold 10 shares of the Common Stock
of OHE to each of Messrs. Nicholas P. Carpinello and Charles A. Williams for a
price of $468.00 per share (equivalent to 2,730 shares each of Common Stock of
the Company for a price of $1.71 per share). The Company will incur a non-
recurring, non-cash expense of approximately $37,000 in the fiscal quarter in
which the Offering is closed relating to such sales. This expense will result in
a corresponding increase in additional paid-in capital, and no change in total
shareholders' equity. This expense is not tax deductible and represents the
difference between the net offering price and the net sales price of these
shares as if issued directly by the Company.

50
<PAGE> 54

PRINCIPAL AND SELLING SHAREHOLDERS

The following table, which gives effect to the Reorganization (see "Certain
Relationships and Related Party Transactions -- Corporate Reorganization"), sets
forth certain information regarding the beneficial ownership of the Company's
Common Stock on September 30, 1996 (on an actual basis and as adjusted to
reflect the sale of shares offered hereby) by (i) each Selling Shareholder, (ii)
each beneficial owner of more than five percent of the Common Stock immediately
prior to the Offering, (iii) each director, nominee for director and named
executive officer and (iv) all directors, nominees and executive officers of the
Company as a group. Unless otherwise indicated, all shares are owned directly
and the indicated owner has sole voting and dispositive power with respect
thereto.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING(1) AFTER OFFERING(1)
--------------------- SHARES TO BE ---------------------
NAME NUMBER PERCENT SOLD IN OFFERING NUMBER PERCENT
---- --------- ------- ---------------- --------- -------
<S> <C> <C> <C> <C> <C>
Thomas M. O'Gara(2)................ 4,030,838(3) 87.4% 373,524(4) 3,657,314(5) 50.7%
Wilfred T. O'Gara(2)............... 260,266 5.6 -- 260,266 3.6
Nicholas P. Carpinello............. 56,866 1.2 -- 56,866 *
Richard L. Curotto................. 23,201 0.5 -- 23,201 *
Charles A. Williams................ 26,476 0.6 26,476 -- --
Michael J. Lennon.................. -- -- -- -- --
Raymond E. Mabus................... -- -- -- -- --
Hugh E. Price...................... -- -- -- -- --
William S. Sessions................ -- -- -- -- --
All directors, nominees and
executive officers as a group (10
persons)......................... 4,417,171 95.8 373,524 4,043,647 56.1
</TABLE>

- ---------------

* Less than 1% of the outstanding Common Stock.

(1) Pursuant to the regulations of the Commission, shares are deemed to be
"beneficially owned" by a person if such person directly or indirectly has
or shares the power to vote or dispose of such shares, whether or not such
person has any pecuniary interest in such shares, or has or shares the right
to acquire the power to vote or dispose of such shares within 60 days,
including through the exercise of any option, warrant or right.

(2) The address of Messrs. Thomas M. and Wilfred T. O'Gara is 9113 LeSaint
Drive, Fairfield, Ohio 45014.

(3) Includes 793,095 shares held by MeesPierson Management (Guernsey) Ltd. and
373,524 shares held by Union Federal Corporation over which Thomas M. O'Gara
has indirect voting control and 2,864,219 shares held by a family trust.

(4) All 373,524 shares are to be sold by Union Federal Corporation.

(5) Includes 793,095 shares held by MeesPierson Management (Guernsey) Ltd. and
2,864,219 shares held by a family trust.

51
<PAGE> 55

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 25,000,000 shares of
Common Stock, $.01 par value per share, and 100,000 shares of undesignated
preferred stock, $.01 par value per share. The following description of the
material terms of the capital stock of the Company is qualified in its entirety
by the provisions of the Company's Amended and Restated Articles of
Incorporation and Code of Regulations and by the provisions of the Ohio General
Corporation Law.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Shareholders do not
have the right to cumulate their votes in the election of directors.

Subject to preferences which have been and may be granted to holders of
preferred stock, holders of Common Stock are entitled to share in such dividends
as the Board of Directors, in its discretion, may validly declare from funds
legally available. In the event of liquidation, each outstanding share of Common
Stock entitles its holder to participate ratably in the assets remaining after
payment of liabilities and any preferred stock liquidation preferences.

Shareholders have no preemptive or other rights to subscribe for or
purchase additional shares of any class of stock or any other securities of the
Company. There are no redemption or sinking fund provisions with regard to the
Common Stock. All outstanding shares of Common Stock are fully paid, validly
issued and nonassessable.

The vote of holders of a majority of all outstanding shares of Common Stock
is required to amend the Restated Articles of Incorporation and to approve
mergers, reorganizations, and similar transactions.

PREFERRED STOCK

Up to 100,000 authorized shares of preferred stock may be issued from time
to time in series having such designations, preferences and rights,
qualifications and limitations as the Board of Directors may determine without
any approval of shareholders. Preferred stock could be given rights which would
adversely affect the equity of holders of Common Stock and could have preference
to Common Stock with respect to dividend and liquidation rights. Issuance of
preferred stock could have the effect of acting as an anti-takeover device to
prevent a change of control of the Company.

PROVISIONS AFFECTING BUSINESS COMBINATIONS AND CHANGES IN CONTROL

Ohio law governs the rights of shareholders of the Company. Chapter 1704 of
the Ohio Revised Code may be viewed as having an anti-takeover effect. This
statute, in general, prohibits an "issuing public corporation" (the definition
of which would include the Company) from entering into a "Chapter 1704
Transaction" with the beneficial owner (or affiliates of such beneficial owner)
of 10% or more of the outstanding shares of the corporation (an "interested
shareholder") for at least three years following the date on which the
interested shareholder attains such 10% ownership, unless the board of directors
of the corporation approves, prior to such person becoming an interested
shareholder, either the transaction or the acquisition of shares resulting in a
10% ownership position. A "Chapter 1704 Transaction" is broadly defined to
include, among other things, a merger or consolidation with, a sale of
substantial assets to, or the receipt of a loan, guaranty or other financial
benefit (which is not proportionately received by all shareholders) from the
interested shareholder. Following the expiration of such three-year period, a
Chapter 1704 Transaction with the interested shareholder is permitted only if
either (i) the transaction is approved by the holders of at least two-thirds of
the voting power of the corporation (or such different proportion as is set
forth in the corporation's articles of incorporation), including a majority of
the outstanding shares excluding those owned by the interested shareholder, or
(ii) the business combination results in the shareholders other than the
interested shareholder receiving a prescribed "fair price" for their shares. One
significant effect of Chap-

52
<PAGE> 56

ter 1704 is to encourage a person to negotiate with the board of directors of a
corporation prior to becoming an interested shareholder.

In addition, Section 1707.043 of the Ohio Revised Code requires a person or
entity that makes a proposal to acquire the control of a corporation to repay to
that corporation any profits made from trades in the corporation's stock within
18 months after making the control proposal.

Section 1701.831 of the Ohio GCL (the "Control Share Acquisition Statute")
requires shareholder approval of any proposed "control share acquisition" of an
Ohio corporation. A "control share acquisition" is the acquisition, directly or
indirectly, by any person (including any individual, partnership, corporation,
limited liability company, society, association or two or more persons who have
a joint or common interest) of shares of a corporation that, when added to all
other shares of the corporation that may be voted, directly or indirectly, by
the acquiring person, would entitle such person to exercise or direct the
exercise of 20% or more (but less than 33 1/3%) of the voting power of the
corporation in the election of directors or 33 1/3% or more (but less than a
majority) of such voting power or a majority or more of such voting power. Under
the Control Share Acquisition Statute, the control share acquisition must be
approved in advance by the holders of a majority of the outstanding voting
shares represented at a meeting at which a quorum is present and by the holders
of a majority of the portion of the outstanding voting shares represented at
such a meeting excluding the voting shares owned by the acquiring shareholder
and certain "interested shares," including shares owned by officers elected or
appointed by the directors of the corporation and by directors of the
corporation who are also employees of the corporation.

The purpose of the Control Share Acquisition Statute is to give
shareholders of Ohio corporations a reasonable opportunity to express their
views on a proposed shift in control, thereby reducing the coercion inherent in
an unfriendly takeover. The provisions of the Control Share Acquisition Statute
grant to the shareholders of the Company the assurance that they will have
adequate time to evaluate the proposal of the acquiring person, that they will
be permitted to vote on the issue of authorizing the acquiring person's purchase
program to go forward in the same manner and with the same proxy information
that would be available to them if a proposed merger of the Company were before
them and, most importantly, that the interests of all shareholders will be taken
into account in connection with such vote and the probability will be increased
that they will be treated equally regarding the price to be offered for their
common shares if the implementation of the proposal is approved.

The Control Share Acquisition Statute applies not only to traditional
offers but also to open market purchases, privately negotiated transactions and
original issuances by an Ohio corporation, whether friendly or unfriendly. The
procedural requirements of the Control Share Acquisition Statute could render
approval of any control share acquisition difficult in that the transaction must
be authorized at a special meeting of shareholders, at which a quorum is
present, by the affirmative vote of the majority of the voting power represented
and by a majority of the portion of such voting power excluding "interested
shares." It is recognized that any corporate defense against persons seeking to
acquire control may have the effect of discouraging or preventing offers which
some shareholders might find financially attractive. On the other hand, the need
on the part of the acquiring person to convince the shareholders of the Company
of the value and validity of his offer may cause such offer to be more
financially attractive in order to gain shareholder approval.

While the Company believes that these provisions are in its best interests,
potential shareholders should be aware that such provisions could be
disadvantageous to them because the overall effect of these statutes may be to
render more difficult or discourage the removal of incumbent management or the
assumption of effective control by other persons.

TRANSFER AGENT AND REGISTRAR

The registrar and transfer agent for the Company's Common Stock is The
Fifth Third Bank, Cincinnati, Ohio.

53
<PAGE> 57

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
7,211,846 shares of Common Stock. The 3,000,000 shares sold in the Offering and
any of the up to 450,000 shares sold upon exercise of the Underwriters'
over-allotment option, will be freely tradeable by persons other than
"affiliates" of the Company, as that term is defined in Rule 144 under the
Securities Act of 1933, as amended (the "Act"), without restriction or
registration under that Act. The remaining 4,211,846 shares (the "Restricted
Shares") will be held by the Company's current shareholders. The Restricted
Shares may not be sold unless they are registered under the Act or sold pursuant
to an applicable exemption from registration, including an exemption pursuant to
Rule 144. The Company and its current shareholders have agreed not to offer,
sell or otherwise dispose of any shares of Common Stock, including the
Restricted Shares, for a period of 180 days from the date of this Prospectus,
without the prior written consent of Dillon, Read & Co. Inc.

Rule 144 governs the public sale in ordinary trading transactions of
"restricted securities" and of securities owned by "affiliates." Restricted
securities are securities acquired directly or indirectly from an issuer in a
transaction not involving a public offering. In general, under Rule 144, if a
holding period of at least two years has elapsed since the date the restricted
securities were acquired from the Company, then the holder of such restricted
securities (including an affiliate of the Company) is entitled, subject to
certain conditions, to sell within any three-month period a number of shares
which does not exceed the greater of (i) 1% of the Company's then outstanding
shares of Common Stock or (ii) the shares' average weekly trading volume during
the four calendar weeks preceding such sale. Sales under Rule 144 are also
subject to certain manner-of-sale provisions and requirements as to notice and
the availability of current public information about the Company. The Company
anticipates that essentially all of the Restricted Shares will be eligible for
sale 90 days after the Offering pursuant to Rule 144.

The Company has reserved up to 400,000 shares of its Common Stock for
issuance under its 1996 Stock Option Plan (the "Plan"). Upon the completion of
the Offering there will be options for 180,000 shares of Common Stock
outstanding under the Plan. The Company currently intends to register the shares
of Common Stock reserved for issuance under the Plan. Subject to the expiration
of the 180-day lock-up period, and subject to compliance with Rule 144 by
affiliates of the Company and to Section 16 of the Securities Exchange Act of
1934 by directors, officers and 10% beneficial owners, any shares issued upon
exercise of options granted under the Plan will become freely tradeable at the
effective date of the registration statement for the Plan shares.

Prior to the Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that market sales
of shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices and the Company's ability to raise capital at favorable prices. The
Common Stock has been approved for listing on the Nasdaq National Market under
the symbol "OGAR." There can be no assurance, however, that the Company will be
able to maintain its Nasdaq listing.

54
<PAGE> 58

UNDERWRITING

The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares of Common Stock that each of them has agreed
to purchase from the Company and the Selling Shareholders, subject to the terms
and conditions specified in the Underwriting Agreement, are as follows:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------------ ---------
<S> <C>
Dillon, Read & Co. Inc..................................................
Furman Selz LLC.........................................................
Equitable Securities Corporation........................................
---------
Total......................................................... 3,000,000
=========
</TABLE>

The Managing Underwriters are Dillon, Read & Co. Inc., Furman Selz LLC and
Equitable Securities Corporation.

If any shares of Common Stock offered hereby are purchased by the
Underwriters, all such shares will be so purchased. The Underwriting Agreement
contains certain provisions whereby, if any Underwriter defaults in its
obligation to purchase such shares, and the aggregate obligations of the
Underwriters so defaulting do not exceed ten percent of the shares offered
hereby, the remaining Underwriters, or some of them, must assume such
obligations.

The Common Stock offered hereby is being initially offered severally by the
Underwriters for sale at the price set forth on the cover page of this
Prospectus, or at such price less a concession not in excess of $ per share
on sales to certain dealers. The Underwriters may allow, and such dealers may
re-allow, a concession not to exceed $ per share on sales to certain other
dealers. The offering of shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and withdrawal, cancellation or
modification of the offer without notice. The Underwriters reserve the right to
reject any order for the purchase of the shares. After the initial public
offering of the Common Stock, the public offering price and such concessions may
be changed by the Managing Underwriters.

The Company has granted to the Underwriters an over-allotment option to
purchase up to an aggregate of 450,000 additional shares of Common Stock at the
initial public offering price less the underwriting discount and commission set
forth on the cover page of this Prospectus. If the Underwriters exercise such
option, each of the Underwriters will be obligated, subject to certain
conditions, to purchase the number of additional shares of Common Stock
proportionate to such Underwriter's initial commitment. The Underwriters may
exercise such option on or before the thirtieth day from the date of the
Underwriting Agreement and only to cover over-allotments made of the shares in
connection with the Offering.

The Company and the Selling Shareholders have agreed in the Underwriting
Agreement to indemnify the Underwriters against certain liabilities, including
liabilities under the Act, or to contribute to payments that the Underwriters
may be required to make in respect thereof.

The Company and all of its shareholders (other than, with respect to shares
of Common Stock included in the Offering, the Selling Shareholders) have agreed
that they will not sell, contract to sell, grant any option to sell or otherwise
dispose of, directly or indirectly, any shares of Common Stock, or securities
convertible into or exercisable or exchangeable for, any shares of Common Stock
or warrants or other rights to purchase shares of Common Stock, or permit the
registration of any shares of Common Stock for a period of 180 days after the
date of this Prospectus, without the prior consent of Dillon, Read & Co. Inc.,
except that the Company may issue options to purchase shares of Common Stock,
and may register the shares of Common

55
<PAGE> 59

Stock underlying such options, pursuant to its 1996 Stock Option Plan; provided
that such options are not exercisable for a period of 180 days after the date of
this Prospectus.

Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the shares of Common
Stock included in the Offering has been determined by negotiation among the
Company, the Selling Shareholders and the Managing Underwriters. Among the
factors considered in determining such price were the history of and prospects
for the Company's business and the industry in which it operates, an assessment
of the Company's management, past and present revenues and earnings of the
Company, the prospects for growth of the Company's revenues and earnings,
currently prevailing conditions in the securities markets, including current
market valuations of publicly traded companies which are comparable to the
Company, and other factors deemed relevant. The Common Stock has been approved
for listing on the Nasdaq National Market under the symbol "OGAR."

The Underwriters do not expect to confirm sales to accounts over which they
exercise discretionary authority.

Dillon, Read & Co. Inc. performs certain financial advisory services for
the Company and expects to receive customary fees in connection therewith.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Taft, Stettinius & Hollister. Certain legal matters in
connection with the Offering will be passed upon for the Underwriters by Cahill
Gordon & Reindel, a partnership including a professional corporation.

EXPERTS

The audited combined financial statements and schedule of the Company as of
December 31, 1994 and 1995 and for each of the three years in the period ended
December 31, 1995 included in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included in reliance upon the authority of said firm as experts in giving said
reports.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act with respect to
the Common Stock offered hereby. The Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and such
Common Stock, reference is hereby made to such Registration Statement and to the
exhibits and schedules thereto. The Registration Statement can be inspected
without charge at the office of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies may be obtained from the
Commission at prescribed rates. The Commission also maintains an Internet web
site at http://www.sec.gov that contains reports, proxy statements and other
information.

56
<PAGE> 60

THE O'GARA COMPANY (NOTE 1)

INDEX TO COMBINED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Combined Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996
(unaudited)......................................................................... F-3
Combined Statements of Operations for the Years Ended December 31, 1993, 1994 and 1995
and the Six Months Ended June 30, 1995 and 1996 (unaudited)......................... F-5
Combined Statements of Shareholders' Equity for the Years Ended December 31, 1993,
1994 and 1995 and the Six Months Ended June 30, 1996 (unaudited).................... F-6
Combined Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995
and the Six Months Ended June 30, 1995 and 1996 (unaudited)......................... F-7
Notes to Combined Financial Statements................................................ F-8
</TABLE>

F-1
<PAGE> 61

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
The O'Gara Company:

We have audited the accompanying combined balance sheets of THE O'GARA
COMPANY (Note 1) as of December 31, 1994 and 1995 and the related combined
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The O'Gara Company (Note 1)
as of December 31, 1994 and 1995 and the results of its operations and cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Cincinnati, Ohio,

July 10, 1996,
except for Notes 14 and 15

as to which the date is October 28, 1996

F-2
<PAGE> 62

THE O'GARA COMPANY

COMBINED BALANCE SHEETS

ASSETS (NOTE 5)

<TABLE>
<CAPTION>
PRO FORMA
JUNE 30,
DECEMBER 31, DECEMBER 31, JUNE 30, 1996
1994 1995 1996 (NOTE 15)
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
CURRENT ASSETS:
Cash...................................... $ 633,653 $ 323,851 $ 1,087,765 $ 1,061,258
Trade accounts receivable, net of
allowance for doubtful accounts of
$100,373, $109,283 and $159,631 in
1994, 1995 and 1996, respectively (Note
2)..................................... 7,857,678 7,094,894 6,231,733 5,966,733
Other receivables (Note 4) --
Advances to shareholders............... 69,094 204,698 382,577 382,577
Affiliates............................. 3,914 128,222 196,858 196,858
Advances to vendors (Notes 2 and 10)...... -- 3,360,136 3,203,498 3,203,498
Notes receivable -- shareholder (Note
4)..................................... -- 233,253 239,961 239,961
Note receivable -- affiliate (Note 4)..... -- -- 310,000 310,000
Costs and estimated earnings in excess of
billings on uncompleted contracts (Note
2)..................................... 3,742,788 7,700,075 12,152,367 12,152,367
Inventories (Note 2)...................... 3,337,129 4,927,499 7,272,362 7,272,362
Prepaid expenses.......................... 98,930 149,250 286,042 286,042
Deferred tax asset (Note 2)............... -- -- -- 883,000
----------- ----------- ----------- -----------
Total current assets.............. 15,743,186 24,121,878 31,363,163 31,954,656
----------- ----------- ----------- -----------
PROPERTY, PLANT AND EQUIPMENT,
at cost (Note 6):
Land................................... 372,039 372,039 372,039 372,039
Buildings and improvements............. 2,743,557 2,762,905 2,932,906 2,932,906
Furniture and fixtures................. 1,124,775 1,286,421 1,481,593 1,473,469
Machinery and equipment................ 1,802,990 2,260,005 2,681,838 2,681,838
----------- ----------- ----------- -----------
6,043,361 6,681,370 7,468,376 7,460,252
Less accumulated depreciation.......... (3,098,732) (3,510,702) (3,799,781) (3,799,781)
----------- ----------- ----------- -----------
2,944,629 3,170,668 3,668,595 3,660,471
----------- ----------- ----------- -----------
OTHER ASSETS (Note 2)....................... 555,388 524,440 1,233,349 1,233,349
----------- ----------- ----------- -----------
$19,243,203 $27,816,986 $36,265,107 $36,848,476
=========== =========== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined balance sheets.

F-3
<PAGE> 63

THE O'GARA COMPANY

COMBINED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
PRO FORMA
JUNE 30,
DECEMBER 31, DECEMBER 31, JUNE 30, 1996
1994 1995 1996 (NOTE 15)
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
CURRENT LIABILITIES:
Revolving lines of credit (Note 5)........ $ 5,637,740 $10,188,765 $13,645,975 $13,645,975
Current portion of long-term debt (Note
6)..................................... 1,725,620 1,649,018 1,623,327 1,623,327
Notes payable -- shareholders (Note 4).... 308,630 308,630 268,630 268,630
Accounts payable --
Trade.................................. 4,376,214 10,075,075 10,087,349 10,087,349
Affiliates (Note 4).................... 127,645 499,730 716,971 371,082
Billings in excess of costs and estimated
earnings on uncompleted contracts (Note
2)..................................... 1,749,192 1,706,042 469,935 469,935
Accrued liabilities....................... 2,179,729 1,677,307 2,062,642 2,062,642
Customer deposits......................... 1,637,622 1,248,197 3,104,267 3,104,267
----------- ----------- ----------- -----------
Total current liabilities......... 17,742,392 27,352,764 31,979,096 31,633,207
----------- ----------- ----------- -----------
SUBORDINATED NOTES PAYABLE - SHAREHOLDERS... -- -- -- 9,000,000
----------- ----------- ----------- -----------
LONG-TERM DEBT, net of current portion (Note
6)........................................ 228,088 225,429 270,497 270,497
----------- ----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
(Notes 7 and 10)
SHAREHOLDERS' EQUITY (DEFICIT) (Notes 1 and
14):
Preferred stock, $.01 par value, 100,000
shares authorized; none issued......... -- -- -- --
Common stock, $.01 par value, 25,000,000
shares authorized, 3,568,008, 4,490,383
and 4,490,383 shares issued and
outstanding in 1994, 1995 and 1996,
respectively, and 4,611,846 shares pro
forma.................................. 14,072 15,235 15,235 14,235
Additional paid-in-capital................ 2,482,140 2,730,977 2,730,977 260,512
Retained earnings (deficit)............... (1,223,982) (2,508,834) 1,262,843 (4,336,434)
Cumulative foreign currency translation
adjustment (Note 2).................... 493 1,415 6,459 6,459
----------- ----------- ----------- -----------
Total shareholders' equity
(deficit)....................... 1,272,723 238,793 4,015,514 (4,055,228)
----------- ----------- ----------- -----------
$19,243,203 $27,816,986 $36,265,107 $36,848,476
=========== =========== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined balance sheets.

F-4
<PAGE> 64

THE O'GARA COMPANY

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES................... $21,054,044 $33,912,279 $32,816,996 $12,161,513 $41,520,784
COST OF SALES............... 14,640,361 24,505,236 25,237,159 9,307,793 31,382,806
----------- ----------- ----------- ----------- -----------
Gross profit........... 6,413,683 9,407,043 7,579,837 2,853,720 10,137,978
OPERATING EXPENSES:
Selling and marketing..... 1,932,055 2,735,940 3,628,312 1,352,759 2,158,603
General and
administrative......... 3,169,343 4,440,552 4,129,017 2,079,618 3,286,492
----------- ----------- ----------- ----------- -----------
Operating income
(loss)............... 1,312,285 2,230,551 (177,492) (578,657) 4,692,883
OTHER INCOME (EXPENSES):
Interest expense.......... (269,463) (410,325) (841,972) (365,632) (613,293)
Interest income........... 6,891 54,099 23,010 10,985 --
Other..................... (88,033) 6,151 (100,813) (57,927) (85,576)
Equity in income (loss) of
joint venture (Note
2)..................... -- -- (24,785) -- 7,663
----------- ----------- ----------- ----------- -----------
Net income (loss)...... $ 961,680 $ 1,880,476 $(1,122,052) $ (991,231) $ 4,001,677
=========== =========== =========== =========== ===========
UNAUDITED PRO FORMA
INFORMATION (Note 15):
Gross profit.............. $ 7,579,837 $10,137,978
Selling and marketing..... 3,628,312 2,158,603
General and
administrative......... 4,269,017 3,356,492
----------- -----------
Operating income (loss)... (317,492) 4,622,883
Interest expense.......... (185,000) (94,000)
Interest income........... 23,010 --
Other..................... (100,813) (85,576)
Equity in income (loss) of
joint venture.......... (24,785) 7,663
----------- -----------
Income (loss) before
provision (benefit)
for income taxes..... (605,080) 4,450,970
Provision (benefit) for
income taxes........... (242,000) 1,780,000
----------- -----------
Net income (loss)...... $ (363,080) $ 2,670,970
=========== ===========
Earnings (loss) per
share.................. $ (0.06) $ 0.40
=========== ===========
Weighted average shares
outstanding............ 6,095,000 6,602,157
=========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined statements.

F-5
<PAGE> 65

THE O'GARA COMPANY

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
FOREIGN
CURRENCY
ADDITIONAL RETAINED TRANSLATION
COMMON PAID-IN EARNINGS ADJUSTMENT
STOCK CAPITAL (DEFICIT) (NOTE 2) TOTAL
------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1993.............. $ 9,826 $ 914,661 $(2,636,988) $ -- $(1,712,501)
Net income............................ -- -- 961,680 -- 961,680
Accrual of stock option compensation
(Note 9)............................ -- 207,335 -- -- 207,335
Distributions to shareholders......... -- -- (480,000) -- (480,000)
------- ---------- ----------- ------ ---- ------
BALANCE, December 31, 1993............ 9,826 1,121,996 (2,155,308) -- (1,023,486)
Net income............................ -- -- 1,880,476 -- 1,880,476
Aggregate translation adjustment...... -- -- -- 493 493
Issuance of OHE stock (Note 13)....... 3,246 1,356,144 -- -- 1,359,390
Incorporation of Limited.............. 1,000 4,000 -- -- 5,000
Distributions to shareholders......... -- -- (949,150) -- (949,150)
------- ---------- ----------- ------ ---- ------
BALANCE, December 31, 1994............ 14,072 2,482,140 (1,223,982) 493 1,272,723
Net loss.............................. -- -- (1,122,052) -- (1,122,052)
Aggregate translation adjustment...... -- -- -- 922 922
Incorporation of OSN.................. 1,163 248,837 -- -- 250,000
Distributions to shareholders......... -- -- (162,800) -- (162,800)
------- ---------- ----------- ------ ---- ------
BALANCE, December 31, 1995............ 15,235 2,730,977 (2,508,834) 1,415 238,793
Net income (unaudited)................ -- -- 4,001,677 -- 4,001,677
Aggregate translation adjustment
(unaudited)......................... -- -- -- 5,044 5,044
Distributions to shareholders
(unaudited)......................... -- -- (230,000) -- (230,000)
------- ---------- ----------- ------ ---- ------
BALANCE, June 30, 1996 (unaudited).... $15,235 $2,730,977 $ 1,262,843 $6,459 $ 4,015,514
======= ========== =========== ====== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined statements.

F-6
<PAGE> 66

THE O'GARA COMPANY

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................... $ 961,680 $ 1,880,476 $(1,122,052) $ (991,231) $ 4,001,677
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities --
Depreciation and amortization......................... 266,243 469,889 476,868 345,521 316,615
Stock option compensation............................. 207,335 -- -- -- --
Decrease (increase) in receivables.................... 1,574,339 (4,887,854) 502,872 2,968,992 601,646
Decrease (increase) in advances to vendors............ -- -- (3,360,136) -- 156,638
Decrease (increase) in costs and estimated earnings in
excess of billings on uncompleted contracts......... (2,134,330) (1,608,458) (3,957,287) 401,006 (4,452,292)
Decrease (increase) in inventories.................... 463,585 (444,879) (1,590,370) (2,339,933) (2,344,863)
Decrease (increase) in prepaid expenses............... (80,670) 47,839 (50,320) (17,014) (136,792)
Increase in other assets.............................. (312,958) (146,882) (33,950) (58,646) (621,491)
Increase (decrease) in accounts payable............... 898,891 106,655 6,070,946 (113,510) 229,515
Increase (decrease) in billings in excess of costs and
estimated earnings on uncompleted contracts......... 1,321,542 427,650 (43,150) (1,061,957) (1,236,107)
Increase (decrease) in accrued liabilities............ (851,621) 1,021,620 (502,422) (151,453) 385,335
Increase (decrease) in customer deposits.............. (1,506,793) 871,021 (389,425) 139,888 1,856,070
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in) operating
activities..................................... 807,243 (2,262,923) (3,998,426) (878,337) (1,244,049)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment.............. (636,687) (683,319) (638,009) (153,022) (786,960)
Investment in shareholder and affiliate notes........... -- -- (233,253) -- (316,708)
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities............ (636,687) (683,319) (871,262) (153,022) (1,103,668)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving lines of credit.......... 246,386 4,676,630 4,551,025 761,216 3,457,210
Proceeds from long-term debt............................ 257,705 30,958 41,608 -- --
Payments of long-term debt.............................. (12,105) (109,351) (120,869) (69,007) (80,623)
Repayment of shareholder notes.......................... (175,000) (190,000) -- -- (40,000)
Proceeds from issuance of common stock.................. -- 104,390 250,000 250,000 --
Foreign currency translation............................ -- 493 922 (64) 5,044
Distributions to shareholders........................... (480,000) (949,150) (162,800) (162,800) (230,000)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in) financing
activities..................................... (163,014) 3,563,970 4,559,886 779,345 3,111,631
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH........................... 7,542 617,728 (309,802) (252,014) 763,914
----------- ----------- ----------- ----------- -----------
CASH, beginning of year................................... 8,383 15,925 633,653 633,653 323,851
----------- ----------- ----------- ----------- -----------
CASH, end of year......................................... $ 15,925 $ 633,653 $ 323,851 $ 381,639 $ 1,087,765
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................. $ 671,000 $ 361,000 $ 796,000 $ 402,000 $ 565,000
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Conversion of note payable to the majority shareholder
to common stock (Note 13)............................. $ -- $ 1,260,000 $ -- $ -- $ --
=========== =========== =========== =========== ===========
Note payable obligation incurred and receivable forgiven
in connection with non-compete agreement (Notes 1 and
2).................................................... $ -- $ -- $ -- $ -- $ 115,000
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined statements.

F-7
<PAGE> 67

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS
(FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
UNAUDITED FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996)

(1) BASIS OF PRESENTATION

The accompanying combined financial statements consist of the following
entities, all of which are owned or controlled by substantially the same
shareholders, with one such shareholder owning or controlling approximately 86%
to 88% of each entity:

COMBINING ENTITIES --

O'Gara-Hess & Eisenhardt Armoring Company (OHE) -- OHE is a Delaware S
Corporation whose principal business is the armoring of commercial and military
vehicles for the U.S. Government, foreign governments, large foreign and
domestic corporations and individuals.

O'Gara Satellite Networks Limited (Satellite Ltd.), and its wholly owned
subsidiary, O'Gara Satellite Networks, Inc. (Satellite Inc.) (collectively
"OSN") -- OSN is engaged in the business of providing satellite communication
equipment and services primarily to European and Middle Eastern customers.

O'Gara-Hess & Eisenhardt Armoring Company Limited (Limited) -- Limited is
an Irish corporation that is engaged in the armoring of commercial vehicles
primarily for Middle Eastern governments, large foreign corporations and
individuals.

O'Gara-Hess & Eisenhardt de Mexico S.A. de C.V. (OHEM) -- OHEM, a 100%
owned Mexican subsidiary of Limited, was formed in 1995 for the purpose of
producing light armored commercial vehicles primarily for customers in Mexico.
In June 1996, Limited acquired the 49% minority interest in OHEM not previously
owned. In conjunction with this acquisition, Limited entered into a two year
employment agreement, a five year non-competition agreement and a commission
agreement with the former shareholder. Under the terms of these agreements,
Limited forgave a $15,000 receivable from the former shareholder and is required
to pay the former shareholder $100,000 prior to October 1, 1997 (see Notes 2 and
6).

O'Gara-Hess & Eisenhardt do Brasil (OHEB) -- OHEB, a 75% owned Brazilian
subsidiary of Limited, was formed in 1996 for the purpose of producing armored
commercial vehicles primarily for customers in South America (see Note 14).

O'Gara Security International, Inc. (OSI) -- OSI, a Delaware corporation
and a 100% owned subsidiary of Limited, was formed in 1996 for the purpose of
providing security products and services in the former Soviet Union.

O'Gara-Hess & Eisenhardt, S.r.1. (Italy) -- Italy, a 90% owned Italian
subsidiary of Limited was formed in 1992 for the purpose of facilitating
contract manufacturing of armored commercial vehicles by an unrelated
manufacturer, FGP, S.r.1.

REORGANIZATION --

In contemplation of a public equity offering (see Notes 14 and 15), the
above combining entities and respective shareholders have entered into a
reorganization plan which will result in the following:

(1) The shareholders of OHE will transfer their ownership interests in
OHE to The O'Gara Company (the Company), an Ohio corporation which prior to
the proposed public equity offering had nominal assets and no operations,
in exchange for 3,689,476 shares of common stock of the Company. The ratio
of exchange was 272.95 shares of Company common stock for each share of OHE
stock.

(2) The Company will then acquire all of the equity ownership of OSN
from the shareholders of OSN in exchange for 922,370 shares of Company
common stock. The ratio of exchange was 793.1 shares of Company common
stock for each share of OSN stock.

F-8
<PAGE> 68

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(3) OHE will acquire the operations and certain selected assets and
assume certain selected liabilities of Limited for consideration (including
OHE's interest in O'Gara Overseas Services, S.A.) which the Board of
Directors of the Company believes represents the fair value of such assets
and liabilities.

This reorganization will occur immediately prior to the effective date of
the Registration Statement filed in connection with the Company's anticipated
sale of common stock to the public. Accordingly, the accompanying combined
financial statements present, as a combination of entities under common control
as if using the pooling method of accounting, the financial position and related
results of operations of the Company on a combined basis for all periods
presented. All significant balances and transactions between the combined
entities have been eliminated in these combined statements.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Business -- Historically, the Company operates in one segment,
providing security products worldwide. The Company's primary products include
the armoring of commercial and military vehicles. The Company also sells and
integrates telecommunications equipment and sells satellite and other
telecommunications services. The following summarizes the Company's foreign and
domestic sales (in 000's):

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers:
U.S. Government........................ $ 3,881 $15,332 $11,514 $ 1,899 $28,714
Other United States.................... 4,670 2,711 7,356 4,208 3,595
Middle East............................ 7,252 7,795 8,582 4,038 3,278
Central & South America................ 972 4,093 1,050 929 1,875
Other foreign.......................... 4,279 3,981 4,315 1,088 4,059
------- ------- ------- ------- -------
$21,054 $33,912 $32,817 $12,162 $41,521
======= ======= ======= ======= =======
</TABLE>

Export sales by the Company's domestic operations were approximately 59%,
46% and 37% of net sales for the years ended December 31, 1993, 1994 and 1995,
respectively.

The Company is subject to audit and investigation by various agencies which
oversee contract performance in connection with the Company's contracts with the
U.S. Government. Management believes that potential claims from such audits and
investigations will not have a material adverse effect on the combined financial
statements. In addition, contracts with the U.S. Government generally contain
cost or performance incentives or both based on stated targets or other
criteria. Cost or performance incentives are recorded at the time there is
sufficient information to relate actual performance to targets or other
criteria.

(b) Revenue Recognition -- Revenue related to government contracts and most
commercial contracts results principally from long-term fixed price contracts
and is recognized on the percentage-of-completion method calculated utilizing
the cost-to-cost approach. The percent deemed to be complete is calculated by
comparing the costs incurred to date to estimated total costs for each contract.
This method is used because management considers costs incurred to be the best
available measure of progress on these contracts. However, adjustments to this
measurement are made when management believes that costs incurred materially
exceed effort expended. Contract costs include all direct material and labor
costs, along with certain direct overhead costs related to contract production.

Provisions for any estimated total contract losses on uncompleted contracts
are recorded in the period in which it becomes known that such losses will
occur. Changes in estimated total contract costs will result in revisions to
contract revenue. These revisions are recognized when determined.

F-9
<PAGE> 69

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(c) Trade Accounts Receivable and Costs and Estimated Earnings in Excess of
Billings on Uncompleted Contracts -- The following summarizes the components of
trade accounts receivable and costs and estimated earnings in excess of billings
on uncompleted contracts:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1994 1995 1996
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
United States Military:
Billed receivables...................................... $3,149,957 $2,322,553 $ 2,736,705
Costs and estimated earnings in excess of billings on
uncompleted contracts................................ 3,236,830 6,201,466 9,471,860
---------- ---------- -----------
Total United States Military......................... $6,386,787 $8,524,019 $12,208,565
========== ========== ===========
Other contracts:
Billed receivables...................................... $4,707,721 $4,772,341 $ 3,495,028
Costs and estimated earnings in excess of billings on
uncompleted contracts................................ 505,958 1,498,609 2,680,507
---------- ---------- -----------
Total other contracts................................ $5,213,679 $6,270,950 $ 6,175,535
========== ========== ===========
Total trade accounts receivable........................... $7,857,678 $7,094,894 $ 6,231,733
========== ========== ===========
Total costs and estimated earnings in excess of billings
on uncompleted contracts................................ $3,742,788 $7,700,075 $12,152,367
========== ========== ===========
</TABLE>

Costs and estimated earnings in excess of billings on uncompleted
contracts are net of $13,331,608 and $20,385,270 of progress billings to the
United States Military at December 31, 1994 and 1995, respectively, and
$46,401,061 at June 30, 1996.

Costs and estimated earnings in excess of billings on uncompleted
contracts represent revenue recognized on long-term contracts in excess of
billings because amounts were not billable at the balance sheet date. It is
anticipated such unbilled amounts attributable to the United States Military
will generally be billed over the next 90 days as the contract is substantially
completed. Amounts receivable on other contracts are generally billed as
shipments are made. It is estimated that substantially all of such amounts will
be billed within one year, although contract extensions may delay certain
collections beyond one year.

(d) Advances to Vendors -- OHE and OSN periodically make advances to
vendors. Such advances are non-interest bearing and are generally applied to
vendor billings for shipments of inventory (Note 5).

(e) Inventories -- Inventories are stated at the lower of cost or market
using the first-in, first-out (FIFO) method and include the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1994 1995 1996
---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials.............................................. $1,603,816 $2,306,176 $3,670,031
Vehicle costs and work-in-process.......................... 1,733,313 2,621,323 3,602,331
---------- ---------- ----------
$3,337,129 $4,927,499 $7,272,362
========== ========== ==========
</TABLE>

F-10
<PAGE> 70

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(f) Property, Plant and Equipment -- Property, plant and equipment are
stated at cost. Depreciation is computed on the straight-line method over the
estimated useful lives of the related assets as follows:

<TABLE>
<S> <C>
Buildings and improvements..................................... 19-40 years
Furniture and fixtures......................................... 5-7 years
Machinery and equipment........................................ 5-7 years
</TABLE>

(g) Other Assets -- Other assets are stated at cost less accumulated
amortization and are being amortized on a straight line basis over their
estimated useful lives. Other assets consist of the following:

<TABLE>
<CAPTION>
JUNE 30,
USEFUL DECEMBER 31, 1996
LIFE --------------------- ----------
DESCRIPTION (YEARS) 1994 1995
- ----------------------------------------------------- ------ --------- --------- (UNAUDITED)
<S> <C> <C> <C> <C>
Non-refundable deposit on an equipment lease with a
related party (see Notes 4 and 7).................. 10 $ 503,858 $ 503,858 $ 503,058
Prepaid offering costs............................... -- -- -- 545,413
Non-compete agreement with a former OHEM
shareholder........................................ 5 -- -- 115,000
Loan origination costs............................... 30 152,940 152,940 152,940
Patents, trademarks, tradenames and distributor
agreements......................................... 5-10 50,000 50,000 50,000
Investment in OGM (see Note 2(n)).................... -- -- 25,215 57,378
Deposit on building (see Note 10).................... -- -- -- 29,000
Deferred bid costs and other......................... -- 14,726 23,461 39,176
--------- --------- ----------
721,524 755,474 1,491,965
Less-accumulated amortization........................ (166,136) (231,034) (258,616)
--------- --------- ----------
$ 555,388 $ 524,440 $1,233,349
========= ========= ==========
</TABLE>

Costs applicable to bids in process are deferred when management believes
it is probable that future contracts will be obtained. These costs are
transferred to contract costs when contracts are awarded or are expensed when
the contract award is no longer considered probable.

(h) Income Taxes -- OHE is an S Corporation for federal and state income
tax purposes. As an S Corporation, OHE generally is not responsible for income
taxes. Instead, OHE's taxable income or loss is included in the applicable
shareholders' individual federal and state income tax returns.

As described in Notes 1, 14 and 15, the Company has pending an initial
public offering for the sale of common stock. Prior to the consummation of the
offering, OHE's status as an S Corporation will be terminated and, accordingly,
OHE will be subject to federal and state income taxes after the sale of the
common stock of the Company. In addition, OHE will be required to recognize a
deferred tax asset for cumulative temporary differences between financial
reporting and tax reporting, which include primarily accruals and reserves not
currently deductible for tax purposes. Such deferred tax asset will be based on
the cumulative temporary difference at the date of termination of the S
Corporation status. If the termination of the S Corporation status had occurred
at December 31, 1995 or June 30, 1996, the deferred tax asset would have been
approximately $730,000 or $883,000, respectively.

The income tax provisions (benefits) of OSN, Limited, OHEM, OHEB, OSI and
Italy are not material to the accompanying combined statements of operations.

(i) Foreign Currency Translation -- Assets and liabilities of foreign
operations are translated using year-end exchange rates and revenues and
expenses are translated using exchange rates prevailing during the year,

F-11
<PAGE> 71

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

with gains or losses resulting from translation included in a separate component
of shareholders' equity. Gains and losses resulting from transactions in foreign
currencies were immaterial.

(j) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

(k) Interim Information -- The accompanying interim combined financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments and reclassifications considered necessary for a fair and comparable
presentation have been included and are of a normal recurring nature. Operating
results for the six months ended June 30, 1996 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1996.

(l) Research and Development -- Research and development costs are expensed
as incurred. The Company incurred approximately $19,000, $69,000 and $91,000 for
the years ended December 31, 1993, 1994 and 1995, respectively, and $36,000 and
$41,000 for the six months ended June 30, 1995 and 1996, respectively, for
research and development. These costs are included in general and administrative
expenses in the accompanying combined statements of operations.

(m) Advertising -- Advertising costs, while not material, are expensed as
incurred.

(n) Investments -- In May 1995, OSN entered into a joint venture, OGM
Communications, Ltd. (OGM), with Morsviazsputnik (MVS), the Russian signatory to
Inmarsat and a marketer of Inmarsat mobile services. OSN owns a 49% interest in
OGM. The investment in OGM was recorded at the cost of the initial capital
contribution of $50,000 in May 1995 and is accounted for on the equity method.
The Company's proportionate share of OGM's income (loss) was $(24,785) for the
year ended December 31, 1995 and $7,663 for the six months ended June 30, 1996.

(o) New Accounting Pronouncements -- In March 1995, the Financial
Accounting Standards Board issued Statement No. 121 (SFAS No. 121), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. This statement also addresses the accounting for long-lived
assets that are expected to be disposed of in the future. The Company adopted
SFAS No. 121 in the first quarter of fiscal 1996 with no material impact.

In October 1995, the Financial Accounting Standards Board issued Statement
No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation," which
encourages companies to recognize expense for stock-based awards based on their
fair value on the date of grant. At a minimum, SFAS No. 123 will require pro
forma disclosures in the Company's fiscal 1996 financial statements. The Company
has determined not to adopt the expense recognition provisions of SFAS No. 123.

(3) AFFILIATED ENTITIES

Affiliated entities are not included in the accompanying combined financial
statements, and include the following:

O'Gara Overseas Services, SA (OOS) -- OOS is a Swiss corporation that,
subsequent to the reorganization, will be indirectly owned by the current
shareholders of OHE. OOS performs sales functions, primarily in the Middle East,
Africa and Europe.

F-12
<PAGE> 72

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Excel Armor Products, Inc. (Excel) -- Excel is a Delaware S Corporation
that purchases and distributes dual-hard opaque armor material and armoring
products. It has substantially the same shareholders as OHE. Excel had an
exclusive purchasing arrangement with a dual-hard steel producer through
December 31, 1995.

Longline Leasing, Inc. (Longline) -- Longline is a Delaware S Corporation
that leases equipment to OHE. It has substantially the same shareholders as OHE.
OHE leases certain manufacturing and production equipment from Longline.
Longline and Excel have a 50/50 joint venture in a corporate aircraft. OHE has a
minimum monthly usage agreement with the joint venture (see Notes 4 and 7).

O'Gara Protective Services, Inc. (OPS) -- OPS is a Delaware corporation
that provides protective training and services, primarily to foreign
governments. The shareholders of OHE own approximately 47% of OPS.

OLG, Limited (OLG) -- OLG is an Ohio limited liability corporation
organized in March 1996. It has substantially the same shareholders as OHE. In
1996, OLG acquired a building for approximately $1.8 million and leased the
building to OHE for a one year period for $468,000 (see Notes 4 and 7).

The August Group (August) -- August is a partnership in which the majority
shareholder of OHE had a 25% interest prior to December 31, 1993. August
provided certain services to OHE relative to the use of a corporate aircraft in
1993.

Excel Metal Products, Inc. (Excel Metal) -- Excel Metal is a wholly owned
corporation of the majority shareholder. Excel Metal provides management
consulting services to Satellite Inc.

Silver Springs Land and Cattle Company (Silver) -- Silver is a wholly owned
corporation of the majority shareholder that provided facilities for certain
corporate meetings of OHE.

(4) RELATED PARTY TRANSACTIONS

(a) Notes Receivable - Shareholder -- Notes receivable, shareholder,
consist of two unsecured promissory notes in the principal amounts of $100,000
and $130,000, respectively. These notes bear interest at the rate of 8.75% per
annum and are due on December 31, 1996. Accrued interest amounted to $3,253 and
$9,961 at December 31, 1995 and June 30, 1996, respectively.

(b) Advances to Shareholders -- OHE periodically makes advances to
shareholders. Such advances are due on demand and are non-interest bearing.
Advances to OHE's majority shareholder were $65,684 and $189,698 at December 31,
1994 and 1995, respectively, and $242,242 at June 30, 1996. At June 30, 1996,
Limited also had an advance to the minority shareholder of OHEB in the amount of
$117,809.

(c) Note Receivable - Affiliate -- Note receivable, affiliate, consists of
an unsecured promissory note from Excel Metal in the principal amount of
$310,000. This note bears interest at the rate of 8.5% per annum and is due on
February 11, 1997.

(d) Notes Payable - Shareholders -- OHE has the following notes payable to
shareholders at:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to minority shareholder, interest at 10%,
payable on demand, unsecured........................ $243,630 $243,630 $ 203,630
Notes payable to minority shareholders of OHE,
interest at 7.5% through December 31, 1995, 10%
thereafter, payable on demand, unsecured............ 65,000 65,000 65,000
-------- -------- ---------
$308,630 $308,630 $ 268,630
======== ======== =========
</TABLE>

F-13
<PAGE> 73

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Interest cost associated with the above obligations expensed by OHE
approximated $92,000, $38,000 and $33,000 for the years ended 1993, 1994 and
1995, respectively, and $17,000 and $20,000 for the six months ended June 30,
1995 and 1996, respectively.

(e) Sales - Affiliated Entities -- In 1995, OHE entered into a contract
with Excel to provide certain manufacturing services. Total revenue recognized
under this contract approximated $27,000 in 1995 and $44,000 for the six months
ended June 30, 1996.

Beginning in 1995, OSN entered into certain sales contracts with MVS for
the sale of portable satellite terminals. Total revenue recognized approximated
$66,000 in 1995 and $45,000 and $99,000 for the six months ended June 30, 1995
and 1996, respectively.

(f) Purchases - Affiliated Entities -- OHE purchases dual-hard steel used
in the vehicle armoring process from Excel. Purchases were approximately
$521,000 in 1995 and $47,000 and $623,000 for the six months ended June 30, 1995
and 1996, respectively. Additionally, OHE has provided a guarantee of a $150,000
letter of credit furnished by Excel to its third party dual-hard steel supplier.

OSN offers satellite air time to customers through an agreement with MVS.
Total purchases under this agreement were approximately $36,000 in 1995 and
$194,000 for the six months ended June 30, 1996.

(g) Building and Equipment Leases -- OHE currently is leasing a corporate
aircraft from Longline/Excel under a non-cancelable ten year lease agreement
which began in February 1995. The lease stipulates minimum monthly payments of
$35,200, with additional charges accruing for usage in excess of established
base limits. In 1994, OHE leased a corporate aircraft from Longline under a five
year agreement. This original lease was canceled upon the execution of the lease
with Longline/Excel. The terms of the original lease and the newly executed
lease required a non-refundable deposit. The original deposit of approximately
$504,000 is being amortized as rental expense over the existing lease period.
Rental expense, including amortization recognized, approximated $365,000 and
$414,000 in 1994 and 1995, respectively, and $159,000 and $200,000 for the six
months ended June 30, 1995 and 1996, respectively.

In 1993, OHE incurred charges relating to the use of an aircraft owned by
August. Total expense recognized amounted to approximately $294,000.

OHE is also currently leasing equipment from Longline under various
non-cancelable three year lease agreements which began in July 1995. Rental
expense approximated $17,000 in 1995 and $172,000 for the six months ended June
30, 1996.

OHE leases a manufacturing facility from OLG under a non-cancelable one
year lease agreement which began in March 1996. The lease stipulates monthly
payments of $39,000. Rental expense recognized approximated $142,000 for the six
months ended June 30, 1996.

(h) Consulting Services -- OOS and a minority shareholder provide certain
sales and marketing services for OHE and OSN. OHE recognized expense of
approximately $377,000, $490,000 and $506,000 in 1993, 1994 and 1995,
respectively, and $245,000 and $223,000 for the six months ended June 30, 1995
and 1996, respectively, for such services.

In 1993, OHE entered into a one year consulting agreement with a former
shareholder which stipulated monthly payments of $10,000 for services to be
provided relating to certain U.S. Government contracts. OHE recognized $120,000
in expense in 1993 for these services. In May 1994, the agreement was renewed
and the payment obligation was assumed by Excel under a new consulting agreement
with similar terms. In conjunction with this renewal, OHE provided a payment
guarantee to the former shareholder. In 1995, OHE incurred $20,000 in expense
relating to payments made under this guarantee. OHE currently has provided a
payment guarantee under an agreement which extends through December 31, 1996.

F-14
<PAGE> 74

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In 1996, OSN entered into a management consulting agreement with Excel
Metal which stipulates monthly payments of $6,000. OSN has recognized
approximately $36,000 in expense for the six months ended June 30, 1996 under
this agreement.

In 1994 and 1995, prior to joining the Company, a minority shareholder of
OSN was paid $45,000 and $135,000, respectively, in conjunction with a
consulting agreement. These payments were recognized in selling and marketing
expenses in the accompanying 1995 combined statement of operations.

(i) Other -- In 1994 and 1995, OHE recognized approximately $55,000 and
$11,000, respectively, in expense relating to payments made to Silver for use of
its facilities for corporate meetings.

(j) Summary of Related Party Transactions -- The following summarizes
transactions with related parties:

<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------------------- ---------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales
to Excel.......................... $ -- $ -- $ 27,000 $ -- $ 44,000
to MVS............................ -- -- 66,000 45,000 99,000
Purchases
from Excel........................ -- -- 521,000 47,000 623,000
from MVS.......................... -- -- 36,000 -- 194,000
Lease expense
to Longline....................... -- 365,000 17,000 -- 172,000
to Longline/Excel................. -- -- 414,000 159,000 200,000
to OLG............................ -- -- -- -- 142,000
to August......................... 294,000 -- -- -- --
Consulting services
provided by OOS................... 248,000 361,000 377,000 180,500 158,500
provided by minority
shareholder.................... 129,000 129,000 129,000 64,500 64,500
provided by minority
shareholder.................... -- 45,000 135,000 90,000 --
provided by Excel Metal........... -- -- -- -- 36,000
provided by former shareholder.... 120,000 -- 20,000 20,000 --
Facility service fees paid to
Silver............................ -- 55,000 11,000 -- --
</TABLE>

(k) Other Receivables - Affiliates -- Other receivables - affiliates
consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
------ -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Excel....................................... $ -- $ 53,057 $ 152,133
OPS......................................... 3,914 9,657 44,725
OGM......................................... -- 38,669 --
Longline.................................... -- 26,839 --
------ -------- ---------
$3,914 $128,222 $ 196,858
====== ======== =========
</TABLE>

F-15
<PAGE> 75

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(l) Accounts Payable - Affiliates -- Accounts payable - affiliates consist
of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
OOS....................................... $127,645 $348,535 $ 339,763
MVS....................................... -- 29,195 128,604
OOST...................................... -- 122,000 122,000
OLG....................................... -- -- 78,102
Longline.................................. -- -- 27,036
OGM....................................... -- -- 15,466
Excel Metal............................... -- -- 6,000
-------- -------- ---------
$127,645 $499,730 $ 716,971
======== ======== =========
</TABLE>

(5) REVOLVING LINES OF CREDIT

OHE had a $8,500,000 revolving line of credit with a bank at December 31,
1995 with interest at the bank's prime rate. In May 1996, OHE obtained an
additional $3.5 million revolving line of credit with interest at the bank's
prime rate plus 1%. These lines of credit mature on November 1, 1996 and are
secured by substantially all of the assets of OHE. In addition, the $3.5 million
revolving line of credit is secured by the personal guarantees of a majority of
OHE's shareholders (specifically Thomas M. O'Gara, Wilfred T. O'Gara and
Nicholas P. Carpinello). The lines of credit contain certain covenants, which
among other restrictions, require the maintenance of a minimum net worth and
certain defined financial ratios. OHE was not in compliance with certain
covenants at December 31, 1995. All such violations were subsequently waived or
amended by the lender. Borrowings under these and prior lines of credit were
$5,637,740 and $7,601,686 at December 31, 1994 and 1995, respectively, and
$9,809,896 at June 30, 1996.

OSN has a bank credit facility consisting of (i) a $1,000,000 six-month
revolving loan, of which $1,000,000 was outstanding at December 31, 1995 and
June 30, 1996, and (ii) an available $3,000,000 six-month letter of credit of
which $1,587,079 and $2,836,079 was outstanding at December 31, 1995 and June
30, 1996, respectively. The letter of credit was established in the name of a
prime supplier with which OSN has a firm purchase commitment (see Note 10). The
letter of credit is provided for the reimbursement of costs incurred by the
supplier relating to the production of inventory (Note 10) to be sold to OSN. At
December 31, 1995, and June 30, 1996, OSN had advances to this vendor of
$1,607,597 and $2,624,788, respectively, related to such inventories. The
facility was originally payable on February 14, 1996 and was subsequently
refinanced through February 14, 1997. The facility is secured by OSN's currently
owned and future acquired inventory and accounts receivable.

Interest on borrowings outstanding at December 31, 1995 accrues at the
bank's prime rate (8.5% at December 31, 1995) and is payable monthly.

In June 1996, OHEB obtained a $500,000 line of credit with interest at
market rates. This line of credit matures on May 31, 1997 and is supported by a
standby letter of credit issued by OHE's primary lender with a similar maturity.
As of June 30, 1996, there were no borrowings under this line of credit.

F-16
<PAGE> 76

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(6) LONG-TERM DEBT

The components of long-term debt are as follows at:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- JUNE 30,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Development Bonds, variable interest rate
approximating 85% of the bond equivalent yield of
13 week U.S. Treasury bills (not to exceed 12%)
which approximated 4.1% at December 31, 1995,
payable in scheduled installments through
September 2016, subject to optional prepayment by
the bondholders, secured by the property, plant
and equipment of OHE, the guaranty of OHE's
majority shareholder and a bank letter of credit
(Note 10)......................................... $ 1,681,250 $ 1,606,250 $ 1,544,986
Mortgage note to bank, interest at 8.68%, payable in
monthly installments of $2,349, including
interest, through April 2003, secured by real
estate and the guaranty of OHE's majority
shareholder....................................... 217,628 208,274 202,501
Note payable to former shareholder of OHEM, interest
imputed at 9%, due October 1, 1997................ -- -- 100,000
Other notes payable, interest at 6.84% to 15.7%,
payable in scheduled installments through July
2000, secured by equipment........................ 54,830 59,923 46,337
----------- ----------- -----------
Total long-term debt...................... 1,953,708 1,874,447 1,893,824
Less - current portion.................... (1,725,620) (1,649,018) (1,623,327)
----------- ----------- -----------
$ 228,088 $ 225,429 $ 270,497
=========== =========== ===========
</TABLE>

Scheduled maturities of long-term debt at December 31, 1995 are as follows:

<TABLE>
<S> <C>
1996, including $1,606,250 of Development Bonds subject to prepayment
by the bondholders................................................... $1,649,018
1997................................................................... 22,282
1998................................................................... 21,892
1999................................................................... 23,748
2000................................................................... 19,574
Thereafter............................................................. 137,933
----------
$1,874,447
==========
</TABLE>

F-17
<PAGE> 77

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(7) OPERATING LEASES

The Company leases certain equipment under agreements with terms from one
to ten years. The following is a schedule, by year, of approximate future
minimum rental or usage payments required under operating leases that have
initial or non-cancelable lease terms in excess of one year as of December 31,
1995:

<TABLE>
<CAPTION>
AFFILIATED
COMPANIES OTHER
---------- ----------
<S> <C> <C>
1996......................................................... $1,086,958 $ 429,359
1997......................................................... 902,309 286,034
1998......................................................... 694,765 201,028
1999......................................................... 435,351 164,436
2000......................................................... 422,400 40,081
Thereafter................................................... 2,112,000 --
---------- ----------
$5,653,783 $1,120,938
========== ==========
</TABLE>

Rental expense charged against current operations amounted to approximately
$375,000, $500,000 and $670,000 for the years ended December 31, 1993, 1994 and
1995, respectively, and $253,000 and $755,000 for the six months ended June 30,
1995 and 1996, respectively.

(8) RETIREMENT PLANS

During 1991, OHE established a non-contributory profit sharing/401(k) plan
covering substantially all employees. Contributions are discretionary and are
determined annually by OHE's Board of Directors. Plan contribution expense
charged against current operations amounted to approximately $50,000, $75,000
and $25,000 for the years ended December 31, 1993, 1994 and 1995, respectively,
and $12,500 and $63,000 for the six months ended June 30, 1995 and 1996,
respectively.

The Company does not maintain any other postretirement or postemployment
benefit plans.

(9) EXECUTIVE BONUS PLAN

During 1993, OHE adopted an executive bonus plan, which covered four
individuals. The plan awarded a bonus based on the attainment of goals
stipulated in the five year business plan, ranging from 50 to 120 percent of the
executives' base compensation. The bonus amounts were distributed 50% in cash
and 50% in non-qualified stock options to purchase stock of OHE. Subject to the
executives' ability to elect a decrease in the percentage of cash payments and
to increase the percentage of stock options, 50 percent of the bonus amount was
payable in cash, and the remainder in stock options. All options are exercisable
at $1 per share, will be forfeited should the executives terminate employment,
and are exercisable at the earliest of (i) the rejection of a bonafide offer to
purchase OHE, (ii) death or disability, or (iii) December 31, 1997. Stock
received upon exercise is subject to the same buyback agreements as OHE's common
stock (see Notes 10 and 14).

OHE issued 445 options in 1994 based on 1993's operating results and
recorded compensation expense of approximately $207,000 in fiscal 1993. No
options were issued in 1994 or 1995.

(10) COMMITMENTS AND CONTINGENCIES

(a) Letters of Credit -- Under the terms of the Economic Development
Revenue Bonds Agreement, OHE is required to maintain a letter of credit
supporting the debt. OHE's lender is committed to providing this letter of
credit to September 2, 1996. As of December 31, 1995, OHE had an outstanding
letter of credit in the amount of $1,912,500.

F-18
<PAGE> 78

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1995, OHE had standby and purchase letters of credit,
issued by its primary lender, in the aggregate amount of $2,794,543.

(b) Supply and Purchase Agreements -- In June 1995, OSN entered into an
irrevocable supply agreement with Magellan Systems Corporation ("Magellan")
whereby Magellan will purchase 4,000 Compact-M portable satellite
telecommunication units for delivery within two years of the first shipment at a
predetermined price for a total contract value of approximately $16,000,000. In
the agreement, OSN granted worldwide distribution to Magellan except for certain
limited markets retained by OSN.

In June 1995, in connection with the above-mentioned supply agreement, OSN
entered into a firm purchase agreement with Glocom, Inc. ("Glocom"). The
agreement provides for an irrevocable purchase order for the purchase of 4,000
units of the Compact-M for approximately $12,000,000. In accordance with the
agreement, OSN delivered to Glocom a letter-of-credit in the amount of
$3,000,000 that expired in February 1996 and was extended through November 1996
for the funding of the related production costs incurred (see Note 5).

In 1996, OHEB committed to purchase 100 glass kits, valued at approximately
$675,000, for delivery at various dates prior to June 1997.

In 1996, OHEM entered into an irrevocable call option agreement whereby
OHEM was granted the option of purchasing its leased Mexico City manufacturing
facility for approximately $1,300,000. The option was acquired at a cost of
$29,000 and it expires on November 15, 1996.

(c) Stock Buyback Agreements -- OHE's common stock is subject to a right of
first refusal prior to any sales and buy-back provisions based on estimated fair
market value (see Note 14).

(d) Legal Matters -- The Company is party to various legal proceedings
arising from its combined operations. Management of the Company believes that
the outcome of these proceedings, individually and in the aggregate, will have
no material adverse effect on the Company's combined financial position or
results of operations.

(11) FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of current assets, current liabilities and long-term debt
approximate their respective historical carrying amounts.

(12) MAJOR CUSTOMERS

During 1993, 1994 and 1995 and for the six months ended June 30, 1995 and
1996, sales to four customers and their affiliated entities approximated 55%,
69% and 57%, respectively, and 35% and 78%, respectively, of the Company's net
sales, individually presented as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
U.S. Government.......................... 18% 45% 35% 16% 69%
Foreign Government A..................... 13% 9% 14% 9% 7%
Customer A............................... 13% 5% 5% 4% 2%
Foreign Government B..................... 11% 10% 3% 6% --
----- ----- ----- ----- -----
55% 69% 57% 35% 78%
===== ===== ===== ===== =====
</TABLE>

The year end accounts receivable balances of these customers approximated
71%, 63%, and 62% of the Company's total trade receivable balance in 1993, 1994
and 1995, and 59% for the six months ended June 30,

F-19
<PAGE> 79

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

1996. In addition, two other customers not included above had year end accounts
receivable balances which approximated 16% in 1994 and 14% for the six months
ended June 30, 1996 of total trade accounts receivable.

(13) ISSUANCE OF OHE STOCK

Prior to August 1994, OHE was indebted to Letter International Limited
Irrevocable Trust (Trust), a trust for which OHE was the sole beneficiary, in
the amount of $1,260,000. At the same time, the Trust was indebted in an equal
amount to OHE's majority shareholder. In August 1994, the majority shareholder
received from the Trust an assignment of OHE's obligation. The majority
shareholder then agreed to the cancellation of this indebtedness of OHE in
exchange for 2,692 shares of common stock of OHE (734,781 shares of the Company,
giving effect to the reorganization).

(14) SUBSEQUENT EVENTS (UNAUDITED)

(a) Registration of Common Stock -- The Company has filed with the
Securities and Exchange Commission a Form S-1 Registration Statement, as
amended, for the sale of 3,000,000 shares of common stock (excluding the
underwriters' over-allotment option to purchase an additional 450,000 shares of
common stock), which will represent approximately 42% of the ownership of the
Company. The proceeds from the 2,600,000 shares to be sold by the Company in the
offering will be used for retirement of bank debt, payment of the AAA Notes (see
(b) below), purchase of the leased Mexico City manufacturing facility, the
acquisition in (g) below, transaction costs associated with the offering,
funding for acquisition activities and the balance for working capital. The
Registration Statement contains various risk factors that include, among others,
substantial dependence on U.S. Military contracts, single and primary source
suppliers, fluctuations in operating results, fixed price contracts, percentage
of completion accounting, competition and business and acquisition strategies
(See "Risk Factors" in the accompanying Registration Statement).

The OHE Executive Bonus Plan terminated on August 23, 1996.

On October 28, 1996, the Company completed the reorganization described in
Note 1 and effected the combination and transfers referred to therein and
terminated its S Corporation election. Existing buyback arrangements for OHE's
common stock terminated upon completion of the reorganization.

(b) Dividend to Shareholders -- On October 28, 1996, OHE distributed to its
shareholders a dividend of $9,000,000 in the form of long-term notes (the "AAA
Notes") which represent the undistributed previously taxed income of OHE as an S
Corporation through the effective date of the reorganization.

(c) Stock Option Plans -- In August 1996, 445 options in the OHE Executive
Bonus Plan were exercised for 445 shares of OHE common stock in contemplation of
the planned public offering of common stock at their $1 per share stated value
(121,463 shares of the Company, giving effect to the reorganization).

In 1996, the Company adopted a stock option plan for employees and
directors. Options granted under the plan are generally granted at fair market
value at date of grant and are exercisable over periods not exceeding ten years.
Shares reserved for grant pursuant to this plan may not exceed 400,000 shares
and options to purchase 180,000 common shares at the initial public offering
price will be awarded at the effective date of the registration.

(d) Preferred Stock -- In August 1996, the Company authorized the issuance
of up to 100,000 preferred shares, $.01 par value.

(e) Option to Purchase OHEB Minority Interest -- In August 1996, the
Company entered into an option agreement to acquire the minority interest in
OHEB on or prior to December 31, 1997. Under terms of the agreement, if the
Company exercises its option, it will be obligated to transfer to the former
shareholder, over a period of three years, common shares of the Company valued
at $1,200,000. The number of shares

F-20
<PAGE> 80

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

transferred is dependent on the market value of the stock at the time of
transfer. The exercise price for the purchase option increases by $100,000 for
each year after 1997 through 1999.

In conjunction with this purchase, the Company also entered into a two year
employment agreement with the former shareholder.

(f) Employment Agreements -- In August 1996, the Company entered into
employment agreements with key officers and employees with 2 year terms.

(g) Palmer Associates, S.C. Acquisition -- In August 1996, the Company
agreed to a letter of intent to purchase certain assets and certain liabilities
of Palmer Associates, S.C. ("Palmer") for $1,000,000 in cash, payable $500,000
at the closing of the planned registration of common stock and $250,000 each on
December 31, 1997 and 1998. The former owner also will receive a $200,000
covenant not to compete, payable over four years, and a two year employment
agreement.

(h) Litigation -- On October 9, 1996, the Company was named in a lawsuit
which alleges, among other allegations, that the Company's plan to enter the
security services market constitutes a breach of a non-competition agreement
existing with OPS and the controlling shareholder of OPS, Mr. Edward F. O'Gara,
the brother of Mr. Thomas M. O'Gara, the Company's Chairman of the Board, and
Mr. Wilfred T. O'Gara, the Company's Chief Executive Officer. The Company denies
the assertions made by OPS in this matter.

(15) PRO FORMA INFORMATION (UNAUDITED)

(a) Pro Forma Combined Balance Sheet Information -- The pro forma combined
balance sheet at June 30, 1996 reflects the following pro forma adjustments:

(i) Payment of a $9,000,000 dividend in the form of long-term AAA
shareholder notes due on November 15, 1997, with interest at 8%, with
no prepayment penalties.

(ii) Elimination of certain net liabilities of Limited (approximately
$46,000) not acquired by OHE in the reorganization.

(iii) Recognition of a $883,000 net deferred tax asset resulting from
the termination of OHE's S Corporation status.

(iv) OHE had a retained deficit immediately prior to becoming a C
Corporation. A portion of this retained deficit is reclassified to
offset completely OHE's existing additional paid-in capital
(approximately $2.5 million).

(b) Pro Forma Combined Statements of Operations Adjustments -- The pro
forma combined statements of operations information presents the pro forma
effects on the historical combined financial information reflecting certain
transactions as if they occurred on January 1, 1995 and 1996. The following
adjustments have been reflected in the pro forma combined statements of
operations information:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
1995 JUNE 30, 1996
------------ -------------
<S> <C> <C>
Amortization on intangible assets resulting from the purchase of
Palmer Associates, S.C........................................... $ (140,000) $ (70,000)
The elimination of interest expense relating to the debt intended
to be repaid..................................................... 657,000 519,000
The benefit (provision) for income taxes at an effective rate of
40% as if OHE had been a C Corporation and as if the Company had
filed a consolidated U.S. Federal tax return..................... 242,000 (1,780,000)
------- -----------
Total.................................................... $ 759,000 $ (1,331,000)
======= ===========
</TABLE>

F-21
<PAGE> 81

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(c) Pro Forma Net Income (Loss) Per Share -- Pro forma net income (loss)
per common share is based on the weighted average number of shares of common
stock of the Company outstanding during the period (assuming the reorganization
had occurred and using the treasury stock method), plus the estimated number of
shares required to fund the planned distribution to shareholders and the
estimated number of shares to be issued to repay existing debt.

Supplemental pro forma income (loss) per share considering only the
repayment of existing debt would have been $(.07) for the year ended December
31, 1995 and $.46 for the six months ended June 30, 1996, based on the weighted
average number of shares of common stock outstanding during the period, plus the
estimated number of shares to be issued to repay existing debt.

F-22
<PAGE> 82

THE O'GARA COMPANY

THE O'GARA TEAM

As a service organization, the Company strives to hire, retain, and
motivate the highest level of quality personnel available who are focused on a
set of core values designed to promote teamwork, fairness, honesty and
leadership.

ENGINEERS The Company's veteran engineering staff is comprised of armor and
security experts with considerable experience in developing prototype solutions
for both military and commercial customers utilizing advanced CAD/CAE equipment.

[Picture of man operating CAD/CAE computer equipment]

SECURITY ADVISORS

The Company's senior management team is comprised of individuals with broad
experience in the defense, intelligence, special forces, and anti-crime
divisions of the U.S. and foreign governments.

[Picture of several persons meeting in a conference room]

WORLDWIDE NETWORK

The Company has manufacturing and sales offices in the U.S., Mexico,
Brazil, and Italy, in addition to sales offices in Moscow and Geneva.

[Picture of world map with O'Gara locations]

CRAFTSMANSHIP AND MATERIALS

In applying their craft, the Company's highly skilled tradespeople utilize
only the highest quality protective materials that must pass the Company's
strenuous ballistic testing.

[Picture of technician at work on a vehicle]

[Picture of woman working on the upholstery of a seat]
<PAGE> 83

- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES OF
COMMON STOCK IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
---------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................... 3
Risk Factors................................ 8
Prior S Corporation Status.................. 14
Corporate Reorganization.................... 15
Use of Proceeds............................. 16
Dividend Policy............................. 16
Capitalization.............................. 17
Dilution.................................... 18
Selected Combined Financial Data............ 19
Selected Unaudited Condensed Pro Forma
Financial Data............................ 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 22
Industry Overview........................... 27
Business.................................... 30
Management.................................. 44
Certain Relationships and Related
Party Transactions........................ 47
Principal and Selling Shareholders.......... 51
Description of Capital Stock................ 52
Shares Eligible for Future Sale............. 54
Underwriting................................ 55
Legal Matters............................... 56
Experts..................................... 56
Additional Information...................... 56
Index to Combined Financial Statements...... F-1
</TABLE>

---------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

[LOGO]

THE O'GARA COMPANY
---------------------------
3,000,000 SHARES

COMMON STOCK

PROSPECTUS

, 1996
---------------------------
DILLON, READ & CO. INC.

FURMAN SELZ

EQUITABLE SECURITIES CORPORATION

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 84

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is a list of anticipated expenses in connection with the
issuance and distribution of the shares of Common Stock being registered, all of
which will be paid by the Company and all of which (other than the SEC, NASD and
Nasdaq fees) are estimated:

<TABLE>
<CAPTION>
SEC registration fee........................... $ 16,655
<S> <C> <C>
NASD fee....................................... 5,330
Nasdaq National Market listing fee............. 35,030
Printing costs................................. 150,000
Legal fees..................................... 385,000
Accounting fees................................ 725,000
Transfer agent fees............................ 5,000
Blue sky fees and expenses..................... 20,000
Miscellaneous.................................. 157,985
----------
$1,500,000
=========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 1701.13(E) of the Ohio General Corporation Law allows
indemnification by the Registrant to any person made or threatened to be made a
party to any proceedings, other than a proceeding by or in the right of the
Registrant, by reason of the fact that he is or was a director, officer,
employee or agent of the Registrant, against expenses, including judgments and
fines, if he acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the Registrant and, with respect to
criminal actions, in which he had no reasonable cause to believe that his
conduct was unlawful. Similar provisions apply to actions brought by or in the
right of the Registrant, except that no indemnification shall be made in such
cases when the person shall have been adjudged to be liable for negligence or
misconduct to the Registrant unless determined by the court. The right to
indemnification is mandatory in the case of a director or officer who is
successful on the merits or otherwise in defense of any action, suit or
proceeding or any claim, issue or matter therein. Permissive indemnification is
to be made by a court of competent jurisdiction, the majority vote of a quorum
of disinterested directors, the written opinion of independent counsel or by the
shareholders.

The Registrant's Code of Regulations provides that the Registrant shall
indemnify such persons to the fullest extent permitted by law.

The Registrant intends to maintain director and officer liability insurance
which provides coverage against certain liabilities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since August 1993, the Registrant has made or will make the following sales
of unregistered securities:

Pursuant to the Reorganization, on October 28, 1996, the Registrant issued
3,689,476 shares of its Common Stock, in exchange for all of the outstanding
common stock of OHE, as follows: Thomas M. O'Gara, as Trustee of the Thomas M.
O'Gara Family Trust, dated July 8, 1992 -- 3,237,743 shares (of which 373,524
shares were acquired by Union Federal Corporation); Wilfred T. O'Gara -- 214,266
shares; Thomas M. Letter -- 136,475 shares; Nicholas P. Carpinello -- 51,315
shares; Charles A. Williams -- 26,476 shares; and Richard L. Curotto -- 23,201
shares.

On October 28, 1996, in connection with the Reorganization and following
the acquisition of the common stock of OHE by the Company, the Registrant issued
922,370 shares of Common Stock, in exchange for all of

II-1
<PAGE> 85

the outstanding common stock of OSN, as follows: MeesPierson Management
(Guernsey) Ltd., for the beneficial interest of Gentry Corporation Limited, of
which Thomas M. O'Gara has indirect voting control -- 793,095 shares; Wilfred T.
O'Gara -- 45,999 shares; Thomas M. Letter -- 31,724 shares; Nicholas P.
Carpinello -- 5,552 shares; and Neil P. Saldin -- 46,000 shares.

On August 23, 1996 OHE issued shares of its common stock, all upon the
exercise of options granted as bonus compensation on December 31, 1993 at a
price of $1.00 per share, as follows: Thomas M. O'Gara -- 138 shares; Wilfred T.
O'Gara -- 131 shares; Nicholas P. Carpinello -- 91 shares; and Richard L.
Curotto -- 85 shares.

On July 31, 1996 the Registrant issued 10 shares of its Common Stock to
Nicholas P. Carpinello for $10.00 in connection with the Registrant's
incorporation.

On December 29, 1995, OSN issued 55 shares of its common stock for $1,375
to MeesPierson Management (Guernsey) Ltd. for the beneficial interest of Gentry
Corporation Limited, of which Thomas M. O'Gara has indirect voting control, and
58 shares to Neil P. Saldin for $1,450.

On December 2, 1994, OSN issued 1,050 shares of its common stock for
$27,700 to MeesPierson Management (Guernsey) Ltd. for the beneficial interest of
each of the following: Gentry Corporation Limited, of which Thomas M. O'Gara has
indirect voting control -- 945 shares; Wilfred T. O'Gara -- 58 shares; Thomas M.
Letter -- 40 shares; and Nicholas P. Carpinello -- 7 shares.

On August 31, 1994 OHE issued 554 shares of its common stock to Wilfred T.
O'Gara as consideration for services rendered.

On August 1, 1994 OHE issued 2,692 shares of its common stock to Thomas M.
O'Gara, Trustee of the Thomas M. O'Gara Family Trust, dated July 8, 1982 as
consideration for the extinguishment of indebtedness of OHE in the amount of
$1,260,000.

All of the securities described above were issued without registration
under the Securities Act of 1933 in reliance upon the exemptions provided by
Sections 3(a)(9), 4(1) and 4(2) of that Act. No underwriting commissions were
paid on any such issuances.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits. The list of exhibits is set forth beginning on page II-5 of
this Registration Statement and is incorporated herein by reference.

(b) Financial Statement Schedules. See Index to Financial Statement
Schedules on page S-1 for the list of financial statement schedules filed with
this Registration Statement.

ITEM 17. UNDERTAKINGS.

*(f) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.

*(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

II-2
<PAGE> 86

*(i) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
- ---------------

*Paragraph references correspond to those of Regulation S-K, Item 512.

II-3
<PAGE> 87

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CINCINNATI,
STATE OF OHIO, AS OF THE 28TH DAY OF OCTOBER, 1996.

THE O'GARA COMPANY

By: /s/ NICHOLAS P. CARPINELLO
----------------------------------
Nicholas P. Carpinello
Executive Vice President

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED AS OF THE 28TH DAY OF OCTOBER, 1996.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
*/s/ THOMAS M. O'GARA Chairman of the Board
- -------------------------------------
Thomas M. O'Gara

*/s/ WILFRED T. O'GARA Chief Executive Officer and Director
- ------------------------------------- (Principal Executive Officer)
Wilfred T. O'Gara

Director
- -------------------------------------
Hugh E. Price

/s/ NICHOLAS P. CARPINELLO Chief Financial Officer (Principal
- ------------------------------------- Financial and Accounting Officer)
Nicholas P. Carpinello

*By /s/ NICHOLAS P. CARPINELLO Attorney in Fact
- -------------------------------------
Nicholas P. Carpinello
</TABLE>

II-4
<PAGE> 88

LIST OF EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1 Form of Underwriting Agreement*
3.1 Form of Restated Articles of Incorporation of the Registrant*
3.2 Form of Code of Regulations of the Registrant*
5 Opinion of Taft, Stettinius & Hollister.
10.1 Form of proposed Revolving Credit and Security Agreement between the Registrant and
The Fifth Third Bank
10.2 Agreement to armor HMMWVs between the Registrant and the United States Army Tank
Automotive Command, dated May 12, 1994, as amended*
10.3 Lease of Mulhauser Road facility between O'Gara-Hess & Eisenhardt Armoring Company
and OLG, Limited, dated March 12, 1996, as amended*
10.4 Aircraft Lease between O'Gara-Hess & Eisenhardt Armoring Company and Longline
Leasing, Inc. and Excel Armor Products, Inc., dated February 13, 1995, as amended*
10.5 Terms of Lease (English Translation) of Sao Paulo, Brazil facility between
O'Gara-Hess & Eisenhardt Armoring Company do Brazil and Piero Balducci and Elvira
Miriam Colo Balducci, dated March 8, 1996*
10.6 Option to purchase facility in Mexico City, Mexico between O'Gara-Hess & Eisenhardt
Armoring Company de Mexico S.C. and Mexinvest, SA de C.V.*
10.7 1996 Stock Option Plan*
10.8 Employment Agreement between O'Gara-Hess & Eisenhardt Armoring Company and Richard
L. Curotto, dated August 23, 1996*
10.9 Employment Agreement between the Registrant and Thomas M. O'Gara, dated August 23,
1996*
10.10 Employment Agreement between the Registrant and Wilfred T. O'Gara, dated August 23,
1996*
10.11 Employment Agreement between the Registrant and Nicholas P. Carpinello, dated
August 23, 1996*
10.12 Employment Agreement between O'Gara Satellite Networks Limited and Neil P. Saldin,
dated August 23, 1996*
10.13 Employment Agreement between O'Gara-Hess & Eisenhardt Armoring Company and Gary W.
Allen, dated August 23, 1996*
10.14 Employment Agreement between O'Gara-Hess & Eisenhardt Armoring Company and Michael
J. Lennon, dated August 23, 1996*
10.15 Form of Accumulated Adjustments Account ("AAA") promissory notes to existing
shareholders*
10.16 Trust Indenture, Economic Development Revenue Bonds, Series 1986*
10.17 Loan Agreement, Economic Development Revenue Bonds, Series 1986*
10.18 Supply agreement between O'Gara Satellite Networks Limited and Glocom, Inc.*
10.19 Marketing agreement between O'Gara Satellite Networks Limited and Magellan Systems
Corporation*
10.20 Letter of Intent between the Registrant and Palmer Associates, S.C., dated August
15, 1996*
10.21 License agreement between O'Gara Satellite Networks Limited and Morsviasputnik,
dated March 21, 1995*
10.22 Extension of Option to purchase Mexico City facility*
</TABLE>

II-5
<PAGE> 89

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------

<S> <C>
10.23 Agreement to armor HMMWVs between the Registrant and the United Stated Army Tank
Automotive Command, dated September 27, 1996*
11 Computation of pro forma earnings (loss) per common share*
21 Subsidiaries of the Registrant*
23.1 Consent of Taft, Stettinius & Hollister (contained in Exhibit 5)
23.2 Consent of Arthur Andersen LLP
24 Power of Attorney (contained in Signature Page)*
99.1 Consent of Hugh E. Price, Nominee for Director*
99.2 Consent of William S. Sessions, Nominee for Director*
99.3 Consent of Raymond E. Mabus, Nominee for Director*
</TABLE>

- ---------------

* Previously filed.

II-6
<PAGE> 90

THE O'GARA COMPANY
FINANCIAL STATEMENT SCHEDULES
INDEX

Report of Independent Public Accountants S-2

Schedule II -- Valuation and Qualifying Accounts S-3

All other financial statement schedules are omitted due to the absence of
conditions under which they are required or because the information is shown in
the combined financial statements or notes thereto.

S-1
<PAGE> 91

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of The O'Gara Company:

We have audited, in accordance with generally accepted auditing standards,
the combined financial statements of THE O'GARA COMPANY included in this
registration statement and have issued our report thereon dated July 10, 1996,
except for Notes 14 and 15 as to which the date is October 28, 1996. Our audit
was made for the purpose of forming an opinion on the basic combined financial
statements taken as a whole. The schedule listed in the accompanying index is
the responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic combined financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic combined financial
statements and, in our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to the basic
combined financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Cincinnati, Ohio,

July 10, 1996,
except for Notes 14 and 15

as to which the date is October 28, 1996

S-2
<PAGE> 92

THE O'GARA COMPANY
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
BALANCE
AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING CHARGED FROM AT END
DESCRIPTION OF YEAR TO INCOME RESERVE OF YEAR
- ----------- --------- --------- ---------- --------
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Allowance for doubtful receivables......... $ 131,903 $18,000 $ 4,913 $144,990
Year ended December 31, 1994
Allowance for doubtful receivables......... $ 144,990 $45,197 $ 89,814 $100,373
Year ended December 31, 1995
Allowance for doubtful receivables......... $ 100,373 $52,350 $ 43,440 $109,283
</TABLE>

S-3

<PAGE> 1
Taft, Stettinius & Hollister
1800 Star Bank Center
425 Walnut Street
Cincinnati, OH 45202-3957

October 28, 1996

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549

Dear Sirs:

We have acted as counsel for The O'Gara Company, an Ohio corporation
(the "Company"), in connection with its filing of a Registration Statement on
Form S-1 (Registration No. 333-11093) with respect to the sale of 3,450,000
shares of the Company's Common Stock, $.01 par value per share (the "Common
Stock").

Subject to the establishment of the price for the Common Stock by the
Company's Board of Directors, it is our opinion that the registration of the
sale of the Common Stock pursuant to such Registration Statement and the
issuance of such shares by the Company have been duly authorized by all
necessary corporate action by the Company. When issued as contemplated by the
Registration Statement, the Common Stock will be validly issued, fully paid and
non-assessable.

We hereby consent to the filing of this opinion as an exhibit to such
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus contained therein.

Very truly yours,

TAFT, STETTINIUS & HOLLISTER

<PAGE> 1
EXHIBIT 10.1

CREDIT AGREEMENT

This Credit Agreement (the "Agreement") is entered into as of the _____
day of_____________, 1996, by and between THE O'GARA COMPANY,, an Ohio
corporation ("Borrower") and THE FIFTH THIRD BANK, an Ohio banking corporation
("Bank").

Section 1. Definitions.

Certain capitalized terms have the meanings set forth on Exhibit 1
hereto or in the Security Agreement. All financial terms used in this Agreement
but not defined on Exhibit 1 or in the Security Agreement have the meanings
given to them by generally accepted accounting principles. All other undefined
terms have the meanings given to them in the Ohio Uniform Commercial Code.

Section 2. Loans.

2.1. Revolving Credit Loans. (a) Subject to the terms and conditions
hereof, Bank hereby extends to Borrower a line of credit facility (the
"Facility") under which Bank will make loans (the "Revolving Loans") to Borrower
at Borrower's request from time to time during the term of this Agreement in an
amount not exceeding $30,000,000. Borrower may borrow, prepay (without penalty
or charge), and reborrow under the Facility, provided that the principal amount
of all Revolving Loans outstanding at any one time under the Facility will not
exceed $30,000,000. If the amount of Revolving Loans outstanding at any time
under the Facility exceeds the limit set forth above, Borrower will immediately
pay the amount of such excess to Bank in cash. In the event Borrower fails to
pay such excess, Bank may, in its discretion, setoff such amount against
Borrower's accounts at Bank.

(b) Borrower may request a Revolving Loan by written or telephone
notice to Bank. Bank will make Revolving Loans by crediting the amount thereof
to Borrower's account at Bank.

(i) general working capital purposes; and

(ii) to purchase substantially all of the assets of one or
more related corporations, partnerships, companies or other
entities or to purchase the stock or other ownership interest
in one or more related entities (the "Interest"); provided
that the purchase price of such Interest is in an amount of
less to $2,000,000 or, with the Bank's prior written consent,
Borrower may purchase such Interest in an amount in excess of
$2,000,000; and provided further, in connection with the
purchase of such Interest by Borrower, Borrower will be
granted a first priority perfected security interest in such
Interest and Borrower will execute and deliver to Bank any and
all necessary documents required thereunder.

(d) On the date hereof, Borrower will duly issue and deliver to Bank a
Revolving Note in the form of Exhibit 2.1 (the "Revolving Note"), in the
principal amount of $30,000,000, bearing interest as specified in the Revolving
Note.

(e) The term of the Facility will expire on ___________________, 1997,
and the Revolving Note will become payable in full on that date. Borrower may
prepay the principal balance of the Revolving Note in whole or part at any time.

2.2 Unused Facility Fee. So long as this Agreement is in effect,
Borrower will pay to Bank an unused facility fee at an annual rate equal to
one-quarter of one percent (.25%) of that portion of the Facility that is not
outstanding on each day (the "Unused Facility Fee"), which will be payable on
the first (1st) day of each calendar month in arrears for the previous calendar
month with a final payment due on the termination of this Agreement.
<PAGE> 2
2.3 Letter of Credit Facility. (a) Bank hereby agrees to grant to
Borrower a letter of credit facility (the "Letter of Credit Facility") under
which Borrower may, from time to time, obtain standby letters of credit and
commercial letters of credit from Bank (the "Letters of Credit" and individually
a "Letter of Credit") in an aggregate amount not to exceed $4,500,000
outstanding at any one time (the "Letter of Credit Facility"). The Letters of
Credit shall be in favor of such beneficiaries (collectively the "Beneficiaries"
and each a "Beneficiary") and for such purposes as an authorized representative
of Borrower specifies, shall have such expiration dates as Bank and Borrower
agree (provided that no Letters of Credit shall have a term beyond
____________________________, 1997), and shall otherwise be in such form and
substance as Bank and Borrower agree.

(b) All advances to the holder of the Letter of Credit will be funded
by advances under a Letter of Credit Note from Borrower to Bank in the form
attached hereto as Exhibit 2.3 (the "Letter of Credit Note"). In the event that
Bank pays any amount under or on account of the Letter of Credit issued by it
(the payment by Bank under or on account of the Letter of Credit being herein
called a "Draw"), a Loan by Bank shall be made to Borrower in a total amount
equal to the amount of such Draw to reimburse Bank for such Draw which shall be
evidenced by the Letter of Credit Note. Borrower hereby irrevocably requests
that such Revolving Loans be made and irrevocably authorizes Bank to apply the
proceeds of such Revolving Loans to immediately reimburse Bank for the amount of
the Draw.

(c) Prior to the date of issuance of any Letter of Credit, Borrower
agrees to execute a Letter of Credit Application for each Letter of Credit (the
"Applications"). The obligations of Borrower with respect to the Letter of
Credit shall include the terms of the application for such Letter of Credit and
any other documentation executed between Bank and Borrower with respect to such
Letter of Credit.

(d) Borrower agrees to pay to Bank, a non-refundable fee of one percent
(1%) per annum of the amount of each new standby Letter of Credit or each
extension of the expiration date of a standby Letter of Credit. Borrower agrees
to pay Bank, a non-refundable fee for each new commercial Letter of Credit or
each extension of a commercial Letter of Credit based upon Bank's Letter of
Credit Fee Schedule to be delivered to Borrower from time to time. The fee shall
be payable on or before the issuance of each Letter of Credit.

(e) The obligations of Borrower to Bank under this Agreement with
respect to each Letter of Credit shall be absolute, unconditional and
irrevocable, and shall be paid and performed strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever.

(f) The proceeds of the Letter of Credit(s) will be used to support the
purchase and sale of inventory and equipment associated with Borrower' foreign
customers and suppliers.

2.4 Letter of Credit Costs. If any change in any law or regulation or
in the interpretation thereof by any court or administrative agency shall either
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit issued by the Bank or (ii) impose on the
Bank any other condition regarding this Agreement or the Letters of Credit
(other than changes in the rates of income taxation generally applicable to
Bank), and the result of any such event shall be to increase the costs of Bank
for issuing or maintaining the Letters of Credit (which increases in cost shall
be determined by Bank's reasonable allocation of the aggregate of such cost
increases resulting from such event(s), other than increases which result solely
from Bank's acts or omissions, then (a) Bank shall so notify Borrower and (b)
upon receipt of such notice from Bank, Borrower shall promptly pay to Bank, from
time to time as specified by Bank, additional amounts which shall be sufficient
to compensate Bank for such increased costs, together with interest on each such
amount from the date of such notice until payment in full thereof at the rate
set forth in the Letter of Credit Note. A certificate setting forth in
reasonable detail such increased cost incurred by Bank as a result of any such
event and that such increased costs are being charged to Bank's other letter of
credit customers, submitted by Bank to Borrower shall be prima facie evidence,
absent manifest error, as to the amount thereof.

-2-
<PAGE> 3
2.5 Actions Relating to the Letter of Credit Liability of Bank. Any
action taken or omitted by Bank, under or in connection with the Letters of
Credit or sight drafts or documents relating thereto, if taken or omitted
without gross negligence or willful misconduct, shall be binding upon Borrower
and shall not result in Bank being under any liability to Borrower. Borrower
assumes all risks of the acts or omissions of the Beneficiaries, Bank or any
permitted transferee of the Letters of Credit with respect to its use of the
Letters of Credit, if such acts or omissions are without negligence or wilful
misconduct. Neither Bank nor any of its officers or directors will be liable or
responsible for: (a) the use which may be made of the Letters of Credit or for
any acts or omissions of any Beneficiary and any permitted transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement(s) thereon, even if such documents should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged; (c) any
other circumstances whatsoever in making or failing to make payment under the
Letters of Credit, except only damages which Borrower proves were caused by (i)
the Bank's willful misconduct or negligence in determining whether a sight draft
or other documents presented under the Letters of Credit comply with the terms
of the Letters of Credit or (ii) Bank's willful or negligent failure to pay
under the Letter(s) of Credit after the presentation to it by the Beneficiary
(or a permitted successor to whom the Letter(s) of Credit has been transferred
in accordance with its terms) of a sight draft and documents strictly complying
with the terms and conditions of such Letter of Credit. In furtherance and not
in limitation of the foregoing, Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation.

2.6 Letter of Credit Indemnification. Borrower hereby agrees at all
times to protect, defend, indemnify, save and hold harmless Bank from and
against any and all claims, actions, suits and other legal proceedings, and from
and against any and all losses, claims, demands, liabilities, damages, charges,
counsel fees, interest and penalties and other expenses which Bank may, at any
time, sustain or incur by reason of or in consequence of or arising out of any
Letter of Credit or the use (or the proposed or potential use) of the proceeds
of any drawing under such Letter of Credit or any increased costs incurred by
Bank due to any change in law or regulations governing Bank or letters of credit
in general; provided that Borrower shall not be required to indemnify Bank for
any claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (i) the willful misconduct or gross negligence of
Bank in determining whether a sight draft or other documents presented under any
Letter of Credit complied with the terms of such Letter of Credit or (ii) Bank's
willful or negligent failure to pay under such Letter of Credit after the
presentation to it by the Beneficiary (or a successor to whom the Letter of
Credit has been transferred in accordance with its terms) of a sight draft and
documents strictly complying with the terms and conditions of such Letter of
Credit.

Notwithstanding any of the foregoing, Bank shall not, in any way, be
liable for any failure by Bank to pay any sight draft under any Letter of Credit
as a result of any act of a governmental authority or any other cause beyond the
reasonable control of the Bank.

2.7 Time of Payment. All payments of principal and interest made by
Borrower shall be made no later than 2:00 P.M., on the Business Day such
payments are due. All amounts paid after such time will be credited on the
following date.

Section 3. Representations And Warranties.

Borrower hereby warrants and represents to Bank the following:

3.1 Organization and Qualification. Borrower is a duly organized,
validly existing corporation in good standing under the laws of the State of
Ohio, its state of incorporation, has the power and authority (corporate and
otherwise) to carry on its business and to enter into and perform this
Agreement, the Notes and the other Loan Documents, is qualified and licensed to
do business in each jurisdiction in which such qualification or licensing is
required. All information provided to Bank with respect to Borrower and its
operations is true and correct.

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3.2. Due Authorization. The execution, delivery and performance by
Borrower of this Agreement, the Security Agreement, the Notes and the other Loan
Documents have been duly authorized by all necessary corporate action, and will
not contravene any law or any governmental rule or order binding on Borrower, or
the Articles of Incorporation or Code of Regulations of Borrower, nor violate
any agreement or instrument by which Borrower is bound nor result in the
creation of a Lien on any assets of Borrower except the Lien granted to Bank
herein. Borrower has duly executed and delivered this Agreement, the Security
Agreement, the Notes and the other Loan Documents and they are valid and binding
obligations of Borrower enforceable according to their respective terms except
as limited by equitable principles and by bankruptcy, insolvency or similar laws
affecting the rights of creditors generally. No notice to or consent by any
governmental body is needed in connection with this transaction.

3.3. Litigation. There are no suits or proceedings pending or
threatened against or affecting Borrower, and no proceedings before any
governmental body are pending or threatened against Borrower.

3.4 Margin Stock. No part of the Loans will be used to purchase or
carry, or to reduce or retire or refinance any credit incurred to purchase or
carry, any margin stock (within the meaning of Regulations U and X of the Board
of Governors of the Federal Reserve System) or to extend credit to others for
the purpose of purchasing or carrying any margin stock. If requested by Bank,
Borrower will furnish to Bank statements in conformity with the requirements of
Federal Reserve Form U-1.

3.5 Business. Borrower is not a party to or subject to any agreement or
restriction which in the opinion of Borrower's management is so unusual or
burdensome that it might have a material adverse effect on Borrower's business,
properties or prospects.

3.6 Licenses, etc.. Borrower has obtained any and all licenses,
permits, franchises, governmental authorizations, patents, trademarks,
copyrights or other rights necessary for the ownership of its properties and the
advantageous conduct of its business. Borrower possesses adequate licenses,
patents, patent applications, copyrights, trademarks, trademark applications,
and trade names to continue to conduct its business as heretofore conducted by
it, without any conflict with the rights of any other person or entity. All of
the foregoing are in full force and effect and none of the foregoing are in
known conflict with the rights of others.

3.7 Laws and Taxes. Borrower is in compliance with all laws,
regulations, rulings, orders, injunctions, decrees, conditions or other
requirements applicable to or imposed upon Borrower by any law or by any
governmental authority, court or agency. Borrower has filed all required tax
returns and reports that are now required to be filed by it in connection with
any federal, state and local tax, duty or charge levied, assessed or imposed
upon Borrower or its assets, including unemployment, social security, and real
estate taxes. Borrower has paid all taxes which are now due and payable. No
taxing authority has asserted or assessed any additional tax liabilities against
Borrower which are outstanding on the date of this Agreement, and Borrower has
not filed for any extension of time for the payment of any tax or the filing of
any tax return or report.

3.8 Financial Condition. All financial information relating to Borrower
which has been or may hereafter be delivered by Borrower or on its behalf to
Bank is true and correct and has been prepared in accordance with generally
accepted accounting principles consistently applied. Borrower has no material
obligations or liabilities of any kind not disclosed in that financial
information, and there has been no material adverse change in the financial
condition of Borrower nor has Borrower suffered any damage, destruction or loss
which has adversely affected its business or assets since the submission of the
most recent financial information to Bank.

3.9 Title. Borrower has good and marketable title to the assets
reflected on the most recent balance sheet submitted to Bank, free and clear
from all liens and encumbrances of any kind, except for (collectively, the
"Permitted Liens"): (a) current taxes and assessments not yet due and payable,
(b) liens and encumbrances, if any, reflected or noted on such balance sheet or
notes thereto, (c) assets disposed of in the ordinary course of business, and
(d) any security interests, pledges, assignments or mortgages granted to Bank to
secure the repayment or performance of the Obligations.

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<PAGE> 5
3.10 Defaults. Borrower is in compliance with all material agreements
applicable to it and there does not now exist any default or violation by
Borrower of or under any of the terms, conditions or obligations of (a) its
Articles of Incorporation or Regulations/Bylaws, or (b) any indenture, mortgage,
deed of trust, franchise, permit, contract, agreement or other instrument to
which Borrower is a party or by which it is bound, and the consummation of the
transactions contemplated by this Agreement will not result in such default or
violation.

3.11 Environmental Laws. (a) Borrower has obtained all permits,
licenses and other authorizations or approvals which are required under
Environmental Laws and Borrower is in compliance in all material respects with
all terms and conditions of the required permits, licenses, authorizations and
approvals, and is also in compliance in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws.

(b) Borrower is not aware of, and has not received notice of, any past,
present or future events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent compliance or
continued compliance, in any material respect, with Environmental Laws, or may
give rise to any material common law or legal liability, or otherwise form the
basis of any material claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or waste.

(c) There is no civil, criminal or administrative action suit, demand,
claim, hearing, notice or demand letter, notice of violation, investigation or
proceeding pending or threatened against Borrower, relating in any way to
Environmental Laws.

3.12 Subsidiaries and Partnerships. Borrower has no subsidiaries and is
not a party to any partnership agreement or joint venture agreement other than
those set forth on Exhibit 3.12 attached to this Agreement.

3.13 ERISA. Borrower and all individuals or entities along with
Borrower would be treated as a single employer under ERISA or the Internal
Revenue Code of 1986, as amended (an "ERISA Affiliate"), are in compliance with
all of their obligations to contribute to any "employee benefit plan" as that
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, and any regulations promulgated thereunder from time to time ("ERISA").
Borrower and each of its ERISA Affiliates are in full compliance with ERISA, and
there exists no event described in Section 4043(b) thereof ("Reportable Event").

Section 4. Affirmative Covenants.

4.1 Books and Records. Borrower will maintain proper books of account
and records and enter therein complete and accurate entries and records of all
of its transactions in accordance with generally accepted accounting principles
and give representatives of Bank access thereto at all reasonable times,
including permission to examine, copy and make abstracts from any such books and
records and such other information which might be helpful to Bank in evaluating
the status of the Loans as it may reasonably request from time to time. Borrower
will give Bank reasonable access to the Collateral and the other property
securing the Obligations for the purpose of performing examinations thereof and
to verify its condition or existence.

4.2 Financial Statements. Borrower will maintain a standard and modern
system for accounting and will furnish to Bank:

(a) Within thirty (30) days after the end of each month, a
copy of Borrower's consolidated financial statements for that month and for the
year to date in a form reasonably acceptable to Bank, prepared and certified as
complete and correct, subject to changes resulting from year-end adjustments, by
the principal financial officer of Borrower;

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<PAGE> 6
(b) Within ninety (90) days after the end of each fiscal year,
a copy of Borrower's consolidated financial statements for that year audited by
a firm of independent certified public accountants acceptable to Bank (which
acceptance will not be unreasonably withheld), and accompanied by a standard
audit opinion of such accountants without qualification;

(c) All of the statements referred to in (a) and (b) above
shall be in conformance with generally accepted accounting principles;

(d) With the statements submitted under (a) and (b) above, a
certificate signed by the principal financial officer of Borrower, (i) stating
he is familiar with all documents relating to Bank and that no Event of Default
specified in this Agreement, nor any event which upon notice or lapse of time,
or both would constitute such an Event of Default, has occurred, or if any such
condition or event existed or exists, specifying it and describing what action
Borrower has taken or proposes to take with respect thereto, and (ii) setting
forth, in summary form, figures showing the financial status of Borrower in
respect of the financial restrictions contained in this Agreement;

(e) Prior to the end of each fiscal year, a projected balance
sheet, projected income statement and projected statement of cash flow for the
subsequent fiscal year prepared in accordance with generally accepted accounting
principles consistently applied;

(f) Immediately upon any officer of Borrower obtaining
knowledge of any condition or event which constitutes or, after notice or lapse
of time or both, constitutes an Event of Default, a certificate of such person
specifying the nature and period of the existence thereof, and what action
Borrower has taken or is taking or proposes to take in respect thereof; and

(g) Upon request, copies of all federal, state and local
income tax returns and such other information as Bank may reasonably request.

If at any time Borrower has any additional subsidiaries which have
financial statements that could be consolidated with those of Borrower under
generally accepted accounting principles, the financial statements required by
subsections (a) and (b) above will be the financial statements of Borrower and
all such subsidiaries prepared on a consolidated and consolidating basis.

4.3 Condition and Repair. Borrower will maintain its assets in good
repair and working order and will make all appropriate repairs and replacements
thereof.

4.4 Insurance. Borrower will insure its properties and business against
loss or damage of the kinds and in the amounts customarily insured against by
corporations with established reputations engaged in the same or similar
business as Borrower. All such policies will (a) be issued by financially sound
and reputable insurers, (b) name Bank as an additional insured and, where
applicable, as loss payee under a lender loss payable endorsement satisfactory
to Bank, and (c) will provide for thirty (30) days written notice to Bank before
such policy is altered or canceled all of which will be evidenced by a
Certificate of Insurance delivered to Bank by Borrower on the date of execution
of this Agreement.

4.5 Taxes. Borrower will pay when due all taxes, assessments and other
governmental charges imposed upon it or its assets, franchises, business, income
or profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which by law might be a lien or charge upon any of its
assets, provided that (unless any material item or property would be lost,
forfeited or materially damaged as a result thereof) no such charge or claim
need be paid if it is being diligently contested in good faith, if Bank is
notified in advance of such contest and if Borrower establishes an adequate
reserve or other appropriate provision required by generally accepted accounting
principles and deposits with Bank cash or bond in an amount acceptable to Bank.

4.6 Existence; Business. Borrower will (a) maintain its existence, (b)
engage primarily in business of the same general character as that now
conducted, and (c) refrain from entering into any lines of business
substantially different from the business or activities in which Borrower is
presently engaged.

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<PAGE> 7
4.7 Compliance with Laws. Borrower will comply with all federal, state
and local laws, regulations and orders applicable to Borrower or its assets
including but not limited to all Environmental Laws, in all respects material to
Borrower's business, assets or prospects and will immediately notify Bank of any
violation of any rule, regulation, statute, ordinance, order or law relating to
the public health or the environment and of any complaint or notifications
received by Borrower regarding to any environmental or safety and health rule,
regulation, statute, ordinance or law.

4.8 Notice of Default. Borrower will, within three (3) days of its
knowledge thereof, give written notice to Bank of: (a) the occurrence of any
event or the existence of any condition which would be, after notice or lapse of
applicable grace periods, an Event of Default, and (b) the occurrence of any
event or the existence of any condition which would prohibit Borrower from
continuing to make the representations set forth in this Agreement.

4.9 Costs. Borrower will pay to Bank its fees, costs and expenses
(including, without limitation, reasonable attorneys' fees, other professionals'
fees, appraisal fees, environmental assessment fees (including Phase I and Phase
II assessments), expert fees, court costs, litigation and other expense
(collectively, "Costs") incurred or paid by Bank in connection with the
negotiating, documenting, administering and enforcing the Facility, the Loans
and the Loan Documents and the defense, preservation and protection of Bank's
rights and remedies thereunder, including without limitation, its security
interest in the Collateral or any other property pledged to secure the Loans,
whether incurred in bankruptcy, insolvency, foreclosure or other litigation or
proceedings or otherwise. The Costs will be due and payable upon demand by Bank.
If Borrower fails to pay the Costs when upon such demand, Bank is entitled to
disburse such sums as an advance under the Facility. Thereafter, the Costs will
bear interest from the date incurred or disbursed at the highest rate set forth
in the Notes. This provision will survive the termination of this Agreement
and/or the repayment of any amounts due or the performance of any Obligation.

4.10 Depository/Banking Services. So long as this Agreement is in
effect, Bank will be the principal depository in which substantially all of
Borrower's funds are deposited, and the principal bank of account of Borrower.
Borrower will also maintain a non-interest bearing account with Bank at all
times during the term of this Agreement with a collected balance of at least
$250,000 deposited therein. Borrower will grant Bank the first and last
opportunity to provide any corporate banking services required by Borrower and
its Affiliates, including, without limitation, payroll, cash management and
employee benefit plan services.

4.11 Other Amounts Deemed Loans. If Borrower fails to pay any tax,
assessment, governmental charge or levy or to maintain insurance within the time
permitted or required by this Agreement, or to discharge any Lien prohibited
hereby, or to comply with any other Obligation, Bank may, but shall not be
obligated to, pay, satisfy, discharge or bond the same for the account of
Borrower, and to the extent permitted by law and at the option of Bank, all
monies so paid by Bank on behalf of Borrower will be deemed Loans and
Obligations.

4.12 Initial Public Offering. This Agreement and Bank's obligations to
fund and perform hereunder are specifically contingent upon the successful
consummation prior to November ___________ , 1996 of an initial public offering
for Borrower's stock in an amount of at least $_________________ as set forth in
the Prospectus filed with the Securities and Exchange Commission on
________________________, 1996.

Section 5. Negative Covenants.

5.1 Indebtedness. Borrower will not incur, create, assume or permit to
exist any additional Indebtedness for borrowed money (other than the
Obligations) or Indebtedness on account of deposits, advances or progress
payments under contracts, notes, bonds, debentures or similar obligations or
other indebtedness evidenced by notes, bonds, debentures, capitalized leases or
similar obligations.

5.2 Prepayments. Borrower will not voluntarily prepay any Indebtedness
owing by Borrower prior to the stated maturity date thereof other than (i) the
Obligations and (ii) Indebtedness to trade creditors where the prepayment will
result in a discount on the amount due.

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5.3 Pledge or Encumbrance of Assets. Other than the Permitted Liens,
Borrower will not create, incur, assume or permit to exist, arise or attach any
Lien in any present or future asset, except for Liens to Bank, Liens existing on
the date of this Agreement which have been disclosed to and approved by Bank and
Liens imposed by law which secure amounts not at the time due and payable.

5.4 Guarantees and Loans. Borrower will not enter into any direct or
indirect guarantees other than by endorsement of checks for deposit or other
than in the ordinary course of business nor make any advance or loan other than
in the ordinary course of business as presently conducted, including, without
limitation, loans and advances to employees of Borrower.

5.5 Merger; Disposition of Assets. Except as permitted in Section
2.1(c) hereof, Borrower will not (a) change its capital structure, (b) merge or
consolidate with any corporation, (c) amend or change its Articles of
Incorporation or Code of Regulations or (d) sell, transfer or otherwise dispose
of all or any substantial part of its assets, whether now owned or hereafter
acquired.

5.6 Transactions with Affiliates. Borrower will not (a) directly or
indirectly issue any guarantee for the benefit of any of its Affiliates, (b)
directly or indirectly make any loans or advances to or investments in any of
its Affiliates, (c) enter into any transaction with any of its Affiliates, other
than transactions entered into on an arm's length basis in the normal course of
Borrower's business, or (d) divert (or permit anyone to divert) any of its
business opportunities to any Affiliate or any other corporate or business
entity in which Borrower or its shareholders holds a direct or indirect
interest.

5.7 Investments. Except as set forth in Sections 2.1(c) and 5.8 of this
Agreement, Borrower will not purchase or hold beneficially any stock, securities
or evidences of indebtedness of, or make any investment or acquire any interest
in, any other firm, partnership, corporation or entity other than short term
investments of excess working capital in one or more of the following: (a)
investments (of one year or less) in direct or guaranteed obligations of the
United States, or any agencies thereof; and (b) investments (of one year or
less) in certificates of deposit of banks or trust companies organized under the
laws of the United States or any jurisdiction thereof, provided that such banks
or trust companies are insured by the Federal Deposit Insurance Corporation and
have capital in excess of $25,000,000.

5.8 Foreign Investments. Borrower will not purchase or hold
beneficially any stock, securities or ownership interest, or make any investment
or acquire any interest in any foreign entity or entities in an aggregate amount
in excess of $10,000,000.

5.9 Indebtedness to Tangible Net Worth. Borrower will not permit its
ratio of outstanding Indebtedness to Tangible Net Worth, on a consolidated
basis, to exceed 2.25 : 1.00 so long as any of the Obligations remain
outstanding.

5.10 Minimum Tangible Net Worth. Borrower will not permit its Tangible
Net Worth, on a consolidated basis, to be less than $20,000,000 so long as any
of the Obligations remain outstanding.

5.11 Debt Service Coverage Ratio. Borrower will not permit its Debt
Service Coverage Ratio, on a consolidated basis, to be less than 1.50 : 1.00 so
long as any of the Obligations remain outstanding.

5.12 Current Ratio. Borrower will not permit its Current Ratio, on a
consolidated basis, to be less than 1.50 : 1.00 so long as any of the
Obligations remain outstanding.

Section 6. Events of Default and Remedies.

6.1 Events of Default. Any of the following events will be an Event of
Default ("Event of Default"):

(a) any representation or warranty made by Borrower herein or in
any of the Loan Documents is incorrect when made or
reaffirmed; or

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<PAGE> 9
(b) Borrower defaults in the payment of any principal or interest
on any Obligation when due and payable, by acceleration or
otherwise; or

(c) Borrower fails to observe or perform any covenant, condition
or agreement herein and fails to cure such default within 30
days of the occurrence thereof, provided that such 30 day
grace period will not apply to (i) a breach of any covenant
which in Bank's good faith judgment is incapable of cure, (ii)
any failure to maintain insurance or permit inspection of the
Collateral or of the books and records of Borrower, (iii) any
breach in any negative covenant set forth in Section 5 hereof,
or (iv) any breach of any covenant which has already occurred;
or

(d) a court enters a decree or order for relief with respect to
Borrower in an involuntary case under any applicable
bankruptcy, insolvency or other similar law then in effect, or
appoints a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Borrower or for
any substantial part of its property, or orders the wind-up or
liquidation of its affairs; or a petition initiating an
involuntary case under any such bankruptcy, insolvency or
similar law is filed and is pending for thirty (30) days
without dismissal; or

(e) Borrower commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law in effect, or
makes any general assignment for the benefit of creditors, or
fails generally to pay its debts as such debts become due, or
takes corporate action in furtherance of any of the foregoing;
or

(f) Borrower defaults under the terms of any Indebtedness or lease
involving total payment obligations of Borrower in excess of
$150,000, and such default gives any creditor or lessor the
right to accelerate the maturity of any such indebtedness or
lease payments which right is not contested by Borrower or is
determined by any court of competent jurisdiction to be valid;
or

(g) final judgment of the payment of money in excess of $150,000
is rendered against Borrower and remains undischarged for 10
days during which execution is not effectively stayed; or

(h) any event occurs which might, in Bank's opinion, have a
material adverse effect on the Collateral or on Borrower's
financial condition, operations, assets or prospects, or on
any other property securing the repayment of the Obligations;
or

(i) a change occurs in the ownership of Borrower's common stock so
that at least 51% of the outstanding common stock of Borrower
is no longer owned by those parties owning such stock on the
date of this Agreement; or

(j) an Event of Default or default occurs under any Loan Document;
or

(k) the dissolution of Borrower; or

(l) the commencement of any foreclosure proceedings, proceedings
in aid of execution, attachment actions, levies against, or
the filing by any taxing authority of a lien against any of
the Collateral or any property securing the repayment of any
of the Obligations; or

(m) the loss, theft or substantial damage to the Collateral or any
property securing the repayment of the Obligations if the
result of such occurrence will be, in Bank's reasonable
judgment, the failure or inability of Borrower to continue
substantially normal operation of its business within thirty
(30) days of the date of such occurrence.

(n) Bank ceases to be Borrower's (i) principal depository Bank in
which substantially all of Borrower's funds are deposited, and
(ii) principal bank of account.

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<PAGE> 10
(o) (i) the validity or effectiveness of any of the Loan Documents
or its transfer, grant, pledge, mortgage, or assignment by the
party executing such Loan Document is impaired; (ii) any party
executing any of the Loan Documents asserts that any of such
Loan Documents is not a legal, valid and binding obligation of
the party thereto enforceable in accordance with its terms;
(iii) the security interest or Lien purporting to be created
by any of the Loan Documents will for any reason cease to be a
valid, perfected lien subject to no other liens other than
Liens permitted by the terms of this Agreement; or (iv) any
Loan Document is amended, hypothecated, subordinated,
terminated or discharged, or if any person is released from
any of its covenants or obligations under any of the Loan
Documents except as permitted by Bank in writing; or

(p) Bank has called for additional security and the Borrower has
not furnished such additional security on demand; or

(q) Bank in good faith deems itself insecure; or

(r) a Reportable Event (as defined in ERISA) occurs with respect
to any employee benefit plan maintained by Borrower for its
employees other than a Reportable Event caused solely by a
decrease in employment; or a trustee is appointed by a United
States District Court to administer any employee benefit plan;
or the Pension Benefit Guaranty Corporation institutes
proceedings to terminate any of Borrower's employee benefit
plans; or

(s) the filing of any lien or charge against the Collateral or any
part thereof which is not removed to the satisfaction of Bank
within a period of 30 days thereafter; or

(t) the abandonment by Borrower of all or any part of the
Collateral.

6.2 Remedies. If any Event of Default occurs, Bank may (i) cease
advancing money hereunder, (ii) declare all Obligations to be immediately due
and payable, whereupon such Obligations will immediately become due and payable,
(iii) exercise any and all rights and remedies provided by applicable law and
the Loan Documents, (iv) proceed to realize upon the Collateral or any property
securing the Obligations, including, without limitation, causing all or any part
of the Collateral to be transferred or registered in its name or in the name of
any other person, firm or corporation, with or without designation of the
capacity of such nominee, all without presentment, demand, protest, or notice of
any kind, each of which are hereby expressly waived by Borrower. Borrower shall
be liable for any deficiency remaining after disposition of any Collateral, and
waives all valuation and appraisement laws.

6.3 Setoff. If any Event of Default will occur, Bank is authorized,
without notice to Borrower, to offset and apply to all or any part of the
Obligations all moneys, credits and other property of any nature whatsoever of
Borrower now or at any time hereafter in the possession of, in transit to or
from, under the control or custody of, or on deposit with (whether held by
Borrower individually or jointly with another party), Bank, including but not
limited to certificates of deposit.

6.4 Default Rate. After the occurrence of an Event of Default, all
amounts of principal outstanding as of the date of the occurrence of such Event
of Default will accrue interest at the Default Rate, in Bank's sole discretion,
without notice to Borrower. This provision does not constitute a waiver of any
Events of Default or an agreement by Bank to permit any late payments
whatsoever.

6.5 Late Payment Penalty. If any payment of principal is not paid when
due (whether at maturity, by acceleration or otherwise after the expiration of
any applicable notice, grace and cure periods), Borrower agrees to pay to Bank a
late payment fee equal to five percent (5%) of the payment amount then due.

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<PAGE> 11
6.6 No Remedy Exclusive. No remedy set forth herein is exclusive of any
other available remedy or remedies, but each is cumulative and in addition to
every other remedy available under this Agreement, the Loan Documents or as may
be now or hereafter existing at law, in equity or by statute. Borrower waives
any requirement of marshalling of assets which may be secured by any of the Loan
Documents.

6.7 Effect of Termination. The termination of this Agreement will not
affect any rights of either party or any obligation of either party to the
other, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights created or Obligations incurred prior to such termination
have been fully disposed of, concluded or liquidated. The security interest,
lien and rights granted to Bank hereunder and under the Loan Documents will
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that no Loans are outstanding to Borrower, until all of
the Obligations, have been paid in full.

6.8 No Adequate Remedy at Law. Borrower recognizes that in the event
Borrower fails to pay, perform, observe or discharge any of its Obligations
under this Agreement, the Notes or the other Loan Documents, no remedy at law
will provide adequate relief to Bank and Borrower agrees that Bank shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that it has incurred actual damages.

Section 7. Conditions Precedent.

7.1 Conditions to Initial Loans. Bank will have no obligation to make
or advance any Revolving Loan or the Term Loan until Borrower has delivered to
Bank at or before the closing date, in form and substance satisfactory to Bank:

(a) An executed Revolving Note in the form of Exhibit 2.1
attached hereto and an executed Letter of Credit Note in the form of Exhibit 2.3
attached hereto.

(b) A Certificate of Borrower in the form of Exhibit 7.1(b)
and all attachments thereto.

(d) An executed version of the Security Agreement in the form
of Exhibit 8.5 attached hereto along with a completed version on Schedule I
attached thereto entitled "Specific Representations".

(e) All appropriate financing statements (Form UCC-1) and
consents or waivers of landlords, warehousemen and mortgagees, as requested by
Bank.

(f) UCC searches, tax lien and litigation searches, insurance
certificates, notices or other documents which Bank may require to reflect,
perfect or protect Bank's first priority lien in the Collateral and all other
property pledged to secure the Obligations and to fully consummate this
transaction.

(g) All requisite releases of liens, termination statements
and satisfactions of mortgages necessary to release all liens and encumbrances
against the Collateral and any other property pledged to secure the Loans and
all requisite waivers and subordination agreements, in a form satisfactory to
Bank, to be executed and delivered by Borrower's landlords and mortgagees which
are necessary to grant Bank a first lien in the Collateral, including but not
limited to all Inventory and Equipment of Borrower.

(h) Borrower has paid or will pay to Bank all out of pocket
expenses incurred by Bank in connection with the preparation of this Agreement
and accompanying documents and the consummation of the transactions contemplated
hereby.

(i) A Certificate of Insurance as described in Section 4.4
hereof.

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(j) Bank shall have completed to its reasonable satisfaction
an audit of the books and records of Borrower, including the Collateral. It is
understood, however, that any such audit by Bank will in no respect waive Bank's
rights to pursue remedies upon an Event of Default.

(k) Such additional information and materials as Bank may
reasonably request.

7.2 Conditions to Each Revolving Loan. On the date of each Revolving
Loan, the following statements will be true:

(a) All of the representations and warranties contained herein
and in the Loan Documents will be correct in all material respects as though
made on such date;

(b) No event will have occurred and be continuing, or would
result from such Revolving Loan, which constitutes an Event of Default, or would
constitute an Event of Default but for the requirement that notice be given or
lapse of time or both;

(c) The aggregate unpaid principal amount of the Revolving
Loans after giving effect to such Revolving Loan will not violate the lending
limits set forth in Section 2.1 of this Agreement.

The acceptance by Borrower of the proceeds of each Revolving
Loan will be deemed to constitute a representation and warranty by Borrower that
the conditions in Section 7.2 of this Agreement, other than those that have been
waived in writing by Bank, have been satisfied.

Section 8. Miscellaneous Provisions.

8.1 Miscellaneous. This Agreement, the exhibits and the other Loan
Documents are the complete agreement of the parties hereto and supersede all
previous understandings relating to the subject matter hereof. This Agreement
may be amended only in writing signed by the party against whom enforcement of
the amendment is sought. This Agreement may be executed in counterparts. If any
part of this Agreement is held invalid, illegal or unenforceable, the remainder
of this Agreement will not in any way be affected. This Agreement is and is
intended to be a continuing agreement and will remain in full force and effect
until the Loans are finally and irrevocably paid in full and the Facility is
terminated.

8.2 Waiver by Borrower. Borrower waives notice of non-payment, demand,
presentment, protest or notice of protest of any Accounts or other Collateral,
and all other notices (except those notices specifically provided for in this
Agreement); consents to any renewals or extensions of time of payment thereof.
Borrower hereby waives all suretyship defenses, including but not limited to,
all defenses set forth in Section 3-605 of the Uniform Commercial Code, as
revised in 1990 (the "UCC"). Such waiver is entered to the full extent permitted
by Section 3-605 (i) of the UCC.

8.3 Binding Effect. This Agreement will be binding upon and inure to
the benefit of the respective legal representatives, successors and assigns of
the parties hereto; however, Borrower may not assign or transfer any of its
rights or delegate any of its Obligations under this Agreement or any of the
Loan Documents, by operation of law or otherwise. Bank (and any subsequent
assignee) may transfer and assign any of its rights or delegate any of its
duties under this Agreement or may transfer or assign partial interests or
participation in the Loans to other persons. Bank may disclose to all
prospective and actual assignees and participants all financial, business and
other information about a Borrower which Bank may possess at any time.

8.4 Subsidiaries. If Borrower has any additional Subsidiaries at any
time during the term of this Agreement, the term "Borrower" in each
representation, warranty and covenant herein will mean "Borrower" and each
Subsidiary individually and in the aggregate, and Borrower will cause each
Subsidiary to be in compliance therewith.

8.5 Security. The Obligations are secured as provided herein, in this
Agreement, the Security Agreement, in the Loan Documents and in each other
document or agreement which by its terms secures the repayment or performance of
the Obligations.

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<PAGE> 13
8.6 Survival. All representations, warranties, covenants and agreements
made by Borrower herein and in the Loan Documents will survive the execution and
delivery of this Agreement, the Loan Documents and the issuance of the Notes.

8.7 Delay or Omission. No delay or omission on the part of Bank in
exercising any right, remedy or power arising from any Event of Default will
impair any such right, remedy or power or any other right remedy or power or be
considered a waiver or any right, remedy or power or any Event of Default nor
will the action or omission to act by Bank upon the occurrence of any Event of
Default impair any right, remedy or power arising as a result thereof or affect
any subsequent Event of Default of the same or different nature.

8.8 Notices. Any notices under or pursuant to this Agreement will be
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, addressed as follows:

To Borrower: The O'Gara Company
________________________________
________________________________
Attention: ________________________________

To Bank: The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Metropolitan Lending Department

Either party may change such address by sending written notice of the
change to the other party.

8.9 No Partnership. Nothing contained herein or in any of the Loan
Documents is intended to create or will be construed to create any partnership,
joint venture or other relationship between Bank and Borrower other than as
expressly set forth herein or therein and will not create any joint venture,
partnership or other relationship.

8.10 Indemnification. If after receipt of any payment of all or part of
the Obligations, Bank is for any reason compelled to surrender such payment to
any person or entity, because such payment is determined to be void or voidable
as a preference, impermissible setoff, or diversion of trust funds, or for any
other reason, this Agreement will continue in full force and effect and Borrower
will be liable to, and will indemnify, save and hold Bank, its officers,
directors, attorneys, and employees harmless of and from the amount of such
payment surrendered. The provisions of this Section will be and remain effective
notwithstanding any contrary action which may have been taken by Bank in
reliance on such payment, and any such contrary action so taken will be without
prejudice to Bank's rights under this Agreement and will be deemed to have been
conditioned upon such payment becoming final, indefeasible and irrevocable. In
addition, Borrower will indemnify, defend, save and hold Bank, its officers,
directors, attorneys, and employees harmless of, from and against all claims,
demands, liabilities, judgments, losses, damages, costs and expenses, joint or
several (including all accounting fees and attorneys' fees reasonably incurred),
that Bank or any such indemnified party may incur arising out of this Agreement,
any of the Loan Documents or any act taken by Bank hereunder except for the
willful misconduct or gross negligence of such indemnified party. The provisions
of this Section will survive the termination of this Agreement.

8.11 Governing Law; Jurisdiction. This Agreement, the Notes and the
other Loan Documents will be governed by the domestic laws of the State of Ohio.
Borrower agrees that the state and federal courts in Hamilton County, Ohio, or
any other court in which Bank initiates proceedings have exclusive jurisdiction
over all matters arising out of this Agreement, and that service of process in
any such proceeding will be effective if mailed to Borrower at its address
described in the Notices section of this Agreement. BANK AND BORROWER HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

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<PAGE> 14
8.12 Confession of Judgment. Borrower authorizes any attorney of record
to appear for it in any court of record in the State of Ohio, after an
Obligation becomes due and payable whether by its terms or upon default, waives
the issuance and service of process, releases all errors and rights of appeal,
and confesses a judgment against it in favor of the holder of such Obligation,
for the principal amount of such Obligation plus interest thereon, together with
court costs and attorneys' fees. Stay of Execution and all exemptions are hereby
waived. Borrower also agrees that the attorney acting for Borrower as set forth
in this paragraph may be compensated by Bank for such services, and Borrower
waives any conflict of interest caused by such representation and compensation
arrangement. If an Obligation is referred to an attorney for collection, and the
payment is obtained without the entry of a judgment, the obligors will pay to
the holder of such Obligation its attorneys' fees.

IN WITNESS WHEREOF, Borrower and Bank have executed this Agreement by
their duly authorized officers as of the date first above written.

WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN
AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN
BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE
AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE
ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.

THE O'GARA COMPANY

By: ________________________________

Its: _______________________________

THE FIFTH THIRD BANK

By: ________________________________

Its: _______________________________

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<PAGE> 15
EXHIBITS
TO
CREDIT AGREEMENT
BETWEEN
THE O'GARA COMPANY
AND
THE FIFTH THIRD BANK

<TABLE>
<CAPTION>
Page
----
<S> <C>
Exhibit 1 - Definitions 17
Exhibit 2.1 - Revolving Note 20
Exhibit 2.3 - Letter of Credit Note 24
Exhibit 3.12 - Subsidiaries and Partnerships 27
Exhibit 7.1 (b) - Certificate of Borrower 28
- Attachment C - Directors' Resolution 30
Exhibit 7.1 (c) - Form of Opinion of Borrower's Counsel 32
Exhibit 8.5 - Security Agreement 33
- Schedule I - Specific Representations 39
</TABLE>

-15-

<PAGE> 16
EXHIBIT 1

DEFINITIONS

1. "Affiliate" means, as to Borrower, (a) any person or entity which,
directly or indirectly, is in control of, is controlled by or is under common
control with, Borrower, or (b) any person who is a director, officer or employee
(i) of Borrower or (ii) of any person described in the preceding clause (a).

2. "Business Day" means any day which the Bank and the Federal Reserve
Bank of Cleveland is open for business.

3. "Collateral" has the meaning assigned to that term in the Security
Agreement.

4. "Current Assets" means all assets which may properly be classified
as current assets in accordance with generally accepted accounting principles,
provided that for the purpose of determining the Current Assets of Borrower (a)
notes and accounts receivable will be included only if good and collectible and
payable on demand or within twelve (12) months from the date as of which Current
Assets are to be determined (and if not directly or indirectly renewable or
extendible, at the option of the debtors, by their terms or by the terms of any
instrument or agreement relating thereto, beyond such twelve (12) months) and
will be taken at their face value less reserves determined to be sufficient in
accordance with generally accepted accounting principles, and (b) the cash
surrender value of life insurance policies will be excluded.

5. "Current Liabilities" means all Indebtedness maturing on demand or
within twelve (12) months from the date as of which Current Liabilities are to
be determined (including, without limitation, liabilities, including taxes
accrued as estimated, accounts payable, and all current liabilities as may
properly be classified as current liabilities in accordance with generally
accepted accounting principles), and excluding intercompany liabilities.

6. "Current Ratio" means the ratio of Current Assets to Current
Liabilities.

8. "Debt Service Coverage Ratio" means the ratio of (a) the sum of
Borrower's net income for a fiscal year before taxes and depreciation, less
distributions and dividends to (b) the sum of Borrower's interest expense and
principal payments for such fiscal year.

9. "Default Rate" means six percent (6%) in excess of the interest rate
otherwise in effect under amounts outstanding under the Notes. In no event will
the interest rate accruing under such Notes be increased to be in excess of the
maximum interest rate permitted by applicable state or federal usury laws then
in effect.

10. "Environmental Laws" means all federal, state, local and foreign
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial toxic or hazardous substances
or wastes into the environment (including without limitation ambient air,
surface water, ground water or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes, and any and all regulations, codes, plans,
orders, decrees, judgments, injunctions, notices or demand letters issued,
entered promulgated or approved thereunder.

11. "ERISA" means the Federal Employee Retirement Income Security Act
of 1974.

12. "Event(s) of Default" will have the meaning set forth in Section
6.1 of this Agreement.

13. "Facility" will have the meaning set forth in Section 2.1 of this
Agreement.

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<PAGE> 17
14. "Indebtedness" means (a) all items (except items of capital stock,
of capital surplus, of general contingency reserves or of retained earnings,
deferred income taxes, and amount attributable to minority interests, if any)
which in accordance with generally accepted accounting principles would be
included in determining total liabilities on a consolidated basis as shown on
the liability side of a balance sheet as at the date as of which Indebtedness is
to be determined, (b) all indebtedness secured by any mortgage, pledge, lien or
conditional sale or other title retention agreement to which any property or
asset owned or held is subject, whether or not the indebtedness secured thereby
will have been assumed (excluding non-capitalized leases which may amount to
title retention agreements but including capitalized leases), and (c) all
indebtedness of others which Borrower or any Subsidiary has directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which Borrower or any Subsidiary has agreed to apply or advance
funds (whether by way of loan, stock purchase, capital contribution or
otherwise) or otherwise to become directly or indirectly liable.

15. "Letter(s) of Credit" will have the meaning set forth in Section
2.3 of this Agreement.

16. "Letter of Credit Facility" will have the meaning set forth in
Section 2.3 of this Agreement.

17. "Letter of Credit Note" will have the meaning set forth in Section
2.3 of this Agreement.

18. "Lien" means any security interest, mortgage, pledge, assignment,
lien or other encumbrance of any kind, including interests of vendors or lessors
under conditional sale contracts and capitalized leases.

19. "Loan Documents" means this Agreement, the Note, the Security
Agreement, and every other document or agreement executed by any party
evidencing, guarantying or securing any of the Obligations; and "Loan Document"
means any one of the Loan Documents.

20. "Loans" means the Revolving Loans and any Draw(s) under the Letter
of Credit Facility.

21. "Note" means the Revolving Note and the Letter of Credit Note.

22. "Obligation(s)" means all loans, advances, indebtedness,
liabilities and obligations of Borrower owed to each of Bank and the Affiliates
of Fifth Third Bancorp of every kind and description whether now existing or
hereafter arising including without limitation, those owed by Borrower to others
and acquired by Bank or any Affiliate of Fifth Third Bancorp, by purchase,
assignment or otherwise, and whether direct or indirect, primary or as guarantor
or surety, absolute or contingent, liquidated or unliquidated, matured or
unmatured, whether or not secured by additional collateral, and including
without limitation all liabilities, obligations and indebtedness arising under
this Agreement, the Notes and the other Loan Documents, all obligations to
perform or forbear from performing acts, all amounts represented by letters of
credit now or hereafter issued by Bank for the benefit of or at the request of
Borrower, and all expenses and attorneys' fees incurred by Bank and any
Affiliate of Fifth Third Bancorp under this Agreement or any other document or
instrument related to any of the foregoing.

23. "Permitted Liens" has the meaning assigned thereto as set forth in
Section 3.9 of this Agreement.

24. "Prime Rate" means the rate of interest per annum announced to be
its prime rate from time to time by Bank at its principal office in Cincinnati,
Ohio whether or not Bank will at times lend to borrowers at lower rates of
interest or, if there is no such prime rate, then its base rate or such other
rate as may be substituted by Bank for the prime rate.

25. "Revolving Loans" has the meaning assigned to that term in Section
2.1 of this Agreement.

26. "Revolving Note" has the meaning assigned to that term in Section
2.1 of this Agreement.

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<PAGE> 18
27. "Security Agreement" means the Security Agreement of even date
herewith between Borrower and Bank, securing the Obligations.

28. "Subsidiary" means any corporation of which Borrower directly or
indirectly owns or controls at the time outstanding stock having under ordinary
circumstances (not depending on the happening of a contingency) voting power to
elect a majority of the board of directors of said corporation.

29. "Tangible Net Worth" means the total of the capital stock (less
treasury stock), paid-in surplus, general contingency reserves and retained
earnings (deficit) of Borrower and any Subsidiary as determined on a
consolidated basis in accordance with generally accepted accounting principles,
after eliminating all inter-company items and all amounts properly attributable
to minority interests, if any, in the stock and surplus of any Subsidiary, minus
the following items (without duplication of deductions) if any, appearing on the
consolidated balance sheet of Borrower:

(i) all deferred charges (less amortization, unamortized debt
discount and expense and corporate organization expenses);

(ii) the book amount of all assets which would be treated as
intangibles under generally accepted accounting principles,
including, without limitation, such items as good-will,
trademark applications, trade names, service marks, brand
names, copyrights, patents, patent applications and licenses,
and rights with respect to the foregoing;

(iii) the amount by which aggregate inventories or aggregate
securities appearing on the asset side of such consolidated
balance sheet exceed the lower of cost or market value (at the
date of such balance sheet) thereof; and

(iv) any subsequent write-up in the book amount of any asset
resulting from a revaluation thereof from the book amount
entered upon acquisition of such asset.

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<PAGE> 19
EXHIBIT 2.1

REVOLVING NOTE

$30,000,000 Cincinnati, Ohio
____________________, 1996

THE O'GARA COMPANY, an Ohio corporation, for value received, hereby
promises to pay to the order of THE FIFTH THIRD BANK, an Ohio banking
corporation (the "Bank"), at its offices, located at 38 Fountain Square Plaza,
Cincinnati, Ohio 45263, in lawful money of the United States of America and in
immediately available funds, the principal sum of Thirty Million Dollars
($30,000,000) or such lesser unpaid principal amount as may be advanced by Bank
pursuant to the terms of the Credit Agreement of even date herewith by and
between Borrower and Bank, as the same may be amended from time to time (the
"Agreement").

Principal amounts outstanding hereunder shall bear interest commencing
on the date of the first advance hereunder at the rate or rates per annum set
forth below which shall be designated by Borrower as more fully set forth
herein. At any time and from time to time during the term hereof, so long as no
Event of Default has occurred and so long as such outstanding principal amounts
hereunder are not then subject to an Interest Rate Election, Borrower may notify
Bank that it wishes to exercise its right to adjust the rate of interest
accruing on amounts of principal outstanding under this Note to one of the rates
set forth below, however, once the rate of interest accruing against any amounts
outstanding hereunder is adjusted to one of the following interest rates during
an Interest Period, Borrower may not elect to adjust such interest rate to a
different interest rate until the expiration of such Interest Period:

(a) LIBOR Rate. Upon telephonic notice by Borrower to Bank by
12:00 noon on the Effective Date, Borrower may elect to have all or a portion of
the Note in minimum amounts of $100,000 per election (provided such amounts are
not then subject to an Interest Rate Election) bear interest at the per annum
rate equal to two hundred seventy-five (275) basis points in excess of the LIBOR
Rate (a "LIBOR Election"). Such notice shall inform Bank of the amount of the
Note to be subject to the LIBOR Election, the LIBOR Interest Period and the
Effective Date for the LIBOR Interest Period.

Borrower's right to make a LIBOR Election shall be terminated automatically if
Bank, by telephonic notice, shall notify Borrower that LIBOR deposits with a
maturity corresponding to the maturity of the LIBOR Interest Period, in an
amount equal to the borrowings to be subject to the LIBOR Election are not
readily available in the London Inter-Bank Offered Rate Market, or that, by
reason of circumstances affecting such Market, adequate and reasonable methods
do not exist for ascertaining the interest rate applicable to such deposits for
the proposed LIBOR Interest Period.

In addition, notwithstanding anything herein contained to the contrary, if,
prior to or during any period with respect to which a LIBOR Election is in
effect, any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful for the Bank to find or maintain its funding in
Eurodollars of any portion of the Note subject to the LIBOR Election or
otherwise to give effect to Bank's obligations as contemplated hereby, (i) Bank
may, by written notice to Borrower, declare Bank's obligations in respect of the
LIBOR Election to be terminated forthwith, and (ii) the LIBOR Election with
respect to Bank shall forthwith cease to be in effect, and interest shall from
and after such date be calculated at the Prime Rate.

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<PAGE> 20
(b) Prime Rate. Upon telephonic notice by Borrower to Bank by
12:00 noon on the Effective Date, Borrower may elect to have all or any portion
of the Note (provided such amounts are not then subject to an Interest Rate
Election), bear interest at the Prime Rate (the "Prime Rate Election").

If Borrower fails to designate one of the interest rates set forth
above or at any time after Borrower has elected to adjust the interest rate
accruing on any principal outstanding hereunder to a rate other than the fixed
rates set forth above, then, at the expiration of the LIBOR Interest Period, if
Borrower has not made another Interest Rate Election hereunder, such outstanding
amounts of principal will accrue interest at a rate per annum equal to the Prime
Rate.

Interest will be payable in immediately available funds at the
principal office of the Bank set forth above on the first day of each calendar
month unless Borrower elects a LIBOR Interest Rate at which time accrued
interest will be due and payable at the end of the LIBOR Interest Period.
Interest will be calculated based on a 360 day year and charged for the actual
number of days elapsed. After maturity, whether by acceleration or otherwise,
this Note will bear interest (computed and adjusted in the same manner, and with
the same effect, as interest hereon prior to maturity) payable on demand, at a
rate per annum equal to the Default Rate, until paid, and whether before or
after the entry of judgment hereon. If any amount as to which a LIBOR Rate
Election is in effect is repaid on a day other than the last day of the
applicable LIBOR Interest Period, or becomes payable on a day other than the
last day of the applicable LIBOR Interest Period due to acceleration or
otherwise, the Borrower shall pay, on demand by the Bank, such amount (as
determined by the Bank) as is required to compensate the Bank for any losses,
costs or expenses which the Bank may incur as a result of such payment or
acceleration, including, without limitation, any loss, cost or expense
(including loss of profit) incurred by reason of liquidation or reemployment of
deposits or other funds acquired by the Bank to fund or maintain such amount
bearing interest at the LIBOR Rate plus two hundred seventy-five (275) basis
points.

Definitions. As used herein, the following terms will have the meanings
set forth below:

(a) "Effective Date" means the date on which a LIBOR Rate Election or
Prime Rate Election will begin.

(b) "Interest Rate Election" means a LIBOR Rate Election or a Prime
Rate Election.

(c) "LIBOR Interest Period" means, with respect to a borrowing elected
to accrue interest at the LIBOR Rate for a period of 30, 60 or 90 days
commencing on a business day selected by the Borrower pursuant to this Note.
Such LIBOR Interest Period shall end on the day in the succeeding calendar month
which corresponds numerically to the beginning day of such LIBOR Interest
Period, provided, however, that if there is no such numerically corresponding
day in such succeeding month, such LIBOR Interest Period shall end on the last
business day of such succeeding month. If a LIBOR Interest Period would
otherwise end on a day which is not a business day, such LIBOR Interest Period
shall end on the next succeeding business day, provided, however, that if said
next succeeding business day falls in a new month, such LIBOR Interest Period
shall end on the immediately preceding business day.

(d) "LIBOR Rate" means the rate (adjusted for reserves if Bank is
required to maintain reserves with respect to relevant advances) being asked on
an amount of Eurodollar deposits equal to the amount of borrowings subject to a
LIBOR Rate Election on the first day of a LIBOR Interest Period and which has a
maturity corresponding to the maturity of the LIBOR Interest Period, as reported
by the TELERATE rate reporting system (or any successor) as determined by Bank
by noon on the Effective Date of the LIBOR Interest Period. Each determination
by Bank of the LIBOR Rate shall be conclusive in the absence of manifest error.

(e) "Prime Rate" shall mean the rate of interest per annum established
from time to time by the Bank at its principal office in Cincinnati, Ohio,
whether or not Bank shall at times lend to borrowers at lower rates of interest
or, if there is no such prime rate, then its base rate or such other rate as may
be substituted by Bank for the prime rate; provided that in no event shall the
Prime Rate exceed the highest rate permitted by law.

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<PAGE> 21
(f) "Reserve Requirement" means, with respect to a LIBOR Interest
Period, the maximum aggregate reserve requirement applicable to the Bank,
(including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on Eurocurrency liabilities with a maturity equal to
that of the LIBOR Interest Period.

The principal amount of each loan made by Bank under this Note and the
amount of each prepayment made by Borrower under this Note will be recorded by
Bank in the regularly maintained data processing records of Bank. The aggregate
unpaid principal amount of all loans set forth in such records will be
presumptive evidence of the principal amount owing and unpaid on this Note.
However, failure by Bank to make any such entry will not limit or otherwise
affect Borrower's obligations under this Note or the Agreement.

On the execution date hereof, Bank may charge and the Borrower agrees
to pay a note processing fee in an amount reasonably determined by Bank from
time to time.

All payments received by Bank under this Note will be applied first to
payment of amounts advanced by Bank on behalf of Borrower or which may be due
for insurance, taxes and attorneys' fees or other charges to be paid by Borrower
pursuant to the Agreement and the Loan Documents (as defined in the Agreement),
then to accrued interest on this Note, then to principal which will be repaid in
the inverse order of maturity.

This Note is the Revolving Note referred to in the Agreement, and is
entitled to the benefits, and is subject to the terms, of the Agreement.
Capitalized terms used but not otherwise defined herein will have the meanings
attributed thereto in the Agreement. The principal of this Note is prepayable in
the amounts and under the circumstances, and its maturity is subject to
acceleration upon the terms, set forth in the Agreement. Except as otherwise
expressly provided in the Agreement, if any payment on this Note becomes due and
payable on a day other than one on which Bank is open for business (a "Business
Day"), the maturity thereof will be extended to the next Business Day, and
interest will be payable at the rate specified herein during such extension
period.

After the occurrence of an Event of Default, all amounts of principal
outstanding as of the date of the occurrence of such Event of Default will bear
interest at the Default Rate, in Bank's sole discretion, without notice to
Borrower. This provision does not constitute a waiver of any Events of Default
or an agreement by Bank to permit any late payments whatsoever.

If any payment of principal is not paid when due (whether by
acceleration or otherwise after the expiration of applicable notice grace and
cure periods, if any), Borrower agrees to pay to Bank a late payment fee equal
to five percent (5%) of the payment amount then due.

In no event will the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction will, in a
final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note in
excess of the highest permissible rate applicable hereto, such excess will be
deemed received on account of, and will automatically be applied to reduce the
amounts due to Bank from Borrower under this Note, other than interest, and the
provisions hereof will be deemed amended to provide for the highest permissible
rate. If there are no such amounts outstanding, Bank will refund to Borrower
such excess.

Borrower and all endorsers, sureties, guarantors and other persons
liable on this Note hereby waive presentment for payment, demand, notice of
dishonor, protest, notice of protest and all other demands and notices in
connection with the delivery, performance and enforcement of this Note, and
consent to one or more renewals or extensions of this Note.

This Note may not be changed orally, but only by an instrument in
writing.

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<PAGE> 22
This Note is being delivered in, is intended to be performed in, will
be construed and enforceable in accordance with, and be governed by the internal
laws of, the State of Ohio without regard to principles of conflict of laws.
Borrower agrees that the State and Federal courts in Hamilton County, Ohio or
any other court in which Bank initiates proceedings will have exclusive
jurisdiction over all matters arising out of this Note, and that service of
process in any such proceeding will be effective if mailed to Borrower at its
address described in the Notices section of the Agreement. BORROWER HEREBY
WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.

Borrower authorizes any attorney of record to appear for it in any
court of record in the State of Ohio, after this Note becomes due and payable,
whether by its terms or upon default, waives the issuance and service of
process, and releases all errors and rights of appeal, and confesses a judgment
against it in favor of the holder of such obligation, for the principal amount
of such obligation plus interest thereon, together with court costs and
attorneys' fees. Stay of execution and all exemptions are hereby waived.
Borrower also agrees that the attorney acting for Borrower as set forth in this
paragraph may be compensated by Bank for such services, and Borrower waives any
conflict of interest caused by such representation and compensation arrangement.
If an obligation is referred to an attorney for collection, and the payment is
obtained without the entry of a judgment, the obligors will pay to the holder of
such obligation its attorneys' fees.

THE O'GARA COMPANY

By: _______________________

Its: ______________________

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<PAGE> 23
EXHIBIT 2.3

LETTER OF CREDIT NOTE

$4,500,000 Cincinnati, Ohio
____________________, 1996

On Demand, THE O'GARA COMPANY, an Ohio corporation, for value received,
hereby promises to pay to the order of THE FIFTH THIRD BANK, an Ohio banking
corporation (the "Bank"), at its offices, located at 38 Fountain Square Plaza,
Cincinnati, Ohio 45263, in lawful money of the United States of America and in
immediately available funds, the principal sum of Four Million Five Hundred
Thousand Dollars ($4,500,000) or such lesser unpaid principal amount as may be
advanced by Bank pursuant to the terms of the Credit Agreement of even date
herewith by and between Borrower and Bank, as the same may be amended from time
to time (the "Agreement").

Principal amounts outstanding hereunder shall bear interest commencing
on the date of the first advance hereunder at the rate equal to the Bank's Prime
Rate (as defined below) as in effect from time to time. The interest rate
charged hereunder will change automatically upon each change in the Prime Rate.
Interest will be payable in immediately available funds at the principal office
of the Bank set forth above on the first day of each calendar month during the
term hereof. Interest will be calculated based on a 360 day year and charged for
the actual number of days elapsed. After maturity, whether by acceleration or
otherwise, this Note will bear interest (computed and adjusted in the same
manner, and with the same effect, as interest hereon prior to maturity) payable
on demand, at a rate per annum equal to the Default Rate, until paid, and
whether before or after the entry of judgment hereon.

"Prime Rate" shall mean the rate of interest per annum established from
time to time by the Bank at its principal office in Cincinnati, Ohio, whether or
not Bank shall at times lend to borrowers at lower rates of interest or, if
there is no such prime rate, then its base rate or such other rate as may be
substituted by Bank for the prime rate; provided that in no event shall the
Prime Rate exceed the highest rate permitted by law.

On the execution date hereof, Bank may charge and the Borrower agrees
to pay a note processing fee in an amount reasonably determined by Bank from
time to time.

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<PAGE> 24
This Note is the Letter of Credit Note referred to in the Agreement,
and is entitled to the benefits, and is subject to the terms, of the Agreement.
Capitalized terms used but not otherwise defined herein will have the meanings
attributed thereto in the Agreement. The principal of this Note is prepayable in
the amounts and under the circumstances, and its maturity is subject to
acceleration upon the terms, set forth in the Agreement. Except as otherwise
expressly provided in the Agreement, if any payment on this Note becomes due and
payable on a day other than one on which Bank is open for business (a "Business
Day"), the maturity thereof will be extended to the next Business Day, and
interest will be payable at the rate specified herein during such extension
period.

This Note may not be changed orally, but only by an instrument in
writing.

This Note is being delivered in, is intended to be performed in, will
be construed and enforceable in accordance with, and be governed by the internal
laws of, the State of Ohio without regard to principles of conflict of laws.
Borrower agrees that the State and Federal courts in Hamilton County, Ohio or
any other court in which Bank initiates proceedings will have exclusive
jurisdiction over all matters arising out of this Note, and that service of
process in any such proceeding will be effective if mailed to Borrower at its
address described in the Notices section of the Agreement. BORROWER HEREBY
WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.

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<PAGE> 25
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT OR ANY OTHER CAUSE.

THE O'GARA COMPANY

By: _______________________

Its: ______________________

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<PAGE> 26
EXHIBIT 3.12

SUBSIDIARIES AND PARTNERSHIPS

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<PAGE> 27
EXHIBIT 7.1(b)

THE O'GARA COMPANY

CERTIFICATE OF BORROWER

RE: $30,000,000 REVOLVING LOAN FACILITY AND
$4,500,000 LETTER OF CREDIT FACILITY
FROM
THE FIFTH THIRD BANK

The undersigned does hereby certify that he is the duly elected,
qualified and acting Secretary of THE O'GARA COMPANY, an Ohio corporation (the
"Borrower"), and the undersigned does hereby further certify as follows:

1. Attached hereto, marked Attachment A, is a true and correct
copy of the current Articles of Incorporation of Borrower
together with all amendments thereto.

2. Attached hereto, marked Attachment B, is a true and correct
copy of the current Bylaws of Borrower together with all
amendments thereto.

3. Attached hereto, marked Attachment C, is a true and correct
copy of certain resolutions of the board of directors of
Borrower dated _________, 1996, which were duly and lawfully
adopted by the board of directors of Borrower. Such
resolutions have not been amended, altered or rescinded and
are in full force and effect on the date hereof.

4. The following persons are the duly elected officers of
Borrower, holding the office set forth opposite their
respective names. Each officer who has executed or will
execute any documents in connection with this loan transaction
has set forth his true and customary signature opposite his
name.

Name Title Signature

__________________ __________________ __________________

5. Each officer whose personal signature appears above has been
duly authorized by resolution of the board of directors of
Borrower to execute any and all instruments or documents which
he may deem necessary or appropriate in connection with this
loan transaction.

6. Borrower is in good standing in the state of its
incorporation. Attached hereto, marked Attachment D, is a
short-form certificate of good standing issued within the past
30 days by that state.

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<PAGE> 28
IN WITNESS WHEREOF, the undersigned hereby certifies the above to be
true and has executed this certificate this _____ day of __________, 1996.

_______________________________
, Secretary

The undersigned does hereby certify that he is the President of
Borrower, and does further certify that ____________________ is the Secretary of
Borrower, and that his signature set forth above is his true and customary
signature.

_______________________________
, President

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<PAGE> 29
ATTACHMENT C

TO
EXHIBIT 7.1(b)
THE O'GARA COMPANY
DIRECTORS' ACTION
BY WRITTEN CONSENT

The undersigned, being all of the Directors of THE O'GARA COMPANY, an
Ohio corporation (the "Corporation") who would be entitled to notice of a
meeting of the Board of Directors, do hereby authorize, approve and agree to the
adoption of the following action by their written consent without a meeting,
pursuant to Section 1701.54 of the Ohio Revised Code:

WHEREAS, the Board of Directors of the Corporation deem it in the best
interest of the Corporation to borrow up to an aggregate amount of $34,500,000
from The Fifth Third Bank ("Bank") to finance various operations of the
Corporation; and

WHEREAS, negotiations have been carried on by and between the
Corporation and Bank relating to the structuring of the transaction and the form
of documents to be used in connection with the financing; and

WHEREAS, the following documents (collectively called the "Loan
Documents") have been substantially finalized:

1. The Credit Agreement by and between the Corporation and Bank;

2. $30,000,000 Revolving Note executed by the Corporation, as
Maker, and made payable to Bank;

3. $4,500,000 Letter of Credit Note executed by the Corporation,
as Maker, and made payable to Bank;

4. The Security Agreement by and between the Corporation and
Bank.

NOW THEREFORE, BE IT RESOLVED, that the Loan Documents are hereby
approved with such additional terms and provisions as the officer executing the
same will approve and the execution and delivery of such documents by such
officer will be conclusive evidence that the same has been authorized by this
resolution; and

RESOLVED FURTHER, that any one of the following officers of the
Corporation are hereby authorized to execute and deliver the Loan Documents on
behalf of the Corporation, and any and all other documents that he deems
necessary and advisable in order to complete the transaction authorized by these
resolutions and to perform such other acts, as in his judgment may be necessary
or appropriate in order to effectuate the financing and the intent and purposes
of the foregoing resolutions, the signature of only one such officer being
necessary:

Chairman of the Board
President
Vice President
Secretary
Treasurer

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<PAGE> 30
RESOLVED FURTHER, that the Chairman of the Board, President, Vice
President, Secretary and Treasurer of the Corporation are hereby authorized to
execute, the signature of only one such officer being necessary, and any and all
closing documents including but not limited to closing certificates and
financing statements necessary to obtain the financing with such additional
terms and provisions as the officer executing the same will approve and the
execution and delivery of such documents by such officer will be conclusive
evidence that the same has been authorized by this resolution.

RESOLVED FURTHER, that the Chairman of the Board, President, Vice
President, Secretary and Treasurer of the Corporation are hereby each hereby
authorized to request advances under the Revolving Note, direct Bank as to where
such advances are to be paid, repay such advances,and reborrow such amounts on
behalf of Borrower during the term of the Revolving Note, which requests shall
be made in the manner prescribed by the terms of the Credit Agreement.

Dated:

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EXHIBIT 7.1 (c)

OPINION OF COUNSEL FOR BORROWER

The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Metropolitan Lending Department

Re: THE O'GARA COMPANY

Gentlemen:

We have acted as general counsel for The O'Gara Company, an Ohio
corporation (the "Borrower"), in connection with the negotiation and execution
of the Credit Agreement of even date herewith between you and Borrower (the
"Credit Agreement"), the Security Agreement between you and Borrower of even
date herewith, the $30,000,000 Revolving Note and the $4,500,000 Letter of
Credit Note of Borrower, each dated of even date herewith (collectively the
"Notes") (all of which will be collectively referred to as the "Loan
Documents"). All capitalized terms not defined herein have the meanings set
forth in the Credit Agreement. As general counsel for Borrower, we have made
such investigations as we have deemed necessary in connection with the opinions
hereinafter set forth.

Based upon such investigations, it is our opinion that:

(1) Borrower is a corporation duly organized and validly existing under
the laws of the state of its incorporation, having full corporate power and
authority to execute and deliver and to carry out and perform its obligations
under the Loan Documents;

(2) The execution and performance of the Loan Documents have been duly
authorized by all necessary corporate action of Borrower and the Loan Documents
have been duly executed and delivered by Borrower and are valid and binding
obligations of Borrower enforceable in accordance with their respective terms,
except to the extent that enforcement thereof may be limited by equitable
principles or by bankruptcy, insolvency or other similar laws affecting the
rights of creditors generally;

(3) To our knowledge, after due investigation, the execution and
delivery of the Loan Documents and the performance by Borrower of its
obligations thereunder do not and will not conflict with or constitute on the
part of Borrower a breach of or default under the articles of incorporation or
code of regulations governing Borrower, any existing law, regulation, court
order or consent decree to which Borrower is subject, or any agreement,
indenture, note, mortgage, or other obligation or instrument to which Borrower
is a party or by which it may be bound;

(4) There is not pending, or to our knowledge, after due investigation,
threatened, any action, suit, proceeding (at law or in equity) or investigation
before or by any court, administrative agency, or public board or body against
Borrower or its properties;

(5) The Security Agreement and accompanying financing statements will
grant to Bank a fully perfected first priority security interest in the
Accounts, Inventory, Equipment and General Intangibles of Borrower, assuming the
delivery to Bank of all collateral for which possession is necessary to perfect
a security interest;

(6) The execution, delivery and performance by Borrower of the Loan
Documents are not subject to any authorization, consent, approval or review by
any governmental body or regulatory authority not heretofore obtained or
affected;

(7) The Notes are not usurious under the governing laws.

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<PAGE> 32
EXHIBIT 8.5

SECURITY AGREEMENT

THIS SECURITY AGREEMENT is entered into as of the day of , 1996, by and
between THE O'GARA COMPANY, an Ohio corporation (the "Borrower") and THE FIFTH
THIRD BANK, an Ohio banking corporation (the "Bank").

Section 1. Definitions:

1.1 Specific Definitions. The following definitions will apply:

(a) "Accounts" means all accounts, accounts receivable, contract
rights, instruments, documents, chattel paper, and all obligations in any form
including but not limited to those arising out of the sale or lease of goods or
the rendition of services by Borrower; all guaranties, letters of credit and
other security for any of the above; all merchandise returned to or reclaimed by
Borrower; and all books and records (including computer programs, tapes and data
processing software) evidencing an interest in or relating to the above.

(b) "Debtors" means Borrower's customers and all other persons
obligated to Borrower on Accounts.

(c) "Equipment" means all machinery, machine tools, equipment,
fixtures, office equipment, furniture, furnishings, motors, motor vehicles,
tools, dies, parts, jigs, goods (including, without limitation, each of the
items of equipment set forth on any schedule which is either now or in the
future attached to Bank's copy of this Agreement), and all attachments,
accessories, accessions, replacements, substitutions, additions and improvements
thereto, and all supplies used or useful in connection therewith.

(d) "General Intangibles" means all general intangibles, choses in
action, causes of action, obligations or indebtedness owed to Borrower from any
source whatsoever, and all other intangible personal property of every kind and
nature (other than Accounts) including without limitation patents, trademarks,
trade names, service marks, copyrights and applications for any of the above,
and goodwill, trade secrets, licenses, franchises, rights under agreements, tax
refund claims, and all books and records including all computer programs, disks,
tapes, printouts, customer lists, credit files and other business and financial
records, and the equipment containing any such information.

(e) "Inventory" means any and all goods, supplies, wares, merchandises
and other tangible personal property, including raw materials, work in process,
supplies and components, and finished goods, whether held for sale or lease, or
furnished or to be furnished under any contract for service, or otherwise and
also including products of and accessions to inventory, packing and shipping
materials, and all documents of title, whether negotiable or non-negotiable,
representing any of the foregoing.

(f) "Lien" means any security interest, mortgage, pledge, assignment,
lien or other encumbrance of any kind, including interests of vendors or lessors
under conditional sale contracts or capital leases.

(g) In addition to the foregoing, the definitions of the terms
Accounts, Inventory, Equipment and General Intangibles will have the meanings
attributed thereto in the applicable version of the Uniform Commercial Code
adopted in the jurisdiction where Bank's principal place of business is located,
as such definitions may be enlarged or expanded from time to time by amendment
or judicial decision.

1.2 Other Definitions. Capitalized terms not defined herein have the
meanings set forth in the Credit Agreement of even date herewith between
Borrower and Bank (the "Credit Agreement"). All other undefined terms will have
the meaning given to them in the Ohio Uniform Commercial Code.

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<PAGE> 33
Section 2. Security.

2.1 Security Interest of Bank. To induce Bank to make the Loans, and as
security for all Obligations, Borrower hereby assigns to Bank as collateral and
grants to Bank a continuing first priority pledge and security interest in the
following property of Borrower (the "Collateral"), whether now owned or existing
or hereafter acquired or arising and regardless of where it is located:

(a) all Accounts;

(b) all Inventory;

(d) all General Intangibles;

(e) all proceeds and products of Collateral and all additions and
accessions to, replacements of, insurance or condemnation proceeds of, and
documents covering Collateral, all tort or other claims against third parties
arising out of damage or destruction of Collateral, all property received wholly
or partly in trade or exchange for Collateral, all fixtures, all leases of
Collateral and all rents, revenues, issues, profits and proceeds arising from
the sale, lease, license, encumbrance, collection, or any other temporary or
permanent disposition, of the Collateral or any interest therein; and

(f) all instruments, chattel paper, documents, securities, money, cash,
letters of credit, warrants, dividends, distributions, contracts, agreements,
contract rights or other property, owned by Borrower or in which Borrower has an
interest, which now or hereafter are at any time in the possession or control of
Bank or in transit by mail or carrier to or in the possession of any third party
acting on behalf of Bank, without regard to whether Bank received the same in
pledge, for safekeeping, as agent for collection or transmission or otherwise or
whether Bank had conditionally released the same, and the proceeds thereof, all
rights to payment from all claims against Bank, and any deposit accounts of
Borrower with Bank, including certificates of deposit, all demand, time,
savings, passbook or other accounts.

2.2 Representations in Schedule I. The representations and warranties
in Schedule I attached hereto entitled the Specific Representation Schedule are
true and correct. Except as otherwise permitted hereunder, Borrower will not
change its name, transfer executive offices or maintain records with respect to
Accounts at any location other than the present locations specified in that
schedule.

2.3 Provisions Concerning Accounts. (a) Borrower represents and
warrants that each Account reflected in Borrower's books and records and on each
Collateral Report submitted to Bank is, or at the time it arises will be owned
by Borrower free and clear of all Liens in favor of any third party, will be a
bona fide existing obligation created by the final sale and delivery goods or
the completed performance of services by Borrower in the ordinary course of its
business, will be for a liquidated amount maturing as stated in the supporting
data covering such transaction, and will not be subject to any known deduction,
offset, counterclaim, return privilege or other condition, except as reflected
on Borrower's books and records and on all Collateral Reports delivered to Bank.
Borrower will not redate any invoices. Any allowances between Borrower and its
customers will be in accordance with the usual customary practices of Borrower,
as they exist at this time.

(b) Any officer, employee or agent of Bank will have the right, at any
time or times hereafter, in the name of Bank or its nominee (including
Borrower), to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone, or otherwise. Bank or its designee may at any time
notify Debtors that Accounts have been assigned to Bank or of Bank's security
interest therein, and after default by Borrower hereunder collect the same
directly and charge all collection costs and expenses to Borrower's account.

(c) If Borrower becomes aware that a Debtor disputes liability or makes
any claim with respect to an Account in excess of $10,000 or that a receivership
petition or petition under any chapter of the federal bankruptcy act is filed by
or against a Debtor, or that a Debtor dissolves, makes an assignment for the
benefit of creditors, becomes insolvent, fails or goes out of business, or that
any other event occurs which adversely affects the value of any Account owed by
a debtor, Borrower will immediately notify Bank of each such event where such
event is material in nature. After default by Borrower hereunder, Borrower will
not grant any discounts, credit or allowances to any Debtor and will not accept
returns of merchandise

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<PAGE> 34
without Bank's consent. After default by Borrower, Bank may settle disputes and
claims directly with Debtors, and in such cases, Bank will credit Borrower's
account with the net amounts collected from such disputed Accounts, after
expenses of collection.

(d) Borrower appoints Bank or Bank's designee as its attorney-in-fact
to endorse Borrower's name on any checks, notes, acceptances, money orders,
drafts or other forms of payment or security that may come into Bank's
possession; to sign Borrower's name on any invoice or bill of lading relating to
any Accounts or Inventory, on drafts against Debtors, on schedules and
assignments of Accounts or Inventory, on notices of assignment and other public
records, on verifications of Accounts and on notices to Debtors; to notify post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Bank, to receive and open all mail addressed to Borrower
and to retain all mail relating to Collateral and forward all other mail to
Borrower; to send requests for verification of accounts to customers or Debtors,
and to do all things necessary to carry out or enforce this Agreement. Borrower
ratifies and approves all acts of Bank as attorney-in-fact. Bank as
attorney-in-fact will not be liable for any acts or omissions, or for any error
of judgment or mistake of fact or law except for bad faith. This power, being
coupled with an interest, is irrevocable until all Obligations have been fully
satisfied; provided that Bank will not exercise this power until after an Event
of Default.

(e) If any Accounts will arise out of a contract with the United States
of America or any department, agency, subdivision or instrumentality thereof,
Borrower will promptly notify Bank and will perfect Bank's Lien in such Accounts
under the provisions of the Federal laws on assignment of claims.

2.4 Provisions Concerning General Intangibles. Borrower represents and
warrants that Borrower owns all of the General Intangibles in which Borrower
grants Bank a Lien, free and clear of any Liens in favor of any person other
than Bank. Borrower will preserve all patents, trademarks, copyrights and the
like which are necessary or useful for the conduct of its business.

2.5 Provisions Concerning Inventory. (a) Borrower represents and
warrants that each item of Inventory will be valued by Borrower at the lower of
cost or market on a FIFO basis. Borrower has informed Bank on Schedule I of all
places where Borrower maintains Inventory or has maintained Inventory at any
time during the past four months, including, without limitations, facilities
leased and operated by Borrower and locations neither owned nor leased by
Borrower. Schedule I indicates whether the premises are those of a warehouseman
or other party. No Inventory will be removed from the current locations or
stored at locations other than the current locations disclosed to Bank on
Schedule I, except (i) for the purpose of sale in the ordinary course of
Borrower's business or (ii) upon 30 days' written notice to Bank, to such other
locations as to which all action required to perfect and protect Bank's lien in
such Inventory has been taken. Inventory may be moved from one current location
to another.

(b) Borrower will keep all Inventory in good order and condition and
will maintain full, accurate and complete books and records with respect to
Inventory at all times.

(c) Except during the continuance of an Event of Default, Borrower may
sell Inventory in the ordinary course of its business (which does not include a
transfer in full or partial satisfaction of indebtedness).

(d) If any Inventory is stored with a bailee, warehouseman or similar
party at any time, Borrower so storing such Inventory will inform Bank of that
fact and will take all steps requested by Bank so that Bank retains a first
priority perfected Lien in those assets.

(e) Borrower has not purchased any of the Collateral in a bulk transfer
or in a transaction which was outside the ordinary course of the seller's
business, except as set forth on an exhibit attached hereto.

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<PAGE> 35
2.6 Provisions Concerning Equipment. (a) Borrower warrants and
represents that Borrower has informed Bank on Schedule I of all places where any
of Borrower's Equipment is located or has been located at any time during the
past four months. No Equipment will be moved to any location not disclosed to
Bank on Schedule I but Equipment may be moved from one such location to another.
In addition, Borrower may move Equipment from job site to job site provided that
Borrower will provide Bank with prior written notice if any Equipment with a
book value in excess of $50,000 is to be moved to and maintained at a particular
job site for a period in excess of three months.

(b) Borrower will keep and maintain the Equipment in good operating
condition and repair, make all necessary replacements so that its value and
operating efficiency is maintained and preserved. Borrower will immediately
notify Bank of any material loss or damage to the Collateral.

(c) Borrower will immediately deliver to Bank all certificates of title
or applications for title or the like for any vehicles, ships or airplanes
covered by certificates of title. Borrower will take all steps necessary to
perfect Bank's Lien in such assets.

(d) Borrower will not permit any item of Equipment to become a fixture
to real estate or accession to other property and the Equipment is now and will
at all times remain and be personal property, except with the prior written
consent of Bank. If any of the Collateral is or may become a fixture, Borrower
will obtain from all persons with an interest in the relevant real estate such
waivers or subordinations as Bank reasonably requires.

2.7 Liens. Borrower has good and marketable title to its respective
Collateral, and the Liens granted to Bank in this Agreement are fully perfected
first priority Liens in the Collateral with priority over the rights of every
person other than Borrower in the Collateral. Borrower is the owner of all
personal property in its possession, and all assets of Borrower are owned free,
clear and unencumbered, except for the Lien of Bank and except for Liens imposed
by law which secure amounts not yet due and payable and Permitted Liens.

2.8 Further Assurances. (a) Borrower will execute and deliver to Bank
at Bank's request all financing statements, continuation statements and other
documents that Bank may reasonably request, in form satisfactory to Bank, to
perfect and maintain perfected Bank's security interest in the Collateral and to
fully consummate all transactions contemplated under this Agreement. Borrower
hereby irrevocably makes, constitutes and appoints Bank (and any of Bank's
officers, employees or agents designated by Bank) as Borrower's true and lawful
attorney with power to sign the name of Borrower on any such documents.

(b) If any Collateral, including proceeds, consists of a letter of
credit, advice of credit, instrument, money, negotiable documents, chattel paper
or similar property (collectively, "Negotiable Collateral") Borrower will,
immediately upon receipt thereof, endorse and assign such Negotiable Collateral
over to Bank and deliver actual physical possession of the Negotiable Collateral
to Bank.

(c) Bank may inspect and verify Borrower's books and records at any
time or times hereafter, during usual business hours, in order to verify the
amount or condition of the Collateral, or any other matter relating to the
Collateral or Borrower's financial condition. Borrower will promptly deliver to
Bank copies of all books and records requested by Bank.

2.9 Other Amounts Deemed Loans. If Borrower fails to pay any tax,
assessment, government charge or levy or to maintain insurance within the time
permitted by this Agreement or the Credit Agreement, or to discharge any Lien
prohibited hereby, or to comply with any other obligation, Bank may, but will
not be required to, pay, satisfy, discharge or bond the same of the account of
Borrower, and to the extent permitted by law and all monies so paid out will be
secured by the Collateral.

2.10 Borrower Remains Liable. Borrower will remain liable under any
contracts and agreements included in the Collateral to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, and Bank will not have any obligation or liability under such
contracts and agreements by reason of this Agreement or otherwise.

2.11 Insurance. Borrower will insure the Collateral against loss or
damage of the kinds and in the amounts customarily insured against by
corporations with established reputations engaged in the same or similar
business as Borrower. All such policies will (a) be issued by financially sound
and reputable insurers, (b) name Bank as an additional insured and, where
applicable, as loss payee under a lender loss

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<PAGE> 36
payable endorsement satisfactory to Bank, and (c) will provide for thirty (30)
days written notice to Bank before such policy is altered or canceled all of
which will be evidenced by a Certificate of Insurance delivered to Bank by
Borrower on the date of execution of this Agreement.

Section 3 Events of Default and Remedies.

3.1 Events of Default. Any of the following events will be an Event of
Default:

(a) any representation or warranty made herein by Borrower is incorrect
when made or reaffirmed; or

(b) Borrower fails to keep its assets insured as required herein or in
the Credit Agreement, or material uninsured damage to or loss, theft or
destruction of the Collateral occurs; or

(c) Borrower fails to observe or perform any covenant, condition or
agreement herein and the failure or inability of Borrower to cure such default
within 30 days of the occurrence thereof, provided that such 30 day grace period
will not apply to (i) a breach of any covenant which in Bank's good faith
judgement is incapable of cure, (ii) any failure to maintain insurance or permit
inspection of the Collateral or of the books and records of Borrower, or (iii)
any breach of any covenant which has already occurred; or

(d) an Event of Default occurs under the Credit Agreement, the Loan
Documents or any document or agreement evidencing or securing the Obligations.

3.2 Remedies. If any Event of Default will occur and be continuing, in
addition to the remedies provided in the Credit Agreement:

(a) Bank may resort to the rights and remedies of a secured party under
the Uniform Commercial Code including the right to enter any premises of
Borrower, with or without legal process and take possession of the Collateral
and remove it and any records pertaining thereto and/or remain on such premises
and use it for the purpose of collecting, preparing and disposing of the
Collateral;

(b) Bank may ship, reclaim, recover, store, finish, maintain and repair
the Collateral, and may sell the Collateral at public or private sale, and
Borrower will be credited with the net proceeds of such sale only when they are
actually received by Bank and any requirement of reasonable notice of any
disposition of the Collateral will be satisfied if such notice is sent to
Borrower 10 days prior to such disposition;

(c) Borrower will upon request of Bank assemble the Collateral and any
records pertaining thereto and make them available at a place designated by
Bank; or

(d) Bank may use, in connection with any assembly or disposition of the
Collateral, any trademark, trade name, tradestyle, copyright, patent right,
trade secret or technical process used or utilized by Borrower.

3.3 No Remedy Exclusive. No remedy set forth herein is exclusive of any
other available remedy or remedies, but each is cumulative and in addition to
every other remedy given under this Agreement or the Credit Agreement or now or
hereafter existing at law or in equity or by statute.

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Section 4 Miscellaneous Provisions.

4.1 Miscellaneous. No delay or omission to exercise any right will
impair any such right or be a waiver thereof, and a waiver on one occasion will
be limited to that particular occasion. This Agreement may be amended only in
writing signed by the party against whom enforcement of the amendment is sought.
This Agreement may be executed in counterparts. If any part of this Agreement is
held invalid, the remainder of this Agreement will not be affected thereby.

4.2 Binding Effect. This Agreement will be binding upon and inure to
the benefit of the respective legal representatives, successors and assigns of
the parties hereto; however, Borrower may not assign any of its rights or
delegate any of its obligations hereunder. Bank (and any subsequent assignee)
may transfer and assign this Agreement or may assign partial interests or
participation in the Loans to other persons.

4.3 Subsidiaries. If Borrower has any additional Subsidiaries at any
time during the term of this Agreement, the term "Borrower" in each
representation, warranty and covenant herein will mean "Borrower and each
Subsidiary individually and in the aggregate," and Borrower will cause each
Subsidiary to be in compliance therewith.

4.4 Financing Statement. Borrower hereby authorizes Bank to file a copy
of this Agreement as a Financing Statement under the Uniform Commercial Code
with appropriate county and state government authorities necessary to perfect
the Bank's security interest in the Collateral as set forth herein.

4.5 Notices. Any notices under or pursuant to this agreement will be
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, to the addresses then provided for in
the Notices section of the Credit Agreement.

4.6 Governing Law; Jurisdiction. This Agreement will be governed by the
domestic laws of the State of Ohio. Borrower agrees that the state and federal
courts in Hamilton County, Ohio or any other court in which Bank initiates
proceedings have exclusive jurisdiction over all matters arising out of this
Agreement, and that service of process in any such proceeding will be effective
if mailed to Borrower at its address described in the Notices section of the
Credit Agreement. BANK AND BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF
ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

IN WITNESS WHEREOF, Borrower and Bank have executed this Security
Agreement by their duly authorized officers as of the date first above written.

THE O'GARA COMPANY

By:
-----------------------------------

Its:
-----------------------------------

THE FIFTH THIRD BANK

By:
-----------------------------------

Its:
-----------------------------------

-37-
<PAGE> 38
SCHEDULE I

SPECIFIC REPRESENTATIONS

1. The exact legal name of Borrower is: _______________________________
_____________.

2. If Borrower has changed its name since it was incorporated, its past
legal names were: _____________________________________________________________.

3. Borrower uses in its business and owns the following trade names:___
_____________________________________________________________.

4. Borrower was incorporated on ___________________________, under the
laws of the State of ______________, and is in good standing under those laws.

5. Borrower is qualified to transact business in the following states:
_____________________________________________________________.

6. Borrower has its chief executive office and principal place of
business at ___________________________________________________________________.
Borrower maintains all of its records with respect to its Accounts at that
address.

7. Borrower also has places of business at ____________________________
_________________________________.

8. No inventory, equipment or fixtures owned by Borrower are located at
any other place, nor were they located at any other place within the past four
months. The locations noted in #7 above.

9. In the past five years Borrower has never maintained its chief
executive office or principal place of business or records with respect to
accounts, nor owned personal property, at any locations except those set forth
above and except _____________________________________________________________.

10. The following entities (a) have been merged into Borrower, (b) have
sold substantially all of their assets to Borrower outside the ordinary course
of their business since Borrower was incorporated: _____________________________
___________________________________________________________________.

11. Borrower owns the following numbers of motor vehicles:

_____ autos; _____ trucks; _____tractors; _____trailers.

12. Borrower is not the owner or licensee of any registered patents,
trademarks or copyrights except ________________________________________________
_____________________________________________________________.

13. Borrower does not have any subsidiaries, or own stock in any other
corporations, or own an interest in any partnerships or joint ventures, except
_____________________________________________________________.

14. Borrower is not the owner of any life insurance policies except
_____________________________________________________________.

-38-
<PAGE> 39
15. If Borrower is incorporated in Kentucky or qualified to do business
there, its registered agent and registered office there as listed on the
Kentucky secretary of state's corporate records are: ___________________________
_____________________________________________________________.

16. Borrower is not a plaintiff or defendant in any litigation except
as follows: ____________________________________________________________________
_________________________________________________________________

-39-
<PAGE> 40
EXHIBIT A
TO
UCC-1 FINANCING STATEMENT
DEBTOR: SECURED PARTY:
The O'Gara Company The Fifth Third Bank
________________________________ 38 Fountain Square Plaza
________________________________ Cincinnati, Ohio 45263

This UCC-1 Financing Statement covers the following property of Debtor
whether now owned or existing or hereafter acquired or arising regardless of
where it is located (collectively referred to herein as the"Collateral"):

(a) all accounts, accounts receivable, contract rights, instruments,
documents, chattel paper, and all obligations in any form including but not
limited to those arising out of the sale or lease of goods or the rendition of
services by Debtor; all guaranties, letters of credit and other security for any
of the above; all merchandise returned to or reclaimed by Debtor; and all books
and records (including computer programs, tapes and data processing software)
evidencing an interest in or relating to the above.

(b) all equipment, machinery, machine tools, fixtures, office
equipment, furniture, furnishings, motors, motor vehicles, tools, dies, parts,
jigs, goods (including, without limitation, each of the items of equipment set
forth on any schedule which is either now or in the future attached to Secured
Party's copy of this Agreement), and all attachments, accessories, accessions,
replacements, substitutions, additions and improvements thereto, and all
supplies used or useful in connection therewith.

(c) all general intangibles, choses in action, causes of action,
obligations or indebtedness owed to Debtor from any source whatsoever, and all
other intangible personal property of every kind and nature (other than
Accounts) including without limitation patents, trademarks, trade names, service
marks, copyrights and applications for any of the above, and goodwill, trade
secrets, licenses, franchises, rights under agreements, tax refund claims, and
all books and records including all computer programs, disks, tapes, printouts,
customer lists, credit files and other business and financial records, and the
equipment containing any such information.

(d) all inventory, goods, supplies, wares, merchandises and other
tangible personal property, including raw materials, work in process, supplies
and components, and finished goods, whether held for sale or lease, or furnished
or to be furnished under any contract for service, and also including products
of and accessions to inventory, packing and shipping materials, and all
documents of title, whether negotiable or non-negotiable, representing any of
the foregoing.

(e) all proceeds and products of the Collateral and all additions and
accessions to, replacements of, insurance or condemnation proceeds of, and
documents covering Collateral, all tort or other claims against third parties
arising out of damage or destruction of Collateral, all property received wholly
or partly in trade or exchange for Collateral, all fixtures, all leases of
Collateral and all rents, revenues, issues, profits and proceeds arising from
the sale, lease, license, encumbrance, collection, or any other temporary or
permanent disposition, of the Collateral or any interest therein.

(f) all instruments, chattel paper, documents, securities, money, cash,
letters of credit, warrants, dividends, distributions, contracts, agreements,
contract rights or other property, owned by Debtor or in which Debtor has an
interest, including but not limited to, those which now are or at any time
hereafter will be in the possession or control of Secured Party or in transit by
mail or carrier to or in the possession of any third party acting on behalf of
Secured Party, without regard to whether Secured Party received the same in
pledge, for safekeeping, as agent for collection or transmission or otherwise or
whether Secured Party had conditionally released the same, and the proceeds
thereof, all rights to payment from, and all claims against Secured Party, and
any deposit accounts of Debtor with Secured Party, including all demand, time,
savings, passbook or other accounts and all deposits therein.

-40-

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Cincinnati, Ohio

October 28, 1996