KROLL O GARA CO, PRES14A, 2000-09-19

KROLL O GARA CO
PRES14A, 2000-09-19
MOTOR VEHICLES & PASSENGER CAR BODIES

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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
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[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-12
</TABLE>

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

(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11.

(1) Title of each class of securities to which transaction applies:
Common Stock, $.01 par value
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(2) Aggregate number of securities to which transaction applies:
14,500,000 shares
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$10.15 per share (based upon the book value of Kroll-O'Gara at June 30,
2000 divided by the number of shares to be distributed)
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(4) Proposed maximum aggregate value of transaction:
$147,234,000
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(5) Total fee paid:
$29,447
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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[KROLL-O'GARA LETTERHEAD]

TO OUR SHAREHOLDERS:

You are invited to attend a Special Meeting of Shareholders of The Kroll-O'Gara
Company to be held on , 2000, at a.m. local time, at
.

At the special meeting, you will be asked to consider and vote on two proposals
which, if both are adopted, will result in a series of transactions that split
Kroll-O'Gara into two new public companies, namely, Kroll Risk Consulting
Services, Inc., or KRCS, and The O'Gara Company. The split-up will effectively
unwind the 1997 merger of the former O'Gara Company and Kroll Holdings, Inc. You
will receive approximately 0.38 shares of KRCS common stock and approximately
0.27 shares of O'Gara Company common stock for each share of Kroll-O'Gara common
stock owned by you on the record date for the distribution. The split-up is
structured so that Messrs. Thomas M. O'Gara, Wilfred T. O'Gara and other members
of The O'Gara Company's management will receive no KRCS stock and Mr. Jules B.
Kroll and other members of KRCS' management will receive no O'Gara Company
stock. You will have the same ownership percentage in each of The O'Gara Company
and KRCS after the split-up that you have in Kroll-O'Gara before the split-up.
After the split-up, The Kroll-O'Gara Company will be dissolved.

This document describes the split-up and the proposals we are asking you to
approve. WE URGE YOU TO READ AND CONSIDER CAREFULLY THE INFORMATION PRESENTED,
INCLUDING THAT SET FORTH UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 13.

KRCS has applied to list its common stock on the Nasdaq National Market under
the symbol "KRCS." The O'Gara Company has applied to list its common stock on
the Nasdaq National Market under the symbol "OGAR." Kroll-O'Gara common stock
currently trades on the Nasdaq National Market under the symbol "KROG."

THE BOARD OF DIRECTORS, ACTING ON THE UNANIMOUS RECOMMENDATION OF A SPECIAL
COMMITTEE OF INDEPENDENT DIRECTORS, BELIEVES THE SPLIT-UP IS IN YOUR BEST
INTEREST AND HAS UNANIMOUSLY APPROVED IT AND BOTH OF THE PROPOSALS TO BE
PRESENTED AT THE SPECIAL MEETING. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" BOTH PROPOSALS.

YOUR VOTE IS CRUCIAL. One proposal must be approved by a majority of the
outstanding shares of Kroll-O'Gara common stock. The other proposal must be
approved by a majority of the shares represented at the special meeting and by a
majority of those shares excluding the shares held by Kroll-O'Gara's executive
officers. THE SPLIT-UP WILL NOT TAKE PLACE UNLESS BOTH PROPOSALS ARE APPROVED.

Please complete, sign and return the enclosed proxy card whether or not you plan
to attend the special meeting.

<TABLE>
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Jules B. Kroll Wilfred T. O'Gara
Chairman of the Board Co-Chief Executive Officer
and Co-Chief Executive Officer
</TABLE>

This proxy statement is dated , 2000 and was first mailed to
shareholders on or about , 2000.
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THE KROLL-O'GARA COMPANY
------------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
------------------------

The Kroll-O'Gara Company will hold a Special Meeting of Shareholders at
, in , at local time on ,
2000 to consider:

1. Approving an Agreement and Plan of Reorganization and Dissolution of The
Kroll-O'Gara Company dated as of September 8, 2000 which, when the
transactions contemplated by the Agreement are completed, provides for the
dissolution of The Kroll-O'Gara Company.

2. Authorizing the acquisition of approximately 26% of The O'Gara Company's
common stock by Thomas M. O'Gara.

3. Any other matters that properly come before the special meeting or any
adjournment or postponement of the special meeting.

Kroll-O'Gara shareholders at the close of business on , 2000 are
receiving notice of and only they may vote at the special meeting. Approval of
Proposal 1 above requires the affirmative vote of the holders of a majority of
the outstanding shares of Kroll-O'Gara common stock. Proposal 2 requires
authorization by a majority of the shares of Kroll-O'Gara common stock
represented at the special meeting and a majority of those shares excluding
shares held by Kroll-O'Gara's executive officers.

PROPOSALS 1 AND 2 ARE INTERRELATED. UNLESS BOTH ARE ADOPTED BY THE REQUISITE
SHAREHOLDER VOTES, NEITHER WILL BE IMPLEMENTED. THEREFORE, IT IS VERY IMPORTANT
THAT YOU VOTE. THE BOARD OF DIRECTORS STRONGLY RECOMMENDS A VOTE "FOR" BOTH
PROPOSALS.

Kroll-O'Gara shareholders have dissenters' rights in connection with Proposal 1
above. These rights are described in the accompanying proxy statement.

PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, whether or not you plan to attend the special meeting. If you
attend the special meeting, you may vote in person if you wish, even if you
previously returned your proxy card.

By Order of the Board of Directors

Abram S. Gordon
Secretary
, 2000
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TABLE OF CONTENTS

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SUMMARY TERM SHEET.......................................... 1
The Companies............................................. 1
The Split-Up.............................................. 1
Relationships Between the Companies After the Split-Up.... 5
Differences in Rights of Shareholders..................... 5
Dissenters' Rights........................................ 5
Regulatory Approvals...................................... 6
Shareholder Inquiries..................................... 6
SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL
INFORMATION............................................... 7
RISK FACTORS................................................ 13
THE SPECIAL MEETING......................................... 16
Time and Place; Purpose................................... 16
Proxies................................................... 16
Solicitation of Proxies................................... 16
Record Date and Voting Rights............................. 16
PROPOSALS AND VOTES REQUIRED................................ 17
Proposal 1 -- Approval of the Agreement and Plan of
Reorganization and Dissolution of The Kroll-O'Gara
Company................................................ 17
Proposal 2 -- Authorization of Acquisition of O'Gara
Company Common Stock by Thomas M. O'Gara............... 19
THE SPLIT-UP................................................ 20
Background of the Split-Up................................ 20
Reasons for the Split-Up.................................. 25
Opinion of Financial Advisor.............................. 28
Manner of Effecting the Distribution of KRCS and O'Gara
Company Common Stock................................... 31
Listing and Trading Markets............................... 31
Treatment of Employee Stock Plans in the Split-Up......... 32
Interests of Kroll-O'Gara's Executive Officers, Directors
and Exchanging Shareholders in the Split-Up............ 32
United States Federal Income Tax Consequences............. 35
Federal Securities Law Consequences....................... 37
Regulatory Approvals...................................... 37
Dissenters' Rights........................................ 37
THE REORGANIZATION AND DISSOLUTION AGREEMENT................ 40
Terms of the Split-Up..................................... 40
Representations and Warranties............................ 41
Conduct of Business Pending the Distribution.............. 42
Additional Agreements..................................... 42
Conditions to Consummation of the Split-Up................ 43
Termination............................................... 44
Amendment and Waiver...................................... 44
</TABLE>

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RELATIONSHIPS BETWEEN THE COMPANIES AFTER THE SPLIT-UP..................................................... 44
Tax Sharing Agreement.................................................................................... 44
Cross-Indemnification Agreement.......................................................................... 45
Voice and Data Communications Business................................................................... 45
Securify................................................................................................. 45
THE KROLL-O'GARA COMPANY................................................................................... 46
General.................................................................................................. 46
Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 47
General Information and Recent Developments.............................................................. 47
Market Prices and Dividends.............................................................................. 63
Legal Proceedings........................................................................................ 63
Principal Shareholders and Holdings of Management........................................................ 64
Section 16(a) Beneficial Ownership Reporting Compliance.................................................. 65
THE O'GARA COMPANY......................................................................................... 66
Financing; Dividend Policy............................................................................... 66
Pro Forma Capitalization................................................................................. 67
Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 68
Business................................................................................................. 80
Management............................................................................................... 89
Executive Compensation and Benefit Plans................................................................. 91
Principal Shareholders and Stock Holdings of Management.................................................. 94
Certain Relationships and Related Party Transactions..................................................... 95
KROLL RISK CONSULTING SERVICES, INC. ...................................................................... 96
Financing; Dividend Policy............................................................................... 96
Pro Forma Capitalization................................................................................. 97
Management's Discussion and Analysis of Pro Forma Financial Condition and Pro Forma Results of
Operations............................................................................................ 98
Business................................................................................................. 111
Management............................................................................................... 120
Executive Compensation and Benefit Plans................................................................. 124
Principal Stockholders and Stock Holdings of Management.................................................. 129
Certain Relationships and Related Party Transactions..................................................... 130
DESCRIPTION OF O'GARA COMPANY CAPITAL STOCK................................................................ 131
DESCRIPTION OF KRCS CAPITAL STOCK.......................................................................... 133
COMPARISON OF RIGHTS OF HOLDERS OF O'GARA COMPANY COMMON STOCK AND KRCS COMMON STOCK....................... 135
INDEPENDENT PUBLIC ACCOUNTANTS............................................................................. 139
FUTURE SHAREHOLDER PROPOSALS............................................................................... 139
OTHER BUSINESS............................................................................................. 140
INDEX TO FINANCIAL STATEMENTS.............................................................................. F-1
APPENDIX A: Agreement and Plan of Reorganization and Dissolution........................................... A-1
APPENDIX B: Opinion of Financial Advisor................................................................... B-1
APPENDIX C: Acquiring Person Statement under the Ohio General Corporation Law.............................. C-1
APPENDIX D: Dissenters' Rights Provisions under the Ohio General Corporation Law........................... D-1
</TABLE>

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SUMMARY TERM SHEET

This summary highlights selected information from this proxy statement. It does
not contain all the information that is important to you. You should read this
entire proxy statement carefully.

THE COMPANIES (PAGES 46, 66 AND 94)

THE KROLL-O'GARA COMPANY
9113 LeSaint Drive
Fairfield, Ohio 45014
(513) 881-9800

Kroll-O'Gara is a leading global provider of a broad range of specialized
products and services designed to provide governments, businesses and
individuals with information, analysis, training and products that mitigate
risks. Kroll-O'Gara has a network of over 60 offices in 20 countries and had
1999 revenues of approximately $322 million.

THE O'GARA COMPANY
9113 LeSaint Drive
Fairfield, Ohio 45014
(513) 881-9800

The O'Gara Company is a new subsidiary of Kroll-O'Gara. The corporation formerly
named The O'Gara Company now is Kroll-O'Gara. The new O'Gara Company will be a
public holding company for, and will continue, Kroll-O'Gara's security products
and services business after the split-up described below has been completed. The
O'Gara Company's actual 1999 revenues were approximately $119 million.

KROLL RISK CONSULTING SERVICES, INC.
900 Third Avenue
New York, New York 10022
(212) 593-1000

KRCS also is a new subsidiary of Kroll-O'Gara. KRCS will be a public holding
company for, and will continue, Kroll-O'Gara's investigations and intelligence
business after the split-up has been completed. KRCS' pro forma 1999 revenues
were approximately $203 million.

THE SPLIT-UP (PAGE 20)

GENERAL

The split-up involves a multi-step process designed to separate Kroll-O'Gara
into two new public companies and to eliminate cross-ownership by Kroll-O'Gara's
management -- primarily Jules B. Kroll, on the one hand, and Thomas M. O'Gara
and Wilfred T. O'Gara, on the other hand -- in those companies.

REASONS FOR THE SPLIT-UP (PAGE 25)

The purpose of the split-up is to resolve internal management conflicts by
separating the principal historical Kroll and O'Gara businesses: investigations
and intelligence, and security products and services. The Board of Directors
believes that the separation will permit each business' management to focus
exclusively on its business plan and that it is the best available means to
enhance the future success and efficiency of each.

WHAT YOU WILL RECEIVE IN THE SPLIT-UP (PAGE 31)

You will receive approximately 0.27 shares of O'Gara Company common stock and
approximately 0.38 shares of KRCS common stock for each share of Kroll-O'Gara
common stock owned by you on the record date for the distribution. These numbers
of shares are subject to adjustment based on the number of shares of Kroll-
O'Gara common stock outstanding on that record date. However, we do not expect
any adjustments to be material.

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Immediately after the split-up, we expect the ownership of The O'Gara Company
and KRCS will be approximately as set forth below.

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The O'Gara Company
Thomas M. O'Gara...................... 25.8%
Wilfred T. O'Gara..................... 2.6%
Other O'Gara Shareholder Group
Members............................. 0.6%
Other Shareholders.................... 71.0%

KRCS
Jules B. Kroll........................ 21.8%
Other Kroll Shareholder Group
Members............................. 7.2%
Other Shareholders.................... 71.0%
</TABLE>

Your ownership percentage in each of The O'Gara Company and KRCS after the
split-up will be equal to your ownership percentage in Kroll-O'Gara before the
split-up. As a result, Kroll-O'Gara believes that the value of your combined
ownership interests in the separate companies immediately after the split-up
will be the same as the value of your interest in Kroll-O'Gara immediately
before the split-up.

Differences in the value of each company will, of course, occur -- perhaps
immediately and certainly over time. These differences will result in large part
from each company's financial performance and the market's perception of each
company's current business and future prospects.

You will receive only whole shares of O'Gara Company common stock and KRCS
common stock. Cash will be paid for any fractional shares.

THE SPLIT-UP PROCESS (PAGE 40)

The steps in the split-up will be as follows:

1. Kroll-O'Gara will transfer to KRCS its investigations and intelligence
business, its voice and data communications business and 40% of the common
stock held by it in its subsidiary, Securify Inc. KRCS also will assume and
then repay a portion of Kroll-O'Gara's corporate-level indebtedness and
other liabilities that are not related exclusively to a particular business
group. In consideration, KRCS will issue shares of its common stock to
Kroll-O'Gara.

2. Kroll-O'Gara will transfer to The O'Gara Company its security products and
services business and 60% of its stock of Securify. The O'Gara Company will
assume and then repay the remaining portion of Kroll-O'Gara's
corporate-level indebtedness and other liabilities that are not related
exclusively to a particular business group. In consideration, The O'Gara
Company will issue shares of its common stock to Kroll-O'Gara.

3. After these transfers, Kroll-O'Gara's only assets will be 8,500,000 shares
of KRCS common stock and 6,000,000 shares of O'Gara Company common stock.

4. Messrs. O'Gara and two others who will be executive officers of The O'Gara
Company after the split-up will exchange all of their Kroll-O'Gara common
stock for a portion of the O'Gara Company common stock held by Kroll-O'Gara.
In this proxy statement, we refer to Messrs. O'Gara and these two other
individuals as the "O'GARA SHAREHOLDER GROUP."

5. Mr. Kroll and 16 others who will be executive officers or other members of
management of KRCS or one of its subsidiaries after the split-up will
exchange all of their Kroll-O'Gara common stock for a portion of the KRCS
common stock held by Kroll-O'Gara. In this proxy statement, we refer to Mr.
Kroll and these 16 other individuals as the "KROLL SHAREHOLDER GROUP."

6. Kroll-O'Gara then will distribute the O'Gara Company common stock and the
KRCS common stock still held by it to you and the other remaining holders of
Kroll-O'Gara common stock. After the distribution, The O'Gara Company and
KRCS will be separate, independent public companies.

7. Because the members of the O'Gara Shareholder Group and the members of the
Kroll Shareholder Group will have exchanged their Kroll-O'Gara common stock
before the close of business on the record date for the distribution of
O'Gara Company common

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stock and KRCS common stock, they will not participate in the distribution.

8. Having distributed all its assets and provided for the assumption of its
liabilities, Kroll-O'Gara will be dissolved.

The split-up will be governed by the reorganization and dissolution agreement
attached to this proxy statement as Appendix A. We encourage you to read it
carefully in its entirety.

RECORD AND DISTRIBUTION DATES

We currently expect the record and mailing dates for the distribution of O'Gara
Company common stock and KRCS common stock will be:

Record Date -- As soon as practicable following receipt of shareholder approval
and a favorable tax ruling from the Internal Revenue Service.

Mailing Date -- Ten business days after the record date.

We expect that all of the transactions comprising the split-up, other than the
actual mailing of O'Gara Company and KRCS share certificates, will be completed
on or before the record date for the distribution. That record date will be
delayed if any of the conditions to the split-up have not been satisfied, and
the mailing date will be delayed correspondingly.

Although you will not be required to send in your Kroll-O'Gara stock
certificates, they will be valueless after the split-up because Kroll-O'Gara
will have no assets and will be dissolved. Trading in Kroll-O'Gara common stock
will cease on the record date for the distribution.

VOTES REQUIRED (PAGE 17)

The proposal to approve the reorganization and dissolution agreement must be
approved by the holders of a majority of the outstanding shares of Kroll-O'Gara
common stock entitled to vote at the special meeting. The proposal to authorize
Mr. Thomas O'Gara's acquisition of O'Gara Company common stock must be approved
by a majority of the shares represented at the special meeting and by a majority
of those shares excluding shares held by Kroll-O'Gara's executive officers. This
proposal is designed to comply with Ohio's "control share acquisition" law
because, after the split-up, Mr. O'Gara will own over 20% of The O'Gara
Company's common stock.

Together, the executive officers of Kroll-O'Gara can vote approximately 25.3% of
the shares entitled to vote at the special meeting. Mr. Kroll and Messrs. O'Gara
own in the aggregate approximately 24.8% of the shares entitled to vote at the
special meeting and have agreed with each other to vote "for" both proposals
presented at the meeting. Based upon a unanimous recommendation of the Board, we
expect that all other Kroll-O'Gara executive officers also will vote "for" both
proposals. Because the votes of our executive officers will be excluded from the
second vote calculation relating to Mr. Thomas O'Gara's acquisition of O'Gara
Company common stock and the reorganization and dissolution agreement cannot be
implemented if Mr. O'Gara's acquisition is not approved, as a practical matter
the split-up will be completed only if it is approved by the vote of Kroll-
O'Gara shareholders who are not executive officers.

RECOMMENDATION OF THE BOARD OF DIRECTORS AND ITS SPECIAL COMMITTEE (PAGE 25)

In April 2000 Kroll-O'Gara's Board of Directors decided to explore a separation
of the company's principal businesses. At that time, the Board appointed a
special committee, composed of Kroll-O'Gara's non-employee directors, to
consider proposals to separate the company's businesses and make a
recommendation to the full Board regarding any proposals. The special committee
then retained Bear Stearns & Co. Inc. as its financial advisor and directed it
to work with management to develop a plan to create two separate public
companies.

The special committee has determined that the split-up is fair to and in the
best interests of Kroll-O'Gara's shareholders other than the members of the
O'Gara Shareholder Group and the Kroll Shareholder Group. Based upon the unani-

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mous recommendation of the special committee, the Board of Directors unanimously
recommends that you vote in favor of the proposals to be considered at the
meeting.

OPINION OF FINANCIAL ADVISOR (PAGE 28)

Among the factors considered in deciding to approve the split-up and recommend
it to shareholders, the Board considered Bear Stearns' opinion to the special
committee that the distribution of the shares of The O'Gara Company common stock
and KRCS common stock is fair, from a financial point of view, to the holders of
Kroll-O'Gara common stock, other than the members of the O'Gara Shareholder
Group and the Kroll Shareholder Group.

We have attached Bear Stearns' opinion to this proxy statement as Appendix B.
You should read it carefully in its entirety. Kroll-O'Gara has agreed to pay
Bear Stearns a financial advisory fee of $1,500,000 for its services in
connection with the split-up.

FEDERAL INCOME TAX CONSEQUENCES (PAGE 35)

We expect that neither Kroll-O'Gara nor its shareholders will recognize any gain
or loss for U.S. federal income tax purposes as a result of the split-up, except
in connection with any cash that shareholders receive instead of fractional
shares. Kroll-O'Gara has requested a private letter ruling from the Internal
Revenue Service confirming this tax treatment. This tax treatment will not apply
to any Kroll-O'Gara shareholder who exercises dissenters' rights under Ohio law.

Determining the actual tax consequences of the split-up to you as a taxpayer can
be complicated. The tax treatment will depend on your specific situation and on
many variables not within our control. You should consult your tax advisor for a
full understanding of the split-up's tax consequences.

LISTING AND TRADING MARKETS (PAGE 31)

Kroll-O'Gara's common stock currently trades on the Nasdaq National Market. On
, 2000, the common stock's closing price was $ per share. The
O'Gara Company has applied to list its common stock on the Nasdaq National
Market under the symbol "OGAR." KRCS has applied to list its common stock on the
Nasdaq National Market under the symbol "KRCS."

MANAGEMENTS OF THE O'GARA COMPANY AND KRCS AFTER THE SPLIT-UP (PAGES 89 AND 120)

After the split-up, Mr. Thomas M. O'Gara will be Chairman of the Board of The
O'Gara Company and Mr. Wilfred T. O'Gara will be The O'Gara Company's President
and Chief Executive Officer. Mr. Jules B. Kroll will be Chairman of the Board of
KRCS and Mr. Michael G. Cherkasky will be KRCS' President and Chief Executive
Officer. Of Kroll-O'Gara's other executive officers, Messrs. Abram S. Gordon and
Nicholas P. Carpinello will be executive officers of The O'Gara Company and Mr.
Nazzareno E. Paciotti will be an executive officer of KRCS.

INTERESTS OF KROLL-O'GARA'S OFFICERS AND DIRECTORS IN THE SPLIT-UP (PAGE 32)

Some executive officers and directors of Kroll-O'Gara have interests in the
split-up that are different from your interests. After the split-up, the members
of the O'Gara Shareholder Group will hold only O'Gara Company stock and the
members of the Kroll Shareholder Group will hold only KRCS stock, while all
other shareholders will have shares in both companies. Additionally, some
executive officers and directors have special interests as a result of their
participation in Kroll-O'Gara's benefit plans. Kroll-O'Gara's Board of Directors
was aware of these interests and took them into account in approving the
split-up.

COMPLETING THE SPLIT-UP; RIGHT TO TERMINATE (PAGE 44)

A number of conditions must be met before the split-up can be completed. These
conditions are

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set forth in the reorganization and dissolution agreement. Some of the
conditions are:

1. Kroll-O'Gara shareholders must approve both of the proposals presented at
the special meeting by the requisite votes;

2. Kroll-O'Gara must receive a private letter ruling from the Internal Revenue
Service confirming that the transactions comprising the split-up, other than
the payment of cash for fractional shares and any dissenting shares, will be
tax-free to Kroll-O'Gara and its shareholders;

3. Bear Stearns must not have withdrawn its opinion that the distribution of
the shares of O'Gara common stock and KRCS common stock is fair, from a
financial point of view, to Kroll-O'Gara's shareholders other than the
members of the O'Gara Shareholder Group and the Kroll Shareholder Group;

4. Kroll-O'Gara must receive all required regulatory approvals and certain
waiting periods required by law must have passed;

5. there must be no legal restraint or prohibition of the split-up in effect;
and

6. the Nasdaq National Market must approve the KRCS common stock and the O'Gara
Company common stock for listing.

In addition, Kroll-O'Gara may decide not to proceed with the split-up at any
time before the exchanges of shares by the O'Gara Shareholder Group and the
Kroll Shareholder Group, even if shareholders already have approved it, if the
Board determines, with the concurrence of the special committee, that the
split-up no longer is in the best interests of the company and its shareholders.
For example, Kroll-O'Gara could decide not to proceed if it receives an
acquisition proposal which the Board of Directors determines, with the
concurrence of the special committee, is more favorable to Kroll-O'Gara's
shareholders than the split-up.

Similarly, the special committee may terminate the reorganization and
dissolution agreement at any time prior to the exchanges if, in the exercise of
its fiduciary duty, it determines that termination is in the best interests of
Kroll-O'Gara's shareholders other than the members of the O'Gara Shareholder
Group and the Kroll Shareholder Group.

Also, Kroll-O'Gara, The O'Gara Company and KRCS may mutually agree to terminate
the reorganization and dissolution agreement at any time prior to the exchanges,
and any party may terminate the agreement if the exchanges have not taken place
by June 30, 2001. It is possible, therefore, that we will not complete the
split-up.

RELATIONSHIPS BETWEEN THE COMPANIES AFTER THE SPLIT-UP (PAGE 44)

The O'Gara Company and KRCS will enter into a tax sharing agreement and a
cross-indemnification agreement to provide for an orderly separation of the
businesses and the relationships between the companies as to these matters after
the split-up.

DIFFERENCES IN RIGHTS OF SHAREHOLDERS (PAGE 135)

The Ohio General Corporation Law and Kroll-O'Gara's Articles of Incorporation
and Code of Regulations govern your rights as a shareholder of Kroll-O'Gara.
Ohio law also will govern your rights as a shareholder of The O'Gara Company
after the split-up. KRCS is a Delaware corporation and the Delaware General
Corporation Law and KRCS' Certificate of Incorporation and Bylaws will govern
your rights as a stockholder of KRCS.

DISSENTERS' RIGHTS (PAGE 37)

Ohio law permits holders of Kroll-O'Gara common stock to dissent from the
split-up and to have the fair value of their stock appraised by a court and paid
to them in cash. To do this, holders of dissenting shares must follow required
procedures, including filing notices with us and either abstaining or voting
against the proposal to approve the reorganization and dissolution agreement. If
you dissent and follow the required procedures, you will lose your right to
receive KRCS common stock and O'Gara Company common stock. Instead, your only
right will be

5
<PAGE> 11

to receive the appraised value of your shares of Kroll-O'Gara common stock in
cash. We have attached the applicable provisions of Ohio law related to
dissenters' rights to this proxy statement as Appendix D.

REGULATORY APPROVALS (PAGE 37)

We cannot complete the split-up until a waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired. During the
waiting period the Department of Justice or the Federal Trade Commission could
seek to enjoin the split-up. The required Hart-Scott-Rodino notifications were
filed on , 2000. Although we do not know of any reason why the
Department of Justice or the Federal Trade Commission would seek to enjoin the
split-up, we cannot be certain when or if the split-up will be allowed to
proceed.

SHAREHOLDER INQUIRIES

Kroll-O'Gara shareholders with questions about the distribution and delivery of
stock certificates, or the trading of O'Gara Company common stock or KRCS common
stock during the period between the record date and the mailing date, should
contact the Distribution Agent:

Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Tel: (800) 837-2755

For other questions about the split-up, Kroll-O'Gara or The O'Gara Company,
please contact:

Abram S. Gordon, Esq.
Vice President and General Counsel
The Kroll-O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
Tel: (513) 881-9800

After the mailing date, stockholders with inquiries relating to KRCS should
contact:

Sabrina H. Perel, Esq.
Vice President and General Counsel
Kroll Risk Consulting Services, Inc.
900 Third Avenue
New York, New York 10022
Tel: (212) 593-1000

PLEASE DO NOT SEND IN YOUR KROLL-O'GARA STOCK CERTIFICATES.

6
<PAGE> 12

SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL INFORMATION

INFORMATION PRESENTED

The following pages contain tables which present historical selected
financial information for Kroll-O'Gara and The O'Gara Company and unaudited
summary pro forma financial information for KRCS and The O'Gara Company.

The historical selected financial information, except as discussed below,
is derived from the audited financial statements and notes set forth elsewhere
in this proxy statement. You should read the selected historical financial
information for Kroll-O'Gara and The O'Gara Company together with their full
historical financial statements and their notes. The selected unaudited pro
forma financial information, except as discussed below, is derived from the
unaudited pro forma financial statements and notes set forth elsewhere in this
proxy statement. You should read the selected unaudited pro forma financial
information for KRCS and The O'Gara Company together with the full unaudited pro
forma financial statements and their notes, beginning on page F-100.

Some of the financial information presented in the following tables is
derived from financial statements that are not included in this proxy statement.
Specifically, the selected historical financial information for Kroll-O'Gara as
of December 31, 1997 and for the year ended December 31, 1996 is derived from
Kroll-O'Gara's audited financial statements. The selected historical financial
information for Kroll-O'Gara as of December 31, 1995 and 1996 and for the year
ended December 31, 1995 is derived from Kroll-O'Gara's unaudited financial
statements. The selected historical financial information for The O'Gara Company
as of December 31, 1995, 1996 and 1997 and for the years ended December 31, 1995
and 1996 is derived from The O'Gara Company's unaudited financial statements.

You also should read each company's selected historical financial
information together with its "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which is included elsewhere in this proxy
statement.

For financial reporting purposes, Kroll-O'Gara will be deemed to be the
predecessor to KRCS. Accordingly, the unaudited pro forma financial information
for KRCS is based upon the historical financial statements of Kroll-O'Gara. The
unaudited pro forma financial information for KRCS also reflects the financial
position and results of operations of The O'Gara Company as discontinued
operations (which are not reflected in a pro forma presentation), as well as
other aspects of the reorganization and split-up. Upon receipt of shareholder
approval of the split-up, the historical financial statements of KRCS, which are
the historical financial statements of Kroll-O'Gara, will be restated to
eliminate the financial results of The O'Gara Company and reflect them as
discontinued operations.

Some of the KRCS unaudited pro forma financial information presented in the
following tables is derived from unaudited pro forma financial statements that
are not included in this proxy statement. Specifically, the selected unaudited
pro forma financial information as of December 31, 1995 through 1999 and as of
June 30, 1999 and for the years ended December 31, 1995 and 1996 and for the six
months ended June 30, 1999, are derived from the KRCS unaudited pro forma
financial statements, which are not included in this proxy statement. You also
should read KRCS' pro forma financial information together with its
"Management's Discussion and Analysis of Pro Forma Financial Condition and Pro
Forma Results of Operations" which is included elsewhere in this proxy
statement.

The unaudited pro forma combining condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have been achieved if the
split-up had been consummated as of the beginning of the periods indicated, nor
are they indicative of future financial position or results of operations.
7
<PAGE> 13

OTHER RELEVANT INFORMATION

In reviewing the financial information which follows, you also should know,
and bear in mind, the following:

- Kroll-O'Gara completed acquisitions using the purchase method of
accounting with aggregate purchase prices totalling approximately $26.0
million in 1997, approximately $37.2 million in 1998 and approximately
$20.0 million in 1999. As a result, financial results from period-to-
period are not comparable.

- Kroll-O'Gara's full year 1997, 1998 and 1999 results were impacted
significantly by approximately $7.2 million, $5.7 million and $4.1
million, respectively, of costs relating to mergers which were accounted
for as poolings of interests.

- Kroll-O'Gara's full year 1999 results also were impacted significantly by
approximately $4.4 million of costs relating to a restructuring plan
designed to reduce costs and improve operating efficiencies.

- Prior to October 28, 1996, a number of the entities that currently are a
part of Kroll-O'Gara were not subject to federal and state income taxes.

- Kroll-O'Gara's full year 1999 results were impacted by approximately $1.6
million of costs relating to the failed merger with Blackstone.
Kroll-O'Gara's six months ended June 30, 2000 results were impacted by
$2.0 million of costs relating to the failed merger with Blackstone as
well as $0.7 million of costs relating to the reorganization and split-up
of Kroll-O'Gara.

RECENT DEVELOPMENTS

- On April 28, 1999, Kroll-O'Gara's Board of Directors approved a formal
plan to discontinue operations of Kroll-O'Gara's Voice and Data
Communications Group. In May 2000, due to an inability to agree to terms
of a sale with outside third parties, Kroll-O'Gara reclassified the
results of operations of this Group from discontinued operations to
continuing operations. The financial statements for all prior periods
have been restated to reflect this change.

- On November 15, 1999, Kroll-O'Gara announced that it had entered into a
definitive agreement with Blackstone Capital Partners III Merchant
Banking Fund L.P. pursuant to which shares held by all Kroll-O'Gara
shareholders, other than certain members of management, would be acquired
by Blackstone for $18.00 per share in cash. On April 12, 2000,
Kroll-O'Gara announced that Blackstone had withdrawn its offer to acquire
Kroll-O'Gara shares. Costs associated with the failed merger in the six
months ended June 30, 2000 were approximately $2.0 million and consisted
primarily of fees for attorneys, accountants, travel and other related
charges.
8
<PAGE> 14

THE KROLL-O'GARA COMPANY SELECTED CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $ 94,999 $166,694 $210,324 $272,196 $321,938 $152,041 $163,049
Cost of sales............................ 66,764 118,922 143,213 178,421 203,457 93,553 104,711
-------- -------- -------- -------- -------- -------- --------
Gross profit........................... 28,235 47,772 67,110 93,774 118,481 58,488 58,338
Selling, general and administrative
expenses, including amortization....... 31,886 38,949 49,824 65,167 102,332 42,881 55,541
Asset impairment......................... -- 125 -- -- -- -- --
Restructuring expenses................... -- -- -- -- 4,364 4,364 --
Separation expenses...................... -- -- -- -- -- -- 676
Failed merger related costs.............. -- -- -- -- 1,562 -- 2,000
Merger related expenses.................. -- -- 7,205 5,727 4,069 3,094 438
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)................ (3,651) 8,698 10,081 22,880 6,153 8,149 (317)
Interest expense......................... (2,897) (3,307) (5,244) (4,670) (4,966) (1,875) (2,872)
Other income (expense), net.............. 18 388 (112) 929 98 70 (91)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before minority interest,
provision (benefit) for income taxes,
extraordinary item and cumulative
effect of change in accounting
principle............................ (6,530) 5,779 4,725 19,139 1,286 6,344 (3,280)
Minority interest........................ -- -- (156) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before provision (benefit)
for income taxes, extraordinary item
and cumulative effect of change in
accounting principle................. (6,530) 5,779 4,569 19,139 1,286 6,344 (3,280)
Provision (benefit) for income taxes..... (824) 366 3,305 7,353 2,429 2,773 1,380
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before extraordinary item
and cumulative effect of change in
accounting principle................. (5,706) 5,413 1,264 11,786 (1,144) 3,571 (4,660)
Loss from operations and disposal of
discontinued clinical business, net of
tax.................................... -- (1,274) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle................. (5,706) 4,139 1,264 11,786 (1,144) 3,571 (4,660)
Extraordinary item, net of tax benefit... -- -- (194) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before cumulative effect
of change in accounting principle.... (5,706) 4,139 1,070 11,786 (1,144) 3,571 (4,660)
Cumulative effect of change in accounting
principle.............................. -- -- (360) -- (778) (778) --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........................ $ (5,706) $ 4,139 $ 710 $ 11,786 $ (1,922) $ 2,793 $ (4,660)
======== ======== ======== ======== ======== ======== ========
Basic earnings (loss) per share from
continuing operations.................. $ (0.52) $ 0.45 $ 0.09 $ 0.61 $ (0.05) $ 0.16 $ (0.21)
======== ======== ======== ======== ======== ======== ========
Basic weighted average shares
outstanding............................ 11,019 12,112 14,751 19,337 22,006 21,815 22,267
======== ======== ======== ======== ======== ======== ========
Diluted earnings (loss) per share from
continuing operations.................. $ (0.52) $ 0.43 $ 0.08 $ 0.59 $ (0.05) $ 0.16 $ (0.21)
======== ======== ======== ======== ======== ======== ========
Diluted weighted average shares
outstanding............................ 11,019 12,670 15,560 19,908 22,006 22,548 22,267
======== ======== ======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.......................... $ 5,044 $ 10,626 $ 38,329 $ 84,890 $ 62,042 $ 70,289 $ 53,994
Net property, plant and equipment........ 8,325 11,106 18,189 24,640 38,908 32,681 39,822
Total assets............................. 75,500 93,739 155,687 253,744 299,393 289,513 290,671
Long-term debt, including line-of-credit
and current portion.................... 31,729 31,249 54,239 41,347 66,584 63,594 75,808
Shareholders' equity..................... 11,404 22,874 42,861 144,496 155,868 154,531 147,234
</TABLE>

9
<PAGE> 15

THE O'GARA COMPANY SELECTED COMBINED FINANCIAL INFORMATION(1)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................. $30,773 $75,008 $100,739 $131,690 $118,507 $ 56,962 $ 53,335
Cost of sales......................... 23,579 55,865 72,383 95,290 83,620 38,434 40,347
------- ------- -------- -------- -------- -------- --------
Gross profit........................ 7,194 19,143 28,356 36,400 34,887 18,528 12,988
Selling, general and administrative
expenses, including amortization.... 6,783 11,167 16,668 20,738 29,438 11,119 16,039
Restructuring expenses................ -- -- -- -- 292 292 --
Failed merger related costs........... -- -- -- -- 704 -- 830
Separation expenses................... -- -- -- -- -- -- 280
Merger related expenses............... -- -- 2,933 1,137 145 36 --
------- ------- -------- -------- -------- -------- --------
Operating income (loss)............. 411 7,976 8,755 14,525 4,309 7,081 (4,161)
Interest expense...................... (779) (1,077) (2,967) (2,415) (1,995) (799) (1,167)
Other income (expense), net........... (78) (56) (249) 53 (158) 28 (134)
------- ------- -------- -------- -------- -------- --------
Income (loss) before minority
interest, provision for income
taxes, extraordinary item and
cumulative effect of change in
accounting principle.............. (446) 6,843 5,538 12,163 2,156 6,310 (5,462)
Minority interest..................... -- -- (156) -- -- -- --
------- ------- -------- -------- -------- -------- --------
Income (loss) before provision for
income taxes, extraordinary item
and cumulative effect of change in
accounting principle.............. (446) 6,843 5,382 12,163 2,156 6,310 (5,462)
Provision for income taxes............ -- 518 2,822 5,016 2,303 2,454 327
------- ------- -------- -------- -------- -------- --------
Income (loss) before extraordinary
item and cumulative effect of
change in accounting principle.... (446) 6,325 2,560 7,147 (147) 3,856 (5,789)
Extraordinary item, net of tax
benefit............................. -- -- (194) -- -- -- --
------- ------- -------- -------- -------- -------- --------
Income (loss) before cumulative
effect of change in accounting
principle......................... (446) 6,325 2,366 7,147 (147) 3,856 (5,789)
Cumulative effect of change in
accounting principle................ -- -- -- -- (778) (778) --
------- ------- -------- -------- -------- -------- --------
Net income (loss)..................... $ (446) $ 6,325 $ 2,366 $ 7,147 $ (925) $ 3,078 $ (5,789)
======= ======= ======== ======== ======== ======== ========
Basic and diluted earnings (loss) per
share............................... $ (0.07) $ 1.05 $ 0.39 $ 1.19 $ (0.15) $ 0.51 $ (0.96)
======= ======= ======== ======== ======== ======== ========
Basic and diluted weighted average
shares outstanding.................. 6,000 6,000 6,000 6,000 6,000 6,000 6,000
======= ======= ======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
---------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
------- ------ ------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................. $(2,036) $6,266 $19,102 $49,685 $36,443 $ 42,049 $ 26,496
Net property, plant and equipment......... 3,171 4,925 10,292 13,318 19,159 16,464 19,818
Total assets.............................. 24,674 41,872 77,743 120,802 118,272 119,101 111,028
Long-term debt, including line-of-credit
and current portion..................... 10,529 12,241 26,202 17,155 27,628 28,151 34,014
Shareholder's equity...................... 665 12,749 23,171 68,771 58,098 60,076 46,712
</TABLE>

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

(1) See Note 1 to The O'Gara Company combined financial statements for
discussion regarding the basis of presentation.
10
<PAGE> 16

KROLL RISK CONSULTING SERVICES, INC.
SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION(1)

BALANCE SHEET DATA:
Working capital..................... $ 5,021 $ 2,372 $ 18,815 $ 35,306 $ 25,585 $ 27,580 $ 25,696
Net property, plant and equipment... 5,154 6,181 7,898 11,323 19,748 16,217 20,004
Total assets........................ 50,401 51,867 77,896 135,398 182,795 174,347 179,976
Long-term debt, including
line-of-credit and current
portion........................... 20,456 19,008 31,734 24,191 38,957 35,443 41,794
Shareholders' equity................ 10,313 10,032 16,161 75,061 97,226 94,455 99,053
</TABLE>

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

(1) See the unaudited pro forma combining condensed financial statements
beginning on page F-106 for information regarding the basis of presentation
for the unaudited pro forma financial data as well as for a discussion of
applicable pro forma entries.
11
<PAGE> 17

THE O'GARA COMPANY
SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION(1)

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 JUNE 30, 2000
----------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................ $118,507 $ 53,335
Cost of sales............................................ 83,620 40,347
-------- --------
Gross profit........................................... 34,887 12,988
Selling and marketing expenses........................... 8,854 4,390
General and administrative expenses...................... 20,584 11,649
Restructuring expenses................................... 292 --
Separation expenses...................................... -- 280
Merger related expenses.................................. 145 --
Failed merger related costs.............................. 704 830
-------- --------
Operating income (loss)................................ 4,308 (4,161)
Interest expense......................................... (1,995) (1,167)
Other income (expense)................................... (157) (134)
-------- --------
Income (loss) from continuing operations before
minority interest, provision for income taxes,
extraordinary item and cumulative effect of change
in accounting principle............................. 2,156 (5,462)
Minority interest........................................ 719 1,881
-------- --------
Income (loss) from continuing operations before
provision for income taxes, extraordinary item and
cumulative effect of change in accounting
principle........................................... 2,875 (3,581)
Provision for income taxes............................... 2,591 327
-------- --------
Income (loss) from continuing operations............... $ 284 $ (3,908)
======== ========
Basic and diluted earnings (loss) per share from
continuing operations.................................. $ 0.05 $ (0.65)
======== ========
Basic and diluted weighted average shares outstanding.... 6,000 6,000
======== ========
</TABLE>

BALANCE SHEET DATA:
Working capital............................................................. $ 25,727
Net property, plant and equipment........................................... 19,818
Total assets................................................................ 109,997
Long-term debt, including line-of-credit and current portion................ 34,014
Shareholders' equity........................................................ 44,202
</TABLE>

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

(1) See the unaudited pro forma combining condensed financial statements
beginning on page F-100 for information regarding basis of presentation for
The O'Gara Company unaudited pro forma financial data as well as for a
discussion of applicable pro forma entries.
12
<PAGE> 18

RISK FACTORS

In addition to the other information in this proxy statement, you should
carefully consider the risk factors discussed below in evaluating the split-up.

Some of the information in this proxy statement is forward-looking.
Forward-looking statements can be identified by the use of language such as
"anticipate," "believe," "continue," "estimate," "expect," "may," "will," or
other similar words. These statements discuss future expectations which are
subject to risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors, including those
identified in this section and elsewhere in this proxy statement.

THE RISKS INHERENT IN EACH OF THE O'GARA COMPANY'S AND KRCS' BUSINESSES WILL BE
ACCENTUATED AFTER THE SPLIT-UP. DOWNTURNS IN EACH COMPANY'S BUSINESS WILL BE
MORE LIKELY TO AFFECT NEGATIVELY ITS FINANCIAL RESULTS AND CONDITION.

Each company will have a narrower business focus and business base after
the split-up than does Kroll-O'Gara. Because Kroll-O'Gara carries on a wide
variety of risk-management activities, business fluctuations in any one area
have tended to be smoothed out by opposite fluctuations in another. Similar
fluctuations in the business of either The O'Gara Company or KRCS after the
split-up will have a much more significant impact on that company's results of
operations and cash flows than previously.

EITHER OR BOTH OF THE O'GARA COMPANY AND KRCS MAY BE UNSUCCESSFUL IN DEVELOPING
AND IMPLEMENTING A GROWTH STRATEGY AFTER THE SPLIT-UP.

Each of The O'Gara Company and KRCS will be substantially smaller than
Kroll-O'Gara and will need to grow after the split-up. Therefore, each will need
to develop and implement successfully a strategy of internal and/or external
growth. To the extent that either company's strategy involves acquisitions, that
company may not be able to integrate or manage the acquired businesses so as to
produce returns that justify the investment, and issues relating to acquisitions
may divert management's attention from existing operations. Additionally,
acquisitions by either company using its common stock will be limited for two
years following the split-up in order to preserve the split-up's tax-free
status. If either company cannot generate growth, or manage its growth, there
could be a material adverse effect on its operations and earnings.

THE O'GARA COMPANY AND KRCS EACH WILL NEED CAPITAL FOR GROWTH. WE CANNOT BE SURE
THAT EITHER WILL BE ABLE TO SECURE THE CAPITAL IT WILL NEED OR TO SECURE THAT
CAPITAL ON ACCEPTABLE TERMS.

In order to grow, each company eventually will require additional capital.
Either or both of The O'Gara Company and KRCS may not be able to generate
adequate cash from operations or obtain adequate financing from external sources
for this purpose. Because each company will be smaller than Kroll-O'Gara was
before the split-up, the financing available to each is likely to be more
limited and also may be more expensive. The issuance of additional common stock
by either company to raise capital or to finance acquisitions may result in
dilution to holders of that company's common stock. Additionally, issuances of
common stock by either company will be limited for two years following the
split-up in order to preserve the split-up's tax-free status. Any debt financing
by either The O'Gara Company or KRCS may increase significantly that company's
leverage and may impose restrictive covenants which limit the company's
operations or ability to make future acquisitions.

13
<PAGE> 19

EACH OF THE O'GARA COMPANY AND KRCS WILL NEED TO USE A SIGNIFICANT PORTION OF
ITS CASH FLOW TO SERVICE ITS DEBT.

After the split-up, and based on its June 30, 2000 pro forma balance sheet,
The O'Gara Company expects to have total indebtedness of approximately $34
million and total shareholders' equity of approximately $46 million, resulting
in a debt to equity ratio of approximately 0.74. Based on its June 30, 2000 pro
forma balance sheet, KRCS had as of June 30, 2000 total indebtedness of
approximately $42 million and total stockholders' equity of approximately $101
million, for a debt to equity ratio of approximately 0.41. Each company will
have to use a significant percentage of its cash flow from operations to pay the
principal and interest on its debt, which both will limit the cash available for
existing operations and future growth and will make it more difficult for the
company to obtain additional debt financing for these purposes. This, in turn,
may adversely affect the price of each company's common stock. Additionally,
current credit agreements contain, and future credit agreements will contain,
financial and operating covenants that will limit the ability of each company to
take various corporate actions. These restrictions may limit each company's
ability to pursue future growth plans.

EACH OF THE O'GARA COMPANY'S AND KRCS' STOCK PRICE MAY BE HIGHLY VOLATILE AFTER
THE SPLIT-UP. YOU MAY LOSE ALL OR PART OF THE VALUE OF YOUR STOCK.

There currently is no public market for O'Gara Company common stock or KRCS
common stock. After the split-up, trading prices for each stock will be
established by the public markets, and an active trading market in one or both
stocks may not develop or be sustained. The market price of each stock may
fluctuate significantly due to a number of factors, some of which may be beyond
each company's control, including:

- sale of the company's common stock by shareholders immediately after the
split-up because the company's business profile does not fit their
investment objectives;

- actual or anticipated fluctuations in the company's operating results;

- changes in earnings estimated by securities analysts or the company's
ability to meet those estimates;

- the operating and stock price performance of other comparable companies;

- developments and publicity regarding the company's industry; and

- general economic conditions.

In addition, the stock market in general has experienced extreme volatility
that has often been unrelated to the operating performance of individual
companies. These broad market fluctuations may adversely affect the trading
price of each company's common stock, regardless of actual performance, and
could enhance the effect of any fluctuations that do relate to the company's
operating results.

THE PRICE OF EITHER OR BOTH OF THE O'GARA COMPANY'S AND KRCS' COMMON STOCK MAY
BE DEPRESSED BECAUSE OF EACH COMPANY'S SMALLER CAPITALIZATION.

Because each of The O'Gara Company and KRCS will have smaller market
capitalizations after the split-up, it is possible they will be less widely
followed by analysts and disfavored by institutional investors. The lack of a
significant following by either or both of these two groups may result in lower
trading volumes and depressed or stagnant stock prices, which may be unrelated
to operating performance.

14
<PAGE> 20

THE O'GARA COMPANY'S EARNINGS MAY BE AFFECTED ADVERSELY BY ITS SUBSTANTIAL
OWNERSHIP INTEREST IN SECURIFY INC., WHICH HAS A HISTORY OF SIGNIFICANT LOSSES.

After the split-up, The O'Gara Company will own 60% of the portion of the
common stock of Securify previously held by Kroll-O'Gara and will be required to
include a percentage of any losses incurred by Securify in reporting its income.
Securify had net losses of approximately $1.1 million in 1999 and approximately
$4.7 million in the first six months of 2000. On a pro forma basis, after giving
effect to the split-up, The O'Gara Company's portion of these losses would have
been $0.6 million, or $(0.11) per share, for 1999 and $2.8 million, or $(0.47)
per share, for the first six months of 2000.

THE VOTING POWER OF EACH COMPANY'S MANAGEMENT WILL INFLUENCE SIGNIFICANTLY THE
RESULTS OF SHAREHOLDER VOTES AFTER THE SPLIT-UP. THIS COULD IMPEDE A CHANGE IN
CONTROL AND COULD LIMIT THE PRICE INVESTORS ARE WILLING TO PAY FOR O'GARA
COMPANY COMMON STOCK OR KRCS COMMON STOCK.

After the split-up, The O'Gara Company's executive officers and directors
will control approximately 29% of its voting power, and KRCS' executive officers
and directors will control approximately 29% of its voting power. Therefore, the
management of each company will be able to influence significantly most matters
requiring shareholder approval, including the election of directors. This could
delay or prevent a change in control of each company and have an adverse effect
on the company's stock price.

IF THE SPLIT-UP IS NOT TAX-FREE, KRCS AND/OR THE O'GARA COMPANY WOULD BE LIABLE
FOR THE RESULTING TAXES, WHICH WOULD SIGNIFICANTLY HARM THE BUSINESS OF EACH.

KRCS and The O'Gara Company have agreed to enter into a tax sharing
agreement under which each company will indemnify the other in the event the
split-up is not tax-free as a result of various actions taken by or with respect
to that company or the company's failure to take various actions. KRCS and The
O'Gara Company may not be able to control some of the events that could trigger
this liability. In particular, any acquisition of KRCS or The O'Gara Company by
a third party within two years of the split-up could result in the split-up
becoming a taxable transaction and give rise to the acquired company's
obligation to indemnify the other company for any resulting tax liability. If
either company were to become obligated to indemnify the other for this tax
liability, the indemnifying company's financial condition and business would be
affected materially and adversely. In addition, if the split-up otherwise failed
to qualify for tax-free treatment, each company would be subject to a
substantial tax liability and both companies' financial condition and business
would be affected materially and adversely.

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THE SPECIAL MEETING

The Kroll-O'Gara Company, an Ohio corporation, is mailing this proxy
statement to holders of shares of its common stock, on or about ,
2000, together with a Notice of Special Meeting of Shareholders and a form of
proxy solicited by the Board of Directors of Kroll-O'Gara for use at the special
meeting.

TIME AND PLACE; PURPOSE

The special meeting will be held at , ,
on , 2000, starting at , local time. At
the special meeting, you will be asked to consider and vote on two proposals,
described below under "Proposals and Required Votes," which, if both are adopted
by the required votes, will result in the separation of Kroll-O'Gara into two
public companies.

PROXIES

You may use the accompanying proxy card if you are unable to attend the
special meeting in person or if you wish to have your shares voted by proxy even
if you do attend the special meeting. You may revoke any proxy that you give at
any time before it is exercised, either by submitting a written notice of
revocation or a properly executed proxy of a later date, or by attending the
special meeting and voting in person. You should address any written notice of
revocation and other communications with respect to your proxy to The
Kroll-O'Gara Company, 9113 LeSaint Drive, Fairfield, Ohio 45014, Attention:
Corporate Secretary.

All shares of Kroll-O'Gara common stock represented by properly executed
proxies received prior to or at the special meeting and not revoked before they
are exercised will be voted in accordance with the instructions indicated in
those proxies. If you do not specify how your proxy is to be voted, it will be
voted "FOR" both of the proposals.

SOLICITATION OF PROXIES

Kroll-O'Gara will pay the expenses of solicitation of proxies for the
special meeting. In addition to solicitation by mail, proxies may be solicited
in person by directors, officers and employees of Kroll-O'Gara without
additional compensation and by telephone, teletype, facsimile or similar method.
Kroll-O'Gara also will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxy materials to beneficial
owners and to secure their voting instructions, if necessary. Kroll-O'Gara will
reimburse these record holders for their reasonable expenses in so doing. To
assist in the solicitation of proxies, Kroll-O'Gara has engaged
for a fee estimated at $ , plus reimbursement of
out-of-pocket expenses.

RECORD DATE AND VOTING RIGHTS

RECORD DATE. You have been sent this proxy statement and the enclosed proxy
card, and you are entitled to vote at the special meeting, because you were a
shareholder of record on the close of business on , 2000, the
record date of the special meeting. As of the record date, there were
shares of Kroll-O'Gara common stock outstanding and entitled to
vote.

VOTING RIGHTS. Each share of Kroll-O'Gara common stock entitles its holder
to one vote.

QUORUM. A majority of the shares of Kroll-O'Gara common stock entitled to
vote, represented in person or by proxy, will constitute a quorum at the special
meeting.

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ABSTENTIONS. Shares represented by a properly executed proxy marked
"abstain" as to a proposal will be counted as present for purposes of
determining a quorum for the special meeting but will not be voted on the
proposal as to which you abstain. Therefore, an abstention will have the same
effect as a vote against the proposal.

BROKER NON-VOTES. If your shares are held in the name of your broker, bank
or other nominee, the nominee will contact you seeking instructions on how to
vote. If you do not give your nominee voting instructions as to one or both of
the proposals to be presented at the special meeting, under stock exchange rules
your nominee will not have discretionary authority to vote on that proposal at
the meeting, and the effect will be the same as a vote against the proposal. It
is, therefore, very important that you return your voting instructions promptly
to any nominee holding shares for you.

PROPOSALS AND VOTES REQUIRED

YOUR VOTE IS VERY IMPORTANT. Proposals 1 and 2 below are interrelated. Unless
BOTH are adopted by the required shareholder votes, neither will be implemented
and the split-up will not take place.

For further information about the split-up, please be sure you have read
the sections of this document captioned "Summary," "The Split-Up" and "The
Reorganization and Dissolution Agreement."

PROPOSAL 1 -- APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION AND
DISSOLUTION OF THE KROLL-O'GARA COMPANY

THE PROPOSAL. At the special meeting, you will be asked to approve the
reorganization and dissolution agreement. The transactions which will take place
in the split-up are described in more detail under "The Reorganization and
Dissolution Agreement -- Terms of the Split-Up" on page 39, which you should
read. Briefly,

- all of the assets and liabilities of Kroll-O'Gara will be transferred to
or assumed by Kroll-O'Gara's new subsidiaries, KRCS and The O'Gara
Company, and, in exchange, Kroll-O'Gara will receive shares of KRCS
common stock and shares of O'Gara Company common stock;

- the members of the Kroll Shareholder Group will exchange all of their
Kroll-O'Gara common stock for a portion of the shares of KRCS common
stock held by Kroll-O'Gara, and the members of the O'Gara Shareholder
Group will exchange all of their Kroll-O'Gara common stock for a portion
of the shares of O'Gara Company common stock held by Kroll-O'Gara;

- Kroll-O'Gara will distribute, on a pro rata basis, all remaining shares
of KRCS common stock and O'Gara Company common stock to the remaining
holders of Kroll-O'Gara common stock; and

- Kroll-O'Gara then will be dissolved.

In the distribution, you will receive approximately 0.38 shares of KRCS
common stock and approximately 0.27 shares of O'Gara Company common stock for
each share of Kroll-O'Gara common stock owned by you on the record date for the
distribution. These numbers of shares are subject to adjustment based on the
number of shares of Kroll-O'Gara common stock outstanding on that record date.

The total number of shares of KRCS common stock and O'Gara Company common
stock you will receive will be different from the number of shares of
Kroll-O'Gara common stock you now own because each of KRCS and The O'Gara
Company will have fewer shares of common stock outstanding

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<PAGE> 23

after the split-up than Kroll-O'Gara does now. While Kroll-O'Gara has
approximately 22,300,000 shares of common stock outstanding, KRCS will have
8,500,000 shares outstanding and The O'Gara Company will have 6,000,000 shares
outstanding. The distribution of a smaller number of shares has the effect of a
"reverse stock split" for each company and is intended to result in per share
trading prices which will be higher than that which might have resulted if KRCS
and The O'Gara Company were to have as many shares outstanding after the
split-up as Kroll-O'Gara does now.

Although the number of shares that you will hold in KRCS and in The O'Gara
Company will be different from the number you hold now in Kroll-O'Gara,
Kroll-O'Gara believes that the combined value of the KRCS common stock and the
O'Gara Company common stock which you receive in the distribution will be
equivalent to the value of your Kroll-O'Gara common stock prior to the
distribution because your percentage ownership in each of KRCS and The O'Gara
Company will be the same as your percentage ownership in Kroll-O'Gara
immediately before the split-up.

It is important that you understand: For this purpose, "equivalent value"
refers to the situation immediately after the split-up. It does not take into
consideration any changes in value due to the market's reaction to the split-up
and the market's perception of the value of KRCS and The O'Gara Company after
the split-up. Differences in the value of each company will occur as a result of
the market's perception of each company's current business and future prospects
and each company's financial performance. These changes may happen almost
immediately or they may evolve over time.

After the split-up, Kroll-O'Gara shareholders other than the members of the
Kroll Shareholder Group and the O'Gara Shareholder Group will hold the same
percentage ownership in each of KRCS and The O'Gara Company as they hold in
Kroll-O'Gara immediately prior to the split-up. Based on the number of shares of
Kroll-O'Gara now outstanding, this would be approximately 71%. The members of
the KRCS Shareholder Group will own the remaining approximate 29% in KRCS and
the members of the O'Gara Shareholder Group will own the remaining approximate
29% in The O'Gara Company. The actual percentages will vary depending upon the
number of shares of Kroll-O'Gara common stock that are outstanding immediately
prior to the split-up, but any variance will not be material.

You will receive a cash payment instead of any fractional share of KRCS
common stock or O'Gara Company common stock that otherwise would be issuable to
you.

When the split-up is completed, Kroll-O'Gara will have distributed all its
assets and provided for the assumption of all its liabilities. The
reorganization and dissolution agreement requires Kroll-O'Gara to take all
necessary actions to dissolve as soon as practicable after the distribution.
Your vote on the reorganization and dissolution agreement will be a vote on
Kroll-O'Gara's dissolution as well as on the other components of the split-up.

Kroll-O'Gara shareholders have dissenters' rights under Ohio law in
connection with this proposal. See "The Split-Up -- Dissenters' Rights."

VOTE REQUIRED. This proposal must be approved by the affirmative vote of
the holders of a majority of the shares of Kroll-O'Gara common stock outstanding
on the record date for the special meeting.

Kroll-O'Gara's executive officers own 25.3% of the outstanding shares of
Kroll-O'Gara common stock and their votes will be counted on this proposal. Mr.
Kroll and Messrs. O'Gara, who together own 24.8% of the outstanding shares of
Kroll-O'Gara common stock, have agreed with each other to vote

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<PAGE> 24

"for" this proposal and Proposal 2 below. Directors of Kroll-O'Gara who are not
executive officers owned no shares of Kroll-O'Gara common stock entitled to vote
on the record date.

The Board of Directors unanimously recommends that you vote "FOR" this
Proposal 1.

PROPOSAL 2 -- AUTHORIZATION OF ACQUISITION OF O'GARA COMPANY COMMON STOCK BY
THOMAS M. O'GARA

THE PROPOSAL. After the split-up, Thomas M. O'Gara will own approximately
26% of The O'Gara Company's voting stock. Under Section 1701.831 of the Ohio
General Corporation Law, Ohio's Control Share Acquisition Statute, an Ohio
corporation must obtain shareholder approval for the acquisition by any person
of shares that entitle the person to exercise prescribed levels of the
corporation's voting power in the election of directors, including between 20%
and 33 1/3% of that voting power. The Control Share Acquisition Statute is
described in more detail under "Description of O'Gara Company Capital
Stock -- Provisions Affecting Business Combinations and Changes in Control."

The findings of the Ohio legislature adopting the Statute indicate that it
was designed primarily to protect Ohio corporations against hostile tender
offers, and other unwelcome accumulations of securities, not transactions such
as the split-up which are initiated and recommended by a corporation.
Nonetheless, the operative terms of the Statute are not so limited.

Therefore, we are requesting your authorization of Mr. O'Gara's acquisition
of shares of O'Gara Company common stock which, after the split-up, will entitle
him to direct more than 20% but less than 33 1/3% of The O'Gara Company's voting
power in the election of directors. As required by Section 1701.831, Mr. O'Gara
has delivered an "acquiring person statement" to Kroll-O'Gara. His statement is
attached to this proxy statement as Appendix C.

You are not required, or being asked, to approve Mr. Kroll's acquisition of
over 20% of the KRCS common stock because KRCS is a Delaware corporation and the
acquisition of its shares is not subject to the Control Share Acquisition
Statute. Mr. Kroll's acquisition has been approved by the board of directors of
KRCS in accordance with Delaware law.

VOTES REQUIRED. This proposal must receive the affirmative vote of

(1) a majority of the shares of Kroll-O'Gara common stock represented,
in person or by proxy, at the special meeting, and

(2) a majority of the shares represented at the meeting excluding
shares held by Kroll-O'Gara's executive officers.

Shares voted by Kroll-O'Gara's executive officers may be counted in the first
calculation described above, but not the second.

The Board of Directors unanimously recommends that you vote "FOR" this
Proposal 2.

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<PAGE> 25

THE SPLIT-UP

BACKGROUND OF THE SPLIT-UP

During the first quarter of 1999, disagreements arose between Thomas
O'Gara, vice chairman of Kroll-O'Gara's Board of Directors, and his brother
Wilfred O'Gara, then president and chief operating officer and a director of
Kroll-O'Gara, on the one hand, and Jules Kroll, chief executive officer and
chairman of the Board of Directors, on the other hand, over the appropriate
method of managing Kroll-O'Gara and the strategic directions in which
Kroll-O'Gara should proceed. In March 1999, after a number of discussions among
themselves and consultations with and presentations from management,
Kroll-O'Gara's independent directors promulgated a plan for the future operation
and management of the company, to which senior management agreed.

Thereafter, however, it became evident that the plan had not eliminated the
disagreements between Messrs. O'Gara and Mr. Kroll and, on June 22, 1999, Jules
Kroll, Thomas O'Gara and other senior executive officers of Kroll-O'Gara
unanimously proposed to the Board that it explore strategic alternatives to
enhance shareholder value, including a possible sale of the company. After a
full discussion, the Board unanimously agreed to direct management to explore
strategic alternatives and to retain Bear Stearns & Co., Inc. as its financial
advisor in this connection.

At a meeting on July 22, 1999, Bear Stearns discussed generally with the
Board possible alternatives to enhance shareholder value, including an
investment by a financial sponsor, a sale of the entire company and sales of the
different business units within Kroll-O'Gara. Bear Stearns also discussed the
competitive advantages of and challenges faced by Kroll-O'Gara and the
accounting and tax considerations of the various alternative transactions. Bear
Stearns noted at the meeting that a sale of the company as a whole was most
likely to maximize value for all shareholders because of the substantial
corporate-level tax that would be payable upon the sale of a business group
within Kroll-O'Gara. After a lengthy discussion, the Board directed management
and Bear Stearns to pursue a transaction that would maximize value for all
shareholders.

Beginning in late July 1999, Bear Stearns, on behalf of Kroll-O'Gara,
contacted 34 companies and institutions, including Blackstone Capital Partners
III Merchant Banking Fund L.P., to inquire whether they would be interested in
discussing a transaction. Thirteen of the entities contacted expressed an
interest in exploring a transaction and, after entering into appropriate
confidentiality agreements, received a confidential offering memorandum about
the company.

From August 24 to September 9, 1999, various members of senior management
of Kroll-O'Gara made presentations to nine entities regarding the business and
prospects of Kroll-O'Gara, and Bear Stearns, on behalf of Kroll-O'Gara,
delivered supplemental information to these entities. On September 14 and 16,
1999, Blackstone and two other private equity funds made preliminary proposals
for a transaction with Kroll-O'Gara. Blackstone proposed a leveraged
recapitalization of Kroll-O'Gara as an entity, with the participation of
management.

On September 22, 1999, the Board met to discuss the proposals. At the
meeting, Bear Stearns reviewed with the Board the proposals and the alternatives
available to Kroll-O'Gara and its shareholders. The Board concluded that it was
important that Kroll-O'Gara pursue all of the proposals, although the directors
felt that Blackstone's leveraged recapitalization proposal appeared to be the
best because it was the only proposal that would provide value to all, rather
than only a limited number of, Kroll-O'Gara shareholders.

From the end of September to the end of October 1999, Blackstone and the
two other entities that had made preliminary proposals conducted due diligence
reviews of Kroll-O'Gara and pursued

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<PAGE> 26

discussions with various members of Kroll-O'Gara management and representatives
of Bear Stearns regarding the business and prospects of Kroll-O'Gara.

In addition, Bear Stearns, on behalf of Kroll-O'Gara, received inquiries
from six other entities, all of which entered into confidentiality agreements
and received copies of the confidential memorandum. None of these entities
ultimately made any preliminary proposals. On October 20, 1999 and November 1,
1999, respectively, each of the two other private equity funds that had
submitted a preliminary proposal informed representatives of Bear Stearns and
Kroll-O'Gara that it would not make a definitive proposal and was withdrawing
from the acquisition process. Neither fund indicated why it would not continue
with the acquisition process.

On November 3, 1999, Blackstone delivered a formal proposal to acquire
Kroll-O'Gara in a merger transaction that would be treated as a recapitalization
for financial reporting purposes in which all shareholders, other than Jules
Kroll, some other members of management and American International Group
("AIG"), would receive $20 per share in cash, some members of management would
retain a portion of their shares to ensure that the interests of Kroll-O'Gara's
senior managers would be aligned with those of Blackstone, and Jules Kroll and
AIG would exchange some of their shares of Kroll-O'Gara common stock for
preferred stock. The proposal included a description of the financing that
Blackstone proposed to secure from The Chase Manhattan Bank for the proposed
transaction.

On November 3, 1999, the Board met, along with its legal and financial
advisors, to discuss the Blackstone proposal. Bear Stearns then reviewed the
Blackstone proposal with the Board. Following this discussion, the Board
decided, in order to mitigate any potential conflicts of interest, to form a
special committee of independent directors to evaluate and negotiate the
Blackstone proposal and to make a recommendation to the full Board. The special
committee consisted of Jerry E. Ritter, Marshall S. Cogan, Raymond E. Mabus,
William S. Sessions and Wilfred T. O'Gara. The Board also authorized the special
committee to retain counsel and investment bankers to advise it. The special
committee then met, engaged its legal advisor and engaged Bear Stearns as its
financial advisor because of Bear Stearns' familiarity with Kroll-O'Gara and the
sale process and negotiations to date.

The special committee held several meetings prior to November 11, 1999. At
each meeting, the special committee's legal and financial advisors reported on
the status of the negotiations of both the transaction and the financing
documentation.

On November 11, 1999, Bear Stearns reported to the special committee that,
following extensive conversations with management of Kroll-O'Gara concerning the
anticipated performance of Kroll-O'Gara for the remainder of fiscal 1999,
Blackstone had revised its proposal to reduce the cash price to be paid to the
unaffiliated shareholders to $18 per share and to make the terms of the
preferred stock to be received by Jules Kroll less favorable to him.

On November 14, 1999, the special committee met again and Bear Stearns
reviewed with the committee the financial terms of the transaction. The special
committee then unanimously determined that the Blackstone transaction and the
cash consideration to be paid to the unaffiliated shareholders of Kroll-O'Gara
were fair to, and in the best interests of, those shareholders. In addition, the
special committee unanimously recommended that the Board approve the Blackstone
transaction and recommended its approval to Kroll-O'Gara shareholders.

In March 2000, it became evident to Kroll-O'Gara that, for various reasons,
including management distractions resulting from the merger, announcement of its
financial results for 1999 would be delayed and that these results would be
below the projections previously shared with Blackstone and Chase Manhattan. It
also became apparent that Kroll-O'Gara would not be able to meet a maximum debt
condition required for the Chase Manhattan financing.

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<PAGE> 27

Kroll-O'Gara discussed these developments with Blackstone. On March 27,
2000, Blackstone informed Kroll-O'Gara that it would not proceed with the
transaction on the terms agreed to on November 14, 1999 because of
Kroll-O'Gara's operating results for the fourth quarter of 1999 and the
company's inability to meet the maximum indebtedness condition. Blackstone
proposed reducing from $18 to $16 the cash consideration to be offered to the
company's public shareholders in the merger and proposed revisions to the
financing of the transaction designed to increase the likelihood of its
completion. This new Blackstone proposal was conditioned on Kroll-O'Gara's final
audited financial statements for 1999 showing no material change from the
financial information previously delivered to Blackstone and there being no
material change in the company's operating results for February or March 2000.
Kroll-O'Gara publicly announced the Blackstone proposal but did not accept or
reject it.

On April 12, 2000, Kroll-O'Gara announced that Blackstone had terminated
its offer to acquire the company and that the Board would meet to discuss
alternatives. The Board met on April 13, 2000 to discuss Blackstone's withdrawal
and the reasons for the withdrawal.

The Kroll-O'Gara Board next met on April 17, 2000. At this meeting, Mr.
Ritter offered to become chief executive officer of the company, with Mr. Kroll
continuing as non-executive chairman. The Board did not approve Mr. Ritter's
proposal. The Board then decided that it should explore a separation of the
company's principal operating segments. The Board directed management to explore
structuring a transaction that would establish the Security Products and
Services Group, the Investigations and Intelligence Group and the Information
Security Group (Securify) as stand alone companies as soon as practicable. In
addition, the Board elected Jules Kroll and Wilfred O'Gara as co-chief executive
officers of the company.

Management immediately began to discuss with its professional advisors the
proposed division of Kroll-O'Gara. It quickly became evident that tax
considerations effectively precluded a complete separation of Securify at this
time and attention was focused on division of the other Groups.

On May 8, 2000, the Board met again and appointed Messrs. Ritter, Mabus,
Sessions and Cogan as a special committee to oversee the development of and to
evaluate any proposal regarding the separation of Kroll-O'Gara's businesses and
to make a recommendation to the full Board. The Board determined that the
guiding principle to be followed in developing any proposal was fair treatment
of all shareholders and the creation of two separate publicly-held corporations
with optimal value to shareholders after the proposed transaction. The special
committee was authorized to retain financial and legal advisors to assist it in
evaluating any separation proposals. After discussion concerning several
potential financial advisor candidates which had been contacted since the April
17 Board meeting, the special committee engaged Bear Stearns as its financial
advisor because of Bear Stearns' extensive familiarity with Kroll-O'Gara. Bear
Stearns first worked with Kroll-O'Gara as a co-manager of Kroll-O'Gara's public
offering in May 1998. As described above, Bear Stearns advised Kroll-O'Gara and
the special committee of independent directors in connection with the Blackstone
transaction.

Kroll-O'Gara issued a press release on May 17, 2000 reporting its first
quarter 2000 financial results, the appointment of the special committee and the
retention of Bear Stearns. The company also announced that Mr. Ritter had
resigned as a director.

Following the May 8, 2000 Board meeting, company management, Bear Stearns
and company counsel developed alternative structures for a separation. Although
various structures were considered, the two principal alternatives were a
traditional spin-off, in which all shareholders would receive a pro rata
interest in both business segments, and a hybrid split/spin-off, in which the
investigations and intelligence business would be spun off to the Kroll-O'Gara
shareholders, Mr. Kroll would receive an interest only in the investigations and
intelligence business, Messrs. O'Gara would retain an interest in Kroll-O'Gara
and receive no interest in the investigations and intelligence business and all
other

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shareholders would retain their interest in Kroll-O'Gara and receive a pro rata
interest in the investigations and intelligence business. These alternatives
were presented to the special committee at a meeting held on June 5, 2000. The
special committee noted that the traditional spin-off would result in two
companies in which Mr. Kroll and Messrs. O'Gara would maintain their pro rata
positions and, therefore, might perpetuate management's disagreements.
Accordingly, the special committee elected to focus on the second alternative.
In deciding to proceed with development of the hybrid split/spin-off structure,
the committee noted that it could achieve the division of the company in a
manner that would be tax-free to all shareholders, would completely separate the
ownership interests of Mr. Kroll and Messrs. O'Gara and would treat all other
shareholders equally. Mr. Kroll and Messrs. O'Gara also participated in this
meeting and supported the special committee's approach. The special committee
directed Bear Stearns to conduct financial analyses of the hybrid split/spin-off
separation proposal.

On June 2, 2000, Kroll-O'Gara received a preliminary proposal from a third
party, referred to herein as Company A, for the acquisition of the Security
Products and Services Group for $120 million in cash. The proposal was subject
to various conditions, including negotiation of definitive documents, receipt of
third party approvals, no material adverse change in the business, financial
condition or prospects of the Group, completion of Company A's due diligence and
maintenance by the Group of an unspecified minimum net worth through the
closing.

On June 14, 2000, the special committee retained Dewey Ballantine LLP to
act as legal counsel to the special committee. Dewey Ballantine reviewed with
the special committee the purpose and function of the special committee and the
fiduciary duties of the members of the special committee to the shareholders of
Kroll-O'Gara. At this meeting, Bear Stearns agreed to prepare its preliminary
financial analysis of Kroll-O'Gara and, with the assistance of Kroll-O'Gara
management, prepare and submit a split-up proposal to the special committee by
the end of June 2000.

On June 20, 2000, the special committee met with its advisors to review the
financial analysis and proposals for the split-up of Kroll-O'Gara prepared by
Bear Stearns with the assistance of Kroll-O'Gara management. Bear Stearns and
the special committee discussed the allocation of Securify between KRCS and The
O'Gara Company and also discussed preliminary second quarter financial results.
The special committee concluded that it would need to review the second quarter
earnings results in order to evaluate any split-up proposals and make a
recommendation to the Board of Directors.

On June 26, 2000, the special committee met with its advisors to review its
fiduciary duties and the process in general in connection with making a
recommendation to the Board of Directors regarding a possible split-up of
Kroll-O'Gara. Following this discussion, Bear Stearns discussed with the special
committee its financial analysis of Kroll-O'Gara and the allocation of debt
between KRCS and The O'Gara Company under the split-up proposal. Bear Stearns
also updated the special committee on the status of a proposed Securify
financing. The special committee then again discussed with its advisors
Kroll-O'Gara's preliminary second quarter financial results. Dewey Ballantine
and the special committee next discussed the advisability of requiring that any
split-up proposal include adequate protections for Kroll-O'Gara's unaffiliated
shareholders. The special committee then discussed the preliminary indication of
interest submitted by Company A and a second preliminary indication of interest
submitted by another third party, referred to herein as Company B, concerning a
possible transaction with Kroll-O'Gara. After full discussion, the special
committee concluded that while it would investigate these proposals, it would
not deviate from its current course of action without sufficient assurances from
Company A or Company B regarding its commitment to pursuing a transaction and
financial ability to consummate a transaction.

On July 13, 2000, the special committee met with its legal and financial
advisors to discuss the review process that the Internal Revenue Service will
undertake to issue the private letter ruling

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requested by Kroll-O'Gara in connection with the split-up. The special committee
also discussed the status of the proposed Securify financing. Following this
discussion, Bear Stearns reviewed with the special committee its updated
financial analyses of Kroll-O'Gara and alternatives with respect to the
allocation of debt and of interests in Securify between KRCS and The O'Gara
Company under the split-up proposal. Dewey Ballantine and the special committee
next discussed the advisability of requiring that any split-up proposal include
adequate protections for Kroll-O'Gara's unaffiliated shareholders and the
special committee's fiduciary duties with respect to Kroll-O'Gara's minority
shareholders. After a full discussion, the special committee decided that it
would continue to evaluate the split-up proposal and proceed with its
negotiations with respect to the reorganization agreement.

On July 24, 2000 the special committee met with its advisors to review the
preparations for Kroll-O'Gara's pre-submission hearing with the Internal Revenue
Service. The special committee also reviewed the status of Dewey Ballantine's
negotiations with counsel for Kroll-O'Gara for the inclusion of protections for
minority shareholders in any final reorganization and dissolution agreement. The
special committee discussed with Bear Stearns the status of the Securify
financing and its effect on a possible split-up.

On August 2, 2000, the special committee met to discuss the results of a
pre-submission conference which Kroll-O'Gara had held with the Internal Revenue
Service on July 25, 2000. Dewey Ballantine advised the special committee that as
a result of the pre-submission conference, it was recommended that the
transaction structure be modified from a structure in which the investigations
and intelligence business was spun off and Kroll-O'Gara survived the transaction
to one in which the investigations and intelligence business would be spun off,
a new holding company, The O'Gara Company, would be formed to hold the security
products and services business and would also be spun off and Kroll-O'Gara would
be dissolved after the transaction. Dewey Ballantine explained that this
modification was necessary to attempt to avoid an even more extended review of
the split-up by the Internal Revenue Service. The special committee was advised
that, although there can be no certainty, the original hybrid split/spin-off
structure was expected to be under review by the Internal Revenue Service for
six to nine months, while the revised structure is expected to be under review
for four to six months. The special committee agreed that a less extended review
process under the circumstances was preferred because that would permit the
split-up to be consummated on an earlier date.

On August 7, 2000 the special committee met with its advisors and Nazzareno
Paciotti, the chief financial officer of Kroll-O'Gara, to discuss the status of
the Kroll-O'Gara's quarterly financial statements. On August 10, the special
committee held a telephonic meeting to further discuss Kroll-O'Gara's financial
condition and consider the impact of the financial condition on the split-up. At
that meeting, Mr. Paciotti and representatives of Kroll-O'Gara's independent
auditors, Arthur Andersen, were present by invitation.

The special committee met with its advisors during the morning of August
30, 2000 to review the split-up and the terms and conditions set forth in the
reorganization and dissolution agreement. Prior to the meeting, drafts of the
reorganization and dissolution agreement had been circulated to the members of
the special committee. During the meeting, the special committee recessed
briefly to allow Dewey Ballantine to contact counsel for Kroll-O'Gara to resolve
open issues relating to the reorganization and dissolution agreement. The
special committee reconvened and Dewey Ballantine summarized its discussions
with company counsel. Bear Stearns and the special committee discussed the
status of the third-party indications of interest received by Kroll-O'Gara and
the fact that there had been no developments with respect to such proposals that
would justify a delay in the split-up. Bear Stearns then delivered its oral
opinion, which was subsequently confirmed in writing, to the effect that, as of
August 30, 2000 and based on the assumptions made, matters considered and
limitations on review set

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<PAGE> 30

forth in the opinion, the distribution of the shares of O'Gara Company common
stock and KRCS common stock is fair, from a financial point of view, to the
shareholders of Kroll-O'Gara other than the members of the Kroll Shareholder
Group and the O'Gara Shareholder Group.

After a full discussion and subject to the reorganization and dissolution
agreement being executed in substantially the form presented to and discussed
with the special committee, the special committee unanimously determined (a) to
recommend that the Board of Directors approve the reorganization and dissolution
agreement, (b) that the terms of the reorganization and dissolution agreement
are fair to, and in the best interests of, Kroll-O'Gara and its shareholders
other than the members of the Kroll Shareholder Group and the O'Gara Shareholder
Group and (c) to recommend that the Board of Directors recommend approval of the
reorganization and dissolution agreement by the shareholders of Kroll-O'Gara.
The special committee also ratified the filing with the IRS of Kroll-O'Gara's
ruling request.

At a meeting later on August 30, 2000, the Board received the report and
recommendation from the special committee. The Board then determined, in light
of the report and recommendation and subject to the terms and conditions set
forth in the reorganization and dissolution agreement, that it was in the best
interests of the shareholders of Kroll-O'Gara other than the members of the
O'Gara Shareholder Group and the Kroll Shareholder Group for Kroll-O'Gara to
enter into the agreement in the form presented to the Board, with such changes
as might be agreed by Kroll-O'Gara's co-chief executive officers. The Board also
determined that the split-up is fair to, and in the best interest of the
non-exchanging shareholders, and resolved to recommend to the shareholders of
Kroll-O'Gara that they approve the proposals to be considered at the meeting.
The actions taken by the Board at the August 30, 2000 meeting were approved
unanimously by the directors who were present. Mr. Thomas M. O'Gara did not
attend the meeting but subsequently expressed his support and approval of those
actions. After its terms were finalized, the reorganization and dissolution
agreement was executed by the parties effective September 8, 2000.

REASONS FOR THE SPLIT-UP

As described above, subject to the reorganization and dissolution agreement
being executed in substantially the form presented to and discussed with the
special committee, the members of the special committee (a) unanimously
recommended that the Board of Directors approve the reorganization and
dissolution agreement, (b) determined that the terms of the reorganization and
dissolution agreement are fair to, and in the best interests of, Kroll-O'Gara
and its shareholders other than the members of the Kroll Shareholder Group and
the O'Gara Shareholder Group and (c) determined to recommend that the Board of
Directors recommend approval of the reorganization and dissolution agreement by
the shareholders of Kroll-O'Gara.

In reaching its recommendation to the Board of Directors, the special
committee considered a number of factors including the following:

1. The special committee's familiarity with Kroll-O'Gara's business,
financial condition, results of operations, prospects and the nature of
the industries in which Kroll-O'Gara operates.

2. The fact that Bear Stearns had, on behalf of Kroll-O'Gara, previously
conducted an extensive market search of potential bidders and that, at
the end of this process, Blackstone was the only remaining interested
party that had submitted a viable proposal and that the Blackstone
proposal subsequently had been withdrawn. In addition, the special
committee considered the contacts and expressions of interest from third
parties described in "Background of the Split-Up" above. In light of
these facts, the special committee determined that a renewed effort at
this time to sell

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<PAGE> 31

Kroll-O'Gara or a substantial portion of its assets was unlikely to
maximize value for Kroll-O'Gara shareholders.

3. The fact that since the announcement of the termination of the
Blackstone transaction, the closing price per share of Kroll-O'Gara
common stock had decreased from $8.98 on April 12, 2000 to $4.88 on
August 28, 2000.

4. The financial presentations and the oral opinion of Bear Stearns,
subsequently confirmed in writing, that, as of that date and based upon
and subject to the matters described in the written opinion, the
distribution of the shares of O'Gara Company common stock and KRCS
common stock is fair, from a financial point of view, to all of
Kroll-O'Gara shareholders other than the members of the Kroll
Shareholder Group and the O'Gara Shareholder Group. The Bear Stearns
opinion, which states the procedures followed, assumptions made, matters
considered and limitations on the review undertaken by Bear Stearns, is
described below under "Opinion of Financial Advisor." The full opinion
is attached as Appendix B to this proxy statement and is incorporated in
this section by reference. You are urged to, and should, read the
opinion of Bear Stearns carefully in its entirety.

5. The fact that the transactions comprising the split-up are intended to
be tax-free to Kroll-O'Gara and its shareholders and consummation of the
split-up is conditioned upon receipt of a private letter ruling from the
Internal Revenue Service to the effect that the split-up will be
tax-free to Kroll-O'Gara and its shareholders.

6. The fact that the structure of the split-up will result in a complete
separation of the holdings of Mr. Kroll and Messrs. O'Gara and,
accordingly, should resolve the management disagreements described above
and allow management of both companies to devote more attention and
focus on the respective businesses and the potential adverse
consequences of continuing to operate the businesses on a combined
basis.

7. The structure of the transaction and the terms and conditions of the
reorganization and dissolution agreement, the cross-indemnification
agreement and the tax sharing agreement, including, among other things,
the following:

- the special committee's ability to terminate the reorganization and
dissolution agreement prior to the exchange if the special committee
determines, in the exercise of its fiduciary duty after consultation
with its advisors, that such termination is in the best interests of
the unaffiliated shareholders of Kroll-O'Gara;

- the fact that Mr. Kroll has agreed for a period of five years from
the exchange date to limit his acquisitions of additional KRCS
common stock to 2% of the total number of shares of KRCS outstanding
immediately following the distribution date and to refrain from
joining or forming any group, as defined in the Securities Exchange
Act of 1934, for the purpose of, or which has the effect of,
acquiring control of KRCS or opposing an effort by another person to
obtain control of KRCS, unless the acquisition or group activity is
approved in advance by a majority of the independent directors of
KRCS;

- the fact that Thomas M. O'Gara has agreed for a period of five years
from the exchange date to limit his acquisitions of additional The
O'Gara Company common stock to 2% of the total number of shares of
The O'Gara Company common stock outstanding immediately following
the distribution date and to refrain from joining or forming any
group, as defined in the Exchange Act, for the purpose of, or which
has the effect of, acquiring control of The O'Gara Company or
opposing an effort by another person to obtain control of The O'Gara

26
<PAGE> 32

Company, unless the acquisition or group activity is approved in
advance by a majority of the independent directors of The O'Gara
Company;

- the fact that the parties have agreed not to take and Kroll-O'Gara,
The O'Gara Company and KRCS have agreed not to fail to take any
action, either before or after the exchanges by the members of the
O'Gara Shareholders Group and the KRCS Shareholder Group, which
action or failure to act is prohibited by terms of the tax sharing
agreement or that otherwise reasonably could be expected to affect
adversely the qualification of the transactions comprising the
split-up as tax-free; and

- the fact that any amendment to the reorganization and dissolution
agreement must be approved in advance by the special committee.

8. The fact that some executive officers and directors of Kroll-O'Gara have
interests in the split-up that are different from the interests of
unaffiliated Kroll-O'Gara shareholders. For instance after the split up,
The O'Gara Company's executive officers and directors will control
approximately 29% of its voting power, and KRCS' executive officers and
directors will control approximately 29% of its voting power. In
addition, as a result of the split-up Mr. Thomas M. O'Gara would
increase his voting power from approximately 10.8% in Kroll-O'Gara to
approximately 25.8% in The O'Gara Company and Mr. Kroll would increase
his voting power from approximately 12.9% in Kroll-O'Gara to
approximately 21.8% in KRCS. In the view of the special committee,
however, any negative effect from this increase in control of voting
power as a result of the split-up is mitigated by the fact that the two
largest shareholders, Mr. Kroll and Mr. Thomas M. O'Gara, have agreed to
the minority shareholder protection provisions described above.

9. The facts that the reorganization and dissolution agreement is to be
approved by the holders of a majority of Kroll-O'Gara's outstanding
shares and that a second proposal on which the split-up is contingent
must be approved by the holders of a majority of the shares represented
at the special meeting excluding the shares held by Kroll-O'Gara's
executive officers.

10. The financial condition of KRCS and The O'Gara Company following the
split-up, based on management financial projections.

11. The likelihood that the split-up would be consummated.

12. The potential risk that the split-up would not be consummated due to
the failure to satisfy the conditions to the split-up.

13. The fact that the Kroll-O'Gara shareholders other than the members of
the O'Gara Shareholder Group and the Kroll Shareholder Group will have
the same percentage ownership in each of The O'Gara Company and KRCS
immediately after the split-up as they do in Kroll-O'Gara immediately
prior to the split-up.

The members of the special committee evaluated the split-up in light of
their knowledge of the business, financial condition and prospects of
Kroll-O'Gara, and based upon the advice of financial and legal advisors.

In view of the variety of factors considered in connection with the
evaluation of the reorganization, the special committee did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
specific factors considered in reaching its conclusion. The special committee
did consider each such material factor in arriving at its decision, which was
based on the totality of the information presented to and considered by it.
Individual directors may have given different weights to different factors.

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<PAGE> 33

OPINION OF FINANCIAL ADVISOR

Bear Stearns has acted as the financial advisor to the special committee of
the Board of Directors of Kroll-O'Gara in connection with the split-up. Bear
Stearns is an internationally recognized investment banking firm that has
substantial experience in transactions similar to the split-up. Bear Stearns, as
part of its investment banking business, is continuously engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and other
purposes. The special committee of the Board of Directors of Kroll-O'Gara
retained Bear Stearns based on its extensive familiarity with Kroll-O'Gara and
its qualifications, expertise and reputation in providing advice to companies
with respect to transactions similar to the split-up.

In connection with Bear Stearns' engagement as financial advisor, the
special committee requested that Bear Stearns evaluate the fairness, from a
financial point of view, of the distribution to be received by the shareholders
of Kroll-O'Gara, other than the members of the KRCS Shareholder Group and the
O'Gara Shareholder Group, which shareholders are referred to collectively as the
Unaffiliated Shareholders, in the split-up. On August 30, 2000, Bear Stearns
rendered its oral opinion, which opinion was confirmed in writing on September
8, 2000, to the effect that, as of August 30, 2000 and based on and subject to
the assumptions, limitations and other matters described in the opinion, the
distribution to be received in the split-up by the Unaffiliated Shareholders was
fair, from a financial point of view, to those holders.

THE FULL TEXT OF BEAR STEARNS' OPINION, WHICH SETS FORTH THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS APPENDIX B TO, AND IS INCORPORATED BY REFERENCE IN,
THIS PROXY STATEMENT. THIS SUMMARY OF THE OPINION IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE FULL TEXT OF THE OPINION. KROLL-O'GARA SHAREHOLDERS ARE
URGED TO CAREFULLY READ THE OPINION IN ITS ENTIRETY. THE OPINION WAS DIRECTED TO
THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF KROLL-O'GARA FOR THEIR
INFORMATION IN CONNECTION WITH THEIR CONSIDERATION OF THE SPLIT-UP AND RELATES
ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE DISTRIBUTION TO BE
RECEIVED BY THE UNAFFILIATED SHAREHOLDERS. THE OPINION DOES NOT ADDRESS ANY
OTHER ASPECT OF THE SPLIT-UP OR ANY RELATED TRANSACTION, DOES NOT ADDRESS
KROLL-O'GARA'S UNDERLYING BUSINESS DECISION TO EFFECT THE SPLIT-UP, DOES NOT
CONSTITUTE A RECOMMENDATION TO THE SPECIAL COMMITTEE OR THE BOARD OF DIRECTORS
OF KROLL-O'GARA, AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS
TO ANY MATTER RELATING TO THE SPLIT-UP.

In preparing its opinion to the special committee, Bear Stearns performed a
variety of financial and comparative analyses, including those described below.
The summary of Bear Stearns' analyses is not a complete description of the
analyses underlying its opinion. The preparation of a fairness opinion is a
complex process and involves various judgments and determinations as to the most
appropriate and relevant assumptions and financial analyses and the application
of those methods to the particular circumstances involved. Bear Stearns' opinion
is therefore not necessarily susceptible to partial analysis or summary
description. In arriving at its opinion, Bear Stearns made qualitative judgments
as to the significance and relevance of each analysis and factor considered by
it and did not attribute particular weight to any one analysis or factor. Bear
Stearns did not form an opinion as to whether any individual analysis or factor,
positive or negative, considered in isolation, supported or failed to support
its opinion. Accordingly, Bear Stearns believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors,
or of the summary described above, without considering all analyses and factors
or the narrative description of the analyses, could create a misleading or
incomplete view of the processes underlying its analyses and opinion.

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<PAGE> 34

The analyses performed by Bear Stearns, particularly those based on
estimates, are not necessarily indicative of actual values or actual future
results, which may be significantly more or less favorable than those results
suggested by the analyses. The analyses were prepared solely as part of Bear
Stearns' analysis of the fairness, from a financial point of view, of the
distribution to the Unaffiliated Shareholders.

OPINION OF BEAR STEARNS. Bear Stearns rendered to the special committee of
the Board of Directors of Kroll-O'Gara its oral opinion on August 30, 2000,
which oral opinion was subsequently confirmed in writing as of September 8,
2000, that as of August 30, 2000 and based upon and subject to the assumptions,
limitations and other matters set forth in such opinion and in light of the fact
that the distribution will result in the Unaffiliated Shareholders owning the
same percentage of KRCS and The O'Gara Company as the Unaffiliated Shareholders
own of Kroll-O'Gara prior to the exchanges by the members of the Kroll
Shareholder Group and the O'Gara Shareholder Group, the distribution of shares
of O'Gara Company common stock and KRCS common stock is fair from a financial
point of view to the Unaffiliated Shareholders. The Bear Stearns opinion was
given as of August 30, 2000, which oral opinion was confirmed in writing as of
September 8, 2000, and should not be construed as applying to any subsequent
date.

In arriving at its opinion, Bear Stearns:

- reviewed the reorganization and dissolution agreement, and its
attachments;

- reviewed Kroll-O'Gara's Annual Report to Shareholders and Annual Report
on Form 10-K for the years ended December 31, 1997 through 1999, its
Quarterly Reports on Form 10-Q for the periods ended June 30, 1999 and
2000 and its Reports on Form 8-K for the three years as of August 30,
2000;

- reviewed certain operating and financial information, including
projections for the four years ended December 31, 2003, provided by
management relating to Kroll-O'Gara's, KRCS' and The O'Gara Company's
businesses and prospects;

- met with certain members of Kroll-O'Gara's senior management to discuss
Kroll-O'Gara's, KRCS' and The O'Gara Company's businesses, operations,
historical and projected financial results and future prospects;

- reviewed the historical prices, trading multiples and trading volume of
the common shares of Kroll-O'Gara;

- reviewed publicly available financial data, stock market performance data
and trading multiples of companies whose operations we considered
generally relevant in evaluating Kroll-O'Gara, KRCS and The O'Gara
Company;

- performed discounted cash flow analyses based on the projections for
KRCS' business, excluding the Voice and Data Communications Business, and
The O'Gara Company's business furnished to Bear Stearns;

- reviewed the projected pro forma financial results, financial condition
and capitalization of KRCS and The O'Gara Company giving effect to the
split-up; and

- conducted such other studies, analyses, inquiries and investigations as
we deemed appropriate.

Bear Stearns has relied upon, without independent verification, the
accuracy and completeness of the financial and other information, including
without limitation the projections, provided to Bear Stearns by Kroll-O'Gara and
Bear Stearns has further relied upon the assurances of the senior management of
Kroll-O'Gara that they are unaware of any facts that would make the information
and

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<PAGE> 35

projections provided to Bear Stearns incomplete or misleading. With respect to
Kroll-O'Gara's, KRCS' and The O'Gara Company's projected financial results, Bear
Stearns has assumed that they have been reasonably prepared on bases reflecting
the best currently available estimates and judgments of the senior management of
Kroll-O'Gara as to the expected future performance of Kroll-O'Gara, KRCS and The
O'Gara Company.

In arriving at its opinion, Bear Stearns has not performed or obtained any
independent appraisal of the assets or liabilities, contingent or otherwise, of
Kroll-O'Gara, KRCS or The O'Gara Company, nor has Bear Stearns been furnished
with any such appraisals. Bear Stearns assumed that the split-up will qualify as
a tax-free reorganization pursuant to the Internal Revenue Code. Bear Stearns
assumed that the split-up will be consummated in accordance with the terms of
the reorganization and dissolution agreement without any restrictions,
conditions, amendments or modifications that collectively would have a material
adverse effect on KRCS or The O'Gara Company.

In connection with the delivery of its opinion, Bear Stearns discussed with
the special committee, among other things, Bear Stearns' views of (a) in the
case of both KRCS and The O'Gara Company, the potential benefits of resolving
the impasse in Kroll-O'Gara's executive ranks that has had a negative impact on
operating and stock price performance in recent quarters and (b) in the case of
both KRCS and The O'Gara Company, the potential benefits of heightened focus,
accountability and independence of management and employees that should result
from the split-up. Bear Stearns did note that, in the case of both KRCS and The
O'Gara Company, additional costs might result as an outcome of operating the two
divisions as publicly traded independent companies.

No limitations were imposed by Kroll-O'Gara or the special committee upon
Bear Stearns with respect to the investigations made or the procedures followed
by Bear Stearns, except that Bear Stearns was not requested or authorized to
solicit, and did not solicit, any proposals for the acquisition of stock or
assets of Kroll-O'Gara or any of its subsidiaries following the termination of
the Blackstone transaction. Bear Stearns made no determination as to whether any
such proposals could be obtained, if solicited, after the termination of the
Blackstone transaction.

In the ordinary course of business, Bear Stearns may actively trade the
debt and equity securities of Kroll-O'Gara for its own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in those securities. Bear Stearns has previously rendered investment
banking and financial advisory services unrelated to the split-up to
Kroll-O'Gara for which Bear Stearns received customary compensation.

Pursuant to an amended letter agreement dated May 15, 2000, entered into by
the special committee of the Board of Directors of Kroll-O'Gara and Bear
Stearns, Kroll-O'Gara has agreed to pay Bear Stearns (1) a fee of $100,000 per
month commencing on June 15, 2000, payable in arrears on the 15th of every
month, until either a transaction, as defined in the agreement, is consummated
or a separation of KRCS and The O'Gara Company is effected, with a limit set on
cumulative monthly fees of $600,000, (2) an additional fee of $500,000 upon the
rendering of the opinion by Bear Stearns and (3) a fee upon consummation of the
split-up equal to $1,500,000, less a credit for fees previously paid pursuant to
(1) and (2) above. Kroll-O'Gara has agreed to reimburse Bear Stearns for all
out-of-pocket expenses reasonably incurred by Bear Stearns, including reasonable
fees and disbursements of counsel, and of other consultants and advisors
retained by Bear Stearns with the prior written consent of Kroll-O'Gara, in
connection with its engagement. Kroll-O'Gara has agreed to indemnify Bear
Stearns and related persons against liabilities in connection with the
engagement of Bear Stearns, including liabilities under the federal securities
laws.

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MANNER OF EFFECTING THE DISTRIBUTION OF KRCS AND O'GARA COMPANY COMMON STOCK

After the exchanges of shares by the members of the KRCS Shareholder Group
and the members of the O'Gara Shareholder Group, Kroll-O'Gara will deliver all
remaining shares of KRCS common stock and O'Gara Company common stock owned by
it to Fifth Third Bank, as Distribution Agent. Kroll-O'Gara then will declare
the close of business on the day of the exchanges as the record date for the
distribution. We expect that approximately ten business days after the record
date the Distribution Agent will begin mailing share certificates to holders of
Kroll-O'Gara common stock on the record date for the distribution. You will
receive approximately 0.38 shares of KRCS common stock and approximately 0.27
shares of O'Gara Company common stock for every share of Kroll-O'Gara common
stock owned by you on the record date. The exact number of shares of KRCS common
stock and O'Gara Company common stock distributed to you will depend on the
number of shares of Kroll-O'Gara common stock outstanding on that record date.

No fractional shares of KRCS common stock or O'Gara Company common stock
will be issued to you. The Distribution Agent will aggregate fractional shares
into whole shares and sell them in the open market at then prevailing prices on
behalf of holders who otherwise would be entitled to fractional shares. These
persons then will receive a cash payment in the amount of their pro rata share
of the total sale proceeds, net of brokerage fees. We expect the sales to be
made as soon as practical after the record date for the distribution. No
interest will be paid on the proceeds, and none of Kroll-O'Gara, KRCS, The
O'Gara Company or the Distribution Agent can guarantee any minimum sale price
for these shares.

You will not be required to pay any cash or other consideration for the
shares of KRCS common stock and O'Gara Company common stock that are distributed
to you. You need not surrender your certificates for shares of Kroll-O'Gara
common stock or take any other action in order to receive the distribution.

LISTING AND TRADING MARKETS

Kroll-O'Gara's common stock currently trades on the Nasdaq National Market
under the symbol "KROG."

KRCS has applied to list its common stock on the Nasdaq National Market
under the symbol "KRCS," and The O'Gara Company has applied to list its common
stock on the Nasdaq National Market under the symbol "OGAR." Trading of KRCS
common stock and O'Gara Company common stock is expected to begin on a "when
issued" basis on the record date for the distribution.

There currently is no public trading marking for KRCS common stock or
O'Gara Company common stock. We cannot predict the prices at which these stocks
will trade, either on a "when-issued" basis prior to the distribution or after
the distribution. In particular, until each stock is fully distributed and an
orderly market develops, trading prices may fluctuate significantly and may, at
any time, be higher or lower than the price that would be expected for a fully
distributed issue. The prices at which KRCS common stock and O'Gara Company
common stock trade will be determined by the market and may be influenced by
many factors, including -- among others -- the depth and liquidity of the market
for each stock, each company's financial performance, investor perceptions of
each company's business and prospects and of the industry in which it operates,
and general economic and market conditions.

Trading in Kroll-O'Gara common stock will cease on the record date for the
distribution.

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TREATMENT OF EMPLOYEE STOCK PLANS IN THE SPLIT-UP

Kroll-O'Gara has two stock option plans, the 1996 Stock Option Plan and the
2000 Stock Option Plan for Employees, under which employees of Kroll-O'Gara and
its subsidiaries hold options to purchase Kroll-O'Gara common stock. Each plan
provides that it and all unexercised options granted under it terminate on the
date of a transfer of all or substantially all the assets of Kroll-O'Gara to one
or more successor corporations, unless the successor corporations agree to
continue the plan and assume all obligations under it. KRCS and The O'Gara
Company will not be continuing these plans. Instead, each is adopting new plans.
Therefore, both existing plans and all outstanding options will terminate when
Kroll-O'Gara delivers its shares of KRCS common stock and O'Gara Company common
stock to the Distribution Agent.

Kroll-O'Gara also is obligated to issue shares of its common stock to
employees of three companies acquired by Kroll-O'Gara, including Kroll Holdings,
Inc., which had stock option plans that were assumed by Kroll-O'Gara in the
acquisitions. To the extent these options, or the plans under which they were
granted, do not terminate on or before the record date for the distribution,
Kroll-O'Gara will obtain the consent of all option holders to the acceleration
of the vesting of their options and to the termination of their options
immediately prior to that record date.

Kroll-O'Gara has an employee stock purchase plan. This plan is inactive and
will be terminated by the Board of Directors prior to the split-up.

Kroll-O'Gara also has a stock incentive plan under which 14 current
employees hold shares of restricted stock that vest incrementally on a monthly
basis through March 2002. As of September 5, 2000, 13,813 shares, of a total of
39,500 shares originally issued to these employees, were unvested. Approximately
820 shares vest each month. The reorganization and dissolution agreement
provides that all remaining unvested shares will vest immediately prior to the
exchanges of shares by the members of the O'Gara Shareholder Group and the Kroll
Shareholder Group.

INTERESTS OF KROLL-O'GARA'S EXECUTIVE OFFICERS, DIRECTORS AND EXCHANGING
SHAREHOLDERS IN THE SPLIT-UP

Some of the executive officers and directors of Kroll-O'Gara, as well as
members of the Kroll Shareholder Group and O'Gara Shareholder Group, have
interests in the split-up that are in addition to their interests as
shareholders of Kroll-O'Gara generally.

After the split-up, Messrs. O'Gara and the other members of the O'Gara
Shareholder Group will hold only O'Gara Company common stock and Mr. Kroll and
the other members of the Kroll Shareholder Group will hold only KRCS common
stock, while all other shareholders will hold shares in both companies. As a
result, the ownership positions of each member of the O'Gara Shareholder Group
and the Kroll Shareholder Group in their respective companies will increase in
comparison to their ownership positions in Kroll-O'Gara and the potential
benefits and detriments of their share ownership will be different than will be
the case for other shareholders.

The table below lists each member of the O'Gara Shareholder Group and each
member of the Kroll Shareholder Group. It also shows the number of shares of
Kroll-O'Gara common stock which will be exchanged by each person in the
split-up; the number of shares of either O'Gara Company common

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stock or KRCS common stock expected to be held by each immediately after the
split-up; and the applicable ownership percentage in each case.

<TABLE>
<CAPTION>
PRE-SPLIT-UP(1)(2) POST-SPLIT-UP(1)(2)
KROLL-O'GARA SHARES -----------------------------------------------
NAME (%) O'GARA COMPANY SHARES (%) KRCS SHARES (%)
---- ----------------------- -------------------------- ---------------
<S> <C> <C> <C>
Thomas M. O'Gara..... 2,418,219(10.7%) 1,547,402(25.8%) --
Wilfred T. O'Gara.... 243,042(1.1%) 155,521(2.6%) --
Nicholas P.
Carpinello......... 56,867 36,389 --
Abram S. Gordon...... 100 64 --
Jules B. Kroll....... 2,879,991(12.7%) -- 1,851,449(21.8%)
Michael G.
Cherkasky.......... 34,310 -- 22,057
Nazzareno E.
Paciotti........... 15,966 -- 10,264
Michael D.
Shmerling.......... 440,000(1.9%) -- 282,861(3.3%)
David Buchler........ 127,913 -- 82,231
Simon Freakley....... 72,766 -- 46,779
Robert Macdonald..... 47,082 -- 30,267
E. Norbert Garrett... 2,000 -- 1,286
Marc S. Curvin....... 9,968 -- 6,408
Tedd Avey............ 63,699 -- 40,950
Frank Holder......... 46,287 -- 29,756
Michael A. Beber..... 41,543 -- 26,707
David Holloway....... 2,000 -- 1,286
James R. Bucknam..... 2,000 -- 1,286
Richard Rosetti...... 16,000 -- 10,286
Michael J. Slattery,
Jr................. 31,415 -- 20,195
Sabrina H. Perel..... 100 -- 64
</TABLE>

---------------
(1) Less than 1% unless otherwise indicated.
(2) Percentages are based on 22,610,000 shares of Kroll-O'Gara common stock, the
approximate number of shares that are expected to be outstanding immediately
prior to the exchange (which assumes the exercise or cash-out of
approximately 300,000 "in-the-money" options), and on 6,000,000 shares of
O'Gara Company common stock and 8,500,000 shares of KRCS common stock to be
outstanding after the split-up. Except for 2,650 shares included for each of
Messrs. Cherkasky and Paciotti, the numbers of shares shown do not include
any shares that may be acquired upon option exercise.

Other than Mr. Kroll, all of the executive officers and directors of
Kroll-O'Gara and the exchanging shareholders listed above hold exercisable
options to purchase shares of Kroll-O'Gara common stock. These options were
issued either under Kroll-O'Gara's 1996 Stock Option Plan or under a plan of a
company acquired by Kroll-O'Gara. The options have exercise prices ranging from
$0.52 to $34.88 per share. On , 2000 the closing price for Kroll-O'Gara
common stock was $ per share. Based upon this price, the realizable values
(that is, the stock price less the exercise price) of in-the-money options held
by Kroll-O'Gara's executive officers and directors were as follows:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES REALIZABLE VALUE
---- ---------------- ----------------
<S> <C> <C>
Michael G. Cherkasky......................... 90,529
Marc S. Curvin............................... 5,435
Nazzareno E. Paciotti........................ 90,529
</TABLE>

To the extent not exercised, all of these options will terminate no later than
the time at which Kroll-O'Gara delivers its shares of KRCS common stock and
O'Gara Company common stock to the Distribution Agent. See "Treatment of
Employee Stock Plans in the Split-Up." Moreover, except as

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<PAGE> 39

described below, each member of the O'Gara Shareholder Group and each member of
the Kroll Shareholder Group has agreed, at the option of Kroll-O'Gara, to
receive a cash-out payment from Kroll-O'Gara in lieu of exercising his or her
options, or to sell, or dispose of beneficial ownership of, any shares of
Kroll-O'Gara common stock acquired as a result of any option exercise after the
date of the reorganization and dissolution agreement and the receipt of a
favorable private letter ruling from the IRS and before the date of his or her
exchange of Kroll-O'Gara common stock for either O'Gara Company common stock or
KRCS common stock. If Kroll-O'Gara elects to have a shareholder sell shares
received upon exercise of options rather than cash out such options, and the
aggregate amount received for such shares is less than the product of (x) the
average closing price of Kroll-O'Gara common stock over the twenty trading days
preceding the date of receipt of the IRS private letter ruling (the "Average
Price") and (y) the number of shares sold, Kroll-O'Gara will pay to the
shareholder an amount equal to the amount by which (1) the product of the
Average Price and the number of shares sold exceeds (2) the aggregate amount
received by such exchanging shareholder from the sale of such shares. The
"pre-split-up" shares of Kroll-O'Gara common stock listed in the left column of
the table above include for each of Mr. Cherkasky and Mr. Paciotti 2,650 shares
that he will acquire through option exercise after the date of the
reorganization and dissolution agreement and the receipt of the private letter
ruling and will exchange for shares of KRCS common stock.

As of September 5, 2000 Michael G. Cherkasky, president of Kroll-O'Gara's
Investigations and Intelligence Group and a director of Kroll-O'Gara, and
Michael J. Slattery, Jr., a member of the Kroll Shareholder Group held 2,375 and
1,333 shares, respectively, of restricted Kroll-O'Gara common stock that were
awarded under Kroll-O'Gara's 1998 Stock Incentive Plan and were scheduled to
vest incrementally through early 2002. As described above under "Treatment of
Employee Stock Plans in the Split-Up," all of their unvested restricted shares
will vest immediately prior to the exchange of shares by the members of the
Kroll Shareholder Group.

Kroll-O'Gara's Outside Directors' Deferred Compensation Plan entitles
non-employee directors to defer all or a portion of their directors' fees into
bookkeeping accounts which are credited with "phantom" units representing shares
of Kroll-O'Gara common stock. The split-up will cause a "change in control"
under the terms of the Plan. As a result, the value of the units in each
director's account on the record date for the distribution, based on the closing
price of Kroll-O'Gara common stock on that date, must be paid in cash. Messrs.
Marshall S. Cogan and William S. Sessions currently participate in the Plan. As
of , 2000, their accounts were credited with units representing
and shares of Kroll-O'Gara common stock, respectively.

Kroll-O'Gara's employment agreements with Mr. Cherkasky will be assigned to
and assumed by KRCS at the time of the split-up. Kroll-O'Gara's employment
agreements with Messrs. Kroll and Paciotti will be terminated or assigned to
KRCS, and its employment agreements with Messrs. Thomas M. and Wilfred T.
O'Gara, Carpinello and Gordon will be terminated or assigned to The O'Gara
Company. Each of these executives has waived his right to any severance or other
payments as a result of the assignment or termination of his respective
agreement. After the split-up, each of KRCS and The O'Gara Company expects to
enter into new employment agreements with those executive officers whose
employment agreements have not already been assumed. See "The O'Gara
Company -- Executive Compensation" and "KRCS -- Executive Compensation."

The Board was aware of the interests of the directors and executive
officers and took them into account in approving the reorganization and
dissolution agreement.

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<PAGE> 40

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the expected material federal income
tax consequences of the split-up. It does not address the effects of the
split-up to the members of the O'Gara Shareholder Group or the Kroll Shareholder
Group or under any state, local or foreign tax laws. Your tax treatment may vary
depending on your particular situation. Some Kroll-O'Gara shareholders,
including insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, persons who do not hold Kroll-O'Gara stock as capital assets,
employees of Kroll-O'Gara and individuals who might hold Kroll-O'Gara stock as
part of a straddle or conversion transaction, may be subject to special rules
not discussed below.

The summary below is intended for your general information only. You should
consult your tax advisor with respect to the specific tax consequences of the
split-up to you, including the effects of United States federal, state and
local, and foreign and other tax rules, and the effect of possible changes in
tax laws.

Kroll-O'Gara has requested a private letter ruling from the Internal
Revenue Service regarding the United States federal income tax consequences of
the split-up. We expect the ruling will provide that the transfer by
Kroll-O'Gara of its assets to, and the assumption of its liabilities by, KRCS
and The O'Gara Company in the split-up will qualify as tax-free transactions to
Kroll-O'Gara, KRCS, The O'Gara Company and the shareholders of each under
Sections 368(a)(1)(D) or 351(a) of the Internal Revenue Code, and the exchange
and the distribution by Kroll-O'Gara of KRCS common stock and O'Gara Company
common stock to holders of Kroll-O'Gara common stock will qualify as tax-free
transactions to Kroll-O'Gara, KRCS, The O'Gara Company and the shareholders of
each under Section 355 or 361 of the Internal Revenue Code. Additionally, the
requested ruling is expected to provide that:

(1) you will not recognize income, gain or loss, and will not be required
to include any amount as taxable income, solely as a result of the
receipt of KRCS common stock and O'Gara Company common stock in the
distribution, except as described below in connection with cash
received instead of fractional shares;

(2) assuming that you hold your Kroll-O'Gara common stock as a capital
asset on the distribution date, your holding period for the KRCS
common stock and O'Gara Company common stock received in the
distribution will include the period during which you have held your
Kroll-O'Gara common stock;

(3) your tax basis in your Kroll-O'Gara common stock immediately before
the distribution will be apportioned, based upon relative fair market
values at the time of the distribution, between the KRCS common stock
and the O'Gara Company common stock you receive in the distribution,
including any fractional share to which you are entitled; and

(4) any cash you receive instead of a fractional share of KRCS common
stock or O'Gara Company common stock will be treated as if you had
received the fractional share as part of the distribution and then
sold it to Kroll-O'Gara. You will recognize gain or loss equal to the
difference between the cash received and the portion of the tax basis
in the KRCS common stock or the O'Gara Company common stock that is
allocable to the fractional share. The gain or loss will be capital
gain or loss if you held the fractional share as a capital asset at
the time of distribution.

This tax treatment will not apply to you if you exercise dissenters' rights
in connection with the split-up and are paid the "fair cash value" of your
shares of Kroll-O'Gara common stock. In that case, you will recognize gain or
loss equal to the difference between the amount you are paid and your tax

35
<PAGE> 41

basis in the shares. The gain or loss will be capital gain or loss if you hold
your shares as a capital asset at the time of payment.

Treasury Regulations require each holder of Kroll-O'Gara common stock who
receives KRCS common stock and O'Gara Company common stock in the distribution
to attach to his or her federal income tax return for the year in which the
distribution occurs a detailed statement setting forth appropriate information
in order to show the tax-free nature of the distribution. Kroll-O'Gara will send
you the information necessary to comply with this requirement, as well as
information with respect to the allocation of tax basis between KRCS common
stock and O'Gara Company common stock.

The private letter ruling is generally binding on the IRS. However, the
ruling will be based on various factual representations and assumptions, as well
as on undertakings to which Kroll-O'Gara and certain of its shareholders have
agreed. We are not aware of any facts or circumstances that would cause the
representations and assumptions to be untrue or incomplete in a material
respect. If, however, any of those factual representations or assumptions were
untrue or incomplete in a material respect, or any undertaking were not complied
with, or the facts on which the ruling is based were materially different from
the facts at the time of the distribution, the ruling received from the IRS
might be revoked in whole or in part, retroactively.

If the distribution fails to qualify as a tax-free distribution under
Section 355 of the Code, then Kroll-O'Gara will recognize gain equal to the
difference between the aggregate fair market values of the KRCS common stock and
O'Gara Company common stock and Kroll-O'Gara's adjusted tax basis in that stock.
If Kroll-O'Gara were to recognize gain on the distribution, that gain and the
resulting tax liability likely would be very substantial. Furthermore, if the
distribution were not to qualify as a tax-free distribution under Section 355 of
the Code, each Kroll-O'Gara shareholder who receives shares of KRCS common stock
and O'Gara Company common stock in the distribution generally would recognize
gain (or loss) from the exchange of Kroll-O'Gara common stock to the extent the
fair market value of the KRCS common stock and O'Gara Company common stock, plus
cash instead of a fractional share, received exceeds (or is less than) that
shareholder's basis in the Kroll-O'Gara common stock.

Section 355(e), which was added to the Code in 1997, generally provides
that a company that distributes shares of one or more subsidiaries in a
transaction that is otherwise tax-free will incur federal income tax liability
if 50% or more, by vote or value, of the capital stock of (1) the distributing
company or (2) one or more of the distributed subsidiaries, is acquired by one
or more persons acting pursuant to a plan or series of related transactions that
includes the distribution. There is a presumption that any such acquisition of
the distributing company or one or more of the distributed subsidiaries that
occurs within two years before or after the distribution is pursuant to a plan
or series of related transactions that includes the distribution. Because of
this presumption, shifts in the stock ownership of Kroll-O'Gara during the
two-year period prior to the distribution would be presumed to be related to the
distribution and could impact KRCS or The O'Gara Company if aggregated with
stock ownership changes following the distribution. However, the presumption may
be rebutted by establishing that the distribution and the acquisition are not
part of a plan or series of related transactions.

Among the representations made by Kroll-O'Gara to the IRS in connection
with the requested tax ruling is the representation that the distribution is not
part of such a plan or series of related transactions. If KRCS or The O'Gara
Company were to undergo a 50% ownership shift, particularly if that 50%
ownership shift occurred within two years after the distribution date, there can
be no assurance that the IRS will not assert that the ownership shift occurred
pursuant to a plan or series of related transactions and, therefore, that the
distribution is taxable under Section 355(e). If the distribution were taxable
solely under Section 355(e), under proposed regulations, Kroll-O'Gara would
recognize gain equal to the difference between the fair market value of the
common stock of the company that had the

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<PAGE> 42

50% ownership shift and Kroll-O'Gara's adjusted tax basis in that stock at the
time of the distribution. That gain and the resulting tax liability would be
very substantial. However, in this case, holders of Kroll-O'Gara stock would not
recognize gain or loss as a result of the distribution.

Under United States federal income tax laws, KRCS and The O'Gara Company
generally would be jointly and severally liable for Kroll-O'Gara's federal
income taxes resulting from the distribution being taxable. As summarized below
under "Relationships between the Companies After the Split-Up -- Tax Sharing
Agreement," arrangements exist between KRCS and The O'Gara Company relating to
tax sharing and other tax matters, including indemnification by KRCS and The
O'Gara Company of each other with respect to the failure of the distribution to
be tax-free. However, neither KRCS nor The O'Gara Company will indemnify
Kroll-O'Gara shareholders for any taxes or other losses if the distribution
fails to be tax-free.

FEDERAL SECURITIES LAW CONSEQUENCES

The shares of KRCS common stock and O'Gara Company common stock received by
Kroll-O'Gara shareholders in the split-up have been registered by KRCS and The
O'Gara Company under the Securities Act of 1933 and, generally, will be freely
transferable. If, however, you are an "affiliate" of Kroll-O'Gara prior to the
split-up or of KRCS or The O'Gara Company after the split-up, you may resell the
KRCS common stock or O'Gara Company common stock you receive in the split-up
only in compliance with the volume, manner-of-sale and notice requirements of
Rules 144 and 145 under the Securities Act of 1933. You may be deemed to be an
affiliate of Kroll-O'Gara, KRCS or The O'Gara Company if you control, are
controlled by, or are under common control with, that company. Officers,
directors and principal shareholders are often deemed affiliates of a company.

Under Rules 144 and 145, an affiliate may sell KRCS common stock or O'Gara
Company common stock in ordinary broker's transactions. The maximum number of
shares which may be sold in a three-month period is the greater of 1% of the
company's then outstanding common stock or the average weekly reported trading
volume in the company's common stock during the four calendar weeks preceding
the sale. In addition, an affiliate of KRCS or The O'Gara Company may not sell
shares of the company's common stock under Rules 144 and 145 until the company
has been subject to the reporting requirements of the Securities Exchange Act of
1934 for at least 90 days. KRCS and The O'Gara Company each expect to become
subject to those reporting requirements at the time the split-up is completed.

REGULATORY APPROVALS

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the
split-up may not be completed until certain information has been submitted to
the Antitrust Division of the Department of Justice and to the Federal Trade
Commission and until specified waiting period requirements have been satisfied.
The required Hart-Scott-Rodino filings were made on , 2000. Either the
DOJ or the FTC may request additional information or commence litigation under
the antitrust laws to enjoin the split-up during a 30-day waiting period which
expires on , 2000 but which can be extended under certain
circumstances.

DISSENTERS' RIGHTS

The following is a summary of the principal steps which you must take to
perfect dissenters' rights under Section 1701.85 of the Ohio General Corporation
Law. Because this is a summary, it does not contain all the information that may
be important to you if you want to exercise dissenters' rights. You should
review this discussion and Section 1701.85 carefully if you wish to exercise
dissenters' rights, or

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<PAGE> 43

wish to preserve the right to do so, since failure to comply with the required
procedures will result in the loss of those rights. The full text is Section
1701.85 is attached as Appendix D to this proxy statement.

If you dissent from Proposal 1 to approve the reorganization and
dissolution agreement and perfect dissenters' rights under Section 1701.85, and
if the split-up is completed, you will not receive shares of KRCS common stock
and O'Gara Company common stock in the distribution. Instead, you will have the
right to receive the "fair cash value" of your Kroll-O'Gara shares. The "fair
cash value" of your Kroll-O'Gara shares may be more or less than the value of
the KRCS common stock and O'Gara Company common stock which you would own after
the split-up if you did not dissent. If you are considering dissenting, you
should consult with your legal advisor. If your Kroll-O'Gara shares are held of
record in the name of another person, you should contact the record owner. Only
record holders may exercise dissenters' rights under Ohio law.

To exercise dissenters' rights, you must:

(1) not vote in favor of Proposal 1, and

(2) file with Kroll-O'Gara, no later than 10 days after the special
meeting, a written demand for payment of the fair cash value of your
shares of Kroll-O'Gara common stock. The written demand must state your
address, the number and class of shares, and the amount you claim to be
the fair cash value of the shares.

If you vote in favor of Proposal 1, you will waive your dissenters' rights.
However, a vote against the Proposal or a failure to vote does not, alone,
constitute a demand. If you dissent and demand payment, you must do so as to all
the shares of Kroll-O'Gara common stock owned by you.

Once you have filed a demand for payment, it cannot be withdrawn without
Kroll-O'Gara's consent.

If you comply with (1) and (2) above, Kroll-O'Gara may send you a request
for your Kroll-O'Gara stock certificates. You must deliver the certificates to
Kroll-O'Gara within 15 days from the date of the request. Kroll-O'Gara will
endorse the certificates with a legend indicating that you have demanded payment
and then will return them to you promptly. If you do not deliver the requested
certificates to Kroll-O'Gara within the 15 day period, Kroll-O'Gara may, by
notice to you during the following 20 days, terminate your dissenters' rights,
unless otherwise ordered by a court.

If you and Kroll-O'Gara cannot agree on the fair cash value of your
Kroll-O'Gara shares, within three months after delivery of your demand for
payment, either you or Kroll-O'Gara may file a complaint in the Court of Common
Pleas of Butler County, Ohio. After a hearing, the court will determine whether
you are entitled to payment. If you are, the court subsequently will determine
the amount of that payment and order that it be made.

All rights you have in your shares, including voting, dividend and
distribution rights, will be suspended when you deliver your demand for payment
to Kroll-O'Gara. Any dividend or distribution made while your rights are
suspended, including the KRCS common stock and O'Gara Company common stock
distribution, will be credited against the fair cash value of the shares. If
your right to receive fair cash value for your shares subsequently terminates
other than by Kroll-O'Gara's purchase of the shares, your shareholder rights
will be restored and you will receive the distribution of KRCS common stock and
O'Gara Company common stock.

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<PAGE> 44

You will lose your dissenters' rights if:

- you vote in favor of Proposal 1;

- you do not send in your demand for payment within the specified time
period;

- you fail to deliver the certificates for your shares to Kroll-O'Gara upon
request;

- Kroll-O'Gara abandons, or is barred from completing, the split-up; or

- you and Kroll-O'Gara do not come to an agreement as to the fair cash
value of your shares and neither you nor Kroll-O'Gara files a court
complaint within the specified time period.

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<PAGE> 45

THE REORGANIZATION AND DISSOLUTION AGREEMENT

The description of the reorganization and dissolution agreement set forth
below summarizes the material terms of the agreement. We encourage you to read
the complete agreement, a copy of which is included as Appendix A to, and is
incorporated by reference in, this proxy statement.

TERMS OF THE SPLIT-UP

THE SPLIT-UP. The parties to the reorganization and dissolution agreement
are Kroll-O'Gara, KRCS, The O'Gara Company, the members of the Kroll Shareholder
Group and the members of the O'Gara Shareholder Group. The following
transactions will take place in connection with the split-up.

First, Kroll-O'Gara will contribute to KRCS all of the outstanding stock
that it holds in its direct and indirect subsidiaries which operate
Kroll-O'Gara's investigations and intelligence, and voice and data
communications, businesses; 40% of the stock of Securify Inc. that it holds; and
other specified assets. In exchange, KRCS will issue to Kroll-O'Gara enough
shares of its common stock to bring to 8,500,000 the number of shares of KRCS
common stock held by Kroll-O'Gara.

At the same time, Kroll-O'Gara will contribute to The O'Gara Company all of
the outstanding stock that it holds in its direct and indirect subsidiaries
which operate Kroll-O'Gara's security products and services business; 60% of the
stock of Securify that it holds; and other specified assets. In exchange, The
O'Gara Company will issue to Kroll-O'Gara enough shares of its common stock to
bring to 6,000,000 the number of shares of O'Gara Company common stock held by
Kroll-O'Gara.

After these transfers, Kroll-O'Gara's only assets will be the stock of KRCS
and The O'Gara Company.

In connection with the transfers, KRCS and The O'Gara Company will assume,
and subsequently will draw on new credit facilities to repay, Kroll-O'Gara's
outstanding indebtedness under its current bank credit facility and the
principal, interest and prepayment penalty on Kroll-O'Gara's Senior Notes due
2004. KRCS will assume and then repay approximately 55.1% and The O'Gara Company
will assume and then repay approximately 44.9% of this indebtedness, up to $70.0
million. To the extent the total amount exceeds $70.0 million, KRCS will assume
and then repay approximately 58.5% and The O'Gara Company will assume and then
repay approximately 41.5% of the excess. These two items of indebtedness
totalled approximately $69.3 million at June 30, 2000. In addition, KRCS will
assume approximately 58.5% and The O'Gara Company will assume approximately
41.5% of Kroll-O'Gara's other liabilities, including contingent liabilities,
that are not related exclusively to a particular business group.

KRCS intends to sell Kroll-O'Gara's voice and data communications business
as soon as possible. If this business is sold before the split-up is completed,
KRCS will receive the net proceeds of the sale and will be responsible for the
related expenses and liabilities when assets and liabilities are allocated in
the split-up.

Second, Mr. Kroll and the other members of the Kroll Shareholder Group will
transfer to Kroll-O'Gara all of their shares of Kroll-O'Gara common stock in
exchange for shares of KRCS common stock held by Kroll-O'Gara. Messrs. O'Gara
and the other members of the O'Gara Shareholder Group will transfer to
Kroll-O'Gara all of their Kroll-O'Gara common stock in exchange for shares of
O'Gara Company stock. The exact number of shares of KRCS common stock and O'Gara
Company common stock to be received by the members of each Shareholder Group
will be equal to the product of a fraction, the numerator of which is the number
of shares of Kroll-O'Gara common stock now held by all members of both
Shareholder Groups and the denominator of which is the total number of shares of
Kroll-O'Gara common stock actually outstanding at the time of the exchanges,
multiplied by 8,500,000

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<PAGE> 46

and 6,000,000 shares, respectively. We expect these will be approximately 29% of
the shares of KRCS common stock and O'Gara Company common stock, respectively.

Third, after the exchanges described above, but on the same day as the
exchanges, Kroll-O'Gara will deliver the remaining KRCS common stock and O'Gara
Company common stock that it holds to the Distribution Agent and will declare
the record date for the pro rata distribution of that stock to the holders of
Kroll-O'Gara common stock as of the close of business on that date. The members
of the KRCS Shareholder Group and the O'Gara Shareholder Group will not
participate in the distribution because they will not be holders of Kroll-O'Gara
common stock as of the close of business on the record date for the
distribution.

The effect of the distribution will be that, immediately after the
distribution, the shareholders of Kroll-O'Gara other than the O'Gara Shareholder
Group and the Kroll Shareholder Group will own in the aggregate the same
percentage of the common stock of each of The O'Gara Company and KRCS as they
owned of the common stock of Kroll-O'Gara immediately prior to the exchanges.

No fractional shares of KRCS common stock or O'Gara Company common stock
will be issued in the distribution. Instead, we will pay each shareholder who
would otherwise have been entitled to a fractional share of KRCS common stock or
O'Gara Company common stock a ratable amount of the aggregate net proceeds from
the sale of all fractional interests.

TREATMENT OF OUTSTANDING WARRANTS AND OPTIONS. Former shareholders of, and
consultants and others related to, two companies acquired by Kroll-O'Gara hold
warrants which now may be exercised to purchase Kroll-O'Gara common stock. To
the extent these warrants do not either terminate prior to the record date for
the distribution or become exercisable for both O'Gara Company common stock and
KRCS common stock, Kroll-O'Gara will obtain the warrant holders' consents to
acceleration of the exercisability of the warrants and either their exercise for
both O'Gara Company common stock and KRCS common stock or the cash-out of the
warrants. For information with respect to the treatment of outstanding options,
see "The Split-Up -- Treatment of Employee Stock Plans in the Split-Up."

EXPENSES OF THE SPLIT-UP. Approximately 58.5% of the costs and expenses of
the split-up will be assumed and paid by KRCS and approximately 41.5% of these
costs and expenses will be assumed and paid by The O'Gara Company. We currently
expect the total costs of the split-up will be approximately $ million.

EFFECTIVE TIME. We will complete the split-up as promptly as practicable
after the satisfaction or waiver of the conditions set forth in the
reorganization and dissolution agreement.

THE DISSOLUTION. As soon as practicable after the distribution of the KRCS
common stock and O'Gara Company common stock, Kroll-O'Gara will file a
Certificate of Dissolution with the Ohio Secretary of State and will take all
other actions necessary to dissolve and terminate its corporate existence.

REPRESENTATIONS AND WARRANTIES

The reorganization and dissolution agreement contains various
representations and warranties of the parties. Those relate, among other things,
to the matters identified below, some of which are subject to specified
exceptions.

CORPORATE STATUS. The organization, good standing, qualification and
capitalization of Kroll-O'Gara, KRCS and The O'Gara Company are as
described in the reorganization and dissolution agreement.

ABSENCE OF MATERIAL UNTRUE STATEMENTS. There are no material untrue
statements in this proxy statement or in the registration statements filed
by KRCS and The O'Gara Company with the SEC for the shares of KRCS common
stock and O'Gara Company common stock to be distributed.

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<PAGE> 47

OTHER MATTERS. The reorganization and dissolution agreement also includes
representations and warranties by each member of the Kroll Shareholder
Group and each member of the O'Gara Shareholder Group. Each represents that
he has the authority to enter into the agreement, that he owns his
Kroll-O'Gara common stock free and clear of any undisclosed liens or
restrictions on transfer and that the agreement does not conflict with any
other agreement to which he is a party.

CONDUCT OF BUSINESS PENDING THE DISTRIBUTION

Prior to the distribution of KRCS common stock and O'Gara Company common
stock, Kroll-O'Gara, KRCS and The O'Gara Company will conduct their respective
businesses in all material respects only in the ordinary course and in a manner
consistent with past practice. Each company will use commercially reasonable
efforts to maintain its properties and facilities, to retain its key employees,
to maintain its material assets and to maintain present relationships with its
customers and others having business relations with it. Among other things,
without the prior consent of the other parties to the reorganization and
dissolution agreement, and except as contemplated by that agreement or the tax
sharing agreement entered into by KRCS and The O'Gara Company, the companies
will not:

(1) declare any dividends, make any distributions of assets to shareholders
or repurchase any stock;

(2) issue additional shares of common stock, except as a result of
exercises of Kroll-O'Gara's outstanding stock options and warrants, or
securities exercisable for or convertible into common stock;

(3) adopt, amend or terminate any employee benefit plan;

(4) take any action that would result in the conditions to the split-up not
being satisfied; or

(5) take any action that would be inconsistent with any statement or
representation made in the private letter ruling request, or that might
be reasonably likely to cause the reorganization or the distribution to
be taxable to Kroll-O'Gara, KRCS, The O'Gara Company or their
shareholders.

ADDITIONAL AGREEMENTS

APPLICATIONS; APPROVALS. Each party to the reorganization and dissolution
agreement has agreed to use commercially reasonable efforts and cooperate with
the other parties to accomplish the split-up at the earliest practicable date,
including making applications and obtaining approvals necessary to complete the
split-up.

TAX TREATMENT. Each of the parties has agreed not to take any action, and
Kroll-O'Gara, KRCS and The O'Gara Company have agreed to refrain from taking any
action, either before or after the split-up, which is prohibited by the tax
sharing agreement or could reasonably be expected to adversely affect the
qualification of the transactions comprising the split-up as tax-free.

AGREEMENTS OF PRINCIPAL SHAREHOLDERS. Each of Mr. Kroll and Mr. Thomas M.
O'Gara has agreed that, except as may be approved in advance by the independent
directors of KRCS or The O'Gara Company, as the case may be, for five years
after the split-up, he will not

(1) acquire additional shares of KRCS common stock, in the case of Mr.
Kroll, or O'Gara Company common stock, in the case of Mr. O'Gara,
exceeding 2% of the total number of shares of that company outstanding
immediately after the distribution, or

(2) form, join or participate in any group for the purpose of, or with the
effect of, acquiring control, or opposing an effort by another person
to obtain control, of KRCS, in the case of Mr. Kroll, or The O'Gara
Company, in the case of Mr. O'Gara.

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<PAGE> 48

Each of Mr. Kroll and Mr. O'Gara also has represented that he has no plan or
intention to dispose of any of his shares of KRCS common stock or O'Gara Company
common stock, as the case may be, after the split-up.

AMERICAN INTERNATIONAL GROUP, INC. For three years after the split-up, The
O'Gara Company will not provide crisis management services to AIG other than
driver training, threat recognition and avoidance training, firearms training
and the sale of vehicle armoring systems.

SECURIFY. The parties have agreed that Kroll-O'Gara's right to nominate a
director of Securify will belong to The O'Gara Company after the split-up and
that KRCS will receive shares of Securify common stock that do not vote in the
election of Securify's directors. If, prior to the first anniversary of an
initial public offering by Securify, either KRCS or The O'Gara Company seeks to
sell all or a portion of its shares of Securify common stock, the other, so long
as it still owns over 5% of Securify's stock, will have the right to participate
in the sale on a pro rata basis. Similarly, KRCS and The O'Gara Company will
participate proportionately in any offering by Securify as to which they have
registration rights if all shares both wish to sell cannot be included.

As of August 31, 2000, Kroll-O'Gara had loaned $9.5 million to Securify and
has agreed to lend Securify up to an additional $0.1 million during September
2000. Securify will be required to repay 58% of the total amount loaned by
Kroll-O'Gara to KRCS and 42% to The O'Gara Company. We cannot assure you that
Securify will be able to repay these loans.

USE OF NAMES. KRCS and Mr. Kroll have agreed that, after the split-up, KRCS
will not use the name "O'Gara" in connection with the promotion of its business,
other than the voice and data communications business. The O'Gara Company and
Messrs. O'Gara similarly have agreed that The O'Gara Company will not use the
name "Kroll" in connection with the promotion of its business.

VOICE AND DATA COMMUNICATIONS BUSINESS. The O'Gara Company has agreed to
assist KRCS, as requested and at KRCS' expense, with the sale of the voice and
data communications business. The O'Gara Company also has agreed that agreements
relating to that business and to the business' use of the O'Gara name may be
assigned to a buyer and that it will negotiate in good faith with a buyer on the
terms of new agreements.

DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. Kroll-O'Gara, KRCS and The
O'Gara Company have agreed to provide directors' and officers' liability
insurance, mutually satisfactory to each of them and to the special committee of
Kroll-O'Gara's Board of Directors covering those persons who are currently
covered by Kroll-O'Gara's directors' and officers' liability insurance policy.

CONDITIONS TO CONSUMMATION OF THE SPLIT-UP

The obligations of each party to complete the split-up are subject to
various conditions, including:

(1) The proposals presented at the special meeting must have been
approved by the requisite votes of Kroll-O'Gara shareholders;

(2) Kroll-O'Gara must have received a private letter ruling from the
Internal Revenue Service confirming that the transactions comprising the
split-up, other than the payment of cash for fractional shares and any
dissenting shares, will be tax-free to Kroll-O'Gara and its shareholders;

(3) Bear Stearns must not have withdrawn its opinion that the
distribution of the shares of O'Gara Company common stock and KRCS common
stock is fair, from a financial point of view, to the holders of
Kroll-O'Gara common stock, other than the members of the Kroll Shareholder
Group and the O'Gara Shareholder Group;

43
<PAGE> 49

(4) All waiting periods applicable to the consummation of the split-up
under the Hart-Scott-Rodino Act must have expired or terminated;

(5) There must not be any legal restraint or prohibition of the
split-up in effect;

(6) The KRCS common stock and the O'Gara Company common stock each
must have been approved for listing on the Nasdaq National Market, upon
official notice of issuance;

(7) The representations and warranties of the other parties contained
in the reorganization and dissolution agreement must be complete and
correct in all material respects;

(8) Each party must have performed or complied in all material
respects with all of its or his agreements and covenants required by the
reorganization and dissolution agreement; and

(9) The parties must have obtained all material consents, waivers,
approvals, authorizations or orders.

TERMINATION

Notwithstanding shareholder approval, the reorganization and dissolution
agreement may be terminated at any time, prior to the exchanges of shares, by
written agreement of Kroll-O'Gara, The O'Gara Company and KRCS, or by the Board
of Directors of Kroll-O'Gara, with the concurrence of the special committee, if
the Board determines that the split-up is no longer in the best interests of
Kroll-O'Gara and its shareholders. Similarly, the special committee may
terminate the reorganization and dissolution agreement if, in the exercise of
its fiduciary duty, it determines that termination is in the best interest of
Kroll-O'Gara's shareholders, other than the members of the Kroll Shareholder
Group and the O'Gara Shareholder Group. Additionally, the agreement may be
terminated prior to the exchanges by the mutual agreement of Kroll-O'Gara, KRCS
and The O'Gara Company, and it may be terminated by any party if the exchanges
have not taken place by June 30, 2001.

AMENDMENT AND WAIVER

The reorganization and dissolution agreement may be amended in writing by
the parties at any time prior to completion of the split-up. Any amendment
requires the approval of the special committee of Kroll-O'Gara's Board of
Directors. However, after shareholder approval of the agreement at the special
meeting, no amendment may be made which by law requires shareholder approval
without that further approval, and the special committee must concur with any
amendment.

Also, at any time prior to completion of the split-up, any party to the
reorganization and dissolution agreement may extend the time for the performance
of any of the obligations or other acts of another party, waive any inaccuracies
in the representations and warranties of another party contained in the
agreement or in any document delivered pursuant to the agreement, or waive
compliance with any of the agreements or conditions of another party contained
in the agreement.

RELATIONSHIPS BETWEEN THE COMPANIES AFTER THE SPLIT-UP

TAX SHARING AGREEMENT

The O'Gara Company and KRCS will enter into a tax sharing agreement
regarding the payment and refund of taxes that are attributable to periods
beginning prior to and including the date of the distribution and any taxes
resulting from the distribution. The agreement generally will provide that for
any taxable period, The O'Gara Company and KRCS will make payments to each other
so that, to the extent that either company or any of its subsidiaries is
included in (1) Kroll-O'Gara's consolidated

44
<PAGE> 50

group for U.S. federal income tax purposes or (2) any consolidated, combined or
unitary group which includes Kroll-O'Gara or any of its subsidiaries for state,
local or foreign income tax purposes, that company will be responsible for only
a portion of the taxes. Each company's portion will be based on that company's
relative contribution to the group.

Each member of a consolidated group for U.S. federal income tax purposes is
jointly and severally liable for the federal income tax liability of each other
member of the consolidated group. Accordingly, although the agreement will
allocate tax liabilities between The O'Gara Company and KRCS, for any period in
which either company or any of its subsidiaries was included in Kroll-O'Gara's
consolidated group, that company or any of its subsidiaries could be liable for
any federal tax liability that was incurred, but not discharged, by the other.
Under the agreement, each company will indemnify the other for those
liabilities.

The agreement will prohibit The O'Gara Company and KRCS from taking actions
that could jeopardize the tax treatment of the distribution. The agreement will
allocate responsibility for any taxes arising from restructurings related to the
split-up, and The O'Gara Company and KRCS will indemnify each other with respect
to taxes allocated to it. In addition, the agreement will provide that The
O'Gara Company and KRCS will indemnify each other for any taxes arising out of
the failure of the split-up to qualify as tax-free as a result of actions taken,
or the failure to take required actions, by it. The tax sharing agreement also
will provide that KRCS and The O'Gara Company will cooperate in the preparation
of tax returns and will exchange information and retain records which may affect
their income tax liabilities.

CROSS-INDEMNIFICATION AGREEMENT

Kroll-O'Gara, The O'Gara Company and KRCS will enter into a
cross-indemnification agreement. Under the cross-indemnification agreement, KRCS
will indemnify Kroll-O'Gara and The O'Gara Company against liabilities relating
to the operation of the investigations and intelligence and voice and data
communications businesses, whether those liabilities arise on, prior to or after
the split-up. The O'Gara Company will indemnify Kroll-O'Gara and KRCS against
liabilities relating to the operation of the security products and services
business, whether those liabilities arise on, prior to or after the split-up and
matters arising out of The O'Gara Company's financial information included in
KRCS' registration statement. If a contingent liability does not exclusively
relate to one business or the other, it will be considered a shared contingent
liability, and The O'Gara Company will be responsible for approximately 41.5%
and KRCS will be responsible for approximately 58.5% of that liability. The
cross-indemnification agreement does not apply to tax claims or liabilities,
which are covered by the tax sharing agreement described above.

VOICE AND DATA COMMUNICATIONS BUSINESS

The KRCS subsidiaries that are involved in the voice and data
communications business will enter into a license agreement for the use of the
O'Gara name in its voice and data communications business and a strategic
alliance agreement with The O'Gara Company's subsidiary, O'Gara-Hess &
Eisenhardt Armoring Company, for the sale of its voice and data communications
products and services in or with The O'Gara Company's products and services.

SECURIFY

KRCS and The O'Gara Company have entered into arrangements regarding the
sale of their Securify common stock and their respective registration rights.
See "The Reorganization and Dissolution Agreement -- Securify."

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<PAGE> 51

THE KROLL-O'GARA COMPANY

This section provides selected information concerning Kroll-O'Gara prior to
the split-up. Please see "The O'Gara Company" and "Kroll Risk Consulting
Services, Inc." for business, management and other information concerning each
company after the split-up.

GENERAL

Kroll-O'Gara is a leading global provider of a broad range of specialized
products and services that are designed to provide solutions to a variety of
security needs. Kroll-O'Gara reports its revenue from continuing operations
through four groups. The Security Products and Services Group markets ballistic
and blast protected vehicles and security services. The Investigations and
Intelligence Group offers business intelligence and investigation services. The
Voice and Data Communications Group offers secure satellite communication
equipment, satellite navigation systems and computer hardware and software
security. The Information Security Group (Securify Inc.) offers information and
computer security services, including network and system security review and
repair.

After the split-up, the business of the Securities Products and Services
Group will be carried on by The O'Gara Company, while the businesses of the
Investigations and Intelligence Group and the Voice and Data Communications
Group will be conducted by KRCS. KRCS intends to sell the Voice and Data
Communications business as soon as possible after the split-up. Descriptions of
the businesses of these Groups are provided under the separate discussions of
The O'Gara Company and KRCS below in this Proxy Statement.

Additionally, after the split-up, The O'Gara Company will own approximately
% and KRCS will own approximately % of the stock of Securify, which
will operate as a private company under separate management. Securify provides
objective information security services, including:

- network and system security assessment;

- product evaluation and assessment;

- security policy creation and implementation;

- security architecture and design; and

- public key infrastructure (PKI) consulting services.

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<PAGE> 52

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 Kroll-O'Gara's Consolidated
Financial Statements and Notes. As a result of the acquisitions made by
Kroll-O'Gara in 1997, 1998 and 1999, described below, financial results from
period-to-period may lack comparability. In May 2000, Kroll-O'Gara decided to
retain the Voice and Data Communications Group which had been classified as
discontinued operations. Historical amounts have been reclassified to conform to
the current categories.

GENERAL INFORMATION AND RECENT DEVELOPMENTS

As indicated above under "General," Kroll-O'Gara reports its revenue
through four groups: the Security Products and Services Group, the
Investigations and Intelligence Group, the Voice and Data Communications Group
and the Information Security Group.

Failed Merger and Proposed Separation of Business. On November 15, 1999,
Kroll-O'Gara announced that it had entered into a definitive agreement with
Blackstone Capital Partners III Merchant Banking Fund L.P. pursuant to which
shares held by all Kroll-O'Gara shareholders, other than certain members of
management, would be acquired by Blackstone for $18.00 per share in cash. On
April 12, 2000, Kroll-O'Gara announced that Blackstone had withdrawn its offer
to acquire Kroll-O'Gara shares.

On August 30, 2000, Kroll-O'Gara announced that the Board of Directors had
approved an Agreement and Plan of Reorganization and Dissolution which will
separate its two principal operating segments, the Security Products and
Services Group and the Investigations and Intelligence Group, into two distinct
companies. After the separation, Kroll-O'Gara will be dissolved. Completion of
the separation is expected in the fourth quarter of 2000 or first quarter of
2001 and, as is described in this proxy statement, is subject to a number of
conditions, including the receipt of a favorable tax ruling and relevant
shareholder approvals. When the separation is completed, Kroll-O'Gara's
shareholders other than members of the O'Gara Shareholder Group and the Kroll
Shareholder Group will own shares in two publicly-traded companies. Each of
these companies will continue to hold an equity interest in the Information
Security Group, Securify, which will operate as a private company under separate
management. This will result in each of Kroll-O'Gara's Groups, other than the
Voice and Data Communications Group, being stand-alone companies. Costs
associated with the separation in the six months ended June 30, 2000 were
approximately $0.7 million ($0.03 per diluted share) and consisted primarily of
fees for attorneys, accountants and other related charges. Kroll-O'Gara
anticipates additional expenses will be incurred in the second half of 2000.

Discontinued Operations Subsequently Retained. On April 28, 1999,
Kroll-O'Gara's Board of Directors approved a formal plan to discontinue
operations of the Voice and Data Communications Group pursuant to several
outside expressions of interest to purchase this business. In May 2000, Kroll-
O'Gara terminated all then pending negotiations to sell this business to outside
third parties and reclassified the results of operations of the Voice and Data
Communications Group for all prior periods from discontinued operations to
continuing operations. See Note 17(c) to The Kroll-O'Gara Company's Notes to
Consolidated Financial Statements for more information.

Restructuring of Security Products and Services Group Operations. In the
third quarter of 2000, Kroll-O'Gara's Security Products and Services Group began
implementation of a plan to reduce costs on a post separation basis and
anticipates incurring a total non-recurring pre-tax restructuring charge of less
than $1.0 million. The primary component of the restructuring charge is
severance related to the termination of employees.

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<PAGE> 53

1998 Offering. On May 5, 1998, Kroll-O'Gara completed a public offering of
3,200,000 shares of its common stock at $20.50 per share, resulting in net
proceeds to Kroll-O'Gara of $60.4 million. A portion of the net proceeds was
used to repay $14.8 million of indebtedness, with the balance being used through
the first quarter of 1999 to fund acquisitions, working capital and other
general corporate purposes. In addition to the shares sold by Kroll-O'Gara,
certain shareholders sold 1,860,000 shares of Kroll-O'Gara common stock in
conjunction with this offering.

Merger with Kroll Holdings. The merger with Kroll Holdings, Inc. was
completed on December 1, 1997. In the Kroll Holdings merger, 6,098,561 shares of
common stock were issued and an aggregate of $14.5 million in outstanding
indebtedness of Kroll Holdings was repaid. Approximately 550,000 additional
shares of Kroll-O'Gara common stock were reserved for issuance upon the exercise
of options held by Kroll Holdings employees, which were assumed by Kroll-O'Gara.

Other Acquisitions. Kroll-O'Gara has pursued a strategy of aggressive
growth and has completed numerous other acquisitions since the beginning of
1997, some of which have been accounted for as poolings of interest and others
of which have been accounted for as purchases.

Most recently, on May 16, 2000, Kroll-O'Gara acquired substantially all of
the assets and assumed certain liabilities of The Search Is On, Inc., a
corporation doing business in Nashville, Tennessee. The purchase price of $0.6
million was satisfied with cash of $0.4 million and a note payable of $0.2
million to the former owner. The acquisition has been accounted as a purchase
and was effective on May 16, 2000. Goodwill related to this transaction was
approximately $0.4 million which is being amortized over 25 years. The Search Is
On specializes in obtaining public records information for utilization in
providing background investigation to its clients. Its revenues are included in
Kroll-O'Gara's Investigations and Intelligence Group.

Other acquisitions since the beginning of 1997 are listed in the chart
which follows.

POOLINGS(1)

<TABLE>
<CAPTION>
COMPANY BUSINESS GROUP DATE ACQUIRED PRICE
------- ---------------------- --------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Laboratory Specialists Drug testing Investigations and December 7, 1998 1,209,053 shares
of America, Inc.(2) Intelligence
Securify Inc. Information security Information Security December 31, 1998 1,430,936 shares
services
Schiff & Associates, Security architectural Investigations and December 31, 1998 169,521 shares
Inc. services Intelligence
Financial Research, Business valuation and Investigations and March 1, 1999 101,555 shares
Inc. economic damage Intelligence
analysis services
Background America, Background Investigations and June 16, 1999 899,243 shares
Inc. investigation services Intelligence
</TABLE>

PURCHASES(3)

<TABLE>
<CAPTION>
COMPANY BUSINESS GROUP DATE ACQUIRED PRICE
------- ---------------------- --------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Labbe, S.A. Armors commercial Security Products and January 1, 1997 $10.7 million in
vehicles and builds Services cash and 376,597
truck bodies in France shares
</TABLE>

48
<PAGE> 54

<TABLE>
<CAPTION>
COMPANY BUSINESS GROUP DATE ACQUIRED PRICE
------- ---------------------- --------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Next Destination, Distributes high Voice and Data February 1, 1997 170,234 shares
Limited technology products Communications and $1.6 million
for the global in financing
positioning satellite
and satellite
communications markets
International Advanced security Security Products and March 1, 1997 $0.5 million in
Training, training Services cash, 68,086
Incorporated shares and $1.2
million in
financing
ZAO IMEA Armors cash-in transit Security Products and December 1, 1997 $0.6 million in
vehicles and Services cash and 138,889
distributes commercial shares
bank equipment in
Russia
Corplex, Inc. Investigative and Investigations and March 1, 1998 29,207 shares
executive protection Intelligence
services
Lindquist Avey Forensic and Investigations and June 1, 1998 $4.7 million in
MacDonald investigative Intelligence cash and 278,340
Baskerville, Inc. accounting services; shares
headquartered in
Canada
Kizorek, Inc. (renamed Video surveillance Investigations and July 1, 1998 $0.8 million in
InPhoto services Intelligence cash and 352,381
Surveillance) shares
Protec S.A. Armors cars in Security Products and September 30, 1998 $3.2 million in
Colombia Services cash and 38,788
shares
Holder Associates, Security services in Investigations and October 1, 1998 $4.5 million in
S.A. Argentina Intelligence cash and 46,287
shares
Fact Finders Ltd. Investigates Investigations and November 1, 1998 $3.2 million in
intellectual property Intelligence cash, plus a
infringement cases in 3-year earn-out
Hong Kong and the of up to $3.0
Peoples Republic of million based on
China profits
The Buchler Phillips Corporate advisory Investigations and April 1, 1999 $12.0 million in
Group practices Intelligence cash and 366,469
shares
</TABLE>

---------------
(1) Pooling of interest accounting requires the restating of all prior period
consolidated financial information as though the acquired entity had always
been a part of Kroll-O'Gara.

(2) In 1997 and 1998 Laboratory Specialists paid a total of approximately $5.9
million to acquire customer lists and related assets from Pathology
Laboratories, Ltd., Harrison Laboratories, Inc., Accu-Path Medical
Laboratory, Inc., and TOXWORX Laboratories, Inc.

(3) Kroll-O'Gara's consolidated financial statements include the reported
results of each entity from its effective date of acquisition forward.

Revenue recognition. Kroll-O'Gara recognizes net sales from certain
military and most commercial armoring contracts using the
percentage-of-completion method calculated utilizing the cost-to-cost approach.
Under this method, Kroll-O'Gara accrues estimated contract revenues based
generally on the percentage that costs to date bear to total estimated costs and
recognizes estimated contract losses in full

49
<PAGE> 55

when it becomes likely that a loss will occur. Accordingly, Kroll-O'Gara
periodically reviews and revises contract revenues and total cost estimates as
the work progresses and as change orders are approved. It reflects adjustments
in contract revenues, based upon the percentage of completion, in the period
when the estimates are revised. To the extent that these adjustments result in
an increase, a reduction or an elimination of previously reported contract
revenues, Kroll-O'Gara recognizes a credit or a charge against current earnings,
which could be material. Contract costs include all direct material and labor
costs, along with certain direct overhead costs related to contract production.
Kroll-O'Gara records provisions for any estimated total contract losses on
uncompleted contracts in the period in which it concludes that the losses will
occur. Changes in estimated total contract costs result in revisions to contract
revenue. The revisions are recognized when determined.

Kroll-O'Gara recognizes revenue from investigative and intelligence
services as the services are performed. It records either billed or unbilled
accounts receivable based on case-by-case invoicing determinations.

Kroll-O'Gara recognizes revenue from telecommunications equipment and
services 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.

Kroll-O'Gara recognizes information security service revenues, which
consist of consulting fees on information security projects, ratably over the
period of the agreement or according to the completed contract method of
accounting for contract revenues, depending on the nature of the agreement.

RESTRUCTURING OF OPERATIONS

Due to the large number of acquisitions Kroll-O'Gara completed in 1997 and
1998, integration of the operations of the acquired companies with existing
operations became a strategic initiative for Kroll-O'Gara's management in 1999.
As part of this initiative, management continuously evaluates its business
segments to ensure that its core businesses within the segments are operating
efficiently. In 1998, most of the businesses were acquired as part of the
Investigations and Intelligence Group. As a result of management's evaluation of
this Group, the decision was made to close several less profitable operating
facilities so that the Group could focus on integration of existing facilities
with the newly acquired businesses. In 1997, the Security Products and Services
Group completed several acquisitions as well. In evaluating the operations of
this Group, management concluded that a cost savings initiative was required and
would be achieved largely through operating process improvements and a
corresponding decrease in personnel.

In the first quarter of 1999, Kroll-O'Gara began implementation of a plan
to reduce costs and improve operating efficiencies and recorded a non-recurring
pre-tax restructuring charge of approximately $0.5 million. In the second
quarter of 1999, Kroll-O'Gara completed the restructuring plan with an
additional non-recurring pre-tax restructuring charge of $3.9 million. The
principal elements of the restructuring plan were the closure of one
Investigations and Intelligence Group office and the relocation of another
Investigations and Intelligence Group office and the elimination of
approximately 82 employees. The primary components of the restructuring charge
were severance costs and lease termination costs. See Note 4(e) to The
Kroll-O'Gara Company's Notes to Consolidated Financial Statements for more
information.

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<PAGE> 56

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
FOR THE
FOR THE SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- ----------------
1997 1998 1999 1999 2000
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Security products and services
Commercial..................................... 29.4% 28.3% 25.2% 11.7% 9.4%
Military....................................... 20.8 22.0 12.3 26.1 24.1
Investigations and intelligence.................. 41.5 43.2 54.9 55.7 60.1
Voice and data communications.................... 8.3 6.5 6.2 4.9 5.3
Information security............................. -- -- 1.3 1.6 1.1
----- ----- ----- ----- -----
Total net sales............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................... 68.1 65.5 63.2 61.5 64.2
----- ----- ----- ----- -----
Gross profit................................... 31.9 34.5 36.8 38.5 35.8
Operating expenses:
Selling and marketing.......................... 7.4 8.2 8.5 8.7 9.0
General and administrative..................... 16.3 15.7 23.3 19.5 25.1
Separation expenses............................ -- -- -- -- 0.4
Restructuring charge........................... -- -- 1.4 2.9 --
Failed merger costs............................ -- -- 0.5 -- 1.2
Merger related costs........................... 3.4 2.1 1.3 2.0 0.3
----- ----- ----- ----- -----
Operating income (loss).......................... 4.8 8.4 1.9 5.4 (0.2)
Other income (expense):
Interest expense............................... (2.5) (1.7) (1.5) (1.2) (1.8)
Interest income................................ 0.1 0.5 0.1 -- --
Other, net..................................... (0.2) (0.1) (0.1) -- (0.1)
----- ----- ----- ----- -----
Income before provision for income taxes,
extraordinary item and cumulative effect of
accounting change.............................. 2.2 7.0 0.4 4.2 (2.0)
Provision for income taxes....................... 1.6 2.7 0.8 1.8 0.8
----- ----- ----- ----- -----
Income (loss) before extraordinary item and
cumulative effect of accounting change......... 0.6 4.3 (0.4) 2.3 (2.9)
Extraordinary item............................... (0.1) -- -- -- --
Cumulative effect of accounting change........... (0.2) -- (0.2) (0.5) --
----- ----- ----- ----- -----
Net income (loss)................................ 0.3% 4.3% (0.6)% 1.8% (2.9)%
===== ===== ===== ===== =====
</TABLE>

Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999

NET SALES. Net sales for the six months ended June 30, 2000 increased $11.0
million, or 7%, from $152.0 million in 1999 to $163.0 million in 2000.

Security Products and Services Group. Net sales for the Security Products
and Services Group for the six months ended June 30, 2000 decreased $2.8
million, or 5%, from $57.5 million in 1999 to $54.7 million in 2000. The
decrease results from a decrease in net sales of military products and services
of $2.6 million, or 14%, from $17.9 million in 1999 to $15.3 million in 2000.
The decrease in net sales of military products and services was a result of the
completion in the fourth quarter of 1999 of a contract with the U.S. Military to
supply 738 armored High Mobility Multi-Purpose Wheeled

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<PAGE> 57

Vehicles ("HMMWVs") to the U.S. Army and the U.S. Air Force (the "738
Contract"). The 738 Contract, which began in 1998, resulted in higher levels of
production and net sales as a result of an aggressive delivery schedule required
by the U.S. Air Force. In 2000, Kroll-O'Gara's military product sales were based
solely on a newer contract for 245 Up-Armored HMMWVs, which does not provide for
an aggressive delivery schedule.

Also included in net sales for the Security Products and Services Group are
sales of commercial armoring products and services, which decreased 1%, from
$39.6 million in 1999 to $39.4 million in 2000. In one foreign location, net
sales in the second quarter of 2000 decreased because base units needed to start
production on signed contracts were not available due to recalls by the original
equipment manufacturer in order to fix safety defects.

Investigations and Intelligence Group. Net sales for the Investigations and
Intelligence Group increased $13.4 million, or 16%, from $84.6 million in 1999
to $98.0 million in 2000. A portion of this increase is a result of the Buchler
Phillips acquisition, which was included only for the last three months of the
six months ended June 30, 1999. Excluding purchase acquisitions, sales increased
$8.4 million. This increase primarily stems from internal growth in the Group's
domestic Business Investigations and Intelligence and Corporate Services
practices.

Voice and Data Communications Group. Net sales for the Voice and Data
Communications Group increased $1.1 million, or 15%, from $7.5 million in 1999
to $8.6 million in 2000. The increase in net sales is a result of a large
foreign satellite communications integration contract received in the fourth
quarter of 1999. In addition, the Group focused efforts on reducing its
inventory of satellite communications equipment in order to improve cash flow
and offered slightly discounted prices in order to move certain inventory.

Information Security Group. Net sales for the Information Security Group
decreased $0.7 million, or 27%, from $2.5 million in 1999 to $1.8 million in
2000. Net sales decreased due to a continuing focus on development of this
Group's service capabilities and the related inability to establish a firm
customer base until the development of the business is complete.

COST OF SALES AND GROSS PROFIT. Cost of sales for the six months ended June
30, 2000 increased 12%, from $93.6 million in 1999 to $104.7 million in 2000.
The increase in cost of sales was partially due to the Buchler Phillips
acquisition, which was included only for the last three months of the six months
ended June 30, 1999. Excluding this acquisition, cost of sales increased $8.2
million. This increase in cost of sales was primarily due to increased employee
compensation costs and subcontractor fees associated with generating
professional fee revenue in the Investigations and Intelligence Group. Gross
margin for the six months ended June 30, 2000 was 35.8%, as compared with 38.5%
for the same period in 1999.

Gross margin for the Security Products and Services Group decreased
approximately 6.3 percentage points from 32.3% in 1999 to 26.0% in 2000. In the
second quarter of 2000, new vehicle models caused additional costs as prototypes
for the new models had to be completed before full production could begin. All
prototype costs were expensed as incurred. In 1999, there were no substantial
prototype expenses. In addition, commercial armoring margins were impacted by
the previously mentioned original equipment manufacturer recalls as well as
competitive pricing pressures and pricing concessions necessitated by poor
foreign economic conditions in certain locations.

Gross margin decreased approximately 0.8 percentage points from 44.7% in
1999 to 43.9% in 2000 for the Investigations and Intelligence Group. The
decrease in gross margin was due to increased fixed costs associated with
increased employee compensation and benefits as well as increased subcontractor
fees associated with generating professional fee revenue.

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<PAGE> 58

Gross margin for the Voice and Data Communications Group increased 5.0
percentage points from 11.0% in 1999 to 16.0% in 2000. This increase relates to
a change in sales mix from 1999 to 2000. In 1999, sales were based exclusively
on sales of the Group's navigation and satellite communication products. Due to
softness in the market at the time, these sales were at much lower margins than
had previously been achieved. In 2000, the Group continued work on a large
foreign satellite communications integration contract received in the fourth
quarter of 1999. Because the contract involved integration services as well as
equipment, sales and gross margin were higher than product sales alone.

OPERATING EXPENSES. Operating expenses for the six months ended June 30,
2000 increased $8.3 million, or 17%, from $50.3 million in 1999 to $58.7 million
in 2000. This increase is despite a decrease in non-recurring expenses of $4.3
million, from $7.5 million in 1999 to $3.1 million in 2000. Non-recurring
charges in 2000 consist of approximately $2.0 million of costs associated with
the failed recapitalization merger with Blackstone as well as $0.7 million of
costs associated with the separation of Kroll-O'Gara's Security Products and
Services Group and Investigations and Intelligence Group. In addition, $0.4
million of costs relate to additional merger integration costs associated with
the acquisitions completed in 1999. In 1999, non-recurring expenses included
$3.1 million of merger-related expenses primarily for the Background America
merger as well as a restructuring charge of $4.4 million.

Excluding non-recurring expenses, operating expenses increased $12.7
million. Approximately $1.6 million of this increase is due to operating
expenses incurred by Buchler Phillips in the first quarter of 2000. The Buchler
Phillips acquisition was not completed until the second quarter of 1999 and its
operating expenses are not included in Kroll-O'Gara's historical financial
information until the effective date of the acquisition, April 1, 1999. Also
included in this increase were $2.1 million for depreciation and amortization of
fixed and intangible assets, including goodwill, and $1.4 million for bad debt
expense. In the first six months of 2000, slow customer payments as well as
several customer bankruptcies prompted Kroll-O'Gara's Investigations and
Intelligence Group to increase its reserve for uncollectible accounts
receivable. In addition, operating expenses in the Information Security Group
increased $3.3 million as a result of the continuing focus on development of
this Group's software products capabilities, including an increase in
professional and support personnel to support the increased development. The
remaining increase relates to an increase in expenses related to the additional
legal, accounting, insurance and information system costs required to administer
the growth experienced by Kroll-O'Gara due to the acquisitions completed in
December 1998 and throughout 1999.

As a percent of net sales, operating expenses, before non-recurring
charges, increased from 28.2% in 1999 to 34.1% in 2000. As mentioned previously,
the increase in operating expenses as a percentage of net sales is primarily a
result of increased fixed costs to develop the Information Security Group's
software products capabilities and to administer the growth experienced by
Kroll-O'Gara due to the acquisitions completed in December 1998 and throughout
1999.

INTEREST EXPENSE. Interest expense for the six months ended June 30, 2000
increased $1.0 million, or 53%, from $1.9 million in 1999 to $2.9 million in
2000. This increase was the result of increased borrowings on Kroll-O'Gara's
revolving credit facility. For most of the first six months of 1999, Kroll-
O'Gara had excess funds as a result of a public offering of stock completed in
May 1998 and no additional borrowings were required on the revolving credit
facility until the purchase of Buchler Phillips on June 3, 1999.

PROVISION FOR INCOME TAXES. The provision for income taxes for the six
months ended June 30, 2000 was $1.4 million compared to $2.8 million in 1999.
Despite a pre-tax loss in the first six months of 2000, Kroll-O'Gara recorded a
provision for income taxes for certain foreign subsidiaries which generated
income in the period. In addition, certain foreign jurisdictions realized losses
during the first

53
<PAGE> 59

six months of 2000 from which Kroll-O'Gara was not able to benefit for tax
purposes due to the uncertainty relating to the future realizability of the net
operating loss carryforward.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. Kroll-O'Gara had
previously capitalized costs associated with the start-up of activities,
including pre-operating costs, organization costs and other start- up costs.
These capitalized costs were amortized over periods ranging from one to five
years. The capitalized amount, $1.2 million before tax, was expensed in 1999 in
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, "Reporting on the Cost of Start-Up Activities." The amount
expensed is shown net of applicable tax benefit of $0.4 million.

1999 Compared to 1998

NET SALES. Net sales for the year ended December 31, 1999 increased $49.7
million, or 18%, from $272.2 million in 1998 to $321.9 million in 1999.

Security Products and Services Group. Net sales for the Security Products
and Services Group decreased $16.0 million, or 12%, from $136.8 million in 1998
to $120.8 million in 1999. The decrease related to a decrease in net sales of
military products and services of $20.2 million, or 34%, from $59.8 million in
1998 to $39.6 million in 1999. In April 1998, Kroll-O'Gara began work on a new
contract with the U.S. Military to supply 738 armored HMMWVs to the U.S. Army
and the U.S. Air Force. In addition, Kroll-O'Gara continued work on a previous
contract with the U.S. Military for 360 Up-Armored HMMWVs through July of 1998.
The combination of production on the two contracts as well as an aggressive
delivery schedule required by the U.S. Air Force relating to the 738 Contract
resulted in unusually high levels of production and net sales in 1998. In 1999,
levels of production and net sales more nearly approximated those of 1997.

Also included in net sales for the Security Products and Services Group are
sales of commercial armoring products and services, which increased $4.2
million, or 5%, from $77.0 million in 1998 to $81.2 million in 1999. Increases
in net sales for security services accounted for the increase in commercial net
sales as these services increased $4.1 million, or 43%, for the year ended
December 31, 1999 in comparison with 1998. The increase in net sales of security
services was primarily the result of increased sales associated with the
introduction of driver's training operations in Texas and Mexico in 1999.

Investigations and Intelligence Group. Net sales for the Investigations and
Intelligence Group increased $59.3 million, or 50%, from $117.6 million in 1998
to $176.8 million in 1999. A substantial portion of this increase was a result
of the acquisitions of Lindquist Avey, InPhoto, Corplex, Fact Finders, Holder
and Buchler Phillips. These acquisitions have increased Kroll-O'Gara's presence
in Asia, Europe and Latin America and have strengthened the Business
Investigations and Analysis and Financial Services practices on a global scale.
Excluding net sales reported by these acquired entities, net sales increased
$16.8 million, or 17%, from $98.2 million in 1998 to $115.0 million in 1999.
This increase primarily stems from internal growth in the Group's Corporate
Services practices.

Voice and Data Communications Group. Net sales for the Voice and Data
Communications Group increased $2.3 million, or 13%, from $17.7 in 1998 to $19.9
million in 1999. This increase resulted from a large satellite
telecommunications integration contract received and completed in the second
half of 1999.

Information Security Group. Net sales for the Information Security Group
increased $4.2 million from $0.1 million in 1998 to $4.3 million in 1999. The
Information Security Group initiated operations in February 1998 but had minimal
sales as it was involved in start-up activities for most of the year.

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<PAGE> 60

COST OF SALES AND GROSS PROFIT. Cost of sales increased $25.0 million, or
14%, from $178.4 million in 1998 to $203.5 million in 1999. The increase in cost
of sales was due to the acquisitions completed in 1998 and 1999. Excluding these
acquisitions, cost of sales increased $1.6 million. Gross profit as a percentage
of net sales was 34.5% and 36.8% for 1998 and 1999, respectively. The overall
increase in gross profit as a percent of net sales was primarily the result of a
shift in sales mix in which higher margin Investigations and Intelligence Group
and Information Security Group net sales increased as a percentage of total net
sales.

Gross margins for the Security Products and Services Group were 28.8% and
29.0% in 1998 and 1999, respectively. Gross margin increased as a result of a
planned shift in sales mix in the Security Products and Services Group's
domestic operations to increased commercial armoring sales and military spare
parts sales, both of which have higher margins. However, this gross margin
increase was almost completely offset by poor gross margin performance
experienced in all foreign operations as a result of competitive pricing
pressures and pricing concessions necessitated by foreign economic conditions. A
transition to higher levels of armoring in Latin and South America also slowed
sales and required some inventory writeoffs. Additionally, currency devaluations
in South America hurt margins and slowed sales.

Gross margins for the Investigations and Intelligence Group were 43.9% and
44.5% in 1998 and 1999, respectively. The increase in gross margin was primarily
a result of the acquisition of Buchler Phillips which historically has had
higher margins than the other Investigations and Intelligence businesses.

Gross margins for the Voice and Data Communications Group were 20.0% and
12.1% in 1998 and 1999, respectively. The decrease in gross margin was a result
of an increase in the Group's inventory reserve which resulted from technology
changes in the telecommunications market effectively reducing demand and
lowering sales prices for certain items in the Group's inventory.

Gross margin at the Information Security Group reflects a full year of
operations and was 52.9% in 1999.

Historically, Kroll-O'Gara has experienced a higher gross margin associated
with revenue from its Investigations and Intelligence Group in comparison with
the Security Products and Services Group. Management expects the level of gross
margin to remain relatively consistent within each Group.

OPERATING EXPENSES. Operating expenses increased $41.4 million, or 58%, to
$112.3 million in 1999 from $70.9 million in 1998. The increase was partially
due to the acquisitions completed in 1998 and 1999. Operating expenses of
acquired companies represented $24.7 million of total operating expenses in 1999
and $6.4 million of total operating expenses in 1998. Excluding operating
expenses of these acquisitions, operating expenses increased $23.1 million net
of a $1.5 million recovery of a previously written off bad debt. Included in
this increase was a restructuring charge of $4.4 million and $5.0 million for
depreciation and amortization of intangible assets including goodwill. In
addition, approximately $5.0 million of the increase in expenses related to the
additional legal, accounting, insurance and information systems costs required
to administer the growth experienced by Kroll-O'Gara since the beginning of
1998. A key component of these costs was the implementation of new enterprise
systems at one of the Security Products and Services Group's subsidiaries and at
one of the Investigation and Intelligence Group's subsidiaries as well as new
corporate financial reporting software. The remaining increase, $10.2 million,
related to overall compensation and benefits increases, an increase in the level
of personnel working to administer the growth experienced by Kroll-O'Gara since
the beginning of 1998 and other administrative, marketing and facility costs.

In 1998, Kroll-O'Gara recorded approximately $5.7 million in expenses
related to the mergers with Laboratory Specialists, Schiff, Securify and
Background America. In 1999, Kroll-O'Gara recorded

55
<PAGE> 61

approximately $4.1 million in merger and integration related expenses associated
with the above mentioned mergers. In addition, Kroll-O'Gara recorded
approximately $1.6 million in failed merger expenses associated with the failed
recapitalization merger with Blackstone.

As a percent of net sales, operating expenses, before merger related,
restructuring and failed merger costs, were 23.9% in 1998 and 31.8% in 1999. As
mentioned previously, the increase in operating expenses as a percentage of net
sales was primarily a result of increased fixed costs to administer the growth
experienced by Kroll-O'Gara since the beginning of 1998.

INTEREST EXPENSE. Interest expense increased $0.3 million, or 6%, to $5.0
million in 1999, compared to $4.7 million in 1998. With the completion of the
May 1998 offering, a significant portion of Kroll-O'Gara's indebtedness was
repaid (approximately $14.8 million). As a result, Kroll-O'Gara experienced
lower interest expense starting in the third quarter of 1998 and continuing
through the first quarter of 1999. However, due to the significant number of
acquisitions completed in the second half of 1998 and first half of 1999,
remaining cash from the offering was utilized. Kroll-O'Gara began to draw on its
$25.0 million credit facility in 1999, primarily to fund the $12.0 million cash
portion of the Buchler Phillips purchase price and to fund overall growth and
working capital, particularly the additional cash needs of the Information
Security Group.

INTEREST INCOME. Interest income decreased $0.9 million, or 68%, to $0.4
million in 1999, compared to $1.3 million in 1998. Net proceeds of the May 1998
offering that were not used to repay debt were invested in short-term
instruments with maturities of three months or less. The return on these
investments was responsible for the increased interest income in 1998. In 1999,
the remaining investments were liquidated to fund acquisitions and increases in
working capital needs as a result of acquisitions and growth.

PROVISION FOR INCOME TAXES. The provision for income taxes was $2.4 million
in 1999 in comparison with $7.4 million in 1998. The effective tax rates for the
periods were 38% in 1998 and 189% in 1999. In 1999, Kroll-O'Gara booked taxes at
an effective rate significantly higher than it had previously experienced
largely due to the non-deductibility of some of the merger related expenses
incurred in the period as well as increases in nondeductible goodwill and
intangible amortization. The 1999 tax provision also reflects the favorable
impact of the reversal of the valuation allowance related to certain foreign
jurisdiction net operating loss carryforwards, net of other foreign losses that
do not have a current benefit. In 1998, Kroll-O'Gara determined that certain of
the Kroll Holdings merger expenses qualified for future deductibility which
favorably impacted the effective tax rate in 1998.

In addition, the 1998 tax provision also reflects the favorable impact of
foreign locations with statutory tax rates at levels below U.S. tax rates and
the reversal of the valuation allowance related to certain foreign net operating
loss carryforwards. Certain foreign operations, especially those of the Voice
and Data Communications Group, realized losses in 1999 from which Kroll-O'Gara
was not able to benefit for tax purposes.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. Kroll-O'Gara had
previously capitalized costs associated with the start-up of activities,
including pre-operating costs, organization costs and other start-up costs.
These capitalized costs were amortized over periods ranging from one to five
years. The capitalized amount, $1.2 million before tax, was expensed in 1999 in
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, "Reporting on the Cost of Start-Up Activities." The amount
expensed is shown net of applicable tax benefit of $0.4 million.

NET INCOME (LOSS). Net income decreased $13.7 million from $11.8 million in
1998 to a loss of $1.9 million in 1999. The decrease was due primarily to a
$41.4 million increase in operating expenses,

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<PAGE> 62

partially offset by $24.7 million in increased gross profit and a decreased
provision for income taxes, as discussed above.

1998 Compared to 1997

NET SALES. Net sales for the year ended December 31, 1998 increased $61.9
million, or 29%, from $210.3 million in 1997 to $272.2 million in 1998.

Security Products and Services Group. Net sales for the Security Products
and Services Group increased $31.3 million, or 30%, from $105.6 million in 1997
to $136.8 million in 1998. The increase included net sales of commercial
products and security services, which increased $15.2 million, or 25%, from
$61.8 million in 1997 to $77.0 million in 1998. The increase in commercial net
sales was primarily due to continued growth in Kroll-O'Gara's international
armoring divisions. During 1996, 1997 and 1998, Kroll-O'Gara initiated start-up
armoring operations in Mexico, Brazil and the Philippines, and acquired Labbe,
IMEA and the assets of Protec.

Increases in net sales for security services also contributed to the
increase in commercial net sales for the Security Products and Services Group.
Net sales of these services increased $2.1 million, or 29%, for the year ended
December 31, 1998 in comparison with 1997.

Net sales for the Security Products and Services Group included sales of
military products and services, which increased $16.1 million, or 37%, from
$43.7 million in 1997 to $59.8 million in 1998. In April 1998, Kroll-O'Gara
began work on the 738 Contract. Production on Kroll-O'Gara's previous contract
with the U.S. Military for 360 Up-Armored HMMWVs continued through July 1998.
The combination of production on the two contracts was a factor in the increase
in net sales.

The U.S. Air Force dictated an aggressive delivery schedule for the 738
Contract. This delivery schedule required Kroll-O'Gara to maintain an increased
level of production in 1998 for the Up-Armored HMMWV in comparison with
production levels in previous periods.

Investigations and Intelligence Group. Net sales for the Investigations and
Intelligence Group increased $30.3 million, or 35%, from $87.3 million in 1997
to $117.6 million in 1998. The increases in 1998 were primarily due to the
inclusion of net sales from the acquisitions of Lindquist Avey, InPhoto,
Corplex, Fact Finders and Holder. Excluding net sales reported by these acquired
entities, net sales for the Investigations and Intelligence Group would have
been $98.2 million for the year ended December 31, 1998, in comparison with
$87.3 million for the year ended December 31, 1997, an increase of 12%.

The increase in net sales without acquisitions in the Investigations and
Intelligence Group was the result of an internal growth plan carried out by the
Group in 1998. During the year, the Investigations and Intelligence Group opened
offices in Dallas, Boston, Houston and Mexico City.

Voice and Data Communications Group. Net sales for the Voice and Data
Communications Group increased $0.2 million, or 1%, from $17.4 million in 1997
to $17.7 million in 1998.

Information Security Group. The Information Security Group initiated
operations in 1998, recording net sales of $0.1 million.

COST OF SALES AND GROSS PROFIT. Cost of sales increased $35.2 million, or
25%, from $143.2 million in 1997 to $178.4 million in 1998. The increase in cost
of sales was due to the increased level of business activity experienced in
1998. Gross profit as a percentage of net sales was 31.9% and 34.5% for 1997 and
1998, respectively. This increase was primarily due to an increase, of
approximately 5 percentage points, in gross profit as a percent of net sales
experienced in the Investigations and

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<PAGE> 63

Intelligence Group. This increase was due to high margin engagements booked
during the year which are historically infrequent in nature.

Gross margins for the Security Products and Services Group were 28.4% and
28.8% in 1997 and 1998, respectively.

Gross margins for the Voice and Data Communications Group were 17.9% and
20.0% in 1997 and 1998, respectively. The increase in gross margin was a result
of a one time reconciliation of cost recognized on air time sold with the
satellite communications equipment.

OPERATING EXPENSES. Operating expenses increased $13.9 million, or 24%, to
$70.9 million in 1998 from $57.0 million in 1997. Included in operating expenses
in 1997 were approximately $7.2 million in expenses related to the merger with
Kroll Holdings. In 1998, Kroll-O'Gara recorded approximately $5.7 million in
merger related expenses primarily associated with the Laboratory Specialists,
Schiff, Securify and Background America mergers.

Before merger related expenses, operating expenses increased $15.3 million,
or 31%, from $49.8 million in 1997 to $65.2 million in 1998. The increase was
primarily attributable to an increase in the level of personnel and professional
services required to administer the growth experienced by Kroll-O'Gara in 1998.

As a percent of net sales, operating expenses, before merger related costs,
were 23.7% in 1997 and 23.9% in 1998. As a result of investments made by
Kroll-O'Gara in facilities and personnel in previous periods, Kroll-O'Gara did
not require additional commitments of fixed cost relative to the level of net
sales in 1998.

INTEREST EXPENSE. Interest expense for the year ended December 31, 1998
decreased $0.6 million, or 11%, to $4.7 million, compared to $5.2 million in
1997. With the completion of the May 1998 offering, a significant portion of
Kroll-O'Gara's indebtedness was repaid (approximately $14.8 million). As a
result, Kroll-O'Gara experienced lower interest expense starting in the third
quarter of 1998.

On May 30, 1997, Kroll-O'Gara entered into an agreement with institutional
investors to issue and sell $35.0 million worth of Senior Notes. This agreement
contained a provision for a reduction of the interest rate if specified criteria
were met. Kroll-O'Gara complied with the criteria and the step down of rates
commenced in the second quarter of 1998. The reduction changed the interest rate
from 9.56% to 8.56% and contributed to the decrease in interest expense in 1998.

INTEREST INCOME. Interest income for the year ended December 31, 1998
increased $1.1 million, or 638%, to $1.3 million, compared to $0.2 million in
1997. Net proceeds of the May 1998 offering that were not used to repay debt
were invested in short-term instruments with maturities of three months or less.
The return on these investments was responsible for the increase in interest
income in 1998.

PROVISION FOR INCOME TAXES. The provision for income taxes was $7.4 million
for the year ended December 31, 1998 in comparison with $3.3 million for the
same period in 1997. The effective tax rates for the periods were 72% in 1997
and 38% in 1998. In 1997, Kroll-O'Gara booked taxes at an effective rate
significantly higher than it had previously experienced largely due to the
non-deductibility of some of the merger related expenses incurred in the period.
In 1998, Kroll-O'Gara determined that certain of the Kroll Holdings merger
expenses qualified for future deductibility which favorably impacted the
effective tax rate in 1998.

In addition, the 1998 tax provision also reflected the favorable impact of
foreign locations with statutory tax rates at levels below U.S. tax rates and
the reversal of the valuation allowance related to certain foreign net operating
loss carryforwards.

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<PAGE> 64

NET INCOME. Net income increased $11.1 million from $0.7 million in 1997 to
$11.8 million in 1998. The increase was due primarily to a $26.7 million
increase in gross profit, offset by $13.9 million in increased operating
expenses and an increased provision for income taxes, as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

General. Kroll-O'Gara historically has met its operating cash needs by
utilizing borrowings under its credit arrangements and net proceeds from public
offerings to supplement cash provided by operations, excluding non-cash charges
such as depreciation and amortization.

Credit Facility. On September 14, 2000, Kroll-O'Gara amended its credit
agreement to provide for an extension of its temporary increase in its revolving
line of credit from $25.0 million to $40.0 million. Pursuant to the amended
credit agreement, the increase in the revolving line of credit is effective
until January 1, 2001, at which time all borrowings in excess of $25.0 million
must be repaid. The credit facility continues to provide for a letter of credit
facility of approximately $7.6 million. Both the letter of credit facility and
the line of credit mature on May 31, 2001. Advances under the revolving line of
credit bear interest at rates ranging from prime to prime plus 0.75%, or, at
Kroll-O'Gara's option, LIBOR plus 1.50% to LIBOR plus 2.50%, dependent upon a
defined financial ratio. Borrowings under this line of credit were approximately
$22.8 million and $34.3 million at December 31, 1999 and June 30, 2000,
respectively.

This credit agreement includes financial covenants which, among other
restrictions, require the maintenance of certain financial ratios and other
financial requirements, including an interest coverage ratio and net worth
minimum, and impose limitations on foreign investment, goodwill, additional
indebtedness and capital expenditures. Pursuant to the amended credit agreement,
certain of these financial ratios were revised. Kroll-O'Gara was not in
compliance with certain of these covenants at June 30, 2000. The lender
subsequently waived or amended all such events of non-compliance.

Effective June 3, 1999, with the acquisition of Buchler Phillips,
Kroll-O'Gara acquired a demand note with maximum borrowings of pound sterling
2.5 million. The demand note bears interest at the Bank of England's base rate
plus 1.5%. Maximum borrowings permitted pursuant to this demand note were
approximately $4.0 million. Borrowings outstanding pursuant to this demand note
were $3.4 million and $2.9 million, respectively, as translated at December 31,
1999 and June 30, 2000.

Kroll-O'Gara's $35.0 million of senior unsecured notes payable also contain
financial covenants, which among other restrictions, require the maintenance of
a minimum level of net worth and a fixed charge coverage ratio. Kroll-O'Gara was
not in compliance with the fixed charge coverage ratio at June 30, 2000. The
note holders subsequently waived or amended this event of non-compliance.

As described above, Kroll-O'Gara has entered into an agreement for the
separation of its principal business groups into two public companies.
Management is currently in discussions with its banks to provide financing
subsequent to the separation. Pending the separation, Kroll-O'Gara will require
additional sources of capital to supplement operating cash flow, either through
amending and increasing its credit facilities, through an equity offering of one
of its subsidiaries or both. In the absence of the separation of the businesses,
management is of the opinion that there will be sufficient liquidity available
from existing operations and credit facilities, which can be supplemented, if
necessary, with additional secured or unsecured financing, to finance the
continuing operations of Kroll-O'Gara.

Cash flows from operating activities. Cash used in operating activities
increased from $3.6 million in the first six months of 1999 to $4.9 million in
the same period of 2000. In the first six months of 1999, cash was used
primarily to fund working capital investments offset by net income. In the first
six

59
<PAGE> 65

months of 2000, cash was used primarily to fund Kroll-O'Gara's net loss which
resulted from the net loss incurred by the Information Security Group.

Operating activities used $5.3 million in net cash in 1999 in comparison
with $13.3 million in net cash used in operating activities in 1998. From the
inception in 1993 of Kroll-O'Gara's contract with the U.S. Government to armor
the HMMWV through the first quarter of 1998, Kroll-O'Gara was designated a Small
Business according to U.S. Government procurement regulations. Thereafter,
Kroll-O'Gara's designation was changed to Large Business for government
procurement purposes.

The change in designation has affected contract progress payments from the
government, and Kroll-O'Gara's cash flow, in two ways. First, since the change,
the progress payments have been determined using a smaller percentage of total
cost committed than before. Second, Kroll-O'Gara has been reimbursed for vendor
invoices paid instead of expenses incurred. Although these changes do not affect
the total amount ultimately collected, they defer some of the amounts previously
included as part of a progress payment until the vehicles are delivered.

The majority of these adjustments to the way Kroll-O'Gara is reimbursed for
its military business were applied to the HMMWV contracts in 1998. This resulted
in a significant increase in the balance of Cost and Estimated Earnings in
Excess of Billings on Uncompleted Contracts and its related effect on cash flows
from operating activities.

Kroll-O'Gara will continue to absorb the effect of the change in
procurement designation throughout the life of the HMMWV contract. Although
there will be no effect on Cash Flows from Operating Activities on a cumulative
basis, the change in payment terms will impact accounts receivable and Cost and
Estimated Earnings in Excess of Billings on Uncompleted Contracts from
period-to-period.

Cash used in operating activities decreased approximately $8.0 million in
1999 as compared to 1998. Unlike the large increase from 1997 to 1998 as a
result of the change in timing of progress payments for Kroll-O'Gara's HMMWV
contracts, Cost and Estimated Earnings in Excess of Billings on Uncompleted
Contracts account decreased slightly in 1999. This, combined with the increase
in amortization and depreciation expense, partially offset by a $5.4 million
increase in cash used for trade receivables and the overall net loss experienced
in 1999, contributed to the decreased use of cash from operating activities.

Cash flows from investing activities. In the six months ended June 30,
2000, Kroll-O'Gara incurred $4.9 million of capital expenditures primarily for
upgrades of general information systems as well as additional leasehold
improvements and office furniture and fixtures related to new office space in
the Investigations and Intelligence Group. In the six months ended June 30,
1999, Kroll-O'Gara incurred capital expenditures of $9.3 million primarily
related to the acquisition and implementation of two new enterprise systems, one
at its Security Products and Services Group and one at its Investigations and
Intelligence Group. The Security Products and Services Group is still in the
process of implementing additional modules of its new enterprise system;
Kroll-O'Gara currently estimates it will be completed by December 31, 2000. In
1999, Kroll-O'Gara sold $12.0 million of its marketable securities in order to
fund its increased capital expenditure requirements. Additions to databases
totaled $1.8 million and $2.2 million for the six months ended June 30, 1999 and
2000, respectively.

In 1999, Kroll-O'Gara incurred capital expenditures of $19.2 million.
Approximately $7.7 million related to the acquisition and implementation of two
new enterprise systems, one at its Security Products and Services Group and one
at its Investigation and Intelligence Group, as well as upgrades of general
information systems unrelated to Kroll-O'Gara's Year 2000 compliance efforts.
The Information Security Group incurred approximately $1.3 million of internal
use software development costs which were capitalized in 1999. Additional
capital expenditures of $6.2 million were made for machinery and

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<PAGE> 66

equipment. The remaining $4.0 million of capital expenditures related primarily
to normal periodic expenditures for leasehold improvements, vehicles and
furniture and fixtures. In 1998, Kroll-O'Gara incurred normal periodic capital
expenditures of $7.3 million. In 1999, Kroll-O'Gara sold $13.3 million of its
marketable securities in order to fund its increased capital expenditure
requirements. Additions to databases totaled $4.2 million and $3.9 million for
the years ended December 31, 1998 and 1999, respectively.

The levels of capital expenditures were in excess of the amounts permitted
by the credit agreement between Kroll-O'Gara and KeyBank in 1999. KeyBank has
provided Kroll-O'Gara a waiver from the requirements of this covenant.

In addition to capital expenditures, 1999 investing activities included the
acquisition of Buchler Phillips which required cash of approximately $12.0
million, net of cash acquired. In 1998, the acquisitions of Lindquist Avey,
InPhoto, Holder and Fact Finders as well as the assets of Protec, Pathology
Laboratories, Accu-Path, Harrison Laboratories and TOXWORX Laboratories required
cash of approximately $18.6 million, net of cash acquired. Management
anticipates that, to the extent Kroll-O'Gara continues to pursue strategic
acquisitions, additional cash outlays will be required.

Cash flows from financing activities. Cash provided by financing activities
for the first six months of 1999 was $18.2 million. In the first six months of
2000, cash provided by financing activities was $5.0 million. In both periods,
cash was provided by borrowings under bank lines of credit, net of repayments of
long term debt.

Net cash provided by financing activities was $57.9 million and $27.3
million for the years ended December 31, 1998 and 1999, respectively. Cash
provided by financing activities for 1999 was primarily provided by borrowings
under the bank lines of credit as well as proceeds from the exercise of stock
options and warrants. Cash from financing activities in 1998 included
approximately $60.4 million in net proceeds from the May offering. In addition,
Laboratory Specialists completed a private offering of its stock in June 1998
with proceeds of approximately $2.3 million. Approximately $14.8 million of the
proceeds from these transactions was used to repay indebtedness of Kroll-O'Gara.

Cash flows from financing activities in 1998 also included convertible
preferred stock issued by Securify, which was converted to Kroll-O'Gara common
stock in Kroll-O'Gara's acquisition of Securify. The net proceeds to Securify
associated with these shares were approximately $5.5 million.

Foreign operations. Kroll-O'Gara attempts to mitigate the risks of doing
business in foreign countries by separately incorporating its operations in
those countries, maintaining reserves for credit losses, maintaining insurance
on equipment to protect against losses related to political risks and terrorism,
and using financial instruments to hedge Kroll-O'Gara's risk from translation
gains and losses.

Kroll-O'Gara utilizes derivative financial instruments, in the form of
forward contracts, to hedge some of its exposure to foreign currency rate
fluctuations. At June 30, 2000, nine such contracts, maturing between July 2000
and January 2002, were outstanding in connection with intercompany demand notes
with certain subsidiaries. These contracts are intended to hedge Kroll-O'Gara's
exposure to deterioration in the amount outstanding due to changes in currency
translation rates. The notional amount, together with amortized premium, and the
fair market value associated with these forward contracts were $17.9 million and
$1.8 million, respectively. Gains or losses on existing forward instruments are
offset against the translation effects reflected in shareholders' equity. The
fair value of forward contracts is not recognized in the consolidated financial
statements since they are accounted for as hedges. Kroll-O'Gara does not hold or
issue derivative financial instruments for trading purposes.

Quarterly fluctuations. Kroll-O'Gara's operations may fluctuate on a
quarterly basis as a result of the timing of contract costs and revenues of its
Security Products and Services Group, particularly from

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<PAGE> 67

its military and governmental contracts which are generally awarded on a
periodic and/or sporadic basis. Kroll-O'Gara generally does not have long-term
contracts with its clients in its Investigations and Intelligence Group and its
ability to generate net sales is dependant upon obtaining many new projects each
year, most of which are of a relatively short duration. 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.

New accounting pronouncements. In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). SFAS
133 establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. SFAS 133, as amended, is effective for fiscal
years beginning after June 15, 2000. Kroll-O'Gara has several forward contracts
in place in association with demand notes from certain subsidiaries. These
instruments qualify for hedge accounting. Kroll-O'Gara has not yet quantified
the impact of adopting SFAS 133 on its financial statements and has not
determined the timing of or method of adoption of SFAS 133. However, SFAS 133
could increase volatility in earnings and other comprehensive income.

The Emerging Issues Task Force (EITF) Issue No. 00-20, "Accounting for
Costs Incurred to Acquire or Originate Information for Database Content and
Other Collections of Information", states that the EITF is considering different
views for the accounting for database costs. One of the views would require
Kroll-O'Gara to expense some or all of the database costs that Kroll-O'Gara
currently capitalizes and amortizes, which is currently an acceptable
alternative. Adoption of a different method of accounting for database costs
could have a material impact on Kroll-O'Gara's financial position and results of
operations. To date, the EITF has not made any official determinations on this
issue.

Forward-looking statements. This Management's Discussion and Analysis of
Financial Condition and Results of Operations contains statements which
Kroll-O'Gara believes are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. These statements are based
upon management's estimates, assumptions and projections and are subject to
substantial risks and uncertainties. Factors that could cause actual results to
differ materially from those in the forward-looking statements include, among
other things: contract delays, reductions or cancellations; cost overruns with
regard to fixed price contracts; problems and costs associated with integrating
business combinations; various political and economic risks of conducting
business outside the United States, including foreign economic conditions and
currency rate fluctuations; changes in laws and regulations; adjustments
associated with percentage-of-completion accounting; inability of
sub-contractors to perform on schedule and meet demand; unexpected competitive
pressures resulting in lower margins and volumes; uncertainties in connection
with start-up operations and opening new offices; higher- than-anticipated costs
of financing the business; loss of senior personnel; and changes in the general
level of business activity.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Liquidity and Capital Resources -- Foreign Operations," above. In
addition, see Note "Fair Value of Financial Instruments" of the Notes to The
Kroll-O'Gara Company's Consolidated Financial Statements.

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<PAGE> 68

MARKET PRICES AND DIVIDENDS

MARKET PRICES

Kroll-O'Gara common stock trades on the Nasdaq National Market under the
symbol "KROG." On September 1, 2000, there were approximately 225 record holders
of Kroll-O'Gara common stock.

The table below sets forth the high and low sale prices for Kroll-O'Gara
common stock as reported by The Nasdaq Stock Market for the periods indicated.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1998
First Quarter............................................. $19.25 $16.50
Second Quarter............................................ 22.00 17.00
Third Quarter............................................. 26.00 18.50
Fourth Quarter............................................ 40.50 20.00
1999
First Quarter............................................. $40.88 $26.31
Second Quarter............................................ 29.00 20.00
Third Quarter............................................. 26.31 14.31
Fourth Quarter............................................ 17.19 11.94
2000
First Quarter............................................. $16.69 $10.94
Second Quarter............................................ 10.94 4.56
Third Quarter (through 2000)..............................
</TABLE>

On , 2000, the closing price of Kroll-O'Gara common stock on
the Nasdaq National Market was $ per share.

DIVIDENDS

Kroll-O'Gara has never paid cash dividends but, instead, has retained its
earnings to finance its operations and for the growth and development of its
business. Kroll-O'Gara does not anticipate paying cash dividends on its shares
of Kroll-O'Gara common stock in the foreseeable future. Additionally the terms
of Kroll-O'Gara's Senior Notes and the credit agreement with its bank require
maintenance of certain financial ratios which may limit the funds available for
cash dividends. For information regarding the expected dividend policies of The
O'Gara Company and KRCS after the split-up, see "The O'Gara Company-Financing;
Dividend Policy" and "Kroll Risk Consulting Services, Inc.-Financing; Dividend
Policy."

LEGAL PROCEEDINGS

Kroll-O'Gara has been named as a defendant in eight lawsuits alleging that
its officers and directors breached their fiduciary duties in connection with
the now terminated proposed acquisition of a majority of Kroll-O'Gara's shares
by a company formed by Blackstone Capital Partners III Merchant Banking Fund
L.P. Five of the lawsuits were filed in the Court of Common Pleas, Butler
County, Ohio, and were consolidated on November 29, 1999. The remaining three
lawsuits were filed in the United States District Court for the Southern
District of New York and were consolidated on November 30, 1999. In amended
complaints, plaintiffs allege that Kroll-O'Gara's officers and directors
breached their fiduciary duties by deferring acquisitions, by negotiating an
inadequate acquisition price, by failing to engage in arms-length negotiations
and by failing to seek redress from Blackstone after Blackstone terminated the
proposed transaction. The plaintiffs also allege that Blackstone and AIG aided
and abetted the directors' and officers' alleged breaches of fiduciary duties.
The plaintiffs seek to bring their claims derivatively on

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<PAGE> 69

behalf of Kroll-O'Gara and also seek class certification. On behalf of
Kroll-O'Gara and putative plaintiff classes of shareholders, they seek a
declaration that the individual defendants breached their fiduciary duty and
seek damages and attorneys' fees in an unspecified amount. The defendants
believe that the allegations in the complaints are wholly meritless and will
defend the suits vigorously.

Kroll-O'Gara has learned that an individual has filed a qui tam suit, which
is under seal, against Kroll-O'Gara under the Civil False Claims Act, 31 U.S.C.
sec.3729, alleging that Kroll-O'Gara and three of its vendors knowingly violated
their contractual requirements with the U.S. Army. On January 18, 2000, an
attorney for the U.S. Department of Justice stated that it was his intention to
recommend that the Government intervene and take over the suit and estimated
Kroll-O'Gara's liability to be as high as $16,000,000 stemming from its vendors'
alleged failure to have certified welders. Although Kroll-O'Gara strongly
disputes the Government's contentions against it and will vigorously contest the
Government's claims, in September 2000, Kroll-O'Gara began settlement
negotiations with the U.S. Department of Justice. Management currently believes
a settlement of this matter is possible for approximately $1.1 million and
Kroll-O'Gara will accrue this expense in the third quarter of fiscal 2000.

In addition to the matters discussed above, Kroll-O'Gara is involved in
litigation from time to time in the ordinary course of its business; however,
the company does not believe that there is any currently pending litigation,
individually or in the aggregate, that is likely to have a material adverse
effect on its business, financial condition, results of operations or cash
flows.

PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of Kroll-O'Gara common stock on September 8, 2000 by (1) each
beneficial owner of more than five percent of the common stock, (2) each
director and named executive officer individually and (3) all directors and
executive officers of Kroll-O'Gara as a group. Unless otherwise indicated, all
shares are owned directly and the indicated owner has sole voting and
dispositive power with respect to such shares.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-----------------------
NAME NUMBER PERCENT
---- ----------- --------
<S> <C> <C>
Jules B. Kroll(2)(3)........................................ 2,879,991 12.9
Thomas M. O'Gara(2)......................................... 2,441,369 10.9
Wilfred T. O'Gara........................................... 380,489 1.7
Michael G. Cherkasky........................................ 217,814 *
Marshall S. Cogan........................................... 2,000 *
Raymond E. Mabus............................................ 4,000 *
Nazzareno E. Paciotti....................................... 138,845 *
Hugh E. Price............................................... 27,889 *
William S. Sessions......................................... 4,000 *
All directors and executive officers as a group (11
persons).................................................. 6,248,363 27.3
American International Group, Inc.(2)....................... 1,444,212 6.5
</TABLE>

---------------
* Less than 1%.

(1) Includes the following numbers of shares of common stock which may be
acquired through the exercise of currently exercisable stock options or
stock options which become exercisable within 60 days after September 1,
2000: Mr. Kroll, none; Mr. Thomas M. O'Gara, 23,150 shares; Mr. Wilfred T.
O'Gara, 137,447 shares; Mr. Cherkasky, 189,154 shares; Mr. Cogan, 2,000
shares, Mr. Mabus, 4,000 shares; Mr. Paciotti, 125,529 shares; Mr. Price,
27,889 shares; Mr. Sessions, 4,000 shares; and all directors and executive
officers as a group, 608,169 shares. Also includes for Mr. Cherkasky, 250
shares of restricted stock that vest within 60 days of September 8, 2000.

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<PAGE> 70

(2) Mr. Kroll's address is 900 Third Avenue, New York, New York 10022. Mr.
O'Gara's address is 9113 LeSaint Drive, Fairfield, Ohio 45014. AIG's address
is 70 Pine Street, New York, New York 10270.

(3) Does not include 192,560 shares held by trusts for the benefit of Mr.
Kroll's adult children, in which Mr. Kroll disclaims any beneficial
interest.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires
Kroll-O'Gara's executive officers and directors, and persons who beneficially
own more than ten percent of Kroll-O'Gara's equity securities, to file reports
of security ownership and changes in such ownership with the Securities and
Exchange Commission. These persons also are required by SEC regulations to
furnish Kroll-O'Gara with copies of all Section 16(a) forms they file. Based
upon a review of copies of those forms and written representations from its
executive officers and directors, Kroll-O'Gara believes that all Section 16(a)
forms were filed on a timely basis during and for 1999.

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<PAGE> 71

THE O'GARA COMPANY

This section gives financial, business and management information about The
O'Gara Company after the split-up. The "Business" description generally is
written as if the split-up already were completed.

FINANCING; DIVIDEND POLICY

FINANCING

The O'Gara Company expects to obtain debt funding prior to completion of
the split-up to repay the portion of Kroll-O'Gara's third party financing
obligations assumed by it as well as a working capital and letter of credit
facility.

DIVIDEND POLICY

The O'Gara Company anticipates that any future earnings will be retained to
finance its operations and for the growth and development of its business.
Accordingly, The O'Gara Company does not anticipate paying cash dividends on its
shares of common stock in the foreseeable future. Additionally the terms of the
credit agreement with its bank is expected to require maintenance of certain
financial ratios which may limit the funds available for cash dividends. The
payment of any future dividends will be subject to the discretion of the Board
of Directors of The O'Gara 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.

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<PAGE> 72

PRO FORMA CAPITALIZATION

The following table sets forth The O'Gara Company's capitalization as of
June 30, 2000 (1) on an historical basis and (2) as adjusted to give effect to
the split-up. This information should be read in conjunction with "Selected
Historical and Unaudited Pro Forma Financial Information", The O'Gara Company's
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and its audited combined financial statements and related notes
included elsewhere in this proxy statement.

<TABLE>
<CAPTION>
AT JUNE 30, 2000
----------------------
ACTUAL AS ADJUSTED
------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 2,597 $ 2,597
======= =======
Short-term debt and current maturities of long-term
debt(1)................................................... $ 1,671 $ 1,671
Current portion of allocated Kroll-O'Gara long-term debt.... 15,652 15,652
Long-term debt, less current maturities(1).................. 966 966
Allocation of Kroll-O'Gara long-term debt................... 15,725 15,725
Shareholders' equity:
Preferred Stock, 1,000,000 shares authorized; no shares
issued or outstanding................................. -- --
Common Stock, $0.01 par value, 15,000,000 shares
authorized; 6,000,000 shares issued and outstanding on
June 30, 2000, as adjusted............................ -- 60
Additional paid-in capital............................. -- 48,722
Retained earnings (deficit)............................ -- (1,465)
Advances from Kroll-O'Gara............................. 50,653 --
Deferred compensation.................................. (826) --
Accumulated other comprehensive income (loss).......... (3,115) (3,115)
------- -------
Total shareholders' equity........................ 46,712 44,202
------- -------
Total capitalization.............................. $80,726 $78,216
======= =======
</TABLE>

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

(1) For a description of The O'Gara Company's debt, see its "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

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<PAGE> 73

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 O'Gara Company's
Combined Financial Statements and Notes. As a result of the acquisitions made by
The O'Gara Company's parent, The Kroll-O'Gara Company, in 1997 and 1998,
financial results from period-to-period may lack comparability .

RECENT DEVELOPMENTS

In the third quarter of 2000, The O'Gara Company began implementation of a
plan to reduce costs and anticipates incurring a total non-recurring pre-tax
restructuring charge of less than $1.0 million. The primary component of the
restructuring charge is severance related to the termination of employees.

GENERAL

The O'Gara Company is a wholly owned holding company subsidiary of The
Kroll-O'Gara Company and currently consists of most of the businesses that
operate in Kroll-O'Gara's Security Products and Services Group as well as
Securify, the business that operates as Kroll-O'Gara's Information Security
Group.

In April 2000, Kroll-O'Gara decided to explore the split-up of its
principal businesses into two independent public companies; The O'Gara Company
is a newly incorporated company organized in preparation for the split-up. Under
an agreement and plan of reorganization and dissolution of Kroll-O'Gara adopted
by Kroll-O'Gara's Board of Directors on August 30, 2000, the completion of which
is subject to a number of conditions including the receipt of a favorable tax
ruling and the approval by Kroll-O'Gara's shareholders, The O'Gara Company will
receive substantially all of the assets and liabilities of Kroll-O'Gara's
Security Products and Services Group, and 60% of Kroll-O'Gara's ownership
interest in the common stock of Securify, as well as a portion of Kroll-O'Gara's
assets and liabilities that are not attributable to a particular business group.
The remaining business of Kroll-O'Gara, primarily the Investigations and
Intelligence Group, the Voice and Data Communications Group and 40% of
Kroll-O'Gara's ownership interest in the common stock of Securify, as well as
the other assets and liabilities that are not attributable to a particular
business group, will be transferred to and assumed by another newly incorporated
company, Kroll Risk Consulting Services, Inc. After these transfers, certain
management shareholders of Kroll-O'Gara will exchange all of their shares of
Kroll-O'Gara common stock for shares of The O'Gara Company common stock and
other management shareholders of Kroll-O'Gara will exchange all their shares of
Kroll-O'Gara common stock for shares of KRCS common stock. Kroll-O'Gara then
will distribute, on a pro rata basis, all remaining shares of The O'Gara Company
common stock and KRCS common stock held by it to the remaining holders of Kroll-
O'Gara common stock. The exchanging management shareholders will not participate
in this distribution. Concurrent with the completion of these transactions, The
O'Gara Company and KRCS will become separate publicly-traded companies.
Subsequent to the reorganization and split-up, Kroll-O'Gara will be dissolved.
In the six months ended June 30, 2000, costs associated with this separation
were approximately $0.3 million ($0.05 per diluted share) and consisted
primarily of fees for attorneys, accountants and other related charges. The
O'Gara Company anticipates additional expenses will be incurred in the second
half of 2000.

The O'Gara Company is a leading provider of a broad range of specialized
products and services that are designed to provide solutions to a variety of
security needs. The O'Gara Company reports its revenue from operations through
two groups. The Security Products and Services Group markets

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<PAGE> 74

ballistic and blast protected vehicles and security services. Securify offers
information and computer security services, including network and system
security review and repair.

Failed Merger. On November 15, 1999, Kroll-O'Gara announced that it had
entered into a definitive agreement with Blackstone Capital Partners III
Merchant Banking Fund L.P. pursuant to which shares held by all Kroll-O'Gara
shareholders, other than certain members of management, would be acquired by
Blackstone for $18.00 per share in cash. On April 12, 2000, Kroll-O'Gara
announced that Blackstone had withdrawn its offer to acquire Kroll-O'Gara
shares. Costs associated with this separation that have been allocated from
Kroll-O'Gara to The O'Gara Company for the year ended December 31, 1999 and the
six months ended June 30, 2000 were approximately $0.7 million and $0.8 million,
respectively, and consisted primarily of fees for attorneys, accountants and
other related charges.

Other Acquisitions. Kroll-O'Gara has pursued a strategy of aggressive
growth and has completed several acquisitions in 1997 and 1998 which benefited
The O'Gara Company, one of which was accounted for as a pooling of interest and
others of which have been accounted for as purchases. These acquisitions are
listed in the chart which follows.

POOLINGS(1)

<TABLE>
<CAPTION>
COMPANY BUSINESS GROUP DATE ACQUIRED PRICE
------- -------- ----- ------------- -----
<S> <C> <C> <C> <C>
Securify Inc. Information Information December 31, 1998 1,430,936 shares
security services Security
</TABLE>

PURCHASES(2)

<TABLE>
<CAPTION>
COMPANY BUSINESS GROUP DATE ACQUIRED PRICE
------- -------- ----- ------------- -----
<S> <C> <C> <C> <C>
Labbe, S.A. Armors commercial Security Products January 1, 1997 $10.7 million in
vehicles and builds and Services cash and 376,597
truck bodies in shares
France

International Advanced security Security Products March 1, 1997 $0.5 million in
Training, training and Services cash, 68,086 shares
Incorporated and $1.2 million in
financing

ZAO IMEA Armors cash-in Security Products December 1, 1997 $0.6 million in
transit vehicles and Services cash and 138,889
and distributes shares
commercial bank
equipment in Russia

Protec S.A. Armors cars in Security Products September 30, 1998 $3.2 million in
Colombia and Services cash and 38,788
shares
</TABLE>

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

(1) Pooling of interest accounting requires the restating of all prior period
financial information as though the acquired entity had always been a part
of The O'Gara Company.

(2) The O'Gara Company's combined financial statements include the reported
results of each entity from its effective date of acquisition forward.

Revenue recognition. The O'Gara Company recognizes net sales from most
military and certain commercial armoring contracts using the
percentage-of-completion method calculated utilizing the cost-to-cost approach.
Under this method, The O'Gara Company accrues estimated contract revenues based
generally on the percentage that costs to date bear to total estimated costs and
recognizes estimated contract losses in full when it becomes likely that a loss
will occur. Accordingly, The O'Gara Company

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<PAGE> 75

periodically reviews and revises contract revenues and total cost estimates as
the work progresses and as change orders are approved. It reflects adjustments
in contract revenues, based upon the percentage of completion, in the period
when the estimates are revised. To the extent that these adjustments result in
an increase, a reduction or an elimination of previously reported contract
revenues, The O'Gara Company recognizes a credit or a charge against current
earnings, which could be material. Contract costs include all direct material
and labor costs, along with certain direct overhead costs related to contract
production. The O'Gara Company records provisions for any estimated total
contract losses on uncompleted contracts in the period in which it concludes
that the losses will occur. Changes in estimated total contract costs result in
revisions to contract revenue. The revisions are recognized when determined.

The O'Gara Company recognizes information security service revenues, which
consist of consulting fees on information security projects, ratably over the
period of the agreement or according to the completed contract method of
accounting for contract revenues, depending on the nature of the agreement.

RESTRUCTURING OF OPERATIONS

Due to the acquisitions Kroll-O'Gara completed in 1997 and 1998,
integration of the operations of the acquired companies with existing operations
was a strategic initiative for Kroll-O'Gara's management. As part of this
initiative, The O'Gara Company's management evaluated its business to ensure
that its core businesses were operating efficiently and concluded that a cost
savings initiative was required and would be achieved largely through operating
process improvements and a corresponding decrease in personnel.

In the first quarter of 1999, The O'Gara Company began implementation of a
plan to reduce costs and improve operating efficiencies and recorded a
non-recurring pre-tax restructuring charge of approximately $0.2 million. In the
second quarter of 1999, The O'Gara Company completed the restructuring plan with
an additional non-recurring pre-tax restructuring charge of $0.1 million. The
principal elements of the restructuring plan were the elimination of
approximately 55 employees. The primary components of the restructuring charge
were severance costs. See Note 4 to the Notes to Combined Financial Statements
for more information.

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RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
FOR THE YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------- ----------------
1997 1998 1999 1999 2000
------- ------- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Security Products and Services
Military................................. 43.4% 45.4% 33.4% 31.4% 28.7%
Commercial............................... 56.6% 54.5% 62.9% 64.3% 67.9%
Information Security....................... -- 0.1% 3.7% 4.4% 3.4%
----- ----- ----- ----- -----
Total net sales.................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.............................. 71.9 72.4 70.6 67.5 75.6
----- ----- ----- ----- -----
Gross profit.......................... 28.1 27.6 29.4 32.5 24.4

Operating expenses:
Selling and marketing.................... 6.5 5.8 7.5 7.2 8.2
General and administrative............... 10.1 9.9 17.4 12.3 21.8
Spin-off expenses........................ -- -- -- -- 0.5
Failed merger expenses................... -- -- 0.6 -- 1.6
Merger expenses.......................... 2.9 0.9 0.1 0.1 --
Restructuring charge..................... -- -- 0.2 0.5 --
----- ----- ----- ----- -----
Operating income (loss)............... 8.7 11.0 3.6 12.4 (7.8)

Other income (expense):
Interest expense......................... (2.9) (1.8) (1.7) (1.4) (2.2)
Other, net............................... (0.4) -- (0.1) -- (0.3)
----- ----- ----- ----- -----
Income (loss) before provision for income
taxes, extraordinary item and cumulative
effect of accounting change.............. 5.3 9.2 1.8 11.1 (10.2)
Provision (benefit) for income taxes..... 2.8 3.8 (1.9) 4.3 0.6
----- ----- ----- ----- -----
Income (loss) before extraordinary item and
cumulative effect of accounting change... 2.5 5.4 (0.1) 6.8 (10.9)
Extraordinary item......................... (0.2) -- -- -- --
Cumulative effect of accounting change, net
of tax benefit........................... -- -- (0.7) (1.4) --
----- ----- ----- ----- -----
Net income (loss).......................... 2.3% 5.4% (0.8)% 5.4% (10.9)%
===== ===== ===== ===== =====
</TABLE>

Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999

NET SALES. Net sales for the six months ended June 30, 2000 decreased $3.6
million, or 6%, from $57.0 million in 1999 to $53.3 million in 2000.

Security Products and Services Group. Net sales for the Security Products
and Services Group for the six months ended June 30, 2000 decreased $3.0
million, or 5%, from $54.5 million in 1999 to $51.5 million in 2000. The
decrease results from a decrease in net sales of military products and services
of $2.6 million, or 14%, from $17.9 million in 1999 to $15.3 million in 2000.
The decrease in net sales of military products and services was a result of the
completion in the fourth quarter of 1999 of a contract with the U.S. Military to
supply 738 armored High Mobility Multi-Purpose Wheeled Vehicles ("HMMWVs") to
the U.S. Army and the U.S. Air Force (the "738 Contract"). The 738 Contract,
which began in 1998, resulted in higher levels of production and net sales as a
result of an

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<PAGE> 77

aggressive delivery schedule required by the U.S. Air Force. In 2000, The O'Gara
Company's military product sales were based solely on a newer contract for 245
Up-Armored HMMWVs, which does not provide for an aggressive delivery schedule.

Also included in net sales for the Security Products and Services Group are
sales of commercial armoring products and services, which decreased $0.4
million, or 1%, from $36.6 million in 1999 to $36.2 million in 2000. Commercial
armoring sales decreased approximately $2.7 million from $34.8 million in 1999
to $32.1 million in 2000. In one foreign location, net sales of armoring
products in the second quarter of 2000 decreased because base units needed to
start production on signed contracts were not available due to recalls by the
original equipment manufacturer in order to fix safety defects. However,
security service revenue increased $2.3 million from $1.8 million in 1999 to
$4.1 million in 2000. This increase was primarily related to increases in driver
training revenues in Texas and Virginia.

Securify. Net sales for Securify decreased $0.7 million, or 27%, from $2.5
million in 1999 to $1.8 million in 2000. Net sales decreased due to a continuing
focus on development of Securify's service capabilities and the related
inability to establish a firm customer base until the development of the
business is complete.

COST OF SALES AND GROSS PROFIT. Cost of sales for the six months ended June
30, 2000 increased $1.9 million, or 5%, from $38.4 million in 1999 to $40.3
million in 2000. Cost of sales increased approximately $1.1 million in the
Security Products and Services Group primarily as a result of increased
engineering costs associated with new vehicle models introduced by original
equipment manufacturers in 2000. Securify's cost of sales increased
approximately $0.8 million as a result of an increase in client consulting
personnel to prepare for future growth of Securify's service business.

Gross margin for the six months ended June 30, 2000 was 24.4% compared with
32.5% for the same period in 1999. Approximately 2.1 percentage points of this
decrease were the result of Securify's loss of $0.2 million included in gross
profit. Gross margin for the Security Products and Services Group decreased
approximately 6.0 percentage points from 31.7% in 1999 to 25.7% in 2000. In the
second quarter of 2000, new vehicle models caused additional costs as prototypes
for the new models had to be completed before full production could begin. All
prototype costs were expensed as incurred. In 1999, there were no substantial
prototype expenses. In addition, commercial armoring margins were impacted by
the previously mentioned original equipment manufacturer recalls as well as
competitive pricing pressures and pricing concessions necessitated by poor
foreign economic conditions in certain locations.

OPERATING EXPENSES. Operating expenses for the six months ended June 30,
2000 increased $5.7 million, or 50%, from $11.4 million in 1999 to $17.1 million
in 2000. This increase includes an increase in non-recurring expenses of $0.8
million, from $0.3 million in 1999 to $1.1 million in 2000. Non-recurring
charges in the first six months of 2000 consisted of approximately $0.8 million
of costs associated with the failed recapitalization merger with Blackstone
allocated to the Security Products and Services Group as well as $0.3 million of
costs associated with the split-up of Kroll-O'Gara allocated to the Security
Products and Services Group. In the first six months of 1999, non-recurring
expenses included a restructuring charge of $0.3 million.

Excluding non-recurring expenses, operating expenses increased $4.9
million. Included in this increase were $0.8 million for depreciation and
amortization of fixed and intangible assets, including goodwill. In addition,
Securify's operating expenses increased $3.3 million as a result of the
continuing focus on development of Securify's software products capabilities
including an increase in professional and administrative personnel to support
the increased development. The remaining increase relates to additional legal,
accounting, insurance and information system costs.

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<PAGE> 78

As a percent of net sales, operating expenses, before non-recurring
charges, increased from 19.5% in 1999 to 30.0% in 2000. As mentioned previously,
the increase in operating expenses as a percentage of net sales is primarily a
result of increased fixed costs to develop Securify's software products
capabilities and to administer the growth experienced by The O'Gara Company due
to the acquisitions completed since 1998.

INTEREST EXPENSE. Interest expense for the six months ended June 30, 2000
increased $0.4 million, or 46%, from $0.8 million in 1999 to $1.2 million in
2000. This increase was the result of increased borrowings on the Security
Products and Services Group's allocated portion of Kroll-O'Gara's revolving
credit facility. For most of the first six months of 1999, Kroll-O'Gara had
excess funds as a result of a public offering of stock completed in May 1998. As
a result, The O'Gara Company experienced lower allocated interest expense from
Kroll-O'Gara throughout 1999. However, in 2000, borrowings on the Kroll-O'Gara
line of credit increased partially as a result of funding the development of
Securify's software products capabilities. This resulted in an increase in the
allocation of interest from Kroll-O'Gara to The O'Gara Company.

PROVISION FOR INCOME TAXES. The provision for income taxes for the six
months ended June 30, 2000 was $0.3 million compared to $2.5 million in 1999.
Despite a pre-tax loss in the first six months of 2000, The O'Gara Company
recorded a provision for income taxes for certain foreign subsidiaries which
generated income in the period. In addition, certain foreign jurisdictions
realized losses during the first six months of 2000 from which The O'Gara
Company was not able to benefit for tax purposes due to the uncertainty relating
to the future realizability of the net operating loss carryforward.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. The O'Gara Company had
previously capitalized costs associated with the start-up of activities,
including pre-operating costs, organization costs and other start-up costs.
These capitalized costs were amortized over periods ranging from one to five
years. The capitalized amount, $1.2 million before tax, was expensed in 1999 in
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, "Reporting on the Cost of Start-Up Activities." The amount
expensed is shown net of applicable tax benefit of $0.4 million.

1999 COMPARED TO 1998

Net Sales. Net sales for the year ended December 31, 1999 decreased $13.2
million, or 10%, from $131.7 million in 1998 to $118.5 million in 1999.

Security Products and Services Group. Net sales for the Security Products
and Services Group decreased $17.4 million, or 13%, from $131.6 million in 1998
to $114.2 million in 1999. The decrease related to a decrease in net sales of
military products and services of $20.2 million, or 34%, from $59.8 million in
1998 to $39.6 million in 1999. In April 1998, The O'Gara Company began work on
the 738 Contract. In addition, The O'Gara Company continued work on a previous
contract with the U.S. Military for 360 Up-Armored HMMWVs through July of 1998.
The combination of production on the two contracts as well as an aggressive
delivery schedule required by the U.S. Air Force relating to the 738 Contract
resulted in unusually high levels of production and net sales in 1998. In 1999,
levels of production and net sales more nearly approximated those of 1997.

Also included in net sales for the Security Products and Services Group are
sales of commercial armoring products and services, which increased $2.8
million, or 4%, from $71.7 million in 1998 to $74.6 million in 1999. Increases
in net sales for security services accounted for the increase in commercial net
sales as these services increased $2.7 million, or 65%, for the year ended
December 31, 1999 in comparison with 1998. The increase in net sales of security
services was primarily the result of

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<PAGE> 79

increased sales associated with the introduction of driver training operations
in Texas and Mexico in 1999.

Securify. Net sales for Securify increased $4.2 million from $0.1 million
in 1998 to $4.3 million in 1999. Securify initiated operations in February 1998
but had minimal sales as it was involved in start-up activities for most of the
year.

COST OF SALES AND GROSS PROFIT. Cost of sales decreased $11.7 million, or
12%, from $95.3 million in 1998 to $83.6 million in 1999. The decrease in cost
of sales was due to the decrease in sales in the Security Products and Services
Group. Gross margin was 27.6% and 29.4% for 1998 and 1999, respectively. The
overall increase in gross profit as a percent of net sales was primarily the
result of a shift in sales mix in which higher margin Securify net sales
increased as a percentage of total net sales.

Gross margins for the Security Products and Services Group were 28.0% and
28.5% in 1998 and 1999, respectively. Gross margin increased as a result of a
planned shift in sales mix in the Security Products and Services Group's
domestic operations to increased commercial armoring sales and military spare
parts sales, both of which have higher margins. However, this gross margin
increase was partially offset by poor gross margin performance experienced in
all foreign operations as a result of competitive pricing pressures and pricing
concessions necessitated by foreign economic conditions. A transition to higher
levels of armoring in Latin and South America also slowed sales and required
some inventory writeoffs. Additionally, currency devaluations in South America
hurt margins and slowed sales.

Gross margin at Securify reflects a full year of operations and was 52.9%
in 1999.

OPERATING EXPENSES. Operating expenses increased $8.7 million, or 40%, to
$30.6 million in 1999 from $21.9 million in 1998. The increase is partially due
to the acquisition of Protec assets completed in 1998. Operating expenses of
this company represented $1.1 million of total operating expenses in 1999 and
$0.3 million of total operating expenses in 1998. Excluding operating expenses
of this acquisition and non-recurring charges, operating expenses increased $7.9
million. Included in this increase was $1.3 million for depreciation and
amortization of intangible assets, including goodwill. In addition,
approximately $2.7 million of the increase relates to increased operating
expenses at Securify as it was a start-up operation in 1998 and did not begin
full operations until 1999. An additional $2.1 million of the increase in
expenses relates to the additional legal, accounting, insurance and information
systems costs required to administer the growth experienced by The O'Gara
Company since the beginning of 1998. A key component of these costs was the
implementation of a new enterprise system at one of the Security Products and
Services Group's subsidiaries as well as new financial consolidation reporting
software. The implementation of additional modules of the new enterprise system
is still in process and is currently expected to be completed by December 31,
2000. The remaining increase, $1.8 million, related to overall compensation and
benefits increases, an increase in the level of personnel working to administer
the growth experienced by The O'Gara Company since the beginning of 1998 and
other administrative, marketing and facility costs.

In 1998, The O'Gara Company recorded approximately $1.1 million in
non-recurring expenses related to the merger with Securify. In 1999, The O'Gara
Company recorded approximately $1.1 million in non-recurring charges as well.
Approximately, $0.1 million related to merger expenses associated with the above
mentioned merger. In addition, The O'Gara Company recorded approximately $0.7
million in failed merger expenses associated with the failed recapitalization
merger with Blackstone and an additional $0.3 million for a restructuring
charge.

As a percent of net sales, operating expenses, before non-recurring
charges, were 15.8% in 1998 and 24.8% in 1999. As mentioned previously, the
increase in operating expenses as a percentage of net

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sales is primarily a result of increased fixed costs to administer the growth
experienced by The O'Gara Company since the beginning of 1998.

INTEREST EXPENSE. Interest expense decreased $0.4 million, or 17%, to $2.0
million in 1999 from $2.4 million in 1998. With the completion of a stock
offering by Kroll-O'Gara in May 1998, a portion of Kroll-O'Gara's debt was
repaid. As a result, The O'Gara Company experienced lower allocated interest
expense from Kroll-O'Gara starting in the third quarter of 1998 and continuing
throughout 1999.

INTEREST INCOME. Interest income decreased $0.5 million, or 86%, to $0.1
million in 1999, compared to $0.6 million in 1998. Net proceeds of the May 1998
Kroll-O'Gara stock offering that were not used to repay debt were invested in
short-term instruments with maturities of three months or less. The return on
these investments was responsible for the increased allocation of interest
income to The O'Gara Company in 1998. In 1999, the remaining investments were
liquidated to fund acquisitions by Kroll-O'Gara and increases in working capital
needs as a result of acquisitions and growth.

PROVISION FOR INCOME TAXES. The provision for income taxes was $2.3 million
in 1999 in comparison with $5.0 million in 1998. The effective tax rates for the
periods were 41% in 1998 and 107% in 1999. In 1999, The O'Gara Company booked
taxes at an effective rate significantly higher than it had previously
experienced largely due to the non-deductibility of some of the merger related
expenses incurred in the period as well as increases in nondeductible goodwill
and intangible amortization. In 1998, The O'Gara Company determined that certain
of the Kroll Holdings merger expenses qualified for future deductibility which
favorably impacted the effective tax rate in 1998.

NET INCOME. Net income decreased $8.1 million from $7.1 million in 1998 to
a loss of $0.9 million in 1999. The decrease was due primarily to an $8.7
million increase in operating expenses, as discussed above.

1998 COMPARED TO 1997

Net Sales. Net sales for the year ended December 31, 1998 increased $31.0
million, or 31%, from $100.7 million in 1997 to $131.7 million in 1998.

Security Products and Services Group. Net sales for the Security Products
and Services Group increased $30.8 million, or 31%, from $100.7 million in 1997
to $131.6 million in 1998. The increase includes net sales of commercial
products and security services, which increased $14.7 million, or 26%, from
$57.0 million in 1997 to $71.7 million in 1998. The increase in commercial net
sales was primarily due to continued growth in The O'Gara Company's
international armoring divisions. During 1996, 1997 and 1998, The O'Gara Company
initiated start-up armoring operations in Mexico, Brazil and the Philippines,
and acquired Labbe, IMEA and the assets of Protec.

Increases in net sales for security services also contributed to the
increase in commercial net sales for the Security Products and Services Group.
Net sales of these services increased $1.7 million, or 67%, for the year ended
December 31, 1998 in comparison with 1997.

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<PAGE> 81

Net sales for the Security Products and Services Group include sales of
military products and services, which increased $16.1 million, or 37%, from
$43.7 million in 1997 to $59.8 million in 1998. In April 1998, The O'Gara
Company began work on the 738 Contract. Production on The O'Gara Company's
previous contract with the U.S. Military for 360 Up-Armored HMMWVs continued
through July 1998. The combination of production on the two contracts was a
factor in the increase in net sales.

The U.S. Air Force dictated an aggressive delivery schedule for the 738
Contract. This delivery schedule required The O'Gara Company to maintain an
increased level of production in 1998 for the Up-Armored HMMWV in comparison
with production levels in previous periods.

Securify. Securify initiated operations in 1998, recording net sales of
$0.1 million.

COST OF SALES AND GROSS PROFIT. Cost of sales increased $22.9 million, or
32%, from $72.4 million in 1997 to $95.3 million in 1998. The increase in cost
of sales was due to the increased level of business activity experienced in
1998. Gross margin was 28.1% and 27.6% for 1997 and 1998, respectively. The
slight decrease in gross margin is primarily the result of Securify's loss of
$0.4 million included in gross profit. This loss was a result of an increase in
client consulting personnel to prepare for future growth as Securify's service
business was developed.

Gross margins for the Security Products and Services Group were 28.1% and
28.0% in 1997 and 1998, respectively.

OPERATING EXPENSES. Operating expenses increased $2.3 million, or 12%, to
$21.9 million in 1998 from $19.6 million in 1997. Included in operating expenses
in 1997 were approximately $2.9 million in expenses related to the merger with
Kroll Holdings. In 1998, The O'Gara Company recorded approximately $1.1 million
in merger related expenses primarily associated with the Securify merger.

Before merger related expenses, operating expenses increased $4.1 million,
or 24%, from $16.7 million in 1997 to $20.7 million in 1998. A portion of this
increase was attributable to the start-up of Securify in February 1998.
Operating expenses related to Securify were $1.8 million in 1998. The remaining
increase was primarily attributable to an increase in the level of personnel and
professional services required to administer the business growth experienced by
The O'Gara Company in 1998.

As a percent of net sales, operating expenses, before merger related costs,
were 16.5% in 1997 and 15.7% in 1998. Although The O'Gara Company did experience
an increase in fixed costs associated with Securify's start-up of operations,
the increased level of production and net sales in the Security Products and
Services Group in 1998 caused operating expenses as a percentage of net sales to
decline overall.

INTEREST EXPENSE. Interest expense decreased $0.6 million, or 19%, to $2.4
million in 1998 from $3.0 million in 1997. With the completion of the previously
mentioned stock offering by Kroll-O'Gara, a significant portion of
Kroll-O'Gara's indebtedness was repaid. As a result, The O'Gara Company's
allocated interest expense from Kroll-O'Gara decreased starting in the third
quarter of 1998.

The allocation of interest expense from Kroll-O'Gara was also affected by a
decrease in interest expense related to the Senior Notes. On May 30, 1997,
Kroll-O'Gara entered into an agreement with institutional investors to issue and
sell $35.0 million worth of Senior Notes. This agreement contained a provision
for a reduction of the interest rate if specified criteria were met.
Kroll-O'Gara complied with the criteria and the step down of rates commenced in
the second quarter of 1998. The reduction changed the interest rate from 9.56%
to 8.56% and contributed to the decrease in interest expense in 1998.

INTEREST INCOME. Interest income increased $0.6 million, or 600%, to $0.6
million in 1998. Net proceeds of the previously mentioned stock offering that
were not used to repay debt were invested in

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short-term instruments with maturities of three months or less. The return on
these investments was responsible for the increase in allocated interest income
from Kroll-O'Gara in 1998.

PROVISION FOR INCOME TAXES. The provision for income taxes was $5.0 million
for the year ended December 31, 1998 in comparison with $2.8 million for the
same period in 1997. The effective tax rates for the periods were 52% in 1997
and 41% in 1998. In 1997, The O'Gara Company booked taxes at an effective rate
significantly higher than it had previously experienced largely due to the
non-deductibility of some of the merger related expenses incurred in the period.
In 1998, The O'Gara Company determined that certain of the Kroll Holdings merger
expenses qualified for future deductibility which favorably impacted the
effective tax rate in 1998.

NET INCOME. Net income increased $4.8 million from $2.4 million in 1997 to
$7.1 million in 1998. The increase was due primarily to an $8.0 million increase
in gross profit, offset by $2.3 million in increased operating expenses and an
increased provision for income taxes, as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

General. The O'Gara Company historically has met its operating cash needs
by utilizing advances from Kroll-O'Gara to supplement cash provided by
operations and other financing activities, excluding non-cash charges such as
depreciation and amortization.

Financing. The O'Gara Company expects to obtain debt funding prior to
completion of the split-up to repay the portion of Kroll-O'Gara's third party
financing obligations assumed by it as well as to establish a working capital
and letter of credit facility.

On September 14, 2000, Kroll-O'Gara amended its credit agreement to provide
for an extension of its temporary increase in its revolving line of credit from
$25.0 million to $40.0 million. Pursuant to the amended credit agreement, the
increase in the revolving line of credit is effective until January 1, 2001, at
which time all borrowings in excess of $25.0 million must be repaid. The credit
facility continues to provide for a letter of credit facility of approximately
$7.6 million. Both the letter of credit facility and the line of credit mature
on May 31, 2001. Advances under the revolving line of credit bear interest at
rates ranging from prime to prime plus 0.75%, or, at Kroll-O'Gara's option,
LIBOR plus 1.50% to LIBOR plus 2.50%, dependent upon a defined financial ratio.

Cash flows from operating activities. Cash used in operating activities was
$0.2 million in the first six months of 1999. Cash provided by operating
activities was $0.9 million in 2000. In the first six months of 1999, cash was
used primarily to fund working capital investments offset by net income. In the
first six months of 2000, cash was provided by working capital investments but
was partially offset by the net loss incurred by Securify.

Operating activities used $1.8 million in net cash in 1999 in comparison
with $11.4 million in net cash used in operating activities in 1998. From the
inception in 1993 of The O'Gara Company's contract with the U.S. Government to
armor the HMMWV through the first quarter of 1998, The

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O'Gara Company was designated a Small Business according to U.S. Government
procurement regulations. Thereafter, The O'Gara Company's designation was
changed to Large Business for government procurement purposes.

The change in designation has affected contract progress payments from the
government, and The O'Gara Company's cash flow, in two ways. First, since the
change, the progress payments have been determined using a smaller percentage of
total cost committed than before. Second, The O'Gara Company has been reimbursed
for vendor invoices paid instead of expenses incurred. Although these changes do
not affect the total amount ultimately collected, they defer some of the amounts
previously included as part of a progress payment until the vehicles are
delivered.

The majority of these adjustments to the way The O'Gara Company is
reimbursed for its military business were applied to the HMMWV contracts in
1998. This resulted in a significant increase in the balance of Cost and
Estimated Earnings in Excess of Billings on Uncompleted Contracts and its
related effect on cash flows from operating activities.

The O'Gara Company will continue to absorb the effect of the change in
procurement designation throughout the life of the HMMWV contract. Although
there will be no effect on Cash Flows from Operating Activities on a cumulative
basis, the change in payment terms will impact accounts receivable and Cost and
Estimated Earnings in Excess of Billings on Uncompleted Contracts from
period-to-period.

Cash used in operating activities decreased approximately $9.6 million in
1999 as compared to 1998. Unlike the large increase from 1997 to 1998 as a
result of the change in timing of progress payments for Kroll-O'Gara's HMMWV
contracts, Cost and Estimated Earnings in Excess of Billings on Uncompleted
Contracts account decreased slightly in 1999. This, combined with the increase
in non-cash expenses, partially offset by a $7.0 million increase in cash used
for accrued liabilities, long-term liabilities and customer deposits and the
overall net loss experienced in 1999, contributed to the decreased use of cash
from operating activities.

Cash flows from investing activities. In the six months ended June 30,
2000, The O'Gara Company incurred $2.3 million of capital expenditures primarily
for upgrades of general information systems as well as additional capitalized
internal software development costs associated with Securify. In the six months
ended June 30, 1999, The O'Gara Company incurred capital expenditures of $4.2
million primarily related to the acquisition and implementation of a new
enterprise system at its Security Products and Services Group. In the first six
months of 1999, capital expenditures were funded by the sale of $6.0 million of
marketable securities.

In 1999, The O'Gara Company incurred capital expenditures of $8.0 million.
Approximately $2.7 million related to the acquisition and implementation of a
new enterprise system at one of its locations, as well as upgrades of general
information systems unrelated to O'Gara's Year 2000 compliance efforts. The
Information Security Group incurred approximately $1.3 million of internal use
software development costs which were capitalized in 1999. Additional capital
expenditures of $4.0 million were made for machinery and equipment. In 1998, The
O'Gara Company incurred normal periodic capital expenditures of $4.1 million. In
1999, The O'Gara Company sold $6.6 million of its marketable securities in order
to fund its increased capital expenditure requirements.

The levels of total capital expenditures made by Kroll-O'Gara in 1999 were
in excess of the amounts permitted by its credit agreement with KeyBank. KeyBank
has provided Kroll-O'Gara a waiver from the requirements of this covenant.

Cash flows from financing activities. Cash used in financing activities for
the first six months of 1999 was $0.9 million. In the first six months of 2000,
cash provided by financing activities was $0.7 million. In the first six months
of 2000, cash was provided by borrowings under Kroll-O'Gara's credit

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agreement, net of repayments of advances from Kroll-O'Gara. In the first six
months of 1999, cash used to reduce advances from Kroll-O'Gara exceeded cash
provided by borrowings under Kroll-O'Gara's credit agreements.

Net cash provided by financing activities was $28.5 million and $0.4
million for the years ended December 31, 1998 and 1999, respectively. Cash
provided by financing activities for 1999 was primarily provided by borrowings
under Kroll-O'Gara's credit agreement, net of repayments of advances from
Kroll-O'Gara. Cash from financing activities in 1998 included proceeds from the
May offering. A portion of these proceeds, $5.2 million, were used to repay
indebtedness of Kroll-O'Gara.

Foreign operations. The O'Gara Company attempts to mitigate the risks of
doing business in foreign countries by separately incorporating its operations
in those countries; maintaining reserves for credit losses; maintaining
insurance on equipment to protect against losses related to political risks and
terrorism, and using financial instruments to hedge The O'Gara Company's risk
from translation gains and losses.

The O'Gara Company utilizes derivative financial instruments, in the form
of forward contracts, to hedge some of its exposure to foreign currency rate
fluctuations. At June 30, 2000, five such contracts, maturing between July 2000
and January 2002, were outstanding in connection with an intercompany demand
note with a subsidiary. These contracts are intended to hedge The O'Gara
Company's exposure to deterioration in the amount outstanding due to changes in
currency translation rates. The notional amount, together with amortized
premium, and the fair market value associated with these forward contracts were
$14.6 million and $1.9 million, respectively. Gains or losses on existing
forward instruments are offset against the translation effects reflected in
shareholders' equity. The fair value of forward contracts is not recognized in
the consolidated financial statements since they are accounted for as hedges.
The O'Gara Company does not hold or issue derivative financial instruments for
trading purposes.

Quarterly fluctuations. The O'Gara Company's operations may fluctuate on a
quarterly basis as a result of the timing of contract costs and revenues,
particularly from its military and governmental contracts which are generally
awarded in a periodic and/or sporadic basis. 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.

Forward-looking Statements. This Management's Discussion and Analysis of
Financial Condition and Results of Operations contains statements which The
O'Gara Company believes are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. These statements are based
upon management's estimates, assumptions and projections and are subject to
substantial risks and uncertainties. Factors that could cause actual results to
differ materially from those in the forward-looking statements include, among
other things: contract delays, reductions or cancellations; cost overruns with
regard to fixed price contracts; problems and costs associated with integrating
past and future business combinations; various political and economic risks of
conducting business outside the United States, including foreign economic
conditions and currency rate fluctuations; changes in laws and regulations;
adjustments associated with percentage-of-completion accounting; inability of
subcontractors to perform on schedule and meet demand; unexpected competitive
pressures resulting in lower margins and volumes; uncertainties in connection
with start-up operations and opening new offices; higher-than-anticipated costs
of financing the business; loss of senior personnel; and changes in the general
level of business activity.

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BUSINESS

GENERAL

The O'Gara Company is a leading provider of armored products and security
services. Through facilities in 10 countries, The O'Gara Company provides:

- ballistic and blast protected armoring systems for commercial and
military vehicles, aircraft and missile components; and

- security services, including advanced driver training, threat recognition
and avoidance training and training in firearms safety and use.

The O'Gara Company's O'Gara-Hess & Eisenhardt Armoring Company subsidiary
("OHE") has a long and distinguished history dating back to 1876 as a
horse-drawn carriage builder. In the 1940's, OHE designed and built one of the
earliest armored presidential limousines, which was used by President Harry S
Truman. Since then, OHE's armored commercial vehicles have been used by U.S.
Presidents, other heads of state, business executives and VIPs worldwide. OHE
also has been the sole source provider of armoring systems for the U.S.
Military's Up-Armored High Mobility Multi-Purpose Wheeled vehicles, commonly
known as HMMWVs, since their introduction in 1994. Additionally, through ITI,
The O'Gara Company's International Training, Incorporated subsidiary, the
company offers driver training, firearms training, threat recognition and
avoidance training and other security related services.

The O'Gara Company completed several acquisitions during 1997 and 1998.
Several of these acquisitions were accounted for as purchases, and the financial
results of the acquired businesses are included in The O'Gara Company's results
from the effective date of each acquisition forward. Therefore, period-to-period
comparability is affected by these acquisitions. Further information on the
development of The O'Gara Company's business is provided in "The O'Gara
Company-Management's Discussion and Analysis of Financial Condition and Results
of Operations."

PRODUCTS AND SERVICES

The following table presents the aggregate net sales for The O'Gara
Company's product and services categories for the periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1998 1999
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Commercial products........................ $ 54,541 $ 67,594 $ 67,727
Military products.......................... 43,719 59,839 39,602
Security services.......................... 2,479 4,257 11,178
-------- -------- --------
$100,739 $131,690 $118,507
======== ======== ========
</TABLE>

In addition to the information presented above, see the Notes to The O'Gara
Company's Combined Financial Statements, included elsewhere in this document,
for business segment data and for information concerning foreign and domestic
operations and export sales.

COMMERCIAL PRODUCTS

The O'Gara Company armors a variety of vehicles, including limousines,
sedans, sport utility vehicles, commercial trucks and money transport vehicles,
to protect against varying degrees of ballistic and blast threats. The armoring
process begins with the disassembly of a new base vehicle. This disassembly
normally involves the removal of the interior trim, seats, doors and windows.
The passenger

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compartment then is armored with both opaque and transparent armor. Other
features, such as run flat tires and non-exploding gas tanks, also may be added.
Finally, the vehicle is reassembled as close to its original appearance as
possible. The types of commercial products produced are described below. During
1999, The O'Gara Company shipped approximately 2,720 commercial armored
vehicles.

ARMORED VEHICLES. The O'Gara Company produces fully armored vehicles and
light armored vehicles. Fully armored vehicles, such as limousines, large sedans
or sport utility vehicles, typically are armored to protect against attacks from
military assault rifles such as AK-47s and M16s. These vehicles also can be
blast protected by enhancing the ballistic and underbody protection with
proprietary materials and installation methods that protect the occupants
against a defined blast threat. Blast protected vehicles defend against threats
such as pipe bombs attached to the exterior of the vehicle and nondirectional
charges of 20 kg of TNT detonated approximately five meters from the vehicle.
Fully armored vehicles typically sell for $70,000 to $200,000 exclusive of the
cost of the base vehicle.

Fully armored vehicles also include Parade Cars, which are formal
limousines used predominantly for official functions by a president or other
head of state. These vehicles are usually customized based upon a commercially
available chassis which The O'Gara Company essentially rebuilds from the ground
up. Because the threat of organized assassination attempts is greater for heads
of state, these vehicles normally incorporate more advanced armor and
sophisticated protection features. These features can include supplemental air
and 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 bomb scanners. Parade Cars normally sell for $300,000 to in excess
of $1.0 million inclusive of the cost of the base vehicle.

Light armored vehicles are similar in all respects to fully armored
vehicles except that substantially less total weight of armoring is added.
Therefore, it is possible to armor smaller vehicles such as the Volkswagen Jetta
and the General Motors Omega, as well as larger vehicles such as the Mercedes
Benz S600 and the Jeep Cherokee. Light armored vehicles are designed to protect
against attacks from handguns, such as a 9 mm or .357 Magnum. The price of a
light armored vehicle ranges from $5,000 to $60,000 exclusive of the cost of the
base vehicle.

OTHER VEHICLES. The O'Gara Company also produces specialty vehicles,
cash-in-transit money transport vehicles and commercial truck bodies. Specialty
vehicles are custom built for a specific mission. Examples of specialty vehicles
are Escort Cars, usually convertibles, and Chase Cars, usually closed-top
vehicles, in which security personnel ride while in a head of state motorcade.
Cash-in-transit vehicles are used by banks or other businesses to transport
currency and other valuables. After starting with a van or small truck, the
company modifies the base vehicle to provide protection for the cargo and
passengers from ballistic and blast threats. The O'Gara Company also builds
commercial truck bodies. The truck bodies are manufactured primarily for 3.5 ton
trucks and are installed on chassis produced by a variety of manufacturers.

MILITARY PRODUCTS

UP-ARMORED HMMWVS. The O'Gara Company is the prime contractor to the U.S.
Military for the supply of armoring and blast protection for High Mobility
Multi-Purpose Wheeled Vehicles. The HMMWV chassis are produced by AM General
Corporation and shipped directly to The O'Gara Company's facility in Fairfield,
Ohio where armor and blast protection components are added. A number of these
components are purchased from single source suppliers. The Up-Armored HMMWVs
provide exterior protection against various levels of armor-piercing ammunition,
overhead airburst protection and underbody blast protection against anti-tank
and anti-personnel mines. In addition, The O'Gara Company installs other
features designed to enhance crew safety, comfort and performance, such as air

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<PAGE> 87

conditioning, weapon turrets and mounts, door locks and shock-absorbing seats.
The company charges $70,000 to $110,000 for these ballistic and blast protective
systems. During 1999, The O'Gara Company shipped 557 Up-Armored HMMWVs. The
company also supplies engineering design and prototype services in support of
the Up-Armored HMMWV Program, and supplies spare parts and logistic support.

HIMARS. The O'Gara Company is serving as a subcontractor to develop a
ballistically armored and sealed truck cab for the High Mobility Artillery
Rocket System ("HIMARS"), which will be used by the U.S. Army. The truck is used
to fire missiles which are a part of either the Multiple Launch Rocket System
(MLRS) or the Army Tactical Missile System (ATACM).

OTHER ARMOR SYSTEMS. The O'Gara Company markets armor sub-systems for other
tactical wheeled vehicles, such as 2.5 ton and 5.0 ton trucks. The company also
produces various armor systems as a subcontractor to larger defense contractors,
such as Lockheed Martin Corporation. 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 O'Gara Company.

SECURITY SERVICES

The O'Gara Company offers comprehensive security training programs in
advanced driving, ballistics, counterintelligence and surveillance both at its
facilities near Washington, D.C., San Antonio, Texas and Mexico City, Mexico and
at customer designated locations. The company offers ballistics training in a
progressive and realistic shooting house, encompassing 6,800 square feet of
training space, at its facility near Washington, DC. Ballistics training
consists of a wide spectrum of combat marksmanship skills which focuses on
realistic situations, exposing students to stress while under difficult firing
situations. The O'Gara Company also offers security and counterintelligence
training courses for both U.S. Government agencies and clients in the private
sector. The training includes instruction on methods of recognizing and
deterring security risks. Students learn methodologies utilized by terrorists,
what information is needed by terrorists in order to plan an attack and how to
block or manipulate this flow of intelligence.

CUSTOMERS

COMMERCIAL PRODUCTS

The O'Gara Company's armored commercial vehicle customers include
governmental and private buyers. U.S. and foreign governmental buyers purchase
both fully and light-armored vehicles. 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. These customers are not constrained in their purchasing decisions by
considerations such as import duties and taxes and are free to search globally
for the best product available. 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 response to a particular crisis, to prolonged bureaucratic bids
and evaluations for normally budgeted items. 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 that meets their needs. Local servicing of the vehicle is also a
critical concern to private buyers. The O'Gara Company's customers for
cash-in-transit vehicles are generally financial institutions. Purchasing
decisions for cash-in-transit vehicles depend on many criteria including whether
the financial institution is private or governmental, insurance and regulatory
requirements and cost. The geographic distribution

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of 1999 sales of The O'Gara Company's commercial armored vehicles, as a
percentage of total 1999 sales for those products, was as follows:

PERCENTAGE OF 1999 COMMERCIAL SALES BY GEOGRAPHIC AREA

<TABLE>
<S> <C>
Europe...................................................... 43.4%
Central and South America................................... 27.6%
North America............................................... 21.9%
Middle East................................................. 2.4%
Far East.................................................... 3.4%
Other....................................................... 1.4%
</TABLE>

MILITARY PRODUCTS

The O'Gara 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 are with the U.S. Military.
The company also is serving as a subcontractor to develop a ballistically
armored and sealed truck cab for the HIMARS, to be used by the U.S. Army.
Additionally, The O'Gara Company provides protected container systems, typically
used to protect missile systems from small arms fire, to the U.S. Military under
a subcontract with Lockheed Martin. The company is seeking to expand its sales
of armored tactical wheeled vehicles to foreign defense forces.

TRAINING

The O'Gara Company offers advanced driver training, firearms training and
surveillance detection training courses. Many private sector clients are drawn
to the company's training courses due to its reputation of providing these
services to various governmental agencies. Because the protection afforded by
armored vehicles is greatly enhanced by their proper operation, The O'Gara
Company markets its various courses to its armored commercial vehicle customers
and vice versa.

MARKETING AND SALES

COMMERCIAL

On a worldwide basis, The O'Gara Company has 25 full-time sales
professionals, who operate out of Washington, D.C.; Miami, Florida; Fairfield,
Ohio; Sao Paulo, Brazil; Lamballe, France; Paris, France; Mexico City, Mexico;
Manila, the Philippines; Moscow, Russia; Bogota, Colombia; and Geneva,
Switzerland. All personnel have a geographic and/or product-specific
responsibility. In most cases, the sales personnel also recruit and maintain
sales agents or distributors. The agents or distributors have geographic and
product-specific agreements, and compensation in most cases is based upon a
commission arrangement. The sales personnel use a consultative approach when
offering solutions to customers' security problems. Sales cycles for commercial
physical security 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. Physical security products which are readily available, such as
the fully armored Chevrolet Suburban, allow the company to assist customers who
have, or believe they have, developed an immediate threat. The O'Gara Company is
working with various cash transportation companies to create joint ventures in
order to supply all of these companies' armored cash-in-transit vehicles in
specific countries or regions.

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MILITARY

The O'Gara Company has positioned itself in the marketplace as a commercial
company with a military production capability. As such, the company emphasizes
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 O'Gara Company also places strong emphasis on its superior
antitank and antipersonnel mine protection for the occupants of tactical wheeled
vehicles. 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 exclusive teaming and joint marketing
agreements with AM General, the manufacturer of the basic HMMWV, for sales in
the military and commercial arenas. These agreements designate The O'Gara
Company as the exclusive armorer to AM General for HMMWVs and allow 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 both would show
products. Additionally, the company currently is working with other military
vehicle manufacturers whose products are more popular in other areas of the
world to develop armored configurations for their vehicles.

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

ENGINEERING AND DEVELOPMENT

The O'Gara 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 generally are converted to solid models or prototypes. Manufacturing
engineers concentrate on improvements in the production process and on overall
cost reductions from better methods, fewer components and less expensive
materials with equal or superior quality. Applying these techniques, over the
years the company has been able to reduce both the time and cost necessary to
produce its armored vehicles. The company's ballistic engineer, in conjunction
with its design and manufacturing engineers, develops and tests new ballistic
and blast protection systems that meet ever-changing threats. Advanced
engineering is responsible for new product development in conjunction with
design engineering, manufacturing engineering and ballistic engineering.

The O'Gara Company estimates that it expended approximately $2.9 million,
$3.7 million and $3.5 million in 1997, 1998 and 1999, respectively, on its
engineering and development efforts. These amounts include expensed amounts
reimbursed under a Systems Technical Support contract described below under
"U.S. Government Contracts."

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U.S. GOVERNMENT CONTRACTS

The O'Gara Company serves as the U.S. Military's sole source contractor for
armoring the HMMWV fleet. Since its initial contract in August 1993 to armor 59
HMMWVs, the company has been awarded contracts to armor a total of 2,297 HMMWVs.
Of these, 2,055 Up-Armored HMMWVs have been shipped, as follows:

<TABLE>
<CAPTION>
NUMBER OF
YEAR SHIPPED HMMWVS
------------ ---------
<S> <C>
1993...................................................... 0
1994...................................................... 139
1995...................................................... 26
1996...................................................... 507
1997...................................................... 366
1998...................................................... 460
1999...................................................... 557
-----
Total.................................................. 2,055
=====
</TABLE>

Prior to March 2000, The O'Gara Company's most recent HMMWV contract with
the U.S. Military was entered into in 1998 and included an option for additional
vehicles which was exercised on April 30, 1999. The 245 Up-Armored HMMWVs for
the U.S. Army and the U.S. Navy covered by the option were delivered through
August 2000. On March 30, 2000 the company was awarded a new contract by the
U.S. Military. The contract, with options, has a five-year duration with a
baseline quantity of 360 Up-Armored HMMWVs per year and a potential to reach
3,060 vehicles over the life of the contract. The range of the contract's total
value is between $125 million and $215 million. The initial order is for 360
Up-Armored HMMWVs with a value of approximately $25 million.

As the Up-Armored HMMWV fleet grows, the company is experiencing continued
growth in fleet management activity and spare parts. The U.S. Military signed a
five-year spare parts contract with the company in March 1999. This contract
designates The O'Gara Company to provide HMMWV armor parts to all U.S. Military
end users. The most recent fleet management contract option with the U.S.
Military was exercised in March 2000.

The O'Gara Company is in the last year of a System Technical Support
contract with the U.S. Military to support continued research and development on
the Up-Armored HMMWV program. This contract, signed in 1997, has required the
company to provide up to 25,000 hours per year of engineering and development
time to enhance and study the Up-Armored HMMWV. The last option to the contract
was exercised in August 1999 for year 2000, work on which will continue into
2001. The U.S. Military is currently evaluating a further extension of this
contract.

As a subcontractor to Lockheed Martin Corporation, the company has provided
armoring for certain missile weapons systems. The O'Gara Company was first
engaged in September 1993 by Lockheed Martin to armor launch systems of
missiles. The company was most recently engaged by Lockheed Martin in February
2000 to provide this armoring and believes that it is well positioned for future
engagements.

Stewart & Stevenson Services, Incorporated has subcontracted with The
O'Gara Company to develop a ballistically armored and sealed HIMARS truck cab.
Two phases of this contract have been released to the company, totaling $1.5
million. It is anticipated that this eventually will result in a multi-year
production contract.

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COMPETITION

The markets for The O'Gara Company's products and services are highly
competitive. The company's competitors range from small businesses to
multinational corporations.

The O'Gara 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. The largest competitors on a worldwide
basis in the production of armored commercial vehicles are DaimlerChrysler AG,
which sells its armored Mercedes Benz products both on a special order basis as
well as through its world-wide distribution system, and BMW AG, which sells its
products through its world-wide dealer distribution system. In addition, there
are a number of other vehicle armorers in Europe, the Middle East and Latin
America which armor primarily locally manufactured automobiles. U.S.-based
protected passenger automobile armorers include the Pittston Company (owner of
Brinks armored vehicles), Moloney Coachbuilders, Inc., Armor Holdings, Inc., and
Armet Armored Vehicles, Inc. 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. There are a large
number of companies that provide specific armoring packages for tactical wheeled
vehicles, 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 develop.

SEASONALITY, BACKLOG AND RELATED MATTERS

Approximately 33% of The O'Gara Company's pro forma net sales during 1999
were derived from U.S. Military contracts and an additional 14% were derived
from commercial contracts with U.S. governmental agencies or foreign
governments. For 1998, these percentages were 45% and 9%, respectively. Military
and governmental contracts generally are awarded on a periodic or sporadic
basis. The company frequently receives substantial orders in one quarter, the
revenues from which are not recognized until one or more subsequent quarters. As
a result, The O'Gara Company has significant fluctuations from time to time in
its business. Historically, these fluctuations have not been seasonal. The
company does not believe that its business is seasonal overall, although
historically the first quarter has been weaker than the other three.
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.

The O'Gara Company's backlog at December 31, 1998 and 1999 was
approximately $21.6 million and $18.2 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 timing and cost
factors affect the production and delivery of the company's products, there is
no certainty as to when net sales will be recognized from backlog. However, the
company expects to ship all of its 1999 backlog in 2000. Year-to-year
comparisons of backlog are not necessarily indicative of future operating
results.

The O'Gara Company's net sales from government contracts and most
commercial contracts for its armoring products are recognized using the
percentage-of-completion method. Under this method, contract revenues are
reported based on the percentage that costs to date bear to total estimated
costs. Estimated contract losses are recognized in full in the period in which
it becomes likely that a loss will occur. 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. See "The O'Gara Company -- Management's Discussion
and Analysis of Financial Condition and Results of Operations."

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PROPERTIES AND FACILITIES

The O'Gara Company's executive offices are located in Fairfield, Ohio. In
addition, the company maintains three other domestic offices or facilities in
three states and offices or facilities in nine foreign countries. The O'Gara
Company's principal properties and facilities are as follows:

<TABLE>
<CAPTION>
BUILDING
LOCATION SQUARE FOOTAGE STATUS
-------- -------------- ------
<S> <C> <C>
Fairfield, Ohio..................................... 130,000 owned
Lamballe, France.................................... 125,000 leased
Sao Paulo, Brazil................................... 50,000 leased
Mexico City, Mexico................................. 20,000 owned
Washington, D.C. area............................... n/a leased
San Antonio, Texas.................................. n/a owned
</TABLE>

FAIRFIELD, OHIO. In addition to executive offices, this facility contains
full production and assembly facilities for the company's armored commercial
vehicles and the manufacturing and distribution of Up-Armored HMMWVs. The
facility is financed through tax-exempt debt and is pledged to secure the
repayment of the debt. The facility includes 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.

LAMBALLE, FRANCE. The site contains facilities for production of armored
commercial and cash-in-transit vehicles, design studios for development of
prototypes, integrated computer systems, and areas for parts, fabrication,
painting and quality control. This facility also contains a ballistics range. It
currently is leased for a term expiring in September 2000. The company is in the
process of constructing a replacement facility. For accounting purposes, this is
treated as an operating lease.

SAO PAULO, BRAZIL. This facility is used for manufacturing and sales of a
full product line of armored commercial vehicles. It currently is leased for a
term expiring in April 2002; however, either party can terminate the lease on 90
days written notice. For accounting purposes, this lease is treated as an
operating lease.

MEXICO CITY, MEXICO. This facility is used for manufacturing and sales of a
full product line of armored commercial vehicles. The facility was purchased in
1996.

WASHINGTON D.C. AREA. This facility is used for advanced security training
and includes a portion of an abandoned airport runway that is used for advanced
driver training. The facility is leased for a term expiring in May 2009. For
accounting purposes, this lease is treated as an operating lease.

SAN ANTONIO, TEXAS. This facility, which was acquired in 1997, consists of
165 acres of land used for advanced driver and force protection training.

The O'Gara Company's manufacturing capabilities include fully integrated
manufacturing programs which link production control, materials control, quality
control and accounting. The company believes that its facilities are adequate
for its current needs and that its properties, including machinery and
equipment, are generally in good condition, well maintained and suitable for
intended current and foreseeable uses.

EMPLOYEES

The O'Gara Company has approximately 953 employees, comprised of 93 in
marketing and sales, 576 in operations, 68 in professional services, 61 in
engineering and 155 in general and administrative. The company's U.S. employees
are not represented by any union and are not covered by any collective

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bargaining agreements. Approximately 224 employees of the company's French
subsidiary are employed under agreements with the Confederation Francaise
Democratique du Travail. Wage increase parameters are set twice a year by local
management in consultation with the union. The company has not experienced any
work stoppages or employee related slowdowns and believes that its relationship
with its employees is good.

GOVERNMENT REGULATION

As a contractor with agencies of the U.S. Government, The O'Gara Company is
obligated to comply with a variety of regulations governing 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
these 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.

Regulations promulgated by the U.S. Commerce Department require The O'Gara
Company to obtain a general destination license in connection with the sale of
certain commercial products in foreign countries, and 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 military equipment to certain countries, and
the U.S. complies with United Nations trade embargos. Additionally, foreign
countries in which The O'Gara Company does business or into which it expects to
expand have laws and regulations which may restrict the company's business. The
company believes that it currently conducts its activities and operations in
substantial compliance with applicable governmental laws and regulations.

ENVIRONMENTAL MATTERS

The O'Gara Company is subject to a number of environmental laws,
regulations and ordinances, both in the U.S. and foreign countries, governing
activities that may have adverse environmental effects, such as discharges to
air and water, as well as handling, storage and disposal practices for solid and
hazardous materials. These laws also impose liability for the cost of
remediating, and damages resulting from, sites of past releases of hazardous
materials. Environmental laws continue to change rapidly, and it is likely that
the 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.

LEGAL PROCEEDINGS

Please see "The Kroll-O'Gara Company -- Legal Proceedings" for a
description of currently pending proceedings. After the split-up, any liability
and expenses relating to the shareholder litigation will be paid approximately
58.5% by KRCS and approximately 41.5% by The O'Gara Company. Any liability and
legal expenses arising from the qui tam proceeding will be the responsibility of
The O'Gara Company.

PATENTS, TRADEMARKS AND COPYRIGHTS

The O'Gara Company currently has six issued U.S. patents relating to its
armoring business. The company has several federally registered trademarks and
copyrights and has registered its trademarks in numerous foreign countries.
Although the company does not believe that its ability to compete in any of its
product markets is dependent on its intellectual property, the company does
believe that the protection afforded by its "Armoring Assembly" and "Vehicle
Mine Protection Structure" patents, both

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<PAGE> 94

of which relate to vehicle underbody blast protection, provides the company with
important technological advantages over its competitors. Although The O'Gara
Company has protected its technologies to the extent that it believes
appropriate, there can be no assurance that the 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.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Set forth below is information concerning the directors and executive
officers of The O'Gara Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas M. O'Gara..................... 49 Chairman of the Board
Wilfred T. O'Gara.................... 43 President and Chief Executive Officer, Director
Abram S. Gordon...................... 37 Vice President, General Counsel and Secretary
Nicholas P. Carpinello............... 50 Vice President and Chief Financial Officer
</TABLE>

[DIRECTORS TO BE ADDED]

THOMAS M. O'GARA is Chairman of the Board of The O'Gara Company. He has
been Vice Chairman of the Board of Kroll-O'Gara since December 1997. Mr. O'Gara
served as Chairman of the Board of the former O'Gara Company from August 1996
until December 1997. Mr. O'Gara also has been Chairman of the Board of The
O'Gara Company's O'Gara-Hess & Eisenhardt Armoring Company subsidiary since 1990
and was OHE's Chief Executive Officer from 1990 until 1995. He has been a
director of the former O'Gara Company or Kroll-O'Gara since August 1996 and a
director of OHE since 1988. Mr. O'Gara has held numerous executive officer and
director positions with the company, its subsidiaries 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 President and Chief Executive Officer of The O'Gara
Company. He has served as Co-Chief Executive Officer of Kroll-O'Gara and Chief
Executive Officer of Kroll-O'Gara's Security Products and Services Group since
April 2000. Previously he had served as Kroll-O'Gara's President and Chief
Operating Officer since December 1997 and as the former O'Gara Company's Chief
Executive Officer from August 1996 until December 1997. Mr. O'Gara has been
associated with the company, its subsidiaries and its predecessors since 1983
and has held numerous executive officer and director positions, including
serving as Chief Executive Officer of OHE since January 1996, President and
Chief Operating Officer of OHE from 1991 through 1995 and Vice
President -- Sales and Marketing of OHE from 1988 until 1991. Mr. O'Gara has
been a director of the former O'Gara Company or Kroll-O'Gara since August 1996
and a director of OHE since 1991. Mr. O'Gara also is a director of LSI
Industries, Inc.

ABRAM S. GORDON is Vice President, General Counsel and Secretary of The
O'Gara Company, positions he has held with the former O'Gara Company or
Kroll-O'Gara since January 1997. Prior to that time he was with the law firm of
Taft, Stettinius & Hollister LLP, Cincinnati, Ohio, from October 1987 until
December 1996.

NICHOLAS P. CARPINELLO initially is serving as Vice President and Chief
Financial Officer of The O'Gara Company. He has been Controller and Treasurer of
Kroll-O'Gara since December 1997. From

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<PAGE> 95

August 1996 until December 1997 he served as the former O'Gara Company's
Executive Vice President, Chief Financial Officer and Treasurer, positions he
also has held with OHE since 1993. Mr. Carpinello has been associated with the
former O'Gara Company or Kroll-O'Gara and its predecessors since 1984. From 1975
until 1984, he was employed by Arthur Andersen LLP where he served as a manager
in the audit and small business consulting divisions. Mr. Carpinello has advised
the company that he currently anticipates resigning from his employment as soon
as practicable after the split-up.

[directors to be added]

DIRECTORS' MEETINGS, FEES AND COMMITTEES

The O'Gara Company's Board of Directors will hold regularly scheduled
meetings, and hold special meetings as necessary to review significant matters
affecting the company and to act upon matters requiring Board approval.

After the split-up, The O'Gara Company's Board will have an Audit Committee
and a Compensation Committee. The Audit Committee will be composed of
, , and . The Audit Committee will
recommend the appointment of independent accountants and review and discuss with
the independent accountants the scope of their examination, their proposed fee
and the overall approach to the audit. The Audit Committee also will review with
the independent accountants and the company's financial management the annual
financial statements and discuss the effectiveness of internal accounting
controls. The Compensation Committee will be composed of ,
, and . The Compensation Committee will be
responsible for establishing executive officers' compensation and fringe
benefits and administering the company's stock option and other executive
benefit plans. The Board will not have a Nominating Committee.

Directors who are not employees of The O'Gara Company will receive an
annual retainer of $15,000, plus options to purchase 2,000 shares of O'Gara
Company common stock, for serving as directors. These directors also will be
paid $1,000 for each Board meeting attended in person and $750 for attending
Board meetings held by telephone. Each Committee Chairman will receive an
additional annual retainer of $1,600 and committee members, including the
Chairman, will receive $750 per meeting attended, whether in person or by
telephone, 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.

The O'Gara Company expects to adopt a plan substantially similar to
Kroll-O'Gara's current Outside Directors' Deferred Compensation Plan. Under this
plan each nonemployee director will be entitled to defer all or a portion of his
director's fees into a bookkeeping account. The account will be credited with
"phantom" units representing shares of O'Gara Company common stock equivalent in
value to the amount of each fee deferred, at the time earned. Unless a later
time is selected by a director, the value of the units in the director's account
will be paid in cash when the director's service on the Board terminates or at
the time of a "change in control" of The O'Gara Company as defined in the plan.

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<PAGE> 96

EXECUTIVE COMPENSATION AND BENEFIT PLANS

HISTORICAL COMPENSATION INFORMATION

The following table describes the compensation paid by Kroll-O'Gara during
the last three years to Mr. Wilfred T. O'Gara, The O'Gara Company's Chief
Executive Officer, and to each of The O'Gara Company's other executive officers.
These persons are sometimes referred to as the "named executive officers."

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------- -----------------------
SECURITIES
UNDERLYING
OTHER RESTRICTED STOCK
ANNUAL STOCK OPTION ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS GRANTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)(1)
------------------ ---- ------- ------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas M. O'Gara............. 1999 275,000 -- -- -- -- 7,030
Chairman of the Board 1998 275,000 -- -- -- -- 7,651
1997 252,083 -- -- -- 23,150 7,452
Wilfred T. O'Gara............ 1999 350,000 -- -- -- 17,000 8,675
President and Chief 1998 350,000 -- -- -- -- 6,816
Executive Officer 1997 240,000 45,000 -- -- 98,150 6,590
Abram S. Gordon.............. 1999 150,000 -- -- -- 5,000 5,813
Vice President 1998 135,000 35,000 -- -- -- 4,160
1997 97,237 25,000 -- -- 15,000 233
Nicholas P. Carpinello....... 1999 180,000 -- -- -- 10,000 10,024
Vice President 1998 140,000 -- -- -- -- 9,055
1997 140,000 40,000 -- -- 14,000 9,248
</TABLE>

---------------
(1) For 1999 represents profit-sharing contributions of $2,400 for each person;
executive disability insurance plan benefits of $3,706 for Mr. Thomas M.
O'Gara, $5,708 for Mr. Wilfred T. O'Gara, $6,700 for Mr. Carpinello, and
$2,993 for Mr. Gordon; and group term life insurance benefits of $924 for
Mr. Thomas M. O'Gara, $567 for Mr. Wilfred T. O'Gara, $924 for Mr.
Carpinello and $420 for Mr. Gordon.

The following table presents information on option grants to the named
executive officers during 1999 pursuant to Kroll-O'Gara's 1996 Stock Option
Plan. The Plan does not provide for the grant of stock appreciation rights
("SARs").

OPTION GRANTS IN 1999

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
--------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS EXERCISE PRICE APPRECIATION FOR
OPTIONS GRANTED TO OR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. O'Gara.................... -- -- -- -- -- --
Wilfred T. O'Gara................... 17,000 2.6 26.938 3/24/09 287,994 729,834
Abram S. Gordon..................... 5,000 0.8 26.938 3/24/09 84,704 214,657
Nicholas P. Carpinello.............. 10,000 1.5 26.938 3/24/09 169,408 429,314
</TABLE>

---------------
(1) All options vest one-third per year beginning one year after the date of
grant. The exercise price of all options may be paid in cash or by the
transfer of shares of Kroll-O'Gara's common stock valued at their fair
market value on the date of exercise. Under the terms of the Plan, each
option became exercisable in full when the reorganization and dissolution
agreement was signed.

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<PAGE> 97

With respect to each named executive officer, the following table sets
forth information concerning stock options exercised during 1999 and unexercised
stock options held at December 31, 1999.

AGGREGATED OPTION EXERCISES IN 1999
AND OPTION VALUES AS OF DECEMBER 31, 1999

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
VALUE UNEXERCISED IN-THE-MONEY
REALIZED($) OPTIONS AT OPTIONS AT
---------------- FY-END(#) FY-END($)
(MARKET PRICE ON ------------- -------------
SHARES ACQUIRED EXERCISE LESS EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) EXERCISE PRICE) UNEXERCISABLE UNEXERCISABLE
---- --------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Thomas M. O'Gara................... -- -- 15,443/7,717 67,905/33,955
Wilfred T. O'Gara.................. 14,703 341,240 62,730/49,717 86,612/42,444
Abram S. Gordon.................... -- -- 11,666/8,334 33,100/--
Nicholas P. Carpinello............. -- -- 24,332/14,668 127,163/7,337
</TABLE>

EMPLOYMENT AGREEMENTS

Each of the named executive officers has an employment agreement with
Kroll-O'Gara which expires on November 30, 2000. These agreements will be
continued on a month-to-month basis until the split-up and will be terminated at
the time of the split-up. Notwithstanding the terms of the agreements, each
named executive officer has waived his right to any severance or other payment
when his agreement terminates as a result of the split-up. The O'Gara Company's
Compensation Committee will review executive officer compensation after the
split-up and recommend employment agreements to the Board as it deems
appropriate.

The current agreements have the following terms: They provide for annual
base salaries for Mr. Thomas M. O'Gara, Mr. Wilfred T. O'Gara, Mr. Gordon and
Mr. Carpinello of $275,000, $350,000, $175,000 and $180,000, respectively. Each
executive officer also is entitled to participate in an annual bonus plan
established by the Compensation Committee of Kroll-O'Gara's Board and to receive
up to 50% of the bonus in shares of Kroll-O'Gara common stock. Pursuant to the
employment agreements, employment may be terminated by Kroll-O'Gara at any time
with or without cause, except that, in a case of termination without cause, the
employee is entitled to receive compensation for the greater of the balance of
the term of the agreement or one year. The agreements also provide that if
Kroll-O'Gara does not renew the agreement for one year or more at the end of the
term, the employee will receive an amount equal to one year's base salary. Each
employment agreement restricts the executive officer from competing with
Kroll-O'Gara 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. In
addition, Messrs. Thomas M. and Wilfred T. O'Gara each has agreed that during
his employment and for a period of 10 years thereafter he will not directly or
indirectly own any interest in or perform any services for any entity which uses
the word "O'Gara" as a business or trade name and competes with Kroll-O'Gara.

STOCK PLANS

The plans below are administered by the compensation committee of the board
of directors or any other committee of the board of directors that the board of
directors may appoint.

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<PAGE> 98

The O'Gara Company 2000 Stock Incentive Plan.

The O'Gara Company 2000 Stock Incentive Plan is designed primarily to
provide key individuals, on whose initiative and efforts the successful conduct
of the business of The O'Gara Company largely depends, and who are largely
responsible for the management, growth and protection of the business of The
O'Gara Company, with incentives and rewards to encourage them to continue their
association with The O'Gara Company, and to maximize their performance and to
provide "performance-based compensation" to these key individuals. The O'Gara
Company 2000 Stock Incentive Plan specifically provides for the grant of (i)
non-qualified stock options, (ii) incentive stock options and (iii) shares of
restricted stock which are known collectively as incentive awards. The O'Gara
Company 2000 Stock Incentive Plan also provides that the compensation committee
may grant other types of stock-based awards in amounts, and on terms and
conditions, as the compensation committee will in its discretion determine.

The maximum number of shares of O'Gara Company common stock for which
incentive awards may be granted under The O'Gara Company 2000 Stock Incentive
Plan is 1,200,000. The maximum number of shares of O'Gara Company common stock
for which any individual may be granted incentive awards during any calendar
year is 100,000. Key current employees of The O'Gara Company and its affiliates
will be eligible to receive grants of incentive awards.

The O'Gara Company 2000 Employee Stock Purchase Plan.

The purpose of the 2000 Employee Stock Purchase Plan is to provide eligible
employees of The O'Gara Company and its designated subsidiaries with an
opportunity to purchase O'Gara Company common stock and, therefore, to have an
additional incentive to contribute to the prosperity of The O'Gara Company. The
maximum number of shares of O'Gara Company common stock for which awards may be
granted under the Employee Stock Purchase Plan is shares. Any employee of
The O'Gara Company or any O'Gara Company subsidiary designated by the
compensation committee is eligible to participate in the Employee Stock Purchase
Plan during the offering period beginning on an enrollment date established by
the compensation committee. However, no employee is eligible to participate in
the Employee Stock Purchase Plan if, immediately after the grant, the employee
would have owned five percent of either the voting power or the value of O'Gara
Company's common stock, and no employee's rights to purchase The O'Gara Company
common stock pursuant to the Employee Stock Purchase Plan may accrue at a rate
that exceeds $25,000 per calendar year. As of , 2000, all
employees of The O'Gara Company other than Thomas M. O'Gara were eligible to
participate in the Employee Stock Purchase Plan.

Shares of O'Gara Company common stock may be purchased under the Employee
Stock Purchase Plan at a price not less than 85% of the lesser of (1) the fair
market value of the common stock on the enrollment date or (2) the fair market
value of the common stock on the last trading day of the offering period. The
length of the offering period will be established by the compensation committee
but may not exceed two years.

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<PAGE> 99

PRINCIPAL SHAREHOLDERS AND STOCK HOLDINGS OF MANAGEMENT

The following table sets forth the anticipated beneficial ownership of
O'Gara Company common stock after the split-up by (1) each beneficial owner of
more than five percent of common stock, (2) each director and named executive
officer individually and (3) all directors and executive officers of The O'Gara
Company as a group. These anticipated holdings are based on certain assumptions
contained in "Interests of Kroll-O'Gara's Executive Officers, Directors and
Exchanging Shareholders in the Split-Up" beginning on page 32. The actual
holdings will vary based on the number of shares of Kroll-O'Gara common stock
outstanding immediately prior to the split-up; however the changes will not be
material. Unless otherwise indicated, all shares are owned directly and the
indicated owner has sole voting and dispositive power with respect to the listed
shares.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
NAME NUMBER PERCENT
---- -------------------- -------
<S> <C> <C>
Thomas M. O'Gara(1)......................................... 1,546,572 25.8
Wilfred T. O'Gara........................................... 155,438 2.6
Abram S. Gordon............................................. 64 *
Nicholas P. Carpinello...................................... 36,365 *
[directors to be added]
All directors and executive officers as a group (
persons).................................................. 1,738,439 29.0
American International Group, Inc.(1)
</TABLE>

---------------
* Less than 1%.

(1) Messrs. O'Gara, Gordon and Carpinello's address is 9113 LeSaint Drive,
Fairfield, Ohio 45014. AIG's address is 70 Pine Street, New York, New York
10270.

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<PAGE> 100

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

GENERAL

This section describes certain transactions and relationships during the
last fiscal year between The O'Gara Company, as it will be constituted after the
split-up, and The O'Gara Company's executive officers, directors and 5%
shareholders after the split-up. Similar information for the portions of
Kroll-O'Gara's business which will comprise KRCS after the split-up is given
under "Kroll Risk Consulting Services, Inc. -- Certain Relationships and Related
Party Transactions." The O'Gara Company believes that the material terms of the
transactions described below were as favorable as could have been obtained from
unrelated third parties.

VICTORY AVIATION

Victory Aviation Services, Inc. is a Delaware corporation of which Messrs.
Thomas M. O'Gara, Wilfred T. O'Gara and Carpinello own approximately 92%, 1% and
1%, respectively, of the outstanding capital stock.

Lease agreements. The O'Gara Company has a Master Equipment Lease with Victory
Aviation, entered into in July 1995, under which the company leases various
items of equipment from Victory Aviation. As of December 31, 1999, the company
had approximately $1,250,000 of equipment under lease. Rental expense was
$566,213 for the year ended December 31, 1999.

Supplier arrangements. During 1995 and 1996, The O'Gara Company purchased the
dual-hard steel required for its vehicle armoring from Victory Aviation, which
distributed the steel for an unrelated third party. As a result of financing
arrangements entered into at the time, the company had receivables of $282,345
from Victory Aviation at December 31, 1999, which sum is guaranteed by the
shareholders of Victory Aviation. All other aspects of the arrangement have been
terminated.

Corporate aircraft. In February 1995, The O'Gara Company entered into a lease
for a Gulfstream G-II aircraft owned by Victory Aviation. The lease later was
amended to provide the company with a hourly discount from the normal commercial
hourly rate on future charters of corporate aircraft from Victory Aviation in
order to amortize the remaining portion of existing lease deposits from the
original aircraft lease. The company had approximately $403,000 in unamortized
lease deposits with Victory Aviation as of December 31, 1999. Rental expense
related to the Gulfstream lease, including amortization of the deposit, was
$82,000 for 1999.

AIG

Since 1995, Kroll-O'Gara has purchased some of its liability insurance,
including Professional Errors and Omissions and Directors and Officers liability
insurance, from AIG's subsidiaries. AIG's subsidiaries billed Kroll-O'Gara
$361,320 for this insurance during 1999. Kroll-O'Gara obtains the coverage
through an independent insurance broker and where possible obtains competitive
proposals from unrelated third parties.

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<PAGE> 101

KROLL RISK CONSULTING SERVICES, INC.

This section gives financial, business and management information about
KRCS after the split-up. The "Business" description generally is written as if
the split-up already were completed.

FINANCING; DIVIDEND POLICY

FINANCING

KRCS expects to obtain a credit facility prior to completion of the
split-up to repay the portion of Kroll-O'Gara's third party financing assumed by
it as well as to provide funds for working capital purposes.

DIVIDEND POLICY

KRCS anticipates that any future earnings will be retained to finance its
operations and for the growth and development of its business. Accordingly, KRCS
does not anticipate paying cash dividends on its shares of common stock for the
foreseeable future. Furthermore, the terms of the credit agreement with its bank
will require maintenance of certain financial ratios which may limit the funds
available for cash dividends. The payment of any future dividends will be
subject to the discretion of the KRCS Board of Directors 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 KRCS
Board of Directors deems relevant.

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<PAGE> 102

PRO FORMA CAPITALIZATION

The following table sets forth the pro forma capitalization of KRCS as of
June 30, 2000: (1) on an historical basis; and (2) as adjusted to give effect to
the split-up. The following table should be read in conjunction with "Selected
Historical and Unaudited Pro Forma Financial Information", KRCS' "Management's
Discussion and Analysis of Pro Forma Financial Condition and Pro Forma Results
of Operations" and the consolidated financial statements and related notes
included elsewhere in this proxy statement.

<TABLE>
<CAPTION>
AT JUNE 30, 2000
------------------------
ACTUAL(1) AS ADJUSTED
--------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 6,260 $ 3,663
======== ========
Short-term debt and current maturities of long-term
debt(2)................................................... $ 39,228 $ 21,905
Long-term debt, less current maturities(2).................. 36,580 19,889
Stockholders' equity:
Preferred Stock, 2,500,000 shares authorized; no shares
issued or outstanding.................................. -- --
Common Stock, $0.01 par value, 25,000,000 shares
authorized; and 8,500,000 shares issued and outstanding
on June 30, 2000, as adjusted(3)....................... 223 85
Additional paid-in capital.................................. 170,026 121,382
Retained deficit............................................ (17,300) (21,032)
Deferred compensation....................................... (1,218) --
Accumulated other comprehensive loss........................ (4,497) (1,382)
-------- --------
Total stockholders' equity.................................. 147,234 99,053
-------- --------
Total capitalization........................................ $223,042 $140,847
======== ========
</TABLE>

---------------
(1) For financial reporting purposes, Kroll-O'Gara will be deemed to be the
predecessor to KRCS. Accordingly, the capitalization of KRCS on an
historical basis is based upon the historical capitalization of
Kroll-O'Gara.

(2) For a description of KRCS' debt, see KRCS' "Management's Discussion and
Analysis of Pro Forma Financial Condition and Pro Forma Results of
Operations -- Liquidity and Capital Resources."

(3) Outstanding shares excludes 1,700,000 shares of common stock reserved for
issuance upon the exercise of options to purchase common stock under the
stock option plans described in "Executive Compensation and Benefit Plans."

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<PAGE> 103

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

The following discussion of the pro forma results of operations and
financial condition of KRCS is based upon and should be read in conjunction with
its pro forma financial statements presented in "Selected Historical and
Unaudited Pro Forma Financial Information" and the consolidated financial
statements and notes included in this proxy statement. For financial reporting
purposes, Kroll-O'Gara will be deemed to be the predecessor to KRCS.
Accordingly, the unaudited pro forma financial information for KRCS is based
upon the historical financial statements of Kroll-O'Gara. The unaudited pro
forma financial information for KRCS also reflects the financial results of The
O'Gara Company as discontinued operations, as well as other aspects of the
reorganization and split-up. Upon receipt of shareholder approval of the
split-up, the historical financial statements of KRCS, which are the historical
financial statements of Kroll-O'Gara, will be restated to eliminate the
financial results of The O'Gara Company and reflect them as discontinued
operations. Because of the foregoing and as a result of the acquisitions made in
1997, 1998 and 1999, described below, financial results from period-to-period
are not comparable.

GENERAL INFORMATION AND RECENT DEVELOPMENTS

KRCS is a wholly owned holding company subsidiary that was formed on July
17, 2000 in connection with the split-up of Kroll-O'Gara to operate and manage
the investigations and intelligence services business of Kroll-O'Gara. As part
of the split-up of Kroll-O'Gara, the investigations and intelligence services
business as well as the voice and data communications business of Kroll-O'Gara
will be contributed to KRCS. KRCS intends to sell the voice and data
communications business, which we refer to as the voice and data communications
group, as soon as possible after the split-up.

On November 15, 1999, Kroll-O'Gara announced that it had entered into a
definitive agreement with Blackstone Capital Partners III Merchant Banking Fund
L.P. under which shares held by all Kroll-O'Gara shareholders, other than
certain members of management, would be acquired by Blackstone for $18.00 per
share in cash. On April 12, 2000, Kroll-O'Gara announced that Blackstone had
withdrawn its offer to acquire Kroll-O'Gara shares.

On April 18, 2000 Kroll-O'Gara announced that it would explore a split-up
of its principal businesses into two stand-alone companies. On August 30, 2000
Kroll-O'Gara announced that its board of directors had approved an agreement and
plan of reorganization and dissolution that will separate its two principal
operating segments, the security products and services business and the
investigations and intelligence services business into two distinct companies.
Under this agreement, KRCS will receive substantially all of the assets and
liabilities of Kroll-O'Gara's investigations and intelligence services business
and voice and data communications business and 40% of Kroll-O'Gara's ownership
interest in the common stock of Securify, as well as approximately 58% of
Kroll-O'Gara's assets and liabilities that are not attributable to a particular
business group. The remaining business of Kroll-O'Gara, the security products
and services group and 60% of Kroll-O'Gara's ownership interest in the common
stock of Securify, as well as approximately 42% of the other assets and
liabilities that are not attributable to a particular business group, will be
transferred to and assumed by The O'Gara Company. After this reorganization,
some management shareholders of Kroll-O'Gara will exchange all of their shares
of Kroll-O'Gara common stock for shares of KRCS common stock, and other
management shareholders of Kroll-O'Gara will exchange all of their shares of
Kroll-O'Gara common stock for shares of The O'Gara Company common stock. After
these exchanges, Kroll-O'Gara will distribute the remaining shares of KRCS
common stock and The O'Gara Company common stock held by it to its shareholders.
The exchanging management shareholders will not participate in this
distribution. Following the split-up, KRCS and The O'Gara Company will be
separate publicly traded companies and
98
<PAGE> 104

Kroll-O'Gara will be dissolved. Completion of the split-up is subject to a
number of conditions, including the receipt of a favorable tax ruling and the
approval of the Kroll-O'Gara shareholders. KRCS expects that completion of the
split-up will occur in the fourth quarter of 2000 or first quarter of 2001.

Costs associated with the split-up for the six months ended June 30, 2000
were approximately $0.4 million ($0.02 per diluted share) and consisted
primarily of fees for attorneys, accountants and other related charges. KRCS
anticipates additional expenses will be incurred in the second half of 2000.

KRCS is a leading global provider of investigations, intelligence and risk
mitigation consulting services. Through a network of 53 offices and more than
2,000 employees located in 18 countries, KRCS provides risk mitigation
consulting services to governments and multinational corporations. KRCS global
platform allows it to address those issues with skilled investigators and
consultants who have first hand knowledge of local customs, business practices
and information. KRCS reports its revenue from continuing operations through two
groups. The investigations and intelligence services business consists of the
following categories: business intelligence and investigation services,
corporate services, financial services, security services and technology
services. The voice and data communications business offers three types of
products: satellite communication and navigation equipment, packages of
satellite airtime and customized design, hardware and software integration
services relating to satellite communication.

REVENUE RECOGNITION

KRCS recognizes revenue as services are performed. It records either billed
or unbilled accounts receivable based on case-by-case invoicing determinations.
Revenues are recognized on a "time and materials" or "proportional performance
method" basis, depending upon the arrangement with the customer. Revenue related
to time and materials arrangements are recognized in the period in which the
services are performed as follows: revenues from standard hourly rate
engagements are recognized as hours are recorded and costs are recognized as
incurred and revenues from standard daily rate arrangements are recognized at
amounts represented by the agreed-upon billing amounts and costs are recognized
as incurred. Revenues related to fixed price arrangements are recognized based
upon costs incurred as a percentage of the estimated total direct costs of the
respective arrangements. The cumulative impact of any revisions in estimated
total revenues and direct contract costs are recognized in the period in which
they become known.

KRCS usually enters into engagement letters with its customers prior to the
time it begins work on a project. KRCS does not believe it is appropriate to
characterize these arrangements as backlog because these arrangements generally
provide that they can be terminated without significant advance notice or
penalty. Generally, in the event that a client terminates a project, the client
remains obligated to pay KRCS for services performed and expenses incurred
through the date of termination.

COST OF SALES

Cost of sales includes professional compensation, other direct contract
expenses and some other costs of service.

Competition for consulting professionals, particularly for personnel with
specific risk mitigation skills necessary to perform the services which KRCS
offers, has caused wages to increase at a rate greater than the general rate of
inflation. As with other professional service firms, KRCS must adequately
anticipate wage increases. See "Risk Factors - Risks Related to our Business."
The success of KRCS is largely dependent upon the ability to hire and retain
talented people at a time when the industry is generally experiencing a shortage
of skilled professionals and a high rate of employee turnover.

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<PAGE> 105

Other direct contract expenses include costs directly attributable to
client contracts. These costs include such items as contractor expenses, travel
expenses for professional staff and independent contractors, hardware and
supplies purchases and reproductions costs.

Other costs of service primarily consist of the costs attributable to the
support and maintenance of professional staff, as well as other costs of
servicing clients. These costs include occupancy and communications costs
relating to office space utilized by professional staff, the costs of training
and recruiting professional staff, bad debts and the amortization of accumulated
databases assets that are utilized in investigative research for clients.

ACQUISITIONS

KRCS has pursued a strategy of growth and completed a number of
acquisitions in 1998 and 1999, some of which have been accounted for as poolings
of interest and others of which have been accounted for as purchases.

Most recently, on May 16, 2000, KRCS acquired substantially all of the
assets and assumed certain liabilities of The Search Is On, Inc., a corporation
doing business in Nashville, Tennessee. The purchase price of $0.6 million was
paid in cash of $0.4 million and a note payable of $0.2 million to the former
owner. The acquisition has been accounted as a purchase. Goodwill related to
this transaction was approximately $0.4 million and is being amortized over 25
years. The Search Is On specializes in obtaining public records information for
use in providing background investigations to clients.

Other acquisitions are listed in the following chart.

A. POOLINGS(1)

<TABLE>
<CAPTION>
COMPANY BUSINESS DATE ACQUIRED CONSIDERATION(4)
------- ---------------------------- ------------------ ------------------------
<S> <C> <C> <C>
Laboratory Specialists of Drug testing December 7, 1998 1,209,053 shares
America, Inc.(2)
Schiff & Associates, Inc. Security architectural December 31, 1998 169,521 shares
services
Financial Research, Inc. Business valuation and March 1, 1999 102,555 shares
economic damage analysis
services
Background America, Inc. Background investigative June 16, 1999 899,243 shares
services

B. PURCHASES(3)
Corplex, Inc. Investigative and executive March 1, 1998 29,207 shares
protection services
Lindquist Avey MacDonald Forensic and investigative June 1, 1998 $4.7 million in cash and
Baskerville, Inc. accounting services; 278,340 shares
headquartered in Canada
Kizorek, Inc. (renamed Video surveillance services July 1, 1998 $0.8 million in cash and
InPhoto Surveillance) 352,381 shares
Holder Associates, S.A. Security services in October 1, 1998 $4.5 million in cash and
Argentina 46,287 shares
</TABLE>

100
<PAGE> 106

<TABLE>
<CAPTION>
COMPANY BUSINESS DATE ACQUIRED CONSIDERATION(4)
------- ---------------------------- ------------------ ------------------------
<S> <C> <C> <C>
Fact Finders Ltd. Investigates intellectual November 1, 1998 $3.2 million in cash,
property infringement cases plus a 3-year earn-out
in Hong Kong and the of up to $3 million
People's Republic of China based on profits
The Buchler Phillips Group Corporate advisory practices April 1, 1999 $12 million in cash and
366,469 shares
</TABLE>

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

(1) Pooling of interest accounting requires the restating of all prior period
consolidated financial information as though the acquired entity had always
been consolidated with KRCS.

(3) KRCS's consolidated financial statements include the reported results of
each entity from the effective date of the acquisition.

(4) References to shares mean shares of common stock of Kroll-O'Gara.

RESTRUCTURING OF OPERATIONS

Due to multiple acquisitions completed by KRCS in 1998 and 1999,
integration of the operations of the acquired companies with existing operations
became a strategic initiative for KRCS' management in 1999. As part of this
initiative, management evaluates KRCS' business segments to determine if its
core businesses within the segments are operating efficiently. As a result of
management's evaluation, several less profitable operating facilities were
closed to enable KRCS to focus on integrating existing facilities with the newly
acquired businesses. Management concluded that a cost savings initiative was
required and would be achieved largely through operating efficiencies and a
corresponding decrease in personnel.

In the first quarter of 1999, KRCS began implementing a plan to reduce
costs and improve operating efficiencies and recorded a non-recurring pre-tax
restructuring charge of approximately $0.5 million. In the second quarter of
1999, KRCS completed the restructuring plan and recorded an additional
non-recurring pre-tax restructuring charge of $3.9 million. The principal
elements of the restructuring plan were the closing of two offices, the
relocation of another office and the staff reduction of approximately 27
employees. The primary components of the restructuring charge were severance
costs and lease termination costs.

INTENTION TO SELL THE VOICE AND DATA COMMUNICATIONS BUSINESS

As part of the split-up, Kroll-O'Gara will contribute the voice and data
communications business to KRCS. This business was previously accounted for as a
discontinued operation in the financial statements of Kroll-O'Gara, when
Kroll-O'Gara was negotiating its sale. In May 2000, Kroll-O'Gara terminated all
then pending negotiations to sell this business. Accordingly, the results of
operations of the voice and data communications business for all prior periods
have been reclassified from discontinued operations to continuing operations.
KRCS intends to sell this business as soon as possible after the split-up.
Management expects proceeds from the sale to cover KRCS' investment in net
assets as well as any costs incurred in the sale. However, there can be no
assurance that management will be successful in selling the business or on
favorable terms.

KRCS recognizes revenue from the voice and data communications business 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.

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<PAGE> 107

A summary of the operating results of the voice and data communications
group is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------------------- ----------------------------------
1997 1998 1999 1999 2000
----------------- ----------------- ----------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............ $17,437 100.0% $17,653 100.0% $19,931 100.0% $6,687 100.0% $8,297 100.0%
======= ======= ======= ======= ======= ======= ====== ======= ====== =======
Gross profit......... $ 3,125 17.9% $ 3,522 20.0% $ 2,415 12.1% $ 823 12.3% $1,372 16.5%
======= ======= ======= ======= ======= ======= ====== ======= ====== =======
Operating income
(loss)............. $ 69 0.4% $ (635) (3.6)% $(2,598) (13.0)% $ (987) (14.8)% $ 799 (9.6)%
======= ======= ======= ======= ======= ======= ====== ======= ====== =======
</TABLE>

The loss from operations of the voice and data communications group
increased $2.0 million from $0.6 million for the year ended December 31, 1998 to
$2.6 million for the year ended December 31, 1999. This increase was partially
due to an increase in its inventory reserve, which resulted from technology
changes in the telecommunications market that reduced demand and lowered sales
prices for certain items in inventory, as well as the overall impact on gross
margins resulting from the decrease in sales prices. Income from operations of
the voice and data communications group decreased $0.7 million from $0.1 million
for the year ended December 31, 1997 to a loss of $0.6 million for the year
ended December 31, 1998. The decrease in operating income was primarily
attributable to an increase in selling expenses to support expected revenue
growth in 1998. Revenue growth did not occur and sales levels remained
consistent with 1997 levels.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the items noted
as a percentage of net sales. As indicated above, the table and detailed
discussion of the pro forma results of operations and pro forma financial
condition that follow relate only to the investigations and intelligence
services business and do not include the voice and data communications business,
which is expected to be sold as soon as possible after the split-up.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
FOR THE YEARS ENDED: ENDED JUNE
--------------------- -------------
1997 1998 1999 1999 2000
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales................................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................. 61.3% 56.2% 55.8% 55.7% 56.6%
----- ----- ----- ----- -----
Gross margin......................................... 38.7% 43.8% 44.2% 44.3% 43.4%

Operating Expenses:
Selling and marketing..................................... 7.4% 9.6% 8.9% 9.4% 9.1%
General and administrative................................ 25.3% 23.2% 28.1% 24.5% 27.7%
Restructuring charge...................................... -- -- 2.2% 4.6% --
Merger related costs...................................... 4.6% 3.7% 2.1% 3.5% 0.4%
Failed merger costs....................................... -- -- 0.5% -- 1.5%
----- ----- ----- ----- -----
Operating income.......................................... 1.4% 7.3% 2.4% 2.3% 4.6%

Other income (expense):
Interest expense.......................................... (2.1)% (1.4)% (1.4)% (1.0)% (1.4)%
Interest income........................................... 0.2% 0.5% 0.2% 0.2% 0.1%
Earnings (losses) of equity investment.................... -- (0.7)% (0.4)% 0.1% (1.9)%
Other, net................................................ -- 0.7% -- (0.2)% 0.1%
----- ----- ----- ----- -----
</TABLE>

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<PAGE> 108

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
FOR THE YEARS ENDED: ENDED JUNE
--------------------- -------------
1997 1998 1999 1999 2000
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing operations before provision
for income taxes and cumulative effect of accounting
change.................................................. (0.6)% 7.1% 1.2% 1.3% 3.3%
Provisions for income taxes............................... 0.5% 2.1% 0.1% 2.9% 1.0%
----- ----- ----- ----- -----
Net income (loss) from continuing operations.............. (1.1)% 4.9% 1.1% (1.6)% 2.3%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999 "PRO
FORMA"

NET SALES

Net sales increased $13.0 million, or 14.7%, to $101.4 million for the six
months ended June 30, 2000 from $88.4 million for the six months ended June 30,
1999. A substantial portion of this increase is the result of the acquisition of
Buchler Phillips, which was only included for the last three months of the six
months ended June 30, 1999. Net sales attributable to this acquisition amounted
to $4.7 million for the first six months of 1999 compared to $10.1 million for
the first six months of 2000, an increase of $5.4 million. Excluding net sales
of Buchler Phillips, net sales increased $7.6 million or 9.1% for the six months
ended June 30, 2000. This increase is primarily due to the increase in net sales
of the corporate services group and domestic business investigations and
intelligence group, which increased $2.1 million and $3.6 million, respectively,
for the six months ended June 30, 2000 compared to the six months ended June 30,
1999.

COST OF SALES

Cost of sales increased $8.2 million, or 16.6%, to $57.4 million for the
six months ended June 30, 2000 from $49.3 million for the six months ended June
30, 1999. The increase in cost of sales was primarily due to the acquisition of
Buchler Phillips, which was only included for the last three months of the six
months ended June 30, 1999. Cost of sales of Buchler Phillips increased $2.6
million to $5.1 million for the six months ended June 30, 2000 from $2.5 million
for the six months ended June 30, 1999. Excluding cost of sales of Buchler
Phillips, cost of sales increased $5.7 million or 11.9% for the six months ended
June 30, 2000. Gross profit as a percent of net sales was 43.4% for the six
months ended June 30, 2000 compared to 44.3% for the six months ended June 30,
1999. The decrease in gross profit as a percentage of net sales is primarily due
to the increased employee compensation costs and subcontractor fees associated
with generating professional fee revenue. In addition, provisions for bad debt
increased $1.1 million for the six months ended June 30, 2000 from the six
months ended June 30, 2000.

OPERATING EXPENSES

Operating expenses increased $2.3 million, or 6.1%, to $39.3 million for
the six months ended June 30, 2000 from $37.1 million for the six months ended
June 30, 1999. For the six months ended June 30, 1999, KRCS recorded $7.2
million of restructuring and merger costs in connection with the restructuring
of its corporate services group and the acquisition of Background America, Inc.,
which was accounted for as a pooling of interests. For the six months ended June
30, 2000, KRCS recorded $2.0 million of separation, failed merger and merger and
integration costs associated with (1) the split-up of Kroll-O'Gara, (2) the
termination of the Blackstone transaction and (3) continuing integration costs
associated with the acquisition of Buchler Phillips.

Excluding restructuring, separation, failed merger and merger and
integration charges, operating expenses increased $7.4 million, or 24.6%, to
$37.3 million for the six months ended June 30, 2000

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<PAGE> 109

from $30.0 million for the six months ended June 30, 1999. A significant portion
of this increase is due to the acquisition of Buchler Phillips, which was only
included for the last three months of the six months ended June 30, 1999.
Excluding the operating expenses of Buchler Phillips, operating expenses
increased $4.8 million or 16.8% for the six months ended June 30, 2000 due to
personnel and professional services required to administer the growth
experienced for the acquisitions completed since 1998, depreciation and
amortization of systems development and related consulting support costs for the
new accounting and operations system placed into service for the year 2000, and
the additional amortization of goodwill.

As a percentage of net sales, operating expenses decreased from 42.0% for
the six months ended June 30, 1999 to 38.8% for the six months ended June 30,
2000. Excluding restructuring, separation, failed merger and merger and
integration charges, as a percentage of net sales, operating expenses increased
from 33.9% for the six months ended June 30, 1999 to 36.8% for the six months
ended June 30, 2000, as explained above.

OTHER INCOME (EXPENSE)

Interest expense increased $0.5 million, or 60%, to $1.4 million for the
six months ended June 30, 2000 from $0.9 million for the six months ended June
30, 1999. This increase was the result of the portion of increased borrowings
under Kroll-O'Gara's revolving credit facility that was allocated to KRCS. For
most of the first six months of 1999, KRCS had excess funds as a result of the
funds from Kroll-O'Gara's public offering of stock completed in May 1998 that
were allocated to KRCS, and no additional borrowings were required under the
revolving credit facility until the purchase of Buchler Phillips on June 3,
1999.

Earnings (losses) of equity investment represents KRCS' 40% ownership
interest in Securify. Earnings on equity investment decreased $2.0 million to a
loss of $1.9 million for the six months ended June 30, 2000 from earnings of
$0.1 million for the six months ended June 30, 1999. This loss was primarily due
to a decrease in sales and an increase in personnel costs from a continuing
focus on Securify's service capabilities and the related inability to establish
a firm customer base until the development of the business is complete.

PROVISION FOR INCOME TAXES

The provision for income taxes for the six months ended June 30, 2000 was
$1.1 million compared to $2.6 million for the six months ended June 30, 1999.
The effective tax rates for the periods were 215.8% in 1999 and 31.4% in 2000.
The 1999 effective tax rate does not reflect the benefit of some foreign
jurisdiction net operating losses that KRCS was not able to recognize for tax
purposes due to the uncertainty relating to the future ability to realize the
net operating loss carryforward. In 2000, the effective tax rate reflects the
favorable impact of the reversal of the valuation allowance previously provided
in 1999 related to those foreign jurisdiction net operating loss carryforwards,
net of other foreign losses that do not have a current benefit.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 "PRO
FORMA"

NET SALES

Net sales increased $60.6 million, or 49.4%, to $183.5 million for the year
ended December 31, 1999 from $122.9 million for the year ended December 31,
1998. A substantial portion of this increase is the result of acquisitions
completed in 1998 and the first half of 1999. Net sales of these acquired
companies accounted for under the purchase method of accounting increased $44.9
million, or 231.4%, from $19.4 million for the year ended December 31, 1998 to
$64.3 million for the year ended

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<PAGE> 110

December 31, 1999. Excluding the net sales of these acquired companies, net
sales increased $15.7 million or 15.2% for the year ended December 31, 1999.
This increase is primarily due to the increase in net sales of the corporate
services and business investigations and intelligence groups.

COST OF SALES

Cost of sales increased $33.3 million, or 48.3%, to $102.3 million for the
year ended December 31, 1999 from $69.0 million for the year ended December 31,
1998, primarily due to the acquisitions completed in the second half of 1998 and
the first half of 1999. Excluding cost of sales of these acquired companies,
cost of sales increased $9.3 million or 15.6% for the year ended December 31,
1999. Gross profit as a percent of net sales was 44.2% for the year ended
December 31, 1999 compared to 43.8% for the year ended December 31, 1998. This
increase in gross profit as a percentage of net sales is due to the fact that in
1999, KRCS received $1.5 million in settlement for receivables that had been
written off as uncollectible in a previous year. Without this settlement, gross
profit as a percentage of net sales for the year ended December 31, 1999 would
have been 43.4%. The remaining increase in gross profit as a percentage of net
sales is primarily due to the relatively higher margin derived from the services
provided by Buchler Phillips.

OPERATING EXPENSES

Operating expenses increased $31.9 million, or 71.0%, to $76.7 million for
the year ended December 31, 1999 from $44.9 million for the year ended December
31, 1998. This increase is primarily due to the acquisitions completed in the
second half of 1998 and first half of 1999, as well as restructuring charges and
merger-related costs recorded during 1999. Excluding restructuring, failed
merger and merger related costs, operating expenses increased $27.7 million for
the year ended December 31, 1999. Operating expenses of $24.5 million were
attributable to acquired companies in 1999. Restructuring charges, failed merger
and merger-related costs were $8.9 million for the year ended December 31, 1999
compared to merger-related costs of $4.6 million for the year ended December 31,
1998. Of the restructuring charges in 1999, $1.8 million is related to the
integration of InPhoto Surveillance, which was acquired in 1998.

Excluding operating expenses of acquired companies, operating expenses
increased $13.5 million for the year ended December 31, 1999. In 1999,
restructuring charges and merger related expenses increased $4.3 million,
primarily as a result of a restructuring charge of $3.9 million for the
reorganization of the corporate services group. In addition, in 1999 KRCS
recorded approximately $0.9 million in failed merger expenses associated with
the terminated transaction with Blackstone. The remaining increase in operating
expenses is attributable to increased costs for marketing and promotion to
develop a unified marketing approach for new businesses and expanded service
capabilities. KRCS also recorded a one time charge of $0.5 million for the
reorganization of the corporate marketing department, which primarily consisted
of severance payments. Amortization of goodwill associated with acquisitions
increased approximately $1.2 million for the year ended December 31, 1999. In
addition, KRCS incurred an overall increase in compensation and benefits and an
increase in personnel and professional services required to administer its
growth from the acquisitions completed in 1998 and 1999.

As a percentage of net sales, operating expenses, before restructuring,
merger-related costs and failed merger costs were 32.8% for the year ended
December 31, 1998 and 37.0% for the year ended December 31, 1999. The increase
in operating expenses as a percentage of net sales is primarily the result of
increased fixed costs to administer the growth of KRCS since the beginning of
1998.

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<PAGE> 111

OTHER INCOME (EXPENSE)

Interest expense increased $0.7 million, or 41.0%, to $2.5 million for the
year ended December 31, 1999 from $1.8 million for the year ended December 31,
1998. Upon the completion of a stock offering by Kroll-O'Gara in May 1998,
Kroll-O'Gara repaid a significant portion of its debt. As a result, lower
interest expense starting in the third quarter of 1998 and continuing through
the first quarter of 1999 was allocated to KRCS. However, due to the significant
number of acquisitions completed in the second half of 1998 and first half of
1999, KRCS began to draw on Kroll-O'Gara's $25.0 million credit facility in
1999, primarily to fund the acquisition of Buchler Phillips and to fund its
growth and working capital requirements. The increase in borrowings after the
first quarter of 1999 under Kroll-O'Gara's credit facility resulted in an
increase in interest expense for the fiscal year ended December 31, 1999.

Loss on equity investment decreased $0.1 million to $0.7 million for the
year ended December 31, 1999 from $0.8 million for the year ended December 31,
1998. Kroll-O'Gara acquired Securify, which began operations in February 1998,
in December 1998 and accounted for the transaction as a pooling of interests. In
1998, KRCS recognized its allocated portion of Securify's start-up losses.
Although the first half of 1999 was marginally profitable, Securify experienced
a decrease in sales and an increase in personnel costs in the second half of the
year as it focused on its service capabilities and further developed its
business plan.

PROVISION FOR INCOME TAXES

The provision for income taxes was $0.1 million for the year ended December
31, 1999 compared to $2.6 million for the year ended December 31, 1998. The
effective tax rates for the periods were 5.8% in 1999 and 30.3% in 1998. The
1999 tax provision reflects the favorable impact of the reversal of the
valuation allowance related to some foreign jurisdiction net operating loss
carryforwards, net of other foreign losses that do not have a current benefit.

NET INCOME

Net income decreased $4.0 million to $2.1 million for the year ended
December 31, 1999 from $6.1 million for the year ended December 31, 1998. This
decrease was due primarily to a $31.9 million increase in operating expenses,
partially offset by $27.3 million in increased gross profit and a decreased
provision for income taxes, as described above.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997 "PRO
FORMA"

NET SALES

Net sales increased $30.7 million, or 33.3%, to $122.9 million for the year
ended December 31, 1998 from $92.1 million for the year ended December 31, 1997.
This increase was primarily due to the inclusion of net sales from the
acquisitions of Lindquist Avey MacDonald Baskerville, Inc., InPhoto
Surveillance, Inc., Corplex, Inc., Fact Finders Ltd. and Holder Associates,
S.A., which were acquired in 1998 and accounted for under the purchase method of
accounting. Excluding net sales of these acquired companies, net sales for KRCS
would have been $103.5 million for the year ended December 31, 1998 compared to
$92.1 million for the year ended December 31, 1997, an increase of $11.4
million, or 12.4%.

The increase in net sales, excluding net sales of acquired companies for
KRCS, was due to an increase in net sales of the corporate services group, where
revenues increased $6.4 million, or 37.7%, to $23.4 million for the year ended
December 31, 1998 from $17.0 million for the year ended December 31, 1997. The
remaining increase was the result of internal growth in the business

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<PAGE> 112

investigations and intelligence group, which opened new offices in Dallas,
Boston, Houston and Mexico City.

COST OF SALES

Cost of sales increased $12.5 million, or 22.1%, to $69.0 million for the
year ended December 31, 1998 from $56.5 million for the year ended December 31,
1997. This increase in cost of sales was primarily due to the cost of sales of
companies acquired in 1998 and accounted for under the purchase method of
accounting. Cost of sales of companies acquired in 1998 amounted to $10.4
million for the year ended December 31, 1998. Excluding the cost of sales of
these acquired companies, cost of sales increased $2.1 million, or 3.7%, for the
year ended December 31, 1998. The remaining increase in cost of sales was due to
the increased level of business activity experienced in the core businesses in
1998. Gross profit as a percentage of net sales was 43.8% for the year ended
December 31, 1998 compared to 38.7% for the year ended December 31, 1997. This
increase was primarily due to higher average gross margins of 46.4% from the
companies acquired in 1998, and the increased gross profit as a percentage of
net sales of the business investigations and intelligence group. This increase
in gross profit as a percentage of net sales for the business investigations and
intelligence group was a result of several large, higher margin engagements that
were booked during 1998; these types of engagement are historically infrequent
in nature.

OPERATING EXPENSES

Operating expenses increased $10.5 million, or 30.5%, to $44.9 million for
the year ended December 31, 1998 from $34.4 million for the year ended December
31, 1997. Included in operating expenses in 1997 were approximately $4.3 million
in expenses related to the merger between Kroll Holdings, Inc and The O'Gara
Company. In 1998, KRCS recorded approximately $4.6 million in merger-related
expenses primarily associated with the acquisitions of Laboratory Specialists of
America, Schiff & Associates, Securify and Background America, all of which were
accounted for under the pooling of interests method of accounting.

Before merger-related expenses, operating expenses increased $10.2 million,
or 33.8%, to $40.3 million for the year ended December 31, 1998 from $30.1
million for the year ended December 31, 1997. The increase was primarily due to
operating expenses incurred by companies acquired in 1998, which accounted for
$6.1 million of the increase from 1997. The additional increase in operating
expenses is attributable to an increase in the level of personnel and
professional services required to administer KRCS's growth in 1998.

As a percentage of net sales, operating expenses, before merger related
costs, were 32.7% and 32.8% for the years ended December 31, 1997 and 1998,
respectively. As a result of investments made by KRCS in facilities and
personnel in previous periods, KRCS did not require additional commitments of
fixed costs relative to the level of net sales in 1998.

OTHER INCOME (EXPENSE)

Interest expense decreased $0.2 million, or 9.9%, to $1.8 million for the
year ended December 31, 1998 from $2.0 million for the year ended December 31,
1997. Upon completion of a stock offering in May 1998, Kroll-O'Gara repaid
approximately $14.8 million of its debt. As a result, interest expense decreased
starting in the third quarter of 1998.

On May 30, 1997, Kroll-O'Gara entered into an agreement with institutional
investors to issue and sell $35.0 million aggregate principal amount of senior
notes. This agreement provided for a reduction of the interest rate if specified
criteria were met. Kroll-O'Gara complied with the criteria and the interest

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<PAGE> 113

rate was decreased, beginning in the second quarter of 1998. The reduction
changed the interest rate from 9.56% to 8.56% and contributed to the decrease in
interest expense for the year ended December 31, 1998.

Losses from KRCS' equity investment in Securify were $0.8 million for the
year ended December 31, 1998, the initial year of Securify's operations and the
year in which Kroll-O'Gara acquired it.

PROVISION FOR INCOME TAXES

The provision for income taxes was $2.6 million for the year ended December
31, 1998 compared to $0.5 million for the year ended December 31, 1997. The
effective tax rates for the periods were 30.3% in 1998 and 95.2% in 1997. In
1997, KRCS recorded taxes at an effective rate significantly higher than it had
previously experienced because some of the merger-related expenses incurred in
the period were not deductible for tax purposes. In 1998, KRCS determined that
some of the merger expenses incurred in 1997 would be deductible in the future,
which had the effect of reducing the effective tax rate in 1998. In addition,
the 1998 tax provision also reflected the favorable impact of foreign locations
with statutory tax rates at levels below U.S. tax rates and the reversal of the
valuation allowance related to some foreign net operating loss carryforwards.

NET INCOME (LOSS)

Net income increased $7.4 million to $6.1 million for the year ended
December 31, 1998 from a net loss of $1.4 million for the year ended December
31, 1997. The increase was due primarily to an increase in gross profit of $18.2
million, offset by $10.5 million in increased operating expenses and an
increased provision for income taxes, as described above.

LIQUIDITY AND CAPITAL RESOURCES

General. KRCS has historically met its operating cash needs by utilizing
advances from Kroll-O'Gara to supplement cash provided by operations and other
financing activities, excluding non-cash charges such as depreciation and
amortization.

Financing. KRCS expects to obtain debt funding prior to completion of the
split-up and to use substantially all of the proceeds to repay debt of
Kroll-O'Gara that it will assume under the agreement and plan of reorganization
and dissolution and to provide funds for working capital purposes.

Kroll-O'Gara's currently existing credit agreement includes certain
financial covenant restrictions. Kroll-O'Gara was not in compliance with certain
of these covenants as of December 31, 1999 and as of June 30, 2000. All the
events of non-compliance have been subsequently amended or waived by the lenders
or the relevant agreement has been amended. If the lenders had not provided a
waiver or amendment, all amounts outstanding under the credit agreement would
have been subject to acceleration by the lenders.

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Cash flows from operating activities. Cash used in operating activities
increased from $3.4 million for the first six months of 1999 to $5.8 million for
the six months of 2000. In 1999 and 2000, cash was used primarily to fund
working capital investments. Cash used in operating activities increased from
$1.9 million for the year ended December 31, 1998 to $3.5 million for the year
ended December 31, 1999. In both years, cash was used primarily to fund working
capital investments.

Cash flows from investing activities. For the six months ended June 30,
2000, KRCS used $5.0 million for investing activities, comprised of $2.6 million
for capital expenditures relating to leasehold improvements, vehicles, furniture
and fixtures and office equipment, $2.2 million for additions to databases and
$0.3 million for acquisitions. For the six months ended June 30, 1999, KRCS used
$13.0 million for investing activities, comprised of $5.1 million for capital
expenditures relating to leasehold improvements, vehicles, furniture and
fixtures and office equipment, $1.8 million for additions to databases, and
$12.0 million for acquisitions. This activity in 1999 was offset by proceeds
realized from the sale of marketable securities of approximately $6.0 million.

For the year ended December 31, 1999, KRCS used $20.4 million for investing
activities, comprised of $6.4 million for capital expenditures relating to
leasehold improvements, vehicles, furniture and fixtures and office equipment,
$3.9 million for additions to databases, $4.8 million for the acquisition and
implementation of a new enterprise system and upgrades of general information
systems unrelated to KRCS's Year 2000 compliance efforts and $12.0 million for
the acquisition of Buchler Phillips. This activity in 1999 was offset by
proceeds realized from the sale of marketable securities of approximately $6.7
million. The levels of total capital expenditures made by Kroll-O'Gara in 1999
were in excess of the amounts permitted by its credit agreement with KeyBank.
KeyBank has provided Kroll-O'Gara a waiver from the requirements of this
covenant.

For the year ended December 31, 1998, KRCS used $22.9 million for investing
activities, comprised of $3.3 million for capital expenditures relating to
leasehold improvements, furniture and fixtures and office equipment, $4.2
million for additions to databases and $15.4 million for the acquisitions of
Lindquist Avey Macdonald Baskerville, InPhoto Surveillance, Holder Associates
and Fact Finders and the purchase of assets of Pathology Laboratories,
Accu-Path, Harrison Laboratories and TOXWORX Laboratories.

Management anticipates that, to the extent KRCS continues to pursue
strategic acquisitions, additional cash outlays will be required.

Cash flows from financing activities. Cash provided by financing activities
for the first six months of 1999 was $19.1 million. For the first six months of
2000, cash provided by financing activities was $4.3 million. In both periods,
cash was provided by advances from Kroll-O'Gara, net of repayments of long term
debt. Cash provided by financing activities decreased from $29.4 million for the
year ended December 31, 1998 to $26.9 million for the year ended December 31,
1999. Cash provided by financing activities in 1999 was primarily provided by
borrowings under Kroll-O'Gara's credit agreement as well as additional advances
from Kroll-O'Gara. Cash provided by financing activities in 1998 included
proceeds from Kroll-O'Gara's stock offering, net of repayments of long term
debt.

Foreign operations. KRCS attempts to mitigate the risks of doing business
in foreign countries by separately incorporating its operations in those
countries; maintaining reserves for credit losses; and maintaining insurance on
equipment to protect against losses related to political risks and terrorism.

Quarterly fluctuations. KRCS' operations may fluctuate on a quarterly basis
as a result of the nature of its business. 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.

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Forward-looking Statements. This "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains statements which KRCS
believes are forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. These statements are based upon management's
estimates, assumptions and projections and are subject to substantial risks and
uncertainties. Factors that could cause actual results to differ materially from
those in the forward-looking statements include, among other things: contract
reductions or cancellations; cost overruns with regard to fixed price contracts;
problems and costs associated with integrating past and future business
combinations; various political and economic risks of conducting business
outside the United States, including foreign economic conditions and currency
rate fluctuations; changes in laws and regulations; adjustments associated with
percentage-of-completion accounting; inability of independent contractors to
perform on schedule and meet demand; unexpected competitive pressures resulting
in lower margins and volumes; uncertainties in connection with start-up
operations and opening new offices; higher-than-anticipated costs of financing
the business; loss of senior personnel; and changes in the general level of
business activity.

Potential Accounting Pronouncements. The Emerging Issues Task Force (EITF)
Issue No. 00-20, "Accounting for Costs Incurred to Acquire or Originate
Information for Database Content and Other Collections of Information", states
that the EITF is considering different views for the accounting for database
costs. One of the views would require KRCS to expense some or all of the
database costs that KRCS currently capitalizes and amortizes, which is currently
an acceptable alternative. Adoption of a different method of accounting for
database costs could have a material impact on KRCS' financial position and
results of operations. To date, the EITF has not made any official
determinations on this issue.

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BUSINESS

OVERVIEW

KRCS is a leading provider of investigations, intelligence and risk
mitigation consulting services. Through a network of 53 offices located in 18
countries, KRCS provides information, analysis and advice, including:

- business investigations and intelligence services, including nonfinancial
due diligence, litigation support, fraud investigations, monitoring
services and special inquiries and intellectual property infringement
investigations;

- corporate services, including pre-employment background checking, drug
testing, surveillance and vendor integrity programs;

- financial services, including forensic accounting, recovery and
restructuring, asset tracing and analysis services and pre-acquisition
financial due diligence;

- security services, including risk and crisis management, security
architecture and design, corporate security planning and executive
protection, and electronic countermeasures; and

- technology services, including computer forensics, data recovery and
litigation and systems support services.

SERVICES

KRCS' investigations and intelligence services are divided into five major
categories. The following table presents the aggregate net sales for each of its
five service categories for the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
----------------------------- ------------------
1997 1998 1999 1999 2000
------- -------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Business investigations and
intelligence........................ $52,719 $ 56,823 $ 71,584 $34,720 $ 40,214
Corporate services.................... 17,152 32,764 43,350 21,581 22,775
Financial services.................... 7,506 15,033 37,258 17,128 23,498
Security services..................... 14,770 18,232 30,682 14,770 14,044
Technology services................... 0 0 625 193 886
------- -------- -------- ------- --------
Total............................ $92,147 $122,852 $183,499 $88,392 $101,417
======= ======== ======== ======= ========
</TABLE>

BUSINESS INVESTIGATIONS AND INTELLIGENCE SERVICES

KRCS' business investigations and intelligence services include
nonfinancial due diligence, litigation support, fraud investigations, monitoring
services and special inquiries, and intellectual property infringement
investigations.

Nonfinancial due diligence. KRCS helps its clients conduct in-depth,
insightful investigations into prospective transactions to minimize risk and
help ensure success. Without proper due diligence, businesses are exposed to an
increased likelihood of financial losses and liabilities as well as injured
reputations. KRCS provides comprehensive background information and intelligence
in areas such as personal and business reputation, financial and operating
history, verification of key representations, records of litigation, liens or
judgments, environmental liabilities and other actual or potential problems.

Litigation Support. KRCS provides litigation support services to a client's
outside counsel and in-house lawyers in preparation for litigation or
arbitration proceedings and in designing settlement

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strategies. These services include developing evidence to support a claim or a
defense, identifying and locating material witnesses, investigating adverse
witnesses, locating and evaluating recoverable or relevant assets of adverse
parties, assessing the strategic goals and financial commitment of the
opposition and helping to assess whether an adequate recovery can be obtained if
a lawsuit is successful. KRCS' wide-ranging information gathering can help
businesses and legal strategists decide whether to sue, go to trial or employ
alternative dispute resolution and whether, and at what level, to negotiate a
settlement. In complex litigation, KRCS uses sophisticated software to track and
process voluminous documentation, as well as extensive database material, in
order to identify elusive connections and produce investigative leads.

Fraud Investigations. Through its forensic accounting professionals and
corporate investigators, KRCS has the financial expertise and investigative
capability to respond to suspected wrongdoing wherever it may occur. KRCS' fraud
investigations services encompass civil and criminal fraud, employee fraud and
theft, management fraud and theft, procurement fraud and the identification of
secret commissions and kickbacks. KRCS has broad experience in detecting,
investigating and assisting clients in asset tracing and recovery, systems
consulting, security and internal control reviews and training on fraud
awareness, prevention and related topics.

Monitoring Services and Special Inquiries. KRCS provides monitoring
services to, and conducts special inquiries for, clients that require an
independent fact finder to uncover and end fraud and install systems that
monitor compliance. KRCS' lawyers, forensic accountants, investigators, analysts
and industry experts seek to identify violations of federal or state regulatory
requirements or corporate policies and consult with clients regarding
establishing systems to audit and ensure compliance with these regulatory
requirements or policies. KRCS serves as an objective fact finder, whose work
product could be turned over to a questioning government regulator or a
skeptical and vocal segment of the public. KRCS' fact finding efforts have been
enlisted by managements and by audit committees concerned about problems that
need to be resolved within an enterprise.

Intellectual Property and Infringement Investigations. KRCS' investigators
help to investigate and devise strategies to solve problems such as thefts of
trade secrets, threats and hostile acts, gray market and counterfeit products
and patent and trademark infringements. KRCS attempts to determine the source
and extent of the problem, develop information about the parties responsible,
minimize damage to the client and propose effective measures to prevent further
losses.

CORPORATE SERVICES

KRCS' corporate services include pre-employment background checking, drug
testing, surveillance and vendor integrity programs.

Pre-Employment Background Checking. KRCS verifies job applicant background
information for employers. The background investigations are made through the
use of databases and independent contractors. The searches include reviews of
credit histories, reference checks, criminal records, workers' compensation
histories and driving records as well as education and credential verification.

Drug Testing. KRCS owns and operates a state-of-the-art laboratory
providing drug testing services to corporate and institutional clients seeking
to detect and deter the use of illegal drugs. The laboratory is certified by the
federal Substance Abuse and Mental Health Services Administration to conduct
drug testing using forensic procedures required for legal defensibility of test
results. KRCS' drug testing services also include assisting clients with the
development of drug testing programs, training client personnel, managing
specimen collections, arranging for transportation of specimens to its
laboratory, identifying trends in local and national drug use, interpreting test
results and providing expert testimony concerning test results.

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Surveillance. KRCS provides video surveillance services to its clients in
connection with investigating exaggerated disability claims and other frauds. In
performing surveillance, KRCS utilizes its fleet of more than 125 vans stationed
throughout the United States, each containing state-of-the-art equipment
designed to obtain clear footage without detection. Agents with extensive
training and experience man the surveillance vans.

Vendor Integrity Programs. KRCS provides profiles of a client's vendors,
using information provided by the vendors and obtained from independent sources.
A client utilizes these profiles to insure that its vendors adhere to the
client's standards for ethical business practices. The fees for this service may
be paid either through nominal fees charged to each participating vendor or
billed directly to the client.

FINANCIAL SERVICES

KRCS' financial services include forensic accounting, recovery and
restructuring, asset tracing and analysis services and pre-acquisition due
diligence.

Forensic Accounting. KRCS' forensic and investigative accountants work with
corporations, governments, law firms, financial institutions and individuals to
assist them in successfully resolving complex, high risk, financial and
investigative concerns on a worldwide basis. Forensic accounting, by definition,
is the application of financial knowledge and skills, in conjunction with
investigative strategies and techniques, to resolve matters that are financial
in nature in a legally defensible manner. KRCS' services include commercial
litigation support, corporate investigations, statutory and regulatory
compliance, insurance claims, business valuations, financial due diligence and
visual strategies.

Recovery and Restructuring. KRCS' clients include creditors, lenders and
investors as well as companies in difficult financial situations. The services
KRCS provides relate to turnarounds, liquidations, corporate recovery and
pre-lending and refinancing reviews. KRCS has helped hundreds of troubled
companies recover and restructure their operations by investigating and
reviewing their management accounts, financial systems and operations. KRCS also
helps them implement turnaround strategies and design innovative solutions that
can increase sales and profits, lower costs and improve efficiency. KRCS' bank
clients also turn to it for financial forecasts, advice and intelligence prior
to taking on new loans or advancing additional funds to current customers.

Asset Tracing and Analysis. KRCS' asset tracing services consist of tracing
and locating assets anywhere in the world. This includes developing financial
profiles and lifestyle assessments in connection with bankruptcy cases, loan
defaults, internal investigations and other due diligence requests by clients.
In many cases, KRCS has worked with trustees in bankruptcy and insolvency,
creditors' committees, bankers in workout and restructuring departments and
litigation and bankruptcy attorneys in conducting searches for concealed or
undisclosed assets. In other contexts, clients may be interested in a financial
profile or asset analysis of a person in connection with a potential business
relationship, lawsuit or internal investigation. KRCS believes that its asset
searching and analysis techniques are effective both in uncovering assets and in
bringing debtors to the negotiating table. In identifying assets, KRCS relies
both on a range of investigative techniques and on the use of sophisticated
electronic databases. Tactics employed include searching publicly available, but
sometimes obscure, local records, reviewing financial documents and conducting
discreet interviews with people associated with the subject.

Pre-Acquisition Due Diligence. The due diligence and background information
and analysis furnished by KRCS is intended to be useful for lenders,
underwriters, potential acquirers and other businesses concerned with assessing
and attempting to minimize the risks related to critical financial and other
business decisions. These services include pre-transaction intelligence, due
diligence investigations,

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competitor intelligence and analysis, intelligence in contests for corporate
control, new market entry intelligence and intelligence on business partners,
customers and critical vendors.

SECURITY SERVICES

KRCS' security services include risk and crisis management, security
architecture and design, corporate security planning and executive protection,
and electronic countermeasures.

Risk and Crisis Management. KRCS provides consulting services to assist
businesses in managing risks to their personnel and assets and in meeting and
managing unexpected crises. Its crisis management services are provided in a
variety of contexts, such as the crisis response to a kidnapping of a company's
executive, the safety of consumers, the contamination of a consumer product or
the environment and the potential damage to the reputation of a corporate client
as a result of disclosure of adverse events. KRCS maintains a crisis management
center in Vienna, Virginia where personnel are available 24 hours a day, 365
days a year, to handle requests for information and provide initial advice and
immediate contact with members of KRCS professional staff specializing in the
particular crisis presented.

As part of its risk and crisis management service, KRCS furnishes periodic
information including: reports providing city-specific advisories to business
travelers on conditions and other relevant information with respect to almost
300 cities around the world; a comprehensive country security risk assessment
service that includes daily intelligence briefings containing early warnings of
events and up-to-date information about political unrest, terrorist activities,
product contaminations, health emergencies and other similar events; a monthly
bulletin that reviews and analyzes safety and security issues relating to air
travel around the world; a monthly intelligence review that provides a global
survey of political risk development in countries around the world; and special
reports on topics, such as kidnapping or specific regions or countries, that are
relevant to business travelers.

Security Architecture and Design. KRCS offers comprehensive planning,
engineering and design services customized to meet the requirements of customers
for physical site protection. These services are primarily intended to protect
business facilities, embassies, VIPs' homes and public facilities against
unauthorized intrusions. Generally, a project begins with a security survey,
which identifies areas of vulnerability and recommends methods for protecting
the facility. Specific pieces of hardware are selected, processes and procedures
are outlined, engineering documentation is provided and control centers are
detailed.

Corporate Security Planning and Executive Protection. KRCS designs
corporate security programs that help to safeguard clients' operations and
premises. Security programs and systems are designed to protect the safety of
key executives, preserve assets and protect the integrity of computer and
telecommunications systems. Additionally, in several areas of the world, KRCS
provides special escort and general protective services to executives and VIPs.

Electronic Countermeasures. KRCS protects its clients by ensuring that they
are able to operate their businesses and communicate confidential matters freely
without electronic intrusion from outsiders. KRCS' clients may face the risk of
electronic eavesdropping from outsiders who wish to procure confidential and
proprietary information in order to gain a competitive advantage in the
marketplace. Other electronic eavesdroppers may wish to jeopardize the personal
safety of KRCS' clients. Through sophisticated inspections and equipment KRCS is
able to detect listening devices and disable or remove them before its clients
are compromised.

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TECHNOLOGY SERVICES

KRCS' technology services include computer forensics, data recovery and
litigation and systems support.

Computer Forensics and Data Recovery. Businesses face a variety of risks
relating to the use of computers and technology at the workplace, both from
employees and from outsiders. KRCS provides investigative resources to assist
clients in matters such as collecting data from computers, logs, networks and
other sources to facilitate investigations and tracing disgruntled employees,
competitors and others using Internet bulletin boards to start rumors about
stocks, to post trade secrets or to conduct other kinds of cyberterrorism. By
using sophisticated forensic software, KRCS also helps clients access
information recovered from hard drives and reconstruct computer data that may be
introduced as evidence in legal proceedings.

Litigation and Systems Support. KRCS provides litigation support through
assistance in designing strategy and tactics and also analyses data provided in
the discovery stage of litigation. KRCS also helps clients track down web-based
intellectual property thefts, counterfeit goods and criminals that use the
Internet to steal information or property and commit fraud. KRCS provides
network security testing in which it helps clients gauge objectively the level
of network protection so that security flaws can be identified and cured.

VOICE AND DATA COMMUNICATIONS PRODUCTS

KRCS will also receive the voice and data communications business from
Kroll-O'Gara in the split-up. The voice and data communications group provides
three types of products. The group distributes satellite communication and
navigation equipment, including portable satellite terminals, mobile antennas
and global positioning satellite systems. The group sells packages of satellite
airtime to customers through its arrangements with several satellite earth
stations. In addition, the group offers customized design and hardware and
software integration services customized to meet specific satellite
communication requirements of its customers.

KRCS intends to sell the voice and data communications business as soon as
possible following the split-up.

OWNERSHIP OF SECURIFY INC.

As part of the reorganization, Kroll-O'Gara will transfer 40% of its equity
in Securify Inc., a California corporation and its currently 100% owned
subsidiary, to KRCS. Securify offers information and computer security services,
including network and system security review and repair. KRCS will not
participate in the business of Securify and will not vote in the election of
directors.

As of August 31, 2000, Kroll-O'Gara had loaned $9.5 million to Securify and
has agreed to lend Securify up to an additional $0.1 million during September
2000. Of the total amount loaned by Kroll-O'Gara, Securify will be required to
repay 58% to KRCS and 42% to The O'Gara Company. Kroll-O'Gara cannot assure you
that Securify will be able to repay these loans.

CUSTOMERS

KRCS' clients for investigative and intelligence services include
multinational corporations, leading law firms, financial institutions,
government agencies and individuals in a wide range of business sectors. The
financial institutions to which KRCS provides services include many of the
largest international investment banks, numerous commercial banks, insurance
companies and other significant credit institutions. KRCS classifies its sales
by where the services are delivered; international sales are services

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delivered outside the United States. For the years ended December 31, 1997, 1998
and 1999, 74%, 71%, and 58%, respectively, of its net sales were attributable to
services delivered in the United States; the balance were attributable to
services delivered outside the United States. For the first half of 2000, 61% of
its net sales were attributable to services delivered in the United States and
39% of its net sales were attributable to services delivered outside the United
States. Although many of its clients utilize these services on a periodic basis,
comparatively few clients utilize its services on a long-term continuing basis
and the clients that account for a material percentage of net sales in any year
may vary widely.

In the United States, KRCS generally charges for its services on an hourly
basis at varying rates, depending upon the type of service being provided and
the competition that exists in providing the service. KRCS also provides its
services, particularly outside the United States, on a negotiated project, or
fixed fee, basis. Providing services on a fixed fee basis enhances the potential
for higher profit margins. However, these arrangements can also result in
unexpected losses on a particular project. KRCS believes that this risk is
reduced by being spread over a number of fixed fee arrangements and through its
contracting process that specifies the actual steps that are required to be
performed for the fixed fee.

A significant portion of KRCS' business of investigating and negotiating
ransom demands in connection with kidnapping and of investigating incidents of
product tampering or disparagement arise from a contract with American
International Group, Inc., an international multi-risk insurance company, under
which KRCS investigates claims by AIG's insured customers. Although KRCS is paid
by AIG after claims are made, KRCS' customer is the affected person or entity.
The customers for KRCS' information services relating to travel safety are
multinational corporations and individuals. KRCS markets its information
services to many of its customers for other services.

MARKETING AND SALES

KRCS' services are marketed and sold by three different types of sales
personnel. As of June 30, 2000 it has four global key account managers who
market and sell all its varied services, both domestically and internationally,
to its most significant multinational corporate clients, 667 professional
service providers who are also expected to provide marketing services and 67
full time sales and marketing employees who work in regional markets.

KRCS' global key account managers are expected to work with targeted
clients with which it has done significant business in the past to expand their
relationships with KRCS by selling them a broader range of services. In
addition, KRCS relies on its professional service providers not only to service
existing clients, but also for new business development and marketing. KRCS
obtains engagements from a client's board of directors, executive officers and
management and a variety of other corporate officials. KRCS' senior
professionals act as relationship managers for its major clients. A significant
part of its marketing efforts consist of maintaining and developing these
personal relationships. KRCS' full time regional marketing staff coordinates
local sales and marketing efforts around the world. These marketing efforts
include seminars, briefings, receptions, breakfast and lunch meetings, direct
mail and selected advertising in trade and other journals. KRCS' services and
marketing events are promoted through its Internet website and publications
mailed periodically to approximately 20,000 clients and prospective clients.

KRCS' marketing efforts attempt to increase business with existing clients
by expanding clients' awareness of the range of services it offers and by
increasing the number of decision makers within a client's organization that are
aware of the range of services it offers. KRCS' business development staff
periodically conducts surveys of clients to assess their perception of the range
and quality of its services

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and, after the completion of an assignment, clients are often asked to complete
a quality control questionnaire.

KRCS does not believe that its business is seasonal, although historically
the first quarter has been weaker than the other three.

COMPETITION

KRCS competes with local, regional, national and international firms,
including investigative and security firms, guard companies and consultants in
specialized areas such as kidnapping. KRCS believes that it is one of the
largest companies in the world, providing a broad array of corporate
investigation, risk and crisis management and business intelligence services on
a global basis, and that it enjoys strong name recognition in its industry.

Nevertheless, the markets in which it does, and intends to do, business are
highly competitive. In most individual service areas in which KRCS operates,
there is at least one competitor that is significantly larger or more
established than KRCS in the delivery of that individual service. In general,
many of the national and international accounting firms, along with other
companies such as Decision Strategies/Fairfax International, LLC, Investigations
Group, Inc. and ChoicePoint, Inc., provide consulting services similar to some
of the services provided by KRCS. Some of these firms have indicated an interest
in providing corporate investigation and business intelligence services similar
to the services provided by KRCS on a broader scale and may prove to be
formidable competitors if they elect to devote the necessary resources to these
competitive businesses. The accounting firms have significantly larger financial
and other resources than KRCS and have long-established relationships with their
clients, which also are likely to be clients or prospective clients of KRCS. In
addition, large multinational security service providers have indicated an
interest in expanding their services to include value-added services such as
some of the investigation and consulting services provided by KRCS. Competitive
conditions could have a material adverse effect on KRCS' financial condition,
results of operations and cash flows.

GOVERNMENT REGULATION

KRCS' services are subject to various federal, state, local and foreign
laws, including laws designed to protect the privacy of persons. Subsidiaries of
KRCS hold private investigative licenses from, and their investigative
activities are subject to regulation by, the state and local licensing
authorities in the locations where these subsidiaries do business. KRCS also
utilizes data from outside sources, including data from third party vendors and
various government and public record services, in performing its services. Use
of this data is subject to compliance with applicable law. Additionally, KRCS'
drug testing laboratory is certified on the federal level and licensed in a
number of states. If the laboratory's certification were suspended or lost, it
would have a material adverse effect on this aspect of its business. Foreign
countries in which it does business have laws and regulations which may restrict
its business. KRCS believes that it currently conducts its activities and
operations in substantial compliance with applicable governmental laws and
regulations.

ENVIRONMENTAL MATTERS

KRCS' operations are subject to a number of environmental laws, regulations
and ordinances, both in the United States and various foreign countries,
governing activities that may have adverse environmental effects, such as
discharges to air and water, as well as handling, storage and disposal practices
for solid and hazardous materials. These laws also impose liability for the cost
of remediating, and damages resulting from, sites of past releases of hazardous
materials. KRCS believes that it

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currently conducts its activities and operations in substantial compliance with
applicable environmental laws.

EMPLOYEES

As of June 30, 2000, KRCS had a total of 2,014 full-time employees, of
which 67 were in marketing and sales, 860 were in operations, 667 were in
professional services and 416 performed general and administrative services. In
addition, KRCS had 158 part-time employees. KRCS' employees in the United States
are not represented by any union and are not covered by any collective
bargaining agreements. KRCS has not experienced any work stoppages or employee
related slowdowns and believes that its relationship with its employees is good.

PROPERTY

KRCS maintains its principal executive offices and a regional headquarters
in New York, New York, and other regional headquarters in London, Toronto, Hong
Kong, and Miami. In addition to these offices, KRCS maintains 23 domestic
offices or facilities in 13 states and 25 foreign offices or facilities in 13
foreign countries around the world. Its principal properties and facilities of
over 15,000 square feet as of June 30, 2000 were as follows:

<TABLE>
<CAPTION>
LOCATION TOTAL SQ. FOOTAGE STATUS
-------- ----------------- ------
<S> <C> <C>
New York, New York................................ 47,500 Leased
Philadelphia, Pennsylvania........................ 21,000 Leased
Toronto, Canada................................... 20,274 Leased
Gretna, Louisiana................................. 20,000 Owned
Nashville, Tennessee.............................. 15,939 Leased
</TABLE>

NEW YORK, NEW YORK. This facility contains KRCS' principal executive
offices and serves as a regional headquarters for KRCS. The space is leased for
a term expiring in December, 2007. For accounting purposes, this lease is
treated as an operating lease. In addition, KRCS leases a smaller office near
the headquarters for administrative purposes. The total annual rent for these
two offices in New York is $1,664,453.

PHILADELPHIA, PENNSYLVANIA. This facility primarily houses the U.S. offices
of Kroll Lindquist Avey, KRCS' forensic accounting, litigation consulting and
business valuation services subsidiary. The total annual rent is $372,756.

TORONTO, CANADA. This facility houses the headquarters of Kroll Lindquist
Avey and Kroll Associates Canada. The total annual rent is $331,167.

GRETNA, LOUISIANA. This facility houses KRCS' drug testing laboratory as
well as serving as offices for its drug testing subsidiary, Laboratory
Specialists of America, Inc.

NASHVILLE, TENNESSEE. This facility serves as the headquarters of Kroll
Background America, Inc., our background investigative services subsidiary. It
consists of two office locations near each other and the total annual rent is
$276,145.

TRADEMARKS AND PATENTS

KRCS has numerous federally registered trademarks and copyrights and has
registered its trademarks in numerous foreign countries. Although it has taken
steps to protect its proprietary rights to the extent that it believes
appropriate, there can be no assurance that its protective measures will deter
or prevent unauthorized use. In other countries, its proprietary rights may not
be protected to the same extent as in the United States.

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LEGAL PROCEEDINGS

KRCS is involved in litigation from time to time in the ordinary course of
its business. However, it does not believe that there is any currently pending
litigation, individually or in the aggregate, that is likely to have a material
adverse effect on its business, financial condition, results of operations or
cash flows.

KRCS may incur liability under some legal proceedings filed against
Kroll-O'Gara. Kroll-O'Gara has been named as a defendant in eight lawsuits
alleging that its officers and directors breached their fiduciary duties in
connection with the now terminated proposed acquisition of a majority of Kroll-
O'Gara's shares by a company formed by Blackstone Capital Partners III Merchant
Banking Fund L.P. Five lawsuits were filed in Ohio and three lawsuits were filed
in New York; they were consolidated in each state at the end of November, 1999.
The plaintiffs seek to bring their claims derivatively on behalf of Kroll-O'Gara
and its shareholders and seek class certification; they also seek damages and
attorneys' fees in an unspecified amount. KRCS has agreed to indemnify The
O'Gara Company for approximately 58% of any liability awarded and paid, and fees
and expenses incurred, in these lawsuits. The O'Gara Company has agreed to
indemnify KRCS for approximately 42% of any liability awarded and paid, and fees
and expenses incurred, in these lawsuits.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of KRCS are as follows:

<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Jules B. Kroll............................... 58 Chairman of the Board
Michael G. Cherkasky......................... 50 President, Chief Executive Officer and
Director
Michael D. Shmerling......................... 45 Chief Operating Officer
Nazzareno E. Paciotti........................ 54 Chief Financial Officer and Treasurer
Michael J. Slattery, Jr...................... 49 Executive Vice President
Michael A. Beber............................. 40 Executive Vice President, Strategic
Development
Marc S. Curvin............................... 37 Chief Information Officer
Sabrina H. Perel............................. 38 Vice President, General Counsel and
Secretary
Michael A. Petrullo.......................... 32 Vice President - Finance
Prior to the split-up, Michael D. Shmerling and the following individuals are expected to become
directors of KRCS:
Thomas E. Constance.......................... 63 Director
Marshall S. Cogan............................ 63 Director
Raymond E. Mabus............................. 51 Director
J. Arthur Urciuoli........................... 62 Director
</TABLE>

JULES B. KROLL, age 58, has been Chairman of the Board of KRCS since August
2000. He has been Chairman of the Board of Kroll-O'Gara since December 1997 and
was its Chief Executive Officer from December 1997 until April 2000. Since April
2000, Mr. Kroll has been Co-Chief Executive Officer of Kroll-O'Gara and Chief
Executive Officer of Kroll-O'Gara's investigations and intelligence group. He
founded Kroll Associates, Inc. in 1972 and was the Chairman of the Board and
Chief Executive Officer of Kroll Associates from 1974 until August 2000. Mr.
Kroll also is a director of Presidential Life Insurance Company. Upon
consummation of the split-up, Mr. Kroll will resign from his positions with
Kroll-O'Gara.

MICHAEL G. CHERKASKY, age 50, has been President and Chief Executive
Officer of KRCS since August 2000. He has been President and Chief Operating
Officer of Kroll-O'Gara's investigations and intelligence group, and a director
of Kroll-O'Gara, since December 1997. Prior to December 1997, he had been an
Executive Managing Director of Kroll Associates since April 1997 and Chief
Operating Officer of Kroll Associates since January 1997. From November 1995 to
January 1997, he was the head of Kroll Associates' North American Region and
from February 1994 to November 1995 he was the head of Kroll Associates'
Monitoring Group. From June 1993 to November 1993, Mr. Cherkasky was a candidate
for public office. From 1978 to June 1993, Mr. Cherkasky was with the District
Attorney's office for New York County, his last position being Chief of the
Investigation Division. Upon consummation of the split-up, Mr. Cherkasky will
resign from his positions with Kroll-O'Gara.

MICHAEL D. SHMERLING, age 45, has been Chief Operating Officer of KRCS
since August 2000. He has been President of the Corporate Services Division of
Kroll-O'Gara's investigations and intelligence group since June 1999 and has
been involved in the criminal justice system for over 13 years. From September
1995 to June 1999, Mr. Shmerling was one of the founders of Background America,
Inc., a company providing background investigations services to governments,
corporations and other

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professional clients, which was acquired by Kroll-O'Gara in 1999. In 1989, he
co-founded Transcor America, Inc., a nationwide prison transportation company.
In 1990, he founded Correction Management Affiliates, Inc., a private
correctional facility management company. He served as Chairman of the Board of
Transcor America, Inc. until he resigned to dedicate his time to Correction
Partners, Inc., a private prison management company majority-owned by Correction
Management Affiliates, Inc. In 1994 and 1995, all of the above correctional
management companies were sold to Corrections Corporation of America. Mr.
Shmerling is also a Certified Public Accountant, although not currently active,
and a member of the American Institute of Certified Public Accountants. He
practiced as an accountant for more than 15 years. From 1977 to 1980, he was a
member of the professional staff of certified public accountants at Ernst &
Young.

NAZZARENO E. PACIOTTI, age 54, has been Chief Financial Officer and
Treasurer of KRCS since August 2000. He has been the Chief Financial Officer of
Kroll-O'Gara since December 1997. From 1992 until December 1997 he was the Chief
Financial Officer of Kroll Associates. From 1990 to 1992, he was a Managing
Director and the Controller of the Henley Group (the parent of PneumoAbex Inc.
and Fisher Scientific, a laboratory supply company) and from 1988 to 1990, he
was a Vice President and the Controller of PneumoAbex Inc., an aerospace
contractor specializing in the manufacture of landing gear and flight actuating
systems. Upon consummation of the split-up, Mr. Paciotti will resign from his
position with Kroll-O'Gara.

MICHAEL J. SLATTERY, JR., age 49, has been Executive Vice President of KRCS
since August 2000. He has been Executive Vice President of Corporate Operations
and Administration for Kroll Associates since December 1997. For more than 13
years, Mr. Slattery has served in a variety of positions at Kroll Associates
including Executive Managing Director for North American operations and Managing
Director for Kroll Associates' Northeast Region of the United States. Prior to
joining Kroll Associates in September of 1987, Mr. Slattery served for eleven
years as Special Agent of the Federal Bureau of Investigation. He also served as
a Special Investigator/Auditor for the Office of the New York State Prosecutor
investigating corruption in New York City's Police Department and Criminal
Justice System in the early 1970's.

MICHAEL A. BEBER, age 40, has been Executive Vice President, Strategic
Development of KRCS since August 2000. He has been the Executive Vice President
of Strategic Development of Kroll-O'Gara's investigations and intelligence group
since February 1999. Mr. Beber joined Kroll-O'Gara's investigations and
intelligence group in June 1998 when Kroll-O'Gara acquired Lindquist Avey
Macdonald Baskerville Inc. Mr. Beber is a chartered accountant and is a founding
stockholder of Lindquist Avey. He has been a Principal with Lindquist Avey since
its inception in 1991 and a member of its Executive Operating Committee since
1995.

MARC S. CURVIN, age 37, has been Chief Information Officer of KRCS since
August, 2000. He has been Chief Information Officer of Kroll-O'Gara since
December 1999. He was the Executive Vice President and Chief Information Officer
of Background America, Inc. from August 1995 to December 1999. Mr. Curvin was
one of four original employees of Background America, Inc. Prior to Background
America, Inc., Mr. Curvin served as Chief Information Officer of Amicus
Staffing, Inc. from June 1994 to March 1997 and was Director of MIS of
Corrections Partners, Inc. from May 1994 to August 1995, both of which were
acquired by publicly traded companies. Upon consummation of the split-up, Mr.
Curvin will resign from his position with Kroll-O'Gara.

SABRINA H. PEREL, age 38, has been Vice President, General Counsel and
Secretary of KRCS since August 2000. She has been Vice President, Deputy General
Counsel and Managing Director of The Kroll-O'Gara Company since January 1998.
From October 1996 until December 1997, she served as Deputy General Counsel of
Kroll Associates. From 1988 until 1996, Ms. Perel was with the law firm of

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<PAGE> 127

Riker, Danzig, Scherer, Hyland & Perretti LLP in Morristown, New Jersey. She
also served as a law clerk to a state appellate judge from 1987 to 1988. Upon
consummation of the split-up, Ms. Perel will resign from her position with
Kroll-O'Gara.

MICHAEL A. PETRULLO, age 32 has been Vice President-Finance since August
2000. He has been Vice President-Finance of Kroll-O'Gara's investigations and
intelligence group since February 1999. He was Controller of that group from
February 1998 until February 1999. He served as Assistant Controller of Kroll
Associates from April 1995 to February 1998. From 1990 until April 1995 he was
with KPMG Peat Marwick LLP in the audit/assurance practice and in the forensic
accounting group.

Prior to the split-up, Michael D. Shmerling and the following individuals are
expected to become directors of KRCS:

THOMAS E. CONSTANCE, age 63, has been a partner with the law firm of Kramer
Levin Naftalis & Frankel LLP since 1994. From 1973 to 1994, Mr. Constance was
Chairman and a partner with the law firm of Shea & Gould. He is a director of
Uniroyal Technology Group and serves on the Advisory Board of Barington Capital
Group L.P., Atwood Richards Inc., and Lions Eye Bank of North Shore Hospital. He
is a trustee of the M.D. Sass Foundation and St Vincent's Services for Children.

MARSHALL S. COGAN, age 63, has been Chairman of Foamex International, Inc.,
a manufacturer of polyurethane foam products, since May 1997. Mr. Cogan was
Chairman and Chief Executive Officer of United Auto Group, a franchisor of car
and light truck dealerships, from 1997 to 1999. He was Chairman of the Executive
Committee of Foamex International from 1993 until 1997 and was Chief Executive
Officer of Foamex International from 1994 until 1997. Since 1974 he has been the
principal shareholder, Chairman or Co-Chairman of the board of directors, and
Chief Executive Officer or Co-Chief Executive Officer, of Trace International
Holdings, Inc., a holding company operating businesses in the auto sales, foam,
textile and publishing industries. Mr. Cogan is a director of United Auto Group.
Mr. Cogan has been a director of Kroll-O'Gara since December 1997.

RAYMOND E. MABUS, age 51, is President of Frontline Global Resources
Development Group Ltd., a provider of workforce analysis, foreign investment
planning and resource generation services, and of counsel to the law firm of
Baker, Donaldson, Bearman and Caldwell. He 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. Mr. Mabus has been a director of Kroll-O'Gara since November
1996. He is also a director of Friede Goldman Halter which builds & repairs
offshore oil platforms and boats.

J. ARTHUR URCIUOLI, age 62, has been Chairman of Archer Corporation, a
provider of private investment and consulting services, since 1999. Mr. Urciuoli
served with Merrill Lynch & Company, Inc. from 1969 to 1999. He was Chairman of
Merrill Lynch's International Private Client Group and was responsible for
strategic development and acquisitions from 1997 to 1999. He was Director of the
Marketing Group of Merrill Lynch Private Client Group from 1993 to 1997. He
served as Chairman of the Mutual Fund Forum/Forum for Investor Advice from 1997
to 1998 and also as Chairman of Sales and Marketing for the Securities Industry
Association from 1986 to 1989.

KRCS' bylaws provide that the number of KRCS directors will not be less
than two nor more than 10, the exact number of which will be determined from
time to time by the board of directors. Upon the effective time of the split-up,
the directors will be classified regarding the term for which they severally
hold office into three classes, each of which will be comprised of approximately
the same number of directors. The current KRCS board will appoint the initial
class I, II and III directors upon the effective time of the split-up. The
initial class I directors will serve until the first annual meeting after the
split-

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up. The initial class II directors shall serve until the second annual meeting
after the split-up. The initial class III directors shall serve until the third
annual meeting after the split-up. Directors in each class will remain directors
until their successors are duly elected and qualified or until their earlier
death, disqualification, resignation or removal. At each annual meeting, the
successors of the class of directors whose term expires at that meeting will be
elected by a plurality vote of all votes cast at that meeting to hold office for
a term expiring at the annual meeting held three years after their election.

DIRECTORS' MEETINGS, FEES AND COMMITTEES

The board of directors expects to hold regularly scheduled meetings, and
will hold special meetings as it deems advisable to review significant matters
affecting KRCS and to act upon matters requiring KRCS board approval.
Non-employee directors will receive an annual retainer of $20,000, plus $2,000
for personally attending each regular or special KRCS board or committee
meeting, and $750 for attending each meeting by telephone. KRCS also has a stock
option plan for non-employee directors which will automatically grant to each
non-employee director at every annual meeting options to purchase 3,600 shares
of common stock at the fair market value of the common stock on the date of
grant, which will vest in four equal quarterly installments beginning on the
date of grant. Directors of KRCS who are also employees of KRCS will not be
separately compensated for their services as directors.

KRCS' board of directors has an audit committee and a compensation
committee. The audit committee will be composed of Mr. Mabus as chairman and
Messrs. Cogan, Constance and Urciuoli. The audit committee will recommend the
appointment of independent accountants and review and discuss with the
accountants the scope of their examination, their proposed fee and the overall
approach to the audit. The audit committee also will review with the accountants
and KRCS' financial management the annual financial statements and discuss the
effectiveness of internal accounting controls. The compensation committee will
be composed of Mr. Urciuoli as Chairman and Messrs. Cogan, Constance and Mabus.
The compensation committee will have responsibility for establishing executive
officers' compensation and fringe benefits. It will also administer the KRCS
stock option and employee stock purchase plans and is authorized to grant
options under these plans. The KRCS board will not have a nominating committee.

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<PAGE> 129

EXECUTIVE COMPENSATION AND BENEFIT PLANS

HISTORICAL COMPENSATION INFORMATION

The following table describes the compensation paid by Kroll-O'Gara during
the last three years to Mr. Cherkasky, KRCS' Chief Executive Officer, and to
each of the other four individuals initially expected to be the most highly
compensated executive officers of KRCS. These persons are sometimes referred to
as the "named executive officers." The principal positions listed in the table
are those which will be held by KRCS named executive officers following the
split-up.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------------------
---------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING STOCK ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTION GRANTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)(1)
------------------ ---- ------- ------- ------------ ---------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jules B. Kroll............ 1999 375,000 -- -- -- -- 14,661
Chairman of the Board 1998 375,000 -- -- -- -- 31,915
1997 489,583 -- -- -- -- 32,965
Michael G. Cherkasky...... 1999 400,000 100,000 -- 155,628(2) 50,000 25,930
President and Chief 1998 400,000 -- -- -- -- 28,914
Executive Officer 1997 400,000 -- -- -- 25,000 26,767
Michael D. Shmerling...... 1999 87,500(3) 31,250 -- -- -- --
Chief Operating Officer
Nazzareno E. Paciotti..... 1999 275,520 66,667 -- -- 10,000 8,777
Chief Financial Officer, 1998 275,520 66,667 -- -- -- 19,813
Treasurer 1997 275,520 66,667 -- -- 15,000 26,984
Michael Slattery, Jr...... 1999 292,500 66,666 -- 139,500(2) -- --
Executive Vice President 1998 270,000 66,666 -- -- 10,000 --
1997 270,000 66,358 -- -- 14,000 --
Michael A. Beber.......... 1999 275,000 15,000 -- -- 10,000 --
Executive Vice
President, 1998 103,000(4) 13,000 -- -- -- --
Strategic Development
</TABLE>

---------------
(1) Represents profit-sharing contributions of $2,400 for each person;
supplemental disability plan benefits of $7,674 for Mr. Kroll, $4,639 for
Mr. Cherkasky and $4,002 for Mr. Paciotti; and group term life insurance
benefits of $4,567 for Mr. Kroll, $2,701 for Mr. Cherkasky and $2,375 for
Mr. Paciotti.

(2) Represents 6,000 shares of restricted stock for Mr. Cherkasky and 4,000
shares of restricted stock for Mr. Slattery, awarded to Mr. Cherkasky on
March 25, 1999 and to Mr. Slattery on January 4, 1999 under Kroll-O'Gara's
1998 Stock Incentive Plan and having an aggregate value at December 31, 1999
of $93,000 and $62,000, respectively. No other shares of restricted stock
are held by Mr. Cherkasky or Mr. Slattery. The shares vest over a three year
period, with 50% vesting ratably over the first 12 months after the date of
grant and an additional 25% vesting ratably over each of the second and
third 12 months after the date of grant. Until vested, the shares have no
dividend rights.

(3) Represents compensation from June 1999 to December 1999. Mr. Shmerling
joined KRCS in June 1999.

(4) Represents compensation from July 1998 to December 1998. Mr. Beber joined
KRCS in July 1998.

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<PAGE> 130

The following table presents information with respect to option grants to
the named executive officers during 1999 pursuant to Kroll-O'Gara's 1996 Stock
Option Plan. The Plan does not provide for the grant of stock appreciation
rights.

OPTION GRANTS IN 1999

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jules B. Kroll................... -- -- -- -- -- --
Michael G. Cherkasky............. 50,000 7.7 26.938 3/25/09 847,121 2,146,771
Michael D. Shmerling............. -- -- -- -- -- --
Nazzareno E. Paciotti............ 10,000 1.5 26.938 3/25/09 169,424 429,354
Michael Slattery, Jr............. -- -- -- -- -- --
Michael A. Beber................. 10,000 1.5 26.938 3/25/09 169,424 429,354
</TABLE>

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

(1) All options vest in three equal annual installments beginning one year after
the date of grant. The exercise price of all options may be paid in cash or
by the transfer of shares of Kroll-O'Gara's common stock valued at their
fair market value on the date of exercise. Each option becomes exercisable
in full after the execution of an agreement of merger, consolidation or
reorganization pursuant to which Kroll-O'Gara is not to be the surviving
corporation or the execution of an agreement of sale or transfer of all or
substantially all of the assets of Kroll-O'Gara. The Kroll-O'Gara option
plans terminate upon, among other events, the transfer by Kroll-O'Gara of
all or substantially all of its assets, and thus all options will terminate
upon the delivery of KRCS common stock and The O'Gara Company common stock
to the distribution agent.

With respect to each named executive officer, the following table sets
forth information concerning stock options exercised during 1999 and unexercised
stock options held at December 31, 1999.

AGGREGATED OPTION EXERCISES IN 1999
AND OPTION VALUES AS OF DECEMBER 31, 1999

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
VALUE UNEXERCISED IN-THE-MONEY
REALIZED($) OPTIONS AT OPTIONS AT
---------------- FY-END(#) FY-END($)
SHARES (MARKET PRICE ON -------------- -------------
ACQUIRED ON EXERCISE LESS EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) EXERCISE PRICE) UNEXERCISABLE UNEXERCISABLE
---- ----------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Jules B. Kroll..................... -- -- -- --
Michael G. Cherkasky............... -- -- 109,445/62,084 1,188,931/0
Michael D. Shmerling............... -- -- 0/14,000 0/0
Nazzareno E. Paciotti.............. -- -- 100,529/15,000 1,188,931/0
Michael Slattery, Jr............... -- -- 17,333/6,667 0/0
Michael A. Beber................... -- -- 0/10,000 0/0
</TABLE>

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<PAGE> 131

EMPLOYMENT AGREEMENTS

KRCS will enter into new employment agreements with each of the following
executive officers providing for annual base salaries in the listed amounts:
Jules B. Kroll, $ , expiring on , Nazzareno E. Paciotti,
$ , expiring on , and Michael Shmerling, $300,000,
expiring on . Each of these executive officers will also be entitled
to participate in an annual bonus plan established by the Compensation Committee
of the board of directors of KRCS and to receive up to 50% of the bonus in
shares of KRCS common stock. Under these employment agreements, KRCS can
terminate their employment at any time with or without cause, except that, in a
case of termination without cause, the employee is entitled to receive
compensation for the greater of the balance of the term of the agreement or one
year. The agreements will also provide that if KRCS does not renew the agreement
for one year or more at the end of the term, the employee will receive an amount
equal to one year's base salary. Each employment agreement will restrict the
executive officer from competing with KRCS 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. Mr. Kroll will be required by the employment agreement
to agree that during his employment and for a period of 10 years thereafter he
will not directly or indirectly own any interest in or perform any services for
any entity which uses the word "Kroll" as a business or trade name and competes
with KRCS.

KRCS will assume Mr. Cherkasky's employment agreement with Kroll-O'Gara. In
May 1999 Mr. Cherkasky entered into an employment agreement with Kroll-O'Gara
for an "evergreen" two year term. The agreement provides for a base salary of
$400,000 for 1999 and for subsequent annual calendar year increases of at least
4%. Mr. Cherkasky also is entitled to participate in KRCS's annual bonus, stock
option, stock incentive and other benefit plans. Under the agreement, he
received a signing bonus of $140,000, payable $40,000 in May 1999 and $100,000
in January 2000. On each three-year anniversary of the agreement he will receive
an additional $350,000. If the agreement is terminated due to Mr. Cherkasky's
death or disability or by KRCS for other than cause or by Mr. Cherkasky for good
reason, he is entitled to receive a lump sum payment equal to the value of his
salary, annual bonus, the three-year anniversary payment, stock options and
incentive stock for the remainder of the term. During his employment and for two
years after his employment terminates, if the termination occurs during the
first two years of the agreement and is by KRCS for cause or by him for other
than good reason, Mr. Cherkasky is restricted from directly or indirectly
engaging in the investigations and intelligence services business. For purposes
of the agreement, "cause" means conviction of a felony and "good reason"
includes a change in duties or responsibilities, a reduction in compensation or
any person or group other than Jules Kroll becoming the beneficial owner of 35%
or more of the voting power of KRCS's securities.

Michael Slattery, Jr., has an employment agreement with Kroll Associates.
In July 1999, Mr. Slattery entered into an employment contract with Kroll
Associates for a term of not less than two years. The agreement provides for a
base salary of not less than $350,000 and an annual increase of at least 4% or
more, as determined by senior management or the board of directors. In addition
to his base salary, Mr. Slattery is also entitled to receive a bonus of $250,000
if he remains employed by Kroll Associates on July 1, 2004. This bonus will be
renewed every five years for as long as Mr. Slattery remains employed under this
contract. If Kroll Associates terminates his employment at any time, with or
without cause, or if Kroll Associate terminates his employment at the end of his
term, Mr. Slattery will receive the $250,000 bonus. "Cause" means wilfulness or
gross negligence by Mr. Slattery in the performance of his duties, if such
conduct is not cured within 15 days after written notice; a wilful breach by him
of any terms and conditions of his employment agreement after 15 days'
opportunity to cure; grossly insubordinate conduct or conduct that would
constitute a breach of loyalty as defined by New York law; or his pleading no
contest or guilty to a felony charge or being convicted of a felony. If

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<PAGE> 132

Mr. Slattery's employment is terminated at the end of his term, he will also be
paid any accrued and unpaid base salary, and an amount equal to two year's base
salary, payable at Kroll Associate's discretion either in a lump sum or in 24
equal monthly installments. Mr. Slattery must give Kroll Associates two years'
prior notice before he resigns.

Michael A. Beber has an employment agreement with Kroll Lindquist Avey. In
June 1998, Mr. Beber entered into an employment agreement with Kroll Lindquist
Avey which provides that he shall be employed until terminated by Kroll
Lindquist Avey or until he voluntary resigns, for which he shall provide 3
months' notice. The agreement provides for an annual base salary of $300,000, in
addition to stock options and an incentive compensation package as determined by
the compensation committee of the board of directors. Once declared, the
incentive compensation must be paid to Mr. Beber upon termination of his
employment. Up to 50% of the incentive compensation may be in the form of shares
of stock in KRCS, as determined by the compensation committee. For purposes of
eligibility for membership and entitlement under the terms of KRCS' pension
plan, Mr. Beber is deemed to have been employed by KRCS since August 1, 1991.

BENEFIT PLANS

The plans below are administered by the compensation committee of the board
of directors or any other committee of the board of directors that the board of
directors may appoint.

KRCS 2000 Stock Incentive Plan.

The KRCS 2000 Stock Incentive Plan is designed primarily to provide key
individuals, on whose initiative and efforts the successful conduct of the
business of KRCS largely depends, and who are largely responsible for the
management, growth and protection of the business of KRCS, with incentives and
rewards to encourage them to continue their association with KRCS, and to
maximize their performance and to provide "performance-based compensation" to
these key individuals. The KRCS 2000 Stock Incentive Plan specifically provides
for the grant of (i) non-qualified stock options, (ii) incentive stock options
and (iii) shares of restricted stock which are known collectively as incentive
awards. The KRCS 2000 Stock Incentive Plan also provides that the compensation
committee may grant other types of stock-based awards in amounts, and on terms
and conditions, as the compensation committee will in its discretion determine.

The maximum number of shares of KRCS common stock for which incentive
awards may be granted under the KRCS 2000 Stock Incentive Plan is 1,350,000. The
maximum number of shares of KRCS common stock for which any individual may be
granted incentive awards during any calendar year is 100,000. Key current
employees of KRCS and its affiliates will be eligible to receive grants of
incentive awards.

KRCS 2000 Employee Stock Purchase Plan.

The purpose of the 2000 Employee Stock Purchase Plan is to provide eligible
employees of KRCS and its designated subsidiaries with an opportunity to
purchase KRCS common stock and, therefore, to have an additional incentive to
contribute to the prosperity of KRCS. The maximum number of shares of KRCS
common stock for which awards may be granted under the Employee Stock Purchase
Plan is 250,000 shares. Any employee of KRCS or any KRCS subsidiary designated
by the compensation committee is eligible to participate in the Employee Stock
Purchase Plan during the offering period beginning on an enrollment date
established by the compensation committee. However, no employee is eligible to
participate in the Employee Stock Purchase Plan if, immediately after the grant,
the employee would have owned five percent of either the voting power or the
value of KRCS's common stock, and

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no employee's rights to purchase KRCS' common stock pursuant to the Employee
Stock Purchase Plan may accrue at a rate that exceeds $25,000 per calendar year.
As of , 2000, all employees of KRCS other than Jules B. Kroll
were eligible to participate in the Employee Stock Purchase Plan.

Shares of KRCS common stock may be purchased under the Employee Stock
Purchase Plan at a price not less than 85% of the lesser of (1) the fair market
value of the common stock on the enrollment date or (2) the fair market value of
the common stock on the last trading day of the offering period. The length of
the offering period will be established by the compensation committee but may
not exceed two years.

KRCS 2000 Non-Employee Director Plan.

The KRCS 2000 Non-Employee Director Plan is designed primarily to increase
the ownership interest in KRCS of non-employee directors whose services are
considered essential to KRCS' continued progress, to align those interests with
those of the stockholders of KRCS and to provide a further incentive to serve as
a director of KRCS. The Non-Employee Director Plan specifically provides for the
grant of non-qualified stock options only. The maximum number of shares of KRCS
common stock for which awards may be granted under the Non-Employee Director
Plan is 100,000 shares. The Non-Employee Director Plan will automatically grant
to each non-employee director at every annual board meeting options to purchase
3,600 shares of common stock at the fair market value of the common stock on the
date of grant, which will vest in four quarterly installments beginning on the
date of grant. Options granted under the 2000 non-employee director plan
terminate 10 years after the date of grant. All non-employee directors of KRCS
will be eligible to receive grants of options. A "non-employee director" is a
director of KRCS who is not an employee of KRCS or any of its subsidiaries. As
of , 2000, four KRCS non-employee directors were eligible to
participate in the Non-Employee Director Plan.

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PRINCIPAL STOCKHOLDERS AND STOCK HOLDINGS OF MANAGEMENT

The following table sets forth the anticipated beneficial ownership of KRCS
common stock after the split-up by (1) each beneficial owner of more than five
percent of common stock, (2) each director and named executive officer
individually and (3) all directors and executive officers of KRCS as a group.
These anticipated holdings are based on certain assumptions contained in
"Interests of Kroll-O'Gara's Executive Officers, Directors and Exchanging
Shareholders in the Split-Up" beginning on Page 32. The actual holdings will
vary based on the number of shares of Kroll-O'Gara common stock outstanding
immediately prior to the split-up; however the changes will not be material.
Unless otherwise indicated, all shares are owned directly and the indicated
owner has sole voting and dispositive power with respect to those shares.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-----------------------
NAME NUMBER PERCENT
---- ---------- ---------
<S> <C> <C>
Jules B. Kroll(1)(2)........................................ 1,851,449 21.8%
Michael G. Cherkasky(1)..................................... 22,057 *
Michael D. Shmerling(1)..................................... 282,861 3.3
Nazzareno E. Paciotti(1).................................... 10,264 *
Michael J. Slattery, Jr.(1)................................. 20,195 *
Michael A. Beber(1)......................................... 26,707 *
Thomas E. Constance......................................... -- --
Marshall S. Cogan........................................... -- --
Raymond E. Mabus............................................ -- --
J. Arthur Urciuoli.......................................... 3,800 *
American International Group, Inc.(1)....................... 548,800 6.5
All directors and executive officers as a group (12
persons)(1)(2)............................................ 2,772,605 26.2
</TABLE>

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

* Less than 1%.

(1) Messrs. Kroll, Cherkasky, Shmerling, Paciotti, Slattery and Beber's, address
is 900 Third Avenue, New York, New York 10022. AIG's address is 70 Pine
Street, New York, New York 10270.

(2) Does not include 73,172 shares held by trusts for the benefit of Mr. Kroll's
adult children, in which shares Mr. Kroll disclaims any beneficial interest.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Described below are some transactions and relationships between
Kroll-O'Gara and KRCS officers, directors and stockholders that have occurred
since January 1, 1997. Except for interest rates charged on some of the
intercompany notes and accounts payable/receivable, KRCS believes that the
material terms of the various transactions were as favorable as could have been
obtained from unrelated third parties.

Immediately prior to the merger into Kroll-O'Gara, Kroll Holdings owed
$6,349,813 to Mr. Kroll, representing unpaid principal of $4,761,958 and accrued
interest of $242,356 on open account advances and loans which had been made by
him to Kroll Holdings from time to time since 1989. An additional $286,308
previously had been repaid. Also immediately prior to the merger, Mr. Kroll owed
Kroll Holdings $1,420,756, representing aggregate borrowings from Kroll Holdings
of $1,345,499 plus $75,257 in accrued interest. Of the outstanding principal
amounts, $4,380,849 owed by Kroll Holdings to Mr. Kroll and $748,000 owed by Mr.
Kroll to Kroll Holdings bore interest at an annual rate equal to the prime rate
plus 1%, $1,129,109 owed by Kroll Holdings to Mr. Kroll bore interest at an
annual rate equal to the brokers' loan rate (7.625% at December 1, 1997) and
$597,499 owed by each of Kroll Holdings and Mr. Kroll to the other bore interest
at an annual rate of 7% (equal to the prime rate at the date of the loan plus
1%). Immediately prior to the merger, the principal and accrued interest on all
outstanding loans from Kroll Holdings to Mr. Kroll were repaid in full and loans
(plus all accrued interest) from Mr. Kroll to Kroll Holdings were repaid to the
extent of the amounts owed to Kroll Holdings by Mr. Kroll. Also upon
consummation of the merger, all $6,040,313 of principal and accrued interest
owed by Kroll Holdings to Mr. Kroll for open account advances were repaid. In
1998, Mr. Kroll was repaid $332,490 in principal and interest owed him on a
promissory note issued by a subsidiary of Kroll Holdings at the time of the
merger. There were no principal payments made with respect to this note prior to
1998.

During 1998 and 1999, Kroll-O'Gara and Mr. Kroll agreed to reimburse
Kroll-O'Gara for a portion of general and administrative expenses, including
outside professional fees, office rent and travel expenses, which were incurred
for the benefit of both Kroll-O'Gara and Mr. Kroll. Amounts due to Kroll-O'Gara
at December 31, 1998 and 1999 pursuant to this agreement were $85,672 and
$281,561, respectively.

During 1997, 1998 and 1999, Kroll-O'Gara rendered risk management services,
including marketing support, and claims investigations services to American
International Group, Inc. and its subsidiaries. Kroll-O'Gara billed AIG and its
subsidiaries $6,412,244 in 1997, $4,877,478 in 1998, and $4,779,449 in 1999 for
these services. The year-end accounts receivable balance for AIG was $897,361,
$1,290,558 and $1,231,685 at December 31, 1997, 1998 and 1999, respectively.
Since 1995, Kroll-O'Gara has purchased some of its liability insurance,
including Professional Errors and Omissions and Directors and Officers liability
insurance, from AIG's subsidiaries. AIG's subsidiaries billed Kroll-O'Gara
$814,154, $474,800 and $361,320 for this insurance during 1997, 1998, and 1999,
respectively. Kroll-O'Gara obtains the coverage through an independent insurance
broker and where possible obtains competitive proposals from unrelated third
parties.

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DESCRIPTION OF O'GARA COMPANY CAPITAL STOCK

The authorized capital stock of The O'Gara Company consists of 15,000,000
shares of common stock $.01 par value per share, and 100,000 shares of
undesignated preferred stock, $.01 par value per share. After the split-up, The
O'Gara Company will have 6,000,000 shares of common stock outstanding. There
will be no preferred stock outstanding. The following description summarizes the
material terms of The O'Gara Company's capital stock. Your rights as a
shareholder of The O'Gara Company will be governed by the provisions of the
company's Articles of Incorporation and Code of Regulations and by the
provisions of Ohio law, including the Ohio General Corporation Law ("OGCL").

COMMON STOCK

You will be entitled to one vote for each share held of record by you on
all matters submitted to a vote of shareholders. You will not have the right to
cumulate your votes in the election of directors.

Subject to preferences which may be granted to holders of any preferred
stock which is issued, you will be entitled to share in any dividends that the
Board of Directors, in its discretion, validly declares from funds legally
available. In the event of liquidation, each outstanding share of O'Gara Company
common stock entitles its holder to participate ratably in the assets remaining
after payment of liabilities and any preferred stock liquidation preferences.

You will have no preemptive or other rights to subscribe for or purchase
additional shares of any class of stock or any other securities of The O'Gara
Company. There are no redemption or sinking fund provisions with regard to the
O'Gara Company common stock. All outstanding shares of O'Gara Company common
stock will be fully paid, validly issued and nonassessable.

The vote of holders of a majority of all outstanding shares of O'Gara
Company common stock is required to amend the company's Articles and to approve
mergers, reorganizations and similar transactions.

PREFERRED STOCK

The O'Gara Company may issue up to 100,000 authorized shares of preferred
stock from time to time in series having such designations, preferences and
rights, qualifications and limitations as the Board of Directors may determine,
without any need for your approval. Preferred stock could be given rights which
would adversely affect your equity and could have preference to your O'Gara
Company common stock with respect to dividends and liquidation, voting and other
rights and privileges. Issuance of preferred stock could have the effect of
acting as an anti-takeover device to prevent a change of control of The O'Gara
Company.

PROVISIONS AFFECTING BUSINESS COMBINATIONS AND CHANGES IN CONTROL

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 will include The O'Gara Company, from
entering into a "Chapter 1704 Transaction" with the beneficial owner of 10% or
more of the outstanding shares of the corporation (an "interested shareholder")
for at least three years after the date on which the interested shareholder
attains a 10% ownership, unless the board of directors of the corporation
approves, prior to the person becoming an interested shareholder, either the
transaction or the acquisition of shares resulting in a 10% ownership position.
A "Chapter 1704 Transaction" includes, 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

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all shareholders, from the interested shareholder. After the three-year period,
a Chapter 1704 Transaction with the interested shareholder is permitted only if
either 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 required by
the corporation's articles of incorporation), including a majority of the shares
not owned by the interested shareholder, or the business combination results in
the shareholders other than the interested shareholder receiving a prescribed
"fair price" for their shares. One significant effect of Chapter 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 OGCL, Ohio's "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 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

(a) 20% or more, but less than 33 1/3%, of the voting power of the
corporation in the election of directors, or

(b) 33 1/3% or more, but less than a majority, of such voting power, or

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 the 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 shareholders of The O'Gara Company the assurance that they will have
adequate time to evaluate the proposal of an 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 and the probability will be increased that they will be treated
equally regarding the price to be offered for their common shares if 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 that voting power excluding interested
shares. 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

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value and validity of the person's offer may cause the offer to be more
financially attractive in order to gain shareholder approval.

In addition, Section 1701.59 of the OGCL provides that, in determining what
a director reasonably believes to be in the best interests of the corporation,
the director may consider, in addition to the interests of the corporation's
shareholders, any of the interests of the corporation's employees, suppliers,
creditors and customers, the economy of the State of Ohio and the U.S.,
community and societal considerations and the long-term as well as the short-
term interests of the corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the corporation.

Although we believe that these provisions are in The O'Gara Company's best
interests, you should be aware that the provisions could be disadvantageous to
you 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 O'Gara Company common stock will be
Fifth Third Bank, Cincinnati, Ohio.

DESCRIPTION OF KRCS CAPITAL STOCK

GENERAL

The authorized capital stock of KRCS consists of 25,000,000 shares of
common stock, par value $0.01 per share, and 2,500,000 shares of preferred
stock, par value $0.01 per share. After the split-up, KRCS will have 8,500,000
shares of common stock outstanding. There will be no preferred stock
outstanding. The following description summarizes the material terms of KRCS'
capital stock. Your rights as a stockholder of KRCS will be governed by KRCS'
Certificate of Incorporation and Bylaws and by the provisions of Delaware law,
including the Delaware General Corporation Law ("DGCL").

COMMON STOCK

Holders of KRCS common stock will be entitled to one vote for each share
held and will be entitled to notice of any stockholders meeting and to vote upon
any matters that properly come before a meeting as provided in the bylaws of
KRCS or as may be provided by law. Except for and subject to those rights
expressly granted to holders of preferred stock, and except as may be provided
by the laws of the State of Delaware, holders of KRCS common stock will have all
other rights of stockholders, including, without limitation, (1) the right to
receive dividends, when, as and if declared by the KRCS Board of Directors, out
of assets lawfully available therefor, and (2) in the event of any distribution
of assets upon a liquidation or winding up of KRCS, the right to receive all the
assets and funds of KRCS remaining after the payment to the creditors of KRCS
and the holders of the preferred stock, if any, of the specific amounts which
they are entitled to receive upon such distribution. The KRCS common stock is
not convertible or redeemable and there are no sinking fund provisions
applicable to it. All shares of KRCS common stock distributed in the connection
with the reorganization will be fully paid and not liable for any call or
assessment.

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PREFERRED STOCK

Preferred stock is issuable from time to time by the KRCS Board of
Directors, without the approval of stockholders, in one or more series and with
such voting powers, if any, designations and preferences for each series as
shall be stated in the resolutions providing for the designation and issue of
series adopted by the Board of Directors. The KRCS Board of Directors is
authorized by KRCS' Certificate of Incorporation to determine, among other
things, the voting, dividend, redemption, conversion and liquidation powers,
rights and preferences and the limitations thereon pertaining to each series.
The issuance of preferred stock may have the effect of delaying, deferring or
preventing a change in control, and may adversely affect the voting and other
rights of holders of KRCS stock.

CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS THAT MAY HAVE AN ANTI-TAKEOVER
EFFECT

KRCS' Certificate of Incorporation and Bylaws contain several provisions
which may be deemed to have anti-takeover effects and may discourage, delay or
prevent a takeover attempt that a stockholder might consider in its best
interest. These provisions include: (1) the requirement that there be three
classes of directors and that their terms be staggered; (2) the requirement that
a stockholder comply with certain procedures, including advance written notice,
before bringing matters, including the nomination of directors, before a
stockholders' meeting; (3) the specific denial of stockholders' ability to take
action by written consent; and (4) the restriction of the right to call special
meetings to only the Chairman of the Board, the Chief Executive Officer or the
Board of Directors pursuant to a board resolution.

Any and all vacancies occurring on the KRCS Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors then in
office, even if those remaining directors constitute less a quorum of the Board,
or if the vacancy is not so filled by the remaining directors, by the
stockholders of KRCS.

LIMITATION ON DIRECTOR'S LIABILITY

KRCS' Certificate of Incorporation and Bylaws contain provisions that
require the indemnification of directors and officers of KRCS, and their
predecessors, to the fullest extent permitted under Delaware law, and that
permit the indemnification, pursuant to the discretion of the Board of
Directors, of employees and agents under the same terms. The Certificate of
Incorporation and Bylaws also provide that a director of KRCS will not be
personally liable to KRCS or its stockholders for monetary damages for breach of
fiduciary duty as a director. However, a director will remain liable for any
breach of the director's duty of loyalty to KRCS or its stockholders, for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, for unlawful payment of a dividend or an unlawful
stock purchase or redemption (except that any director who may have been absent
when the acts were performed may be exonerated from liability by causing his or
her dissent to be entered in the minutes of KRCS at the time of the unlawful
act, or immediately after the director received notice of the act), or for any
transaction from which the director derived any improper personal benefit.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for KRCS common stock will
be .

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COMPARISON OF RIGHTS OF HOLDERS OF O'GARA
COMPANY COMMON STOCK AND KRCS COMMON STOCK

Your rights as a Kroll-O'Gara shareholder currently are governed by the
OGCL and by Kroll-O'Gara's Articles and Code of Regulations. This will continue
to be true after the reorganization as to your shares of O'Gara Company common
stock. KRCS is a Delaware corporation, and your rights as to those shares will
be governed by the DGCL and by KRCS' Certificate of Incorporation and Bylaws.
The following discussion summarizes material differences between Ohio and
Delaware law and between The O'Gara Company's and KRCS' governing documents
which may affect your rights as a shareholder.

AMENDMENT OF CODE OF REGULATIONS AND BYLAWS. The O'Gara Company's Code of
Regulations may be amended by the affirmative vote of holders of a majority of
the shares entitled to vote. KRCS's Bylaws may be amended by its Board of
Directors or by the affirmative vote of holders of a majority of KRCS shares
entitled to vote on the amendment.

AMENDMENT OF CHARTER DOCUMENTS. There are no material differences in
shareholder rights in this area.

DIRECTORS. The O'Gara Company's Code of Regulations provides that the
number of directors will be not less than three. The actual number of directors
may be fixed and changed by a majority vote of the directors. Directors of the
O'Gara Company are elected for terms of one year.

KRCS' Bylaws provide that KRCS will have no less than two and no more than
ten directors, divided into three classes as nearly equal in number as possible.
Generally, each KRCS director will be elected to serve for a term of three
years, except that the initial directors in Class I will serve until the first
KRCS annual meeting after the reorganization and the initial directors in Class
II will serve until the second annual meeting after the reorganization. As a
result, the subsequent elections of directors will be staggered and the members
of only one Class will be elected at each annual meeting to serve for a
three-year term.

REMOVAL OF DIRECTORS. Shareholders of The O'Gara Company may remove any and
all of the directors from office, without assigning any cause, by the vote of
holders of a majority of the voting power in the election of directors. KRCS'
Certificate of Incorporation provides that no director may be removed by vote,
consent or other action of stockholders except for cause.

FILLING VACANCIES ON THE BOARD OF DIRECTORS. There are no material
differences in shareholder rights in this area.

SHAREHOLDER MEETINGS AND PROVISIONS FOR NOTICES. The O'Gara Company's Code
of Regulations provides that special meetings of shareholders may be called by
the Chairman of the Board of Directors, the President, a majority of the
directors or a person or persons holding 50% of the outstanding shares entitled
to vote at the meeting.

KRCS's Bylaws provide that special meetings of stockholders may be called
only by the Chairman of the Board, the Chief Executive Officer or a majority of
the directors.

NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS. Both The O'Gara Company's
Code of Regulations and KRCS' Bylaws provide that, with respect to an annual
meeting of shareholders, nominations of a person for election to the Board of
Directors and the proposal of business to be considered at the annual meeting
must be specified in the notice of the annual meeting given by or at the
direction of the Board or brought before the annual meeting by a shareholder who
has complied with the advance notice procedures set forth in the Code of
Regulations or Bylaws, as applicable.

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An O'Gara Company shareholder may nominate a director only by notice to the
company's Secretary sent or delivered at least five and no more than thirty days
prior to the meeting of shareholders. The notice must include the shareholder's
name and residence; a representation that the shareholder is a holder of record
of voting stock of The O'Gara Company and intends to appear in person or by
proxy at the meeting to nominate the individual specified in the notice; the
nominated director's name and residence; and the consent of the nominated
director to serve as a director if he or she is elected.

A KRCS stockholder may nominate a director only by notice to the company's
Secretary sent or delivered at least 75 and no more than 120 days prior to the
anniversary date of the previous year's annual meeting, subject to some
exceptions. The notice must include the nominated director's name, age, address
and occupation; the class and number of shares of the company's stock owned by
the nominated director; the consent of the nominated director to serve as a
director if he or she is elected; the stockholder's name and address; the class
and number of shares of the company's common stock owned by the stockholder; and
a description of any arrangements between the stockholder and the nominated
director.

QUORUM. There are no material differences in shareholder rights in this
area.

VOTING BY PROXY. Both the OGCL and the DGCL permit voting by proxy. Under
the OGCL, a proxy generally is valid for eleven months whereas, under the DGCL,
a proxy generally may be valid for up to three years.

CLASS VOTING. Under the OGCL, shareholders of a particular class of shares
generally are entitled to vote as a separate class if the rights of that class
are effected in the matter being voted upon. The DGCL generally requires voting
by separate classes only for amendments to the certificate of incorporation that
adversely affect the shareholders of those classes or that increases or
decreases the aggregate number or par value of authorized shares any of those
classes.

CUMULATIVE VOTING. Neither O'Gara Company nor KRCS shareholders may vote
cumulatively in the election of directors.

PRE-EMPTIVE RIGHTS. Neither O'Gara Company nor KRCS shareholders have a
pre-emptive right to acquire unissued shares of stock of the corporation.

SHAREHOLDER APPROVAL OF MERGER, SALE OR OTHER DISPOSITION. Under the OGCL,
unless otherwise stated in the articles of incorporation, a merger, sale or
other disposition of all or substantially all of the assets of a corporation
requires the approval of two-thirds of the shareholders authorized to vote on
those matters. The articles of incorporation of the corporation may provide for
a greater or lesser vote, so long as the vote required is not less than a
majority of the voting power of the corporation. The O'Gara Company's Articles
of Incorporation provide for the approval of these matters by the holders of
shares who can exercise a majority of the voting power of the corporation. A
merger may be approved without the approval of the shareholders of the
corporation if the articles of incorporation do not require shareholder
approval, the merger does not conflict or change the articles of incorporation
or code of regulations of the corporation, the merger does not authorize any
action that would require the approval of shareholders, or the number of shares
to be issued to shareholders of the non-surviving corporation, if any, is less
than 16 2/3% of the voting power of the surviving corporation after the merger.
The O'Gara Company's Articles of Incorporation do not require shareholders to
approve a merger if The O'Gara Company is the surviving corporation and the
above conditions are met.

Under the DGCL, a merger, sale or other disposition of all or substantially
all of the assets of the corporation requires the approval of at least a
majority of the stockholders entitled to vote, unless the

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certificate of incorporation requires a higher percentage. However, a merger may
be approved without the vote of the stockholders if the articles of
incorporation will not be amended, the stock of the corporation is identical
before and after the merger, and the number of shares of common stock to be
issued in the merger is less than 20% of the surviving corporation's common
stock outstanding immediately prior to the merger. KRCS' Certificate of
Incorporation permits the approval of these matters by the holders of shares who
can exercise a majority of the voting power of the corporation. If the
conditions described above are met and KRCS is the surviving corporation,
stockholder approval of a merger is not required.

DIVIDENDS. The O'Gara Company may pay dividends out of surplus, however
created, but must notify its shareholders if a dividend is paid out of surplus
other than earned surplus. KRCS may pay dividends out of surplus or, if there is
no surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year.

REPURCHASE OF SHARES. Under the OGCL, the directors of a corporation may
repurchase its shares in limited circumstances, including when the articles of
incorporation authorize the redemption of those shares, when the articles
provide that the corporation will have the right to repurchase and when
authorized by the shareholders of the corporation by a vote of two-thirds of the
voting power, or a different proportion, but not less than a majority of the
voting power, as provided in the articles. The O'Gara Company may purchase or
redeem its own shares unless its assets would be less than its liabilities plus
its stated capital, if any, or if it is insolvent or would be rendered insolvent
by the purchase or redemption.

Under the DGCL, a corporation may redeem its shares, except that, with
limited exceptions, the redemption may not impair the capital of the
corporation. A corporation may not repurchase its shares at a price higher than
the redemption price of the shares, or redeem its shares if the redemption
results in less than one share outstanding in at least one class or series of
stock having full voting powers. KRCS may purchase or redeem its own shares in
accordance with the DGCL and also in accordance with any times, prices and other
conditions for redemption the Board of Directors may designate for its preferred
stock.

DISSENTERS' RIGHTS. Under the OGCL, dissenting shareholders are entitled to
appraisal rights in connection with the lease, sale, exchange, transfer or other
disposition of all or substantially all of the assets of a corporation and in
connection with certain amendments to its articles of incorporation. In
addition, shareholders of an Ohio corporation being merged into a new
corporation are also entitled to appraisal rights. Shareholders of an acquiring
corporation are entitled to appraisal rights in a merger, combination or
majority share acquisition on which the shareholders also are entitled to vote.

Under the DGCL, appraisal rights are available only in connection with
statutory mergers or consolidations. Even in these cases, the DGCL generally
does not recognize dissenters' rights for any class or series of stock which is
either listed on Nasdaq or a national securities exchange or held of record by
more than 2,000 stockholders. Appraisal rights are available, however, for
holders of stock who, by the terms of the merger or consolidation, are required
to accept anything except (1) stock of the corporation surviving or resulting
from the merger or consolidation, (2) shares which are either listed on Nasdaq
or a national securities exchange or held of record by more than 2,000
stockholders, (3) cash in lieu of fractional shares, or (4) a combination of
stock described in (1) and (2) and cash in lieu of fractional shares.

LIABILITY OF DIRECTORS. Under the OGCL, a director is only liable for
damages resulting from the director's actions or failure to act if it is proved
by clear and convincing evidence that the action or failure to act involved
deliberate intent to cause injury to the corporation or reckless disregard for
the best interests of the corporation, unless the corporation's articles or
regulations make this provision
137
<PAGE> 143

inapplicable by specific reference. The O'Gara Company's Articles of
Incorporation and Code of Regulations do not make this provision inapplicable.

In addition, under the OGCL, a director is only liable for a violation of
his fiduciary duties if it is proved by clear and convincing evidence that the
director has not acted in good faith, in a manner he reasonably believes to be
in, or not opposed to, the best interest of the corporation and with the care
that an ordinary prudent person in a like position would use under similar
circumstances.

The DGCL specifically permits a corporation to include in its certificate
of incorporation a provision which eliminates or limits the personal liability
of a director to the corporation or its shareholders for monetary damages and
for a breach of fiduciary duty as a director. This provision is included in
KRCS' Certificate of Incorporation. However, in accordance with the DGCL, no
provision may eliminate or limit the liability of a director for any breach of
the director's duty of loyalty to the corporation or its stockholders, for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, for illegal declarations of dividends, redemptions and
stock repurchases or for any transaction from which the director derived an
improper personal benefit.

INDEMNIFICATION AND LIMITATION OF LIABILITY. Generally, the OGCL and the
DGCL provide that a corporation may indemnify any person from liability arising
out of the person's activities as a director, officer, employee or agent of the
corporation including indemnification against expenses, including attorney's
fees, judgments, fines, and all other amounts reasonably incurred in connection
with the liability if that individual acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to criminal conduct, if he had no reason to
believe the conduct was unlawful. The O'Gara Company's Articles of Incorporation
provide for the indemnification of directors to the maximum extent provided
under the OGCL. KRCS' Certificate of Incorporation provides for the
indemnification of its directors and officers, including directors and officers
of a predecessor corporation or a subsidiary, to the maximum extent provided
under the DGCL. Additionally, KRCS may, at the discretion and authorization of
its Board of Directors, provide rights to indemnification to employees or agents
of KRCS similar to those conferred to its directors and officers.

LOANS TO DIRECTORS AND OFFICERS. Under the OGCL, a corporation may make a
loan or guarantee to its officers, directors or shareholders if the loan or
guarantee is approved by a majority of the disinterested members of the board of
directors. The disinterested directors, taking into account the terms and
provisions of the loan or guarantee, must determine that making the loan or
guarantee could reasonably be expected to benefit the corporation. Directors who
authorize unlawful loans are liable for the loan, together with interest.

Under the DGCL, a corporation may make loans or guarantees to its officers
or other employees when the transaction, in the judgment of the board of
directors, is reasonably expected to benefit the corporation.

ANTI-TAKEOVER STATUTES. See "Description of O'Gara Company Capital Stock."

DISSOLUTION. Under the OGCL, a corporation may be voluntarily dissolved by
the directors when the corporation has been adjudged bankrupt, when a receiver
is appointed to wind-up the corporation, when substantially all the assets of
the corporation are sold, when the articles have been canceled for failure to
pay tax, or when the period of existence of the corporation expires.
Additionally, the shareholders may adopt a resolution to dissolve the
corporation by an affirmative vote of two-thirds of the voting power of the
corporation. The articles of incorporation may provide for the vote of a higher
or lower percentage as long as it is not less than a majority of the voting
power of the corporation. The

138
<PAGE> 144

O'Gara Company's Articles of Incorporation permit approval of a dissolution by a
majority of the company's voting power.

Under the DGCL, the board of directors, upon an affirmative vote of a
majority of the whole board, may send notice to the stockholders of a meeting to
address the adoption of a resolution to dissolve the corporation. The
corporation will be dissolved if a majority of the stockholders of the
corporation vote for the dissolution. Additionally, dissolution may be
authorized without action of the directors by consent of all the stockholders.

INDEPENDENT PUBLIC ACCOUNTANTS

The consolidated financial statements of The Kroll-O'Gara Company as of
December 31, 1998 and 1999 and for each of the three years in the period ended
December 31, 1999, included in this proxy statement, have been audited by Arthur
Andersen LLP, independent public accountants, as set forth in their report. In
that report, that firm states that with respect to a certain subsidiary its 1997
opinion is based on the report of other independent public accountants.
Reference is also made to said report, which includes an explanatory paragraph
with respect to the change in the method of accounting for costs incurred in
connection with business process reengineering activities in the fourth quarter
of 1997 and the change in the method of accounting for costs of start-up
activities in the first quarter of 1999, both as discussed in Note 2(r) to the
consolidated financial statements.

The combined financial statements of The O'Gara Company as of December 31,
1998 and 1999 and for each of the three years in the period ended December 31,
1999, included in this proxy statement, have been audited by Arthur Andersen
LLP, independent public accountants, as set forth in their report. Reference is
made to said report, which includes an explanatory paragraph with respect to the
change in the method of accounting for costs of start-up activities in the first
quarter of 1999, as discussed in Note 2(q) to the combined financial statements.

It is expected that representatives of Arthur Andersen LLP will be present
at the special meeting, where they will have an opportunity to respond to
appropriate questions of shareholders and to make a statement if they so desire.

FUTURE SHAREHOLDER PROPOSALS

Should the split-up not be completed, shareholder proposals will be
considered for inclusion in the proxy statement for Kroll-O'Gara's 2001 Annual
Meeting if they are received by Kroll-O'Gara before the close of business on
February 23, 2001. In addition, Kroll-O'Gara will retain discretionary authority
to vote proxies on any matter raised by a shareholder at the 2001 Annual
Meeting, and not included in Kroll-O'Gara's proxy statement, unless Kroll-O'Gara
is notified prior to May 11, 2001 that the shareholder intends to present the
matter at that meeting. If there is a change in the date after which shareholder
notification is untimely, Kroll-O'Gara will so inform shareholders by notice in
a filing with the SEC.

Neither The O'Gara Company nor KRCS has set a date for its 2001 Annual
Meeting. Each company will notify shareholders of all applicable dates in a
filing with the SEC after the split-up is completed.

139
<PAGE> 145

OTHER BUSINESS

We are not aware of any matters which properly may be presented at the
special meeting other than those discussed above. However, if other matters do
come before the special meeting, proxies will be voted on those matters in
accordance with the recommendation of Kroll-O'Gara's Board of Directors.

140
<PAGE> 146

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
THE KROLL-O'GARA COMPANY
Reports of Independent Public Accountants................... F-1
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-103
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-7
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1997, 1998 and 1999.............. F-8
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-10
Notes to Consolidated Financial Statements.................. F-11
Consolidated Balance Sheets as of December 31, 1999 and June
30, 2000 (unaudited)...................................... F-45
Consolidated Statements of Operations for the Six Months
Ended June 30, 1999 and 2000 (unaudited).................. F-47
Consolidated Statements of Shareholders' Equity for the Six
Months Ended June 30, 2000 (unaudited).................... F-48
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1999 and 2000 (unaudited).................. F-49
Notes to Consolidated Unaudited Financial Statements........ F-50
THE O'GARA COMPANY
Report of Independent Public Accountants.................... F-58
Combined Balance Sheets as of December 31, 1998 and 1999.... F-59
Combined Statements of Operations for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-61
Combined Statements of Shareholders' Equity for the Years
Ended December 31, 1997, 1998 and 1999.................... F-62
Combined Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-63
Notes to Combined Financial Statements...................... F-64
Combined Balance Sheets as of December 31, 1999 and June 30,
2000 (unaudited).......................................... F-90
Combined Statements of Operations for the Six Months Ended
June 30, 1999 and 2000 (unaudited)........................ F-92
Combined Statements of Shareholders' Equity for the Period
Ended June 30, 2000 (unaudited)........................... F-93
Combined Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 2000 (unaudited)........................ F-94
Notes to Combined Unaudited Financial Statements............ F-95
</TABLE>

F-1
<PAGE> 147

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
THE O'GARA COMPANY PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
Unaudited Pro Forma Combining Condensed Balance Sheet as of
June 30, 2000............................................. F-101
Unaudited Pro Forma Combining Condensed Statements of
Operations for the Six Months Ended June 30, 2000
(unaudited)............................................... F-103
Unaudited Pro Forma Combining Condensed Statements of
Operations for the Year Ended December 31, 1999........... F-105
KROLL RISK CONSULTING SERVICES, INC. PRO FORMA FINANCIAL
STATEMENTS (UNAUDITED)
Unaudited Pro Forma Combining Condensed Balance Sheet as of
June 30, 2000............................................. F-107
Unaudited Pro Forma Combining Condensed Statements of
Operations for the Six Months Ended June 30, 2000
(unaudited)............................................... F-109
Unaudited Pro Forma Combining Condensed Statements of
Operations for the Years Ended December 31, 1999, 1998 and
1997...................................................... F-111
</TABLE>

F-2
<PAGE> 148

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE KROLL-O'GARA COMPANY:

We have audited the accompanying consolidated balance sheets of THE
KROLL-O'GARA COMPANY and subsidiaries as of December 31, 1998 and 1999 and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. 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 did not audit the 1997 financial statements of Background
America, Inc., a company acquired during 1999 in a transaction accounted for as
a pooling of interests, as discussed in Note 3. Such statements are included in
the consolidated financial statements of The Kroll-O'Gara Company and reflect
total revenues of 2 percent of the consolidated totals. Those statements were
audited by other auditors whose report has been furnished to us and our opinion,
insofar as it relates to amounts included for Background America, Inc., is based
solely upon the report of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 and the report of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of The Kroll-O'Gara Company and
subsidiaries as of December 31, 1998 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

As explained in Note 2(r) to the consolidated financial statements,
effective in the fourth quarter of 1997, the Company changed its method of
accounting for costs incurred in connection with business process reengineering
activities and, effective in the first quarter of 1999, the Company changed its
method of accounting for costs of start-up activities.

Arthur Andersen LLP

Cincinnati, Ohio
September 14, 2000

F-3
<PAGE> 149

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Background America, Inc.
Nashville, Tennessee

We have audited the consolidated statements of operations, redeemable
preferred stock and other shareholders' equity (deficit) and cash flows for the
year ended December 31, 1997 of Background America, Inc. and subsidiaries (the
"Company"). 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 audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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 audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements (not presented
separately herein) present fairly, in all material respects, the results of
operations of Background America, Inc. and subsidiaries and their cash flows for
the year ended December 31, 1997, in conformity with accounting principles
generally accepted in the United States of America.

Deloitte & Touche LLP
Nashville, Tennessee

December 18, 1998
(January 21, 1999 as to
first paragraph of Note 15)

F-4
<PAGE> 150

THE KROLL-O'GARA COMPANY

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999

<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
ASSETS (NOTE 7)
CURRENT ASSETS:
Cash and cash equivalents................................. $ 14,040,700 $ 13,834,560
Marketable securities..................................... 13,285,322 --
Trade accounts receivable, net of allowance for doubtful
accounts of approximately $3,821,306 and $4,778,906 in
1998 and 1999, respectively (Notes 2 and 4)............ 56,960,753 68,017,062
Unbilled revenues (Note 2)................................ 7,766,015 18,033,811
Related party receivables (Note 6)........................ 2,763,108 2,095,810
Costs and estimated earnings in excess of billings on
uncompleted contracts (Note 4)......................... 26,408,097 24,159,724
Inventories (Note 4)...................................... 22,397,939 26,264,388
Prepaid expenses and other................................ 8,001,102 11,579,522
Deferred tax asset (Note 5)............................... -- 823,831
------------ ------------
Total current assets.............................. 151,623,036 164,808,708
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost (Notes 2 and 8):
Land...................................................... 1,856,003 2,164,197
Buildings and improvements................................ 8,271,967 8,586,985
Leasehold improvements.................................... 6,344,398 7,451,655
Furniture and fixtures.................................... 6,013,679 10,131,191
Machinery and equipment................................... 19,702,242 36,768,571
Construction-in-progress.................................. 2,915,135 --
------------ ------------
45,103,424 65,102,599
Less-accumulated depreciation............................. (20,462,991) (26,194,953)
------------ ------------
24,640,433 38,907,646
------------ ------------
DATABASES, net of accumulated amortization of $22,788,857
and $26,187,348 in 1998 and 1999, respectively (Note 2)... 9,238,903 9,696,162
COSTS IN EXCESS OF ASSETS ACQUIRED AND OTHER INTANGIBLE
ASSETS, net of accumulated amortization of $4,449,752 and
$9,028,471 in 1998 and 1999, respectively (Notes 2 and
3)........................................................ 62,148,482 81,676,083
OTHER ASSETS:
Other assets (Note 4)..................................... 6,093,435 4,304,000
------------ ------------
77,480,820 95,676,245
------------ ------------
$253,744,289 $299,392,599
============ ============
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
F-5
<PAGE> 151

THE KROLL-O'GARA COMPANY

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999

<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving lines of credit (Note 7)........................ $ -- $ 26,582,688
Current portion of long-term debt (Note 8)................ 2,000,299 3,737,227
Trade accounts payable.................................... 35,989,761 38,822,977
Related party payables (Note 6)........................... 353,233 --
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 182,656 360,725
Accrued liabilities (Note 4).............................. 22,800,436 28,299,006
Income taxes currently payable............................ 760,340 768,105
Deferred income taxes (Note 5)............................ 781,575 --
Customer deposits......................................... 3,865,219 4,195,762
------------ ------------
Total current liabilities......................... 66,733,519 102,766,490

OTHER LONG-TERM LIABILITIES................................. 1,542,588 2,673,092

DEFERRED INCOME TAXES (Note 5).............................. 1,625,363 1,820,815

LONG-TERM DEBT, net of current portion (Note 8)............. 39,346,555 36,264,163
------------ ------------
Total liabilities................................. 109,248,025 143,524,560
------------ ------------

COMMITMENTS AND CONTINGENCIES (Notes 9, 12 and 17)
SHAREHOLDERS' EQUITY (Note 1):
Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued................................ -- --
Common stock, $.01 par value, 50,000,000 shares
authorized, 21,584,872 and 22,255,510 shares issued and
outstanding in 1998 and 1999, respectively............. 215,848 222,555
Additional paid-in-capital................................ 157,229,936 170,101,929
Retained deficit.......................................... (10,964,249) (12,639,574)
Deferred compensation..................................... (1,113,936) (1,629,893)
Accumulated other comprehensive loss...................... (871,335) (186,978)
------------ ------------
Total shareholders' equity........................ 144,496,264 155,868,039
------------ ------------
$253,744,289 $299,392,599
============ ============
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
F-6
<PAGE> 152

THE KROLL-O'GARA COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES....................................... $210,323,664 $272,195,513 $321,937,532
COST OF SALES................................... 143,213,182 178,421,433 203,456,962
------------ ------------ ------------
Gross profit............................. 67,110,482 93,774,080 118,480,570
OPERATING EXPENSES:
Selling and marketing......................... 15,532,029 22,332,090 27,470,879
General and administrative.................... 34,292,093 42,834,565 74,861,467
Restructuring charge (Note 4)................. -- -- 4,363,566
Failed merger related costs (Note 17)......... -- -- 1,562,331
Merger related costs (Note 3)................. 7,204,926 5,727,358 4,069,089
------------ ------------ ------------
Operating expenses....................... 57,029,048 70,894,013 112,327,332
------------ ------------ ------------
Operating income......................... 10,081,434 22,880,067 6,153,238
OTHER INCOME (EXPENSE):
Interest expense.............................. (5,244,249) (4,670,010) (4,965,597)
Interest income............................... 172,544 1,273,218 409,892
Other, net.................................... (284,639) (344,279) (311,901)
------------ ------------ ------------
Income before minority interest,
provision for income taxes,
extraordinary item and cumulative
effect of change in accounting
principle............................. 4,725,090 19,138,996 1,285,632
Minority interest............................. 156,223 -- --
------------ ------------ ------------
Income before provision for income taxes,
extraordinary item and cumulative
effect of change in accounting
principle............................. 4,568,867 19,138,996 1,285,632
Provision for income taxes.................... 3,304,993 7,352,931 2,429,410
------------ ------------ ------------
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle.................. 1,263,874 11,786,065 (1,143,778)
Extraordinary loss, net of applicable tax
benefit of $129,250 (Note 7)............... (193,875) -- --
------------ ------------ ------------
Income (loss) before cumulative effect of
change in accounting principle........ 1,069,999 11,786,065 (1,143,778)
Cumulative effect of change in accounting
principle, net of applicable tax benefit of
$240,000 in 1997 and $408,000 in 1999 (Note
2(r))...................................... (360,000) -- (778,041)
------------ ------------ ------------
Net income (loss)........................ $ 709,999 $ 11,786,065 $ (1,921,819)
============ ============ ============
Earnings (loss) per share (Note 2(o)):
Basic...................................... $ 0.05 $ 0.61 $ (0.09)
============ ============ ============
Diluted.................................... $ 0.05 $ 0.59 $ (0.09)
============ ============ ============
Weighted average shares outstanding (Note
2(o)):
Basic...................................... 14,750,676 19,336,580 22,005,632
============ ============ ============
Diluted.................................... 15,560,050 19,908,206 22,005,632
============ ============ ============
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
F-7
<PAGE> 153

THE KROLL-O'GARA COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>

COMPREHENSIVE COMMON ADDITIONAL RETAINED DEFERRED
SHARES INCOME (LOSS) STOCK PAID-IN CAPITAL DEFICIT COMPENSATION
---------- ------------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996......... 14,035,151 $140,351 $ 44,143,424 $(21,266,057) $ --
Issuances of stock under employee
benefit plans, including related
tax benefit (Note 11)............ 750,725 7,507 6,301,276 -- --
Issuance of stock in conjunction
with the acquisition of
businesses and minority interest
(Note 3)......................... 823,371 8,234 9,695,009 -- --
Issuance of stock in conjunction
with the settlement of a note
payable.......................... 21,721 217 232,282 -- --
Private offering of common stock,
net of issuance cost of
$36,373.......................... 307,613 3,076 5,964,976 -- --
Purchase and retirement of common
stock (Note 11 (c)).............. (259,036) (2,590) (498,978) (2,194,256) --
Comprehensive income:
Net income....................... -- $ 709,999 -- -- 709,999 --
-----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of $157,000
tax benefit.................. -- (236,393) -- -- -- --
Unrealized depreciation of
marketable securities, net of
$2,400 tax benefit........... -- (3,698) -- -- -- --
-----------
Other comprehensive loss....... -- (240,091) -- -- -- --
-----------
Comprehensive income......... -- $ 469,908 -- -- -- --
---------- =========== -------- ------------ ------------ -----------
BALANCE, December 31, 1997......... 15,679,545 156,795 65,837,989 (22,750,314) --
Public and private offerings of
common stock, net of issuance
costs of approximately
$1,431,000....................... 4,716,757 47,168 68,289,755 -- --
Net issuances of stock under
employee benefit plans, including
related tax benefit (Note 11).... 428,625 4,286 4,473,859 -- --
Issuance of stock in conjunction
with the acquisition of
businesses (Note 3).............. 767,416 7,674 17,602,830 -- --
Exercise of stock put option (Note
3)............................... (7,471) (75) (166,593) -- --
Deferred compensation related to
stock options.................... -- -- 1,192,096 -- (1,113,936)
Comprehensive income:
Net income....................... -- $11,786,065 -- -- 11,786,065 --
-----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of $318,000
tax benefit.................. -- (476,956) -- -- -- --
Reclassification adjustment for
gain on securities included
in net income, net of $7,000
tax benefit.................. -- (10,469) -- -- -- --
-----------
Other comprehensive loss....... -- (487,425) -- -- -- --
-----------
Comprehensive income......... -- $11,298,640 -- -- -- --
---------- =========== -------- ------------ ------------ -----------

<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS) TOTAL
------------- ------------
<S> <C> <C>
BALANCE, December 31, 1996......... $(143,819) $ 22,873,899
Issuances of stock under employee
benefit plans, including related
tax benefit (Note 11)............ -- 6,308,783
Issuance of stock in conjunction
with the acquisition of
businesses and minority interest
(Note 3)......................... -- 9,703,243
Issuance of stock in conjunction
with the settlement of a note
payable.......................... -- 232,499
Private offering of common stock,
net of issuance cost of
$36,373.......................... -- 5,968,052
Purchase and retirement of common
stock (Note 11 (c)).............. -- (2,695,824)
Comprehensive income:
Net income....................... -- 709,999

Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of $157,000
tax benefit.................. -- --
Unrealized depreciation of
marketable securities, net of
$2,400 tax benefit........... -- --

Other comprehensive loss....... (240,091) (240,091)

Comprehensive income......... -- --
--------- ------------
BALANCE, December 31, 1997......... (383,910) 42,860,560
Public and private offerings of
common stock, net of issuance
costs of approximately
$1,431,000....................... -- 68,336,923
Net issuances of stock under
employee benefit plans, including
related tax benefit (Note 11).... -- 4,478,145
Issuance of stock in conjunction
with the acquisition of
businesses (Note 3).............. -- 17,610,504
Exercise of stock put option (Note
3)............................... -- (166,668)
Deferred compensation related to
stock options.................... -- 78,160
Comprehensive income:
Net income....................... -- 11,786,065

Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of $318,000
tax benefit.................. -- --
Reclassification adjustment for
gain on securities included
in net income, net of $7,000
tax benefit.................. -- --

Other comprehensive loss....... (487,425) (487,425)

Comprehensive income......... -- --
--------- ------------
</TABLE>

F-8
<PAGE> 154
<TABLE>
<CAPTION>

<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS) TOTAL
------------- ------------
<S> <C> <C>
BALANCE, December 31, 1998......... $(871,335) $144,496,264
Net issuances of stock under
employee benefit plans, including
related tax benefit (Note 11).... -- 3,295,110
Issuance of stock in conjunction
with acquisition of businesses
(Note 3)......................... -- 8,258,423
Deferred compensation related to
restricted stock and stock
options (Note 11)................ -- 1,055,704
Comprehensive income (loss):
Net loss......................... -- (1,921,819)
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of $456,000
tax provision................ -- --
Other comprehensive income..... 684,357 684,357
Comprehensive income
(loss)..................... -- --
--------- ------------
BALANCE, December 31, 1999......... $(186,978) $155,868,039
========= ============
</TABLE>

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

F-9
<PAGE> 155

THE KROLL-O'GARA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 15)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
1997 1998 1999
------------ ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 709,999 $11,786,065 $ (1,921,819)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operations --
Depreciation and amortization......................... 6,798,668 9,112,221 14,088,149
Bad debt expense...................................... 2,083,080 2,556,506 4,360,227
Shareholder stock compensation........................ 1,356,280 -- --
Loss on write-off of notes receivable................. 35,434 -- --
Share in net income of joint ventures................. (121,650) -- --
Gain on sale of marketable securities................. (14,503) (10,469) --
Noncash compensation expense.......................... -- 226,074 1,055,704
Change in assets and liabilities, net of effects of
acquisitions --
Receivables -- trade and unbilled....................... (10,410,824) (13,668,954) (19,094,085)
Costs and estimated earnings in excess of billings on
uncompleted contracts................................. 3,499,084 (14,329,633) 2,248,373
Inventories, prepaid expenses and other assets.......... (7,226,253) (4,100,776) (5,189,742)
Accounts payable and income taxes currently payable..... 8,058,527 608,102 966,965
Billings in excess of costs and estimated earnings on
uncompleted contracts................................. (1,009,740) (138,006) 178,069
Amounts due to/from related parties..................... 443,290 (2,623,651) 731,612
Deferred taxes.......................................... (156,892) (838,668) (1,409,954)
Accrued liabilities, long-term liabilities and customer
deposits.............................................. 667,999 (1,902,669) (1,333,001)
------------ ----------- ------------
Net cash provided by (used in) operating
activities....................................... 4,712,499 (13,323,858) (5,319,502)
------------ ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net........... (6,016,619) (7,329,376) (19,198,147)
Additions to databases.................................... (3,856,914) (4,186,924) (3,855,750)
Acquisitions, net of cash acquired (Note 3)............... (10,710,128) (18,595,996) (12,014,287)
Sale (purchases) of marketable securities, net............ 35,424 (13,262,353) 13,285,322
Other..................................................... 266,004 -- --
------------ ----------- ------------
Net cash used in investing activities.............. (20,282,233) (43,374,649) (21,782,862)
------------ ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan financing fees....................................... (723,727) -- --
Net borrowings (repayments) under revolving lines of
credit.................................................. (9,376,835) (559,112) 24,262,221
Proceeds from debt........................................ 44,902,987 284,877 --
Payments of long-term debt................................ (10,042,503) (13,662,425) (1,345,464)
Proceeds from notes payable -- shareholder................ 1,261,000 -- --
Repayment of notes payable -- shareholder................. (8,107,641) (176,057) --
Net proceeds from issuance of common stock................ 4,914,317 68,336,923 --
Purchase and retirement of stock.......................... (2,695,824) (166,668) --
Foreign currency translation.............................. (160,462) (593,494) 1,096,137
Proceeds from exercise of stock options and warrants...... 2,780,966 4,478,145 3,295,110
------------ ----------- ------------
Net cash provided by financing activities.......... 22,752,278 57,942,189 27,308,004
------------ ----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 7,182,544 1,243,682 205,640
Effects of foreign currency exchange rates on cash and cash
equivalents............................................... (75,931) 106,049 (411,780)
CASH AND CASH EQUIVALENTS, beginning of year................ 5,584,356 12,690,969 14,040,700
------------ ----------- ------------
CASH AND CASH EQUIVALENTS, end of year...................... $ 12,690,969 $14,040,700 $ 13,834,560
============ =========== ============
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
F-10
<PAGE> 156

THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

(1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION --

The Kroll-O'Gara Company, an Ohio corporation, together with its
subsidiaries (collectively "Kroll-O'Gara"), is a leading global provider of
a broad range of specialized products and services that are designed to
provide solutions to a variety of security needs. Kroll-O'Gara's Security
Products and Services Group markets ballistic and blast protected vehicles
and security services. The Investigations and Intelligence Group offers
business intelligence and investigation services. The Information Security
Group offers information and computer security services, including network
and system security review and repair. The Voice and Data Communications
Group offers secure satellite communication equipment and satellite
navigation systems.

In December 1997, a wholly owned subsidiary of The O'Gara Company (O'Gara)
was merged into Kroll Holdings, Inc. (Kroll). At the time of the merger,
The O'Gara Company's name was changed to The Kroll-O'Gara Company. The
consolidated financial statements include the historical consolidated
financial statements of Kroll-O'Gara (and the businesses it has acquired,
since their respective dates of acquisition, under the purchase method of
accounting) and the financial position, results of operations and cash
flows of entities which were merged with Kroll-O'Gara in connection with
pooling of interests business combinations (See Note 3).

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --

(a) CONSOLIDATION -- The consolidated financial statements include the
accounts of all majority-owned subsidiaries. All material intercompany
accounts and transactions are eliminated. Investments in 20% to 50%
owned entities are accounted for on the equity method and investments
in less than 20% owned entities are accounted for on the cost method.
Affiliated entities are not included in the accompanying consolidated
financial statements, and include entities that are directly or
indirectly owned by current shareholders or former shareholders.

(b) REVENUE RECOGNITION -- Revenue related to contracts for security
products (both government and commercial) 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.

Revenue from intelligence and investigation services and information
security services is recognized as the services are performed.
Kroll-O'Gara records either billed or unbilled accounts receivable
based on case-by-case invoicing determinations.

F-11
<PAGE> 157
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Revenue related to voice and data communications 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.

(c) CASH AND CASH EQUIVALENTS -- Cash equivalents consist of all highly
liquid debt instruments with an initial maturity of three months or
less at the date of purchase. Kroll-O'Gara invests excess cash in
overnight repurchase agreements, which are government collateralized
securities. The carrying amount of cash and cash equivalents
approximates fair value of those instruments due to their short
maturity.

(d) MARKETABLE SECURITIES -- Pursuant to the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," (SFAS 115), Kroll-O'Gara
must classify its debt and marketable securities as either trading,
available-for-sale or held-to-maturity. Kroll-O'Gara's marketable
security investments consist largely of available-for-sale municipal
obligations. These securities are valued at current market value, which
approximates cost.

Unrealized holding gains and losses, net of the related income tax
effect, on the available-for-sale securities are excluded from earnings
and are reported as a separate component of shareholders' equity until
realized. Kroll-O'Gara recorded an unrealized net loss of $3,698 as of
December 31, 1997. There were no such unrealized gains or losses as of
December 31, 1998 and 1999.

(e) CONCENTRATIONS OF CREDIT RISK -- Financial instruments that subject
Kroll-O'Gara to credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to accounts receivable are
limited by the number of clients that comprise Kroll-O'Gara's client
base, along with the different industries and geographic regions in
which Kroll-O'Gara's clients operate. Kroll-O'Gara does not generally
require collateral or other security to support client receivables,
although Kroll-O'Gara does require retainers, up-front deposits or
irrevocable letters-of-credit in many situations. Kroll-O'Gara has
established an allowance for doubtful accounts based upon facts
surrounding the credit risk of specific clients and past history.
Management does not anticipate incurring losses on its trade
receivables in excess of established allowances.

(f) PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are
stated at cost. Depreciation is computed on both straight-line and
accelerated methods over the estimated useful lives of the related
assets as follows:

<TABLE>
<S> <C>
Buildings and improvements............................... 5-40 years
Furniture and fixtures................................... 4-10 years
Machinery and equipment.................................. 3-12 years
Leasehold improvements................................... Life of lease
</TABLE>

(g) DATABASES -- Databases are capitalized costs incurred to obtain
information from third party providers. Kroll-O'Gara relies on this
information to create and maintain its proprietary and non-proprietary
databases. Because of the continuing accessibility of the information
and its usefulness to future investigative procedures, the cost of
acquiring the information is capitalized

F-12
<PAGE> 158
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and amortized over a five year period. Amortization of databases for the
years ended December 31, 1997, 1998 and 1999 was $2,937,152, $3,283,232
and $3,520,624, respectively.

(h) IMPAIRMENT OF LONG-LIVED ASSETS -- Pursuant to the provisions of SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS 121), long-lived assets,
certain identifiable intangibles and goodwill related to those assets
must be reviewed for impairment by asset group for which the lowest
level of independent cash flows can be identified. In accordance with
this standard, Kroll-O'Gara periodically reviews the carrying value of
these assets and impairments are recognized when the expected
undiscounted future cash flows are less than the carrying amount of the
asset. Based on its most recent analysis, Kroll-O'Gara believes no
impairment existed at December 31, 1999. However, it is possible, due
to a change in circumstances, that carrying values could become
impaired in the future. Such impairment could have a material effect on
the results of operations in a particular reporting period.

(i) COSTS IN EXCESS OF ASSETS ACQUIRED -- Costs in excess of assets
acquired represents the excess of the purchase cost over the fair value
of net assets acquired in a purchase business combination. Costs in
excess of assets acquired, net of accumulated amortization, as of
December 31, 1998 and 1999 were $52,418,302 and $72,269,993,
respectively. Amortization is recorded on a straight-line basis over
periods ranging from 12 to 40 years. Amortization of costs in excess of
assets acquired for the years ended December 31, 1997, 1998 and 1999
were $828,913, $1,636,013 and $3,431,058, respectively.

(j) OTHER INTANGIBLE ASSETS -- Other intangible assets, comprised mainly of
customer lists and non-compete agreements, are amortized on a
straight-line basis. Customer lists are amortized over a fifteen year
period and the non-compete agreements are amortized over the lives of
the respective agreements, which range from 6 months to fifteen years.
Other intangible assets, net of accumulated amortization, as of
December 31, 1998 and 1999 were $9,730,180 and $9,406,090,
respectively. Amortization of other intangible assets for the years
ended December 31, 1997, 1998 and 1999 was $350,309, $972,489 and
$1,147,660, respectively.

(k) 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, with gains or losses resulting from translation included in a
separate component of shareholders' equity.

Gains or losses resulting from foreign currency transactions are
translated to local currency at the rates of exchange prevailing at the
dates of the transactions. Amounts receivable or payable in foreign
currencies, other than the subsidiary's local currency, are translated
at the rates of exchange prevailing at the balance sheet date. The
effect of transactional gains or losses is included in other income
(expense) in the accompanying consolidated statements of operations.

(l) 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.

F-13
<PAGE> 159
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(m) RESEARCH AND DEVELOPMENT -- Research and development costs are expensed
as incurred. Kroll-O'Gara incurred approximately $136,000, $537,000 and
$297,000 for the years ended December 31, 1997, 1998 and 1999,
respectively, for research and development. These costs are included in
general and administrative expenses in the accompanying consolidated
statements of operations.

(n) ADVERTISING -- Kroll-O'Gara expenses the cost of advertising as
incurred. Advertising expenses for the years ended December 31, 1997,
1998 and 1999 were approximately $1,542,996, $2,027,233 and $2,374,096,
respectively.

(o) EARNINGS PER SHARE -- In 1997, Kroll-O'Gara adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
128). In accordance with SFAS 128, basic earnings per share are
computed by dividing net income by the weighted average number of
shares of common stock outstanding during the year. Diluted earnings
per share are computed by dividing net income by the weighted average
number of shares of common stock and common stock equivalents
outstanding during the year. Dilutive common stock equivalents
represent shares issuable upon assumed exercise of stock options and
warrants, assumed issuance of restricted stock and assumed conversion
of a convertible note payable.

The following is a reconciliation of the numerator and denominator for
basic and diluted earnings per share for the years ended December 31,
1997, 1998 and 1999:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic earnings per share............ $709,999 14,750,676 $0.05
=====
Effect of dilutive securities:
Options........................... -- 254,575
Restricted stock.................. -- 443,152
Warrants.......................... -- 97,425
Convertible note payable.......... -- 14,222
-------- ----------
Diluted earnings per share.......... $709,999 15,560,050 $0.05
======== ========== =====
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-----------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic earnings per share........... $11,786,065 19,336,580 $0.61
=====
Effect of dilutive securities:
Options.......................... -- 568,849
Warrants......................... -- 2,777
----------- ----------
Diluted earnings per share......... $11,786,065 19,908,206 $0.59
=========== ========== =====
</TABLE>

F-14
<PAGE> 160
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
-----------------------------------------
LOSS SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic and diluted loss per share... $(1,921,819) 22,005,632 $(0.09)
=========== ======
Effect of anti-dilutive securities:
Options.......................... 546,614
Restricted stock................. 42,974
Warrants......................... 1,188
----------
Diluted shares..................... 22,596,408
==========
</TABLE>

As a result of the net loss recorded in 1999, basic and diluted
earnings per share are identical as all options and warrants are
anti-dilutive.

Basic and diluted earnings per share based on income before
extraordinary item and cumulative effect of change in accounting
principle were $0.09 and $0.08, respectively, for the year ended
December 31, 1997. The basic and diluted per share impact of the
extraordinary item were $0.01 and the basic and diluted per share
impact of the change in accounting principle were $0.03 and $0.02,
respectively.

Basic and diluted loss per share based on loss before cumulative effect
of change in accounting principle were $0.05 for the year ended
December 31, 1999. The basic and diluted per share impact of the change
in accounting principle was $0.04.

During 1997, 66,000 warrants to purchase a total of 27,746 shares of
common stock of Kroll-O'Gara at $7.20 per warrant were outstanding but
were not included in the computation of diluted earnings per share
because the warrants' exercise price was greater than the average
market price of the common shares.

During 1998, 11,666 warrants to purchase an equivalent amount of shares
of common stock of Kroll-O'Gara at $25.69 per warrant were outstanding
but were not included in the computation of diluted earnings per share
because the warrants' exercise price was greater than the average
market price of the common shares.

During 1999, 8,719 warrants and 597,155 options to purchase an
equivalent amount of shares of common stock of Kroll-O'Gara at $25.69
per warrant and from $26.94 to $34.88 per option were outstanding but
were not included in the computation of diluted weighted average shares
because the warrants' and options' exercise prices were greater than
the average market price of the common shares.

(p) NEW ACCOUNTING PRONOUNCEMENTS -- In 1998, Kroll-O'Gara adopted
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130), which established standards for
reporting and displaying comprehensive income and its components in a
financial statement that is displayed with the same prominence as other
financial statements. Kroll-O'Gara has chosen to disclose comprehensive
income, which encompasses net income, foreign currency translation
adjustments and unrealized holding gains of marketable securities, in
the consolidated statements of shareholders' equity. Prior years have
been restated to conform to the SFAS 130 requirements. The accumulated
other comprehensive income (loss) balance of ($0.4) million at December
31, 1997 consisted of ($0.4) million of foreign currency translation
adjustments and $0.01 million of unrealized appreciation of marketable
securities.

F-15
<PAGE> 161
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The accumulated other comprehensive income (loss) balance of ($0.9)
million and ($0.2) million at December 31, 1998 and 1999, respectively,
consisted entirely of foreign currency translation adjustments.

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133 establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS 133 requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. SFAS 133, as amended, is
effective for fiscal years beginning after June 15, 2000. Kroll-O'Gara
has several forward contracts in place in association with demand notes
from certain subsidiaries. These instruments qualify for hedge
accounting. Kroll-O'Gara has not yet quantified the impact of adopting
SFAS 133 on its financial statements and has not determined the timing
of or method of adoption of SFAS 133. However, SFAS 133 could increase
volatility in earnings and other comprehensive income.

In March 2000, the FASB issued Financial Accounting Standards Board
Interpretation No. 44 ("Interpretation No. 44"), "Accounting for
Certain Transactions Involving Stock Compensation -- an interpretation
of APB Opinion 25." Interpretation No. 44 is effective July 1, 2000.
Interpretation No. 44 clarifies the application of APB Opinion 25 for
certain matters, specifically (a) the definition of an employee for
purposes of applying APB Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. Management does not
anticipate that the adoption of Interpretation No. 44 will have a
material impact on Kroll-O'Gara's financial position or results of
operations.

(q) STOCK-BASED COMPENSATION -- Kroll-O'Gara has elected to account for the
cost of its employee stock options and other forms of employee
stock-based compensation plans utilizing the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25 (APB 25) as
allowed by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). APB 25 requires
compensation cost for stock-based compensation plans to be recognized
based on the difference, if any, between the fair market value of the
stock on the date of grant and the option exercise price. SFAS 123
established a fair value-based method of accounting for compensation
cost related to stock options and other forms of stock-based
compensation plans. SFAS 123 allows an entity to continue to measure
compensation cost using the principles of APB 25 if certain pro forma
disclosures are made. The pro forma disclosures required by SFAS 123
are presented in Note 11(e).

(r) CHANGES IN ACCOUNTING PRINCIPLE -- In the fourth quarter of 1997,
Kroll-O'Gara changed its method of accounting for costs incurred in
connection with business process reengineering activities relating to
information technology transformation. Consistent with a consensus
reached by the Emerging Issues Task Force (EITF) under Issue 97-13, in
late November 1997, Kroll-O'Gara expensed costs previously capitalized
in earlier quarters of 1997 (approximately $0.4 million, net of tax
benefit of $0.2 million) as a cumulative effect of change in accounting
principle.

F-16
<PAGE> 162
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In April 1998, the American Institute of Certified Public Accountants
released Statement of Position (SOP) 98-5 "Reporting on the Cost of
Start-Up Activities." The SOP requires costs of start-up activities,
including preoperating costs, organization costs and other start-up
costs, to be expensed as incurred. Kroll-O'Gara's former practice was
to capitalize certain of these expenses and amortize them over periods
ranging from one to five years. Included in the accompanying December
31, 1998 consolidated balance sheet is approximately $1.2 million of
preoperating, organization and start-up costs which would have been
expensed had this statement already been implemented. Kroll-O'Gara
adopted the provisions of this statement in the first quarter of fiscal
1999 and recorded a cumulative effect of a change in accounting
principle of $0.8 million, net of a tax benefit of $0.4 million.

(s) DERIVATIVE FINANCIAL INSTRUMENTS -- Financial instruments in the form
of foreign currency exchange contracts are utilized by Kroll-O'Gara to
hedge its exposure to movements in foreign currency exchange rates.
Kroll-O'Gara does not hold or issue derivative financial instruments
for trading purposes. Gains and losses on foreign exchange contracts
are deferred and amortized as an adjustment to the cumulative foreign
currency translation adjustment component of equity over the terms of
the agreements in accordance with hedge accounting standards. The fair
value of foreign currency exchange contracts is not recognized in the
consolidated financial statements since they are accounted for as
hedges.

(t) RECLASSIFICATIONS -- Certain reclassifications have been reflected in
1997 and 1998 to conform with the current period presentation.

(3) MERGERS AND ACQUISITIONS --

Kroll-O'Gara has completed numerous business combinations in the periods
presented. The transactions were accounted for as both purchase business
combinations and pooling of interests business combinations as follows:

(a) POOLING OF INTERESTS TRANSACTIONS -- In December 1997, a wholly owned
subsidiary of O'Gara was merged with and into Kroll. Effective upon the
consummation of the merger with Kroll, each then issued and outstanding
share of Kroll common stock, including shares subject to issuance under
the Kroll restricted stock plan (See Note 11), were converted into
62.52 shares of common stock of Kroll-O'Gara or 6,098,561 shares of
Kroll-O'Gara's common stock in total. Outstanding employee stock
options of Kroll were converted at the same exchange factor into
options to purchase 551,492 shares of Kroll-O'Gara common stock (See
Note 11).

The merger constituted a tax-free reorganization and was accounted for
as a pooling of interests. Accordingly, all prior period consolidated
financial statements presented have been restated to include the
combined results of operations, financial position and cash flows of
Kroll as though it had always been a part of Kroll-O'Gara.

There were no transactions between O'Gara and Kroll prior to the
combination, and immaterial adjustments were recorded to conform
Kroll's accounting policies. Certain reclassifications were made to the
Kroll financial statements to conform to Kroll-O'Gara's presentations.
The results

F-17
<PAGE> 163
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of operations for the separate companies and the combined amounts
included in the consolidated financial statements follow:

<TABLE>
<CAPTION>
O'GARA KROLL COMBINED
----------- ----------- ------------
<S> <C> <C> <C>
Nine months ended
September 30, 1997
(unaudited)
Revenue...................... $82,567,200 $53,823,958 $136,391,158
Extraordinary item........... (193,875) -- (193,875)
Net income................... 4,181,387 1,796,124 5,977,511
</TABLE>

In connection with the Kroll merger, Kroll-O'Gara recorded, in the
fourth quarter in 1997, a charge to operating expenses of approximately
$7.2 million ($5.7 million after taxes, or $0.37 per diluted share) for
direct and other merger-related costs pertaining to the transaction.
Merger transaction costs are nonrecurring and included $0.8 million for
stock based compensation costs triggered by the change in control of
Kroll, $1.8 million for stay bonuses and severance and $4.6 million
which consisted primarily of fees for investment bankers, attorneys,
accountants, financial printing, travel and other related charges.

In December 1998, a wholly owned subsidiary of Kroll-O'Gara was merged
with and into Laboratory Specialists of America, Inc. (LSAI). Effective
upon the consummation of the merger, each then issued and outstanding
share of LSAI common stock was converted into .2102 shares of common
stock of Kroll-O'Gara or 1,209,053 shares of Kroll-O'Gara's common
stock in total. Outstanding stock options and stock warrants of LSAI
were converted at the same exchange factor into options to purchase
39,094 and 24,386 shares, respectively, of Kroll-O'Gara's common stock
(See Note 11). The financial position and results of operations of LSAI
are reported as part of Kroll-O'Gara's Investigations and Intelligence
Group.

In December 1998, a wholly owned subsidiary of Kroll-O'Gara was merged
with and into Schiff & Associates, Inc. (Schiff). Effective upon the
consummation of the merger, each then issued and outstanding share of
Schiff common stock was converted into approximately 131.41 shares of
common stock of Kroll-O'Gara or 169,521 shares of Kroll-O'Gara's common
stock in total. The financial position and results of operations of
Schiff are reported as part of Kroll-O'Gara's Investigations and
Intelligence Group.

In December 1998, a wholly owned subsidiary of Kroll-O'Gara was merged
with and into Securify Inc. (Securify). Effective upon the consummation
of the merger, all of the outstanding stock of Securify was converted
to shares of Kroll-O'Gara's common stock at a rate of .110793 per share
of Series A Preferred, .118273 per share of Series B Preferred and
.0955252 per share of Securify common stock. In total, Kroll-O'Gara
issued 1,430,936 shares of common stock. In addition, outstanding
employee stock options of Securify were converted at the same exchange
factor as Securify common stock into options to purchase 179,877 shares
of Kroll-O'Gara's common stock. Effective with the consummation of the
merger, Kroll-O'Gara created the Information Security Group and
Securify's results of operations and financial position are reported in
this group.

The mergers with LSAI, Schiff and Securify constituted tax-free
reorganizations and have been accounted for as pooling of interests
transactions. Accordingly, all prior period consolidated financial
statements presented have been restated to include the combined results
of operations,

F-18
<PAGE> 164
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

financial position and cash flows of LSAI, Schiff and Securify as
though they had always been a part of Kroll-O'Gara.

There were no transactions between Kroll-O'Gara and LSAI, Schiff and
Securify prior to the combinations and immaterial adjustments were
recorded to conform LSAI's, Schiff's and Securify's accounting
policies. Certain reclassifications were made to Kroll-O'Gara's,
LSAI's, Schiff's and Securify's financial statements to conform
presentation. The results of operations for the separate companies and
the combined amounts included in the consolidated financial statements
follow:

<TABLE>
<CAPTION>
KROLL-O'GARA
HISTORICAL LSAI SCHIFF SECURIFY COMBINED
------------ ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Nine months ended
September 30, 1998
(unaudited)
Revenue.............. $178,943,336 $12,039,154 $3,531,062 $ 48,000 $194,561,552
Net income (loss).... 11,559,576 1,440,725 582,254 (944,196) 12,638,359
Year ended December 31,
1997
Revenue.............. 190,413,349 12,836,953 2,852,303 -- 206,102,605
Extraordinary item... (193,875) -- -- -- (193,875)
Cumulative effect of
change in
accounting
principle......... (360,000) -- -- -- (360,000)
Net income........... 709,866 1,329,103 7,674 -- 2,046,643
</TABLE>

In 1998, Kroll-O'Gara recorded, in the fourth quarter, a charge to
operating expenses of approximately $5.7 million ($4.1 million after
taxes, or $0.21 per diluted share) for direct and other merger and
integration related costs. Merger transaction costs are non-recurring
and included $0.8 million for stay bonuses and $4.5 million, which
consisted primarily of fees for investment bankers, attorneys,
accountants, financial printing, travel and other related charges.
Integration costs related primarily to the merger with Kroll
consummated in December 1997 and were approximately $0.4 million.

In March 1999, a wholly owned subsidiary of Kroll-O'Gara was merged
with and into Financial Research, Inc. (FRI). Effective upon the
consummation of the merger, each then issued and outstanding share of
FRI common stock was converted into 101.555 shares of common stock of
Kroll-O'Gara or 101,555 shares of Kroll-O'Gara's common stock in total.
The merger constituted a tax-free reorganization and has been accounted
for as a pooling of interests. The prior period consolidated financial
statements would not have been materially different from the reported
results and accordingly have not been restated.

In June 1999, a wholly owned subsidiary of Kroll-O'Gara was merged with
and into Background America, Inc. (BAI). Effective upon the
consummation of the merger, each then issued and outstanding share of
BAI common and preferred stock was converted into .2689628 shares of
common stock of Kroll-O'Gara or 899,243 shares of Kroll-O'Gara's common
stock in total. Outstanding stock options and stock warrants of BAI
were converted at the same exchange factor into options to purchase
86,844 and 2,018 shares, respectively, of Kroll-

F-19
<PAGE> 165
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

O'Gara's common stock (see Note 11). The financial position and results
of operations of BAI are reported as part of Kroll-O'Gara's
Investigations and Intelligence Group.

The merger with BAI constituted a tax-free reorganization and has been
accounted for as a pooling of interests. Accordingly, all prior period
consolidated financial statements presented have been restated to
include the combined results of operations, financial position and cash
flows of BAI as though it had always been a part of Kroll-O'Gara.

There were no transactions between Kroll-O'Gara and BAI prior to the
combination. Immaterial adjustments were recorded to conform the
accounting practices of Kroll-O'Gara and BAI and certain
reclassifications were made to the BAI financial statements to conform
to Kroll-O'Gara's presentation.

The combined companies have recorded an income tax benefit of $113,533
in 1998 to reflect a reduction in a valuation allowance applicable to
certain domestic net operating loss carryforwards. Included in the
December 31, 1998 consolidated balance sheet is approximately $573,000
of merger costs incurred by Kroll-O'Gara which, along with other merger
costs subsequently incurred, were expensed immediately upon
consummation of the transaction on a pooling of interests basis in
1999. The results of operations for the separate companies and the
combined amounts presented in the consolidated financial statements
follow:

<TABLE>
<CAPTION>
KROLL-O'GARA
HISTORICAL BAI ADJUSTMENTS COMBINED
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Three months ended
March 31, 1999 (unaudited)
Revenue......................... $ 69,007,000 $ 2,492,000 $ -- $ 71,499,000
Cumulative effect of change in
accounting principle......... (778,041) -- -- (778,041)
Net income...................... 2,418,000 110,000 -- 2,528,000
Year ended December 31, 1998
Revenue......................... 264,844,847 7,350,666 -- 272,195,513
Net income (loss)............... 13,088,906 (1,416,374) 113,533 11,786,065
Year ended December 31, 1997
Revenue......................... 206,102,605 4,221,059 -- 210,323,664
Extraordinary item.............. (193,875) -- -- (193,875)
Cumulative effect of change in
accounting principle......... (360,000) -- -- (360,000)
Net income (loss)............... 2,046,643 (1,336,644) -- 709,999
</TABLE>

In 1999, Kroll-O'Gara recorded a charge to operating expenses of
approximately $4.1 million ($3.2 million after taxes, or $0.14 per
diluted share) for direct and other merger and integration related
costs. Merger transaction costs are non-recurring and included $0.3
million for stay bonuses, $0.4 million for stock based compensation
costs triggered by the change in control of BAI and $2.4 million which
consisted primarily of fees for investment bankers, attorneys,
accountants, financial printing, travel and other related charges.
Integration costs related primarily to the mergers and acquisitions
completed in the fourth quarter of 1998 and were approximately $1.0
million.

F-20
<PAGE> 166
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(b) PURCHASE TRANSACTIONS -- In addition to the merger with Kroll,
Kroll-O'Gara completed six other acquisitions in 1997 which were
accounted for as purchase business combinations. Three of the 1997
purchase acquisitions have been included in Kroll-O'Gara's Security
Products and Services Group, two in the Investigations and Intelligence
Group and one in the Voice and Data Communications Group. The aggregate
purchase price of these six acquisitions amounted to approximately
$26.0 million and consisted of $13.4 million in cash, $4.1 million in
seller-provided financing and 753,806 shares of common stock (valued at
approximately $8.5 million or an average of $11.28 per share). In
connection with these acquisitions, Kroll-O'Gara entered into various
employment and non-compete agreements with officers and key employees
of the acquired companies with varying terms and conditions. The
results of operations of the acquired businesses are included in the
consolidated financial statements from the respective effective dates
of acquisition. The resulting goodwill from these transactions is being
amortized over periods ranging from fifteen to thirty years. In
addition to these 1997 acquisitions, Kroll-O'Gara also exercised its
option to acquire the minority interest in its O'Gara Brazilian
subsidiary for approximately 69,565 shares of common stock valued at
approximately $1.2 million.

Kroll-O'Gara made one significant acquisition in 1997 which is included
above. In February 1997, Labbe, S.A. (Labbe), a company located in
France specializing in vehicle armoring systems, was acquired for
approximately $14.2 million, consisting of $10.7 million in cash and
376,597 shares of Kroll-O'Gara's common stock valued at approximately
$3.5 million or $9.29 per share. For accounting purposes, the
acquisition was effective on January 1, 1997 and the results of
operations of Labbe are included in the consolidated results of
operations of Kroll-O'Gara from that date forward.

In addition to the mergers with LSAI, Schiff and Securify, Kroll-O'Gara
completed nine other acquisitions in 1998, all of which were accounted
for as purchase business combinations. Eight of the 1998 purchase
acquisitions have been included in Kroll-O'Gara's Investigations and
Intelligence Group and the ninth has been included in the Security
Products and Services Group. The aggregate purchase price of these nine
acquisitions amounted to approximately $37.1 million and consisted of
$19.5 million in cash and 767,416 shares of common stock (valued at
approximately $17.6 million or an average of $22.93 per share). The
$37.1 million aggregate purchase price for the 1998 acquisitions
excludes a potential earnout of $3.25 million applicable to one of the
acquired companies, which is payable over three years and is contingent
upon the achievement of specified operating income targets.
Approximately $1.1 million was earned and accrued at December 31, 1999
pursuant to this earnout agreement. In conjunction with one of the 1998
purchase acquisitions, the shareholders of the acquired entity had the
option to put the shares of common stock received for cash of $22.31
per share for a certain defined period. The put option relating to
7,471 shares issued in connection with this acquisition was exercised
for $166,668 in cash with the remaining put options expiring
unexercised. In addition, in connection with several of these
acquisitions, Kroll-O'Gara entered into various employment and
non-compete agreements with officers and key employees of the acquired
companies with varying terms and conditions. The results of operations
of the acquired businesses are included in the consolidated financial
statements from the respective effective dates of acquisition. The
resulting goodwill from these transactions is being amortized over
periods ranging from twelve to twenty-five years.

F-21
<PAGE> 167
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Kroll-O'Gara made one significant acquisition in 1998 which is included
above. In September 1998, Kizorek, Inc., now renamed InPhoto
Surveillance, Inc. (InPhoto), a company located in Illinois specializing
in video surveillance services, was acquired for approximately $9.1
million, consisting of $0.9 million in cash and 352,381 shares of
Kroll-O'Gara's common stock valued at approximately $8.2 million or
$23.35 per share. For accounting purposes, the acquisition was effective
on July 1, 1998 and the results of operations of InPhoto are included in
the consolidated results of operations of Kroll-O'Gara from that date
forward. The following unaudited pro forma combined results of
operations for the years ended December 31, 1997 and 1998 assumes the
InPhoto acquisition occurred as of January 1, 1997 (in thousands, except
per share data):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
Sales.............................................. $224,800 $278,581
Income before extraordinary item and cumulative
effect of accounting change...................... 1,716 11,680
Net income......................................... 1,162 11,680
Earnings per share:
Basic............................................ $ 0.08 $ 0.60
Diluted.......................................... $ 0.07 $ 0.58
</TABLE>

In addition to the mergers with BAI and FRI during 1999, Kroll-O'Gara
completed an additional acquisition in 1999 which was accounted for as
a purchase business combination. In June 1999 Kroll-O'Gara completed
the acquisition of substantially all of the assets and liabilities of
The Buchler Phillips Group (BP). BP provides financial recovery,
restructuring, insolvency and turnaround services throughout the United
Kingdom and Europe and has been included in the Investigations and
Intelligence Group. The purchase price amounted to approximately $20.0
million and consisted of approximately $12.0 million in cash and
366,469 shares of Kroll-O'Gara's common stock (valued at approximately
$8.0 million or an average of $21.86 per share). For accounting
purposes, the acquisition was effective on April 1, 1999 and the
results of operations of BP are included in the consolidated results of
operations of Kroll-O'Gara from that date forward. The resulting
goodwill from this acquisition is being amortized over 25 years.

F-22
<PAGE> 168
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the 1997, 1998 and 1999 purchase acquisitions,
assets were acquired and liabilities assumed were as follows (dollars
in thousands):

<TABLE>
<CAPTION>
OTHER 1997 OTHER 1998 1999
LABBE ACQUISITIONS INPHOTO ACQUISITIONS ACQUISITION
-------- ------------ ------- ------------ -----------
<S> <C> <C> <C> <C> <C>
FAIR VALUE OF ASSETS
ACQUIRED INCLUDING:
Cash................... $ 3,501 $ 125 $ 192 $ 701 $ 4
Accounts receivable.... 4,689 2,072 1,743 5,300 1,174
Inventories............ 3,392 1,829 -- -- --
Unbilled revenue....... -- -- 269 1,561 5,441
Other current assets... 316 11 450 551 852
Property, plant and
equipment........... 3,360 378 955 1,243 1,233
Other non-current
assets.............. 2,357 4 -- 271 319
Costs in excess of
assets acquired and
other intangible
assets.............. 7,802 11,727 9,790 28,874 20,835
-------- ------- ------- -------- --------
25,417 16,146 13,399 38,501 29,858
Less: Cash paid for net
assets.............. (10,730) (2,700) (854) (18,689) (12,018)
Fair value of debt
issued.............. -- (4,126) -- -- --
Fair value of stock
issued.............. (3,431) (5,029) (8,228) (9,381) (8,012)
-------- ------- ------- -------- --------
$ 11,256 $ 4,291 $ 4,317 $ 10,431 $ 9,828
======== ======= ======= ======== ========
LIABILITIES ASSUMED
INCLUDING:
Liabilities assumed and
acquisition costs... $ 9,287 $ 4,272 $ 4,117 $ 9,583 $ 7,508
Debt................... 1,969 19 200 848 2,320
-------- ------- ------- -------- --------
$ 11,256 $ 4,291 $ 4,317 $ 10,431 $ 9,828
======== ======= ======= ======== ========
</TABLE>

(4) BALANCE SHEET ACCOUNTS --

(a) 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:

F-23
<PAGE> 169
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Other contracts and receivables:
Billed receivables.......................... $53,735,089 $63,139,492
Costs and estimated earnings in excess of
billings on uncompleted contracts........ 5,365,912 10,331,795
----------- -----------
Total other contracts and
receivables....................... $59,101,001 $73,471,287
=========== ===========
Total trade accounts receivable, net.......... $56,960,753 $68,017,062
=========== ===========
Total costs and estimated earnings in excess
of billings on uncompleted contracts........ $26,408,097 $24,159,724
=========== ===========
</TABLE>

Costs and estimated earnings in excess of billings on uncompleted
contracts are net of $107,374,834 and $131,582,751 of progress billings
to the United States Military at December 31, 1998 and 1999,
respectively.

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 180 days
from the balance sheet date 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.

The following summarizes activity in the allowance for doubtful
accounts on trade accounts receivable:

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO
BEGINNING OF COSTS AND BALANCE END
PERIOD EXPENSES DEDUCTIONS OF PERIOD
------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1997....... $2,532,566 $2,083,080 $(1,506,900) $3,108,746
Year ended December 31, 1998....... 3,108,746 2,556,506 (1,843,946) 3,821,306
Year ended December 31, 1999....... 3,821,306 4,360,227 (3,402,627) 4,778,906
</TABLE>

(b) 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,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Raw materials................................. $ 8,148,000 $15,347,831
Vehicle costs and work-in-process............. 14,249,939 10,916,557
----------- -----------
$22,397,939 $26,264,388
=========== ===========
</TABLE>

F-24
<PAGE> 170
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes activity in valuation reserves for inventory
obsolescence:

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO BALANCE
BEGINNING OF COSTS AND END OF
PERIOD EXPENSES DEDUCTIONS PERIOD
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended December 31,
1997...................... $264,114 $113,567 $(23,782) $ 353,899
Year ended December 31,
1998...................... 353,899 7,971 -- 361,870
Year ended December 31,
1999...................... 361,870 804,960 -- 1,166,830
</TABLE>

(c) 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, as applicable. Other assets consist of
the following:

<TABLE>
<CAPTION>
USEFUL DECEMBER 31,
LIFE -----------------------
DESCRIPTION (YEARS) 1998 1999
----------- ----------- ---------- ----------
<S> <C> <C> <C>
Advance to vendor..................... -- $1,130,361 $ --
Preoperating and start-up costs....... -- 1,185,574 --
Security deposits..................... -- 1,003,666 971,405
Pending acquisition costs............. -- 573,035 --
Long-term receivable.................. -- 380,000 1,112,681
Non-refundable deposit on an equipment
lease with a related party.......... 5 537,784 537,784
Deferred financing fees............... 7-30 906,667 920,492
Investment in unconsolidated
subsidiary.......................... -- -- 520,695
Other long-term assets................ -- 585,557 653,935
---------- ----------
6,302,644 4,716,992
Less- accumulated amortization........ (209,209) (412,992)
---------- ----------
$6,093,435 $4,304,000
========== ==========
</TABLE>

Preoperating and start-up costs in 1998 included costs applicable to
bids in process which were deferred when management believed it was
probable that future contracts would be obtained. These costs were
transferred to contract costs when contracts were awarded or were
expensed when the contract award was no longer considered probable.
Preopening and start-up costs also included certain costs incurred in
connection with establishing operations in new locations. In accordance
with SOP 98-5, all such costs were expensed in the first quarter of
fiscal 1999 (see Note 2(r)).

F-25
<PAGE> 171
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(d) ACCRUED LIABILITIES -- Accrued liabilities consist of the following at
December 31, 1998 and 1999:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
DESCRIPTION 1998 1999
----------- ----------- -----------
<S> <C> <C>
Payroll and related benefits.................. $ 9,860,811 $11,019,288
Accrued professional fees..................... 3,993,486 2,113,264
Property, sales and other taxes payable....... 2,160,417 2,636,732
Accrued satellite time........................ 1,948,557 1,619,204
Accrued hedge contract settlement............. 710,760 --
Accrued medical costs......................... 483,038 645,132
Accrued interest.............................. 460,923 497,576
Accrued warranty reserve...................... 451,773 442,597
Accrued payments to former owners of acquired
businesses.................................. 515,538 2,868,569
Accrued restructuring costs................... -- 664,900
Other accruals................................ 2,215,133 5,791,744
----------- -----------
$22,800,436 $28,299,006
=========== ===========
</TABLE>

(e) RESTRUCTURING OF OPERATIONS -- In the first quarter of 1999,
Kroll-O'Gara began implementation of a restructuring plan (the "Plan")
to reduce costs and improve operating efficiencies. The Plan was
substantially completed by the end of the second quarter of 1999. The
total non-recurring pre-tax restructuring charge recorded pursuant to
the Plan was approximately $4.4 million. Total payments or writeoffs
made pursuant to the Plan through December 31, 1999 were $3.1 million.
Kroll-O'Gara does not expect to incur any other significant
restructuring charges in future periods related to this Plan. The
principal elements of the restructuring plan were the closure of two
Investigations and Intelligence Group offices and the elimination of
approximately 82 employees. The primary components of the restructuring
charge, including accrued balances as of December 31, 1999, were as
follows:

<TABLE>
<CAPTION>
DESCRIPTION EXPENSE ACCRUAL
----------- ---------- ----------
<S> <C> <C>
Severance and related costs..................... $3,116,303 $ 540,667
Writedown of property, plant and equipment...... 150,166 --
Lease termination costs......................... 1,064,270 686,301
Other........................................... 32,827 --
---------- ----------
$4,363,566 1,226,968
==========
Less -- Current portion......................... (664,900)
----------
$ 562,068
==========
</TABLE>

(5) INCOME TAXES --

Kroll-O'Gara accounts for income taxes under the liability method pursuant
to Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Under the liability

F-26
<PAGE> 172
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

method, deferred tax liabilities and assets are determined based on the
differences between the financial reporting and tax bases of assets and
liabilities using enacted tax rates.

Kroll-O'Gara's provision (benefit) for income taxes, excluding extraordinary
item and the cumulative effect of a change in accounting principle, for all
periods is summarized as follows:

<TABLE>
<CAPTION>
1997 1998 1999
----------- ---------- -----------
<S> <C> <C> <C>
Currently payable:
Federal........................ $ 2,800,720 $5,530,085 $ 1,887,333
State and local................ 576,837 965,158 333,059
Foreign........................ 1,364,873 1,834,143 2,235,172
----------- ---------- -----------
4,742,430 8,329,386 4,455,564
----------- ---------- -----------
Deferred:
Federal........................ (1,213,147) (847,018) (1,352,885)
State and local................ (224,290) (129,437) (238,745)
Foreign........................ -- -- (434,524)
----------- ---------- -----------
(1,437,437) (976,455) (2,026,154)
----------- ---------- -----------
$ 3,304,993 $7,352,931 $ 2,429,410
=========== ========== ===========
</TABLE>

A reconciliation between the statutory federal income tax rate and the
effective tax rate is summarized as follows:

<TABLE>
<CAPTION>
1997 1998 1999
----------------- ----------------- ------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
---------- ---- ---------- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Provision for income
taxes at the
federal statutory
rate............... $1,553,415 34.0% $6,583,815 34.4% $ 437,115 34.0%
State and local
income taxes, net
of federal
benefit............ 295,119 6.5 637,004 3.3 47,750 3.7
Nondeductible
expenses........... 1,437,174 31.4 275,294 1.4 2,010,619 156.4
Change in valuation
allowance.......... (319,283) (7.0) (1,035) -- (119,704) (9.3)
Effect of foreign
(income) loss...... 577,743 12.6 (47,924) (0.2) (187,783) (14.6)
Other................ (239,175) (5.2) (94,223) (0.5) 241,413 18.8
---------- ---- ---------- ---- ---------- -----
Provision for
income taxes.... $3,304,993 72.3% $7,352,931 38.4% $2,429,410 189.0%
========== ==== ========== ==== ========== =====
</TABLE>

F-27
<PAGE> 173
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of Kroll-O'Gara's consolidated deferred income tax assets and
liabilities as of December 31 are summarized below:

<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts............. $ 432,027 $ 1,051,436
Depreciation and amortization............... 244,693 320,653
Net operating loss carryforwards............ 3,774,470 3,847,371
Payroll and other benefits.................. 1,721,081 1,452,718
Restructuring............................... -- 658,246
Other accruals.............................. 707,708 961,809
Acquisition costs........................... 1,697,885 1,694,866
Other....................................... 512,382 779,765
----------- -----------
9,090,246 10,766,864
Valuation allowance......................... (3,303,683) (3,183,979)
----------- -----------
Net deferred tax assets.................. 5,786,563 7,582,885
----------- -----------
Deferred tax liabilities:
Nonaccrual service fee receivable........... (156,804) (181,579)
Deferred revenue............................ (3,540,825) (4,220,953)
Database capitalization..................... (2,951,351) (3,107,610)
Customer lists, net of amortization......... (310,667) (121,399)
Percentage of completion on foreign
subsidiaries............................. (381,917) (201,148)
Foreign leasing transactions................ (125,827) (147,146)
Other....................................... (726,110) (600,034)
----------- -----------
(8,193,501) (8,579,869)
----------- -----------
Net deferred tax liability.................... $(2,406,938) $ (996,984)
=========== ===========
</TABLE>

Kroll-O'Gara has certain foreign and domestic net operating loss
carryforwards, which approximated $3.8 million at December 31, 1998 and
1999, respectively. The foreign net operating loss carryforwards relate
primarily to the United Kingdom, Mexico and the Philippines. The
carryforwards expire beginning in 2001. A valuation allowance for the
majority of all existing foreign carryforwards has been provided as it is
not more likely than not that the tax benefit will be realized in the
foreseeable future. Adjustments to the valuation allowance, if any, will be
recorded in the periods in which it is determined the asset is realizable.

F-28
<PAGE> 174
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(6) RELATED PARTY TRANSACTIONS --

(a) SUMMARY OF RELATED PARTY TRANSACTIONS -- The following summarizes
transactions with related parties:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Sales
to Shareholder..................... $6,412,244 $4,877,478 $4,779,449
to affiliated entities............. 1,294,800 821,400 70,595
Purchases
from Shareholder................... 814,154 474,800 361,320
from affiliated entities........... 447,525 1,406,210 382,100
Lease expense to affiliated
entities........................... 856,300 916,600 792,979
Legal services expense provided by
former Director.................... 170,000 190,000 --
Non-interest bearing advances to
shareholders....................... 525,996 568,213 581,779
Air charter fees included in offering
or merger costs.................... 576,000 566,000 --
Interest on shareholder notes
payable............................ 78,950 1,100 --
Forgiveness of note payable to
affiliated entity/shareholder...... 1,053,735 -- --
Non-interest bearing advances to
affiliates......................... 282,346 615,851 282,346
Trade accounts receivable due from
shareholder........................ 897,361 1,290,558 1,231,685
</TABLE>

(b) NOTES PAYABLE -- SHAREHOLDERS -- BAI had certain notes payable to
shareholders. Interest expense associated with these obligations
approximated $78,950 and $1,100 in 1997 and 1998, respectively. In June
1997, approximately $1,053,735 of the principal and accrued interest
payable by BAI to certain shareholders was canceled in partial
consideration for the issuance of stock. The remaining outstanding
balance of $152,000 was paid in full during 1998.

(c) SALES -- SHAREHOLDER -- During 1997, 1998 and 1999, Kroll-O'Gara
rendered services to American International Group, Inc. and its
subsidiaries (AIG) which is also a shareholder of Kroll-O'Gara. Total
revenue recognized for the years ended December 31, 1997, 1998 and 1999
was $6,412,244, $4,877,478 and $4,779,449, respectively. Additionally,
AIG provides certain services to Kroll-O'Gara which have been included
in cost of sales and operating expenses in the accompanying
consolidated statements of operations. These costs were approximately
$814,154, $474,800 and $361,320 for the years ended December 31, 1997,
1998 and 1999, respectively. The yearend accounts receivable balance
for AIG was approximately $1,290,558 and $1,231,685 at December 31,
1998 and 1999, respectively.

(d) BUILDING AND EQUIPMENT LEASES -- AFFILIATED ENTITIES -- Effective June
1, 1998, Kroll-O'Gara reached an agreement to terminate the corporate
aircraft lease which originated in February 1995 with an affiliated
entity. The terms of the aircraft lease addendum provide Kroll-O'Gara
with a future hourly discount from the normal commercial hourly rate in
order to

F-29
<PAGE> 175
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

amortize the remaining portion of existing lease deposits from the
original aircraft lease. Rental expense, including amortization recognized,
approximated $234,000, $292,000 and $82,000 for the years ended December
31, 1997, 1998 and 1999, respectively. Kroll-O'Gara also paid this
affiliated entity $576,000 in fiscal 1997 for usage of the aircraft to
consummate the merger with Kroll and included such amount in
merger-related costs. Kroll-O'Gara paid $296,000 in 1998 for usage of the
aircraft during the roadshow for a stock offering and included such
amount in stock issuance costs. Kroll-O'Gara also paid $270,000 in fiscal
1998 for usage of the aircraft to consummate the merger with Securify and
included such amount in merger related costs. Management is of the
opinion that the hourly rate paid by Kroll-O'Gara was equivalent to the
rate charged by the affiliated entity to other unrelated companies for
similar services and it was favorably comparable to rates charged by
another unrelated charter service for similar aircraft. As of December
31, 1998 and 1999, Kroll-O'Gara had approximately $484,371 and $402,801,
respectively in unamortized lease deposits with this affiliated entity.

Kroll-O'Gara is also currently leasing various equipment and office space from
several affiliated entities under various three year and month-to-month lease
agreements. Rental expense, net of sub-lease income, approximated
$622,000, $625,000 and $711,000 for the years ended December 31, 1997,
1998 and 1999, respectively.

(7) REVOLVING LINES OF CREDIT --

On September 14, 2000, Kroll-O'Gara amended its existing credit agreement
to extend its temporary increase in its revolving line of credit from $25.0
million to $40.0 million. Pursuant to the amended credit agreement, the
increase in the revolving line of credit is effective until January 1,
2001, at which time all borrowings in excess of $25.0 million must be
repaid. See Note 17 for additional discussion. The credit facility
continues to provide for a letter of credit facility of approximately $7.6
million. Both the letter of credit facility and the revolving line of
credit mature on May 31, 2001. Advances under the revolving line of credit
bear interest at rates ranging from prime to prime plus 0.75%, or, at
Kroll-O'Gara's option, LIBOR plus 1.50% to LIBOR plus 2.50%, dependent upon
a defined financial ratio. Average borrowings under the revolving line of
credit and its predecessors were $4,568,994, $1,659,131 and $10,838,273
during 1997, 1998 and 1999, respectively, at approximate weighted average
interest rates of 8.46%, 7.96% and 7.02%, respectively. The maximum
borrowings outstanding during 1997, 1998, and 1999 were $11,600,000,
$7,735,029 and $22,822,706, respectively. Borrowings under this line of
credit were approximately $22.8 million at December 31, 1999. There were no
outstanding borrowings pursuant to line of credit agreements at December
31, 1998.

This credit agreement includes financial covenants which, among other
restrictions, require the maintenance of certain financial ratios and other
financial requirements, including an interest coverage ratio and net worth
minimum, and impose limitations on foreign investment, goodwill, additional
indebtedness and capital expenditures. Kroll-O'Gara was not in compliance
with certain of these covenants as of December 31, 1999. All such events of
non-compliance were subsequently waived or amended by the lender. Had the
lender not provided a waiver or amendment, all amounts outstanding under
the credit agreement would have been subject to acceleration by the lender.

Effective June 3, 1999, with the acquisition of BP, Kroll-O'Gara acquired a
demand note with maximum borrowings of L2.5 million. The demand note bears
interest at the Bank of England's

F-30
<PAGE> 176
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

base rate plus 1.5%. Average borrowings during 1999 under the demand note
were $2,836,905, as translated, at an approximate weighted average interest
rate of 6.71%. The maximum borrowings outstanding during 1999 were
$3,675,097, as translated. Maximum borrowings permitted and borrowings
outstanding pursuant to this demand note were approximately $4.0 million
and $3.4 million, respectively, as translated at December 31, 1999.

Kroll-O'Gara also had borrowings of approximately $0.4 million outstanding
as of December 31, 1999, pursuant to various overdraft facilities of
certain subsidiaries.

In connection with a refinancing in 1997, Kroll-O'Gara fully amortized the
remaining deferred financing costs from a previous agreement, resulting in
an extraordinary charge to Kroll-O'Gara's net income of $193,875, after
income tax benefits of $129,250, or $0.01 per diluted share.

(8) LONG-TERM DEBT --

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

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Senior unsecured notes payable to various institutions,
interest at 8.56% (9.56% prior to May 1998) payable
semi-annually, principal payable at maturity in May 2004,
subject to prepayment penalties........................... $35,000,000 $35,000,000
Economic Development Revenue Bonds, variable interest rate
approximating 85% of the bond equivalent yield of 13 week
U.S. Treasury bills (not to exceed 12%), which
approximated 5.17% at December 31, 1999, payable in
scheduled installments through September 2016, subject to
optional tender by the bondholders and a corresponding
remarketing agreement, secured by certain property, plant
and equipment and a bank letter of credit (Note 12)....... 1,357,224 1,275,974
Notes payable to former shareholders of acquired companies,
interest at fixed rates ranging from 6% to 10%, payable in
scheduled installments through February 2000, certain
notes secured by acquired assets.......................... 2,526,361 1,994,414
Notes payable to banks, variable interest rate at prime plus
1.5%, fixed rates ranging from 6.39% to 20.66%, payable in
scheduled installments through December, 2010 with certain
instruments subject to prepayment penalties,
collateralized by certain real and personal property...... 1,001,204 452,806
Other notes payable, interest at 7% to 10.9%, payable in
scheduled installments through September 2007, certain
notes secured by various equipment........................ 1,462,065 1,278,196
----------- -----------
Less -- current portion..................................... 41,346,854) 40,001,390)
(2,000,299 (3,737,227
----------- -----------
$39,346,555 $36,264,163
=========== ===========
</TABLE>

F-31
<PAGE> 177
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Kroll-O'Gara's $35.0 million of senior unsecured notes payable also
contains financial covenants, which among other restrictions, requires the
maintenance of a minimum level of net worth and a fixed charge coverage
ratio.

Scheduled maturities of long-term debt at December 31, 1999 are as follows:

<TABLE>
<S> <C>
2000...................................................... $ 3,737,227
2001...................................................... 355,759
2002...................................................... 180,031
2003...................................................... 128,775
2004...................................................... 35,134,848
Thereafter................................................ 464,750
-----------
$40,001,390
===========
</TABLE>

(9) OPERATING LEASES --

Kroll-O'Gara leases office space and certain equipment and supplies under
agreements with terms from one to fifteen 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, 1999:

Rental expense charged against current operations amounted to approximately
$4,329,000, $6,691,000 and $10,204,000, for the years ended December 31,
1997, 1998 and 1999, respectively.

<TABLE>
<S> <C>
2000...................................................... $ 9,250,804
2001...................................................... 8,606,454
2002...................................................... 6,029,952
2003...................................................... 5,191,308
2004...................................................... 4,057,019
Thereafter................................................ 13,434,484
-----------
$46,570,021
===========
</TABLE>

(10) DEFINED CONTRIBUTION AND BONUS PLANS --

As of December 31, 1999, Kroll-O'Gara had the following employee benefit
plans in place:

(a) DEFINED CONTRIBUTION PLANS -- Kroll-O'Gara and its subsidiaries have
established various profit sharing/401(k) plans covering substantially
all of Kroll-O'Gara's employees. Contributions to the plans are
discretionary and are determined annually by Kroll-O'Gara's Board of
Directors. Certain plans also offer a matching contribution whereby
Kroll-O'Gara will contribute a percentage of the amount a participant
contributes, limited to certain maximum amounts. Plan contribution
expense charged against current operations for all such plans amounted
to approximately $1,211,140, $797,003 and $1,189,841, for the years
ended December 31, 1997, 1998 and 1999, respectively.

(b) PROFIT AND REVENUE SHARING PLANS -- Kroll-O'Gara and its subsidiaries
have established various profit and revenue sharing plans covering
substantially all of Kroll-O'Gara's employees.

F-32
<PAGE> 178
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The plans were established to provide employees an annual cash
incentive bonus based on various operating and non-operating criteria.
Kroll-O'Gara may amend, modify or terminate these plans at any time.

Kroll-O'Gara expensed approximately $516,000, $476,000 and $1,235,000
associated with the profit and revenue sharing plans in 1997, 1998 and
1999, respectively.

(11) EQUITY ARRANGEMENTS --

(a) STOCK OPTION PLANS -- In 1996, Kroll-O'Gara adopted a stock option plan
(the 1996 Plan) for employees, non-employee directors and consultants.
Kroll-O'Gara may grant options for up to 1,757,000 shares under the
1996 Plan. Options for 482,050, 360,000 and 647,195 shares were granted
during 1997, 1998 and 1999, respectively. Options granted under the
plan have been granted at fair market value at the date of grant and
are exercisable over periods not exceeding ten years. Additionally,
effective with the mergers with Kroll, LSAI, Securify and BAI each
outstanding stock option was converted at the respective exchange
factor into options to purchase Kroll-O'Gara common stock. After
conversion, total stock options granted under the previously existing
Kroll, LSAI, Securify and BAI stock option plans in 1997 and 1998 were
174,887 and 248,497, respectively. No options were granted under
previously existing stock option plans in 1999.

In connection with stock options granted by Securify during the year
ended December 31, 1998, Kroll-O'Gara recorded deferred compensation of
$1,192,096, representing the difference between the deemed value of the
common stock for accounting purposes and the option exercise price of
such options at the date of grant. This amount is presented as a
reduction of shareholders' equity, to be expensed ratably over the
vesting periods of the applicable options. Approximately $78,000 and
$298,000 was expensed in 1998 and 1999, respectively, with the balance
to be expensed ratably over the next three years as the options vest.

Effective May 12, 2000, Kroll-O'Gara established a new stock option
plan (the 2000 Plan). Pursuant to this plan, employees were granted
879,400 stock options on May 12, 2000. Additionally, effective May 12,
2000, Kroll-O'Gara amended the 1996 Plan and granted options to certain
employees for 118,000 shares of common stock under that plan.

(b) RESTRICTED STOCK PLAN -- Effective June 14, 1993, Kroll replaced a
previously existing long-term incentive plan with a restricted stock
plan. The restricted stock plan provided for cliff vesting after a
five-year period from the date the stock was awarded. Under the
provisions of the plan, a participant had the ability to put the stock
back to Kroll and receive cash for the then fair value of the stock. In
addition, the plan included a provision which resulted in accelerated
vesting of all shares in the event of a change in control of Kroll.
Kroll-O'Gara has accounted for this plan as a fixed plan and,
accordingly, compensation expense was based on the fair market value as
determined by independent appraisal at the date of grant.

Kroll also entered into other agreements with certain of its senior
executives which provided additional grants. As a result of the Kroll
merger in December 1997, all remaining shares associated with the
restricted stock plan vested and all restrictions lapsed on the merger
date. In connection with this accelerated vesting Kroll-O'Gara
recognized compensation expense of approximately $800,000 in 1997,
which is included with merger related costs in the

F-33
<PAGE> 179
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accompanying consolidated statement of operations. In addition to the
regular tax benefits based on compensation expense recognized,
Kroll-O'Gara also realized a tax benefit for the fair market value of
all restricted shares which became fully vested in 1997. This benefit
of approximately $2.2 million has been recognized as an increase to
additional paid in capital in the accompanying consolidated statement
of shareholders' equity. This balance represents the spread between
cumulative compensation expense recognized by Kroll-O'Gara for
accounting purposes and the cumulative compensation expense recognized
for tax purposes based on the fair market value of the shares. No
shares were outstanding under the plan as of December 31, 1997 and
effective January 2, 1998, further issuances under the plan were ceased
by a board resolution.

Effective August 12, 1998, Kroll-O'Gara adopted a stock incentive plan
(the 1998 Stock Incentive Plan) for employees. Kroll-O'Gara may grant
up to 500,000 shares under the 1998 Stock Incentive Plan. There were no
shares granted under the plan during 1998; however, during fiscal 1999,
47,500 shares were granted under the plan. In connection with the
shares granted under the Stock Incentive Plan in 1999, Kroll-O'Gara
recorded deferred compensation of $1,571,661, representing the
difference between the fair market value of Kroll-O'Gara common stock
on the date of grant and the purchase price of the shares. This amount
is presented as a reduction of shareholders' equity, to be expensed
ratably over the vesting periods of the applicable grants.
Approximately $758,000 was expensed in 1999 and the balance will be
expensed ratably over the next two years as the grants vest.

(c) PURCHASE AND RETIREMENT OF COMMON STOCK -- In accordance with Kroll's
historical bylaws, restricted stock and stock option agreements, Kroll
acquired 259,036 shares (representing shares and shares under options)
of a former director for approximately $2.7 million upon his leaving
the employment of Kroll in January 1997.

(d) COMMON STOCK WARRANTS -- In connection with LSAI's initial public
offering on October 11, 1994, LSAI issued 660,000 warrants. No warrants
had been exercised at December 31, 1996. Until April 15, 1997, each
warrant could be exercised to purchase .4204 shares of common stock for
$16.65 per share. After April 15, 1997, each warrant could be exercised
to purchase .4204 shares of common stock for $9.51 per share. On
September 3, 1997, LSAI gave notice to the holders of these warrants of
LSAI's election to redeem the outstanding warrants at $0.01 each on
October 14, 1997, unless extended, at the sole discretion of LSAI, to a
date not later than November 7, 1997 (the "Warrant Redemption"). As a
result, 658,290 of the warrants were exercised in September and October
1997, and the remaining 1,710 warrants were redeemed.

As a portion of the public offering underwriting compensation, LSAI
also issued warrants to purchase 66,000 units at $7.32 per unit,
consisting of .4204 shares of common stock of Kroll-O'Gara and one
warrant for .4204 additional shares of common stock of Kroll-O'Gara,
exercisable during a four-year period commencing on October 11, 1995
(the "Underwriter Warrants"). The warrants included within each unit
were exercisable under the same terms as the warrants issued in
connection with the public offering as described above. As a result of
the Warrant Redemption, 62,000 of these warrants were exercised for
$0.12 per warrant plus $9.51 per share in September and October 1997,
and the remaining 4,000 warrants were redeemed. After the Warrant
Redemption, the holders of the Underwriter Warrants continue to have
the right to exercise the Underwriter Warrants with respect to the
.4204 shares of common stock of

F-34
<PAGE> 180
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Kroll-O'Gara comprising the unit for $7.20. In November 1997, 30,000 of
the Underwriter Warrants were exercised with respect to the .4204
shares of common stock of Kroll-O'Gara comprising the unit for $7.20.
The remaining 36,000 of the Underwriter Warrants with respect to the
.4204 shares of common stock had not been exercised and were
outstanding at December 31, 1997. The proceeds from the exercise of all
warrants during 1997 are included in net proceeds from exercise of
stock options and warrants in the accompanying consolidated statement
of cash flows and approximated $2.7 million, net of commissions and
other offering expenses.

In connection with the Warrant Redemption, LSAI issued warrants to
purchase 30,281 shares of common stock of Kroll-O'Gara to various
investment bankers as a portion of their compensation for serving as
managers of the Warrant Redemption and certain other services. These
warrants have an exercise price per share of $10.47 and expire on
October 14, 2000. Both the number of shares and the exercise price per
share are subject to adjustment under certain circumstances. The value
of these warrants, recognized as compensation paid to the investment
bankers for services provided, was treated as a reduction in the
recognized net proceeds to LSAI from the Warrant Redemption. The value
of the outstanding warrants is included in paid in capital in excess of
par and entirely offsets the recognized compensatory value of the
warrants, resulting in no net effect on shareholders' equity.

As of December 31, 1999, 8,775 warrants granted by LSAI were still
outstanding.

As of December 31, 1999, BAI had outstanding warrants to purchase 135
shares of Kroll-O'Gara's common stock at $13.01 per share and 1,076
shares of Kroll-O'Gara's common stock at $4.65 per share. These
warrants were issued in June and July of 1996 to certain consultants
and other non-employees of BAI with exercise prices equal to or greater
than the then fair value of BAI's common stock on those dates.
Additionally, as of December 31, 1999, BAI also had outstanding
warrants to purchase 807 shares of Kroll-O'Gara's common stock at
$19.52 per share which were issued in January 1998.

As of December 31, 1999, Kroll-O'Gara had a total of 10,793 warrants
still outstanding.

(e) STOCK BASED COMPENSATION DISCLOSURE -- SFAS 123 requires, at a minimum,
pro forma disclosures of expense for stock-based awards based on their
fair values. Had compensation cost for these plans been determined
consistent with SFAS 123, Kroll-O'Gara's net income (loss) and diluted
earnings (loss) per share for the years ended December 31, 1997, 1998
and 1999 would have been as follows:

<TABLE>
<CAPTION>
1997 1998 1999
--------- ----------- -----------
<S> <C> <C> <C>
Net income (loss):
As reported..................... $ 709,999 $11,786,065 $(1,921,819)
Pro forma....................... $(403,461) $ 9,315,427 $(4,844,407)
Diluted earnings (loss) per share:
As reported..................... $ .05 $ .59 $ (.09)
Pro forma....................... $ (.03) $ .47 $ (.22)
</TABLE>

F-35
<PAGE> 181
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1997, 1998 and 1999:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1998 1999
----------------- --------------- ------------------
<S> <C> <C> <C>
Dividend yield....... -- -- --
Expected
volatility......... 0% - 40.5% 40% - 41.4% 41.4%
Risk-free interest
rate............... 5.8% - 6.76% 4.2% - 5.7% 5.29% - 5.44%
Expected lives....... 5 - 7.5 years 1.5 - 7.5 years 7.5 years
</TABLE>

Option grants by Kroll-O'Gara during 1997 have a weighted-average
exercise price of $14.56, a weighted-average fair value of $7.28 and
contractual lives, on a weighted-average basis, of 9.4 years. The
608,497 options granted by Kroll-O'Gara during 1998 have a
weighted-average exercise price of $12.78, a weighted-average fair value
of $9.35 and contractual lives, on a weighted-average basis, of 9.4
years. The 647,195 options granted by Kroll-O'Gara during 1999 have a
weighted-average exercise price of $27.31, a weighted-average fair value
of $15.49 and contractual lives, on a weighted-average basis, of 9.2
years.

A summary of the status of Kroll-O'Gara's stock option plans at December
31, 1997, 1998 and 1999, and the change during the years then ended is
presented in the table below:

<TABLE>
<CAPTION>
1997 1998 1999
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning
of year............. 812,749 $ 6.68 1,371,808 $10.11 1,459,990 $11.54
Granted............. 656,937 14.56 608,497 12.78 647,195 27.31
Exercised........... (6,745) 8.50 (477,894) 8.52 (194,371) 9.11
Forfeited/Expired/
Cancelled........ (91,133) 11.74 (42,421) 17.05 (82,775) 23.06
--------- ------ --------- ------ --------- ------
Outstanding, end of
year................ 1,371,808 $10.11 1,459,990 $11.54 1,830,039 $17.06
========= ====== ========= ====== ========= ======
Exercisable, end of
year................ 761,825 $ 6.52 855,122 $ 8.31 983,510 $10.53
========= ====== ========= ====== ========= ======
</TABLE>

Of the options outstanding at December 31, 1999, 274,173 options are
exercisable at prices per share ranging from $0.52 to $2.79 per share,
673,898 options are exercisable at prices per share ranging from $4.65
to $18.59 per share and 881,968 options are exercisable at prices per
share ranging from $20.22 to $34.88 per share.

(12) COMMITMENTS AND CONTINGENCIES --

(a) LETTERS OF CREDIT -- Under the terms of the Economic Development
Revenue Bonds Agreement, Kroll-O'Gara is required to maintain a letter
of credit supporting the debt. As of December 31, 1999, Kroll-O'Gara's
lender was committed to providing this letter of credit through May 31,
2001. As of December 31, 1999, Kroll-O'Gara had an outstanding letter
of credit in the amount of $1,437,625.

F-36
<PAGE> 182
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1999, Kroll-O'Gara had standby and purchase letters of
credit, issued by Kroll-O'Gara's lender, in the aggregate amount of
$1,678,241.

(b) EMPLOYMENT AGREEMENTS -- Kroll-O'Gara has employment agreements with
its executive officers and management level personnel with annual
compensation ranging in value from $55,000 to $486,000, over varying
periods extending to April 2005. The agreements generally provide for
salary continuation in the event of termination without cause for the
greater of the remainder of the agreement or one year. The agreements
also contain certain non-competition clauses and generally provide for
one year's salary if the agreement is not renewed.

As of December 31, 1999, the remaining aggregate commitment under these
employment agreements if all individuals were terminated without cause
was approximately $22.9 million.

(c) LEGAL MATTERS -- Kroll-O'Gara has been named as a defendant in eight
lawsuits alleging that its officers and directors breached their
fiduciary duties in connection with the now terminated proposed
acquisition of a majority of Kroll-O'Gara's shares by a company formed
by Blackstone Capital Partners III Merchant Banking Fund L.P.
(Blackstone). Five of the lawsuits were filed in the Court of Common
Pleas, Butler County, Ohio, and were consolidated on November 29, 1999.
The remaining three lawsuits were filed in the United States District
Court for the Southern District of New York and were consolidated on
November 30, 1999. In amended complaints, plaintiffs allege that
Kroll-O'Gara's officers and directors breached their fiduciary duties
by deferring acquisitions, by negotiating an inadequate acquisition
price, by failing to engage in arms-length negotiations and by failing
to seek redress from Blackstone after Blackstone terminated the
proposed transaction. The plaintiffs also allege that Blackstone and
AIG aided and abetted the directors' and officers' alleged breaches of
fiduciary duties. The plaintiffs seek to bring their claims
derivatively on behalf of Kroll-O'Gara and also seek class
certification. On behalf of Kroll-O'Gara and putative plaintiff classes
of shareholders, they seek a declaration that the individual defendants
breached their fiduciary duty and seek damages and attorneys' fees in
an unspecified amount. The defendants believe that the allegations in
the complaints are wholly meritless and will defend the suits
vigorously.

Kroll-O'Gara has learned that an individual has filed a qui tam suit,
which is under seal, against Kroll-O'Gara under the Civil False Claims
Act, 31 U.S.C. sec. 3729, alleging that Kroll-O'Gara and three of its
vendors knowingly violated their contractual requirements with the
Army. On January 18, 2000, an attorney for the U.S. Department of
Justice stated that it was his intention to recommend that the
Government intervene and take over the suit and estimated
Kroll-O'Gara's liability to be as high as $16,000,000 stemming from its
vendors' alleged failure to have certified welders. Though Kroll-O'Gara
strongly disputes the Government's contention and will vigorously
contest the Government's claims, in September 2000, the Company began
settlement negotiations with the U.S. Department of Justice. Management
currently believes a settlement of this matter is possible for
approximately $1.1 million and the Company will accrue this expense in
the third quarter of fiscal 2000.

In addition to the matters discussed above, Kroll-O'Gara is involved in
litigation from time to time in the ordinary course of its business;
however, Kroll-O'Gara does not believe that there is

F-37
<PAGE> 183
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

any currently pending or threatened litigation, individually or in the
aggregate, that is likely to have a material adverse effect on its financial
position, results of operations or its cash flows.

(13) FAIR VALUE OF FINANCIAL INSTRUMENTS --

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

Kroll-O'Gara has entered into nine foreign currency exchange contracts to
effectively hedge its exposure to certain foreign currency rate
fluctuations on demand loans to two subsidiaries which are denominated in
foreign currencies. By virtue of these contracts, Kroll-O'Gara has fixed
the total dollar amount which it will receive under the aforementioned
subsidiary loans through the maturity dates of the contracts regardless of
the fluctuations in the exchange rate. As of December 31, 1999, the total
notional amount of the contracts, which mature between January 2000 and
July 2001, was $18.1 million. Kroll-O'Gara's cumulative foreign currency
translation adjustment component of shareholders' equity was decreased by
$0.7 million in 1998 and increased by $1.9 million in 1999 as a result of
these agreements.

Kroll-O'Gara has estimated the fair value of their foreign exchange
contracts based on information obtained from the counterparty of the amount
Kroll-O'Gara would receive at December 31, 1999 in order to terminate the
agreements. As of December 31, 1999, Kroll-O'Gara would have received
approximately $1.1 million upon cancellation of all contracts.

(14) CUSTOMER AND SEGMENT DATA --

(a) SEGMENT DATA -- During 1997, Kroll-O'Gara operated in three business
segments, the Security Products and Services Group, the Investigations
and Intelligence Group, and the Voice and Data Communications Group. In
1998, Kroll-O'Gara created the Information Security Group in connection
with the merger with Securify.

The following summarizes information about Kroll-O'Gara's business
segments:

<TABLE>
<CAPTION>
SECURITY VOICE AND
PRODUCTS INVESTIGATIONS DATA
AND AND INFORMATION COMMUNI-
SERVICES INTELLIGENCE SECURITY CATIONS
GROUP GROUP GROUP GROUP OTHER CONSOLIDATED
-------- -------------- ----------- --------- -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1997
Net sales to
unaffiliated
customers............. $105,557 $ 87,329 $ -- $17,438 $ -- $210,324
======== ======== ======= ======= ======== ========
Gross profit............ $ 30,006 $ 33,979 $ -- $ 3,125 $ -- $ 67,110
======== ======== ======= ======= ======== ========
Operating income........ $ 8,238 $ 1,775 $ -- $ 68 $ -- $ 10,081
======== ======== ======= ======= ======== ========
Identifiable assets at
year-end.............. $ 74,283 $ 58,670 $ -- $13,449 $ -- $146,402
======== ======== ======= ======= ========
Corporate assets........ 9,284
--------
Total assets at
year-end.............. $155,686
========
</TABLE>

F-38
<PAGE> 184
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
SECURITY VOICE AND
PRODUCTS INVESTIGATIONS DATA
AND AND INFORMATION COMMUNI-
SERVICES INTELLIGENCE SECURITY CATIONS
GROUP GROUP GROUP GROUP OTHER CONSOLIDATED
-------- -------------- ----------- --------- -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1998
Net sales to
unaffiliated
customers............. $136,844 $117,583 $ 116 $17,653 $ -- $272,196
======== ======== ======= ======= ======== ========
Gross profit (loss)..... $ 39,345 $ 51,627 $ (395) $ 3,522 $ (325) $ 93,774
======== ======== ======= ======= ======== ========
Operating income
(loss)................ $ 22,822 $ 11,748 $(2,194) $ (351) $ (9,145) $ 22,880
======== ======== ======= ======= ======== ========
Identifiable assets at
year-end.............. $102,294 $108,303 $ 4,288 $16,488 $ -- $231,373
======== ======== ======= ======= ========
Corporate assets........ 22,371
--------
Total assets at
year-end.............. $253,744
========

1999
Net sales to
unaffiliated
customers............. $120,824 $176,837 $ 4,345 $19,932 $ -- $321,938
======== ======== ======= ======= ======== ========
Gross profit............ $ 35,004 $ 78,762 $ 2,300 $ 2,415 $ -- $118,481
======== ======== ======= ======= ======== ========
Operating income
(loss)................ $ 12,786 $ 13,167 $(1,764) $(1,534) $(16,502) $ 6,153
======== ======== ======= ======= ======== ========
Identifiable assets at
year-end.............. $107,786 $155,534 $ 3,359 $17,791 $ -- $284,470
======== ======== ======= ======= ========
Corporate assets........ 14,923
--------
Total assets at
year-end.............. $299,393
========
</TABLE>

Total net sales by segment includes sales to unaffiliated customers.
Intersegment sales are nominal. Operating income (loss) is total net
sales less operating expenses. Operating income (loss) does not include
the following items: interest expense, other expenses and income taxes.
The Other column includes Kroll-O'Gara's corporate headquarters costs.
Depreciation expense and capital expenditures for each of
Kroll-O'Gara's business segments for the years ended December 31, 1997,
1998 and 1999 are as follows:

<TABLE>
<CAPTION>
SECURITY VOICE AND
PRODUCTS DATA
AND INVESTIGATIONS AND INFORMATION COMMUNI-
SERVICES INTELLIGENCE SECURITY CATIONS
GROUP GROUP GROUP GROUP OTHER CONSOLIDATED
-------- ------------------ ----------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
1997
Depreciation expense... $1,427 $1,373 $ -- $ 16 $ -- $ 2,816
====== ====== ====== ==== ====== =======
Capital expenditures... $3,149 $3,263 $ -- $ 43 $ -- $ 6,455
====== ====== ====== ==== ====== =======
</TABLE>

F-39
<PAGE> 185
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
SECURITY VOICE AND
PRODUCTS DATA
AND INVESTIGATIONS AND INFORMATION COMMUNI-
SERVICES INTELLIGENCE SECURITY CATIONS
GROUP GROUP GROUP GROUP OTHER CONSOLIDATED
-------- ------------------ ----------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
1998
Depreciation expense... $1,282 $1,760 $ 24 $ 24 $ 13 $ 3,103
====== ====== ====== ==== ====== =======
Capital expenditures... $3,427 $3,001 $ 186 $ 68 $ 647 $ 7,329
====== ====== ====== ==== ====== =======

1999
Depreciation expense... $2,188 $3,400 $ 93 $ 36 $ 400 $ 6,117
====== ====== ====== ==== ====== =======
Capital expenditures... $5,969 $9,687 $1,673 $117 $1,752 $19,198
====== ====== ====== ==== ====== =======
</TABLE>

Identifiable assets by segment are those assets that are used in
Kroll-O'Gara's operations in each segment. Corporate assets are
principally cash, marketable securities, computer software, certain
intangible assets and certain prepaid expenses.

The following summarizes information about Kroll-O'Gara's different
geographic areas:

<TABLE>
<CAPTION>
UNITED OTHER
STATES FRANCE FOREIGN ELIMINATIONS CONSOLIDATED
-------- ------- -------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1997
Net sales to unaffiliated
customers........................ $139,023 $24,004 $ 47,297 $ -- $210,324
Intercompany....................... 7,413 208 5,624 (13,245) --
-------- ------- -------- -------- --------
Total net sales.......... $146,436 $24,212 $ 52,921 $(13,245) $210,324
======== ======= ======== ======== ========
Operating income................... $ 4,920 $ 1,382 $ 3,779 $ -- $ 10,081
======== ======= ======== ======== ========
Identifiable assets................ $ 91,325 $23,706 $ 31,371 $ -- $146,402
======== ======= ======== ========
Corporate assets................... 9,284
--------
Total assets at
year-end............... $155,686
========

1998
Net sales to unaffiliated
customers........................ $165,062 $28,458 $ 78,676 $ -- $272,196
Intercompany....................... 2,960 199 4,548 (7,707) --
-------- ------- -------- -------- --------
Total net sales.......... $168,022 $28,657 $ 83,224 $ (7,707) $272,196
======== ======= ======== ======== ========
Operating income................... $ 10,825 $ 2,251 $ 9,804 $ -- $ 22,880
======== ======= ======== ======== ========
Identifiable assets................ $139,759 $29,047 $ 62,567 $ -- $231,373
======== ======= ======== ========
Corporate assets................... 22,371
--------
Total assets at
year-end............... $253,744
========
</TABLE>

F-40
<PAGE> 186
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
UNITED OTHER
STATES FRANCE FOREIGN ELIMINATIONS CONSOLIDATED
-------- ------- -------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1999
Net sales to unaffiliated
customers........................ $183,904 $27,483 $110,551 $ -- $321,938
Intercompany....................... 6,683 1,858 5,746 (14,287) --
-------- ------- -------- -------- --------
Total net sales.......... $190,587 $29,341 $116,297 $(14,287) $321,938
======== ======= ======== ======== ========
Operating income (loss)............ $ (4,654) $ 2,245 $ 8,562 $ -- $ 6,153
======== ======= ======== ======== ========
Identifiable assets................ $160,952 $26,784 $ 96,734 $ -- $284,470
======== ======= ======== ========
Corporate assets................... 14,923
--------
Total assets at
year-end............... $299,393
========
</TABLE>

Kroll-O'Gara accounts for transfers between geographic areas at cost
plus a proportionate share of operating profit.

The following summarizes Kroll-O'Gara's sales in the United States and
foreign locations:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997 1998 1999
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Sales to unaffiliated customers:
U.S. Government...................... $ 43,719 $ 62,149 $ 54,953
Other United States.................. 78,068 97,204 126,212
Middle East.......................... 5,887 5,958 4,917
Europe............................... 44,022 52,927 66,057
Asia................................. 10,697 15,467 22,763
Central & South America.............. 20,123 25,850 33,428
Other Foreign........................ 7,808 12,641 13,608
-------- -------- --------
$210,324 $272,196 $321,938
======== ======== ========
</TABLE>

Export sales by Kroll-O'Gara's domestic operations were approximately
15%, 17% and 3% of net sales for the years ended December 31, 1997,
1998 and 1999, respectively.

Kroll-O'Gara is subject to audit and investigation by various agencies
which oversee contract performance in connection with Kroll-O'Gara's
contracts with the U.S. Government. Additionally, Kroll-O'Gara's
laboratory testing operations are certified and subject to frequent
inspections and proficiency tests by certain federal, state or local
jurisdictions. Management believes that potential claims from such
audits and investigations will not have a material adverse effect on
the consolidated financial statements. In addition, contracts with the
U.S. Government may 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.

Kroll-O'Gara has foreign operations and assets in Argentina, Australia,
Brazil, Canada, Chile, China, Colombia, France, Germany, India, Italy,
Japan, Mexico, Russia, Singapore, South Africa, Switzerland, the
Philippines and the United Kingdom. In addition, Kroll-O'Gara sells its
products and services in other foreign countries and has continued to
increase its level of international activity. Accordingly, Kroll-O'Gara
is subject to various risks including, among

F-41
<PAGE> 187
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

others, foreign currency restrictions, exchange rate fluctuations,
government instability and complexities of local laws and regulations.

(b) MAJOR CUSTOMERS -- During the years ended December 31, 1997, 1998 and
1999 sales in the Security Products and Services Group to the U.S.
Government approximated 21%, 23% and 17% of Kroll-O'Gara's net sales,
respectively.

(15) SUPPLEMENTAL CASH FLOWS DISCLOSURES --

The following is a summary of cash paid related to certain items:

<TABLE>
<CAPTION>
1997 1998 1999
---------- ----------- ----------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest................. $4,960,504 $ 4,593,326 $4,581,720
========== =========== ==========
Cash paid for taxes.................... $3,468,474 $ 4,095,349 $6,055,244
========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
ACTIVITIES:
Issuance of restricted stock........... $1,356,280 $ -- $ --
========== =========== ==========
Deferred compensation related to
options and restricted stock......... $ -- $ 1,192,096 $1,571,661
========== =========== ==========
Accrued contingent consideration
incurred in connection with
acquisition of business.............. $ -- $ -- $1,071,688
========== =========== ==========
Fair value of stock issued in
connection with acquisition of
businesses........................... $8,459,769 $17,610,504 $8,011,929
========== =========== ==========
Fair value of stock issued in
connection with acquisition of
minority interest.................... $1,243,474 $ -- $ --
========== =========== ==========
Notes issued in connection with
acquisition of businesses............ $2,906,513 $ -- $ --
========== =========== ==========
Tax benefit of restricted stock
vesting.............................. $2,160,341 $ -- $ --
========== =========== ==========
Cancellation of shareholder's note
payable obligation and issuance of
stock................................ $1,053,735 $ -- $ --
========== =========== ==========
Note issued in connection with
consulting agreement entered into
with former shareholder of an
acquired business.................... $ -- $ 147,914 $ --
========== =========== ==========
</TABLE>

F-42
<PAGE> 188
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(16) QUARTERLY FINANCIAL DATA (UNAUDITED) --

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1999
Net sales............................. $ 71,499 $ 80,542 $ 87,547 $ 82,350
Gross profit.......................... 26,253 32,235 31,994 27,999
Net income (loss)..................... 2,528 265 3,654 (8,369)
Earnings (loss) per share:
Basic.............................. $ 0.12 $ 0.01 $ 0.16 $ (0.38)
Diluted............................ $ 0.11 $ 0.01 $ 0.16 $ (0.38)
1998
Net sales............................. $ 58,476 $ 66,319 $ 74,794 $ 72,607
Gross profit.......................... 19,547 22,503 26,027 25,697
Net income (loss)..................... 2,792 3,955 5,293 (254)
Earnings (loss) per share:
Basic.............................. $ 0.18 $ 0.21 $ 0.25 $ (0.01)
Diluted............................ $ 0.17 $ 0.21 $ 0.24 $ (0.01)
</TABLE>

(17) SUBSEQUENT EVENTS --

(a) FAILED MERGER WITH BLACKSTONE -- On November, 15, 1999, Kroll-O'Gara
announced that it had entered into a definitive agreement with
Blackstone pursuant to which shares held by all Kroll-O'Gara
shareholders, other than certain members of management, would be
acquired by Blackstone for $18.00 per share in cash. On April 12, 2000,
Kroll-O'Gara announced that Blackstone had withdrawn its offer to
acquire Kroll-O'Gara shares. Costs associated with the failed merger
through December 31, 1999 were approximately $1.6 million ($0.9 million
after taxes, or $0.04 per diluted share) and consisted primarily of
fees for attorneys, accountants, travel and other related charges.
Kroll-O'Gara anticipates additional expenses will be incurred in fiscal
2000.

(b) PROPOSED PLAN OF REORGANIZATION AND DISSOLUTION -- In April 2000,
subsequent to the terminated Blackstone transaction, Kroll-O'Gara
decided to explore the split-up of its principal businesses into two
independent public companies. On August 30, 2000, Kroll-O'Gara's Board
of Directors approved an agreement and plan of reorganization and
dissolution of Kroll-O'Gara (which was executed effective September 8,
2000), the completion of which is subject to a number of conditions
including the receipt of a favorable tax ruling and the approval by
Kroll-O'Gara's shareholders. Under this agreement, The O'Gara Company
(O'Gara), a newly incorporated company, will receive substantially all
of the assets and liabilities of Kroll-O'Gara's Security Products and
Services Group, and 60% of Kroll-O'Gara's ownership interest in the
common stock of the entity comprising its Information Security Group,
as well as a portion of Kroll-O'Gara's assets and liabilities that are
not attributable to a particular business group. The remaining business
of Kroll-O'Gara, primarily the Investigations and Intelligence Group,
the Voice and Data Communications Group and 40% of Kroll-O'Gara's
ownership interest in the common stock of the entity comprising the
Information Security Group, as well as the other assets and liabilities
that are not attributable to a particular business group, will be
transferred to and assumed by another newly incorporated company, Kroll
Risk Consulting Services, Inc. (KRCS). After these transfers, certain
management shareholders of Kroll-O'Gara will exchange all of their
shares of Kroll-O'Gara common stock for shares of O'Gara common

F-43
<PAGE> 189
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

stock and other management shareholders of Kroll-O'Gara will exchange
all their shares of Kroll-O'Gara common stock for shares of KRCS
common stock. Kroll-O'Gara then will distribute, on a pro rata basis,
all remaining shares of O'Gara common stock and KRCS common stock held
by it to the remaining holders of Kroll-O'Gara common stock. The
exchanging management shareholders will not participate in this
distribution. Concurrent with the completion of these transactions,
O'Gara and KRCS will become separate publicly-traded companies.
Subsequent to the reorganization and split-up, Kroll-O'Gara will be
dissolved.

As part of the reorganization and split-up, Kroll-O'Gara will incur
approximately $2.8 million (net of tax benefit of $1.9 million) of
charges for the write-off of certain intangibles and unamortized
financing fees, debt prepayment fees and compensation costs related to
accelerated vesting of stock option plans. KRCS and O'Gara have agreed
to split these charges on an agreed-upon basis. Also, as soon as
possible following completion of this transaction, KRCS plans to sell
the Voice and Data Communications Group.

As described above, Kroll-O'Gara has entered into an agreement for the
separation of its principal business groups into two public companies.
Management of each of O'Gara and KRCS is currently in discussions with
banks to provide financing for each company subsequent to the
separation. Pending the separation, Kroll-O'Gara will require
additional sources of capital to supplement operating cash flow, either
through amending and increasing its credit facilities, through an
equity offering of one of its subsidiaries or both. In the absence of
the separation of the businesses, management is of the opinion that
there will be sufficient liquidity available from existing operations
and credit facilities, which can be supplemented, if necessary, with
additional secured or unsecured financing, to finance the continuing
operations of Kroll-O'Gara.

(d) DISCONTINUED OPERATIONS SUBSEQUENTLY RETAINED

On April 28, 1999, the Board of Directors approved a formal plan to
discontinue operations of the Voice and Data Communications Group
pursuant to several outside expressions of interest to purchase this
business. In May 2000, Kroll-O'Gara terminated all then pending
negotiations to sell this business to outside third parties.
Accordingly, the results of operations of the Voice and Data
Communications Group for all prior periods have been reclassified from
discontinued operations to continuing operations.

(e) ACQUISITIONS -- During fiscal 2000, Kroll-O'Gara has completed two
acquisitions in the Investigations and Intelligence Group. The
aggregate purchase price of these acquisitions amounted to $1.2 million
and consisted of $0.7 million of cash and $0.5 million in seller
provided financing. These acquisitions have been accounted for as
purchase business acquisitions and the related goodwill from these
acquisitions (approximately $1.0 million) is being amortized over
twenty-five years.

F-44
<PAGE> 190

THE KROLL-O'GARA COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents (Note 7)............................. $ 13,835 $ 6,260
Trade accounts receivable, net of allowance for doubtful
accounts of $4,779 and $4,370 at December 31, 1999 and
June 30, 2000, respectively............................ 68,017 68,683
Unbilled revenues......................................... 18,034 22,548
Related party receivables................................. 2,096 2,792
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 24,160 15,241
Inventories (Note 8)...................................... 26,264 30,587
Prepaid expenses and other................................ 11,579 10,201
Deferred tax asset........................................ 824 824
-------- --------
Total current assets.............................. 164,809 157,136
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land...................................................... 2,164 2,140
Buildings and improvements................................ 8,587 8,379
Leasehold improvements.................................... 7,452 8,081
Furniture and fixtures.................................... 10,131 11,258
Machinery and equipment................................... 36,769 39,699
-------- --------
65,103 69,557
Less: accumulated depreciation............................ (26,195) (29,735)
-------- --------
38,908 39,822
-------- --------
DATABASES, net of accumulated amortization of $26,187 and
$27,853 at December 31, 1999 and June 30, 2000,
respectively.............................................. 9,696 10,083
COSTS IN EXCESS OF ASSETS ACQUIRED AND OTHER INTANGIBLE
ASSETS, net of accumulated amortization of $9,028 and
$10,798 at December 31, 1999 and June 30, 2000,
respectively.............................................. 81,676 79,077
OTHER ASSETS:
Other assets.............................................. 4,304 4,553
-------- --------
95,676 93,713
-------- --------
$299,393 $290,671
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.
F-45
<PAGE> 191

THE KROLL-O'GARA COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank lines of credit (Note 5)............................. $ 26,583 $ 37,422
Current portion of long-term debt......................... 3,737 1,806
Trade accounts payable.................................... 38,823 34,099
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 361 486
Accrued liabilities....................................... 28,299 23,137
Customer deposits......................................... 4,196 4,586
Income taxes currently payable............................ 768 1,606
-------- --------
Total current liabilities......................... 102,767 103,142
-------- --------

OTHER LONG-TERM LIABILITIES................................. 2,673 1,894

DEFERRED INCOME TAXES....................................... 1,821 1,821

LONG-TERM DEBT, net of current portion...................... 36,264 36,580
-------- --------
Total liabilities................................. 143,525 143,437
SHAREHOLDERS' EQUITY (Note 1):
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued................................ -- --
Common stock, $.01 par value, 50,000,000 shares
authorized, 22,255,510 and 22,309,610 shares issued and
outstanding at December 31, 1999 and June 30, 2000,
respectively........................................... 223 223
Additional paid-in capital................................ 170,102 170,026
Retained deficit.......................................... (12,640) (17,300)
Deferred compensation..................................... (1,630) (1,218)
Accumulated other comprehensive loss...................... (187) (4,497)
-------- --------
Total shareholders' equity........................ 155,868 147,234
-------- --------
$299,393 $290,671
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.
F-46
<PAGE> 192

THE KROLL-O'GARA COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1999 2000
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
NET SALES................................................... $ 152,041 $ 163,049
COST OF SALES............................................... 93,553 104,711
----------- -----------
Gross profit......................................... 58,488 58,338
OPERATING EXPENSES:
Selling and marketing expenses............................ 13,302 14,624
General and administrative expenses....................... 29,579 40,917
Separation expenses (Note 12)............................. -- 676
Failed merger expenses (Note 12).......................... -- 2,000
Merger expenses (Note 3).................................. 3,094 438
Restructuring expense (Note 2)............................ 4,364 --
----------- -----------
Operating income (loss).............................. 8,149 (317)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense.......................................... (1,875) (2,872)
Other, net................................................ 70 (91)
----------- -----------
Income (loss) before provision for income taxes and
cumulative effect of change in accounting
principle........................................... 6,344 (3,280)
Provision for income taxes................................ 2,773 1,380
----------- -----------
Income (loss) before cumulative effect of change in
accounting principle................................ 3,571 (4,660)
Cumulative effect of change in accounting principle, net
of applicable tax benefit of $408 (Note 6)............. (778) --
----------- -----------
Net income (loss)......................................... $ 2,793 $ (4,660)
----------- -----------
PER SHARE DATA:
BASIC EARNINGS (LOSS) PER SHARE (Note 4)
Earnings (loss) per share................................. $ 0.13 $ (0.21)
=========== ===========
Weighted Average Shares Outstanding....................... 21,815,388 22,267,065
=========== ===========
DILUTED EARNINGS (LOSS) PER SHARE (Note 4)
Earnings (loss) per share................................. $ 0.12 $ (0.21)
=========== ===========
Weighted Average Shares Outstanding....................... 22,547,934 22,267,065
=========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-47
<PAGE> 193

THE KROLL-O'GARA COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE COMMON ADDITIONAL RETAINED DEFERRED COMPREHENSIVE
SHARES INCOME (LOSS) STOCK PAID-IN CAPITAL DEFICIT COMPENSATION INCOME (LOSS) TOTAL
------ ------------- ------ --------------- -------- ------------ ------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1999.................... 22,256 $223 $170,102 $(12,640) $(1,630) $ (187) $155,868
Net issuances of stock
under employee benefit
plans, including related
tax benefit............. 10 -- 21 -- -- -- 21
Issuance of restricted
stock................... 44 -- 43 -- -- -- 43
Deferred compensation
related to restricted
stock and stock
options................. -- -- (140) -- 412 -- 272
Comprehensive income
(loss):
Net loss................ -- $(4,660) -- -- (4,660) -- -- (4,660)
-------
Other comprehensive
income (loss), net of
tax:
Foreign currency
translation
adjustment, net of
$2,873 tax
benefit............. -- (4,310) -- -- -- -- -- --
-------
Other comprehensive
income.............. -- (4,310) -- -- -- -- (4,310) (4,310)
-------
Comprehensive income
(loss)............ -- $(8,970) -- -- -- -- -- --
------ ======= ---- -------- -------- ------- ------- --------
BALANCE, June 30, 2000.... 22,310 $223 $170,026 $(17,300) $(1,218) $(4,497) $147,234
====== ==== ======== ======== ======= ======= ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
F-48
<PAGE> 194

THE KROLL-O'GARA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 7) (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1999 2000
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 2,793 $(4,660)
Adjustments to reconcile net income (loss) to net cash
used in
operating activities--
Depreciation and amortization........................ 6,034 8,142
Bad debt expense..................................... 806 2,222
Noncash compensation expense......................... 514 273
Change in assets and liabilities, net of effects of
acquisitions--
Receivables -- trade and unbilled...................... (12,098) (7,266)
Costs and estimated earnings in excess of billings on
uncompleted contracts................................. 2,976 8,919
Income tax receivable.................................. (327) --
Inventories, prepaid expenses and other assets......... 217 (2,528)
Accounts payable and income taxes currently payable.... (10,608) (3,886)
Billings in excess of costs and estimated earnings on
uncompleted contracts................................. (94) 125
Amounts due to/from related parties.................... (1,027) (696)
Customer deposits...................................... (1,024) 390
Accrued liabilities.................................... 6,374 (5,177)
Long-term liabilities.................................. 1,862 (779)
-------- -------
Net cash used in operating activities................ (3,602) (4,921)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net........... (9,325) (4,892)
Additions to databases.................................... (1,843) (2,249)
Acquisitions, net of cash acquired........................ (12,015) (263)
Sale of marketable securities............................. 12,007 --
-------- -------
Net cash used in investing activities................ (11,176) (7,404)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under bank lines of credit................. 20,808 10,839
Payments of long-term debt................................ (881) (1,840)
Proceeds from exercise of stock options................... 964 61
Foreign currency translation.............................. (2,719) (4,068)
-------- -------
Net cash provided by financing activities............ 18,172 4,992
-------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS............. 3,394 (7,333)
Effects of foreign currency exchange rates on cash.......... (450) (242)
-------- -------
CASH AND EQUIVALENTS, BEGINNING OF PERIOD................... 14,041 13,835
-------- -------
CASH AND EQUIVALENTS, END OF PERIOD......................... $ 16,985 $ 6,260
======== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-49
<PAGE> 195

THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(1) GENERAL

The Kroll-O'Gara Company, an Ohio corporation, together with its
subsidiaries (collectively "Kroll-O'Gara"), is a leading global provider of
a broad range of specialized products and services that are designed to
provide solutions to a variety of security needs. Kroll-O'Gara's Security
Products and Services Group markets ballistic and blast protected vehicles
and security services. The Investigations and Intelligence Group offers
business intelligence and investigation services. The Voice and Data
Communications Group offers secure satellite communication equipment and
satellite navigation systems. The Information Security Group offers
information and computer security services, including network and system
security review and repair.

The consolidated financial statements include all majority-owned
subsidiaries. All material intercompany accounts and transactions are
eliminated. Investments in 20% to 50% owned entities are accounted for
using the equity method. Affiliated entities are not included in the
accompanying consolidated financial statements.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for fair presentation have been included. Operating results for
the three and six month periods ended June 30, 2000, are not necessarily
indicative of the results that may be expected for the year ended December
31, 2000. The accompanying financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in Kroll-O'Gara's annual report on Form 10-K for the year ended
December 31, 1999.

(2) RESTRUCTURING OF OPERATIONS

In the first quarter of 1999, Kroll-O'Gara began implementation of a
restructuring plan (the "Plan") to reduce costs and improve operating
efficiencies. The Plan was substantially completed by the end of the second
quarter of 1999. Including the first quarter 1999 charge of $0.5 million,
the total non-recurring, pre-tax restructuring charge associated with the
Plan was $4.4 million. Total payments or write-offs made pursuant to the
Plan through June 30, 2000 were $3.5 million. Kroll-O'Gara does not expect
to incur any other significant restructuring charges in future periods
related to this Plan. The principal elements of the restructuring plan are
the closure of two Investigations and Intelligence Group offices and the
elimination of approximately 82 employees. The primary

F-50
<PAGE> 196
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

components of the restructuring charge, including accrued balances, as of
June 30, 2000 are as follows:

<TABLE>
<CAPTION>
DESCRIPTION EXPENSE ACCRUAL
----------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Severance and related costs.......................... $3,116 $369
Writedown of property, plant and equipment........... 150 --
Lease termination costs.............................. 1,064 498
Other................................................ 34 --
------ ----
$4,364 867
====== ====
Less -- Current portion.............................. 560
----
$307
====
</TABLE>

(3) ACQUISITIONS AND MERGERS

Kroll-O'Gara has completed several business combinations in the periods
presented. These transactions, accounted for as either purchase business
combinations or pooling of interests business combinations were as follows:

On June 16, 1999, Kroll-O'Gara acquired all of the outstanding capital
stock of Background America, Inc. for approximately 989,000 shares of
Kroll-O'Gara common stock, including approximately 90,000 shares reserved
for issuance for outstanding common stock equivalents. Background America
provides employment screening and compliance services to a variety of
industries and is included in Kroll-O'Gara's Investigations and
Intelligence Group.

The merger with Background America constituted a tax-free reorganization
and has been accounted for as a pooling of interests transaction.
Accordingly, all prior period consolidated financial statements presented
have been restated to include the combined results of operations, financial
position and cash flows of Background America as though they had always
been a part of Kroll-O'Gara.

There were no transactions between Kroll-O'Gara and Background America
prior to the combination and immaterial adjustments were recorded to
conform Background America's accounting policies. Certain reclassifications
were made to Kroll-O'Gara's and Background America's financial statements
to conform presentation.

In 2000, Kroll-O'Gara recorded a charge to operating expenses of
approximately $0.4 million ($0.02 per diluted share) for integration
related costs. These costs relate primarily to mergers and acquisitions
completed in 1999.

On May 16, 2000, Kroll-O'Gara acquired substantially all of the assets and
assumed certain liabilities of The Search Is On, Inc., a corporation doing
business in Nashville, Tennessee. The purchase price of $0.6 million was
satisfied with cash of $0.4 million and a note payable of $0.2 million to
the former owner. The acquisition has been accounted for as a purchase and
was effective on May 16, 2000. Goodwill related to this transaction was
approximately $0.4 million which is being amortized over 25 years. The
Search Is On specializes in obtaining public records information for
utilization in providing background investigation to clients. Its revenues
are included in Kroll-O'Gara's Investigations and Intelligence Group.

F-51
<PAGE> 197
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

On June 3, 1999, Kroll-O'Gara acquired substantially all of the assets and
assumed certain liabilities of The Buchler Phillips Group, a partnership
headquartered in London, England. The purchase price of $20.0 million was
satisfied with cash of $12.0 million and 366,469 shares of stock valued at
$8.0 million, or $21.86 per share. The acquisition has been accounted for
as a purchase and was effective on April 1, 1999. Goodwill related to this
transaction was approximately $20.7 million which is being amortized over
25 years. Buchler Phillips specializes in corporate advisory practices
which includes work related to corporate rescue, insolvency, financial
consulting and corporate finance. Buchler Phillips' revenues are included
in the Investigations and Intelligence Group.

On March 1, 1999, Kroll-O'Gara acquired all of the capital stock of
Financial Research, Inc. for approximately $3.3 million, consisting of
101,555 shares of common stock. Financial Research provides business
valuation and economic damage analysis services and is included in Kroll-
O'Gara's Investigations and Intelligence Group. The acquisition has been
accounted for as a pooling of interests.

(4) EARNINGS PER SHARE --

In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", basic earnings per share are computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share are computed by dividing net
income by the weighted average number of shares of common stock and common
stock equivalents outstanding during the period. Dilutive common stock
equivalents represent shares issuable upon assumed exercise of stock
options and warrants and upon assumed issuance of restricted stock. The
following is a reconciliation of the numerator and denominator for basic
and diluted earnings per share for the six months ended June 30, 1999 (in
thousands, except per share data):

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
---------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS.................................. $2,793 21,815 $0.13
=====
Effect of dilutive securities:
Options.................................. -- 708
Warrants................................. -- 3
Restricted Stock......................... -- 22
------ ------
Diluted EPS................................ $2,793 22,548 $0.12
====== ====== =====
</TABLE>

As a result of the net loss recorded for the six months ended June 30,
2000, basic and diluted earnings per share are identical as all options and
warrants are anti-dilutive.

Basic and diluted earnings per share based on income before cumulative
effect of change in accounting principle were $0.16 for the six months
ended June 30, 1999. The basic and diluted per share impact of the change
in accounting principle was $0.03 and $0.04, respectively.

(5) DEBT --

(a) AMENDMENT OF CREDIT FACILITY -- On September 14, 2000, Kroll-O'Gara
amended its credit agreement to extend its temporary increase in its
revolving line of credit from $25.0 million to $40.0 million. Pursuant
to the amended credit agreement, the increase in the revolving line of

F-52

<PAGE> 198
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

credit is effective until January 1, 2001, at which time all borrowings
in excess of $25.0 million must be repaid. The credit facility continues
to provide for a letter of credit facility of approximately $7.6 million.
Both the letter of credit facility and the line of credit mature on May
31, 2001. Advances under the revolving line of credit bear interest at
prime to prime plus 0.75%, or, at Kroll-O'Gara's option, LIBOR plus 1.50%
to LIBOR plus 2.50%, dependent upon a defined financial ratio. Borrowings
under this line of credit were approximately $22.8 million and $34.3
million at December 31, 1999 and June 30, 2000, respectively.

This credit agreement includes financial covenants which, among other
restrictions, require the maintenance of certain financial ratios and
other financial requirements, including an interest coverage ratio and
net worth minimum, and impose limitations on foreign investment,
goodwill, additional indebtedness and capital expenditures. Pursuant to
the amended credit agreement, certain of these financial ratios were
revised. Kroll-O'Gara was not in compliance with certain of these
covenants at June 30, 2000. All such events of non-compliance were
subsequently waived or amended by the lender.

(b) SENIOR UNSECURED NOTES PAYABLE -- Kroll-O'Gara's $35.0 million of senior
unsecured notes payable also contains financial covenants, which among
other restrictions, require the maintenance of a minimum level of net
worth and a fixed charge coverage ratio. Kroll-O'Gara was not in
compliance with the fixed charge coverage ratio at June 30, 2000. This
event of non-compliance was subsequently waived by the lenders.

(6) NEW PRONOUNCEMENTS --

In April 1998, the American Institute of Certified Public Accountants
released Statement of Position (SOP) 98-5 "Reporting on the Cost of
Start-Up Activities". The SOP requires costs of start-up activities,
including pre-operating costs, organization costs and start-up costs to be
expensed as incurred. Kroll-O'Gara's practice was to capitalize these
expenses and amortize them over periods ranging from one to five years.
Kroll-O'Gara adopted SOP 98-5 in the first quarter of 1999 and recorded a
cumulative effect of an accounting change of $0.8 million, net of a tax
benefit of $0.4 million.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133 establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. SFAS 133, as amended, is effective for
fiscal years beginning after June 15, 2000. Kroll-O'Gara has nine forward
contracts in place in association with demand notes from two subsidiaries.
These instruments qualify for hedge accounting. Kroll-O'Gara has not yet
quantified the impact of adopting SFAS 133 on its financial statements and
has not determined the timing of or method of adoption of SFAS 133.
However, SFAS 133 could increase volatility in earnings and other
comprehensive income.

F-53
<PAGE> 199
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

No. 44 clarifies the application of APB Opinion 25 for certain matters,
specifically (a) the definition of an employee for purposes of applying APB
Opinion 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and
(d) the accounting for an exchange of stock compensation awards in a
business combination. Management does not anticipate that the adoption of
Interpretation No. 44 will have a material impact on financial position or
the results of operations.

(7) SUPPLEMENTAL CASH FLOW DISCLOSURE --

Cash equivalents consist of all highly liquid debt instruments with an
initial maturity of three months or less at the date of purchase.
Kroll-O'Gara invests excess cash in overnight repurchase agreements, which
are government collateralized securities. The carrying amount of cash and
cash equivalents approximates fair value of those instruments due to their
short maturity.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1999 2000
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash paid for taxes......................................... $3,680 $ 991
Cash paid for interest...................................... $1,949 $2,708
Non-cash activity:
Fair value of stock issued in connection with acquisition of
Buchler Phillips.......................................... $8,011 $ --
Deferred compensation related to options and restricted
stock..................................................... $1,572 $ --
</TABLE>

(8) 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,
INVENTORY CATEGORY 1999 2000
------------------ ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Raw materials............................................... $14,495 $19,437
Vehicle costs and work-in-process........................... 11,769 11,150
------- -------
Total inventory........................................ $26,264 $30,587
======= =======
</TABLE>

(9) DERIVATIVE FINANCIAL INSTRUMENTS --

Financial instruments in the form of foreign currency exchange contracts
are utilized by Kroll-O'Gara to hedge its exposure to movements in foreign
currency exchange rates. Kroll-O'Gara does not hold or issue derivative
financial instruments for trading purposes. Gains and losses on foreign
exchange contracts are deferred and amortized as an adjustment to the
cumulative foreign currency translation adjustment component of equity over
the terms of the agreements in accordance with hedge accounting standards.

Kroll-O'Gara has entered into nine foreign currency exchange contracts to
hedge its exposure to certain foreign currency rate fluctuations on demand
loans to two subsidiaries that are denominated in the foreign currencies.
By virtue of these contracts, Kroll-O'Gara has fixed the total dollar
amount that they will receive under the aforementioned subsidiary loans
through the maturity dates

F-54
<PAGE> 200
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

of the contracts regardless of the fluctuations in the exchange rate. At
June 30, 2000, the total notional amount of the contracts, which mature
between July 2000 and January 2002, is $17.9 million. Kroll-O'Gara's
foreign currency translation adjustment component of shareholder's equity
was increased by $0.9 million in the six months ended June 30, 2000 as a
result of these agreements.

Kroll-O'Gara has estimated the fair value of the foreign exchange contracts
based on information obtained from the counterparty of the amount
Kroll-O'Gara would receive at June 30, 2000 in order to terminate the
agreements. As of June 30, 2000, Kroll-O'Gara would have received
approximately $1.8 million upon cancellation of all contracts.

(10) SEGMENT DATA --

During 1999 and 2000, Kroll-O'Gara operated in four business segments, the
Security Products and Services Group, the Investigations and Intelligence
Group, the Voice and Data Communications Group and the Information Security
Group.

The following summarizes information about the Company's business segments:

<TABLE>
<CAPTION>
SECURITY INVESTIGATIONS
PRODUCTS AND AND VOICE AND DATA INFORMATION
SERVICES INTELLIGENCE COMMUNICATIONS SECURITY
GROUP GROUP GROUP GROUP OTHER CONSOLIDATED
------------ -------------- -------------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30,
1999
Net sales to unaffiliated
customers.............. $57,475 $ 84,623 $ 7,463 $ 2,480 $ -- $152,041
======= ======== ======= ======= ======= ========
Gross profit............. $18,576 $ 37,822 $ 823 $ 1,267 $ -- $ 58,488
======= ======== ======= ======= ======= ========
Operating income
(loss)................. $ 9,544 $ 5,818 $ (633) $ 123 $(6,703) $ 8,149
======= ======== ======= ======= ======= ========
SIX MONTHS ENDED JUNE 30,
2000
Net sales to unaffiliated
customers.............. $54,650 $ 98,001 $ 8,588 $ 1,810 $ -- $163,049
======= ======== ======= ======= ======= ========
Gross profit............. $14,184 $ 43,023 $ 1,372 $ (241) $ -- $ 58,338
======= ======== ======= ======= ======= ========
Operating income
(loss)................. $ 5,191 $ 8,925 $ (122) $(4,704) $(9,607) $ (317)
======= ======== ======= ======= ======= ========
Identifiable assets at
June 30, 2000.......... $99,783 $159,300 $10,762 $ 4,907 $ -- $274,752
======= ======== ======= ======= ======= ========
Corporate assets......... 15,919
--------
Total assets at June
30, 2000.......... $290,671
========
</TABLE>

(11) DISCONTINUED OPERATIONS SUBSEQUENTLY RETAINED --

On April 28, 1999, the Board of Directors approved a formal plan to
discontinue operations of the Voice and Data Communications Group pursuant
to several outside expressions of interest to purchase this business. In
May 2000, Kroll-O'Gara terminated all then pending negotiations to sell
this business due to an inability to agree to terms of a sale with outside
third parties. Accordingly,

F-55
<PAGE> 201
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

the results of operations of the Voice and Data Communications Group for
all prior periods have been reclassified from discontinued operations to
continuing operations.

Kroll-O'Gara had not anticipated a loss on disposal of the Voice and Data
Communications Group and, accordingly, had not recorded any estimated loss
on disposal. Kroll-O'Gara continues to monitor the potential for impairment
of the net assets of this Group and will record impairment reserves as
facts and circumstances warrant. Based on its most recent analysis,
Kroll-O'Gara believes that no impairment existed at June 30, 2000.

(12) SUBSEQUENT EVENTS --

(a) FAILED MERGER WITH BLACKSTONE -- On November 15, 1999, Kroll-O'Gara
announced that it had entered into a definitive agreement with
Blackstone Capital Partners III Merchant Banking Fund L.P. (Blackstone)
pursuant to which shares held by all Kroll-O'Gara shareholders, other
than certain members of management, would be acquired by Blackstone for
$18.00 per share in cash. On April 12, 2000, Kroll-O'Gara announced
that Blackstone had withdrawn its offer to acquire Kroll-O'Gara shares.
Costs associated with the failed recapitalization merger in the six
months ended June 30, 2000 were approximately $2.0 million ($0.09 per
diluted share) and consisted primarily of fees for attorneys,
accountants, travel and other related charges.

F-56
<PAGE> 202
THE KROLL-O'GARA COMPANY

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

On September 12, 2000, Kroll-O'Gara amended its existing credit
agreement, extending its $15.0 million temporary increase in the
revolving line of credit until January 1, 2001 (see Note 5). Interest
rates on the components of the revolving line of credit were increased
0.75%. Pursuant to this most recent amendment, certain of the financial
covenants and ratios in the credit agreement were waived or amended as
Kroll-O'Gara had not been in compliance with certain of these prior
covenants at June 30, 2000.

As described above, Kroll-O'Gara has entered into an agreement for the
separation of its principal business groups into two public companies.
Management of each of O'Gara and KRCS is currently in discussions with
banks to provide financing for each company subsequent to the
separation. Pending the separation, Kroll-O'Gara will require additional
sources of capital to supplement operating cash flow, either through
amending and increasing its credit facilities, through an equity
offering of one of its subsidiaries or both. In the absence of the
separation of the businesses, management is of the opinion that there
will be sufficient liquidity available from existing operations and
credit facilities, which can be supplemented, if necessary, with
additional secured or unsecured financing, to finance the continuing
operations of Kroll-O'Gara.

F-57
<PAGE> 203

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE KROLL-O'GARA COMPANY:

We have audited the accompanying combined balance sheets of THE O'GARA
COMPANY (Note 1) and subsidiaries as of December 31, 1998 and 1999 and the
related combined statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1999. 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.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of The O'Gara Company
and subsidiaries as of December 31, 1998 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

As explained in Note 2(q) to the combined financial statements, effective
in the first quarter of 1999, the Company changed its method of accounting for
costs of start-up activities.

Cincinnati, Ohio
September 14, 2000

F-58
<PAGE> 204

THE O'GARA COMPANY

COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999

<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 6,416,652 $ 3,395,566
Marketable securities..................................... 6,563,054 --
Trade accounts receivable, net of allowance for doubtful
accounts of approximately $509,510 and $968,749 in 1998
and 1999, respectively (Notes 2 and 4)................. 21,480,116 24,314,173
Related party receivables (Note 6)........................ 381,534 334,934
Costs and estimated earnings in excess of billings on
uncompleted contracts (Note 4)......................... 26,408,097 24,159,724
Inventories (Note 4)...................................... 18,607,062 21,194,072
Prepaid expenses and other................................ 4,515,479 5,026,544
Deferred tax asset (Note 5)............................... 1,118,830 1,743,947
------------ ------------
Total current assets.............................. 85,490,824 80,168,960
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost (Notes 2 and 7):
Land...................................................... 1,661,900 1,970,094
Buildings and improvements................................ 6,342,553 6,630,563
Leasehold improvements.................................... 656,189 1,109,421
Furniture and fixtures.................................... 3,384,034 6,243,522
Machinery and equipment................................... 6,974,724 12,521,171
Construction-in-progress.................................. 1,427,363 --
------------ ------------
20,446,763 28,474,771
Less-accumulated depreciation............................. (7,129,220) (9,315,376)
------------ ------------
13,317,543 19,159,395
------------ ------------
COSTS IN EXCESS OF ASSETS ACQUIRED AND OTHER INTANGIBLE
ASSETS, net of accumulated amortization of $1,694,922 and
$3,192,086 in 1998 and 1999, respectively (Notes 2 and
3)........................................................ 18,319,997 17,195,049
OTHER ASSETS:
Other assets (Note 4)..................................... 3,114,799 1,318,206
Deferred tax asset (Note 5)............................... 559,051 430,729
------------ ------------
21,993,847 18,943,984
------------ ------------
$120,802,214 $118,272,339
============ ============
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined balance sheets.
F-59
<PAGE> 205

THE O'GARA COMPANY

COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999

<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt due to third-parties
(Note 7)............................................... $ 1,336,449 $ 2,245,927
Current portion of allocated Kroll-O'Gara long-term
debt................................................... -- 9,454,702
Trade accounts payable.................................... 20,653,939 22,588,044
Related party payables (Note 6)........................... 341,358 --
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 182,656 360,725
Accrued liabilities (Note 4).............................. 10,408,563 7,680,234
Income taxes currently payable (Note 5)................... 599,248 --
Customer deposits......................................... 2,283,312 1,395,984
------------ ------------
Total current liabilities......................... 35,805,525 43,725,616

OTHER LONG-TERM LIABILITIES................................. 406,606 521,787

ALLOCATION OF KROLL-O'GARA LONG-TERM DEBT................... 13,560,212 15,072,798

LONG-TERM DEBT DUE TO THIRD PARTIES, net of current portion
(Note 7).................................................. 2,258,976 853,639
------------ ------------
Total liabilities................................. 52,031,319 60,173,840
------------ ------------

COMMITMENTS AND CONTINGENCIES (Notes 8 and 11)
SHAREHOLDER'S EQUITY (Note 1 and 4(e)):
Advances from Kroll-O'Gara, net........................... 70,926,669 58,868,241
Deferred compensation (Note 10)........................... (1,113,936) (1,030,079)
Accumulated other comprehensive income (loss)............. (1,041,838) 260,337
------------ ------------
Total shareholder's equity........................ 68,770,895 58,098,499
------------ ------------
$120,802,214 $118,272,339
============ ============
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined balance sheets.
F-60
<PAGE> 206

THE O'GARA COMPANY

COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES........................................ $100,738,987 $131,690,342 $118,507,042
COST OF SALES.................................... 72,383,397 95,290,444 83,619,864
------------ ------------ ------------
Gross profit................................ 28,355,590 36,399,898 34,887,178
OPERATING EXPENSES:
Selling and marketing.......................... 6,523,927 7,643,386 8,854,226
General and administrative..................... 10,144,436 13,094,713 20,583,388
Restructuring charge (Note 4).................. -- -- 291,757
Failed merger related costs (Note 2(s))........ -- -- 703,819
Merger related costs (Note 3).................. 2,932,674 1,136,554 145,429
------------ ------------ ------------
Operating expenses.......................... 19,601,037 21,874,653 30,578,619
------------ ------------ ------------
Operating income............................ 8,754,553 14,525,245 4,308,559
OTHER INCOME (EXPENSE):
Interest expense............................... (2,967,936) (2,415,307) (1,994,705)
Interest income................................ 535 600,325 86,826
Other, net..................................... (249,001) (547,593) (244,391)
------------ ------------ ------------
Income before minority interest, provision
for income taxes, extraordinary item and
cumulative effect of change in accounting
principle................................. 5,538,151 12,162,670 2,156,289
Minority interest.............................. 156,223 -- --
------------ ------------ ------------
Income before provision for income taxes,
extraordinary item and cumulative effect
of change in accounting principle......... 5,381,928 12,162,670 2,156,289
Provision for income taxes..................... 2,821,709 5,015,853 2,303,377
------------ ------------ ------------
Income (loss) before extraordinary item and
cumulative effect of change in accounting
principle................................. 2,560,219 7,146,817 (147,088)
Extraordinary loss, net of applicable tax
benefit of $129,250 (Note 2(r))............. (193,875) -- --
------------ ------------ ------------
Income (loss) before cumulative effect of
change in accounting principle............ 2,366,344 7,146,817 (147,088)
Cumulative effect of change in accounting
principle, net of applicable tax benefit of
$408,000 in 1999 (Note 2(q))................ -- -- (778,041)
------------ ------------ ------------
Net income (loss)...................... $ 2,366,344 $ 7,146,817 $ (925,129)
============ ============ ============
Earnings (Loss) Per Share (Note 2(n)):
Basic and diluted.............................. $ 0.39 $ 1.19 $ (0.15)
============ ============ ============
Weighted Average Shares Outstanding (Note 2 (n)):
Basic and diluted.............................. 6,000,000 6,000,000 6,000,000
============ ============ ============
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-61
<PAGE> 207

THE O'GARA COMPANY

COMBINED STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE ADVANCES FROM DEFERRED COMPREHENSIVE
INCOME (LOSS) KROLL-O'GARA COMPENSATION INCOME (LOSS) TOTAL
------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996......... $ 12,793,403 $ -- $ (44,772) $ 12,748,631
Comprehensive income:
Net income....................... $2,366,344 2,366,344 -- -- 2,366,344
----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of
$335,000 tax benefit...... (502,634) -- -- -- --
----------
Other comprehensive loss..... (502,634) -- -- (502,634) (502,634)
----------
Comprehensive income...... $1,863,710 -- -- -- --
==========
Change in advances from
Kroll-O'Gara..................... 12,086,918 -- -- 12,086,918
------------ ----------- ----------- ------------
BALANCE, December 31, 1997......... 27,246,665 -- (547,406) 26,699,259
Comprehensive income:
Net income....................... $7,146,817 7,146,817 -- -- 7,146,817
----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of
$330,000 tax benefit...... (494,432) -- -- -- --
----------
Other comprehensive loss..... (494,432) -- --
----------
Comprehensive income...... $6,652,385 -- -- (494,432) (494,432)
==========
Change in advances from
Kroll-O'Gara..................... 35,341,091 -- -- 35,341,091
Deferred compensation related to
stock options of Kroll-O'Gara
(Note 10)........................ 1,192,096 (1,113,936) -- 78,160
------------ ----------- ----------- ------------
BALANCE, December 31, 1998......... 70,926,669 (1,113,936) (1,041,838) 68,770,895
Comprehensive income (loss):
Net loss......................... $ (925,129) (925,129) -- -- (925,129)
----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of
$868,000 tax provision.... 1,302,175 -- -- -- --
----------
Other comprehensive income... 1,302,175 -- -- 1,302,175 1,302,175
----------
Comprehensive income...... $ 377,046 -- -- -- --
==========
Change in advances from
Kroll-O'Gara..................... (11,546,894) -- -- (11,546,894)
Deferred compensation related to
restricted stock of Kroll-O'Gara
(Note 10)........................ 413,595 83,857 -- 497,452
------------ ----------- ----------- ------------
BALANCE, December 31, 1999......... $ 58,868,241 $(1,030,079) $ 260,337 $ 58,098,499
============ =========== =========== ============
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-62
<PAGE> 208

THE O'GARA COMPANY

COMBINED STATEMENTS OF CASH FLOWS (NOTE 14)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $ 2,366,344 $ 7,146,817 $ (925,129)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operations --
Depreciation and amortization................ 1,902,748 2,431,877 3,683,320
Bad debt expense............................. 582,377 337,203 1,144,722
Share in net income of joint ventures........ (121,650) -- --
Noncash compensation expense................. -- 78,160 497,452
Change in assets and liabilities, net of effects
of acquisitions --
Receivables-trade and unbilled............... (4,786,333) (6,859,225) (3,978,779)
Costs and estimated earnings in excess of
billings on uncompleted contracts......... 3,290,709 (14,510,296) 2,248,373
Inventories, prepaid expenses and other
assets.................................... (6,536,340) (5,048,018) (1,673,698)
Accounts payable and income taxes currently
payable................................... 4,365,566 2,462,800 1,334,857
Billings in excess of costs and estimated
earnings on uncompleted contracts......... (801,365) (68,214) 178,069
Amounts due to/from related parties.......... (28,162) (158,862) (294,758)
Deferred taxes............................... (926,239) (751,642) (496,795)
Accrued liabilities, long-term liabilities
and customer deposits..................... (916,387) 3,514,132 (3,500,476)
------------ ------------ ------------
Net cash used in operating activities..... (1,608,732) (11,425,268) (1,782,842)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net... (3,211,995) (4,051,921) (8,028,008)
Acquisitions, net of cash acquired (Note 3)....... (8,103,948) (3,200,000) --
Sale (purchases) of marketable securities, net.... -- (6,563,054) 6,563,054
------------ ------------ ------------
Net cash used in investing activities..... (11,315,943) (13,814,975) (1,464,954)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayments of) allocated
Kroll-O'Gara long-term debt.................... 20,812,083 (5,247,473) 10,967,288
Proceeds from third party debt.................... 278,979 1,066,585 --
Payments of third party debt...................... (797,658) (609,074) (495,859)
Increase (decrease) in advances from
Kroll-O'Gara................................... 4,184,942 34,451,091 (11,546,894)
Foreign currency translation...................... (473,947) (581,551) 1,481,562
Net repayments under revolving lines of credit.... (9,376,835) (559,112) --
------------ ------------ ------------
Net cash provided by financing
activities.............................. 14,627,564 28,520,466 406,097
------------ ------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS........... 1,702,889 3,280,223 (2,841,699)
Effects of foreign currency exchange rates on cash
and cash equivalents.............................. (28,687) 87,119 (179,387)
CASH AND CASH EQUIVALENTS, beginning of year........ 1,375,108 3,049,310 6,416,652
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of year.............. $ 3,049,310 $ 6,416,652 $ 3,395,566
============ ============ ============
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-63
<PAGE> 209

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

(1) BASIS OF PRESENTATION --

The O'Gara Company (O'Gara or the Company) is a wholly-owned holding
company subsidiary of The Kroll-O'Gara Company (Kroll-O'Gara).

In April 2000, Kroll-O'Gara decided to explore the split-up of its
principal businesses into two independent public companies; O'Gara is a
newly incorporated company organized in preparation for the split-up. Under
an agreement and plan of reorganization and dissolution of Kroll-O'Gara
(which was executed effective September 8, 2000), adopted by Kroll-O'Gara's
Board of Directors on August 30, 2000, the completion of which is subject
to a number of conditions including the receipt of a favorable tax ruling
and the approval by Kroll-O'Gara's shareholders, O'Gara will receive
substantially all of the assets and liabilities of Kroll-O'Gara's Security
Products and Services Group, and 60% of Kroll-O'Gara's ownership interest
in the common stock of the entity comprising its Information Security
Group, as well as a portion of Kroll-O'Gara's assets and liabilities that
are not attributable to a particular business group. The remaining business
of Kroll-O'Gara, primarily the Investigations and Intelligence Group, the
Voice and Data Communications Group and 40% of Kroll-O'Gara's ownership
interest in the common stock of the entity comprising the Information
Security Group, as well as the other assets and liabilities that are not
attributable to a particular business group, will be transferred to and
assumed by another newly incorporated company, Kroll Risk Consulting
Services, Inc. (KRCS). After these transfers, certain management
shareholders of Kroll-O'Gara will exchange all of their shares of
Kroll-O'Gara common stock for shares of O'Gara common stock and other
management shareholders of Kroll-O'Gara will exchange all their shares of
Kroll-O'Gara common stock for shares of KRCS common stock. Kroll-O'Gara
then will distribute, on a pro rata basis, all remaining shares of O'Gara
common stock and KRCS common stock held by it to the remaining holders of
Kroll-O'Gara common stock. The exchanging management shareholders will not
participate in this distribution. Concurrent with the completion of these
transactions, O'Gara and KRCS will become separate publicly-traded
companies. Subsequent to the reorganization and split-up, Kroll-O'Gara will
be dissolved.

As part of the reorganization and split-up, Kroll-O'Gara will incur
approximately $2.8 million (net of tax benefit of $1.9 million) of charges
for the write off of certain intangibles and unamortized financing fees,
debt prepayment fees and compensation costs related to accelerated vesting
of stock option plans. KRCS and O'Gara have agreed to split these charges
on an agreed-upon basis.

The accompanying combined financial statements are presented on a carve-out
basis and include the historical results of operations and assets and
liabilities allocated to O'Gara, prior to the effects of the
reorganization, which includes most of the businesses that operate in
Kroll-O'Gara's Security Products and Services Group as well as 100% of the
business that operates in Kroll-O'Gara's Information Security Group. These
combined financial statements have been prepared from Kroll-O'Gara's
historical accounting records.

The newly incorporated O'Gara has its origins in the former O'Gara Company,
a holding company for previously affiliated companies. A wholly owned
subsidiary of the former O'Gara Company merged with Kroll Holdings, Inc. in
December 1997 in a transaction accounted for as a pooling of interests. At
the time of that merger the former O'Gara Company changed its name to The
Kroll-O'Gara Company. See Note 3 for a further discussion of this merger
transaction.

F-64
<PAGE> 210
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

O'Gara was allocated $4.4 million and $5.4 million of overhead costs
related to Kroll-O'Gara's corporate administrative functions in 1998 and
1999, respectively. For the year ended December 31, 1997, the former O'Gara
Company operated on a standalone basis and, accordingly, no allocation of
overhead costs was recorded in the accompanying combined financial
statements. The allocations for 1998 and 1999 were based on a specific
identification of Kroll-O'Gara's administrative costs attributable to
O'Gara and, to the extent that such identification was not practicable, on
the basis of O'Gara's sales as a percentage of Kroll-O'Gara's sales. The
allocated costs are included in the various operating expense captions in
the accompanying combined statements of operations. Management believes
that such allocation methodology is reasonable. Subsequent to the split-up,
O'Gara will be required to manage these functions and will be responsible
for the expenses associated with the operations of a stand-alone public
company. Management does not believe these expenses on a stand-alone basis
will be significantly different from those reflected in the accompanying
statements of operations.

O'Gara's operations have been financed through its operating cash flows and
advances from Kroll-O'Gara. O'Gara's interest expense includes an
allocation of Kroll-O'Gara's interest expense based on Kroll-O'Gara's
weighted average interest rate applied to intercompany advances. Interest
expense allocated from Kroll-O'Gara was $2.0 million and $1.7 million for
the years ended December 31, 1998 and 1999, respectively. The historical
interest expense allocated to O'Gara may not be indicative of future
interest expense incurred. Income tax was calculated as if O'Gara had filed
separate income tax returns. O'Gara's future effective tax rate will depend
largely on its structure and tax strategies as a separate, independent
public company.

On September 14, 2000, Kroll-O'Gara amended its credit agreement to provide
for an extension of its temporary increase in its revolving line of credit
from $25.0 million to $40.0 million. Pursuant to the amended credit
agreement, the increase in the revolving line of credit is effective until
January 1, 2001, at which time all borrowings in excess of $25.0 million
must be repaid. The credit facility continues to provide for a letter of
credit facility of approximately $7.6 million. Both the letter of credit
facility and the line of credit mature on May 31, 2001. Advances under the
revolving line of credit bear interest at rates ranging from prime to prime
plus 0.75%, or, at Kroll-O'Gara's option, LIBOR plus 1.50% to LIBOR plus
2.50%, dependent upon a defined financial ratio.

Kroll-O'Gara's currently existing credit agreements include certain
financial covenant restrictions. Kroll-O'Gara was not in compliance with
certain of these covenants as of December 31, 1999 and as of June 30, 2000.
All such events of non-compliance have been subsequently amended or waived
by the lenders. Had the lenders not provided a waiver or amendment, all
amounts outstanding under the credit agreements would have been subject to
acceleration by the lenders. Pending the separation, Kroll-O'Gara will
require additional sources of capital to supplement operating cash flow,
either through amending and increasing its credit facilities, through an
equity offering of one of its subsidiaries or both. In the absence of the
separation of the businesses, management is of the opinion that there will
be sufficient liquidity available from existing operations and credit
facilities, which can be supplemented, if necessary, with additional
secured or unsecured financing, to finance the continuing operations of
Kroll-O'Gara.

F-65
<PAGE> 211
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In addition, O'Gara and KRCS will enter into agreements, principally a tax
sharing and cross-indemnification agreement, governing the relationships
between the separated businesses of Kroll-O'Gara after the split-up.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --

(a) NATURE OF OPERATIONS AND BASIS OF COMBINATION -- The accompanying
combined financial statements include the accounts of all
majority-owned subsidiaries involved in most of the businesses that
operate in Kroll-O'Gara's Security Products and Services Group as well
as the Information Security Group. The Security Products and Services
Group markets ballistic and blast protected vehicles and security
services. The Information Security Group offers information and
computer security services, including network and system security
review and repair. All material intercompany accounts and transactions
are eliminated. Investments in 20% to 50% owned entities are accounted
for on the equity method and investments in less than 20% owned
entities are accounted for on the cost method. Affiliated entities are
not included in the accompanying combined financial statements, and
include entities that are directly or indirectly owned by current
shareholders or former shareholders.

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
result in revisions to contract revenue. These revisions are recognized
when determined.

Revenue from information security services is recognized as the
services are performed. O'Gara records either billed or unbilled
accounts receivable based on case-by-case invoicing determinations.

(c) CASH AND CASH EQUIVALENTS -- Cash equivalents consist of all highly
liquid debt instruments with an initial maturity of three months or
less at the date of purchase. O'Gara invests excess cash in overnight
repurchase agreements, which are government collateralized securities.
The carrying amount of cash and cash equivalents approximates fair
value of those instruments due to their short maturity.

(d) MARKETABLE SECURITIES -- Pursuant to the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115), O'Gara must
classify its debt and marketable securities as either trading,
available-for-sale or held-to-maturity. O'Gara's marketable security
investments consist largely of available-for-

F-66
<PAGE> 212
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

sale municipal obligations. These securities are valued at current
market value, which approximates cost.

Unrealized holding gains and losses, net of the related income tax
effect, on the available-for-sale securities are excluded from earnings
and are reported as a separate component of shareholders' equity until
realized. There were no such unrealized gains or losses as of December
31, 1997, 1998 and 1999.

(e) CONCENTRATIONS OF CREDIT RISK -- Financial instruments that subject
O'Gara to credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to accounts receivable are
limited by the number of clients that comprise O'Gara's client base,
along with the different industries and geographic regions in which
O'Gara's clients operate. O'Gara does not generally require collateral
or other security to support client receivables, although O'Gara does
require retainers, up-front deposits or irrevocable letters-of-credit
in certain situations. O'Gara has established an allowance for doubtful
accounts based upon facts surrounding the credit risk of specific
clients and past history. Management does not anticipate incurring
losses on its trade receivables in excess of established allowances.

<TABLE>
<S> <C>
Buildings and improvements................................. 5-40 years
Furniture and fixtures..................................... 4-10 years
Machinery and equipment.................................... 3-12 years
Leasehold improvements..................................... Life of lease
</TABLE>

(g) IMPAIRMENT OF LONG-LIVED ASSETS -- Pursuant to the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" (SFAS 121), long-lived assets, certain identifiable
intangibles and goodwill related to those assets must be reviewed for
impairment by asset group for which the lowest level of independent
cash flows can be identified. In accordance with this standard, O'Gara
periodically reviews the carrying value of these assets and impairments
are recognized when the expected undiscounted future cash flows are
less than the carrying amount of the asset. Based on its most recent
analysis, O'Gara believes no impairment existed at December 31, 1999.
However, it is possible, due to a change in circumstances, that
carrying values could become impaired in the future. Such impairment
could have a material effect on the results of operations in a
particular reporting period.

(h) COSTS IN EXCESS OF ASSETS ACQUIRED -- Costs in excess of assets
acquired represents the excess of the purchase cost over the fair value
of net assets acquired in a purchase business combination. Costs in
excess of assets acquired, net of accumulated amortization, as of
December 31, 1998 and 1999 were $16,867,312 and $15,911,000,
respectively. Amortization is recorded on a straight-line basis over
periods ranging from 15 to 30 years. Amortization of costs in excess of
assets acquired for the years ended December 31, 1997, 1998 and 1999
was $411,233, $641,673 and $1,058,549, respectively.

F-67
<PAGE> 213
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(i) OTHER INTANGIBLE ASSETS -- Other intangible assets, comprised mainly of
customer lists and non-compete agreements, are amortized on a
straight-line basis. Customer lists are amortized over a fifteen year
period and the non-compete agreements are amortized over the lives of
the respective agreements, which range from two and one-half years to
five years. Other intangible assets, net of accumulated amortization,
as of December 31, 1998 and 1999 were $1,452,685 and $1,284,049,
respectively. Amortization of other intangible assets for the years
ended December 31, 1997, 1998 and 1999 was $32,222, $468,631 and
$438,615, respectively.

(j) 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, with gains or losses resulting from translation included in a
separate component of shareholders' equity.

(k) USE OF ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States 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.

(l) RESEARCH AND DEVELOPMENT -- Research and development costs are expensed
as incurred. O'Gara incurred approximately $136,000, $537,000 and
$297,000 for the years ended December 31, 1997, 1998 and 1999,
respectively, for research and development. These costs are included in
general and administrative expenses in the accompanying combined
statements of operations.

(m) ADVERTISING -- O'Gara expenses the cost of advertising as incurred.
Advertising expenses for the years ended December 31, 1997, 1998 and
1999 were approximately $681,000, $1,327,000 and $1,508,000,
respectively.

(n) EARNINGS PER SHARE -- In 1997, O'Gara adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). In
accordance with SFAS 128, basic earnings per share are computed by
dividing net income by the weighted average number of shares of common
stock outstanding during the year. Diluted earnings per share are
computed by dividing net income by the weighted average number of
shares of common stock and common stock equivalents outstanding during
the year.

O'Gara is expected to be capitalized initially with 6.0 million shares
of outstanding common stock. This number of shares was assumed to be
outstanding for all periods presented. To date, no common stock
equivalents of O'Gara have been issued. Therefore, basic and diluted
earnings per share are the same.

F-68
<PAGE> 214
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Basic and diluted earnings per share based on income before
extraordinary item and cumulative effect of change in accounting
principle was $0.43 for the year ended December 31, 1997. The basic and
diluted per share impact of the extraordinary item was $0.03.

Basic and diluted loss per share based on loss before extraordinary
item and cumulative effect of change in accounting principle was $0.02
for the year ended December 31, 1999. The basic and diluted per share
impact of the cumulative effect of change in accounting principle was
$0.13.

(o) NEW ACCOUNTING PRONOUNCEMENTS -- In 1998, O'Gara adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130), which established standards for reporting and
displaying comprehensive income and its components in a financial
statement that is displayed with the same prominence as other financial
statements. O'Gara has chosen to disclose comprehensive income, which
encompasses net income and foreign currency translation adjustments in
the combined statements of shareholders' equity. Prior years have been
restated to conform to the SFAS 130 requirements. The accumulated other
comprehensive income (loss) balances of ($0.5) million, ($1.0) million
and $0.3 million at December 31, 1997, 1998 and 1999, respectively,
consisted entirely of foreign currency translation adjustments.

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133
establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either
an asset or liability measured at its fair value. SFAS 133 requires
that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. SFAS 133,
as amended, is effective for fiscal years beginning after June 15,
2000. O'Gara has several forward contracts in place in association with
demand notes from one of its subsidiaries. These instruments currently
qualify for hedge accounting. O'Gara has not yet quantified the impact
of adopting SFAS 133 on its financial statements and has not determined
the timing of or method of adoption of SFAS 133. However, SFAS 133
could increase volatility in earnings and other comprehensive income.

In March 2000, the FASB issued Financial Accounting Standards Board
Interpretation No. 44 ("Interpretation No. 44"), "Accounting for
Certain Transactions Involving Stock Compensation -- an interpretation
of APB Opinion 25." Interpretation No. 44 is effective July 1, 2000.
Interpretation No. 44 clarifies the application of APB Opinion 25 for
certain matters, specifically (a) the definition of an employee for
purposes of applying APB Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. Management does not
anticipate that the adoption of Interpretation No. 44 will have a
material impact on O'Gara's financial position or results of
operations.

(p) STOCK-BASED COMPENSATION -- O'Gara has elected to account for the cost
of its employee stock options and other forms of employee stock-based
compensation plans utilizing the intrinsic

F-69
<PAGE> 215
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

value method prescribed in Accounting Principles Board Opinion No. 25
(APB 25) as allowed by Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS 123). APB 25
requires compensation cost for stock-based compensation plans to be
recognized based on the difference, if any, between the fair market
value of the stock on the date of grant and the option exercise price.
SFAS 123 established a fair value-based method of accounting for
compensation cost related to stock options and other forms of
stock-based compensation plans. SFAS 123 allows an entity to continue
to measure compensation cost using the principles of APB 25 if certain
pro forma disclosures are made. The pro forma disclosures required by
SFAS 123 are presented in Note 10(c).

(q) CHANGE IN ACCOUNTING PRINCIPLE -- In April 1998, the American Institute
of Certified Public Accountants released Statement of Position (SOP)
98-5 "Reporting on the Cost of Start-Up Activities." The SOP requires
costs of start-up activities, including preoperating costs,
organization costs and other start-up costs, to be expensed as
incurred. O'Gara's former practice was to capitalize certain of these
expenses and amortize them over periods ranging from one to five years.
Included in the accompanying December 31, 1998 combined balance sheet
is approximately $1.2 million of preoperating, organization and
start-up costs which would have been expensed had this statement
already been implemented. O'Gara adopted the provisions of this
statement in the first quarter of fiscal 1999 and recorded a cumulative
effect of a change in accounting principle of $0.8 million, net of a
tax benefit of $0.4 million.

(r) EXTRAORDINARY LOSS -- In connection with a refinancing in 1997 of
certain long-term debt, O'Gara fully amortized the remaining deferred
financing costs from a previous credit agreement, resulting in an
extraordinary charge to net income of $0.2 million, net of a tax
benefit of $0.1 million.

(s) FAILED MERGER RELATED COSTS -- On November 15, 1999 Kroll-O'Gara
announced that it had entered into a definitive agreement with
Blackstone Capital Partners III Merchant Banking Fund L.P. (Blackstone)
pursuant to which shares held by all Kroll-O'Gara shareholders, other
than certain members of management, would be acquired by Blackstone. On
April 12, 2000, Kroll-O'Gara announced that Blackstone had withdrawn
its offer to acquire Kroll-O'Gara shares. Costs allocated to O'Gara
associated with the failed merger through December 31, 1999 were
approximately $0.7 million ($0.4 million after taxes, or $0.07 per
diluted share) and consisted primarily of fees for attorneys,
accountants, travel and other related charges. O'Gara anticipates
additional expenses will be incurred in fiscal 2000.

(t) DERIVATIVE FINANCIAL INSTRUMENTS -- Financial instruments in the form
of foreign currency exchange contracts are utilized by O'Gara to hedge
its exposure to movements in foreign currency exchange rates. O'Gara
does not hold or issue derivative financial instruments for trading
purposes. Gains and losses on foreign exchange contracts are deferred
and amortized as an adjustment to the cumulative foreign currency
translation adjustment component of equity over the terms of the
agreements in accordance with hedge accounting standards. The fair
value of foreign currency exchange contracts is not recognized in the
combined financial statements since they are accounted for as hedges.

(u) RECLASSIFICATIONS -- Certain reclassifications have been reflected in
1997 and 1998 to conform with the current period presentation.

F-70
<PAGE> 216
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(3) MERGERS AND ACQUISITIONS --

Kroll-O'Gara has completed numerous business combinations in the Security
Products and Services Group and the Information Security Group in the
periods presented. The transactions were accounted for as both purchase
business combinations and pooling of interests business combinations as
follows:

(a) POOLING OF INTERESTS TRANSACTIONS -- In December 1997, a wholly owned
subsidiary of the former O'Gara Company was merged with and into Kroll
Holdings, Inc. (Kroll). Effective upon the consummation of the merger
with Kroll, each then issued and outstanding share of Kroll common
stock, including shares subject to issuance under Kroll stock option
plans, were converted into shares, or options to acquire shares, of
common stock of the former O'Gara Company and the Company changed its
name to The Kroll-O'Gara Company. The merger constituted a tax-free
reorganization and was accounted for as a pooling of interests.

In connection with this merger, O'Gara recorded, in the fourth quarter
of 1997, a charge to operating expenses of approximately $2.9 million
($2.6 million after taxes, or $0.43 per diluted share) for direct and
other merger-related costs pertaining to the transaction. Merger
transaction costs were nonrecurring and consisted primarily of fees for
investment bankers, attorneys, accountants, financial printing, travel
and other related charges.

In December 1998, a wholly owned subsidiary of Kroll-O'Gara was merged
with and into Securify Inc. (Securify). Effective upon the consummation
of the merger, all of the outstanding preferred and common stock of
Securify was converted to shares of Kroll-O'Gara's common stock. In
addition, outstanding employee stock options of Securify were converted
at the same exchange factor as Securify common stock into options to
purchase 179,877 shares of Kroll-O'Gara common stock. Effective with
the consummation of the merger, Kroll-O'Gara created the Information
Security Group and Securify's results of operation and financial
position are reported in this group.

In 1998, Kroll-O'Gara allocated to O'Gara in the fourth quarter, a
charge to operating expenses of approximately $1.1 million ($0.8
million after taxes, or $0.13 per diluted share) for direct and other
merger and integration related costs. Merger transaction costs were
non-recurring and consisted primarily of fees for investment bankers,
attorneys, accountants, financial printing, travel and other related
charges.

In 1999, Kroll-O'Gara allocated to O'Gara a charge to operating
expenses of approximately $0.1 million for other merger and integration
costs related primarily to the Securify merger completed in the fourth
quarter of 1998.

(b) PURCHASE TRANSACTIONS -- Kroll-O'Gara completed three acquisitions in
1997 that were accounted for as purchase business combinations and were
included in the Security Products and Services Group. The aggregate
purchase price of these three acquisitions amounted to approximately
$19.5 million and consisted of $11.7 million in cash, $1.2 million in
seller-provided financing and 583,572 shares of Kroll-O'Gara common
stock (valued at approximately $6.6 million or an average of $11.31 per
share). In connection with these acquisitions, the Company entered into
various employment and non-compete agreements with officers and key

F-71
<PAGE> 217
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

employees of the acquired companies with varying terms and conditions.
The results of operations of the acquired businesses are included in
the combined financial statements from the respective effective dates
of acquisition. The resulting goodwill from these transactions is being
amortized over periods ranging from fifteen to thirty years. In
addition to these 1997 acquisitions, Kroll-O'Gara also exercised its
option to acquire the minority interest in its O'Gara Brazilian
subsidiary for approximately 69,565 shares of common stock valued at
approximately $1.2 million.

Kroll-O'Gara made one significant acquisition in 1997 which is included
above. In February 1997, Labbe, S.A. (Labbe), a Company located in
France specializing in vehicle armoring systems, was acquired for
approximately $14.2 million, consisting of $10.7 million in cash and
376,597 shares of Kroll-O'Gara's common stock valued at approximately
$3.5 million or $9.29 per share. For accounting purposes, the
acquisition was effective on January 1, 1997 and results of operations
of Labbe are included in the combined financial statements of O'Gara
from that date forward.

Kroll-O'Gara completed one acquisition in the Security Products and
Services Group in 1998 that was accounted for as a purchase business
combination. In September 1998, Kroll-O'Gara, through its O'Gara-Hess &
Eisenhardt de Columbia (OHE-Columbia) subsidiary, completed the
acquisition of the assets of Protec, S.A., headquartered in Bogota,
Colombia, which specializes in vehicle armoring systems and
manufacturing bullet and smash resistant glass for its own use and for
sale to third parties. OHE-Columbia has been included in the Security
Products and Services Group. The purchase price of this acquisition
amounted to approximately $4.1 million and consisted of $3.2 million in
cash and 38,788 shares of Kroll-O'Gara common stock (valued at
approximately $0.9 million or an average of $22.95 per share). For
accounting purposes, the acquisition was effective on October 1, 1998
and the results of operations of OHE-Columbia are included in the
combined financial statements from that date forward. The resulting
goodwill from this transaction is being amortized over a 20 year
period.

In connection with the 1997 and 1998 purchase acquisitions, the
original assets acquired and liabilities assumed were as follows
(dollars in thousands):

<TABLE>
<CAPTION>
OTHER 1997
LABBE ACQUISITIONS PROTEC
-------- ------------ -------
<S> <C> <C> <C>
FAIR VALUE OF ASSETS ACQUIRED INCLUDING:
Cash............................... $ 3,501 $ 125 $ --
Accounts receivable................ 4,689 242 --
Inventories........................ 3,392 553 --
Other current assets............... 316 11 75
Property, plant and equipment...... 3,360 298 311
Other non-current assets........... 2,357 4 --
Costs in excess of assets acquired
and other intangible assets...... 7,802 5,348 3,917
-------- ------- -------
25,417 6,581 4,303
</TABLE>

F-72
<PAGE> 218
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
OTHER 1997
LABBE ACQUISITIONS PROTEC
-------- ------------ -------
<S> <C> <C> <C>
Less: Cash paid for net assets..... (10,730) (1,000) (3,200)
Fair value of debt issued.......... -- (1,331) --
Fair value of Kroll-O'Gara stock
issued........................... (3,431) (3,178) (890)
-------- ------- -------
$ 11,256 $ 1,072 $ 213
======== ======= =======
LIABILITIES ASSUMED INCLUDING:
Liabilities assumed and acquisition
costs.............................. $ 9,287 $ 1,053 $ 99
Debt.................................. 1,969 19 114
-------- ------- -------
$ 11,256 $ 1,072 $ 213
======== ======= =======
</TABLE>

(4) BALANCE SHEET ACCOUNTS --

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
United States Military:
Billed receivables.......................... $ 3,225,664 $ 4,877,570
Costs and estimated earnings in excess of
billings on uncompleted contracts........ 21,042,185 13,827,929
----------- -----------
Total United States Military........ $24,267,849 $18,705,499
=========== ===========
Other contracts and receivables:
Billed receivables.......................... $18,254,452 $19,436,603
Costs and estimated earnings in excess of
billings on uncompleted contracts........ 5,365,912 10,331,795
----------- -----------
Total other contracts and
receivables....................... $23,620,364 $29,768,398
=========== ===========
Total trade accounts receivable, net.......... $21,480,116 $24,314,173
=========== ===========
Total costs and estimated earnings in excess
of billings on uncompleted contracts........ $26,408,097 $24,159,724
=========== ===========
</TABLE>

Costs and estimated earnings in excess of billings on uncompleted contracts
are net of $107,374,834 and $131,582,751 of progress billings to the United
States Military at December 31, 1998 and 1999, respectively.

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 180 days from the balance
sheet date as the contract is substantially completed. Amounts receivable
on other contracts are generally billed as shipments are made. It is
estimated that substantially all such amounts will be billed within one
year, although contract extensions may delay certain collections beyond one
year.

F-73
<PAGE> 219
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes activity in the allowance for doubtful accounts on
trade accounts receivable:

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO
BEGINNING OF COSTS AND BALANCE END
PERIOD EXPENSES DEDUCTIONS OF PERIOD
------------ ---------- ---------- --------------
<S> <C> <C> <C> <C>
Year ended December 31, 1997............ $149,253 $ 582,377 $ (74,376) $657,254
Year ended December 31, 1998............ 657,254 337,203 (484,947) 509,510
Year ended December 31, 1999............ 509,510 1,144,722 (685,483) 968,749
</TABLE>

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

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Raw materials................................. $ 7,102,009 $14,494,953
Vehicle costs and work-in-process............. 11,505,053 6,699,119
----------- -----------
$18,607,062 $21,194,072
=========== ===========
</TABLE>

The following summarizes activity in valuation reserves for inventory
obsolescence:

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO BALANCE
BEGINNING OF COSTS AND END OF
PERIOD EXPENSES DEDUCTIONS PERIOD
------------ ----------------- ---------- --------
<S> <C> <C> <C> <C>
Year ended December 31, 1997.............. $252,114 $112,000 $(23,782) $340,332
Year ended December 31, 1998.............. 340,332 9,668 -- 350,000
Year ended December 31, 1999.............. 350,000 116,752 -- 466,752
</TABLE>

F-74
<PAGE> 220
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(c) 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, as applicable. Other assets consist of
the following:

<TABLE>
<CAPTION>
USEFUL DECEMBER 31,
LIFE ------------------------
DESCRIPTION (YEARS) 1998 1999
----------- ----------- ---------- ----------
<S> <C> <C> <C>
Preoperating and start-up costs....... -- $1,185,574 $ --
Security deposits..................... -- 264,255 145,904
Long-term receivable.................. -- 380,000 --
Non-refundable deposit on an equipment
lease with a related party.......... 5 537,784 537,784
Deferred financing fees............... 7-30 514,729 460,719
Other long-term assets................ -- 366,096 411,941
---------- ----------
3,248,438 1,556,348
Less- accumulated amortization........ (133,639) (238,142)
---------- ----------
$3,114,799 $1,318,206
========== ==========
</TABLE>

Preoperating and start-up costs in 1998 included costs applicable to bids
in process which were deferred when management believed it was probable
that future contracts would be obtained. These costs were transferred to
contract costs when contracts were awarded or were expensed when the
contract award was no longer considered probable. Preoperating and start-up
costs also included certain costs incurred in connection with establishing
operations in new locations. In accordance with SOP 98-5, all such costs
were expensed in the first quarter of fiscal 1999 (See Note 2 (q)).

(d) ACCRUED LIABILITIES -- Accrued liabilities consist of the following at
December 31, 1998 and 1999:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
DESCRIPTION 1998 1999
----------- ----------- ----------
<S> <C> <C>
Payroll and related benefits................... $ 5,713,201 $3,784,935
Accrued professional fees...................... 655,628 529,972
Property, sales and other taxes payable........ 1,614,652 400,306
Accrued hedge contract settlement.............. 699,820 --
Accrued medical costs.......................... 192,666 332,394
Accrued interest............................... 168,342 128,252
Accrued warranty reserve....................... 451,773 442,597
Other accruals................................. 912,481 2,061,778
----------- ----------
$10,408,563 $7,680,234
=========== ==========
</TABLE>

(e) SHAREHOLDER'S EQUITY -- The combined advances from Kroll-O'Gara include
the respective contributed capital and retained earnings/deficit
accounts of the subsidiaries comprising the Security Products and
Services Group and the Information Security Group, in addition to
allocations made by Kroll-O'Gara to O'Gara. Included below in "Other
subsidiaries-retained

F-75
<PAGE> 221
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

deficit" as of December 31, 1998 and 1999 is approximately $9.3 million
and $11.1 million, respectively, of allocated corporate overhead
expenses. Included in "Other subsidiaries-advances from Kroll-O'Gara"
as of December 31, 1998 and 1999 is approximately $13.5 million and
$7.2 million, respectively, of allocated net corporate assets. The
components of equity are summarized as follows:

<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
O'Gara-Hess & Eisenhardt Armoring Co.
Contributed capital......................... $ 2,427,627 $ 2,427,627
Retained earnings........................... 12,443,149 18,005,640
Advances from Kroll-O'Gara.................. 19,502,881 13,149,269
----------- -----------
34,373,657 33,582,536
----------- -----------
Securify Inc.
Contributed capital......................... 6,889,001 6,889,001
Retained deficit............................ (2,061,261) (3,858,328)
Advances from Kroll-O'Gara.................. -- 678,119
----------- -----------
4,827,740 3,708,792
----------- -----------
Other subsidiaries
Contributed capital......................... -- --
Retained deficit............................ (5,483,578) (10,174,131)
Advances from Kroll-O'Gara.................. 37,208,850 31,751,044
----------- -----------
31,725,272 21,576,913
----------- -----------
Total............................... $70,926,669 $58,868,241
=========== ===========
</TABLE>

(f) RESTRUCTURING OF OPERATIONS -- In the first quarter of 1999, O'Gara
began implementation of a restructuring plan (the "Plan") to reduce
costs and improve operating efficiencies. The Plan was substantially
completed by the end of the second quarter of 1999. The total
non-recurring pre-tax restructuring charge recorded pursuant to the
Plan was approximately $0.3 million. Total payments or writeoffs made
pursuant to the Plan through December 31, 1999 were $0.3 million.
O'Gara does not expect to incur any other significant restructuring
charges in future periods related to this Plan. The principal element
of the restructuring plan was the elimination of approximately 55
employees. The primary components of the restructuring charge in 1999
were as follows:

<TABLE>
<CAPTION>
DESCRIPTION EXPENSE
----------- --------
<S> <C>
Severance and related costs................................. $195,095
Writedown of property, plant and equipment.................. 96,662
--------
$291,757
========
</TABLE>

(5) INCOME TAXES --

O'Gara accounts for income taxes under the liability method pursuant to
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under the liability method, deferred tax liabilities and assets are
determined based on the differences between the financial reporting and tax
bases of assets and liabilities using enacted tax rates.

F-76
<PAGE> 222
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

O'Gara is a wholly-owned subsidiary of Kroll-O'Gara and does not file an
individual tax return. Accordingly, for purposes of these separate combined
financial statements, O'Gara has computed deferred income tax assets and
liabilities using the separate return method as allowed by SFAS 109. Under
this method, the allocation of tax expense or tax benefit is based on what
O'Gara's current and deferred tax expense would have been had O'Gara filed
separate tax returns. This method also assumes that all net operating loss
carryforwards are available to be utilized by the respective subsidiaries.

O'Gara's provision for income taxes, excluding the cumulative effect of a
change in accounting principle and the extraordinary loss, for all periods
is summarized as follows:

<TABLE>
<CAPTION>
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Currently payable:
Federal.......................... $2,086,857 $3,225,141 $2,098,616
State and local.................. 368,269 569,142 370,344
Foreign.......................... 972,459 1,632,204 592,815
---------- ---------- ----------
3,427,585 5,426,487 3,061,775
---------- ---------- ----------
Deferred:
Federal.......................... (514,995) (349,039) (460,187)
State and local.................. (90,881) (61,595) (81,210)
Foreign.......................... -- -- (217,001)
---------- ---------- ----------
(605,876) (410,634) (758,398)
---------- ---------- ----------
$2,821,709 $5,015,853 $2,303,377
========== ========== ==========
</TABLE>

A reconciliation between the statutory federal income tax rate and the
effective tax rate is summarized as follows:

<TABLE>
<CAPTION>
1997 1998 1999
----------------- ----------------- ------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
---------- ---- ---------- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Provision for income
taxes at the federal
statutory rate......... $1,829,856 34.0% $4,135,308 34.0% $ 733,138 34.0%
State and local income
taxes, net of federal
benefit................ 339,435 6.3 571,796 4.7 269,532 12.5
Nondeductible expenses... 795,084 14.8 (199,811) (1.7) 476,670 22.1
Change in valuation
allowance.............. (504,962) (9.4) 107,206 0.9 661,620 30.7
Effect of foreign
(income) loss.......... 218,465 4.0 156,041 1.3 31,262 1.4
Other.................... 143,831 2.7 245,313 2.0 131,155 6.1
---------- ---- ---------- ---- ---------- -----
Provision for income
taxes............... $2,821,709 52.4% $5,015,853 41.2% $2,303,377 106.8%
========== ==== ========== ==== ========== =====
</TABLE>

F-77
<PAGE> 223
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The components of O'Gara's combined deferred income tax assets and
liabilities as of December 31 are summarized below:

<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts............... $ 94,847 $ 260,256
Depreciation and amortization................. 33,280 50,467
Net operating loss carryforwards.............. 606,466 1,268,086
Payroll and other benefits.................... 1,008,253 789,739
Other accruals................................ 522,891 439,823
Acquisition costs............................. 452,780 628,887
Other......................................... 112,206 521,239
---------- ----------
2,830,723 3,958,497
Valuation allowance........................... (492,657) (1,154,277)
---------- ----------
Net deferred tax assets.................... 2,338,066 2,804,220
---------- ----------
Deferred tax liabilities:
Percentage of completion on foreign
subsidiaries............................... (381,917) (201,148)
Foreign leasing transactions.................. (125,827) (147,146)
Other......................................... (152,441) (281,250)
---------- ----------
(660,185) (629,544)
---------- ----------
Net deferred tax asset.......................... $1,677,881 $2,174,676
========== ==========
</TABLE>

O'Gara has certain foreign and domestic net operating loss carryforwards,
which approximated $0.6 million and $1.3 million at December 31, 1998 and
1999, respectively. The foreign net operating loss carryforwards relate
primarily to Mexico and the Philippines. The carryforwards expire beginning
in 2001. A valuation allowance for all existing foreign carryforwards has
been provided as it is not more likely than not that the tax benefit will
be realized in the foreseeable future. Adjustments to the valuation
allowance, if any, will be recorded in the periods in which it is
determined the asset is realizable.

In connection with the reorganization and split-up, O'Gara has entered into
a tax sharing agreement with KRCS whereby each member of the consolidated
group for U.S. tax purposes is jointly and severally liable for the federal
liability of each other member of the consolidated group. Accordingly, for
any period in which either company was included in Kroll-O'Gara's
consolidated group, that company could be liable for any federal tax
liability that was incurred, but not discharged, by the other.

F-78
<PAGE> 224
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(6) RELATED PARTY TRANSACTIONS --

(a) SUMMARY OF RELATED PARTY TRANSACTIONS -- The following summarizes
transactions with related parties:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997 1998 1999
-------- ---------- -------
<S> <C> <C> <C>
Purchases
from Kroll-O'Gara Shareholder.......... $ -- $ 118,700 $90,350
from affiliated entities............... -- 1,325,410 --
Lease expense to affiliated entities..... 813,000 838,597 566,213
Commission expense from Kroll-O'Gara..... -- -- 40,000
Non-interest bearing advances to a
Kroll-O'Gara shareholder............... 172,779 482,541 52,588
Air charter fees included in offering or
merger costs........................... 576,000 566,000 --
</TABLE>

(b) BUILDING AND EQUIPMENT LEASES -- AFFILIATED ENTITIES -- Effective June
1, 1998, O'Gara reached an agreement to terminate the corporate
aircraft lease which originated in February 1995 with an affiliated
entity. The terms of the aircraft lease addendum provide O'Gara with a
future hourly discount from the normal commercial hourly rate in order
to amortize the remaining portion of existing lease deposits from the
original aircraft lease. Rental expense, including amortization
recognized, approximated $234,000, $292,000 and $82,000 for the years
ended December 31, 1997, 1998 and 1999, respectively. O'Gara also paid
this affiliated entity $576,000 in fiscal 1997 for usage of the
aircraft to consummate the merger with Kroll and included such amounts
in merger-related costs. O'Gara paid $296,000 in 1998 for usage of the
aircraft during the roadshow for a stock offering and included such
amount in stock issuance costs. O'Gara also paid $270,000 in fiscal
1998 for usage of the aircraft to consummate the merger with Securify
and included such amount in merger related costs. Management is of the
opinion that the hourly rate paid by O'Gara was equivalent to the rate
charged by the affiliated entity to other unrelated companies for
similar services and it was favorably comparable to rates charged by
another unrelated charter service for similar aircraft. As of December
31, 1998 and 1999, O'Gara had approximately $484,371 and $402,081,
respectively in unamortized lease deposits with this affiliated entity.

O'Gara is currently leasing various equipment from an affiliated entity
under various three year lease agreements. Rental expense approximated
$579,000, $547,000 and $484,000 for the years ended December 31, 1997,
1998 and 1999, respectively.

F-79
<PAGE> 225
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(7) LONG-TERM DEBT DUE TO THIRD PARTIES --

The components of long-term debt due to third parties are as follows at:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Economic Development Revenue Bonds, variable interest rate
approximating 85% of the bond equivalent yield of 13
week U.S. Treasury bills (not to exceed 12%), which
approximated 5.17% at December 31, 1999, payable in
scheduled installments through September 2016, subject
to optional tender by the bondholders and a
corresponding remarketing agreement, secured by certain
property, plant and equipment and a bank letter of
credit (Note 11)........................................ $ 1,357,224 $ 1,275,974
Notes payable to former shareholders of acquired
companies, interest at fixed rates ranging from 7% to
10%, payable in scheduled installments through July
1999.................................................... 912,424 250,000
Other notes payable, interest at 7% to 10.9% payable in
scheduled installments through September 2007, certain
notes secured by various equipment...................... 1,325,777 1,573,592
----------- -----------
3,595,425 3,099,566
Less -- current portion................................... (1,336,449) (2,245,927)
----------- -----------
$ 2,258,976 $ 853,639
=========== ===========
</TABLE>

Scheduled maturities of long-term debt at December 31, 1999 are as follows:

<TABLE>
<S> <C>
2000....................................................... $2,245,927
2001....................................................... 229,073
2002....................................................... 135,656
2003....................................................... 108,192
2004....................................................... 112,109
Thereafter................................................. 268,609
----------
$3,099,566
==========
</TABLE>

(8) OPERATING LEASES --

O'Gara leases office space and certain equipment and supplies under
agreements with terms from one to fifteen 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, 1999:

<TABLE>
<S> <C>
2000....................................................... $1,846,783
2001....................................................... 1,647,572
2002....................................................... 782,076
2003....................................................... 442,814
2004....................................................... 216,125
Thereafter................................................. 823,493
----------
$5,758,863
==========
</TABLE>

F-80
<PAGE> 226
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Rental expense charged against current operations amounted to approximately
$1,517,992, $1,257,418 and $1,836,662, for the years ended December 31,
1997, 1998 and 1999, respectively.

(9) DEFINED CONTRIBUTION PLAN --

O'Gara and its subsidiaries participate in a Kroll-O'Gara sponsored profit
sharing/401(k) plan covering substantially all employees. Contributions to
the plan are discretionary. The plan includes a matching contribution
whereby O'Gara will contribute a percentage of the amount a participant
contributes, limited to certain maximum amounts. Plan contribution expense
charged against current operations amounted to approximately $125,000 and
$185,000, for the years ended December 31, 1997 and 1999, respectively.
There was no contribution expense for the year ended December 31, 1998.

(10) EQUITY ARRANGEMENTS --

(a) STOCK OPTION PLANS -- O'Gara employees were granted stock options under
Kroll-O'Gara's 1996 stock option plan (the 1996 Plan). Options for
243,600, 60,500 and 311,100 shares were granted during 1997, 1998 and
1999, respectively. Options granted under the 1996 plan have been
granted at fair market value at the date of grant and are exercisable
over periods not exceeding ten years. Additionally, effective with the
merger with Securify, each outstanding Securify stock option was
converted at the exchange factor into options to purchase Kroll-O'Gara
common stock. After conversion, total stock options granted under the
previously existing Securify stock option plan in 1998 were 210,756. No
options were granted under the previously existing Securify stock
option plan in 1999.

In connection with stock options granted by Securify during the year
ended December 31, 1998, O'Gara recorded deferred compensation of
$1,192,096, representing the difference between the deemed value of the
common stock for accounting purposes and the option exercise price of
such options at the date of grant. This amount is presented as a
reduction of shareholders' equity, to be expensed ratably over the
vesting periods of the applicable options. Approximately $78,000 and
$298,000 was expensed in 1998 and 1999, respectively, with the balance
to be expensed ratably over the next three years as the options vest.
These options will, however, fully vest in connection with the
reorganization and split-up, resulting in an acceleration of the
remaining unrecognized compensation expense.

(b) RESTRICTED STOCK PLAN -- Effective August 12, 1998, Kroll-O'Gara
adopted a stock incentive plan (the 1998 Stock Incentive Plan) for
employees. There were no shares granted under the plan during 1998;
however, during fiscal 1999, 12,500 shares were granted under the plan
to O'Gara employees. In connection with the shares granted under the
Stock Incentive Plan in 1999, O'Gara recorded deferred compensation of
$413,595 representing the difference between the fair market value of
Kroll-O'Gara common stock on the date of grant and the purchase price
of the shares. This amount is presented as a reduction of shareholders'
equity, to be expensed ratably over the vesting periods of the
applicable grants. Approximately $199,000 was expensed in 1999, with
the balance to be expensed ratably through March 2002 as the grants
vest. However, the remaining grants will vest in full at the time of
the reorganization, resulting in an acceleration of the remaining
unrecognized compensation expense.

F-81
<PAGE> 227
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(c) STOCK BASED COMPENSATION DISCLOSURE -- SFAS 123 requires, at a minimum,
pro forma disclosures of expense for stock-based awards based on their
fair values. The pro forma amounts below are not necessarily
representative of the effects of stock-based awards on future pro forma
net income because the plans eventually adopted by O'Gara may differ
from Kroll-O'Gara stock option plans and accordingly (1) future grants
of employee stock options by O'Gara management may not be comparable to
awards made to employees while O'Gara was a part of Kroll-O'Gara, and
(2) the assumptions used to compute the fair value of any stock option
awards will be specific to O'Gara and, therefore, may not be comparable
to the Kroll-O'Gara assumptions used. If O'Gara had measured
compensation cost for the Kroll-O'Gara stock options granted to its
employees under the fair value method prescribed by SFAS 123, O'Gara's
net income (loss) for the years ended December 31, 1997, 1998 and 1999
would have been as follows:

<TABLE>
<CAPTION>
1997 1998 1999
---------- ---------- -----------
<S> <C> <C> <C>
Net income (loss):
As reported....................... $2,366,344 $7,146,817 $ (925,129)
Pro forma......................... $1,676,813 $6,518,404 $(2,167,758)
Diluted earnings (loss) per share:
As reported....................... $ 0.50 $ 1.52 $ (0.20)
Pro forma......................... $ 0.36 $ 1.39 $ (0.46)
</TABLE>

The fair value of these options is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted
average assumptions used by Kroll-O'Gara for grants in 1997, 1998 and
1999:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Dividend yield................... -- -- --
Expected volatility.............. 40.5% 41.4% 41.4%
Risk-free interest rate.......... 5.96%-6.76% 4.61%-5.67% 5.29%-5.44%
2.5-7.5
Expected lives................... 7.5 years years 7.5 years
</TABLE>

Option grants by Kroll-O'Gara to O'Gara employees during 1997 have a
weighted-average exercise price of $15.52, a weighted-average fair value
of $10.28 and remaining contractual lives, on a weighted-average basis,
of 9.4 years. The 271,256 options granted by Kroll-O'Gara to O'Gara
employees during 1998 have a weighted-average exercise price of $4.71, a
weighted-average fair value of $6.70 and contractual lives, on a
weighted-average basis, of 9.4 years. The 311,100 options granted by
Kroll-O'Gara to O'Gara employees during 1999 have a weighted-average
exercise price of $27.70, a weighted-average fair value of $14.80 and
contractual lives, on a weighted-average basis, of 9.2 years.

F-82
<PAGE> 228
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the status of Kroll-O'Gara stock options granted to O'Gara
employees at December 31, 1997, 1998 and 1999, and the change during the
years then ended is presented in the table below:

<TABLE>
<CAPTION>
1997 1998 1999
------------------ ------------------ ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning of
year............... 180,000 $ 5.79 381,449 $11.60 561,827 $ 9.24
Granted.............. 243,600 15.52 271,256 4.71 311,100 27.70
Exercised............ (4,200) 9.00 (88,378) 5.82 (63,906) 4.26
Forfeited/Expired/
Cancelled.......... (37,951) 9.46 (2,500) 17.50 (40,467) 22.10
------- ------ ------- ------ ------- -------
Outstanding, end of
year............... 381,449 $11.60 561,827 $ 9.24 768,554 $ 12.62
======= ====== ======= ====== ======= =======
Exercisable, end of
year............... 146,750 $ 6.16 351,777 $ 6.44 387,856 $ 8.77
======= ====== ======= ====== ======= =======
</TABLE>

Of the options outstanding at December 31, 1999, 135,396 options are
exercisable at prices per share ranging from $0.52 to $0.84 per share,
355,513 options are exercisable at prices per share ranging from $9.00
to $20.75 per share and 277,645 options are exercisable at prices per
share ranging from $26.94 to $34.88 per share. All options that were
outstanding but not yet exercisable at December 31, 1999 become fully
vested in connection with the reorganization and split-up.

Effective May 12, 2000, Kroll-O'Gara established a new stock option plan
(the 2000 Plan). Pursuant to this plan, O'Gara employees were granted
291,400 stock options on May 12, 2000. Additionally, effective May 12,
2000, Kroll-O'Gara amended the 1996 Plan and granted options to certain
O'Gara employees for 82,000 shares of common stock under that plan. By
their terms, none of the May 12, 2000 options vest as a result of the
reorganization and split-up.

The stock option share data described above has not been modified to
give effect to anticipated changes to the capital structure of O'Gara.

(11) COMMITMENTS AND CONTINGENCIES --

(a) LETTERS OF CREDIT -- Under the terms of the Economic Development
Revenue Bonds Agreement, O'Gara is required to maintain a letter of
credit supporting the debt. As of December 31, 1999, O'Gara's lender
was committed to providing this letter of credit through May 31, 2000;
the letter of credit was subsequently amended to extend its maturity
through May 31, 2001. As of December 31, 1999, O'Gara had an
outstanding letter of credit in the amount of $1,437,625.

At December 31, 1999, O'Gara had standby and purchase letters of
credit, issued on its behalf by its primary lender, in the aggregate
amount of $1,330,710.

F-83
<PAGE> 229
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(b) EMPLOYMENT AGREEMENTS -- Kroll-O'Gara and O'Gara have employment
agreements with O'Gara executive officers and management level
personnel with annual compensation ranging in value from $66,000 to
$350,000, over varying periods extending to April 2005. The agreements
generally provide for salary continuation in the event of termination
without cause for the greater of the remainder of the agreement or one
year. The agreements also contain certain non-competition clauses and
generally provide for one year's salary if the agreement is not
renewed.

As of December 31, 1999, the remaining aggregate commitment under these
employment agreements if all individuals were terminated without cause
was approximately $3.4 million. In conjunction with the reorganization
and split-up certain of these employment agreements will be terminated.

(c) LEGAL MATTERS -- Kroll-O'Gara has been named as a defendant in eight
lawsuits alleging that its officers and directors breached their
fiduciary duties in connection with the now terminated proposed
acquisition of a majority of Kroll-O'Gara's shares by a company formed
by Blackstone. Five of the lawsuits were filed in the Court of Common
Pleas, Butler County, Ohio, and were consolidated on November 29, 1999.
The remaining three lawsuits were filed in the United States District
Court for the Southern District of New York and were consolidated on
November 30, 1999. In amended complaints, plaintiffs allege that
Kroll-O'Gara's officers and directors breached their fiduciary duties
by deferring acquisitions, by negotiating an inadequate acquisition
price, by failing to engage in arms-length negotiations and by failing
to seek redress from Blackstone after Blackstone terminated the
proposed transaction. The plaintiffs also allege that Blackstone and
AIG aided and abetted the directors' and officers' alleged breaches of
fiduciary duties. The plaintiffs seek to bring their claims
derivatively on behalf of Kroll-O'Gara and also seek class
certification. On behalf of Kroll-O'Gara and putative plaintiff classes
of shareholders, they seek a declaration that the individual defendants
breached their fiduciary duty and seek damages and attorneys' fees in
an unspecified amount. The defendants believe that the allegations in
the complaints are wholly meritless and will defend the suits
vigorously. In accordance with the provisions of the reorganization
agreement, any liability and expenses relating to this matter will be
shared by KRCS and O'Gara on an approximate 58.5% and 41.5% basis,
respectively.

Kroll-O'Gara has learned that an individual has filed a qui tam suit,
which is under seal, against Kroll-O'Gara under the Civil False Claims
Act, 31 U.S.C. sec. 3729, alleging that Kroll-O'Gara and three of its
vendors knowingly violated their contractual requirements with the
Army. On January 18, 2000, an attorney for the U.S. Department of
Justice stated that it was his intention to recommend that the
Government intervene and take over the suit and estimated
Kroll-O'Gara's liability to be as high as $16,000,000 stemming from its
vendors' alleged failure to have certified welders. Though Kroll-O'Gara
strongly disputes the Government's contention and will vigorously
contest the Government's claims, in September 2000, O'Gara began
settlement negotiations with the U.S. Department of Justice. Management
currently believes a settlement of this matter is possible for
approximately $1.1 million and O'Gara will accrue this expense in the
third quarter of fiscal 2000. In accordance with the provisions of the
reorganization agreement, any liability and expenses relating to this
matter will be the responsibility of O'Gara.

F-84
<PAGE> 230
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In addition to the matters discussed above, O'Gara is involved in
litigation from time to time in the ordinary course of its business;
however, O'Gara does not believe that there is any currently pending or
threatened litigation, individually or in the aggregate, that is likely
to have a material adverse effect on its financial position, results of
operations or its cash flows.

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS --

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

O'Gara has entered into 5 foreign currency exchange contracts to
effectively hedge its exposure to certain foreign currency rate
fluctuations on demand loans to one subsidiary which are denominated in a
foreign currency. By virtue of these contracts, O'Gara has fixed the total
dollar amount which it will receive under the aforementioned subsidiary
loan through the maturity dates of the contracts regardless of the
fluctuations in the exchange rate. As of December 31, 1999, the total
notional amount of the contracts, which mature between January 2000 and
July 2001, was $14.8 million. O'Gara's cumulative foreign currency
translation adjustment component of shareholders' equity was decreased by
$1.0 million in 1998 and increased by $2.0 million in 1999 as a result of
these agreements.

O'Gara has estimated the fair value of its foreign exchange contracts based
on information obtained from the counterparty of the amount O'Gara would
receive at December 31, 1999 in order to terminate the agreements. As of
December 31, 1999, O'Gara would have received approximately $1.3 million
upon cancellation of all contracts.

(13) CUSTOMER AND SEGMENT DATA --

(a) SEGMENT DATA -- O'Gara operates in two business segments, the Security
Products and Services Group and the Information Security Group. The
following summarizes information about O'Gara's business segments:

<TABLE>
<CAPTION>
SECURITY
PRODUCTS
AND INFORMATION
SERVICES SECURITY
GROUP GROUP OTHER COMBINED
-------- ----------- ------- --------
<S> <C> <C> <C> <C>
1997
-----
Net sales to unaffiliated customers........... $100,739 $ -- $ -- $100,739
======== ======= ======= ========
Gross profit.................................. $ 28,356 $ -- $ -- $ 28,356
======== ======= ======= ========
Operating income.............................. $ 8,755 $ -- $ -- $ 8,755
======== ======= ======= ========
Identifiable assets at year-end............... $ 72,672 $ -- $ -- $ 72,672
======== ======= =======
Corporate assets.............................. 9,013
--------
Total assets at year-end...................... $ 81,685
========
</TABLE>

F-85
<PAGE> 231
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
SECURITY
PRODUCTS
AND INFORMATION
SERVICES SECURITY
GROUP GROUP OTHER COMBINED
-------- ----------- ------- --------
<S> <C> <C> <C> <C>
1998
-----
Net sales to unaffiliated customers........... $131,574 $ 116 $ -- $131,690
======== ======= ======= ========
Gross profit (loss)........................... $ 37,120 $ (395) $ (325) $ 36,400
======== ======= ======= ========
Operating income (loss)....................... $ 20,626 $(2,194) $(3,907) $ 14,525
======== ======= ======= ========
Identifiable assets at year-end............... $103,134 $ 4,288 $ -- $107,422
======== ======= =======
Corporate assets.............................. 13,380
--------
Total assets at year-end...................... $120,802
========
1999
-----
Net sales to unaffiliated customers........... $114,162 $ 4,345 $ -- $118,507
======== ======= ======= ========
Gross profit.................................. $ 32,587 $ 2,300 $ -- $ 34,887
======== ======= ======= ========
Operating income (loss)....................... $ 11,376 $(1,764) $(5,303) $ 4,309
======== ======= ======= ========
Identifiable assets at year-end............... $105,340 $ 3,359 $ -- $108,699
======== ======= =======
Corporate assets.............................. 9,573
--------
Total assets at year-end...................... $118,272
========
</TABLE>

Total net sales by segment includes sales to unaffiliated customers.
Intersegment sales are nominal. Operating income (loss) is total net
sales less operating expenses. Operating income (loss) does not include
the following items: interest expense, other expenses and income taxes.
The Other column includes allocated corporate overhead costs.
Depreciation expense and capital expenditures for each of O'Gara's
business segments for the years ended December 31, 1997, 1998 and 1999
are as follows:

<TABLE>
<CAPTION>
SECURITY
PRODUCTS
AND INFORMATION
SERVICES SECURITY
GROUP GROUP OTHER COMBINED
-------- ----------- ----- --------
<S> <C> <C> <C> <C>
1997
-----
Depreciation expense.............................. $1,427 $ -- $ -- $1,427
====== ====== ==== ======
Capital expenditures.............................. $3,149 $ -- $ -- $3,149
====== ====== ==== ======
1998
-----
Depreciation expense.............................. $1,282 $ 24 $ 6 $1,312
====== ====== ==== ======
Capital expenditures.............................. $3,427 $ 186 $313 $3,926
====== ====== ==== ======
1999
-----
Depreciation expense.............................. $2,188 $ 93 $143 $2,424
====== ====== ==== ======
Capital expenditures.............................. $5,611 $1,673 $590 $7,874
====== ====== ==== ======
</TABLE>

Identifiable assets by segment are those assets that are used in
O'Gara's operations in each segment. Corporate assets allocated to
O'Gara consist principally of cash, marketable

F-86
<PAGE> 232
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

securities, computer software, deferred tax assets, certain intangible
assets and certain prepaid expenses.

The following summarizes information about O'Gara's different geographic
areas:

<TABLE>
<CAPTION>
UNITED OTHER
STATES FRANCE FOREIGN ELIMINATIONS COMBINED
------- ------- ------- ------------ --------
<S> <C> <C> <C> <C> <C>
1997
-----
Net sales to unaffiliated customers... $62,015 $20,524 $18,200 $ -- $100,739
Intercompany.......................... 3,003 2,130 624 (5,757) --
------- ------- ------- ------- --------
Total net sales............. $65,018 $22,654 $18,824 $(5,757) $100,739
======= ======= ======= ======= ========
Operating income...................... $ 5,402 $ 1,813 $ 1,540 $ -- $ 8,755
======= ======= ======= ======= ========
Identifiable assets................... $34,117 $22,898 $15,657 $ -- $ 72,672
======= ======= ======= =======
Corporate assets...................... 9,013
--------
Total assets at year-end.... $ 81,685
========
1998
-----
Net sales to unaffiliated customers... $77,766 $26,164 $27,760 $ -- $131,690
Intercompany.......................... 898 637 186 (1,721) --
------- ------- ------- ------- --------
Total net sales............. $78,664 $26,801 $27,946 $(1,721) $131,690
======= ======= ======= ======= ========
Operating income...................... $ 8,524 $ 2,185 $ 3,816 $ -- $ 14,525
======= ======= ======= ======= ========
Identifiable assets................... $57,493 $28,106 $21,823 $ -- $107,422
======= ======= ======= =======
Corporate assets...................... 13,380
--------
Total assets at year-end.... $120,802
========
1999
-----
Net sales to unaffiliated customers... $69,446 $25,315 $23,746 $ -- $118,507
Intercompany.......................... 2,037 1,445 423 (3,905) --
------- ------- ------- ------- --------
Total net sales............. $71,483 $26,760 $24,169 $(3,905) $118,507
======= ======= ======= ======= ========
Operating income (loss)............... $ 4,104 $ 2,012 $(1,807) $ -- $ 4,309
======= ======= ======= ======= ========
Identifiable assets................... $63,683 $25,808 $19,208 $ -- $108,699
======= ======= ======= =======
Corporate assets...................... 9,573
--------
Total assets at year-end.... $118,272
========
</TABLE>

O'Gara accounts for transfers between geographic areas at cost plus a
proportionate share of operating profit.

F-87
<PAGE> 233
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes O'Gara's sales in the United States and foreign
locations:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Sales to unaffiliated customers:
U.S. Government.......................... $ 43,719 $ 62,059 $ 54,953
Other United States...................... 8,362 5,813 9,162
Middle East.............................. 5,887 3,998 1,618
Europe................................... 15,829 31,202 29,759
Central and South America................ 19,135 20,766 19,716
Other Foreign............................ 7,807 7,852 3,299
-------- -------- --------
$100,739 $131,690 $118,507
======== ======== ========
</TABLE>

Export sales by O'Gara's domestic operations were approximately 12%, 11%
and 4% of net sales for the years ended December 31, 1997, 1998 and
1999, respectively.

O'Gara is subject to audit and investigation by various agencies which
oversee contract performance in connection with O'Gara'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 may 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.

O'Gara has foreign operations and assets in Brazil, Colombia, France,
Italy, Mexico, Russia and the Philippines. In addition, O'Gara sells its
products and services in other foreign countries and has continued to
increase its level of international activity. Accordingly, O'Gara is
subject to various risks including, among others, foreign currency
restrictions, exchange rate fluctuations, government instability and
complexities of local laws and regulations.

(b) MAJOR CUSTOMERS -- During the years ended December 31, 1997, 1998 and
1999 sales in the Security Products and Services Group to the U.S.
Government approximated 43%, 47% and 46% of O'Gara's net sales,
respectively.

F-88
<PAGE> 234
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(14) SUPPLEMENTAL CASH FLOWS DISCLOSURES --

The following is a summary of cash paid related to certain items:

<TABLE>
<CAPTION>
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest.................. $2,951,794 $ 473,107 $ 212,277
========== ========== ==========
Cash paid for taxes..................... $2,599,000 $1,303,277 $2,455,459
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES:
Deferred compensation related to options
and restricted stock.................. $ -- $1,192,096 $ 413,595
========== ========== ==========
Fair value of Kroll-O'Gara stock issued
in connection with acquisition of
businesses............................ $6,608,485 $ 890,185 $ --
========== ========== ==========
Notes issued in connection with
acquisition of businesses............. $1,331,513 $ -- $ --
========== ========== ==========
Fair value of stock issued in connection
with acquisition of minority
interest.............................. $1,243,474 $ -- $ --
========== ========== ==========
</TABLE>

The supplemental cash flow disclosure information does not include
allocated interest and tax expense that was funded directly by
Kroll-O'Gara.

(15) SUBSEQUENT EVENT

In the third quarter of fiscal 2000, O'Gara began implementation of a plan
to reduce costs. O'Gara anticipates incurring a total non-recurring pre-tax
charge of less than $1.0 million in connection with this cost reduction
plan. The primary component of the restructuring charge is severance
related to the termination of employees.

F-89
<PAGE> 235

THE O'GARA COMPANY

COMBINED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents (Note 5)............................. $ 3,395 $ 2,597
Trade accounts receivable, net of allowance for doubtful
accounts of $969 and $750 at December 31, 1999 and June
30, 2000, respectively................................. 24,314 23,135
Related party receivables................................. 335 425
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 24,160 15,241
Inventories (Note 6)...................................... 21,194 26,787
Prepaid expenses and other................................ 5,027 3,998
Deferred tax asset........................................ 1,744 1,744
-------- --------
Total current assets.............................. 80,169 73,927
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land...................................................... 1,970 1,946
Buildings and improvements................................ 6,631 6,418
Leasehold improvements.................................... 1,109 1,057
Furniture and fixtures.................................... 6,243 5,847
Machinery and equipment................................... 12,521 15,296
-------- --------
28,474 30,564
Less: accumulated depreciation............................ (9,315) (10,746)
-------- --------
19,159 19,818
-------- --------
COSTS IN EXCESS OF ASSETS ACQUIRED AND OTHER INTANGIBLE
ASSETS, net of accumulated amortization of $3,192 and
$3,278 at December 31, 1999 and June 30, 2000,
respectively.............................................. 17,195 15,683
OTHER ASSETS:
Other assets.............................................. 1,318 1,169
Deferred tax asset........................................ 431 431
-------- --------
18,944 17,283
-------- --------
$118,272 $111,028
======== ========
</TABLE>

The accompanying notes are an integral part of these combined balance sheets.
F-90
<PAGE> 236

THE O'GARA COMPANY

COMBINED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt due to third-parties.... $ 2,246 $ 1,671
Current portion of allocated Kroll-O'Gara long-term
debt................................................... 9,455 15,652
Trade accounts payable.................................... 22,588 20,943
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 361 486
Accrued liabilities....................................... 7,680 6,584
Customer deposits......................................... 1,396 2,085
Income taxes currently payable............................ -- 10
-------- --------
Total current liabilities......................... 43,726 47,431
-------- --------

OTHER LONG-TERM LIABILITIES................................. 522 194

ALLOCATION OF KROLL-O'GARA LONG-TERM DEBT................... 15,072 15,725

LONG-TERM DEBT DUE TO THIRD PARTIES, net of current
portion................................................... 854 966
-------- --------
Total liabilities................................. 60,174 64,316
SHAREHOLDERS' EQUITY (Note 1):
Advances from Kroll-O'Gara................................ 58,868 50,653
Deferred compensation..................................... (1,030) (826)
Accumulated other comprehensive income (loss)............. 260 (3,115)
-------- --------
Total shareholders' equity........................ 58,098 46,712
-------- --------
$118,272 $111,028
======== ========
</TABLE>

The accompanying notes are an integral part of these combined balance sheets.
F-91
<PAGE> 237

THE O'GARA COMPANY

COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1999 2000
------------ ----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
NET SALES................................................... $ 56,962 $ 53,335
COST OF SALES............................................... 38,434 40,347
---------- ----------
Gross profit...................................... 18,528 12,988
OPERATING EXPENSES:
Selling and marketing expenses............................ 4,096 4,390
General and administrative expenses....................... 7,023 11,649
Separation expenses (Note 1).............................. -- 280
Failed merger expenses (Note 9)........................... -- 830
Merger expenses........................................... 36 --
Restructuring expense (Note 2)............................ 292 --
---------- ----------
Operating income (loss)........................... 7,081 (4,161)
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense.......................................... (799) (1,167)
Other, net................................................ 28 (134)
---------- ----------
Income (loss) before provision for income taxes
and cumulative effect of change in accounting
principle....................................... 6,310 (5,462)
Provision for income taxes................................ 2,454 327
---------- ----------
Income (loss) before cumulative effect of change
in accounting principle......................... 3,856 (5,789)
Cumulative effect of change in accounting principle, net
of applicable tax benefit of $408 (Note 4)............. (778) --
---------- ----------
Net income (loss)......................................... $ 3,078 $ (5,789)
========== ==========
PER SHARE DATA:
EARNINGS (LOSS) PER SHARE (Note 3)
Basic and diluted......................................... $ 0.51 $ (0.96)
========== ==========
Weighted Average Shares Outstanding............... 6,000,000 6,000,000
========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-92
<PAGE> 238

THE O'GARA COMPANY

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE PERIOD ENDED JUNE 30, 2000

The accompanying notes to combined financial statements are an integral part of
these combined statements.
F-93
<PAGE> 239

THE O'GARA COMPANY

COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1999 2000
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 3,078 $(5,789)
Adjustments to reconcile net income (loss) to net cash
used in operating activities --
Depreciation and amortization........................ 1,581 2,260
Bad debt expense..................................... 122 144
Noncash compensation expense......................... 245 204
Change in assets and liabilities, net of effects of
acquisitions and dispositions --
Receivables -- trade................................. 2,183 1,035
Costs and estimated earnings in excess of billings on
uncompleted contracts............................... 3,514 8,919
Inventories, prepaid expenses and other assets....... (7,040) (3,550)
Accounts payable and income taxes currently
payable............................................. (8,765) (1,670)
Billings in excess of costs and estimated earnings on
uncompleted contracts............................... (94) 125
Amounts due to/from related parties.................. (229) (56)
Customer deposits.................................... (1,037) 689
Accrued liabilities.................................. 6,610 (1,095)
Long-term liabilities................................ (343) (328)
--------- -------
Net cash provided by (used in) operating
activities...................................... (175) 888
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net........... (4,206) (2,272)
Sale of marketable securities............................. 6,032 --
--------- -------
Net cash provided by (used in) investing
activities...................................... 1,826 (2,272)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) from allocated Kroll-O'Gara
long-term debt......................................... 2,165 653
Payments of third party debt.............................. (285) (255)
Increase (decrease) in advances from Kroll-O'Gara......... (9,450) (2,426)
Net borrowings (repayments) under revolving lines of
credit................................................. 9,116 5,989
Foreign currency translation.............................. (2,435) (3,244)
--------- -------
Net cash provided by (used in) financing
activities...................................... (889) 717
--------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS............. 762 (667)
Effects of foreign currency exchange rates on cash.......... (132) (131)
--------- -------
CASH AND EQUIVALENTS, BEGINNING OF PERIOD................... 6,417 3,395
--------- -------
CASH AND EQUIVALENTS, END OF PERIOD......................... $ 7,047 $ 2,597
========= =======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-94
<PAGE> 240

THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

(1) GENERAL

The O'Gara Company (O'Gara or the Company) is a wholly-owned holding
company subsidiary of The Kroll-O'Gara Company (Kroll-O'Gara) and currently
consists of most of the businesses that operate in Kroll-O'Gara's Security
Products and Services Group as well as the business that operates in
Kroll-O'Gara's Information Security Group.

In April 2000, Kroll-O'Gara decided to reorganize itself and split into two
separate companies; O'Gara is a newly incorporated company organized in
preparation for the split-up. Under an agreement and plan of
reorganization, the completion of which is pending receipt of favorable tax
rulings and the approval by Kroll-O'Gara's shareholders, O'Gara will
receive substantially all of the assets and liabilities of the Security
Products and Services Group and a 60% ownership interest in the common
stock of the entity comprising the Information Security Group, as well as
certain other assets and liabilities that are not assignable to a
particular business group. The remaining business of Kroll-O'Gara,
primarily the Investigation and Intelligence Group, the Voice and Data
Communication Group and a 40% ownership interest in the common stock of the
entity comprising the Information Security Group, as well as the remaining
other assets and liabilities that are not assignable to a particular
business group, will be spun off into a newly incorporated company, Kroll
Risk Consulting Services (KRCS). Concurrent with the completion of the
reorganization and spin-off, O'Gara and KRCS will become separate
publicly-traded companies. Also, in conjunction with the reorganization and
spinoff, certain management shareholders of O'Gara will exchange all of
their shares of Kroll-O'Gara common stock for shares of O'Gara prior to the
split-up. Therefore, these management shareholders will not participate in
the pro rata distribution of O'Gara common stock and will not receive any
stock in KRCS.

Costs associated with this separation in the six months ended June 30, 2000
were approximately $0.3 million ($0.05 per diluted share) and consisted
primarily of fees for attorneys, accountants and other related charges.
O'Gara anticipates additional expenses will be incurred in the second half
of 2000.

O'Gara was allocated $1.6 million and $4.5 million of overhead costs
related to Kroll-O'Gara's corporate administrative functions for the six
months ended June 30, 1999 and 2000, respectively. The allocation was based
on a specific identification of Kroll-O'Gara's administrative costs
attributable to O'Gara and, to the extent that such identification was not
practicable, on the basis of O'Gara's sales as a percentage of
Kroll-O'Gara's sales. The allocated costs are included in the various
operating expense captions in the accompanying combined statements of
operations. Management believes that such allocation methodology is
reasonable. Subsequent to the spin-off, O'Gara will be required to manage
these functions and will be responsible for the expenses associated with
the operations of a stand-alone public company.

F-95
<PAGE> 241
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

On September 14, 2000, Kroll-O'Gara amended its credit agreement to provide
for an extension of its temporary increase in its revolving line of credit
from $25.0 million to $40.0 million. Pursuant to the amended credit
agreement, the increase in the revolving line of credit is effective until
January 1, 2001, at which time all borrowings in excess of $25.0 million
must be repaid. The credit facility continues to provide for a letter of
credit facility of approximately $7.6 million. Both the letter of credit
facility and the line of credit mature on May 31, 2001. Advances under the
revolving line of credit bear interest at rates ranging from prime to prime
plus 0.75%, or, at Kroll-O'Gara's option, LIBOR plus 1.50% to LIBOR plus
2.50%, dependent upon a defined financial ratio.

Kroll-O'Gara's currently existing credit agreements include certain
financial covenant restrictions. Kroll-O'Gara was not in compliance with
certain of these covenants as of December 31, 1999 and as of June 30, 2000.
All such events of non-compliance have been subsequently amended or waived
by the lenders. Had the lenders not provided a waiver or amendment, all
amounts outstanding under the credit agreements would have been subject to
acceleration by the lenders. In addition, O'Gara and KRCS will enter into
agreements governing the relationships between the separated businesses of
Kroll-O'Gara that are the result of the plan of reorganization. Such
agreements shall include a tax sharing and cross-indemnification agreement.
Subsequent to the reorganization and spin-off, Kroll-O'Gara will be
dissolved.

The accompanying unaudited consolidated 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 footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for fair presentation have been included. Operating results for
the six month period ended June 30, 2000, are not necessarily indicative of
the results that may be expected for the year ended December 31, 2000. The
accompanying financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in O'Gara's
audited financial statements contained elsewhere in this document for the
year ended December 31, 1999.

(2) RESTRUCTURING OF OPERATIONS

In the first quarter of 1999, O'Gara began implementation of a
restructuring plan (the "Plan") to reduce costs and improve operating
efficiencies. The Plan was substantially completed by the end of the second
quarter of 1999. Including the first quarter 1999 charge of $0.2 million,
the total non-recurring, pre-tax restructuring charge associated with the
Plan was $0.3 million. Total payments or writeoffs made pursuant to the
Plan through June 30, 2000 were $0.3 million. O'Gara does not

F-96
<PAGE> 242
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

expect to incur any other significant restructuring charges in future
periods related to this Plan. The principal elements of the restructuring
plan are the elimination of approximately 55 employees. The primary
components of the restructuring charge as of June 30, 2000 are as follows:

<TABLE>
<CAPTION>
DESCRIPTION EXPENSE
----------- -------
<S> <C>
Severance and related costs................................. $195
Writedown of property, plant and equipment.................. 97
----
$292
====
</TABLE>

(3) EARNINGS PER SHARE

O'Gara is expected to be capitalized initially with 6.0 million shares of
common stock. This number of shares was assumed to be outstanding for all
periods presented. To date, no common stock equivalents of O'Gara have been
issued so basic and diluted earnings per share are the same.

Basic and diluted earnings per share based on income before cumulative
effect of change in accounting principle were $0.64 for the six months
ended June 30, 1999. The basic and diluted per share impact of the change
in accounting principle was $0.13.

(4) NEW PRONOUNCEMENTS

In April 1998, the American Institute of Certified Public Accountants
released Statement of Position (SOP) 98-5 "Reporting on the Cost of
Start-Up Activities". The SOP requires costs of start-up activities,
including pre-operating costs, organization costs and start-up costs to be
expensed as incurred. Kroll-O'Gara's practice was to capitalize these
expenses and amortize them over periods ranging from one to five years.
O'Gara adopted SOP 98-5 in the first quarter of 1999 and recorded a
cumulative effect of an accounting change of $0.8 million, net of a tax
benefit of $0.4 million.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133 establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. SFAS 133, as amended, is effective for
fiscal years beginning after June 15, 2000. O'Gara has five forward
contracts in place in association with a demand note from a subsidiary.
These instruments qualify for hedge accounting. O'Gara has not yet
quantified the impact of adopting SFAS 133 on its financial statements and
has not determined the timing of or method of adoption

F-97
<PAGE> 243
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

of SFAS 133. However, SFAS 133 could increase volatility in earnings and
other comprehensive income.

In March 2000, the FASB issued Financial Accounting Standards Board
Interpretation No. 44 ("Interpretation No. 44"), "Accounting for Certain
Transactions involving Stock Compensation -- an interpretation of APB
Opinion 25." Interpretation No. 44 is effective July 1, 2000.
Interpretation No. 44 clarifies the application of APB Opinion 25 for
certain matters, specifically (a) the definition of an employee for
purposes of applying APB Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. Management does not
anticipate that the adoption of Interpretation No. 44 will have a material
impact on financial position or the results of operations.

(5) SUPPLEMENTAL CASH FLOW DISCLOSURE

<TABLE>
<CAPTION>
1999 2000
------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash paid for taxes....................................... $ 28 $224
Cash paid for interest.................................... $ 61 $ 52
Non-cash activity:
Deferred compensation related to options and restricted
stock................................................... $414 $ --
</TABLE>

(6) 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,
INVENTORY CATEGORY 1999 2000
------------------ ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Raw materials......................................... $14,495 $19,437
Vehicle costs and work-in-process..................... 6,699 7,350
------- -------
Total inventory............................. $21,194 $26,787
======= =======
</TABLE>

(7) DERIVATIVE FINANCIAL INSTRUMENTS

Financial instruments in the form of foreign currency exchange contracts
are utilized by O'Gara to hedge its exposure to movements in foreign
currency exchange rates. O'Gara does not hold or issue derivative financial
instruments for trading purposes. Gains and losses on foreign exchange
contracts are deferred and amortized as an adjustment to the cumulative
foreign currency translation adjustment component of equity over the terms
of the agreements in accordance with hedge accounting standards.

F-98
<PAGE> 244
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

O'Gara has entered into five foreign currency exchange contracts to hedge
its exposure to certain foreign currency rate fluctuations on a demand loan
to a subsidiary that is denominated in the foreign currency. By virtue of
these contracts, O'Gara has fixed the total dollar amount that they will
receive under the aforementioned subsidiary loan through the maturity dates
of the contracts regardless of the fluctuations in the exchange rate. At
June 30, 2000, the total notional amount of the contracts, which mature
between July 2000 and January 2002, is $14.6 million. O'Gara's foreign
currency translation adjustment component of shareholder's equity was
increased by $0.8 million in the six months ended June 30, 2000 as a result
of these agreements.

O'Gara has estimated the fair value of the foreign exchange contracts based
on information obtained from the counterparty of the amount O'Gara would
receive at June 30, 2000 in order to terminate the agreements. As of June
30, 2000, O'Gara would have received approximately $1.9 million upon
cancellation of all contracts.

(8) SEGMENT DATA

During 1999 and 2000, O'Gara operated in two business segments, the
Security Products and Services Group and the Information Security Group.

The following summarizes information about the Company's business segments:

<TABLE>
<CAPTION>
SECURITY INFORMATION
PRODUCTS AND SECURITY
SERVICES GROUP GROUP OTHER CONSOLIDATED
-------------- ----------- ------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1999
Net sales to unaffiliated
customers........................ $54,482 $ 2,480 $ -- $ 56,962
======= ======= ======= ========
Gross profit....................... $17,262 $ 1,266 $ -- $ 18,528
======= ======= ======= ========
Operating income (loss)............ $ 8,674 $ 152 $(1,745) $ 7,081
======= ======= ======= ========
SIX MONTHS ENDED JUNE 30, 2000
Net sales to unaffiliated
customers........................ $51,525 $ 1,810 $ -- $ 53,335
======= ======= ======= ========
Gross profit....................... $13,229 $ (241) $ -- $ 12,988
======= ======= ======= ========
Operating income (loss)............ $ 4,647 $(4,704) $(4,104) $ (4,161)
======= ======= ======= ========
Identifiable assets at June 30,
2000............................. $97,376 $ 4,907 $ -- $102,283
======= ======= =======
Corporate assets................... 8,745
--------
Total assets at June 30,
2000........................ $111,028
========
</TABLE>

(9) FAILED MERGER COSTS

On November 15, 1999, Kroll-O'Gara announced that it had entered into a
definitive agreement with Blackstone Capital Partners III Merchant Banking
Fund L.P. (Blackstone) pursuant to which shares held by all Kroll-O'Gara
shareholders, other than certain members of management, would be acquired
by Blackstone. On April 12, 2000, Kroll-O'Gara announced that Blackstone
had withdrawn its offer to acquire Kroll-O'Gara shares. Allocated costs to
O'Gara associated with the failed recapitalization merger in the six months
ended June 30, 2000 were approximately $0.8 million ($0.14 per diluted
share) and consisted primarily of fees for attorneys, accountants, travel
and other related charges.
F-99
<PAGE> 245

THE O'GARA COMPANY AND KROLL RISK CONSULTING SERVICES, INC.
UNAUDITED PRO FORMA COMBINING CONDENSED FINANCIAL STATEMENTS

The unaudited pro forma combining condensed financial statements of Kroll
Risk Consulting Services, Inc. give effect to the reorganization and split-up
transaction and have been prepared from The Kroll-O'Gara Company audited
consolidated financial statements presented elsewhere in this document and The
O'Gara Company audited combined financial statements also presented elsewhere in
this document. These unaudited pro forma statements should be read in
conjunction with the audited consolidated financial statements of The
Kroll-O'Gara Company and the audited combined financial statements of The O'Gara
Company.

The unaudited pro forma combining condensed financial statements of The
O'Gara Company also give effect to the reorganization and split-up transaction
and have been prepared from The O'Gara Company audited combined financial
statements presented elsewhere in this document. These unaudited pro forma
statements should also be read in conjunction with the audited combined
financial statements of The O'Gara Company.

The unaudited pro forma combining condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have been achieved if the
reorganization and split-up transaction had been consummated as of the beginning
of the periods indicated, nor are they indicative of future financial position
or results of operations.

F-100
<PAGE> 246

THE O'GARA COMPANY

UNAUDITED PRO FORMA COMBINING CONDENSED BALANCE SHEET
AS OF JUNE 30, 2000

<TABLE>
<CAPTION>
O'GARA PRO FORMA O'GARA
SPLIT-UP ADJUSTMENTS PRO FORMA
-------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash................................................. $ 2,597 $ -- $ 2,597
Accounts receivable, net............................. 23,560 -- 23,560
Costs and estimated earnings in excess of billings on
uncompleted contracts.............................. 15,241 -- 15,241
Inventories.......................................... 26,787 -- 26,787
Other current assets................................. 5,742 -- 5,742
-------- -------- --------
Total current assets............................ 73,927 -- 73,927
Property, plant, and equipment, net..................... 19,818 -- 19,818
Costs in excess of assets acquired and other intangible
assets............................................... 15,683 (819)(2) 14,864
Other assets............................................ 1,600 (212)(3) 1,388
-------- -------- --------
Total assets.................................... $111,028 $ (1,031) $109,997
======== ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of allocated Kroll-O'Gara long-term
debt............................................... $ 15,652 $ -- $ 15,652
Current portion of long-term debt due to third
parties............................................ 1,671 -- 1,671
Accounts payable..................................... 20,943 -- 20,943
Accrued liabilities.................................. 6,624 2,519(4) 9,143
Other current liabilities............................ 2,541 (1,750)(5) 791
-------- -------- --------
Total current liabilities....................... 47,431 769 48,200
Long-term debt due to third parties, net of current
portion.............................................. 966 -- 966
Allocation of Kroll-O'Gara long-term debt............... 15,725 -- 15,725
Other long-term liabilities............................. 194 -- 194
Minority interest in consolidated subsidiary............ -- 710(1) 710
-------- -------- --------
Total liabilities............................... 64,316 1,479 65,795
Shareholders' equity.................................... 46,712 (2,510)(6) 44,202
-------- -------- --------
Total liabilities and shareholders' equity...... $111,028 $ (1,031) $109,997
======== ======== ========
</TABLE>

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

(1) To recognize KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).
(2) To recognize write-off of certain intangibles that will not be utilizable by
Kroll-O'Gara as a result of the reorganization and split-up transaction.
(3) To recognize write-off of unamortized deferred financing costs resulting
from the anticipated prepayment of certain third party indebtedness as a
result of the reorganization and split-up transaction.
(4) To recognize transaction costs ($1,689) expected to be incurred associated
with the reorganization and split-up transaction, as well as to recognize
debt prepayment fees ($830) associated with the prepayment of certain third
party indebtedness.
(5) To recognize related tax benefit to be realized in conjunction with the
transactions discussed above.

F-101
<PAGE> 247

(6) Reflects adjustments to shareholders' equity for transactions discussed
above as follows (in thousands):

<TABLE>
<S> <C>
Tax benefit of accelerated stock option compensation...... $ 330
Debt prepayment fee ($830) and financing cost write-off,
net of tax............................................. (625)
Transaction costs ($1,689), net of tax.................... (1,014)
Intangible asset write-offs ($819), net of tax............ (491)
KRCS' minority ownership interest of 40% in ISG........... (710)
--------
$ (2,510)
========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-102
<PAGE> 248

THE O'GARA COMPANY

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
O'GARA PRO FORMA(3)(4)(5) O'GARA
SPLIT-UP ADJUSTMENTS(6)(7)(9) PRO FORMA
-------- --------------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales............................................ $53,335 $ -- $53,335
Cost of sales........................................ 40,347 -- 40,347
------- ------ -------
Gross profit.................................... 12,988 -- 12,988
Selling and marketing expenses....................... 4,390 -- 4,390
General and administrative expenses.................. 11,650 -- 11,650
Separation expenses.................................. 280 -- 280
Failed merger expenses............................... 829 -- 829
------- ------ -------
Operating loss.................................. (4,161) -- (4,161)
Interest expense..................................... (1,167) --(10) (1,167)
Other expense........................................ (134) -- (134)
------- ------ -------
Loss from continuing operations before minority
interest, provision for income taxes,
extraordinary item and cumulative effect of
change in accounting principle................ (5,462) -- (5,462)
Minority interest.................................... -- 1,881(1) 1,881
------- ------ -------
Loss from continuing operations before provision
for income taxes, extraordinary item and
cumulative effect of change in accounting
principle..................................... (5,462) 1,881 (3,581)
Provision for income taxes........................... 327 --(2) 327
------- ------ -------
Loss from continuing operations................. $(5,789) $1,881 $(3,908)
======= ====== =======
Basic and diluted loss per share from continuing
operations......................................... $ (0.96) $ (0.65)
======= =======
Basic and diluted weighted average shares
outstanding........................................ 6,000 6,000(8)
======= =======
</TABLE>

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

(1) To reflect KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(2) Pro forma adjustments exclude a benefit for income taxes on KRCS' share of
the ISG net loss as no benefit was recognized in the historical The O'Gara
Company results of operations for the six months ended June 30, 2000.

(3) Pro forma adjustments exclude the impact of compensation expense, if any,
that might result from the exchange of Kroll-O'Gara common shares by
certain management shareholders for shares of The O'Gara Company, based on
the respective fair values at the exchange date.

(4) Pro forma adjustments exclude the impact of compensation expense of
approximately $0.5 million, net of estimated tax benefit of approximately
$0.3 million, for a non-recurring charge associated with the accelerated
vesting of certain ISG stock option grants and certain restricted stock
grants resulting from the reorganization and split-up transaction.

(5) Pro forma adjustments exclude the allocation of an extraordinary charge
from Kroll-O'Gara that will occur in conjunction with the reorganization
and split-up transaction resulting from the anticipated prepayment of
certain third party indebtedness. The total allocated charge from Kroll-
O'Gara is estimated to be approximately $0.6 million, net of estimated tax
benefit of approximately $0.4 million, and includes a prepayment fee and
the write-off of unamortized deferred financing costs.

F-103
<PAGE> 249

(6) The O'Gara Company expects to incur additional charges currently estimated
to be approximately $1.0 million, net of estimated tax benefit of
approximately $0.7 million, to reflect costs associated with the
reorganization and split-up transaction. These non-recurring charges are
not reflected in the unaudited pro forma combining condensed statements of
operations.

(7) Management does not believe that corporate overhead costs associated with
the operations of a stand-alone public company will be significantly
different from those expenses allocated from Kroll-O'Gara and reflected in
the historical statements of operations of The O'Gara Company above.

(8) The O'Gara Company is expected to be capitalized initially with 6.0 million
shares of common stock. This number of shares was assumed to be outstanding
for all periods presented. To date, no common stock equivalents of The
O'Gara Company have been issued so basic and diluted loss per share are the
same.

(9) Pro forma adjustments exclude a non-recurring charge estimated to be
approximately $0.5 million, net of estimated tax benefit of approximately
$0.3 million, associated with the write-off of certain assets (intangibles
and certain trademarks) that will not be utilizable by the company as a
result of the reorganization and split-up transaction.

(10) The pro forma statement of operations above does not give any effect to any
potential reductions or increases in interest expense relating to debt
being assumed by The O'Gara Company as part of the reorganization and
split-up.

F-104
<PAGE> 250

THE O'GARA COMPANY

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
O'GARA PRO FORMA(3)(4)(5) O'GARA
SPLIT-UP ADJUSTMENTS(6)(7)(9) PRO FORMA
-------- -------------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales......................................... $118,507 $ -- $118,507
Cost of sales..................................... 83,620 -- 83,620
-------- ---- --------
Gross profit................................. 34,887 -- 34,887
Selling and marketing expenses.................... 8,854 -- 8,854
General and administrative expenses............... 20,584 -- 20,584
Restructuring expenses............................ 292 -- 292
Merger related expenses........................... 145 -- 145
Failed merger expenses............................ 704 -- 704
-------- ---- --------
Operating income............................. 4,308 -- 4,308
Interest expense.................................. (1,995) --(10) (1,995)
Other expense..................................... (157) -- (157)
-------- ---- --------
Income from continuing operations before
minority interest, provision for income
taxes, extraordinary item and cumulative
effect of change in accounting principle... 2,156 -- 2,156
Minority interest................................. -- 719(1) 719
-------- ---- --------
Income from continuing operations before
provision for income taxes, extraordinary
item and cumulative effect of change in
accounting principle....................... 2,156 719 2,875
Provision for income taxes........................ 2,303 288(2) 2,591
-------- ---- --------
Income (loss) from continuing operations..... $ (147) $431 $ 284
======== ==== ========
Basic and diluted earnings (loss) per share from
continuing operations........................... $ (0.02) $ 0.05
======== ========
Basic and diluted weighted average shares
outstanding..................................... 6,000 6,000(8)
======== ========
</TABLE>

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

(1) To reflect KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(2) To recognize the provision/(benefit) for income taxes on pro forma
adjustments at an effective rate of 40%.

(4) Pro forma adjustments exclude the impact of compensation expense of
approximately $0.6 million, net of estimated tax benefit of approximately
$0.4 million, for a non-recurring charge associated with the accelerated
vesting of certain ISG stock option grants and certain restricted stock
grants resulting from the reorganization and split-up transaction.

(5) Pro forma adjustments exclude the allocation of an extraordinary charge
from Kroll-O'Gara that will occur in conjunction with the reorganization
and split-up transaction resulting from the prepayment of certain third
party indebtedness. The total allocated charge from Kroll-O'Gara is
estimated to be approximately $0.6 million, net of estimated tax benefit of
approximately $0.4 million, and includes a prepayment fee and the write-off
of unamortized deferred financing costs.

F-105
<PAGE> 251

(6) The O'Gara Company expects to incur additional charges (in addition to the
$0.3 million of charges recognized for the six months ended June 30, 2000)
currently estimated to be approximately $1.0 million, net of estimated tax
benefit of approximately $0.7 million, to reflect costs associated with the
reorganization and split-up transaction. These non-recurring charges are
not reflected in the unaudited pro forma combining condensed statements of
operations.

(9) Pro forma adjustments exclude a non-recurring charge estimated to be
approximately $0.5 million, net of estimated tax benefit of approximately
$0.3 million, associated with the write-off of certain assets (certain
intangibles and trademarks) that will not be utilizable by the company as a
result of the reorganization and split-up transaction.

(10) The pro forma statement of operations above does not give any effect to
any potential reductions or increases in interest expense relating to debt
being assumed by The O'Gara Company as part of the reorganization and
split-up.

F-106
<PAGE> 252

KROLL RISK CONSULTING SERVICES, INC.

UNAUDITED PRO FORMA COMBINING CONDENSED BALANCE SHEET
AS OF JUNE 30, 2000

<TABLE>
<CAPTION>
KROLL- O'GARA SUBTOTAL - PRO FORMA KRCS
O'GARA SPLIT-UP KRCS ADJUSTMENTS PRO FORMA
-------- -------- ---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash................................. $ 6,260 $ 2,597 $ 3,663 $ -- $ 3,663
Accounts receivable, net............. 94,023 23,560 70,463 -- 70,463
Costs and estimated earnings in
excess of billings on uncompleted
contracts.......................... 15,241 15,241 -- -- --
Inventories.......................... 30,587 26,787 3,800 -- 3,800
Other current assets................. 11,025 5,742 5,283 -- 5,283
-------- -------- -------- ----------- --------
Total current assets............ 157,136 73,927 83,209 -- 83,209
Property, plant and equipment, net...... 39,822 19,818 20,004 -- 20,004
Databases, net.......................... 10,083 -- 10,083 -- 10,083
Costs in excess of assets acquired and
other intangible assets, net......... 79,077 15,683 63,394 -- 63,394
Other assets............................ 4,553 1,600 2,953 (377)(1) 2,576
Investment in unconsolidated entities... -- -- -- 710(2) 710
-------- -------- -------- ----------- --------
Total assets.................... $290,671 $111,028 $179,643 333 179,976
======== ======== ======== =========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Revolving lines of credit............ $ 37,422 $ 15,652 $ 21,770 $ -- $ 21,770
Current portion of long term debt.... 1,806 1,671 135 -- 135
Accounts payable..................... 34,099 20,943 13,156 -- 13,156
Accrued liabilities.................. 23,137 6,624 16,513 3,552(3) 20,065
Other current liabilities............ 6,678 2,541 4,137 (1,750)(4) 2,387
-------- -------- -------- ----------- --------
Total current liabilities....... 103,142 47,431 55,711 1,802 57,513
Long-term debt, net of current
portion.............................. 36,580 16,691 19,889 -- 19,889
Deferred income taxes................... 1,821 18 1,803 -- 1,803
Other long term liabilities............. 1,894 176 1,718 -- 1,718
-------- -------- -------- ----------- --------
Total liabilities............... 143,437 64,316 79,121 1,802 80,923
Stockholders' equity.................... 147,234 46,712 100,522 (1,469)(5) 99,053
-------- -------- -------- ----------- --------
Total liabilities and
stockholders' equity.......... $290,671 $111,028 $179,643 333 $179,976
======== ======== ======== =========== ========
</TABLE>

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

(1) To recognize the write-off of certain intangibles ($79) that cannot be
utilized by Kroll-O'Gara and to recognize the write-off of unamortized
deferred financing costs ($298) resulting from the anticipated prepayment of
the portion of Kroll-O'Gara's third party indebtedness to be assumed by KRCS
as a result of the reorganization and split-up.

(2) To recognize KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(3) To recognize transaction costs ($2,381) expected to be incurred in the
reorganization and split-up, as well as to recognize debt prepayment fees
($1,171) associated with the prepayment of the portion of Kroll-O'Gara's
third party indebtedness to be assumed by KRCS.

(4) To recognize related tax benefit to be realized in conjunction with the
reorganization and split-up.

F-107
<PAGE> 253

(5) Reflects adjustments to stockholders' equity arising out of the
reorganization and split-up as follows (in thousands):

<TABLE>
<S> <C>
Tax benefit of accelerated stock option compensation........ $ 178
Debt prepayment fee ($1,171) and financing cost write-off,
net of tax................................................ (881)
Transaction costs ($2,381), net of tax...................... (1,429)
Intangible asset write-off, net of tax...................... (47)
KRCS' minority ownership interest of 40% in ISG............. 710
--------
$ (1,469)
========
</TABLE>

F-108
<PAGE> 254

KROLL RISK CONSULTING SERVICES, INC.

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
KROLL- O'GARA SUBTOTAL - PRO FORMA(3)(4)(5) KRCS
O'GARA SPLIT-UP KRCS ADJUSTMENTS(6)(7)(9) PRO FORMA
------ -------- ---------- -------------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales....................... $163,049 $53,335 $109,714 $ -- $109,714
Cost of sales................... 104,712 40,347 64,365 -- 64,365
-------- ------- -------- ------- --------
Gross profit............... 58,337 12,988 45,349 -- 45,349
Selling and marketing
expenses...................... 14,623 4,390 10,233 -- 10,233
General and administrative
expenses...................... 40,918 11,650 29,268 -- 29,268
Separation expenses............. 676 280 396 -- 396
Merger related expenses......... 438 -- 438 -- 438
Failed merger expenses.......... 1,999 829 1,170 -- 1,170
-------- ------- -------- ------- --------
Operating income (loss).... (317) (4,161) 3,844 -- 3,844
Interest expense................ (2,872) (1,167) (1,705) --(10) (1,705)
Earnings (losses) of equity
investment.................... -- -- -- (1,881)(1) (1,881)
-------- ------- -------- ------- --------
Other income (expense).......... (90) (134) 44 -- 44
-------- ------- -------- ------- --------
Income (loss) from
continuing operations
before provision for
income taxes,
extraordinary item and
cumulative effect of
change in accounting
principle................ (3,279) (5,462) 2,183 (1,881) 302
Provision for income taxes...... 1,381 327 1,054 --(2) 1,054
-------- ------- -------- ------- --------
Income (loss) from
continuing operations.... $ (4,660) $(5,789) $ 1,129 $(1,881) $ (752)
======== ======= ======== ======= ========
Basic loss per share from
continuing operations......... $ (0.21) $ (0.03)
======== ========
Basic weighted average shares
outstanding................... 22,267 22,267(8)
======== ========
Diluted loss per share from
continuing operations......... $ (0.21) $ (0.03)
======== ========
Diluted weighted average shares
outstanding................... 22,267 22,267(8)
======== ========
</TABLE>

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

(1) To recognize KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(2) Pro forma adjustments exclude a benefit for income taxes on KRCS' share of
the ISG net loss as no benefit was recognized in the historical
Kroll-O'Gara results of operations for the six months ended June 30, 2000.

(3) Pro forma adjustments exclude the impact of compensation expense, if any,
that might result from the exchange of Kroll-O'Gara common shares by
certain management shareholders for shares of KRCS, based on the respective
fair values at the exchange date.

(4) Pro forma adjustments exclude the impact of compensation expense of
approximately $0.3 million, net of estimated tax benefit of approximately
$0.2 million, for a non-recurring charge associated with the

F-109
<PAGE> 255

accelerated vesting of certain restricted stock grants resulting from the
reorganization and split-up transaction.

(5) Pro forma adjustments exclude an extraordinary charge that will occur in
conjunction with the reorganization and split-up transaction resulting from
the anticipated prepayment of the portion of Kroll-O'Gara's third party
indebtedness assumed by KRCS. The portion of the charge allocated to KRCS
is estimated to be approximately $0.9 million, net of estimated tax benefit
of approximately $0.6 million, and includes a prepayment fee and the write
off of unamortized deferred financing costs.

(6) KRCS expects to incur additional charges currently estimated to be
approximately $1.4 million, net of estimated tax benefit of approximately
$1.0 million, to reflect costs associated with the reorganization and
split-up transaction. These non-recurring charges are not reflected in the
unaudited pro forma combining condensed statements of operations.

(7) Management does not believe that corporate overhead costs associated with
the operations of a stand-alone public company will be significantly
different from those expenses reflected in the historical statements of
operations above.

(8) For financial reporting purposes, Kroll-O'Gara will be deemed to be the
predecessor to KRCS. Accordingly, pro forma loss per share of KRCS from
continuing operations is based upon the historical weighted average shares
outstanding of Kroll-O'Gara. Upon completion of the reorganization and
split-up transaction, KRCS is expected to be capitalized initially with 8.5
million shares of common stock and thus from that date forward, KRCS'
weighted average shares outstanding will be determined based upon the new
capitalization.

(9) Pro forma adjustments exclude a non-recurring charge estimated to be
approximately $0.05 million, net of tax benefit, associated with the
write-off of certain assets (certain trademarks) that cannot be utilized by
the company as a result of the reorganization and split-up transaction.

(10) The pro forma statement of operations above does not give any effect to any
potential reductions or increases in interest expense relating to the debt
being assumed and repaid by KRCS as part of the reorganization and
split-up.

F-110
<PAGE> 256

KROLL RISK CONSULTING SERVICES, INC.

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
KROLL- O'GARA SUBTOTAL - PRO FORMA(3)(4)(5) KRCS
O'GARA SPLIT-UP KRCS ADJUSTMENTS(6)(7)(9) PRO FORMA
-------- -------- ---------- -------------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales.................... $321,938 $118,507 $203,431 $ -- $203,431
Cost of sales................ 203,457 83,620 119,837 -- 119,837
-------- -------- -------- -------- --------
Gross profit............ 118,481 34,887 83,594 -- 83,594
Selling and marketing
expenses................... 27,471 8,854 18,617 -- 18,617
General and administrative
expenses................... 74,862 20,584 54,278 -- 54,278
Restructuring expenses....... 4,364 292 4,072 -- 4,072
Merger related expenses...... 4,069 145 3,924 -- 3,924
Failed merger expenses....... 1,562 704 858 -- 858
-------- -------- -------- -------- --------
Operating income........ 6,153 4,308 1,845 -- 1,845
Interest expense............. (4,966) (1,995) (2,971) --(10) (2,971)
Earnings (losses) of equity
investment................. -- -- -- (719)(1) (719)
-------- -------- -------- -------- --------
Other income (expense)....... 98 (157) 255 -- 255
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before provision for
income taxes,
extraordinary item and
cumulative effect of
change in accounting
principle............. 1,285 2,156 (871) (719) (1,590)
Provision for income taxes... 2,429 2,303 126 (288)(2) (162)
-------- -------- -------- -------- --------
Loss from continuing
operations............ $ (1,144) $ (147) $ (997) $ (431) $ (1,428)
======== ======== ======== ======== ========
Basic loss per share from
continuing operations...... $ (0.05) $ (0.06)
======== ========
Basic weighted average shares
outstanding................ 22,006 22,006(8)
======== ========
Diluted loss per share from
continuing operations...... $ (0.05) $ (0.06)
======== ========
Diluted weighted average
shares outstanding......... 22,006 22,006(8)
======== ========
</TABLE>

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

(1) To recognize KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(2) To recognize the benefit for income taxes on the ISG net loss at an
effective rate of 40%, equivalent to the benefit recognized in the
historical Kroll-O'Gara results of operations.

(3) Pro forma adjustments exclude the impact of compensation expense, if any,
that might result from the exchange of Kroll-O'Gara common shares by
certain management shareholders for shares of KRCS, based on the respective
fair values at the exchange date.

F-111
<PAGE> 257

(4) Pro forma adjustments exclude the impact of compensation expense of
approximately $0.4 million, net of estimated tax benefit of approximately
$0.2 million, for a non-recurring charge associated with the accelerated
vesting of certain restricted stock grants resulting from the
reorganization and split-up transaction.

(5) Pro forma adjustments exclude an extraordinary charge that will occur in
conjunction with the reorganization and split-up transaction resulting from
the anticipated prepayment of the portion of Kroll-O'Gara's third party
indebtedness assumed by KRCS. The portion of the charge allocated to KRCS
is estimated to be approximately $0.9 million, net of estimated tax benefit
of approximately $0.6 million, and includes a prepayment fee and the
write-off of unamortized deferred financing costs.

(6) KRCS expects to incur additional charges (in addition to the $0.4 million
of charges recognized for the six months ended June 30, 2000) currently
estimated to be approximately $1.4 million, net of estimated tax benefit of
approximately $1.0 million, to reflect costs associated with the
reorganization and split-up transaction. These non-recurring charges are
not reflected in the unaudited pro forma combining condensed statements of
operations.

(7) Management does not believe that corporate overhead costs associated with
the operations of a stand-alone public company will be significantly
different from those expenses reflected in the historical statements of
operations above.

F-112
<PAGE> 258

KROLL RISK CONSULTING SERVICES, INC.

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
KROLL- O'GARA SUBTOTAL- PRO FORMA(3)(4)(5) KRCS
O'GARA SPIN-OFF KRCS ADJUSTMENTS(6)(7)(8) PRO FORMA
------------ -------- ---------- -------------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales................... $272,195 $131,690 $140,505 $ -- $140,505
Cost of sales............... 178,421 95,290 83,131 -- 83,131
-------- -------- -------- -------- --------
Gross profit.............. 93,774 36,400 57,374 -- 57,374
Selling and marketing
expenses.................. 22,332 7,643 14,689 -- 14,689
General and administrative
expenses.................. 42,835 13,095 29,740 -- 29,740
Merger related expenses..... 5,727 1,137 4,590 -- 4,590
-------- -------- -------- -------- --------
Operating income.......... 22,880 14,525 8,355 -- 8,355
Interest expense............ (4,670) (2,415) (2,255) --(9) (2,255)
Earnings (losses) of equity
investment................ -- -- -- (825)(1) (825)
-------- -------- -------- -------- --------
Other income................ 929 53 876 -- 876
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before provision for
income taxes,
extraordinary item and
cumulative effect of
change in accounting
principle.............. 19,139 12,163 6,976 (825) 6,151
Provision for income
taxes..................... 7,353 5,016 2,337 (161)(2) 2,176
-------- -------- -------- -------- --------
Income from continuing
operations............. $ 11,786 $ 7,147 $ 4,639 $ (664) $ 3,975
======== ======== ======== ======== ========
Basic earnings (loss) per
share from continuing
operations................ $ 0.61 $ 0.21
======== ========
Basic weighted average
shares outstanding........ 19,337 19,337(7)
======== ========
Diluted earnings (loss) per
share from continuing
operations................ $ 0.59 $ 0.20
======== ========
Diluted weighted average
shares outstanding........ 19,908 19,908(7)
======== ========
</TABLE>

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

(1) To record KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(2) To recognize the benefit for income taxes realized on the ISG net loss at an
effective rate of 20%, equivalent to the benefit recognized in the
historical Kroll-O'Gara results of operations.

(3) Pro forma adjustments exclude the impact of compensation expense, if any,
that might result from the exchange of Kroll-O'Gara common shares by certain
management shareholders for shares of KRCS, based on the respective fair
values at the exchange date.

(4) Pro forma adjustments exclude an extraordinary charge that will occur in
conjunction with the reorganization and split-up transaction resulting from
the anticipated prepayment of the portion of Kroll-O'Gara's third party
indebtedness assumed by KRCS. The portion of the charge allocated to KRCS is

F-113
<PAGE> 259

estimated to be approximately $0.9 million, net of estimated tax benefit of
approximately $0.6 million, and includes a prepayment fee and the write-off of
unamortized deferred financing costs.

(5) KRCS expects to incur additional charges (in addition to the $0.4 million of
charges recognized for the six months ended June 30, 2000) currently
estimated to be approximately $1.4 million, net of estimated tax benefit of
approximately $1.0 million, to reflect costs associated with the
reorganization and split-up transaction. These non-recurring charges are not
reflected in the unaudited pro forma combining condensed statements of
operations.

(6) Management does not believe that corporate overhead costs associated with
the operations of a stand-alone public company will be significantly
different from those expenses reflected in the historical statements of
operations above.

(7) For financial reporting purposes, Kroll-O'Gara will be deemed to be the
predecessor to KRCS. Accordingly, pro forma earnings per share of KRCS from
continuing operations is based upon the historical weighted average shares
outstanding of Kroll-O'Gara. Upon completion of the reorganization and
split-up transaction, KRCS is expected to be capitalized initially with 8.5
million shares of common stock and thus from that date forward, KRCS'
weighted average shares outstanding will be determined based upon the new
capitalization.

(8) Pro forma adjustments exclude a non-recurring charge estimated to be
approximately $0.05 million, net of tax benefit, associated with the
write-off of certain assets (certain trademarks) that cannot be utilized by
the company as a result of the reorganization and split-up transaction.

(9) The pro forma statement of operations above does not give any effect to any
potential reductions or increases in interest expense relating to the debt
being assumed and repaid by KRCS as part of the reorganization and split-up.

F-114
<PAGE> 260

KROLL RISK CONSULTING SERVICES, INC.

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
KROLL- O'GARA SUBTOTAL- PRO FORMA(1)(2)(3) KRCS
O'GARA SPIN-OFF KRCS ADJUSTMENTS(4)(6) PRO FORMA
-------- -------- ---------- ------------------ ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales...................... $210,324 $100,739 $109,585 $ -- $109,585
Cost of sales.................. 143,213 72,383 70,830 -- 70,830
-------- -------- -------- -------- --------
Gross profit.............. 67,111 28,356 38,755 -- 38,755
Selling and marketing
expenses..................... 15,532 6,524 9,008 -- 9,008
General and administrative
expenses..................... 34,292 10,144 24,148 -- 24,148
Merger related expenses........ 7,205 2,933 4,272 -- 4,272
-------- -------- -------- -------- --------
Operating income.......... 10,082 8,755 1,327 -- 1,327
Interest expense............... (5,244) (2,968) (2,276) --(7) (2,276)
Other income (expense)......... (112) (248) 136 -- 136
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before minority
interest, provision for
income taxes,
extraordinary item and
cumulative effect of
change in accounting
principle............... 4,726 5,539 (813) -- (813)
Minority interest.............. (156) (156) -- -- --
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before provision for
income taxes,
extraordinary item and
cumulative effect of
change in accounting
principle............... 4,570 5,383 (813) -- (813)
Provision for income taxes..... 3,305 2,822 483 -- 483
-------- -------- -------- -------- --------
Income (loss) from
continuing operations... $ 1,265 $ 2,561 $ (1,296) $ -- $ (1,296)
======== ======== ======== ======== ========
Basic earnings (loss) per share
from continuing operations... $ 0.09 $ (0.09)
======== ========
Basic weighted average shares
outstanding.................. 14,751 14,751(5)
======== ========
Diluted earnings (loss) per
share from continuing
operations................... $ 0.08 $ (0.08)
======== ========
Diluted weighted average shares
outstanding.................. 15,560 15,560(5)
======== ========
</TABLE>

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

(1) Pro forma adjustments exclude the impact of compensation expense if any,
that might result from the exchange of Kroll-O'Gara common shares by certain
management shareholders for shares of KRCS, based on the respective fair
values at the exchange date.

F-115
<PAGE> 261

(2) Pro forma adjustments exclude an extraordinary charge that will occur in
conjunction with the reorganization and split-up transaction resulting from
the anticipated prepayment of the portion of Kroll-O'Gara's third party
indebtedness assumed by KRCS. The portion of the charge allocated to KRCS is
estimated to be approximately $0.9 million, net of estimated tax benefit of
approximately $0.6 million, and includes a prepayment fee and the write-off
of unamortized deferred financing costs.

(3) KRCS expects to incur additional charges (in addition to the $0.4 million of
charges recognized for the six months ended June 30, 2000) currently
estimated to be approximately $1.4 million, net of estimated tax benefit of
approximately $1.0 million, to reflect costs associated with the
reorganization and split-up transaction. These non-recurring charges are not
reflected in the unaudited pro forma combining condensed statements of
operations.

(4) Management does not believe that corporate overhead costs associated with
the operations of a stand-alone public company will be significantly
different from those expenses reflected in the historical statements of
operations above.

(5) For financial reporting purposes, Kroll-O'Gara will be deemed to be the
predecessor to KRCS. Accordingly, pro forma loss per share of KRCS from
continuing operations is based upon the historical weighted average shares
outstanding of Kroll-O'Gara. Upon completion of the reorganization and
split-up transaction, KRCS is expected to be capitalized initially with 8.5
million shares of common stock and thus from that date forward, KRCS'
weighted average shares outstanding will be determined based upon the new
capitalization.

(6) Pro forma adjustments exclude a non-recurring charge estimated to be
approximately $0.05 million, net of tax benefit, associated with the
write-off of certain assets (certain trademarks) that cannot be utilized by
the company as a result of the reorganization and split-up transaction.

(7) The pro forma statement of operations above does not give any effect to any
potential reductions or increases in interest expense relating to the debt
being assumed and repaid by KRCS as part of the reorganization and split-up.

F-116
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APPENDIX A

AGREEMENT

AND

PLAN

REORGANIZATION AND DISSOLUTION

THE KROLL-O'GARA COMPANY
<PAGE> 263

TABLE OF CONTENTS

<TABLE>
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<S> <C> <C>
RECITALS.................................................................... A-1
ARTICLE I FORMATION AND SEPARATION.................................... A-2
1.01 Formation of KRCS........................................... A-2
1.02 Formation of TOC............................................ A-2
1.03 Reorganization.............................................. A-2
1.04 Financing Arrangements...................................... A-2
1.05 Employee Benefits........................................... A-3
1.06 Treatment of Company Stock Options and Warrants............. A-5
1.07 Third-Party Consents........................................ A-5
1.08 Other Agreements............................................ A-5
ARTICLE II EXCHANGE.................................................... A-6
2.01 Exchange by JBK and the other KRCS Exchanging
Shareholders.............................................. A-6
2.02 Exchange by TMO, WTO and the other O'Gara Exchanging
Shareholders.............................................. A-6
2.03 Effect of Contemplated Transactions......................... A-7
ARTICLE III THE DISTRIBUTION............................................ A-7
3.01 The Distribution............................................ A-7
3.02 Number of Shares of KRCS Common Stock....................... A-7
3.03 Number of Shares of TOC Common Stock........................ A-8
3.04 Actions Prior to the Exchange and Distribution.............. A-8
3.05 Fractional Shares........................................... A-9
3.06 Dissenters' Rights.......................................... A-9
ARTICLE IV THE DISSOLUTION AND LIQUIDATION............................. A-10
ARTICLE V REPRESENTATIONS AND WARRANTIES.............................. A-10
5.01 Representations and Warranties of the Company............... A-10
5.02 Representations and Warranties of KRCS...................... A-12
5.03 Representations and Warranties of TOC....................... A-13
5.04 Representations and Warranties of JBK and the other KRCS
Exchanging Shareholders................................... A-14
5.05 Representations and Warranties of TMO, WTO and the other
O'Gara Exchanging Shareholders............................ A-15
</TABLE>

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<TABLE>
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PAGE
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<S> <C> <C>
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE COMPANY, KRCS, TOC, JBK,
TMO, WTO, THE O'GARA EXCHANGING SHAREHOLDERS AND THE KRCS
EXCHANGING SHAREHOLDERS................................... A-16
6.01 Necessary Governmental Approvals............................ A-16
6.02 Effectiveness of the KRCS Registration Statement............ A-16
6.03 No Injunction............................................... A-16
6.04 Opinion of Financial Advisor................................ A-16
6.05 Shareholder Approval........................................ A-16
6.06 Control Share Acquisition................................... A-16
6.07 Required Consents........................................... A-16
6.08 IRS Tax Ruling.............................................. A-16
6.09 Nasdaq Listing.............................................. A-16
6.10 Tax Sharing Agreement....................................... A-17
6.11 Cross-Indemnification Agreement............................. A-17
6.12 Termination of Employment................................... A-17
6.13 Supplemental Documents...................................... A-17
6.14 Completion of Transactions.................................. A-17

ARTICLE VII CONDITION TO OBLIGATIONS OF THE COMPANY, TOC, TMO, WTO AND
THE OTHER O'GARA EXCHANGING SHAREHOLDERS.................. A-17
7.01 Representations and Warranties True; Covenants and
Obligations Performed..................................... A-17
ARTICLE VIII CONDITION TO OBLIGATIONS OF THE COMPANY, KRCS, JBK AND THE
OTHER KRCS EXCHANGING SHAREHOLDERS........................ A-18
8.01 Representations and Warranties True; Covenants and
Obligations Performed..................................... A-18
ARTICLE IX COVENANTS................................................... A-18
9.01 Access to Properties and Records............................ A-18
9.02 Operations Pending Distribution and Liquidation............. A-18
9.03 Reasonable Efforts to Expedite Reorganization............... A-19
9.04 Satisfaction of Conditions.................................. A-19
9.05 HSR Act..................................................... A-19
9.06 Insurance................................................... A-19
9.07 Voice & Data Business....................................... A-19
9.08 Guaranties.................................................. A-20
9.09 JBK Agreement............................................... A-20
9.10 TMO Agreement............................................... A-20
9.11 Further Assurances.......................................... A-20
</TABLE>

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<PAGE> 265

<TABLE>
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<S> <C> <C>
ARTICLE X MUTUAL POST-REORGANIZATION COVENANTS........................ A-21
10.01 Use of Names................................................ A-21
10.02 Tax Treatment............................................... A-21
10.03 American International Group................................ A-21
10.04 Securify.................................................... A-21
10.05 Voice & Data................................................ A-22
10.06 D&O Insurance............................................... A-22
ARTICLE XI TERMINATION OF AGREEMENT.................................... A-22
ARTICLE XII FEES AND EXPENSES........................................... A-23
ARTICLE XIII NOTICES..................................................... A-23
ARTICLE XIV PUBLIC ANNOUNCEMENT......................................... A-24
ARTICLE XV GOVERNING LAW............................................... A-24
ARTICLE XVI CAPTIONS; COUNTERPARTS...................................... A-25
ARTICLE XVII ENTIRE AGREEMENT............................................ A-25
ARTICLE XVIII WAIVER; MODIFICATION; ASSIGNMENT............................ A-25
ARTICLE XIX SPECIFIC PERFORMANCE........................................ A-25
ARTICLE XX SEVERABILITY................................................ A-25
ARTICLE XXI NO THIRD PARTY BENEFICIARIES................................ A-26
ARTICLE XXII DEFINITIONS................................................. A-26
SIGNATURES.................................................................. A-33
</TABLE>

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<PAGE> 266

AGREEMENT AND PLAN OF REORGANIZATION AND DISSOLUTION
OF
THE KROLL-O'GARA COMPANY

This Agreement and Plan of Reorganization and Dissolution dated as of the
8th day of September, 2000 (the "Agreement") is entered into by and among THE
KROLL-O'GARA COMPANY, an Ohio corporation (the "Company"), KROLL RISK CONSULTING
SERVICES, INC., a Delaware corporation ("KRCS"), THE O'GARA COMPANY, an Ohio
corporation ("TOC"), THOMAS M. O'GARA ("TMO"), WILFRED T. O'GARA("WTO"), JULES
B. KROLL ("JBK"), the O'GARA EXCHANGING SHAREHOLDERS and the KRCS EXCHANGING
SHAREHOLDERS.

RECITALS

A. The Company is an Ohio public corporation and has its main office at
9113 LeSaint Drive, Fairfield, Ohio 45014. The Company's authorized capital
stock consists of 50,000,000 shares of common stock, par value of $0.01 per
share ("Company Common Stock"), of which 22,309,610 shares are issued and
outstanding as of the date hereof and none are held as treasury stock, and
1,000,000 shares of preferred stock, par value $0.01 per share, none of which is
outstanding.

B. TOC is an Ohio corporation and has its main office at 9113 LeSaint
Drive, Fairfield, Ohio 45014. TOC's authorized capital stock consists of
15,000,000 shares of common stock, par value $0.01 per share ("TOC Common
Stock"), of which 100 shares are issued and outstanding as of the date hereof,
and 100,000 shares of preferred stock, par value $0.01 per share, none of which
is outstanding.

C. KRCS is a Delaware corporation and has its main office at 900 Third
Avenue, New York, New York 10022. KRCS's authorized capital stock consists of
25,000,000 shares of common stock, par value of $0.01 per share ("KRCS Common
Stock"), of which 10 shares are issued and outstanding as of the date hereof,
and 2,500,000 shares of preferred stock, par value $0.01 per share, none of
which is outstanding.

D. The holders of the Company Common Stock are entitled to vote on this
Agreement.

E. The respective Boards of Directors of the Company, KRCS, and TOC deem it
advisable and in the best interests of their respective corporations and their
shareholders to consummate the reorganization and dissolution of the Company set
forth in this Agreement designed to (a) separate the Company's operations into
two public companies, (b) eliminate cross-ownership by JBK and the other KRCS
Exchanging Shareholders in TOC, and by TMO, WTO and the other O'Gara Exchanging
Shareholders in KRCS, and (c) liquidate and dissolve the Company, all on the
terms and conditions hereinafter set forth (collectively, the "Contemplated
Transactions").

F. Approval of this Agreement by the shareholders of the Company shall
constitute the approval and adoption of a resolution of dissolution as
contemplated by Section 1701.86 of the Ohio Revised Code.

G. The Company, KRCS, and TOC desire that, for U.S. federal income tax
purposes, the Reorganization shall qualify as tax-free to the Company and its
shareholders pursuant to Section 351(a) or 368(a)(1)(D) of the Code, and the
Exchange, the Distribution and the Liquidation shall qualify as tax-free to the
Company and its shareholders pursuant to Section 355 or 361 of the Code.

H. Certain capitalized terms used herein are defined in Article XXII
hereof.

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<PAGE> 267

NOW THEREFORE, in consideration of the premises and the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:

ARTICLE I

FORMATION AND SEPARATION

1.01 Formation of KRCS. On July 17, 2000, KRCS was incorporated pursuant
to the laws of the State of Delaware by the filing of a Certificate of
Incorporation with the State of Delaware, which was amended and restated in the
form of Exhibit 1.01(A) hereto on August 29, 2000. The initial Bylaws of KRCS
are attached hereto as Exhibit 1.01(B).

1.02 Formation of TOC. On April 4, 2000, TOC was incorporated pursuant to
the laws of the State of Ohio by the filing of Articles of Incorporation with
the State of Ohio, which were amended and restated in the form of Exhibit
1.02(A) hereto on August 28, 2000. The initial Code of Regulations of TOC is
attached hereto as Exhibit 1.02(B).

1.03 Reorganization.

(a) Prior to the Exchange, the Company shall contribute to KRCS all of the
outstanding stock it holds in the Kroll Subsidiaries and shall transfer, assign
and deliver to KRCS all of its title, right and interest in and to the KRCS
Assets. In exchange therefor, KRCS shall issue to the Company 8,499,990 shares
of KRCS Common Stock and KRCS shall assume the KRCS Liabilities and pay its
allocable portion of indebtedness as set forth in Section 1.04 below (the "Kroll
Reorganization").

(b) Prior to the Exchange, the Company shall contribute to TOC all of the
outstanding stock it holds in the O'Gara Subsidiaries and shall transfer, assign
and deliver to TOC all of its title, right and interest in and to the TOC
Assets. In exchange therefor, TOC shall issue to the Company 5,999,900 shares of
TOC Common Stock and TOC shall assume the TOC Liabilities and pay its allocable
portion of indebtedness as set forth in Section 1.04 below (the "O'Gara
Reorganization" and, together with the Kroll Reorganization, the
"Reorganization").

1.04 Financing Arrangements.

(a) Each of KRCS and TOC shall use all commercially reasonable efforts to
consummate one or more new credit facilities on or before the Exchange Date.
Prior to the Exchange, each of KRCS and TOC shall assume and then pay its
allocable portion, as set forth in Section 1.04(b) below and assumed pursuant to
Sections 1.03(a) and (b) above, of (i) the Company's indebtedness under its
credit agreement with KeyBank National Association and (ii) the $35,000,000
principal amount of, plus any interest and prepayment penalty on, the Company's
Senior Notes due May 30, 2004, so as to repay these items of indebtedness (the
"Indebtedness") in full.

(b) Prior to the Exchange KRCS shall assume and then pay 55.071% and TOC
shall assume and then pay 44.929% of the Company's Indebtedness as of June 30,
2000 up to $70 million. Indebtedness in excess of $70 million as of June 30,
2000 shall be allocated 58.508% to (and assumed by) KRCS and 41.492% to (and
assumed by) TOC and shall be paid in full prior to the Exchange.

(c) For the period from July 1, 2000 to the Exchange Date, the Company
shall maintain separate accounting records for TOC and KRCS so that, to the
extent possible, liabilities and assets will be allocated to KRCS if the
liability or asset relates to the KRCS Group and to TOC if the liability or
asset relates to the TOC Group.

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1.05 Employee Benefits.

(a) Savings Plans.

(i) Effective as of the Coverage Date, KRCS shall adopt (A) the Kroll
Risk Consulting Services, Inc. 401(k) Plan (the "KRCS Savings Plan"), which
shall be a defined contribution savings plan designed to qualify under
Section 401(a) of the Code and to preserve "protected benefits," within the
meaning of Section 411(d)(6) of the Code, accrued under the Kroll-O'Gara
Retirement Plan (the "Company Savings Plan") by those Company Savings Plan
participants who become KRCS Employees as of the Distribution Date, and (B)
the Kroll Risk Consulting Services, Inc. 401(k) Plan Trust (the "KRCS
Savings Trust"), which shall be a trust exempt from taxation under Section
501(a) of the Code. The KRCS Savings Plan shall include provisions
recognizing service of covered KRCS Employees with the Company prior to the
Coverage Date for all plan purposes. On and after the Distribution Date,
all contributions by, or for the benefit of, a KRCS Employee shall be made
to the KRCS Savings Trust.

(ii) Effective as of the Coverage Date, TOC shall adopt (A) The O'Gara
Company 401(k) Plan (the "TOC Savings Plan"), which shall be a defined
contribution savings plan designed to qualify under Section 401(a) of the
Code and to preserve "protected benefits," within the meaning of Section
411(d)(6) of the Code, accrued under the Company Savings Plan by those
Company Savings Plan participants who become TOC Employees as of the
Distribution Date, and (B) The O'Gara Company 401(k) Plan Trust (the "TOC
Savings Trust"), which shall be a trust exempt from taxation under Section
501(a) of the Code. The TOC Savings Plan shall include provisions
recognizing service of covered TOC Employees with the Company prior to the
Coverage Date for all plan purposes. On and after the Distribution Date,
all contributions by, or for the benefit of, a TOC Employee shall be made
to the TOC Savings Trust.

(iii) Subject to the conditions set forth in clauses (iv) and (v) of
this Section 1.05, as soon as practicable after the Distribution Date, the
Company shall cause a transfer from The Kroll-O'Gara Company 401(k) Plan
Trust (the "Company Savings Trust") to (A) the KRCS Savings Trust of an
amount equal to the aggregate account balances, as of the date of any such
transfer, of those Company Savings Plan participants who become KRCS
Employees and (B) the TOC Savings Trust of an amount equal to the aggregate
account balances, as of the date of any such transfer, of those Company
Savings Plan participants who become TOC Employees. The transfer from the
Company Savings Trust shall be in kind (including any participant loans
held by the Company Savings Plan with respect to KRCS Employees or TOC
Employees); provided, however, that the Company, TOC and KRCS may agree to
a transfer in another form (including, for example, an amount in cash
representing pre-Distribution contributions of KRCS Employees or TOC
Employees to the Company Savings Plan which have not yet been invested in
accordance with participant elections under the Company Savings Plan).

(iv) The transfer of assets to the KRCS Savings Trust shall occur as
soon as practicable following the latest to occur of (A) the Coverage Date,
(B) the establishment of the KRCS Savings Plan, (C) the receipt by KRCS of
a favorable determination letter from the Internal Revenue Service or other
adequate assurance that the KRCS Savings Plan is qualified under Section
401(a) of the Code, and (D) the expiration of thirty (30) days after the
Company and KRCS have filed Form 5310-A, if necessary, with the Internal
Revenue Service. As a condition to the receipt of such an asset transfer by
the KRCS Savings Trust, KRCS shall cause the KRCS Savings Plan to assume
and covenant to fully perform, pay and discharge when due all obligations
and liabilities of the Company and the Company Savings Plan for and with
respect to the account balances under the

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<PAGE> 269

Company Savings Plan of those Company Savings Plan participants whose
account balances are to be transferred to the KRCS Savings Plan.

(v) The transfer of assets to the TOC Savings Trust shall occur as
soon as practicable following the latest to occur of (A) the Coverage Date;
(B) the establishment of the TOC Savings Plan; (C) the receipt by TOC of a
favorable determination letter from the Internal Revenue Service or other
adequate assurance that the TOC Savings Plan is qualified under Section
401(a) of the Code, and (D) the expiration of thirty (30) days after the
Company and TOC have filed Form 5310-A, if necessary, with the Internal
Revenue Service. As a condition to the receipt of such an asset transfer by
the TOC Savings Trust, TOC shall cause the TOC Savings Plan to assume and
covenant to fully perform, pay and discharge when due all obligations and
liabilities of the Company and the Company Savings Plan for and with
respect to the account balances under the Company Savings Plan of those
Company Savings Plan participants whose account balances are to be
transferred to the TOC Savings Plan.

(vi) KRCS shall act as plan sponsor/administrator for the Company
Savings Plan until all of the asset transfers contemplated by this Section
1.05 are completed, and until the Company Savings Plan is terminated and
all of its assets are transferred or distributed.

(b) Welfare Plans.

(i) The Company currently maintains the Kroll-O'Gara Long Term
Disability Plan (the "LTD Plan") and The Kroll-O'Gara Company Group Term
Life Insurance Plan (the "Life Insurance Plan"), both of which are "welfare
benefit plans" within the meaning of Section 3(1) of ERISA. Not later than
the Coverage Date, KRCS shall (A) establish or otherwise make available
employee welfare benefit plans (the "KRCS Replacement Plans") providing
generally comparable disability benefits to KRCS Employees who were
participants under the LTD Plan or the Life Insurance Plan; (B) provide
that the KRCS Employees shall be eligible for immediate participation in
the KRCS Replacement Plans with no interruption of coverage; and (C) credit
the period of coverage under the LTD Plan or the Life Insurance Plan
towards any preexisting condition limitations under the KRCS Replacement
Plans. The KRCS Replacement Plans shall be structured in a manner to
eliminate any obligation of the Company to provide continuation of coverage
as contemplated in Section 4980B of the Code and Sections 601 through 608
of ERISA with respect to KRCS Employees (and their qualified beneficiaries)
after the Exchange Date. KRCS shall assume the responsibility for resolving
any claims attributable to KRCS Employees prior to the Coverage Date.

(ii) Not later than the Coverage Date, TOC shall (A) establish or
otherwise make available employee welfare benefit plans (the "TOC
Replacement Plans") providing generally comparable disability benefits to
TOC Employees who were participants under the LTD Plan or the Life
Insurance Plan; (B) provide that the TOC Employees shall be eligible for
immediate participation in the TOC Replacement Plans with no interruption
of coverage; and (C) credit the period of coverage under the LTD Plan or
the Life Insurance Plan towards any preexisting condition limitations under
the TOC Replacement Plans. The TOC Replacement Plans shall be structured in
a manner to eliminate any obligation of the Company to provide continuation
of coverage as contemplated in Section 4980B of the Code and Sections 601
through 608 of ERISA with respect to TOC Employees (and their qualified
beneficiaries) after the Exchange Date. TOC shall assume the responsibility
for resolving any claims attributable to TOC Employees prior to the
Coverage Date.

(i) A KRCS Employee or a TOC Employee who was an employee of the
Company, or a subsidiary of the Company, at the Coverage Date shall be
given credit for all years of service with

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<PAGE> 270

the Company or a subsidiary of the Company (to the extent such years of
service were recognized by the Company) performed on or prior to the
Coverage Date with respect to matters of employment generally, regardless
of whether such service credit is expressly provided for elsewhere in this
Agreement as to any particular employee benefit plan, program or practice.

(ii) Except as otherwise expressly provided herein, nothing in this
Agreement shall be construed as limiting the ability of TOC or KRCS, as
applicable, in its sole discretion, to amend or terminate any employee
benefit plan, program or practice which it now maintains or may hereafter
establish at any time or for any reason nor shall any provision of this
Agreement be construed as creating a right in any TOC Employee or KRCS
Employee under any such plan, program or practice which such employee would
not otherwise have under the terms of the plan, program or practice itself.

1.06 Treatment of Company Stock Options and Warrants.

(a) Company Stock Options. Upon the delivery by the Company to the
Distribution Agent of the stock certificates representing the shares of KRCS
Common Stock and TOC Common Stock pursuant to Section 3.01 of this Agreement,
the Company's 1996 Stock Option Plan and 2000 Stock Option Plan for Employees
(the "Company Stock Plans") and all unexercised options granted under the
Company Stock Plans will terminate pursuant to the terms thereof. On or before
the Exchange Date, the Board of Directors of the Company will terminate the
Company's Employee Stock Purchase Plan.

(b) Restricted Stock. Immediately prior to the Exchange, all outstanding
grants of shares of restricted Company Common Stock under the Company's 1998
Stock Incentive Plan shall, without regard to any vesting schedule or
restriction, automatically and immediately become fully vested.

(c) Background America/Lab Specialist/Kroll Holdings Options. If any of
the outstanding options granted under the stock option plans of Kroll Background
America Inc., Kroll Laboratory Specialists of America, Inc. or Kroll Holdings
Inc. does not terminate pursuant to its terms or the terms of the plan under
which it was granted on or before the Distribution Date, the Company will obtain
the consent of the holders of all such outstanding options to an amendment to
provide for (i) the immediate acceleration of all outstanding options upon
receipt of (x) Company shareholder approval of the Reorganization and (y) the
Private Letter Ruling and (ii) the termination of the stock option plans and any
outstanding and unexercised options immediately prior to the close of business
on the Record Date.

(d) Warrants. If any of the outstanding warrants issued by Kroll
Background America, Inc. or Kroll Laboratory Specialists of America, Inc. does
not, pursuant to its terms, either terminate immediately prior to the close of
business on the Record Date or become exercisable for shares of KRCS Common
Stock and TOC Common Stock, the Company will obtain the consent of the holders
of all such outstanding warrants to an amendment to provide for (i) the
immediate acceleration of all outstanding warrants upon receipt of (x) Company
shareholder approval of the Reorganization and (y) the Private Letter Ruling and
(ii) either (A) the exercise of such warrants for either (I) shares of KRCS
Common Stock and TOC Common Stock or (II) an amount of cash equal to the
difference between the fair market value of the Company Common Stock for which
the warrants are exercisable and the exercise price or (B) the payment of an
amount of cash to terminate the warrant. Any payment made pursuant to this
Section 1.06(d) shall be allocated 58.508% to KRCS and 41.492% to TOC.

1.07 Third-Party Consents. The parties will use all commercially
reasonable efforts to obtain any governmental approvals and third party consents
required for the Reorganization.

1.08 Other Agreements. Prior to or on the Exchange Date, the Company, TOC
and KRCS shall execute and deliver the Tax Sharing Agreement and the
Cross-Indemnification Agreement pursuant to Article VI hereof.

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ARTICLE II

EXCHANGE

2.01 Exchange by JBK and the other KRCS Exchanging Shareholders. On the
Exchange Date, each of JBK and the other KRCS Exchanging Shareholders shall
transfer to the Company that number of shares of Company Common Stock shown
opposite his or her name on Exhibit 2.01 hereto as "Shares of Company Common
Stock Owned," and the Company shall transfer to each person in exchange that
number of shares of KRCS Common Stock equal to the product of (a) a fraction,
the numerator of which is equal to the sum of the number of shares of Company
Common Stock owned by the KRCS Exchanging Shareholders and the O'Gara Exchanging
Shareholders as shown on Exhibits 2.01 and 2.02 hereto and the denominator of
which is equal to the number of shares of Company Common Stock issued and
outstanding on the Exchange Date times (b) 8,500,000 times (c) a fraction, the
numerator of which is equal to that number of shares of Company Common Stock
shown opposite his or her name on Exhibit 2.01 hereto as "Shares of Company
Common Stock Owned" and the denominator of which is equal to the sum of the
number of shares of Company Common Stock owned by the KRCS Exchanging
Shareholders as shown in Exhibit 2.01 hereto. Each KRCS Exchanging Shareholder
hereby represents and warrants that the number of shares of Company Common Stock
shown opposite his or her name on Exhibit 2.01 hereto as "Shares of Company
Common Stock Owned" represents all of the shares of Company Common Stock
beneficially owned by such individual at the date of this Agreement, except with
respect to Michael G. Cherkasky and Nazzareno E. Paciotti each of whose shares
listed as "Shares of Company Common Stock Owned" on Exhibit 2.01 hereto also
includes 2,650 shares of Company Common Stock which shall be acquired prior to
the Exchange Date through the exercise of outstanding stock options exercisable
for Company Common Stock. From the date hereof through the Exchange Date, each
KRCS Exchanging Shareholder agrees to neither acquire nor dispose of shares of
Company Common Stock except through, at the option of the Company, a cash-out
payment for outstanding options or the exercise of outstanding stock options
exercisable for Company Common Stock. To the extent shares of Company Common
Stock are acquired by a KRCS Exchanging Shareholder through the exercise of such
stock options, such KRCS Exchanging Shareholder will sell, or otherwise dispose
of his or her beneficial ownership of, such shares prior to the Exchange and
after receipt of the Private Letter Ruling; provided, however, that prior to the
Exchange and after receipt of the Private Letter Ruling Michael G. Cherkasky and
Nazzareno E. Paciotti shall sell, or otherwise dispose of his beneficial
ownership of, the number of shares of Company Common Stock exceeding the number
for each listed on Exhibit 2.01 hereto as "Shares of Company Common Stock
Owned". If the Company elects to have a KRCS Exchanging Shareholder sell shares
received upon exercise of his or her options rather than cash out such options,
and the aggregate amount received by such exchanging shareholder for the sale of
such shares is less than the product of (x) the average closing price of the
Company's common stock over the twenty trading days preceding the date of
receipt of the Private Letter Ruling (the "Average Price") and (y) the number of
shares sold, the Company shall pay to the KRCS Exchanging Shareholder an amount
equal to the amount by which (1) the product of the Average Price and the number
of shares sold exceeds (2) the aggregate amount received by such exchanging
shareholder for the sale of such shares.

2.02 Exchange by TMO, WTO and the other O'Gara Exchanging Shareholders. On
the Exchange Date, each of TMO, WTO and the other O'Gara Exchanging Shareholders
shall transfer to the Company that number of shares of Company Common Stock
shown opposite his name on Exhibit 2.02 hereto as "Shares of Company Common
Stock Owned," and the Company shall transfer to each person in exchange that
number of shares of TOC Common Stock equal to the product of (a) a fraction, the
numerator of which is equal to the sum of the number of shares of Company Common
Stock owned by the KRCS Exchanging Shareholders and the O'Gara Exchanging
Shareholders as shown on Exhibits 2.01 and 2.02 hereto and the

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denominator of which is equal to the number of shares of Company Common Stock
issued and outstanding on the Exchange Date times (b) 6,000,000 times (c) a
fraction, the numerator of which is equal to that number of shares of Company
Common Stock shown opposite his name on Exhibit 2.02 hereto as "Shares of
Company Common Stock Owned" and the denominator of which is equal to the sum of
the number of shares of Company Common Stock owned by the O'Gara Exchanging
Shareholders as shown in Exhibit 2.02 hereto. Each O'Gara Exchanging Shareholder
hereby represents and warrants that the number of shares of Company Common Stock
shown opposite his or her name on Exhibit 2.02 hereto as "Shares of Company
Common Stock Owned" represents all of the shares of Company Common Stock
beneficially owned by such individual at the date of this Agreement. From the
date hereof through the Exchange Date, each O'Gara Exchanging Shareholder agrees
to neither acquire nor dispose of shares of Company Common Stock except through,
at the option of the Company, a cash-out payment for outstanding options or the
exercise of outstanding stock options exercisable for Company Common Stock. To
the extent shares of Company Common Stock are acquired by an O'Gara Exchanging
Shareholder through the exercise of such stock options, such O'Gara Exchanging
Shareholder will sell, or otherwise dispose of his or her beneficial ownership
of, such shares prior to the Exchange and after receipt of the Private Letter
Ruling. If the Company elects to have an O'Gara Exchanging Shareholder sell
shares received upon exercise of his or her options rather than cash out such
options, and the aggregate amount received by such exchanging shareholder for
the sale of such shares is less than the product of (x) the average closing
price of the Company's common stock over the twenty trading days preceding the
date of receipt of the Private Letter Ruling (the "Average Price") and (y) the
number of shares sold, the Company shall pay to the O'Gara Exchanging
Shareholder an amount equal to the amount by which (1) the product of the
Average Price and the number of shares sold exceeds (2) the aggregate amount
received by such exchanging shareholder for the sale of such shares.

2.03 Effect of Contemplated Transactions. Notwithstanding anything in this
Agreement to the contrary, the effect of this Agreement shall be that,
immediately after the Distribution, the shareholders of the Company other than
the O'Gara Exchanging Shareholders and the KRCS Exchanging Shareholders will own
the same percentages of the common stock of each of TOC and KRCS as they owned
of the common stock of the Company immediately prior to the Exchange.

ARTICLE III

THE DISTRIBUTION

3.01 The Distribution. Subject to the conditions set forth in Articles VI,
VII and VIII hereof, and subject to and immediately after the completion of the
Exchange, the Company will deliver to the Distribution Agent for the benefit of
holders of record of Company Common Stock at the Record Date, two stock
certificates, endorsed by the Company in blank, representing all of the
outstanding shares of KRCS Common Stock and all of the outstanding shares of TOC
Common Stock owned by the Company after the Exchange. As soon as practicable
after the Record Date, the Company shall deliver to the Distribution Agent a
list of shareholders of the Company at the Record Date certified by the
Secretary of the Company. The Company shall instruct the Distribution Agent to
distribute promptly on the Distribution Date to each holder of Company Common
Stock at the Record Date, certificates representing the number of shares of KRCS
Common Stock and TOC Common Stock that such holder is entitled to receive in the
Distribution, determined as provided in Sections 3.02 and 3.03 hereof. In
addition, the Company, TOC and KRCS, as the case may be, will provide to the
Distribution Agent all share certificates, share powers and any information
required in order to complete the Distribution.

3.02 Number of Shares of KRCS Common Stock. Subject to Section 3.06
hereof, each holder of Company Common Stock at the Record Date will be entitled
to receive in the Distribution a number of shares of KRCS Common Stock equal to
the product of (a) the total number of shares of KRCS

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Common Stock then held by the Company times (b) a fraction, the numerator of
which is the number of shares of Company Common Stock owned by such holder at
the Record Date and the denominator of which is the number of shares of Company
Common Stock issued and outstanding at the Record Date; provided that no
fractional shares of KRCS Common Stock will be issued and, instead of fractional
shares, a cash payment will be made pursuant to Section 3.05 hereof.

3.03 Number of Shares of TOC Common Stock. Subject to Section 3.06 hereof,
each holder of Company Common Stock at the Record Date will be entitled to
receive in the Distribution a number of shares of TOC Common Stock equal to the
product of (a) the total number of shares of TOC Common Stock then held by the
Company times (b) a fraction, the numerator of which is the number of shares of
Company Common Stock owned by such holder at the Record Date and the denominator
of which is the number of shares of Company Common Stock issued and outstanding
at the Record Date; provided that no fractional shares of TOC Common Stock will
be issued and, instead of fractional shares, a cash payment will be made
pursuant to Section 3.05 hereof.

3.04 Actions Prior to the Exchange and Distribution.

(a) The Company shall prepare and file with the Commission, under the
Exchange Act, a Proxy Statement for the Special Meeting (the "Proxy Statement")
containing such information concerning the Company, TOC, KRCS, the
Reorganization, the Exchange, the Distribution, the dissolution of the Company
and such other matters as the Company shall reasonably determine and as may be
required by law. KRCS shall prepare and file with the Commission a registration
statement on Form S-1 under the Act, including a prospectus meeting the
requirements of Section 10 of the Act (the "KRCS Prospectus"), with respect to
the KRCS Common Stock to be delivered in the Exchange and distributed in the
Distribution (the "KRCS Registration Statement"). KRCS (with the assistance of
the Company as described below) shall use its commercially reasonable efforts to
cause the KRCS Registration Statement to be declared effective under the Act as
soon as may be practicable. TOC shall prepare and file with the Commission a
registration statement on Form S-1 under the Act, including a prospectus meeting
the requirements of Section 10 of the Act (the "TOC Prospectus"), with respect
to the TOC Common Stock to be delivered in the Exchange and distributed in the
Distribution (the "TOC Registration Statement"). TOC (with the assistance of the
Company as described below) shall use its commercially reasonable efforts to
cause the TOC Registration Statement to be declared effective under the Act as
soon as may be practicable. The Company (with the assistance of KRCS and TOC as
described below) shall use its commercially reasonable efforts to cause the
Proxy Statement to be cleared for mailing as soon as may be practicable and to
mail the Proxy Statement, the TOC Prospectus and the KRCS Prospectus promptly
thereafter to the holders of Company Common Stock. The parties agree to
cooperate in their efforts to obtain Commission clearance of the TOC
Registration Statement, the KRCS Registration Statement and the Proxy Statement,
including, without limitation, exchanging drafts of the Proxy Statement, the TOC
Registration Statement and the KRCS Registration Statement in a timely manner,
communicating any information as may be requested by any party hereto in a
timely manner for inclusion in the Proxy Statement, the TOC Registration
Statement and the KRCS Registration Statement and cooperating in the preparation
of prompt responses to all Commission comments on the KRCS Registration
Statement, the TOC Registration Statement and the Proxy Statement.

(b) As soon as practicable after the effectiveness of the KRCS Registration
Statement and the TOC Registration Statement, and the Commission's notification
to the Company that it has no further comments on the Proxy Statement, the
Company shall duly call and hold the Special Meeting in accordance with its Code
of Regulations and applicable law. Subject to its fiduciary obligations, at the
Special Meeting, the Board of Directors of the Company (with the concurrence of
the Special Committee) shall present the Contemplated Transactions to the
Company's shareholders for their approval and shall recommend approval of all of
the Contemplated Transactions.

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(c) The Company, TOC and KRCS shall take all such actions as may be
necessary or appropriate in connection with the Exchange and the Distribution
under the state securities, or "blue sky," laws of the United States (and any
comparable laws of any foreign jurisdiction).

(d) Each of the Company, TOC and KRCS shall take all commercially
reasonable steps that are within its control and are necessary and appropriate
to cause the conditions set forth in Articles VI, VII and VIII to be satisfied
and to effect the Distribution on the Distribution Date.

(e) KRCS shall prepare and file, and shall use all commercially reasonable
efforts to have approved, an application for the listing of the KRCS Common
Stock on the National Market tier of The Nasdaq Stock Market.

(f) TMO covenants and agrees to take such action as may be required in
order to comply with Section 1701.831 of the Ohio Revised Code including,
without limitation, delivering to the Company an acquiring person statement.

(g) TOC shall prepare and file, and shall use all commercially reasonable
efforts to have approved, an application for the listing of the TOC Common Stock
on the National Market tier of The Nasdaq Stock Market.

(h) Each of JBK, TMO and WTO (in his individual capacity as a shareholder
of the Company) covenants and agrees with each other (but not with the Company,
KRCS or TOC) to vote all of his shares of Company Common Stock in favor of all
of the Contemplated Transactions at the Special Meeting.

(i) Each party to this Agreement shall take all such action as may be
reasonably necessary or appropriate and shall cooperate fully with the others in
applying for all necessary governmental approvals and in prosecuting
applications, including the execution of supplemental agreements and other
documents consistent with the terms of this Agreement.

3.05 Fractional Shares. No certificates or scrip evidencing fractional
shares of KRCS Common Stock or TOC Common Stock will be issued in the
Distribution. Instead of issuing fractional shares, as soon as practicable after
the Record Date, the Company shall direct the Distribution Agent to determine
the number, if any, of fractional shares of KRCS Common Stock and TOC Common
Stock allocable to each holder of Company Common Stock as of the Record Date; to
aggregate all such fractional shares and sell the whole shares obtained thereby
in open market transactions, at then-prevailing trading prices; and to cause to
be distributed as promptly as practicable on or after the Distribution Date to
each such holder or for the benefit of each beneficial owner to which a
fractional share shall be allocable, such holder's or owner's ratable share of
the proceeds of such sale, after making appropriate deductions of the amount
required to be withheld for federal income tax purposes and after deducting an
amount equal to all brokerage charges, commissions and transfer taxes attributed
to such sale.

3.06 Dissenters' Rights. Notwithstanding any provisions of this Agreement
to the contrary, any shares of Company Common Stock outstanding immediately
prior to the Distribution Date held by a holder who has demanded appraisal of
those shares in accordance with the provisions of Section 1701.85 of the Ohio
Revised Code and as of the Distribution Date has not withdrawn or lost such
right to such appraisal ("Dissenting Shares") shall not represent a right to
receive KRCS Common Stock and TOC Common Stock pursuant to Section 3.01 hereof,
but the holder shall only be entitled to such rights as are granted by Section
1701.85 of the Ohio Revised Code. If payment is made by TOC and KRCS in
connection with any dissenter, the Dissenting Shares shall be aggregated and
sold with the fractional shares, if any, pursuant to Section 3.05 hereof. Any
net proceeds from the sale of Dissenting Shares (i.e. the TOC Common Stock and
the KRCS Common Stock underlying such Dissenting Shares) shall be allocated
58.508% to KRCS and 41.492% to TOC. If a holder of shares of Company Common

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Stock who demands appraisal of those shares under Ohio law shall effectively
withdraw or lose (through failure to perfect or otherwise) the right to
appraisal, then, as of the Distribution Date or the occurrence of such event,
whichever last occurs, those shares shall represent only the right to receive
KRCS Common Stock and TOC Common Stock as provided in Section 3.01 hereof,
without interest. The Company shall give TOC and KRCS prompt notice of any
written demands for appraisal of any shares of Company Common Stock, attempted
withdrawals of such demands, and any other instruments served pursuant to Ohio
law and received by the Company relating to shareholders' rights of appraisal.
In addition, the Company shall give the Distribution Agent notice of any written
demands for appraisal of any shares of Company Common Stock and shall instruct
the Distribution Agent to sell such Dissenting Shares (or the shares of TOC
Common Stock and the KRCS Common Stock underlying such Dissenting Shares) as
provided above rather than to distribute shares of TOC Common Stock and KRCS
Common Stock in the Distribution to the holder making such demand.

ARTICLE IV

THE DISSOLUTION

As soon as practicable following the Distribution and in accordance with
Ohio law, the Company shall take the following steps in connection with its
dissolution:

(a) The filing of a Certificate of Dissolution of the Company (the
"Certificate of Dissolution") pursuant to Section 1701.86 of the Ohio
Revised Code; and

(b) The completion of all actions that may be necessary, appropriate
or desirable to dissolve and terminate the corporate existence of the
Company.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.01 Representations and Warranties of the Company. The Company represents
and warrants to each of the other parties as follows:

(a) Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio.

(b) Authorization of Transactions. The Company has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to perform its obligations hereunder
and thereunder. This Agreement does, and the Ancillary Agreements to which
it is a party, when executed and delivered by the Company, will, constitute
the valid, legal and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms and
conditions, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally.

(c) Capitalization. The authorized capital stock of the Company is as
set forth in Recital A hereof. All of the issued and outstanding shares of
Company Common Stock have been and are duly authorized, validly issued,
fully paid and non-assessable.

(d) KRCS Common Stock. Upon the Kroll Reorganization and prior to the
Exchange, (i) all shares of KRCS Common Stock will be duly authorized,
validly issued, fully paid and non-assessable; and (ii) the Company will
hold of record all of the shares of KRCS Common Stock, free and clear of
any restrictions on transfer (other than any restrictions under the Act and
state

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securities laws), Taxes, security interests, liens, options, warrants,
purchase rights, contracts, commitments, equities, claims and demands. Upon
the Exchange, JBK and the other KRCS Exchanging Shareholders will receive
good and marketable title to the shares of KRCS Common Stock they will
receive, free and clear of any restriction on transfer (other than any
restrictions under the Act and state securities laws), Taxes, security
interests, liens, options, warrants, purchase rights, contracts,
commitments, equities, claims and demands.

(e) TOC Common Stock. Upon the O'Gara Reorganization and prior to the
Exchange, (i) all shares of TOC Common Stock will be duly authorized,
validly issued, fully paid, and non-assessable; and (ii) the Company will
hold of record all of the shares of TOC Common Stock, free and clear of any
restrictions on transfer (other than any restrictions under the Act and
state securities laws), Taxes, security interests, liens, options,
warrants, purchase rights, contracts, commitments, equities, claims and
demands. Upon the Exchange, TMO, WTO and the other O'Gara Exchanging
Shareholders will receive good and marketable title to the shares of TOC
Common Stock they will receive, free and clear of any restriction on
transfer (other than any restrictions under the Act and state securities
laws), Taxes, security interests, liens, options, warrants, purchase
rights, contracts, commitments, equities, claims and demands.

(f) Subsidiary Stock. Immediately after giving effect to the
Reorganization, (i) all shares of stock of the Kroll Subsidiaries, O'Gara
Subsidiaries and Securify will be duly authorized, validly issued, fully
paid and non-assessable; (ii) KRCS will own directly or indirectly all of
the shares of stock of the Kroll Subsidiaries and 7,500,000 shares of
Securify Common Stock, free and clear of any restrictions on transfer
(other than any restrictions under the Act and state securities laws),
Taxes, security interests, liens, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands; and (iii) TOC will
own directly or indirectly all of the shares of stock of the O'Gara
Subsidiaries and 11,250,000 shares of Securify Common Stock, free and clear
of any restrictions on transfer (other than any restrictions under the Act
and state securities laws), Taxes, security interests, liens, options,
warrants, purchase rights, contracts, commitments, equities, claims and
demands.

(g) Proxy Statement. When the Proxy Statement is mailed to the
Company's shareholders, and at all times subsequent thereto up to and
including the Distribution, the Proxy Statement (other than with respect to
any information therein provided by KRCS, JBK, TOC, TMO or WTO specifically
for inclusion therein), (i) will comply as to form in all material respects
with the provisions of the Exchange Act and (ii) will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Distribution, any event relating to
the Company or the Contemplated Transactions shall occur which, pursuant to
the Exchange Act or the rules and regulations thereunder, should be
disclosed in the Proxy Statement and which is not so disclosed, the Company
shall promptly inform the other parties hereto and shall promptly prepare
and distribute to all holders of Company Common Stock one or more
supplements to the Proxy Statement providing the necessary disclosure(s).

(h) TOC Registration Statement. When the TOC Registration Statement
is declared effective by the Commission and when the TOC Prospectus is
mailed to the Company's shareholders, and at all times subsequent thereto
up to and including the Distribution, the information in the TOC
Registration Statement provided to TOC by the Company for inclusion therein
will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which
they

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are made, in the case of the TOC Prospectus, not misleading. If at any time
prior to the Distribution, any event relating to the Company shall occur
which, pursuant to the Act or the rules and regulations thereunder, should
be disclosed in the TOC Registration Statement and which is not so
disclosed, the Company shall promptly inform the other parties hereto and
provide to TOC all necessary information to allow TOC to amend or
supplement appropriately the TOC Registration Statement and/or the TOC
Prospectus.

(i) KRCS Registration Statement. When the KRCS Registration Statement
is declared effective by the Commission and when the KRCS Prospectus is
mailed to the Company's shareholders, and at all times subsequent thereto
up to and including the Distribution, the information in the KRCS
Registration Statement provided to KRCS by the Company for inclusion
therein will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which
they are made, in the case of the KRCS Prospectus, not misleading. If at
any time prior to the Distribution, any event relating to the Company shall
occur which, pursuant to the Act or the rules and regulations thereunder,
should be disclosed in the KRCS Registration Statement and which is not so
disclosed, the Company shall promptly inform the other parties hereto and
provide to KRCS all necessary information to allow KRCS to amend or
supplement appropriately the KRCS Registration Statement and/or the KRCS
Prospectus.

5.02 Representations and Warranties of KRCS. KRCS represents and warrants
to each of the other parties as follows:

(a) Organization of the Company. KRCS is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware.

(b) Authorization of Transactions. KRCS has full corporate power and
authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to perform its obligations hereunder
and thereunder. This Agreement does, and the Ancillary Agreements to which
it is a party, when executed and delivered by KRCS, will, constitute the
valid, legal and binding obligations of KRCS, enforceable against KRCS in
accordance with their respective terms and conditions, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally.

(c) Capitalization. The authorized capital stock of KRCS is as set
forth in Recital C hereof. Upon consummation of the Kroll Reorganization,
8,500,000 shares of KRCS Common Stock shall be issued and outstanding, all
of which shall be held by the Company.

(d) KRCS Registration Statement. When the KRCS Registration Statement
is declared effective by the Commission and when the KRCS Prospectus is
mailed to the Company's shareholders, and at all times subsequent thereto
up to and including the Distribution, the KRCS Registration Statement
(other than with respect to any information therein provided by the
Company, TOC or any O'Gara Exchanging Shareholder specifically for
inclusion therein) (i) will comply as to form in all material respects with
the provisions of the Act and (ii) will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements contained therein, in light of
the circumstances under which they are made in the case of the KRCS
Prospectus, not misleading. If at any time prior to the Distribution, any
event relating to KRCS shall occur which, pursuant to the Act or the rules
and regulations thereunder, should be disclosed in the KRCS Registration
Statement and which is not so disclosed, KRCS shall promptly inform the
other parties hereto and shall promptly amend or supplement the KRCS
Registration Statement and/or the KRCS Prospectus as appropriate and

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distribute to all holders of Company Common Stock amended material or
supplements providing the necessary disclosures(s).

(e) TOC Registration Statement. When the TOC Registration Statement
is declared effective by the Commission and when the TOC Prospectus is
mailed to the Company's shareholders, and at all times subsequent thereto
up to and including the Distribution, the information in the TOC
Registration Statement provided by KRCS for inclusion therein will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which
they are made in the case of the TOC Prospectus, not misleading. If at any
time prior to the Distribution, any event relating to KRCS shall occur
which, pursuant to the Act or the rules and regulations thereunder, should
be disclosed in the TOC Registration Statement and which is not so
disclosed, KRCS shall promptly inform the other parties hereto and provide
to TOC all necessary information to allow TOC to amend or supplement
appropriately the TOC Registration Statement and/or the TOC Prospectus.

(f) Proxy Statement. When the Proxy Statement is mailed to the
Company's shareholders, and at all times subsequent thereto up to and
including the Distribution, the information in the Proxy Statement provided
by KRCS for inclusion therein will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements contained therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Distribution, any event relating to KRCS shall occur which,
pursuant to the Exchange Act or the rules and regulations thereunder,
should be disclosed in the Proxy Statement and which is not so disclosed,
KRCS shall promptly inform the other parties hereto and provide to the
Company all necessary information to allow the Company to amend or
supplement appropriately the Proxy Statement.

5.03 Representations and Warranties of TOC. TOC represents and warrants to
each of the other parties as follows:

(a) Organization of the Company. TOC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio.

(b) Authorization of Transactions. TOC has full corporate power and
authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to perform its obligations hereunder
and thereunder. This Agreement does, and the Ancillary Agreements to which
it is a party, when executed and delivered by TOC, will, constitute the
valid, legal and binding obligations of TOC, enforceable against TOC in
accordance with their respective terms and conditions, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally.

(c) Capitalization. The authorized capital stock of TOC is as set
forth in Recital B hereof. Upon consummation of the O'Gara Reorganization,
6,000,000 shares of TOC Common Stock shall be issued and outstanding, all
of which shall be held by the Company.

(d) TOC Registration Statement. When the TOC Registration Statement
is declared effective by the Commission and when the TOC Prospectus is
mailed to the Company's shareholders, and at all times subsequent thereto
up to and including the Distribution, the TOC Registration Statement (other
than with respect to any information therein provided by the Company, KRCS
or any KRCS Exchanging Shareholder specifically for inclusion therein) (i)
will comply as to form in all material respects with the provisions of the
Act and (ii) will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the

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statements contained therein, in light of the circumstances under which
they are made, in the case of the TOC Prospectus, not misleading. If at any
time prior to the Distribution, any event relating to TOC shall occur
which, pursuant to the Act or the rules and regulations thereunder, should
be disclosed in the TOC Registration Statement and which is not so
disclosed, TOC shall promptly inform the other parties hereto and shall
promptly amend or supplement the TOC Registration Statement and/or the TOC
Prospectus as appropriate and distribute to all holders of Company Common
Stock amended material or supplements providing the necessary
disclosures(s).

(e) Proxy Statement. When the Proxy Statement is mailed to the
Company's shareholders, and at all times subsequent thereto up to and
including the Distribution, the information in the Proxy Statement provided
by TOC for inclusion therein will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements contained therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Distribution, any event relating to TOC shall occur which,
pursuant to the Exchange Act or the rules and regulations thereunder,
should be disclosed in the Proxy Statement and which is not so disclosed,
TOC shall promptly inform the other parties hereto and provide to the
Company all necessary information to allow the Company to amend or
supplement appropriately the Proxy Statement.

(f) KRCS Registration Statement. When the KRCS Registration Statement
is declared effective by the Commission and when the KRCS Prospectus is
mailed to the Company's shareholders, and at all times subsequent thereto
up to and including the Distribution, the information in the KRCS
Registration Statement provided by TOC for inclusion therein will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which
they are made, in the case of the KRCS Prospectus, not misleading. For
purposes of this Agreement, the information provided by TOC for inclusion
in the KRCS Registration Statement shall include the financial information
of TOC included therein. If at any time prior to the Distribution, any
event relating to TOC shall occur which, pursuant to the Act or the rules
and regulations thereunder, should be disclosed in the KRCS Registration
Statement and which is not so disclosed, TOC shall promptly inform the
other parties hereto and provide to KRCS all necessary information to allow
KRCS to amend or supplement appropriately the KRCS Registration Statement
and/or the KRCS Prospectus.

5.04 Representations and Warranties of JBK and the other KRCS Exchanging
Shareholders. In connection with the Exchange, each of JBK and the other KRCS
Exchanging Shareholders severally represents and warrants to the other parties
as to himself or herself as follows:

(a) Authorization. He or she has full power and authority to execute
and deliver this Agreement and to perform his or her obligations hereunder.
This Agreement constitutes his or her valid, legal and binding obligation,
enforceable against him or her in accordance with its terms and conditions,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally.

(b) Non-contravention. Neither the execution and the delivery of this
Agreement by him or her, nor the consummation by him or her of the
transactions contemplated hereby: (A) violates any statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or other
restriction of any government, governmental agency or court to which he or
she is subject, or (B) conflicts with, results in a breach of, constitutes
a default under, results in the acceleration of, creates in any person or
entity the right to accelerate, terminate, modify or cancel, or requires
any notice under any agreement, contract, lease, license, instrument or
other arrangement to which he or she is a

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party or by which he or she is bound or to which his or her assets are
subject, which, as a result of either (A) or (B) above, would materially
impede, restrict or otherwise prohibit his or her ability to perform his or
her obligations under this Agreement.

(c) Title. As of the date hereof, JBK and each KRCS Exchanging
Shareholder beneficially owns, directly or indirectly, the shares of
Company Common Stock listed opposite his or her name on Exhibit 2.01 as
"Shares of Company Common Stock Owned," all of which are held by him or her
free and clear of any restrictions on transfer (other than any restrictions
under the Act and state securities laws), Taxes, security interests, liens,
pledges, options, warrants, purchase rights, contracts, commitments,
equities, claims and demands. He or she is not a party to any option,
warrant, purchase right, pledge or other contract or commitment that could
require him or her to sell, transfer or otherwise dispose of any Company
Common Stock (other than pursuant to this Agreement). He or she is not a
party to any voting trust, proxy or other agreement or understanding with
respect to any shares of Company Common Stock owned by him or her.

(d) Disposition of Shares. JBK hereby represents that he has no plan
or intention to sell, exchange, transfer by gift, or otherwise dispose of
any of his shares of KRCS Common Stock after the Distribution.

5.05 Representations and Warranties of TMO, WTO and the other O'Gara
Exchanging Shareholders. In connection with the Exchange, each of TMO, WTO and
the other O'Gara Exchanging Shareholders severally represents and warrants to
the other parties as to himself as follows:

(a) Authorization. He has full power and authority to execute and
deliver this Agreement and to perform his obligations hereunder. This
Agreement constitutes his valid, legal and binding obligation, enforceable
against him in accordance with its terms and conditions, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally.

(b) Non-contravention. Neither the execution and the delivery of this
Agreement by him, nor the consummation by him of the transactions
contemplated hereby: (A) violates any statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of
any government, governmental agency or court to which he is subject, or (B)
conflicts with, results in a breach of, constitutes a default under,
results in the acceleration of, creates in any person or entity the right
to accelerate, terminate, modify or cancel, or requires any notice under
any agreement, contract, lease, license, instrument or other arrangement to
which he is a party or by which he is bound or to which his assets are
subject which, as a result of either (A) or (B) above, would materially
impede, restrict or otherwise prohibit his ability to perform his
obligations under this Agreement or complete the Contemplated Transactions.

(c) Title. Except as set forth on Exhibit 2.02, (i) as of the date
hereof, TMO, WTO and each O'Gara Exchanging Shareholder beneficially owns,
directly or indirectly, the shares of Company Common Stock listed opposite
his name on Exhibit 2.02 as "Shares of Company Common Stock Owned," all of
which are held by him, free and clear of any restrictions on transfer
(other than any restrictions under the Act and state securities laws),
Taxes, security interests, liens, pledges, options, warrants, purchase
rights, contracts, commitments, equities, claims and demands; (ii) he is
not a party to any option, warrant, purchase right, pledge or other
contract or commitment that could require him to sell, transfer or
otherwise dispose of any Company Common Stock (other than pursuant to this
Agreement); and (iii) he is not a party to any voting trust, proxy or other
agreement or understanding with respect to any shares of Company Common
Stock owned by him.

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(d) Disposition of Shares. TMO hereby represents that he has no plan
or intention to sell, exchange, transfer by gift, or otherwise dispose of
any of his shares of TOC Common Stock after the Distribution.

ARTICLE VI

CONDITIONS TO OBLIGATIONS OF THE COMPANY,
KRCS, TOC, JBK, TMO, WTO, THE O'GARA EXCHANGING SHAREHOLDERS
AND THE KRCS EXCHANGING SHAREHOLDERS

The obligations of the Company, KRCS, TOC, JBK, TMO, WTO, the other O'Gara
Exchanging Shareholders and the other KRCS Exchanging Shareholders under this
Agreement are subject to the following conditions being fulfilled on or before
the Exchange Date:

6.01 Necessary Governmental Approvals. All necessary governmental
approvals shall have been received from any governmental authority, and all
necessary waiting periods shall have expired, including all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act").

6.02 Effectiveness of the KRCS Registration Statement and the TOC
Registration Statement. The KRCS Registration Statement and the TOC
Registration Statement shall have become effective pursuant to an order of
the Commission, and there shall have been no stop order issued or
threatened by the Commission suspending the effectiveness of the KRCS
Registration Statement or the TOC Registration Statement.

6.03 No Injunction. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Contemplated Transactions shall be in effect.

6.04 Opinion of Financial Advisor. The Special Committee of the Board
of Directors of the Company shall have received an opinion from Bear
Stearns & Co. Inc., dated the date of this Agreement, to the effect that
the Distribution is fair, from a financial point of view, to all of the
holders of Company Common Stock other than the KRCS Exchanging Shareholders
and the TOC Exchanging Shareholders, and such opinion shall not have been
withdrawn.

6.05 Shareholder Approval. The Contemplated Transactions shall have
been approved at the Special Meeting by the requisite votes of the holders
of Company Common Stock.

6.06 Control Share Acquisition. The Company shall have received from
TMO an acquiring person statement pursuant to and in accordance with
Section 1701.831 of the Ohio Revised Code.

6.07 Required Consents. All third-party consents, the failure of
which to receive would have a material adverse effect on KRCS or TOC (the
"Required Consents"), prior to consummation of the Contemplated
Transactions shall have been received, including but not limited to the
consent of any lender to the Company.

6.08 IRS Tax Ruling. The Company shall have received the Private
Letter Ruling from the Internal Revenue Service and such ruling shall
continue in effect and be in form and substance satisfactory to the
Company, TOC and KRCS.

6.09 Nasdaq Listing. The KRCS Common Stock and the TOC Common Stock
shall have been approved for listing on the National Market tier of The
Nasdaq Stock Market upon official notice of issuance.

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6.10 Tax Sharing Agreement. The Company, TOC and KRCS shall have
entered into the Tax Sharing Agreement.

6.11 Cross-Indemnification Agreement. The Company, TOC and KRCS shall
have entered into the Cross-Indemnification Agreement.

6.12 Termination of Employment. The Employment Agreement between the
Company and Michael G. Cherkasky shall be assigned to and assumed by KRCS,
and the Employment Agreements between the Company and each of JBK and
Nazzareno E. Paciotti shall be terminated or assigned to and assumed by
KRCS, without further obligation to or by the Company or TOC and the
Employment Agreements between the Company and each of TMO, WTO, Abram S.
Gordon and Nicholas P. Carpinello shall be terminated or assigned to and
assumed by TOC without further obligation to or by the Company or KRCS and
each such person shall have agreed to waive any rights to severance or
other payments under his Employment Agreement; provided, however, that the
termination of an agreement shall not affect any provisions thereof, such
as those relating to confidentiality and non-competition, which by the
terms of the agreement survive its termination.

6.13 Supplemental Documents. The Company, TOC and KRCS shall have
entered into (a) one or more bills of sale and instruments of assignment
with respect to the assets to be transferred pursuant to Section 1.03 and
(b) an assignment and assumption agreement with respect to the liabilities
to be assumed pursuant to Section 1.03, all of which shall be in form and
substance reasonably satisfactory to each party.

6.14 Completion of Transactions. The transactions contemplated by
Sections 1.01, 1.02, 1.03, 1.04, 1.05 and 1.06 shall have been completed.

ARTICLE VII

CONDITION TO OBLIGATIONS OF THE COMPANY, TOC
TMO, WTO AND THE OTHER O'GARA EXCHANGING SHAREHOLDERS

The obligations of the Company, TOC, TMO, WTO and the other O'Gara
Exchanging Shareholders under this Agreement are subject to the following
additional condition being fulfilled on or before the Exchange Date:

7.01 Representations and Warranties True; Covenants and Obligations
Performed. All of the representations and warranties of KRCS, JBK and the
other KRCS Exchanging Shareholders herein shall have been true and complete
when made and shall be true and complete in all material respects as of the
Exchange Date, with the same force and effect as though such
representations and warranties had been made at the Exchange Date. KRCS,
JBK and the other KRCS Exchanging Shareholders shall have performed in all
material respects all covenants, agreements and obligations to be performed
by them hereunder prior to or at the Exchange Date. KRCS shall have
delivered to the Company certificates of its officers, and JBK and the
other KRCS Exchanging Shareholders shall have delivered to the Company a
certificate, to that effect.

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ARTICLE VIII

CONDITION TO OBLIGATIONS OF THE COMPANY, KRCS, JBK AND THE
OTHER KRCS EXCHANGING SHAREHOLDERS

The obligations of the Company, KRCS, JBK and the other KRCS Exchanging
Shareholders under this Agreement are subject to the following additional
condition being fulfilled on or before the Exchange Date:

8.01 Representations and Warranties True; Covenants and Obligations
Performed. All of the representations and warranties of the Company, TOC,
TMO, WTO and the other O'Gara Exchanging Shareholders herein shall have
been true and complete when made and shall be true and complete in all
material respects as of the Exchange Date, with the same force and effect
as though such representations and warranties had been made at the Exchange
Date. The Company, TOC, TMO, WTO and the other O'Gara Exchanging
Shareholders shall have performed in all material respects all covenants,
agreements and obligations to be performed by them hereunder prior to or at
the Exchange Date. Each of the Company and TOC shall have delivered to KRCS
certificates of its officers, and TMO and WTO and the other O'Gara
Exchanging Shareholders shall have delivered to KRCS a certificate, to that
effect.

ARTICLE IX

COVENANTS

9.01 Access to Properties and Records. From the date hereof until the
Distribution Date, the Company, TOC and KRCS, and their officers, employees,
attorneys, accountants and other authorized agents, shall be given access to all
of the offices, properties and records of each of the Company, TOC and KRCS on
reasonable notice to allow each to make an investigation of the businesses,
assets and affairs of the others. The Company, TOC and KRCS shall be permitted
to make such extracts or copies of such documents, books or records of the
others as each may desire and each of KRCS, TOC and the Company shall furnish to
the others such financial and operating data and other information concerning
its business, assets and affairs as is reasonably requested. Each of KRCS, TOC
and the Company shall instruct its accountants and attorneys to disclose all
non-privileged information they may have with respect to its business, assets
and affairs as is reasonably requested by the others. From and after the
Distribution Date, the Company, TOC and KRCS and their officers, employees,
attorneys, accountants and other authorized agents shall be given access to all
of the offices, properties and records of each of the Company, TOC and KRCS and
their respective subsidiaries as are necessary or helpful in defending any
claims for which the party is or may be liable or in the general transition of
the businesses pursuant to this Agreement or as required by the Tax Sharing
Agreement; provided, however, that the provisions of the following sentence of
this Section 9.01 regarding confidential information shall apply. The
information concerning KRCS, TOC and the Company received by the others during
the course of its investigation shall be treated as confidential (subject to
such disclosure as may be required by applicable law with prompt notice thereof
to be given to the Company, TOC or KRCS, as applicable) and all extracts and
copies of documents, books and records received by any of the Company, TOC or
KRCS from one of the others shall be returned or destroyed no later than thirty
(30) days after the Distribution Date if the Distribution is consummated, except
as required by the Tax Sharing Agreement.

9.02 Operations Pending Distribution. KRCS, TOC and the Company will be
operated in all material respects in the ordinary course of business consistent
with prior practice without substantial change in current operational policy or
plans, and in compliance in all material respects with applicable laws, and each
of the Company, TOC and KRCS will use commercially reasonable efforts to
maintain

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its properties and facilities in their present condition, reasonable use and
ordinary wear and tear excepted, to retain each of its key employees, and to
maintain each of its material assets and relationships with its customers and
others having business relations with KRCS, TOC or the Company. KRCS, TOC and
the Company further agree that from the date hereof to the Distribution Date,
neither it nor any of its subsidiaries will, without the prior written consent
of the parties hereto and except as specifically contemplated by this Agreement
and/or the Tax Sharing Agreement:

(a) Declare any dividends, make any distribution of assets to its
shareholders or purchase any shares of KRCS Common Stock, TOC Common Stock
or Company Common Stock or any stock option;

(b) Issue additional shares of common stock, or any securities
exercisable for or convertible into common stock other than pursuant to
existing stock options or warrants;

(c) Except as may be required by law, enter into, adopt, amend or
terminate any employee benefit or welfare trust, plan or arrangement;

(d) Take or agree to take any action which would result in any of the
conditions set forth in Articles VI, VII and VIII hereof not being
satisfied at or prior to the Exchange Date; or

(e) Take or agree to take any action that would be inconsistent with
any statement or representation made in the ruling request delivered to the
IRS on August 24, 2000 as supplemented by further submissions, or that
might be reasonably likely to cause the Reorganization or the Distribution
to be taxable to the Company, KRCS, TOC or any of their shareholders (other
than with respect to any cash received by shareholders in lieu of
fractional shares and Dissenting Shares pursuant to Sections 3.05 and 3.06
hereof).

9.03 Reasonable Efforts to Expedite Reorganization. From the date hereof
through the Exchange Date, each of the parties shall exert his, her or its
commercially reasonable efforts and cooperate with the other parties hereto to
accomplish by the earliest practicable date all those things within its control
necessary to cause this Agreement to be carried out, including but not limited
to the making of applications to, and the obtaining of approvals from, the
appropriate regulatory agencies for the accomplishment of the Reorganization.

9.04 Satisfaction of Conditions. From and after the date hereof, the
parties shall use their commercially reasonable efforts to cause all conditions
precedent set forth in Articles VI, VII and VIII of this Agreement to be
satisfied and fulfilled at the earliest practicable date to the extent the
satisfaction or fulfillment thereof is within their reasonable control.

9.05 HSR Act. As promptly as practicable after the date of this Agreement,
the Company, KRCS, and TOC and, if and to the extent required, JBK and TMO shall
file notifications under the HSR Act in connection with the Reorganization, the
Exchange and the Distribution and shall respond as promptly as practicable to
any inquiries received from the Federal Trade Commission and the Antitrust
Division of the Department of Justice for additional information or
documentation.

9.06 Insurance. Effective as of the Exchange Date, KRCS and TOC shall
maintain (or cause to be maintained) liability insurance in connection with the
assets and subsidiaries transferred to each and the liabilities assumed by each
pursuant to this Agreement and the Ancillary Agreements.

9.07 Voice & Data Business. Between the date hereof and the Exchange Date,
if the Company sells the Voice & Data Business, the net proceeds shall be added
to the assets transferred pursuant to Section 1.03(a) hereof, as listed on
Exhibit 1.03(a)(i), and all costs, expenses and liabilities, contingent or
otherwise, associated with the sale shall be borne by KRCS; provided that the
Company will consult

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with KRCS in connection with the sale and will not sell the Voice & Data
Business without the prior written consent of KRCS.

9.08 Guaranties. From and after the date hereof, the Company, TOC and KRCS
shall use best efforts and act in good faith to have the Company removed from
any guaranties to which it is a party and which are related to assets to be
contributed to, or the liabilities to be assumed by, KRCS or TOC pursuant to
this Agreement and to have either KRCS or TOC, as applicable, substituted in the
place of the Company.

9.09 JBK Agreement. Except as may be approved in advance by a majority of
the Independent Directors of KRCS, from the Exchange Date until the fifth
anniversary of the Exchange Date, JBK agrees he will not: (i) by purchase or
otherwise, acquire, agree to acquire or offer to acquire Beneficial Ownership of
additional shares of KRCS Common Stock if, as a result of such action, the total
number of such additional shares acquired by him in the aggregate during such
five-year period exceeds 2% of the total number of shares of KRCS Common Stock
outstanding immediately following the Distribution Date, subject to proportional
adjustment for any stock splits, stock dividends or any other similar changes in
the capitalization of KRCS affecting all stockholders equally; (ii) form, join
or in any way participate in a Group (as defined in the Exchange Act) for the
purpose of, or which has the effect of, acquiring or asserting control of KRCS
or opposing an effort by another Person to obtain control of KRCS; or (iii) take
any action challenging the validity or enforceability of the foregoing or which
would be inconsistent with the foregoing.

9.10 TMO Agreement. Except as may be approved in advance by a majority of
the Independent Directors of TOC, from the Exchange Date until the fifth
anniversary of the Exchange Date, TMO agrees he will not: (i) by purchase or
otherwise, acquire, agree to acquire or offer to acquire Beneficial Ownership of
additional shares of TOC Common Stock if, as a result of such action, the total
number of such additional shares acquired by him in the aggregate during such
five-year period exceeds 2% of the total number of shares of TOC Common Stock
outstanding immediately following the Distribution Date, subject to proportional
adjustment for any stock splits, stock dividends or any other similar changes in
the capitalization of TOC affecting all shareholders equally; (ii) form, join or
in any way participate in a Group (as defined in the Exchange Act) for the
purpose of, or which has the effect of, acquiring or asserting control of TOC or
opposing an effort by another Person to obtain control of TOC; or (iii) take any
action challenging the validity or enforceability of the foregoing or which
would be inconsistent with the foregoing.

9.11 Further Assurances. From and after the date hereof, the parties
shall, from time to time upon any other party's request, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, all such
further discharges, releases, assurances and consents, and shall take or cause
to be taken such further actions, as such other party may reasonably request to
further evidence or carry out the transactions contemplated by, and the purposes
of, this Agreement, including without limitation the execution and delivery of
such further or additional bills of sale, assignments, assumptions agreements,
certificates of title or other documents or instruments reasonably necessary or
desirable to transfer to and vest in KRCS (or the Kroll Subsidiaries) or TOC (
or the O'Gara Subsidiaries) all of the Company's right, title and interest in,
to or under any asset of the Company intended to be transferred and delivered to
KRCS or TOC, as the case may be. The Company hereby constitutes and appoints
KRCS and TOC the true and lawful attorney of the Company with full power of
substitution, having full right and authority, in the name of, and on behalf of,
the Company to execute and deliver, and to take such action as KRCS and TOC may
together deem proper, to carry out this Section 9.11 from and after the
Distribution.

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ARTICLE X

MUTUAL POST-REORGANIZATION COVENANTS

10.01 Use of Names. From and after the Exchange Date, TOC, TMO and WTO
agree that TOC and its subsidiaries shall not use the name "Kroll" or any
related marks in connection with the promotion of their business and KRCS and
JBK agree that KRCS and its subsidiaries shall not use the name "O'Gara" or any
related marks in connection with the promotion of their business other than in
connection with the Voice & Data Business as and to the extent permitted by the
License Agreement. The parties agree that from and after the Exchange Date, TOC
and KRCS, and the respective subsidiaries of each, may use the phrase "The Risk
Mitigation Company" in the promotion of their business and the parties will
enter into such licensing arrangements as are appropriate to accomplish this
purpose.

10.02 Tax Treatment. The parties agree not to take (and the Company, KRCS
and TOC agree not to fail to take) any action, either before or after the
Exchange Date, which action by any party or failure to act by the Company, KRCS
or TOC is prohibited by the terms of the Tax Sharing Agreement or that otherwise
reasonably could be expected to affect adversely the qualification of the
transactions comprising (i) the Reorganization as tax-free under Section
368(a)(1)(D) or 351(a) of the Code or (ii) the Exchange, the Distribution and
the Liquidation as tax-free under Section 355 or 361 of the Code.

10.03 American International Group. For a period of three years from the
Exchange Date, TOC agrees that it shall not directly or indirectly provide
crisis management services to American International Group, Inc. ("AIG") other
than: hands-on driver training; threat recognition and avoidance training; and
hands-on firearms safety and use training; and the sale of vehicle armoring
systems. To the extent that these services and systems are remarketed to other
parties by AIG, or KRCS in cooperation with AIG, they will be remarketed under
TOC's name.

10.04 Securify

(a) KRCS and TOC agree that the Company's right to nominate directors of
Securify shall belong to TOC. KRCS will receive Securify Common Stock which by
its terms does not vote on the election of directors of Securify. KRCS shall
have the right to appoint a non-voting observer to attend meetings of Securify's
Board of Directors and any executive committee thereof (who shall receive notice
of all meetings and shall have the right to attend all meetings) until the
earlier of (i) the consummation of an initial public offering of the stock of
Securify, or (ii) such time as KRCS has a less than ten percent (10%) equity
interest in Securify (on a diluted basis after giving effect to the outstanding
Series A Preferred Stock of Securify).

(b) If either TOC or KRCS (a "Selling Shareholder") proposes to sell any or
all of its shares of Securify Common Stock to a third party or parties, the
Selling Shareholder shall notify the other, and, subject to the provisions
hereof, KRCS or TOC shall have the right to participate in such sale upon the
terms set forth in such notice, which notice shall specify the terms and
conditions of such proposed sale, including the number of shares to be sold and
the price at which such shares will be sold. Within ten (10) days after the date
of the notice, by written notice, the other company may elect to sell any or all
of its shares of Securify Common Stock on the same terms and conditions in
respect of such shares as were specified in the notice from the Selling
Shareholder. If the other company timely makes the election to sell its shares
with the Selling Shareholder, and the purchaser or purchasers does not agree to
acquire all of the shares of Securify Common Stock being offered by the Selling
Shareholder and the other company, then the number of shares which each of TOC
and KRCS shall be permitted to sell to such prospective purchaser shall be
proportionate to its percentage of the aggregate number of shares beneficially
owned by TOC and KRCS, calculated on a diluted basis after giving effect to the

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outstanding Series A Preferred Stock of Securify. The right to participate in
any sale of shares pursuant to this Section 10.04(b) shall terminate (i) upon
the first anniversary of the date of consummation of an initial public offering
of the stock of Securify, or (ii) if the shares of Securify Common Stock held by
the Selling Shareholder is 5% or less of the issued and outstanding shares of
Securify.

(c) If Securify should propose to register any of its shares of Securify
Common Stock or other equity securities under the Act, including any
registration made pursuant to the "small business issuer" registration forms
available under the Act, or to carry out an offer of any such shares or other
equity securities pursuant to Regulation A of the Act, but excluding any
registration statement on Form S-8, Form S-4 or another form not permitting the
inclusion of shares held by TOC or KRCS, and the underwriters thereof reasonably
object to the inclusion in such registration of all of the shares of Securify
Common Stock owned by TOC and KRCS as to which TOC and KRCS have registration
rights under agreements with Securify and which they have requested be included
in the proposed registration, then the number of shares included in such
registration by each of TOC and KRCS shall be reduced pro rata based upon the
percentage of the aggregate number of shares beneficially owned by TOC and KRCS,
calculated on a diluted basis after giving effect to the outstanding Series A
Preferred Stock of Securify.

10.05 Voice & Data. TOC and the O'Gara Subsidiaries agree that the License
Agreement and the Strategic Alliance Agreement can be assigned to any purchaser
of or successor to the Voice & Data Business, whether by sale of assets or
stock, merger or consolidation. TOC and the O'Gara Subsidiaries agree to assist
KRCS, at the expense of KRCS, to the extent requested with the sale of the Voice
& Data Business. In connection with a sale by KRCS of the Voice & Data Business
after the Exchange Date, TOC and the O'Gara Subsidiaries agree to negotiate in
good faith with the buyer of the Voice & Data Business on the terms of any
necessary new Strategic Alliance Agreement or License Agreement and any other
agreement necessary to transfer the Voice & Data Business.

10.06 D&O Insurance. The Company, TOC and KRCS shall provide directors'
and officers' liability insurance mutually satisfactory to each of the Company
(with the concurrence of the Special Committee), TOC and KRCS covering those
persons who are currently covered by the Company's directors' and officers'
liability insurance policy.

ARTICLE XI

TERMINATION OF AGREEMENT

This Agreement and the Contemplated Transactions may be terminated,
notwithstanding approval thereof by the shareholders of the Company, at any time
prior to the Exchange (i) by written agreement of the Company, TOC and KRCS;
(ii) by the Board of Directors of the Company if the Board (with the concurrence
of the Special Committee) determines, after consultation with its advisors, that
termination of this Agreement is in the best interests of the Company and its
shareholders; (iii) by the Special Committee if the Special Committee
determines, in the exercise of its fiduciary duty after consultation with its
advisors, that termination of this Agreement is in the best interests of the
shareholders of the Company (other than the KRCS Exchanging Shareholders and the
TOC Exchanging Shareholders); or (iv) by any of the parties hereto if the
Exchange has not occurred on or prior to June 30, 2001.

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ARTICLE XII

FEES AND EXPENSES

If the Reorganization, Distribution and Liquidation are not consummated,
the Company shall bear all expenses reasonably incurred by any of the parties in
connection with this Agreement. If the Reorganization, Distribution and
Liquidation are consummated, 41.492% of such expenses shall be assumed and paid
by TOC and 58.508% of such expenses shall be assumed and paid by KRCS.

ARTICLE XIII

NOTICES

All notices, consents, waivers or other communications between the parties
hereto shall be in writing and shall be deemed delivered on the date actually
received by personal delivery, facsimile, overnight courier, ordinary mail or
other such means, or five (5) days after being mailed by United States certified
or registered mail, return receipt requested, with postage prepaid, in each case
addressed as follows:

(a) If to KRCS, JBK or any of the other KRCS Exchanging Shareholders:

Kroll Risk Consulting Services, Inc.
900 Third Avenue
New York, New York 10022
Attention: Sabrina Perel, Esq.
Fax: (212) 750-6194
Phone: (212) 833-3392

with a copy to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Peter S. Kolevzon, Esq.
Fax: (212) 715-8000
Phone: (212) 715-9288

(b) If to the Company, TOC, TMO, WTO or any of the other O'Gara
Exchanging Shareholders:

The Kroll-O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
Attention: Wilfred T. O'Gara
Fax: (513) 874-1262
Phone: (513) 881-5440

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with copies to:

The O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
Attention: Abram S. Gordon, Esq.
Fax: (513) 874-1262
Phone: (513) 881-5481

and

Taft, Stettinius & Hollister LLP
1800 Firstar Tower
425 Walnut Street
Cincinnati, Ohio 45202-3957
Attention: Timothy E. Hoberg, Esq.
Fax: (513) 381-0205
Phone: (513) 381-2838

and

Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Morton A. Pierce, Esq.
Fax: (212) 259-6333
Phone: (212) 259-8000

or to such other addresses, to the attention of such other persons or to such
other fax or phone numbers as any party hereto may specify in a notice given
pursuant to this Article XIII.

ARTICLE XIV

PUBLIC ANNOUNCEMENT

No party shall issue any press release or otherwise make any public
statements with respect to this Agreement or the transactions contemplated
hereby without the prior approval of the Company, TOC and KRCS; provided,
however, if either company is required by law or the rules or regulations of The
Nasdaq Stock Market to issue a public statement, it shall use all reasonable
efforts to consult with the other companies hereto prior to issuing any such
public statement.

ARTICLE XV

GOVERNING LAW

This Agreement shall be construed in accordance with the laws of the State
of Ohio, applicable to agreements made and to be performed entirely therein.

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ARTICLE XVI

CAPTIONS; COUNTERPARTS

The captions in this Agreement are for convenience purposes only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement. This Agreement may be executed in counterparts by
the parties and any such counterpart shall be deemed an original hereof.

ARTICLE XVII

ENTIRE AGREEMENT

This Agreement is binding upon, shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
This Agreement, the Ancillary Agreements, and the exhibits and schedules hereto
and thereto contain the entire agreement of the parties with respect to the
subject matter hereof, supersede all previous agreements, and there are no
agreements or commitments with respect thereto except as set forth herein and
therein.

ARTICLE XVIII

WAIVER; MODIFICATION; ASSIGNMENT

No delay on the part of any party hereto in the exercise of any right,
power or remedy arising hereunder shall operate as a waiver thereof. No waiver
shall be effective unless in writing and signed by the party or parties granting
the waiver and such waiver shall be effective only with respect to the specific
matters set forth therein. This Agreement may be amended by agreement of the
parties hereto at any time prior to the Exchange Date, provided that no
amendment requiring the approval of the shareholders of KRCS, TOC or the Company
may be made without such approval and provided further however that the consent
of the Company to any amendment shall require the concurrence of the Special
Committee. No amendment or modification of this Agreement shall be effective
unless in writing and signed by all parties hereto. No assignment of this
Agreement or any rights or obligations hereunder shall be effective without the
prior written consent of all parties hereto.

ARTICLE XIX

SPECIFIC PERFORMANCE

This Agreement and each and every provision hereof shall be specifically
enforceable. The Company, TOC and KRCS, upon the introduction and presentation
to the applicable court having jurisdiction over the matter of evidence showing
a material breach by the other party hereto shall be entitled to injunctive
relief mandating specific performance without posting any bond and without
proving that damages would be inadequate. In addition, the Company, TOC and KRCS
shall have all of the rights and remedies conferred in this Agreement or now or
hereafter conferred at law or in equity, which rights and remedies are
cumulative.

ARTICLE XX

SEVERABILITY

If any one or more of the nonmaterial sections, sentences or other portions
of this Agreement shall be determined by a court of competent jurisdiction to be
invalid, the invalidity of any such section,

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sentence or other portion of this Agreement shall in no way affect the validity
or effectiveness of the remainder of this Agreement, and this Agreement shall
continue in force to the fullest extent permitted by law. Upon such
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent reasonably possible.

ARTICLE XXI

NO THIRD PARTY BENEFICIARIES

This Agreement is not intended to, and does not, create any third party
contractual or other rights. No person or entity, including without limitation
any employee, former employee or holder of Company Common Stock, KRCS Common
Stock or TOC Common Stock shall be deemed to be a third party beneficiary with
respect to this Agreement, except that the Independent Directors of KRCS and TOC
shall have the right to enforce against JBK and TMO the provisions of Sections
9.09 and 9.10, respectively.

ARTICLE XXII

DEFINITIONS

As used in this Agreement, the following terms have the meanings specified
in this Article XXII.

"Act" shall mean the Securities Act of 1933, as amended.

"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental authority or arbitration
tribunal.

"Affiliate" shall have the meaning as in Rule 12b-2 promulgated under the
Exchange Act as in effect on the date hereof (i.e., a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the person specified).

"Agreement" has the meaning set forth in the first paragraph hereof.

"Ancillary Agreements" shall mean the Tax Sharing Agreement, the
Cross-Indemnification Agreement, the Compensation and Indemnification Agreement
(which is also a Shared Contingent Liability pursuant to the
Cross-Indemnification Agreement), the Strategic Alliance Agreement and the
License Agreement.

"Associate" shall have the meaning as in Rule 12b-2 promulgated under the
Exchange Act as in effect on the date hereof (i.e., (1) any corporation or
organization (other than KRCS or TOC or a majority-owned subsidiary of KRCS or
TOC) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten (10) percent or more of any class of
equity securities, (2) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, and (3) any relative or spouse of such person,
or any relative of such spouse, who has the same home as such person or who is a
director or officer or KRCS or TOC or any of its parents or subsidiaries).

"Beneficial Owner" and any derivative thereof shall have the meaning set
forth in Rule 13d-3 under the Exchange Act as in effect on the date of this
Agreement.

"Business Entity" shall mean any corporation, partnership, business trust,
joint venture, limited liability company, company or other entity, foreign or
domestic.

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"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, together with the rules and regulations promulgated thereunder.

"Commission" shall mean the Securities and Exchange Commission.

"Company" shall mean The Kroll-O'Gara Company, an Ohio corporation.

"Company Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company.

"Company Savings Plan" shall have the meaning set forth in Section
1.05(a)(i) hereof.

"Company Savings Trust" shall have the meaning set forth in Section
1.05(a)(iii) hereof.

"Compensation and Indemnification Agreement" shall mean the Compensation
and Indemnification Agreement between the Company and the members of the Special
Committee.

"Contemplated Transactions" shall have the meaning set forth generally in
Recital E and, more specifically, shall mean the following proposals as
specified in the Notice of Special Meeting of Shareholders contained in the
Proxy Statement:

1. Approving this Agreement which includes the Reorganization, the
Exchange, and the Distribution and when the transactions contemplated by
the Agreement are completed, provides for the dissolution of the Company.

2. Authorizing the acquisition of O'Gara Common Stock by TMO pursuant
to Ohio Revised Code Section 1701.831.

"Coverage Date" shall mean the day immediately following the Exchange Date.

"Cross-Indemnification Agreement" shall mean the Cross-Indemnification
Agreement substantially in the form of Exhibit 6.11 hereto.

"Distribution" shall mean the distribution of shares of KRCS Common Stock
and TOC Common Stock to holders of Company Common Stock in accordance with
Section 3.01 hereof.

"Distribution Agent" shall mean the Fifth Third Bank, Cincinnati, Ohio, as
transfer agent for the Company Common Stock and as Distribution Agent for the
KRCS Common Stock and the TOC Common Stock.

"Distribution Date" shall be the date that is ten business days following
the Record Date.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, including any successor legislation.

"Exchange" shall mean the exchange of Company Common Stock for KRCS Common
Stock by JBK and the other KRCS Exchanging Shareholders and the exchange of
Company Common Stock for TOC Common Stock by TMO, WTO and the other O'Gara
Exchanging Shareholders.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Exchange Date" shall mean the date, as soon as practicable following
satisfaction of the conditions in Articles VI, VII and VIII, upon which the
Exchange occurs.

"HSR Act" shall have the meaning set forth in Section 6.01 hereof.

"Independent Director" shall mean a director of KRCS or TOC, as the case
may be, who (i) is in fact independent; (ii) is not (apart from such
directorship) an officer, Affiliate, Associate, employee,

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principal shareholder or partner of KRCS or TOC, as applicable; and (iii) is
deemed independent under National Association of Securities Dealers Rule
4200(a)(14) in effect on the date hereof.

"JBK" shall mean Jules B. Kroll.

"KRCS" shall mean Kroll Risk Consulting Services, Inc., a Delaware
corporation.

"KRCS Assets" shall mean:

(i) any and all assets associated with KRCS and the Kroll Subsidiaries
(including without limitation the assets set forth on Exhibit 1.03(a)(i)
hereof);

(ii) the ownership interest in those Business Entities listed on
Exhibit 22.01(A) hereof;

(iii) any assets reflected on the KRCS Balance Sheet or the accounting
records supporting such balance sheet and any assets acquired by or for any
member of the KRCS Group subsequent to the date of such balance sheet
which, had they been so acquired on or before such date and owned as of
such date, would have been reflected on such balance sheet if prepared on a
consistent basis, subject to any dispositions of any of such assets
subsequent to the date of such balance sheet;

(iv) any assets primarily relating to or used in any terminated or
divested Business Entity, business or operation formerly owned or managed
by or associated with KRCS or any KRCS Business, except for those assets
primarily relating to or used exclusively in those Business Entities,
businesses or operations listed on Exhibit 22.01(B) hereof; or

(v) any and all assets owned or held immediately prior to the Exchange
Date by the Company or any of its subsidiaries primarily relating to the
KRCS Business. The intention of this clause (v) is only to rectify any
inadvertent omission of transfer or conveyance of any asset that, had the
parties given specific consideration to such Asset as of the date hereof,
would have otherwise been classified as a KRCS Asset. No asset shall be
deemed to be a KRCS Asset solely as a result of this clause (v) if such
asset is within the category or type of asset expressly covered by this
Agreement or another Ancillary Agreement.

Notwithstanding the foregoing, the KRCS Assets shall not in any event
include any and all assets that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Exhibits hereto or thereto) to
be TOC Assets.

In the event of any inconsistency or conflict which may arise in the
application or interpretation of any of the foregoing provisions, for the
purpose of determining what is and is not a KRCS Asset, any item explicitly
included on an Exhibit referred to in this definition of "KRCS Assets"
shall take priority over any provision of the text hereof.

"KRCS Balance Sheet" shall mean the unaudited pro forma combining condensed
balance sheet after all eliminations and adjustments of the KRCS Group,
including the notes thereto, as of June 30, 2000 included in the KRCS
Registration Statement.

"KRCS Business" shall mean (i) the businesses of the members of the KRCS
Group, and (ii) the businesses of Business Entities acquired or established by
or for KRCS or any of its subsidiaries after the date of this Agreement.

"KRCS Common Stock" shall mean the common stock, par value $0.01 per share,
of KRCS.

"KRCS Employee" shall mean any individual who is an employee of KRCS or any
subsidiary of KRCS at any time between the Coverage Date and the Distribution
Date, inclusive.

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"KRCS Exchanging Shareholders" shall mean those shareholders of the Company
listed on Exhibit 2.01 hereto who exchange their shares of Company Common Stock
for shares of KRCS Common Stock pursuant to Section 2.01 hereof.

"KRCS Group" shall mean KRCS and each Business Entity which becomes a
subsidiary of KRCS pursuant to this Agreement.

"KRCS Liabilities" shall mean:

(i) any and all Liabilities that are expressly identified or referred
to in this Agreement or any Ancillary Agreement (or the Exhibits hereto or
thereto, including without limitation the Liabilities set forth on Exhibit
1.03(a)(ii) hereto) as Liabilities to be assumed by KRCS or any member of
the KRCS Group, and all agreements, obligations and Liabilities of any
member of the KRCS Group under this Agreement or any of the Ancillary
Agreements;

(ii) all Liabilities (other than Taxes), primarily relating to,
primarily arising out of or primarily resulting from:

(A) the operation of the KRCS Business, as conducted at any time;
or

(B) any KRCS Assets;

whether arising before, on or after the Exchange Date; and

(iii) all Liabilities reflected (or that should have been reflected in
accordance with generally accepted accounting principles) as liabilities or
obligations on the KRCS Balance Sheet or the accounting records supporting
such balance sheet, and all Liabilities arising or assumed by or for any
member of the KRCS Group subsequent to the date of such balance sheet
which, had they arisen or been assumed on or before such date and been
retained as of such date, would have been reflected on such balance sheet,
subject to any discharge of such Liabilities subsequent to the date of the
KRCS Balance Sheet.

Notwithstanding the foregoing, the KRCS Liabilities shall not include any
TOC Liabilities.

"KRCS Registration Statement" shall have the meaning set forth in Section
3.04(a) hereof.

"KRCS Savings Plan" shall have the meaning set forth in Section 1.05(a)(i)
hereof.

"KRCS Savings Trust" shall have the meaning set forth in Section 1.05(a)(i)
hereof.

"KRCS Replacement Plans" shall have the meaning set forth in Section
1.05(b)(i) hereof.

"Kroll Reorganization" shall have the meaning set forth in Section 1.03(a)
hereof.

"Kroll Subsidiaries" shall mean those direct and indirect subsidiaries of
the Company listed on Exhibit 22.01(A) hereto.

"LTD Plan" shall have the meaning set forth in Section 1.05(b)(i) hereof.

"Liabilities" shall mean any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments, costs
and expenses, accounts, reckonings, bonds, specialties, indemnities and similar
obligations, exonerations, covenants, contracts, controversies, agreements,
promises, omissions, variances, guarantees, make whole agreements and similar
obligations, and other liabilities, including all contractual obligations,
whether absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising, and
including those arising under any law, rule, regulation, Action, threatened or
contemplated Action (including the costs and expenses of demands, assessments,
judgments, settlements and compromises

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relating thereto and attorneys' fees and any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such Actions or threatened or contemplated Actions), order or consent decree
of any governmental authority or any award of any arbitrator or mediator of any
kind, and those arising under any contract, commitment or undertaking, including
those arising under this Agreement or any Ancillary Agreement, in each case,
whether or not recorded or reflected or required to be recorded or reflected on
the books and records or financial statements of any Person.

"License Agreement" shall mean the License Agreement dated as of the date
hereof between the Company and O'Gara Satellite Networks, Ltd.

"Liquidation" shall mean a distribution in complete liquidation of the
Company for federal income tax purposes.

"O'Gara Exchanging Shareholders" shall mean those shareholders of the
Company listed on Exhibit 2.02 hereto who exchange their shares of Company
Common Stock for shares of TOC Common Stock pursuant to Section 2.02 hereof.

"O'Gara Reorganization" shall have the meaning set forth in Section 1.03(b)
hereof.

"O'Gara Subsidiaries" shall mean those direct and indirect subsidiaries of
the Company listed on Exhibit 22.01(B) hereto.

"Person" shall mean any natural person, corporation, business trust, joint
venture, limited liability company, association, company, partnership or
government, or any agency or political subdivision thereof.

"Private Letter Ruling" shall mean a private letter ruling from the
Internal Revenue Service to the effect that for U.S. federal income tax
purposes, among other things, the Reorganization will qualify as tax-free to the
Company and its shareholders under Section 351(a) or 368(a)(1)(D) of the Code
and the Exchange, Distribution and Liquidation will qualify as tax-free to the
Company and its shareholders under Section 355 or 361 of the Code

"Proxy Statement" shall have the meaning set forth in Section 3.04(a)
hereof.

"Record Date" shall be the close of business on the Exchange Date and shall
be after (i) the exchanges provided for in Sections 2.01 and 2.02 hereof have
been completed and (ii) the KRCS Exchanging Shareholders and the O'Gara
Exchanging Shareholders are no longer holders of record of shares of Company
Common Stock.

"Reorganization" shall have the meaning set forth in Section 1.03(b)
hereof.

"Securify" shall mean Securify Inc., a Delaware corporation.

"Securify Common Stock" shall mean the common stock, no par value, of
Securify.

"Shared Liabilities" shall mean those liabilities set forth in items (1),
(3), (4), (5) and (6) on Exhibits 1.03(a)(ii) and 1.03(b)(ii) hereof and those
items listed on Exhibit A of the Cross-Indemnification Agreement.

"Special Committee" shall mean the special committee of the Board of
Directors of the Company comprised of Marshall S. Cogan, William S. Sessions and
Raymond E. Mabus appointed in connection with the Contemplated Transactions.

"Special Meeting" shall mean the meeting of the Company's shareholders held
to vote on the approval of the Contemplated Transactions.

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"Strategic Alliance Agreement" shall mean the Strategic Alliance Agreement
dated as of the date hereof between O'Gara-Hess & Eisenhardt Armoring Company
and O'Gara Satellite Networks, Ltd.

"Tax" or "Taxes" shall mean any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem, stamp,
excise, severance, occupation, service, sales, use, license, lease, transfer,
import, export, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment, or other charge in the nature of or in lieu of
any tax) imposed by any domestic or foreign governmental entity or political
subdivision thereof, and any interest, penalties, additions to tax or additional
amounts in respect of the foregoing.

"Tax Sharing Agreement" shall mean the Tax Sharing Agreement a current
draft of which is attached as Exhibit 6.10 hereto, with such changes thereto as
may be agreed to by the Company (with the concurrence of the Special Committee),
KRCS and TOC.

"TMO" shall mean Thomas M. O'Gara.

"TOC" shall mean The O'Gara Company, an Ohio corporation.

"TOC Assets" shall mean:

(i) any and all assets that are associated with TOC and the O'Gara
Subsidiaries (including without limitation the assets set forth on Exhibit
1.03(b)(i) hereof);

(ii) the ownership interest in those Business Entities listed on
Exhibit 22.01(B) hereof;

(iii) any assets reflected on the TOC Balance Sheet or the accounting
records supporting such balance sheet and any assets acquired by or for any
member of the TOC Group subsequent to the date of such balance sheet which,
had they been so acquired on or before such date and owned as of such date,
would have been reflected on such balance sheet if prepared on a consistent
basis, subject to any dispositions of any of such assets subsequent to the
date of such balance sheet;

(iv) any assets primarily relating to or used in any terminated or
divested Business Entity, business or operation formerly owned or managed
by or associated with TOC or any TOC Business, except for those assets
primarily relating to or used exclusively in those Business Entities,
businesses or operations listed on Exhibit 22.01(A) hereof; or

(v) any and all assets owned or held immediately prior to the Exchange
Date by the Company or any of its subsidiaries primarily relating to the
TOC Business. The intention of this clause (v) is only to rectify any
inadvertent omission of transfer or conveyance of any asset that, had the
parties given specific consideration to such Asset as of the date hereof,
would have otherwise been classified as a TOC Asset. No asset shall be
deemed to be a TOC Asset solely as a result of this clause (v) if such
asset is within the category or type of asset expressly covered by this
Agreement or an Ancillary Agreement.

Notwithstanding the foregoing, the TOC Assets shall not in any event
include any and all assets that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Exhibits hereto or thereto) to
be KRCS Assets.

In the event of any inconsistency or conflict which may arise in the
application or interpretation of any of the foregoing provisions, for the
purpose of determining what is and is not a TOC Asset, any item explicitly
included on an Exhibit referred to in this definition of "TOC Assets" shall
take priority over any provision of the text hereof.

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<PAGE> 297

"TOC Balance Sheet" shall mean the combined pro forma balance sheet of the
TOC Group, including the notes thereto, as of June 30, 2000 included in the TOC
Registration Statement.

"TOC Business" shall mean (i) the businesses of the members of the TOC
Group, and (ii) the businesses of Business Entities acquired or established by
or for TOC or any of its subsidiaries after the date of this Agreement.

"TOC Common Stock" shall mean the common stock, par value $0.01 per share,
of TOC.

"TOC Employee" shall mean any individual who is an employee of TOC or any
subsidiary of TOC at any time between the Coverage Date and the Distribution
Date, inclusive.

"TOC Group" shall mean TOC and each Business Entity other than Securify
which becomes a subsidiary of TOC pursuant to this Agreement.

"TOC Liabilities" shall mean:

(i) any and all Liabilities that are expressly identified or referred
to in this Agreement or any Ancillary Agreement (or the Exhibits hereto or
thereto, including without limitation the Liabilities set forth on Exhibit
1.03(b)(ii) hereto) as Liabilities to be assumed by TOC or any member of
the TOC Group, all agreements, obligations and Liabilities of any member of
the TOC Group under this Agreement or any of the Ancillary Agreements, and
any and all Liabilities arising out of the inclusion of TOC financial
information in the KRCS Registration Statement;

(ii) all Liabilities (other than Taxes), primarily relating to,
primarily arising out of or primarily resulting from:

(A) the operation of the TOC Business, as conducted at any time; or

(B) any TOC Assets;

whether arising before, on or after the Exchange Date; and

(iii) all Liabilities reflected (or that should have been reflected in
accordance with generally accepted accounting principles) as liabilities or
obligations on the TOC Balance Sheet or the accounting records supporting
such balance sheet, and all Liabilities arising or assumed by or for any
member of the TOC Group subsequent to the date of such balance sheet which,
had they arisen or been assumed on or before such date and been retained as
of such date, would have been reflected on such balance sheet, subject to
any discharge of such Liabilities subsequent to the date of the TOC Balance
Sheet.

Notwithstanding the foregoing, the TOC Liabilities shall not include any
KRCS Liabilities.

"TOC Registration Statement" shall have the meaning set forth in Section
3.04(a) hereof.

"TOC Replacement Plans" shall have the meaning set forth in Section
1.05(b)(ii) hereof.

"WTO" shall mean Wilfred T. O'Gara.

"Voice & Data Business" shall mean the voice and data communications
business of the Company.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.

THE KROLL-O'GARA COMPANY

By: /s/ ABRAM S. GORDON
------------------------------------
Printed Name: Abram S. Gordon
------------------------------
Title: Vice President
-----------------------------------

KROLL RISK CONSULTING
SERVICES, INC.

By: /s/ MICHAEL G. CHERKASKY
------------------------------------
Printed Name: Michael G. Cherkasky
------------------------------
Title: President & Chief Executive
Officer
-----------------------------------

THE O'GARA COMPANY

By: /s/ ABRAM S. GORDON
------------------------------------
Printed Name: Abram S. Gordon
------------------------------
Title: Vice President
-----------------------------------

/s/ JULES B. KROLL
--------------------------------------
Jules B. Kroll

/s/ THOMAS M. O'GARA
--------------------------------------
Thomas M. O'Gara

/s/ WILFRED T. O'GARA
--------------------------------------
Wilfred T. O'Gara

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KRCS EXCHANGING SHAREHOLDERS:

/s/ MICHAEL D. SHMERLING
--------------------------------------
Michael D. Shmerling

/s/ DAVID BUCHLER
--------------------------------------
David Buchler

/s/ SIMON FREAKLEY
--------------------------------------
Simon Freakley

/s/ ROBERT MACDONALD
--------------------------------------
Robert Macdonald

/s/ E. NORBERT GARRETT
--------------------------------------
E. Norbert Garrett

/s/ MARC S. CURVIN
--------------------------------------
Marc S. Curvin

/s/ TEDD AVEY
--------------------------------------
Tedd Avey

/s/ FRANK HOLDER
--------------------------------------
Frank Holder

/s/ MICHAEL A. BEBER
--------------------------------------
Michael A. Beber

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/s/ MICHAEL G. CHERKASKY
--------------------------------------
Michael G. Cherkasky

/s/ NAZZARENO E. PACIOTTI
--------------------------------------
Nazzareno E. Paciotti

/s/ DAVID HOLLOWAY
--------------------------------------
David Holloway

/s/ JAMES R. BUCKNAM
--------------------------------------
James R. Bucknam

/s/ RICHARD ROSETTI
--------------------------------------
Richard Rosetti

/s/ MICHAEL SLATTERY, JR.
--------------------------------------
Michael Slattery, Jr.

/s/ SABRINA H. PEREL
--------------------------------------
Sabrina H. Perel

O'GARA EXCHANGING SHAREHOLDERS:

/s/ ABRAM S. GORDON
--------------------------------------
Abram S. Gordon

/s/ NICHOLAS P. CARPINELLO
--------------------------------------
Nicholas P. Carpinello

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EXHIBIT 1.01(A)

See Amended and Restated Certificate of Incorporation of KRCS attached
hereto.

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<PAGE> 302

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
KROLL RISK CONSULTING SERVICES, INC.

Kroll Risk Consulting Services, Inc., a corporation organized under the
laws of the State of Delaware (the "Corporation"), desires to amend and restate
its Certificate of Incorporation as currently in effect, which was originally
filed on July 17, 2000 with the Secretary of the State of Delaware. This Amended
and Restated Certificate of Incorporation was duly adopted in accordance with
Section 245 of the Delaware General Corporation Law. The Certificate of
Incorporation of the Corporation is hereby amended and restated to read in its
entirety as follows:

FIRST: The name of the Corporation is Kroll Risk Consulting Services, Inc.
(the "Corporation").

SECOND: The address of the registered office of the Corporation in Delaware
is 1013 Centre Road, City of Wilmington, County of New Castle, and the name of
the registered agent of the Corporation at such address is Corporation Service
Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law").

FOURTH: The name and mailing address of the Sole Incorporator are as
follows:

<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Tahir Nawab c/o Kramer Levin Naftalis & Frankel
LLP
919 Third Avenue
New York, New York 10022
</TABLE>

FIFTH: The total number of shares of all classes of stock which the
Corporation is authorized to issue is 27,500,000 shares, of which 25,000,000
shall be designated Common Stock, par value $0.01 per share, and 2,500,000 shall
be designated Preferred Stock, par value $0.01 per share.

(a) The Common Stock:

The holders of Common Stock shall be entitled to one vote for each
Share so held and shall be entitled to notice of any stockholders meeting
and to vote upon any such matters as provided in the bylaws of the
Corporation or as may be provided by law. Except for and subject to those
rights expressly granted to holders of Preferred Stock, and except as may
be provided by the laws of the State of Delaware, the holders of Common
Stock shall have all other rights of stockholders, including, without
limitation, (i) the right to receive dividends, when, as and if declared by
the Board of Directors of the Corporation, out of assets lawfully available
therefor, and (ii) in the event of any distribution of assets upon a
liquidation or otherwise, the right to receive all the assets and funds of
the Corporation remaining after the payment to the holders of the Preferred
Stock, if any, of the specific amounts which they are entitled to receive
upon such distribution.

(b) The Preferred Stock:

The Board of Directors is hereby expressly authorized to provide for,
designate and issue, out of the authorized but unissued shares of Preferred
Stock, one or more series of Preferred Stock, subject to the terms and
conditions set forth herein. Before any shares of any such series are
issued, the Board of Directors shall fix, and hereby is expressly empowered
to fix, by resolution or resolutions, the following provisions of the
shares of any such series:

(i) the designation of such series, the number of shares to
constitute such series and the stated value thereof, if different from
the par value thereof;

A-37
<PAGE> 303

(ii) whether the shares of such series shall have voting rights or
powers, in addition to any voting rights required by law, and, if so,
the terms of such voting rights or powers, which may be full or limited;

(iii) the dividends, if any, payable on such series, whether any
such dividends shall be cumulative, and, if so, from what dates, the
conditions and dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the dividends
payable on any other series of Preferred Stock or on any other class of
stock of the Corporation or any series of such class;

(iv) whether the shares of such series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;

(v) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the Corporation;

(vi) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the shares of such series for retirement
or other corporate purposes and the terms and provisions relative to the
operation thereof;

(vii) whether the shares of such series shall be convertible into,
or exchangeable for, shares of Preferred Stock of any other series or
any other class of stock of the Corporation or any series of such class
or any other securities and, if so, the price or prices or the rate or
rates of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions of such conversion or exchange;

(viii) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of
dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of, the
Common Stock or shares of Preferred Stock of any other series or any
other class of stock of the Corporation or any series of such class;

(ix) the conditions or restrictions, if any, to be effective while
any shares of such series are outstanding upon the creation of
indebtedness of the Corporation or upon the issuance of any additional
stock, including additional shares of such series or of any other series
of the Preferred Stock or of any class of stock of the Corporation or
any series of such class; and

(x) any other powers, designations, preferences and relative,
participating, optional or other special rights, and any qualifications,
limitations or restrictions thereof.

The powers, designations, preferences and relative, participating,
optional or other special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding. The Board
of Directors is hereby expressly authorized from time to time to increase
(but not above the total number of authorized shares of Preferred Stock) or
decrease (but not below the number of shares thereof then outstanding) the
number of shares of stock of any series of Preferred Stock designated as
any one or more series of Preferred Stock.

SIXTH: (a) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors except as otherwise provided
herein, in the bylaws of the Corporation or required by law.

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<PAGE> 304

(b) Election of directors need not be by written ballot unless the bylaws
of the Corporation shall so provide.

(c) The number of directors of the Corporation shall be fixed by, or in the
manner provided in, the bylaws of the Corporation. Commencing on the effective
time of the spin-off (the "Spin-Off") of Kroll Risk Consulting Services, Inc., a
Delaware corporation and a wholly-owned subsidiary of The Kroll-O'Gara Company,
from the Kroll-O'Gara Company, an Ohio corporation, the directors, other than
those who may be elected by the holders of any series of Preferred Stock, shall
be classified, with respect to the term for which they severally hold office,
into three classes, as nearly equal in number as possible. The initial Class I,
II and III directors shall be appointed by the Board of Directors upon the
effective time of the Spin-Off. The initial Class I directors shall serve until
the first annual meeting of stockholders after the Spin-Off. The initial Class
II directors shall serve until the second annual meeting of stockholders after
the Spin-Off. The initial Class III directors shall serve until the third annual
meeting of stockholders after the Spin-Off. Members of each class shall hold
office until their successors are duly elected and qualified or until their
earlier death, disqualification, resignation or removal. At each succeeding
annual meeting of the stockholders of the Corporation, the successors of the
class of directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast at such meeting to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election and until their successors are duly elected and
qualified or until their earlier death, disqualification, resignation or
removal.

Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of stock issued by the Corporation shall have the right,
voting separately by class or series, to elect directors at an annual or special
meeting of stockholders, the election, term of office, filing of vacancies and
other features of such directorships shall be governed by the terms of this
Certificate of Incorporation applicable thereto, such directors so elected shall
not be divided into classes pursuant to this Article SIXTH and the number of
such directors shall not be counted in determining the maximum number of
directors permitted under the foregoing provisions of this Article SIXTH, in
each case unless expressly provided by such terms. (d) No director of the
Corporation shall be removed from his office as a director by vote, consent or
other action of the stockholders or otherwise except for cause.

SEVENTH: (a) Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of the stockholders and may not be effected by a consent in
writing by any such stockholders.

(b) Special meetings of the stockholders of the Corporation may be called
only by the Chairman of the Board or the Chief Executive Officer of the
Corporation or the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of directors then in office.

EIGHTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after the
date hereof to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended. No amendment to or repeal
of this Article EIGHTH shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment.

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NINTH: (a) The Corporation shall to the fullest extent permitted by
Delaware law, as in effect from time to time (but, in the case of any amendment
of the Delaware General Corporation Law, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), indemnify each
person who is or was a director or officer of the Corporation (or any
predecessor) or of any of its wholly-owned subsidiaries who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, or was or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or officer of the Corporation or of any of its
subsidiaries, or is or was at any time serving, at the request of the
Corporation, any other corporation, partnership, limited liability company,
joint venture, trust, employee benefit plan or other enterprise in any capacity,
against all expense, liability and loss (including, but not limited to,
attorneys' fees, judgments, fines, excise taxes or penalties with respect to any
employee benefit plan or otherwise, and amounts paid or to be paid in
settlement) incurred or suffered by such director or officer in connection with
such proceeding; provided, however, that the Corporation shall not be obligated
to indemnify any person under this Article NINTH in connection with a proceeding
(or part thereof) if such proceeding (or part thereof) was initiated by such
person, but was not authorized by the Board of Directors of the Corporation
against (i) the Corporation or any of its subsidiaries, (ii) any person who is
or was a director, officer, employee or agent of the Corporation or any of its
subsidiaries and/or (iii) any person or entity which is or was controlled,
controlled by or under common control with the Corporation or has or had
business relations with the Corporation or any of its subsidiaries. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Corporation similar to those conferred in this
Article NINTH to directors and officers of the Corporation.

(b) Expenses incurred by a person who is or was a director or officer of
the Corporation (or any predecessor) or any of its wholly-owned Subsidiaries in
defending a proceeding shall be paid by the Corporation as they are incurred in
advance of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation. Such expenses incurred by former directors or
officers of the Corporation may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.

(c) For purposes of this Article NINTH, the term "Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation in a
consolidation or merger; the term "other enterprise" shall include any
corporation, partnership, joint venture, limited liability company, trust or
employee benefit plan; service "at the request of the Corporation" shall
include, without limitation, service as a director, officer or employee of the
Corporation which imposes duties on, or involves service by, such director,
officer or employee with respect to an employee benefit plan, its participants
or beneficiaries; any excise taxes assessed on a person with respect to an
employee benefit plan shall be deemed to be indemnifiable expenses; and action
by a person with respect to any employee benefit plan which such person
reasonably believes to be in the interest of the participants and beneficiaries
of such plan shall be deemed to be action in or not opposed to the best
interests of the Corporation.

(d) Notwithstanding any other provision of this Certificate of
Incorporation or the bylaws of the Corporation, no action by the Corporation,
either by amendment to or repeal of this Article NINTH or the bylaws of the
Corporation or otherwise shall diminish or adversely affect any right or
protection granted under this Article NINTH to any director or officer or former
director or officer of the

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Corporation (or any predecessor) or of any of its wholly-owned subsidiaries
which shall have become vested as aforesaid prior to the date that any such
amendment, repeal or other corporate action is taken.

TENTH: (a) Except as provided otherwise by law or in the bylaws of the
Corporation, the bylaws of the Corporation may be amended or repealed or new
bylaws (not inconsistent with any provision of law or this Certificate of
Incorporation) may be adopted by the Board of Directors.

(b) The bylaws of the Corporation may be amended or repealed at any annual
meeting of stockholders, or special meeting of stockholders called for such
purpose, by the affirmative vote of a majority of the total votes eligible to be
cast on such amendment or repeal by holders of voting stock, voting together as
a single class.

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed on its behalf this day
of August, 2000.

KROLL RISK CONSULTING SERVICES, INC.

By:
--------------------------------------
Printed Name:
--------------------------------------
Title:
--------------------------------------

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EXHIBIT 1.01(B)

See Bylaws of KRCS attached hereto.

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BYLAWS
OF
KROLL RISK CONSULTING SERVICES, INC.

ARTICLE I

STOCKHOLDERS

SECTION 1. Annual Meeting. The annual meeting of stockholders shall be
held at the hour, date and place within or without the United States which is
fixed by the Board of Directors or an officer designated by the Board of
Directors, which time, date and place may subsequently be changed at any time by
vote of the Board of Directors.

SECTION 2. Matters to be Considered at Annual Meetings. At any annual
meeting or special meeting of stockholders in lieu thereof (the "Annual
Meeting"), only such business shall be conducted, and only such proposals shall
be acted upon as shall have been properly brought before such Annual Meeting. To
be considered as properly brought before an Annual Meeting, business must be:
(a) specified in the notice of meeting, (b) otherwise properly brought before
the meeting by, or at the direction of, the Board of Directors, or (c) otherwise
properly brought before the meeting by any holder of record (both as of the time
notice of such proposal is given by the stockholder as set forth below and as of
the record date for the Annual Meeting in question) of any shares of capital
stock of the Corporation entitled to vote at such Annual Meeting on such
business who complies with the requirements set forth in this Section 2.

In addition to any other applicable requirements, for business to be
properly brought before an Annual Meeting by a stockholder of record of any
shares of capital stock entitled to vote at such Annual Meeting, such
stockholder shall: (i) give timely notice as required by this Section 2 to the
Secretary of the Corporation, and (ii) be present at such meeting, either in
person or by a representative. For the first Annual Meeting following the
spin-off (the "Spin-off") of Kroll Risk Consulting Services, Inc., a Delaware
corporation and a wholly-owned subsidiary of The Kroll-O'Gara Company, from The
Kroll-O'Gara Company, an Ohio corporation, a stockholder's notice shall be
timely if delivered to, or mailed to and received by, the Corporation at its
principal executive office not later than the close of business on the later of
(A) the 75th day prior to the scheduled date of such Annual Meeting or (B) the
15th day following the day on which public announcement of the date of such
Annual Meeting is first made by the Corporation. For all subsequent Annual
Meetings, a stockholder's notice shall be timely if delivered to, or mailed to
and received by, the Corporation at its principal executive office not less than
75 days nor more than 120 days prior to the anniversary date of the immediately
preceding Annual Meeting (the "Anniversary Date"); provided, however, that in
the event the Annual Meeting is scheduled to be held on a date more than 30 days
before the Anniversary Date or more than 60 days after the Anniversary Date, a
stockholder's notice shall be timely if delivered to, or mailed to and received
by, the Corporation at its principal executive office not later than the close
of business on the later of (A) the 75th day prior to the scheduled date of such
Annual Meeting, or (B) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the
Corporation.

For purposes of these Bylaws, "public announcement" shall mean: (i)
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service, (ii) a report or other document filed
publicly with the Securities and Exchange Commission (including, without
limitation, a Form 8-K), or (iii) a letter or report sent to stockholders of
record of the Corporation at the close of business on the day of the mailing of
such letter or report.

A stockholder's notice to the Secretary shall set forth as to each matter
proposed to be brought before an Annual Meeting: (i) a brief description of the
business the stockholder desires to bring before

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such Annual Meeting and the reasons for conducting such business at such Annual
Meeting, (ii) the name and address, as they appear on the Corporation's stock
transfer books, of the stockholder proposing such business, (iii) the class and
number of shares of the Corporation's capital stock beneficially owned by the
stockholder proposing such business, (iv) the names and addresses of the
beneficial owners, if any, of any capital stock of the Corporation registered in
such stockholder's name on such books, and the class and number of shares of the
Corporation's capital stock beneficially owned by such beneficial owners, (v)
the names and addresses of other stockholders known by the stockholder proposing
such business to support such proposal, and the class and number of shares of
the Corporation's capital stock beneficially owned by such other stockholders,
and (vi) any material interest of the stockholder proposing to bring such
business before such meeting (or any other stockholders known to be supporting
such proposal) in such proposal.

If the Board of Directors or a designated committee thereof determines that
any stockholder proposal was not made in a timely fashion in accordance with the
provisions of this Section 2 or that the information provided in a stockholder's
notice does not satisfy the information requirements of this Section 2 in any
material respect, such proposal shall not be presented for action at the Annual
Meeting in question. If neither the Board of Directors nor such committee makes
a determination as to the validity of any stockholder proposal in the manner set
forth above, the presiding officer of the Annual Meeting shall determine whether
the stockholder proposal was made in accordance with the terms of this Section
2. If the presiding officer determines that any stockholder proposal was not
made in a timely fashion in accordance with the provisions of this Section 2 or
that the information provided in a stockholder's notice does not satisfy the
information requirements of this Section 2 in any material respect, such
proposal shall not be presented for action at the Annual Meeting in question. If
the Board of Directors, a designated committee thereof or the presiding officer
determines that a stockholder proposal was made in accordance with the
requirements of this Section 2, the presiding officer shall so declare at the
Annual Meeting and ballots shall be provided for use at the meeting with respect
to such proposal.

Notwithstanding the foregoing provisions of these Bylaws, a stockholder
shall also comply with all applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder with respect to the matters set forth in this Bylaw, and nothing in
this Bylaw shall be deemed to affect any rights of stockholders to request
inclusion of proposals in the Corporation's proxy statement, or the
Corporation's right to refuse inclusion thereof, pursuant to Rule 14a-8 under
the Exchange Act.

SECTION 3. Special Meetings. Except as otherwise required by law, special
meetings of the stockholders of the Corporation may be called only by the Chief
Executive Officer of the Corporation or the Board of Directors pursuant to a
resolution approved by the affirmative vote of a majority of the Directors then
in office.

SECTION 4. Matters to be Considered at Special Meetings. Only those
matters set forth in the notice of the special meeting may be considered or
acted upon at a special meeting of stockholders of the Corporation, unless
otherwise provided by law.

SECTION 5. Notice of Meetings; Adjournments. A written notice of all
Annual Meetings stating the hour, date and place of such Annual Meetings shall
be given by the Secretary (or other person authorized by these Bylaws or by law)
not less than 10 days nor more than 60 days before the Annual Meeting, to each
stockholder entitled to vote thereat and to each stockholder who, by law or
under the Certificate of Incorporation of the Corporation ("Certificate of
Incorporation") or under these Bylaws, is entitled to such notice, by delivering
such notice to him or by mailing it, postage prepaid, addressed to such
stockholder at the address of such stockholder as it appears on the
Corporation's stock transfer

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books. Such notice shall be deemed to be delivered when hand delivered to such
address or deposited in the mail so addressed, with postage prepaid.

Notice of all special meetings of stockholders shall be given in the same
manner as provided for Annual Meetings, except that the written notice of all
special meetings shall state the purpose or purposes for which the meeting has
been called.

Notice of an Annual Meeting or special meeting of stockholders need not be
given to a stockholder if a written waiver of notice is signed before or after
such meeting by such stockholder or if such stockholder attends such meeting,
unless such attendance was for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting was not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any Annual Meeting or special meeting of stockholders need be
specified in any written waiver of notice.

The Board of Directors may adjourn, postpone and reschedule any previously
scheduled Annual Meeting or special meeting of stockholders and any record date
with respect thereto, regardless of whether any notice or public disclosure with
respect to any such meeting has been sent or made pursuant to Section 2 of this
Article I or Section 3 of Article II of these Bylaws or otherwise. In no event
shall the public announcement of an adjournment, postponement or rescheduling of
any previously scheduled meeting of stockholders commence a new time period for
the giving of a stockholder's notice under Section 2 of this Article I or
Section 3 of Article II of these Bylaws.

When any Annual Meeting or special meeting of stockholders is convened, the
presiding officer may adjourn the meeting if (a) no quorum is present for the
transaction of business, (b) the Board of Directors determines that adjournment
is necessary or appropriate to enable the stockholders to consider fully
information which the Board of Directors determines has not been made
sufficiently or timely available to stockholders, or (c) the Board of Directors
determines that adjournment is otherwise in the best interests of the
Corporation. When any Annual Meeting or special meeting of stockholders is
adjourned to another hour, date or place, notice need not be given of the
adjourned meeting other than an announcement at the meeting at which the
adjournment is taken of the hour, date and place to which the meeting is
adjourned; provided, however, that if the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote thereat and each stockholder who, by law or under the
Certificate of Incorporation or under these Bylaws, is entitled to such notice.

SECTION 6. Quorum. The holders of shares of voting stock representing a
majority of the voting power of the outstanding shares of voting stock issued,
outstanding and entitled to vote at a meeting of stockholders, represented in
person or by proxy at such meeting, shall constitute a quorum; but if less than
a quorum is present at a meeting, the holders of voting stock representing a
majority of the voting power present at the meeting or the presiding officer may
adjourn the meeting from time to time, and the meeting may be held as adjourned
without further notice, except as provided in Section 5 of this Article I. At
such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The stockholders present at a duly constituted meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.

SECTION 7. Voting and Proxies. Stockholders shall have one vote for each
share of stock entitled to vote owned by them of record according to the books
of the Corporation, unless otherwise provided by law or by the Certificate of
Incorporation. Stockholders may vote either in person or by written proxy, but
no proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. Proxies shall be filed with the
Secretary of the meeting before being voted. Except as otherwise limited therein
or as otherwise provided by law, proxies shall entitle the
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persons authorized thereby to vote at any adjournment of such meeting. A proxy
with respect to stock held in the name of two or more persons shall be valid if
executed by or on behalf of any one of them unless at or prior to the exercise
of the proxy the Corporation receives a specific written notice to the contrary
from any one of them. A proxy purporting to be executed by or on behalf of a
stockholder shall be deemed valid, and the burden of proving invalidity shall
rest on the challenger.

SECTION 8. Action at Meeting. When a quorum is present, any matter
properly brought before any meeting of stockholders shall be decided by the vote
of a majority of the voting power of shares of voting stock present in person or
represented by proxy at such meeting and entitled to vote on such matter, except
where a larger vote is required by law, by the Certificate of Incorporation or
by these Bylaws. Any election of Directors by stockholders shall be determined
by a plurality of the votes cast, except where a larger vote is required by law,
by the Certificate of Incorporation or by these Bylaws. The Corporation shall
not directly or indirectly vote any shares of its own stock; provided, however,
that the Corporation may vote shares which it holds in a fiduciary capacity to
the extent permitted by law.

SECTION 9. Stockholder Lists. The Secretary (or the Corporation's transfer
agent or other person authorized by these Bylaws or by law) shall prepare and
make, at least 10 days before every Annual Meeting or special meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the hour, date and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.

SECTION 10. Presiding Officer. The Chairman of the Board or if there is no
Chairman of the Board, or in his absence, the Chief Executive Officer of the
Corporation or, in their absence, such other officer as shall be designated by
the Board of Directors shall preside at all Annual Meetings or special meetings
of stockholders and shall have the power, among other things, to adjourn such
meeting at any time and from time to time, subject to Sections 5 and 6 of this
Article I. The order of business and all other matters of procedure at any
meeting of the stockholders shall be determined by the presiding officer.

SECTION 11. Voting Procedures and Inspectors of Elections. The Corporation
shall, in advance of, or at, any meeting of stockholders, appoint one or more
inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the presiding officer shall appoint one or more
inspectors to act at the meeting. Any inspector may, but need not, be an
officer, employee or agent of the Corporation. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall perform such duties as are
required by the General Corporation Law of the State of Delaware, as amended
from time to time, including the counting of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of the duties of the inspectors. The presiding
officer may review all determinations made by the inspector(s), and in so doing
the presiding officer shall be entitled to exercise his or her sole judgment and
discretion and he or she shall not be bound by any determinations made by the
inspector(s). All determinations by the inspector(s) and, if applicable, the
presiding officer shall be subject to further review by any court of competent
jurisdiction.

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SECTION 11. No Action by Written Consent. Any action required or permitted
to be taken by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of the stockholders and may not be effected by
a consent in writing by any such stockholders.

ARTICLE II

DIRECTORS

SECTION 1. Powers. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors except as otherwise
provided by the Certificate of Incorporation or required by law.

SECTION 2. Number and Terms. The number of Directors constituting the
entire Board of Directors of the Corporation shall not be less than two nor more
than ten as fixed by resolution duly adopted from time to time by the Board of
Directors.

Commencing on the effective time of the Spin-off, the Directors shall be
classified, with respect to the term for which they severally hold office, into
three classes, as nearly equal in number as possible. The initial Class I, II
and III Directors shall be appointed by the Board of Directors upon the
effective time of the Spin-off. The initial Class I Directors shall serve until
the first Annual Meeting after the Spin-off. The initial Class II Directors
shall serve until the second Annual Meeting after the Spin-off. The initial
Class III Directors shall serve until the third Annual Meeting after the
Spin-off. Members of each class shall hold office until their successors are
duly elected and qualified or until their earlier death, disqualification,
resignation or removal. At each succeeding Annual Meeting, the successors of the
class of Directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast at such meeting to hold office for a term
expiring at the Annual Meeting held in the third year following the year of
their election.

SECTION 3. Director Nominations. Nominations of candidates for election as
Directors of the Corporation at any Annual Meeting may be made only (a) by, or
at the direction of, the Board of Directors or (b) by any holder of record (both
as of the time notice of such nomination is given by the stockholder as set
forth below and as of the record date for the Annual Meeting in question) of any
shares of the capital stock of the Corporation entitled to vote for the election
of Directors at such Annual Meeting who complies with the timing, informational
and other requirements set forth in this Section 3. Any stockholder who seeks to
make such a nomination or his representative must be present in person at the
Annual Meeting. Only persons nominated in accordance with the procedures set
forth in this Section 3 shall be eligible for election as Directors at an Annual
Meeting.

Nominations, other than those made by, or at the direction of, the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Section 3. For the first Annual Meeting
following the Spin-off, a stockholder's notice shall be timely if delivered to,
or mailed to and received by, the Corporation at its principal executive office
not later than the close of business on the later of (A) the 75th day prior to
the scheduled date of such Annual Meeting or (B) the 15th day following the day
on which public announcement of the date of such Annual Meeting is first made by
the Corporation. For all subsequent Annual Meetings, a stockholder's notice
shall be timely if delivered to, or mailed to and received by, the Corporation
at its principal executive office not less than 75 days nor more than 120 days
prior to the Anniversary Date; provided, however, that in the event the Annual
Meeting is scheduled to be held on a date more than 30 days before the
Anniversary Date or more than 60 days after the Anniversary Date, a
stockholder's notice shall be timely if delivered to, or mailed and received by,
the Corporation at its principal executive office not later than the close of
business on the later of (i) the 75th day prior to the scheduled date of

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such Annual Meeting or (ii) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the
Corporation.

A stockholder's notice to the Secretary shall set forth as to each person
whom the stockholder proposes to nominate for election or re-election as a
Director: (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the Corporation's capital stock which are
beneficially owned by such person on the date of such stockholder notice, (iv)
the consent of each nominee to serve as a Director if elected, and (v) such
information concerning such person as is required to be disclosed concerning a
nominee for election as Director of the Corporation pursuant to the rules and
regulations under the Exchange Act. A stockholder's notice to the Secretary
shall further set forth as to the stockholder giving such notice: (i) the name
and address, as they appear on the Corporation's stock transfer books, of such
stockholder and of the beneficial owners (if any) of the Corporation's capital
stock registered in such stockholder's name and the name and address of other
stockholders known by such stockholder to be supporting such nominee(s), (ii)
the class and number of shares of the Corporation's capital stock which are held
of record, beneficially owned or represented by proxy by such stockholder and by
any other stockholders known by such stockholder to be supporting such
nominee(s) on the record date for the Annual Meeting in question (if such date
shall then have been made publicly available) and on the date of such
stockholder's notice, and (iii) a description of all arrangements or
understandings between such stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by such stockholder or in connection therewith.

If the Board of Directors or a designated committee thereof determines that
any stockholder nomination was not timely made in accordance with the terms of
this Section 3 or that the information provided in a stockholder's notice does
not satisfy the informational requirements of this Section 3 in any material
respect, then such nomination shall not be considered at the Annual Meeting in
question. If neither the Board of Directors nor such committee makes a
determination as to whether a nomination was made in accordance with the
provisions of this Section 3, the presiding officer of the Annual Meeting shall
determine whether a nomination was made in accordance with such provisions. If
the presiding officer determines that any stockholder nomination was not timely
made in accordance with the terms of this Section 3 or that the information
provided in a stockholder's notice does not satisfy the information requirements
of this Section 3 in any material respect, then such nomination shall not be
considered at the Annual Meeting in question. If the Board of Directors, a
designated committee thereof or the presiding officer determines that a
nomination was made in accordance with the terms of this Section 3, the
presiding officer shall so declare at the Annual Meeting and such nominee shall
be eligible for election at the meeting.

No person shall be elected by the stockholders as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section. Election of Directors at the Annual Meeting need not be by written
ballot, unless otherwise provided by the Board of Directors or the presiding
officer at such Annual Meeting. If written ballots are to be used, ballots
bearing the names of all the persons who have been nominated for election as
Directors at the Annual Meeting in accordance with the procedures set forth in
this Section shall be provided for use at the Annual Meeting.

SECTION 4. Qualification. No Director need be a stockholder of the
Corporation.

SECTION 5. Vacancies. Any and all vacancies occurring on the Board of
Directors, including, without limitation, any vacancy created by reason of an
increase in the number of Directors, or resulting from death, resignation,
disqualification, removal or any other cause, may be filled by the affirmative
vote of a majority of the remaining Directors then in office, even if such
remaining Directors constitute

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less than a quorum of the Board of Directors, or if such vacancy is not so
filled by the remaining Directors, by the stockholders of the Corporation. Any
Director appointed or elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the class of Directors in
which the new directorship was created or the vacancy occurred and until such
Director's successor shall have been duly elected and qualified or until his or
her earlier death, disqualification, resignation or removal. When the number of
Directors is increased or decreased, the Board of Directors shall determine the
class or classes to which the increased or decreased number of Directors shall
be apportioned; provided, however, that no decrease in the number of Directors
shall shorten the term of any incumbent Director unless such Director is removed
as permitted in the Certificate of Incorporation. In the event of a vacancy in
the Board of Directors, the remaining Directors, except as otherwise provided by
law, may exercise the powers of the full Board of Directors until the vacancy is
filled.

SECTION 6. Removal. Directors may be removed from office in the manner
provided in the Certificate of Incorporation.

SECTION 7. Resignation. A Director may resign at any time by giving
written notice to the Corporation addressed to the Chief Executive Officer or
the Secretary. A resignation shall be effective upon receipt, unless the
resignation otherwise provides, and need not be accepted by the Corporation.

SECTION 8. Regular Meetings. The regular annual meeting of the Board of
Directors shall be held, without notice other than this Bylaw, on the same date
and at the same place as the Annual Meeting following the close of such meeting
of stockholders. Other regular meetings of the Board of Directors may be held at
such hour, date and place as the Board of Directors may by resolution from time
to time determine without notice other than such resolution.

SECTION 9. Special Meetings. Special meetings of the Board of Directors
may be called, orally or in writing, by or at the request of a majority of the
Directors then in office or the Chief Executive Officer of the Corporation. The
person calling any such special meeting of the Board of Directors may fix the
hour, date and place thereof.

SECTION 10. Notice of Meetings. Notice of the hour, date and place of all
special meetings of the Board of Directors shall be given to each Director by
the Secretary or the person calling such meeting, or in case of the death,
absence, incapacity or refusal of such person, by the Chief Executive Officer of
the Corporation or such other officer as shall be designated by the Board of
Directors. Notice of any special meeting of the Board of Directors shall be
given to each Director in person, by telephone, or by telex, telecopy, telegram,
e-mail or other written form of electronic communication, sent to his business
or home address, at least 24 hours in advance of the meeting, or by written
notice sent by next-day delivery courier service to his business or home
address, at least 48 hours in advance of the meeting. Such notice shall be
deemed to be delivered when hand delivered to such address, read to such
Director by telephone, deposited in the mail so addressed, with postage thereon
prepaid if mailed, dispatched or transmitted if telexed, telecopied, e-mailed or
effected by another written form of electronic communication, or when delivered
to the telegraph company if sent by telegram.

When any Board of Directors meeting, either regular or special, is
adjourned for 30 days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. It shall not be necessary to give any notice
of the hour, date or place of any meeting adjourned for less than 30 days or of
the business to be transacted thereat, other than an announcement at the meeting
at which such adjournment is taken of the hour, date and place to which the
meeting is adjourned.

A written waiver of notice signed before or after a meeting by a Director
and filed with the records of the meeting shall be deemed to be equivalent to
notice of the meeting. The attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting, except where a Director attends a

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meeting for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because such meeting is not lawfully called or
convened. Except as otherwise required by law, by the Certificate of
Incorporation or by these Bylaws, neither the business to be transacted at, nor
the purpose of, any meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.

SECTION 11. Quorum. At any meeting of the Board of Directors, a majority
of the Directors then in office (but in no event less than one-third of the
entire Board of Directors) shall constitute a quorum for the transaction of
business, but if less than a quorum is present at a meeting, a majority of the
Directors present may adjourn the meeting from time to time, and the meeting may
be held as adjourned without further notice, except as provided in Section 10 of
this Article II. Any business which might have been transacted at the meeting as
originally noticed may be transacted at such adjourned meeting at which a quorum
is present.

SECTION 12. Action at Meeting. At any meeting of the Board of Directors at
which a quorum is present, a majority of the Directors present may take any
action on behalf of the Board of Directors, unless otherwise required by law, by
the Certificate of Incorporation or by these Bylaws.

SECTION 13. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting if
all members of the Board of Directors consent thereto in writing. Such written
consent shall be filed with the records of the meetings of the Board of
Directors and shall be treated for all purposes as a vote at a meeting of the
Board of Directors.

SECTION 14. Manner of Participation. Directors may participate in meetings
of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all Directors participating in the
meeting can hear each other, and participation in a meeting in accordance
herewith shall constitute presence in person at such meeting for purposes of
these Bylaws.

SECTION 15. Committees. The Board of Directors, by vote of a majority of
the Directors then in office, may elect from its number, one or more committees,
including but not limited to, an Executive Committee, a Compensation Committee
and an Audit Committee, and may delegate thereto some or all of its powers
except those which by law, by the Certificate of Incorporation or by these
Bylaws may not be delegated. Except as the Board of Directors may otherwise
determine, any such committee may make rules for the conduct of its business,
but unless otherwise provided by the Board of Directors or in such rules, its
business shall be conducted so far as possible in the same manner as is provided
by these Bylaws for the Board of Directors. All members of such committees shall
hold such offices at the pleasure of the Board of Directors. The Board of
Directors may abolish any such committee at any time. Any committee to which the
Board of Directors delegates any of its powers or duties shall keep records of
its meetings and shall report its action to the Board of Directors. The Board of
Directors shall have power to rescind any action of any committee, to the extent
permitted by law, but no such rescission shall have retroactive effect.

SECTION 16. Compensation of Directors. Directors shall receive such
compensation for their services as shall be determined by a majority of the
Directors then in office provided that Directors who are serving the Corporation
as employees and who receive compensation for their services as such, shall not
receive any salary or other compensation for their services as Directors of the
Corporation.

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ARTICLE III

OFFICERS

SECTION 1. Enumeration. The officers of the Corporation shall consist of a
Chief Executive Officer, a President, a Chief Operating Officer, a Chief
Financial Officer, a Secretary and such other officers, including, without
limitation, a Treasurer, a Chairman of the Board and one or more Vice-Chairmen
of the Board, Vice-Presidents (including Executive Vice Presidents or Senior
Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant
Secretaries, as the Board of Directors may determine.

SECTION 2. Election. At the regular annual meeting of the Board following
the annual meeting of stockholders, the Board of Directors shall elect the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, and the Secretary. Other officers may be elected or appointed
by the Board of Directors at such regular annual meeting of the Board of
Directors or at any other regular or special meeting.

SECTION 3. Qualification. No officer need be a stockholder or a Director.
Any person may occupy more than one office of the Corporation at any time. Any
officer may be required by the Board of Directors to give bond for the faithful
performance of his duties in such amount and with such sureties as the Board of
Directors may determine.

SECTION 4. Tenure. Except as otherwise provided by the Certificate of
Incorporation or by these Bylaws, each of the officers of the Corporation shall
hold office until the regular annual meeting of the Board of Directors following
the next Annual Meeting and until his successor is elected and qualified or
until his earlier death, disqualification, resignation or removal.

SECTION 5. Resignation. Any officer may resign by giving written notice to
the Corporation addressed to the Chief Executive Officer or the Secretary. A
resignation shall be effective, upon receipt unless the resignation otherwise
provides, and need not be accepted by the Corporation.

SECTION 6. Removal. Except as otherwise provided by law, the Board of
Directors may remove any officer with or without cause at any time.

SECTION 7. Absence or Disability. In the event of the absence or
disability of any officer, the Board of Directors may designate another officer
to act temporarily in place of such absent or disabled officer.

SECTION 8. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.

SECTION 9. Powers and Duties. Each of the officers of the Corporation
shall, unless otherwise ordered by the Board of Directors, have such powers and
duties as generally pertain to the officer's respective office as well as such
powers and duties as from time to time may be conferred upon the officer by the
Board of Directors.

ARTICLE IV

CAPITAL STOCK

SECTION 1. Certificates of Stock. Each stockholder shall be entitled to a
certificate of the capital stock of the Corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall be
signed by the Chairman or Vice-Chairman of the Board or the Chief Executive
Officer, the President, the Chief Operating Officer or a Vice President and by
the Treasurer or

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an Assistant Treasurer or the Secretary or an Assistant Secretary. The corporate
seal and the signatures by Corporation officers, the transfer agent or the
registrar may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed on such certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the time of its
issue. Every certificate for shares of stock which are subject to any
restriction on transfer and every certificate issued when the Corporation is
authorized to issue more than one class or series of stock shall contain such
legend with respect thereto as is required by law.

SECTION 2. Transfers. Subject to any restrictions on transfer and unless
otherwise provided by the Board of Directors, shares of stock may be transferred
only on the books of the Corporation by the surrender to the Corporation or its
transfer agent of the certificate theretofore properly endorsed or accompanied
by a written assignment or power of attorney properly executed, with transfer
stamps (if necessary) affixed, and with such proof of the authenticity of
signature as the Corporation or its transfer agent may reasonably require.

SECTION 3. Record Holders. Except as may otherwise be required by law, by
the Certificate of Incorporation or by these Bylaws, the Corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect thereto, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on the books
of the Corporation in accordance with the requirements of these Bylaws.

It shall be the duty of each stockholder to notify the Corporation of his
or her post office address and any changes thereto.

SECTION 4. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof or entitled to receive payments of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders,
shall, unless otherwise required by law, not be more than sixty nor less than
ten days before the date of such meeting, and (2) in the case of any other
action, shall not be more than sixty days prior to such other action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which the meeting is held, and (2)
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.

ARTICLE V

INDEMNIFICATION

The Corporation shall to the fullest extent permitted by Delaware law, as
in effect from time to time (but, in the case of any amendment of the Delaware
General Corporation Law, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), indemnify each person who
is or was a Director or officer of the Corporation (or any predecessor) or of
any of its wholly-owned subsidiaries who was or is a party or is threatened to
be made a party to any threatened, pending or completed

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action, suit or proceeding, or was or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that such
Director or officer is or was a Director, officer, employee or agent of the
Corporation or of any of its subsidiaries, or is or was at any time serving, at
the request of the Corporation, any other corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against all expense, liability and loss (including,
but not limited to, attorneys' fees, judgments, fines, excise taxes or penalties
with respect to any employee benefit plan or otherwise, and amounts paid or to
be paid in settlement) incurred or suffered by such Director or officer in
connection with such proceeding; provided, however, that the Corporation shall
not be obligated to indemnify any person under this Article in connection with a
proceeding (or part thereof) if such proceeding (or part thereof) was initiated
by such person, but was not authorized by the Board of Directors of the
Corporation against (i) the Corporation or any of its subsidiaries, (ii) any
person who is or was a Director, officer, employee or agent of the Corporation
or any of its subsidiaries and/or (iii) any person or entity which is or was
controlled, controlled by or under common control with the Corporation or has or
had business relations with the Corporation or any of its subsidiaries.

Expenses incurred by a person who is or was a Director or officer of the
Corporation (or any predecessor) or any of its wholly-owned subsidiaries in
defending a proceeding shall be paid by the Corporation as they are incurred in
advance of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such Director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation. Such expenses incurred by former Directors or
officers of the Corporation may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.

For purposes of this Article, the term "Corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed by the Corporation in a consolidation
or merger; the term "other enterprise" shall include, without limitation, any
corporation, partnership, joint venture, limited liability company, trust or
employee benefit plan; service "at the request of the Corporation" shall
include, without limitation, service as a Director, officer or employee of the
Corporation which imposes duties on, or involves service by, such Director,
officer or employee with respect to an employee benefit plan, its participants
or beneficiaries; any excise taxes assessed on a person with respect to an
employee benefit plan shall be deemed to be indemnifiable expenses; and action
by a person with respect to any employee benefit plan which such person
reasonably believes to be in the interest of the participants and beneficiaries
of such plan shall be deemed to be action in or not opposed to the best
interests of the Corporation.

Notwithstanding any other provision of these Bylaws, no action by the
Corporation, either by amendment to or repeal of this Article or otherwise,
shall diminish or adversely affect any right or protection granted under this
Article to any Director or officer or former Director or officer of the
Corporation (or any predecessor) or of any of its wholly-owned subsidiaries
which shall have become vested as aforesaid prior to the date that any such
amendment, repeal or other corporate action is taken.

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 1. Fiscal Year. Except as otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall end on the last day of
December of each year.

SECTION 2. Seal. The Board of Directors shall have power to adopt and
alter the seal of the Corporation.

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SECTION 3. Execution of Instruments. All deeds, leases, transfers,
contracts, bonds, notes and other obligations to be entered into by the
Corporation in the ordinary course of its business without Board of Directors
action may be executed on behalf of the Corporation by the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, any Vice President, or any other officer, employee
or agent of the Corporation as the Board of Directors may authorize.

SECTION 4. Voting of Securities. Unless otherwise ordered by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, and any
Vice President each shall have full power and authority on behalf of the
Corporation to attend and to vote at any meeting of stockholders of any
corporation or other entity in which this Corporation may hold stock or an
ownership interest, and may exercise on behalf of this Corporation any and all
of the rights and powers incident to the ownership of such stock or ownership
interest at any such meeting and shall have power and authority to execute and
deliver proxies, waivers and consents on behalf of the Corporation in connection
with the exercise by the Corporation of the rights and powers incident to the
ownership of such stock or ownership interest. The Board of Directors, from time
to time, may confer like powers upon any other person or persons.

SECTION 5. Resident Agent. The Board of Directors may appoint a resident
agent upon whom legal process may be served in any action or proceeding against
the Corporation.

SECTION 6. Corporate Records. The original or attested copies of the
Certificate of Incorporation, Bylaws and records of all meetings of the
incorporators, stockholders and the Board of Directors (and committees thereof)
and the stock transfer books, which shall contain the names of all stockholders,
their record addresses and the number of shares of stock held by each, may be
kept outside the State of Delaware and shall be kept at the principal office of
the Corporation, at the office of its counsel or at an office of its transfer
agent or at such other place or places as may be designated from time to time by
the Board of Directors.

SECTION 7. Certificate of Incorporation. All references in these Bylaws to
the Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the Corporation as in effect from time to time (including all
certificates and other instruments which are filed with the Secretary of State
of the State of Delaware pursuant to the provisions of the Delaware General
Corporation Law and which have the effect of amending or supplementing in some
respect the Certificate of Incorporation of the Corporation).

SECTION 8. Amendment of Bylaws.

(a) Amendment by Directors. Except as provided otherwise by law, these
Bylaws may be amended or repealed or new Bylaws (not inconsistent with any
provision of law or the Certificate of Incorporation) may be adopted, by the
Board of Directors.

(b) Amendment by Stockholders. These Bylaws may be amended or repealed at
any annual meeting of stockholders, or special meeting of stockholders called
for such purpose, by the affirmative vote of a majority of the total votes
eligible to be cast on such amendment or repeal by holders of voting stock,
voting together as a single class.

[rest of the page is left blank]

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EXHIBIT 1.02(A)

See Amended and Restated Articles of Incorporation of TOC attached hereto.

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AMENDED AND RESTATED
ARTICLES OF INCORPORATION

FIRST. The name of the corporation is THE O'GARA COMPANY (the
"Corporation").

SECOND. The place in the State of Ohio where the Corporation's principal
office is to be located is the City of Fairfield in Butler County, Ohio.

THIRD. The purpose for which the Corporation is organized shall be to
engage in any lawful act or activity for which corporations may be formed under
the Ohio General Corporation Law, Ohio Revised Code sec.sec.,1701.01 et seq.

FOURTH. The aggregate number of shares of stock which the Corporation shall
have authority to issue is Fifteen Million One Hundred Thousand (15,100,000)
shares, which shall be divided into two classes, consisting of:

(a) Fifteen Million (15,000,000) shares of common stock ("Common
Stock") with a par value of $.01 per share.

(b) One Hundred Thousand (100,000) shares of preferred stock
("Preferred Stock") with a par value of $.01 per share.

PART ONE: COMMON STOCK

The shares of Common Stock may be issued at any time or from time to time
for such amount of lawful consideration as may be fixed by the Board of
Directors. Each holder of Common Stock shall be entitled to one (1) vote for
each share of Common Stock held by such holder.

PART TWO: PREFERRED STOCK

Clause 1. Except as otherwise provided by this Article Fourth or by the
amendment or amendments adopted by the Board of Directors providing for the
issue of any series of Preferred Stock, the Preferred Stock may be issued at any
time or from time to time in any amount, not exceeding in the aggregate,
including all shares of any and all series thereof theretofore issued, the One
Hundred Thousand (100,000) shares of Preferred Stock hereinabove authorized, as
Preferred Stock of one or more series, as hereinafter provided, and for such
lawful consideration as shall be fixed from time to time by the Board of
Directors.

Clause 2. Authority is hereby expressly granted to the Board of Directors
from time to time to adopt amendments to these Articles of Incorporation
providing for the issue in one more series of any unissued or treasury shares of
the Preferred Stock, and providing, to the fullest extent now or hereafter
permitted by the laws of the State of Ohio and notwithstanding the provisions of
any other Article of these Articles of Incorporation of the Corporation, in
respect of the matters set forth in the following subdivisions (i) to (ix),
inclusive, as well as any other rights or matters pertaining to such series:

(i) The designation and number of shares of such series;

(ii) Voting rights (to the fullest extent now or hereafter permitted
by the laws of the State of Ohio);

(iii) The dividend rate or rates of such series (which may be a
variable rate and which may be cumulative);

(iv) The dividend payment date or dates of such series;

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(v) Redemption rights (to the fullest extent now or hereafter
permitted by the laws of the State of Ohio), including the price or prices
at which shares of such series may be redeemed;

(vi) The amount of the sinking fund, if any, to be applied to the
purchase or redemption of shares of such series and the manner of its
application;

(vii) The liquidation price or prices of such series;

(viii) Whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or classes
or of any other series of the same class of stock of the Corporation or any
other property, and if made so convertible or exchangeable, the conversion
price or prices, or the rates of exchange at which such conversation or
exchange may be made and the adjustments thereto, if any; and,

(ix) Whether or not the issue of any additional shares of such series
or any future series in addition to such series shall be subject to any
restrictions and, if so, the nature of such restrictions.

Any of the voting rights, dividend rate or rates, dividend payment date or
dates, redemption rights and price or prices, sinking fund requirements,
liquidation price or prices, conversion or exchange rights and restrictions on
issuance of shares of any such series of Preferred Stock may, to the fullest
extent now or hereafter permitted by the laws of the State of Ohio, be made
dependent upon facts ascertainable outside these Articles of Incorporation or
outside the amendment or amendments providing for the issue of such Preferred
Stock adopted by the Board of Directors pursuant to authority expressly vested
in it by this Article Fourth. If the then-applicable laws of the State of Ohio
do not permit the Board of Directors to fix, by the amendment creating a series
of Preferred Stock, the voting rights of shares of such series, each holder of a
share of such series of Preferred Stock shall, except as may be otherwise
provided by law, be entitled to one (1) vote for each share of Preferred Stock
of such series held by such holder.

Clause 3. Before any dividends shall be declared or paid upon or set apart
for, or distribution made on, the Common Stock and before any sum shall be paid
or set apart for the purchase or redemption of Preferred Stock of any series or
for the purchase of the Common Stock, the holders of Preferred Stock of each
series shall be entitled to receive accrued dividends declared by the Board of
Directors, payable at the rate or rates fixed for such series in accordance with
the provisions of this Article Fourth, and no more, from the dividend payment
date thereof, or preceding dividend payment date or dates fixed from time to
time by the Board of Directors.

Clause 4. If upon any dissolution, liquidation or winding up of the
Corporation or reduction of its capital stock, the assets so to be distributed
among the holders of the Preferred Stock pursuant to the provisions of this
Article Fourth or of the amendment or amendments providing for the issue of such
Preferred Stock adopted by the Board of Directors pursuant to authority
expressly vested in it by this Article Fourth shall be insufficient to permit
the payment to such holders of the full preferential amounts aforesaid, then the
entire assets of the Corporation shall be distributed ratably among the holders
of the Preferred Stock in proportion to the full preferential amounts to which
they are respectively entitled as aforesaid.

Clause 5. The term "accrued dividends", whenever used herein with respect
to the Preferred Stock of any series, shall be deemed to mean that amount which
would have been paid as dividends declared on the Preferred Stock of such series
to date had full dividends been paid thereon at the rate fixed for such series
in accordance with the provisions of this Article Fourth, less in each case the
amount of all dividends declared paid upon the shares of such series.

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FIFTH. The Corporation shall have the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation or any
provision that may be added or inserted in these Articles of Incorporation,
provided that:

(a) Such amendment, alteration, change, repeal, addition or insertion
is consistent with law and is accomplished in the manner now or hereafter
prescribed by statute or these Articles; and

(b) Any provision of these Articles of Incorporation which requires,
or the change of which requires, the vote or consent of all or a specific
number or percentage of the holders of shares of any class or series shall
not be amended, altered changed or repealed by any lesser amount, number or
percentage of votes or consents of such class or series. Any rights at any
time conferred upon the shareholders of the Corporation are granted subject
to the provisions of this Article.

SIXTH. Subject to the provisions of Article Fifth hereof, the affirmative
vote of shareholders entitled to exercise a majority of the voting power of the
Corporation shall be required to amend these Articles of Incorporation, approve
mergers and to take any other action which by law must be approved by a
specified percentage of the voting power of the Corporation or of all
outstanding shares entitled to vote.

SEVENTH. No holder of any shares of the Corporation shall have any
preemptive rights to subscribe for or to purchase any shares of the Corporation
of any class, whether such shares or such class be now or hereafter authorized,
or to purchase or subscribe for any security convertible into, or exchangeable
for, shares of any class or to which shall be attached or appertained any
warrants or rights entitling the holder thereof to purchase or subscribe for
shares of any class.

EIGHTH. Subject to the provisions of Article Fourth hereof, the
Corporation, through its Board of Directors, shall have the right and power to
purchase any of its outstanding shares at such price and upon such terms as may
be agreed upon between the Corporation and any selling shareholder.

NINTH. No shareholder shall have the right to vote cumulatively in the
election of directors.

TENTH. These Amended and Restated Articles of Incorporation shall take the
place of and supersede the existing Articles of Incorporation.

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EXHIBIT 1.02(B)

See the Code of Regulations of TOC attached hereto.

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CODE OF REGULATIONS
OF
THE O'GARA COMPANY

ARTICLE I

SHAREHOLDERS

Section 1. Annual Meetings.

The Annual Meeting of the shareholders of this Corporation, for the
election of the Board of Directors and the transaction of such other business as
may properly be brought before such meeting, shall be held at the time, date and
place designated by the Board of Directors or, if it shall so determine, by the
Chairman of the Board or the President. If the Annual Meeting is not held or if
Directors are not elected thereat, a Special Meeting may be called and held for
that purpose.

Section 2. Special Meetings.

Special meetings of the shareholders may be held on any business day when
called by the Chairman of the Board, the President, a majority of Directors or
persons holding fifty percent of all voting power of the Corporation and
entitled to vote at such meeting.

Section 3. Place of Meetings.

Any meeting of shareholders may be held at such place within or without the
State of Ohio as may be designated in the Notice of said meeting.

Section 4. Notice of Meeting and Waiver of Notice

4.1 Notice. Written notice of the time, place and purposes of any meeting
of shareholders shall be given to each shareholder entitled thereto not less
than seven (7) days nor more than sixty (60) days before the date fixed for the
meeting and as prescribed by law. Such notice shall be given either by personal
delivery or mail to the shareholders at their respective addresses as they
appear on the records of the Corporation. Notice shall be deemed to have been
given on the day mailed. If any meeting is adjourned to another time or place,
no notice as to such adjourned meeting need be given other than by announcement
at the meeting at which such an adjournment is taken. No business shall be
transacted at any such adjourned meeting except as might have been lawfully
transacted at the meeting at which such adjournment was taken.

4.2 Notice to Joint Owners. All notices with respect to any shares to
which persons are entitled by joint or common ownership may be given to that one
of such persons who is named first upon the books of this Corporation, and
notice so given shall be sufficient notice to all the holders of such shares.

4.3 Waiver. Notice of any meeting may be waived in writing by any
shareholder either before or after any meeting, or by attendance at such meeting
without protest to its commencement.

Section 5. Shareholders Entitled to Notice and to Vote.

If a record date shall not be fixed, the record date for the determination
of shareholders entitled to notice of or to vote at any meeting of shareholders
shall be the date next preceding the day on which notice is given, or the date
next preceding the day on which the meeting is held, as the case may be.

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Section 6. Quorum and Voting.

The holders of shares entitling them to exercise a majority of the voting
power of the Corporation, present in person or by proxy, shall constitute a
quorum for any meeting. The shareholders present in person or by proxy, whether
or not a quorum be present, may adjourn the meeting from time to time without
notice other than by announcement at the meeting.

In any other matter brought before any meeting of shareholders, the
affirmative vote of the holders of shares representing a majority of the votes
actually cast shall be the act of the shareholders provided, however, that no
action required by law, the Articles, or these Regulations to be authorized or
taken by the holders of a designated proportion of the shares of the Corporation
may be authorized or taken by a lesser proportion.

Section 7. Organization of Meetings.

7.1 Presiding Officer. The Chairman of the Board, or in the Chairman of
the Board's absence the President, or the person designated by the Board of
Directors, shall call all meetings of the shareholders to order and shall act as
Chairman thereof; if all are absent, the shareholders shall elect a Chairman.

7.2 Minutes. The Secretary of the Corporation, or in the Secretary's
absence, an Assistant Secretary, or, in the absence of both, a person appointed
by the Chairman of the meeting, shall act as Secretary of the meeting and shall
keep and make a record of the proceedings thereat.

Section 8. Voting.

Except as provided by statute or in the Articles, every shareholder
entitled to vote shall be entitled to cast one vote on each proposal submitted
to the meeting for each share held of record on the record date for the
determination of the shareholders entitled to vote at the meeting.

Section 9. Proxies.

A person who is entitled to attend a shareholders' meeting, to vote thereat
or to execute consents, waivers and releases, may be represented at such meeting
or vote thereat, and execute consents, waivers and releases and exercise any of
the person's rights, by proxy or proxies appointed by a writing signed by such
person, or by his duly authorized attorney which may be transmitted physically
or by facsimile.

Section 10. List of Shareholders.

At any meeting of shareholders a list of shareholders, alphabetically
arranged, showing the number and classes of shares held by each on the record
date applicable to such meeting, shall be produced upon the request of any
shareholder.

ARTICLE II

DIRECTORS

Section 1. General Powers.

The authority of this Corporation shall be exercised by or under the
direction of the Board of Directors, except where the law, the Articles or these
Regulations require action to be authorized or taken by the shareholders.

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Section 2. Election, Number and Qualification of Directors.

2.1 Election. The Directors shall be elected at the Annual Meeting of the
shareholders, or if not so elected, at a special meeting of shareholders. The
only candidates who shall be eligible for election at such meeting shall be
those who have been nominated by or at the direction of the Board of Directors
(which nominations shall be either made at such meeting or disclosed in a proxy
statement, or supplement thereto, distributed to shareholders for such meeting)
and those who have been nominated at such meeting by a shareholder who has
complied with the procedures set forth in this Section 2. A shareholder may make
a nomination for the office of director only if such shareholder has first
delivered or sent by certified mail, return receipt requested, to the Secretary
of the Corporation notice in writing at least five and no more than thirty days
prior to such meeting of shareholders, which notice shall set forth or be
accompanied by (a) the name and residence of such shareholder; (b) a
representation that such shareholder is a holder of record of voting stock of
the Corporation and intends to appear in person or by proxy at such meeting to
nominate the person or persons specified in the notice; (c) the name and
residence of each such nominee; and (d) the consent of such nominee to serve as
director if so elected. The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.

2.2 Number. The number of Directors, which shall not be less than the
lesser of three or the number of shareholders of record, may be fixed or changed
at a meeting of the shareholders called for the purpose of electing Directors at
which a quorum is present, by the affirmative vote of the holders of a majority
of the shares represented at the meeting and entitled to vote on such proposal.
In addition, the number of Directors may be fixed or changed by action of the
Directors at any meeting of Directors at which a quorum is present by a majority
vote of the Directors present at the meeting. The Directors then in office may
fill any Director's office that is created by an increase in the number of
Directors. The number of Directors elected shall be deemed to be the number of
Directors fixed unless otherwise fixed by resolution adopted at the meeting at
which such Directors are elected.

2.3 Qualifications. Directors need not be shareholders of the Corporation.

Section 3. Term of Office of Directors.

3.1 Term. Each Director shall hold office until the next Annual Meeting of
the shareholders and until a Director's successor has been elected or until a
Director's earlier resignation, removal from office or death. Directors shall be
subject to removal as provided by statute or by other lawful procedures and
nothing herein shall be construed to prevent the removal of any or all Directors
in accordance therewith.

3.2 Resignation. A resignation from the Board of Directors shall be deemed
to take effect immediately upon its being received by any incumbent corporate
officer other than an officer who is also the resigning Director, unless some
other time is specified therein.

3.3 Vacancy. In the event of any vacancy in the Board of Directors for any
reason, the remaining Directors, though less than a majority of the whole Board,
may fill any such vacancy for the unexpired term.

Section 4. Meetings of Directors.

4.1 Regular Meetings. A regular meeting of the Board of Directors shall be
held immediately following the adjournment of the meeting of shareholders at
which Directors are elected. The holding of such shareholders' meeting shall
constitute notice of such Directors' meeting and such meeting shall be

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held without further notice. Other regular meetings of the Board of Directors
shall be held at such times and places as may be fixed by the Directors.

4.2 Special Meetings. Special meetings of the Board of Directors may be
held at any time upon call of the Chairman of the Board, the President or any
two Directors.

4.3 Place of Meeting. Any meeting of Directors may be held at such place
within or without the State of Ohio as may be designated in the notice of said
meeting.

4.4 Notice of Meeting and Waiver of Notice. Notice of the time and place
of any regular or special meeting of the Board of Directors shall be given to
each Director by personal delivery, telephone, facsimile transmission or mail at
least forty-eight hours before the meeting, which notice need not specify the
purpose of the meeting.

Section 5. Quorum and Voting.

At any meeting of Directors, not less than one-half of the whole authorized
number of Directors is necessary to constitute a quorum for such meeting, except
that a majority of the remaining Directors in office shall constitute a quorum
for filling a vacancy in the Board. At any meeting at which a quorum is present,
all acts, questions and business which may come before the meeting shall be
determined by a majority of votes cast by the Directors present at such meeting,
unless the vote of a greater number is required by the Articles or Regulations.

Section 6. Committees.

6.1 Appointment. The Board of Directors may from time to time appoint
certain of its members to act as a committee or committees in the intervals
between meetings of the Board and may delegate to such committee or committees
power to be exercised under the control and direction of the Board. Each
committee shall be composed of at least three directors unless a lesser number
is allowed by law. Each such committee and each member thereof shall serve at
the pleasure of the Board.

6.2 Executive Committee. In particular, the Board of Directors may create
from its membership and define the powers and duties of an Executive Committee.
During the intervals between meetings of the Board of Directors, the Executive
Committee shall possess and may exercise all of the powers of the Board of
Directors in the management and control and the business of the Corporation to
the extent permitted by law. All action taken by the Executive Committee shall
be reported to the Board of Directors at its first meeting thereafter.

6.3 Committee Action. Unless otherwise provided by the Board of Directors,
a majority of the members of any committee appointed by the Board of Directors
pursuant to this Section shall constitute a quorum at any meeting thereof and
the act of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee. Any such committee shall prescribe
its own rules for calling and holding meetings and its method of procedure,
subject to any rules prescribed by the Board of Directors, and shall keep a
written record of all action taken by it.

Section 7. Action of Directors Without a Meeting.

Any action which may be taken at a meeting of Directors or any committee
thereof may be taken without a meeting if authorized by a writing or writings
signed by all the Directors or all of the members of the particular committee,
which writing or writings shall be filed or entered upon the records of the
Corporation.

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Section 8. Compensation of Directors.

The Board of Directors may allow compensation to directors for performance
of their duties and for attendance at meetings or for any special services, may
allow compensation to members of any committee, and may reimburse any Director
for the Director's expenses in connection with attending any Board or committee
meeting.

Section 9. Relationship with Corporation.

Directors shall not be barred from providing professional or other services
to the Corporation. No contract, action or transaction shall be void or voidable
with respect to the Corporation for the reason that it is between or affects the
Corporation and one or more of its Directors, or between or affects the
Corporation and any other person in which one or more of its Directors are
directors, trustees or officers or have a financial or personal interest, or for
the reason that one or more interested Directors participate in or vote at the
meeting of the Directors or committee thereof that authorizes such contract,
action or transaction, if in any such case any of the following apply:

(i) the material facts as to the Director's relationship or interest
and as to the contract, action or transaction are disclosed or are known to
the Directors or the committee and the Directors or committee, in good
faith, reasonably justified by such facts, authorize the contract, action
or transaction by the affirmative vote of a majority of the disinterested
Directors, even though the disinterested Directors constitute less than a
quorum;

(ii) the material facts as to the Director's relationship or interest
and as to the contract, action or transaction are disclosed or are known to
the shareholders entitled to vote thereon and the contract, action or
transaction is specifically approved at a meeting of the shareholders held
for such purpose by the affirmative vote of the holders of shares entitling
them to exercise a majority of the voting power of the Corporation held by
persons not interested in the contract, action or transaction; or

(iii) the contract, action or transaction is fair as to the
Corporation as of the time it is authorized or approved by the Directors, a
committee thereof or the shareholders.

ARTICLE III

OFFICERS

Section 1. General Provisions.

The Board of Directors shall elect a Chairman of the Board, a President, a
Secretary, a Treasurer, one or more Vice Presidents, and such other officers and
assistant officers as the Board may from time-to-time deem necessary. The
Chairman of the Board, if any, shall be a Director, but none of the other
officers needs to be a Director. Any two or more offices may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity if such instrument is required to be executed,
acknowledged or verified by two or more officers.

Section 2. Powers and Duties.

All officers, as between themselves and the Corporation, shall respectively
have such authority and perform such duties as are customarily incident to their
respective offices, and as may be specified from time to time by the Board of
Directors regardless of whether such authority and duties are customarily
incident to such office. In the absence of any officer of the Corporation, or
for any other reason the

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Board of Directors may deem sufficient, any or all of the powers or duties of
such officer may be delegated to any other officer or to any Director. The Board
of Directors may from time to time delegate to any officer authority to appoint
and remove subordinate officers and to prescribe their authority and duties.

Section 3. Term of Office and Removal.

3.1 Term. Each officer of the Corporation shall hold office at the
pleasure of the Board of Directors and, unless sooner removed by the Board of
Directors, until the meeting of the Board of Directors following the date of
election of Directors and until his or her successor is elected and qualified.

3.2 Removal. The Board of Directors may remove any officer at any time
with or without cause by the affirmative vote of a majority of Directors in
office.

Section 4. Compensation of Officers.

The Directors shall establish the compensation of officers and employees or
may, to the extent not prohibited by law, delegate such authority to one or more
officers or Directors as they determine.

ARTICLE IV

INDEMNIFICATION

Section 1. Right to Indemnification.

Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved (including, without limitation, as a witness) in any
actual or threatened action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "proceeding"), by reason of the
fact that such person is or was a director or officer of the Corporation or
that, being or having been such a director or officer of the Corporation, such
person is or was serving at the request of an executive officer of the
Corporation as a director, officer, partner, employee, or agent of another
corporation or of a partnership, joint venture, trust, limited liability
company, or other enterprise, including service with respect to an employee
benefit plan (hereinafter an "indemnitee"), whether the basis of such proceeding
is alleged action in an official capacity as such a director, officer, partner,
employee, or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent permitted by the General Corporation Law of Ohio, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), or by other applicable law
as then in effect, against all expense, liability, and loss (including, without
limitation, attorneys' fees, costs of investigation, judgments, fines, excise
taxes or penalties arising under the Employee Retirement Income Security Act of
1974 ("ERISA") or other federal or state acts) actually incurred or suffered by
such indemnitee in connection therewith and such indemnification shall continue
as to an indemnitee who has ceased to be a director, officer, employee, or agent
and shall inure to the benefit of the indemnitee's heirs, executors, and
administrators. Except as provided in Section 2 with respect to proceedings
seeking to enforce rights to indemnification, the Corporation shall indemnify
any such indemnitee in connection with a proceeding (or part thereof) initiated
by such indemnitee only if such proceeding (or part thereof) was authorized or
ratified by the Board of Directors of the Corporation.

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The right to indemnification conferred in this Section 1 shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition (hereinafter an "advancement of expenses"). An advancement of
expenses incurred by an indemnitee in such person's capacity as a director,
officer or employee (and not in any other capacity in which service was or is
rendered by such indemnitee including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such indemnitee to repay all amounts so advanced
if it is proved by clear and convincing evidence in a court of competent
jurisdiction that such indemnitee's omission or failure to act involved an act
or omission undertaken with deliberate intent to cause injury to the Corporation
or undertaken with reckless disregard for the best interests of the Corporation.
An advancement of expenses shall not be made if the Corporation's Board of
Directors makes a good faith determination that such payment would violate
applicable law or public policy.

Section 2. Right of Indemnitee to Bring Suit.

If a claim under Section 1 is not paid in full by the Corporation within
sixty days after a written claim has been received by the Corporation, except in
the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty days, the indemnitee may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall also be entitled to be paid the expense of
prosecuting or defending such suit. The indemnitee shall be presumed to be
entitled to indemnification under this Article IV upon submission of a written
claim (and, in an action brought to enforce a claim for an advancement of
expenses, where the required undertaking has been tendered to the Corporation),
and thereafter the Corporation shall have the burden of proof to overcome the
presumption that the indemnitee is not so entitled. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances, nor
an actual determination by the Corporation (including its Board of Directors,
independent legal counsel or its shareholders) that the indemnitee is not
entitled to indemnification shall be a defense to the suit or create a
presumption that the indemnitee is not so entitled.

Section 3. Nonexclusivity and Survival of Rights.

The rights to indemnification and to the advancement of expenses conferred
in this Article IV shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, provisions of the Articles of
Incorporation, Code of Regulations, agreement, vote of shareholders or
disinterested directors, or otherwise.

Notwithstanding any amendment to or repeal of this Article IV, or of any of
the procedures established by the Board of Directors pursuant to Section 7, any
indemnitee shall be entitled to indemnification in accordance with the
provisions hereof and thereof with respect to any acts or omissions of such
indemnitee occurring prior to such amendment or repeal.

Without limiting the generality of the foregoing paragraph, the rights to
indemnification and to the advancement of expenses conferred in this Article IV
shall, notwithstanding any amendment to or repeal of this Article IV, inure to
the benefit of any person who otherwise may be entitled to be indemnified
pursuant to this Article IV (or the estate or personal representative of such
person) for a period of six years after the date such person's service to or in
behalf of the Corporation shall have terminated or for such longer period as may
be required in the event of a lengthening in the applicable statute of
limitations.

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Section 4. Insurance, Contracts, and Funding.

The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee, or agent of the Corporation or another
corporation, partnership, joint venture, trust, or other enterprise against any
expense, liability, or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability, or loss under the
General Corporation Law of Ohio. The Corporation may enter into contracts with
any indemnitee in furtherance of the provisions of this Article IV and may
create a trust fund, grant a security interest, or use other means (including,
without limitation, a letter of credit) to ensure the payment of such amounts as
may be necessary to effect indemnification as provided in this Article IV.

Section 5. Persons Serving Other Entities.

Any person who is or was a director, officer, or employee of the
Corporation who is or was serving (i) as a director or officer of another
corporation of which a majority of the shares entitled to vote in the election
of its directors is held by the Corporation or a wholly-owned subsidiary of the
Corporation, or (ii) in an executive or management capacity in a partnership
joint venture, trust, limited liability company or other enterprise of which the
Corporation or a wholly-owned subsidiary of the Corporation is a general partner
or member or has a majority ownership shall be deemed to be so serving at the
request of an executive officer of the Corporation and entitled to
indemnification and advancement of expenses under Section 1.

Section 6. Indemnification of Employees and Agents of the Corporation.

The Corporation may, by action of its Board of Directors, authorize one or
more executive officers to grant rights to advancement of expenses to employees
or agents of the Corporation on such terms and conditions no less stringent than
provided in Section 1 hereof as such officer or officers deem appropriate under
the circumstances. The Corporation may, by action of its Board of Directors,
grant rights to indemnification and advancement of expenses to employees or
agents or groups of employees or agents of the Corporation with the same scope
and effect as the provisions of this Article IV with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation; provided, however, that an undertaking shall be made by an employee
or agent only if required by the Board of Directors.

Section 7. Procedures for the Submission of Claims.

The Board of Directors may establish reasonable procedures for the
submission of claims for indemnification pursuant to this Article IV,
determination of the entitlement of any person thereto, and review of any such
determination. Such procedure, shall be set forth in an appendix to these Code
of Regulations and shall be deemed for all purposes to be a part hereof.

ARTICLE V

AMENDMENTS

This Code of Regulations may be amended by the affirmative vote or the
written consent of the shareholders entitled to exercise a majority of the
voting power on such proposal. If an amendment is adopted by written consent the
Secretary shall mail a copy of such amendment to each shareholder who would be
entitled to vote thereon and did not participate in the adoption thereof. This
Code of Regulations may also be amended by the affirmative vote of a majority of
the Directors to the extent permitted by Ohio law at the time of such amendment.

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EXHIBIT 1.03(a)(i)

On or before the Exchange Date, the Company shall contribute to KRCS all of
the outstanding stock it holds in the Kroll Subsidiaries and to KRCS all of the
KRCS Assets which are held by the Company, and all of its right, title and
interest in and to KRCS's allocable portion of the shared assets listed below.
The Company shall use the June 30, 2000 balance sheet to allocate cash and other
assets at that date.

1. $6,259,743.00 (cash at June 30, 2000) which shall be allocated 41.492%
($2,597,293.00) to TOC and 58.508% ($3,662,450.00) to KRCS. Effective as of July
1, 2000, the Company shall maintain separate accounting records for the TOC
Group and the KRCS Group so that cash will be allocated to the KRCS Group if the
cash relates to, or is collected by, a Kroll Subsidiary and to the TOC Group if
the cash relates to, or is collected by, an O'Gara Subsidiary.

2. The Company shall contribute 7,500,000 shares of Securify Common Stock
that it holds to KRCS.

3. The operating leases designated as "Split to KRCS" set forth on the
attached list of the Summary of Jacom Lease Schedule, Master Lease Agreement
9943, relating to assets that will be contributed to KRCS, shall be assigned to,
and assumed by, KRCS.

4. To the extent that any software information technology assets ("IT
Assets") are not KRCS Assets or TOC Assets, KRCS and TOC agree to allocate such
IT Assets so as to maximize the value and utility of such IT Assets.

5. The Kroll-O'Gara logo and all trademarks and tradenames used by, or
relating to, the Kroll Subsidiaries shall be contributed to KRCS, including the
intellectual property listed on the attached list.

6. An undivided interest in all other assets that are not specifically
identified and allocated on this Exhibit 1.03(a)(i) or elsewhere in this
Agreement but that are assets of the Company shall be allocated 41.492% to TOC
and 58.508% to KRCS.

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THE KROLL-O'GARA COMPANY

SUMMARY OF JACOM LEASE SCHEDULE, MASTER LEASE AGREEMENT 9943

<TABLE>
<CAPTION>
SCHEDULE DATE EQUIPMENT LEASED PURSUANT TO SCHEDULE LEASE TERM MONTHLY PMT SPLIT TO
-------- ---- ------------------------------------- ---------- ----------- --------
<C> <C> <S> <C> <C> <C>
1 10/20/1999 Sun I-Planet E-Mail System 36 months $ 5,567 SPSG

2 10/20/1999 HP-Elite System 48 months $17,782 KRCS
HP-JDEdwards System SPSG

3 09/13/1999 Nortel Meridian Phone System-Fairfield 48 months $ 7,632 SPSG
Nortel Meridian Phone System-New York KRCS

4 Not used

5 11/05/1999 Kins/Crisis Phone System 48 months $ 766 KRCS

6 12/01/1999 Laptops and other computer equipment in
NY/Nashville 36 months $ 2,052 KRCS

7 06/13/2000 PC equipment at Fairfield (HP vectra
system) 30 months $ 1,930 SPSG

8 12/28/1999 Computer Equipment at Lindquist Avey 36 months $ 5,673 KRCS

9 03/24/2000 Computer Equipment at Fairfield 36 months $ 675 SPSG

10 02/02/2000 Workstations and Desks in New York 60 months $ 5,450 KRCS
</TABLE>

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<TABLE>
<CAPTION>
COUNTY/
OWNER MARK JURISDICTION CLASS(ES) STATUS
----- ---- ------------ --------- ------
<S> <C> <C> <C> <C>
The Kroll-O'Gara Company KROLL BACKGROUND AMERICA Canada n/a Pending
The Kroll-O'Gara Company KROLL BACKGROUND AMERICA United Kingdom n/a Pending
The Kroll-O'Gara Company KBUK United Kingdom n/a Pending
The Kroll-O'Gara Company KROLL Ecuador 16 Pending
The Kroll-O'Gara Company KROLL Ecuador 35 Pending
The Kroll-O'Gara Company KROLL Ecuador 36 Pending
The Kroll-O'Gara Company KROLL Ecuador 42 Pending
The Kroll-O'Gara Company KROLL Singapore n/a Pending
The Kroll-O'Gara Company KROLL South Africa n/a Pending
The Kroll-O'Gara Company KROLL BACKGROUND AMERICA United States 42 Pending
The Kroll-O'Gara Company KROLL LABORATORY SPECIALISTS United States 42 Pending
The Kroll-O'Gara Company KROLL TRAVEL WATCH United States n/a Pending
The Kroll-O'Gara Company TOTAL BUSINESS CONTROLS United States n/a Pending
</TABLE>

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EXHIBIT 1.03(a)(ii)

On or before the Exchange Date, KRCS shall assume from the Company the KRCS
Liabilities, and its allocable portion of the Shared Liabilities, including
without limitation the following Company liabilities:

1. Corporate Expenses that accrue through the Distribution Date shall be
allocated 41.492% to TOC and 58.508% to KRCS. "Corporate Expenses" shall include
the funding of Securify, general corporate accounting matters, general corporate
legal expenses, corporate communication costs (long distance and data
communication charges), costs of maintaining the Company's 401(k) Plan, costs of
maintaining the Company's insurance policies, fees and expenses of the Board of
Directors of the Company, and bank fees charged for maintaining the corporate
bank account. Corporate Expenses shall specifically exclude the costs and
expenses of the Reorganization which shall be allocated pursuant to Article XII
of the Agreement.

2. Any amounts due under Company capitalized leases or purchase money
obligations relating to equipment contributed to KRCS or maintained by a Kroll
Subsidiary shall be allocated to and assumed by KRCS.

3. An undivided interest in all other liabilities that are not specifically
identified and allocated on this Exhibit 1.03(a)(ii) or elsewhere in this
Agreement but that are liabilities of the Company shall be allocated 41.492% to
TOC and 58.508% to KRCS.

4. Any and all liabilities to make payments to Dissenters as required by
law and any other liabilities and expenses relating to shareholders' rights of
appraisal in connection with the contemplated Transactions as set forth on
Exhibit A to the Cross-Indemnification Agreement.

5. Fees and expenses in connection with this Agreement as set forth in
Article XII hereof.

6. The percentage provided in Section 1.04 of this Agreement to be assumed
by KRCS of (i) the Company's indebtedness under its credit agreement with
KeyBank National Association and (ii) the $35,000,000 principal amount of, plus
any interest and prepayment penalty on, the Company's Senior Notes due May 30,
2004, as provided in Section 1.04 of this Agreement.

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EXHIBIT 1.03(b)(i)

On or before the Exchange Date, the Company shall contribute to TOC all of
the outstanding stock it holds in the O'Gara Subsidiaries and to TOC all of the
TOC Assets which are held by the Company, and all of its right, title and
interest in and to TOC's allocable portion of the shared assets listed below.
The Company shall use the June 30, 2000 balance sheet to allocate cash and other
assets at that date.

1. $6,259,743.00 (cash at June 30, 2000) which shall be allocated 41.492%
($2,597,293.00) to TOC and 58.508% ($3,662,450.00) to KRCS. Effective as of July
1, 2000, the Company shall maintain separate accounting records for TOC and KRCS
so that cash will be allocated to the KRCS Group if the cash relates to, or is
collected by, a Kroll Subsidiary and to the TOC Group if the cash relates to, or
is collected by, an O'Gara Subsidiary.

2. The Company shall contribute 11,250,000 shares of Securify Common Stock
that it holds to TOC.

3. The operating leases designated as "Split to SPSG" set forth on the
attached list of the Summary of Jacom Lease Schedule, Master Lease Agreement
9943, relating to assets that will be contributed to TOC, shall be assigned to,
and assumed by, TOC.

4. To the extent that any IT Assets are not KRCS Assets or TOC Assets, KRCS
and TOC agree to allocate such IT Assets so as to maximize the value and utility
of such IT Assets.

5. All trademarks and tradenames used by, or relating to, the O'Gara
Subsidiaries shall be contributed to TOC.

6. An undivided interest in all other assets that are not specifically
identified and allocated on this Exhibit 1.03(b)(i) or elsewhere in this
Agreement but that are assets of the Company shall be allocated 41.492% to TOC
and 58.508% to KRCS.

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THE KROLL-O'GARA COMPANY

SUMMARY OF JACOM LEASE SCHEDULE, MASTER LEASE AGREEMENT 9943

2 10/20/1999 HP-Elite System 48 months $17,782 KRCS
HP-JDEdwards System SPSG

3 09/13/1999 Nortel Meridian Phone System-Fairfield 48 months $ 7,632 SPSG
Nortel Meridian Phone System-New York KRCS

4 Not used

5 11/05/1999 Kins/Crisis Phone System 48 months $ 766 KRCS

6 12/01/1999 Laptops and other computer equipment in
NY/Nashville 36 months $ 2,052 KRCS

7 06/13/2000 PC equipment at Fairfield (HP vectra
system) 30 months $ 1,930 SPSG

8 12/28/1999 Computer Equipment at Lindquist Avey 36 months $ 5,673 KRCS

9 03/24/2000 Computer Equipment at Fairfield 36 months $ 675 SPSG

10 02/02/2000 Workstations and Desks in New York 60 months $ 5,450 KRCS
</TABLE>

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<TABLE>
<CAPTION>
COUNTY/
OWNER MARK JURISDICTION CLASS(ES) STATUS
----- ---- ------------ --------- ------
<S> <C> <C> <C> <C>
O'Gara Satellite Networks O'GARA SATELLITE NETWORKS United States 9, 38 Registered
Limited AND DESIGN
The Kroll-O'Gara Company O'GARA-HESS & EISENHARDT United States 12, 40, Pending
41
The Kroll-O'Gara Company O'GARA-HESS & EISENHARDT AND United States 12, 40, Pending
DESIGN 41
O'Gara-Hess & Eisenhardt O'GARA-HESS & EISENHARDT United States 12 Pending
Armoring Company ARMORING COMPANY AND DESIGN
O'Gara-Hess & Eisenhardt O'GARA-HESS & EISENHARDT United States 6, 21, 40 Registered
Armoring Company ARMORING COMPANY AND DESIGN
The Kroll-O'Gara Company O'GARA.COM WEB SITE United States n/a Registered
The Kroll-O'Gara Company OGE DESIGN United States 12, 40, Pending
41
</TABLE>

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EXHIBIT 1.03(b)(ii)

On or before the Exchange Date, TOC shall assume from the Company the TOC
Liabilities, and its allocable portion of the Shared Liabilities, including
without limitation the following Company liabilities:

2. Any amounts due under Company capitalized leases or purchase money
obligations relating to equipment contributed to TOC or maintained by an O'Gara
Subsidiary shall be allocated to and assumed by TOC, including the Economic
Development Bonds of the Company.

3. An undivided interest in all other liabilities that are not specifically
identified and allocated on this Exhibit 1.03(b)(ii) or elsewhere in this
Agreement but that are liabilities of the Company shall be allocated 41.492% to
TOC and 58.508% to KRCS.

5. Fees and expenses in connection with this Agreement as set forth in
Article XII hereof.

6. The percentage provided in Section 1.04 of this Agreement to be assumed
by TOC of (i) the Company's indebtedness under its credit agreement with KeyBank
National Association and (ii) the $35,000,000 principal amount of, plus any
interest and prepayment penalty on, the Company's Senior Notes due May 30, 2004,
as provided in Section 1.04 of this Agreement.

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EXHIBIT 2.01

<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
NAME OWNED
---- -----------------
<C> <S> <C>
1. Jules B. Kroll 2,879,991
2. Michael Shmerling 440,000
3. David Buchler 127,913
4. Simon Freakley 72,766
5. Robert McDonald 47,082
6. Norb Garrett 2,000
7. Marc Curvin 9,968
8. Tedd Avey 63,699
9. Frank Holder 46,287
10. Michael Beber 41,543
11. Michael Cherkasky 34,310
12. Nazzareno Paciotti 15,966
13. David Holloway 2,000
14. Jim Bucknam 2,000
15. Richard Rosetti 16,000
16. Michael Slattery 31,415
17. Sabrina Perel 100
</TABLE>

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EXHIBIT 2.02

<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
NAME OWNED
---- -----------------
<C> <S> <C>
1. Thomas M. O'Gara* 2,418,219
2. Wilfred T. O'Gara 243,042
3. Abram S. Gordon 100
4. Nicholas P. Carpinello 56,867
</TABLE>

---------------
* Thomas M. O'Gara has pledged his shares of Company Common Stock pursuant to a
certain bank credit agreement.

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EXHIBIT 6.11

See current draft of Tax Sharing Agreement attached hereto.

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TAX SHARING AGREEMENT

This Agreement is entered into as of the [ ] day of , 2000
between The O'Gara Company ("TOC"), an Ohio corporation, on behalf of itself and
the TOC Affiliates, Kroll Risk Consulting Services, Inc. ("KRCS"), a Delaware
corporation, on behalf of itself and the KRCS Affiliates and Securify, Inc.
("Securify"), a Delaware Corporation. TOC and KRCS are sometimes collectively
referred to herein as the "Companies."

W I T N E S S E T H:

WHEREAS, on and after December 1, 1997 and prior to the Exchange and the
Distribution, each as defined below, TOC and KRCS conducted business as a
consolidated entity, The Kroll-O'Gara Company ("KROG"), and filed certain Tax
Returns, pursuant to the tax laws of various jurisdictions, on a consolidated,
combined, unitary or other group basis (including as permitted by Section 1501
of the Internal Revenue Code of 1986, as amended (the "Code")) with KROG and its
Affiliates;

WHEREAS, during such period, KROG indirectly through its subsidiaries has
conducted the investigation and intelligence ("I&I") business and the security
products and services ("SPS") business;

WHEREAS, KROG has concluded that the separation of its I&I business from
its SPS business is the best available means to enhance the future success and
efficiency of each of the businesses by (i) removing limitations and internal
management conflicts resulting from KROG's ownership of both the SPS and I&I
businesses and (ii) permitting each business' management, including Jules B.
Kroll ("JBK"), a principal shareholder of KROG, on the one hand and Thomas M.
O'Gara ("TMO"), another principal shareholder of KROG, on the other hand, to
focus exclusively on its own business plan;

WHEREAS, to effectuate the separation of these two businesses, KROG
considered it appropriate to restructure its assets and liabilities (the
"Restructuring") so as to separate KROG'S I&I business from its SPS business,
which Restructuring included (i) the contribution (the "KRCS Contribution") of
the stock of subsidiaries used in connection with the I&I business and KROG's
voice and data communications business (or the proceeds from any sale of the
voice and data communications business), together with certain other assets, to
KRCS, (ii) the contribution (the "TOC Contribution," and together with the KRCS
Contribution, the "Contribution") of the stock of subsidiaries used in
connection with the SPS business, together with certain other assets, to TOC,
(iii) an exchange by JBK and certain others who will be executives of KRCS (the
"KRCS Exchanging Shareholders") of their KROG common stock for common stock of
KRCS (the "KRCS Exchange"), (iv) an exchange by TMO and certain others who will
be executives of TOC (the "TOC Exchanging Shareholders") of their KROG common
stock for common stock of TOC (the "TOC Exchange," and together with the KRCS
Exchange, the "Exchange"), (v) a distribution to the holders of KROG's common
stock (the "Distribution") of all of the remaining shares of the common stock of
KRCS and TOC held by KROG in complete liquidation of KROG (the "Liquidation");
and (vi) the conversion of Kroll Associates, Inc. pursuant to Delaware Business
Corporation Law into Kroll Associates, LLC.

WHEREAS, TOC and KRCS intend that the Contribution, the Exchange and the
Distribution qualify as free of Federal income tax to KROG and those of its
stockholders who will receive common stock of KRCS and/or TOC under Sections
368(a)(1)(D) or 351(a) and 355(a) of the Code; and

WHEREAS, the parties wish to (i) provide for the payment of tax liabilities
and entitlement to refunds thereof, allocate responsibility for, and cooperation
in, the filing of tax returns and provide for certain other matters relating to
Taxes and (ii) set forth certain representations, covenants and indemnities
relating to the preservation of the tax-free status of the Contribution, the
Exchange, the Distribution and the Liquidation;

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NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:

Section 1. Definition of Terms. For purposes of this Agreement (including
the recitals hereof), the following terms have the following meanings:

"Accounting Cutoff Date" means, with respect to KRCS and TOC, any date
as of the end of which there is a closing of the financial accounting
records for such entity.

"Accounting Firm" shall have the meaning provided in Section 14.

"Adjustment Request" means any formal or informal claim or request
filed with any Tax Authority, or with any administrative agency or court,
for the adjustment, refund or credit of Taxes, including, without
limitation, (a) any amended Tax Return claiming adjustment to the income,
loss or Taxes as reported on the Tax Return or, if applicable, as
previously adjusted, or (b) any claim for refund or credit of Taxes
previously paid.

"Affiliate" means any entity that directly or indirectly is
"controlled" by the person or entity in question. "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through
ownership of voting securities, by contract or otherwise. Except as
otherwise provided herein, the term Affiliate shall refer to Affiliates of
a person as determined immediately after the Exchange and Distribution. The
term Affiliate shall also mean (i) TOG with respect to TOC and (ii) JBK
with respect to KRCS.

"Agreement" shall mean this Tax Sharing Agreement.

"Allocated Federal Tax Liability" shall have the meaning provided in
Section 5.01(b)(i).

"Carryback" means any net operating loss, net capital loss, excess tax
credit or other similar Tax item which may or must be carried from one Tax
Period back to another Tax Period under the Code or other applicable Tax
Law.

"Code" means the U.S. Internal Revenue Code of 1986, as amended, or
any successor law.

"Companies" means TOC and KRCS, collectively, and "Company" means any
one of TOC and KRCS.

"Consolidated or Combined Income Tax" means any Income Tax computed by
reference to the assets and activities of members of more than one Group.

"Consolidated or Combined State Income Tax" means any State Income Tax
computed by reference to the assets and activities of members of more than
one Group.

"Consolidated Tax Liability" means, with respect to any KROG Federal
Consolidated Return, for any applicable Pre-Distribution Period, the "tax
liability of the group" as that term is used in Treasury Regulation Section
1.1552-1 (a)(1) (including applicable interest, additions to the tax,
additional amounts, and penalties as provided in the Code), adjusted such
that the tax liability shall be treated as including any alternative
minimum tax liability under Code Section 55.

"Cumulative Federal Tax Payment" shall have the meaning provided in
Section 5.01(b)(ii).

"Distribution Date" means the date of the Distribution.

"Distribution" means the distribution to KROG shareholders as of the
Record Date (as that term is defined in the Reorganization Agreement) of
all of the outstanding stock of KRCS and TOC owned by KROG as of such date.

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"Federal Income Tax" means any Tax imposed by Subtitle A or F of the
Code.

"Foreign Income Tax" means any Tax imposed by any foreign country or
any possession of the United States, or by any political subdivision of any
foreign country or United States possession, which is an income tax as
defined in Treasury Regulation Section 1.901-2.

"Group" means the KROG Group, the TOC Group or the KRCS Group, as the
context requires.

"Income Tax" means any Federal Income Tax, State Income Tax, or
Foreign Income Tax.

"Joint Adjustment" means any proposed adjustment by a Tax Authority or
claim for refund asserted in a Tax Contest which is neither a KRCS
Adjustment nor a TOC Adjustment.

"KRCS Adjustment" means any proposed adjustment by a Tax Authority or
claim for refund asserted in a Tax Contest to the extent any member of the
KRCS Group would be exclusively liable for any resulting Tax under this
Agreement and exclusively entitled to receive any resulting Tax Benefit
under this Agreement.

"KRCS Group" means KRCS (and its predecessors) and its Affiliates (and
their predecessors), excluding any entity that is a member of the TOC
Group.

"KROG Federal Consolidated Return" means any United States Federal Tax
Return for the affiliated group (as that term is defined in Code Section
1504) that includes KROG as the common parent and includes any member of
the KRCS Group and the TOC Group.

"KRCS Group Federal Income Tax Liability" shall have the meaning
provided in Section 2.02(b).

"KRCS Group Combined Tax Liability" shall have the meaning provided in
Section 2.02(c).

"Non-Federal Combined Tax Return" means any Return other than the KROG
Federal Consolidated Return for a group that includes any member of the
KRCS Group and any member of the TOC Group.

"Non-Federal Combined Tax" means any Income Tax computed on any
Non-Federal Combined Tax Return.

"Payment Date" means (i) with respect to any KROG Federal Consolidated
Return, the due date for any required installment of estimated taxes
determined under Code Section 6655, the due date (determined without regard
to extensions) for filing the return determined under Code Section 6072,
and the date the return is filed, and (ii) with respect to any Tax Return
for any Non-Federal Combined Tax, the corresponding dates determined under
the applicable Tax Law.

"Person" means an individual or an entity, including a corporation,
share company, limited liability company, partnership, trust, association,
governmental body or any other body with legal personality separate from
its equity holders or members.

"Post-Distribution Period" means any Tax Period beginning after the
Distribution Date, and, in the case of any Straddle Period, the portion of
such Straddle Period beginning the day after the Distribution Date.

"Pre-Distribution Period" means any Tax Period beginning on or after
December 1, 1997 and ending on or before the Distribution Date, and, in the
case of any Straddle Period, the portion of such Straddle Period ending on
the Distribution Date.

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"Prime Rate" means the base rate on corporate loans charged by
Citibank, N.A., New York, New York from time to time, compounded daily on
the basis of a year of 365 or 366 (as applicable) days and actual days
elapsed.

"Prior Intercompany Tax Allocation Agreements" means any written or
oral agreement or any other arrangements relating to allocation of Taxes
existing between or among TOC Group and the KRCS Group as of the
Distribution Date (other than this Agreement and other than any such
agreement or arrangement between or among persons who are members of a
single Group).

"Private Letter Ruling" means the private letter ruling issued by the
Internal Revenue Service to KROG in connection with the Transactions.

"Pro Forma KRCS Group Combined Tax Return" means a pro forma
Non-Federal Combined Tax Return prepared with respect to the KRCS Group
pursuant to Section 2.02(b) of this Agreement.

"Pro Forma KRCS Group Consolidated Tax Return" means a pro forma
consolidated Federal Income Tax Return prepared with respect to the KRCS
Group pursuant to Section 2.02(b) of this Agreement.

"Pro Forma TOC Group Combined Tax Return" means a pro forma
Non-Federal Combined Tax Return prepared with respect to the TOC Group
pursuant to Section 2.02(b) of this Agreement.

"Pro Forma TOC Group Consolidated Tax Return" means a pro forma
consolidated Federal Income Tax Return prepared with respect to the TOC
Group pursuant to Section 2.02(b) of this Agreement.

"Reorganization Agreement" means the agreement dated August 30, 2000,
by and among KROG, KRCS, TOC, TOG, Wilfred T. O'Gara, JBK, the KRCS
Exchanging Shareholders and the TOC Exchanging Shareholders, as amended
from time to time, setting forth the corporate transactions required to
effect the Distribution.

"Responsible Company" means, with respect to any Tax Return, the
Company having responsibility for preparing and filing such Tax Return
under this Agreement.

"Restricted Period" means the period beginning on the Distribution
Date and ending two years and one day thereafter.

"Restructuring Tax" means the Taxes described in Sections 2.04(a)(ii)
and (iii) (relating to Tax resulting from any income or gain recognized as
a result of the Transactions).

"Ruling Request" means the letter filed by KROG with the Internal
Revenue Service requesting a ruling from the Internal Revenue Service
regarding certain tax consequences of the Transactions (including all
attachments, exhibits, and other materials submitted with such ruling
request letter) and any amendment or supplement to such ruling request
letter.

"Securify Adjustment" means any proposed adjustment by a Tax Authority
or claim for refund asserted in a Tax Contest with respect to Securify for
any Pre-Distribution Period.

"Separate Company Tax" means any Tax computed by reference to the
assets and activities of a member or members of a single Group.

"Sole Discretion Consent" means the advance, written consent of a
Company, which consent may be granted or withheld in such Company's sole
and absolute discretion.

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"Straddle Period" means any Tax Period that begins on or before and
ends after the Distribution Date.

"State Income Tax" means any Tax imposed by any State of the United
States or by any political subdivision of any such State which is imposed
on or measured by net income, including state and local franchise or
similar Taxes measured by net income.

"Tax" or "Taxes" means any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem,
stamp, excise, severance, occupation, service, sales, use, license, lease,
transfer, import, export, value added, alternative minimum, estimated or
other similar tax (including any fee, assessment, or other charge in the
nature of or in lieu of any tax) imposed by any domestic or foreign
governmental entity or political subdivision thereof, and any interest,
penalties, additions to tax or additional amounts in respect of the
foregoing.

"Tax Asset" means any Tax Item that has accrued for Tax purposes, but
has not been used during a taxable period, and that could reduce a Tax in
another taxable period, including a net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or credit
related to alternative minimum tax.

"Tax Authority" means, with respect to any Tax, the governmental
entity or political subdivision thereof that imposes such Tax and the
agency (if any) charged with the collection of such Tax for such entity or
subdivision.

"Tax Benefit" means any refund, credit or other reduction in otherwise
required Tax payments (including any reduction in estimated tax payments).

"Tax Contest" means an audit, review, examination or any other
administrative or judicial proceeding with the purpose or effect of
redetermining Taxes of either of the Companies or their Affiliates
(including any administrative or judicial review of any claim for refund)
for any Tax Period ending on or before the Distribution Date or any
Straddle Period.

"Tax Contest Committee" shall have the meaning provided in Section
9.02(b).

"Tax Item" means, with respect to any Income Tax, any item of income,
gain, loss, deduction or credit.

"Tax Law" means the law, rule or regulation of any governmental entity
or political subdivision thereof relating to any Tax.

"Tax Period" means, with respect to any Tax, the period for which the
Tax is reported as provided under the Code or other applicable Tax Law.

"Tax Records" means Tax Returns, Tax Return workpapers, documentation
relating to any Tax Contests and any other books of account or records
required to be maintained under the Code or other applicable Tax Laws or
under any record retention agreement with any Tax Authority.

"Tax Return" means any report of Taxes due, any claims for refund of
Taxes paid, any information return with respect to Taxes or any other
similar report, statement, declaration or document required to be filed
under the Code or other Tax Law or any agreement with any Tax Authority,
including, without limitation, any attachments, exhibits or other materials
submitted with any of the foregoing, including, without limitation, any
amendments or supplements to any of the foregoing.

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<PAGE> 349

"TOC Adjustment" means any proposed adjustment by a Tax Authority or
claim for refund asserted in a Tax Contest to the extent any member of TOC
Group would be exclusively liable for any resulting Tax under this
Agreement and exclusively entitled to receive any resulting Tax Benefit
under this Agreement.

"TOC Group" means TOC (and its predecessors) and its Affiliates (and
their predecessors), excluding any entity that is a member of the KRCS
Group.

"TOC Group Federal Income Tax Liability" shall have the meaning
provided in Section 2.02(b).

"TOC Group Combined Tax Liability" shall have the meaning provided in
Section 2.02(c).

"Transactions" means the transactions contemplated by the
Reorganization Agreement.

"Treasury Regulations" means the regulations promulgated from time to
time under the Code as in effect for the relevant Tax Period.

Section 2. Allocation of Tax Liabilities. The provisions of this Section 2
are intended to determine each Company's liability for Taxes with respect to
Pre-Distribution Periods. Once the liability has been determined under this
Section 2, Section 5 determines the time when payment of the liability is to be
made and whether the payment is to be made to the Tax Authority directly or to
the other Company.

2.01. General Rule

(a) TOC Liability. TOC shall be liable for Taxes attributable to the TOC
Group for any Pre-Distribution Period and for any period prior to the
Pre-Distribution Period. TOC shall indemnify and hold harmless the KRCS Group
from and against any liability for Taxes for which TOC is liable under this
Section 2.01(a).

(b) KRCS Liability. KRCS shall be liable for Taxes attributable to the
KRCS Group for any Pre-Distribution Period and for any period prior to the
Pre-Distribution Period. KRCS shall indemnify and hold harmless the TOC Group
from and against any liability for Taxes for which KRCS is liable under this
Section 2.01(b).

2.02. Allocation of Certain Consolidated Taxes. Except as provided herein:

(a) With respect to Tax Returns filed on a consolidated, combined or
unitary basis, which Tax Returns include both one or more members of the
KRCS Group and one or more members of the TOC Group, for purposes of
determining the amount of TOC's payment to KRCS under Section 5 hereof, TOC
shall owe to KRCS an amount equal to the sum of the TOC Group Federal
Income Tax Liability and the TOC Group Combined Tax Liability for such
taxable period.

(b) No later than 30 days after the filing of any KROG Federal
Consolidated Return after the Distribution, KRCS shall prepare a Pro Forma
TOC Group Consolidated Tax Return and a Pro Forma KRCS Group Consolidated
Tax Return. The TOC Group Federal Income Tax Liability shall be the TOC
Group's liability for Federal Income Taxes for such taxable period, as
determined on such Pro Forma TOC Group Consolidated Return prepared: (i) on
the basis of the KROG Federal Consolidated Return for such period,
determined by (x) including only Tax Items of members of the TOC Group
which are included in the KROG Federal Consolidated Return, (y) allocating
Tax Assets to the TOC Group to the extent that a Tax Asset was created by a
member of the TOC Group and was actually utilized on the relevant KROG
Federal Consolidated Return, and (z) in the case of any Straddle Period,
taking into account only the Tax Items calculated employing the methodology
described in Section 3 and (ii) applying the actual federal corporate Tax
rate of the combined KRCS Group and TOC Group for such taxable period (or
portion thereof). KRCS shall

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compute the KRCS Group Federal Income Tax Liability in the same manner. TOC
shall have the right to review the computation of such amounts and, in the
event of a dispute, shall submit such dispute to the Tax Contest Committee.

(c) No later than 30 days after the filing of each Non-Federal
Combined Tax Return after the Distribution, KRCS shall prepare a Pro Forma
TOC Group Combined Tax Return and a Pro Forma KRCS Group Combined Tax
Return. The TOC Group Combined Tax Liability shall be the sum for such
taxable period of the TOC Group's liability for each Non-Federal Combined
Tax, as determined on such Pro Forma TOC Group Combined Tax Return, which
Pro Forma TOC Group Combined Tax Return shall be prepared in a manner
consistent with the principles and procedures set forth in Section 2.02(b)
above, for preparing the Pro Forma TOC Group Consolidated Tax Return. KRCS
shall compute the KRCS Group Combined Tax Liability in the same manner. TOC
shall have the right to review the computation of such amounts and, in the
event of a dispute, shall submit such dispute to the Tax Contest Committee.

(d) TOC shall be liable to KRCS for any Tax increase, and shall be
entitled to any refund or other benefit, that results from any Tax Contest
relating TOC Group Tax Items. Similarly, KRCS shall be liable for any Tax
increase, and shall be entitled to any refund or other benefit, that
results from any Tax Contest relating KRCS Group Tax Items. KRCS shall
compute any such Tax adjustments and TOC shall have the right to review the
computation of such amounts and, in the event of a dispute, shall submit
such dispute to the Tax Contest Committee. Notwithstanding anything herein
to the contrary, TOC shall be liable to KRCS for the Tax liability
attributable to (i) a disallowance of Securify losses to the extent that a
TOC Tax liability was reduced on account of such disallowed loss, and (ii)
41.492% of any adjustments to the Tax liability for any Pre-Distribution
Period with respect to KROG's subsidiaries engaged in the voice and data
business.

(e) In the event that the sum of the KRCS Group Federal Income Tax
Liability and the TOC Group Federal Income Tax Liability does not satisfy
the liability on the KROG Federal Consolidated Return, each party shall
contribute its proportional share (based on the KRCS Group Federal Income
Tax Liability and the TOC Group Federal Income Tax Liability as computed)
to make up the difference. Similarly, if the sum of any KRCS Group Combined
Tax Liability and the TOC Group Combined Tax Liability does not satisfy the
total liability on any Non-Federal Combined Tax Return, each party shall
contribute its proportional share (based on the KRCS Group Combined Tax
Liability and the TOC Group Combined Tax Liability as computed) to make up
the difference.

2.03. Allocation of Separate Company Taxes. Except as otherwise provided
herein, in the case of any Income Tax which is a Separate Company Tax, KRCS
shall be liable for such Tax imposed on any members of the KRCS Group and TOC
shall be liable for such Tax imposed on any members of the TOC Group.

2.04. Transaction and Other Taxes

(a) Liability. Except as otherwise provided in this Section 2.04, each
Company shall be liable for (and shall indemnify and hold harmless the other
Company from and against any liability for) all Taxes resulting from its own
participation in the Transactions (and all costs and expenses in respect of an
indemnification claim for Taxes including, without limitation, attorneys fees
and disbursements and other costs of litigation, arbitration and settlement),
including:

(i) any sales and use, gross receipts, or other transfer Taxes imposed
as the result of the receipt of stock or assets transferred pursuant to the
Transactions;

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(ii) any Tax resulting from any income or gain recognized under
Treasury Regulation Sections 1.1502-13 or 1.1502-19 (or any corresponding
provisions of other applicable Tax Laws) as a result of the Transactions;
and

(iii) any Tax resulting from any income or gain recognized as a result
of any of the transactions contemplated by the Reorganization Agreement
failing to qualify for tax-free treatment.

Any Taxes with respect to the Transactions which may pertain to both Companies
jointly shall be allocated 58.508% to KRCS and 41.492% to TOC.

(b) Indemnity for Inconsistent Acts.

(i) KRCS shall be liable for, and shall indemnify and hold harmless
the TOC Group from and against any liability for, any Restructuring Tax
(described in Sections 2.04(a) (ii) and (iii) hereof) to the extent arising
from any breach of KRCS' representations or covenants under Section 11.

(ii) TOC shall be liable for, and shall indemnify and hold harmless
the KRCS Group from and against any liability for, any Restructuring Tax to
the extent arising from any breach of TOC's representations or covenants
under Section 11.

(i) KRCS shall be liable for, and shall indemnify and hold harmless
the TOC Group from and against any liability for, any Restructuring Tax to
the extent arising from the inaccuracy of any factual statements or
representations in connection with the Ruling Request relating to KRCS
events taking place prior to December 1, 1997.

(ii) TOC shall be liable for, and shall indemnify and hold harmless
the KRCS Group from and against any liability for, any Restructuring Tax to
the extent arising from the inaccuracy of any factual statements or
representations in connection with the Ruling Request relating to TOC
events taking place prior to December 1, 1997.

(iii) With respect to liability for any Restructuring Tax to the
extent arising from the inaccuracy of any factual statements or
representations in connection with the Ruling Request relating to events
taking place on or after December 1, 1997, KRCS shall bear 58.508% of such
liability and TOC shall bear 41.492% of such liability.

Section 3. Proration of Taxes for Straddle Periods

3.01. General Method of Proration. In the case of any Straddle Period, Tax
Items shall be apportioned between Pre-Distribution Periods and
Post-Distribution Periods in accordance with the principles of Treasury
Regulation Section 1.1502-76(b) as reasonably interpreted and applied by the
Companies. No election shall be made under Treasury Regulation Section
1.1502-76(b)(2)(ii) (relating to ratable allocation of a year's items) and no
extraordinary items will be determined pursuant to Treas. Reg. sec.
1.1502-76(b)(2)(ii)(B). If the Distribution Date is not an Accounting Cutoff
Date, the provisions of Treasury Regulation Section 1.1502-76(b)(2)(iii) will be
applied to ratably allocate the items (other than extraordinary items) for the
month which includes the Distribution Date.

3.02. Transaction Treated as Extraordinary Item. In determining the
apportionment of Tax Items between Pre-Distribution Periods and Post-
Distribution Periods, any Tax Items relating to the Transactions shall be
treated as extraordinary items described in Treasury Regulation Section 1.1502-
76(b)(2)(ii)(C) and shall be allocated to Pre-Distribution Periods, and any
Taxes related to such items shall be treated under Treasury Regulation Section
1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall be
allocated to Pre-Distribution Periods.

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Section 4. Preparation and Filing of Tax Returns

4.01. General. Except as otherwise provided in this Section 4, Tax Returns
shall be prepared and filed when due (including extensions) by the person
obligated to file such Tax Returns under the Code or applicable Tax Law. The
Companies shall provide, and shall cause their Affiliates to provide, assistance
to and shall cooperate with one another in accordance with Section 7 with
respect to the preparation and filing of Tax Returns, including providing
information required to be provided pursuant to Section 7. As used in this
Section 4, the terms "domestic" and "foreign" have the meanings ascribed to such
terms in Code Section 7701.

4.02. KRCS's Responsibility. KRCS has the exclusive obligation and right
to prepare and file, or to cause to be prepared and filed:

(a) KROG Federal Consolidated Returns for any Periods ending on,
before or after the Distribution Date.

(b) Non-Federal Combined Tax Returns and Tax Returns with respect to
Income Taxes that are Separate Company Taxes which the Companies reasonably
determine, in accordance with KROG's past practices, are required to be
filed by the Companies or any of their Affiliates for Tax Periods ending on
or before the Distribution Date.

4.03. TOC's Responsibility. TOC shall prepare and file, or shall cause to
be prepared and filed, all Tax Returns required to be filed by or with respect
to members of the TOC Group other than those Tax Returns which KRCS is required
to prepare and file under Section 4.02. The Tax Returns required to be prepared
and filed by TOC under this Section 4.03 shall include (a) the TOC Federal
Consolidated Return for Tax Periods ending after the Distribution Date and (b)
Tax Returns for Separate Company Taxes which the Companies reasonably determine,
in accordance with KROG's past practices, are required to be filed by the
Companies or any of their Affiliates for Tax Periods ending after the
Distribution Date.

4.04. Tax Accounting Practices

(a) General Rule. Except as otherwise provided in this Section 4.04, any
Tax Return for any Pre-Distribution Period or any Straddle Period, and any Tax
Return for any Post-Distribution Period to the extent items reported on such Tax
Return might reasonably affect items reported on any Tax Return for any
Pre-Distribution Period or any Straddle Period, shall be prepared in accordance
with past Tax accounting practices used with respect to the Tax Returns in
question (unless such past practices are no longer permissible under the Code or
other applicable Tax Law), and to the extent any items are not covered by past
practices (or in the event such past practices are no longer permissible under
the Code or other applicable Tax Law), in accordance with reasonable Tax
accounting practices selected by the Responsible Company.

(b) Reporting of Transaction Tax Items. The tax treatment reported on any
Tax Return of Tax Items relating to the Transactions shall be consistent with
the treatment of such items in the Private Ruling Letter. To the extent there is
a Tax Item relating to the Transactions which is not covered by the Private
Ruling Letter, the Companies shall agree on the tax treatment of any such Tax
Item reported on any Tax Return. For this purpose, the tax treatment of such Tax
Items on a Tax Return shall be determined by the Responsible Company with
respect to such Tax Return and shall be agreed to by the other Company unless
either (i) there is no reasonable basis for such tax treatment, or (ii) such tax
treatment is inconsistent with the tax treatment contemplated in the Private
Letter Ruling. Such Tax Return shall be submitted for review pursuant to Section
4.05(a), and any dispute regarding such proper tax treatment shall be referred
for resolution pursuant to Section 14, sufficiently in advance of the filing
date of such Tax Return (including extensions) to permit timely filing of the
return.

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4.05. Right to Review Tax Returns

(a) General. The Responsible Company with respect to any Tax Return shall
make such Tax Return and related workpapers available for review by the other
Company, if requested, to the extent (i) such Tax Return relates to Taxes for
which the requesting party may be liable, (ii) such Tax Return relates to Taxes
for which the requesting party may be liable in whole or in part for any
additional Taxes owing as a result of adjustments to the amount of Taxes
reported on such Tax Return, (iii) such Tax Return relates to Taxes for which
the requesting party may have a claim for Tax Benefits under this Agreement, or
(iv) the requesting party reasonably determines that it must inspect such Tax
Return to confirm compliance with the terms of this Agreement. The Responsible
Company shall make such Tax Return available for review as required under this
Section 4.05(a) at least 45 days prior to the due date for filing such Tax
Return (including extensions) and any dispute regarding such proper tax
treatment shall be referred to the Tax Contest Committee. The Companies shall
attempt in good faith to resolve any issues arising out of the review of such
Tax Returns.

(b) Execution of Returns Prepared by Other Party. In the case of any Tax
Return which is required to be prepared and filed by one Company under this
Agreement and which is required by law to be signed by another Company (or by
its authorized representative), the Company which is legally required to sign
such Tax Return shall not be required to sign such Tax Return under this
Agreement if there is no reasonable basis for the tax treatment of any material
items reported on the Tax Return. In the event of a dispute under this Section
4.05(b), the parties shall be refer the matter to the Tax Contest Committee.

4.06. Claims for Refund, Carrybacks and Self-Audit Adjustments ("Adjustment
Requests")

(a) Consent Required for Adjustment Requests Related to Consolidated or
Combined Income Taxes. Except as provided in paragraph (b) below, each of the
Companies hereby agrees that, unless each of the Companies consents in writing,
which consent shall not be unreasonably withheld or delayed, no Adjustment
Request with respect to any Consolidated or Combined Income Tax for a
Pre-Distribution Period shall be filed. Any Adjustment Request which the
Companies consent to make under this Section 4.06 shall be prepared and filed by
the Responsible Company under Section 4.02 for the Tax Return to be adjusted.
The Company requesting the Adjustment Request shall provide to the Responsible
Company all information required for the preparation and filing of such
Adjustment Request in such form and detail as are reasonably requested by the
Responsible Company.

(b) Other Adjustment Requests Permitted. Nothing in this Section 4.06
shall prevent any Company or its Affiliates from filing any Adjustment Request
with respect to Income Taxes which are not Consolidated or Combined Income Taxes
or with respect to any Taxes other than Income Taxes. Any refund or credit
obtained as a result of any such Adjustment Request (or otherwise) shall be for
the account of the person liable for the Tax under this Agreement.

(c) Payment of Refunds. Any refunds or other Tax Benefits received by any
Company (or any of its Affiliates) as a result of any Adjustment Request which
are for the account of another Company (or member of such other Company's Group)
shall be paid by the Company receiving (or whose Affiliate received) such refund
or Tax Benefit (taking into account collateral tax consequences) to such other
Company in accordance with Section 6.

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Section 5. Tax Payments and Intercompany Billings

5.01. Payment of Taxes With Respect to KROG Federal Consolidation Returns
Filed After the Distribution Date. In the case of any KROG Federal Consolidated
Return which includes KRCS or any of its Affiliates the due date for which
(including extensions) is after the Distribution Date:

(a) Computation and Payment of Tax Due. At least five business days
prior to any Payment Date, KRCS shall compute the amount of Tax required to
be paid to the Internal Revenue Service (taking into account the
requirements of Section 4.04 relating to consistent accounting practices)
with respect to such Tax Return on such Payment Date. KRCS will pay such
amount to the Internal Revenue Service on or before such Payment Date.

(b) Computation and Payment of TOC Liability With Respect to Tax
Due. Within 30 days following TOC's receipt of a copy of a Pro Forma TOC
Group Consolidated Return, TOC will pay to KRCS the excess (if any) of:

(i) the Consolidated Tax Liability determined as of such Payment
Date with respect to the applicable Tax Period allocable to the members
of the TOC Group as determined on the Pro Forma TOC Group Consolidated
Return (the "Allocated Federal Tax Liability"), over

(ii) the cumulative net payment by the members of the TOC Group
(the "Cumulative Federal Tax Payment") as determined by KRCS with
respect to such Tax Return prior to such Payment Date.

If the TOC Group Cumulative Federal Tax Payment is greater than the
TOC Group Allocated Federal Tax Liability as of any Payment Date, then KRCS
shall pay such excess to KRCS within 30 days of KRCS's receipt of the
corresponding Tax Benefit (i.e., through either a reduction in KROG's
otherwise required Tax payment or a refund of prior Tax payments).

(c) Interest on Intergroup Tax Allocation Payments. In the case of
any payments required under paragraphs (a) or (b) of this Section 5.01, TOC
shall also pay to KRCS an amount of interest computed at the Prime Rate on
the amount of the payment required based on the number of days from the
applicable Payment Date to the date of payment. In the case of any payments
by KRCS required under Section 5.01(b), KRCS shall also pay to TOC an
amount of interest computed at the Prime Rate on the amount of the payment
required based on the number of days from the date of receipt of the Tax
Benefit to the date of payment of such amount to TOC. KRCS shall pay to TOC
interest in a similar fashion in the event that TOC prevails in any dispute
brought pursuant to KRCS' calculation of the Pro Forma TOC Group
Consolidated Return.

5.02. Payment of Federal Income Tax Related to Adjustments

(a) Adjustments Resulting in Underpayments. KRCS shall pay to the
Internal Revenue Service when due any additional Federal Income Tax
required to be paid as a result of adjustment to the Tax liability with
respect to any KROG Federal Consolidated Return for any Pre-Distribution
Period. KRCS shall compute the amount attributable to the TOC Group in
accordance with Section 2.02(d) and TOC shall pay to KRCS any amount due
KRCS under Section 2.02(d) within 30 days from the later of (i) the date
the additional Tax was paid by KRCS or (ii) the date of receipt by TOC of a
written notice and demand from KRCS for payment of the amount due,
accompanied by evidence of payment and a statement detailing the Taxes paid
and describing in reasonable detail the particulars relating thereto. Any
payments required under this Section 5.02(a) shall include interest
computed at the Prime Rate based on the number of days from the date the
additional Tax was paid by KRCS to the date of the payment under this
Section 5.02(a). If TOC

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disagrees with the amount it is determined to owe KRCS, TOC shall pay KRCS
the computed amount and TOC shall submit the dispute to the Tax Contest
Committee

(b) Adjustments Resulting in Overpayments. Within 30 days of receipt by
KRCS of any Tax Benefit resulting from any adjustment to the Consolidated Tax
Liability with respect to any KROG Federal Consolidated Return for any
Pre-Distribution Period, KRCS shall pay to TOC, or TOC shall pay to KRCS (as the
case may be), their respective amounts due from or to KRCS as determined by KRCS
in accordance with Section 2.02(d). Any payments required under this Section
5.02(b) shall include interest computed at the Prime Rate based on the number of
days from the date the Tax Benefit was received by KRCS to the date of the
payment under this Section 5.02(b).

5.03. Payment of Non-Federal Combined Tax and Separate Company Tax With
Respect to Returns Filed After the Distribution Date.

(a) Computation and Payment of Tax Due. At least three business days prior
to any Payment Date for any Tax Return with respect to any Non-Federal Combined
Tax or Separate Company Tax, the Responsible Company shall compute the amount of
Tax required to be paid to the applicable Tax Authority (taking into account the
requirements of Section 4.04 relating to consistent accounting practices) with
respect to such Tax Return on such Payment Date and --

(i) If such Tax Return is with respect to a Non-Federal Combined Tax,
the Responsible Company shall notify the other Company in writing of the
amount of Tax required to be paid on such Payment Date. The Responsible
Company will pay the Tax due to such Tax Authority on or before such
Payment Date.

(ii) If such Tax Return is with respect to a Separate Company Tax, the
Responsible Company shall, if it is not the Company liable for the Tax
reported on such Tax Return, notify the Company liable for such Tax in
writing of the amount of Tax required to be paid on such Payment Date. The
Company liable for such Tax will pay such amount to such Tax Authority on
or before such Payment Date.

(b) Computation and Payment of Liability With Respect To Tax Due. Within
120 days following the due date (including extensions) for filing any Tax Return
for any Non-Federal Combined Tax (excluding any Tax Return with respect to
payment of estimated Taxes or Taxes due with a request for extension of time to
file), the other Company shall pay to the Responsible Company the tax liability
allocable to the other Company as determined by the Responsible Company under
the provisions of Section 2.02(c), plus interest computed at the Prime Rate on
the amount of the payment based on the number of days from the due date
(including extensions) to the date of payment by the other Company.

5.04. Payment of Non-Federal Combined Taxes Related to Adjustments

(a) Adjustments Resulting in Underpayments. The Responsible Company shall
pay to the applicable Tax Authority when due any additional Non-Federal Combined
Tax required to be paid as a result of any adjustment to the tax liability with
respect to any Tax Return for any KROG Non-Federal Combined Tax for any
Pre-Distribution Period. The other Company shall pay to the Responsible Company
its respective share of any such additional Tax payment determined by the
Responsible Company in accordance with Section 2.02(d) within 120 days from the
later of (i) the date the additional Tax was paid by the Responsible Company and
(ii) the date of receipt by the other Company of a written notice and demand
from the Responsible Company for payment of the amount due, accompanied by
evidence of payment and a statement detailing the Taxes paid and describing in
reasonable detail the particulars relating thereto (including, without
limitation the calculation of the amount due in accordance with Section 2.03(b)
hereof). The other Company shall also pay to the Responsible Company interest on
its respective share of such Tax computed at the Prime Rate based on

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the number of days from the date the additional Tax was paid by the Responsible
Company to the date of its payment to the Responsible Company under this Section
5.04(a).

(b) Adjustments Resulting in Overpayments. Within 120 days of receipt by
the Responsible Company of any Tax Benefit resulting from any adjustment to the
tax liability with respect to any Tax Return for any Non-Federal Combined Tax
for any Pre-Distribution Period, the Responsible Company shall pay to the other
Company its respective share of any such Tax Benefit determined by the
Responsible Company in accordance with Section 2.02(d). The Responsible Company
shall also pay to other Company interest on its respective share of such Tax
Benefit computed at the Prime Rate based on the number of days from the date the
Tax Benefit was received by the Responsible Company to the date of payment to
the other Company under this Section 5.04(b).

5.05. Payment of Separate Company Taxes. Each Company shall pay, or shall
cause to be paid, to the applicable Tax Authority when due all Separate Company
Taxes owed by such Company or a member of such Company's Group.

5.06. Indemnification Payments. If either Company (the "payor") is
required to pay to a Tax Authority a Tax that the other Company (the
"responsible party") is required to pay to such Taxing Authority under this
Agreement, the responsible party shall reimburse the payor within 30 days of
delivery by the payor to the responsible party of an invoice for the amount due,
accompanied by evidence of payment and a statement detailing the Taxes paid and
describing in reasonable detail the particulars relating thereto. The
reimbursement shall include interest on the Tax payment computed at the Prime
Rate based on the number of days from the date of the payment to the Tax
Authority to the date of reimbursement under this Section 5.06.

Section 6. Tax Benefits. If a member of one Group receives any Tax Benefit
with respect to any Taxes (i) as the result of a Tax Item of a member of another
Group or (ii) for which a member of another Group is liable hereunder, the
Company receiving such Tax Benefit shall make a payment to the Company who is
liable for such Taxes hereunder within 30 days following receipt of the Tax
Benefit in an amount equal to the Tax Benefit (including any Tax Benefit
realized as a result of the payment), plus interest on such amount computed at
the Prime Rate based on the number of days from the date of receipt of the Tax
Benefit to the date of payment of such amount under this Section 6.1.

Section 7. Assistance and Cooperation

7.01. General. After the Distribution Date, each of the Companies shall
cooperate (and cause their respective Affiliates to cooperate) with each other
and with each other's agents, including accounting firms and legal counsel, in
connection with Tax matters relating to the Companies and their Affiliates
including, without limitation, (i) preparation and filing of Tax Returns, (ii)
determining the liability for and amount of any Taxes due (including estimated
Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of
Tax Returns, and (iv) any administrative or judicial proceeding in respect of
Taxes assessed or proposed to be assessed. Such cooperation shall include making
all information and documents in their possession relating to the other Company
and its Affiliates available to such other Company as provided in Section 8.
Each of the Companies shall also make available to each other, as reasonably
requested and available, personnel (including officers, directors, employees and
agents of the Companies or their respective Affiliates) responsible for
preparing, maintaining and interpreting information and documents relevant to
Taxes and personnel reasonably required as witnesses or for purposes of
providing information or documents in connection with any administrative or
judicial proceedings relating to Taxes. Any information or documents provided
under this Section 7 shall be kept confidential by the Company receiving the
information or documents, except as may otherwise be necessary in connection
with the filing of Tax Returns or in connection with any administrative or
judicial proceedings relating to Taxes.
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7.02. Income Tax Return Information. Each Company will provide to the
other Company information and documents relating to their respective Groups
required by the other Company to prepare Tax Returns. Any additional information
or documents the Responsible Company requires to prepare such Tax Returns will
be provided in accordance with past practices, if any, or as the Responsible
Company reasonably requests and in sufficient time for the Responsible Company
to file such Tax Returns timely.

Section 8. Tax Records

8.01. Retention of Tax Records. Except as provided in Section 8.02, each
Company shall preserve and keep all Tax Records exclusively relating to the
assets and activities of their respective Groups for Pre-Distribution Tax
Periods, and each of KRCS and TOC shall preserve and keep all other Tax Records
relating to Taxes of the Groups for Pre-Distribution Tax Periods, for so long as
the contents thereof may become material in the administration of any matter
under the Code or other applicable Tax Law, but in any event until the later of
(i) the expiration of any applicable statutes of limitation, and (ii) seven
years after the Distribution Date. If, prior to the expiration of the applicable
statute of limitation and such seven-year period, a Company reasonably
determines that any Tax Records which it is required to preserve and keep under
this Section 8 are no longer material in the administration of any matter under
the Code or other applicable Tax Law, such Company may dispose of such records
upon 90 days prior notice to the other Company. Such notice shall include a list
of the records to be disposed of describing in reasonable detail each file,
book, or other record accumulation being disposed. The notified Company shall
have the opportunity, at its cost and expense, to copy or remove, within such
90-day period, all or any part of such Tax Records.

8.02. State Income Tax Returns. Tax Returns with respect to State Income
Taxes and workpapers prepared in connection with preparing such Tax Returns
shall be preserved and kept, in accordance with the guidelines of Section 8.01,
by the Company responsible for preparing and filing the applicable Tax Return.

8.03. Access to Tax Records. The Companies and their respective Affiliates
shall make available to each other for inspection and copying during normal
business hours upon reasonable notice all Tax Records in their possession to the
extent reasonably required by the other Company in connection with the
preparation of Tax Returns, audits, litigation or the resolution of items under
this Agreement.

Section 9. Tax Contests

9.01. Notice. Each of the parties shall provide prompt notice to the other
parties of any pending or threatened Tax audit, assessment or proceeding or
other Tax Contest of which it becomes aware related to Taxes for Tax Periods for
which it is indemnified by other party hereunder. Such notice shall contain
factual information (to the extent known) describing any asserted Tax liability
in reasonable detail and shall be accompanied by copies of any notice and other
documents received from any Tax Authority in respect of any such matters. If an
indemnified party has knowledge of an asserted Tax liability with respect to a
matter for which it is to be indemnified hereunder and such party fails to give
the indemnifying party prompt notice of such asserted Tax liability, then (i) if
the indemnifying party is precluded from contesting the asserted Tax liability
in a court of law as a result of the failure to give prompt notice, the
indemnifying party shall have no obligation to indemnify the indemnified party
for any Taxes arising out of such asserted Tax liability, and (ii) if the
indemnifying party is not precluded from contesting the asserted Tax liability
in a court of law forum, but such failure to give prompt notice results in a
monetary detriment to the indemnifying party, then any amount which the
indemnifying party is otherwise required to pay the indemnified party pursuant
to this Agreement shall be reduced by the amount of such detriment. Disputes
arising under this Section 9.01 shall be submitted to the Tax Contest Committee,
which will take into account the hazards of litigation.
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9.02. Control of Tax Contests

(a) Separate Company Taxes. In the case of any Tax Contest with respect to
any Separate Company Tax, the Company having liability for the Tax shall have
exclusive control over the Tax Contest, including exclusive authority with
respect to any settlement of such Tax liability.

(b) Consolidated or Combined Income Taxes. In the case of any Tax Contest
with respect to any Consolidated or Combined Income Tax, (i) TOC shall control
the defense or prosecution of the portion of the Tax Contest directly and
exclusively related to any TOC Adjustment, including settlement of any such TOC
Adjustment and (ii) KRCS shall control the defense or prosecution of the portion
of the Tax Contest directly and exclusively related to any KRCS Adjustment,
including settlement of any such KRCS Adjustment, and (iii) the Tax Contest
Committee shall control the defense or prosecution of Joint Adjustments and any
and all administrative matters not directly and exclusively related to any TOC
Adjustment or KRCS Adjustment, including, but not limited to, a Securify
Adjustment. Each Company's right to control shall extend to any matter
pertaining to the conduct, management and control of a Tax Contest, including,
without limitation, execution of waivers, scheduling of conferences and the
resolution of any Tax Item. A Company shall not agree to any Tax liability for
which another Company may be liable under this Agreement or otherwise, or
compromise any claim for any Tax Benefit which another Company may be entitled
under this Agreement, without such other Company's written consent (which
consent may be given or withheld at the sole discretion of the Company from
which the consent would be required). The Tax Contest Committee shall consist of
two persons, one person selected by TOC (as designated in writing to KRCS) and
one person selected by KRCS (as designated in writing to TOC). Each person
serving on the Tax Contest Committee shall continue to serve unless and until he
or she is replaced by the party designating such person. Any and all matters to
be decided by the Tax Contest Committee shall require the unanimous approval of
both persons serving on the committee. In the event the Tax Contest Committee
shall be deadlocked on any matter, the provisions of Section 14 of this
Agreement shall apply.

(c) If a Tax Authority asserts, proposes or recommends a deficiency, claim
or adjustment that, if sustained, would result in Restructuring Taxes for which
either Company could be responsible under this Agreement:

(i) TOC and KRCS shall jointly prepare any correspondence or filing
submitted to the Tax Authority or any judicial authority that relates to
the merits of such deficiency, claim or adjustment.

(ii) If either of TOC or KRCS acknowledges in writing to the other
Company that it is responsible for 100% of any such Restructuring Taxes
that are determined to be due, then the Company making such acknowledgement
(A) shall contest such deficiency, claim or adjustment, including
administrative and judicial proceedings; (B) shall have the right to
participate fully with respect to such deficiency, claim or adjustment and
related proceedings, and (C) in no event shall the other Company settle or
compromise any such deficiency, claim or adjustment without the written
consent of the acknowledging company.

Section 10. Effective Date. This Agreement shall be effective on the
Distribution Date.

Section 11. No Inconsistent Actions.

11.01. No Inconsistent Actions by KRCS.

(a) Neither KRCS nor any Affiliate will take any action or fail to take any
action, which action or failure to act would cause the Contribution, Exchange
and Distribution to fail to qualify under

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Sections 351(a), 355(a) and 368(a)(1)(D) of the Code or any corresponding
provision of state or local law. Without limiting the foregoing, KRCS and its
Affiliates covenant to TOC that:

(i) During the Restricted Period, KRCS will not liquidate, merge or
consolidate with any other person, other than a wholly owned subsidiary.

(ii) During the Restricted Period, neither KRCS nor its Affiliates
will sell, exchange, distribute or otherwise dispose of assets with an
aggregate gross fair market value of greater than $[ ] million
except in the ordinary course of business.

(iii) Following the Distribution, KRCS will, for a minimum of two
years, continue the active conduct of the historic business as transferred
to it in the Contribution.

(iv) Neither KRCS nor any Affiliate will take any action inconsistent
with the information and representations in the Ruling Request.

(v) Neither KRCS nor any Affiliate will repurchase stock of KRCS in a
manner contrary to the requirements of Rev. Proc. 96-30, 1996-1, C.B. 696
or in a manner contrary to the representations made in Ruling Request.

(vi) Neither KRCS nor any Affiliate will enter into any negotiations,
agreements or arrangements with respect to any of the foregoing.

(b) KRCS covenants and agrees, on behalf of itself and each other member of
the KRCS Group, that within the Restricted Period, KRCS will not take any action
(including stock issuances, whether pursuant to the exercise of options (or
similar interests) or otherwise, option grants, capital contributions, or
redemptions) or omit to take any action which may, either alone or in
combination with actions or omissions by KRCS or any other party, result in the
imposition of any Restructuring Tax.

(c) KRCS covenants and agrees, on behalf of itself and each other member of
the KRCS Group, that neither KRCS nor any other member of the KRCS Group will
take any position (on a Tax Return, in a Tax proceeding or audit, or otherwise)
that is inconsistent with the Ruling Request or the Private Letter Ruling.

(d) KRCS covenants and agrees, on behalf of itself and each other member of
the KRCS Group, that, in addition to the other representations, warranties,
covenants and agreements set forth in this Agreement, KRCS and each member of
the KRCS Group will take, or refrain from taking, as the case may be, such
actions as TOC may require as necessary to ensure that the Exchange,
Distribution and Liquidation qualify for the intended Tax treatment, including
such actions as TOC determines may be necessary to preserve the Tax treatment
set forth in the Private Letter Ruling. Without limiting the generality of the
foregoing, KRCS covenants and agrees, on behalf of itself and each other member
of the KRCS Group, that KRCS and each member of the KRCS Group shall cooperate
with TOC if TOC determines to obtain additional Internal Revenue Service rulings
with respect to the Exchange, Distribution or Liquidation or any portion
thereof, including rulings pertaining to whether any actual or proposed change
in facts and circumstances affects the Tax treatment of the Exchange,
Distribution or Liquidation or any portion thereof, and TOC shall reimburse KRCS
for reasonable third-party costs and expenses directly related to requests for
additional Internal Revenue Service rulings that are initiated by TOC.

(e) Following the Distribution Date, KRCS and its Affiliates may take any
action or engage in conduct otherwise prohibited by this Section 11 so long as
prior to such action or conduct, as the case may be, KRCS obtains TOC's Sole
Discretion Consent and, if TOC so requires, TOC or KRCS receives (i) a ruling
from the Internal Revenue Service in form and substance satisfactory to TOC, in
its discretion, and upon which TOC can rely, to the effect that the proposed
action or conduct, as the case

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may be, will not cause the Exchange, Distribution or Liquidation, or any portion
thereof to fail to qualify for the Tax treatment stated in the Private Letter
Ruling, or (ii) an opinion of counsel that is in form and substance satisfactory
to TOC, and upon which TOC can rely (which ruling or opinion of counsel, as the
case may be, shall be obtained at the sole cost and expense of KRCS), to the
effect that the proposed action or conduct, as the case may be, will not cause
the Exchange, Distribution or Liquidation or any portion thereof to fail to
qualify for the Tax treatment stated in the Private Letter Ruling.

(f) Notwithstanding any other provision of this Agreement, KRCS covenants,
on behalf of itself and each other member of the KRCS Group, that neither KRCS
nor any member of the KRCS Group will apply for any additional Internal Revenue
Service ruling pertaining to the Transactions or any portion thereof unless,
prior to so applying, KRCS obtains TOC's consent, which consent shall not be
unreasonably withheld or delayed. TOC shall be entitled to review and approve
any request for, or document relating to, any such ruling prior to its
submission to the Internal Revenue Service.

11.02. No Inconsistent Actions by TOC.

(a) Neither TOC nor any Affiliate will take any action or fail to take any
action, which action or failure to act would cause the Contribution, Exchange
and Distribution to fail to qualify under Sections 351(a), 355(a) and
368(a)(1)(D) of the Code or any corresponding provision of state or local law.
Without limiting the foregoing, TOC and its Affiliates covenant to KRCS that:

(i) During the Restricted Period, TOC will not liquidate, merge or
consolidate with any other person, other than a wholly owned subsidiary.

(ii) During the Restricted Period, neither TOC nor its Affiliates will
sell, exchange, distribute or otherwise dispose of assets with an aggregate
gross fair market value of greater than $[ ] million except in the ordinary
course of business.

(iii) Following the Distribution, TOC will, for a minimum of two
years, continue the active conduct of the historic business as transferred
to it in the Contribution.

(iv) Neither TOC nor any Affiliate will take any action inconsistent
with the information and representations in the Ruling Request.

(v) Neither TOC nor any Affiliate will repurchase stock of TOC in a
manner contrary to the requirements of Rev. Proc. 96-30, 1996-1, C.B. 696
or in a manner contrary to the representations made in Ruling Request.

(vi) Neither TOC nor any Affiliate will enter into any negotiations,
agreements or arrangements with respect to any of the foregoing.

(b) TOC covenants and agrees, on behalf of itself and each other member of
the TOC Group, that within the Restricted Period, TOC will not take any action
(including stock issuances, whether pursuant to the exercise of options (or
similar interests) or otherwise, option grants, capital contributions, or
redemptions) or omit to take any action which may, either alone or in
combination with actions or omissions by TOC or any other party, result in the
imposition of any Restructuring Tax.

(c) TOC covenants and agrees, on behalf of itself and each other member of
the TOC Group, that neither TOC nor any other member of the TOC Group will take
any position (on a Tax Return, in a Tax proceeding or audit, or otherwise) that
is inconsistent with the Ruling Request or the Private Letter Ruling.

(d) TOC covenants and agrees, on behalf of itself and each other member of
the TOC Group, that, in addition to the other representations, warranties,
covenants and agreements set forth in this

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Agreement, TOC and each member of the TOC Group will take, or refrain from
taking, as the case may be, such actions as KRCS may require as necessary to
ensure that the Exchange, Distribution and Liquidation qualify for the intended
Tax treatment, including such actions as KRCS determines may be necessary to
preserve the Tax treatment set forth in the Private Letter Ruling. Without
limiting the generality of the foregoing, TOC covenants and agrees, on behalf of
itself and each other member of the TOC Group, that TOC and each member of the
TOC Group shall cooperate with KRCS if KRCS determines to obtain additional
Internal Revenue Service rulings with respect to the Exchange, Distribution or
Liquidation or any portion thereof, including rulings pertaining to whether any
actual or proposed change in facts and circumstances affects the Tax treatment
of the Exchange, Distribution or Liquidation or any portion thereof, and KRCS
shall reimburse TOC for reasonable third-party costs and expenses directly
related to requests for additional Internal Revenue Service rulings that are
initiated by KRCS.

(e) Following the Distribution Date, TOC and its Affiliates may take any
action or engage in conduct otherwise prohibited by this Section 11.02 so long
as prior to such action or conduct, as the case may be, TOC obtains KRCS' Sole
Discretion Consent and, if KRCS so requires, KRCS or TOC receives (i) a ruling
from the Internal Revenue Service in form and substance satisfactory to KRCS, in
its discretion, and upon which KRCS can rely, to the effect that the proposed
action or conduct, as the case may be, will not cause the Exchange, Distribution
or Liquidation or any portion thereof to fail to qualify for the Tax treatment
stated in the Private Letter Ruling, or (ii) an opinion of counsel that is in
form and substance satisfactory to KRCS, and upon which KRCS can rely (which
ruling or opinion of counsel, as the case may be, shall be obtained at the sole
cost and expense of TOC), to the effect that the proposed action or conduct, as
the case may be, will not cause the Exchange, Distribution or Liquidation or any
portion thereof to fail to qualify for the Tax treatment stated in the Private
Letter Ruling.

(f) Notwithstanding any other provision of this Agreement, TOC covenants,
on behalf of itself and each other member of the TOC Group, that neither TOC nor
any member of the TOC Group will apply for any additional Internal Revenue
Service ruling pertaining to the Transactions or any portion thereof unless,
prior to so applying, TOC obtains KRCS' consent, which consent shall not be
unreasonably withheld or delayed. KRCS shall be entitled to review and approve
any request for, or document relating to, any such ruling prior to its
submission to the Internal Revenue Service.

11.03. Redetermination. If, after the date hereof, the Internal Revenue
Service issues Treasury Regulations under, or other guidance regarding, Section
355(e) of the Code, the Companies hereby agree to meet to review the conditions,
requirements and covenants set forth in this Article 11, and to consider making
appropriate revisions to this Article 11 as well as seeking any additional
rulings as may be appropriate in light of such regulations or other guidance.

11.04. Tender Offer or Purchase Offer. Notwithstanding anything to the
contrary set forth in this Agreement, if, during the Restricted Period, any
Person or group of Persons acquires beneficial ownership of KRCS or TOC common
stock (or any other class of outstanding KRCS or TOC stock) or commences a
tender or other purchase offer for the capital stock of KRCS or TOC or initiates
any other form of transaction to acquire directly or indirectly KRCS or TOC
stock, upon consummation of which such Person or group of Persons would acquire
beneficial ownership of KRCS or TOC common stock (or any other class of
outstanding KRCS or TOC stock) such that the Exchange, the Distribution or the
Liquidation, or any portion thereof, shall fail to qualify as a tax-free
transaction as a result of such acquisition, tender or other purchase offer, or
other form of transaction, then the Company whose stock is the subject of the
acquisition, tender or other purchase offer, or other form of transaction shall
indemnify and hold harmless the other Company and its Affiliates against any and
all Taxes and any

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other costs and liabilities imposed upon or incurred by the other Company, its
Affiliates and their shareholders as a result of the failure of the Exchange,
the Distribution or the Liquidation, or any portion thereof, to so qualify.

Section 12. Survival of Obligations. All rights and obligations arising
hereunder with respect to a Pre-Distribution Period shall survive until they are
fully effectuated or performed provided, that notwithstanding anything in this
Agreement to the contrary, this Agreement shall remain in effect and its
provisions shall survive for the full period of all applicable statutes of
limitation (giving effect to any extension, waiver or mitigation thereof).

Section 13. Treatment of Payments

13.01. Treatment of Tax Indemnity and Tax Benefit Payments. Unless
required under the Code or other applicable Tax Law,

(a) any Tax indemnity payments made by a Company under Section 5 shall
be reported for Tax purposes by the payor and the recipient as
distributions or capital contributions or combinations thereof, as
appropriate, occurring immediately before the distribution of the KRCS and
the TOC common shares to KROG shareholders on the Distribution Date, but
only to the extent the payment does not relate to a Tax allocated to the
payor in accordance with Treasury Regulation Section 1.1502-33(d) (or under
corresponding principles of other applicable Tax Laws), and

(b) any Tax Benefit payments made by a Company under Section 6, shall
be reported for Tax purposes by the payor and the recipient as
distributions or capital contributions, as appropriate, occurring
immediately before the distribution of the KRCS and the TOC common shares
to KROG shareholders on the Distribution Date, but only to the extent the
payment does not relate to a Tax allocated to the payor in accordance with
Treasury Regulation Section 1.1502-33(d) (or under corresponding principles
of other applicable Tax Laws).

(c) If any Tax indemnity payment made by a Company under Section 5 is
treated as taxable income, such Tax indemnity payment shall be increased by
any Tax cost incurred as the result of the receipt of such payment.

13.02. Interest Under This Agreement. Anything herein to the contrary
notwithstanding, to the extent one Company ("indemnitor") makes a payment of
interest to another Company ("indemnitee") under this Agreement with respect to
the period from the date that the indemnitee made a payment of Tax to a Tax
Authority to the date that the indemnitor reimbursed the indemnitee for such Tax
payment, or with respect to the period from the date that the indemnitor
received a Tax Benefit to the date indemnitor paid the Tax Benefit to the
indemnitee, the interest payment shall be treated as interest expense to the
indemnitor (deductible to the extent provided by law) and as interest income by
the indemnitee (includible in income to the extent provided by law).

Section 14. Disagreements. If after good faith negotiations the parties
cannot agree on the application of this Agreement to any matter, including,
without limitation Section 4.05, then the matter will be referred to a
nationally recognized accounting firm acceptable to each of the parties (the
"Accounting Firm"). If the parties cannot agree on an Accounting Firm within 15
days, then Arthur Andersen, LLP and Deloitte & Touche shall choose a third
nationally recognized accounting firm for this purpose. The Accounting Firm
shall furnish written notice to the parties of its resolution of any such
disagreement as soon as practical, but in any event no later than 45 days after
its acceptance of the matter for resolution. Any such resolution by the
Accounting Firm will be conclusive and binding on all parties to this Agreement.
In accordance with Section 15, each party shall pay its own fees and expenses
(including the fees and expenses of its representatives) incurred in connection
with the referral of the

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matter to the Accounting Firm. All fees and expenses of the Accounting Firm in
connection with such referral shall be shared equally by the parties affected by
the matter.

Section 15. Expenses. Except as provided in Section 14 and 2.05, each
party and its Affiliates shall bear their own expenses incurred in connection
with preparation of Tax Returns, Tax Contests and other matters related to Taxes
under the provisions of this Agreement.

Section 16. General Provisions

16.01. Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to any party under this Agreement
shall be in writing and shall be deemed given or made when delivered in party or
when sent by first class mail or by other commercially reasonable means of
written communication (including delivery by an internationally recognized
courier service or by facsimile transmission) to the party at the party's
address as follows:

If to TOC:

The O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014

Att: Nicholas P. Carpinello
Fax: (513) 874-1262
Phone: (513) 881-5401

If to KRCS:

Kroll Risk Consulting Services, Inc.
900 Third Avenue
New York, N.Y. 10022

Att: Nazzareno E. Paciotti
Fax: (212) 593-2631
Phone: (212) 833-3322

If to Securify:

[Name/Address]

A party may change the address, person's attention or facsimile number for
receiving notices under this Agreement by providing written notice of such
change to the other parties.

16.02. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and assigns.

16.03. No Third Party Beneficiaries. This Agreement is not intended to,
and does not, create any third party contractual or other rights. No person or
entity, including a holder of common stock of KROG, KRCS or TOC, shall be deemed
to be a third party beneficiary with respect to this Agreement.

16.04. Waiver; Modification. No delay on the part of any party hereto in
the exercise of any right, power or remedy arising hereunder shall operate as a
waiver thereof. No waiver shall be effective unless in writing and signed by the
party or parties granting the waiver and such waiver shall be effective only
with respect to the specific matters set forth therein. This Agreement may be
amended by agreement of the parties hereto at any time prior to the Distribution
Date. No amendment or modification of this Agreement shall be effective unless
in writing and signed by all parties hereto.

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16.05. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.

16.06. Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement,
including, without limitation, the execution and delivery to the other parties
and their Affiliates and representatives of such powers of attorney or other
authorizing documentation as is reasonably necessary or appropriate in
connection with Tax Contests (or portions thereof) under the control of such
other parties in accordance with Section 9 hereof.

16.07. Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements and understandings pertaining thereto. In the event of any
inconsistency between this Agreement and the Reorganization Agreement or any
other agreements relating to the transactions contemplated by the Reorganization
Agreement, the provisions of this Agreement shall control.

16.08. Construction. The language in all parts of this Agreement shall in
all cases be construed according to its fair meaning and shall not be strictly
construed for or against any party.

16.09. No Double Recovery; Subrogation. No provision of this Agreement
shall be construed to provide an indemnity or other recovery for any costs,
damages or other amounts for which the damaged party has been fully compensated
under any other provision of this Agreement or under any other agreement or
action at law or equity. Unless expressly required in this Agreement, a party
shall not be required to exhaust all remedies available under other agreements
or at law or equity before recovering under the remedies provided in this
Agreement. Subject to any limitations provided in this Agreement (for example,
the limitation on filing claims for refund in Section 4.06), the indemnifying
party shall be subrogated to all rights of the indemnified party for recovery
from any third party.

16.10. Counterparts. Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.

16.11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed in and to be performed in that State.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by the respective officers as of the date set forth above.

THE O'GARA COMPANY

By:
----------------------------------------

Its:
-----------------------------------------

KROLL RISK CONSULTING SERVICES, INC.

By:
----------------------------------------

Its:
-----------------------------------------

SECURIFY, INC.

By:
----------------------------------------

Its:
-----------------------------------------

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EXHIBIT 6.12

See form of Cross-Indemnification Agreement attached hereto.

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CROSS-INDEMNIFICATION AGREEMENT

This Cross-Indemnification Agreement dated as of the day of
, 2000 (the "Agreement") is entered into by and between THE
KROLL-O'GARA COMPANY, an Ohio corporation (the "Company"), KROLL RISK CONSULTING
SERVICES, INC., a Delaware corporation ("KRCS"), and THE O'GARA COMPANY, an Ohio
corporation ("TOC").

A. The Company, TOC and KRCS, among others, have entered into an Agreement
and Plan of Reorganization and Dissolution dated as of September 8, 2000 (the
"Reorganization Agreement").

B. This Agreement is being entered into pursuant to Sections 1.08 and 6.11
of the Reorganization Agreement.

C. Terms not otherwise defined herein shall have the respective meanings
set forth in Article XXII of the Reorganization Agreement.

NOW THEREFORE, in consideration of the premises and the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:

ARTICLE I

RELEASE AND INDEMNIFICATION

1.1. Release of Pre-Closing Claims. (a) Except as provided in Section
1.1(d) hereof, effective as of the Distribution Date, KRCS does hereby, for
itself and each other member of the KRCS Group, their respective Affiliates
(other than any member of the TOC Group and the Company), successors and
assigns, and, to the extent legally possible, all Persons who at any time prior
to the Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the KRCS Group (in each case, in their respective
capacities as such), remise, release and forever discharge the Company, each
member of the TOC Group, their respective Affiliates (other than any member of
the KRCS Group), successors and assigns, and all Persons who at any time prior
to the Distribution Date have been shareholders, directors, officers, agents or
employees of the Company or the TOC Group (in each case, in their respective
capacities as such) other than officers and directors of the KRCS Group, and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever, whether at law or in equity (including any
right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Distribution Date, including in connection with the Contemplated Transactions.

(b) Except as provided in Section 1.1(d) hereof, effective as of the
Distribution Date, the Company does hereby, for itself and its Affiliates (other
than any member of the KRCS Group or the TOC Group), successors and assigns,
and, to the extent legally possible, all Persons who at any time prior to the
Distribution Date have been shareholders, directors, officers, agents or
employees of the Company (in each case, in their respective capacities as such),
remise, release and forever discharge KRCS, TOC, the respective members of the
KRCS Group, the respective members of the TOC Group, their respective Affiliates
(other than the Company), successors and assigns, and all Persons who at any
time prior to the Distribution Date have been shareholders, directors, officers,
agents or employees of any member of the KRCS Group or the TOC Group (in each
case, in their respective capacities as such), and their respective heirs,
executors, administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events

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occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Distribution Date, including in connection with the Contemplated Transactions.

(c) Except as provided in Section 1.1(d) hereof, effective as of the
Distribution Date, TOC does hereby, for itself and each other member of the TOC
Group, their respective Affiliates (other than any member of the KRCS Group or
the Company), successors and assigns, and, to the extent legally possible, all
Persons who at any time prior to the Distribution Date have been shareholders,
directors, officers or employees of any member of the TOC Group (in each case,
in their respective capacities as such), remise, release and forever discharge
the Company, KRCS, the respective members of the KRCS Group, their respective
Affiliates (other than any member of the TOC Group), successors and assigns, and
all Persons who at any time prior to the Distribution Date have been
shareholders, directors, officers, agents, or employees of any member of the
KRCS Group or the Company (in each case, in their respective capacities as such)
other than officers and directors of the TOC Group, and their respective heirs,
executors, administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Distribution Date,
including in connection with the Contemplated Transactions.

(d) Nothing contained in Section 1.1(a), (b) or (c) above shall impair any
right of any Person to enforce this Agreement, the Reorganization Agreement, any
other Ancillary Agreement or any agreements, arrangements, commitments or
understandings that are specified in the Reorganization Agreement or the
applicable Exhibits thereto. Nothing contained in Section 1.1(a), (b) or (c)
shall remise, release or otherwise discharge any Person from:

(i) any Liability provided in or resulting from any agreement that is
specified in the Reorganization Agreement as not terminating as of the
Exchange Date;

(ii) any Liability assumed by or transferred, assigned or allocated to
the Company, to any member of the KRCS Group or to any member of the TOC
Group in accordance with this Agreement, the Reorganization Agreement or
any other Ancillary Agreement;

(iii) Any Liability of the Company, any member of the KRCS Group or
any member of the TOC Group arising out of this Agreement, the
Reorganization Agreement or any other Ancillary Agreement;

(iv) any Liability for the sale, lease, construction or receipt of
goods, property or services purchased, obtained or used in the ordinary
course of business by the Company, a member of the KRCS Group or a member
of the TOC Group from any of the others prior to the Exchange Date;

(v) any Liability for unpaid amounts for products or services or
refunds owing on products or services due on a value-received basis for
work done by the Company, a member of the KRCS Group or a member of the TOC
Group at the request or on behalf of any of the others; or

(vi) any Liability that any of them may have with respect to
indemnification or contribution pursuant to this Agreement for claims
brought against them by third Persons, which Liability shall be governed by
Section 1.4 and 1.5 hereof and, if applicable, the appropriate provisions
of the Reorganization Agreement or any other Ancillary Agreements.

(e) KRCS shall not make, and shall not permit any member of the KRCS Group
to make, any claim or demand, or commence any Action asserting any claim or
demand, including any claim of

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contribution or any indemnification, against the Company, TOC or any member of
the TOC Group, or any other Person released pursuant to Section 1.1(a), with
respect to any Liabilities released pursuant to Section 1.1(a). The Company
shall not make any claim or demand, or commence any Action asserting any claim
or demand, including any claim of contribution or any indemnification, against
KRCS or any member of the KRCS Group, TOC or any member of the TOC Group, or any
other Person released pursuant to Section 1.1(b), with respect to any
Liabilities released pursuant to Section 1.1(b). TOC shall not make, and shall
not permit any member of the TOC Group to make, any claim or demand, or commence
any Action asserting any claim or demand, including any claim of contribution or
indemnification, against KRCS or any member of the KRCS Group, the Company, or
any other Person released pursuant to Section 1.1(c), with respect to
Liabilities released pursuant to Section 1.1(c).

(f) It is the intent of each of the Company, TOC and KRCS by virtue of the
provisions of this Section 1.1 to provide for a full and complete release and
discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Distribution Date, between or among any member of the KRCS Group, any member of
the TOC Group, and the Company (including any contractual agreements or
arrangements existing or alleged to exist between or among any such members on
or before the Distribution Date), except as expressly set forth in Section
1.1(d). At any time, at the request of any other party, each party shall cause
each member of its Group to execute and deliver further releases reflecting the
provisions hereof.

1.2. Indemnification by KRCS. Except as provided in Section 1.5, KRCS
shall indemnify, defend and hold harmless each of the Company Indemnitees and
each of the TOC Indemnitees from and against any and all Liabilities relating
to, arising out of or resulting from any of the following items:

(a) the failure of KRCS or any other member of the KRCS Group or any
other Person to pay, perform or otherwise promptly discharge any KRCS
Liabilities, whether prior to or after the Distribution Date or the date
hereof;

(b) the KRCS Business or any KRCS Liability;

(c) any breach by any member of the KRCS Group of this Agreement, the
Reorganization Agreement or any of the other Ancillary Agreements;

(d) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, with respect to all information (other than with respect to any
information therein provided by the Company, TOC, TMO, WTO or any of the
other O'Gara Exchanging Shareholders specifically for inclusion therein)
contained in the KRCS Registration Statement;

(e) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, with respect to all information in the TOC Registration
Statement provided by KRCS, JBK or any of the other KRCS Exchanging
Shareholders specifically for inclusion therein; or

(f) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, with respect to all information in the Proxy Statement provided
by KRCS, JBK or any of the other KRCS Exchanging Shareholders specifically
for inclusion therein;

provided, however, that KRCS shall have no obligation to indemnify,
defend or hold harmless any of the Company Indemnitees or any of the TOC
Indemnitees, from and against any Liability

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not involving a Third Party Claim for (i) any consequential damages, (ii)
any damages for lost profits or (iii) any special or punitive damages.

1.3. Indemnification by TOC. Except as provided in Section 1.5, TOC shall
indemnify, defend and hold harmless each of the KRCS Indemnitees and each of the
Company Indemnitees, from and against any and all Liabilities relating to,
arising out of or resulting from any of the following items:

(a) the failure of TOC or any other member of the TOC Group or any
other Person to pay, perform or otherwise promptly discharge any TOC
Liabilities, whether prior to or after the Distribution Date or the date
hereof;

(b) the TOC Business or any TOC Liability;

(c) any breach by TOC or any member of the TOC Group of this
Agreement, the Reorganization Agreement or any of the other Ancillary
Agreements;

(d) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, with respect to all information (other than with respect to any
information therein provided by the Company, KRCS, JBK or any of the other
KRCS Exchanging Shareholders specifically for inclusion therein) contained
in the TOC Registration Statement;

(e) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, with respect to all information in the KRCS Registration
Statement provided by TOC, TMO, WTO or any of the other O'Gara Exchanging
Shareholders specifically for inclusion therein;

(f) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, with respect to all information in the Proxy Statement provided
by TOC, TMO, WTO or any of the other O'Gara Exchanging Shareholders
specifically for inclusion therein; or

(g) the financial information of TOC included in the KRCS Registration
Statement;

provided, however, that TOC shall have no obligation to indemnify,
defend or hold harmless any of the Company Indemnitees or any of the KRCS
Indemnitees, from and against any Liability not involving a Third Party
Claim for (i) any consequential damages, (ii) any damages for lost profits
or (iii) any special or punitive damages.

1.4. Indemnification Obligations Net of Insurance Proceeds and Tax
Benefits.

(a) The parties intend that any Liability subject to indemnification or
reimbursement pursuant to Section 1.2 or 1.3 will be net of Insurance Proceeds
that actually reduce the amount of the Liability. Accordingly, the amount which
any Indemnifying Party is required to pay to any Indemnitee will be reduced by
any Insurance Proceeds theretofore actually recovered by or on behalf of the
Indemnitee in reduction of the related Liability. If an Indemnitee receives a
payment (an "Indemnity Payment") required by this Agreement from an Indemnifying
Party in respect of any Liability and subsequently receives, realizes or
recovers Insurance Proceeds with respect thereto, then the Indemnitee will pay
to the Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds had been received, realized or recovered before the
Indemnity Payment was made.

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(b) In the case of any Shared Contingent Liability, any Insurance Proceeds
received, realized or recovered by any party in respect of the Shared Contingent
Liability will be shared among the parties in such manner as may be necessary so
that the obligations of the parties for such Shared Contingent Liability, net of
such Insurance Proceeds, will remain in proportion to their respective Shared
Percentages, regardless of which party or parties may actually receive, realize
or recover such Insurance Proceeds.

(c) An insurer who would otherwise be obligated to pay any claim shall not
be relieved of the responsibility with respect thereto or, solely by virtue of
the indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to a "windfall" (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification provisions) by virtue
of the indemnification provisions hereof.

(d) The parties intend that any Liability subject to indemnification or
reimbursement pursuant to Section 1.2 or 1.3 will be net of any Tax benefit
received as a result of such Liability. Accordingly, the amount which any
Indemnifying Party is required to pay to any Indemnitee will be reduced by any
Tax deduction or other Tax benefit received by the Indemnitee as a result of
such Liability.

1.5. Procedures for Indemnification of Third Party Claims.

(a) If a claim or demand (other than a claim or demand that a Person
believes is a Shared Contingent Liability in which case Section 1.6 hereof shall
govern) is made against a Company Indemnitee, TOC Indemnitee or a KRCS
Indemnitee (each, an "Indemnitee") by any person who is not a party to this
Agreement or a subsidiary of a party to this Agreement (a "Third Party Claim")
as to which such Indemnitee may be entitled to indemnification pursuant to this
Agreement, such Indemnitee shall notify the party which is or may be required
pursuant to Section 1.2 or Section 1.3 hereof to make such indemnification (the
"Indemnifying Party") in writing, and in reasonable detail, of the Third Party
Claim promptly (and in any event within fifteen (15) business days) after
receipt by such Indemnitee of written notice of the Third Party Claim; provided,
however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure (except that the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnitee failed to give such notice). Thereafter, the
Indemnitee shall deliver to the Indemnifying Party promptly (and in any event
within five (5) business days) after the Indemnitee's receipt thereof, copies of
all notices and documents (including court papers) received by the Indemnitee
relating to the Third Party Claim.

If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses to assume the defense thereof with counsel selected by the Indemnifying
Party and reasonably acceptable to the Indemnitee. Should the Indemnifying Party
so elect to assume the defense of a Third Party Claim, the Indemnifying Party
shall, within thirty (30) days (or sooner if the nature of the Third Party Claim
so requires), notify the Indemnitee of its intent to do so, and the Indemnifying
Party shall thereafter not be liable to the Indemnitee for legal or other
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof; provided, that the Indemnitee shall have the right to employ separate
counsel if, in the Indemnitee's reasonable judgment, a conflict of interest
between the Indemnitee and the Indemnifying Party exists in respect of such
claim which would make representation of both parties by one counsel
inappropriate, and in such event the fees and expenses of one such separate
counsel for all Indemnitees shall be paid by the Indemnifying Party. If the
Indemnifying Party assumes such defense, the Indemnitee shall have the right to
participate in the defense thereof and to employ counsel, subject to the proviso
of the preceding sentence, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall control such defense. The Indemnifying

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Party shall be liable for the fees and expenses of counsel employed by the
Indemnitee for any period during which the Indemnifying Party has failed to
assume the defense thereof (other than during the period prior to the time the
Indemnitee shall have given notice of the Third Party Claim as provided above).
If the Indemnifying Party so elects to assume the defense of any Third Party
Claim, all of the Indemnitees shall cooperate with the Indemnifying Party in the
defense or prosecution thereof, including by providing or causing to be
provided, records and witnesses as soon as reasonably practicable after
receiving any request therefor from or on behalf of the Indemnifying Party.

In no event will the Indemnitee admit any liability with respect to, or
settle, compromise or discharge, any such Third Party Claim without the
Indemnifying Party's prior written consent; provided, however, that the
Indemnitee shall have the right to settle, compromise or discharge such Third
Party Claim without the consent of the Indemnifying Party if the Indemnitee
releases the Indemnifying Party from its indemnification obligation hereunder
with respect to such Third Party Claim and such settlement, compromise or
discharge would not otherwise adversely affect the Indemnifying Party. The
Indemnitee will agree to any settlement, compromise or discharge of a Third
Party Claim that the Indemnifying Party may recommend and that by its terms
obligates the Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and releases the Indemnitee completely in
connection with such Third Party Claim and that would not otherwise adversely
affect the Indemnitee. If an Indemnifying Party elects not to assume the defense
of a Third Party Claim, or fails to notify an Indemnitee of its election to do
so as provided herein, such Indemnitee will diligently defend the Third Party
Claim with counsel selected by the Indemnitee and reasonable acceptable to the
Indemnifying Party and may compromise or settle such Third Party Claim only with
the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld.

Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of counsel chosen by the Indemnitee in defending
such Third Party Claim) if: (i) the Third Party Claim seeks an order, injunction
or other equitable relief or relief for other than money damages against the
Indemnitee which the Indemnitee reasonably determines, after conferring with its
counsel, cannot be separated from any related claim for money damages. If such
equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the Indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages; (ii) the
Indemnifying Party would not have the financial resources to pay for the amount
of a final settlement or judgment of such Third Party Claim that is reasonably
expected; (iii) resolution of the Third Party Claim could lead to claims of
criminal violations; or (iv) an adverse resolution of the Third Party Claim
could have a material adverse effect on the business on the Indemnitee that
would be disproportionate to any damages being sought.

(b) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Third Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third Party Claim against any claimant or plaintiff asserting
such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.

(c) The remedies provided in this Section 1.5 shall be cumulative and shall
not preclude assertion by any Indemnitee of any other rights or the seeking of
any and all other remedies against any Indemnifying Party.

(d) Indemnification required by this Section 1.5 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when invoices are received or loss, liability, damage or expense
is incurred.

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1.6 Procedures for Indemnification of Third Party Claims that are or may be
a Shared Contingent Liability.

(a) Shared Contingent Liabilities initially shall include, without
limitation, the items listed on Exhibit A attached hereto.

(b) If the Company, any member of the TOC Group or any member of the KRCS
Group shall receive notice or otherwise learn of the assertion of a Third Party
Claim which may reasonably be determined to be a Shared Contingent Liability,
such Person shall give the parties to this Agreement written notice thereof
within ten (10) days after becoming aware of such Third Party Claim. Any such
notice shall describe the Third Party Claim in reasonable detail.

(c) If an Indemnitee, the party receiving any notice pursuant to Section
1.5 or 1.6 or any other party to this Agreement believes that a Third Party
Claim is or may be a Shared Contingent Liability, such Indemnitee or other party
receiving notice may make a Determination Request at any time following any
notice given by the Indemnitee to the parties to this Agreement pursuant to
Section 1.6(b).

(d) The in-house general counsel of TOC and the Chief Financial Officer of
KRCS shall constitute the Contingent Claim Committee and shall act on the
Determination Request. The Contingent Claim Committee shall determine which
party will assume the defense of any Third Party Claim that is determined to be
a Shared Contingent Liability and shall decide all other matters pertaining to
the control and settlement of any Shared Contingent Liability. Any Indemnitee
who is not determined by the Contingent Claim Committee to control such matter
shall have the right to employ separate counsel and to participate in (but not
control) the defense, compromise or settlement thereof, but all fees and
expenses of such counsel shall be the expense of such Indemnitee. The Contingent
Claim Committee's determination (which shall be made within thirty (30) days of
such Determination Request), if unanimous, shall be binding on all of the
parties and their respective successors and assigns. In the event that the
Contingent Claim Committee cannot reach a unanimous determination as to whether
a matter is a Shared Contingent Liability or an Exclusive Contingent Liability
within five (5) days of receipt of a Determination Request, the issue will be
submitted for binding arbitration in Cincinnati, Ohio. The arbitrator shall be
selected by the party making the Determination Request and approved by the other
party, which approval shall not be unreasonably or untimely withheld. Once
selected and approved, the arbitrator, using the rules of the American
Arbitration Association, shall appoint a time and place for a pre-hearing status
conference not more than five (5) days from the date of his or her appointment,
and shall appoint a time and place for a final hearing not more than five (5)
days from the date of the status conference. The arbitrator shall render a
single written decision stating with reasonable detail the reasons for the
decision reached. Each party shall bear its own cost of preparing for and
presenting its case; and the cost of arbitration, including the fees and
expenses of the arbitrator will be shared by the parties in accordance with the
Shared Percentage of each.

(e) Each of TOC and KRCS shall be responsible for its Shared Percentage of
any Third Party Claim that is a Shared Contingent Liability, and the costs and
expenses thereof shall be included in the calculation of the amount of the
applicable Shared Contingent Liability in determining the reimbursement
obligations of the parties with respect thereto pursuant to this Section 1.6. It
shall not be a defense to any obligation by any party to pay any amount in
respect of any Shared Contingent Liability that such party was not in control of
the defense thereof, that such party's views or opinions as to the conduct of
such defense were not accepted or adopted, that such party does not approve of
the quality or manner of the defense thereof or that such Shared Contingent
Liability was incurred by reason of a settlement rather than by a judgment or
other determination of liability.

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(f) Any amount owed in respect of any Shared Contingent Liabilities
(including reimbursement for the cost or expense of defense of any Third Party
Claim that is a Shared Contingent Liability pursuant to this Section 1.6) shall
be remitted promptly after the party entitled to such amount provides an invoice
(including reasonable supporting information with respect thereto) to the party
owing such amount.

(g) The provisions of this Agreement shall not apply to Taxes (which are
covered by the Tax Sharing Agreement).

(h) In the case of any Shared Contingent Liability, the party defending any
Third Party Claim that is a Shared Contingent Liability shall be entitled to
reimbursement from the other party in advance of a final determination of any
Action for amounts paid in respect of costs and expenses (including allocated
costs of in-house counsel and other personnel) related thereto, from time to
time as such costs and expenses are incurred.

(i) Any amounts invoiced and properly payable in accordance with this
Section 1.6 that are not paid within thirty (30) days of such invoice shall bear
interest at the Prime Rate plus 2% per annum.

ARTICLE II

MISCELLANEOUS PROVISIONS

2.1 Notices. All notices, consents, waivers or other communications
between the parties hereto shall be in writing and shall be deemed delivered on
the date actually received by personal delivery, facsimile, overnight courier,
ordinary mail or other such means, or five (5) days after being mailed by United
States certified or registered mail, return receipt requested, with postage
prepaid, in each case addressed as follows:

(a) If to KRCS:

Kroll Risk Consulting Services, Inc.
900 Third Avenue
New York, New York 10022
Attention: Sabrina Perel, Esq.
Fax: (212) 750-6194
Phone: (212) 833-3392

with a copy to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Peter S. Kolevzon, Esq.
Fax: (212) 715-8000
Phone: (212) 715-9288

(b) If to TOC:

The O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
Attention: Wilfred T. O'Gara
Fax: (513) 874-1262
Phone: (513) 881-5440

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with copies to:

The O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
Attention: Abram S. Gordon, Esq.
Fax: (513) 874-1262
Phone: (513) 881-5481

and

Taft, Stettinius & Hollister LLP
1800 Firstar Tower
425 Walnut Street
Cincinnati, Ohio 45202-3957
Attention: Timothy E. Hoberg, Esq.
Fax: (513) 381-0205
Phone: (513) 381-2838

The Kroll-O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
Attention: Abram S. Gordon
Fax: (513) 874-1262
Phone: (513) 881-5440

with copies to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Peter S. Kolevzon, Esq.
Fax: (212) 715-8000
Phone: (212) 715-9288

and

Taft, Stettinius & Hollister LLP
1800 Firstar Tower
425 Walnut Street
Cincinnati, Ohio 45202-3957
Attention: Timothy E. Hoberg, Esq.
Fax: (513) 381-0205
Phone: (513) 381-2838

or to such other addresses, to the attention of such other persons or to such
other fax or phone numbers as any party hereto may specify in a notice given
pursuant to this Section 2.1.

2.2 Amendment. This Agreement may not be modified or amended except in a
writing signed by each of the parties hereto.

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2.3 Assignment. This Agreement shall not be assignable, in whole or in
part, directly or indirectly, by any party hereto without the prior written
consent of the other party hereto, and any attempt to assign any rights or
obligations arising under this Agreement shall be void.

2.4 Successors and Assigns. The provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns.

2.5 Termination. This Agreement shall be terminated upon termination of
the Reorganization Agreement prior to the completion of the Contemplated
Transactions.

2.6 Third Party Beneficiaries. Except as contemplated by Article I hereof,
this Agreement is solely for the benefit of the parties hereto and their
respective subsidiaries and Affiliates and should not be deemed to confer upon
any Person who is not a party hereto any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.

2.7 Title and Headings. Titles and headings to sections herein contained
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.

2.8 Exhibits and Schedules. The exhibits and schedules shall be construed
with and as an integral part of this Agreement to the same extent as if the same
had been set forth verbatim herein.

2.9 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Ohio applicable to agreements made and to be performed
entirely therein.

2.10 Severability. If any one or more of the nonmaterial sections,
sentences or other portions of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, the invalidity of any such section,
sentence or other portion of this Agreement shall in no way affect the validity
or effectiveness of the remainder of this Agreement, and this Agreement shall
continue in force to the fullest extent permitted by law.

2.11 Counterparts; Entire Agreement. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement when signed by each of the parties and delivered to the other party.
This Agreement, the Reorganization Agreement and each of the other Ancillary
Agreements, and the exhibits and schedules hereto and thereto, contain the
entire agreement between the parties with respect to the subject matter hereof,
supersede all previous agreements, negotiations, discussions, writings and
understandings with respect to such subject matter and there are no agreements
or understandings between the parties other than those set forth or referred to
herein or therein.

ARTICLE III

DEFINITIONS

3.1 Definitions.

"Affiliate" shall mean a Person that controls, is controlled by, or is
under common control with another Person.

"Company Indemnitees" shall mean the Company, each of their respective
present, former or future directors, officer, employees and agents as such, and
each of the heirs, executors, successors and assigns of any of the forgoing,
except the KRCS Indemnitees and the TOC Indemnitees.

"Contingent Claim Committee" shall have the meaning set forth in Section
1.6(d) hereof.

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"Contingent Liability" means any Liability, other than Liabilities for
Taxes (which are governed by the Tax Sharing Agreement), of the Company, TOC,
KRCS or any of their respective Affiliates, whenever arising, to any Person
other than the Company, TOC, KRCS or any of their respective Affiliates, if and
to the extent that (i) such Liability is based on, or is allegedly based on,
acts or omissions arising prior to or on the Distribution Date and (ii) the
existence or scope of the obligation of the Company, TOC, KRCS or any of their
respective Affiliates as of the Distribution Date with respect to such Liability
was not acknowledged, fixed or determined in any material respect, due to a
dispute or other uncertainty as of the Distribution Date or as a result of the
failure of such Liability to have been discovered or asserted as of the
Distribution Date (it being understood that the existence of a litigation or
other reserve with respect to any Liability shall not be sufficient for such
Liability to be considered acknowledged, fixed or determined). For purposes of
the foregoing, a Liability shall be deemed to have accrued as of the
Distribution Date if all the elements necessary for the assertion of a claim
with respect to such Liability shall have occurred on or prior to the
Distribution Date, such that the claim, were it asserted in an Action on or
prior to the Distribution Date, would not be dismissed by a court on ripeness or
similar grounds.

"Determination Request" shall mean a written request to the Contingent
Claim Committee, pursuant to Section 1.6, for a determination as to whether a
Third Party Claim specified in such request constitutes a Shared Contingent
Liability.

"Exclusive Contingent Liability" shall mean any Exclusive TOC Contingent
Liability or Exclusive KRCS Contingent Liability.

"Exclusive KRCS Contingent Liability" shall mean any Contingent Liability
if such Contingent Liability relates solely to any KRCS Business, or is shared
between the Company and a member of the KRCS Group or if such Contingent
Liability is expressly assigned to KRCS pursuant to this Agreement, the
Reorganization Agreement or any other Ancillary Agreement.

"Exclusive TOC Contingent Liability" shall mean any Contingent Liability if
such Contingent Liability relates solely to any TOC Business, or is shared
between the Company and a member of the TOC Group or if such Contingent
Liability is expressly assigned to TOC pursuant to this Agreement, the
Reorganization Agreement or any other Ancillary Agreement.

"Group" shall mean either the TOC Group or the KRCS Group, as the context
requires.

"Indemnifying Party" shall have the meaning set forth in Section 1.5(a)
hereof.

"Indemnitee" shall have the meaning set forth in Section 1.5(a) hereof.

"Insurance Proceeds" shall mean those monies:

(a) received by an insured from an insurance carrier; or

(b) paid by an insurance carrier on behalf of the insured.

In any such case net of any applicable premium adjustments (including
reserves and retrospectively rated premium adjustments) and net of any
costs or expenses incurred in the collection thereof.

"KRCS Indemnitees" shall mean KRCS, each member of the KRCS Group, each of
their respective present, former or future directors, officers, employees and
agents, as such, and each of the heirs, executors, successors and assigns of any
of the foregoing.

"Prime Rate" shall mean the rate which KeyBank (or any successor thereto)
announces from time to time as its prime lending rate, as in effect from time to
time.

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"Shared Contingent Liability" shall mean, without duplication, any
Contingent Liability that is not an Exclusive TOC Contingent Liability or an
Exclusive KRCS Contingent Liability.

"Shared KRCS Percentage" shall mean 58.508%.

"Shared Percentage" shall mean the Shared TOC Percentage or the Shared KRCS
Percentage, as the case may be.

"Shared TOC Percentage" shall mean 41.492%.

"Tax" or "Taxes" shall have the meaning set forth in the Tax Sharing
Agreement.

"Third Party Claim" shall have the meaning set forth in Section 1.5(a).

"TOC Indemnitees" shall mean TOC, each member of the TOC Group, each of
their respective present, former or future directors, officers, employees and
agents, as such, and each of the heirs, executors, successors and assigns of any
of the foregoing.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date and year first above written.

THE KROLL-O'GARA COMPANY

By:
--------------------------------------

Name:
--------------------------------------

Title:
--------------------------------------

KROLL RISK CONSULTING SERVICES, INC.

By:
--------------------------------------

Name:
--------------------------------------

Title:
--------------------------------------

THE O'GARA COMPANY

By:
--------------------------------------

Name:
--------------------------------------

Title:
--------------------------------------

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EXHIBIT A

1. Any and all liabilities pursuant to that certain Compensation and
Indemnification Agreement between the Company and the Special Committee.

2. All costs and expenses relating to the winding up of the business and
subsequent dissolution of the Company after the Distribution Date, including,
without limitation all professional fees and expenses relating to the
preparation of final tax returns and filings to be made with the SEC.

3. All Liabilities for any breach by the Company of this Agreement, the
Reorganization Agreement or any of the other Ancillary Agreements.

4. Any and all liabilities pursuant to In re Kroll-O'Gara Company Shareholders
Litigation, Lead Case No. 99 CIV 11387 9LMM (Consolidated Cases) filed in the
United States District Court, Southern District of New York, including any
amendments, supplements, modifications, re-filings or appeals of the
foregoing Action which arise out of the same subject matter thereof.

5. Any and all liabilities pursuant to In re Kroll-O'Gara Company Shareholders
Litigation, Case No. CV99 11 2178 (Consolidated Cases) filed in the Court of
Common Pleas, Butler County, Ohio, including any amendments, supplements,
modifications, re-filings or appeals of the foregoing Action which arise out
of the same subject matter thereof.

6. Any and all liabilities to make payments to Dissenters as required by law and
any other liabilities and expenses relating to shareholders' rights of
appraisal in connection with the Contemplated Transactions.

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EXHIBIT 22.01(A)

KROLL SUBSIDIARIES

<TABLE>
<C> <S>
1. O'GARA SATELLITE NETWORKS, INC., a Delaware corporation.*
2. O'GARA SATELLITE NETWORKS LIMITED, an Irish company.*
3. O'GARA SATELLITE NETWORKS LIMITED, a U.K. company.
4. NEXT DESTINATION LIMITED, a U.K. corporation.
5. KROLL HOLDINGS, INC., a Delaware corporation.
6. KROLL ASSOCIATES, INC., a Delaware corporation.
7. KROLL ENVIRONMENTAL ENTERPRISES, INC., a Delaware
corporation.
8. KROLL ELECTRONIC RECOVERY, INC., a Delaware corporation.
9. KROLL INFORMATION SERVICES, INC., a Delaware corporation.
10. KROLL INTERNATIONAL, INC., a Delaware corporation.
11. KROLL ASSOCIATES INTERNATIONAL HOLDINGS, INC., a Delaware
corporation.
12. KROLL ASSOCIATES U.K. LIMITED, an English corporation.
13. KROLL ASSOCIATES (S) PTE LTD., a Singapore corporation.
14. KROLL ASSOCIATES BRASIL LTDA., a Brazilian corporation.
15. KROLL ASSOCIATES S.A., a Belgium corporation.
16. KROLL ASSOCIATES DEUTSCHLAND GMBH, a German corporation.
17. KROLL ASSOCIATES (ASIA) LIMITED, a Hong Kong corporation.
18. CORPLEX INC., a New York corporation.
19. L.A.M.B. ACQUISITION, INC., an Ohio corporation.
20. L.A.M.B. ACQUISITION II, INC., an Ohio corporation.
21. KROLL LINDQUIST AVEY CO., a Nova Scotia unlimited liability
company.
22. KROLL BACKGROUND AMERICA CORPORATION (CANADA), a Canadian
corporation.
23. IFR -- EMPLOYEE SCREENING, INC., a Delaware corporation.
24. IFR -- INVESTIGATIVE RESEARCH INC., a Canadian corporation.
25. IFR -- INVESTIGATIVE RESEARCH INC., a Delaware corporation.
26. 964886 ONTARIO INC., an Ontario corporation.
27. VISUAL STRATEGIES INCORPORATED, an Ontario corporation.
28. 448448 B.C. LTD., a British Columbia corporation.
29. TACTRADE PLC., an English corporation.
30. LINDQUIST AVEY MACDONALD BASKERVILLE LTD., an English
corporation.
31. KROLL LINDQUIST AVEY LTD., an English corporation.
32. U.S. HOLDING, INC., a Delaware corporation ("USH").
33. KROLL LINDQUIST AVEY, INC., a Texas corporation.
34. 600 NORTH PEARL INC., a Texas corporation.
35. LAMBCO INTERNATIONAL, INC., a Georgia corporation.
36. AMBB, INC., a Pennsylvania corporation.
37. INPHOTO SURVEILLANCE, INC., an Illinois corporation.
38. KROLL O'GARA S.A., an Argentine company.
</TABLE>

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<TABLE>
<C> <S>
39. HOLDER ASSOCIATES, S.A., an Argentine company.
40. FACT FINDERS (ASIA) LIMITED, an Isle of Man company.
41. FACT FINDERS LIMITED, a Hong Kong company.
42. LABORATORY SPECIALISTS OF AMERICA, INC., an Oklahoma
corporation.
43. KROLL LABORATORY SPECIALISTS, INC., a Louisiana corporation.
44. NATIONAL PSYCHOPHARMACOLOGY LABORATORY, INC., a Tennessee
corporation.
45. KROLL SCHIFF & ASSOCIATES, INC., a Texas corporation.
46. FINANCIAL RESEARCH, INC., a Pennsylvania corporation.
47. KROLL-O'GARA UK LIMITED, an English limited company.
48. KROLL BUCHLER PHILLIPS LTD., an English limited company.
49. IVEX CAPITAL LIMITED, an English limited company.
50. IVEX PARTNERS LIMITED, an English limited company.
51. KROLL BACKGROUND AMERICA, INC., a Tennessee company.
52. BACKGROUND AMERICA OF FLORIDA, INC., a Tennessee company.
53. KROLL-O'GARA CRISIS MANAGEMENT GROUP, INC., a Virginia
company.
54. KROLL ASSOCIATES SA, a Chilean company.
55. KA DE MEXICO, S DR R.L. DE C.V., a Mexican company.
56. KROLL ASSOCIATES SRL, an Italian company.
57. 1186626 ONTARIO INC., an Ontario company.
58. DECISION RESOURCES INC., an Ontario company.
59. KROLL ASSOCIATES (INDIA) PRIVATE LTD., an Indian company.
60. CONCORD SECURITIES SERVICES, INC., a Maryland company.
61 QUALITY FACTS, INC., an Alabama company.
62. KROLL STEVENS CORP., a Delaware corporation.
63. KROLL BACKGROUND UK LTD., an English company.
64. KROLL ASSOCIATES PTY LTD., a South African corporation.
65. KROLL ASSOCIATES FRANCE, S.A.R.L., a French company.
66. BUCHLER PHILLIPS FINANCIAL CONSULTING LIMITED, an English
limited liability company.
67. BUCHLER PHILLIPS CONSULTING LIMITED, an English corporation.
68. OGM COMMUNICATIONS LIMITED, an Irish corporation.*
</TABLE>

---------------
* These companies are to be liquidated.

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EXHIBIT 22.01(B)

O'GARA SUBSIDIARIES

1. O'GARA-HESS & EISENHARDT ARMORING COMPANY, a Delaware corporation.

2. O'GARA-HESS & EISENHARDT ARMORING COMPANY LIMITED, an Irish corporation.

3. O'GARA-HESS & EISENHARDT, S.R.L., an Italian corporation.

4. THE KROLL-O'GARA COMPANY DE MEXICO, SA DE CV, a Mexican corporation.

5. O'GARA-HESS & EISENHARDT DO BRASIL LTDA, a Brazilian corporation.

6. O'GARA SECURITY INTERNATIONAL, INC., a Delaware corporation.

7. O'GARA LAURA AUTOMOTIVE GROUP, a Russian joint stock company.

8. O'GARA FRANCE S.A., a French corporation.

9. LABBE SA, a French corporation.

10. HELLIO POIDS LOURDS -- CARROSSERIE, TOLERIE, PEINTURE SA, a French
corporation.

11. SARL NORMANDIE CARROSSERIE, a French corporation.

12. SOCIETE DE BLINDAGE AND DE SECIRITE, a French corporation.

13. ESSONNE CARROSSERIE VI S.A.R.L., a French corporation.

14. O'GARA SECURITY ASSOCIATES, INC., an Ohio corporation.

15. INTERNATIONAL TRAINING, INCORPORATED, a Virginia corporation.

16. THE O'GARA COMPANY FSC, INC., a Barbados corporation.

17. O'GARA PHILIPPINES, INC., a Philippine corporation.

18. ITI LIMITED PARTNERSHIP, a Texas limited partnership.

19. O'GARA SECURITY SYSTEMS, a Russian company.

20. O'GARA-HESS & EISENHARDT CIS, a Russian joint stock company.

21. O'GARA HESS & EISENHARDT ARMORING COMPANY (ENGLAND) LIMITED, a British
corporation.

22. O'GARA HESS & EISENHARDT DE COLUMBIA S.A., a Colombian company.

23. THE KROLL-O'GARA COMPANY, a Philippine corporation.

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APPENDIX B

[LETTERHEAD TO COME]

September 8, 2000

Special Committee of the Board of Directors
The Kroll-O'Gara Company
900 Third Avenue
New York, NY 10022

Gentlemen:

We understand that The Kroll-O'Gara Company, an Ohio Corporation
("Kroll-O'Gara"); Kroll Risk Consulting Services, Inc., a Delaware Corporation
("KRCS"); The O'Gara Company, an Ohio Corporation ("TOC"); Jules B. Kroll and
certain other members of senior management of KRCS (collectively, the "KRCS
Exchanging Shareholders"); and Thomas M. O'Gara, Wilfred T. O'Gara, Abram Gordon
and Nicholas Carpinello (collectively, the "O'Gara Exchanging Shareholders")
have entered into an Agreement and Plan of Reorganization and Dissolution dated
as of September 8, 2000 (the "Reorganization Agreement"). The shareholders of
Kroll-O'Gara other than the KRCS Exchanging Shareholders and the O'Gara
Exchanging Shareholders are referred to in this opinion as the "Unaffiliated
Shareholders". All capitalized terms used in this letter, unless otherwise
defined herein, shall have the same meaning as set forth in the Reorganization
Agreement.

As more fully described in the Reorganization Agreement, a reorganization
of Kroll-O'Gara involving a multi-step spin-off and dissolution (the
"Reorganization") will occur as follows: (i) prior to the Exchange Date,
Kroll-O'Gara will contribute to KRCS all of the outstanding stock it holds in
the Kroll Subsidiaries and shall transfer, assign and deliver to KRCS all of its
title, right and interest in and to the KRCS Assets. In exchange therefor, KRCS
shall issue to Kroll-O'Gara 8,499,990 shares of KRCS Common Stock, after which
Kroll-O'Gara will own all the issued and outstanding shares of KRCS Common
Stock, and KRCS shall assume the KRCS Liabilities and pay its allocable portion
of indebtedness as set forth in Section 1.04 of the Reorganization Agreement
(the "Kroll Reorganization"); (ii) prior to the Exchange Date, Kroll-O'Gara will
contribute to TOC all of the outstanding stock it holds in the O'Gara
Subsidiaries and shall transfer, assign and deliver to TOC all of its title,
right and interest in and to the TOC Assets. In exchange therefore, TOC shall
issue to Kroll-O'Gara 5,999,900 shares of TOC Common Stock, after which
Kroll-O'Gara will own all the issued and outstanding shares of TOC Common Stock,
and TOC shall assume the TOC Liabilities and pay its allocable portion of
indebtedness as set forth in Section 1.04 of the Reorganization Agreement (the
"O'Gara Reorganization"); (iii) on the Exchange Date, the KRCS Exchanging
Shareholders will transfer to Kroll-O'Gara 3,833,040 shares of Kroll-O'Gara
Common Stock owned by such shareholders in exchange for shares of KRCS Common
Stock equal to the product of (a) a fraction, the numerator of which is equal to
the sum

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of the number of shares of Kroll-O'Gara Common Stock owned by the KRCS
Exchanging Shareholders and the O'Gara Exchanging Shareholders as shown on
Exhibits 2.01 and 2.02 of the Reorganization Agreement and the denominator of
which is equal to the number of shares of Kroll-O'Gara Common Stock issued and
outstanding on the Exchange Date times (b) 8,500,000 (the number of shares of
KRCS Common Stock held by the Company as of the Exchange Date); (iv) on the
Exchange Date, the O'Gara Exchanging Shareholders will transfer to Kroll-O'Gara
2,718,228 shares of Kroll-O'Gara Common Stock owned by such shareholders in
exchange for shares of TOC Common Stock equal to the product of (a) a fraction,
the numerator of which is equal to the sum of the number of shares of
Kroll-O'Gara Common Stock owned by the KRCS Exchanging Shareholders and the
O'Gara Exchanging Shareholders as shown on Exhibits 2.01 and 2.02 of the
Reorganization Agreement and the denominator of which is equal to the number of
shares of Kroll-O'Gara Common Stock issued and outstanding on the Exchange Date
times (b) 6,000,000 (the number of shares of TOC Common Stock held by
Kroll-O'Gara as of the Exchange Date); (v) each Unaffiliated Shareholder on the
Distribution Date will be entitled to receive a number of shares of KRCS Common
Stock equal to the product of (a) the number of shares of KRCS Common Stock held
by Kroll-O'Gara on the Record Date times (b) a fraction, the numerator of which
is the number of shares of Kroll-O'Gara Common Stock owned by such Unaffiliated
Shareholder on the Record Date and the denominator of which is the number of
shares of Kroll-O'Gara Common Stock issued and outstanding at the Record Date
(the "KRCS Distribution"); (vi) each Unaffiliated Shareholder on the
Distribution Date will also be entitled to receive a number of shares of TOC
Common Stock equal to the product of (a) the number of shares of TOC Common
Stock held by Kroll-O'Gara on the Record Date times (b) a fraction, the
numerator of which is the number of shares of Kroll-O'Gara Common Stock owned by
such Unaffiliated Shareholder on the Record Date and the denominator of which is
the number of shares of Kroll-O'Gara Common Stock issued and outstanding at the
Record Date (the "TOC Distribution") (Such KRCS Distribution and TOC
Distribution being collectively referred to herein as the "Distribution"); and
(vii) as soon as practicable following the Distribution, Kroll-O'Gara shall
complete all actions that may be necessary, appropriate or desirable to dissolve
and terminate the corporate existence of Kroll-O'Gara. Section 1.06 of the
Reorganization Agreement provides for the termination of all Kroll-O'Gara stock
options by the close of business on the Exchange Date and the liquidation, as
more fully described in the Reorganization Agreement, of all warrants that, do
not, pursuant to their terms, terminate or become exercisable for shares of KRCS
Common Stock and TOC Common Stock, such that the number of issued and
outstanding shares of Kroll-O'Gara Common Stock immediately after the Exchange
will be equal to the number of issued and outstanding shares of Kroll-O'Gara
Common Stock immediately prior to the Distribution. Immediately after the
Distribution, the Unaffiliated Shareholders will own the same percentage of the
issued and outstanding shares of each of KRCS Common Stock and TOC Common Stock
as such Unaffiliated Shareholders own of the issued and outstanding shares of
Kroll-O'Gara Common Stock immediately prior to the Exchange (which will include
the effect of any shares to be issued through the exercise of any Kroll-O'Gara
stock options and warrants prior to the termination or liquidation of such
equity incentive plans as outlined in Section 1.06 of the Reorganization
Agreement).

You have asked us to render our opinion as to whether the Distribution to
be received is fair, from a financial point of view, to the Unaffiliated
Shareholders.

In the course of performing our review and analyses for rendering this
opinion, we have:

- reviewed the Reorganization Agreement, and attachments thereto;

- reviewed Kroll-O'Gara's Annual Report to Shareholders and Annual Report
on Form 10-K for the years ended December 31, 1997 through 1999, its
Quarterly Reports on Form 10-Q for the

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periods ended June 30, 1999 and 2000 and its Reports on Form 8-K for the
three years as of the date hereof;

- reviewed certain operating and financial information, including
projections for the four years ended December 31, 2003, provided to us by
management relating to Kroll-O'Gara's, KRCS's and TOC's businesses and
prospects;

- met with certain members of Kroll-O'Gara's senior management to discuss
Kroll-O'Gara's, KRCS's and TOC's businesses, operations, historical and
projected financial results and future prospects;

- reviewed the historical prices, trading multiples and trading volume of
the common shares of Kroll-O'Gara;

- performed discounted cash flow analyses based on the projections for the
KRCS Business, excluding the Voice & Data Business, and the TOC Business
furnished to us;

- reviewed the projected pro forma financial results, financial condition
and capitalization of KRCS and TOC giving effect to the Reorganization;
and

- conducted such other studies, analyses, inquiries and investigations as
we deemed appropriate.

We have relied upon, without independent verification, the accuracy and
completeness of the financial and other information, including without
limitation the projections, provided to us by Kroll-O'Gara, and we have further
relied upon the assurances of the senior management of Kroll-O'Gara that they
are unaware of any facts that would make the information and projections
provided to us incomplete or misleading. With respect to Kroll-O'Gara's, KRCS's
and TOC's projected financial results, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the senior management of Kroll-O'Gara as to the expected future
performance of Kroll-O'Gara, KRCS and TOC.

In arriving at our opinion, we have not performed or obtained any
independent appraisal of the assets or liabilities, contingent or otherwise, of
Kroll-O'Gara, KRCS or TOC nor have we been furnished with any such appraisals.
We have assumed that the Reorganization will qualify as a tax-free
reorganization pursuant to the Internal Revenue Code. We have assumed that the
Reorganization will be consummated in accordance with the terms of the
Reorganization Agreement without any restrictions, conditions, amendments or
modifications that collectively would have a material adverse effect on TOC or
KRCS.

We do not express any opinion as to the price or range of prices at which
the shares of Kroll-O'Gara Common Stock may trade subsequent to the announcement
of the Reorganization or as to the price or range of prices at which the shares
of KRCS Common Stock and TOC Common Stock may trade subsequent to the
consummation of the Reorganization or whether the aggregate trading value of
KRCS Common Stock and TOC Common Stock would be equal to or exceed the aggregate
trading value for Kroll-O'Gara Common Stock.

We have acted as a financial advisor to the Special Committee of the Board
of Directors of Kroll-O'Gara in connection with the Reorganization and will
receive a customary fee for such services, a substantial portion of which is
contingent on successful consummation of the Reorganization. Bear Stearns has
been previously engaged by Kroll-O'Gara to provide certain investment banking
and

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financial advisory services for which we received customary fees. In the
ordinary course of business, Bear Stearns may actively trade the equity and debt
securities of Kroll-O'Gara for our own account and for the account of our
customers and, accordingly, may at any time hold a long or short position in
such securities.

It is understood that this letter is intended for the use of the Special
Committee of the Board of Directors of Kroll-O'Gara in their consideration of
the Reorganization and does not constitute a recommendation to the Special
Committee, the Board of Directors or any holders of Kroll-O'Gara Common Stock as
to how to vote in connection with the Reorganization. This opinion does not
address Kroll-O'Gara's underlying business decision to pursue the
Reorganization, the relative merits of the Reorganization as compared to any
alternative business strategies that might exist for Kroll-O'Gara or the effects
of any other transaction in which Kroll-O'Gara might engage. This letter is not
to be used for any other purpose, or to be reproduced, disseminated, quoted from
or referred to at any time, in whole or in part, without our prior written
consent; provided, however, that this letter may be included in its entirety in
any proxy statement to be distributed to the holders of Kroll-O'Gara Common
Stock in connection with the Reorganization. Our opinion is subject to the
assumptions and conditions contained herein and is necessarily based on
economic, market and other conditions, and the information made available to us,
as of the date hereof.

Based on and subject to the foregoing, it is our opinion that, as of the
date hereof, the Distribution to be received is fair, from a financial point of
view, to the Unaffiliated Shareholders.

Very truly yours,

BEAR, STEARNS & CO. INC.

By:
------------------------------------
Senior Managing Director

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APPENDIX C

[TO BE FILED BY AMENDMENT]

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APPENDIX D

SECTION 1701.85 DISSENTING SHAREHOLDER'S DEMAND FOR FAIR CASH VALUE OF SHARES.

(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.

(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.

(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 [1701.80.1] of the Revised Code shall be a
record holder of the shares of the corporation as to which he seeks relief as of
the date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 [1701.80.1] of the Revised Code, the dissenting
shareholder shall deliver to the corporation a written demand for payment with
the same information as that provided for in division (A)(2) of this section.

(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.

(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the shares
as to which he seeks relief, the dissenting shareholder, within fifteen days
from the date of the sending of such request, shall deliver to the corporation
the certificates requested so that the corporation may forthwith endorse on them
a legend to the effect that demand for the fair cash value of such shares has
been made. The corporation promptly shall return such endorsed certificates to
the dissenting shareholder. A dissenting shareholder's failure to deliver such
certificates terminates his rights as a dissenting shareholder, at the option of
the corporation, exercised by written notice sent to the dissenting shareholder
within twenty days after the lapse of the fifteen-day period, unless a court for
good cause shown otherwise directs. If shares represented by a certificate on
which such a legend has been endorsed are transferred, each new certificate
issued for them shall bear a similar legend, together with the name of the
original dissenting holder of such shares. Upon receiving a demand for payment
from a dissenting shareholder who is the record holder of uncertificated
securities, the corporation shall make an appropriate notation of the demand for
payment in its shareholder records. If uncertificated shares for which payment
has been demanded are to be transferred, any new certificate issued for the
shares shall bear the legend required for certificated securities as provided in
this paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
A request under this paragraph by the corporation is not an admission by the
corporation that the shareholder is entitled to relief under this section.

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(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within that three-month period, may join as plaintiffs or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such a complaint is required. Upon the filing of
such a complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to the
respondent or defendant in the manner in which summons is required to be served
or substituted service is required to be made in other cases. On the day fixed
for the hearing on the complaint or any adjournment of it, the court shall
determine from the complaint and from such evidence as is submitted by either
party whether the dissenting shareholder is entitled to be paid the fair cash
value of any shares and, if so, the number and class of such shares. If the
court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505. of the
Revised Code. If, during the pendency of any proceeding instituted under this
section, a suit or proceeding is or has been instituted to enjoin or otherwise
to prevent the carrying out of the action as to which the shareholder has
dissented, the proceeding instituted under this section shall be stayed until
the final determination of the other suit or proceeding. Unless any provision in
division (D) of this section is applicable, the fair cash value of the shares
that is agreed upon by the parties or fixed under this section shall be paid
within thirty days after the date of final determination of such value under
this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a holder
of uncertificated securities entitled to such payment. In the case of holders of
shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.

(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to the day on which the vote by the shareholders was taken and, in
the case of a merger pursuant to section 1701.80 or 1701.801 [1701.80.1] of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the particular

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shareholder. In computing such fair cash value, any appreciation or depreciation
in market value resulting from the proposal submitted to the directors or to the
shareholders shall be excluded.

(D)(1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay the
fair cash value of them terminates if any of the following applies:

(a) The dissenting shareholder has not complied with this section,
unless the corporation by its directors waives such failure;

(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind
their adoption of the action involved;

(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder
nor the corporation has filed or joined in a complaint under division (B)
of this section within the period provided in that division.

(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.

(E) From the time of the dissenting shareholder's giving of the demand
until either the termination of the rights and obligations arising from it or
the purchase of the shares by the corporation, all other rights accruing from
such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.

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THE KROLL-O'GARA COMPANY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

PROXY FOR SPECIAL MEETING

The undersigned hereby appoints Jules B. Kroll and Wilfred T. O'Gara, and
each of them, attorneys with the powers which the undersigned would possess if
personally present, including the power of substitution, to vote all shares of
the undersigned at the Special Meeting of Shareholders of The Kroll-O'Gara
Company to be held at , , ,
on , 2000, at , and at
any adjournments thereof:

1. [ ] FOR [ ] AGAINST [ ] ABSTAIN

on the proposal to approve the Agreement and Plan of Reorganization and
Dissolution of The Kroll-O'Gara Company.

2. [ ] FOR [ ] AGAINST [ ] ABSTAIN

on the proposal to authorize the acquisition of approximately 26% of the O'Gara
Company Common Stock by Thomas M. O'Gara.

3. Upon such other business as may properly come before the meeting.

The proxy will be voted on the above as specified. IF NO SPECIFICATION IS
MADE, THE PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2.

(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)

As to any other matter, said attorneys shall vote in accordance with the
recommendation of the Board of Directors.

PLEASE MARK: I do [ ] do not [ ] plan to attend the meeting.

Dated
----------------------------------------
, 2000

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

----------------------------------------
(Signature of Shareholder)

IMPORTANT: Please date and sign exactly
as name appears hereon. If shares are
held jointly, each shareholder named
should sign. Executors, administrators,
trustees, etc. should so indicate when
signing. If the signer is a corporation,
please sign full corporate name by duly
authorized officer.