CINCINNATI, 26 May 2005. The O'Gara Group, Inc. announced today that it has acquired Diffraction Ltd. of Waitsfield, Vt. for an undisclosed purchase price involving cash and stock.

Diffraction Ltd. designs, develops and manufactures proprietary electro-optics and nanotechnology based products and provides technology development services. Its operations will remain in Waitsfield, Vt.

Diffraction's microfabrication, holography, laser lithography, and diffractive optics technologies were not included in the sale and were spun off into a separate entity.

Diffraction becomes the second subsidiary of The O'Gara Group, following the 2003 purchase of Sensor Technology Systems, Inc, a producer of sophisticated military night vision equipment. The Diffraction acquisition will complement STS and provide access to new technologies as it continues to develop next generation electro-optic equipment. STS will in turn provide Diffraction with additional manufacturing capability for electro-optic products.

"Diffraction's technology and expertise further strengthens The O'Gara Group's position as a leading provider of innovative, next generation electro-optic equipment, such as our advanced night vision goggles," said CEO Bill T. O'Gara. "We will continue to fuel growth organically and through additional acquisitions as we seek to become a premier provider of services and products for homeland defense, counter-terrorism and low intensity conflict."

Bill Parker, the co-founder and former co-owner of Diffraction, will continue as CEO of the subsidiary and will become chief technology officer of The O'Gara Group.

"Diffraction LTD has developed a significant electro-optics capability over the last fifteen years and we look forward to many new opportunities to apply this knowledge toward issues of homeland security," said Parker. "The Diffraction team is primed to make a significant contribution to The O'Gara Group. Additionally, we are delighted to work toward a common goal with Tom and Bill O'Gara, industry veterans with the deep experience and vision needed to build a global company."

As part of the transaction, The Walnut Group provided a second round of equity financing to The O'Gara Group. Key Bank also provided debt financing for the transaction.

The O'Gara Group was established to build a global products and services company focused on solutions for homeland security, counter-terrorism and low intensity conflict. Located in Cincinnati, Ohio, and founded by Thomas O'Gara, the former chairman of the board of O'Gara-Hess & Eisenhardt Armoring Co. (OHEAC) and vice chairman of The Kroll-O'Gara Co., Wilfred (Bill) O'Gara, the former CEO of OHEAC and co-CEO of The Kroll-O'Gara Co., and Michael (Chip) Lennon, the former president of OHEAC and president of the Security and Products Group of The Kroll-O'Gara Co.

Together the founders have more than 50 years of experience in management and acquisition of defense and security businesses on a world-wide basis. In 2003 the company purchased Sensor Technology Systems, Inc, a producer of sophisticated military night vision equipment. In 2004 The O'Gara Group formed a strategic partnership with The Walnut Group, a diversified investment firm also based in Cincinnati.

For more information, see www.diffractionltd.com.