THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

(DHB)

4/18/2005 Proxy Information

We lease a 67,000 square foot office and manufacturing facility located at 4031 N.E. 12th Terrace, Oakland Park, Florida, for our Point Blank subsidiary and our Sports Group. Until July 2004, we leased this facility from V.A.E. Enterprises LLC, a limited liability company controlled by Mrs. Terry Brooks, the wife of David H. Brooks, and beneficially owned by Mr. and Mrs. Brooks's minor children. Our management performed a comparison of market rental rates for comparable properties at the time we entered into this lease and determined that the terms of the lease were at the then-current market rental rate that could then have been obtained from an unrelated third party. In July 2004, the building was sold to an unrelated third party, Cabot Industries Value Fund LP., from whom we now lease the facility under the same terms as the previous lease. Total rent expense under this lease payable to the related party was $369,000 in 2004 and the lease expires on December 31, 2010.

Mrs. Terry Brooks, the wife of David H. Brooks, owns a company called Tactical Armor Products, Inc., or TAP. We purchase certain components of the ballistic-resistant apparel that we manufacture and sell from TAP. The majority of our purchases from TAP are hard armor overweight Small Arms Protective Inserts, or SAPIs, which can be inserted into our Interceptor and other Outer Tactical Vests. TAP is also an approved subcontractor on certain of our government contracts to perform sewing, but the cost of sewing was not a material portion of our purchases from TAP during 2004. Our purchases from TAP during 2004 totaled approximately $17.6 million. To facilitate the delivery and integration of the products that we purchase from TAP, we permit TAP to manufacture certain products in a portion of our manufacturing facility in Jacksboro, Tennessee, for which TAP paid us occupancy charges of approximately $39,600 in 2004. The rent paid by TAP is an estimated allocable portion of our total rent for the facility.

During 2004, we sold certain raw materials, consisting of ceramic cores for the overweight SAPIs, to TAP at cost. Our sales to TAP during 2004 totaled approximately $6.6 million.

In 1997, the Compensation Committee adopted a resolution, the 1997 Resolution, granting to Mr. Brooks the right to reimbursement for business and personal expenses in an aggregate annual amount not to exceed 10% of our annual net income. Under his employment agreement, we agreed to reimburse Mr. Brooks for all expenses associated with a Florida residence and office owned by an affiliate of Mr. Brooks and expenses incurred in conducting business from his New York residence. In 2002, the Board of Directors adopted a resolution authorizing us to pay for all business trips related to the business use of an airplane owned by an affiliate of Mr. Brooks at a total cost not to exceed the cost of comparable charter services. In 2004, the Compensation Committee formally repealed the 1997 Resolution, and the Audit Committee adopted a resolution, the 2004 Resolution, which specifically approved payment or reimbursement for the fair rental value of the Florida residence and office, the corporate use of the New York residence, in a net amount equal to the fair rental value of the allocable portion of the New York residence used to conduct DHB business, and the business use of the plane belonging to Mr. Brooks's affiliate, at rates equivalent to comparable charter flights.

In 2003, we did not reimburse Mr. Brooks for certain expenses relating to the Florida residence and office, the corporate use of the New York residence and the business use of the plane belonging to Mr. Brooks's affiliate in the aggregate amount of approximately $721,000. Also in the year 2003, a total of approximately $322,000 of personal expenses was charged by Mr. Brooks to DHB credit cards. The net of these two amounts is approximately $399,000. During 2004, Mr. Brooks and his affiliates waived all rights to reimbursement in respect of such amount.

Pursuant to the 2004 Resolution, we paid an affiliate of Mr. Brooks charter fees for the use of a plane to fly our executive officers and Board of Directors on business trips during 2004. We paid direct expenses associated with the 2004 plane use to third party vendors that are not affiliated with Mr. Brooks of approximately $696,000 for pilot pay, fuel and maintenance and reimbursed Mr. Brooks's affiliate approximately $161,000 to bring the total cost of the plane trips to the comparable charter rate as determined by the Compensation Committee. During 2004, the Compensation Committee approved the fair rental value payment of $25,000 per month for the cost of renting Mr. Brooks's Florida residence to formalize the provision in his employment contract which calls for the reimbursement of his Florida living expenses. We paid direct expenses to unrelated third parties of approximately $171,000 during 2004 and reimbursed Mr. Brooks's affiliate which owns the Florida residence, approximately $129,000 for 2004.