ADVANCED TECHNICAL PRODUCTS INC, DEF 14A, 1999-10-01

ADVANCED TECHNICAL PRODUCTS INC
DEF 14A, 1999-10-01
METAL FORGINGS & STAMPINGS

Previous: BROOKE GROUP LTD, 8-K, 1999-10-01

Next: MARK IV INDUSTRIES INC, 10-Q, 1999-10-01

<PAGE>

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant To Section 14(A) Of The Securities Exchange Act Of 1934

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.

ADVANCED TECHNICAL PRODUCTS, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: Common
Stock, par value $0.01 per share, of Advanced Technical Products, Inc. (the
"ATP Common Stock").

(2) Aggregate number of securities to which transaction applies: 5,608,541
shares of ATP Common Stock (includes 322,335 shares underlying options to
purchase shares of ATP Common Stock).

(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): $14.50 per share in cash-out
merger plus the difference between $14.50 and the exercise price of each
share underlying an option to purchase shares of ATP Common Stock.

(4) Proposed maximum aggregate value of transaction: $79,745,164.50

(5) Total fee paid: N/A

[x] Fee paid previously with preliminary materials: The total fee of
$15,949.03 computed pursuant to Exchange Act Rules 14a-6(i)(4) and 0-11 was
previously paid in connection with the filing of preliminary proxy materials on
September 3, 1999,

[ ] 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: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC.
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076

October 1, 1999

Dear Stockholders:

You are cordially invited to attend the 1999 Annual Meeting of Stockholders
(the "Annual Meeting") of Advanced Technical Products, Inc., a Delaware
corporation ("ATP"), to be held on October 21, 1999, at 2:00 p.m., local time,
at the Radisson Hotel, 10740 Westside Parkway, Alpharetta, Georgia 30004.

At the Annual Meeting, you will be asked to consider and vote upon the
following:

(1) an Agreement and Plan of Merger dated as of September 3, 1999 (the
"Merger Agreement"), pursuant to which ATP Acquisition Corp., a newly
formed Delaware corporation, will be merged with and into ATP (the
"Merger"), with ATP as the surviving corporation (the "Surviving
Corporation"). If the Merger Agreement is approved, and the Merger is
subsequently consummated, each outstanding share of Common Stock of ATP
(the "ATP Common Stock") held by the public stockholders of ATP will be
converted automatically into the right to receive $14.50 in cash, without
interest. ATP Acquisition Corp. was organized by ATP Holding Corp., a
Delaware corporation, for the purpose of acquiring all of the shares of ATP
Common Stock held by the public stockholders of ATP. As a result of the
Merger, ATP will become a privately held company owned by ATP Holding Corp.
(sometimes, the foregoing is hereinafter collectively referred to as "Proxy
Proposal 1");

(2) the ratification of the 1998 ATP Employee Stock Purchase Plan ("Proxy
Proposal 2");

(3) the election of two Class II directors, each to hold office until
ATP's Annual Meeting of Stockholders in 2002 or until his respective
successor is elected and qualified ("Proxy Proposal 3");

(4) the ratification of the appointment by the Board of Directors of ATP
(the "ATP Board") of KPMG LLP as the independent accountants to audit ATP's
financial statements for the year ending December 31, 1999 ("Proxy Proposal
4"); and

(5) the transaction of such other business as may properly come before
the Annual Meeting or any adjournment thereof.

The disinterested members of ATP Board have unanimously approved the Merger
Agreement (with one disinterested director not present or voting). In
connection with its evaluation of the Merger, the ATP Board engaged Allen &
Company Incorporated ("Allen") to act as its financial advisor and to advise
the ATP Board. Allen has rendered its opinion dated as of September 2, 1999 to
the effect that, as of the date thereof and based upon and subject to the
assumptions, limitations and qualifications set forth in such opinion, the
cash merger consideration of $14.50 per share was fair from a financial point
of view to the public stockholders of ATP. The written opinion of Allen is
attached as Appendix B to the enclosed Proxy Statement and should be read
carefully and in its entirety by stockholders.

ATP'S BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND DETERMINED
THAT THE TERMS OF THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF ATP. ATP'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT. ATP'S BOARD OF DIRECTORS ALSO
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROXY PROPOSAL 2, PROXY PROPOSAL 3
AND PROXY PROPOSAL 4.

1
<PAGE>

Proxy Proposal 3 requires a plurality of the votes of the shares of ATP Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote, and approval of Proxy Proposal 2 and Proxy Proposal 4
requires a majority of the votes of the shares of ATP Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote.

The accompanying Proxy Statement provides you with a summary of the four
Proxy Proposals and additional information about the parties involved and
their interests. If the Merger Agreement is approved by the requisite holders
of ATP Common Stock, the closing of the Merger will occur as soon after the
Annual Meeting as all of the other conditions to closing the Merger are
satisfied.

For your information, a copy of ATP's 1998 Annual Report to Stockholders,
which includes a copy of ATP's annual report on Form 10-K for the year ended
December 31, 1998, a copy of ATP's annual report on Form 10-K/A for the year
ended December 31, 1998 and a copy of ATP's quarterly report on Form 10-Q for
the quarter ended July 2, 1999 accompanies this Proxy Statement.

PLEASE GIVE ALL THIS INFORMATION YOUR CAREFUL ATTENTION. WHETHER OR NOT YOU
PLAN TO ATTEND, IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL
MEETING. A FAILURE TO VOTE WILL COUNT AS A VOTE AGAINST THE MERGER AGREEMENT.
ACCORDINGLY, YOU ARE REQUESTED TO PROMPTLY COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU
PLAN TO ATTEND. THIS WILL NOT PREVENT YOU FROM VOTING YOUR SHARES IN PERSON IF
YOU SUBSEQUENTLY CHOOSE TO ATTEND.

Sincerely,

/s/ James S. Carter
_____________________
James S. Carter
Chairman of the
Board

2
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC.
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 21, 1999

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

Notice is hereby given that a Annual Meeting of Stockholders (the "Annual
Meeting") of Advanced Technical Products, Inc., a Delaware corporation
("ATP"), will be held on October 21, 1999 at 2:00 p.m., local time, at the
Radisson Hotel, 10740 Westside Parkway, Alpharetta, Georgia 30004, to consider
and vote upon the following:

(2) the ratification of the 1998 ATP Employee Stock Purchase Plan ("Proxy
Proposal 2");

(3) the election of two Class II directors, each to hold office until
ATP's Annual Meeting of Stockholders in 2002 or until his respective
successor is elected and qualified ("Proxy Proposal 3");

(5) the transaction of such other business as may properly come before
the Annual Meeting or any adjournment thereof.

The ATP Board has fixed the close of business on September 29, 1999 as the
record date for determining the stockholders having the right to receive
notice of, and to vote at, the Annual Meeting or any adjournment or
postponement thereof. A form of proxy and a Proxy Statement containing more
detailed information with respect to the matters to be considered at the
Annual Meeting accompany and form a part of this notice.

Approval of the Merger Agreement at the Annual Meeting requires the
affirmative vote of holders of a majority of the outstanding shares of ATP
Common Stock entitled to vote at the Annual Meeting. Approval of Proxy
Proposal 3 requires a plurality of the votes of the shares of ATP Common Stock
present in person or represented by proxy at the Annual Meeting and entitled
to vote, and approval of Proxy Proposal 2 and Proxy Proposal 4 requires a
majority of the votes of the shares of ATP Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote.

THE ATP BOARD HAS APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT YOU VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT. THE ATP BOARD ALSO RECOMMENDS THAT YOU
VOTE "FOR" PROXY PROPOSAL 2, PROXY PROPOSAL 3 AND PROXY PROPOSAL 4.

1
<PAGE>

If the Merger is consummated, holders of ATP Common Stock who properly
demand appraisal prior to the stockholder vote on the Merger Agreement, do not
vote in favor of approval and adoption of the Merger Agreement and otherwise
comply with the requirements of Section 262 of the Delaware General
Corporation Law ("DGCL") will be entitled to statutory appraisal rights. See
"Appraisal Rights" in the accompanying Proxy Statement for a statement of the
rights of dissenting stockholders and a description of the procedures required
to be followed.

By order of the ATP Board,

/s/ James P. Hobt
_____________________
James P. Hobt,
Secretary

Atlanta, Georgia
October 1, 1999

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. PLEASE DO
NOT SEND IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.

THE MERGER HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF THE MERGER NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

2
<PAGE>

PROXY STATEMENT OF
ADVANCED TECHNICAL PRODUCTS, INC.
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076

INTRODUCTION

This Proxy Statement is being furnished to the stockholders of Advanced
Technical Products, Inc., a Delaware corporation ("ATP" or the "Company"), in
connection with the solicitation by its Board of Directors (the "ATP Board")
of proxies to be used at an Annual Meeting of Stockholders (as it may be
adjourned or postponed from time to time, the "Annual Meeting") to be held on
October 21, 1999 at 2:00 p.m., local time, at the Radisson Hotel, 10740
Westside Parkway, Alpharetta, Georgia 30004. The purpose of the Annual Meeting
is for the ATP stockholders to consider and vote upon (i) a proposal to
approve an Agreement and Plan of Merger dated as of September 3, 1999 (the
"Merger Agreement") pursuant to which ATP Acquisition Corp. ("ATP
Acquisition"), a corporation newly formed by ATP Holding Corp. ("ATP
Holding"), will be merged (the "Merger") with and into ATP with ATP continuing
as the surviving corporation (the "Surviving Corporation") (sometimes
hereinafter referred to as "Proxy Proposal 1"); (ii) a proposal to ratify the
1998 ATP Employee Stock Purchase Plan (the "Purchase Plan") (sometimes
hereinafter referred to as "Proxy Proposal 2"); (iii) the election of two
Class II directors of ATP, each to hold office until ATP's Annual Meeting of
Stockholders in 2002 or until his respective successor is elected and
qualified (sometimes hereinafter referred to as "Proxy Proposal 3"); and (iv)
the ratification of the appointment by the Board of Directors of ATP (the "ATP
Board") of KPMG LLP as the independent accountants to audit ATP's financial
statements for the year ending December 31, 1999 (sometimes hereinafter
referred to as "Proxy Proposal 4"), each as described in this Proxy Statement.
This Proxy Statement is first being mailed to ATP stockholders on or about
October 1, 1999.

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:WHAT WILL HAPPEN IN THE MERGER?

A: Upon consummation of the Merger, ATP Acquisition will be merged with and
into ATP and the holders (the "Public Stockholders") of common stock, par
value $0.01 per share, of ATP (the "ATP Common Stock"), other than those
stockholders who exercise and perfect their appraisal rights, will receive
a cash payment of $14.50, without interest, for each of their outstanding
shares of ATP Common Stock. Under the Merger Agreement, the holders of each
share of ATP Acquisition Common Stock will receive one share of Common
Stock of the Surviving Corporation (the "Surviving Corporation
Securities"). Accordingly, as a result of the Merger, the Public
Stockholders will receive cash for their shares of ATP Common Stock, while
ATP Holding, the sole holder of ATP Acquisition Common Stock, will receive
the entire continuing equity interest in the Surviving Corporation.

Q:WHO WILL OWN ATP AFTER THE MERGER?

A: After the Merger, ATP will be a privately held company owned by ATP Holding
Corp. and certain of its investors and its affiliates (sometimes
collectively referred to herein as "ATP Holding"), which will own 100% of
outstanding shares of the Surviving Corporation Securities subject to
certain assumptions which are described in the Proxy Statement.

Q:WHY IS ATP BEING ACQUIRED?

A: ATP is being acquired by ATP Holding because the ATP Board believes that
the Merger is a more desirable alternative than continuing to operate ATP
as a public company. To review the background and reasons for the Merger in
greater detail, see pages 9 through 18.

i
<PAGE>

Q:WHAT WILL I RECEIVE IN THE MERGER?

A: As a Public Stockholder, you will receive $14.50 in cash, without interest,
for each share of ATP Common Stock that you own. This is the "Cash Merger
Consideration." For example: If you own 100 shares of ATP Common Stock,
upon completion of the Merger you will receive $1,450 in cash.

Q: IF THE MERGER IS CONSUMMATED, WHEN CAN I EXPECT TO RECEIVE THE CASH MERGER
CONSIDERATION FOR MY SHARES?

A: Promptly after the Merger is consummated, ATP will send you detailed
instructions regarding the surrender of your ATP Common Stock certificates.
You should not send your ATP Common Stock certificates to ATP or anyone
else until you receive these instructions. ATP will send payment of the
Cash Merger Consideration to you as promptly as practicable following its
receipt of your stock certificates and other required documents.

Q:WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A: We expect the Merger to be consummated during the fourth quarter of 1999.

Q:WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?

A: The receipt of the Cash Merger Consideration by you will be a taxable
transaction for federal income tax purposes. To review the tax consequences
to you in greater detail, see pages 32 through 33. Your tax consequences
will depend on your personal situation. You should consult your tax
advisors for a full understanding of the tax consequences of the Merger to
you.

Q:WHAT AM I BEING ASKED TO VOTE UPON?

A: You are being asked to approve the Merger Agreement, which provides, among
other things, for the acquisition of ATP by ATP Holding. After the Merger,
ATP will be a privately held company, and you will no longer own an equity
interest in ATP. The ATP Board has approved the Merger Agreement and the
transactions contemplated thereby (the "Transactions"). You are also being
asked to ratify the Purchase Plan, elect two Class II directors and ratify
the appointment of KPMG LLP as auditors of ATP's financial statements for
1999 (collectively, with the proposal to approve the Merger Agreement, the
"Proxy Proposals"). The ATP Board recommends that you vote "For" the
approval of all of the Proxy Proposals. We do not expect to ask you to vote
on any other matters at the Annual Meeting. However, if a motion is made to
adjourn the Annual Meeting, you may also be asked to vote on adjournment of
the Annual Meeting.

Q:WHAT DO I NEED TO DO NOW?

A: This Proxy Statement contains important information regarding the Proxy
Proposals as well as information about ATP, ATP Acquisition and ATP
Holding. It also contains important information about what the management
of ATP and the ATP Board considered in evaluating the Merger. We urge you
to read this Proxy Statement carefully, including its Appendices. You may
also want to review the documents referenced under "Where You Can Find More
Information."

Q:HOW DO I VOTE?

A: Just indicate on your proxy card how you want to vote, and sign and mail it
in the enclosed envelope as soon as possible, so that your shares will be
represented at the Annual Meeting. Approval of the proposal to approve the
Merger Agreement at the Annual Meeting requires the affirmative vote of
holders of a majority of the outstanding shares of ATP Common Stock
entitled to vote at the Annual Meeting. Therefore, a failure to vote or a
vote to abstain will have the same effect as a vote against the proposal.
Approval of Proxy Proposal 3 requires a plurality of the votes of the
shares of ATP Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote, and approval of Proxy Proposal 2 and

ii
<PAGE>

Proxy Proposal 4 requires a majority of the votes of the shares of ATP
Common Stock present in person or represented by proxy at the Annual Meeting
and entitled to vote. The Annual Meeting will take place on October 21, 1999
at 2:00 p.m., local time, at the Radisson Hotel, 10740 Westside Parkway,
Alpharetta, Georgia 30004. You may attend the Annual Meeting and vote your
shares in person, rather than voting by proxy. In addition, you may withdraw
your proxy up to and including the day of the Annual Meeting and either
change your vote or attend the Annual Meeting and vote in person.

Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?

A: Your broker will vote your shares of ATP Common Stock only if you provide
instructions on how to vote. You should instruct your broker how to vote
your shares, following the directions your broker provides. If you do not
provide instructions to your broker, your shares will not be voted and they
will be counted as votes against the proposal to approve the Merger
Agreement.

WHO CAN HELP ANSWER YOUR QUESTIONS

If you would like to ask any additional questions about the Merger, you
should contact:

James Hobt
Advanced Technical Products, Inc.
200 Mansell Court, East, Suite 505
Roswell, Georgia 30076
Telephone: (770) 993-0291

If you would like additional copies of this document, you should contact:

DF King & Co., Inc.
77 Water Street
New York, New York 10005
Telephone (212) 269-5550

iii
<PAGE>

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The following statements are or may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995:

(i) Certain statements, including possible or assumed future results of
operations of ATP, contained in "Proxy Proposal 1: The Merger--Background
of the Merger," "Proxy Proposal 1: The Merger--Reasons for the Merger," and
"Proxy Proposal 1: The Merger--Opinion of Financial Advisor," including any
forecasts, projections and descriptions of anticipated cost savings
referred to therein, and certain statements incorporated by reference from
documents filed with the Securities and Exchange Commission (the "SEC") by
ATP;

(ii) any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends," "estimates," "projects" or
similar expressions; and

(iii) other statements contained or incorporated by reference herein
regarding matters that are not historical facts.

Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such forward-
looking statements. Public Stockholders are cautioned not to place undue
reliance on such statements, which speak only as of the date hereof.

Among the factors that could cause actual results to differ materially are:
(i) changes in the level of demand for the products sold by ATP; (ii) changes
in capital markets generally or in the markets for securities similar to those
which ATP Holding and ATP Acquisition intend to issue to finance the merger;
(iii) changes in general business and economic conditions, particularly in the
geographic areas in which ATP does business; (iv) increased competition in the
aerospace and defense industries; and (vi) other risks detailed from time to
time in the reports filed with the SEC by ATP.

The cautionary statements contained or referred to in this Proxy Statement
should be considered in connection with any subsequent written or oral
forward-looking statements that may be issued by ATP or persons acting on its
behalf. Except for its ongoing obligations to disclose material information as
required by the federal securities laws, ATP undertakes no obligation to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

iv
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
SUMMARY..................................................................... 1

Effects of the Merger..................................................... 1
The Companies............................................................. 1
The Annual Meeting........................................................ 2
Record Date; Voting Power................................................. 2
Vote Required............................................................. 2
Recommendations........................................................... 3
Opinion of Financial Advisor.............................................. 3

PROXY PROPOSAL 1: THE MERGER................................................ 4

Terms of the Merger Agreement............................................. 4
Share Ownership of ATP Following the Merger............................... 5
Accounting Treatment...................................................... 5
Financing of the Merger................................................... 6
Conflicts of Interest..................................................... 6
Regulatory Approvals...................................................... 6
Appraisal Rights.......................................................... 6
Federal Income Tax Consequences........................................... 6

HISTORICAL MARKET INFORMATION............................................... 7

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............................. 8

BACKGROUND OF THE MERGER.................................................... 9

Reasons for the Merger.................................................... 10
Opinion of Financial Advisor.............................................. 11
Selected Companies Analysis............................................... 12
Selected Mergers and Acquisitions Transactions Analysis................... 13
Discounted Cash Flow Analysis............................................. 13
Leveraged Buyout Analysis................................................. 13
Premium Analysis.......................................................... 14
Conflicts of Interest..................................................... 15
Certain Effects of the Merger............................................. 17
Financing of the Merger................................................... 17
Conduct of ATP's Business After the Merger................................ 18

PROXY PROPOSAL 2: THE EMPLOYEE STOCK PURCHASE PLAN.......................... 19

PROXY PROPOSAL 3: ELECTION OF DIRECTORS..................................... 19

PROXY PROPOSAL 4: RATIFICATION OF AUDITORS.................................. 19

THE ANNUAL MEETING.......................................................... 20

Date, Time, and Place of the Annual Meeting............................... 20
Purpose of the Meeting.................................................... 20
Record Date and Outstanding Shares........................................ 20
Voting of Proxies......................................................... 20
Vote Required............................................................. 20
Expenses; Solicitation of Proxies......................................... 21
Effective Time of the Merger and Payment for Shares....................... 21
Other Matters to be Considered............................................ 21
</TABLE>

v
<PAGE>

<TABLE>
<S> <C>
PROXY PROPOSAL 1: THE MERGER............................................... 22

Terms of the Merger Agreement............................................ 22
Estimated Fees and Expenses of the Merger................................ 27

APPRAISAL RIGHTS........................................................... 27

REGULATORY APPROVALS....................................................... 29

PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT AND OTHERS........ 30

CERTAIN INFORMATION CONCERNING ATP ACQUISITION AND ATP HOLDING............. 32

ATP Holding.............................................................. 32
ATP Acquisition.......................................................... 32

FEDERAL INCOME TAX CONSEQUENCES............................................ 32

PROXY PROPOSAL 2: THE PURCHASE PLAN........................................ 33

General.................................................................. 33
The Purchase Plan........................................................ 33
Shares Subject to the Purchase Plan...................................... 33
Administration........................................................... 33
Eligibility.............................................................. 34
Termination.............................................................. 34
Recommendation of Board of Directors..................................... 34

PROXY PROPOSAL 3: ELECTION OF DIRECTORS ................................... 34

Class I Continuing Directors--Terms Expiring 2001........................ 34
Class II Nominees to Serve until the Annual Meeting to be Held in 2002... 35
Class III Continuing Directors--Terms Expiring 2000...................... 35
Executive Officers....................................................... 36
Meetings of the ATP Board................................................ 36
Committees of the ATP Board.............................................. 36
Compensation of Directors................................................ 37
Security Ownership of Officers and Directors............................. 37

EXECUTIVE COMPENSATION..................................................... 38

Summary Compensation Table............................................... 38
Option Grants During 1998 Fiscal Year.................................... 38
Option Exercises During 1998 Fiscal Year and Fiscal Year End Option
Values.................................................................. 38
Employment Agreements.................................................... 39
Compensation Committee Interlocks and Insider Participation.............. 39
Report of the Compensation Committee..................................... 39
Base Salary.............................................................. 39
Annual Incentive Compensation............................................ 40
Stock Option Program..................................................... 40
Chief Executive Officer Compensation..................................... 40
Stock Performance Chart.................................................. 41
Certain Relationships and Related Transactions........................... 42

SECTION 16 REQUIREMENTS.................................................... 42

PROXY PROPOSAL 4: RATIFICATION OF AUDITORS................................. 42
</TABLE>

vi
<PAGE>

<TABLE>
<S> <C>
INDEPENDENT AUDITORS........................................................ 43

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 43

STOCKHOLDER PROPOSALS....................................................... 43

OTHER MATTERS............................................................... 44

WHERE YOU CAN FIND MORE INFORMATION......................................... 44

ANNUAL REPORT AND FINANCIAL INFORMATION..................................... 45

APPENDIX A--AGREEMENT AND PLAN OF MERGER.................................... A-1

APPENDIX B--FORM OF ALLEN OPINION........................................... B-1

APPENDIX C--DELAWARE GENERAL CORPORATION LAW................................ C-1

APPENDIX D--1998 EMPLOYEE STOCK PURCHASE PLAN OF ATP........................ D-1
</TABLE>

vii
<PAGE>

SUMMARY

This summary highlights selected information from this document and may not
contain all of the information that is important to you. For a more complete
understanding of the Proxy Proposals, and for a more complete description of
the legal terms of the Proxy Proposals, you should read this Proxy Statement
in its entirety carefully, as well as the additional documents to which we
refer you, including the Merger Agreement. See "Where You Can Find More
Information" on page 44.

Effects of the Merger

Pursuant to the Merger Agreement, ATP Acquisition will be merged with and
into ATP with ATP being the Surviving Corporation. As a result of the Merger,
all of the capital stock of ATP will be owned by ATP Holding, and the ATP
Common Stock will no longer be publicly traded. The Public Stockholders will
no longer be stockholders of ATP, and they will not participate in ATP's
future earnings and growth or bear the risk of any decreases in the value of
ATP. Instead, the Public Stockholders will have the right to receive $14.50 in
cash, without interest, for each share of ATP Common Stock held by such
stockholders. ATP Holding will have the opportunity to benefit from any future
earnings and growth of ATP and will bear the risk of any decreases in the
value of ATP.

The Companies

Advanced Technical Products, Inc. ("ATP")
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076
(770) 993-0291

ATP is a Delaware corporation that manufactures a variety of products in two
principal business segments, an aerospace and defense segment and a commercial
segment. Such products are manufactured through five business units, Marion
Composites, Intellitec, Lincoln Composites, Alcore and Lunn Industries. The
aerospace and defense segment designs, develops and manufactures advanced
composite material products used in the aerospace and defense industries,
including radomes, aircraft components, missile and satellite composite
structures, engine components, rocket motor cases, pressure vessels,
relocatable shelters, missile launch tubes, torque shafts and fuel tanks, as
well as a wide range of integrated defense systems including electro-optical
systems, chemical detection systems, ordnance delivery systems and light-
weight camouflage systems. The commercial segment produces natural gas vehicle
fuel tanks, specialty vehicle electronic products, products used in the
exploration and production of oil and gas and aluminum honeycomb products used
by industrial, transportation and construction customers.

On October 31, 1997, TPG Holdings, Inc., a Delaware corporation ("TPG"),
merged (the "Lunn/TPG Merger") with Lunn Industries, Inc., a Delaware
corporation ("Lunn"), under the name "Advanced Technical Products, Inc." Lunn
was originally incorporated in New York in 1948 and was reincorporated in
Delaware in 1987. TPG was formed in 1995 to acquire the business and assets of
three operating units of the Brunswick Technical Group, which was completed on
April 28, 1995.

ATP Acquisition Corp. ("ATP Acquisition")
c/o The Veritas Capital Fund, LP ("Veritas")
660 Madison Avenue
New York, NY 10021

ATP Acquisition is a Delaware corporation that was formed by Veritas for the
sole purpose of effecting the Merger. ATP Acquisition will be merged out of
existence at the effective time of the Merger (the "Effective Time"), with the
Surviving Corporation's being a wholly owned subsidiary of ATP Holding. ATP
Acquisition is not expected to have significant assets or liabilities (other
than those arising in connection with the Transactions) or to engage in any
activities (other than those incident to its formation and the Transactions).

1
<PAGE>

ATP Holding Corp. ("ATP Holding")
c/o The Veritas Capital Fund, LP ("Veritas")
660 Madison Avenue
New York, NY 10021

ATP Holding is a Delaware corporation that was formed by Veritas for the
sole purpose of effecting the Merger. Veritas is a Delaware limited
partnership organized by Veritas Capital Management L.L.C. primarily to make
controlling and shared-control equity investments in private companies
coincident with leveraged acquisitions or recapitalizations of such companies.

The Annual Meeting

The Annual Meeting will be held on October 21, 1999, at 2:00 p.m., local
time, at the Radisson Hotel, 10740 Westside Parkway, Alpharetta, Georgia
30004. At the Annual Meeting, the ATP stockholders will be asked to consider
and vote upon a proposal to approve the Proxy Proposals.

Record Date; Voting Power

Only holders of record of ATP Common Stock at the close of business on
September 29, 1999 (the "Record Date") are entitled to notice of and to vote
at the Annual Meeting. As of the Record Date, there were 5,286,188 shares of
ATP Common Stock issued and outstanding held by approximately 1,600 holders of
record. Holders of record of ATP Common Stock on the Record Date are entitled
to one vote per share on any matter that may properly come before the Annual
Meeting.

Vote Required

Approval of the Merger Agreement at the Annual Meeting requires the
affirmative vote of holders of a majority of the outstanding shares of ATP
Common Stock entitled to vote at the Annual Meeting. Accordingly, a failure to
vote or a vote to abstain will have the same legal effect as a vote against
the Merger Agreement. Approval of Proxy Proposal 3 requires a plurality of the
votes of the shares of ATP Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote and approval of Proxy
Proposal 2 and Proxy Proposal 4 requires a majority of the votes of the shares
of ATP Common Stock present in person or represented by proxy at the Annual
Meeting and entitled to vote.

The presence, either in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of ATP Common Stock is necessary to
constitute a quorum at the Annual Meeting. If, however, a majority of shares
of ATP Common Stock is not present or represented at the Annual Meeting, the
ATP stockholders entitled to vote thereat, present in person or by proxy, can
adjourn the meeting from time to time, until a quorum is present. Because
Proxy Proposal 1 must be approved by holders of a majority of the outstanding
shares entitled to vote on such matter, and because Proxy Proposal 2 and Proxy
Proposal 4 must be approved by holders of a majority of shares of ATP Common
Stock present in person or represented by proxy at the Annual Meeting, a
stockholder or broker who abstains from voting on the resolution to authorize
and approve Proxy Proposal 1, Proxy Proposal 2 and Proxy Proposal 4 will have
the effect of a vote against Proxy Proposal 1, Proxy Proposal 2 and Proxy
Proposal 4 because the shares would be recorded as having abstained and could
not be counted in determining whether the necessary majority vote had been
obtained. Abstentions and broker non-votes will have no effect on Proxy
Proposal 3.

An "Against" vote on the enclosed proxy card on Proxy Proposal 1 will be a
vote against the Merger Agreement. If we do not receive "For" votes from a
majority of the outstanding shares of ATP Common Stock entitled to vote at the
Annual Meeting, the Merger Agreement will not be approved, you will not
receive $14.50 in cash for each share of ATP Common Stock you hold and you
will continue to own shares in a publicly traded company.

2
<PAGE>

A stockholder who gives a proxy with respect to voting on the Merger
Agreement may revoke it at any time before it is voted at the Annual Meeting
by either (i) filing with the Secretary of ATP an instrument revoking it, (ii)
submitting a duly executed proxy bearing a later date or (iii) voting in
person at the Annual Meeting.

Recommendations

The ATP Board reviewed and evaluated the proposed Merger Agreement and the
related transactions. One member of the ATP Board did not vote on the Merger
Agreement because he is a Managing Director at Allen & Company Incorporated
("Allen"), engaged to provide a fairness opinion for the Merger. Two other
members of the ATP Board did not vote on the Merger Agreement because of
potential conflicts of interest resulting from employment agreements they will
enter into with the Surviving Corporation after the Effective Time of the
Merger. The disinterested members of the ATP Board unanimously (with one
disinterested director absent) determined that the Merger Agreement and the
Transactions, including the Merger, were fair to and in the best interests of
the ATP stockholders and recommended that the ATP stockholders vote "For" the
approval of the Merger Agreement. You also should refer to the factors that
the ATP Board considered in determining whether to approve the Merger
Agreement on pages 10 and 11. The ATP Board also recommends that you vote
"For" Proxy Proposal 2, Proxy Proposal 3 and Proxy Proposal 4.

Opinion of Financial Advisor

Allen, a nationally recognized investment banking firm that served as
financial advisor to the ATP Board, has rendered an opinion dated as of
September 2, 1999 to the ATP Board that, as of the date of the opinion, and
based on the assumptions and subject to the limitations and qualifications set
forth therein, the Cash Merger Consideration was fair from a financial point
of view to the Public Stockholders. A copy of a form of Allen's opinion,
setting forth the information reviewed, assumptions made and matters
considered by Allen, is attached to this Proxy Statement as Appendix B. You
should read Allen's opinion in its entirety.

3
<PAGE>

PROXY PROPOSAL 1: THE MERGER

Terms of the Merger Agreement

The Merger Agreement is attached to this Proxy Statement as Appendix A. You
are encouraged to read the Merger Agreement in its entirety. It is the legal
document that governs the Merger.

General. Upon consummation of the Merger, ATP Acquisition will be merged
with and into ATP, and the Public Stockholders will receive a cash payment of
$14.50, without interest, for each of their outstanding shares of ATP Common
Stock. As a result of the Merger, the Public Stockholders will receive cash
for their shares of ATP Common Stock while ATP Holding, as the sole owner of
ATP Acquisition Common Stock, will receive the entire continuing equity
interest in the Surviving Corporation for its shares of ATP Acquisition Common
Stock.

Certificate of Incorporation; By-Laws. At the effective time of the Merger
(the "Effective Time"), ATP's Restated Certificate of Incorporation will be
amended so as to read in its entirety as set forth in Exhibit 1.6(a) of the
Merger Agreement and as so amended shall become the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law.

The By-laws of ATP Acquisition as in effect as of the Effective Time, shall
be, from and after the Effective Time, the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein by
applicable law.

Conditions to the Merger. The completion of the Merger depends upon the
satisfaction of certain conditions, including:

--the affirmative vote of holders of a majority of the outstanding shares
of ATP Common Stock;

--the representations and warranties of ATP, ATP Holding and ATP
Acquisition contained in the Merger Agreement shall be true and correct
as of the date of the Merger except as would not cause or could not be
reasonably expected to cause a material adverse effect on ATP or as would
not impair or would not be reasonably likely to impair the consummation
of the Merger and the related Transactions;

--the performance in all material respects of all material obligations in
the Merger Agreement by ATP, ATP Holding and ATP Acquisition; and

--the receipt of the consent of third parties which is required for
consummation of the Merger under any agreement which ATP or any of its
subsidiaries is a party or by which any of them are bound other than
those consents failure of which to obtain would not cause or would not be
reasonably expected to cause a material adverse effect on ATP and its
subsidiaries taken as a whole or as would not impair or would not be
reasonably likely to impair the consummation of the Merger and the
related Transactions.

Each party may, at its option, waive the satisfaction of any condition to
such other party's obligations under the Merger Agreement.

EVEN IF THE ATP STOCKHOLDERS APPROVE THE MERGER, THERE CAN BE NO ASSURANCE
THAT THE MERGER WILL BE CONSUMMATED.

Termination. Either ATP or ATP Holding may terminate the Merger Agreement
only under certain circumstances, including the following:

--ATP Holding and ATP Acquisition are unable to obtain the necessary
financing to consummate the Merger by January 31, 2000;

--ATP and ATP Holding consent in writing;

--the ATP stockholders do not approve the Merger Agreement by January 15,
2000;

4
<PAGE>

--legal restraints or prohibitions prevent the consummation of the Merger;
or

--a party materially breaches any of its representations, warranties, or
fails to comply in any material respect with covenants, under the Merger
Agreement and fails to timely cure any such breach.

In addition, ATP generally may terminate the Merger Agreement if it enters
into a definitive agreement to effect another acquisition transaction that is
more favorable to the ATP stockholders from a financial point of view than the
Transactions (an "Alternative Transaction").

Good Faith Deposit. ATP Holding has put in escrow $3,000,000 pursuant to an
Escrow Agreement (Exhibit 1.2 to the Merger Agreement) among ATP Holding, ATP
and the Chase Manhattan Bank, as escrow agent, as a good faith deposit in
connection with the Merger (the "Deposit").

Termination Fees. In the event the Merger Agreement is terminated due to the
failure of ATP Holding and ATP Acquisition to obtain financing by January 31,
2000, the Deposit will be disbursed to ATP, and ATP Holding will be obligated
to pay the fees and expenses of ATP in connection with the Merger. In the
event that the Merger Agreement is terminated as a result of ATP's election to
consummate an Alternative Transaction, then ATP is required to pay ATP Holding
$4,125,000 together with an amount equal to the fees and expenses of ATP
Holding and ATP Acquisition in connection with the Merger.

Fees and Expenses. Generally, ATP, on the one hand, and ATP Holding and ATP
Acquisition, on the other hand, will pay their own fees, costs, and expenses
incurred in connection with the Merger Agreement and the Transactions except
in the event of a termination resulting in payment of the termination fees
discussed above and a termination resulting from a breach in which case the
breaching party must pay the expenses of the other party. In addition, in the
event of a termination resulting from the failure of the ATP stockholders to
approve the Merger Agreement as set forth above, ATP is required to pay the
fees and expenses of ATP Holding and ATP Acquisition.

Stock Options and Warrants. Each vested and exercisable option and warrant
to purchase shares of ATP Common Stock that has an exercise price which is
less than $14.50 a share (a "Vested In the Money Option") will be extinguished
on the consummation of the Merger and be converted into the right to receive a
cash amount equal to the excess of $14.50 over the per share exercise price of
the option multiplied by the number of shares issuable upon the exercise of
the vested portion of the option as of the Effective Time. In addition, as of
the Effective Time, each unvested and unexercisable portion of an option that
has an exercise price of less than $14.50 per share (an "Unvested In the Money
Option") shall be extinguished and represent the right to receive equity in,
or an option to purchase equity in, the Surviving Corporation or a holding
entity owning directly or indirectly 100% of the Surviving Corporation, and
such equity shall generally be equal in value to the value of the Unvested In
the Money Option as of the Effective Time. Each Unvested In the Money Option
will terminate at the Effective Time pursuant to the relevant option plan or
agreement with the option holder. All ATP stock option plans shall terminate
upon consummation of the Merger.

Preferred Stock. Each share of preferred stock of ATP ("ATP Preferred
Stock") shall be redeemed by ATP immediately prior to the Effective Time, and
the holders of ATP Preferred Stock will be entitled to receive $1.00 per share
of ATP Preferred Stock in cash, without interest, plus any accrued but unpaid
dividends thereon.

Share Ownership of ATP Following the Merger

ATP Holding will own all of the Surviving Corporation Securities following
the Merger.

Accounting Treatment

ATP believes that the Merger and the other Transactions will be treated as a
purchase in accordance with generally accepted accounting principles.

5
<PAGE>

Financing of the Merger

Veritas is working with Chase Manhattan Bank ("Chase") and First Union
Capital Markets Corp. ("First Union") to arrange for the financing required to
consummate the Merger and related transactions (the "Financing"). The
definitive agreements for Chase's and First Union's providing of financing
have not been negotiated and completed.

If ATP Acquisition and ATP Holding are unable to procure the Financing or
pay the Cash Merger Consideration on or before January 31, 2000, then ATP will
retain the $3,000,000 good faith Deposit which ATP Acquisition has deposited
in escrow with Chase simultaneously with the execution of the Merger
Agreement.

Conflicts of Interest

Allen. Allen served as financial advisor to the ATP Board. A managing
director of Allen also serves as a member of the ATP Board, and he abstained
from the ATP Board's approval of the Merger. The ATP Board and Allen believe
that this relationship does not affect Allen's ability to act independently
and impartially as financial advisor to the ATP Board.

Messrs. Carter and Dominy. James S. Carter and Garrett L. Dominy will enter
into amended employment agreements with the Surviving Corporation effective
upon the Effective Time of the Merger. Because of potential conflicts of
interests resulting from these employment agreements, Messrs. Carter and
Dominy abstained from the ATP Board's approval of the Merger.

The ATP Board. The ATP Board will be treated in the Merger as Public
Stockholders with respect to their shares of ATP Common Stock. The members of
the ATP Board will have the right to receive Cash Merger Consideration in the
aggregate amount of $10,539,412 for their shares of ATP Common Stock. The ATP
Board believes that the foregoing arrangements do not affect the ATP Board's
independence or impartiality.

Regulatory Approvals

ATP is required to make filings with or obtain approvals from certain United
States antitrust regulatory authorities in connection with the Merger. These
consents and approvals include the approval of the United States Federal Trade
Commission and the Department of Justice. An application and notice was
submitted for filing with the Federal Trade Commission and the Department of
Justice on September 30, 1999, and the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, will expire
at the end of October 1999 absent a request for additional information from
any federal antitrust regulatory agencies.

Appraisal Rights

Any ATP stockholder has the right to dissent from approval of the Merger
Agreement and, subject to strict compliance with certain requirements and
procedures set forth in Section 262 of the DGCL (or any successor provision),
to receive "fair value" of his or her shares of ATP Common Stock. To perfect
these appraisal rights with respect to the Merger, you must follow the
required procedures precisely. The full text of Section 262 of the DGCL is
attached to this Proxy Statement as Appendix C.

Federal Income Tax Consequences

Generally, the receipt of the Cash Merger Consideration in the Merger by
Public Stockholders will be a taxable transaction for federal income tax
purposes. Each holder's gain or loss per share of ATP Common Stock will be
equal to the difference between $14.50 and the holder's adjusted basis in that
particular share of the ATP Common Stock. Such gain or loss generally will be
a capital gain or loss. The federal income tax rule applicable to any gain
will generally depend on the length of time that such shares of ATP Common
Stock were held by the holder. Because the tax consequences to each holder of
ATP Common Stock will depend on each holder's particular circumstances and tax
position, you should consult your tax advisors as to the specific tax
consequences of the Merger to you.

6
<PAGE>

HISTORICAL MARKET INFORMATION

ATP Common Stock is traded on the NASDAQ Stock Exchange ("NASDAQ") under the
symbol "ATPX". The following table sets forth the high and low sales prices
for each quarterly period for the two most recent fiscal years and for the
current fiscal year to date as reported by NASDAQ.

<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
1997:
First quarter............................................... $ 0.94 $ 0.66
Second quarter.............................................. $ 1.25 $ 0.75
Third quarter............................................... $ 1.78 $ 1.09
Fourth quarter(1)
October 1--November 3..................................... $ 1.63 $ 1.19
November 4--December 31................................... $18.00 $11.50

1998:
First quarter............................................... $14.88 $11.00
Second quarter.............................................. $15.31 $11.00
Third quarter............................................... $13.25 $ 5.50
Fourth quarter.............................................. $ 9.63 $ 5.50

1999:
First quarter............................................... $11.00 $ 7.50
Second quarter.............................................. $14.25 $ 9.25
Third quarter............................................... $13.88 $10.75
</TABLE>
- --------
(1) On October 31, 1997, ATP effected a ten-to-one reverse stock split and
issued an additional 3,943,830 shares in connection with the Lunn/TPG
Merger. The ATP Common Stock began trading on November 4, 1997 on this
basis.

As of September 29, 1999, ATP had approximately 1,600 holders of record of
ATP Common Stock.

The reported high and low sales prices per share of ATP Common Stock on
September 2, 1999, the last trading day preceding public announcement of the
execution of the Merger Agreement, was $11.25 and $11.00, respectively.

7
<PAGE>

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated historical, financial
and other data of ATP for the five years ended December 31, 1998, which have
been derived from, and should be read in conjunction with, the consolidated
financial statements of ATP included in ATP's Annual Report on Form 10-K,
which is incorporated by reference in this Proxy Statement, including the
Notes to Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.

The selected consolidated data for the six months ended July 2, 1999 has
been derived from, and should be read in conjunction with, ATP's unaudited
condensed consolidated financial statements included in ATP's Quarterly Report
on Form 10-Q, incorporated by reference in this Proxy Statement. The selected
consolidated data for the six months ended July 3, 1998 has been derived from
ATP's unaudited condensed consolidated financial statements included in ATP's
Quarterly Report on Form 10-Q, which has not been included or incorporated by
reference in this Proxy Statement. Data for the six months ended July 2, 1999
is not necessarily indicative of the results to be expected for the full year.

<TABLE>
<CAPTION>
Brunswick Technical
Group(1) ATP
--------------------- ---------------------------------------------------------
Four Eight
Year Months Months Year Year Year Six Months Six Months
Ended Ended Ended Ended Ended Ended Ended Ended
Dec. 31, April 28, Dec. 31, Dec. 31, Dec. 31, Dec. 31, July 3, July 2,
1994 1995 1995 1996 1997 1998 1998 1999
---------- ---------- -------- -------- -------- -------- ---------- ----------
(in thousands) (in thousands) (in thousands)
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenues............ $ 118,660 $ 28,416 $79,172 $126,534 $119,433 $165,074 $ 70,445 $ 91,108
Cost of revenues........ 112,950 27,354 61,738 94,365 91,312 126,678 54,293 70,172
---------- --------- ------- -------- -------- -------- -------- --------
Gross profit............ 5,710 1,062 17,434 32,169 28,121 38,396 16,152 20,936
General and
administrative
expenses............... 3,923 1,350 12,123 21,758 19,006 25,570 12,217 14,043
---------- --------- ------- -------- -------- -------- -------- --------
Operating income
(loss)................. 1,787 (288) 5,311 10,411 9,115 12,826 3,935 6,893
Interest expense(2)..... -- -- 1,892 2,377 2,273 3,579 1,637 1,903
---------- --------- ------- -------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item..... 1,787 (288) 3,419 8,034 6,842 9,247 2,298 4,990
Income tax provision
(benefit).............. 683 (112) 1,312 3,093 2,634 3,560 885 1,921
---------- --------- ------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary items.... 1,104 (176) 2,107 4,941 4,208 5,687 1,413 3,069
Extraordinary items(3).. -- -- -- 667 -- -- -- --
---------- --------- ------- -------- -------- -------- -------- --------
Net income (loss)....... $ 1,104 $ (176) $ 2,107 $ 4,274 $ 4,208 $ 5,687 $ 1,413 $ 3,069
========== ========= ======= ======== ======== ======== ======== ========
Diluted Earnings per
share(4)............... -- -- -- -- .95 1.01 .25 .55
Weighted average number
of diluted common
shares................. -- -- -- -- 4,362 5,526 5,510 5,490
Balance Sheet Data:
Working capital......... 29,882 26,868 17,558 18,462 21,208 22,990 21,995 24,661
Total assets............ 54,995 53,358 38,911 44,723 85,684 106,876 100,723 109,210
Long-term debt,
including current
portion(2)............. -- -- 17,926 17,222 19,216 26,402 22,438 26,215
Redeemable 8% cumulative
preferred stock........ -- -- 1,000 1,000 1,000 1,000 1,000 1,000
Common stockholders'
equity................. -- -- 2,919 7,018 26,494 31,797 28,960 35,008
</TABLE>
- --------
(1) TPG, the predecessor to ATP, acquired all of the assets of the Brunswick
Technical Group on April 28, 1995.
(2) Prior to April 29, 1995, the Brunswick Technical Group was included as
part of Brunswick's consolidated financial statements. Brunswick did not
allocate any debt or interest expenses to the Brunswick Technical Group
(3) Reflects an extraordinary loss from debt refinancing, net of an income tax
benefit of $418,000.
(4) Earnings per share are not meaningful prior to 1997 since ATP's
predecessor company was not a publicly traded company.

8
<PAGE>

BACKGROUND OF THE MERGER

On September 3, 1999, ATP issued a press release announcing that a Merger
Agreement had been entered into, pursuant to which an affiliate of Veritas
would pay $14.50 in cash for each share of ATP Common Stock.

The ATP Board has regularly considered strategic alternatives available for
developing its businesses. In that connection, the ATP Board in October 1998
began reviewing ATP's goals of achieving meaningful growth in each of its
segments. The ATP Board evaluated a variety of alternatives for financing its
growth. The alternatives considered included public debt or equity financing
or additional commercial bank borrowings.

After reviewing in late 1998 and early 1999 the ability of companies
considered to be in the "small cap" category to raise equity financing at a
price the ATP Board believed would be acceptable, the ATP Board believed that
capital for additional growth would probably more likely be found in debt
financing. In considering debt financing, ATP evaluated both commercial bank
loans, as well as the public markets for debt instruments. ATP's analysis
indicated that financing alternatives available in the then prevailing market
conditions for borrowers of its size by lenders likely to understand ATP's
business were not likely achievable at a rate the ATP Board would find
reasonable. In light of these considerations, the ATP Board also considered
the possibility that ATP's growth might best be pursued as a non-public
company working with a financial or strategic investor committed to its
business plan.

To ascertain what its private market value might be and whether such value
might be attractive to stockholders, the ATP Board determined to discretely
explore whether financial or other purchasers might be interested in
purchasing all of ATP. The ATP Board authorized a member of the ATP Board,
John Simon, who also serves as a Managing Director of Allen, to discretely
initiate such inquiries on behalf of ATP.

Since publicly disclosing on April 28, 1999 that ATP was exploring the
possibility of a sale, numerous inquiries were received, and ATP responded to
all of them. ATP also identified and sought other potential buyers to the
extent a potential strategic business fit was believed to exist. In all,
contact was made with numerous prospective buyers including strategic
industrial buyers and financial buyers. ATP received a number of proposals,
and over time, negotiated actively with all offerors. Two of such offerors
performed extensive due diligence, and with one such offeror ATP negotiated,
over a three-month period, nearly-completed transaction documentation. On June
15, 1999, ATP announced that negotiations with a potential purchaser had
terminated. After these negotiations terminated, ATP renewed its efforts to
find other potential buyers.

The current proposed transaction was reached after a period of negotiations
among Veritas and ATP and their financial and legal advisors. Veritas executed
a confidentiality agreement and was provided access to various due diligence
materials. Over a period of six weeks, Veritas and its legal advisors
performed due diligence, and offered a price per share of ATP Common Stock of
$14.50, subject to negotiation of mutually satisfactory documentation. The ATP
Board met on September 2, 1999 to consider the proposed transaction. The ATP
Board reviewed the background of the present offer, the terms of the draft
Merger Agreement and the presentation made by Allen relating to its assessment
of the fairness, from a financial point of view, of the Cash Merger
Consideration.

The Merger Agreement was signed on September 3, 1999, as noted in ATP's
press release of that day. The material provisions of the Merger Agreement are
described elsewhere in this Proxy Statement under "Proxy Proposal 1: The
Merger--Terms of the Merger Agreement." A copy of the Merger Agreement is set
forth as Appendix A to this Proxy Statement.

In considering the proposed transaction, the ATP Board considered the
following factors:

--Industry Changes. ATP's position as a manufacturer and supplier to
customers requiring well financed operations to invest significant up-
front cash on long term contracts, such that ATP is regularly facing
larger, better financed competitors, with more ready access to capital.

9
<PAGE>

--Market Conditions. Prevailing market conditions seemed likely to preclude
raising equity or debt on terms the ATP Board believed would be
acceptable to ATP's stockholders.

--Liquidity. Based on ATP's experience to date, the proposed transaction is
expected to provide ATP the ability to continue to service its customers,
employ its personnel and finance additional growth more efficiently than
it could if it remained a public company. The ATP Board was aware that a
significant portion of ATP's shares had been held by institutional
investors unsatisfied with the relatively illiquid market for ATP's
securities. The ATP Board was concerned that, in the event any of such
large holders were to attempt to sell their positions, significant
disruption could occur in ATP's market value, unrelated to the results of
operations.

Reasons for the Merger

The members of the ATP Board, excluding Messrs. Carter, Dominy and Simon,
who did not vote in connection with the Merger, determined that the proposed
transaction is in the best interests of the stockholders of ATP, and such
directors have unanimously recommended (with one absence) that ATP
stockholders vote for the Merger proposal. In reaching this determination, the
ATP Board considered the following:

--the offer presented by Veritas provides compelling value and immediate
liquidity for all company stockholders;

--the proposed transaction provides an opportunity for ATP's stockholders
to elect immediate liquidity in cash at a price the ATP Board found to be
fair;

--the financing for the offering appeared likely;

--the good faith deposit of $3,000,000, which ATP will retain in the event
Veritas is unable to raise the Financing within the period contemplated
by the Merger Agreement, provided significant comfort that the merger
will be fully funded on time;

--ATP's status as a small cap, publicly traded company has repeatedly
provided challenges for the ATP Board in considering how best to maximize
stockholder value and finance its growth. Specifically, ATP's stockholder
profile, consisting as it does of several large blocks of stock, some of
whom the ATP Board understands to be inclined to sell at a fair price,
provides a potential destabilizing challenge to ATP's market valuation.
The ATP Board regarded this risk as particularly heightened given the
relatively illiquid market for ATP's common stock;

--the ATP Board believed that efforts to maximize stockholder value
confront significant timing risks that arise from the cyclical nature of
ATP's business and what the ATP Board believes is the unpredictability of
when market perceptions of the potential for the aerospace and defense
industries, as well as small cap stocks, would command more favorable
valuations. Such risks led the ATP Board to value highly the proposed
transaction, which provides what the ATP Board considers to be fair terms
for a sale of ATP at this time;

--ATP's extensive experience with other potential buyers, which experience
has produced unsatisfactory or partial offers for ATP or its assets;

--the opinion provided by Allen to the effect that, as of the date of such
opinion, the Cash Merger Consideration to be received by ATP's
stockholders pursuant to the proposed transaction is fair to such
stockholders from a financial point of view. See "Proxy proposal 1: The
Merger--Opinion of Financial Advisor," and a copy of a Form of the Allen
Opinion is set forth as Appendix B to this Proxy Statement;

--the financial condition, results of operations, business, technologies
and products of ATP, in the current market, suggested to the ATP Board
that no assurance could be given that any future determination to sell
for cash would occur in more favorable circumstances than those presented
by the present offer; and

--prior to the closing, the proposed transaction does not preclude
alternative offers to purchase ATP.

10
<PAGE>

The ATP Board also took into account in its deliberations concerning the
Merger the following potentially negative factors:

--the transaction presents certain risks, primarily in connection with
Veritas' procuring financing in timely fashion;

--the risk that, despite the intentions and efforts of the parties, the
benefits sought by the proposed transaction may not be achieved; and

--the ATP Board considered the fact that consummation of the Merger would
preclude the Public Stockholders from having the opportunity to
participate in the future growth prospects of ATP.

The ATP Board does not intend the preceding discussion of the factors
considered by it to be exhaustive, but believes this discussion includes
material factors it considered. In view of the wide variety of factors
considered in connection with its evaluation of the Merger proposal and the
complexity of these matters, the ATP Board did not find it possible to and did
not quantify or otherwise assign relative weights to the specific factors it
considered. In addition, individual members of the ATP Board may have given
different weights to different factors. The ATP Board considered all of these
factors as a whole, and overall considered the facts to be favorable to, and
support, its determination to recommend the Merger to ATP's stockholders.

Those directors who may be deemed to have an interest in, or potential
interest in, the transaction abstained themselves from voting. The remaining
directors voted unanimously (with one absence) "for" the proposed transaction.

If the ATP stockholders do not approve the Merger Agreement, or if the
Merger and the other Transactions are not consummated for any other reason,
the ATP Board expects that ATP will continue to pursue its business objectives
principally of (i) designing, developing, manufacturing advanced composite
material products used in the aerospace and defense industries and natural gas
vehicle fuel tanks, electronic and other commercial products, (ii) developing
and producing chemical detection and protection systems and (iii) seeking
opportunities to grow through acquisitions of complementary or related
businesses and technologies. In addition, ATP may seek other business
combination opportunities.

Opinion of Financial Advisor

Allen acted as financial advisor to the ATP Board in connection with the
Transactions, including the Merger. On September 2, 1999, Allen rendered its
oral opinion to the ATP Board to the effect that, as of that date and based on
and subject to the assumptions made, matters considered and limits of the
reviews undertaken by Allen described in its opinion, the Cash Merger
Consideration to be received by the Public Stockholders pursuant to the Merger
was fair from a financial point of view to the Public Stockholders. Allen
subsequently confirmed this opinion, as of September 2, 1999, in writing. This
written opinion is referred to in this Proxy Statement as the "Allen Opinion."

The full text of the form of the Allen Opinion is included in this Proxy
Statement as Appendix B. The Allen Opinion is addressed to the ATP Board for
its information concerning the fairness from a financial point of view of the
Cash Merger Consideration and does not address the merits of the underlying
decision of ATP to engage in the Merger or the other Transactions and does not
constitute a recommendation to any holder of shares of ATP Common Stock as to
how such holder should vote with respect to the Merger Agreement. The summary
of the Allen Opinion in this section is qualified in its entirety by reference
to the full text of a form of the Allen Opinion included in this Proxy
Statement as Appendix B. For specific information concerning the procedures
followed, assumptions made, matters considered and qualifications and
limitations of the review undertaken by Allen in connection with the Allen
Opinion, holders of shares of ATP Common Stock should read the Allen Opinion
in its entirety.

11
<PAGE>

In connection with the Allen Opinion, Allen reviewed, among other things:

--the Terms and Conditions of the Merger Agreement, the Escrow Agreement
and related documents;

--Annual Reports to stockholders and Annual Reports on Form 10-K of ATP and
its predecessors for the five years ended December 31, 1998;

--certain interim reports to stockholders of ATP and Quarterly Reports on
Form 10-Q of ATP;

--the Registration Statement on Form S-4 of Lunn Industries, Inc. dated
September 26, 1997;

--certain other communications from ATP to its stockholders; and

--internal financial analyses and forecasts of ATP prepared by ATP's
management.

In addition, Allen held discussions with members of the senior management of
ATP regarding the past and current business, operations and financial
condition and future prospects of ATP, reviewed the reported price and trading
activity of the shares of ATP Common Stock, compared certain financial and
stock market information concerning ATP with similar information for some
other companies the securities of which are publicly traded, reviewed the
financial terms of some recent business combinations in industries and markets
Allen deemed relevant and performed other studies and analyses that Allen
considered appropriate, including discounted cash flow analysis, leveraged
buyout analysis and the proposed financing arrangements related to the Merger.

Additionally, Allen reviewed certain historical business information and
acquisition history of Veritas. Allen also approached and held discussions
with third parties to solicit indications of interest in the possible
acquisition of ATP, and Allen considered such other financial, economic and
market criteria as it deemed appropriate in arriving at its opinion. Allen
also considered other factors, including a review of historical and projected
results of ATP, the history of trading prices and volume for ATP Common Stock
and the relationship between movements in ATP Common Stock, movements in the
common stock of selected companies and movements in the S&P 500 Index, and
selected published analysts' reports on ATP. Further, the Allen Opinion
reflects and gives effect to Allen's assessment of general economic, monetary
and market conditions in the aerospace and defense industries existing as of
the date hereof as they may affect the business and prospects of ATP

In preparing the Allen Opinion, Allen assumed and relied without independent
verification on the accuracy and completeness of the financial and other
information reviewed by it for purposes of the Allen Opinion. With respect to
the financial forecasts reviewed and discussed, Allen assumed that they had
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of ATP's management as to the future financial
performance of ATP. Allen did not make an independent evaluation or appraisal
of the assets and liabilities of ATP or any of its subsidiaries, and Allen was
not furnished with any such evaluation or appraisal. It also did not make a
physical inspection of properties or assets of ATP. Allen expressed no view as
to, and its opinion does not address, the relative merits of the Merger as
compared to any alternative business strategies that might exist for ATP or
the effect of any transaction in which ATP might engage. The Allen Opinion is
necessarily based on economic, market, financial and other conditions as they
existed on, and could be evaluated as of, the date of the Allen Opinion.

In evaluating the fairness of the Cash Merger Consideration from a financial
point of view, Allen also reviewed with the ATP Board the limits of the
process undertaken by Allen to identify parties potentially interested in
effecting a transaction with ATP. In rendering the Allen Opinion, Allen
considered the fact that, after discussions with numerous potential
purchasers, no proposal was forthcoming that was more attractive to the ATP
stockholders than Veritas' proposal.

Selected Companies Analysis

Using publicly available information, Allen analyzed the market values and
trading multiples of ATP and eight selected publicly traded companies focusing
on the aerospace and defense industry. These publicly traded companies were
considered by Allen to be reasonably comparable to ATP for purposes of this
analysis. These

12
<PAGE>

public company comparables were Hexcel Corporation, Triumph Group, Magellan
Aerospace, Ladish Co., Ducommun, Engineered Support Systems, Pacific Aerospace
& Electronics and EDO Corp (together, the "Comparable Companies").

Allen compared market values as a multiple of latest 12 months, estimated
forward fiscal year net income, and book value, and firm values, calculated as
equity market value (including preferred stock) plus net debt, as multiples of
latest 12 months sales and earnings before interest, taxes, depreciation and
amortization. All multiples were based on closing stock prices on August 30,
1999. Net income estimates for the selected companies were obtained from
Institutional Brokers Estimate System and net income estimates for ATP were
based on internal estimates of the management of ATP.

Allen then applied a range of selected multiples implied by the selected
companies of latest 12 months and estimated forward fiscal year net income,
and latest 12 months book value, latest 12 months sales, and latest 12 months
earnings before interest, taxes, depreciation and amortization to
corresponding financial data for ATP. This analysis resulted in an implied per
share equity reference range for ATP of $10.25 to $17.75 as compared to the
per share equity value for the merger of $14.50.

Selected Mergers and Acquisitions Transactions Analysis

Using publicly available information, Allen reviewed the purchase prices and
implied transaction value multiples paid in the following 11 selected
transactions in the defense and aerospace industry considered by Allen to be
reasonably comparable to the merger. The transactions were: (1) Fairchild
Corp's acquisition of Keynar Technologies, (2) Woodward Governor Co.'s
acquisition of Textron-Fuel Systems Unit, (3) Moog Inc.'s acquisition of
Raytheon Aircraft Corp., (4) Primex Technologies Inc.'s acquisition of CMS
Group, (5) Pacific Aerospace and Electronics acquisition of Aeromet
International Plc, (6) BF Goodrich's acquisition of Universal Propulsion, (7)
Cytec Industries' acquisition of American Materials and Technology, (8) TI
Group's acquisition of Tri-Manufacturing (General Electric), (9) GKN Plc's
acquisition of Interlake, (10) Engineered Support Systems acquisition of KECO
Industries Inc., and (11) Alvis Plc's acquisition of GKN Plc (Armored Car
Unit) (together, the "Comparable M&A Transactions").

Allen compared the transaction values implied by the purchase prices in the
selected transactions as multiples of latest 12 months sales, earnings before
interest, taxes, depreciation and amortization and net income. All multiples
were based on financial information available at the announcement date of the
relevant transaction.

Allen then applied a range of selected multiples implied by the selected
transactions of latest 12 months revenues, earnings before interest, taxes,
depreciation and amortization and net income to corresponding financial data
of ATP. This analysis resulted in an implied per share equity reference range
of $11.50 to $22.00 for ATP, as compared to the per share equity value for the
merger of $14.50.

Discounted Cash Flow Analysis

Allen derived an implied equity reference range for ATP by performing a
five-year discounted cash flow analysis on the stand-alone free cash flows of
ATP for the fiscal years 1999 through 2003, based on internal estimates of the
management of ATP. The range of estimated terminal values for ATP was
calculated by applying terminal value multiples of 6.5x to 7.5x to ATP's
projected 2003 earnings before interest, taxes, depreciation and amortization.
The cash flows and terminal values were discounted to present value using
discount rates ranging from 11.0% to 17.0%. This analysis resulted in an
implied per share equity reference range of $9.50 to $18.50 for ATP, as
compared to the per share equity value for the merger of $14.50.

Leveraged Buyout Analysis

Allen derived an implied equity reference range for ATP by performing a
leveraged buyout analysis based on internal estimates of the management of ATP
and estimated rates of return for a financial buyer. Allen applied

13
<PAGE>

a range of terminal value multiples of 6.5x to 7.5x to ATP's projected 2003
earnings before interest, taxes, depreciation and amortization and assumed a
rate of return of approximately 25% to 35% for the five-year period ending
2003. This analysis resulted in the implied per share equity reference range
for ATP of $9.50 to $13.50, as compared to the per share equity value for ATP
of the merger consideration of $14.50.

Premium Analysis

Allen analyzed the premiums paid in transactions by manufacturing companies
completed since January 1, 1997 having transaction values of between $50
million and $200 million involving all cash consideration. Allen analyzed the
premiums in these transactions based on the target company's stock price one
day, one week and one month prior to public announcement of the transaction.
This analysis indicated premiums of 21.6%, 25.9% and 36.7% in the selected
transactions, respectively, as compared to corresponding premiums of 48.7%,
43.1% and 48.7% for ATP based on the merger consideration. This analysis
resulted in an implied per share equity reference range of $11.86 to $13.33
for ATP, as compared to the per share equity value for the merger of $14.50.

The information above is a brief summary of the material financial analyses
presented by Allen to the ATP Board on September 2, 1999. This summary does
not purport to be a complete description of the analyses performed by Allen in
connection with the rendering of the Allen Opinion. The preparation of a
fairness opinion is a complex analytical process involving various qualitative
judgments as to the most appropriate and relevant methods of financial
analysis and the application of those methods to particular circumstances and
is not susceptible to partial analysis or summary description. Allen believes
that its analyses must be considered as a whole and that selecting portions of
its analyses, without considering all factors and analyses, would create an
incomplete view of the process underlying the Allen Opinion. In addition,
Allen considered the significance and relevance of the results of every
portion of its analyses and did not assign relative weights to any portion of
its analyses, so that the ranges of valuations resulting from any particular
analysis described above should not be taken to be Allen's view of the actual
value of ATP.

In performing its analyses, Allen made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of ATP. The analyses performed
by Allen are not necessarily indicative of actual values, trading values or
actual future results that might be achieved, all of which may be
significantly more or less favorable than suggested by these analyses. No
public company utilized as a comparison is identical or directly comparable to
ATP, and none of the Comparable M&A Transactions or other business
combinations utilized as a comparison is identical or directly comparable to
the Merger and the other Transactions. Accordingly, a purely mathematical
analysis of publicly traded comparable companies and comparable business
combinations resulting from the Comparable Companies and Comparable M&A
Transactions analyses is not a meaningful method of using the relevant data;
rather, these analyses involve complex considerations and judgments concerning
differences in financial and operating characteristics and other factors that
could affect the transaction or the public trading or other values of the
companies to which they are being compared.

In connection with its analyses, Allen utilized estimates and forecasts of
future operating results provided by the management of ATP, including the ATP
projections. Analyses based on forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by the analyses. The analyses are inherently subject
to uncertainty, being based on numerous factors or events beyond the control
of ATP, and therefore future results or actual values may be materially
different from these forecasts or assumptions. The analyses were prepared
solely as part of Allen's analysis of the fairness from a financial point of
view of the consideration to be received by the Public Stockholders pursuant
to the Merger, and were provided to the ATP Board in connection with the
delivery of the Allen Opinion. Allen's analyses do not purport to be an
appraisal or to reflect the prices at which a company might actually be sold
or the prices at which any securities may be traded in the future. In
addition, the Allen Opinion was one of many factors taken into consideration
by the ATP Board in making its determination to approve the Merger Agreement.
Consequently, the analyses described above should not be viewed as
determinative of the opinion of either the ATP Board or management of ATP with
respect to the value of ATP or whether either the ATP Board or management of
ATP would have been willing to agree to different terms for the Merger.

14
<PAGE>

Under the terms of its engagement, ATP has agreed to pay Allen upon
completion of the Merger a total financial advisory fee of $1,250,000. ATP has
also agreed to reimburse Allen for its travel and other reasonable out of
pocket expenses, including the reasonable fees and expenses of its legal
counsel, and to indemnify Allen and related persons against liabilities,
including liabilities under the federal securities laws, arising out of its
engagement.

The ATP Board retained Allen on the basis of its experience and expertise.
As part of its strategic advisory business, Allen engages in the valuation of
businesses and their securities in connection with mergers and acquisitions,
financings, private placements, principal investments and other purposes.
Allen participated in some of the negotiations relating to the Merger
Agreement and the Transactions.

Conflicts of Interest

In considering the recommendations of the ATP Board with respect to the
Merger, you should be aware that Messrs. Carter and Dominy and Simon have
interests in connection with the Merger which may present them with actual or
potential conflicts of interest as summarized below. The ATP Board was aware
of these interests and considered them among the other matters described under
"--Reasons for the Merger." Furthermore, the ATP Board considered the fact
that consummation of the Merger would preclude the Public Stockholders from
having the opportunity to participate in the future growth prospects of ATP.

Post-Merger Ownership and Control of the Surviving Corporation. It is
anticipated that immediately after the Merger ATP Holding will beneficially
own 100% of the shares of Surviving Corporation Securities.

Following consummation of the Merger, it is proposed that Garrett L. Dominy
and James S. Carter will be on the Board of Directors of the Surviving
Corporation. None of the other current members of the ATP Board will be on the
Board of Directors of the Surviving Corporation.

Cash Payments to the ATP Board. The ATP Board also will participate in the
Merger as Public Stockholders to the extent that they hold shares of ATP
Common Stock or In the Money Options. In the Merger, the ATP Board will be
entitled to receive the Cash Merger Consideration for their shares of ATP
Common Stock. They also will be entitled to receive cash based on the number
of shares of ATP Common Stock underlying their unconverted stock options and
the difference between the applicable per share exercise price of such options
and the Cash Merger Consideration.

15
<PAGE>

The following table sets forth information as of the date of this Proxy
Statement as to the shares of ATP Common Stock and the options to purchase
shares of ATP Common Stock held by the ATP Board for which cash payments will
be received upon consummation of the Merger.

<TABLE>
<CAPTION>
Amount of Cash to be
Received for
Board Member Shares Cashed Out Shares Cashed Out
------------ ------------------------ ------------------------
<S> <C> <C>
James Carter............... 295,787 $4,288,911.50
Garrett Dominy............. 158,013 $2,291,188.50
Alan Baldwin............... -- $ --
Robert Sigrist............. 56,657 $ 821,526.50
Lawrence Wesneski.......... 43,382 $ 629,039.00
Sam Douglass............... 111,798 $1,621,071.00
Gary Forbes................ 61,219 $ 887,675.50
John Simon................. -- $ --
<CAPTION>
Amount of Cash to be
Shares Underlying Received for
Board Member Stock Options Cashed Out Stock Options Cashed Out
------------ ------------------------ ------------------------
<S> <C> <C>
James Carter............... -- $ --
Garrett Dominy............. -- $ --
Alan Baldwin............... 50,000 $ 367,500.00
Robert Sigrist............. -- $ --
Lawrence Wesneski.......... -- $ --
Sam Douglass............... -- $ --
Gary Forbes................ -- $ --
John Simon................. 1,000 $ 5,425.00
</TABLE>

Indemnification and Insurance. Under the Merger Agreement, ATP Holding will
and cause the Surviving Corporation to, indemnify and hold harmless any former
or current director, officer, employee, or agent of ATP or any of its
subsidiaries (the "Indemnified Parties"), from and after the Effective Time,
to the full extent permitted by applicable law, each such Indemnified Party
against any and all losses, claims, damages, liabilities, costs, expenses
(including reasonable fees and expenses of legal counsel), judgments, fines or
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation (each, a "Claim") arising in whole or in part out
of or pertaining to any action or omission occurring prior to the Effective
Time (including, without limitation, any which arise out of or relate to the
transactions contemplated by the Merger Agreement), based on or arising out of
the fact that such person is or was a director, officer, employee or agent of
ATP or any of its subsidiaries, regardless of whether such Claim is asserted
or claimed prior to, at or after the Effective Time

For a period of six years after the Effective Time, ATP Holding or the
Surviving Corporation shall provide officers' and directors' liability
insurance ("D&O Insurance") covering each Indemnified Party who as of
September 3, 1999 was covered by ATP's officers' and directors' liability
insurance or will be so covered at the Effective Time with respect to actions
or omissions occurring prior to the Effective Time, on terms no less favorable
than such insurance maintained in effect by ATP as of the date hereof in terms
of coverage and amounts, provided that ATP Holding and the Surviving
Corporation shall not be required to pay in the aggregate an annual premium
for D&O Insurance in excess of 150% of the last annual premium paid prior to
the date hereof, but in such case shall purchase as much coverage as possible
for such amount. It is anticipated that the total aggregate cost of such
coverage will be approximately $80,000.

Allen. Allen is a nationally recognized investment banking firm and, as part
of its investment banking business, Allen regularly engages 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
valuations for estate, corporate and other purposes. Furthermore, ATP selected
Allen to render the Allen Opinion with respect to the Merger because of
Allen's familiarity with ATP. Allen

16
<PAGE>

served as financial advisor to the ATP Board. Allen has previously served as a
financial advisor to Lunn Industries, a predecessor to ATP. John Simon, a
Managing Director of Allen, also serves as a director of ATP. The ATP Board
and Allen believe that this relationship does not affect Allen's ability to
act independently and impartially as financial advisor to the ATP Board. In
addition, Allen owns approximately 30,000 shares of ATP Common Stock.
Accordingly, the ATP Board believed that despite the economic interest in ATP
held by Mr. Simon, the terms of Allen's engagement provided a great economic
incentive to assist ATP in obtaining the highest price for the stockholders in
any transaction. In view of the foregoing, the ATP Board concluded that the
aforementioned relationship between Mr. Simon and ATP would not affect Allen's
ability to act independently and impartially as financial advisor to the ATP
Board.

Messrs. Carter and Dominy. James S. Carter and Garrett L. Dominy will enter
into amended employment agreements with the Surviving Corporation effective
upon the Effective Time of the Merger. Because of the potential conflicts of
interests resulting from these employment agreements, Messrs. Carter and
Dominy abstained from the ATP Board's approval of the Merger.

The ATP Directors. The ATP Directors who approved the Merger and recommended
the Merger to the Public Stockholders will be treated in the Merger as Public
Stockholders with respect to their shares of ATP Common Stock. Mr. Baldwin
owns 0 shares of ATP Common Stock; Mr. Sigrist owns 56,657 shares of ATP
Common Stock; Mr. Wesneski owns 43,382 shares of ATP Common Stock; Mr.
Douglass owns 111,798 shares of ATP Common Stock, and Mr. Forbes owns 61,219
shares of ATP Common Stock. Mr. Baldwin holds 50,000 options to purchase ATP
Common Stock.

Certain Effects of the Merger

As a result of the Merger, the entire equity interest in ATP as the
Surviving Corporation will be owned by ATP Holding. The Public Stockholders
will no longer have any interest in, and will not be stockholders of, ATP,
and, therefore, will not participate in ATP's future earnings and potential
growth. Instead, the Public Stockholders will have the right to receive $14.50
in cash, without interest, for each share of ATP Common Stock held by them
immediately prior to the Effective Time (other than shares in respect of which
appraisal rights have been perfected). An equity investment in ATP as the
Surviving Corporation in the Merger involves substantial risk, including risks
resulting from the limited liquidity of an investment in the common stock of
ATP as a privately held company and risks resulting from ATP's increased
leverage in connection with the financing of the Transactions. Nonetheless, if
ATP successfully executes its business strategy, the value of such an equity
investment could be considerably greater than the original cost thereof. See
"--Conflicts of Interest" and "Cautionary Statement Concerning Forward-Looking
Information."

Following the Merger, ATP intends to delist the ATP Common Stock from
NASDAQ. The Surviving Corporation does not intend to apply to have the
Surviving Corporation Securities listed on any national securities exchange or
automated quotation system. The registration of ATP Common Stock under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), will
terminate in connection with the Merger.

Financing of the Merger
Veritas is working with Chase Manhattan Bank ("Chase") and First Union
Capital Markets Corp. ("First Union") to arrange for the financing required to
consummate the Merger and related transactions (the "Financing"). ATP
understands that Chase has worked with partners of Veritas on the financing of
other successful transactions, including a recent $425 million financing. The
definitive agreements for Chase's and First Union's providing of financing
have not been negotiated and completed.

17
<PAGE>

Conduct of ATP's Business After the Merger

ATP manufactures a variety of products in two principal business segments,
an aerospace and defense segment and a commercial segment. The aerospace and
defense segment designs, develops and manufactures advanced composite material
products used in the aerospace and defense industries, including radomes,
aircraft components, missile and satellite composite structures, engine
components, rocket motor cases, pressure vessels, relocatable shelters,
missile launch tubes, torque shafts and fuel tanks, as well as a wide range of
integrated defense systems including electro-optical systems, chemical
detection systems, ordnance delivery systems and light-weight camouflage
systems. The commercial segment produces natural gas vehicle fuel tanks,
specialty vehicle electronic products, products used in the exploration and
production of oil and gas and aluminum honeycomb products used by industrial,
transportation and construction customers.

ATP Holding is continuing to evaluate ATP's business, practices, operations,
properties, corporate structure, capitalization, management, and personnel and
will determine what changes, if any, will be desirable. Such changes may
include, without limitation, entering into an extraordinary corporate
transaction, a sale of assets, a change in the composition of the ATP Board,
or a change in ATP's dividend policy. Subject to the foregoing, ATP Holding
expects that the day-to-day business and operations of ATP will be conducted
substantially as they are currently being conducted by ATP.

It is expected that the members of ATP's management prior to the Merger will
remain as management of the Surviving Corporation. ATP Holding does not
currently contemplate any material change in the composition of management or
personnel. Following consummation of the Merger, it is proposed that Garrett
L. Dominy and James S. Carter will be on the Board of Directors of the
Surviving Corporation. None of the other current members of the ATP Board will
be on the Board of Directors of the Surviving Corporation.

ATP anticipates that Veritas will explore the possibility of providing to
the management of the Surviving Corporation an opportunity to participate in
incentive compensation through profit sharing or other similar plans.

18
<PAGE>

PROXY PROPOSAL 2: THE EMPLOYEE STOCK PURCHASE PLAN

The ATP Board has adopted the Purchase Plan, a copy of which is set forth as
Appendix D to this Proxy Statement, in order to provide eligible employees
with an opportunity to purchase ATP Common Stock on a quarterly basis through
accumulated payroll deductions. The ATP Board believes that the Purchase Plan
helps create in ATP's employees a direct interest to increase shareholder
value and provides them with additional compensation. Up to 1,000,000 shares
of ATP Common Stock are reserved under the Purchase Plan. A more detailed
description of the Purchase Plan is contained below in this Proxy Statement.
See "Proxy Proposal 2: The Purchase Plan." The ATP Board unanimously approved
Proxy Proposal 2 and recommends that the stockholders vote "For" Proxy
Proposal 2.

PROXY PROPOSAL 3: ELECTION OF DIRECTORS

The Restated Certificate of Incorporation of ATP authorizes the ATP Board to
fix the number of directors from time to time. The number of directors is
currently established at eight. The Restated Certificate of Incorporation of
ATP also provides for three classes of directors, designated Class I, Class II
and Class III, each currently having three-year terms of office. Each class of
directors is to consist of, as nearly as possible, one-third of the total
number of directors constituting the entire ATP Board. Except for directors
elected to fill vacancies on the ATP Board (whether created by death,
resignation, removal or expansion of the Board), the directors of each class
will be elected for a term of three years and until their successors have been
elected and qualified.

It is intended that the persons named in the accompanying form of proxy
will, except as noted below, vote "For" the election of the following Class II
nominees as directors: Garrett L. Dominy and Sam P. Douglass. Each of the
foregoing persons currently serves as a Class II director of ATP and was
designated as directors of ATP effective October 31, 1997 in connection with
the merger Lunn/TPG Merger. The ATP Board does not contemplate that either of
such nominees will become unable to serve. If, however, either of such
nominees should become unable to serve before the Annual Meeting, proxies
solicited by the ATP Board will be voted by the persons named as proxies
therein in accordance with the best judgment of such proxies.

PROXY PROPOSAL 4: RATIFICATION OF AUDITORS

The ATP Board has appointed KPMG LLP, independent certified public
accountants, to audit ATP's consolidated financial statements for the year
ending December 31, 1999. ATP has been advised by KPMG LLP that neither the
firm nor any of its associates has any material relationship with ATP or any
of its subsidiaries. In accordance with a resolution adopted by the ATP Board,
such appointment is being presented to the stockholders for ratification at
the Annual Meeting.

If Proxy Proposal 4 is not approved by a majority vote of the stockholders
present, in person or by proxy, at the Annual Meeting or if prior to the
Annual Meeting KPMG LLP shall decline to serve, then the ATP Board will
designate another firm to audit the consolidated financial statements of ATP
for the year ending December 31, 1999 whose continued employment thereafter
will be subject to ratification by the stockholders of ATP.

Representatives of KPMG LLP are expected to be present at the Annual Meeting
to respond to appropriate questions of stockholders and to make a statement if
they desire.

19
<PAGE>

THE ANNUAL MEETING

Date, Time, and Place of the Annual Meeting

The Annual Meeting will be held on October 21, 1999, at 2:00 p.m., local
time, at the Radisson Hotel, 10740 Westside Parkway, Alpharetta, Georgia
30004.

Purpose of the Meeting

The purpose of the Annual Meeting is to consider and vote upon Proxy
Proposal 1, Proxy Proposal 2, Proxy Proposal 3, Proxy Proposal 4 and such
other business as may properly come before the Annual Meeting. See "Proxy
Proposal 1: The Merger"; "Proxy Proposal 2: The Purchase Plan"; "Proxy
Proposal 3: Election of Directors" and "Proxy Proposal 4: Ratification of
Auditors."

Record Date and Outstanding Shares

Stockholders of record of outstanding shares of ATP Common Stock at the
close of business on September 29, 1999 (the "Record Date") are entitled to
notice of, and to vote at, the Annual Meeting, or at any adjournment or
postponement thereof. As of the Record Date, there were approximately 1,600
holders of record of ATP Common Stock and approximately 5,286,188 shares of
ATP Common Stock issued and outstanding. The holders of ATP Common Stock are
entitled to one vote per share on all matters to be voted upon by the
stockholders.

Voting of Proxies

All properly executed proxies that are not revoked will be voted at the
Annual Meeting in accordance with the instructions contained therein. Proxies
returned and containing no instructions will be voted "For" approval and
adoption of Proxy Proposal 1, "For" approval and adoption of Proxy Proposal 2,
"For" approval and adoption of Proxy Proposal 3 and "For" approval and
adoption of Proxy Proposal 4 in accordance with the recommendation of the ATP
Board. An ATP stockholder who has executed and returned a proxy may revoke it
at any time before it is voted at the Annual Meeting by executing and
returning a proxy bearing a later date, by filing written notice of such
revocation with the Secretary of ATP stating that the proxy is revoked or by
attending the Annual Meeting and voting in person. Other than approval and
adoption of Proxy Proposal 1, Proxy Proposal 2, Proxy Proposal 3 and Proxy
Proposal 4, ATP does not know of any matters that are to come before the
Annual Meeting. Should any other business properly come before the Annual
Meeting, the proxy holders will have discretionary authority to vote the
shares of ATP Common Stock represented thereby on such matters in accordance
with their best judgment.

Vote Required

Under the DGCL, approval of Proxy Proposal 1 requires the affirmative vote
of the holders of a majority of the outstanding shares of ATP Common Stock,
approval of Proxy Proposal 2 and Proxy Proposal 4 requires a majority of the
votes of the shares of ATP Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote and approval of Proxy
Proposal 3 requires a plurality of the votes of the shares of ATP Common Stock
present in person or represented by proxy at the Annual Meeting and entitled
to vote. The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of ATP Common Stock is
necessary to constitute a quorum at the Annual Meeting. If, however, a
majority of shares of ATP Common Stock is not present or represented at the
Annual Meeting, the ATP stockholders entitled to vote thereat, present in
person or by proxy, can adjourn the meeting from time to time, until a quorum
is present. The persons named in the proxies will vote in favor of such
adjournment those proxies which direct them to vote in favor of Proxy Proposal
1, Proxy Proposal 2, Proxy Proposal 3 and Proxy Proposal 4 and will vote
against any such adjournment those proxies to be voted against such proposals.

20
<PAGE>

Abstentions and broker non-votes (i.e., shares of ATP Common Stock held in
record name by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote, (ii) the
broker or nominee does not have discretionary voting power under applicable
Commission rules or the instrument under which it serves in such capacity or
(iii) the record holder has indicated on the proxy card or otherwise notified
ATP that such record holder does not have authority to vote on that matter)
are counted for purposes of determining the existence of a quorum for the
transaction of business and will have the effect of a vote against Proxy
Proposal 1, Proxy Proposal 2 and Proxy Proposal 4 because a stockholder or
broker who abstains from voting on the resolution to authorize and approve
Proxy Proposal 1, Proxy Proposal 2 and Proxy Proposal 4 would in effect be
voting against Proxy Proposal 1, Proxy Proposal 2 and Proxy Proposal 4 because
such shares would be recorded as having abstained and could not be counted in
determining whether the necessary majority vote had been obtained. Abstentions
and broker non-votes will have no effect on approval of Proxy Proposal 3.

As of the Record Date, the executive officers and directors of ATP (and
their affiliates) holding an aggregate of 1,735,491 shares of ATP Common
Stock, representing approximately 30.9% of the outstanding shares of ATP
Common Stock, have indicated an intention to vote in favor of Proxy Proposal
1, Proxy Proposal 2, Proxy Proposal 3 and Proxy Proposal 4 at the Annual
Meeting.

Expenses; Solicitation of Proxies

In addition to solicitation by use of the mails, proxies may be solicited by
directors, officers and employees of ATP in person or by telephone or other
means of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for out-of-pocket expenses
incurred in connection with such solicitation. Arrangements will also be made
with custodians, nominees and fiduciaries for the forwarding of proxy
solicitation materials to beneficial owners of shares held of record by such
custodians, nominees and fiduciaries, and ATP will reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in connection
therewith. In addition, D.F. King & Co., Inc. (the "Proxy Solicitor") has been
retained by ATP to assist in the solicitation of proxies. The Proxy Solicitor
may contact holders of shares of ATP Common Stock by mail, telephone,
facsimile, telegraph and personal interviews and may request brokers, dealers
and other nominee stockholders to forward materials to beneficial owners of
shares of ATP Common Stock. The Proxy Solicitor will receive reasonable and
customary compensation for its services (estimated at $6,000) and will be
reimbursed for certain reasonable out-of-pocket expenses.

Effective Time of the Merger and Payment for Shares

The Effective Time of the Merger, which shall be the date and time of filing
of Articles of Merger with the Secretary of State of the State of Delaware, is
currently expected to occur as soon as practicable after the Annual Meeting,
subject to approval of the Merger Agreement at the Annual Meeting and
satisfaction or waiver of the terms and conditions of the Merger Agreement.
Detailed instructions with regard to the surrender of ATP Common Stock
certificates, together with a letter of transmittal, will be forwarded to
stockholders by ATP's exchange agent, American Stock Transfer & Trust Co. (the
"Exchange Agent"), promptly following the Effective Time. Stockholders should
not submit their certificates to the Exchange Agent until they have received
such materials. The Exchange Agent will send payment of the Cash Merger
Consideration to stockholders as promptly as practicable following receipt by
the Exchange Agent of their certificates and other required documents. No
interest will be paid or accrued on the cash payable upon the surrender of
certificates. Stockholders should not send any certificates at this time.

Other Matters to be Considered

The ATP Board is not aware of any other matters which will be brought before
the Annual Meeting. If, however, other matters are presented, proxies will be
voted in accordance with the discretion of the holders of such proxies.

21
<PAGE>

PROXY PROPOSAL 1: THE MERGER

Terms of the Merger Agreement

General. The Merger Agreement provides that subject to satisfaction of
certain conditions, ATP Acquisition will be merged with and into ATP, and that
following the Merger, the separate existence of ATP Acquisition will cease and
ATP will continue as the Surviving Corporation. At the Effective Time, and
subject to the terms and conditions set forth in the Merger Agreement, each
share of issued and outstanding ATP Common Stock (other than shares of ATP
Common Stock owned by ATP or any of its wholly-owned subsidiaries, or shares
of ATP Common Stock as to which appraisal rights are properly perfected and
not withdrawn (the "Excluded Shares")), will, by virtue of the Merger, be
converted into the right to receive the Cash Merger Consideration. As a result
of the Merger, the ATP Common Stock will no longer be publicly traded, and the
equity of the Surviving Corporation will be 100% owned by ATP Holding.

The terms of and conditions to the Merger are contained in the Merger
Agreement which is included in full as Appendix A to this Proxy Statement and
is incorporated herein by reference. The discussion in this Proxy Statement of
the Merger and the description of the terms of the Merger Agreement constitute
a summary of the material features of the Merger and the material terms of the
Merger Agreement.

Certificate of Incorporation; By-Laws. At the Effective Time of the Merger,
ATP's Restated Certificate of Incorporation will be amended so as to read in
its entirety as set forth in Exhibit 1.6(a) of the Merger Agreement and as so
amended shall become the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law.

Cash Merger Consideration. At the Effective Time, each share of ATP Common
Stock issued and outstanding immediately prior to the Effective Time (other
than the Excluded Shares) will be converted into the right to receive the Cash
Merger Consideration. All such shares of ATP Common Stock, when converted
pursuant to the Merger Agreement, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate, which immediately prior to the Effective Time evidenced shares of
ATP Common Stock, shall thereafter represent only the right to receive the
Cash Merger Consideration. The holders of certificates previously evidencing
shares of ATP Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to the ATP Common Stock except as
otherwise provided in the Merger Agreement or by law and, upon the surrender
of certificates evidencing shares of ATP Common Stock in accordance with the
Merger Agreement, shall only represent the right to receive for their shares
of ATP Common Stock, the Cash Merger Consideration, without any interest
thereon.

Each share of preferred stock of ATP (the "ATP Preferred Stock") that is
issued and outstanding immediately prior to the Effective Time shall be
redeemed by ATP in accordance with ATP's Restated Certificate of Incorporation
by virtue of the Merger and without any action of the holders of the ATP
Preferred Stock. Upon surrender of a certificate representing ATP Preferred
Stock, $1.00 per share in cash, without interest thereon, plus any accrued but
unpaid dividends thereon shall be paid to the holder thereof.

At the Effective Time, each share of ATP Acquisition Common Stock issued and
outstanding immediately prior to the Effective Time will be converted into one
share of Common Stock of the Surviving Corporation (the "Surviving Corporation
Securities") which Surviving Company Securities shall be validly issued, fully
paid and nonassessable upon such conversion.

ATP Stock Options and Warrants. The Merger Agreement provides that each
portion of an option or warrant to purchase shares of ATP Common Stock that,
as of the Effective Time, by its terms is vested and

22
<PAGE>

exercisable and has an exercise price which is less than $14.50 per share
(each, a "Vested In the Money Option") will be extinguished and represent at
the Effective Time the right to receive a cash amount equal to the product of
(x) the excess of (a) the Cash Merger Consideration over (b) the exercise
price of such Vested In the Money Option multiplied by (y) the aggregate
number of shares of ATP Common Stock issuable upon the exercise of such Vested
in the Money Option as of the Effective Time (the "Vested Option
Consideration"). A holder of a Vested In the Money Option will be entitled to
receive the Vested Option Consideration from ATP upon the cancellation of such
Vested In the Money Option and the surrender and cancellation of the
applicable option agreement. In connection with the Merger, as of September 3,
1999, holders of Vested In the Money Options to purchase an aggregate of
237,130 shares of ATP Common Stock will be entitled to receive as Vested
Option Consideration an aggregate of approximately $2.4 million.

The Merger Agreement also provides that each option or warrant to purchase
shares of ATP Common Stock that, as of the Effective Time, by its terms is
unvested and unexercisable as of the Effective Time and has an exercise price
which is less than $14.50 per share (each, an "Unvested In the Money Option")
shall be extinguished and represent a right to receive equity in, or an option
for the purchase of equity in, the Surviving Corporation or a holding entity
owning directly or indirectly 100% of the Surviving Corporation (the
"Replacement Security"), which Replacement Security shall (i) have a value
equivalent to the value of such Unvested In the Money Option as of the
Effective Time, (ii) shall vest in full or cease to be subject to forfeiture
upon a change in control of the Surviving Corporation and (ii) bear terms and
conditions which are substantially similar to the terms currently contained in
such Unvested In the Money Option or terms more favorable to the holder except
that the vesting/forfeiture provisions of such Replacement Security may be
changed to a vesting/forfeiture period of five (5) years commencing at the
Effective Time so long as the holder of such Unvested In the Money Option is
issued, in addition to the Replacement Security, additional equity or an
additional equity right pursuant to a stock or option plan implemented for
employees of the Surviving Corporation.

In addition, (a) each option that is not a Vested In the Money Option or an
Unvested In the Money Option shall terminate at the Effective Time (i) by
determination of the ATP Board or any applicable committee thereof if the
stock option agreement and the stock option plan relating to such option
permits such a determination, or (ii) by the agreement of the holder of such
option on or before the Effective Time and (b) the stock option plans of ATP
shall terminate as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the ATP or any subsidiary shall be
terminated as of the Effective Time.

Exchange Procedures. As soon as practicable following the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail or deliver to
each record holder, as of the Effective Time, of an outstanding certificate or
certificates or option grant which immediately prior to the Effective Time
represented either Common Shares or In the Money Options (the "Certificates"),
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and instructions for use
in effecting the surrender of the Certificates for payment therefor. Upon
surrender to the Exchange Agent of a Certificate, together with a duly
executed letter of transmittal and any other reasonably required documents,
the holder of such Certificate shall promptly receive in exchange therefor the
Cash Merger Consideration, without interest and/or the Vested Option
Consideration together with the Unvested Option Consideration to which such
holder is entitled, if any, less any required withholding of U.S. federal
income taxes and such Certificate shall be canceled.

Conditions to the Merger. Each party's respective obligation to effect the
Merger is subject to the fulfillment or waiver, if permissible, by the
anticipated closing date of the Merger, of each of the following conditions:
(i) the approval and adoption of the Merger Agreement by the affirmative vote
of the holders of a majority of the outstanding shares of ATP Common Stock
entitled to vote at the Annual Meeting; (ii) the waiting period (and any
extension thereof) applicable to the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have expired or been
terminated; (iii) all necessary approvals, authorizations and

23
<PAGE>

consents of any governmental or regulatory entity required to consummate the
Merger shall have been obtained and remain in full force and effect, and all
waiting periods relating to such approvals, authorizations and consents shall
have expired or been terminated.

The obligations of ATP Acquisition and ATP Holding to effect the Merger are
further subject to the following conditions: (i) the representations and
warranties of ATP set forth in the Merger Agreement shall be true and correct
as of the date of the Merger Agreement and as of the date of the closing date
of the Merger (the "Closing Date") as though made on and as of the Closing
Date except as would not cause or could not be reasonably expected to cause a
material adverse effect on ATP or as would not impair or would not be
reasonably likely to impair the consummation of the Merger and the related
Transactions (an "ATP Material Adverse Effect"); (ii) ATP shall have performed
in all material respects all material obligations required to be performed by
it under the Merger Agreement; (iii) ATP shall have obtained the consent of
any third parties whose consent is required under any agreement, contract or
license to which ATP or any of its subsidiaries is a party to or by which ATP
or its subsidiaries is bound or licensed for consummation of the Merger and as
to whom failure to obtain such consent would have an ATP Material Adverse
Effect; and (iv) ATP Holding shall have received a certificate signed on
behalf of ATP by the chief executive officer and the chief financial officer
of ATP certifying the items in (i) and (ii) above.

The obligation of ATP to effect the Merger is further subject to the
following conditions: (i) the representations and warranties of ATP Holding
and ATP Acquisition set forth in the Merger Agreement shall be true and
correct as of the date of the Merger Agreement and as of the date of the
Closing Date as though made on and as of the Closing Date except as would not
cause or could not be reasonably expected to cause a material adverse effect
on ATP Holding or ATP Acquisition or as would not impair or would not be
reasonably likely to impair the consummation of the Merger and the related
Transactions (an "ATP Holding Material Adverse Effect"); (ii) each of ATP
Holding and ATP Acquisition shall have performed in all material aspects all
obligations required to be performed by it under the Merger Agreement; and
(iii) ATP shall have received a certificate signed on behalf of ATP Holding by
the chief executive officer and the chief financial officer of ATP Holding
certifying the items in (i) and (ii) above.

EVEN IF THE STOCKHOLDERS APPROVE THE MERGER, THERE CAN BE NO ASSURANCE THAT
THE MERGER WILL BE CONSUMMATED.

Representations and Warranties. ATP has made representations and warranties
in the Merger Agreement regarding, among other things, its organization and
good standing, authority to enter into the Transactions, compliance with all
applicable laws, its capitalization, its financial statements, its ownership
of all subsidiaries and their organization and good standing, requisite
governmental and other consents and approvals, the content and submission of
forms, proxy materials and reports required to be filed by ATP with the
Commission, the absence of litigation to which ATP is a party, the absence of
certain changes in the business of ATP since June 30, 1999, requisite tax
filings, properties owned or leased by ATP, ownership or license for all
material intellectual property, systems and software, environmental matters,
employee benefits, labor matters, brokers' and finders' fees, Year 2000
compliance, absence of undisclosed liabilities, recommendation of the ATP
Board, termination, severance and employment agreements and affiliate
transactions.

Certain of ATP's representations and warranties in the Merger Agreement are
qualified by an ATP Material Adverse Effect.

ATP Acquisition and ATP Holding have, jointly and severally, made
representations and warranties in the Merger Agreement regarding, among other
things, their organization and good standing, authority to enter into the
Transactions, proxy materials and brokers' and finders' fees.

Certain of the representations and warranties of ATP Acquisition and ATP
Holding are qualified by an ATP Holding Material Adverse Effect.

24
<PAGE>

The representations, warranties, and agreements in the Merger Agreement or
in any instrument delivered pursuant to the Merger Agreement will expire at
the Effective Time.

Covenants. ATP has agreed under the Merger Agreement that during the period
from the date of the Merger Agreement to the Effective Time, except as
otherwise contemplated by the Merger Agreement or otherwise agreed to in
writing by ATP Acquisition or ATP Holding, ATP shall, use its reasonable best
efforts to generally operate and to generally cause each of its subsidiaries
to, operate their respective businesses in the usual, regular and ordinary
course, and in all material aspects and comply with applicable laws in all
material respects. Specifically, other than certain specified items, ATP has
agreed not to, among other things, (i) pay dividends or make distributions, or
take certain actions with respect to its capital stock, (ii) authorize the
issuance of securities (except in connection with the Transactions), (iii)
amend its organizational documents (except in connection with the
Transactions) (iv) acquire any business for a consideration in excess of $1
million (v) lease, sell or dispose any of its substantial assets outside the
ordinary course of business or in a transaction or series of transactions
involving assets with an aggregate value of less than $1 million, (vi) make
any capital expenditures or commitments exceeding ATP's forecasts by more than
$100,000, (vii) incur any indebtedness or make any loans or advances to any
other person, (viii) take certain actions with respect to employee benefits,
(ix) merge or consolidate with any other entity; (x) enter into or amend any
employment or similar agreement which provides for an annual base salary of
more than $125,000, (xi) change its accounting policies, and (xii) authorize,
recommend, propose or enter into an agreement in principle or an agreement
with respect to any merger, consolidation or business combination other than
the Merger except as contemplated in the Merger Agreement.

Financing. Under the Merger Agreement, each of ATP Holding and ATP
Acquisition agreed to use its commercially reasonable efforts to obtain
financing by January 31, 2000 in an amount sufficient to consummate the Merger
and the related transactions and to pay all fees and expenses in connection
therewith (the "Financing") on terms and conditions reasonably satisfactory to
them.

Solicitation of Acquisition Proposals. Under the Merger Agreement, ATP is
prohibited from authorizing or permitting any of its representatives to,
directly or indirectly, (i) solicit or initiate the submission of any
Acquisition Proposal (as defined below); (ii) participate in any discussions
or negotiations regarding, or furnish to any person any non-public information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal; provided, however, that this shall not prohibit
the independent directors from furnishing information or requiring ATP to
furnish information to, or entering into discussions or negotiations with, any
person in connection with an unsolicited bona fide Acquisition Proposal by
such person.

For purposes of the Merger Agreement, "Acquisition Proposal" means any
proposal with respect to a merger, consolidation, share exchange, business
combination or similar transaction involving ATP or any of its subsidiaries or
any equity interest greater than 25% in ATP or any of its subsidiaries, other
than the transactions contemplated hereby.

ATP is also prohibited from entering into any agreement with respect to any
Acquisition Proposal or entering into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by the Merger Agreement unless
the ATP Board determines in good faith by a majority vote, after consultation
with its financial and legal advisors that such transaction (the "Alternative
Transaction") is more favorable to the stockholders of ATP from a financial
point of view than the transactions contemplated by the Merger Agreement.

Termination. The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the Merger Agreement by
the ATP stockholders only in the following ways: (a) by ATP or ATP Holding if
ATP Holding and ATP Acquisition have not been able to obtain the Financing or
are otherwise unable to pay the Cash Merger Consideration on or before January
31, 2000 (the "Deadline Date") (b) by mutual written consent of ATP Holding
and ATP; (c) by either of ATP or ATP Holding (i) if the ATP stockholders shall
have failed to give the required approval of the Merger Agreement by January
15, 2000, (ii) if

25
<PAGE>

the Merger shall not have been consummated on or before the Deadline Date
provided that the failure to consummate the Merger is not attributable to the
failure of the terminating party to fulfill its obligations pursuant to the
Merger Agreement, or (iii) if any governmental authority shall have issued a
permanent injunction or taken such other final and non-appealable action which
permanently restrains, enjoins or otherwise prohibits the Merger; (d) by ATP
(i) in connection with entering into a definitive agreement to effect an
Alternative Transaction, or (ii) if ATP Acquisition or ATP Holding shall have
breached any of their respective representations, warranties, covenants or
other agreements, which breach would cause an ATP Holding Material Adverse
Effect and which breach is not cured within 10 days following receipt by ATP
Acquisition or ATP Holding of notice of such breach; (e) by ATP Holding if ATP
(i) shall have breached in any respect any of its representations concerning
Acquisition Proposals (ii) withdrew or modified in a manner materially adverse
to ATP Holding or ATP Acquisition the approval or recommendation of the ATP
Board or (iii) approved an Alternative Transaction; or (f) by ATP Holding if
ATP shall have breached any of its representations, warranties, covenants or
other agreements, which breach would cause an ATP Material Adverse Effect and
which breach is not cured within 10 days following receipt by ATP of notice of
such breach.

Good Faith Deposit. ATP Holding has put in escrow $3,000,000 pursuant to an
Escrow Agreement among ATP Holding, ATP and the Chase Manhattan Bank, as
escrow agent, as a good faith deposit in connection with the Merger (the
"Deposit").

26
<PAGE>

Amendment. Subject to applicable law, at any time prior to the Effective
Time, whether before or after adoption of the Merger Agreement by the
stockholders of ATP, ATP, ATP Holding and ATP Acquisition may modify or amend
the Merger Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
adoption of the Merger Agreement by the stockholders of ATP or ATP
Acquisition, no amendment shall be made which by law would require the further
approval of such stockholders, without such further approval. The Merger
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.

Estimated Fees and Expenses of the Merger

Estimated fees and expenses incurred or to be incurred by the Surviving
Corporation in connection with the Transactions are approximately $5,000,000.

APPRAISAL RIGHTS

If the merger is consummated, holders of shares of ATP Common Stock are
entitled to appraisal rights under Section 262 of the DGCL, provided that they
comply with the conditions established by Section 262.

Section 262 is reprinted in its entirety as Appendix C to this Proxy
Statement. The following discussion is not a complete statement of the law
relating to appraisal rights and is qualified in its entirety by reference to
Appendix C. This discussion and Appendix C should be reviewed carefully by any
stockholder who wishes to exercise statutory appraisal rights or who wishes to
preserve the right to do so, as failure to comply with the procedures set
forth herein or therein will result in the loss of appraisal rights.

A record holder of shares of ATP Common Stock who makes the demand described
below with respect to such shares, who continuously is the record holder of
such shares through the effective time of the merger, who otherwise complies
with the statutory requirements of Section 262 and who neither votes in favor
of the merger nor consents thereto in writing will be entitled to an appraisal
by the Delaware Court of Chancery (the "Delaware Court") of the fair value of
his or her shares of ATP Common Stock. All references in this summary of
appraisal rights to a "stockholder" or "holders of shares of ATP Common Stock"
are to the record holder or holders of shares of ATP Common Stock. Except as
set forth herein, stockholders of ATP will not be entitled to appraisal rights
in connection with the merger.

Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, such as the Annual Meeting, not less than 20 days
prior to the meeting a constituent corporation must notify each of the holders
of its stock for whom appraisal rights are available that such appraisal
rights are available and include in each such notice a copy of Section 262.
This proxy statement constitutes such notice to the record holders of ATP
Common Stock.

Holders of shares of ATP Common Stock who desire to exercise their appraisal
rights must not vote in favor of the merger and must deliver a separate
written demand for appraisal to ATP prior to the vote by the stockholders of
ATP on the merger. A demand for appraisal must be executed by or on behalf of
the stockholder of record and must reasonably inform ATP of the identity of
the stockholder of record and that such stockholder intends thereby to demand
appraisal of the ATP Common Stock. A proxy or vote against the merger will not
by itself constitute such a demand. Within ten days after the effective time
of the merger ATP must provide notice of the effective time of the merger to
all stockholders who have complied with Section 262.

A stockholder who elects to exercise appraisal rights should mail or deliver
his or her written demand to: Advanced Technical Products, Inc., Attention:
James P. Hobt, Secretary, 200 Mansell Court, East, Suite 505, Roswell, Georgia
30076.

27
<PAGE>

A person having a beneficial interest in shares of ATP Common Stock that are
held of record in the name of another person, such as a broker, fiduciary,
depositary or other nominee, must act promptly to cause the record holder to
follow the steps summarized herein properly and in a timely manner to perfect
appraisal rights. If the shares of ATP Common Stock are owned of record by a
person other than the beneficial owner, including a broker, fiduciary (such as
a trustee, guardian or custodian), depositary or other nominee, such demand
must be executed by or for the record owner. If the shares of ATP Common Stock
are owned of record by more than one person, as in a joint tenancy or tenancy
in common, such demand must be executed by or for all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for appraisal for a stockholder of record; however, the agent must
identify the record owner and expressly disclose the fact that, in exercising
the demand, such person is acting as agent for the record owner. If a
stockholder holds shares of ATP Common Stock through a broker who in turn
holds the shares through a central securities depository nominee such as Cede
& Co., a demand for appraisal of such shares must be made by or on behalf of
the depository nominee and must identify the depository nominee as record
holder.

A record holder, such as a broker, fiduciary, depositary or other nominee
who holds shares of ATP Common Stock as a nominee for others, may exercise
appraisal rights with respect to the shares held for all or less than all
beneficial owners of shares as to which such person is the record owner. In
such case, the written demand must set forth the number of shares covered by
such demand. Where the number of shares is not expressly stated, the demand
will be presumed to cover all shares of ATP Common Stock outstanding in the
name of such record owner.

Within 120 days after the effective time of the merger, either ATP or any
stockholder who has complied with the required conditions of Section 262 may
file a petition in the Delaware Court, with a copy served on ATP in the case
of a petition filed by a stockholder, demanding a determination of the fair
value of the shares of all dissenting stockholders. There is no present intent
on the part of ATP to file an appraisal petition and stockholders seeking to
exercise appraisal rights should not assume that ATP will file such a petition
or that ATP will initiate any negotiations with respect to the fair value of
such shares. Accordingly, holders of ATP Common Stock who desire to have their
shares appraised should initiate any petitions necessary for the perfection of
their appraisal rights within the time periods and in the manner prescribed in
Section 262. Within 120 days after the effective time of the merger, any
stockholder who has theretofore complied with the applicable provisions of
Section 262 will be entitled, upon written request, to receive from ATP a
statement setting forth the aggregate number of shares of ATP Common Stock not
voting in favor of the merger and with respect to which demands for appraisal
were received by ATP and the number of holders of such shares. Such statement
must be mailed (i) within 10 days after the written request therefor has been
received by ATP or (ii) within 10 days after the expiration of the period for
the delivery of demands as described above, whichever is later.

If a petition for an appraisal is filed timely, at the hearing on such
petition, the Delaware Court will determine which stockholders are entitled to
appraisal rights. The Delaware Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Delaware Court may
dismiss the proceedings as to such stockholder. Where proceedings are not
dismissed, the Delaware Court will appraise the shares of ATP Common Stock
owned by such stockholders, determining the fair value of such shares
exclusive of any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value.

Although ATP believes that the merger consideration for each share held by a
public stockholder is fair, no representation is made as to the outcome of the
appraisal of fair value as determined by the Delaware Court and stockholders
should recognize that such an appraisal could result in a determination of a
value higher or lower than, or the same as, the merger consideration.
Moreover, ATP does not anticipate offering more than the merger consideration
to any stockholder exercising appraisal rights and reserves the right to
assert, in any appraisal proceeding, that, for purposes of Section 262, the
"fair value" of a share of ATP Common Stock is less than the

28
<PAGE>

merger consideration. In determining "fair value," the Delaware Court is
required to take into account all relevant factors. In Weinberger v. UOP, Inc.
the Delaware Supreme Court discussed the factors that could be considered in
determining fair value in an appraisal proceeding, stating that "proof of
value by any techniques or methods which are generally considered acceptable
in the financial community and otherwise admissible in court" should be
considered and that "[f]air price obviously requires consideration of all
relevant factors involving the value of a company." The Delaware Supreme Court
has stated that in making this determination of fair value the court must
consider market value, asset value, dividends, earnings prospects, the nature
of the enterprise and any other facts which could be ascertained as of the
date of the merger which throw any light on future prospects of the merged
corporation. Section 262 provides that fair value is to be "exclusive of any
element of value arising from the accomplishment or expectation of the
merger." In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated
that such exclusion is a "narrow exclusion [that] does not encompass known
elements of value," but which rather applies only to the speculative elements
of value arising from such accomplishment or expectation. In Weinberger, the
Delaware Supreme Court construed Section 262 to mean that "elements of future
value, including the nature of the enterprise, which are known or susceptible
of proof as of the date of the merger and not the product of speculation, may
be considered."

Stockholders considering seeking appraisal should recognize that the fair
value of their shares determined under Section 262 could be more than, the
same as or less than the consideration they are entitled to receive pursuant
to the merger agreement if they do not seek appraisal of their shares. The
cost of the appraisal proceeding may be determined by the Delaware Court and
taxed against the parties as the Delaware Court deems equitable in the
circumstances. However, costs do not include attorneys' and expert witness
fees. Each dissenting stockholder is responsible for his or her attorneys' and
expert witness expenses, although, upon application of a dissenting
stockholder of ATP, the Delaware Court may order that all or a portion of the
expenses incurred by any dissenting stockholder in connection with the
appraisal proceeding, including without limitation, reasonable attorneys' fees
and the fees and expenses of experts, be charged pro rata against the value of
all shares of stock entitled to appraisal.

Any stockholder who has duly demanded appraisal in compliance with Section
262 will not, after the effective time of the merger, be entitled to vote for
any purpose any shares subject to such demand or to receive payment of
dividends or other distributions on such shares, except for dividends or
distributions payable to stockholders of record at a date prior to the
effective time of the merger.

At any time within 60 days after the effective time of the merger, any
stockholder will have the right to withdraw such demand for appraisal and to
accept the terms offered in the merger; after this period, the stockholder may
withdraw such demand for appraisal only with the consent of ATP. If no
petition for appraisal is filed with the Delaware Court within 120 days after
the effective time of the merger, stockholders' rights to appraisal shall
cease, and all holders of shares of ATP Common Stock will be entitled to
receive the consideration offered pursuant to the merger agreement. Inasmuch
as ATP has no obligation to file such a petition, and ATP has no present
intention to do so, any stockholder who desires such a petition to be filed is
advised to file it on a timely basis. Any stockholder may withdraw such
stockholder's demand for appraisal by delivering to ATP a written withdrawal
of his or her demand for appraisal and acceptance of the merger consideration,
except (i) that any such attempt to withdraw made more than 60 days after the
effective time of the merger will require written approval of ATP and (ii)
that no appraisal proceeding in the Delaware Court shall be dismissed as to
any stockholder without the approval of the Delaware Court, and such approval
may be conditioned upon such terms as the Delaware Court deems just.

REGULATORY APPROVALS

ATP is required to make filings with or obtain pre-Merger approvals from
certain United States regulatory authorities in connection with the Merger. An
application and notice was submitted for filing with the Federal Trade
Commission and the Department of Justice on September 30, 1999, and the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, will expire at the end of October 1999 absent a
request for any additional information from any federal antitrust regulatory
agencies.

29
<PAGE>

PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP
OF MANAGEMENT AND OTHERS

The following table sets forth, as of April 26, 1999, the number of shares
of ATP Common Stock and the 8% Cumulative Redeemable Preferred Stock, par
value $1.00 per share, of ATP (the "ATP Preferred Stock") beneficially owned
by (1) each person or group known by ATP to own beneficially more than 5% of
the outstanding shares of ATP Common Stock, (2) each director and each nominee
for director, (3) ATP's Chief Executive Officer and each of ATP's four other
most highly compensated executive officers, and (4) all directors and
executive officers as a group. Except as otherwise indicated, each of the
persons or groups named below has sole voting power and investment power with
respect to such ATP Common Stock and ATP Preferred Stock.

<TABLE>
<CAPTION>
Common Stock Preferred Stock
----------------- ---------------
Name of Beneficial Owner or Group Shares Percent Shares Percent
- --------------------------------- --------- ------- ------- -------
<S> <C> <C> <C> <C>
Equus Corporation International(1)(2)........ 267,602 5.09% 913,043 91.30%
Equus Capital Management Corporation(1)(2)... 267,602 5.09% 913,043 91.30%
Equus Equity Appreciation Fund, L.P.(2)...... -- -- 913,043 91.30%
Alan W. Baldwin(3)........................... 52,500 * -- --
H. Dwight Byrd(4)............................ 200,802 3.82% -- --
James S. Carter(5)........................... 304,087 5.77% -- --
Garrett L. Dominy(6)......................... 165,273 3.14% -- --
Sam P. Douglass(1)(2)(7)(8).................. 378,326 7.19% 913,043 91.30%
Gary L. Forbes(8)............................ 63,719 1.21% -- --
Edward Kiley(9).............................. 30,565 * -- --
Robert C. Sigrist(8)......................... 61,657 1.17% 21,739 2.17%
John M. Simon(10)............................ 3,500 * -- --
Lawrence E. Wesneski(11)..................... 144,477 2.75% 15,946 1.59%
All directors and executive officers as a
group (13 persons)(12)...................... 1,735,491 32.19% 37,685 3.77%
</TABLE>
- --------
* Less than one percent.
(1) Equus Capital Management Corporation ("ECMC") owns beneficially and of
record 11,750 shares of the ATP Common Stock. ECMC may also be deemed to
beneficially own 255,852 shares of the ATP Common Stock that are owned
beneficially and of record by Equus Capital Corporation ("ECC"), a
wholly-owned subsidiary of ECMC. ECMC disclaims beneficial ownership of
these shares. Equus Corporation International ("ECI") may be deemed to
own the 267,602 shares that are beneficially owned by ECMC as a result of
ECI's ownership of 80% of the common stock of ECMC. ECI disclaims
beneficial ownership of those shares.
(2) Equus Equity Appreciation Fund, L.P. ("EEAF") owns beneficially and of
record 913,043 shares of the ATP Preferred Stock. ECMC and ECI may be
deemed to beneficially own the 913,043 shares of the ATP Preferred Stock
owned by EEAF as a result of the relationship described in (1) above.
Each of ECMC and ECI disclaim beneficial ownership of these shares. In
addition, Mr. Douglass may be deemed to beneficially own the 913,043
shares of the ATP Preferred Stock that ECI may be deemed to own as a
result of the relationship described in (7) below. Mr. Douglass disclaims
beneficial ownership of these shares.
(3) Includes 50,000 shares of ATP Common Stock that may be acquired within 60
days of April 26, 1999 upon exercise of options granted by ATP and 2,500
shares of ATP Common Stock that may be acquired within 60 days of April
26, 1999 upon exercise of options granted pursuant to the Non-Employee
Director Plan.
(4) Includes 197,191 shares of ATP Common Stock held by the Harvey Dwight
Byrd, Sr. Revocable Trust DTD, which Mr. Byrd may be deemed to own as a
settlor and trustee of such trust. Mr. Byrd disclaims beneficial
ownership of these shares. In addition, includes 111 shares purchased
through the Purchase Plan and 2,000 shares of ATP Common Stock that may
be acquired within 60 days of April 26, 1999 upon exercise of options
granted pursuant to the 1997 Advanced Technical Products, Inc. Stock
Option Plan (the "Employee Plan").

30
<PAGE>

(5) Includes 8,300 shares of ATP Common Stock that may be acquired within 60
days of April 26, 1999 upon exercise of options granted pursuant to the
Employee Plan.
(6) Includes 7,400 shares of ATP Common Stock that may be acquired within 60
days of April 26, 1999 upon exercise of options granted pursuant to the
Employee Plan and 120 shares purchased through the Purchase Plan.
(7) Includes 267,602 shares of ATP Common Stock that each of the Douglass
Trust IV, FBO Preston Douglass, Jr. and the Douglass Trust IV, FBO Brooke
Douglass (collectively, the "Douglass Trusts") that may be deemed to
beneficially own as a result of their ownership of all of the outstanding
common stock of ECI. Mr. Douglass is the trustee of the Douglass Trusts.
Mr. Douglass, for himself and as trustee of the Douglass Trusts,
disclaims beneficial ownership of such shares. In addition, includes
54,112 shares of ATP Common Stock that are owned of record by the
Douglass Trust IV, FBO Preston Douglass, Jr. and 54,112 shares of ATP
Common Stock that are owned of record by the Douglass Trust IV, FBO
Brooke Douglass. Mr. Douglass disclaims beneficial ownership of these
shares.
(8) Includes 2,500 shares of ATP Common Stock that may be acquired within 60
days of April 26, 1999 upon exercise of options granted under the Non-
Employee Director Plan.
(9) Includes 22,500 shares of ATP Common Stock that may be acquired within 60
days of April 26, 1999 pursuant to the exercise of options granted by
ATP, 500 shares of ATP Common Stock that may be acquired within 60 days
of April 26, 1999 upon exercise of options granted pursuant to the
Employee Plan and 65 shares purchased through the Purchase Plan.
(10) Includes 1,500 shares of ATP Common Stock that may be acquired within 60
days of April 26, 1999 upon exercise of options granted by ATP and 2,000
that may be acquired within 60 days of April 26, 1999 upon exercise of
options granted pursuant to the Non-Employee Director Plan.
(11) Includes 43,382 shares of ATP Common Stock held directly by Mr. Wesneski
through a SEPIRA and 98,595 shares held by Breedlove & Wesneski, L.P., of
which Mr. Wesneski is a general partner. Also includes 2,500 shares of
ATP Common Stock that may be acquired within 60 days of April 26, 1999
upon exercise of options granted under the Non-Employee Director Plan.
(12) Includes 132,796 shares of ATP Common Stock which may be acquired within
60 days of April 26, 1999 pursuant to the exercise of options.

31
<PAGE>

CERTAIN INFORMATION CONCERNING ATP ACQUISITION AND ATP HOLDING

ATP Holding

ATP Acquisition

ATP Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of ATP Holding, was created solely for the purpose of engaging in the
Transactions.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the material federal income tax
considerations relevant to the Merger that are generally applicable to holders
of ATP Common Stock. This discussion is based on currently existing provisions
of the Code, existing and proposed Treasury Regulations thereunder, and
current administrative rulings and court decisions, all of which are subject
to change. Any such change, which may or may not be retroactive, could alter
the tax consequences to the holders of ATP Common Stock as described herein.
Special tax consequences not described below may be applicable to particular
classes of taxpayers, including financial institutions, broker-dealers,
persons who are not citizens or residents of the United States or who are
foreign corporations, foreign partnerships, or foreign estates or trusts as to
the United States, persons who will own, actually or constructively, stock of
ATP after the Merger, and holders who acquired their stock through the
exercise of an employee stock option or otherwise as compensation.

The receipt of the Cash Merger Consideration in the Merger by holders of ATP
Common Stock will be a taxable transaction for federal income tax purposes.
Each holder's gain or loss per share of ATP Common Stock will be equal to the
difference between $14.50 and the holder's adjusted basis in that particular
share of the ATP Common Stock. Such gain or loss generally will be a capital
gain or loss. In the case of individuals, trusts, and estates, such capital
gain will be subject to a maximum federal income tax rate of 20% for shares of
ATP Common Stock held for more than 12 months prior to the date of
disposition.

A holder of ATP Common Stock may be subject to backup withholding at the
rate of 31% with respect to Cash Merger Consideration received pursuant to the
Merger, unless the holder (a) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or (b) provides a
correct taxpayer identification number ("TIN"), certifies as to no loss of
exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. To prevent the possibility of
backup federal income tax withholding on payments made with respect to shares
of ATP Common Stock pursuant to the Merger, each holder must provide the
Exchange Agent with his or her correct TIN by completing a Form W-9 or
substitute Form W-9. A holder of ATP Common Stock who does not provide ATP
with his or her correct TIN may be subject to penalties imposed by the
Internal Revenue Service (the "IRS"), as well as backup withholding. Any
amount withheld under these rules will be creditable against the holder's
federal income tax liability. ATP (or its agent) will report to the holders of
ATP Common Stock and the IRS the amount of any "reportable payments," as
defined in Section 3406 of the Code, and the amount of tax, if any, withheld
with respect thereto.

THE FOREGOING TAX DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS
BASED UPON PRESENT LAW. THE FOREGOING DISCUSSION DOES NOT DISCUSS TAX
CONSEQUENCES UNDER THE LAWS OF STATES OR LOCAL GOVERNMENTS OR OF ANY OTHER
JURISDICTION OR TAX CONSEQUENCES TO CATEGORIES OF STOCKHOLDERS THAT MAY BE
SUBJECT TO SPECIAL RULES, SUCH AS FOREIGN PERSONS, TAX-EXEMPT ENTITIES,

32
<PAGE>

INSURANCE COMPANIES, FINANCIAL INSTITUTIONS, AND DEALERS IN STOCKS AND
SECURITIES. THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO A STOCKHOLDER
WHO CONTINUES TO OWN, ACTUALLY OR CONSTRUCTIVELY, STOCK OF ATP AFTER THE
MERGER OR WHO ACQUIRED HIS OR HER SHARES OF ATP COMMON STOCK PURSUANT TO THE
EXERCISE OF STOCK OPTIONS OR OTHERWISE AS COMPENSATION. EACH HOLDER OF ATP
COMMON STOCK SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR AS TO THE SPECIFIC
TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER, INCLUDING THE APPLICATION AND
EFFECT OF FEDERAL, STATE, LOCAL, AND OTHER TAX LAWS AND THE POSSIBLE EFFECT OF
CHANGES IN SUCH TAX LAWS.

PROXY PROPOSAL 2: THE PURCHASE PLAN

General

On October 29, 1998, the ATP Board voted to approve the Purchase Plan, a
copy of which is set forth as Appendix D to this Proxy Statement. Most of
ATP's full-time employees who work for ATP or one of ATP's designated
subsidiaries are eligible to participate in the Purchase Plan, and it is
intended that the Purchase Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code.

The purpose of the Purchase Plan is to provide our employees with an
opportunity to purchase our common stock through accumulated payroll
deductions. The ATP Board believes that the Purchase Plan helps create in
ATP's employees a direct interest to increase shareholder value and provides
them with additional compensation.

The approval of Proxy Proposal 2 requires the affirmative vote of the
holders of a majority of the shares of ATP Common Stock present, in person or
by proxy, at the Annual Meeting.

The following summary of certain material features of the Purchase Plan does
not purport to be complete and is qualified in its entirety by reference to
the text of the Purchase Plan, set forth as Appendix D to this Proxy
Statement.

The Purchase Plan

Shares Subject to the Purchase Plan

The Purchase Plan provides eligible employees the right to purchase our
common stock on a quarterly basis through payroll deductions. Up to 1,000,000
shares of our common stock are reserved under the plan. These shares may be
pro ratably adjusted in case of stock splits, dividends, or stock
reclassifications. Prior to each offering, a committee of the ATP Board
establishes the purchase price per share at which the ATP Common Stock may be
purchased. This purchase price shall be a percentage established by the
committee which is 85% to 100% of the fair market value of the stock at either
the beginning or end of each quarterly stock purchase period, depending on
which value is lower.

Administration

The Purchase Plan is administered by either the ATP Board or by a committee
of the ATP Board, and the Purchase Plan grants the administrator broad powers,
including the ability to amend the plan, subject to tax laws which require
shareholder approval for limited types of material amendments, such as
increasing the number of shares available under the plan. When an eligible
employee's employment is terminated, he or she will be deemed to have elected
to withdraw from the Purchase Plan, and all funds not yet used to purchase
stock will be returned to that person.

33
<PAGE>

Eligibility

All full-time employees that complete 90 days of employment are eligible to
participate in the Purchase Plan, subject to tax law limitations which limit
participation for employees who own or have the option to purchase 5% or more
of our stock or who have the right to purchase over $25,000 worth of our stock
under all employee stock purchase plans under Section 423 of the Internal
Revenue Code. The Purchase Plan is not subject to the requirements of the
Employee Retirement Income Security Act of 1974, nor is it a qualified plan
under Section 401(a) of the Internal Revenue Code.

Termination

The ATP Board may terminate the Purchase Plan at any time, although any
quarterly stock purchase period in progress may not be canceled. If the Merger
is consummated, the Purchase Plan will be automatically terminated as of the
Effective Date pursuant to the terms of the Merger Agreement.

Recommendation of Board of Directors

The ATP Board has unanimously approved Proxy Proposal 2 and each recommends
that its respective stockholders vote "For" Proxy Proposal 2.

PROXY PROPOSAL 3: ELECTION OF DIRECTORS

The Restated Certificate of Incorporation of ATP authorizes the ATP Board to
fix the number of directors from time to time. The number of directors is
currently established at eight. The Restated Certificate of Incorporation of
ATP also provides for three classes of directors, designated Class I, Class II
and Class III, each currently having three-year terms of office. Each class of
directors is to consist of, as nearly as possible, one-third of the total
number of directors constituting the entire ATP Board. Except for directors
elected to fill vacancies on the ATP Board (whether created by death,
resignation, removal or expansion of the ATP Board), the directors of each
class will be elected for a term of three years and until their successors
have been elected and qualified. At the Annual Meeting, two Class II
directors, Mr. Garrett L. Dominy and Mr. Sam P. Douglass, have been nominated
for election to the ATP Board to serve for a three-year term.

If the enclosed proxy is signed and returned, it will be voted "For" the
election of Messrs. Dominy and Douglass as Class II directors to serve until
the 2002 Annual Meeting of Stockholders or until their successors have been
duly elected and qualified, unless contrary directions are given therein.
However, should any nominee become unavailable or prove unable to serve for
any reason, the proxy will be voted for the election of such other person as
the ATP Board may select to replace such nominee, unless the ATP Board instead
fixes the number of directors at less than eight. The ATP Board has no reason
to believe that the nominees will not be available or prove unable to serve.

The following table sets forth certain information concerning each Class II
director nominee and the continuing Class I and Class III directors. Each of
the director nominees and continuing directors were designated as directors of
ATP effective October 31, 1997 in connection with the consummation of the
merger (the "Lunn/TPG Merger") of TPG Holdings, Inc. ("TPG") and Lunn
Industries, Inc. ("Lunn") under the name "Advanced Technical Products, Inc."
The age of each director nominee and continuing director, his positions and
offices with ATP, the year in which he first became a director of ATP, his
business experience during the past five years or more, and the other
directorships he holds are shown below. Similar information is provided
concerning executive officers who are neither directors nor nominees for
election as directors.

Class I Continuing Directors--Terms Expiring 2001

ALAN W. BALDWIN, 62. Mr. Baldwin is a member of the Audit Committee. Mr.
Baldwin is currently the President and Chief Executive Officer of Batteries
Batteries, Inc. From March 1994 through October 31, 1997, Mr. Baldwin served
as the Chairman of the Board and Chief Executive Officer of Lunn. Mr. Baldwin
was Vice

34
<PAGE>

President of Lunn from December 1993 to March 1994 and was an independent
consultant from 1991 to March 1994. Mr. Baldwin served as a director of Lunn
since 1993.

ROBERT C. SIGRIST, 66. Mr. Sigrist is a member of the Nominating Committee.
Mr. Sigrist served as a director of TPG from August 1995 until October 1997.
Prior to that time, Mr. Sigrist served as the President of the Brunswick
Technical Group of Brunswick Corporation for seven years.

LAWRENCE E. WESNESKI, 51. Mr. Wesneski is a member of the Audit Committee
and Nominating Committee. Mr. Wesneski has been President and Chief Executive
Officer of Hoak Breedlove Wesneski & Co. since August 1996. Mr. Wesneski has
been engaged in the investment banking industry for approximately 21 years.
Prior to the formation of Hoak Breedlove Wesneski & Co., Mr. Wesneski was
president and managing director of Breedlove Wesneski & Co. for ten years. Mr.
Wesneski was formerly head of the Southwest Corporate Finance Department of
Bear Stearns & Co., Inc., a Managing Director of Corporate Finance at Eppler,
Guerin & Turner, Inc., and a member of the Corporate Finance Department at
Dean Witter Reynolds, Inc. Mr. Wesneski is Vice Chairman of David's
Supermarkets, Inc. Mr. Wesneski served as a director of TPG from its inception
in 1995 until the Lunn/TPG Merger.

Class II Nominees to Serve until the Annual Meeting to be Held in 2002

GARRETT L. DOMINY, 54. Mr. Dominy has been Executive Vice President, Chief
Financial Officer, Assistant Secretary and Treasurer of ATP since October
1997. Mr. Dominy served as the Chief Financial Officer, Executive Vice
President, Secretary and Treasurer of TPG from June 1995 until the Lunn/TPG
Merger. Prior to that time, Mr. Dominy was an audit partner of Arthur Andersen
Worldwide. Mr. Dominy is a Certified Public Accountant.

SAM P. DOUGLASS, 66. Mr. Douglass is a member of the Compensation Committee.
Mr. Douglass served as a director of TPG from its inception in 1995 until the
Lunn/TPG Merger. Mr. Douglass has been Chairman of the Board and Chief
Executive Officer of Equus Capital Corporation, the managing general partner
of Equus Equity Appreciation Fund L.P., since its formation in September 1983.
Mr. Douglass has also been Chairman of the Board and Chief Executive Officer
of Equus II Incorporated, an investment company that trades as a closed-end
fund on the American Stock Exchange, and Equus Capital Management Corporation,
since their formation in 1983. Since 1978, Mr. Douglass has served as Chairman
and Chief Executive Officer of Equus Corporation International, a privately
owned corporation engaged in a variety of investment activities.

Class III Continuing Directors--Terms Expiring 2000

JAMES S. CARTER, 64. Mr. Carter is the Chairman of the Board, President and
Chief Executive Officer of ATP. Mr. Carter, served as the President and Chief
Executive Officer and as a director of TPG from its inception in 1995 until
the Lunn/TPG Merger. Mr. Carter served as an industry consultant from 1993 to
1995 and Vice President and General Manager of the Composite Structures
Division of Alcoa Composites, Inc. from 1989 to 1993. Prior to joining Alcoa
Composites, Inc., Mr. Carter was director of Composites with Northrop
Corporation for the B-2 Aircraft Group from 1980 to 1989. Mr. Carter began his
career in the aerospace industry with the Brunswick Technical Group of
Brunswick Corporation in 1956.

GARY L. FORBES, 55. Mr. Forbes is a member of the Audit Committee and the
Compensation Committee. Mr. Forbes served as a director of TPG from its
inception in 1995 until the Lunn/TPG Merger. Mr. Forbes has been a Vice
President of Equus Capital Corporation, the managing general partner of Equus
Equity Appreciation Fund L.P. since November 1991. He has been a Vice
President of Equus II Incorporated and Equus Capital Management Corporation
since December 1991. Mr. Forbes is a director of Consolidated Graphics, Inc.
(a NYSE consolidator of commercial printing companies), Drypers Corporation (a
Nasdaq National Market manufacturer of disposable diapers), and NCI Building
Systems, Inc. (a Nasdaq National Market consolidator of pre-engineered metal
building manufacturers).

35
<PAGE>

JOHN M. SIMON, 56. Mr. Simon is a member of the Compensation Committee. Mr.
Simon has been Managing Director of Allen & Company Incorporated for more than
five years. Mr. Simon is a director of Immune Response Corporation, Neurogen
Corporation and Batteries Batteries, Inc., all of which are Nasdaq National
Market companies. Mr. Simon was originally elected a director of Lunn in 1993.

Executive Officers

H. DWIGHT BYRD, 61. Mr. Byrd has been a Vice President of ATP and President
of the Marion Composites Division since the Lunn/TPG Merger. From April 1995
until the Lunn/TPG Merger, Mr. Byrd served as a Vice President of TPG and
President of the Marion Composites Division. During the period from April 1992
to April 1995, Mr. Byrd served as General Manager of Brunswick Corporation's
Marion, Virginia division. During 1991 to April 1992, Mr. Byrd served as
Director of Manufacturing for Brunswick's Mercury Marine Division in
Stillwater, Oklahoma.

RICK RASHILLA, 40. Mr. Rashilla has been President of Lincoln Composites
since January 1999. Prior to January 1999, Mr. Rashilla served as Lincoln
Composites' Vice President and General Manager. Mr. Rashilla served as
Executive Director of Business Development along with other senior management
positions for Brunswick's Technical Group between 1983 and 1995. These prior
assignments included senior positions in ATP's diversification projects into
Natural Gas Vehicle Fuel Tanks and Oil and Gas related products. From 1989 to
1993, Mr. Rashilla was assigned to Brunswick's Marion, Virginia operation.

EDWARD KILEY, 50. Mr. Kiley has been President and General Manager of
Alcore, a wholly owned subsidiary of ATP, since May 1996. Mr. Kiley was Vice
President and General Manager of Alcore from October 1993 to May 1996. Mr.
Kiley was Vice President and General Manager of Lunn from January 1993 through
October 1993. Prior to December 1992, Mr. Kiley was Director of Sales and
Marketing of Hexcel Corporation.

BRIAN HODGES, 38. Mr. Hodges has been Vice President of ATP and President of
Intellitec since May 1998. Prior to May 1998, Mr. Hodges served as
Intellitec's Vice President and General Manager for Defense Products and Vice
President of Operations. Mr. Hodges served as Director of Operations, along
with other senior management positions for Brunswick's Technical Group between
1987 and 1995. Previous to that, Mr. Hodges held supervisory and engineering
positions at both Honeywell, Inc. and Texas Instruments, Inc.

MICHAEL KOHLER, 35. Mr. Kohler has been Vice President of ATP and President
of Lunn Industries since the Lunn/TPG Merger. From 1994 to 1997, Mr. Kohler
served as Director of Engineering for Lunn and, for over three years prior to
1994, served as a quality assurance manager and quality engineer for Lunn.

Meetings of the ATP Board

The ATP Board met four times in 1998, and the average attendance at the
aggregate number of ATP Board and committee meetings during such time was 90%.
No Director attended fewer than 75% of the aggregate number of meetings of the
ATP Board and the committees on which he or she served held during the period
for which he or she was a Director.

Committees of the ATP Board

The Audit Committee, which is composed entirely of Directors who are not
officers or employees of ATP, reviews ATP's accounting functions, operations
and management and the adequacy and effectiveness of the internal controls and
internal auditing methods and procedures of ATP. The Audit Committee
recommends to the ATP Board the appointment of the independent public
accountants for ATP. In connection with its duties, the Audit Committee
periodically meets privately with the independent public accountants. The
Audit Committee met once in 1998.

The Compensation Committee, which is composed entirely of Directors who are
not officers or employees of ATP, reviews and acts with respect to pension,
compensation and other employee benefit plans, approves the

36
<PAGE>

salary and compensation of officers of ATP other than the five most highly
compensated officers and makes recommendations to the ATP Board concerning the
salary and compensation of the Chairman of the Board, President and Chief
Executive Officer and any other officer who is or would be among the five
highest paid officers of ATP. The Compensation Committee met once in 1998. The
Nominating Committee advises and makes recommendations to the ATP Board on all
matters concerning ATP Board procedures and directorship practices.

The Nominating Committee reviews and makes recommendations to the full ATP
Board concerning the qualifications and selection of candidates as nominees
for election as Directors. In recommending candidates, this committee seeks
individuals who possess broad training and experience in business, finance,
law, government, technology, education or administration and considers factors
such as personal attributes, geographic location and special expertise
complementary to the background and experience of the ATP Board as a whole.
The Nominating Committee was formed on met once in 1998. The committee
memberships of each nominee and continuing Director are set forth in his or
her biographical information above.

Compensation of Directors

Directors who are not employees of ATP receive $20,000 annually.
Additionally, non-employee directors who have not previously served on the ATP
Board receive a grant under the Advanced Technical Products, Inc. Non-Employee
Director Stock Option Plan (the "Non-Employee Director Plan") of options to
purchase 7,500 shares of ATP Common Stock upon commencement of their term, and
continuing non-employee directors receive a grant under the Non-Employee
Director Plan of options to purchase 1,000 shares of ATP Common Stock
immediately following each annual meeting of the stockholders.

Security Ownership of Officers and Directors

The record date for stockholders entitled to notice of, and to vote at, the
Annual Meeting is September 29, 1999. At the close of business on that date,
ATP had 5,286,188 shares of Common Stock issued and outstanding and entitled
to vote at the Annual Meeting.

The table set forth under "Principal Stockholders and Stock Ownership of
Management and Others" on page 30 of this Proxy Statement sets forth, as of
April 26, 1999, the number of shares of ATP Common Stock and the 8% Cumulative
Redeemable Preferred Stock, par value $1.00 per share, of ATP (the "ATP
Preferred Stock") beneficially owned by (1) each person or group known by ATP
to own beneficially more than 5% of the outstanding shares of ATP Common
Stock, (2) each director and each nominee for director, (3) ATP's Chief
Executive Officer and each of ATP's four other most highly compensated
executive officers, and (4) all directors and executive officers as a group.
Except as otherwise indicated, each of the persons or groups named below has
sole voting power and investment power with respect to such ATP Common Stock
and ATP Preferred Stock.

37
<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain information regarding compensation
paid to ATP's Chairman of the Board, President and Chief Executive Officer and
each of ATP's four other most highly compensated executive officers
(collectively, the "Named Executive Officers"), with respect to each of ATP's
last three fiscal years, based on salary and bonus earned during each year.

<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------- ----------------------------------------
Other All
Annual Restricted Securities Other
Compen- Stock Underlying LTIP Compen-
Salary Bonus sation Award(s) Options/Sars Payments sation
Name Year ($) ($) ($) ($) ($) ($) ($)(1)
- ---- ---- -------- -------- ------- ---------- ------------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James S. Carter......... 1998 $305,192 $ 50,000 $ 0 0 $ 9,914
Chairman, President 1997 $246,400 0 $ 0 41,500 $19,466
and Chief Executive
Officer 1996 $226,884 $106,638 $ 0 0 $62,982

Garrett L. Dominy....... 1998 $240,577 $ 35,000 $ 0 0 $ 6,828
Executive Vice
President and 1997 $193,259 0 $ 0 37,000 $ 2,302
Chief Financial Officer 1996 $170,673 $ 79,279 $ 0 0 $51,962

H. Dwight Byrd.......... 1998 $175,264 0 $ 1,853 0 $ 6,426
Vice President 1997 $163,427 0 $ 1,926 10,000 $ 2,851
1996 $145,558 $ 69,778 $ 0 0 $ 3,096

James G. Fuller......... 1998 $156,846 0 $ 0 0 $ 6,675
Vice President 1997 $149,256 0 $ 0 10,000 $ 2,330
1996 $135,285 $ 64,896 $ 0 0 $ 2,095

Edward Kiley............ 1998 $150,000 0 $12,125 0 $ 3,663
Vice President 1997 $127,412 $ 62,750 $ 6,000 22,500 $ 2,405
1996 $111,784 $ 37,500 $36,437 0 $ 1,054
</TABLE>
- --------
(1) "All Other Compensation" for 1998 for the Named Executive Officers is
comprised of the following: (a) Company contributions to retirement
savings plans for Messrs. Carter ($5,000), Dominy ($4,812), Byrd ($3,505),
Fuller ($3,137) and Kiley ($2,923), and (b) the taxable amount of life
insurance premiums paid by ATP for Messrs. Carter ($4,914), Dominy
($2,016), Byrd ($2,921), Fuller ($3,538) and Kiley ($740).

Option Grants During 1998 Fiscal Year

ATP did not grant any employee stock options to the Named Executive Officers
during 1998, nor did ATP grant any stock appreciation rights during 1998.

Option Exercises During 1998 Fiscal Year and Fiscal Year End Option Values

The following table sets forth the aggregate dollar value of in-the-money,
unexercised options held at the end of 1998 by the Named Executive Officers.
There were no stock options exercised during 1998 by any of the Named
Executive Officers.

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options/SARS at Options/SARS
Shares Value Fiscal Year End($) at Fiscal Year End($)
Acquired on Realized ------------------------- -------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James S. Carter......... 0 0 8,300 33,200 $ $0
Garrett L. Dominy....... 0 0 7,400 29,600 $ $0
H. Dwight Byrd.......... 0 0 2,000 8,000 $ $0
James G. Fuller......... 0 0 2,000 8,000 $ $0
Edward Kiley............ 0 0 23,000 2,000 $30,813 $ 0
</TABLE>

38
<PAGE>

Employment Agreements

ATP has entered into three-year employment agreements with each of James S.
Carter and Garrett L. Dominy. Pursuant to the employment agreements, Mr.
Carter will serve as Chairman of the Board, President and Chief Executive
Officer of ATP, and Mr. Dominy will serve as an Executive Vice President and
Chief Financial Officer of ATP. The employment agreements provide for base
salaries, which are $350,000 and $275,000 per year as of January 1, 1999 for
Mr. Carter and Mr. Dominy, respectively, subject to annual increases based, at
a minimum, on the consumer price index for the previous year. Mr. Carter and
Mr. Dominy are also entitled to receive, subject to the discretion of the ATP
Board, annual bonuses of up to 75% of their then annual base salary. The
employment agreements are terminable by ATP with or without cause; provided
that if ATP terminates the employment of Mr. Carter or Mr. Dominy without
cause, such executive will be entitled to continue to receive his base salary
and incentive bonus for specified periods. The employment agreements also
provide that if there is a "change in control" of ATP or a constructive
termination of the executive without cause, then the executives are entitled
to a lump-sum payment of a specified amount within 60 days of the Effective
Date of termination. Following any termination of Mr. Carter's or Mr. Dominy's
employment for cause or upon such employee's breach of the terms of his
employment agreement, it is expected that such executive will be subject to
non-disclosure and non-competition covenants for up to two years.

Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the ATP Board is responsible for determining
executive compensation. The Compensation Committee is currently comprised of
three non-employee directors, Mr. Douglass, Mr. Forbes and Mr. Simon.

Report of the Compensation Committee

The Compensation Committee of the ATP Board (the "Committee"), which
consists of three independent outside directors, reviews and approves ATP's
total compensation philosophy and programs covering executive officers and key
management employees. The Committee reviews the performance levels of
executive officers and determines the annual base salaries and incentive
awards to be paid.

ATP's executive compensation program is designed to help ATP attract,
motivate and retain the executive resources that ATP needs in order to
maximize its return to stockholders. Specifically, the goals of ATP's
compensation program are to:

1. align executive compensation with the interests of the stockholders;

2. provide compensation packages that are consistent with competitive
market norms for companies similar in size, activity and complexity to ATP;

3. link pay to Company, operating group and individual performance; and

4. achieve a balance between incentives for short-term and long-term
performance.

The principal elements of compensation provided to executive and other
officers of ATP historically have consisted of a base salary, annual
incentives and stock option grants. The Committee estimates an executive's
level of total compensation based on information drawn from a variety of
sources, including proxy statements, special surveys and compensation
consultants. Total compensation is targeted to be competitive at the median
level of a peer group of comparable companies.

Base Salary

Salaries for executive officers are determined by the Committee annually,
based on review of each executive's level of responsibility, experience,
expertise and sustained corporate, business unit and individual performance.
The Committee exercises its judgment based upon the above criteria and does
not apply a specific formula or assign a weight to each factor considered.

39
<PAGE>

Annual Incentive Compensation

Annual incentive awards are designed to focus management's attention on the
performance of ATP, particularly in the short-term. At the beginning of each
year, the ATP Board establishes performance goals of ATP for that year, which
may include target increases in sales, net income and earnings per share, as
well as more subjective goals. Incentive awards are based upon the achievement
of one or more of these goals.

Stock Option Program

Each executive officer is eligible to receive a grant of stock options with
an exercise price equal to the fair market value of the stock on the grant
date. Stock options are designed to focus executives on the long-term
performance of ATP by enabling executives to share in any increases in value
of ATP's stock. Accordingly, the Committee believes that the grant of stock
options is a significant method of aligning management's long-term interests
with those of the stockholders of ATP.

Chief Executive Officer Compensation

Mr. Carter, the Chairman of the Board, President and Chief Executive Officer
of ATP, is entitled to receive a minimum annual salary of $265,000 pursuant to
his employment agreement with ATP. Subject to this minimum, Mr. Carter's base
salary rate may be adjusted at the discretion of the ATP Board based upon such
factors as the ATP Board deems appropriate. Mr. Carter's base salary for
fiscal 1998 was $305,192. The Committee believes that Mr. Carter's total
compensation is near the median for the chief executive officers of ATP's peer
group.

This report is submitted by the members of the Compensation Committee.

SAM P. DOUGLASS
GARY L. FORBES
JOHN M. SIMON

40
<PAGE>

Stock Performance Chart

Set forth below is a table comparing the cumulative total returns (assuming
an investment of $100 on December 31, 1993 and reinvestment of dividends) of
ATP, the Standard and Poor's 500 Composite Stock Index (the "S&P 500 Index")
and the Aerospace/Defense 500 Index. The value of the investment in ATP for the
period reflected is based on the market price of the stock of Lunn restated for
the 10-to-1 reverse stock split effected by the Lunn/TPG Merger.

<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ATP..................... 100.00 25.00 37.50 37.50 53.00 36.50
S&P 500 Index........... 100.00 101.36 139.32 171.23 228.27 293.38
Aerospace/Defense 500
Index.................. 100.00 108.16 178.77 238.96 245.85 188.57
</TABLE>

41
<PAGE>

Certain Relationships and Related Transactions

On April 28, 1995, TPG loaned James S. Carter, then its President and Chief
Executive Officer, $74,925 to help fund Mr. Carter's acquisition of 35,625
shares of the common stock of TPG, which were then converted into 295,787
shares of the common stock of ATP. Mr. Carter executed a promissory note in
favor of TPG, bearing interest at 8% per annum, the principal and interest of
which mature on April 28, 2001. The promissory note from Mr. Carter is secured
by a stock pledge agreement pursuant to which Mr. Carter pledged his shares to
TPG. As of December 31, 1998, an aggregate of $96,903 of principal and accrued
and unpaid interest were due and owing under such note. ATP has engaged Allen,
an investment bank of which John Simon is a Managing Director, to act as its
financial advisor in connection with the Merger. Pursuant to the terms of such
engagement, Allen is to receive a fee of $1,250,000 and the reimbursement of
its fees and expenses.

SECTION 16 REQUIREMENTS

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
ATP's directors and executive officers, and persons who own more than 10% of a
registered class of ATP's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC") and the Nasdaq Stock Market. Such persons are required
by the SEC to furnish ATP with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1998, or written representations from certain reporting
persons, ATP believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
ATP's equity securities have been complied with, except as follows: Mr. Byrd
reported a transaction on a Form 5 filed February 15, 1999 that should have
been reported on a Form 4 due on November 11, 1998. Mr. Hodges became an
executive officer of ATP on January 1, 1999, but did not report his holdings
on a Form 5 until February 15, 1999. Mr. Wesneski reported a transaction on a
Form 5 filed on February 17, 1999 that should have been filed on February 15,
1999.

PROXY PROPOSAL 4: RATIFICATION OF AUDITORS

If Proxy Proposal 4 is not approved by a majority vote of the stockholders
present, in person or by proxy, at the Annual Meeting or if prior to the
Annual Meeting KPMG LLP shall decline to serve, then the ATP Board will
designate another firm to audit the financial statements of ATP for the year
ending December 31, 1999 whose continued retention thereafter will be subject
to ratification by the stockholders of ATP.

Effective October 31, 1997 Lunn appointed KPMG LLP to audit its consolidated
financial statements for the year ending December 31, 1997. Effective January
21, 1997, Lunn dismissed the independent accounting firm of Cooper's & Lybrand
L.L.P. and engaged the independent accounting firm of KPMG LLP to examine and
report on Lunn's consolidated financial statements for the year ended December
31, 1996. The termination of Coopers & Lybrand L.L.P. and the engagement of
KPMG LLP were each approved by the Lunn Board of Directors. Lunn and Coopers &
Lybrand L.L.P. were unable to reach agreement on the fees for the audit of
Lunn's 1996 consolidated financial statements. Neither during the audit of
Lunn's two most recent fiscal years nor during any subsequent interim period
have there been any disagreements with Coopers & Lybrand L.L.P. on any matter
of accounting principles or practices, financial statement disclosure,
auditing scope or procedure or any reportable events. The report by Coopers &
Lybrand L.L.P. on Lunn's consolidated financial statements for the year ended
December 31, 1995 did not contain any adverse opinion, disclaimer of opinion
or was modified

42
<PAGE>

as to uncertainty, audit scope, or accounting principles. The report by
Coopers & Lybrand L.L.P. on Lunn's consolidated financial statements for the
year ended December 31, 1994 did not contain any adverse opinion, disclaimer
of opinion or was modified as to uncertainty, audit scope, or accounting
principles, except for a separate paragraph that raised substantial doubt
about Lunn's ability to continue as a going concern. Lunn had incurred net
losses of $4,476,000 for the prior two years (1994 and 1993), was not in
compliance with certain restrictive debt covenants under its borrowing
agreements and had not made certain required payments, for which waivers of
non-compliance had not been obtained. These uncertainties raised substantial
doubt about Lunn's ability to continue as a going concern. Lunn has requested
Coopers & Lybrand L.L.P. to furnish it with a letter addressed to the
Commission stating whether or not they agree with the foregoing statements
made in this paragraph and, if not, stating in what respects they do not
agree.

Representatives of KPMG LLP are expected to be present at the Annual Meeting
to respond to appropriate questions of stockholders and to make a statement if
they desire.

INDEPENDENT AUDITORS

The consolidated balance sheets as of December 31, 1998 and December 31,
1997, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three fiscal years in the three-year period
ended December 31, 1998, incorporated by reference in this Proxy Statement,
have been audited by KPMG LLP, independent auditors. A representative of KPMG
LLP will be at the Annual Meeting to answer appropriate questions from
stockholders and will have the opportunity to make a statement, if so desired.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed with the Commission by ATP (SEC
File No. 000-01298) are incorporated by reference in this Proxy Statement:

(i) ATP's Annual Report on Form 10-K for the fiscal year ended December
31, 1998;

(ii) ATP's Quarterly Report on Form 10-Q for the fiscal quarter ended
July 2, 1999;

(iii) ATP's Annual Report on Form 10-K/A for the year ended December 31,
1998; and

(iv) ATP's Current Report on Form 8-K filed on September 15, 1999.

All documents filed by ATP with the Commission pursuant to Sections 13(a),
13(c), 14, and 15(d) of the Exchange Act after the date hereof and prior to
the date of the Annual Meeting shall be deemed to be incorporated by reference
herein and shall be a part hereof from the date of filing of such documents.
Any statements contained in a document incorporated by reference herein or
contained in this Proxy Statement shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded.

STOCKHOLDER PROPOSALS

If the Merger is not consummated for any reason, stockholder proposals
intended to be presented at ATP's 2000 Annual Meeting of Stockholders must be
received by ATP a reasonable time before ATP begins to print and mail its
proxy statement in order to be considered for inclusion in its proxy statement
and form of proxy for that meeting. These proposals must also comply with the
rules of the Commission governing the form and content of proposals in order
to be included in ATP's proxy statement and form of proxy and should be
directed to: Secretary, Advanced Technical Products, Inc., 200 Mansell Court,
East, Suite 505, Roswell, Georgia 30076.

43
<PAGE>

If the Merger is not consummated for any reason, a stockholder who wishes to
present a proposal at ATP's 2000 Annual Meeting of Stockholders, other than a
proposal to be considered for inclusion in ATP's proxy statement and form of
proxy as described above, must deliver the proposal to ATP at the address set
forth above. Such written proposal must be delivered not less than 75 days nor
more than 120 days prior to the date of the scheduled annual meeting;
provided, however, that in the event that less than 90 days notice or prior
public disclosure of the scheduled date of the meeting is given or made to
stockholders, such written proposal must be received no later than the close
of business on the 15th day following the day on which such notice of the
scheduled date of the meeting was mailed or such disclosure was made,
whichever first occurs. The proposal must also comply with the other
requirements contained in ATP's Amended and Restated By-laws, including
supporting documentation and other information. Proxies solicited by the ATP
Board will confer discretionary voting authority with respect to these
proposals, subject to the Commission's rules governing the exercise of this
authority.

OTHER MATTERS

Management knows of no other business to be presented at the Annual Meeting.
If other matters do properly come before the meeting, or any adjournment or
postponement thereof, it is the intention of the persons named in the proxy to
vote on such matters according to their best judgment and in their discretion.

WHERE YOU CAN FIND MORE INFORMATION

ATP files annual, quarterly, and current reports, proxy statements, and
other information with the Commission. You may read and copy any reports,
statements, or other information that ATP files at the Commission's public
reference rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms. ATP public filings are also available to the
public from commercial document retrieval services and at the Internet World
Wide Web site maintained by the Commission at http://www.sec.gov. Reports,
proxy statements, and other information concerning ATP also may be inspected
at the offices of The Nasdaq Stock Market, 33 Whitehall Street, New York, NY
10004.

The Commission allows ATP to "incorporate by reference" information into
this document, which means that ATP can disclose important information to you
by referring you to another document filed separately with the Commission. The
information incorporated by reference is deemed to be a part of this document,
except for any information superseded by information contained directly in
this document. This document incorporates by reference certain documents that
ATP has previously filed with the Commission. These documents contain
important business information about ATP and its financial condition.

ATP may have sent to you some of the documents incorporated by reference,
but you can obtain any of them through ATP or the Commission or the
Commission's Internet World Wide Web site described above. Documents
incorporated by reference are available from ATP without charge, excluding all
exhibits unless specifically incorporated by reference as an exhibit to this
document. Stockholders may obtain documents incorporated by reference in this
document upon written or oral request to the following address or telephone
number:

ADVANCED TECHNICAL PRODUCTS, INC.
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076
Attention: James Hobt
(770) 993-0291

ATP will send any document so requested to the requesting stockholder by
first class mail or other equally prompt means within one day of receiving
such request. You should note that James Carter, as well as the other
executive officers of ATP, are participants in the Merger.

44
<PAGE>

IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM ATP, PLEASE DO SO AT LEAST FIVE
BUSINESS DAYS BEFORE THE DATE OF THE ANNUAL MEETING IN ORDER TO RECEIVE TIMELY
DELIVERY OF SUCH DOCUMENTS PRIOR TO THE ANNUAL MEETING.

You should rely only on the information contained or incorporated by
reference in this document to vote your shares at the Annual Meeting. ATP has
not authorized anyone to provide you with information that is different from
what is contained in this document. This document is dated October 1, 1999.
You should not assume that the information contained in this document is
accurate as of any date other than that date, and the mailing of this document
to stockholders does not create any implication to the contrary. This Proxy
Statement does not constitute a solicitation of a proxy in any jurisdiction
where, or to or from any person to whom, it is unlawful to make such proxy
solicitation in such jurisdiction.

ANNUAL REPORT AND FINANCIAL INFORMATION

A copy of ATP's 1998 Annual Report to Stockholders, which includes a copy of
ATP's annual report on Form 10-K for the year ended December 31, 1998, a copy
of ATP's annual report on Form 10-K/A for the year ended December 31, 1998 and
a copy of ATP's quarterly report on Form 10-Q for the quarter ended July 2,
1999 accompanies this Proxy Statement.

Nothing contained in the Annual Report to Stockholders is to be regarded as
proxy soliciting material or as a communication by means of which a
solicitation of proxies is to be made.

45
<PAGE>

APPENDIX A

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated September 3, 1999 (this
"Agreement"), by and among ATP HOLDING CORP., a Delaware corporation
("Parent"), ATP ACQUISITION CORP., a Delaware corporation ("Sub"), and
ADVANCED TECHNICAL PRODUCTS, INC. a Delaware corporation (the "Company").
Capitalized terms used herein have the meanings ascribed to them in Section
8.3.

WHEREAS, the Board of Directors of each of Parent, Sub and the Company have
adopted resolutions in accordance with the Delaware General Corporation Law
(the "DGCL") approving this Agreement, and deem it advisable and in the best
interests of their respective companies and stockholders to consummate the
merger of Sub with and into the Company (the "Merger") upon the terms and
subject to the conditions set forth herein; and

WHEREAS, pursuant to the Merger, shares of the Company's common stock will
be converted into the right to receive the Merger Consideration (as defined
below) in the manner set forth herein, and the Company shall become a wholly
owned subsidiary of Parent.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound, the parties agree as follows:

ARTICLE I

THE MERGER

Section 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time (as hereinafter defined). Upon
the Effective Time, the separate existence of Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving Corporation").

Section 1.2. The Deposit. Simultaneously with the execution and delivery
hereof, Parent shall deposit the sum of $3,000,000 (the "Deposit") in escrow
with Chase Manhattan Bank, New York, New York as escrow agent (the "Escrow
Agent"), pending consummation of the transactions contemplated by this
Agreement, pursuant to the terms of an Escrow Agreement (the "Escrow
Agreement") substantially in the form attached hereto as Exhibit 1.2. Unless
this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to Section 7.1, on the Closing
Date (as defined in Section 1.3) the Deposit shall be released to the Exchange
Agent (as defined in Section 2.3) for disbursement in accordance with the
terms hereof. In the event this Agreement is terminated and Section 7.2(a),
Section 7.2(b) or 7.2(d) applies, the Deposit shall, upon the terms and
conditions set forth in the Escrow Agreement, be disbursed to Parent. In the
event this Agreement is terminated and Section 7.2(c) applies, the Deposit
shall, upon the terms and conditions set forth in the Escrow Agreement, be
paid to the Company as liquidated damages. Parent and the Company hereby
acknowledge that the amount of damages which would be incurred by the Company
as a result of Parent's default under this Agreement are difficult to
ascertain and that the amount of liquidated damages provided by this Section
1.2 is reasonable. Except as specifically provided in Section 7.2 herein, none
of the Company, Parent or Sub shall have any liability to the other parties
hereto in the event the Closing does not occur as a result of a termination.

Section 1.3. Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
at 10:00 a.m., New York City time, on the third business day following the
date on which the last to be fulfilled or waived of the

A-1
<PAGE>

conditions set forth in Article VI shall be fulfilled or waived in accordance
with this Agreement (the "Closing Date"), at the offices of Whitman Breed
Abbott & Morgan LLP, 200 Park Avenue, New York, New York or such other date,
time or place as agreed to in writing by the Parties.

Section 1.4. Effective Time. The Company and Sub, with the consent of
Parent, will file with the Secretary of State of the State of Delaware (the
"Delaware Secretary of State") on the Closing Date (or on such other date as
Parent and the Company may agree) a certificate of merger or other appropriate
documents, executed in accordance with the relevant provisions of the DGCL,
and make all other filings or recordings required under the DGCL in connection
with the Merger. The Merger shall become effective upon the filing of the
certificate of merger with the Delaware Secretary of State, or at such later
time as is specified in the certificate of merger and is agreed to by the
parties (the "Effective Time").

Section 1.5. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company, which shall continue
as the Surviving Corporation, and Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Sub shall become the
debts, liabilities and duties of the Surviving Corporation.

Section 1.6. Certificate of Incorporation; By-Laws.

(a) At the Effective Time, the Company's Restated Certificate of
Incorporation (the "Restated Charter") shall be amended so as to read in its
entirety as set forth in Exhibit 1.6(a) to this Agreement and as so amended
shall become the certificate of incorporation of the Surviving Corporation
until amended in accordance with applicable law.

(b) The By-laws of Sub as in effect at the Effective Time shall be, from and
after the Effective Time, the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.

Section 1.7. Directors. The directors of Sub at the Effective Time shall
become, from and after the Effective Time, the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.

Section 1.8. Officers. The officers of the Sub at the Effective Time shall
become, from and after the Effective Time, the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.

ARTICLE II

EFFECT OF THE MERGER ON THE SECURITIES
OF THE CONSTITUENT CORPORATIONS

Section 2.1. Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of any holder:

(a) Common Stock of Sub. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
one share of Common Stock of the Surviving Company ("Surviving Company
Securities"), which Surviving Company Securities shall be validly issued,
fully paid and nonassessable upon such conversion.

(b) Cancellation of Treasury Stock. Each share of the Company's Common
Stock, $0.01 par value (the "Common Stock") or Preferred Stock, $1.00 par
value (the "Preferred Stock"), issued or outstanding immediately prior to the
Effective Time that is owned by the Company or any of its wholly-owned
Subsidiaries

A-2
<PAGE>

(as defined in Section 3.1(b), below) shall be canceled automatically and
shall cease to exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.

(c) Conversion of Company Shares. Each share of Common Stock that is then
issued and outstanding (such shares of Common Stock being hereinafter referred
to collectively as the "Company Shares", other than shares to be canceled
pursuant to subsection 2.1(b) above and other than Dissenting Shares (as
hereinafter defined), which shares will not constitute "Company Shares"
hereunder) shall be converted into and become the right to receive, upon
surrender of the certificate representing such Company Shares in accordance
with Section 2.3, $14.50 in cash, without interest thereon (the "Merger
Consideration").

(d) Redemption of Preferred Stock. Each share of Preferred Stock that is
then issued and outstanding, other than shares to be canceled pursuant to
subsection 2.1(b) above, shall be redeemed by the Company in accordance with
Article IV, Section (C)(1)(d) of the Company's Restated Charter immediately
prior to the Effective Time by virtue of the Merger and without any action by
the holders thereof. Upon surrender of a certificate representing Preferred
Stock, $1.00 per share in cash, without interest thereon, plus any accrued but
unpaid dividends thereon shall be paid to the holder thereof.

(e) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Common Stock issued and outstanding immediately prior to
the Effective Time held by a holder (a "Dissenting Shareholder") (if any) who
has the right to demand, and who properly demands, an appraisal of such shares
in accordance with Section 262 of the DGCL (or any successor provision)
("Dissenting Shares") shall not be converted into a right to receive the
Merger Consideration unless such Dissenting Shareholder fails to perfect or
otherwise loses such Dissenting Shareholder's right to such appraisal. If,
after the Effective Time, such Dissenting Shareholder fails to perfect or
loses any such right to appraisal, each such share of such Dissenting
Shareholder shall be treated as a share that had been converted as of the
Effective Time into the right to receive the Merger Consideration in
accordance with this Section 2.1, without interest or dividends thereon. The
Company shall give prompt notice to Parent of any demands received by the
Company for appraisal of any Company Shares, and Parent shall have the right
to participate in and direct all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands.

(f) Cancellation and Retirement of Common Stock. As of the Effective Time,
all certificates representing shares of Common Stock issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section
2.3, or, in the case of Dissenting Shares, the rights, if any, accorded under
Section 262 of the DGCL.

Section 2.2. Stock Options. For purposes of this Agreement, the term (i)
"Option" means each unexercised option, warrant or other security that is
outstanding at the Effective Time pursuant to which the holder thereof has the
right to purchase Common Stock from the Company (whether or not such option is
vested or exercisable) and (ii) "In the Money Option" means each Option that
by its terms is exercisable from and after the Effective Time and has an
exercise price which is less than $14.50 per share. As of the Effective Time,
each vested and exercisable portion of any In the Money Option (a "Vested In
the Money Option") shall be extinguished and represent at the Effective Time
the right to receive a cash amount (the "Vested Option Consideration") equal
to the product of (x) the excess of (a) the Merger Consideration over (b) the
exercise price of such Option (the "Cash Option Amount") multiplied by (y) the
aggregate number of shares of Common Stock issuable upon the exercise of such
vested and exercisable portion of the Option as of the Effective Time. In
addition, as of the Effective Time, each unvested and unexercisable portion of
any In the Money Option (an "Unvested In the Money Option") shall be
extinguished and represent a right to receive equity in, or an option for the
purchase of equity in, the Surviving Corporation or a holding entity owning
directly or indirectly 100% of the Surviving Corporation (the "Replacement
Security"), which Replacement Security shall (i) have a value equivalent to
the value of such Unvested In the Money Option as of the Effective Time, (ii)
shall vest in full or

A-3
<PAGE>

cease to be subject to forfeiture upon a change in control of the Surviving
Corporation and (ii) bear terms and conditions which are substantially similar
to the terms currently contained in such Unvested In the Money Option or terms
more favorable to the holder except that the vesting/forfeiture provisions of
such Replacement Security may be changed to a vesting/forfeiture period of
five (5) years commencing at the Effective Time so long as the holder of such
Unvested In the Money Option is issued, in addition to the Replacement
Security, additional equity or an additional equity right pursuant to a stock
or option plan implemented for employees of the Surviving Corporation (the
"Unvested Option Consideration"). In addition, (a) each Option that is not an
In the Money Option shall terminate at the Effective Time (i) by determination
of the Company's board or any applicable committee thereof if the stock option
agreement and Company Stock Option Plan relating such Option permits such a
determination, or (ii) by the agreement of the holder of such Option on or
before the Effective Time and (b) the Company Stock Option Plans (as defined
in Section 3.1(c)) shall terminate as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant
of any other interest in respect of the capital stock of the Company or any
Subsidiary shall be terminated as of the Effective Time.

Section 2.3. Exchange of Certificates.

(a) Exchange Agent. As of the Effective Time, the Escrow Agent shall deposit
with or for the account of a bank or trust company designated prior to the
Effective Time by Sub, which shall be reasonably satisfactory to the Company
(the "Exchange Agent"), for the benefit of the holders of Certificates (as
defined herein), the Deposit, and Sub (or the Company, as the Surviving
Corporation) likewise shall deposit, or shall cause to be deposited, with the
Exchange Agent:

(i) cash in an aggregate amount (the "Exchange Fund") equal to the sum of
(x) the product of (A) the number of Company Shares issued and outstanding
at the Effective Time multiplied by (B) the Merger Consideration plus (y)
the product of (A) the aggregate number of shares of Common Stock issuable
upon exercise in full of all of the Vested In the Money Options as of the
Effective Time multiplied by (B) the Cash Option Amount with respect to
such Vested In the Money Options minus (z) the Deposit, and

(ii) certificates representing, or other certified evidence of the
issuance of, the Unvested Option.

(b) Exchange Procedures. As soon as practicable following the Effective
Time, the Surviving Corporation shall cause the Exchange Agent to mail or
deliver to each record holder, as of the Effective Time, of an outstanding
certificate or certificates or option grant which immediately prior to the
Effective Time represented either Common Shares or In the Money Options (the
"Certificates"), a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender to the Exchange Agent of a Certificate,
together with a duly executed letter of transmittal and any other reasonably
required documents, the holder of such Certificate shall promptly receive in
exchange therefor the amount of cash to which such holder is entitled pursuant
to Section 2.1(c) or Section 2.2 (as applicable), without interest, together
with the Unvested Option Consideration to which such holder is entitled
pursuant to Section 2.2, if any, less any required withholding of U.S. federal
income taxes and such Certificate shall be canceled. If, in the case of
Certificates representing Company Shares, payment or delivery is to be made to
a Person other than the Person in whose name a Certificate so surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for
transfer, that the signatures on the certificate or any related stock power
shall be properly guaranteed and that the Person requesting such payment
either pay any transfer or other taxes required by reason of the payment to a
Person other than the registered holder of the Certificate so surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 2.3, each Certificate (other than Certificates
canceled pursuant to Section 2.1(b), and Dissenting Shares) shall represent
for all purposes only the right to receive the Merger Consideration or the
Vested Option Consideration, in each case without interest, payable, or the
Unvested Option Consideration issuable, pursuant to Section 2.1(c) or 2.2, as
the case may be, in the form provided for by this Agreement.

A-4
<PAGE>

(c) Termination of Exchange Fund. If Certificates are not surrendered prior
to the date that is 180 days after the Effective Time, unclaimed amounts
(including interest thereon) remaining in the Exchange Fund shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto. Any stockholders or optionholders of the Company who have
not theretofore complied with the provisions of this Section 2.3 shall
thereafter look only to the Surviving Corporation and only as general
creditors thereof for payment for their claims in the form and amounts to
which such stockholders or optionholders are entitled without any interest or
dividends thereon (subject to applicable abandoned property, escheat and
similar laws). Neither Parent nor Surviving Corporation will be liable to any
stockholder or optionholder of the Company for any amount paid to a public
official in accordance with applicable abandoned property, escheat or similar
laws.

(d) No Further Rights in Common Stock. After the Effective Time, there shall
be no transfers on the stock transfer books of the Surviving Corporation of
the shares of Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration, Vested Option Consideration and/or Unvested Option
Consideration, as the case may be, as provided for and in accordance with the
provisions of this Section 2.3.

(e) Investment of the Exchange Fund. The Exchange Agent shall invest the
Exchange Fund as directed by Parent on a daily basis as provided herein. Any
interest and other income resulting from such investments shall promptly be
paid to Parent. The Exchange Agent shall invest the Exchange Fund, as directed
by Parent, in (i) direct obligations of the United States of America, (ii)
obligations for which the full faith and credit of the United States of
America is pledged to provide for the payment of principal and interest, (iii)
commercial paper rated the highest quality by either Moody's Investors
Services, Inc. or Standard & Poor's Corporation, or (iv) certificates of
deposit, bank repurchase agreements or bankers acceptances, of commercial
banks with capital exceeding $100 million; provided that any such investment
or any such payment of earnings shall not delay the receipt by holders of
Certificates of the Merger Consideration, Vested Option Consideration or
Unvested Option Consideration, as the case may be, or otherwise impair such
holders' respective rights hereunder.

(f) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent will deliver in exchange for such lost, stolen or destroyed Certificate
the applicable Merger Consideration with respect to the Company Shares or
Vested Option Consideration and/or Unvested Option Consideration with respect
to In the Money Options formerly represented thereby.

(g) Withholding Rights. Each of the Surviving Corporation and Parent shall
be entitled to deduct and withhold from the Merger Consideration, Vested
Option Consideration and Unvested Option Consideration otherwise payable
pursuant to this Agreement to any holder of Company Shares or In the Money
Options such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations promulgated thereunder, or any
provision of any other law relating to taxes. To the extent that amounts are
so withheld by the Surviving Corporation or Parent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Company Shares or In the Money Options in
respect to which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.

A-5
<PAGE>

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.1. Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:

(a) Organization, Standing and Corporate Power. The Company and each
Subsidiary (as defined in Section 3.1(b)) is a corporation duly organized,
validly existing and in good standing under the laws of its respective state
of incorporation and has the requisite corporate power and corporate authority
to own, lease and operate its properties and carry on its business as now
being conducted. The Company and each Subsidiary is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed would not have a Company
Material Adverse Effect (as defined below). As used in this Agreement, the
term "Company Material Adverse Affect" means any circumstance, event, change
or effect that, individually or when taken together with all other adverse
circumstances, events, changes and effects that are within the scope
(excluding any qualification as to materiality or Company Material Adverse
Effect) of the representations and warranties made by the Company in this
Agreement, (A) is, or is reasonably likely to be, materially adverse to the
business or financial condition of the Company and its Subsidiaries taken as a
whole, or (B) impairs, or is reasonably likely to impair, the consummation of
the Merger or any of the other transactions contemplated hereby. The Company
has delivered to Parent complete and correct copies of its Restated Charter
and By-laws, as amended to the date of this Agreement.

(b) Subsidiaries. Section 3.1(b) of the disclosure schedule attached hereto
(the "Disclosure Schedule") sets forth the name, jurisdiction of
incorporation, total capitalization and number of shares of outstanding
capital stock of each class owned, directly or indirectly, by the Company of
each corporation of which the Company owns, directly or indirectly, a majority
of the outstanding capital stock (individually, a "Subsidiary" and,
collectively, the "Subsidiaries"). All the issued and outstanding shares of
capital stock of each Subsidiary are validly issued, fully paid and
nonassessable. Other than 4 of the 3,000 shares of Alcore Brigantine which are
owned by officers of the Company and on of the Subsidiaries in accordance with
French law, all such shares owned, directly or indirectly, by the Company are
owned by the Company or a Subsidiary beneficially and of record, free and
clear of all liens, pledges, encumbrances or restrictions of any kind. No
Subsidiary has outstanding any securities convertible into or exchangeable or
exercisable for any shares of its capital stock, and there are no outstanding
options, warrants, stock appreciation rights, phantom stock, stock
equivalents, subscription or other rights, agreements or commitments which
either obligate such Subsidiary to issue, sell or transfer or repurchase or
redeem any shares of its capital stock or other securities. Except for the
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or have any direct or
indirect equity interest in any business. The Company has delivered to Parent
complete and correct copies of the Articles of Incorporation and By-laws of
each Subsidiary, as amended to the date of this Agreement.

(c) Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of 30,000,000 shares of Common Stock, par value $0.01 per
share, and 2,000,000 shares of Preferred Stock, $1.00 par value per share
(1,000,000 shares of which have been designated "8% Cumulative Redeemable
Preferred Stock" and 1,000,000 shares of which remain undesignated). At of the
date hereof, 5,286,206 shares of Common Stock and 1,000,000 shares of
Preferred Stock (all of which are 8% Cumulative Redeemable Preferred Stock)
were issued and outstanding, all of which are duly authorized, validly issued,
fully paid and non-assessable, and 536,835 shares of Common Stock were
reserved for issuance upon the exercise of outstanding Options of which
322,335 shares were subject to In the Money Options. Except as set forth
above, as of the date hereof no shares of capital stock or other equity
securities of the Company were issued, reserved for issuance or outstanding,
and no Options are to be issued between the date hereof and the Effective
Time. Section 3.1(c) of the Disclosure Schedule sets forth each plan or
agreement (collectively, the "Company Stock Option Plans") pursuant to which

A-6
<PAGE>

any Options to acquire Common Stock have been, or may be, granted. Except as
set forth above or in Section 3.1(c) of the Disclosure Schedule, the Company
has no outstanding option, warrant, stock appreciation right, phantom stock,
stock equivalent, subscription or other right, agreement or commitment which
either obligates the Company to issue, sell or transfer, repurchase or redeem
any shares of the capital stock or other securities of the Company. There are
no voting trusts, proxies or other agreements or understandings to which the
Company or, to the best of Company's knowledge, any stockholder of the
Company, is a party with respect to the voting of the capital stock of the
Company.

(d) Authority; Enforceability; Noncontravention.

(i) The Company has the requisite corporate power and authority to enter
into this Agreement and, subject to the adoption of this Agreement by its
stockholders as set forth in subsection 6.1(a) with respect to the
consummation of the Merger, to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company, subject to the adoption of this Agreement by its stockholders as set
forth in subsection 6.1(a). This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes the valid
and binding agreement of Parent and Sub, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.

(ii) Subject to the receipt of consents or waivers from the parties listed
in Schedule 3.1(d) of the Disclosure Schedule and the receipt of the approvals
and completion of the filings referenced in Section 3.1(d)(iii) below, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by the Company with any of the
provisions hereof will (A) violate any provision of its Restated Charter or
By-laws or any of its Subsidiaries' articles or certificates of incorporation
or by-laws, (B) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, require notice
to or the consent of any third party under, or give rise to any right of
termination, cancellation or acceleration or any right which becomes effective
upon the occurrence of a merger, consolidation or change in control or
ownership under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture or other instrument of indebtedness for money borrowed to
which the Company or any of its Subsidiaries is a party, or by which the
Company or any of its Subsidiaries or any of their respective properties is
bound, except for violations, breaches, defaults or rights which, individually
or in the aggregate, would not or could not reasonably be expected to result
in a Company Material Adverse Effect, (C) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
under, require notice to or the consent of any third party under, or give rise
to any right of termination, cancellation or acceleration or any right which
becomes effective upon the occurrence of a merger, consolidation or change in
control or ownership under, any of the terms, conditions or provisions of any
license, franchise, permit, lease or agreement to which the Company or any of
its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries or any of their respective properties may be bound, except for
violations, breaches, defaults or rights which, individually or in the
aggregate, would not or could not reasonably be expected to result in a
Company Material Adverse Effect, or (D) violate any law by which the Company
or any of its Subsidiaries or any of their respective properties is bound,
except for violations, breaches, defaults or rights which, individually or in
the aggregate, would not or could not reasonably be expected to result in a
Company Material Adverse Effect.

(iii) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required in connection with
the execution and delivery of this Agreement by the Company, or the
consummation by the Company of the transactions contemplated hereby, except
(A) in connection, or in compliance, with the provisions of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (B) the filing of a
certificate of merger with the Delaware Secretary of State, (C) such filings
and consents as may be

A-7
<PAGE>

required under any environmental law pertaining to any notification,
disclosure or required approval triggered by the Merger or the transactions
contemplated by this Agreement, (D) filing with, and approval of, the
Securities and Exchange Commission (the "SEC") with respect to the delisting
and deregistration of the Common Stock, (E) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "H-S-R Act") and (F) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings not
obtained or made prior to the consummation of the Merger, the failure of which
to be obtained or made would not, individually or in the aggregate, materially
impair the Company's ability to perform its obligations hereunder or prevent
the consummation of any of the transactions contemplated hereby.

(e) SEC Reports; Financial Statements.

(i) The Company has filed all required forms, reports and documents with the
SEC since January 1, 1996, each of which has complied in all material respects
with all applicable requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the Exchange Act, each as in effect on the dates
such forms, reports and documents were filed. The Company has heretofore made
available to Parent, in the form filed with the SEC (including any amendments
thereto), (i) its Annual Reports on Form 10-K for each of the fiscal years
ended December 31, 1996, 1997 and 1998, (ii) all definitive proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since January 1, 1996, and (iii) all other reports or registration
statements filed by the Company with the SEC since January 1, 1996 (the "SEC
Reports"). None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements and related schedules and notes thereto of the Company
contained in the SEC Reports (or incorporated therein by reference) were
prepared in accordance with generally accepted accounting principles applied
on a consistent basis except as noted therein, and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and, if applicable, the cash flows for the periods then
ended, subject (in the case of interim unaudited financial statements) to
normal year-end audit adjustments, and such financial statements complied as
of their respective dates in all material respects with applicable rules and
regulations of the SEC. Each SEC Report was prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as applicable.

(ii) Neither the Company nor any of its Subsidiaries, nor any of their
respective assets, businesses, or operations, is a party to, or is bound by or
affected by, or receives any benefits under any contract or agreement or
amendment thereto, that in each case was required to be filed as an exhibit to
an SEC Report, that has not been, or timely will not be, filed as an exhibit
to an SEC Report.

(f) Absence of Certain Changes or Events. Except as may be disclosed in the
SEC Reports or disclosed in Section 3.1(f) of the Disclosure Schedule, since
June 30, 1999 the Company and its Subsidiaries have conducted business in the
ordinary course, and there has not been (i) any change in the business,
assets, financial condition or results of operations of the Company or any
other event which in any such case has had or could reasonably be expected to
have a Company Material Adverse Effect; (ii) any damage, destruction or loss,
whether covered by insurance or not, having a material adverse effect upon the
properties or business of the Company; (iii) any declaration, setting aside or
payment of any dividend, or other distribution in respect of the capital stock
of the Company or any redemption or other acquisition by the Company of any of
its capital stock; (iv) any issuance by the Company, or commitment of the
Company to issue, any shares of its Common Stock or securities convertible
into or exchangeable for shares of its Common Stock or Preferred Stock other
than the issuance of Common Stock to any persons exercising Options; (v) any
increase in the rate or terms of compensation payable or to become payable by
the Company to its directors, officers or employees, except increases
occurring in the ordinary course of business in accordance with its customary
past practices; (vi) any grant or increase in the rate or terms of any bonus,
insurance, pension, severance or other employee benefit plan, payment or
arrangement

A-8
<PAGE>

made to, for or with any directors, officers or employees, except increases
occurring in the ordinary course of business in accordance with its customary
past practices; (vii) any change by the Company in accounting methods,
principles or practices except as required by generally accepted accounting
principles; (viii) any stock split, reverse stock split, combination or
reclassification of the Common Stock; (ix) any change in the terms and
conditions of the Company Stock Option Plans except as contemplated hereby; or
(x) any agreement or commitment, whether in writing or otherwise, to take any
action described in this subsection 3.1(f).

(g) Company Proxy Materials. All of the information supplied by the Company
for inclusion in the Definitive Proxy Statement referred to in Section 5.2
hereof will not, on the date when the Definitive Proxy Statement is first
mailed to the Company's shareholders, and the Definitive Proxy Statement, as
then amended or supplemented, will not, on the date of the Company's
stockholders' meeting referred to in Section 5.1 hereof or on the Closing Date
(as defined in Section 1.3 hereof), contain any statement which is false or
misleading with respect to any material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty regarding information furnished by Parent or Sub
for inclusion in the Definitive Proxy Statement (or any amendment or
supplement thereto).

(h) Board Recommendation. As of the date hereof, the Board of Directors of
the Company has recommended that the stockholders of the Company vote for
adoption of this Agreement, subject to Section 5.8.

(i) Undisclosed Liabilities. Except as set forth on Schedule 3.1(i), the
Company has no material liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due,
including any liability for taxes), except for (i) liabilities, obligations or
contingencies that are reflected or reserved against the audited consolidated
balance sheet of the Company and its Subsidiaries dated as of December 31,
1998, (ii) liabilities which have arisen after December 31, 1998 in the
ordinary course of business, and (iii) liabilities which individually or in
the aggregate would not have a Company Material Adverse Effect.

(j) Brokers. Other than Allen & Company Incorporated ("Allen"), the fees and
expenses of which shall be paid by the Company, no broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based on arrangements made by or
on behalf of the Company or any of its Affiliates.

(k) Litigation. Except as disclosed by the Company in the SEC Reports or in
Section 3.1(k) of the Disclosure Schedule, there is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any of their
respective properties or assets before any court or governmental entity, nor,
to the knowledge of the Company, are there any facts that are reasonably
likely to give rise to any such suit, claim, action, proceeding or
investigation. Except as disclosed in the SEC Reports, neither the Company nor
any of its Subsidiaries is subject to any outstanding order, writ, injunction
or decree.

(l) Compliance with Applicable Law. Except as disclosed by the Company in
the SEC Reports, the Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all governmental entities
necessary for the lawful conduct of their respective businesses (the "Company
Permits") and the Company and its Subsidiaries are in compliance with the
terms of the Company Permits except for such failure or noncompliance which,
individually or in the aggregate, would not or could not reasonably be
expected to have a Company Material Adverse Effect.. The businesses of the
Company and its Subsidiaries have not been and are not being conducted in
violation of any law, ordinance or regulation of any governmental entity,
except for such violations which, individually or in the aggregate, would not
or could not reasonably be expected to have a Company Material Adverse Effect.
No investigation by any governmental entity with respect to the Company or any
of its Subsidiaries is pending or, the Company's knowledge, threatened nor has
any

A-9
<PAGE>

governmental entity indicated an intention to conduct the same, except for
such violations which, individually or in the aggregate, would not or could
not reasonably be expected to have a Company Material Adverse Effect.

(m) Taxes.

(i) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes, fees,
levies, duties, tariffs, imposts and governmental impositions or charges of
any kind in the nature of (or similar to) taxes, payable to any federal,
state, provincial, local or foreign taxing authority, including, without
limitation (A) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
transfer and gains taxes and (B) interest, penalties, additional taxes and
additions to tax imposed in respect thereto; and "Tax Returns" shall mean
returns, reports and information statements with respect to Taxes required to
be filed with the Internal Revenue Service (the "IRS") or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.

(ii) Except as set forth in Section 3.1(m) of the Disclosure Schedule, each
of the Company and its Subsidiaries has filed, or caused to be filed, within
the time and in the manner prescribed by law, or has timely applied for
extensions of time to file, all material Tax Returns required to be filed by
it, and all such Tax Returns which have been filed are accurate and complete
in all material respects. Except as set forth in Section 3.1(m) of the
Disclosure Schedule, each of the Company and its Subsidiaries has paid or
discharged (or there has been paid or discharged on its behalf) within the
time and in the manner prescribed by law all Taxes required to be paid,
withheld or deducted or for which any of the Company or its Subsidiaries is
liable, except such Taxes as are being contested in good faith by appropriate
proceedings (to the extent that such proceedings are required) and with
respect to which the Company has set up an adequate reserve for payment of
such Taxes. The Company has set up an adequate reserve on the Company balance
sheet for all Taxes required to be paid by the Company and each of its
Subsidiaries through the date hereof and no Taxes have been incurred by the
Company or any of its Subsidiaries after such date which were not incurred in
the ordinary course of business. Except as set forth in Section 3.1(m) of the
Disclosure Schedule, no material deficiencies for any taxes have been proposed
to, or asserted or assessed against the Company or any of its Subsidiaries or
are pending, and no requests for waivers of time to assess any such Taxes are
pending or have been consented to by the Company or any of its Subsidiaries.
Except as set forth in Section 3.1(m) of the Disclosure Schedule, neither the
Company nor any Subsidiary has requested any extension of time within which to
file any Tax Return in respect of any taxable year, which Tax Return has not
since been filed. Except as set forth in Section 3.1(m) of the Disclosure
Schedule, the federal income Tax Returns of the Company and its Subsidiaries
have not been examined by the IRS during the past three years. None of the
Company or its Subsidiaries has been a member of an affiliated group of
corporations which has filed a consolidated federal income Tax Return (other
than the group of which the Company is the common parent) or otherwise has any
liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treas. Reg. Section 1.1502-6, any similar provision of
state, local or foreign law, or by reason of its status as a transferee,
successor, indemnitor or otherwise.

(n) Termination, Severance And Employment Agreements. Section 3.1(n) of the
Disclosure Schedule contains a complete and accurate list of each (i)
employment or severance agreement not terminable without liability or
obligation on 30 days' or less notice; (ii) agreement with any director,
officer or other employee of the Company or any of its Subsidiaries (A) the
benefits of which are contingent, or the terms of which are materially
altered, on the occurrence of a transaction involving the Company or any of
its Subsidiaries of the nature of any of the transactions contemplated by this
Agreement or relating to an actual or potential change in control of the
Company or any of its Subsidiaries or (B) providing any term of employment or
other compensation guarantee or extending severance benefits or other benefits
after termination not comparable to benefits available to employees of the
Company or its Subsidiaries generally; (iii) agreement, plan or arrangement
under which any person may receive payments that may be subject to tax imposed
by Section 4999 of the Code or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (iv) agreement or
plan, including, but not limited to, any stock option plan, stock appreciation
right

A-10
<PAGE>

plan, restricted stock plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement. Except as
set forth in Section 3.1(n) of the Disclosure Schedule, neither the Company
nor any of its Subsidiaries has entered into or amended any written employment
or severance agreement with any director, officer or other employee of the
Company or any of its Subsidiaries or granted any severance or termination pay
to any director, officer or employee of the Company or any of its
Subsidiaries.

(o) Employee Benefit Plans, Erisa.

(i) Except as set forth in Schedule 3.1(o) of the Disclosure Schedule, the
Company does not maintain, administer, contribute to or have any liability
under, and has not maintained, administered, contributed to or had any
liability under any: employee pension benefit plan (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
("Pension Plan"), including, without limitation, any multiemployer plan as
defined in Section 3(37) of ERISA ("Multiemployer Plan") or any non-qualified
deferred compensation plan or retirement plan; employee welfare benefit plan
(as defined in Section 3(1) of ERISA) ("Welfare Plan"), including any other
plan, program, agreement or arrangement under which former employees of the
Company (or their beneficiaries) are entitled, or current employees of the
Company will be entitled, following termination of employment, to medical,
health or life insurance or other benefits other than pursuant to benefit
continuation rights granted by state or federal law; or bonus, stock, stock
purchase, or stock option plan, severance plan, salary continuation, vacation,
sick leave, fringe benefit, incentive, insurance, welfare or similar plan or
arrangement ("Employee Benefit Plan"). The Pension Plans, Welfare Plans and
Employee Benefit Plans shall be collectively referred to herein as the
"Plans".

(ii) Neither the Company, nor any corporation or business which is now or at
the relevant time was an affiliate of the Company, as determined under Section
414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate"), (A) maintains,
administers, contributes to or has any liability under any pension plan
subject to the minimum funding standards set forth in Section 412 of the Code
or subject to Title IV of ERISA; or (B) has ever maintained, administered,
contributed to or had any liability under any Pension Plan subject to either
the Code Section 412 minimum funding standards or Title IV of ERISA, other
than a Plan as to which all liabilities have been satisfied in full.

(iii) All Plans and related trusts, insurance contracts or other funding
arrangements have been maintained and administered in all respects in material
compliance with each applicable provision of ERISA, the Code, other federal
statutes, state law (including, without limitation, state insurance law) and
the regulations and rules promulgated pursuant thereto or in connection
therewith. Each Pension Plan which is intended to be qualified under Code
Section 401(a) has been administered in material compliance with such
requirements and has received a post-Tax Reform Act of 1986 determination
letter from the IRS that such Pension Plan satisfies the requirements of
Section 401(a) of the Code, and to the Company's knowledge, nothing has
occurred since the issuance of such letter that would adversely affect the tax
qualified status of any of the Pension Plans.

(iv) Contributions with respect to all current Plan years (i.e., from the
first day of the current plan year to the Closing Date) shall be made or
accrued prior to the Closing Date by Company with respect to each Pension
Plan. With respect to all other Welfare Plans and Employee Benefit Plans, all
required or recommended (in accordance with plan terms and past practice)
payments, premiums, contributions, reimbursements or accruals for all periods
ending prior to or as of the Closing Date shall have been made or properly
accrued on the financial statements. None of the Plans has any material
unfunded liabilities which are not reflected on the financial statements of
the Company. The Company has no plans, programs, arrangements or made any
other commitments to its employees, former employees or their beneficiaries
under which it has any obligation to provide any retiree or other employee
benefit payments which are not adequately funded through a trust, insurance or
other funding arrangement. There have been no changes in the operation or
interpretation of any of the Plans since the most recent annual report which
would have any material effect on the cost of operating or maintaining such
Plans.

A-11
<PAGE>

(v) No Pension Plan has been terminated other than a Plan as to which all
liabilities have been satisfied in full. Any Plan which has been terminated
has been terminated in compliance with ERISA and the Code, all required
reports, certifications or notices, have been or will be appropriately filed
or distributed and an application for a favorable determination letter has
been or will be filed with the IRS.

(vi) The Company has made available to Parent true and complete copies of:
(A) the plan documents and any related trusts or funding vehicles, policies or
contracts and the related summary plan descriptions with respect to each Plan;
(B) any pending applications, filings or notices with respect to any of the
Plans with the IRS, the pension Benefit Guaranty Corporation, the Department
of Labor or any other governmental agency; (C) the latest financial statements
and annual reports for each of the Plans and related trusts or funding
vehicles, policies or contracts as of the end of the most recent plan year
with respect to which the filing date for such information has passed; and (D)
all corporate resolutions or other documents pertaining to the adoption of the
Plans or any amendments thereto.

(vii) There are no pending or, to the Company's knowledge, threatened
claims, lawsuits or arbitration asserted or instituted against any of the
Plans by any employee or beneficiary covered under any Plans or otherwise
involving any Plans (other than routine claims for benefits); and the Company
has no knowledge of any facts which would give rise to or could reasonably be
expected to give rise to any such claims, lawsuits or arbitrations.

(viii) Except as provided for in this Agreement or as disclosed in Section
3.1(o) of the Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not (A) entitle any current or former
director, officer or employee of the Company or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, or (B)
accelerate the time of payment or vesting or increase the amount of
compensation due any such employee or officer.

(ix) No liability has been or is expected to be incurred by the Company or
any ERISA Affiliate under or pursuant to the Code or Title I or IV of ERISA or
the penalty, excise tax or joint and several liability provisions of the Code
or ERISA relating to the Plans and, to the knowledge of the Company no event,
transaction or condition has occurred or exists that could result in any such
liability to the Company or any ERISA Affiliate or, following the Closing, the
Company, any ERISA Affiliate, the Purchaser or any such Plan.

(x) At no time has the Company or any of its Subsidiaries contributed to,
been required to contribute to, or incurred any withdrawal liability (within
the meaning of Section 4201 of ERISA) with respect to any Plan which is a
Multiemployer Plan.

(xi) Except as set forth in Schedule 3.1(o) of the Disclosure Schedule, with
respect to all Plans other than Multiemployer Plans, which are funded, or are
required by applicable law to be funded, the present value of all accrued
benefits (vested and non vested) of each such Plan as of the Closing Date,
will not exceed the fair market value of the assets of each such Plan as of
the Closing Date.

(xii) No prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) has occurred with respect to any Plan listed other than
a Multiemployer Plan, which could subject any such Plan or any related trust,
the Company, any ERISA Affiliate, the Purchaser or any director or employee of
any of them to any tax or penalty imposed under Section 4975 of the Code or
Section 502(i) or 502(l) of ERISA, either directly or indirectly, and whether
by way of indemnity or otherwise.

(p) Environmental Matters. Other than those the failure to obtain or comply
with, individually or in the aggregate, would not result or could not
reasonably be expected to result in a Company Material Adverse Effect, the
Company and each of its Subsidiaries has obtained and is in compliance in all
material respects with the terms and conditions of all required permits,
licenses, registrations and other authorizations required under Environmental
Laws. Other than where such, individually or in the aggregate, would not
result or could not reasonably be expected to result in a Company Material
Adverse Effect, no asbestos in a friable condition,

A-12
<PAGE>

equipment containing polychlorinated biphenyls, or leaking underground or
above-ground storage tanks are contained in or located at any facility
currently owned, leased or controlled by the Company or any of its
Subsidiaries, nor was any of the foregoing contained in or located at any
facility previously owned, leased or controlled by the Company or any of its
Subsidiaries . Other than where such, individually or in the aggregate, would
not result or could not reasonably be expected to result in a Company Material
Adverse Effect with respect to each of the following matters, neither the
Company nor any of its Subsidiaries has released, discharged or disposed of
on, under or about any facility currently or previously owned, leased or
controlled by the Company or any of its Subsidiaries, any Hazardous
Substances, and no third party has released, discharged or disposed of on,
under or about any facility currently or previously owned, leased or
controlled by the Company or any of its Subsidiaries, any Hazardous
Substances, except for ordinary and necessary quantities of cleaning, pest
control and office supplies and other chemicals used in the ordinary course of
business and used and stored in compliance with applicable Environmental Laws,
or ordinary rubbish, debris and non-hazardous solid waste stored in garbage
cans or bins for regular disposal off-site, or petroleum contained in, and de
minimis quantities discharged from, motor vehicles in their ordinary operation
on real property owned, used or leased by the Company and its Subsidiaries.
The Company and each of its Subsidiaries is in compliance with all applicable
Environmental Laws, except for such non-compliances which, individually or in
the aggregate, would not result or could not reasonably be expected to result
in a Company Material Adverse Effect. Section 3.1(p) of the Disclosure
Schedule contains a true and accurate list of (i) all past and present
material noncompliance by the Company and each of its Subsidiaries with, or
liability under, Environmental Laws and (ii) all past discharges, emissions,
leaks, releases or disposals by it of any substance or waste regulated under
or defined by Environmental Laws that have formed or could reasonably be
expected to form the basis of any material claim, action, suit, proceeding,
hearing or investigation against the Company or any of its Subsidiaries under
any applicable Environmental Laws. Except as set forth in Section 3.1(p) of
the Disclosure Schedule, with respect to environmental matters, neither the
Company nor any of its Subsidiaries has received notice of any past or present
events, conditions, circumstances, activities, practices, incidents, actions
or plans of the Company or its Subsidiaries that have resulted in or threaten
to result in any material common law or legal liability, or otherwise form the
basis of any material claim, action, suit, proceeding, hearing or
investigation under, any applicable Environmental Laws. For purposes of this
Section 3.1(p), (i) "Environmental Laws" mean applicable federal, state, local
and foreign laws, regulations and codes relating in any respect to pollution
or protection of the environment and (ii) "Hazardous Substances" means any
toxic, caustic, or otherwise dangerous substance (whether or not regulated
under federal, state or local environmental statutes, rules, ordinances, or
orders), including (A) "hazardous substance" as defined in 42 U.S.C. Section
9601, and (B) petroleum products, derivatives, byproducts and other
hydrocarbons.

(q) Assets; Property; Intellectual Property.

(i) The Company and its Subsidiaries own or have rights to use all assets
necessary to permit the Company and its Subsidiaries to conduct their
businesses as they are currently being conducted, except where a failure to
own or have the right to use such assets, individually or in the aggregate,
would not or could not reasonably be expected to have a Company Material
Adverse Effect.

(ii) Except as disclosed in Section 3.1(q) of the Disclosure Schedule, the
Company has, directly or through its Subsidiaries, either (A) good, valid and
marketable or indefeasible title to all real property owned by the Company or
any Subsidiary, all of which is described in Section 3.1(q) of the Disclosure
Schedule, and all personal property material to its business operations which
is owned by it is owned in fee, and, in the case of both of such owned real
property and such owned personal property, free and clear of any liens,
encumbrances, mortgages and security interests other than Permitted Liens, or
(B) rights by lease or other agreement to use all the real and personal
property material to its business operations. The term "Permitted Liens" shall
mean (A) liens or encumbrances for water, sewage and similar charges and
current taxes and assessments, in each case, not yet due and payable or being
contested in good faith and for which adequate reserves have been established,
(B) mechanics', carriers', workers', repairers', materialmen's, warehousemen's
and other similar liens or encumbrances arising or incurred in the ordinary
course of business, (C) liens, encumbrances, mortgages and

A-13
<PAGE>

security interests arising or resulting from any action taken by Parent, (D)
liens, encumbrances, mortgages and security interests of record or securing
indebtedness described in Section 3.1(q) of the Disclosure Schedule and (E)
easements, rights of way, restrictions and other similar charges or
encumbrances that do not materially interfere with the ordinary conduct of the
Company's business. True and complete copies of all mortgages encumbering the
real property described in Section 3.1(q) of the Disclosure Schedule, and all
amendments thereto, have been delivered to Parent. All real property leases
under which the Company or any of its Subsidiaries is a lessee or lessor (the
"Leases") are valid, binding and enforceable in all material respects in
accordance with their terms, and there are no existing defaults thereunder.
True and complete copies of the Leases, and all amendments thereto, have been
delivered to Parent. The Company has not received notice of and does not
otherwise have knowledge of any condemnation, requisition or taking by any
public authority of all or any portion of its owned or leased real property.
Except as disclosed in Section 3.1(q) of the Disclosure Schedule, there is no
construction work being done at, or construction materials being supplied to,
the real property owned or leased by the Company, except in connection with
routine maintenance projects. The Company is liable for invoices for
construction occurring prior to the date hereof as set forth in Section 3.1(q)
of the Disclosure Schedule.

(iii) Section 3.1(q) of the Disclosure Schedule identifies all of the
following which are used in the Company's or any of its Subsidiaries'
businesses or in which the Company or any of its Subsidiaries claims any
ownership rights: (A) all trademarks, service marks, slogans, trade names,
trade dress and the like (collectively with the associated goodwill of each,
"Trademarks"), together with information regarding all registrations and
pending applications to register any such rights anywhere in the world; (B)
all common law Trademarks; (C) all patents on, and pending applications to
patent, any technology or design (collectively "Patents"); (D) all
registrations of and applications to register copyrights since 1978
(collectively, "Copyrights"); and (E) all rights in and licenses to
Trademarks, Patents and Copyrights, whether licensed to or by the Company or
any of its Subsidiaries. The proprietary rights required to be so identified
in clauses (A) (E) herein are referred to herein collectively as the
"Intellectual Property".

(iv) Except as identified in Section 3.1(q) of the Disclosure Schedule: (A)
the Company or one of its Subsidiaries is the owner of or duly licensed to use
each Trademark and its associated goodwill; (B) each Trademark registration
exists and has been maintained in good standing; (C) each patent and
application included in the Intellectual Property exists, is owned by or
licensed to the Company or one of its Subsidiaries, and has been maintained in
good standing; (D) each Copyright exists and is owned by or licensed to the
Company or its Subsidiaries; (E) other than such as, individually or in the
aggregate, would not or could not be reasonably expected to result in a
Company Material Adverse Effect, no other firm, corporation, association or
person claims the right to use in connection with similar or related goods and
in any geographic area, any mark, logo, name, symbol, device, or slogan which
is identical or confusingly similar to any of the Trademarks or which could
serve to dilute the distinctiveness of the Trademarks; (F) other than such as,
individually or in the aggregate, would not or could not reasonably be
expected to result in a Company Material Adverse Effect, no third party claims
or asserts ownership rights in any of the Intellectual Property; (G) other
than such as, individually or in the aggregate, would not or could not
reasonably be expected to result in a Company Material Adverse Effect, the use
by the Company or any of its Subsidiaries of any Intellectual Property does
not now, and has never been alleged to, infringe any right of any third party;
and (H) other than such as, individually or in the aggregate, would not or
could not be reasonably expected to result in a Company Material Adverse
Effect, no third party is now infringing, or has ever been accused by the
Company of infringing, on any rights of the Company or any of its Subsidiaries
in any of the Intellectual Property. Section 3.1(q) of the Disclosure Schedule
sets forth a description of all known claims made or facts known to the
Company or any of its Subsidiaries regarding any third party claims or actions
to use a trademark confusingly similar to the Trademarks owned or used by the
Company or any of its Subsidiaries anywhere in the world or to use technology
which infringes any of the Company's Intellectual Property, other than such
as, individually or in the aggregate, would not or could not reasonably be
expected to result in a Company Material Adverse Effect.

(r) Systems and Software. The Company and its Subsidiaries own or have the
right to use pursuant to lease, license, sublicense, agreement, or permission
all computer hardware, software and information systems

A-14
<PAGE>

necessary for the operation of the businesses of the Company and its
Subsidiaries as presently conducted (collectively, "Systems"). Each System
owned or used by the Company or its Subsidiaries immediately prior to the
Effective Time will be owned or available for use by the Surviving Corporation
or its Subsidiaries on identical terms and conditions immediately subsequent
to the Effective Time. With respect to each System owned by a third party and
used by the Company or its Subsidiaries pursuant to lease, license,
sublicense, agreement or permission: (i) the lease, license, sublicense,
agreement, or permission covering the System is legal, valid, binding and
enforceable, and in full force and effect; (ii) the lease, license,
sublicense, agreement, or permission will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the Effective Time; (iii) with respect to any such lease, license,
sublicense, agreement, or permission the Company is not in breach or default,
and no event has occurred which with notice or lapse of time would constitute
a breach or default by the Company or permit termination, modification, or
acceleration thereunder; (iv) no party to any such lease, license, sublicense,
agreement, or permission has repudiated any provision thereof; (v) neither the
Company nor its Subsidiaries have granted any sublicense, sublease or similar
right with respect to any such lease, license, sublicense, agreement, or
permission; (vi) the Company's or its Subsidiaries' use and continued use of
such Systems will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any intellectual property rights of third
parties as a result of the continued operation of its business as presently
conducted other than such as, individually or in the aggregate, would not or
could not reasonably be expected to result in a Company Material Adverse
Effect.

(s) Labor Matters.

(i) Neither the Company nor any of its Subsidiaries has, since June 30,
1999, (A) been subject to, or threatened with, any material strike, lockout or
other labor dispute or engaged in any unfair labor practice, or (B) received
notice of any pending petition for certification before the National Labor
Relations Board with respect to any material group of employees of the Company
or any of its Subsidiaries who are not currently organized. Except as set
forth in Section 3.1(s) of the Disclosure Schedule, neither the Company nor
any of its Subsidiaries has any collective bargaining agreements.

(ii) The Company and its Subsidiaries have complied in all material respects
with the Workers Adjustment and Retraining Act of 1988, as amended, including,
but not limited to, the provision of all required notices or payments in lieu
thereof.

(t) Affiliate Transactions. The Company's Annual Report on Form 10-K for the
year ended December 31, 1998 accurately describes all arrangements,
agreements, contracts and transactions (the "Affiliate Transactions") to which
the Company or any of its Subsidiaries or any of their respective properties
currently is subject involving (i) any consultant, (ii) any person who is an
officer, director or affiliate of the Company or any of its Subsidiaries,
(iii) any relative of any of the foregoing, or (iv) any entity of which any of
the foregoing is an affiliate. Copies of such arrangements, agreements and
contracts have previously been delivered or made available to Parent and Sub,
are listed in Section 3.1(t) of the Disclosure Schedule and are true, correct
and complete. Each Affiliate Transaction is on terms at least as favorable to
the Company or any relevant Subsidiary as could have been obtained from an
unaffiliated third party.

(u) Year 2000. Except as would not reasonably be expected to have a Company
Material Adverse Affect, all Systems will not be materially adversely affected
by, and will continue to operate substantially in the same manner as such
Systems currently operate notwithstanding, Year 2000; provided, that the
Company does not represent or warrant that the databases and systems of its
material suppliers and customers will not be adversely affected due to the
Year 2000. None of the Intellectual Property or other material assets of the
Company and its Subsidiaries used in their current business will be materially
adversely affected notwithstanding Year 2000 other than such as, individually
or in the aggregate, would not or could not reasonably be expected to result
in a Company Material Adverse Effect. As used herein, the term "Year 2000"
means the occurrence of or calculation involving the Year 2000 A.D., or other
calendar dates occurring through December 31, 2010.

A-15
<PAGE>

(v) Representations and Warranties. None of the information contained in the
representations and warranties of the Company set forth in this Agreement or
in any certificate or writing delivered to Parent or Sub as contemplated by
this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.

Section 3.2. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to the Company as follows:

(a) Organization, Standing And Corporate Power. Each of Parent and Sub is a
corporation duly organized and validly existing under the laws of the State of
Delaware. Neither Parent nor Sub nor any of their affiliates may be deemed to
be a "foreign person" within the meaning of the Exon-Florio Act, 50 USC 2170.
Each of Parent and Sub has the requisite power (corporate or otherwise) and
authority (corporate or otherwise) to carry on its business as now being
conducted. Each of Parent and Sub is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed would not have a Parent Material
Adverse Effect (as defined below). As used in this Agreement, the term "Parent
Material Adverse Effect" means any circumstance, event, change or effect that,
individually or taken together with all adverse circumstances, changes and
effects that are within the scope (excluding any qualification as to
materiality or Parent Material Adverse Effect) of the representations made by
Parent or Sub in this Agreement, impairs, or is reasonably likely to impair,
the consummation of the Merger or any of the other transactions contemplated
hereby.

(b) Authority; Enforceability; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Sub and the consummation by Parent
and Sub of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Parent and Sub.
This Agreement has been duly executed and delivered by and, assuming this
Agreement constitutes the valid and binding agreement of the Company,
constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against such party in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this Agreement will not,
(i) violate any of the provisions of the Articles of Incorporation or By-laws
of the Parent or Sub or (ii) conflict with, result in a breach of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or loss
of a material benefit under, or require the consent of any person under, any
indenture or other agreement, or undertaking to which the Parent or the Sub is
a party or by which the Parent or the Sub or any of its assets is bound, which
would have a Parent Material Adverse Effect or prevent consummation of the
transactions contemplated.

(c) Proxy Materials. All of the information to be furnished by Parent or Sub
for inclusion in the Definitive Proxy Statement (or any amendment or
supplement thereto) will not, on the date it is first mailed to the Company's
stockholders, and, as then amended or supplemented, on the date of the
Company's stockholders' meeting referred to in Section 5.1 hereof or on the
Closing Date, contain any statement which is false or misleading with respect
to any material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(d) Brokers. No broker, investment banker, financial advisor or other person
is entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based on arrangements made by or on behalf of Parent or any of its
Affiliates.

A-16
<PAGE>

ARTICLE IV

COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER

Section 4.1. Conduct of Business of the Company. Except as contemplated or
otherwise permitted by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Company shall use its reasonable best
efforts to operate, and to cause each Subsidiary to operate, its business in
the ordinary course in all material respects and comply with applicable laws
in all material respects. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time,
except as expressly contemplated by this Agreement and except as set forth in
Section 4.1 of the Disclosure Schedule, the Company shall not, and will not
permit its Subsidiaries to, without the prior written consent of Parent:

(i)(x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property or any combination thereof)
in respect of, any of the Company's or any Subsidiary's outstanding capital
stock, (y) split, combine or reclassify any of its outstanding capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its outstanding capital stock, or (z)
purchase, redeem or otherwise acquire any shares of its outstanding capital
stock or any rights, warrants or options to acquire any such shares;

(ii) authorize for issuance, issue, sell, grant, deliver, or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights, to exchange, rights to
purchase or otherwise) pledge or otherwise encumber any shares of the
Company's or any Subsidiary's capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities, except
for the issuance of shares of Common Stock upon exercise of Options
outstanding prior to the date of this Agreement and disclosed in Section
3.1(c), or take any action that would make the Company's representations and
warranties set forth in Section 3.1(c) not true and correct in all material
respects;

(iii) except as contemplated hereby, amend or propose to amend the Company's
Restated Charter or By-laws or any Subsidiary's articles of incorporation or
by-laws or other comparable charter, organizational, or similar constituent
documents;

(iv) acquire any business or any corporation, partnership, joint venture,
association or other business organization or division thereof (or any
interest therein) in a transaction or series of transactions involving
aggregate consideration in excess of $1 million or form any Subsidiary;

(v) lease (other than office equipment leases entered into in the ordinary
course of business), sell or otherwise dispose of any of its assets, except in
the ordinary course of business or in a transaction or series of transactions
involving assets with an aggregate value of less than $1 million;

(vi) make any capital expenditures or commitments with respect thereto,
except capital expenditures or commitments not exceeding the Company's
forecasts provided in Schedule 4.1 of the Disclosure Schedule by more than
$100,000 in the aggregate as the Company may, in its discretion, deem
appropriate;

(vii) (x) mortgage or pledge any of its assets or create or suffer to exist
any liens thereon (excluding Permitted Liens), incur, assume or prepay any
long-term or short-term debt or issue any debt securities or incur any other
indebtedness for borrowed money or guaranty any such indebtedness of another
person, other than (A) borrowings in the ordinary course under existing lines
of credit (or under any refinancing of such existing lines), or (B)
indebtedness owing to, or guaranties of indebtedness owing to, the Company, or
(y) make any loans or advances to any other person, other than to the Company
and other than routine advances to employees;

(viii) grant or agree to grant to any employee any increase in wages or
bonus (other than any increase in the ordinary course of business consistent
with past practices), severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits, or establish any
new compensation or benefit plans or arrangements, or amend or agree to amend
any existing Company Stock Option Plan;

A-17
<PAGE>

(ix) merge, amalgamate or consolidate with any other entity in any
transaction, sell all or substantially all of its business or assets;

(x) enter into or amend any employment, consulting, severance or similar
agreement with any individual which provides for the payment of an annual base
salary in excess of $125,000;

(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principals;

(xii) except as contemplated by Section 5.8 and Section 7.1(d) hereof,
authorize, recommend, propose or announce an intention to authorize, recommend
or propose, or enter into an agreement in principle or an agreement with
respect to any merger, consolidation or business combination (other than the
Merger), any acquisition or disposition of a material amount of assets or
securities (including, without limitation, the assets or securities of any
Subsidiary and other than inventory in the ordinary course); or

(xiii) except as contemplated by Section 5.8 and Section 7.1(d) hereof,
commit or agree to take any of the foregoing actions.
ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1. Meeting of Stockholders. The Company will take all action
necessary in accordance with applicable law and its Restated Charter and By-
laws to duly call, give notice of, and convene a meeting of its stockholders
(the "Stockholders' Meeting") to consider and vote upon the adoption of this
Agreement. The board of directors of the Company shall recommend such adoption
and approval, and subject to fiduciary obligations under applicable law, shall
not withdraw or modify such recommendation other than in compliance with
Section 5.8 and Section 7.1(d) or if the Fairness Opinion (as defined in
Section 5.2) is withdrawn, and shall take all lawful action necessary to
obtain such approval.

Section 5.2. Proxy Statement. In connection with the Stockholders' Meeting
contemplated by Section 5.1 above, the Company will prepare and file (after
consultations with Parent) a preliminary proxy statement relating to the
transactions contemplated by this Agreement (the "Preliminary Proxy
Statement") with the SEC and will use its commercially reasonable efforts to
respond to the comments of the SEC thereon and to cause a final proxy
statement (the "Definitive Proxy Statement") to be mailed to the Company's
stockholders, in each case as soon as reasonably practicable after providing
Parent with reasonable opportunity to comment thereon. The Company will notify
the Parent promptly of the receipt of the comments of the SEC, if any, and of
any request by the SEC for amendments or supplements to the Preliminary Proxy
Statement or the Definitive Proxy Statement or for additional information, and
will supply Parent with copies of all correspondence between the Company or
its representatives, on the one hand, and the SEC or members of its staff, on
the other hand, with respect to the Preliminary Proxy Statement, the
Definitive Proxy Statement or the Merger. If at any time prior to the
Stockholders' Meeting, (i) any event should occur relating to the Company or
any of the Subsidiaries which should be set forth in an amendment of, or a
supplement to, the Definitive Proxy Statement, or (ii) any event should occur
relating to Parent or Sub or any of their respective Associates or Affiliates,
or relating to the plans of any such persons for the Surviving Corporation
after the Effective Time of the Merger, or relating to the Financing (as
defined in Section 5.5) in either case that should be set forth in an
amendment of, or a supplement to, the Definitive Proxy Statement, then the
Company or Parent (as applicable), will, upon learning of such event, promptly
inform the other of such event and the Company shall prepare, file and, if
required, mail such amendment or supplement to the Company's stockholders;
provided that, prior to such filing or mailing the Company shall consult with
Parent with respect to such amendment or supplement and shall afford Parent
reasonable opportunity to comment thereon. Parent will furnish to the Company
the information relating to Parent and Sub, their respective Associates and
Affiliates and the plans of such persons for the Surviving Corporation after
the Effective Time of the Merger, and relating to the Financing, which is
required to be set forth in the Preliminary Proxy Statement or the Definitive
Proxy Statement under the Exchange Act and the rules

A-18
<PAGE>

and regulations of the SEC thereunder. The Definitive Proxy Statement shall
contain a copy of the written opinion (the "Fairness Opinion") of Allen that
the Merger Consideration is fair from a financial point of view to the
Company's stockholders.

Section 5.3. Access to Information; Confidentiality.

(a) From the date hereof, the Parent, Sub and their financing sources shall
be entitled to make or cause to be made such reasonable investigation of the
Company and its Subsidiaries, and the financial and legal condition thereof,
as Parent, Sub and their financing sources deem reasonably necessary or
advisable, and the Company shall reasonably cooperate with any such
investigation. In furtherance of the foregoing, but not in limitation thereof,
the Company will, and will cause each of its Subsidiaries to, provide the
Parent, Sub and their financing sources and their respective agents and
representatives, or cause them to be provided, with reasonable access to any
and all of its management personnel, accountants, representatives, premises,
properties, contracts, commitments, books, records and other information of
the Company and each of its Subsidiaries upon reasonable notice during regular
business hours and shall furnish such financial and operating data,
projections, forecasts, business plans, strategic plans and other data
relating to the Company and its Subsidiaries and their respective businesses
as the Parent, Sub, their financing sources and their respective agents and
representatives shall reasonably request from time to time, including all
information necessary to satisfy closing conditions for obtaining the
Financing; provided, that until the Closing Date all information provided to
Parent, Sub and their financing sources and representatives pursuant hereto
(other than the information (i) contained in any offering memorandum prepared
in connection with the registration, offering, placement, or syndication of
any of the Financing, (ii) disclosed in the process of marketing the
Financing, or (iii) contained in any filing with the SEC, NASDAQ or any
national securities exchange), shall be subject to the confidentiality
provisions set forth in Section 5.3(b). The Company agrees to cause its and
its Subsidiaries' officers, employees, consultants, agents, accountants and
attorneys to cooperate with the Parent, Sub and their financing sources and
representatives in connection with such review and the Financing, including
the preparation by the Parent, Sub and their financing sources of any offering
memorandum or related documents related to such Financing. No investigation by
the Parent or Sub heretofore or hereafter made shall modify or otherwise
affect any representations and warranties of the Company, which shall survive
any such investigation, or the conditions to the obligation of the Parent and
Sub to consummate the transactions contemplated hereby.

(b) Subject to Section 5.7 and Section 5.3(a), all information disclosed,
whether before or after the date hereof, pursuant to this Agreement or in
connection with the transactions contemplated by, or the discussions and
negotiations preceding, this Agreement to any other party (or its
representatives) shall constitute confidential information which shall be kept
confidential by such other party and its representatives and shall not be used
by any Person, other than in connection with evaluating and giving effect to
the Merger and the other the transactions contemplated by this Agreement
including, without limitation, in connection with procurement of the
Financing. If the Merger is not consummated and this Agreement is terminated
in accordance with its terms, at the request of the Company, Parent or Sub (as
applicable) shall return or destroy any information provided hereunder.

Section 5.4. Commercially Reasonable Efforts. Subject to the provisions of
Sections 7.1(a), 7.1(c)(i) and 7.1(c)(ii), it is acknowledged that the parties
desire to close this transaction no later than November 22, 1999. Upon the
terms and subject to the conditions and other agreements set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including the satisfaction of the respective
conditions set forth in Article VI. In furtherance and not in limitation of
the foregoing, each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the H-S-R Act with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within thirty business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the H-S-R Act and to take all other actions necessary to
cause the expiration or termination of the applicable

A-19
<PAGE>

waiting periods under the H-S-R Act as soon as practicable. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this
Section 5.4 shall require Parent or the Company to dispose or hold separate
any part of its business or operations or agree not to compete in any
geographic area or line of business. The Company and Parent shall each furnish
to one another and to one another's counsel all such information as may be
required in order to accomplish the foregoing actions. If any state takeover
statute or similar statute or regulation becomes applicable to the Merger,
this Agreement or any of the other transactions contemplated hereby, the
Company and Parent will take all commercially reasonable action necessary to
ensure that the Merger and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation
on the Merger and the other transactions contemplated by this Agreement.

Section 5.5. Financing. Each of Parent and Sub shall use their commercially
reasonable efforts to obtain financing in an amount sufficient to consummate
the transactions contemplated hereby and to pay all fees and expenses in
connection therewith (the "Financing") on terms and conditions reasonably
satisfactory to them. The foregoing obligation shall include, without
limitation, Parent's obligation to commence substantial efforts to fund its
obligations hereunder, including preparing and, to the extent appropriate,
circulating any offering materials and, after circulating such offering
materials, holding any road shows Parent deems necessary or desirable, no
later than the date on which the Company holds the Stockholders' Meeting.

Section 5.6. Indemnification; Directors' and Officers' Insurance.

(a) From and after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, indemnify and hold harmless each person who is now,
at any time has been or who becomes prior to the Effective Time a director,
officer, employee or agent of the Company or any of its Subsidiaries (the
"Indemnified Parties") against any and all losses, claims, damages,
liabilities, costs, expenses (including reasonable fees and expenses of legal
counsel), judgments, fines or, subject to the last sentence of Section 5.6(b),
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation (each a "Claim") arising in whole or in part out
of or pertaining to any action or omission occurring prior to the Effective
Time (including, without limitation, any which arise out of or relate to the
transactions contemplated by this Agreement), based on or arising out of the
fact that such person is or was a director, officer, employee or agent of the
Company or any of its Subsidiaries, regardless of whether such Claim is
asserted or claimed prior to, at or after the Effective Time, to the full
extent permitted under Delaware law or the Surviving Corporation's Certificate
of Incorporation or By-laws in effect as of the Effective Date; provided,
however, that in no event shall the Surviving Corporation be required to
indemnify, defend or hold harmless any director, officer or employee of the
Company or any of its Subsidiaries in respect of any loss, cost, damage,
expense or liability incurred by such party in respect of any Common Stock or
Options held by such persons prior to or after the Effective Time. Without
limiting the generality of the preceding sentence, in the event any
Indemnified Party becomes involved in any Claim, after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, periodically
advance to such Indemnified Party its legal and other expenses (including the
cost of any investigation and preparation incurred in connection therewith),
subject to the provisions of paragraph (b) of this Section 5.6, and subject to
the providing by such Indemnified Party of an undertaking to reimburse all
amounts so advanced in the event of a final and non-appealable determination
by a court of competent jurisdiction that such Indemnified Party is not
entitled thereto.

(b) The Indemnified Party shall control the defense of any Claim with
counsel selected by the Indemnified Party, which counsel shall be reasonably
acceptable to Parent, provided that Parent and the Surviving Corporation shall
be permitted to participate in the defense of such Claim at their own expense,
and provided further that if any D&O Insurance (as defined in paragraph (c) of
this Section 5.5) in effect at the time shall require the insurance company to
control such defense in order to obtain the full benefits of such insurance
and such provision is consistent with the provisions of the Company's D&O
Insurance existing as of the date of this Agreement, then the provisions of
such policy shall govern the selection of counsel. Neither Parent nor the
Surviving Corporation shall be liable for any settlement effected without its
written consent, which consent shall not be withheld unreasonably.

A-20
<PAGE>

(c) For a period of six years after the Effective Time (the "Insurance
Carry-Over Period"), Parent or the Surviving Corporation shall provide
officers' and directors' liability insurance ("D&O Insurance") covering each
Indemnified Party who is presently covered by the Company's officers' and
directors' liability insurance or will be so covered at the Effective Time
with respect to actions or omissions occurring prior to the Effective Time, on
terms no less favorable than such insurance maintained in effect by the
Company as of the date hereof in terms of coverage and amounts, provided that
Parent and the Surviving Corporation shall not be required to pay in the
aggregate an annual premium for D&O Insurance in excess of 150% of the last
annual premium paid prior to the date hereof, but in such case shall purchase
as much coverage as possible for such amount.

(d) The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain substantially similar provisions with respect to
indemnification, personal liability and advancement of fees and expenses as
set forth in the Restated Charter and By-laws of the Company as of the
Effective Time, which provisions shall not be amended, repealed or otherwise
modified during the Insurance Carry-Over Period in any manner that would
adversely affect the rights thereunder of the Indemnified Parties in respect
of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law. Parent, Sub and the
Company agree that all rights existing in favor of any Indemnified Party under
any indemnification agreement in effect as of the date hereof (each of which
shall be listed on Section 5.6(d) of the Disclosure Schedule hereto) shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto. In the event any Claim is asserted or made, any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with standards set forth under such provisions of the
Restated Charter or By-laws or under the DGCL or any such indemnification
agreement, as the case may be, shall be made by independent legal counsel
selected by such Indemnified Party and reasonably acceptable to Parent unless
the DGCL, the Restated Charter or By-laws provide otherwise; and provided,
that nothing in this Section 5.5 shall impair any rights or obligations of any
current or former director or officer of the Company or any of its
Subsidiaries, including pursuant to the respective certificates of
incorporation or bylaws of Parent, the Surviving Corporation or the Company,
or their respective Subsidiaries, under the DGCL or otherwise.

(e) The provisions of this Section 5.5 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of Parent, Sub, the Company and the Surviving
Corporation.

Section 5.7. Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation; provided, that any such party may make any public statement
which it in good faith believes, based on advice of counsel, is necessary or
advisable in connection with any requirement of applicable law, court process
or by obligations pursuant to any listing agreement with any national
securities exchange, it being understood and agreed that each party shall
promptly provide the other parties hereto with copies of such public
statement.

Section 5.8. Acquisition Proposals.

(a) The Company shall not, nor shall it authorize or permit any of its
representatives to, directly or indirectly, (i) solicit or initiate the
submission of any Acquisition Proposal (as hereinafter defined); (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal; provided,
however, that the foregoing shall not prohibit the independent directors from
furnishing information or requiring the Company to furnish information to, or
entering into discussions or negotiations with, any person in connection with
an unsolicited bona fide Acquisition Proposal by such person. For purposes of
this Agreement, "Acquisition Proposal" means any proposal with respect to a
merger, consolidation, share exchange, business combination or similar
transaction

A-21
<PAGE>

involving the Company or any of its Subsidiaries or any equity interest
greater than 25% in the Company or any of its Subsidiaries, other than the
transactions contemplated hereby.

(b) The Company shall not enter into any agreement with respect to any
Acquisition Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or any
other transactions contemplated by this Agreement unless the Company's Board
of Directors determines in good faith by a majority vote, after consultation
with its financial and legal advisors that such transaction (the "Alternative
Transaction") is more favorable to the stockholders of the Company from a
financial point of view than the transactions contemplated by this Agreement.

Section 5.9. Board Action Relating to Stock Option Plans and Options. As
soon as reasonably practicable following the date of this Agreement, to the
extent permitted by the Company Stock Option Plans and applicable law, the
Board of Directors of the Company (or, if appropriate, any committee
administering a Company Stock Option Plans) shall adopt such resolutions or
take such actions as may be necessary or appropriate to adjust the terms of
all outstanding Company Stock Options in accordance with Section 2.2, and
shall make such other changes to the Company Stock Option Plans as it deems
necessary or appropriate to give effect to the Merger. In addition, prior to
the Effective Time, the Board of Directors of the Company shall adopt such
resolutions and take such actions as may be required to amend the terms of all
outstanding Options in accordance with Section 2.2, to the extent permitted by
the Company Stock Option Plans and applicable law, and shall make such other
changes to the Options as it deems appropriate to give effect to the Merger.

Section 5.10. Notices of Certain Events. The Company and Parent shall
promptly notify the other of:

(a) the receipt of any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;

(b) the receipt of any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and

(c) any actions, suits, claims, investigations or proceedings commenced or,
to the best of its actual knowledge, threatened against, relating to or
involving or otherwise affecting the Company or any Subsidiary, on the one
hand, or Parent or Sub, on the other hand, which, in either case, could
materially interfere with the consummation of the transactions contemplated by
this Agreement.

Section 5.11. Exchange Act and Stock Exchange Filings. Unless an exemption
shall be expressly applicable to the Company, or unless Parent agrees
otherwise in writing, the Company will file with the SEC and the NASDAQ all
reports required to be filed by it pursuant to the rules and regulations of
the SEC and the NASDAQ (including, without limitation, all required financial
statements).

Section 5.12. Amendment to Employment Agreements. Parent, Sub, the Company
Garret L. Dominy ("Dominy") and James S. Carter ("Carter") hereby agree that,
effective upon the Effective Date and contingent upon the consummation of the
Merger, each of the Amended and Restated Employment Agreement between the
Company and (a) Carter dated as of November 1, 1997 and (b) the Amended and
Restated Employment Agreement between the Company and Dominy dated as of
November 1, 1997 (each, an "Employment Agreement"), shall automatically be
amended with regard to the provision in each such Employment Agreement
relating to Termination Without Cause to the effect that the time period "36
months" appearing in Section 4.3(ii)(b) in each Employment Agreement shall be
deleted and in each case replaced with the time period "18 months". This
amendment shall be of no force and effect in the event this Agreement is
terminated or the Merger is not otherwise consummated.

A-22
<PAGE>

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:

(a) Stockholder Approval. This Agreement shall have been adopted by the
affirmative vote of holders of a majority of the outstanding shares of Common
Stock.

(b) Governmental Approvals and Filings. Any applicable waiting period under
the H-S-R Act relating to the merger shall have expired or been terminated
without any material limitation, restriction or condition and all other
filings required to be made prior to the Effective Time with, and all
consents, approvals, permits and authorizations required to be obtained prior
to the Effective Time from governmental entities in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company, Parent and Sub, and which if
not obtained would have a Material Adverse Effect or would prevent
consummation of the Merger, will have been made or obtained.

Section 6.2. Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are further subject to the satisfaction or
waiver of the following conditions:

(a) Representations and Warranties. The representations and warranties of
the Company set forth in Section 3.1 shall be true and correct, in each case
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date, except (i) to the extent such representations and
warranties speak as of an earlier date, (ii) for changes permitted or
contemplated by this Agreement and (iii) for matters or circumstances or
events which would not have a Company Material Adverse Effect, and Parent
shall have received an officers' certificate signed on behalf of the Company
by its chief executive officer and chief financial officer to the effect set
forth in this paragraph.

(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received an officers' certificate signed on behalf of the
Company by its chief executive officer and chief financial officer to such
effect.

(c) Third Party Consents. The Company shall have obtained, or Parent and Sub
shall have waived, the consent of any third parties the consent of whom is
required under any agreement, contract or license to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or licensed for consummation of the Merger and the
transactions contemplated by this Agreement and as to which failure to obtain
such consent would have a Company Material Adverse Effect.

(d) Environmental Due Diligence. Parent and Sub shall have received, Phase I
and, if appropriate in the judgment of Parent's environmental consultant,
Phase II environmental assessment reports for the Company's past and present
property and operations (the "Environmental Reports") which reports shall not
disclose any information which would have a material adverse effect on the
financial condition or operations of any individual Facility (as hereafter
defined); provided, however that Parent shall be deemed to have waived this
condition in the event that the Environmental Reports have not been obtained
by September 30, 1999 and Parent has not notified the Company in writing of
any such disclosure in any Environmental Report by such date. For purposes of
this Section 6.2, Facility shall mean each of Marion Composites (a division of
Technical Products, Group, Inc.), Lincoln Composites (a division of Technical
Products, Group, Inc.), Itellitec (a division of Technical Products, Group,
Inc.), Alcore, Inc. (a subsidiary of Advanced Technical Products, Inc.) and
Lunn Industries, Inc. (a subsidiary of Advanced Technical Products, Inc.).

A-23
<PAGE>

Section 6.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction or waiver
of the following conditions:

(a) Representations and Warranties. The representations and warranties of
Parent and Sub set forth in Section 3.2 shall be true and correct , in each
case as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except (i) to the extent such
representations and warranties speak as of an earlier date, (ii) for changes
permitted or contemplated by this Agreement and (iii) for matters or
circumstances or events which would not have a Parent Material Adverse Effect,
and the Company shall have received a certificate signed on behalf of Parent
by the chief executive officer and the chief financial officer of Parent to
the effect set forth in this paragraph.

(b) Performance of Obligations of Parent and Sub. Parent and Sub shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by the chief
executive officer and the chief financial officer of Parent to such effect.

ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

Section 7.1. Termination. This Agreement may only be terminated pursuant to,
and in accordance with, this Section 7.1 and any termination not in accordance
with this Section 7.1 shall be void and of no force and effect. This Agreement
may be terminated and abandoned at any time prior to the Effective Time,
whether before or after adoption of this Agreement by the stockholders of the
Company or the Sub:

(a) by either the Parent or the Company in the event that the Parent and Sub
are unable to procure the Financing or are otherwise unable to pay the Merger
Consideration on or before the Deadline Date (as hereinafter defined); or

(b) by mutual written consent of Parent and the Company; or

(i) if the adoption of this Agreement by the stockholders of the Company
required by Delaware law or of the amendments, pursuant to Section 1.6(a)
herein, to the Company's Restated Charter shall not have been obtained by
January 15, 2000; or

(ii) if the Merger shall not have been consummated on or before the
Deadline Date, provided that the failure to consummate the Merger is not
attributable to the failure of the terminating party to fulfill its
obligations pursuant to this Agreement; or

(iii) if any governmental entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or

(d) by the Company, provided it is not in breach of Section 5.8, if the
Board of Directors of the Company shall have approved an Alternative
Transaction after determining in good faith that such transaction Alternative
Transaction is more favorable to the stockholders of the Company from a
financial point of view than the transactions contemplated by this Agreement;
or

(e) by Parent, if the Company shall have (i) breached any provision of
Section 5.8, (ii) withdrawn or modified, in a manner materially adverse to
Parent or Sub, the approval or recommendation by the Board of Directors of the
Company of this Agreement or the transactions contemplated hereby or (iii)
approved an Alternative Transaction; or

A-24
<PAGE>

(f) by the Company, if Parent or Sub shall have (i) materially breached any
of their representations or warranties contained herein or (ii) failed to
comply in any material respect with any agreements, covenants or obligations
provided herein applicable to Parent and Sub, in each case of (i) and (ii)
which breach or failure was not cured such within 10 business days after
written notice thereof; or

(g) by Parent, if the Company shall have (i) materially breached any of its
representations or warranties contained herein or (ii) failed to comply in any
material respect with any agreements, covenants or obligations provided herein
applicable to the Company, in each case of (i) and (ii) which breach or
failure was not cured such within 10 business days after written notice
thereof.

For purposes of this Agreement, the term "Deadline Date" shall mean February
15, 2000 unless the Stockholders' Meeting is held on or before December 1,
1999, in which case "Deadline Date" shall mean January 31, 2000. The parties
agree that time is of the essence with respect to the actions to be taken
within the time periods specified in Sections 7.1(a), 7.1(c)(i) and 7.1(c)(ii)
and shall proceed accordingly with respect thereto.

Section 7.2. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, except as
follows:

(a) if this Agreement is terminated by the Company pursuant to Section
7.1(d), or by Parent pursuant to Section 7.1(e), then the Company shall
immediately pay to Parent a cash amount equal to $4,125,000 as compensation
for lost opportunities and shall reimburse Parent for all of its reasonable
and documented out-of-pocket expenses incurred in connection with this
transaction. The Company acknowledges that the amount of damages that would be
incurred by Parent as a result of such a termination are difficult to
ascertain, and that the amount of liquidated damages provided by this Section
7.2(a) is reasonable;

(b) if this Agreement is terminated by Parent or the Company pursuant to
Section 7.1(c)(i) or by Parent pursuant to Section 7.1(g), then the Company
shall immediately reimburse Parent for all of its reasonable and documented
out-of-pocket expenses incurred in connection with this transaction; and

(c) if this Agreement is terminated by Parent or the Company pursuant to
Section 7.1(a), then the Company shall be entitled to retain the Deposit as
compensation for lost opportunities and Parent shall reimburse the Company for
all of its reasonable and documented out-of-pocket expenses incurred in
connection with this transaction (including the expenses of Allen which the
Company is obligated to bear but excluding the fees of Allen, which the
Company is obligated to bear). Parent and Sub acknowledge that the amount of
damages that would be incurred by the Company as a result of such a
termination are difficult to ascertain, and that the amount of liquidated
damages provided by this Section 7.2(c) is reasonable.

(d) if this Agreement is terminated by the Company pursuant to Section
7.1(f), then Parent shall immediately reimburse the Company for all of its
reasonable and documented out-of-pocket expenses incurred in connection with
this transaction (including the expenses of Allen which the Company is
obligated to bear but excluding the fees of Allen, which the Company is
obligated to bear).

Section 7.3. Amendment. Subject to the applicable provisions of the DGCL, at
any time prior to the Effective Time, whether before or after adoption of this
Agreement by the stockholders of the Company, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
adoption of this Agreement by the stockholders of the Company or the Sub, no
amendment shall be made which by law would require the further approval of
such stockholders, without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.

A-25
<PAGE>

Section 7.4. Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations
or other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance with any of the agreements or conditions of the other parties
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.

Section 7.5. Procedure For Termination, Amendment, Extension Or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to
Section 7.4 shall, in order to be effective and in addition to requirements of
applicable law, require, in the case of Parent, Sub or the Company, action by
its Board of Directors or the duly authorized designee of its Board of
Directors.

ARTICLE VIII

GENERAL PROVISIONS

Section 8.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time, including,
without limitation, Section 5.6.

Section 8.2. Fees and Expenses. Except as provided otherwise herein, whether
or not the Merger shall be consummated, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.

Section 8.3. Definitions. For purposes of this Agreement:

(a) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act;

(b) "person" or "Person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity.

Section 8.4. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) or telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):

(a)if to Parent or Sub, to

c/o The Veritas Capital Fund, L.P.
660 Madison Avenue
New York, NY 10021
Attention: Robert B. McKeon
Fax: 212-688-9411

with a copy to:

Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, NY 10166
Attention: Benjamin M. Polk, Esq.
Fax: 212-351-3131

A-26
<PAGE>

(b)if to the Company, to

Advanced Technical Products, Inc.
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076
Attention: Garrett L. Dominy
Fax: 770-993-1986

with a copy to:

Valerie A. Price, Esq.
76 Parkview Road South
Pound Ridge, NY 10576
Fax: 914-763-2590

Section 8.5. Interpretation. When a reference is made in this Agreement to a
Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement. Where the context or construction requires, all words applied in
the plural shall be deemed to have been used in the singular, and vice versa;
the masculine shall include the feminine and neuter, and vice versa; and the
present tense shall include the past and future tense, and vice versa.

Section 8.6. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.

Section 8.7. Entire Agreement; Third-Party Beneficiaries. This Agreement,
including the exhibits and schedules hereto which are incorporated herein by
this reference, the Escrow Agreement and the other agreements referred to
herein constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. This Agreement is not intended to confer
upon any person, other than the parties hereto and the third party
beneficiaries referred to in the following sentence, any rights or remedies.
The parties hereto expressly intend the provisions of Section 5.6 and Article
II to confer a benefit upon and be enforceable by, as third party
beneficiaries of this Agreement, the third persons referred to in, or intended
to be benefited by, such provisions.

Section 8.8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.

Section 8.9. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or
in part, by operation of law or otherwise by any of the parties and any such
assignment shall be null and void, except that Parent may assign this
Agreement without the consent of the Company (i) to any Affiliate of Parent or
(ii) for collateral security purposes to any source of financing to the
Parent, Sub or Surviving Company. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.

Section 8.10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or was otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent

A-27
<PAGE>

breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which they are entitled at law or in equity.

Section 8.11. Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision, and this Agreement will be reformed, construed
and enforced as if such invalid, illegal or unenforceable provision or portion
of any provision had never been contained herein.

Section 8.12. Waiver of Jury Trial. Each of the parties hereto waives any
right it may have to trial by jury in respect of any litigation based on,
arising out of, under or in connection with this agreement or any course of
conduct, course of dealing, verbal or written statement or action of any party
hereto.

IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.

Advanced Technical Products, Inc.

/s/ Garrett L. Dominy
By: _________________________________
Name: Garrett L. Dominy
Title: Executive Vice President &
CFO

ATP Holding Corp.

/s/ Robert B. McKeon
By: _________________________________
Name: Robert B. McKeon
Title: President

ATP Acquisition Corp.

/s/ Robert B. McKeon
By: _________________________________
Name: Robert B. McKeon
Title: President

For purposes of Section 5.12 herein
only:

/s/ Garrett L. Dominy
By: _________________________________
Garrett L. Dominy

/s/ James S. Carter
By: _________________________________
James S. Carter

A-28
<PAGE>

EXHIBIT 1.2

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this "Agreement") is dated as of September , 1999,
by and among ATP HOLDING CORP., a Delaware corporation ("Purchaser"), ADVANCED
TECHNICAL PRODUCTS, INC., a Delaware corporation (the "Company"), and The
Chase Manhattan Bank (the "Escrow Agent"). Purchaser and the Company are
sometimes referred to herein individually as a "Party" and collectively as the
"Parties."

W I T N E S S E T H:

WHEREAS, Purchaser, ATP Acquisition Corp., a Delaware corporation ("Sub"),
and the Company have executed and entered into that certain Agreement and Plan
of Merger of even date herewith relating to the merger of Sub with and into
the Company (the "Merger Agreement");

WHEREAS, pursuant to the Merger Agreement, Purchaser has agreed to deposit
the sum of Three Million Dollars ($3,000,000) (the "Deposit") in an escrow
account with the Escrow Agent subject to and in accordance with the terms and
conditions set forth herein, to be held and disbursed pursuant to the terms
and conditions of this Agreement; and

WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by each party hereto, it is hereby agreed by
and among the Parties and the Escrow Agent as follows:

1. Delivery of the Deposit. On the date hereof, Purchaser shall deliver to
the Escrow Agent, by certified check or by wire transfer of immediately
available funds, an amount equal to the Deposit.

2. Disbursement of the Deposit by Escrow Agent. Subject to Section 5(a)
hereof, the Escrow Agent shall disburse the Deposit as follows:

(a) Five (5) business days (or such shorter period as Purchaser may consent
to in writing) after the receipt by the Escrow Agent of a notice signed by the
Company (the "Company's Demand Notice"), stating that the Company is entitled
to receipt of the Deposit pursuant to the provisions of Section 1.2 of the
Merger Agreement and confirming that the Company has at the same time
delivered the Company's Demand Notice to Purchaser, the Escrow Agent shall
deliver the Deposit in accordance with the Company's Demand Notice; provided,
however, that if within such five (5) business day period, the Escrow Agent
receives a written objection signed by Purchaser, then the Escrow Agent shall
continue to hold the Deposit until otherwise authorized and directed to
distribute the same pursuant to paragraph (c) or (d) of this Section 2;

(b) Five (5) business days (or such shorter period as the Company may
consent to in writing) after the receipt by the Escrow Agent of a notice
signed by Purchaser ("Purchaser's Demand Notice"), stating that Purchaser is
entitled to receipt of the Deposit pursuant to the provisions of Section 1.2
of the Merger Agreement and confirming that Purchaser has at the same time
delivered Purchaser's Demand Notice to the Company, the Escrow Agent shall
deliver the Deposit in accordance with Purchaser's Demand Notice; provided,
however, that if within such five (5) business day period, the Escrow Agent
receives a written objection signed by the Company, then the Escrow Agent
shall continue to hold the Deposit until otherwise authorized and directed to
distribute the same pursuant to paragraph (c) or (d) of this Section 2;

(c) Upon receipt by the Escrow Agent of a joint written instruction ("Joint
Written Instruction") signed by each of Purchaser and the Company (either on
the same document or in counterparts), the Escrow Agent shall

A-29
<PAGE>

deliver the Deposit or such portion of the Deposit in accordance with the
terms of the Joint Written Instruction; and

(d) Upon receipt by the Escrow Agent of a final and non-appealable order,
determination or award of any court or tribunal (an "Order"), the Escrow Agent
shall deliver the Deposit, or any portion thereof, in accordance with the
Order. Any such Order shall be accompanied by an opinion of counsel for the
Party presenting such Order satisfactory to the Escrow Agent to the effect
that such court or tribunal has competent jurisdiction and that such Order is
final and non-appealable.

3. Duties and Responsibilities of the Escrow Agent.

(a) The Parties acknowledge and agree that the Escrow Agent (i) shall not be
responsible for or bound by the terms and conditions of the Merger Agreement,
and shall not be required to inquire into whether either Party is entitled to
receipt of the Deposit, or any portion thereof, pursuant to the Merger
Agreement; (ii) shall be obligated only for the performance of such duties as
are specifically assumed by the Escrow Agent pursuant to this Agreement, and
in any event shall have liability under and in connection with this Agreement,
or any portion thereof, only for gross negligence or willful misconduct, all
other liabilities being expressly disclaimed, and such disclaimer being hereby
explicitly accepted by the Parties; (iii) may rely on and shall be protected
in acting or refraining from acting upon any written notice, instruction,
instrument, statement, request or document furnished to it hereunder and
believed by it in good faith to be genuine and to have been signed or
presented by the proper person or party, whether in the form of a hand-signed
original or a facsimile, without being required to determine the authenticity
or correctness of any fact stated therein or the propriety or validity or the
service thereof or the genuineness of any signature therein; (iv) may assume
that any person purporting to give notice or receipt or advice or make any
statement or execute any document in connection with the provisions hereof has
been duly authorized to do so; (v) shall not be under any duty to give the
property held by it hereunder any greater degree of care than it gives its own
similar property; and (vi) may consult counsel satisfactory to it, and the
opinion or advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith in accordance with the opinion of such counsel.

(b) The Parties acknowledge that the Escrow Agent is acting solely as a
stakeholder at their request and that the Escrow Agent shall not be liable for
any action taken by it in good faith and believed by it to be authorized or
within the rights or powers conferred upon it by this Agreement. The Parties,
jointly and severally, hereby agree to indemnify and hold harmless the Escrow
Agent and any of its officers or employees for any action taken or omitted to
be taken by it or any of its officers or employees hereunder, including the
costs and expenses of defending itself against any claim or liability under
this Agreement (including the fees of outside counsel), except to the extent
of gross negligence of willful misconduct in its capacity as Escrow Agent
under this Agreement. The Escrow's Agent duty is only to the Parties to this
Agreement and to no other person whomsoever. Anything in this Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including, but not limited to, lost profits), even if the Escrow Agent has
been advised of the likelihood of such loss or damage and regardless of the
form of the action.

(c) The Escrow Agent may at any time resign as escrow agent hereunder by
giving thirty (30) days prior written notice of its resignation to each of the
Parties. Prior to the effective date of the resignation as specified in such
notice, each of Purchaser and the Company will issue to the Escrow Agent a
written instruction authorizing delivery of the Deposit to a substitute escrow
agent selected by such Parties. If no successor escrow agent is named by such
Parties, the Escrow Agent may (i) apply to a court of competent jurisdiction
in the State of New York or any federal court located in the State of New York
for appointment of a successor escrow agent, or (ii) deposit the Deposit with
any court of competent jurisdiction in the State of New York or any federal
court located in the State of New York, in either of which events the Escrow
Agent shall give written notice thereof to each of Purchaser and the Company,
and thereupon the Escrow Agent shall be relieved and discharged from all
further obligations pursuant to this Agreement. The Escrow Agent shall have
the right to withhold an amount equal to the amount due and owing to the
Escrow Agent, plus any out of pocket costs and expenses the Escrow Agent

A-30
<PAGE>

may reasonable believe will be incurred by the Escrow Agent in connection with
the termination of the Escrow Agreement.

(d) The Escrow Agent does not have and will not have any interest in the
Deposit, but is serving only as escrow holder, having only possession thereof.
The Escrow Agent shall not be liable for any loss resulting from the making or
retention of any investment of the Deposit in accordance with this Agreement.

(e) This Agreement sets forth exclusively the duties of the Escrow Agent
with respect to any and all matters pertinent thereto, and no implied duties
or obligations shall be read into this Agreement.

(f) The provisions of this Section 3 shall survive the resignation of the
Escrow Agent or the termination of this Agreement.

4. Fees. Purchaser and the Company will share equally all of the fees (as
set forth on Schedule 1 hereto) and reasonable out of pocket expenses of the
Escrow Agent. The foregoing notwithstanding, Purchaser and the Company hereby
agree to jointly and severally (i) pay the Escrow Agent upon execution of this
Agreement as described on Schedule 1 hereto and (ii) pay or reimburse the
Escrow Agent upon request for all reasonable out of pocket expenses incurred
by it in connection with the preparation, execution, performance, delivery,
modification and termination of this Agreement. The parties hereby grant the
Escrow Agent a lien, right of set-off and security interest to the account for
the payment of any claim for compensation, expenses and amounts due hereunder.

5. Dispute Resolution; Judgments.

(a) It is understood and agreed that if any dispute shall arise with respect
to the delivery, ownership, right of possession or disposition of the Deposit,
or if the Escrow Agent shall in good faith be uncertain as to its duties or
rights hereunder, the Escrow Agent shall be authorized, without liability to
anyone, to (i) refrain from taking any action other than to continue to hold
the Deposit pending receipt of a Joint Written Instruction pursuant to Section
2(c) hereof or an Order and accompanying opinion of counsel pursuant to
Section 2(d) hereof, or (ii) deposit the Deposit with any court of competent
jurisdiction in the State of New York or any federal court located in the
State of New York, in which event the Escrow Agent shall give written notice
thereof to each of Purchaser and the Company, and thereupon the Escrow Agent
shall be relieved and discharged from all further obligations pursuant to this
Agreement. The Escrow Agent may, but shall be under no duty whatsoever to,
institute or defend any legal proceedings which relate to the Deposit. The
Escrow Agent shall have the right to retain counsel in case it becomes
involved in any disagreement, dispute or litigation on account of this
Agreement or otherwise determine that it is necessary to consult counsel.

(b) The Escrow Agent is hereby expressly authorized to comply with and obey
any Order (as defined in Section 2(d) hereof). In case the Escrow Agent obeys
or complies with any such Order, the Escrow Agent shall not be liable to any
of the Parties or to any other person, firm, corporation or entity by reason
of such compliance, notwithstanding that any such Order may be subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
into without jurisdiction.

6. Investment of the Deposit.

(a) During the term of this Escrow Agreement, the Deposit shall be invested
and reinvested by the Escrow Agent in the qualified investment indicated
below:

[ ]The Chase Manhattan Bank Money Market Account;

[X]A Chase Manhattan Bank Deposit Account;

[ ] One or more portfolios of The Chase Vista Money Market Mutual Funds,
for which affiliates of The Chase Manhattan Bank provide investment
advisory and shareholder services for a fee as described in the
prospectus for these funds which has been provided to the parties, in
addition to a 25 basis point fee as compensation for administrative and
accounting services provided to clients;

A-31
<PAGE>

[ ] Such other investments as Purchaser and the Company and the Escrow
Agent mutually agree upon.

All trust investment orders involving Treasuries, commercial paper and other
direct investments will be executed through The Chase Asset Management (CAM),
in the investment management division of the Chase Manhattan Bank. Subject to
the principles of best execution, transactions are effected on behalf of the
account by broker-dealers selected by CAM. An agency fee will be assessed in
connection with each transaction. The Company and Purchaser will be provided
periodic statements reflecting transactions executed on their behalf. Upon
request, within 5 days of any securities transaction in the account the
Company and Purchaser will receive at no additional cost a notification
providing transaction details including the agency fee.

The Escrow Agent shall have the right to liquidate any investments held in
order to provide funds necessary to make required payments under the Escrow
Agreement. The Escrow Agent in its capacity as escrow agent hereunder shall
not have any liability for any loss sustained as a result of any investment
made pursuant to the instruction of the parties hereto or as a result of any
liquidation of any investment prior to its maturity or for the failure of the
parties to give the Escrow Agent instructions to invest or reinvest the
Deposit or any earnings thereon.

(b) Any interest or other income earned on the investment of the Deposit
shall be added to and become part of the Deposit for all purposes hereunder.
Any receipt of interest or other income earned on the Deposit shall be subject
to withholding regulations then in force with respect to United States taxes,
and the Party or Parties entitled to receive such interest or other income
shall furnish the Escrow Agent with such forms and certificates as are
required by law.

7. Notices. All notices and other communications to be given under or by
reason of this Agreement to any party must be in writing and will be deemed to
have been validly given and received when delivered in person, by mail or by
facsimile, or when delivered by an overnight courier (such as Federal
Express), addressed as follows:

(a)IF TO PURCHASER:
c/o The Veritas Capital Fund, L.P.
660 Madison Avenue
New York, New York 10021
Facsimile: (212) 688-9411
Attn: Mr. Robert B. McKeon
Federal ID#:

with a copy to:

Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, New York 10166
Facsimile: (212) 351-3131
Attn: Benjamin M. Polk, Esq.

(b)If to the company:

Advanced Technical Products, Inc.
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076
Attn: Garrett L. Dominy
Facsimile: 770-993-1986
Federal ID#: 11-1581582

A-32
<PAGE>

with a copy to:

Valerie A. Price, Esq.
76 Parkview Road South
Pound Ridge, New York 10576
Facsimile: (914) 763-2590

(c)If to the escrow agent:

The Chase Manhattan Bank
Capital Markets Fiduciary Services
450 West 33rd Street
New York, NY 10001
Attention: Escrow Administration, 10th floor
Facsimile: (212) 946-8156

or to such other address or addresses or facsimile number or facsimile numbers
as any of the foregoing may from time to time designate as to itself, by
notice to the other as provided herein.

8. Binding Effect. This Agreement shall be binding upon the Parties and the
Escrow Agent and their respective successors and assigns and shall not be
enforceable by or inure to the benefit of any third party. Except with respect
to the resignation by the Escrow Agent pursuant to Section 3(c) hereof, no
Party may assign any of its rights or obligations under this Agreement without
the written consent of the Escrow Agent and the other Party.

9. Invalidity. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provisions in every other respect and
of the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.

10. Governing Law. This Agreement and all amendments thereto shall, in all
respects, be governed by and construed and enforced in accordance with the
internal laws of the State of New York, excluding the conflicts of law rules
thereof, and any action brought hereunder shall be brought in the courts of
the State of New York, located in the County of New York. Each party hereto
irrevocably waives any objection on the grounds of venue, forum non-conveniens
or any similar grounds and irrevocably consents to service of process by mail
or in any other manner permitted by applicable law and consents to the
jurisdiction of said courts.

11. Modification. This Agreement sets forth the entire agreement of the
parties with respect to the subject matter hereof and may be altered, amended,
modified or revoked only by an instrument in writing executed by the Escrow
Agent and each of the Parties. No waiver of any breach or default hereunder
shall be considered valid unless in writing and signed by the party giving
such waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.

12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
constitute one and the same instrument. All signatures of the parties to this
Agreement may be transmitted by facsimile, and such facsimile will, for all
purposes, be deemed to be the original signature of such party whose signature
it reproduces and will be binding upon such party.

13. Termination of Escrow. This Agreement shall terminate and the Escrow
Agent shall have no further duties hereunder upon the distribution of the
Deposit in full.

14. IRS Reporting. Each party hereto, except the Escrow Agent, shall, in the
notice section of this Agreement, provide the Escrow Agent with their Tax
Identification Number (TIN) as assigned by the Internal

A-33
<PAGE>

Revenue Service. All interest or other income earned under the Escrow
Agreement shall be allocated and paid as provided herein and reported by the
recipient to the Internal Revenue Service as having been so allocated and
paid.

15. Duties of Escrow Agent. The duties and responsibilities of the Escrow
Agent hereunder shall be determined by the express provisions of this Escrow
Agreement, and no other or further duties or responsibilities shall be
implied. The Escrow Agent shall not have any liability under, nor duty to
inquire into the terms and provisions of any agreement or instructions, other
than outlined herein.

16. Security Procedure.

(a) In the event funds transfer instructions are given (other than in
writing at the time of execution of this Agreement), whether in writing, by
telecopier or otherwise, the Escrow Agent is authorized to seek confirmation
of such instructions by telephone call-back to the person or persons
designated on Schedule 2 hereto, and the Escrow Agent may rely upon the
confirmations of any person purporting to be the person or any of the persons
so designated. The persons and telephone numbers for call-backs may be changed
only in writing actually received and acknowledged by the Escrow Agent. The
parties to this Agreement acknowledge that such security procedure is
commercially reasonable.

(b) It is understood that the Escrow Agent and the beneficiary's bank in any
funds transfer may rely solely upon any account numbers or similar identifying
number provided by either of the parties hereto to identify (i) the
beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The
Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even where its use may result in a
person pother than the beneficiary being paid, or the transfer of funds to a
bank other than the beneficiary's bank, or an intermediary bank designated.

17. Liability of Escrow Agent. The Escrow Agent shall not incur any
liability for following the instructions herein contained or expressly
provided for, or written instructions given mutually by the parties hereto.

18. Merger of Escrow Agent. Any corporation into which the Escrow Agent in
its individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all of the corporate trust
business of the Escrow Agent in its individual capacity may be transferred,
shall be the Escrow Agent under this Agreement without further act.

19. Force Majeure. In the event that the Escrow Agent is unable to perform
its obligations under the Agreement because of acts of God, strikes, equipment
or transmission failure or damage reasonably beyond its control, the Escrow
Agent shall not be liable for damages hereunder resulting from such failure to
perform or otherwise from such causes. Performance under this Agreement shall
resume when the Escrow Agent is able to perform substantially its duties.

A-34
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.

ATP Holding Corp.

By:__________________________________
Name:
Title:

Advanced Technical Products, Inc.

By:__________________________________
Name:
Title:

The Chase Manhattan Bank as Escrow
Agent

By:__________________________________
Name:
Title:

A-35
<PAGE>

SCHEDULE 1

15 basis points of the highest value of collateral held on deposit per annum
or any part thereof without proration for partial years, subject to a minimum
of $7,500 per annum or any part thereof without proration for partial years
(includes investment in a Chase Manhattan Bank Money Market Account, Chase
Manhattan Bank Deposit Account or Chase Manhattan Bank Mutual Fund known as
the Vista Fund)

$75 per investment (excludes Money Market, Deposit Account or Vista Fund
investments)

SCHEDULE 2

Telephone Numbers for Call-Backs and Persons Designated to Confirm Funds
Transfer Instructions

If to Purchaser:

<TABLE>
<CAPTION>
Name Telephone Number
---- ----------------
<S> <C>
1. Robert B. McKeon......................................... (212) 688-0020
2. Thomas J. Campbell....................................... (212) 688-0020
</TABLE>

If to the Company:

<TABLE>
<CAPTION>
Name Telephone Number
---- ----------------
<S> <C>
1. Garret L. Dominy......................................... (770) 998-6420
2. James Hobt............................................... (770) 998-6297
</TABLE>

Telephone call-backs shall be made to each of Purchaser and the Company if
joint instructions are required pursuant to the Escrow Agreement.

A-36
<PAGE>

EXHIBIT 1.6(a)

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ADVANCED TECHNICAL PRODUCTS, INC.
(Pursuant to Section 102 of the General Corporation Law of the State of
Delaware)

ARTICLE I

The name of the corporation is Advanced Technical Products, Inc. (the
"Corporation").

ARTICLE II

The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware
19801. The name of the Corporation's registered agent for service of process
at such address is The Corporation Trust Company.

ARTICLE III

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.

ARTICLE IV

The total number of shares of stock which the Corporation shall have
authority to issue is 1,000 shares of common stock, par value $0.01 per share.

ARTICLE V

The number of directors of the Corporation shall be as fixed from time to
time by or pursuant to the By-laws of the Corporation. Each director shall
serve until such director's successor is duly elected and qualified or until
such director's earlier death, resignation or removal.

ARTICLE VI

Unless and except to the extent that the By-laws of the Corporation shall so
require, the election of directors of the Corporation need not be by written
ballot.

ARTICLE VII

A director of this Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is
not permitted under the General Corporation Law of the State of Delaware or as
the same exists or may hereafter be amended.

Any repeal or modification of the foregoing paragraph shall not adversely
affect any right or protection of a director of the Corporation existing
hereunder with respect to any act or omissions occurring prior to such repeal
or modification.

A-37
<PAGE>

ARTICLE VIII

The Corporation shall indemnify to the full extent permitted by law (such as
it presently exists or may hereafter be amended) any person made, or
threatened to be made, a defendant or witness to any action, suit or
proceeding (whether civil, criminal, administrative or investigative) by
reason of the fact that he is or was a director or officer of the Corporation
or by reason of the fact that such director or officer, at the request of the
Corporation, is or was serving any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, in any capacity.

Any repeal or modification of the foregoing paragraph shall not adversely
affect any right to indemnification provided hereunder with respect to any act
or omission occurring prior to such repeal or modification.

A-38
<PAGE>

APPENDIX B

FORM OF ALLEN OPINION

September 2, 1999

Advanced Technical Products, Inc.
200 Mansell Court, East
Suite 505
Roswell, Georgia 30076

Gentlemen:

We hereby confirm our oral opinion presentation as to the fairness, from a
financial point of view, of the Cash Merger Consideration (as defined below)
to the Common Stockholders of ATP, that we presented to the Board of Directors
of ATP at its meeting on September 2, 1999. We understand that Advanced
Technical Products, Inc. ("ATP") and an affiliate of the Veritas Capital Fund,
L.P. ("Veritas") have entered into an Agreement and Plan of Merger, dated
September 3, 1999 (the "Merger Agreement"), pursuant to which, among other
things, (i) Veritas will be merged with and into ATP, (ii) the holders of
Common Stock, par value $0.01 per share, of ATP ("ATP Common Stock") will
receive $14.50 per share in consideration (the "Cash Merger Consideration") of
the surrender and cancellation of each share of ATP Common Stock, (iii) the
shareholders of Preferred Stock, par value $1.00 per share, of ATP ("ATP
Preferred Stock") will receive $1.00 per share plus accrued but unpaid
dividends thereon in consideration for surrender and cancellation of each
share of ATP Preferred Stock, and (iv) holders of options or warrants to
purchase shares of ATP's Common Stock which bear an exercise price of less
than $14.50 per share ("ATP In The Money Options") will receive (a) a cash
amount equal to the difference in the exercise price and $14.50 for each share
of ATP Common Stock which may be issued pursuant to that portion of the option
or warrant which has vested as of the effective date and (b) an option to
purchase securities in ATP on a post-merger basis, having a value equivalent
to the value of the unvested portion of such option or warrant, for that
number of shares subject to the option or warrant which has not vested as of
the effective date, in consideration and cancellation of each ATP In The Money
Options (the "Transaction"). The terms and conditions of the Transaction are
more fully set forth in the Merger Agreement.

You have requested our opinion as to the fairness, from a financial point of
view, of the Cash Merger Consideration to the Common Stockholders of ATP (our
"Opinion").

Allen & Company Incorporated ("Allen"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. We
will receive a fee for rendering our Opinion pursuant to an engagement letter
with ATP dated February 26, 1999. In addition, Allen and certain of its
officers and directors own approximately 32,050 shares ATP Common Stock, and
John Simon, a Managing Director of Allen, is a member of the Board of
Directors of ATP. Allen has previously served as financial advisor to Lunn
Industries, a predecessor to ATP, for which Mr. Simon also served as a
Director. From time to time in the ordinary course of its business as a
broker-dealer, Allen may also hold positions and trade securities of ATP.

In connection with our Opinion, we have reviewed the terms and conditions of
the draft Merger Agreement, the draft Escrow Agreement and related documents
as well as the history and background of the Transaction and certain financial
aspects of the Transaction. We also have reviewed certain business, financial
and other information of ATP that was publicly available or furnished to us by
ATP, including financial projections provided by its management, and certain
internal financial analyses, reports and other information prepared by its
management. We have held discussions with various members of senior management
of ATP concerning its historical and current operations, financial condition
and business prospects. In addition, we have (i) reviewed the price and
trading history of the ATP Common Stock and compared that price and trading
history with selected

B-1
<PAGE>

publicly traded companies we deemed comparable; (ii) compared the financial
positions and operating results of ATP with selected publicly traded companies
we deemed comparable; (iii) compared certain financial terms of the
Transaction to certain financial terms of selected other mergers and
acquisitions we deemed comparable; (iv) performed a discounted cash flow
analysis; (v) performed a leveraged buyout analysis; (vi) approached as
requested, and held discussions with third parties to solicit indications of
interest and the possible acquisition of ATP; (vii) reviewed certain
historical business information and acquisition history of Veritas; and (vii)
conducted such other financial studies, analyses and investigations and
reviewed such other financial, operating, and financial market information we
deemed appropriate in arriving at our Opinion. In addition to our review of
the specific information set forth above, we have held discussions with
management regarding general economic, monetary and market conditions in the
aerospace and defense industries existing as of the date hereof as they may
affect the business and prospects of ATP.

We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our Opinion without
independent verification and have further relied upon the assurances of
management of ATP that they are not aware of any facts that would make such
information inaccurate or misleading. With respect to the financial
projections of ATP, we have relied upon the assurances of management of ATP
that such projections have been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the management of ATP as
to the future financial performance of ATP. In arriving at our Opinion, we
neither conducted a physical inspection of the properties and facilities of
ATP nor obtained any evaluations or appraisals of the assets or liabilities of
ATP. Our Opinion is necessarily based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.

Our Opinion rendered herein does not constitute a recommendation of the
Transaction over any other alternative transaction which may be available to
ATP. The Opinion contained herein relates to the fairness from a financial
point of view of the Cash Merger Consideration to the Common Stockholders of
ATP, and does not address any other aspect of the Transaction or any related
transaction, and does not constitute a recommendation that any shareholder of
ATP vote to approve the Transaction. We have prepared this Opinion at the
request and for the benefit of the Board of Directors of ATP, and we consent
to its inclusion in its entirety in filings ATP may be required to make with
the Securities and Exchange Commission.

Based on the foregoing and subject to the qualifications stated herein, we
are of the Opinion that as of the date hereof the Cash Merger Consideration is
fair to the Common Stockholders of ATP from a financial point of view.

Very truly yours,

ALLEN & COMPANY INCORPORATED

/s/ John Simon
By: _________________________________
John Simon
Managing Director

B-2
<PAGE>

APPENDIX C

DELAWARE GENERAL CORPORATION LAW

Section 262. APPRAISAL RIGHTS

(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the Effective Date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to sec.228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to sec.251 (other than a merger effected pursuant to
sec.251(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or
sec.264 of this title:

(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec.251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
secs.251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the Effective Date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by ATP
Holding corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.

C-1
<PAGE>

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the Effective Date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or

(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
Effective Date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
Effective Date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the Effective
Date of the merger or consolidation, shall, also notify such stockholders
of the Effective Date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the Effective Date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
Effective Date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the Effective Date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
Effective Date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the Effective Date of the merger or
consolidation, the record date shall be such Effective Date. If no record
date is fixed and the notice is given prior to the Effective Date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.

C-2
<PAGE>

(e) Within 120 days after the Effective Date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the Effective Date of the merger
or consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the Effective Date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.

(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated

C-3
<PAGE>

stock forthwith, and the case of holders of shares represented by certificates
upon the surrender to the corporation of the certificates representing such
stock. The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation be a
corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees, and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the Effective Date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the Effective Date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the Effective Date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.

C-4
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I

PURPOSE

1.01 Purpose. The Advanced Technical Products, Inc. 1998 Employee Stock
Purchase Plan is intended to encourage employees of Advanced Technical
Products, Inc. ("ATP") to remain in its employ and participate in its growth
by providing a method whereby employees of ATP and its eligible Subsidiary
Corporations (collectively, with ATP, the "Company") will have an opportunity
to acquire a proprietary interest in the Company's long-term performance and
success through the purchase of shares of the Common Stock at a price that may
be less than the fair market value of the stock on the date of purchase from
funds accumulated through payroll deductions. It is the intention of the
Company to have the Plan qualify as an "employee stock purchase plan" under
section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.

ARTICLE II

DEFINITIONS

2.01 "Base Pay" means regular straight-time earnings excluding payments for
overtime, shift premium, bonuses and other special payments, commissions and
other incentive payments.

2.02 "Board" means the Board of Directors of ATP.

2.03 "Common Stock" means the Common Stock, $.01 par value of ATP.

2.04 "Committee" means the committee appointed by the Board pursuant to
Article X to administer the Plan. If the Board does not appoint a Committee,
or if a Committee otherwise fails to exist at any time during the term hereof,
the Board shall perform the functions of the Committee.

2.05 "Employee" means any person who is customarily employed within the
meaning of Code section 3401, by the Company (i) 20 hours per week or more or
(ii) at least five months in any calendar year. The Committee shall determine
when an Employees period of employment terminates and when such period of
employment is deemed to be continued during an approved leave of absence.

2.06 "Offering" means any offering as described in Section 4.02 hereof
permitting Participants to purchase Common Stock under the Plan.

2.07 "Offering Commencement Date" means the date on which an Offering will
commence, as described in Section 4.02.

2.08 "Offering Period" means the period between the Offering Commencement
Date and the Offering Termination Date, as described in Section 4.02.

2.09 "Offering Termination Date" means the last day of an Offering Period,
as described in Section 4.02.

2.10 "Participant" means an Employee who exercises an option to purchase
Common Stock under the Plan by authorizing payroll deductions under Section
5.02.

2.11 "Plan" means the Advanced Technical Products, Inc. 1998 Employee Stock
Purchase Plan, as set forth herein and as it may be amended from time to time.

D-1
<PAGE>

2.12 "Subsidiary Corporation" means (i) any "subsidiary corporation" of ATP
as that term is defined in section 424(f) of the Code, (ii) any other entity
that is taxed as a corporation under Code Section 7701(a)(3) and is a member
of the "affiliated group" as defined in Code Section 1504(a) of which ATP is
the common parent, and (iii) any other entity as may be permitted from time to
time by the Code or the Internal Revenue Service to be an employer of
employees participating in the Plan; provided, however, that any such
Subsidiary Corporation must be designated as a participating employer in the
Plan by the Board.

ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.01 Initial Eligibility. Except as provided in Section 3.02, any Employee
who shall have completed ninety (90) days employment and shall be employed by
the Company on the date his participation in the Plan is to become effective
shall be eligible to participate in Offerings under the Plan which commence on
or after such ninety day period has concluded.

3.02 Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an option to purchase
Common Stock under the Plan:

(a) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company (for purposes of this subparagraph, the rules of section 424(d) of
the Code shall apply in determining stock ownership of any Employee) and
any option granted to an Employee which results in his stock ownership (as
determined under section 423(b)(3) of the Code) equaling or exceeding such
5% limitation shall be entirely void as if it had never been granted; or

(b) which permits his rights to purchase stock (i) under the Plan to
exceed $2,500 per calendar year or (ii) under all employee stock purchase
plans of the Company to accrue at a rate which exceeds $25,000 in fair
market value of the stock (determined at the time such option is granted)
for each calendar year in which such option is outstanding. For purposes of
this subparagraph (b), (i) an option accrues when the option first becomes
exercisable during any calendar year; (ii) an option accrues at a rate
provided in the applicable Offering, but in no case may such rate for any
Employee exceed $25,000 of the fair market value of stock determined at the
time the option is granted for any one calendar year; (iii) an option that
has accrued under any one Offering may not be carried over by a Participant
to any other Offering; and (iv) only rights to purchase stock that have
been granted under an employee stock purchase plan that complies with
section 423 of the Code shall be taken into account.

3.03 Commencement of Participation. An eligible Employee may become a
Participant by completing an authorization for a payroll deduction in
accordance with Section 5.02 on the form provided by the Company and filing it
with the Company's finance department on or before the date set therefor by
the Committee, which date shall be prior to the Offering.

ARTICLE IV

OFFERINGS

4.01 Shares Offered. The total number of shares of Common Stock available
under the Plan is 1,000,000 shares. If any Offering shall expire without the
rights under such Offering having been exercised in full, such unpurchased
shares covered thereby shall be added to the shares otherwise available for
future Offerings.

4.02 Offerings. The Company may make periodic Offerings to eligible
employees to purchase Common Stock under the Plan, the duration of which may
be for a period of three months up to one year; provided, however, that the
initial Offering Commencement Date may be for a period of less than three
months, as

D-2
<PAGE>

determined by the Committee. Offering Periods commencing after the initial
Offering Period will commence on January 1, April 1, July 1 or October 1. With
respect to each Offering, the Committee, at its discretion, may specify the
maximum number of shares of Common Stock that may be purchased under the
Offering or such other limitations as it may deem appropriate. The number of
shares of Common Stock that may be purchased under each successive Offering
shall be all or a portion of the balance of the 1,000,000 shares authorized
but not purchased previously under the terms of this Plan.

As used in the Plan, "Offering Commencement Date" means the January 1, April
1, July 1 or October 1, as the case may be, on which the particular Offering
begins (except with respect to the initial Offering Commencement Date, which
shall be November 1, 1998), "Offering Termination Date" means the March 31,
June 30, September 30 or December 31, as the case may be, on which the
particular Offering terminates, and Offering Period means the period from the
Offering Commencement Date to the Offering Termination Date.

ARTICLE V

PAYROLL DEDUCTIONS

5.01 Offering Rights. With respect to each Offering, each Employee shall be
offered the opportunity to elect to have deducted from each paycheck issued
during the Offering Period an amount as determined by the Participant which
shall be withheld by the Company for the purchase on behalf of such electing
Employee of the number of whole shares of Common Stock that can be purchased
with the amount deducted for such purpose, but in no event may the number of
whole shares which may be purchased by any Participant exceed the number of
whole shares available during the Offering Period or exceed the individual
Participant allotment, if any, for the Offering Period described in Section
6.03 hereof. Fractional shares may not be purchased; any funds that are
insufficient to purchase whole shares shall remain in each affected
Participant's Plan account until the following Offering Period, at which time
such funds shall be (i) combined with the Participant's payroll deduction for
the following Offering Period and used to purchase whole shares for each
affected Participant who remains eligible to participate in such Offering
Period, or (ii) returned to each affected Participant who is not eligible to
participate in the following Offering Period.

5.02 Payroll Deductions. Each Employee shall become a Participant pursuant
to the terms of an Offering by filing a written election to participate in
that Offering in the form of a payroll deduction authorization prior to the
Offering Commencement Date on the form provided by the Company for that
purpose. A Participant may elect to have his authorization continue for future
Offerings until revoked or modified in writing. A Participant may elect to
have deductions made from his pay in one of two ways. At the time a
Participant files his authorization for payroll deduction, he shall elect to
have deductions made from his pay on each payday during the time he is a
Participant in an Offering at the rate of any specified whole percentage from
1% up to and including 10% of his Base Pay in effect at the Offering
Commencement Date or the Participant shall elect to have a specific dollar
amount deducted from his pay on each payday during the time he is a
Participant pursuant to rules that may be proscribed from time to time by the
Committee; provided, however, that each payroll deduction shall be in an
amount not less than $30 per calendar month and shall be subject to the
restrictions contained in Section 3.02. In the case of a part-time hourly
Employee, such Employee's Base Pay during an Offering shall be determined by
multiplying such Employee's hourly rate of pay in effect on the Offering
Commencement Date by the number of regularly scheduled hours of work for such
Employee during such Offering. Payroll deductions shall commence with the
first regular payroll period coinciding with or ending on the Offering
Commencement Date, or at such other time as may be specified in such Offering
and shall end on the earlier of the last regular payroll period coinciding
with or ending before the Offering Termination Date or, if earlier, upon the
termination of the Participant's employment with the Company.

5.03 Method of Payment; Participant's Account. The Company will maintain or
cause to have maintained a Plan account on its books in the names of each
Participant. All payroll deductions made for a Participant shall be credited
to his account under the Plan. Purchases of shares of Common Stock by any

D-3
<PAGE>

Participant pursuant to an Offering shall be made with funds accumulated in
the Participant's account through payroll deductions from the Participant's
Base Pay during the Offering Period. A Participant may not make any separate
cash payment into such account except when on leave of absence and then only
as provided in Section 5.05. The Company shall not credit a Participant's Plan
account with interest on any payroll deduction.

5.04 Changes in Payroll Deductions. A Participant may discontinue his
participation in the Plan as provided in Article VII, but no other change can
be made during an Offering and, specifically, a Participant may not alter the
amount of his payroll deductions for that Offering.

5.05 Leave of Absence. If a Participant goes on a leave of absence, such
Participant shall have the right to elect (i) to withdraw the balance in his
Plan account pursuant to Article VII, (ii) to discontinue contributions to the
Plan but remain a Participant in the Plan, or (iii) to remain a Participant in
the Plan during such leave of absence, authorizing deductions to be made from
payments by the Company to the Participant during such leave of absence and
undertaking to make cash payments to the Plan at the end of each payroll
period to the extent that amounts payable by the Company to such Participant
are insufficient to meet such Participant's authorized Plan deductions.

ARTICLE VI

TERMS AND CONDITIONS OF OFFERINGS AND OPTIONS

6.01 Terms and Conditions. Except as provided in Section 3.02(b), all
Participants shall have the same rights and privileges, as specified below in
this Article VI.

6.02 Number of Option Shares. On each Offering Commencement Date, a
Participant shall be deemed to have been granted an option to purchase shares
of Common Stock of the Company equal to the percentage of the Employee's Base
Pay that he has elected to have withheld through payroll deductions multiplied
by the Employee's Base Pay during the Offering Period, divided by the purchase
price per share determined under Section 6.04, subject to the allotments, if
any, for the Offering Period described in Section 6.03.

6.03 Allotment of Shares. If the total number of shares of Common Stock to
be purchased by Participants through payroll deduction under any Offering
exceeds the shares available for purchase under the Offering, the Committee
may make allotments of shares among the Participants on any basis consistent
with the terms of the Plan, and Offerings for shares, if any, in excess of the
shares so allotted shall be deemed to have lapsed.

6.04 Purchase Price. The purchase price per share at which Common Stock may
be purchased under each Offering shall be a percentage established by the
Committee prior to the Offering Commencement Date which is from 85% to 100% of
the lesser of the fair market value of a share of Common Stock as determined
as of (i) the Offering Commencement Date or (ii) the Offering Termination
Date. In determining the purchase price, the fair market value per share of
Common Stock shall be the closing price reported on the NASDAQ Stock Market or
successor exchange for the date on which such value is being determined;
provided, however, that if the closing sales price is not reported on such
date, then the closing price on the most recently preceding date on which such
price was reported shall be used.

6.05 Nontransferability of Options. An option shall not be transferable by
the Employee or Participant to whom it has been granted otherwise than by will
or the laws of descent and distribution and shall be exercisable, during the
Participant's lifetime, only by the Participant. Further, in the discretion of
the Board, the terms of any Offering may prohibit transfer under any
circumstances and provide for cancellation of the unexercised portion of any
option upon the death of a Participant.

6.06 Purchases. As of the Offering Termination Date, or such other date as
required by administrative operational requirements, purchases of shares of
Common Stock by any Participant pursuant to an Offering shall

D-4
<PAGE>

be made with funds accumulated in the Participant's account through payroll
deductions from the Participant's pay or as otherwise permitted by the Board,
under rules of uniform application over the time period specified in such
Offering.

6.07 Other Provisions. Each Offering shall contain such other provisions as
the Board shall deem advisable, including restrictions on resale of Common
Stock purchased through an Offering, provided that no such provisions may in
any way conflict, or be inconsistent with the terms of the Plan as amended
from time to time.

6.08 Requirements of Law. The issuance of any Common Stock hereunder is
conditioned upon registration of the Common Stock to be issued under
applicable federal and state securities laws and its listing on any applicable
stock exchange. In no event shall any Common Stock be issued hereunder prior
to the effective date of any such registration or listing application. In
addition, unless and until the Plan is approved by a proper vote of the
stockholders of the Company, the purchase price per share under Section 6.04
shall be at least 100% of the fair market value determined thereunder.

6.09 Issuance of Common Stock. The shares of Common Stock purchased by each
Participant with respect to each Offering shall be considered to be issued and
outstanding to his credit as of the close of business on the Offering
Termination Date or other purchase date for the Offering as described in
Section 6.06. Certificates for shares of Common Stock shall be issued in
accordance with Section 7.02 only in the name of the Participant unless the
Participant, or in the event of death, the Participant's designee, elects
otherwise by written notice to the Company and the Company gives prior written
consent to such election.

6.10 Account Balances. No interest shall accrue at any time for any amount
credited to the account of a Participant. After the close of each Offering, a
report shall be sent to each Participant stating the entries made to his
account, the number of shares of Common Stock purchased, and the applicable
purchase price of such shares.

ARTICLE VII

WITHDRAWALS FROM PARTICIPANT ACCOUNTS

7.01 Withdrawal From Offering. Except for any officer of the Company who is
subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended (an "Insider"), Participant's may cease
participation in an Offering at any time prior to the Offering Termination
Date and withdraw all cash amounts in their accounts by providing at least
fifteen (15) days' prior written notice to the Company's finance department
revoking his payroll deduction authorization. Such withdrawals shall serve to
cancel the Participant's option, and the Participant shall thereupon cease his
participation in such Offering. Partial cash withdrawals shall not be
permitted. Cash withdrawal requests shall be made in such from and under such
conditions as may be specified from time to time by the Committee. Insiders
may not make cash withdrawals for so long as they remain Insiders.

7.02 Issuance of Certificates. As soon as practicable after each Offering
Period, each Participant will receive a stock certificate representing all of
the shares of Common Stock (in a whole number of shares) held in his account.
A Participant shall not be permitted to pledge, transfer, or sell shares of
Common Stock held in his account until they are issued in certificate form.

7.03 Termination of Employment. Upon termination of a Participant's
employment with the Company for any reason, whether voluntary or involuntary,
his participation in the Plan shall immediately terminate. As soon thereafter
as is practicable, the Participant shall receive (i) cash in an amount equal
to the balance in his account as of the date of his termination of employment,
without interest; (ii) a stock certificate for all whole shares of Common
Stock not yet delivered out of the account; and (iii) cash equivalent to any
fractional shares of Common Stock in the account.

D-5
<PAGE>

ARTICLE VIII

RECAPITALIZATION OR REORGANIZATION
AND COMMON STOCK DIVIDENDS

8.01 Merger, Consolidation, or Reorganization. In the event of a dissolution
or liquidation of the Company, or any merger, consolidation, or share exchange
pursuant to which the holders of Common Stock would receive cash, securities
or property from another person or entity, the Board, at its election, may
cause each outstanding option to terminate; provided, however, that each
Participant shall in such event, subject to such rules and limitations of
uniform application as the Board may prescribe, be entitled to the rights of
terminating Participant's provided in Article VII.

8.02 Capital Adjustments. The aggregate number of shares of Common Stock
that may be purchased by the exercise of outstanding options and the purchase
price per share covered by each such outstanding option and the number of
shares of Common Stock held in a Participant's account shall be
proportionately adjusted for any increase or decrease in the number of issued
shares resulting from a subdivision or consolidation of Common Stock shares or
other capital adjustment or the payment of a Common Stock dividend or other
increase or decrease in such shares of Common Stock effected without the
receipt of consideration by the Company.

8.03 Company's Discretion. The grant of an option under the Plan shall not
affect in any way the Company's right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business or
to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part
of its business or assets.

ARTICLE IX

AMENDMENT OR TERMINATION OF THE PLAN

9.01 Amendment or Termination. The Board in its sole and absolute discretion
may suspend or terminate the Plan, reconstitute the Plan in whole or in part,
or amend or revise the Plan in any respect whatsoever except that (i) no
amendment shall cause any option to fail to qualify as an option under section
423 of the Code; (ii) without approval of the stockholders, no amendment shall
increase the number shares of Common Stock that may be sold under the Plan or
make any change in the Employees or class of Employees eligible to participate
in the Plan; and (iii) without the approval of a Participant, no change shall
be made in the terms of any outstanding option adverse to the interest of the
Participant. The Plan shall terminate on the date that all shares of Common
Stock authorized for sale under the Plan have been purchased, except as
otherwise extended by authorizing additional shares under the Plan.

ARTICLE X

ADMINISTRATION

10.01 Appointment of Committee. If the Board appoints a Committee to
administer the Plan, the Committee shall consist of one or more persons who
are either directors or employees of the Company. The Board may from time to
time appoint members of the Committee in substitution for or in addition to
members previously appointed and may fill vacancies, however caused, in the
Committee.

10.02 Authority of Committee. Subject to the express provisions of the Plan,
the Committee shall have full power and authority in its discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be final, conclusive and binding
on all persons. The Committee may delegate some or all of its administrative
powers and responsibilities to such other persons from time to time as it
deems appropriate.

D-6
<PAGE>

ARTICLE XI

MISCELLANEOUS

11.01 Nontransferability. Except by the laws of descent and distribution, no
benefit provided hereunder shall be subject to alienation, assignment, or
transfer by a Participant (or by any person entitled to such benefit pursuant
to the terms of this Plan), nor shall it be subject to attachment or other
legal process of whatever nature, and any attempted alienation, assignment,
attachment, or transfer shall be void and of no effect whatsoever and, upon
any such attempt, the benefit shall terminate and be of no force or effect.
During a Participants lifetime, options granted to the Participant shall be
exercisable only by the Participant. Shares of Common Stock shall be delivered
only to the Participant or death beneficiary entitled to receive the same or
to the Participants authorized legal representative.

11.02 No Employment Right. Neither this Plan nor any action taken hereunder
shall be construed as giving any right to any individual to be retained as an
officer or Employee of the Company.

11.03 Tax Withholding. The Company shall have the right to deduct from all
payments hereunder any federal, state, local, or employment taxes that it
deems are required by law to be withheld with respect to such payments.

11.04 Government and Other Regulations. The obligation of the Company to
deliver shares of Common Stock or make cash payments hereunder shall be
subject to all applicable laws, rules, and regulations and to such approvals
by any government agencies or regulatory authority as may be deemed necessary
or appropriate by the Committee. If shares of Common Stock deliverable
hereunder may in certain circumstances be exempt from registration under the
Securities Act of 1933, as amended, the Company may restrict its transfer in
such manner as it deems advisable to ensure such exempt status. The Plan is
intended to comply with Rule 16b-3 under the Securities Exchange Act of 1934,
as amended. Any provision inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan. The Plan shall be subject to any
provision necessary to assure compliance with federal and state securities
laws.

11.05 Indemnification. Each person who is or at any time serves as a member
of the Board and/or the Committee shall be indemnified and held harmless by
ATP against and from (i) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person may
be a party or in which such person may be involved by reason of any action or
failure to act under this Plan; and (ii) any and all amounts paid by such
person in satisfaction of judgment in any such action, suit, or proceeding
relating to this Plan except to the extent that any such loss, cost, liability
or expense arises from the gross negligence or wilful misconduct of such
person. Each person covered by this indemnification shall give ATP an
opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend the same on such person's own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
charter or bylaws of ATP, as a matter of law, or otherwise, or any power that
ATP may have to indemnify such person or hold such person harmless.

11.06 Reliance on Reports. Each member of the Board and the Committee shall
be fully justified in relying or acting in good faith upon any report made by
the independent public accountants of the Company and upon any other
information furnished in connection with this Plan. In no event shall any
person who is or shall have been a member of the Board and/or the Committee be
liable for any determination made or other action taken or any omission to act
in reliance upon any such report or information, or for any action taken,
including the furnishing of information, or failure to act, if in good faith.

11.07 Governing Law. All matters relating to this Plan shall be governed by
the laws of the State of Georgia, without regard to the principles of conflict
of laws thereof, except to the extent preempted by the laws of the United
States.

D-7
<PAGE>

11.08 Relationship to Other Benefits. No payment under this Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, or group insurance plan of the Company.

11.09 Expenses. The expenses of implementing and administering this Plan
shall be borne by the Company.

11.10 Titles and Headings. The titles and headings of the Articles and
Sections in this Plan are for convenience of reference only, and in the event
of any conflict, the text of this Plan, rather than such titles or headings,
shall control.

11.11 Application of Funds. All funds received by the Company under the Plan
shall constitute general funds of the Company.

11.12 Nonexclusivity of Plan. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.

D-8
<PAGE>

Proxy

Advanced Technical Products, Inc.

200 MANSELL COURT, EAST
SUITE 505
ROSWELL, GEORGIA 30076

The undersigned stockholder of Advanced Technical Products, Inc. ("ATP") hereby
appoints James S. Carter and Garrett L. Dominy, and each of them, as Proxies,
each with the power of ATP substitution and resubstitution for and in the name
of the undersigned, to vote all of the shares of ATP Common Stock, par value
$0.01 per share, held of record by the undersigned as of September 29, 1999 at
ATP's Annual Meeting of Stockholders (the "Annual Meeting") to be held on
October 21, 1999, at 2:00 p.m., local time, at the Radisson Hotel, 10740
Westside Parkway, Alpharetta, Georgia 30004, and at all adjournments or
postponements thereof, with all powers the undersigned would possess if then and
there personally present. Without limiting the general authorization and power
hereby given, the undersigned directs said Proxies to cast the undersigned's
vote as specified on the reverse side hereof.

IF NO DIRECTION IS GIVEN, THE UNDERSIGNED'S VOTE WILL BE CAST "FOR" THE
PROPOSALS IN PARAGRAPHS 1, 2, 3 AND 4 ON THE REVERSE SIDE HEREOF. IN THEIR
DISCRETION, THE PROXIES ARE EACH AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.

Stockholders who plan to attend the Annual Meeting may revoke their proxy by
casting their vote at the meeting in person.

SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
------------------------------------------
<PAGE>

[X] Please mark
votes as in DO NOT PRINT IN
this example. THIS AREA

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

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ADVANCED
TECHNICAL PRODUCTS, INC.

FOR WITHHELD
[_] [_]

3. Proxy proposal 3: Election of the following Directors: Garrett L. Dominy and
Sam. P. Douglass

(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list at right.)

DO NOT PRINT
IN THIS AREA

1. Proxy proposal 1: Approval and adoption of the Agreement and Plan of Merger
dated as of September 3, 1999 by and among Advanced Technical Products, Inc.,
ATP Acquisition Corp. and ATP Holding Corp.

FOR AGAINST ABSTAIN
[_] [_] [_]

2. Proxy proposal 2: Ratification of the 1998 Employee Stock Purchase Plan of
ATP.

FOR AGAINST ABSTAIN
[_] [_] [_]

4. Proxy proposal 4: Ratification of KPMG LLP as the auditors for the fiscal
year ending December 31, 1999.

FOR AGAINST ABSTAIN
[_] [_] [_]

5. The transaction of such other business as may properly come before the Annual
Meeting of Stockholders of ATP.

6. To vote at the discretion of the Proxies upon such other matters as may
properly come before the Annual Meeting or any adjournment or postponement
thereof.

___________________ Date: _____, 1999 ___________________ Date: ______, 1999
Signature Signature
<PAGE>

[Logo] ATP ADVANCED TECHNICAL PRODUCTS, INC.
================================================================================

================
MARION
COMPOSITES
[GRAPHIC]

[GRAPHIC]

[Logo] Intellitec
======================

================
LINCOLN
COMPOSITES

[Logo]
ALCORE
[Logo] LUNN
------Industries

[GRAPHIC] [GRAPHIC]

[GRAPHIC]
<PAGE>

Dear Fellow Shareholders,

We are pleased to report that 1998 was a productive and event-filled year for
Advanced Technical Products, Inc. (ATP or the Company). The Company was formed
in 1997 through a merger between Lunn Industries and TPG Holdings, Inc. ATP
consists of five divisions - Lunn Industries, Lincoln Composites, Marion
Composites, Intellitec and Alcore, Inc. - that design, develop and produce
advanced composite material products for the aerospace, defense and commercial
markets. ATP also possesses capabilities and technologies to develop and produce
chemical defense, optical and mobile protection systems for the military, as
well as fuel tanks for Natural Gas Vehicles (NGVs), equipment for offshore oil
and gas exploration and electronic products for the specialty vehicle market.

FINANCIAL RESULTS

For the fiscal year ended December 31, 1998, the Company reported revenues of
$165.5 million compared to $138.9 million in fiscal 1997 (pro forma). Net income
for fiscal 1998 was $5.7 million compared to $5.1 million for fiscal 1997 (pro
forma). Diluted Earnings Per Share in fiscal 1998 were $1.02 compared to $0.91
in fiscal 1997.

ADVANCED MILITARY COMPOSITES

Among the wide variety of defense-related aircraft components that ATP
manufactures are flap assemblies, winglets and landing gear doors for the US Air
Force's high-priority C-17 aircraft. Additionally, ATP has contracts to provide
over 100 components for advanced military fighter aircraft, including the F/A-
18E/F Super Hornet and the F-22.

High-performance radomes are among ATP's leading products; ATP is the radome
supplier for 13 of the US Armed Forces' highest-rated aircraft. In addition, ATP
has been a supplier of Patriot Missile radomes for the past 12 years.

ATP's all-composite external fuel tanks provide significant weight advantage,
improved crash survivability, greater safety in fires and improved gunfire
protection. We supply 230-gallon fuel tanks for use on the Apache and Blackhawk
helicopters. In addition, the Company manufactures 480-gallon fuel tanks for the
F/A-18E/F Super Hornet.

Our rocket motor cases are used in both strategic (long-range) and tactical
missile systems. We supply launch canisters for the submarine-based Tomahawk and
Trident II missiles and rocket motor cases for the ground-based PAC 3 (Patriot
Advanced Capability) missile, the next generation of Patriot missiles, which
were initially used in the Gulf War. Development of this program began in 1994,
and full-scale production is expected to continue into the next century.

ATP also manufactures high-performance pressure vessels used predominantly for
aircraft, launch vehicles and space applications, including emergency power,
maneuvering, crew capsule impact and flotation, environmental, fuel feed and
purge systems.
<PAGE>

ATP designs, develops and produces mobile defense system shelters including the
field hospital units used in the Gulf War. ATP or its predecessors designed,
qualified and type classified 10 of the 18 shelters that the Department of
Defense (DOD) inventories. We also manufacture foam and beam shop vans for use
on the US Army's new 2.5 ton Light Medium Tactical Vehicle.

ATP also produces tactical deception products for the US Armed Forces and other
military customers, and we have delivered close to one million modules of US
Military Lightweight Camouflage Screen Systems. ATP also makes remote chemical
detection systems, and we are currently developing the next generation remote
sensor, the Joint Services Lightweight Standoff Chemical Agent Detector.

1998 HIGHLIGHTS

GE PARTNERSHIP: In February, ATP announced that it had entered into a long-term
production alliance with GE to fabricate composite inlet devices for the GE
F414-400 turbofan engine powering the F/A-18E/F Super Hornet.

US ARMY CAMOUFLAGE CONTRACT: ATP announced in April that the US Army
Communications-Electronics Command awarded us a $3.6 million contract to produce
various configurations of radar scattering camouflage systems and components.

LOCKHEED MARTIN AWARDS: In April, ATP received the Lockheed Martin STAR Supplier
Award. In addition, the Company received the Aeronautical Systems F-22
Outstanding Team Player Award in December.

ADVANCED COMMERCIAL COMPOSITES

ATP produces all-composite Natural Gas Vehicle (NGV) fuel tanks for commercial
applications. ATP's fuel tanks offer significant weight savings over steel, and
they also offer increased resistance to corrosives, impact damage and fatigue.

We expect that composites will play an increasing role in oil and gas
exploration. We are currently completing the development of a composite rigid
riser for use in deepwater oil production in partnership with Shell, Conoco and
Amoco.

Boeing has qualified our metal bonding technology for components that require
Phosphoric Acid Anodizing, and ATP
metal-bonded products are now part of every Boeing 727, 747, 757, 767 and 777
aircraft.

1998 HIGHLIGHTS

CONTRACT FROM HONDA: ATP has been contracted to produce tanks for Honda of
America's 1998 Model Civic GX; delivery began in April.

ATP ACQUIRES BRIGANTINE AIRCRAFT (BRIGANTINE): In June, we acquired Brigantine,
a manufacturer of honeycomb products and engineered panels located in Biarritz,
France.

CONTRACT TO SUPPLY NGV FUEL TANKS FOR MALAYSIA'S TAXIS: In September, Matra Auto
of
<PAGE>

France awarded a contract to ATP to design and produce 3,000 TUFFSHELL(TM) NGV
fuel tanks for the Enviro 2000, Malaysia's NGV taxi.

TUFFSHELL(TM) NGV fuel tank certification to Japan's MITI standard: Also in
September, ATP announced that the TUFFSHELL(TM) NGV fuel tank became the first
all-composite NGV tank to be certified under this new standard.

COMMERCIAL ELECTRONICS

ATP's Specialty Vehicle Electronics Group designs and manufactures electronic
products for the specialty vehicle market that are used primarily to distribute
and control electrical power throughout trucks, buses, conversion vans,
recreational vehicles, boats and other vehicles. All major motor home original
equipment manufacturers and all but one of the major conversion van companies
currently utilize our electrical products.

1998 HIGHLIGHTS

WALTCO AGREEMENT: ATP signed an agreement in May with Waltco Truck Equipment
Co., one of the world's largest manufacturers of lift gates, to be its exclusive
source of electronic and electrical components.

WINNEBAGO POWERLINE ENERGY MANAGEMENT SYSTEM: In August, ATP began supplying a
unique energy management system to Winnebago Industries which is currently used
in nearly all of its motor homes.

ATP'S FUTURE

In September 1999, we announced that ATP entered into a definitive merger
agreement with Veritas Capital (Veritas). Under this agreement, the stockholders
of ATP will receive $14.50 in cash, without interest, per share, and Veritas
will own the surviving corporation. In the materials accompanying this letter
you will find a Proxy Statement dated October 1, 1999, and an invitation to
attend the Company's Annual Meeting of Shareholders (the Annual Meeting) at
which the Company's Shareholders will vote to (1) approve the merger with
Veritas, (2) approve the Company's 1998 Employee Stock Purchase Plan, (3) elect
two members of the Company's Board of Directors and (4) to ratify the Company's
accountants. The Annual Meeting will take place on October 21, 1999 at 2:00
p.m., local time, at the Radisson Hotel, located at 10740 Westside Pkwy.,
Alpharetta, Georgia 30004.

We thank you for your support,

/s/ James S. Carter

James S. Carter
Chairman of the Board of Directors and Chief Executive Officer
<PAGE>

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM 10-K

(Mark One)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 1998
OR

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission file number: 0-1298

ADVANCED TECHNICAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

Delaware 11-1581582
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

200 Mansell Ct. East, Suite 505
Roswell, Georgia 30076
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (770) 993-0291

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class Name of Each Exchange on Which
Registered
Nasdaq/National Market System
Common Stock, $0.01 par value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant on March 23, 1999 was $36,414,354 (3,711,017 shares at $9.8125 per
share, the closing price of the registrant's common stock on the Nasdaq
National Market on March 23, 1999). As of that date, 5,252,235 shares of the
Company's Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

The information required by Part III is incorporated by reference from the
registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A not later than 120 days after
the end of the fiscal year covered by this report.

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

PART I

Item 1. Business

General

Advanced Technical Products, Inc. ("ATP" or "Company") is a Delaware
corporation that manufactures a variety of products in two principal business
segments, an aerospace and defense segment and a commercial segment. Such
products are manufactured through five business units, Marion Composites,
Intellitec, Lincoln Composites, Alcore and Lunn Industries. The aerospace and
defense segment designs, develops and manufactures advanced composite material
products used in the aerospace and defense industries, including radomes,
aircraft components, missile and satellite composite structures, engine
components, rocket motor cases, pressure vessels, relocatable shelters,
missile launch tubes, torque shafts and fuel tanks, as well as a wide range of
integrated defense systems including electro-optical systems, chemical
detection systems, ordnance delivery systems and light-weight camouflage
systems. The commercial segment produces natural gas vehicle ("NGV") fuel
tanks, specialty vehicle electronic products, products used in the exploration
and production of oil and gas and aluminum honeycomb products used by
industrial, transportation and construction customers. See Note 4 to the
consolidated financial statements of the Company for a summary of selected
financial data of each reportable business segment.

On October 31, 1997, TPG Holdings, Inc., a Delaware corporation ("TPG"),
merged (the "Merger") with Lunn Industries, Inc., a Delaware corporation
("Lunn"), under the name "Advanced Technical Products, Inc." Lunn was
originally incorporated in New York in 1948 and was reincorporated in Delaware
in 1987. TPG was formed in 1995 to acquire the business and assets of three
operating units of the Brunswick Technical Group (the "Brunswick Business"),
which was completed on April 28, 1995.

Acquisitions

On May 29, 1998, ATP acquired all of the capital stock of Brigantine SA, a
manufacturer of honeycomb products and engineered panels located in France.
The acquired company, renamed Alcore Brigantine, operates as a subsidiary of
Alcore, Inc. The acquisition is expected to expand the Company's access to the
European aerospace and commercial markets.

Aerospace and Defense Segment

Composite Based Products

Radomes. ATP develops and manufactures high-temperature composite materials
and products for aerospace and defense applications and is a leading
manufacturer of composite aircraft structures and composite missile
structures. One of ATP's principal products is high-performance radomes. A
radome is the housing, usually made of composite materials, that shelters the
antenna assembly of a radar set on an airplane, rocket or missile. Management
believes that ATP has approximately a 75% share of the domestic high-
performance radome market and is the sole supplier of radomes for aircraft
such as the A-6, AV-8B, B-1, B-1B, C-5B, C-17, E-2C, F-4, F-5, F-14, F-15, F-
16 and the F/A-18. Additionally, ATP owns ceramic radome manufacturing
technology which enables it to manufacture high temperature, high performance
radomes for interceptor missile applications. Management believes that ATP has
been the sole supplier of Patriot Missile radomes for the past 12 years. Sales
of radomes for each of 1998, 1997 and 1996 constituted 7.8%, 16.8% and 14.3%,
respectively, of the total consolidated revenues of ATP.

Aircraft Components. ATP manufactures a variety of other components used in
the aerospace and defense industry. ATP currently fabricates flap assemblies
for the C-17 aircraft and began delivery of winglets and landing gear doors
for the C-17 during 1998. Management believes the C-17 is a high-priority
program for the United States Air Force, and that the production of these C-17
components will provide a stable stream of

1
<PAGE>

revenue for the foreseeable future. ATP also manufactures composite-based
canopies, fuel tanks, wing and floor panels, fairings and other aircraft
components. ATP has also participated in developmental projects that include
the successful application of radar absorbing materials and structures,
frequency selective surfaces and low observable applications. ATP's program to
supply flap track fairings to The Aerostructures Corporation, which parts are
installed on the Airbus A330 and A340 aircraft, is currently in the start-up
phase and deliveries are expected to begin in the second quarter of 1999. This
"life of the program" contract is anticipated to cover approximately 500
aircraft. In February 1998, ATP also announced that it had entered into a
long-term production alliance with GE Aircraft Engines pursuant to which ATP
will manufacture two composite inlet devices for the GE F414-400 turbofan
engine to be used in the United States Navy's newest fighter, the F/A-18E/F
"Super Hornet." In June 1998, GE placed an order with an estimated value of
$65 million over five years as the initial step in the GE-ATP alliance. Sales
of aircraft components for each of 1998, 1997 and 1996 constituted 16.1%, 8.8%
and 12.1%, respectively, of the total consolidated revenues of ATP.

Rocket Motor Cases. ATP manufactures a variety of rocket motor cases used in
solid propellant propulsion systems that are incorporated into strategic
(long-range) and tactical missile systems as well as orbiting commercial
satellites and deep-space penetration spacecraft. ATP manufactures rocket
motor cases for use in strategic missiles such as the D-5 Trident II, as well
as for tactical missile systems such as the VT-1 and the PAC-3 Anti-Missile
missile. ATP also manufactures the ORBUS-21D rocket motor case, which is used
in conjunction with the space shuttle and other unmanned launch vehicles to
place satellites into earth's orbit, and is used on deep space missions.

Pressure Vessels. ATP produces various high-performance pressure vessels
that are used predominantly in aircraft, launch vehicles and space
applications where weight minimization is critical. These high-performance
pressure vessels are used in critical system applications, including emergency
power, crew capsule impact and flotation, maneuvering, environmental, fuel
feed and purge systems. ATP has been a leader in the integration of filament
winding technology in combination with metal liners that results in vessels
that meet or exceed structural requirements. A number of existing pressure
vessel configurations are currently qualified by prime contractors and the
military. This qualification minimizes competition for follow-on orders and
provides a variety of products that can be offered for new applications with
minimal capital investment and production lead time.

Fuel Tanks. External fuel tanks are used by the military to provide an
aircraft with additional operating range. The military requires all-composite
external fuel tanks because they offer a significant weight advantage and
improved crash survivability, greater safety in a fire, and improved gun fire
protection. Management believes that ATP is currently the only qualified
producer of the tank liner for the 230-Gallon AH-64/UH-60 Fuel Tank, which is
used by the United States Army. In October 1998, ATP received a contract for
the production of the 480 gallon external fuel tanks for the F-18 E/F. The
contract covers requirements for three years, along with an option to purchase
additional tanks. Initial deliveries are expected in the last half of 1999.

Vehicle/Missile Structures. ATP's vehicle/missile structure product line
historically has included composite products used for various structured
applications in the aerospace and defense area, including marine, launch
vehicles, space and aircraft applications. Products more recently included in
this product line are missile warheads, radar housings, missile structures,
aircraft and missile control surfaces and aircraft engine ducts. These
structures must be light-weight and have excellent structural properties in
order to replace conventional metal products. These projects are usually
obtained from various aerospace and defense companies and government
laboratories which need to develop prototype hardware to demonstrate
capabilities of advanced composites.

Tubular Products. ATP's tubular product line includes missile launch tubes
and torque shafts. The primary products in the launch tube line include the
Multiple Launch Rocket System ("MLRS") and the launch canister for the
submarine launched Tomahawk Missile. While the MLRS program is extremely
important to the United States Army as an effective, low-cost weapon system,
the Army has a combined inventory of over 500,000 of these missiles and the
funding level for this program has been, and likely will remain, low.
Composites offer desirable properties for torque shafts for various aerospace
and defense applications and are presently being used

2
<PAGE>

in the V-22 Osprey and Boeing Vertol's 234 helicopter. ATP has also
manufactured two prototype drive shafts for the GD-Electric Boat for
evaluation for submarines.

Resin Transfer Molding. Resin transfer molding ("RTM") is the fabrication of
a composite component by pumping resin into a mold containing reinforcement
material. The rough product is then removed from the mold and finished. While
use of this manufacturing process is primarily driven by its lower cost,
recent advances in materials and equipment have helped to make the process a
viable choice for fabricating composite aircraft and military structures.
Currently, ATP supplies over 90 parts on the Air Force Air Superiority
Fighter, the F-22, and is the only qualified supplier of RTM components for
the Navy's F-18 E/F. In addition to serving as a supplier to the manufacturers
of military aircraft, ATP is also providing components for commercial
aircraft, engine components and containers for military hardware. ATP is
continuing to look for ways to expand the use of this manufacturing process to
a wide variety of applications in support of the aerospace and defense
customer base.

Metal Bonding. ATP supplies metal bonded products through its Lunn
Industries division. ATP possesses the technology and qualifications required
by The Boeing Company for Phosphoric Acid Anodizing ("PAA") and structural
bonding to BAC 5555. This PAA capability allows ATP to service the commercial
aircraft market. Numerous other qualifications allow ATP to provide products
and services to the spaceflight, defense and industrial markets. ATP-metal
bonded products can be found in the Boeing 777, 747, 757, 767 and 727
commercial aircraft as well as numerous defense and satellite applications.

Honeycomb. ATP manufactures aluminum and non-metallic honeycomb products
through its Alcore division for use in the aerospace and aircraft industries.
Aluminum honeycomb is a lightweight cellular material composed of hexagonal
cells. The most prominent characteristics of aluminum honeycomb products are
high strength-to-weight ratios, fatigue resistance, energy absorption, sound
dampening, heat exchange, radio frequency shielding, machinability, airflow
directionalization and corrosion resistance. Management believes that one of
Alcore's most promising products is PAA-CORE(R), a phosphoric acid anodized
honeycomb product. PAA-CORE(R), qualified to Boeing specifications as BMS 4-4
and 4-6, has recently been designated as the material of choice for all new
metal bonded structures at Boeing and management believes it is now becoming
the material of choice of other commercial and military aircraft industries.
During 1998, the Alcore division acquired capital equipment which enables it
to produce non-metallic core material. This capability is expected to
complement the division's existing metallic core product lines and helps
solidify Alcore's position as a leading global supplier of structural core
materials. In addition, the Company's acquisition of Alcore Brigantine is
expected to expand the Company's access to the European aerospace and
commercial markets. Sales of honeycomb products for each of 1998, 1997 and
1996 constituted 14.1%, 2.2% and 0%, respectively, of the total consolidated
revenues reported by ATP. These include revenues reported subsequent to the
date of the acquisition of Alcore (October 31, 1997) and Alcore Brigantine
(May 29, 1998).

Other Defense Systems

Shelters/Shelter Integration. ATP designs, develops and produces mobile
military shelters and has developed leading design and automated production
capabilities for honeycomb, and foam and beam sandwich panel construction,
relocatable shelters. Management believes that most of the shelters in the
inventory of the Department of Defense (the "DOD") were designed and produced
by ATP or its predecessors. Sales of shelters and shelter integration products
for each of 1998, 1997 and 1996 constituted 16.1%, 12.1%, and 16.2%,
respectively, of the total consolidated revenues of ATP.

Chemical Defense. ATP is an industry leader in remote chemical detection,
which is expected to be a growth market for the next several years, based on
the latest U. S. defense budgets. ATP's M21 Remote Chemical Sensing Device was
successfully deployed during the Gulf War and has led to the Company's receipt
of a contract to develop the next generation remote sensor, the Joint Services
Lightweight Standoff Chemical Agent Detector ("JSLSCAD"). The JSLSCAD
contract, awarded in 1997, consists of a cost-plus development phase worth
slightly over $30 million over four years, plus options for production units
potentially worth over $200

3
<PAGE>

million. During 1998, the Company passed first article testing and began
production on the Improved Chemical Agent Monitor ("ICAM"), a monitoring
system designed to detect surface contamination on a wide variety of objects.
Full-scale production of the ICAM is expected to continue through 2002. ATP is
also actively involved in the development and production of collective
protection systems. Collective protection systems provide a clean and over-
pressured environment for soldiers to conduct their mission. Management
believes that ATP's collective protection systems, such as the internally
developed Bio-Chem Filter Blower Unit, are the collective protection system of
choice for several of the next generation vehicle systems. Also, ATP is
producing the M28 Deployable Medical Collective Protection Equipment ("CPE").
This product assures a clean environment for field hospital units for both the
United States Army and Air Force. Production of the M28 CPE is expected to
continue through the first half of 2000. Sales of chemical defense systems and
related products for each of 1998, 1997 and 1996 constituted 10.1%, 4.4% and
17.8%, respectively, of the total consolidated revenues of ATP.

Ordnance. ATP has been the sole manufacturer of the Volcano launcher system.
This system, which is mounted on wheeled and tracked vehicles as well as UH60A
helicopters, provides for rapid deployment of mine fields. Customers include
the United States Army and other defense prime contractors. A large Volcano
contract was completed in early 1998 fulfilling the government's current
inventory requirements. Follow-on production on this program is expected to be
insignificant for the next few years. Sales of ordnance delivery system
components for each of 1998, 1997 and 1996 constituted 2.1%, 18.8%, and 5.1%,
respectively, of the total consolidated revenues of ATP.

Tactical Deception. ATP is a leading producer of tactical deception products
for the U. S. Armed Forces and other military customers and has delivered
approximately a million modules of U. S. military Lightweight Camouflage
Screen Systems ("LCSS"). The Company announced in April 1998 that it was
awarded a $3.6 million contract by the U.S. Army Communications-Electronics
Command to produce various configurations of radar scattering camouflage
systems and components.

Commercial Segments

The commercial segment is comprised of four operating segments which provide
the following products.

Natural Gas Vehicle Fuel Tanks

Legislation mandating stricter air pollution regulations combined with the
abundance of natural gas has created a demand for clean running NGVs. The
demand for NGVs is expected to grow dramatically over the next several years
as installation and refueling infrastructure is added. The most rapidly
growing segment of this market is for transit buses and other types of fleet
vehicles which return to a central depot at the end of each shift. There is
also a great deal of interest in many economically developed countries for
NGVs. ATP is actively working with regulatory agencies in other countries to
develop standards to allow use of all composite NGV cylinders.

ATP has spent over six years and $10 million to design, develop and market
an extremely durable, all-composite, plastic-lined Type IV Tank for the NGV
market. The ATP trademarked "Tuffshell T" tank competes with steel tanks (Type
I), metal-lined tanks with a hoop over-wrap (Type II) and metal-lined tanks
with a full over-wrap (Type III). Weight reduction and resistance to external
damage are the primary technical criteria during fuel tank selection. The Type
IV tank offers substantial weight reductions (a minimum of 30% versus glass
wrapped aluminum lined Type III tanks) and the flexibility to reduce the
impact of the weight increase. Type IV tanks may be placed on the roof or
underbody of transit buses without violating Federal restrictions on curb
weight. Metal lined tanks that offer reliable impact resistance are generally
too heavy to place on the roof of buses. Light duty sedan/truck designers must
also keep their gross vehicle weights below defined Federal levels to meet
Environmental Protection Agency classifications and to meet customer
preferences concerning vehicle handling and low repair costs for suspension
and brake components. This is especially important for the highly successful
import vehicle sedan segment where engine displacement is below the North
American average. ATP

4
<PAGE>

makes 60% of all NGV tanks manufactured in the U.S., where its Type IV tank is
preferred by major builders of transit compressed natural gas powered coaches.
The Company sells NGV tanks to operators of fleet vehicles and bus and auto
manufacturers, including Honda. During 1998, ATP was awarded a contract by
Matra Auto of France to supply 3,000 NGV tanks for the Enviro 2000, Malaysia's
NGV taxi. ATP has also signed a distribution agreement with Mitsui Plastics,
Inc. for certain Asian countries. In April 1998, ATP began delivery of NGV
fuel tanks for Honda of America's 1998 Model Civic GX. ATP believes its Type
IV tank has captured market share of about 90% of the OEM transit bus
production over the last year. In addition, the Company's market share for the
OEM sedan production and the truck/auto conversion business is estimated at
30% and 35%, respectively. To accommodate the expected increase in future NGV
product demand, the Company's tank manufacturing operation was recently moved
to a facility which doubles production capacity and enhances productivity
through improved product flow and material handling.

Specialty Vehicle Electronic Products

The specialty vehicle electronics group is engaged in the design and
manufacture of electronic products for the specialty vehicle market that are
primarily used to distribute and control electrical power throughout the
vehicle. This market includes recreational vehicles ("RVs"), conversion vans,
trucks, buses, boats and other vehicles. Currently, ATP sells approximately
250 different products, most of which have been introduced to meet a
customer's request to solve a particular problem. ATP's products fall into
three main categories: battery run-down protection and charging, power
switching and control, and 120 volt AC power management. Many of the battery
run-down protection and charging products are centered around ATP's patented
disconnect relay. The power switching and distribution products center on
ATP's unique patented multiplex system. ATP's patented 120 volt AC power
management products are used in RVs to minimize the overloading of circuit
breakers. ATP's electrical products are currently utilized by all major motor
home original equipment manufacturers and all but one of the major van
converters. ATP is currently directing efforts at increasing its market
penetration into the truck, bus and marine industries and increasing sales to
major vehicle fleet operators. During 1998, ATP signed an agreement with
Waltco Truck Equipment Co., one of the world's largest manufacturers of lift
gates, to be their exclusive source of electronic and electrical components.
The initial products include a unique weatherproof "Super Switch", and a
controller to prevent damage to the electro-hydraulic pump motor caused by
overuse of the lift gate. ATP has also begun supplying a unique energy
management system to Winnebago Industries, the second largest manufacturer of
motor homes. Approximately half of all motor homes built are now installed
with ATP's energy management systems. During 1998, the Company also received
the first production order for the new Programmable Multiplex Control ("PMC")
from Marshall Bus in the United Kingdom. The PMC, a new system that simplifies
wiring in transportation and commuter buses worldwide, is the world's first
user programmable multiplex system intended for use in vehicles. The system is
also suitable for other specialty vehicles, such as emergency and maintenance
equipment.

Oil and Gas Exploration Products

Current deepwater oil completion and production technology utilizes heavy
steel riser systems that require expensive tensioning and buoyancy systems,
and whose designs are often governed by fatigue considerations. Composite
marine risers provide advantages over conventional steel risers because
composite materials are lighter weight, more fatigue and corrosion resistant,
better thermal insulators and can be designed for improved structural and
mechanical performance. Overall, production platform cost reductions are
possible as a result of the lower weight and greater compliance of composite
risers, along with improvements in system reliability. ATP is currently
completing the development of a composite rigid riser for use in deepwater oil
production in partnership with Shell, Conoco and Amoco.

ATP applied the NGV all-composite tank technology to develop an accumulator
tank for the Production Riser Tensioning system on off-shore platforms. There
are as many as four accumulators per well and the new platforms have in excess
of 25 wells per platform. The all-composite accumulator is lighter weight,
non-corrosive and competitively priced with all-steel accumulators. The ATP
accumulator meets ASME Code X and currently

5
<PAGE>

there is not a qualified competitor for this product. These accumulators offer
some significant advantages for the platform and as a result the revenue is
expected to increase significantly over the next several years.

Shafts and Rollers

In the industrial machine industry, there is a growing recognition and
acceptance of the advantages of composite shafts and rollers over heavier
steel units. Composite shafts are much lighter and, with the use of carbon
fiber, the stiffness is maintained and the fatigue life is increased. ATP
manufactures several sizes and configurations of shafts.

Honeycomb

Beginning in 1994, Alcore expanded beyond the aerospace market into a number
of non-aerospace markets. Applications for high performance, low cost
commercial products were developed for manufacturers of "clean rooms" for
computer chip manufacturing and bio-medical research centers, laminated panels
for luxury cruise ship cabins and numerous architectural uses. Alcore's
honeycomb products are utilized by manufacturers of rail car doors for
municipal transit systems, and, due to unique crush characteristics and energy
absorbing qualities, by the nuclear and energy absorption industries. The
acquisition of Alcore Brigantine, the Company's French subsidiary, is expected
to enhance Alcore's emergence into non-aerospace markets on a global basis.

Competition and Markets

ATP competes with many manufacturers which, depending on the product
involved, range from large diversified enterprises to smaller companies
specializing in particular products. Factors that affect ATP's competitive
posture are the quality of products and services, the ability to employ
certain technologies and pricing strategies. ATP competes by defining and
understanding customer and market needs, using its technology base to develop
new product applications that meet those needs, communicating and
demonstrating the technical advantage of its products and building long-term
relationships with its customers.

There are many companies that compete with ATP in the aerospace and defense
industry. While ATP's management believes that it has an approximate 75% share
of the domestic high-performance radome market and is a leading supplier of
radomes in the domestic and international markets, ATP competes with a number
of other companies in the production of composite based products used in the
aerospace and defense industries. ATP is a leader in the design and production
of chemical detection equipment. Similarly, while ATP's market share varies
with respect to its other aerospace and defense products such as rocket motor
cases, fuel tanks and pressure vessels, ATP overall has only a minor share of
the total aerospace and defense markets.

Certain of ATP's other commercial products are highly specialized and face
less competition in their respective markets. ATP's management believes that
ATP has approximately 50% of the NGV fuel tank market and is a leading
supplier of battery run-down protection and the power switching and control
devices for the motor home and van conversion original equipment manufacturer
markets. Additionally, while there are numerous producers of standard drill
pipe and casing and fiberglass tubulars, ATP has a leading position in the
application of advanced composites in the oil and gas industry.

Marketing and Customers

ATP markets its aerospace and defense products through direct personal
contacts with its customers, active membership in various industry groups, and
by participation in industry trade shows. ATP's aerospace and defense products
are sold primarily to agencies of the United States government and to
commercial customers in the aerospace industry. In 1998, sales to the United
States government either directly or by subcontract constituted 61% of ATP's
total consolidated revenue. Other major customers include The Boeing Company
and Lockheed Martin Corporation. Combined aerospace component sales to these
customers, most of which are included above as United States government sales
by subcontract, represented 19.9% of ATP's total consolidated

6
<PAGE>

revenues during 1998. ATP's aerospace and defense products are generally
designed and developed to customer specifications.

ATP markets and sells NGV fuel tanks and specialty vehicle electronics
primarily to vehicle manufacturers. ATP sells a predominant number of its
specialty vehicle products to only a few major customers, the loss of any of
which would have an adverse impact on its specialty vehicle products group.

In the commercial composites business, it is necessary to carry a reasonable
raw material and finished goods inventory to allow for a rapid customer
response. The average days sales outstanding of accounts receivable for the
commercial products run somewhat longer than for comparable aerospace and
defense products. Also, there is a greater risk of bad debt associated with
commercial products.

The Company provides warranties on products for material and workmanship
based on standard industry practice. Though ATP has endeavored to design an
extremely safe and durable product, the NGV tank and production riser have a
potential for greater product liability than standard aerospace and defense
products. ATP believes it has adequate product liability insurance to offset
these risks.

Patents

ATP owns numerous patents and patent applications, some of which, together
with licenses under patents owned by others, are utilized in its operations.
While such patents and licenses are, in the aggregate, important to the
operation of ATP's business, no existing patent, license or other similar
intellectual property right is of such importance that its loss or termination
would, in the opinion of management, materially affect ATP's business.

Backlog

ATP's total backlog of contracts as of December 31, 1998 was approximately
$585 million as compared to approximately $552 million as of December 31,
1997. These backlogs include options or unreleased orders of approximately
$394 million in 1998 and $360 million in 1997. The increase in the backlog
reflects (i) a change in management's strategy, since acquiring the Brunswick
Business in 1995, to obtain longer-term contracts than its predecessor; (ii)
improved economic conditions in the aerospace industry; and (iii) the
military's commitment to develop systems to combat chemical warfare.
Predominantly all of the backlog relates to the aerospace and defense segment.

Government Contracts

Because the United States government is a primary customer, ATP's revenues
are directly affected by the government's budget process and inadequate
funding of the operation and maintenance portion of the DOD budget or a
reduction in the budgeted amount for certain programs could have an adverse
impact on the revenue of ATP. All government contracts, and, in general,
subcontracts thereunder are subject to termination in whole or in part at the
convenience of the United States government as well as for default. Long-term
government contracts and related orders are subject to cancellation if
appropriations for subsequent performance periods become unavailable. However,
with respect to most contracts involving the military, ATP would be entitled
to receive cancellation payments upon cancellation of such contracts.

Raw Materials and Supplies

Raw materials essential to the conduct of all of ATP's business segments
generally are available at competitive prices. ATP has not experienced
significant difficulties in its ability to obtain raw materials and other
supplies needed in its manufacturing processes, nor does ATP expect such
difficulties to arise in the future. ATP ordinarily acquires components and
materials through purchase orders typically covering ATP's requirements for
periods averaging 90 to 120 days.

7
<PAGE>

Research And Development

ATP has spent $864,000, $1,063,000 and $1,213,000 for each of 1998, 1997 and
1996, respectively, on research and development. Predominantly all of the
research and development expenses relate to the aerospace and defense segment.

Seasonality

The United States government's fiscal year begins on October 1 and contracts
and options on contracts are generally awarded just prior to its year end. The
lead time to perform the necessary design work, procure materials and begin
production is generally several months, which can create a period of low
production, revenue and profits in the first half of each fiscal year of ATP.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."

Foreign Operations

Foreign sales to manufacturers worldwide totaled approximately 16.0%, 7.1%
and 5.8% of ATP's total revenues for each of 1998, 1997 and 1996,
respectively. See Note 4 to the Consolidated Financial Statements for
additional disclosure of geographical financial data.

Environmental Regulation

ATP's operations are subject to numerous local, state and federal laws and
regulations concerning the containment and disposal of hazardous materials,
pursuant to which ATP has incurred compliance costs. Such costs to date have
not been material. ATP does not presently anticipate the need for significant
expenditures to ensure continued compliance with current environmental
protection laws. Regulations in this area are subject to change and there can
be no assurance that future laws or regulations will not have a material
adverse effect on ATP.

Employees

At December 31, 1998, ATP had 1,568 employees. Approximately 37% of ATP's
employees are covered by three separate collective bargaining agreements with
various international and local unions. ATP's management considers employee
relations generally to be good and believes that the probability is remote
that renegotiating these contracts will have a material adverse effect on its
business.

8
<PAGE>

Item 2. Properties

ATP's principal executive offices are located in Roswell, Georgia. ATP
maintains various facilities nationwide and considers all of its facilities to
be in relatively good operating condition and adequate for their present uses.
ATP believes that it has sufficient capacity to meet its current and
anticipated manufacturing requirements. The following table sets forth ATP's
principal manufacturing plants:

<TABLE>
<CAPTION>
Approximate Leased
Square or
Footage Owned
----------- ------
<S> <C> <C>
Marion Composites Division:
Marion, Virginia........................................ 1,019,000 Owned
Intellitec Division:
Deland, Florida......................................... 353,000 Owned
Lincoln Composites Division:
Lincoln, Nebraska....................................... 226,000 Owned
Lincoln, Nebraska....................................... 126,000 Leased
Lunn Industries Division:
Glen Cove, New York..................................... 93,000 Leased
Alcore Division:
Belcamp, Maryland....................................... 90,000 Owned
Edgewood, Maryland...................................... 110,000 Leased
Anglet, France.......................................... 70,000 Leased
</TABLE>

The manufacturing facilities of the Marion Composites Division and the Lunn
Industries Division are used exclusively in connection with ATP's aerospace
and defense segment. While predominantly used in connection with ATP's
aerospace and defense segment, the facilities of the Intellitec Division, the
Lincoln Division and the Alcore Division are used to some extent in connection
with ATP's commercial segment.

ATP pays approximately $1,159,000 in annual rental expense with respect to
its leased facilities, of which approximately $291,000 relates to facilities
in Lincoln, Nebraska, $275,000 relates to facilities in Glen Cove, New York,
$478,000 relates to facilities in Edgewood, Maryland and $115,000 relates to
facilities in Anglet, France. ATP earns approximately $250,000 in rental
income on certain of its Deland, Florida facilities.

Leases covering ATP's leased facilities expire at varying dates generally
within the next 15 years. ATP anticipates no difficulty in either retaining
occupancy through lease renewals, month-to-month occupancy or purchases of
leased facilities, or replacing the leased facilities with equivalent
facilities.

During 1998, ATP's Alcore Division entered into a ten year lease agreement
for the facility located in Edgewood, Maryland. Alcore is currently nearing
completion of its move of operations from a leased facility located in Jessup,
Maryland to the Edgewood facility. ATP anticipates that the Edgewood facility
will provide increased production capability to facilitate future business
expansion. ATP plans to sublease the Jessup facility and anticipates that
sublease rental income will substantially offset the lease cost.

Item 3. Legal Proceedings

ATP is not a party to any legal proceedings, other than routine claims and
lawsuits arising in the ordinary course of its business. ATP does not believe
that such claims and lawsuits, individually or in the aggregate, will have a
material adverse effect on ATP's business. Compliance with federal, state,
local and foreign laws and regulations pertaining to the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, has not had, and is not anticipated to have, a material effect
upon the capital expenditures, earnings or competitive position of ATP.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

9
<PAGE>

PART II

Item 5. Market for Registrants' Common Equity and Related Stockholder Matters

ATP's common stock is traded on the National Market System of the Nasdaq
Stock Market, Inc. under the symbol "ATPX." The following table sets forth the
high and low sales prices of ATP common stock for the calendar quarters
indicated, as reported by the Nasdaq Stock Market, Inc.:

ATP Common Stock

<TABLE>
<CAPTION>
Market Price
---------------
Fiscal Year Ended December 31, High Low
------------------------------ ------- -------
<S> <C> <C>
1998
First Quarter............................................... $14.875 $11.000
Second Quarter.............................................. $15.313 $11.000
Third Quarter............................................... $13.250 $ 5.500
Fourth Quarter.............................................. $10.000 $ 5.500
1997
First Quarter............................................... $ 9.375 $ 6.563
Second Quarter.............................................. $12.500 $ 7.500
Third Quarter............................................... $17.813 $10.938
Fourth Quarter(1)
October 1-October 31...................................... $16.250 $11.875
November 4-December 31.................................... $18.000 $11.500
</TABLE>
- --------
(1) On October 31, 1997, the Company effected a ten-to-one reverse stock split
and issued an additional 3,943,830 shares in connection with the Merger.
The common stock of the Company began trading on November 4, 1997 on this
basis. Market prices reported for periods prior to November 4, 1997 have
been adjusted to reflect the reverse stock split.

On March 23, 1999, ATP had approximately 1,203 stockholders of record. The
last reported sales price of ATP's common stock on such date was $9.8125.

ATP has not paid dividends on its common stock and does not currently intend
to pay any cash dividends in the foreseeable future. The determination of the
amount of future cash dividends to be declared and paid on the common stock of
ATP, if any, will depend upon ATP's financial condition, earnings and cash
flow from operations, the level of its capital expenditures, its future
business prospects and other factors that the Board of Directors of ATP deems
relevant. In addition, ATP's debt agreements contain covenants restricting the
payment of cash dividends to ATP's common stockholders.

10
<PAGE>

Item 6. Selected Consolidated Financial Data

Selected Consolidated Financial Data

The selected financial data presented below as of and for the periods ending
December 31, 1994 through December 31, 1998, have been derived from the
audited financial statements of ATP, TPG and Brunswick Technical Group, the
assets of which were acquired by TPG on April 28, 1995 pursuant to the
acquisition of the Brunswick Business.

The information presented below should be read in conjunction with
"Managements Discussion and Analysis of Financial Condition and Results of
Operations," the consolidated financial statements of ATP and related notes
and other financial information included elsewhere in this Annual Report on
Form 10-K.

<TABLE>
<CAPTION>
ATP TPG Brunswick Technical Group
------------------- -------------------------- -------------------------
As of and As of and
As of and As of and for the Eight for the Four As of and
for the Year Ended for the Year Months Months for the Year
------------------- Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, April 28, Dec. 31,
1998 1997 1996 1995 1995 1994
--------- --------- ------------ ------------- ------------ ------------
(Amounts are in thousands, except EPS data.)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues................ $ 165,074 $ 119,433 $126,534 $79,172 $28,416 $118,660
Cost of revenues........ 126,678 91,312 94,365 61,738 27,354 112,950
--------- --------- -------- ------- ------- --------
Gross profit............ 38,396 28,121 32,169 17,434 1,062 5,710
General and
administrative
expenses............... 25,570 19,006 21,758 12,123 1,350 3,923
--------- --------- -------- ------- ------- --------
Operating income
(loss)................. 12,826 9,115 10,411 5,311 (288) 1,787
Interest expense(1)..... 3,579 2,273 2,377 1,892 -- --
--------- --------- -------- ------- ------- --------
Income (loss) before
income taxes and
extraordinary item..... 9,247 6,842 8,034 3,419 (288) 1,787
Income tax provision
(benefit).............. 3,560 2,634 3,093 1,312 (112) 683
--------- --------- -------- ------- ------- --------
Income (loss) before
extraordinary item..... 5,687 4,208 4,941 2,107 (176) 1,104
Extraordinary item(2)... -- -- 667 -- -- --
--------- --------- -------- ------- ------- --------
Net income (loss)....... $ 5,687 $ 4,208 $ 4,274 $ 2,107 $ (176) $ 1,104
========= ========= ======== ======= ======= ========
EPS Data:
Earnings per share--
basic.................. $ 1.06 $ 0.99 $ 1.06 $ 0.52 N/A N/A
Earnings per share--
diluted................ $ 1.01 $ 0.95 $ 1.03 $ 0.52 N/A N/A
Balance Sheet Data:
Working capital......... $ 22,990 $ 21,208 $ 18,462 $17,558 $26,868 $ 29,882
Total assets............ 106,876 85,684 44,723 38,911 53,358 54,995
Long-term debt,
including current
portion(1)............. 26,402 19,216 17,222 17,926 -- --
Redeemable 8% cumulative
preferred stock........ 1,000 1,000 1,000 1,000 -- --
Common shareholders'
equity................. 31,797 26,494 7,018 2,919 -- --
</TABLE>
- --------
(1) Prior to April 29, 1995, the Brunswick Technical Group was included as
part of Brunswick's consolidated financial statements. Brunswick did not
allocate any debt or interest expense to the Brunswick Technical Group.
(2) Reflects an extraordinary loss from debt refinancing, net of an income tax
benefit of $418,000.

11
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion should be read in conjunction with the financial
statements of ATP and related notes contained elsewhere in this Annual Report
on Form 10-K.

TPG was formed in 1995 to acquire the Brunswick Business, which acquisition
was completed on April 28, 1995. The selected consolidated financial data for
1995 presents the four month period prior to the acquisition of the Brunswick
Business and the eight month period subsequent to such acquisition.

On October 31, 1997, TPG merged with Lunn under the name "Advanced Technical
Products, Inc." Immediately after the merger, the former stockholders of Lunn
owned approximately 26% of ATP and the former stockholders of TPG owned
approximately 74% of ATP. For accounting purposes, the merger was treated as a
purchase of Lunn by TPG and the results of operations of Lunn since November
1, 1997 have been included in the consolidated financial statements of ATP.

On May 29, 1998, ATP acquired all of the capital stock of Brigantine
Aircraft, a manufacturer of honeycomb products and engineered panels located
in France. The acquired company, renamed Alcore Brigantine, operates as a
subsidiary of Alcore, Inc., a division of the Company. The acquisition is
expected to expand the Company's access to the European aerospace and
commercial markets. The Company's consolidated financial statements include
the operating results for Alcore Brigantine since the date of the acquisition.

Historically, approximately 60% to 80% of ATP's products and services have
been sold to the United States government through prime contracts directly
with governmental agencies, primarily the DOD, or through subcontracts with
other governmental contractors. During the mid-1980s, the defense industry
began to be negatively impacted by a perceived reduction of threats from the
former Soviet Union and affiliated countries in eastern Europe. In addition,
increased competition for the United States federal budget dollars resulted in
a reduction in real dollars in the United States defense budget over the last
decade. Defense spending has recently begun to stabilize and management of ATP
believes that budgeted procurement spending will increase slightly over the
next few years.

The contraction of the defense budget over the last decade and the resulting
excess capacity and intensified competition among defense contractors has
resulted in significant industry consolidation. ATP's strategy includes the
pursuit of acquisitions which will increase its revenue base and improve its
cost competitiveness through reduced overhead costs, facility consolidations
and the elimination of other duplicative costs. Management of ATP believes
continued defense industry consolidations will create opportunities for
selected acquisitions that will allow ATP to further increase its revenue base
and enhance its cost-competitive position. However, because of the uncertainty
of the nature and size of these opportunities, as well as ATP's leverage,
there can be no assurances that the financing necessary to pay for
acquisitions can be obtained.

Although the long-term impact of industry consolidation and the defense
spending budget cannot be predicted with certainty, management of ATP believes
that it is positioned to further its presence in the United States defense
industry and increase its ongoing diversification efforts into foreign defense
markets and selected commercial markets.

The United States government's fiscal year begins on October 1 and contracts
and options on contracts are generally awarded just prior to its year end. The
lead time to perform the necessary design work, procure material and begin
production is generally several months, which can create a period of low
production, revenue and profits in the first half of each fiscal year of ATP.
Over the last five years, the percentage of sales and operating earnings
(excluding corporate general and administrative expenses) generated in the
second half of the year have been as follows:

12
<PAGE>

<TABLE>
<CAPTION>
Earnings Before
Year Sales Interest & Taxes
---- ----- ----------------
<S> <C> <C>
1998.................................................. 57% 69%
1997.................................................. 57% 73%
1996.................................................. 54% 62%
1995.................................................. 56% 134%
1994.................................................. 57% 80%
</TABLE>

Results of Operations

The following table sets forth, for the periods indicated, the components of
the income statement expressed as a percentage of revenues.

<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Revenues................................................ 100.0% 100.0% 100.0%
Cost of revenues........................................ 76.7 76.5 74.6
----- ----- -----
Gross profit............................................ 23.3 23.5 25.4
General and administrative expenses..................... 15.5 15.9 17.2
----- ----- -----
Operating income........................................ 7.8 7.6 8.2
Interest expense........................................ 2.2 1.9 1.9
----- ----- -----
Income before income taxes and extraordinary item....... 5.6 5.7 6.3
Income taxes............................................ 2.2 2.2 2.4
----- ----- -----
Income before extraordinary item........................ 3.4 3.5 3.9
Extraordinary loss from debt refinancing................ -- -- 0.5
----- ----- -----
Net income.............................................. 3.4% 3.5% 3.4%
===== ===== =====
</TABLE>

Year Ended December 31, 1998 Compared with the Year Ended December 31, 1997

Revenues increased $45.6 million, or 38.2% from $119.4 million in 1997 to
$165.1 million in 1998. Positive revenue variations in 1998 compared to 1997
include: (i) increased revenues of $24.8 million for Lunn operations, which
were included for the full year in 1998 compared to only the post-merger
period (two months) included in the 1997 results reported, (ii) increased
shipments of NGV fuel tanks and related products, (iii) increased sales on new
aerospace / defense programs, including new C-17 and chemical defense
contracts, and (iv) increased shipments on shelter contracts. These increases
were partially offset by reduced ordnance product sales resulting from the
substantial completion of a major ordnance delivery system contract in early
1998.

Gross profit as a percent of revenues was 23.3% in 1998 compared to 23.5% in
1997. The decrease in gross profit percentage was primarily attributable to a
slightly unfavorable product sales mix in 1998 compared to 1997.

General and administrative expenses increased $6.6 million, or 34.5%, from
$19.0 million in 1997 to $25.6 million in 1998. The increase again reflects
the inclusion of Lunn operations for a full year in 1998 compared to two
months in 1997. As a percent of revenues, general and administrative expenses
decreased from 15.9% in 1997 to 15.5% in 1998.

Interest expense in 1998 increased $1.3 million, or 57.5%, primarily because
of an increase in average loan balances as a result of (i) debt assumed from
Lunn in the merger and (ii) higher working capital and capital expenditures
driven by increasing revenue volume anticipated in 1999.

Income taxes increased $0.9 million, reflecting higher pre-tax earnings as
the effective tax rate was 38.5% for both years.

13
<PAGE>

Year Ended December 31, 1997 Compared with the Year Ended December 31, 1996

Revenues decreased $7.1 million, or 5.6% from $126.5 in 1996 to $119.4
million in 1997. The decrease in 1997 was primarily due to (i) the completion
of a major chemical detection contract in late 1996; and (ii) the delay in the
production of a major shelter contract caused by design changes mandated by
the customer. These decreases were partially offset by the production related
to an ordnance contract in 1997.

Gross profit as a percent of revenues decreased from 25.4% in 1996 to 23.5%
in 1997. This was primarily attributable to the substantial completion of two
major contracts in 1996 which had gross margins substantially higher than
those of the contracts that replaced them in 1997. This was partially offset
by improved performance in the NGV business.

General and administrative expenses decreased $2.8 million, or 12.6% from
$21.8 million in 1996 to $19.0 in 1997. This decrease results primarily from a
decrease in incentive compensation expense from $1.5 million in 1996 to $0.0
in 1997. Additionally, in response to lower revenues, certain other general
and administrative expenses were eliminated. Excluding incentive compensation
expense, general and administrative expenses as a percent of revenues were
approximately 16% for both years.

Interest expense decreased approximately $0.1 million or 4.4%, as result of
lower interest rates obtained in a refinancing in late 1996, offset by higher
average loan balances.

The decrease of $0.5 million in income taxes from $3.1 million in 1996 to
$2.6 million in 1997 results from lower earnings as the effective rate
remained at 38.5%.

The extraordinary charge of $0.7 million in 1996 was the result of costs
incurred in connection with a refinancing in late 1996.

Financial Condition and Liquidity

Net cash flow provided by operations was $2.5 million for 1998 compared to
net cash used of $0.5 million for 1997, an increase of $3.0 million. Working
capital, excluding short-term debt balances, increased $11.1 million in 1998
to $51.8 million. The increase was the result of (i) an increase of $5.5
million in inventory, reflecting a build-up on several major aerospace
composites programs which are in the start-up phase, (ii) an increase of $1.2
million in accounts receivable, reflecting the increased sales volume in the
fourth quarter of 1998 compared to the same period in 1997, (iii) $1.3 million
of net working capital acquired in the acquisition of Alcore Brigantine (see
Note 2 to the Consolidated Financial Statements), (iv) an increase in deferred
income taxes of $1.6 million and (iv) a net increase in other working capital
components of $1.5 million. Cash flow of $12.7 million used in investing
activities in 1998 was primarily the result of significant capital
expenditures for (i) equipment to meet anticipated production requirements for
new aerospace composites programs, (ii) the increase of NGV production
capacity in anticipation of an expanded market for NGV fuel tanks and (iii)
equipment necessary to enter the non-metallic core production business, which
is expected to complement the Company's existing product lines. Investing
activities also included cash payments made in connection with the Alcore
Brigantine acquisition.

In March 1998, the Company refinanced its revolving and term loans,
consolidating them with one lending institution. The March loan agreements
were amended in June 1998 to increase the capital expenditure line of credit
available to the Company. The credit facility in place prior to the
refinancing totaling $39.0 million was replaced with a $50.0 million credit
facility consisting of: (i) $27.0 million of revolving credit against eligible
receivable and inventory balances, (ii) an $18.0 million term loan and (iii) a
$5.0 million capital expenditure line of credit. The term loan is payable
quarterly based on a seven year amortization period. Interest rates will vary,
depending on the Company's performance, and through the end of 1998 have been
favorable to the previous rates in effect by an average of slightly over one
full percentage point. The credit facility will initially be in place for a
period extending to December 31, 2000. As of March 26, 1999, the Company had
approximately $5.8 million of unused borrowing availability on the total
credit facility.

14
<PAGE>

As discussed above, the Company made substantial capital expenditures during
1998 which have been financed by a combination of cash flows from operations
and increased borrowings using the revolving and equipment loan portions of
the Company's credit facility.

The Company is continuing to look for acquisition candidates that will
enhance its operations. The timing, size or success of any acquisitions and
the resulting additional capital commitments are unpredictable. The Company
expects to fund future acquisitions primarily through a combination of
issuances of additional equity, working capital, cash flow from operations and
borrowings, including any unused portion of the credit facility. To the extent
new sources of financing are necessary to fund future acquisitions, there can
be no assurance that the Company can secure such additional financing if and
when it is needed or on terms deemed acceptable to the Company.

At December 31, 1998, the Company's backlog of orders and long-term
contracts was approximately $585 million compared to $552 million and $285
million at December 31, 1997 and 1996, respectively. The backlog includes firm
released orders of approximately $191 million, $192 million and $120 million
at December 31, 1998, 1997 and 1996, respectively. The increase in backlog
over the last three years reflects (i) a change in management's strategy in
placing a greater emphasis on obtaining longer-term contracts, (ii) improved
economic conditions in the aerospace industry and (iii) the military's
commitment to combat chemical warfare and develop new generation aircraft.
Approximately 60% of the Company's firm backlog at December 31, 1998 is
expected to be delivered in 1999.

Management of ATP believes that cash flows from operations and the new $50
million credit facility are adequate to sustain ATP's current operating level
and future short-term growth. However, should circumstances arise affecting
cash flow or requiring capital expenditures beyond those anticipated by the
Company, there can be no assurance that such funds will be available.

Factors Affecting Future Operating Results

This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The forward-
looking statements are those that do not state historical facts and are
inherently subject to risk and uncertainties. The forward-looking statements
contained herein are based on current expectations and entail various risks
and uncertainties that could cause actual results to differ materially from
those projected in such forward-looking statements. Some of such risks and
uncertainties are described below.

Dependence on Principal Industries. The revenues of ATP are concentrated in
the aerospace and defense industries. Sales to non-aerospace and non-defense
industries, although growing, are anticipated to approximate 20% of total
revenues of ATP for the foreseeable future. ATP's success will be heavily
dependent on its ability to successfully obtain major new defense orders
currently planned to be released by the United States government and
government prime contractors, as well as the continued strength of the
aerospace industry, particularly the commercial aircraft industry. No
assurances can be given that ATP will be able to successfully obtain all or
even a major portion of the targeted defense industry orders anticipated to be
placed. The commercial aerospace industry is a cyclical business and the
demand by commercial airlines for new aircraft is highly dependent upon a
variety of factors, which historically have been related to the stability and
health of the United States and world economies. Although the aerospace and
commercial aircraft industries are currently enjoying a significant upturn in
business coupled with receipt of numerous major long-term orders, there can be
no assurances that the situation will continue in the future.

Risks of Reductions or Changes in Military Expenditures. The primary
customers of ATP are agencies of the DOD. Sales under contracts with the DOD
or under subcontracts that identify the DOD as the ultimate purchaser
represented approximately 61% of ATP's 1998 revenues. The United States
defense budget has declined in real terms since the mid-1980s, resulting in
some delays in new program starts, program stretch-outs and program
cancellations. The United States defense budget has begun to stabilize and
even increase in real

15
<PAGE>

dollars over the last several years. A major portion of ATP's DOD business is
expected to be funded by the procurement and research, development, test and
evaluation segments of the defense budget. Procurement and research,
development, test and evaluation funding has been significantly reduced over
the last decade but is expected to remain relatively stable or grow slightly
over the next decade. A significant portion of ATP's DOD business is also
expected to be funded by the operations and maintenance portion of the DOD
budget, which has declined less than the other segments. A further significant
decline or reallocation of the procurement, research, development, test and
evaluation or operations and maintenance segments of the DOD budget could
materially and adversely affect ATP's sales and earnings. The loss or
significant curtailment of ATP's material United States defense contracts
would also materially and adversely affect ATP's future sales and earnings.

Competition. The market for ATP's products is highly competitive. ATP
competes with numerous competitors, a number of which possess substantially
greater financial, marketing, personnel and other resources. Continued
consolidation of major aerospace companies could result in program
cancellations as well as increased demand for price concessions. This,
together with increased competition for available business, could translate
into downward pressure on gross margins with resulting lower overall profit
margins. Vendor prices for production materials such as resins, liquid and
film adhesives, reinforcing fiber materials and other materials and supplies
could increase as demand for aircraft parts and assemblies increase to match
higher build rates for commercial aircraft. Higher material prices and demand
for lower aircraft part and assembly prices could place increasing pressure on
ATP's operating margins and net income. Although management of ATP believes
that the Merger has enhanced ATP's competitiveness, there can be no assurance
that ATP will be able to compete successfully in the future.

Financial Leverage. ATP has a significant amount of indebtedness, which
could make it difficult to obtain additional financing for working capital,
capital expenditures, acquisitions or other purposes. Moreover, the terms of
ATP's indebtedness impose various restrictions and covenants on ATP which
could potentially limit ATP's ability to respond to market conditions or to
take advantage of business opportunities. ATP's ability to meet its debt
service obligations and to reduce total debt will be dependent upon its future
performance, which, in turn, will be subject to general conditions in the
aerospace and defense industries and to financial, business and other factors
affecting the operations of ATP, many of which will be beyond its control.

Year 2000 Issues

ATP is currently in the process of evaluating its computer hardware and
software systems to ensure such programs and systems will be able to process
transactions in the year 2000 ("Y2K"). ATP is also currently identifying other
equipment which contains embedded electronics that may render the equipment
inoperable in the year 2000 and is evaluating the plans of its material
suppliers and vendors to become Y2K compliant. ATP has organized its efforts
to prepare for Y2K problems under a plan that involves four steps: assessment,
modification, testing and implementation. Each division has a core of full-
time individuals who have been assigned specific Y2K responsibilities, in
addition to their regular assignments. The Y2K readiness project is a company-
wide effort and is monitored centrally.

ATP has completed the assessment phase under its plan. ATP anticipates that
it will complete the modification, testing and implementation phases by the
end of 1999. ATP anticipates that it will be Y2K compliant by the end of 1999
with respect to internal information technology ("IT") and non-IT systems that
are critical to its operations. ATP is currently evaluating the time table
upon which all other IT and non-IT systems can be made Y2K compliant and will
target a date when the evaluation is complete. However, ATP does not currently
anticipate any material adverse effect on its business operations, products or
financial prospects as a result of the Y2K problem.

Although it is not possible to accurately estimate the costs of this
information systems analysis, at this time ATP expects that such costs will
not be material to its financial position or results of operations. There can
be no assurance, however, that ATP, its suppliers and vendors or their
respective software vendors will complete all modifications to all material IT
systems and non-IT systems in a timely manner, or as to the costs associated

16
<PAGE>

with ATP becoming Y2K compliant, or the costs of the failure of any of ATP's
vendors failing to become Y2K compliant.

Some of the possible consequences of non-compliance by ATP or significant
third parties include, among other things, temporary plant closings, delays in
the receipt and delivery of raw materials and products, invoice and collection
errors, and obsolescence of inventory. Given this risk, ATP intends to develop
contingency plans to mitigate possible disruption in business operations that
may result from Y2K related interruptions. Contingency plans may include
increasing safety stocks of raw materials, securing alternative suppliers or
other appropriate measures.

ATP's Year 2000 activities are an ongoing process and the estimates of costs
and completion dates for various activities described above are subject to
change.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to changes in interest rates primarily relating to
its $50 million credit facility. However, the carrying value of borrowings
under the credit facility generally approximate fair value due to the variable
rate nature of such borrowings. At December 31, 1998, the Company had $44.4
million outstanding under the credit facility at a weighted-average interest
rate of 7.58%.

The Company has not entered into transactions which subject it to material
foreign currency transaction gains and losses.

17
<PAGE>

Item 8. Financial Statements and Supplementary Data

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Advanced Technical Products, Inc.

We have audited the accompanying consolidated balance sheets of Advanced
Technical Products, Inc. and subsidiaries (the "Company") as of December 31,
1998 and 1997, and the related consolidated statements of income,
comprehensive income and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Advanced
Technical Products, Inc. and subsidiaries at December 31, 1998 and 1997 and
the results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.

KPMG LLP

Atlanta, Georgia
February 19, 1999, except
as to Note 7, which is
as of March 24, 1999

18
<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of
TPG Holdings, Inc.

We have audited the accompanying consolidated balance sheets of TPG
HOLDINGS, INC. (a Delaware Corporation) AND SUBSIDIARIES as of December 31,
1996 and the related consolidated statements of income and cash flows for the
year ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of TPG Holdings, Inc. and
Subsidiaries as of December 31, 1996 and the results of their operations and
their cash flows for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.

Arthur Andersen LLP

Chicago, Illinois
March 14, 1997

19
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997

<TABLE>
<CAPTION>
1998 1997
-------- -------
(Dollars in
thousands,
except per share
amounts)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................. $ 2,030 $ 494
Accounts receivable (net of allowance for doubtful accounts
of $722 in 1998 and $449 in 1997)......................... 26,053 23,417
Inventories and costs relating to long-term contracts and
programs in process, net of progress payments............. 40,635 34,633
Prepaid expenses........................................... 1,054 923
Deferred income taxes...................................... 2,570 961
-------- -------
Total current assets....................................... 72,342 60,428
-------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land....................................................... 655 655
Buildings and improvements................................. 7,037 2,596
Machinery and equipment.................................... 26,299 20,333
Construction in progress................................... 3,453 2,125
Less-Accumulated depreciation.............................. (11,516) (8,150)
-------- -------
Net property, plant and equipment.......................... 25,928 17,559
-------- -------
DEFERRED INCOME TAXES....................................... -- 62
OTHER ASSETS................................................ 8,606 7,635
-------- -------
Total assets............................................... $106,876 $85,684
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable........................................... $ 12,665 $12,003
Accrued expenses........................................... 7,626 7,637
Current portion of capital lease obligations............... 294 150
-------- -------
Short-term debt............................................ 28,767 19,430
Total current liabilities................................... 49,352 39,220
LONG-TERM LIABILITIES:
Long-term debt............................................. 20,703 16,678
Capital lease obligations, net of current portion.......... 1,483 325
Deferred income taxes...................................... 194 --
Other liabilities.......................................... 2,347 1,967
-------- -------
Total liabilities.......................................... 74,079 58,190
Mandatorily redeemable preferred stock, 8% cumulative,
redeemable, $1.00 par value, 1,000,000 shares authorized,
issued and outstanding in 1998 and 1997.................... 1,000 1,000
SHAREHOLDERS' EQUITY:
Preferred stock, undesignated, 1,000,000 shares authorized,
no shares issued and outstanding.......................... -- --
Common stock, $.01 par value, 30,000,000 shares authorized,
5,240,188 shares in 1998 and 5,220,052 shares issued and
outstanding............................................... 52 52
Additional paid-in capital................................. 16,522 16,506
Retained earnings.......................................... 15,983 10,376
Notes receivable from officers............................. (135) (135)
Accumulated other comprehensive income--additional minimum
pension liability......................................... (625) (305)
-------- -------
Total shareholders' equity................................. 31,797 26,494
-------- -------
Total liabilities and shareholders' equity................. $106,876 $85,684
======== =======
</TABLE>

The accompanying notes are an integral part of these statements.

20
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C>
Revenues....................................... $ 165,074 $ 119,433 $ 126,534
Cost of revenues............................... 126,678 91,312 94,365
General and administrative expenses............ 25,570 19,006 21,758
--------- --------- ---------
Operating income............................. 12,826 9,115 10,411
Interest expense............................... 3,579 2,273 2,377
--------- --------- ---------
Income before income taxes and extraordinary
item........................................ 9,247 6,842 8,034
Income taxes................................... 3,560 2,634 3,093
--------- --------- ---------
Income before extraordinary item............. 5,687 4,208 4,941
Extraordinary loss from debt refinancing, net
of income taxes of $418....................... -- -- 667
--------- --------- ---------
Net income................................. $ 5,687 $ 4,208 $ 4,274
========= ========= =========
Basic earnings per share:
Income before extraordinary item............. $ 1.06 $ 0.99 $ 1.23
Extraordinary item, net...................... -- -- (0.17)
--------- --------- ---------
Net income................................. $ 1.06 $ 0.99 $ 1.06
========= ========= =========
Diluted earnings per share:
Income before extraordinary item............. $ 1.01 $ 0.95 $ 1.20
Extraordinary item, net...................... -- -- (0.17)
--------- --------- ---------
Net income................................. $ 1.01 $ 0.95 $ 1.03
========= ========= =========
Weighted average number of common and common
equivalent shares outstanding:
Basic........................................ 5,270,520 4,157,111 3,943,830
========= ========= =========
Diluted...................................... 5,526,130 4,362,035 4,058,830
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

21
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
(Dollars in
thousands)
<S> <C> <C> <C>
Net income.............................................. $5,687 $4,208 $4,274
Other comprehensive income (loss)--
minimum pension liability adjustment................... (320) (210) (95)
------ ------ ------
Comprehensive income.................................... $5,367 $3,998 $4,179
====== ====== ======
</TABLE>

The accompanying notes are an integral part of these statements

22
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- --------
(Dollars in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 5,687 $ 4,208 $ 4,274
Adjustments to reconcile net income to net cash
provided by (used in) operating activities--
Depreciation and amortization.................. 3,728 1,512 646
Loss on fixed asset disposal................... -- 33 --
Deferred income taxes, net..................... (17) (523) (836)
Increase in accounts receivable................ (1,205) (2,193) (2,273)
Increase in inventories........................ (5,526) (9,350) (986)
(Increase) decrease in prepaid expenses........ (121) 508 (92)
Increase (decrease) in accounts payable........ (261) 5,736 (1,492)
Increase (decrease) in accrued expenses........ 344 (305) 999
Increase in other noncurrent assets............ (99) (119) (55)
-------- ------- --------
Net cash provided by (used in) operating
activities.................................. 2,530 (493) 185
-------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................... (9,784) (1,785) (1,755)
Cash payments for businesses acquired, net of
cash acquired................................. (2,907) (1,187) (1,000)
Net cash used in investing activities........ (12,691) (2,972) (2,755)
-------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of borrowings......................... 20,116 5,139 21,624
Repayments of borrowings....................... (8,084) (2,102) (19,078)
Proceeds from exercise of stock options and
warrants...................................... 16 -- --
Cash dividends paid............................ (40) (120) (93)
Payments under capital lease obligations....... (311) (17) --
-------- ------- --------
Net cash provided by financing activities.... 11,697 2,900 2,453
-------- ------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... 1,536 (565) (117)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..... 494 1,059 1,176
-------- ------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR........... $ 2,030 $ 494 $ 1,059
======== ======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest......................... $ 3,635 $ 2,109 $ 2,567
Cash paid for income taxes..................... $ 3,776 $ 1,259 $ 3,043
</TABLE>

The accompanying notes are an integral part of these statements.

23
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996

1. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Advanced
Technical Products, Inc. (the "Company" or "ATP") and its subsidiaries, all of
which are 100% owned. The Company is incorporated in the state of Delaware,
with corporate headquarters located in Roswell, Georgia. Principal
manufacturing operations are located in Marion, Virginia; Lincoln, Nebraska;
Deland, Florida; Belcamp and Edgewood, Maryland; Glen Cove, New York and
Anglet, France. The Company's subsidiaries include: Technical Products Group,
Inc., Alcore, Inc., Marion Properties, Inc., Lincoln Properties, Inc., Deland
Properties, Inc., and Alcore Brigantine. All significant intercompany
transactions and balances have been eliminated.

Revenue Recognition

Revenues and anticipated profits under long-term fixed price production
contracts are recorded on a percentage of completion method, principally using
units-of-delivery as the measurement basis for effort accomplished. Delivery
of units are generally made upon acceptance by the customer in accordance with
contract terms.

Revenues under certain long-term fixed price contracts which require a
significant amount of development effort in relation to total contract value
are recorded based on the accomplishment of milestones as specified by
contract terms. Revenues under cost reimbursable type contracts are recorded
as costs are incurred.

Amounts representing contract change orders or claims are included in
estimates of future contract revenues used for preparing estimates of contract
profitability at completion only when realization is probable and amounts can
be reasonably estimated. At December 31, 1998, the amount included in
estimates of future contract revenues for outstanding claims which had not
been finalized was approximately $4.0 million. Outstanding claim amounts were
not material as of December 31, 1997.

Estimated losses on contracts are recorded in full when identified.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid instruments purchased with an
original maturity of three months or less.

Research and Development Costs

Company-sponsored research and development costs are reported as part of
general and administrative expenses. Revenues and costs incurred in connection
with customer-sponsored research and development contracts are accounted for
as contract revenues and costs.

Inventories

Inventories are valued at the lower of first-in, first-out (FIFO) cost or
market (net realizable value). Inventory cost includes material, labor and
manufacturing overhead. Customer progress payments received on long-term
contracts are recorded as an offset to related inventory balances.

24
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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. In particular, accounting for long-term contracts requires
management estimates of future contract revenues and costs used for preparing
estimates at contract completion and determining contract profitability
reflected in the financial statements. Actual results could differ from those
estimates.

Fair Value of Financial Instruments

The fair value of the Company's debt is estimated based upon the cash flows
discounted using the interest rates available to the Company for debt with
similar terms and remaining maturities. The carrying value of the Company's
debt approximates fair value due to the variable rate nature of the borrowings
and/or the short maturity of the borrowings. The carrying value of all other
financial instruments approximates fair value due to the short-term nature of
such instruments.

Property, Plant and Equipment

Property additions are recorded at cost. The costs of maintenance and
repairs are charged to operating results as incurred. Depreciation is charged
against operations over three to ten years for machinery and equipment and
seven to forty years for buildings and improvements. Improvements to leased
property are amortized over the life of the lease or the estimated life of the
improvement, whichever is shorter. Straight-line and accelerated methods of
depreciation are used for financial reporting and accelerated methods are used
for tax purposes where permitted. Depreciation expense for the years ended
December 31, 1998, 1997 and 1996 is $3,375,000, $1,415,000 and $569,000,
respectively.

Earnings Per Share

Basic earnings per share is computed by dividing net earnings available for
common shares by the weighted-average number of shares of common stock
outstanding during the year. Diluted earnings per share is computed by
dividing net earnings available for common shares by the sum of (1) the
weighted-average number of shares of common stock outstanding during the
period, (2) the dilutive effect of the assumed exercise of stock options using
the treasury stock method and (3) the dilutive effect of other potentially
dilutive securities.

Stock Options

On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation, which permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of the grant. Alternatively, Statement 123
allows entities to continue to apply the provisions of Accounting Principles
Board ("APB") Opinion No. 25 and provide pro forma net income and pro forma
income per share disclosures for stock option grants made in 1995 and future
years as if the fair-value-based method defined in Statement 123 had been
applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosures of Statement 123.

25
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Income Taxes

Income taxes are accounted for using an asset and liability approach whereby
deferred tax assets and liabilities are recognized for the expected future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
realized or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Goodwill

Goodwill, which represents the excess of purchase price over the fair value
of net assets acquired, is amortized on the straight-line basis over the
estimated useful life, but not in excess of 40 years. The Company evaluates
the possible impairment of goodwill at each reporting period based on the
undiscounted projected cash flows of the applicable business units.

Long-Lived Assets

In accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of, the Company reviews for the impairment of long-lived assets
whenever events or changes in circumstances indicate the carrying amount of an
asset may not be recoverable. During 1998 and 1997, no such impairment losses
have been identified by the Company.

Comprehensive Income

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income, which requires
the reporting of other comprehensive income in addition to net income from
operations. Other comprehensive income for the Company consists of changes to
its additional minimum pension liability. The Company has presented separate
Consolidated Statements of Comprehensive Income to conform to the requirements
of Statement 130.

2. Acquisitions

The Company was formed on October 31, 1997 when TPG Holdings, Inc. ("TPG")
merged with Lunn Industries, Inc. ("Lunn"), forming Advanced Technical
Products, Inc. Former TPG and Lunn common shareholders received 8.3028 and 0.1
shares of ATP stock respectively, in exchange for each share of the former
companies' stock. The merger agreement specified that 50% of the common stock
to be delivered to each former TPG common shareholder would be held in escrow
subject to cancellation pending the results of TPG's 1997 operations versus
net income targets designated in the agreement. TPG's 1997 net income exceeded
the maximum target, and all of the escrowed shares were released to the former
TPG shareholders in April 1998.

The merger was accounted for as a purchase of Lunn assets by TPG. The
recorded purchase price of $17,582,000 consisted of (1) $14,358,000, the
market value of Lunn's outstanding stock at the time the intent to merge was
announced, (2) $1,200,000, the estimated value of Lunn's stock options and
warrants outstanding as of the merger valuation date and (3) $2,024,000 direct
merger costs incurred. As a result of the transaction, the Company recorded
$5,124,000 of goodwill as of December 31, 1997, which is being amortized using
the straight-line method over 40 years. As discussed in Note 13, such amount
was reduced in 1998 due to the elimination of the valuation allowance for
deferred tax assets which had been recorded at the date of the acquisition.

26
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The operating results of Lunn have been included in the Company's
consolidated financial statements since the date of the acquisition. The
following table presents unaudited pro forma consolidated operating results
for the Company for the year ended December 31, 1997 as if the Lunn
acquisition had occurred as of January 1, 1997 (in thousands, except per share
amounts):

<TABLE>
<S> <C>
Net revenues.................................................... $138,958
Net income...................................................... 5,090
Earnings per share--basic....................................... 0.96
Earnings per share--diluted..................................... 0.91
</TABLE>

The unaudited pro forma consolidated operating results of the Company are
not necessarily indicative of the operating results that would have been
achieved had the merger been consummated at the beginning of the period
presented, and should not be construed as representative of future operating
results.

On May 29, 1998, the Company acquired all of the capital stock of Brigantine
SA, a manufacturer of honeycomb products and engineered panels located in
France. The acquired company, renamed Alcore Brigantine, operates as a
subsidiary of Alcore, Inc., a division of the Company. The acquisition is
expected to expand the Company's access to the European aerospace and
commercial markets. The acquisition was accounted for as a purchase and the
total purchase price of $3,329,000 consisted of (1) $2,502,000, cash paid to
the seller, (2) $500,000 in deferred payments evidenced by a note payable and
(3) $327,000, direct transaction costs. As a result of the transaction, the
Company recorded $2,307,000 of goodwill, which is being amortized using the
straight-line method over 40 years. The Company's consolidated financial
statements include the operating results for Alcore Brigantine since the date
of the acquisition. The pro forma results of operations for 1998 and 1997,
assuming the acquisition had been made at the beginning of each year, would
not be materially different from reported results.

The assets and liabilities of the acquired companies have been recorded in
the Company's consolidated financial statements at their estimated fair values
at the acquisition dates as follows (in thousands):

<TABLE>
<CAPTION>
Alcore
Brigantine Lunn
---------- -------
<S> <C> <C>
Cash.................................................. $ 317 $ --
Accounts receivable................................... 1,431 4,076
Inventories........................................... 476 4,879
Prepaid and other assets.............................. 10 681
Property, plant and equipment......................... 1,542 12,683
Other assets.......................................... 195 644
Current liabilities................................... (923) (7,007)
Capital lease obligations............................. (1,196) --
Long-term debt........................................ (830) (3,498)
------- -------
Total............................................... $ 1,022 $12,458
======= =======
</TABLE>

3. Nature of Business and Customer Concentration

The Company is engaged principally in the design and manufacture of a wide
range of advanced composite, aerospace and defense products including radomes
for high-performance military and commercial aviation, lightweight relocatable
shelters, rocket motor cases, pressure vessels, fuel tanks for military
aircraft and commercial natural gas vehicles, advanced electronic and electro-
optical components, chemical warfare detection systems, metal bonded panels
and composite assemblies using honeycomb cores, fibers and reinforced
plastics.

27
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Sales to the U.S. government on a prime or sub-contract basis during 1998,
1997 and 1996 were approximately 61%, 71% and 81%, respectively. More than 95%
of sales were on a fixed-price basis for all periods reported.

As a government contractor, the Company is exposed to certain inherent
industry risks and uncertainties including technological obsolescence, changes
in government policies, dependence on the federal defense budget and annual
congressional appropriation and allotment of funds. Although the Company's
major programs have been well supported during recent years, future spending
reductions and funding limitations could negatively impact future operations.

4. Segment Reporting

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information, which establishes revised standards for the manner in
which public business enterprises report information about operating segments.
The Company has restated its segment disclosure for periods reported prior to
1998 to conform to Statement No. 131.

The Company identifies its reportable segments based on similarities between
economic characteristics, customers, products, services and regulatory
environment. The Company's operations include one reportable business segment:
Aerospace / Defense. All other operating segments have not met the
quantitative thresholds for determining reportable segments. A description and
financial data for the segments are summarized below:

Aerospace/Defense
The Aerospace / Defense markets served by the Company primarily consist of
the United States government, which the Company sells to on a prime and
subcontract basis, and the commercial aerospace market. The Company designs,
develops and manufactures a wide range of advanced composite products,
advanced electronic and electro-optical components and other integrated
defense systems for this market segment. This reportable segment consists of
five operating segments which have been aggregated for segment reporting
purposes.

Other

The remainder of the Company's business consists of four operating segments
which have not met the quantitative thresholds for determining reportable
segments. One of the segments is involved in the design and manufacture of
composite parts and components for the automotive, oil and gas and other
commercial industries, including fuel tanks for natural gas vehicles,
accumulator bottles, flexible drill pipe and other products. Two of the
segments produce aluminum and composite honeycomb core for commercial markets
(excluding aerospace). In addition, one segment manufactures electrical power
switching products for specialty vehicles including recreational vehicles,
motor homes, conversion vans, over-the-road trucks and leisure boats.

28
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Selected financial data by business segment as of and for the years ended
December 31, 1998, 1997 and 1996 follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net revenues
Aerospace/Defense:
--from external customers..................... $136,881 $ 99,637 $110,847
--intersegment revenues....................... 645 -- --
Other operating segments:
--from external customers..................... 28,193 19,796 15,687
--intersegment revenues....................... -- -- --
Elimination of intersegment revenues............ (645) -- --
-------- -------- --------
Total......................................... $165,074 $119,433 $126,534
======== ======== ========
Operating income (loss)
Aerospace/Defense............................... $ 14,308 $ 10,342 $ 14,311
Other operating segments........................ 1,607 300 (423)
Corporate....................................... (3,089) (1,527) (3,477)
-------- -------- --------
Total......................................... $ 12,826 $ 9,115 $ 10,411
======== ======== ========
Identifiable assets
Aerospace/Defense............................... $ 85,397 $ 65,540 $ 35,572
Other operating segments........................ 16,867 16,974 8,073
Corporate....................................... 4,612 3,170 1,078
-------- -------- --------
Total......................................... $106,876 $ 85,684 $ 44,723
======== ======== ========
Capital expenditures
Aerospace/Defense............................... $ 7,798 $ 1,569 $ 955
Other operating segments........................ 1,955 210 752
Corporate....................................... 31 6 48
-------- -------- --------
Total......................................... $ 9,784 $ 1,785 $ 1,755
======== ======== ========
Depreciation and amortization
Aerospace/Defense............................... $ 3,176 $ 1,149 $ 466
Other operating segments........................ 579 345 158
Corporate....................................... 18 18 22
-------- -------- --------
Total......................................... $ 3,773 $ 1,512 $ 646
======== ======== ========
</TABLE>

The following table presents the locale of revenues and long-lived assets as
of and for the years ended December 31, 1998, 1997 and 1996 (in thousands):

<TABLE>
<CAPTION>
External revenues Long-lived assets
-------------------------- ----------------------
1998 1997 1996 1998 1997 1996
-------- -------- -------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
United States................. $142,327 $110,898 $119,189 $30,619 $25,194 $4,587
Foreign countries............. 22,747 8,535 7,345 3,915 -- --
-------- -------- -------- ------- ------- ------
Total....................... $165,074 $119,433 $126,534 $34,534 $25,194 $4,587
======== ======== ======== ======= ======= ======
</TABLE>

29
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Major Customer Information

Sales to the U. S. government under prime contracts totaled approximately
16%, 31% and 45% of total Company sales for 1998, 1997 and 1996, respectively.
Approximately 14% of 1998 total sales were to The Boeing Company, and
approximately 17% of 1997 sales were to Lockheed Martin Corporation. No other
customers comprised 10% or more of total sales for the periods reported. All
major customer sales reported were included as part of the Aerospace / Defense
business segment.

5. Inventories

Inventories at December 31, 1998 and 1997 consisted of the following (in
thousands):

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Finished goods......................................... $ 956 $ 1,236
Work in process........................................ 26,113 18,035
Raw materials.......................................... 24,860 24,297
Progress payments...................................... (11,294) (8,935)
-------- -------
$ 40,635 $34,633
======== =======
</TABLE>

6. Leases

The Company has various lease agreements for offices, factories and certain
equipment. The longest lease obligation extends to 2013. Most leases contain
renewal options and some contain purchase options. No leases contain
restrictions on the Company's activities concerning dividends, further leasing
or additional debt.

The Company is obligated under various capital leases for certain buildings,
machinery and equipment that expire at various dates through 2013. The gross
amount of buildings, machinery and equipment and related accumulated
amortization recorded under capital leases as of December 31, 1998 and 1997
were as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
------ -----
<S> <C> <C>
Buildings.................................................. $1,167 $ --
Machinery and equipment.................................... 1,147 729
Less accumulated amortization.............................. (242) (140)
------ -----
Net capital lease asset.................................... $2,072 $ 589
====== =====
</TABLE>

Rent expense for the years ended December 31, 1998, 1997 and 1996 consisted
of the following (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Basic expense..................................... $2,036 $1,194 $1,085
Sublease income................................... (253) (250) (250)
------ ------ ------
Rent expense, net................................. $1,783 $ 944 $ 835
====== ====== ======
</TABLE>

30
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Future minimum rental payments at December 31, 1998, under agreements
classified as operating leases with noncancelable terms in excess of one year,
and the present value of future minimum capital lease payments are as follows
(in thousands):

<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- ---------
<S> <C> <C>
Year ending December 31:
1999.................................................... $ 358 $1,607
2000.................................................... 313 905
2001.................................................... 274 790
2002.................................................... 236 752
2003.................................................... 147 640
Beyond 2003............................................. 997 2,566
------ ------
Total minimum lease payments............................ 2,325 $7,260
======
Less amounts representing interest (at rates ranging
from
4.6% to 18.2%)......................................... (548)
------
Net principal portion................................... 1,777
Less portion due within one year........................ (294)
------
Long-term portion....................................... $1,483
======
</TABLE>

During the first quarter of 1998, the Company entered into a ten year lease
agreement for a facility located at Edgewood, Maryland ("Edgewood"), into
which the existing Jessup, Maryland operation is being moved. It is
anticipated that the Edgewood facility will provide increased production
capability to facilitate future business expansion. The schedule of operating
lease obligations includes the new lease commitment. The schedule does not
include the remaining seven years and three months on the lease agreement for
the Company's Jessup facility. This lease obligation totals approximately
$2,161,000 over the seven year, three month period. The Company plans to
sublease the Jessup facility and anticipates that the sublease income will
offset the lease obligation resulting in no significant net expense to be
recognized in future reporting periods.

7. Debt

Short-term debt of the Company at December 31 consisted of the following (in
thousands):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Revolving loans.......................................... $24,845 $17,367
Current maturities of long-term debt..................... 3,922 2,063
------- -------
Total.................................................. $28,767 $19,430
======= =======
</TABLE>

31
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Long-term debt of the Company at December 31 consisted of the following (in
thousands):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Term loans............................................... $16,714 $12,500
Equipment loans.......................................... 2,819 --
Deferred obligations..................................... 500 3,000
Bonds payable............................................ 2,400 2,473
Other long-term debt..................................... 2,192 768
------- -------
Total long-term debt................................... 24,625 18,741
Less current portion..................................... 3,922 2,063
------- -------
Long-term debt, net of current portion................. $20,703 $16,678
======= =======
</TABLE>

Scheduled maturities of long-term debt are as follows (in thousands):

<TABLE>
<S> <C>
1999.............................................................. $ 3,922
2000.............................................................. 17,093
2001.............................................................. 715
2002.............................................................. 546
2003.............................................................. 551
Thereafter........................................................ 1,798
-------
Total........................................................... $24,625
=======
</TABLE>

Revolving, Term and Equipment Loans

In March 1998, the Company refinanced its revolving and term loans,
consolidating them with one lending institution. The financing agreement was
amended in June 1998 to increase the capital expenditure facility from $3.0
million to $5.0 million. The Company's current credit facility totals $50.0
million consisting of (1) $27.0 million of revolving credit against eligible
receivable and inventory balances, (2) an $18.0 million term loan and (3) $5.0
million capital expenditure facility. In connection with the refinancing,
proceeds from the new loans were used in March 1998 to retire the deferred
obligation of $3.0 million which existed at December 31, 1997. As of December
31, 1998, the Company had approximately $4.2 million of unused borrowing
availability on the total credit facility.

On March 28, 1998 and September 30, 1998, the Company borrowed funds on its
capital expenditure facility resulting in equipment loans in the amount of
$700,000 and $2,300,000, respectively. Equipment loan principal payments are
made monthly based on a five-year amortization period. No equipment loans
existed as of December 31, 1997.

The revolving, term and equipment loans are secured by collateral consisting
of substantially all of the Company's assets including inventory, equipment,
receivables, general intangibles, investment property and real property. The
interest rates on the loans are set quarterly based on the Company's
performance against debt-to-earnings ratios specified in the agreement.
Interest rates can range from LIBOR (the London Interbank Offered Rates) plus
2.25% to LIBOR plus 1.0% on the revolving loan and from LIBOR plus 2.75% to
LIBOR plus 1.5% on the term and equipment loans. Alternatively, the Company
may elect interest rates based on the lending institution's prime rate with
the revolving loan fixed at prime plus 0.25% and the term and equipment loans
fixed at prime plus 0.50%. The weighted average interest rates in effect at
December 31, 1998 for the revolving, term and equipment loans were 7.42%,
7.76% and 7.94%, respectively. Interest is paid monthly in arrears on all
loans.

32
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The term loan is payable quarterly based on a seven-year amortization period.
The initial term of the credit facility extends to December 31, 2000.

Under terms of two separate revolving loan agreements outstanding at
December 31, 1997, the Company could borrow up to $23.0 million on a combined
basis against the Company's eligible receivables, inventories and equipment.
Amounts borrowed on one line of credit (up to $17.0 million) carried interest
at an annual rate of 0.50% above the lender's prime rate or, at the Company's
option, 2.75% above LIBOR. The other line of credit ($6.0 million) was
available at an annual interest rate of LIBOR plus 2.5%, with the first $3.0
million covered by an interest rate swap agreement which fixed the interest
rate at 8.65% to protect against the risk of an increase in the LIBOR rate. At
December 31, 1997, the Company's various revolving loan balances (and annual
interest rates in effect) were as follows: $6,351,000 (9.0%), $6,000,000
(8.6563%), $3,000,000 (8.65%) and $2,016,000 (8.2187%).

On December 27, 1996, the Company refinanced its revolving and term loans
with a different bank. The Company recorded an after-tax extraordinary loss of
$667,000 ($1.085 million pre-tax) during 1996 related to prepayment fees,
closing costs, origination fees and legal costs. Under the term loan
provisions of the new agreement, the Company borrowed $14.0 million on
December 27, 1996, at an annual interest rate of .75% above prime. The
interest rate on all or a portion of the term loan was convertible, at the
Company's option, to 3.0% above LIBOR. Principal payments totaled $500,000 per
quarter beginning April 1, 1997. At December 31, 1997, the term loan principal
balance totaled $12.5 million, $12.0 million of which carried LIBOR-based
interest at an annual rate of 8.9063% and $500,000 of which carried prime-
based interest at 9.25%.

The Company is subject to several financial and nonfinancial covenants under
the $50.0 million credit facility. At December 31, 1998, the Company was in
violation of certain financial covenants. Such violations were cured as a
result of an agreement amendment dated March 24, 1999.

Deferred Obligations

The deferred obligation of $500,000 at December 31, 1998 was incurred in
connection with the Brigantine SA acquisition (See Note 2) on May 29, 1998.
The obligation, which bears no interest, is payable in three equal annual
installments beginning May 29, 1999. The deferred obligation of $3,000,000 at
December 31, 1997 was payable to Brunswick in connection with the acquisition
of businesses in 1995. The obligation was payable on April 28, 2001, with
interest of 8.0% per annum payable annually, according to the original terms
of the acquisition agreement. The obligation was paid in full in March 1998.

Bonds Payable and Other Debt

Bonds payable result from a financing agreement with the State of Maryland
dated May 14, 1997 to provide $2.6 million in 15 year tax-exempt industrial
development bonds bearing interest at a variable rate adjusted weekly to
finance the purchase of the Belcamp, Maryland honeycomb manufacturing facility
and an adjacent 3.2 acre parcel of land. The Company has entered into an
interest rate hedge agreement with a financial institution to fix the interest
rate on the tax exempt bonds at 5.07% through the year 2012.

On July 7, 1997, in conjunction with the tax exempt bond financing, the
Company entered into a ten-year $810,000 Maryland Industrial and Commercial
Redevelopment Fund loan agreement with interest set at a fixed rate of 5.1%
annually, plus a five-year $60,000 loan from Harford County, Maryland with
interest set at a fixed rate of 5.5%. The unpaid balance of these loans are
reported as other long-term debt and totaled $773,000 and $768,000 at December
31, 1998 and 1997, respectively.

33
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The remainder of other long-term debt as of December 31, 1998 totals
$1,419,000 and consists of several loans of the Company's French subsidiary,
Alcore Brigantine. The weighted average interest rates on the loans at
December 31, 1998 was approximately 4.76%, and the remaining duration ranged
from two to nine years.

8. Retirement and Employee Benefit Costs

Defined Contribution Plans

The Company has retirement and savings plans for substantially all of the
Company's employees which allow participants to make contributions up to 15%
of their base pay via payroll deductions pursuant to Section 401(k) of the
Internal Revenue Code. Under the plan, the Company may make discretionary
matching contributions. The Company's match for the 1998 plan year was 50% of
each participant's pretax contributions, limited to 4% of their salary. The
cost of the employer match for 1998, 1997 and 1996 was $630,000, $159,000 and
$195,000, respectively.

Union employees at the Glen Cove, New York facility are covered by a defined
contribution retirement plan, the cost of which was $33,000 for 1998 and
$5,000 for 1997 (post-merger period, only).

Defined Benefits Plans

The majority of hourly union employees of the Company, other than those at
the Glen Cove, New York facility, are covered by defined benefit pension plans
with benefits generally based on negotiated rates and years of service. The
Company's funding policy is to contribute annually the minimum required amount
determined by its actuaries.

The change in benefit obligation, change in plan assets and funded status of
the defined benefit plans for 1998 and 1997 is summarized as follows (in
thousands):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Change in benefit obligation:
Balance at beginning of year............................ $ 2,001 $ 550
Service cost............................................ 233 276
Interest cost........................................... 180 74
Plan amendments......................................... -- 950
Actuarial loss.......................................... 460 207
Benefits paid........................................... (71) (56)
------- -------
Balance at end of year.................................... $ 2,803 $ 2,001
======= =======
Change in plan assets:
Balance at beginning of year............................ $ 587 $ 104
Actual return on plan assets............................ 129 (34)
Employer contributions.................................. 541 573
Benefits paid........................................... (71) (56)
------- -------
Balance at end of year.................................. $ 1,186 $ 587
======= =======
Funded status:
Funded status at end of year............................ $(1,617) $(1,414)
Unrecognized net actuarial loss......................... 626 305
Unrecognized prior service cost......................... 956 987
------- -------
Accrued benefit cost.................................... $ (35) $ (122)
======= =======
</TABLE>

34
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The amounts recognized in the Consolidated Balance Sheets at December 31,
1998 and 1997 consist of (in thousands):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Prepaid benefit cost...................................... $ 110 $ --
Accrued benefit cost...................................... (44) (122)
Additional minimum liability.............................. (1,583) (1,292)
Intangible asset.......................................... 956 987
Accumulated other comprehensive income.................... 625 305
------- -------
Accrued benefit cost...................................... $ (35) $ (122)
======= =======
</TABLE>

The net periodic benefit cost of the defined benefit plans for the years
ended December 31, 1998, 1997 and 1996 by components was as follows (in
thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost............................................... $233 $276 $293
Interest cost.............................................. 180 74 37
Expected return on plan assets............................. (65) (24) --
Amortization of prior service cost......................... 82 3 --
Amortization of actuarial loss............................. 24 15 2
---- ---- ----
Net periodic benefit cost................................ $454 $344 $332
==== ==== ====
</TABLE>

Assumptions used to measure the projected benefit obligation and the
expected long-term rate of return on plan assets as of December 31 were as
follows:

<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Discount rate.............................................. 6.75% 7.25% 7.25%
Expected return on plan assets............................. 8.00% 8.00% 8.00%
</TABLE>

The Company does not have any significant postemployment or postretirement
medical or life insurance plans.

35
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. Shareholders' Equity

The activity in the equity accounts for the period January 1, 1996, through
December 31, 1998, is summarized as follows (in thousands):

<TABLE>
<CAPTION>
Notes Accumulated
Common Stock Additional Receivable Other Com-
-------------- Paid-in Retained from prehensive
Shares Amount Capital Earnings Officers Income Total
------ ------ ---------- -------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1996................... 1 $ 1 $ 999 $ 2,054 $(135) $ -- $ 2,919
Common stock split (475-
to-1).................. 474 474 (474) -- -- -- --
Par value adjustment
(common)............... -- (470) 470 -- -- -- --
Net income.............. -- -- -- 4,274 -- -- 4,274
Preferred dividends
declared............... -- -- -- (80) -- -- (80)
Additional minimum
pension liability...... -- -- -- -- -- (95) (95)
----- ----- ------- ------- ----- ----- -------
Balance, December 31,
1996................... 475 5 995 6,248 (135) (95) 7,018
Merger transactions:
Retirement of TPG
stock.................. (475) (5) -- -- -- -- (5)
Conversion of TPG stock
to ATP stock........... 3,944 39 -- -- -- -- 39
Conversion of Lunn stock
to ATP stock........... 1,276 13 -- -- -- -- 13
Purchase accounting
adjustment for
acquisition of Lunn.... -- -- 15,511 -- -- -- 15,511
Net income.............. -- -- -- 4,208 -- -- 4,208
Preferred dividends
declared............... -- -- -- (80) -- -- (80)
Additional minimum
pension liability...... -- -- -- -- -- (210) (210)
----- ----- ------- ------- ----- ----- -------
Balance, December 31,
1997................... 5,220 52 16,506 10,376 (135) (305) 26,494
Exercise of stock
options and warrants... 20 -- 16 -- -- -- 16
Net income.............. -- -- -- 5,687 -- -- 5,687
Preferred dividends
declared............... -- -- -- (80) -- -- (80)
Additional minimum
pension liability...... -- -- -- -- -- (320) (320)
----- ----- ------- ------- ----- ----- -------
Balance, December 31,
1998................... 5,240 $ 52 $16,522 $15,983 $(135) $(625) $31,797
===== ===== ======= ======= ===== ===== =======
</TABLE>

Stock Option Plans

In conjunction with the merger on October 31, 1997, the Company assumed the
outstanding obligations of the Lunn and TPG stock option plans. The Company
also adopted the 1997 Advanced Technical Products, Inc. Stock Option Plan (the
"1997 Plan") on the merger date. Under the 1997 Plan, the Company may grant
nonstatutory and incentive stock options to employees of the Company for the
purchase of the Company's common stock at an exercise price equal to at least
100% of the fair market value as of the date of grant (110% of such fair
market value if the optionee owns more than 10% of the combined voting power
of all classes of stock of the Company). The Company has authorized 300,000
shares of common stock for the 1997 Plan. On November 6, 1997, 173,000
incentive stock options to acquire shares of the Company's common stock were
granted to key employees under the 1997 Plan. The options vest at the rate of
20% on each of the five anniversary dates following the year of the grant. The
exercise price of the options is $15.00 per share.

On November 6, 1997, the Company adopted the Advanced Technical Products,
Inc. Non-Employee Director Stock Option Plan, the terms of which are the same
as the 1997 Plan, except that options are to be granted to only non-employee
members of the Company's board of directors. Stock options for 100,000 shares
of common stock are authorized under this plan. On November 6, 1997, 43,000
nonqualified stock options at an exercise price of $15.00 per share were
granted under the plan. On May 14, 1998, an additional 6,000 nonqualified
stock options at an exercise price of $14.25 per share were granted under the
plan. The options vest at a rate of 33 1/3% on each day preceding the annual
meeting of the stockholders of the Company for the three years subsequent to
the option grant.

36
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A summary of stock option transactions for 1998, 1997 and 1996 follows (pre-
merger amounts have been restated to reflect amounts on a post-merger basis;
shares are in thousands):

<TABLE>
<CAPTION>
Weighted
Stock Average
Options Exercise
Outstanding Price
----------- --------
<S> <C> <C>
At December 31, 1995................................. -- $ --
Options granted...................................... 208 0.41
---
At December 31, 1996................................. 208 0.41
Options granted...................................... 216 15.00
Options assumed in merger............................ 115 7.39
Options canceled..................................... (12) 0.41
---
At December 31, 1997................................. 527 7.91
Options granted...................................... 6 14.25
Options exercised.................................... (19) 0.88
---
At December 31, 1998................................. 514 $ 8.24
=== ======
</TABLE>

The following table summarizes information about stock options outstanding
at December 31, 1998 (pre-merger amounts have been restated to reflect amounts
on a post-merger basis; shares are in thousands):

<TABLE>
<CAPTION>
Exercisable
---------------------
Number of Weighted- Weighted- Weighted-
Range of Shares Average Average Average
Exercise Subject to Remaining Exercise Number of Exercise
Prices Option Life Price Shares Price
--------------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 0.41 - $ 4.99 179 7.5 years $ 0.41 65 $ 0.41
$ 5.00 - $10.00 109 4.4 years 7.22 109 7.22
$10.01 - $15.00 226 8.8 years 14.95 53 14.86
</TABLE>

The weighted average fair value of options granted in 1998, 1997 and 1996
was $8.00, $8.40 and $0.20 per share, respectively, as estimated using the
Black Scholes option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
1998 and
1997 1996
-------- --------
<S> <C> <C>
Risk free interest rate.................................... 5.95% 6.82%
Expected dividend yield.................................... 0% 0%
Expected stock volatility.................................. 45% 100%
Expected option life....................................... 7 years 10 years
</TABLE>

37
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company accounts for these plans under APB Opinion No. 25, under which
no compensation cost has been recognized. Had compensation cost for these
plans been determined based on the fair value at grant date under the fair-
value-based method in Statement of Financial Accounting Standards No.
123,Accounting for Stock-Based Compensation, the Company's net income would
have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Net income:
As reported........................................... $5,687 $4,208 $4,274
Pro forma............................................. 5,428 4,166 4,248
Net income per share:
As reported:
Basic............................................... $ 1.06 $ 0.99 $ 1.06
Diluted............................................. 1.01 0.95 1.03
Pro forma:
Basic............................................... $ 1.01 $ 0.98 $ 1.06
Diluted............................................. 0.97 0.94 1.03
</TABLE>

Stock Warrants

The Company assumed obligations of outstanding Lunn stock warrants as of the
merger on October 31, 1997. A summary of stock warrant transactions for 1998
and 1997 follows (pre-merger amounts have been restated to reflect amounts on
a post-merger basis; shares are in thousands):

<TABLE>
<CAPTION>
Weighted
Stock Average
Warrants Exercise
Outstanding Price
----------- --------
<S> <C> <C>
At December 31, 1996.................................... -- $ --
Warrants assumed in merger.............................. 66 6.85
---
At December 31, 1997.................................... 66 6.85
Warrants exercised...................................... (2) 5.00
---
At December 31, 1998.................................... 64 $6.91
=== =====
</TABLE>

There were no stock warrant transactions during 1996.

Certain warrant agreements contain anti-dilutive provisions providing for
certain adjustments in the exercise price and the number of shares to be
received upon exercise in the event of subsequent sales of stock by the
Company below the initial warrant exercise price.

Employee Stock Purchase Plan

On October 29, 1998, the Company adopted the 1998 Advanced Technical
Products, Inc. Employee Stock Purchase Plan to encourage employees of the
Company to maintain in its employ and to have an opportunity to acquire a
proprietary interest in the Company. Under the plan, employees may elect
payroll withholdings to acquire shares of the Company's common stock at a per
share price reflecting fair market value at the beginning or end of each
calendar quarter, whichever is lower. At December 31, 1998, 1,000,000 shares
of common stock are authorized under the plan. The initial offering period
under the plan was the two months ending December 31,

38
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

1998, and no shares were issued as of the end of 1998. The plan has not been
approved by the stockholders of the Company as of December 31, 1998.

10. Mandatorily Redeemable Preferred Stock

The preferred stock is 8% cumulative and redeemable with a $1.00 par value
and 1,000,000 shares are authorized, issued and outstanding. In case of
liquidation, the holders of preferred stock will be paid out of the assets of
the Company in cash equal to $1.00 per share, plus any accumulated and unpaid
dividends, before the common stockholders.

The Company may, at its option, redeem any or all of the outstanding shares
of the preferred stock for cash equal to $1.00 per share, plus any accumulated
and unpaid dividends. The preferred shares are subject to mandatory redemption
at the above-stated value on the earlier of April 28, 2001, or the date on
which occurs a change in the ownership of 50% or more of the assets or the
common stock of the Company.

11. Related-Party Transactions

At December 31, 1998 and 1997, certain officers of the Company have
outstanding promissory notes in the aggregate amount of $134,865, which were
issued to the Company as consideration for the paid-in capital in excess of
par value for the shares of stock they own.

Common shares of the Company owned by each employee have been pledged as
collateral to secure the payment of the promissory notes. The notes carry an
interest rate of the lesser of 8% and the highest rate permitted by applicable
law. Principal and accrued interest payments are due in full upon maker's sale
of any pledged stock or on April 28, 2001, if earlier. The notes may be repaid
at any time at the option of the maker without penalty.

12. Technological Expenditures

Technological expenditures, excluding reimbursed projects, for the years
ended December 31, 1998, 1997 and 1996 consisted of the following (in
thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Research and development.............................. $ 864 $1,063 $1,213
Engineering and other................................. 138 654 1,256
------ ------ ------
Total............................................... $1,002 $1,717 $2,469
====== ====== ======
</TABLE>

The Company was also reimbursed $11.3 million, $3.9 million and $4.3 million
under federally funded research and development contracts during the years
ended December 31, 1998, 1997 and 1996, respectively.

13. Income Taxes

The combined provision for U.S. federal and state income taxes for the years
ended December 31, 1998, 1997 and 1996 consisted of the following (in
thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Current.............................................. $3,577 $3,157 $3,511
Deferred............................................. (17) (523) (836)
------ ------ ------
Total income tax provision......................... $3,560 $2,634 $2,675
====== ====== ======
</TABLE>

39
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The federal statutory tax rate the years ended December 31, 1998, 1997 and
1996 is reconciled to the effective tax rate as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate..................................... 34.0% 34.0% 34.0%
State and local taxes, net of federal benefit.............. 3.7 4.0 3.8
Other, net................................................. 0.8 0.5 0.7
---- ---- ----
Effective tax rate....................................... 38.5% 38.5% 38.5%
==== ==== ====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1998 and
1997 are as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Deferred tax assets--
Excess of tax over book capitalized inventory costs......... $ 309 $ 327
Reserves not deductible until paid.......................... 1,985 854
Allowance for doubtful accounts............................. 224 95
Net operating loss carryforwards............................ 1,013 2,183
------ ------
Total deferred tax assets................................. 3,531 3,459
Deferred tax liabilities--
Depreciation................................................ 1,155 978
------ ------
Net deferred tax asset before valuation allowance............. 2,376 2,481
Valuation allowance........................................... -- 1,458
------ ------
Net deferred tax asset........................................ $2,376 $1,023
====== ======
</TABLE>

The Company has net operating loss carryforwards of $2,980,000 which were
generated from Lunn operations prior to the merger. Such carryforwards may be
applied against future taxable income and expire at varying dates between 2002
and as a result of the merger and the subsequent ownership change of Lunn, the
timing of the realization of the Company's net operating loss carryforwards is
subject to Section 382 of the Internal Revenue Code ("Section 382"). Section
382 generally provides that, if a corporation undergoes an ownership change,
the amount of taxable income that the corporation may offset with net
operating loss carryforwards is subject to an annual limitation. The Company's
estimated annual limitation under Section 382 is $1,020,000.

The valuation allowance of $1,458,000 at December 31, 1997 primarily
represents a reserve for the net deferred tax assets assumed from Lunn in the
merger. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax assets and liabilities,
projected future taxable income and tax planning strategies in making this
assessment. Based on these factors and the Section 382 limitation on the
annual utilization of net operating loss carryforwards, management did not
believe that it was more likely than not that the Company would realize the
benefits of all these deductible differences as of December 31, 1997. As of
December 31, 1998, it is management's assessment that it is more likely than
not that the Company will realize the benefits of all the deductible
differences recorded at that date. As such, the valuation allowance was
eliminated in 1998, with a corresponding decrease to goodwill recognized as a
result of the merger of TPG and Lunn.

40
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

14. Earnings Per Share

A reconciliation of the numerators and denominators used in calculating
basic and diluted earnings per share ("EPS") for the years ended December 31,
1998, 1997 and 1996 follows (in thousands, except share information):

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Numerators used for basic and diluted EPS
EPS before extraordinary items:
Income before extraordinary items....... $ 5,687 $ 4,208 $ 4,941
Less: preferred stock dividends
declared............................... (80) (80) (80)
--------- --------- ---------
Income available for common shares...... $ 5,607 $ 4,128 $ 4,861
========= ========= =========
EPS:
Net income.............................. $ 5,687 $ 4,208 $ 4,274
Less: preferred stock dividends
declared............................... (80) (80) (80)
--------- --------- ---------
Net income available for common shares.. $ 5,607 $ 4,128 $ 4,194
========= ========= =========
Denominators used for basic and diluted
EPS
Basic EPS:
Weighted average number of common shares
outstanding............................ 5,270,520 4,157,111 3,943,830
Diluted EPS:
Add: assumed stock conversions, net of
assumed treasury stock purchases:
--stock options....................... 220,589 198,379 115,000
--stock warrants...................... 35,021 6,545 --
--------- --------- ---------
Weighted average number of common shares
and common equivalent shares........... 5,526,130 4,362,035 4,058,830
========= ========= =========
</TABLE>

15. Accrued Expenses

Accrued expenses at December 31, 1998 and 1997 consisted of the following
(in thousands):

<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Payroll and other compensation................................ $4,678 $4,025
Medical expenses.............................................. 587 449
Interest expense.............................................. 297 353
Income taxes.................................................. 1,108 1,324
Other......................................................... 956 1,486
------ ------
Total....................................................... $7,626 $7,637
====== ======
</TABLE>

41
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

16. Other Noncurrent Assets

Other noncurrent assets as of December 31, 1998 and 1997 are summarized as
follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Goodwill, net of accumulated amortization of $230 in 1998
and $60 in 1997............................................ $6,180 $5,385
Intangible asset--defined benefit pension plans............. 956 987
Assets of non-qualified deferred compensation plan.......... 765 675
Other....................................................... 705 588
------ ------
Total..................................................... $8,606 $7,635
====== ======
</TABLE>

17. Summary of Quarterly Information (Unaudited)

<TABLE>
<CAPTION>
1998 Quarters
-------------------------------------------
First Second Third Fourth
--------- --------- --------- ------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues............................ $ 30,813 $ 39,632 $ 47,801 $ 46,828
Operating income.................... 986 2,949 4,129 4,762
Net income.......................... 111 1,302 1,949 2,325
Earnings per common share--diluted.. $ 0.02 $ 0.23 $ 0.35 $ 0.42

<CAPTION>
1997 Quarters
-------------------------------------------
First Second Third Fourth (a)
--------- --------- --------- ------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues............................ $ 23,822 $ 28,110 $ 28,608 $ 38,893
Operating income.................... 159 2,213 2,253 4,490
Net income (loss)................... (196) 1,049 1,017 2,338
Earnings (loss) per common Share--
diluted............................ $ (0.06) $ 0.25 $ 0.24 $ 0.46
</TABLE>
- --------
(a) The fourth quarter of 1997 includes the results of Lunn operations for the
two months following the merger creating Advanced Technical Products, Inc.
on October 31, 1997.

42
<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not Applicable.

43
<PAGE>

PART III

Item 10. Directors and Executive Officers of the Registrant

For information concerning directors and executive officers of the Company,
see the information set forth following the caption "ELECTION OF DIRECTORS" in
the Company's definitive proxy statement to be filed no later than 120 days
after the end of the fiscal year covered by this Form 10-K (the "Proxy
Statement"), which information is incorporated herein by reference.

Item 11. Executive Compensation

The information set forth following the caption "EXECUTIVE COMPENSATION" in
the Company's Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information set forth following the caption "ELECTION OF DIRECTORS" in
the Company's Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

The information set forth following the caption "TRANSACTIONS WITH
DIRECTORS, OFFICERS AND AFFILIATES" in the Company's Proxy Statement is
incorporated herein by reference.

44
<PAGE>

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as part of this report:

1. Financial Statements:

Reports of independent public accountants

Consolidated balance sheets at December 31, 1998 and 1997

Consolidated statements of income for the years ended December 31,
1998, 1997 and 1996

Consolidated statements of comprehensive income for the years ended
December 31, 1998, 1997 and 1996

Consolidated statements of cash flows for the years ended December 31,
1998, 1997 and 1996

Notes to consolidated financial statements

2. Financial Statement Schedules:

None

3. Exhibits:

<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated June 6, 1997 by and between Lunn
Industries, Inc. and TPG Holdings, Inc., as amended by Amendment to
Agreement and Plan of Merger dated August 22, 1997 by and between Lunn
Industries, Inc. and TPG Holdings, Inc. (exhibits and schedules
omitted) (incorporated by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated November 14, 1997).

3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3 to the Company's Quarterly
Report on Form 10-QSB for the period ended September 30, 1997).

3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the
Company's Quarterly Report on Form 10-QSB for the period ended
September 30, 1996).

10.1 Lease covering the Jessup, Maryland Plant (incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992).

10.2 Lease for the Company's facilities located in Glen Cove, New York
dated January 1, 1995 between Grill Leasing Corp. and Lunn Industries,
Inc. (incorporated by reference to Exhibit 10.12 to the Company's
Quarterly Report on Form 10-QSB for the period ended March 31, 1995).

10.3 Amendment to the Company's 1994 Stock Incentive Plan adopted at the
1996 Annual Shareholders Meeting on September 26, 1996 (incorporated
by reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-QSB for the period ended September 30, 1996).

10.4 Engagement letter dated February 21, 1996 between the Company and J.E.
Sheehan & Co., Inc. for the placement of 3.5 million shares of the
Company's common stock in a private placement (incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-QSB for period ended March 31, 1996).
</TABLE>

45
<PAGE>

<TABLE>
<C> <S>
10.5 Credit Agreement dated November 22, 1996 between Lunn Industries, Inc.
and Alcore, Inc. and First Union National Bank of Maryland (incorporated
by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-
KSB for the year ended December 31, 1996).

10.6 Promissory Note dated November 15, 1996 payable to the order of First
Union National Bank of Maryland (incorporated by reference to Exhibit
10.27 to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996).

10.7 Security Agreement dated November 22, 1996 between Lunn Industries, Inc.
and Alcore, Inc. and First Union National Bank of Maryland (incorporated
by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-
KSB for the year ended December 31, 1996).

10.8 Loan Agreement dated as of May 1, 1997 between Maryland Industrial
Development Authority and Alcore, Inc. (incorporated by reference to
Exhibit 10.2 to the Company's Current Report on Form 8-K dated June 2,
1997).

10.9 Trust Indenture dated as of May 1, 1997 by and among Maryland Industrial
Development Financing Authority, First Union National Bank of Virginia
and Branch Banking and Trust Company (incorporated by reference to
Exhibit 10.3 to the Company's Current Report on Form 8-K dated June 2,
1997).

10.10 Promissory Note dated May 15, 1997 payable to Maryland Industrial
Development Financing Authority for the sum of $2.6 million
(incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated June 2, 1997).

10.11 Guaranty Agreement dated May 1, 1997 made by Lunn Industries, Inc. in
favor of First Union National Bank of North Carolina (incorporated by
reference to Exhibit 10.4 to the Company's Current Report on Form 8-K
dated June 2, 1997).

10.12 Letter of Credit and Reimbursement Agreement by and between Alcore, Inc.
and First Union National Bank of North Carolina dated May 1, 1997
(incorporated by reference to Exhibit 10.5 to the Company's Current
Report on Form 8-K dated June 2, 1997).

10.13 Security Agreement dated as of May 1, 1997 by and among Alcore, Inc.,
Lunn Industries, Inc., First Union Bank of North Carolina, The Maryland
Industrial Development Financing Authority and First Union National Bank
of Maryland (incorporated by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K dated June 2, 1997).

10.14 Loan and Security Agreement dated December 27, 1996, by and among Fleet
Capital Corporation and Technical Products Group, Inc., Marion
Properties, Inc., Deland Properties, Inc. and Lincoln Properties, Inc.
(incorporated by reference to Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).

10.15 First Amendment to Loan and Security Agreement dated June 10, 1997, by
and among Fleet Capital Corporation and Technical Products Group, Inc.,
Marion Properties, Inc., Deland Properties, Inc. and Lincoln Properties,
Inc. (incorporated by reference to Exhibit 10.15 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).

10.16 Second Amendment to Loan and Security Agreement dated October 31, 1997,
by and among Fleet Capital Corporation and Technical Products Group,
Inc., Marion Properties, Inc., Deland Properties, Inc. and Lincoln
Properties, Inc. (incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1997).
</TABLE>

46
<PAGE>

<TABLE>
<C> <S>
10.17 Secured Promissory Note payable to Fleet Capital Corporation executed
by Technical Products Group, Inc., Marion Properties, Inc., Deland
Properties, Inc. and Lincoln Properties, Inc. (incorporated by
reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).

10.18 Equipment Promissory Note payable to Fleet Capital Corporation
executed by Technical Products Group, Inc., Marion Properties, Inc.,
Deland Properties, Inc. and Lincoln Properties, Inc. (incorporated by
reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).

10.19 Form of Commercial Net Building and Ground Lease of Lincoln Air Park
West by and between Brunswick Corporation and Airport Authority of the
City of Lincoln, Nebraska, together with form of Lease Extension
Agreement, regarding various facilities of the Lincoln Composites
Division located in Lincoln, Nebraska (incorporated by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997).

10.20 Lease dated October 15, 1997 by and between LPR Partnership and
Technical Products Group, Inc., through the Lincoln Composites
Division, regarding premises located in Lincoln, Nebraska
(incorporated by reference to Exhibit 10.20 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).

10.21** Amended and Restated Employment Agreement dated November 1, 1997 by
and between the Company and James S. Carter (incorporated by reference
to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).

10.22** Amended and Restated Employment Agreement dated November 1, 1997 by
and between the Company and Garrett L. Dominy (incorporated by
reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).

10.23** 1997 Advanced Technical Products, Inc. Stock Option Plan (incorporated
by reference to Exhibit 10.23 to the Company's Annual Report on Form
10-K for the year ended December 31, 1997).

10.24** Form of Incentive Stock Option Agreement for options granted under
Advanced Technical Products, Inc. Stock Option Plan (incorporated by
reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).

10.25** Advanced Technical Products, Inc. Non-Employee Directors Stock Option
Plan (incorporated by reference to Exhibit 10.25 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997).

10.26** Form of Nonqualified Stock Option Agreement for options granted under
Advanced Technical Products, Inc. Non-Employee Directors Stock Option
Plan (incorporated by reference to Exhibit 10.26 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997).

10.27** Technical Products Group, Inc. Deferred Compensation Plan
(incorporated by reference to Exhibit 10.27 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).

10.28** Rabbi Trust Agreement executed in connection with Technical Products
Group, Inc. Deferred Compensation Plan (incorporated by reference to
Exhibit 10.28 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997).

10.29 Lease Agreement dated January 21, 1998 by and between FRP Lakeside
L.P., as landlord, and Alcore, Inc., as tenant (incorporated by
reference to Exhibit 10.29 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended April 3, 1998).
</TABLE>

47
<PAGE>

<TABLE>
<C> <S>
10.30 Lease Agreement dated April 14, 1998 by and between Mansell Overlook
200, LLC, and Advanced Technical Products, Inc. (incorporated by
reference to Exhibit 10.29 to the Company's Quarterly Report on Form 10-
Q for the quarterly period ended April 3, 1998).

10.31 Amended and Restated Loan and Security Agreement dated March 31, 1998
between Advanced Technical Products, Inc., Alcore,Inc., Technical
Products Group, Inc., Marion Properties, Inc., Deland Properties, Inc.
and Lincoln Properties, Inc., collectively, as borrower, and Fleet
Capital Corporation, as lender (incorporated by reference to Exhibit
10.31 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended July 3, 1998).

10.32 First Amendment to Amended and Restated Loan and Security Agreement
dated June 26, 1998 by and between Advanced Technical Products, Inc.,
Alcore, Inc., Technical Products Group, Inc., Marion Properties, Inc.,
Deland Properties, Inc. and Lincoln Properties, Inc., collectively, as
borrower, and Fleet Capital Corporation, as lender (incorporated by
reference to Exhibit 10.32 to the Company's Quarterly Report on Form 10-
Q for the quarterly period ended July 3, 1998).

10.33 Second Amended and Restated Equipment Promissory Note dated June 26,
1998, executed by Advanced Technical Products, Inc., Alcore, Inc.,
Technical Products Group, Inc., Marion Properties, Inc., Deland
Properties, Inc. and Properties, Inc. (incorporated by reference to
Exhibit 10.33 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended July 3, 1998).

10.34 Lease Agreement dated May 11, 1998 by and between George W. Hendricks
and Barbara J. Hendricks and the Lincoln Composites Division of Advanced
Technical Products, Inc. (incorporated by reference to Exhibit 10.34 to
the Company's Quarterly Report on Form 10-Q for the quarterly period
ended October 2, 1998).

21.1* List of subsidiaries of Advanced Technical Products, Inc.

23.1* Consent of KPMG LLP.

23.2* Consent of Arthur Andersen LLP

27.0* Financial Data Schedule.
</TABLE>
- --------
* Filed herewith.
** Indicates management contract or compensatory plan or arrangement.

(b) Reports on Form 8-K:

A Current Report on Form 8-K dated March 12, 1998 reporting under Item 5--
Other Events was filed announcing ATP's earnings for the year ended December
31, 1997.

48
<PAGE>

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on March 29, 1999

Advanced Technical Products, Inc.

/s/ James S. Carter
_____________________________________
James S. Carter Chairman of the
Board, Chief Executive Officer and
President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ James S. Carter Chairman of the Board, March 29, 1999
______________________________________ Chief Executive Officer
James S. Carter and President (Principal
Executive Officer) and
Director

/s/ Garrett L. Dominy Executive Vice President, March 29, 1999
______________________________________ Financial Officer,
Garrett L. Dominy Assistant Secretary and
Treasurer (Principal
Financial Officer and
Principal Accounting
Officer) and Director

Director March 29, 1999
______________________________________
Alan W. Baldwin

/s/ Robert C. Sigrist Director March 29, 1999
______________________________________
Robert C. Sigrist

/s/ Lawrence E. Wesneski Director March 29, 1999
______________________________________
Lawrence E. Wesneski

Director March 29, 1999
______________________________________
Sam P. Douglass

/s/ Gary L. Forbes Director March 29, 1999
______________________________________
Gary L. Forbes

/s/ John M. Simon Director March 29, 1999
______________________________________
John M. Simon
</TABLE>

49
<PAGE>

EXHIBIT INDEX

3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3 to the Company's Quarterly
Report on Form 10-QSB for the period ended September 30, 1997).

3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the
Company's Quarterly Report on Form 10-QSB for the period ended
September 30, 1996).

10.1 Lease covering the Jessup, Maryland Plant (incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992).

10.5 Credit Agreement dated November 22, 1996 between Lunn Industries, Inc.
and Alcore, Inc. and First Union National Bank of Maryland
(incorporated by reference to Exhibit 10.26 to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996).

10.7 Security Agreement dated November 22, 1996 between Lunn Industries,
Inc. and Alcore, Inc. and First Union National Bank of Maryland
(incorporated by reference to Exhibit 10.28 to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996).

10.9 Trust Indenture dated as of May 1, 1997 by and among Maryland
Industrial Development Financing Authority, First Union National Bank
of Virginia and Branch Banking and Trust Company (incorporated by
reference to Exhibit 10.3 to the Company's Current Report on Form 8-K
dated June 2, 1997).
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.10 Promissory Note dated May 15, 1997 payable to Maryland Industrial
Development Financing Authority for the sum of $2.6 million
(incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated June 2, 1997).

10.12 Letter of Credit and Reimbursement Agreement by and between Alcore,
Inc. and First Union National Bank of North Carolina dated May 1, 1997
(incorporated by reference to Exhibit 10.5 to the Company's Current
Report on Form 8-K dated June 2, 1997).

10.13 Security Agreement dated as of May 1, 1997 by and among Alcore, Inc.,
Lunn Industries, Inc., First Union Bank of North Carolina, The
Maryland Industrial Development Financing Authority and First Union
National Bank of Maryland (incorporated by reference to Exhibit 10.2
to the Company's Current Report on Form 8-K dated June 2, 1997).

10.14 Loan and Security Agreement dated December 27, 1996, by and among
Fleet Capital Corporation and Technical Products Group, Inc., Marion
Properties, Inc., Deland Properties, Inc. and Lincoln Properties, Inc.
(incorporated by reference to Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).

10.15 First Amendment to Loan and Security Agreement dated June 10, 1997, by
and among Fleet Capital Corporation and Technical Products Group,
Inc., Marion Properties, Inc., Deland Properties, Inc. and Lincoln
Properties, Inc. (incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1997).

10.16 Second Amendment to Loan and Security Agreement dated October 31,
1997, by and among Fleet Capital Corporation and Technical Products
Group, Inc., Marion Properties, Inc., Deland Properties, Inc. and
Lincoln Properties, Inc. (incorporated by reference to Exhibit 10.16
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997).

10.17 Secured Promissory Note payable to Fleet Capital Corporation executed
by Technical Products Group, Inc., Marion Properties, Inc., Deland
Properties, Inc. and Lincoln Properties, Inc. (incorporated by
reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).

2
<PAGE>

<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.21** Amended and Restated Employment Agreement dated November 1, 1997 by
and between the Company and James S. Carter (incorporated by reference
to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).

10.23** 1997 Advanced Technical Products, Inc. Stock Option Plan (incorporated
by reference to Exhibit 10.23 to the Company's Annual Report on Form
10-K for the year ended December 31, 1997).

10.27** Technical Products Group, Inc. Deferred Compensation Plan
(incorporated by reference to Exhibit 10.27 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).

10.30 Lease Agreement dated April 14, 1998 by and between Mansell Overlook
200, LLC, and Advanced Technical Products, Inc. (incorporated by
reference to Exhibit 10.29 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended April 3, 1998).

10.31 Amended and Restated Loan and Security Agreement dated March 31, 1998
between Advanced Technical Products, Inc., Alcore, Inc., Technical
Products Group, Inc., Marion Properties, Inc., Deland Properties, Inc.
and Lincoln Properties, Inc., collectively, as borrower, and Fleet
Capital Corporation, as lender (incorporated by reference to Exhibit
10.31 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended July 3, 1998).

10.32 First Amendment to Amended and Restated Loan and Security Agreement
dated June 26, 1998 by and between Advanced Technical Products, Inc.,
Alcore, Inc., Technical Products Group, Inc., Marion Properties, Inc.,
Deland Properties, Inc. and Lincoln Properties, Inc., collectively, as
borrower, and Fleet Capital Corporation, as lender (incorporated by
reference to Exhibit 10.32 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended July 3, 1998).

3
<PAGE>

<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.34 Lease Agreement dated May 11, 1998 by and between George W. Hendricks
and Barbara J. Hendricks and the Lincoln Composites Division of
Advanced Technical Products, Inc. (incorporated by reference to
Exhibit 10.34 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended October 2, 1998).
21.1* List of subsidiaries of Advanced Technical Products, Inc.
23.1* Consent of KPMG LLP.
23.2* Consent of Arthur Andersen LLP
27.0* Financial Data Schedule.
</TABLE>
- --------
* Filed herewith.
** Indicates management contract or compensatory plan or arrangement.

4
<PAGE>

Exhibit 21.1

List of Subsidiaries of Advanced Technical Products, Inc.

Name of Subsidiary State or Jurisdiction of
--------------- Incorporation
---------------

Technical Products Group, Inc.
Alcore, Inc. Delaware
Lincoln Properties, Inc. Delaware
Marion Properties, Inc. Delaware
Deland Properties, Inc. Delaware
Alcore Brigantine Delaware
France
<PAGE>

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM 10-K/A

(Mark One)

AMENDMENT NO. 1

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 1998

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission file number: 0-1298

ADVANCED TECHNICAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

Delaware 11-1581582
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

200 Mansell Ct. East, Suite 505
Roswell, Georgia 30076
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (770) 993-0291

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

<TABLE>
<CAPTION>
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
<S> <C>
Common Stock, $0.01 par value Nasdaq/National Market System
</TABLE>

The aggregate market value of the voting stock held by non-affiliates of the
registrant, on April 26, 1999 was $34,735,743 (3,656,394 shares at $9.50 per
share, the closing price of the registrant's common stock on the Nasdaq
National Market on April 26, 1999). As of that date, 5,259,089 shares of the
registrant's common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None

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

PART III

Item 10. Directors and Executive Officers of the Registrant

The Certificate of Incorporation and Bylaws of Advanced Technical Products,
Inc. ("ATP" or the "Company"), each as amended, provide that the members of
the Board of Directors will be classified as nearly as possible into three
classes, each with, as nearly as possible, one-third of the members of the
Board of Directors. The following sets forth certain information concerning
each of the directors of the Company now in office and each of the executive
officers of the Company who are not directors. Each of the Class II and Class
III directors were designated as directors of the Company effective October
31, 1997 in connection with the consummation of the merger (the "Merger") of
TPG Holdings, Inc. ("TPG") and Lunn Industries, Inc. ("Lunn") under the name
"Advanced Technical Products, Inc." The terms of the Class II directors expire
on the date of the Company's 1999 Annual Meeting. Each of the Class I
directors were elected to the Board of Directors at the Company's 1998 Annual
Meeting. The age of each director nominee and continuing director, his
positions and offices with the Company, the year in which he first became a
director of the Company, his business experience during the past five years or
more, and the other directorships he holds are shown below. Similar
information is provided concerning executive officers who are neither
directors nor nominees for election as directors.

Class II Directors--Terms Expiring 1999

Garrett L. Dominy, 53. Mr. Dominy has been Executive Vice President, Chief
Financial Officer, Assistant Secretary and Treasurer of the Company since
October 1997. Mr. Dominy served as the Chief Financial Officer, Executive Vice
President, Secretary and Treasurer of TPG from June 1995 until the Merger.
Prior to that time, Mr. Dominy was an audit partner of Arthur Andersen
Worldwide. Mr. Dominy is a Certified Public Accountant.

Sam P. Douglass, 66. Mr. Douglass is a member of the Compensation Committee.
Mr. Douglass served as a director of TPG from its inception in 1995 until the
Merger. Mr. Douglass has been Chairman of the Board and Chief Executive
Officer of Equus Capital Corporation, the managing general partner of Equus
Equity Appreciation Fund L.P., since its formation in September 1983. Mr.
Douglass has also been Chairman of the Board and Chief Executive Officer of
Equus II Incorporated, an investment company that trades as a closed-end fund
on the American Stock Exchange, and Equus Capital Management Corporation,
since their formation in 1983. Since 1978, Mr. Douglass has served as Chairman
and Chief Executive Officer of Equus Corporation International, a privately
owned corporation engaged in a variety of investment activities.

Class III Directors--Terms Expiring 2000

James S. Carter, 63. Mr. Carter is the Chairman of the Board, President and
Chief Executive Officer of the Company. Mr. Carter served as the President and
Chief Executive Officer and as a director of TPG from its inception in 1995
until the Merger. Mr. Carter served as an aerospace industry consultant from
1993 to 1995 and Vice President and General Manager of the Composite
Structures Division of Alcoa Composites, Inc. from 1989 to 1993. Prior to
joining Alcoa Composites, Inc., Mr. Carter was Director of Composites with
Northrop Corporation for the B-2 Aircraft Group from 1980 to 1989. Mr. Carter
began his career in the aerospace industry with the Brunswick Technical Group
of Brunswick Corporation in 1956.

Gary L. Forbes, 55. Mr. Forbes is a member of the Audit Committee and the
Compensation Committee. Mr. Forbes served as a director of TPG from its
inception in 1995 until the Merger. Mr. Forbes has been a Vice President of
Equus II Incorporated, a closed-end investment fund, since 1991. Mr. Forbes is
a director of Consolidated Graphics, Inc. (a NYSE consolidator of commercial
printing companies), Drypers Corporation (a Nasdaq National Market
manufacturer of disposable diapers), and NCI Building Systems, Inc. (a Nasdaq
National Market consolidator of pre-engineered metal building manufacturers).

2
<PAGE>

John M. Simon, 56. Mr. Simon is a member of the Compensation Committee. Mr.
Simon has been Managing Director of Allen & Company Incorporated for more than
five years. Mr. Simon is a director of Immune Response Corporation and
Neurogen Corporation, all of which are Nasdaq National Market companies. Mr.
Simon was originally elected a director of Lunn in 1993.

Class I Directors--Terms Expiring 2001

Alan W. Baldwin, 62. Mr. Baldwin is a member of the Audit Committee. From
March 1994 through October 31, 1997, Mr. Baldwin served as the Chairman of the
Board and Chief Executive Officer of Lunn. Mr. Baldwin was Vice President of
Lunn from December 1993 to March 1994 and was an independent consultant from
1991 to March 1994. Mr. Baldwin served as a director of Lunn since 1993.

Robert C. Sigrist, 66. Mr. Sigrist is a member of the Nominating Committee.
Mr. Sigrist served as a director of TPG from August 1995 until October 1997.
Prior to that time, Mr. Sigrist served as the President of the Brunswick
Technical Group of Brunswick Corporation for seven years.

Lawrence E. Wesneski, 51. Mr. Wesneski is a member of the Audit Committee
and Nominating Committee. Mr. Wesneski has been President and Chief Executive
Officer of Hoak Breedlove Wesneski & Co. since August 1996. Mr. Wesneski has
been engaged in the investment banking industry for approximately 21 years.
Prior to the formation of Hoak Breedlove Wesneski & Co., Mr. Wesneski was
president and managing director of Breedlove Wesneski & Co. for ten years. Mr.
Wesneski was formerly head of the Southwest Corporate Finance Department of
Bear Stearns & Co., Inc., a Managing Director of Corporate Finance at Eppler,
Guerin & Turner, Inc., and a member of the Corporate Finance Department at
Dean Witter Reynolds, Inc. Mr. Wesneski is a director of STB Systems, Inc. and
TSC Communications Corp. Mr. Wesneski served as a director of TPG from its
inception in 1995 until the Merger.

Executive Officers Who Are Not Directors

H. Dwight Byrd, 61. Mr. Byrd has been a Vice President of ATP and President
of the Marion Composites Division since the Merger. From April 1995 until the
Merger, Mr. Byrd served as a Vice President of TPG and President of the Marion
Composites Division. During the period from April 1992 to April 1995, Mr. Byrd
served as General Manager of Brunswick Corporation's Marion, Virginia
division. During 1991 to April 1992, Mr. Byrd served as Director of
Manufacturing for Brunswick's Mercury Marine Division in Stillwater, Oklahoma.

Brian W. Hodges, 38. Mr. Hodges has been Vice President of ATP and President
of the Intellitec Division since May 1998. Prior to May 1998, Mr. Hodges
served as Intellitec's Vice President and General Manager for Defense Products
and Vice President of Operations. Mr. Hodges served as Director of Operations,
and held other senior management positions for Brunswick's Technical Group
between 1987 and 1995. Prior to 1987, Mr. Hodges held supervisory and
engineering positions at both Honeywell Inc. and Texas Instruments, Inc.

Edward Kiley, 49. Mr. Kiley has been President and General Manager of
Alcore, a wholly owned subsidiary of the Company, since May 1996. Mr. Kiley
was Vice President and General Manager of Alcore from October 1993 to May
1996. Mr. Kiley was Vice President and General Manager of Lunn from January
1993 through October 1993. Prior to December 1992, Mr. Kiley was Director of
Sales and Marketing of Hexcel Corporation.

Michael Kohler, 34. Mr. Kohler has been Vice President of ATP and President
of Lunn Industries since the Merger. From 1994 to 1997, Mr. Kohler served as
Director of Engineering for Lunn and, for over three years prior to 1994,
served as a quality assurance manager and quality engineer for Lunn.

Richard J. Rashilla, Jr., 39. Mr. Rashilla has been Vice President of ATP
and President of the Lincoln Composites Division since January of 1999. Prior
to January 1999, Mr. Rashilla served as Lincoln Composites'

3
<PAGE>

Vice President and General Manager. Mr. Rashilla served as Executive Director
of Business Development and held other senior management positions for
Brunswick's Technical Group between 1983 and 1995.

Section 16 Requirements

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file initial
reports of ownership and reports of changes in ownership with the Securities
and Exchange Commission (the "SEC") and the Nasdaq Stock Market. Such persons
are required by the SEC to furnish the Company with copies of all Section
16(a) forms they file.

Based solely on its review of the copies of such forms received by it with
respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been complied with, except as follows:
Mr. Byrd reported a transaction on a Form 5 filed February 15, 1999 that
should have been reported on a Form 4 due on November 11, 1998. Mr. Hodges
became an executive officer of the Company on January 1, 1999, but did not
report his holdings on a Form 5 until February 15, 1999. Mr. Wesneski reported
a transaction on a Form 5 filed on February 17, 1999 that should have been
filed on February 15, 1999.

Item 11. Executive Compensation

Summary Compensation Table

The following table sets forth certain information regarding compensation
paid to the Company's Chairman of the Board, President and Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers (collectively, the "Named Executive Officers"), with respect to each
of the Company's last three fiscal years, based on salary and bonus earned
during each year.

<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------- ------------------------------
Securities
Other Under-
Annual Restricted Lying All Other
Compen- Stock Options/ LTIP Compen-
Salary Bonus sation Award(s) SARs Payments sation
Name Year ($) ($) ($) ($) (#) ($) ($)(1)
- ---- ---- -------- -------- ------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James S. Carter......... 1998 $305,192 $ 50,000 $ 0 0 $ 9,914
Chairman, President and 1997 $246,400 $ 0 $ 0 41,500 $19,466
Chief Executive Officer 1996 $226,884 $106,638 $ 0 0 $62,982

Garrett L. Dominy.......
Executive Vice 1998 $240,577 $ 35,000 $ 0 0 $ 6,828
President and 1997 $193,259 $ 0 $ 0 37,000 $ 2,302
Chief Financial Officer 1996 $170,673 $ 79,279 $ 0 0 $51,962

H. Dwight Byrd.......... 1998 $175,264 $ 0 $ 1,853 0 $ 6,426
Vice President 1997 $163,427 $ 0 $ 1,926 10,000 $ 2,851
1996 $145,558 $ 69,778 $ 0 0 $ 3,906

James G. Fuller......... 1998 $156,846 $ 0 $ 0 0 $ 6,675
Vice President 1997 $149,256 $ 0 $ 0 10,000 $ 2,330
1996 $135,285 $ 64,896 $ 0 0 $ 2,095

Edward Kiley............ 1998 $150,000 $ 0 $12,125 0 $ 3,663
Vice President 1997 $127,412 $ 62,750 $ 6,000 22,500 $ 2,405
1996 $111,784 $ 37,500 $36,437 0 $ 1,054
</TABLE>
- --------
(1) "All Other Compensation" for 1998 for the Named Executive Officers is
comprised of the following: (a) Company contributions to retirement
savings plans for Messrs. Carter ($5,000), Dominy ($4,812), Byrd ($3,505),
Fuller ($3,137) and Kiley ($2,923), and (b) the taxable amount of life
insurance premiums paid by the Company for Messrs. Carter ($4,914), Dominy
($2,016), Byrd ($2,921), Fuller ($3,538) and Kiley ($740).

4
<PAGE>

Option Grants During 1998 Fiscal Year

The Company did not grant any employee stock options during 1998, nor did
the Company grant any stock appreciation rights during 1998.

Option Exercises During 1998 Fiscal Year and Fiscal Year End Option Values

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs At Fiscal The-Money Options/SARs
Shares Value Year-End (#) At Fiscal Year-End ($)
Acquired On Realized ------------------------- -------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James S. Carter......... 0 0 8,300 33,200 $ 0 $ 0

Garrett L. Dominy....... 0 0 7,400 29,600 $ 0 $ 0

H. Dwight Byrd.......... 0 0 2,000 8,000 $ 0 $ 0

James G. Fuller......... 0 0 2,000 8,000 $ 0 $ 0

Edward Kiley............ 0 0 23,000 2,000 $30,813 $ 0
</TABLE>

Employment Agreements

The Company has entered into three-year employment agreements with each of
James S. Carter and Garrett L. Dominy. Pursuant to the employment agreements,
Mr. Carter will serve as Chairman of the Board, President and Chief Executive
Officer of the Company and Mr. Dominy will serve as an Executive Vice
President and Chief Financial Officer of the Company. The employment
agreements provide for base salaries, which are $350,000 and $275,000 per year
as of January 1, 1999 for Mr. Carter and Mr. Dominy, respectively, subject to
annual increases based, at a minimum, on the consumer price index for the
previous year. Mr. Carter and Mr. Dominy are also entitled to receive, subject
to the discretion of the Board, annual bonuses of up to 75% of their then
annual base salary. The employment agreements are terminable by the Company
with or without cause; provided that if the Company terminates the employment
of Mr. Carter or Mr. Dominy without cause, such executive will be entitled to
continue to receive his base salary and incentive bonus for specified periods.
The employment agreements also provide that if there is a "change in control"
of the Company or a constructive termination of the executive without cause,
then the executives are entitled to a lump-sum payment of a specified amount
within 60 days of the effective date of termination. Following any termination
of Mr. Carter's or Mr. Dominy's employment for cause or upon such employee's
breach of the terms of his employment agreement, it is expected that such
executive will be subject to non-disclosure and non-competition covenants for
up to two years.

Compensation of Directors

Directors who are not employees of the Company receive $20,000 annually.
Additionally, non-employee directors who have not previously served on the
Board receive a grant under the Advanced Technical Products, Inc. Non-Employee
Director Stock Option Plan (the "Non-Employee Director Plan") of options to
purchase 7,500 shares of the common stock of the Company (the "Common Stock")
upon commencement of their term, and continuing non-employee directors receive
a grant under the Non-Employee Director Plan of options to purchase 1,000
shares of Common Stock immediately following each annual meeting of the
stockholders.

5
<PAGE>

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board of Directors is responsible for
determining executive compensation. The Compensation Committee is currently
comprised of three non-employee directors, Mr. Douglass, Mr. Forbes and Mr.
Simon.

Report of the Compensation Committee

The Compensation Committee of the Board of Directors (the "Committee"),
which consists of three independent outside directors, reviews and approves
the Company's total compensation philosophy and programs covering executive
officers and key management employees. The Committee reviews the performance
levels of executive officers and determines the annual base salaries and
incentive awards to be paid.

The Company's executive compensation program is designed to help the Company
attract, motivate and retain the executive resources that the Company needs in
order to maximize its return to stockholders. Specifically, the goals of the
Company's compensation program are to:

1. Align executive compensation with the interests of the stockholders;

2. Provide compensation packages that are consistent with competitive
market norms for companies similar in size, activity and complexity to the
Company;

3. Link pay to Company, operating group and individual performance; and

4. Achieve a balance between incentives for short-term and long-term
performance.

The principal elements of compensation provided to executive and other
officers of the Company historically have consisted of a base salary, annual
incentives and stock option grants. The Committee estimates an executive's
level of total compensation based on information drawn from a variety of
sources, including proxy statements, special surveys and compensation
consultants. Total compensation is targeted to be competitive at the median
level of a peer group of comparable companies.

Base Salary. Salaries for executive officers are determined by the Committee
annually, based on review of each executive's level of responsibility,
experience, expertise and sustained corporate, business unit and individual
performance. The Committee exercises its judgment based upon the above
criteria and does not apply a specific formula or assign a weight to each
factor considered.

Annual Incentive Compensation. Annual incentive awards are designed to focus
management's attention on the performance of the Company, particularly in the
short-term. At the beginning of each year, the Board of Directors establishes
performance goals of the Company for that year, which may include target
increases in sales, net income and earnings per share, as well as more
subjective goals. Incentive awards are based upon the achievement of one or
more of these goals.

Stock Option Program. Each executive officer is eligible to receive a grant
of stock options with an exercise price equal to the fair market value of the
stock on the grant date. Stock options are designed to focus executives on the
long-term performance of the Company by enabling executives to share in any
increases in value of the Company's stock. Accordingly, the Committee believes
that the grant of stock options is a significant method of aligning
management's long-term interests with those of the stockholders of the
Company.

Chief Executive Officer Compensation. Mr. Carter, the Chairman of the Board,
President and Chief Executive Officer of the Company, is entitled to receive a
minimum annual salary of $265,000 pursuant to his employment agreement with
the Company. Subject to this minimum, Mr. Carter's base salary rate may be
adjusted at the discretion of the Board of Directors based upon such factors
as the Board of Directors deems appropriate. Mr. Carter's base salary for
fiscal 1998 was $305,192. The Committee believes that Mr. Carter's total
compensation is near the median for the chief executive officers of the
Company's peer group.

6
<PAGE>

This report is submitted by the members of the Compensation Committee.

SAM P. DOUGLASS
GARY L. FORBES
JOHN M. SIMON

Stock Performance Graph

Set forth below is a graph comparing the cumulative total returns (assuming
an investment of $100 on December 31, 1993 and reinvestment of dividends) of
the Company, the Standard and Poor's 500 Composite Stock Index (the "S&P 500
Index") and the Aerospace/Defense 500 Index (the "Aero/Def 500 Index"). The
value of the investment in the Company for the period reflected is based on the
market price of the stock of Lunn restated for the 10-to-1 reverse stock split
effected by the Merger.

[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ATP 100 25 37.5 37.5 53 36.5
S&P 500 Index 100 101.36 139.32 171.23 228.27 293.38
Aerospace/Defense 500 100 108.16 178.77 238.96 245.85 188.57
Index
</TABLE>

7
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of April 26, 1999, the number of shares
of Common Stock and the 8% Cumulative Redeemable Preferred Stock, par value
$1.00 per share, of the Company (the "Preferred Stock") beneficially owned by
(1) each person or group known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock, (2) each director and each nominee
for director, (3) the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers, and (4) all
directors and executive officers as a group. At the close of business on that
date, the Company had 5,259,089 shares of Common Stock issued and outstanding.
Except as otherwise indicated, each of the persons or groups named below has
sole voting power and investment power with respect to such Common Stock and
Preferred Stock.

Equus Capital Management Corporation(1)(2).. 267,602 5.09% 913,043 91.30%

Equus Equity Appreciation Fund, L.P......... -- -- 913,043 91.30%

Alan W. Baldwin(3).......................... 52,500 1.06% -- --

H. Dwight Byrd(4)........................... 200,802 3.82% -- --

James S. Carter(5).......................... 304,087 5.77% -- --

Garrett L. Dominy(6)........................ 165,273 3.14% -- --

Sam P. Douglass(1)(2)(7)(8)................. 378,326 7.19% 913,043 91.30%

Gary L. Forbes(8)........................... 63,719 1.21% -- --

Edward Kiley(9)............................. 30,565 * -- --

James G. Fuller(10)......................... 197,191 3.75% -- --

Robert C. Sigrist(8)........................ 61,657 1.17% 21,739 2.17%

John M. Simon(10)........................... 3,500 * -- --

Lawrence E. Wesneski(11).................... 144,477 2.75% 15,946 1.59%

All directors and executive officers as a
group (13 persons)(12)..................... 1,735,491 32.19% 37,685 3.77%
</TABLE>
- --------
* Less than one percent
(1) Equus Capital Management Corporation ("ECMC") owns beneficially and of
record 11,750 shares of the Common Stock. ECMC may also be deemed to
beneficially own 255,852 shares of the Common Stock that are owned
beneficially and of record by Equus Capital Corporation ("ECC"), a
wholly-owned subsidiary of ECMC. ECMC disclaims beneficial ownership of
these shares. Equus Corporation International ("ECI") may be deemed to
own the 267,602 shares that are beneficially owned by ECMC as a result of
ECI's ownership of 80% of the common stock of ECMC. ECI disclaims
beneficial ownership of these shares.
(2) Equus Equity Appreciation Fund, L.P. ("EEAF") owns beneficially and of
record 913,043 shares of the Preferred Stock. ECMC and ECI may be deemed
to beneficially own the shares of the Preferred Stock owned by EEAF as a
result of the relationship described in (1) above. Each of EMCM and ECI
disclaim beneficial ownership of these shares. In addition, Mr. Douglass
may be deemed to beneficially own the 913.043 shares of the Preferred
Stock that ECI may be deemed to own as a result of the relationship
described in (7) below. Mr. Douglass disclaims beneficial ownership of
these shares.
(3) Includes 50,000 shares of Common Stock that may be acquired within 60
days of April 26, 1999 upon exercise of options granted by the Company
and 2,500 shares of Common Stock that may be acquired

8
<PAGE>

within 60 days of April 26, 1999 upon exercise of options granted pursuant
to the Non-Employee Directors Plan.
(4) Includes 197,191 shares of Common Stock held by the Harvey Dwight Byrd,
Sr. Revocable Trust DTD, which Mr. Byrd may be deemed to own as a settlor
and trustee of such trust. Mr. Byrd disclaims beneficial ownership of
these shares. In addition, includes 11 shares purchased through the
Advanced Technical Products, Inc. 1998 Employee Stock Purchase Plan (the
"Stock Purchase Plan") and 2,000 shares of Common Stock that may be
acquired within 60 days of April 26, 1999 upon exercise of options
granted pursuant to the 1997 Advanced Technical Products, Inc. Stock
Option Plan (the "Employee Plan").
(5) Includes 8,300 shares of Common Stock that may be acquired within 60 days
of April 26, 1999 upon exercise of options granted pursuant to the
Employee Plan.
(6) Includes 7,400 shares of Common Stock that may be acquired within 60 days
of April 26, 1999 upon exercise of options granted pursuant to the
Employee Plan and 120 shares purchased through the Stock Purchase Plan.
(7) Includes 267,602 shares of Common Stock that each of the Douglass Trust
IV, FBO Preston Douglass, Jr. and the Douglass Trust IV, FBO Brooke
Douglass (collectively, the "Douglass Trusts") may be deemed to
beneficially own as a result of their ownership of all of the outstanding
common stock of ECI. Mr. Douglass is the trustee of each of the Douglass
Trusts. Mr. Douglass, for himself and as trustee of the Douglass Trusts,
disclaims beneficial ownership of such shares. In addition, includes
54,112 shares of Common Stock that are owned of record by the Douglass
Trust IV, FBO Preston Douglass, Jr. and 54,112 shares of Common Stock
that are owned of record by the Douglass Trust IV, FBO Brooke Douglass.
Mr. Douglass disclaims beneficial ownership of these shares.
(8) Includes 2,500 shares of Common Stock that may be acquired within 60 days
of April 26, 1999 upon exercise of options granted under the Non-Employee
Director Plan.
(9) Includes 22,500 shares of Common Stock which may be acquired within 60
days of April 26, 1999 pursuant to the exercise of options granted by the
Company, 500 shares of Common Stock that may be acquired within 60 days
of April 26, 1999 upon exercise of options granted pursuant to the
Employee Plan and 65 shares purchased through the Stock Purchase Plan.
(10) Includes 1,500 shares of Common Stock that may be acquired within 60 days
of April 26, 1999 upon exercise of options granted by the Company and
2,000 that may be acquired within 60 days of April 26, 1999 upon exercise
of options granted pursuant to the Non-Employee Directors Plan.
(11) Includes 43,382 shares of Common Stock held directly by Mr. Wesneski
through a SEPIRA and 98,595 shares held by Breedlove & Wesneski, L.P., of
which Mr. Wesneski is a general partner. Mr. Wesneski disclaims
beneficial ownership of these shares. Also includes 2,5000 shares of
Common Stock that may be acquired within 60 days of April 26, 1999 upon
exercise of options granted under the Non-Employee Director Plan.
(12) Includes 132,796 shares of Common Stock which may be acquired within 60
days of April 26, 1999 pursuant to the exercise of options.

Items 13. Certain Relationships and Related Transactions

On April 28, 1995, TPG loaned James S. Carter, then its President and Chief
Executive Officer, $74, 925 to help fund Mr. Carter's acquisition of 35,625
shares of the common stock of TPG, which were then converted into 295,787
shares of the common stock of the Company. Mr. Carter executed a promissory
note in favor of TPG, bearing interest at 8% per annum, the principal and
interest of which mature on April 28, 2001. The promissory note from Mr.
Carter is secured by a stock pledge agreement pursuant to which Mr. Carter
pledged his shares to TPG. As of December 31, 1998, an aggregate of $96,903 of
principal and accrued and unpaid interest were due and owing under such note.

9
<PAGE>

SIGNATURES

Advanced Technical Products, Inc.

/S/ James S. Carter
_____________________________________
James S. Carter
Chairman of the Board, Chief
Executive Officer and President

10
<PAGE>

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

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM 10-Q

(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended: JULY 2, 1999

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-1298

ADVANCED TECHNICAL PRODUCTS, INC.
(Exact name of Issuer as Specified in Its Charter)

Delaware 11-1581582
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

200 Mansell Ct. East, Suite 505,
Roswell, Georgia 30076
(Address of Principal Executive Offices)

(770) 993-0291
Issuer's Telephone Number, Including Area Code)
(Former Address, if Changed Since Last Report)

Indicate by check mark whether the Registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act during the
past 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES [X] NO [_]

The aggregate number of shares of Common Stock outstanding as of August 12,
1999 was 5,285,708.

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

ADVANCED TECHNICAL PRODUCTS, INC.

INDEX

<TABLE>
<CAPTION>
Page
----
PART I. FINANCIAL INFORMATION

<C> <S> <C>
Item 1. Financial Statements........................................... 3

Management's Discussion and Analysis of Financial Condition and
Item 2. Results of Operations.......................................... 10

Results of Operations.......................................... 10
Financial Condition and Liquidity.............................. 10
Year 2000 Issues............................................... 11
Forward Looking Statements--Cautionary Factors................. 12

Item 3. Quantitative and Qualitative Disclosures About Market Risk..... 12

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.............................................. 13

Item 2. Changes in Securities and Use of Proceeds...................... 13

Item 3. Defaults Upon Senior Securities................................ 13

Item 4. Submission of Matters to a Vote of Security Holders............ 13

Item 5. Other Information.............................................. 13

Item 6. Exhibits and Reports on Form 8-K............................... 13
</TABLE>

2
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share data)

<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
--------------- -----------------
July 2, July 3, July 2, July 3,
1999 1998 1999 1998
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues.................................... $48,770 $39,632 $ 91,108 $ 70,445
Cost of revenues............................ 37,258 30,535 70,172 54,293
------- ------- -------- --------
Gross profit.............................. 11,512 9,097 20,936 16,152
General and administrative expenses......... 7,373 6,148 14,043 12,217
------- ------- -------- --------
Operating income.......................... 4,139 2,949 6,893 3,935
Interest expense............................ 951 831 1,903 1,637
------- ------- -------- --------
Income before income taxes................ 3,188 2,118 4,990 2,298
Income taxes................................ 1,227 816 1,921 885
======= ======= ======== ========
Net income................................ $ 1,961 $ 1,302 $ 3,069 $ 1,413
======= ======= ======== ========
Earnings per share:
Basic..................................... $ 0.37 $ 0.24 $ 0.58 $ 0.26
======= ======= ======== ========
Diluted................................... $ 0.35 $ 0.23 $ 0.55 $ 0.25
======= ======= ======== ========
Weighted average number of common and common
equivalent shares outstanding:
Basic..................................... 5,261 5,258 5,255 5,239
======= ======= ======== ========
Diluted................................... 5,510 5,531 5,490 5,510
======= ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

3
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JULY 2, 1999 AND DECEMBER 31, 1998
(Unaudited, in thousands, except share information)

<TABLE>
<CAPTION>
July 2, December 31,
1999 1998
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................. $ 538 $ 2,030
Accounts receivable (net of allowance for doubtful
accounts of $618 and $722
as of July 2, 1999 and December 31, 1998,
respectively)........................................ 25,050 26,053
Inventories and costs relating to long-term contracts
and programs in process,
net of progress payments............................. 44,351 40,635
Prepaid expenses...................................... 913 1,054
Deferred income taxes................................. 2,570 2,570
-------- --------
Total current assets................................ 73,422 72,342
-------- --------
NONCURRENT ASSETS:
Property, plant and equipment......................... 40,830 37,444
Less--accumulated depreciation........................ (13,635) (11,516)
-------- --------
Net property, plant and equipment................... 27,195 25,928
-------- --------
Other assets.......................................... 8,593 8,606
======== ========
Total assets........................................ $109,210 $106,876
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable...................................... $ 11,547 $ 12,665
Accrued expenses...................................... 7,917 7,626
Current portion of capital lease obligation........... 294 294
Short-term debt....................................... 29,003 28,767
-------- --------
Total current liabilities........................... 48,761 49,352
LONG-TERM LIABILITIES:
Long-term debt, net of current portion................ 20,526 20,703
Capital lease obligation, net of current portion...... 1,374 1,483
Deferred income taxes................................. 194 194
Other liabilities..................................... 2,347 2,347
-------- --------
Total liabilities................................... 73,202 74,079
Mandatorily redeemable preferred stock, 8% cumulative,
$1.00 par value, 1,000,000 shares authorized, issued
and outstanding........................................ 1,000 1,000
SHAREHOLDERS' EQUITY:
Preferred stock, undesignated, 1,000,000 shares
authorized, no shares issued and outstanding......... -- --
Common stock, $.01 par value, 30,000,000 shares
authorized, 5,277,491 and 5,240,188 shares issued and
outstanding as of July 2, 1999 and December 31, 1998,
respectively......................................... 53 52
Additional paid-in capital............................ 16,703 16,522
Retained earnings..................................... 19,012 15,983
Notes receivable from officers........................ (135) (135)
Accumulated other comprehensive income--additional
minimum pension liability............................ (625) (625)
-------- --------
Total shareholders' equity.......................... 35,008 31,797
-------- --------
Total liabilities and shareholders' equity.......... $109,210 $106,876
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

4
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 2, 1999 AND JULY 3, 1998
(Unaudited, in thousands)

<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................. $ 3,069 $ 1,413
Adjustments to reconcile net income to net cash provided by
(used in) operating activities--
Depreciation and amortization............................ 2,210 1,722
Deferred income taxes.................................... -- 60
Common stock issued under employee stock plan............ 155 --
Decrease in accounts receivable.......................... 1,003 2,260
Increase in inventories.................................. (3,716) (9,309)
(Increase) decrease in prepaid expenses.................. 141 (214)
(Increase) decrease in other noncurrent assets........... (79) 15
Increase (decrease) in accounts payable.................. (1,118) 328
Increase in accrued expenses............................. 291 375
------- -------
Net cash provided by (used in) operating activities.... 1,956 (3,350)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures....................................... (3,386) (2,844)
Cash payments for businesses acquired, net of cash
acquired.................................................. -- (1,010)
------- -------
Net cash used in investing activities.................. (3,386) (3,854)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of borrowings..................................... 365 15,978
Repayment of borrowings.................................... (306) (8,016)
Proceeds from exercise of stock options and warrants....... 27 10
Cash dividends paid........................................ (40) --
Payments under capital lease obligations................... (108) (145)
------- -------
Net cash provided by (used in) financing activities.... (62) 7,827
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......... (1,492) 623
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............... 2,030 494
======= =======
CASH AND CASH EQUIVALENTS, END OF PERIOD..................... $ 538 $ 1,117
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest..................................... $ 2,218 $ 1,991
Cash paid for income taxes................................. $ 2,046 $ 1,622
</TABLE>

The accompanying notes are an integral part of these statements.

5
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of
Advanced Technical Products, Inc. and Subsidiaries (the "Company" or "ATP")
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 a fair presentation have been included. Operating results for the quarter
and six months ended July 2, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-K for the year ended
December 31, 1998.

2. Acquisition

On May 29, 1998, the Company acquired all of the capital stock of Brigantine
Aircraft, a manufacturer of honeycomb products and engineered panels located
in France. The acquired company, renamed Alcore Brigantine, operates as a
subsidiary of Alcore, Inc., a wholly owned subsidiary of the Company. The
acquisition has expanded the Company's access to the European aerospace and
commercial markets. The acquisition has been accounted for using the purchase
method of accounting and the Company's condensed consolidated financial
statements include the operating results for Alcore Brigantine since the date
of the acquisition.

3. Inventories

Inventories at July 2, 1999 and December 31, 1998 consisted of the following
(in thousands):

<TABLE>
<CAPTION>
July 2, Dec. 31,
1999 1998
------- --------
<S> <C> <C>
Finished goods............................................ $ 1,234 $ 956
Work in process........................................... 30,577 26,113
Raw materials............................................. 22,131 24,860
Progress payments......................................... (9,591) (11,294)
------- --------
Total inventories....................................... $44,351 $ 40,635
======= ========
</TABLE>

6
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited)--(Continued)

4. Debt

Debt is summarized as follows (in thousands):

<TABLE>
<CAPTION>
Dec.
July 2, 31,
1999 1998
------- -------
<S> <C> <C>
Short-term debt:
Revolving loans........................................... $24,982 $24,845
Current maturities of long-term debt...................... 4,021 3,922
------- -------
$29,003 $28,767
======= =======
Long-term debt:
Term loans................................................ $16,714 $16,714
Equipment loans........................................... 2,926 2,819
Deferred obligation....................................... 333 500
Bond payable.............................................. 2,300 2,400
Other long-term debt...................................... 2,274 2,192
------- -------
Total long-term debt.................................... 24,547 24,625
Less current portion...................................... 4,021 3,922
------- -------
Long-term debt, net of current portion.................. $20,526 $20,703
======= =======
</TABLE>

In March 1998, the Company refinanced its revolving and term loans,
consolidating them with one lending institution. The financing agreement was
amended in June 1998 to increase the capital expenditure facility from $3.0
million to $5.0 million. The agreement was further amended on March 24, 1999
to increase the balance of the term loan to $18.0 million from the paid-down
balance of $16.1 million existing just prior to the increase. The Company's
credit facility with this lending institution totals $50.0 million consisting
of: (1) $27.0 million of revolving credit against eligible receivable and
inventory balances, (2) an $18.0 million term loan and (3) a $5.0 million
capital expenditure facility. As of July 2, 1999, the Company had
approximately $3.2 million of unused borrowing availability on this credit
facility.

The loans are secured by collateral consisting of substantially all of the
Company's assets including inventory, equipment, receivables, general
intangibles, investment property and real property. The interest rates on the
loans are set quarterly based on the Company's performance against debt-to-
earnings ratios specified in the agreement. Interest rates can range from
LIBOR (the London Interbank Offered Rates) plus 2.25% to LIBOR plus 1.0% on
the revolving loan and from LIBOR plus 2.75% to LIBOR plus 1.5% on the term
and equipment loans. Alternatively, the Company may elect interest rates based
on the lending institution's prime rate with the revolving loan fixed at prime
plus 0.25% and the term and equipment loans fixed at prime plus 0.50%.
Interest is paid monthly in arrears on all loans. The credit facility matures
on December 31, 2000.

7
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited)--(Continued)

5. Earnings Per Share

Earnings per share ("EPS") are calculated as follows (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
Six Months
Quarter Ended Ended
-------------- --------------
July July July July
2, 3, 2, 3,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net income................................. $1,961 $1,302 $3,069 $1,413
Less: preferred stock dividends accrued.... (20) (20) (40) (40)
------ ------ ------ ------
Net income available for common shares
(same for both basic and diluted EPS
calculation).............................. $1,941 $1,282 $3,029 $1,373
====== ====== ====== ======
Weighted average number of common shares
outstanding:
--Basic.................................. 5,261 5,258 5,255 5,239
Add: assumed stock conversions, net of
assumed treasury stock purchases:
--stock options........................ 212 234 201 233
--stock warrants....................... 37 39 34 38
------ ------ ------ ------
--Diluted................................ 5,510 5,531 5,490 5,510
====== ====== ====== ======
Basic EPS.................................. $ 0.37 $ 0.24 $ 0.58 $ 0.26
====== ====== ====== ======
Diluted EPS................................ $ 0.35 $ 0.23 $ 0.55 $ 0.25
====== ====== ====== ======
</TABLE>

6. Segment Reporting

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information," which establishes revised standards for the manner in
which public business enterprises report information about operating segments.
Interim reporting of certain segment information is required following the
initial year of adoption of the Statement. Segment financial information for
the quarterly and six month periods ended July 2, 1999 and July 3, 1998 is as
follows (in thousands):

<TABLE>
<CAPTION>
Six Months
Quarter Ended Ended
---------------- ----------------
July 2, July 3, July 2, July 3,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenues
Aerospace / Defense:
--from external customers.......... $38,878 $31,666 $72,259 $56,565
--intersegment revenues............ 261 162 384 162
Other operating segments:
--from external customers.......... 9,892 7,966 18,849 13,880
--intersegment revenues............ -- -- -- --
Elimination of intersegment
revenues............................ (261) (162) (384) (162)
------- ------- ------- -------
Total.............................. $48,770 $39,632 $91,108 $70,445
======= ======= ======= =======
Operating income (loss) Aerospace /
Defense............................... $ 3,409 $ 2,404 $ 5,676 $ 3,704
Other operating segments............. 1,542 1,146 2,758 1,409
Corporate............................ (812) (601) (1,541) (1,178)
------- ------- ------- -------
Total.............................. $ 4,139 $ 2,949 $ 6,893 $ 3,935
======= ======= ======= =======
</TABLE>

8
<PAGE>

ADVANCED TECHNICAL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited)--(Continued)

7. Comprehensive Income

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This statement
establishes items that are required to be recognized under accounting
standards as components of comprehensive income. Statement 130 requires, among
other things, that an enterprise report a total for comprehensive income in
financial statements of interim periods issued to shareholders. For the
quarterly and six month periods ended July 2, 1999 and July 3, 1998, the
Company's consolidated comprehensive income does not differ materially from
the consolidated net income set forth on the accompanying condensed
consolidated statements of income.

9
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto included
elsewhere herein.

Results of Operations

Quarter and Six Months ended July 2, 1999 Compared with the Quarter and Six
Months ended July 3, 1998

Revenues for the quarter ended July 2, 1999 increased $9.2 million over the
quarter ended July 3, 1998, or 23.1%, from $39.6 million in 1998 to $48.8
million in 1999. Revenues for the six months ended July 2, 1999 increased
$20.7 million over the six months ended July 3, 1998, or 29.3%, from $70.4
million in 1998 to $91.1 million in 1999. The increase in revenue in 1999 over
1998 was primarily attributable to the following factors: (i) increased
revenues on chemical defense contracts, including two large contracts which
were in the design or start-up phase during the first half of 1998 and are now
in full production, (ii) increased deliveries of composite components on
several long-term aerospace/defense programs, including the C-17 and F-18 E/F
military aircraft and (iii) increased sales of the Company's commercial
products, including natural gas vehicle ("NGV") fuel tanks and specialty
vehicle electronics.

Gross profit as a percentage of revenues was 23.6% in the second quarter of
1999, compared to 23.0% in the second quarter of 1998. The gross profit
percentage for the first six months increased from 22.9% in 1998 to 23.0% in
1999. The increase is primarily the result of improved efficiencies resulting
from increased volume and minor changes in product sales mix.

General and administrative expenses increased $1.2 million, or 19.9%, for
the quarter and $1.8 million, or 14.9%, for the first six months in 1999,
reflecting a general increase in business activity. As a percentage of
revenues, general and administrative expenses decreased from 15.5% in 1998 to
15.1% in 1999 for the quarter, and from 17.3% in 1998 to 15.4% in 1999 for the
six months. The percentage decrease is primarily attributable to the increase
in revenues.

Operating income was $4.1 million, or 8.5% of sales, for the second quarter
of 1999, compared to $2.9 million, or 7.4% of sales, for the second quarter of
1998. Operating income for the first six months of 1999 was $6.9 million, or
7.6% of sales, compared to $3.9 million, or 5.6% of sales, for the first six
months ended of 1998. The increase in operating income for the quarter and six
months ended July 2, 1999 is primarily attributed to the increase in revenues
and gross profit margin.

Interest expense in 1999 increased $120,000 for the quarter and $266,000 for
the six months, primarily the result of an increase in average loan balances
outstanding in the first half of 1999 compared to the same period of 1998.

Income taxes increased $0.4 million for the quarter and $1.0 million for the
six months in 1999 as a result of higher pre-tax earnings. The effective tax
rate was 38.5% for both periods.

Financial Condition and Liquidity

Cash flow provided by operations was $2.0 million for the first six months
of 1999 compared to $3.3 million used in operations for the same period in
1998. Working capital, excluding short-term debt balances, increased $1.9
million in the first six months of 1999 to $53.7 million. This increase was
the result of (i) an increase of $3.7 million in inventory, reflecting a
continued build-up on a few major aerospace composites programs which are in
the start-up or early production phases, (ii) a decrease of $1.0 million in
accounts receivable, resulting from the conversion of a major portion of the
receivables build-up at December 31, 1998 to cash during the first quarter of
1999, (iii) a decrease of $0.8 million in accounts payable and accrued
expenses, (iv) a decrease in cash balances of $1.2 million and (v) a net
decrease in other working capital components of $0.1 million. Cash flow of
$3.4 million used in investing activities in the first six months of 1999
resulted exclusively from capital expenditures.

10
<PAGE>

The Company's primary loan agreement was amended on March 24, 1999 to
increase the balance of the term loan to $18.0 million from the paid-down
balance of $16.1 million existing just prior to the increase. The Company's
total credit facility under the amended agreement is $50.0 million consisting
of: (i) $27.0 million of revolving credit against eligible receivable and
inventory balances, (ii) an $18.0 million term loan and (iii) a $5.0 million
capital expenditure line of credit. The term loan is payable quarterly based
on a seven-year amortization period. The interest rates on the loans are set
quarterly based on the Company's performance against debt-to-earnings ratios
specified in the agreement. Interest rates can range from LIBOR (the London
Interbank Offered Rates) plus 2.25% to LIBOR plus 1.0% on the revolving loan
and from LIBOR plus 2.75% to LIBOR plus 1.5% on the term and equipment loans.
Alternatively, the Company may elect interest rates based on the lending
institution's prime rate with the revolving loan fixed at prime plus 0.25% and
the term and equipment loans fixed at prime plus 0.50%. Interest is paid
monthly in arrears on all loans. The credit facility matures on December 31,
2000. As of July 2, 1999, the Company had approximately $3.2 million of unused
borrowing availability on this credit facility.

At July 2, 1999, the Company's backlog of orders and long-term contracts was
approximately $591 million, compared to $585 million at December 31, 1998. The
backlog includes firm released orders of approximately $182 million and $191
million at July 2, 1999 and December 31, 1998, respectively.

As discussed above, the Company has made capital expenditures totaling $3.4
million during the first six months of 1999, which have been financed by a
combination of cash flows from operations and increased borrowings under the
revolving and equipment loan portions of the Company's credit facility.

ATP announced on June 15, 1999 that its negotiations with a third party
financial buyer regarding the possible sale of the Company have terminated.
ATP also announced that it has received indications of interest from several
other third parties and ATP's board of directors has instructed its management
to explore these potential opportunities. On August 3, 1999, ATP announced
that management is continuing to explore indications of interest from several
other parties regarding the sale of the Company. However, there can be no
assurance that any of these discussions will result in the sale or merger of
the Company.

Pending the possible sale or merger of the Company, ATP is continuing to
look for acquisition candidates that will enhance its operations. The timing,
size or success of any acquisitions and the resulting additional capital
commitments are unpredictable. The Company expects to fund any future
acquisitions primarily through a combination of issuances of additional
equity, working capital, cash flow from operations and borrowings, including
any unused portion of the credit facility. To the extent new sources of
financing are necessary to fund future acquisitions, there can be no assurance
that the Company can secure such additional financing if and when it is needed
or on terms deemed acceptable to the Company.

Management of ATP believes that cash flows from operations and available
borrowings under its credit facility are adequate to sustain the ATP's current
operating level and future short-term growth. However, should circumstances
arise affecting cash flow or requiring capital expenditures beyond those
anticipated by the Company, there can be no assurance that such funds will be
available.

Year 2000 Issues

ATP is currently in the process of evaluating its computer hardware and
software systems to ensure such programs and systems will be able to process
transactions in the year 2000 ("Y2K"). The Company is also currently
identifying other equipment that contains embedded electronics that may render
the equipment inoperable in the year 2000 and is evaluating the plans of its
material suppliers and vendors to become Y2K compliant. ATP has organized its
efforts to prepare for Y2K problems under a plan that involves the following
steps: assessment, modification/implementation and testing. Each division has
a core of employees who have been assigned specific Y2K responsibilities, in
addition to their regular assignments. The Y2K readiness project is a company-
wide effort and is monitored centrally.

11
<PAGE>

ATP has completed the assessment phase under its plan. ATP estimates that it
has currently completed 80% of the modification/implementation phase and 60%
of the testing phase of its plan. ATP anticipates that it will complete all
phases of its plan by the end of 1999. ATP anticipates that it will be Y2K
compliant by the end of 1999 with respect to internal information technology
("IT") and non-IT systems that are critical to its operations. ATP is
currently evaluating the time table upon which all other IT and non-IT systems
can be made Y2K compliant and will target a date when the evaluation is
complete. However, ATP does not currently anticipate any material adverse
effect on its business operations, products or financial prospects as a result
of the Y2K problem.

In addition, ATP has undertaken efforts to monitor and evaluate the Y2K
compliance efforts of its key suppliers and vendors. In particular, ATP is
requesting certification of Y2K compliance from its key suppliers and vendors.

Although it is not possible to accurately estimate the costs of this
information systems analysis, at this time ATP expects that such costs will
not be material to its financial position or results of operations. There can
be no assurance, however, that ATP, its suppliers and vendors or their
respective software vendors will complete all modifications to all material IT
and non-IT systems in a timely manner, or as to the costs associated with ATP
becoming Y2K compliant, or the costs of the failure of any of ATP's vendors
failing to become Y2K compliant.

Some of the possible consequences of non-compliance by ATP or significant
third parties include, among other things, temporary plant closings, delays in
the receipt and delivery of raw materials and products, invoice and collection
errors, and obsolescence of inventory. Given this risk, ATP is developing
contingency plans to mitigate possible disruption in business operations that
may result from Y2K related interruptions. Contingency plans may include
increasing safety stocks of raw materials, securing alternative suppliers or
other appropriate measures.

ATP's Y2K activities are an ongoing process and the estimates of costs and
completion dates for various activities described above are subject to change.

FORWARD LOOKING STATEMENTS--CAUTIONARY FACTORS

This Report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are those that do
not state historical fact and are inherently subject to risk and
uncertainties. The forward-looking statements contained herein are based on
current expectations and entail various risks and uncertainties which could
cause actual results to differ materially from those projected in such
forward-looking statements. For additional information identifying such risks
and uncertainties, see the Company's 1998 Annual Report on Form 10-K (Item 7,
under the heading "Factors Affecting Future Operating Results").

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company has not entered into transactions which subject it to material
foreign currency transaction gains and losses.

12
<PAGE>

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor any of its subsidiaries is a party to, nor is their
property the subject of, any material pending legal proceedings.

Item 2. Changes in Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-k

(a) Exhibits

27.1--Financial Data Schedule (for SEC use only).

(b) Reports on Form 8-K.

None.

13
<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Advanced Technical Products, Inc.
_____________________________________
(Registrant)

Dated: August 16, 1999 /s/ Garrett L. Dominy
By: _________________________________
Garrett L. Dominy
Executive Vice President,
Chief Financial and Accounting
Officer,
Treasurer and Assistant Secretary

14
<PAGE>

EXHIBIT INDEX

27.1--Financial Data Schedule (for SEC use only).