ATEC GROUP INC, DEF 14A, 2000-12-05

ATEC GROUP INC
DEF 14A, 2000-12-05
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE

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<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SECURITIES 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant:
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 240.14a-11(c) or 240.14a-12

Atec Group, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/ / No fee required

/ / Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(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):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:

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

(3) Filing Party:

(4) Date Filed:

<PAGE>

ATEC GROUP, INC.
69 Mall Drive
Commack, NY 11725

-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 19, 2000

To the Stockholders of ATEC Group, Inc.:

You are cordially invited to attend the annual meeting of stockholders of
ATEC Group, Inc. ("Atec, our, we or us"), a Delaware corporation, to be held at
the Huntington Hilton, Melville, New York on Tuesday, December 19, 2000, at
10:00 a.m. local time, for the following purposes:

1. To elect six members to the board of directors of Atec to serve
until their respective successors are elected and qualified;

2. To ratify and approve Weinick Sanders Leventhal & Co., LLP, as our
independent public accountants, to audit our financial statements for the
year ending June 30, 2001;

3. To ratify and approve our 2000 Flexible Stock Plan;

4. To ratify and approve an amendment to our certificate of
incorporation to increase the number of authorized shares of common stock
$.01 par value per share, from 70 million to 100 million shares;

5. To ratify and approve a proposal concerning compensation to members
of our board of directors; and

6. To transact such other matters as may properly come before the
meeting or any adjournment thereof.

Only stockholders of record at the close of business on November 10, 2000
(the "Record Date") are entitled to notice of and to vote at the meeting.

A proxy statement and proxy are enclosed with this notice. If you are
unable to attend the meeting in person you are urged to sign, date and return
the enclosed proxy promptly in the envelope provided, which requires no postage
if mailed within the United States. If you attend the meeting in person, you may
withdraw your proxy and vote your shares. We have also enclosed a copy of: (a)
our 2000 annual report for the fiscal year ended June 30, 2000; (b) our 2000
flexible stock plan (the "2000 Plan"); (c) our proposed amendment to our
certificate of incorporation; and (d) a form of our audit committee charter.

By Order of the Board of Directors

Ashok Rametra, Secretary

Hauppauge, New York
December 4, 2000

<PAGE>

ATEC GROUP, INC.
69 Mall Drive
Commack, NY 11725

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 19, 2000

INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

The enclosed proxy is solicited on behalf of the board of directors of Atec
Group, Inc., a Delaware corporation, for the 2000 annual meeting of stockholders
to be held at 10:00 a.m. local time at the Huntington Hilton, Melville, New York
on Tuesday, December 19, 2000, or any continuation or adjournment thereof. At
the meeting, the stockholders will be asked to vote on proposals, which are
listed in the Atec notice of annual meeting of stockholders and described in
more detail below.

This proxy statement and the enclosed proxy card are being mailed on or
about December 4, 2000, to all stockholders' entitled to vote at the meeting.
Atec's annual report for the fiscal year ended June 30, 2000, including
financial statements, is being mailed to all stockholders' entitled to vote at
the annual meeting. The annual report does not constitute a part of the proxy
soliciting materials.

RECORD DATE; OUTSTANDING SHARES

Only stockholders of record at the close of business on November 10, 2000
are entitled to receive notice of, and vote at our annual meeting. As of
November 10, 2000, the number and class of stock outstanding and entitled to
vote at the meeting consisted of 7,326,693 shares of common stock, par value
$.01 per share, 8,451 shares of series A preferred stock, par value $.01 per
share, 1,458 shares of series B preferred stock, par value $.01 per share and
320,100 shares of series C preferred stock, par value $.01 per share. Each share
of our common and preferred stock is entitled to one vote on all matters. As of
the record date, we had 7,656,702 shares of our common and preferred stock
entitled to one vote per share outstanding. Atec has no other voting securities.

Nominees receiving the highest number of votes cast by the holders of our
shares of common and preferred stock shall be elected as our directors and
constitute our entire board of directors. The affirmative vote of at least a
majority of our shares of common and preferred stock represented and voting at
our annual meeting at which a quorum is present is necessary for approval of
Proposal No. 1, 2, 3, 4 and 5. A quorum is representation in person or by proxy
at the annual meeting of a majority of our outstanding shares of common and
preferred stock.

<PAGE>

REVOCABILITY OF PROXIES

If you attend the meeting, you may vote in person, regardless of whether
you have submitted a proxy. Any person giving a proxy in the form accompanying
this proxy statement has the power to revoke it at any time before it is voted.
It may be revoked by filing, with the corporate secretary of Atec at its
principal offices, 69 Mall Drive, Commack, NY 11725, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person.

VOTING AND SOLICITATION

Every stockholder of record is entitled, for each share held, to one vote
on each proposal or item that comes before the meeting. There are no cumulative
voting rights. By submitting your proxy, you authorize Ashok Rametra to
represent you and vote your shares at the meeting in accordance with your
instructions. Mr. Rametra may also vote your shares to adjourn the meeting from
time to time and will be authorized to vote your shares at any adjournment or
postponement of the meeting.

ADJOURNED MEETING

If a quorum is not present at the scheduled time of the meeting, the
stockholders who are represented may adjourn the meeting until a quorum is
present. The time and place of the adjournment meeting will be announced at the
time the adjournment is taken, and no other notice will be given. An adjournment
will have no effect on the business that may be conducted at the meeting.

TABULATION OF VOTES

The votes will be tabulated and certified by Atec's transfer agent, North
American Transfer.

VOTING BY STREET NAME HOLDERS

If you are the beneficial owner of shares held in "street name" by a
broker, the broker, as the record holder of the shares, is required to vote
those shares in accordance with your instructions. If you do not give
instructions to the broker, the broker will nevertheless be entitled to vote the
shares with respect to "discretionary" items but will not be permitted to vote
the shares with respect to "non-discretionary" items (in which case, the shares
will be treated as "broker non-votes").

<PAGE>

QUORUM; ABSTENTIONS; BROKER NON-VOTES

The required quorum for the transaction of business at the annual meeting
is a majority of the shares of common and preferred stock entitled to vote at
the annual meeting, in person or by proxy. Shares that are voted "FOR,"
"AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
represented and voting the votes cast at the annual meeting with respect to such
matter.

While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, Atec believes that abstentions should be
counted for purposes of determining both: (i) the presence or absence of a
quorum for the transaction of business; and (ii) the total number of votes cast
with respect to a proposal (other than the election of directors). In the
absence of controlling precedent to the contrary, Atec intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote against the proposal.

Under current Delaware case law, while broker non-votes (i.e. the votes of
shares held of record by brokers as to which the underlying beneficial owners
have given no voting instructions) should be counted for purposes of determining
the presence or absence of a quorum for the transaction of business, broker
non-votes should not be counted for purposes of determining the number of votes
cast with respect to the particular proposal on which the broker has expressly
not voted. Atec intends to treat broker non-votes in this manner. Thus, a broker
non-vote will make a quorum more readily obtainable, but the broker non-vote
will not otherwise affect the outcome of the voting on a proposal.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of Atec that are intended to be presented by such
stockholders at the 2001 annual meeting of stockholders must be received by Atec
no later than August 1, 2001 in order that they may be considered for possible
inclusion in the proxy statement and form of proxy relating to that meeting.

<PAGE>

PROPOSALS TO SHAREHOLDERS

PROPOSAL NO. 1

ELECTION OF DIRECTORS

A board of directors consisting of six directors is to be elected at the
meeting. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for Atec's nominees named below. In the event that any nominee
of Atec is unable or declines to serve as a director at the time of the annual
meeting, the proxies will be voted for any nominee who shall be designated by
the current board of directors to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director. In the event that
additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them in such a manner as will assure the
election of as many of the nominees listed below as possible, and in such event
the specific nominees to be voted for will be determined by the proxy holders.
The term of office of each person elected as a director will continue until the
next annual meeting of stockholders or until a successor has been duly elected
and qualified or until his or her earlier resignation, removal from office,
death or incapacity.

Unless otherwise specified, the enclosed proxy will be voted in favor of
the election of Ashok Rametra, James J. Charles, Richard J. Sullivan, David
Loppert, Scott Silverman and Kristen M. Sickorez to our board of directors. It
is the intention of the persons named in the enclosed proxy to vote the proxies
for the election of the nominees named below, unless otherwise specified.

The following table sets forth the names and ages of all current directors of
Atec and all persons nominated or chosen to become directors along with their
position, offices and term:

Name of Nominee Age Position with Atec Director Since
---------------- --- ------------------- --------------
Ashok Rametra(2) 48 President, Treasurer June 1994
and Director

James J. Charles 58 Chief Financial Officer September 2000

Richard J. Sullivan(1)(2) 61 Chairman of the Board and October 2000
Director

David A. Loppert(1) 47 Director November 2000

Scott Silverman(1) 36 Director November 2000

Kristen A. Sickorez(2) 32 Director October 2000

(1)Member of the audit committee
(2)Member of the compensation committee

<PAGE>

Set forth below is certain information with respect to each of the nominees for
director of Atec:

Ashok Rametra.

Mr. Rametra was appointed President in January of 1999. Prior to January 1999,
and since June 1994, Mr. Rametra was the Treasurer, Chief Financial Officer and
a Director of Atec. From June 1994 to March 1995, Mr. Rametra also served as
Atec's president. Prior to 1994, Mr. Rametra was the president of a subsidiary
of Atec. Mr. Rametra received a Bachelor of Science Degree from St. Johns
University in Accounting in 1980.

James J. Charles.

Mr. Charles was appointed Chief Financial Officer in January 1999. Prior to his
appointment, Mr. Charles was a financial consultant to several public companies
for the period of 1994-1998. Mr. Charles was also the Chief Financial Officer of
a printing company from 1991-1994 and a partner at Ernst & Young from 1966-1991.

Richard J. Sullivan.

Mr. Sullivan was appointed to the board of directors in October 2000. Mr.
Sullivan is currently Chairman of the Board of directors of Applied Digital
Solutions, Inc. (NASDAQ:ADSX) Mr. Sullivan is also currently the Chairman of
Great Bay Technology, Inc. From August 1989 to December 1992, Mr. Sullivan was
Chairman of the board of directors of Consolidated Convenience Systems, Inc., in
Springfield, Missouri. He has been the Managing General Partner of the Bay
Group, a merger and acquisition firm in New Hampshire since February 1985. Mr.
Sullivan was formerly Chairman and Chief Executive Officer of Manufacturing
Resources, Inc., an MRP II software company in Boston, Massachusetts and was
Chairman and CEO of Encode Technology, a "Computer-Aided Manufacturing" company,
in Nashua, New Hampshire from February 1984 to August 1986.

David A. Loppert.

Mr. Loppert was appointed to our board in November 2000. He has served Applied
Digital Solutions as Vice President, Treasurer and Chief Financial Officer since
February 1997. From 1996 to 1997, Mr. Loppert was Chief Financial Officer of
Bingo Brain, Inc. From 1994 to 1996, Mr. Loppert was Chief Financial Officer of
both C.T.A. America, Inc., and Ricochet International, L.L.C. Prior to that he
was Senior Vice President, Acquisitions and Due Diligence, of Associated
Financial Corporation. Mr. Loppert started his financial career with Price
Waterhouse in 1978, in Johannesburg, South Africa, before moving to their Los
Angeles Office in 1980, where he rose to the position of Senior Manager. He
holds Bachelor degrees in both Accounting and Commerce, as well as a Higher
Diploma in Accounting, all from the University of the Witwatersrand,
Johannesburg. Mr. Loppert was designated a Chartered Accountant (South Africa)
in 1980. Mr. Loppert has recently been named Chief Executive Officer of SysComm
International Corporation (NASDAQ: SYCM) of Shirley, New York.

<PAGE>

Scott Silverman.

Mr. Silverman was appointed to our board of directors in November 2000. Since
October 1999, Mr. Silverman has been President of Millennium Capital
Consultants, Inc. From July 1995 to October 1999, Mr. Silverman was Senior Vice
President of Applied Digital Solutions, Inc.

Kristen A. Sickorez.

Ms. Sickorez was appointed as a director in October 2000. Since February 2000,
Ms. Sickorez has been a sales associate with Robert Stephens, a broker dealer.
From August 1999 to February 2000 she was a sales associate with Banc of America
Securities and from June 1994 to August 1999 with Donaldson, Lufkin & Jenrette
Securities Corporation.

THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 1 TO BE IN THE BEST INTERESTS OF ATEC
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" ALL SIX OF THE ABOVE-NAMED
NOMINEE DIRECTORS TO THE ATEC BOARD.

<PAGE>

MANAGEMENT

The following table sets forth the names and ages of all current directors
and officers of Atec and all persons nominated or chosen to become directors
along with their current positions in Atec.

Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the board of directors
following the next annual meeting of stockholders and until their successors
have been duly elected and qualified.

Name Age Position
---- --- --------

Ashok Rametra 48 President, Treasurer and
Director

James J. Charles 58 Chief Financial Officer and Director

Richard J. Sullivan 61 Chairman of the Board and Director

Scott Silverman 36 Director

David Loppert 47 Director

Kristen M. Sickovez 32 Director

8
<PAGE>

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

The board of directors of Atec held a total of six meetings during the
fiscal year ended June 30, 2000. In addition, the board of directors acted six
times by unanimous consent during the fiscal year ended June 30, 2000. During
the fiscal year ended June 30, 2000, each of our directors attended 75% of the
aggregate number of all meetings of the board of directors and of the
committees, if any, on which such director served.

The board of directors created the audit committee in 1994. The audit
committee is responsible for reviewing reports of financial results, audits,
internal controls, and adherence to its Business Conduct Guidelines in
compliance with federal procurement laws and regulations. The committee
recommends to the board of directors the selection of Atec's outside auditors
and reviews their procedures for ensuring their independence with respect to the
services performed for Atec.

<PAGE>

The audit committee is composed of directors: Richard Sullivan, David Loppert
and Scott Silverman. In the opinion of the board of directors, Messrs. Sullivan,
Loppert and Silverman are independent of management and free of any relationship
that would interfere with their exercise of independent judgment as members of
this committee. The board of directors has adopted a written charter for the
audit committee, a copy of which is attached as Appendix D.

The audit committee has reviewed and discussed the audited financials with
management and the matters required to be discussed by SAS 61. The committee has
also received the written disclosures and the letter from its independent
accountants required by Independence Standards Board of directors Standard No.
1, and has discussed with its independent accountant the independent
accountant's independence. Based on a review of the foregoing, the audit
committee recommended to the board of directors that the audited financial
statements be included in Atec 2000 annual report on Form 10-K. The audit
committee met in September, 2000 to review results of the 2000 audit.

The board of directors created the stock option committee in July 1994. The
stock option committee currently consists of directors' Ashok Rametra, Richard
Sullivan and Kristen Sickorez. The former directors of our compensation
committee, David C Reback and George Egan, met four times during the last fiscal
year. The stock option committee is responsible for setting forth, and approving
any and all stock options under Atec's stock option plans as the stock option
committee deems is desirable and necessary, while mindful of and guided by
industry standards. In the opinion of the board of directors, Ms. Sickorez and
Mr. Sullivan are independent of management and free of any relationship which
would interfere with their exercise of independent judgment as a member of the
stock option committee. Mr. Ashok Rametra is not independent as determined by
the board of directors based on his status as an employee and executive officer
of Atec.

BOARD OF DIRECTORS COMPENSATION

Compensation of directors.

All directors are entitled to reimbursement of reasonable travel and
lodging expenses related to attending meetings of the board of directors and any
committee on which they serve. On November 14, 2000, we adopted resolutions at a
special meeting of our board of directors, subject to our shareholder approval,
providing for among other things, that our non-employee directors receive $5,000
for attendance at each quarterly meeting of the board of directors plus $1,000
for attendance at each committee meeting. Non-employee directors are also
eligible to participate in and receive stock options under the 2000 Plan.
Directors who are employees receive no fees for attending meetings of the board
of directors or any committee on which they serve.

<PAGE>

During the fiscal year ended June 30, 2000, George Egan, our former
director, received 7,500 common stock purchase options at an exercise price of
1.875 per share, and David Reback, our former director, received 7,500 common
stock purchase options at an exercise price of 1.875 per share. Messrs. Egan and
Reback were non-employee directors of Atec.

On November 14, 2000, the resolutions adopted at a special meeting of our
board of directors, also provided for the grant of stock options to our
directors and executive officers under our 2000 Plan. The grant of the stock
options are subject to shareholder approval of the 2000 Plan. Pursuant to the
resolutions, the following stock options were approved: (a) 1,000,000 stock
options to Ashok Rametra; (b) 300,000 stock options to James Charles; (c)
500,000 stock options to Richard Sullivan; (d) 100,000 stock options to Kristen
Sickorez; (e) 100,000 stock options to David Loppert; and (f) 100,000 stock
options to Scott Silverman. The stock options shall vest annually over a three
year period in three equal installments commencing on November 14, 2000 and
ending on November 14, 2003; subject to the terms of the 2000 Plan.

REPORT OF THE COMPENSATION COMMITTEE

This report outlines the framework used for making compensation
decisions. Management's compensation philosophy and the criteria used for making
compensation decisions in fiscal 2000 regarding the Chief Executive Officer and
the other named executive officers is set below.

Framework for Compensation Decisions.

The board of directors has overall responsibility for compensation and
benefit programs. The board of directors created the compensation committee in
August 1994 to facilitate its fulfillment of this responsibility. The committee
administers Atec's salary program and recommends to the board of directors
grants of stock options under our stock option plans. The committee specifically
reviews and recommends for board approval all decisions relating to the
compensation of the Chief Executive Officer and other named executive officers.

Philosophy of Management Compensation.

Atec has an aggressive goal to significantly improve shareholder value by
being an industry growth leader. The committee recognizes that the compensation
program must enable Atec to attract, retain, and motivate key employees who are
committed to creating shareholder value.

Criteria Used for Making Compensation Decisions in Fiscal 2000.

This section describes the criteria used by the board of directors and
the compensation committee regarding compensation decisions in fiscal 2000
affecting the Chief Executive Officer and other executive officers named in the
summary compensation table below. Before the establishment of the compensation
committee, salaries were based on individual employment

<PAGE>

agreements and any bonuses were reflective of an individual's performance during
the year and that individual's current compensation compared to competitive
market practices.

Base Salary.

In fiscal 2000, the committee reviewed and compared various executive
compensation programs established by competitors in Atec's industry to determine
whether compensation levels for Atec's executive officers were consistent with
competitive practice for companies in the same line of business. The committee
reviewed base salaries, bonuses and whether executive officers were granted
stock options at these comparable companies. The committee believed that these
levels should serve as a barometer of the compensation levels to which executive
compensation should be compared. Based on these comparisons, the committee
recommended and the board of directors approved base salary increases for each
of the executive officers named in the summary compensation table effective
January 1, 2000.

Bonuses.

In fiscal 2000, bonuses were awarded to each of the executive officers
named in the summary compensation table below based on the successful
achievement of specific quantitative and qualitative measures including: growth
in revenue run rates and customer accounts, and managing major change
initiatives.

Stock Options.

In fiscal 2000, the committee recommended, and the board of directors
approved, grants of incentive stock options to each of the executive officers
named in the summary compensation table below.

Chief Executive Officer.

In evaluating the performance of the Chief Executive Officer, the committee
noted that in fiscal 2000, all quantifiable objectives were met or exceeded in
the critical areas of growth in revenue run rates and customer accounts.

Upon committee recommendation and board of directors approval, an incentive
stock option to purchase 150,000 shares was granted to the Chief Executive
Officer, as part of his total compensation package. Due to the fact that the
Chief Executive Officer owned more than ten percent of the total combined voting
power of Atec's common stock, pursuant to terms of the stock option plan, the
exercise price of such option was 110 % of the fair market value of the common
stock on the date of grant and the term of the option or exercise period is ten
years from the date of grant. Subsequently, both of the above performance
measures in regards to vendor and equity financing have recently been
accomplished and, accordingly, the above stock options are now fully vested and
may be exercised upon the one year anniversary of the date of grant.

<PAGE>

The committee believes that our compensation practices and plans bring
Atec's executives into line with current market conditions for pay and benefits
in its industry and supports Atec's mission and strategies going forward.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In August 1994, the board of directors established a compensation
committee, which is responsible for decisions regarding salaries, stock option
grants and other matters regarding executive officers and key employees of Atec.
During fiscal 2000, David C. Reback and George Egan, our former directors, were
both former members of the compensation committee. Directors' Ashok Rametra,
Richard Sullivan and Kristen Sickorez currently serve on the committee. In the
opinion of the board of directors, Mr. Sullivan and Ms. Sickorez are
independent of management and free of any relationship which would interfere
with their exercise of independent judgment as a member of our compensation
committee. Mr. Rametra is not independent based on his status as both an
employee and executive officer of Atec.

EXECUTIVE COMPENSATION

The summary compensation table for the years ended June 30, 2000, 1999 and
1998 is provided below. This table provides compensation information on behalf
of the existing officers and directors who earned in excess of $100,000. There
are no Option/SAR Grants, Aggregated Option/SAR Exercises or Fiscal Year-End
Option/SAR Value Table for the years ended June 30, 2000, 1999 and/or 1998.
There are no long-term incentive plan ("LTIP") awards, or stock option or stock
appreciation rights except as discussed below.

SUMMARY COMPENSATION TABLE

For the Years Ended June 30, 2000, 1999 and 1998
Annual Compensation Awards Payouts

Year Compen-
Name Position Ended Salary($) Bonus($) sation($)
---- -------- ----- --------- -------- ---------
Surinder Rametra CEO 6/30/00 $200,000 12,731(3)
6/30/99 $202,733 15,262(5)
6/30/98 $170,020 14,430(1)

Ashok Rametra President 6/30/00 $200,000 $25,000 12,779(4)
6/30/99 $174,980 11,652(6)
6/30/98 $170,000 14,077(2)

(1) Major Medical $6,372, Leased Auto $8,058
(2) Major Medical $4,380, Leased Auto $9,697
(3) Major Medical $3,941, Leased Auto $8,790
(4) Major Medical $5,611, Leased Auto $7,168
(5) Major Medical $6,472, Leased auto $8,790
(6) Major Medical $4,484, Leased auto $7,168

<PAGE>

YEAR END OPTION TABLE

The following table sets forth certain information regarding the stock
options held as of June 30, 2000, by the individuals named in the above summary
compensation table.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE

Securities Underlying Value of Unexercised
Unexercised Options a In-the-Money-Options
Fiscal Year End (#) at Fiscal Year End (3)
--------------------- ----------------------
Shares Acquire Value
Name on exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Surinder Rametra(1) 0 0 1,047,000 0 $19,800 0
Ashok Rametra(2) 0 0 345,000 0 $26,400 0
</TABLE>

(1) Represents options to acquire: (i) 7,000 shares at $3.44 per share
exercisable through August 8, 2007; (ii) 500,000 shares at $5.50 per share
exercisable through March 28, 2008; (iii) 250,000 shares at $4.67 per share
exercisable through September 27, 2008; (iv) 140,000 shares at $4.26 per
share exercisable through June 29, 2009; and (v) 150,000 shares at $1.993
per share exercisable through November 7, 2009.

(2) Represents options to acquire: (i) 10,000 shares at $3.44 per share
exercisable through August 8, 2007; (ii) 35,000 shares at 3.7125 per share
exercisable through October 8, 2008; (iii) 100,000 shares at $6.80 per
share exercisable through December 14, 2008; and (iv) 200,000 shares at
$1.993 per share exercisable through November 7, 2009.

(3) Computation based on $2.125, which was the June 30, 2000, closing price
for our common stock.

OPTION GRANT TABLE

The following table sets forth certain information regarding the stock
options granted during the fiscal year ended June 30, 2000, by us to the
individuals named in the above summary compensation table.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
% of Total Options
granted to employees in Exercise Price Expiration
Name Granted(#) Fiscal Year $/share Date
---- ---------- ----------------------- -------------- ----------
<S> <C> <C> <C> <C>

Surinder Rametra 150,000 2% $1.993 2009
Ashok Rametra 200,000 3% $1.993 2009
</TABLE>

<PAGE>

401(K) Plan.

ATEC has a 401(k) deferred compensation plan to which Atec may make
discretionary contributions. Atec made no contribution to its plan for the year
ended June 30, 2000.

PERFORMANCE GRAPH(1)

Total Shareholder Returns - Dividends Reinvested

Annual Return Percentages

Years Ending

Atec/Index Name June 96 June 97 June 98 June 99 June 00
================================================================================
ATEC GROUP INC. -8.72 -46.63 142.20 -47.46 -45.16
S&P SMALLCAP 600 INDEX 26.01 21.69 19.46 -2.31 14.39
PEER GROUP 48.27 -18.16 47.45 -2.54 72.94

Indexed Returns

Years Ending
<TABLE>
<CAPTION>

Base
Period
Atec/Index Name June 95 June 96 June 97 June 98 June 99 June 00
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>

ATEC GROUP INC. 100 91.28 48.72 118.00 62.00 34.00
S&P SMALLCAP 600 INDEX 100 126.01 153.34 183.18 178.95 204.69
COMPUTER (SOFTWARE & SVCE) - SMALL 100 148.27 121.34 178.92 174.38 301.57

====================================================================================================================
</TABLE>

(1) Source: Standard & Poor's November 21, 2000.

<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of November 21, 2000, the number and
percentage of outstanding shares of common stock beneficially owned by each
person who beneficially owns:

o more than 5% of the outstanding voting shares of our common stock;
o each of our directors and the executive officers named in the summary
compensation table below ; and
o all of our officers and directors as a group.

Except as otherwise noted, the persons named in this table, based upon
information provided by these persons, have sole voting and investment power
with respect to all shares of common and preferred stock owned by them. Unless
otherwise indicated, the address of each beneficial owner is c/o Atec Group,
Inc., 69 Mall Drive, Commack, NY 11725.

Name and Address Amount and Nature
of Beneficial of Beneficial Percentage of
Owner Ownership of Voting Stock
Outstanding Common Stock Outstanding (1)
----------- ------------ ---------------

Ashok Rametra (2) 961,242 10.4
1762 Central Avenue
Albany, NY 12205

Surinder Rametra (3)(4) 1,640,140 18.0
69 Mall Drive
Commack, NY 11725

Applied Digital
Solutions Inc. (4) 1,298,640 14.13

James Charles (5) 105,000 1.0
69 Mall Drive
Commack, NY 11725

All directors and 1,066,242 11.60
executive/officers as a
group (2 persons)
----------------

(1) Computed based upon a total of 7,326,693 shares of common stock, 8,451
shares of Series A preferred stock, 1,458 shares of Series B preferred
stock, 320,100 shares of Series C preferred stock and options to
acquire 1,533,000 shares of common stock. Each share of common stock
and preferred stock possesses one vote per share. Accordingly, the
foregoing represents an aggregate of 9,189,702 votes.

<PAGE>

(2) The foregoing figure reflects the ownership of 229,146 shares of common
stock by Mr. Rametra and 387,096 common shares owned by Mr. Rametra's
spouse and children. The foregoing amount also assumes the exercise by
Mr. Rametra of options to acquire 345,000 shares of the common stock.
Mr. Rametra disclaims beneficial ownership of shares of Atec securities
owned by other members of the Rametra family.

(3) The foregoing figure reflects the ownership of 382,640 shares of common
stock by Mr. Rametra and 200,000 shares by Mr. Rametra's spouse, Nirmala
Rametra and 11,000 shares held jointly in the name of Surinder and Nirmala
Rametra. In addition, the foregoing assumes the exercise by Mr. Rametra of
options to acquire 1,047,000 shares of Atec common stock. Mr. Rametra
disclaims beneficial ownership of the shares of Atec securities owned by
Nirmala Rametra and other members of the Rametra family, including
independent children.

(4) Pursuant to a stock purchase agreement by and among Applied Digital
Solutions, Inc. ("Applied"), Surinder Rametra and Nirmala Rametra, Surinder
Rametra and Nirmala Rametra (the "Rametras") have agreed to sell to Applied
593,640 shares of their common stock in Atec and an additional 705,000
shares of Atec common stock, which Surinder Rametra will acquire on or prior
to November 30, 2000 on exercise of 705,000 options currently held in the
name of Surinder Rametra. Applied also has the option to acquire any or all
of the remaining shares of Surinder Rametra, which are currently held as of
the date of this proxy information statement by Surinder Rametra, no later
than January 31, 2001. The Rametras have also granted to Applied an
irrevocable proxy to exercise all of the voting rights which the Rametras
have in the common stock of Atec.

(5) The foregoing figure reflects ownership of 10,000 shares of common stock by
Mr. Charles. The foregoing amount also assumes the exercise by Mr. Charles
of options to acquire 95,000 shares of common stock.

<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our Albany facility is leased from a company controlled by Surinder and
Ashok Rametra. Ashok Rametra is a current officer and director of Atec. Surinder
Rametra is our former Chief Executive Officer and Chairman of our board of
directors. Our lease with this company requires annual rental payments of
approximately $108,000 per year plus all expenses and taxes attributable to the
operation of the premises. Atec has not been a party to any significant
transactions in the last fiscal year.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely upon a review of Forms 3, 4 and 5 furnished during the most
recent fiscal year, it is believed, except as discussed below, that there were
no Section 16(a) reports filed untimely during the years ended June 30, 2000 and
1999.

Surinder Rametra, a former executive officer of Atec, failed to report on
his Form 4 in March of 1999, the sale of 62,761 shares by his spouse, which
shares Mr. Rametra disclaims beneficial ownership. Additionally, Mr. Rametra
failed to report on his Form 4 for the month of April 1999, the sale of 2,900
shares by his spouse, which shares Mr. Rametra disclaims beneficial ownership,
and his purchase of 7,500 shares for the month of September, 1999. Ashok
Rametra, an executive officer of Atec, failed to report on his Form 4 in April
of 1999, the sale of 2,700 shares, the purchase of 5,000 shares in May of 1999,
and 15,000 shares in September of 1999. The failure of the reporting persons to
report was inadvertent and has been corrected on a subsequent Form 4.

<PAGE>

PROPOSAL NO. 2

RATIFICATION OF SELECTION OF AUDITORS

The Board of directors has appointed the firm of Weinick Sanders Leventhal
& Co., LLP ("WSL") as independent auditors of Atec for fiscal year 2001 subject
to ratification by the stockholders. WSL has served as Atec's independent
auditors since April 18, 1996.

Audit services expected to be performed by WSL during fiscal year 2001 will
consist of the audit of financial statements of Atec and its wholly owned
subsidiaries. It is anticipated that a representative of WSL will be present at
the Annual Meeting and will be given an opportunity to make a statement if he or
she so desires and to respond to appropriate questions.

The affirmative vote of at least a majority of the shares represented and
voting at the Annual Meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum) is
necessary for approval of Proposal No. 2. Under Delaware law, there are no
rights of appraisal or dissenter's rights that arise as a result of a vote to
ratify the selection of auditor's.

THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF ATEC
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO.2.

<PAGE>

PROPOSAL NO. 3

RATIFICATION OF ATEC'S
2000 FLEXIBLE STOCK PLAN

General

Introduction.

On November 14, 2000, resolutions were adopted at a special meeting of our board
of directors acting pursuant to the General Corporation Law of the State of
Delaware, subject to shareholder approval. Pursuant to the resolutions, we
agreed to, among other things, adopt our 2000 Plan providing for the issuance of
stock options for the purchase of 10,000,000 shares of our common stock plus an
annual increase of our stock options, effective on the first day of each
calendar year, equal to 10% of the number of outstanding shares of common stock
as of the first day of such calendar year, but in no event more than 20,000,000
shares in the aggregate.

The 2000 Plan is intended to attract, retain, motivate and reward employees and
other individuals and to encourage ownership by employees and other individuals
of Atec's common stock. An employee is an individual employed by Atec or a
subsidiary. The 2000 Plan provides for benefits (collectively "Benefits") to be
awarded in the form of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights (as described below and referred to hereafter as
"SARs"), Restricted Stock, Performance Shares, Cash Awards, and Other Stock
Based Awards, each of which is defined below.

Set forth below is a description of the essential features of the 2000
Plan. This description is subject to and qualified in its entirety by the full
text of the 2000 Plan, which is attached to this proxy statement as Appendix B.

<PAGE>

Description of the Plan

Number of Shares.

The number of shares of common stock which may be issued in connection with
Benefits shall be 10,000,000 shares plus an annual increase, effective on the
first day of each calendar year, equal to 10% of the number of outstanding
shares of common stock as of the first day of such calendar year, but in no
event more than 20,000,000 shares in the aggregate. Such shares may be
authorized but unissued shares, shares held in Atec's treasury, or both. If an
option or SAR expires or is terminated, surrendered or canceled, without having
been fully exercised, if Restricted Stock or Performance Shares are forfeited,
or if any other grant results in shares of common stock not being issued, the
shares covered by such option or SAR, grant of shares of Restricted Stock,
Performance Shares or other grant, as the case may be, shall again be available
for use under the 2000 Plan.

Change in our common stock.

If there is any change in our common stock by reason of any stock dividend,
spin-off, split-up, spin-out, recapitalization, merger, consolidation,
reorganization, combination or exchange of shares, the number of SARs and number
and class of shares available for options and grants of Restricted Stock,
Performance Shares and Other Stock Based Awards and the number of shares subject
to any outstanding options, SARs, grants of Restricted Stock Performance Shares
which are not yet vested, and Other Stock Based Awards, and the price thereof,
as applicable, will be appropriately adjusted.

Administration.

The 2000 Plan is administered by a committee ("Committee"). The Committee
shall consist of Ashok Rametra, our President, Richard Sullivan and Kristen
Sickorez. If the Committee does not include the entire board of directors, it
shall serve at the pleasure of the board of directors, which may from time to
time appoint members in substitution for members previously appointed and fill
vacancies, however caused, in the Committee.

Subject to the express provisions of the 2000 Plan, the Committee has
complete authority to: (i) determine when and to whom Benefits are granted and
the type and amounts of Benefits; (ii) determine the terms, conditions and
provisions of, and restrictions relating to, each Benefit granted; (iii)
interpret and construe the 2000 Plan and any agreement ("Agreement") evidencing
and describing a Benefit; (iv) prescribe, amend and rescind rules and
regulations relating to the 2000 Plan; (v) determine the form and contents of
all Agreements; (vi) determine all questions relating to Benefits under the 2000
Plan; and (vii) take any other action which it considers necessary or
appropriate for the administration of the 2000 Plan and to carry out the
purposes of the 2000 Plan.

<PAGE>

Except as required by Rule 16b-3 with respect to Benefits granted to
persons who are subject to Section 16 of the Exchange Act (consisting of
directors and officers), the Committee may delegate its authority to any
employee, employees or committee.

Amendment, Termination and Change in Control.

The board of directors may amend the 2000 Plan at any time. The 2000 Plan has no
fixed termination date and shall continue in effect until terminated by the
board of directors.

The amendment or termination of the 2000 Plan will not adversely affect any
Benefit granted prior to such amendment or termination. However, any Benefit may
be modified or canceled by the Committee if and to the extent permitted by the
2000 Plan or Agreement or with the consent of the participant to whom such
Benefit was granted.

In the event of a Change in Control, as defined below, the Committee may

(a) provide for the purchase of any Benefit for an amount of cash
equal to the amount which could have been attained upon the exercise or
realization of such Benefit;

(b) make such adjustment to the Benefits then outstanding as the
Committee deems appropriate to reflect such transaction or change; and/or

(c) cause the Benefits then outstanding to be assumed, or new Benefits
substituted therefor, by the surviving corporation in such change.

Additionally, upon a Change in Control:

(a) all outstanding options shall become fully exercisable, except to
the extent that the right to exercise the option is subject to restrictions
established in connection with a stock appreciation right ("SAR") that is
issued in tandem with the option;

(b) all outstanding SARs shall become immediately payable, except to
the extent that the right to exercise the SAR is subject to restrictions
established in connection with an option that is issued in tandem with the
SAR;

(d) all performance shares shall be deemed to be fully earned and
shall be paid out in such manner as determined by the Committee; and

(e) all cash awards, other stock based awards and other Benefits shall
become fully vested and/or earned and paid out in such manner as determined
by the Committee.

"Change in Control" means: The occurrence of any of the following:

(a) An acquisition of any Common Stock or other voting securities of
the Company entitled to vote generally for the election of directors (the
"Voting Securities") by any "Person" or "Group" (as each such term is used
for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately
after which such Person or Group, as the case may be, has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of the then outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, that in determining whether a Change of Control has
occurred, shares of Common Stock or Voting Securities that are acquired in
a Non-Control Acquisition (as defined below) shall not constitute an
acquisition which would cause a Change of Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) the Company, (ii) any
Subsidiary or (iii) any employee benefit plan maintained by the Company or
any Subsidiary, including a trust forming part of any such plan (an
"Employee Benefit Plan");

(b) When, during any 2-year period, individuals who, at the beginning
of the 2-year period, constitute the Board (the "Incumbent Board"), cease
for any reason to constitute at least 50% of the members of the Board;
provided, however, that (i) if the election or nomination for election by
the Company's shareholders of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall, for
purposes hereof, be deemed to be a member of the Incumbent Board; and (ii)
no individual shall be deemed to be a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person or Group other than the
Board (a "Proxy Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest;

(c) The consummation of a merger, consolidation or reorganization
involving the Company or any Subsidiary, unless the merger, consolidation
or reorganization is a Non-Control Transaction. A "Non-Control
Transaction" shall mean a merger, consolidation or reorganization of the
Company or any Subsidiary where:

(A) the shareholders of the Company immediately prior to the
merger, consolidation or reorganization own, directly or
indirectly, immediately following such merger, consolidation or
reorganization, at least 50% of the combined voting power of the
outstanding voting securities of the corporation resulting from
such merger, consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Common Stock or Voting Securities, as the case
may be, immediately prior to the merger, consolidation or
reorganization,

(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
the merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the
Surviving Corporation, or a corporation beneficially owning,
directly or indirectly, a majority of the voting securities of
the Surviving Corporation, and

(C) no Person or Group, other than (1) the Company, (2) any
Subsidiary, (3) any Employee Benefit Plan or (4) any other Person
or Group who, immediately prior to the merger, consolidation or
reorganization, had Beneficial Ownership of not less than 20% of
the then outstanding Voting Securities or Common Stock, has
Beneficial Ownership of 20% or more of the combined voting power
of the Surviving Corporation's then outstanding voting securities
or common stock;

(d) A complete liquidation or dissolution of the Company; or

(e) The sale or other disposition of all or substantially all of the
assets of the Company to any Person (other than a transfer to a
Subsidiary).

Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred solely because any Person or Group (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Voting Securities or Common Stock of the Company as a result of an acquisition
of Voting Securities or Common Stock by the Company which, by reducing the
number of shares of Voting Securities or Common Stock then outstanding,
increases the proportional number of shares beneficially owned by the Subject
Person; provided, however, that if a Change of Control would have occurred (but
for the operation of this sentence) as a result of the acquisition of Voting
Securities or Common Stock by the Company, and after such acquisition by the
Company, the Subject Person becomes the beneficial owner of any additional
shares of Voting Securities or Common Stock, which increases the percentage of
the then outstanding shares of Voting Securities or Common Stock beneficially
owned by the Subject Person, then a Change of Control shall be deemed to have
occurred. In addition, notwithstanding the foregoing, the acquisition or
ownership of any Common Stock or Voting Securities by Applied Digital Solutions,
Inc. and its Affiliates (determined as if it was the Company) shall not cause or
result in a Change of Control.

Eligibility for Benefits.

Benefits may be awarded to individuals selected by the Committee. Benefits
may be awarded only to employees, members of the board of directors, employees
and owners of entities which are not affiliates but which have a direct or
indirect ownership interest in an employer, individuals who, and employees and
owners of entities which, are customers or suppliers of an employer, individuals
who, and employees and owners of entities which, render services to an employer,
and individuals who, and employees and owners of entities which, have ownership
or business affiliations with any individual or entity previously described.

<PAGE>

Types of Benefits.

Under the 2000 Plan, the Committee may grant a number of different types of
Benefits. A summary of the principal characteristics of various types of
Benefits which may be granted is set forth below.

Stock Options.

Two types of stock options may be granted under the 2000 Plan. Stock
options intended to qualify for special tax treatment under Section 422 of the
Code are referred to as "Incentive Stock Options," and options not intended to
so qualify are referred to as "Non-Qualified Stock Options." In the case of
Non-Qualified Stock Options, the option price shall be determined by the
Committee but shall be no less than 85% of the fair market value of the shares
of common stock on the date the option is granted, and, in the case of Incentive
Stock Options, the price shall be determined by the Committee but shall be no
less than the fair market value of the shares of Common Stock on the date the
option is granted.

Other Options.

The other terms of options shall be determined by the Committee. However,
in the case of options intended to qualify as Incentive Stock Options, such
terms must meet all requirements of Section 422 of the Code. Currently, such
requirements are (i) the option must be granted within 10 years from the
adoption of the 2000 Plan, (ii) the option may not have a term longer than 10
years, (iii) the option must be not transferable other than by will or the laws
of descent and distribution and may be exercised only by the optionee during
his/her lifetime, (iv) the maximum aggregate fair market value of common stock
with respect to which such options are first exercisable by an optionee in any
calendar year may not exceed $100,000; and (v) the option must be granted to an
employee. In addition, if the optionee owns more than 10% of Atec's common stock
or more than 10% of the total combined voting power of all classes of stock of
any subsidiary, the option price must be at least 110% of fair market value of
the shares of common stock on the date the option is granted, and the option may
not have a term longer than five years.

SARs. An SAR is the right to receive an amount equal to the appreciation in
value of one share of common stock from the time the SAR is granted until the
time the grantee elects to receive payment. Participants who elect to receive
payment of SARs shall receive payment in cash, in common stock or in any
combination of cash and common stock, as determined by the Committee. When SARs
are granted in tandem with an Incentive Stock Option, the SARs must contain such
terms and conditions as are necessary for the related option to qualify as an
Incentive Stock Option. In addition, if SARs are granted in tandem with a stock
option, the exercise of the option shall cause a correlative reduction in the
SARs and the payment of SARs shall cause a correlative reduction in the shares
under the option.

<PAGE>

Restricted Stock.

Restricted Stock is Common Stock which is subject to forfeiture until a
period of time has elapsed or certain conditions have been fulfilled. Unless the
Committee determines otherwise, shares of Restricted Stock shall be granted at a
cost equal to par value (presently $0.01 per share). Certificates representing
shares of Restricted Stock shall bear a legend referring to the 2000 Plan,
noting the risk of forfeiture of the shares and stating that such shares are
non-transferable until all restrictions have been satisfied and the legend has
been removed. As of the date Restricted Stock is granted, the grantee shall be
entitled to full voting and dividend rights with respect to all shares of such
stock.

Performance Shares.

Performance Shares are the right to receive Common Stock or cash equal to
the fair market value of the Common Stock at a future date in accordance with
the terms of the grant. Generally, such right shall be based upon the attainment
of targeted profit and/or other performance objectives.

Cash Awards.

A Cash Award is a Benefit payable in cash. The maximum cash award that an
individual who is subject to Section 16 of the Exchange Act may receive in any
calendar year in the aggregate is the greater of $100,000 or 100% of his/her
compensation (excluding any Cash Award) for such year.

Other Stock Based Awards.

An Other Stock Based Award is an award that is valued in whole or in part
by reference to, or is otherwise based on, Common Stock.

General Provisions Applicable to Benefits.

Under the 2000 Plan, the following provisions are applicable to one or more
types of Benefits.

Agreement and Terms of Benefits.

The grant of any Benefit may be evidenced by an Agreement which describes
the specific Benefit granted and the terms, conditions and provisions of, and
restrictions relating to, such Benefit. Any Agreement shall contain such
provisions as the Committee shall determine to be necessary, desirable and
appropriate.

<PAGE>

Transferability.

Unless otherwise specified in an agreement or permitted by the Committee,
each Benefit shall be non-transferable other than by will or the laws of descent
and distribution and shall be exercisable during a participant's lifetime only
by him/her.

Tandem Awards.

Awards may be granted by the Committee in tandem. However, no Benefit may
be granted in tandem with an Incentive Stock Option except SARs.

Payment.

Upon the exercise of an option or in the case of any other Benefit that
requires a payment to Atec, payment may be made either (i) in cash, including a
so-called "cashless exercise," or (ii) with the consent of the Committee, (a) by
the tender of shares of common stock having an aggregate fair market value equal
to the amount due Atec, (b) in other property, (c) by the surrender of all or
part of a Benefit (including the Benefit being exercised or acquired), or (d) by
any combination of the foregoing.

Dividend Equivalents.

Grants of Benefits in Common Stock or common stock equivalents may include
dividend equivalent payments or dividend credit rights.

Deferral.

The right to receive a Benefit may, upon the request of the request of the
recipient, be deferred for such period and upon such conditions as the Committee
may determine.

Withholding.

At the time any Benefit is distributed under the 2000 Plan, Atec may
withhold, in cash or in shares of Common Stock, from such distribution any
amount necessary to satisfy income withholding requirements applicable to such
distribution.

Limitation on Benefits.

The number of shares covered by options where the purchase price is no less
than fair market value on the date of grant plus SARs which may be granted to
any one individual in any calendar year shall not exceed 500,000.

<PAGE>

Restrictions on Shares.

The Committee may require each person purchasing common stock pursuant to
an option or receiving common stock pursuant to any other form of Benefit under
the 2000 Plan to represent to and agree with Atec in writing that such person is
acquiring the shares for investment and without a view to distribution or
resale. In addition, shares issued under the 2000 Plan may be subject to
restrictive agreements between Atec or a subsidiary and the participant. The
Committee may require that a legend reflecting any restriction described above
be placed on any certificate for shares.

U.S. Federal Tax Consequences of the 2000 Plan.

The following is a summary of the U.S. federal income tax consequences of
the 2000 Plan, based on current income tax laws, regulations and rulings.

Incentive Stock Options.

Subject to the effect of the Alternative Minimum Tax, discussed below, an
optionee does not recognize income on the grant of an Incentive Stock Option. If
an optionee exercises an incentive Stock Option in accordance with the terms of
the option and does not dispose of the shares acquired within two years from the
date of the grant of the option nor within one year from the date of exercise,
the optionee will not realize any income by reason of the exercise, and Atec
will be allowed no deduction by reason of the grant or exercise. The optionee's
basis in the shares acquired upon exercise will be the amount paid upon
exercise. (See the discussion below for the tax consequences of the exercise of
an option with stock already owned by the optionee.) Provided the optionee holds
the shares as a capital asset at the time of sale or other disposition of the
shares, his/her gain or loss, if any, recognized on the sale or other
disposition will be capital gain or loss. The amount of his/her gain or loss
will be the difference between the amount realized on the disposition of the
shares and his/her basis in the shares.

If an optionee disposes of the shares within two years from the date of
grant of the option or within one year from the date of exercise ("Early
Disposition"), the optionee will realize ordinary income at the time of such
Early Disposition which will equal the excess, if any, of the lesser of (i) the
amount realized on the Early Disposition, or (ii) the fair market value of the
shares on the date of exercise, over the optionee's basis in the shares. Atec
will be entitled to a deduction in an amount equal to such income. The excess,
if any, of the amount realized on the Early Disposition of such shares over the
fair market value of the shares on the date of exercise will be long-term or
short-term capital gain, depending upon the holding period of the shares,
provided the optionee holds the shares as a capital asset at the time of Early
Disposition. If an optionee disposes of such shares for less than his/her basis
in the shares, the difference between the amount realized and his/her basis will
be a long-term or short-term capital loss, depending upon the holding period of
the shares, provided the optionee holds the shares as a capital asset at the
time of disposition.

<PAGE>

The excess of the fair market value of the shares at the time the Incentive
Stock Option is exercised over the exercise price for the shares is an item of
tax preference ("Stock Option Preference").

Non-Qualified Stock Options.

Non-Qualified Stock Options do not qualify for the special tax treatment
accorded to Incentive Stock Options under the Code. Although an optionee does
not recognize income at the time of the grant of the option, he recognizes
ordinary income upon the exercise of a Non-Qualified Option in an amount equal
to the difference between the fair market value of the stock on the date of
exercise of the option and the amount of cash paid for the stock.

As a result of the optionee's exercise of a Non-Qualified Stock Option,
Atec will be entitled to deduct as compensation an amount equal to the amount
included in the optionee's gross income. Atec's deduction will be taken in
Atec's taxable year in which the option is exercised.

The excess of the fair market value of the stock on the date of exercise of
a Non-Qualified Stock Option over the exercise price is not a Stock Option
Preference.

SARs.

Recipients of SARs do not recognize income upon the grant of such rights.
When a participant elects to receive payment of an SAR, he recognizes ordinary
income in an amount equal to the cash and fair market value of shares of Common
Stock received, and Atec is entitled to a deduction equal to such amount.

Restricted Stock; Performance Shares.

Grantees of Restricted Stock and Performance Shares do not recognize income
at the time of the grant of such stock. However, when shares of Restricted Stock
become free from any restrictions or when Performance Shares are paid, grantees
recognize ordinary income in an amount equal to the fair market value of the
stock on the date all restrictions are satisfied, less, in the case of
Restricted Stock, the amount paid for the Stock. Alternatively, the grantee of
Restricted Stock may elect to recognize income upon the grant of the stock and
not at the time the restrictions lapse, in which case the amount of income
recognized will be the fair market value of the stock on the date of grant. Atec
will be entitled to deduct as compensation the amount includible in the
grantee's income in its taxable year in which the grantee recognizes the income.

Cash Awards.

Cash Awards are taxable as ordinary income when received or constructively
received by a participant. Atec is entitled to deduct the amount of a Cash Award
when the award is taxable to the recipient.

<PAGE>

Taxation of Preference Items.

Section 55 of the Code imposes an Alternative Minimum Tax equal to the
excess, if any, of (i) 26% of the optionee's "alternative minimum taxable
income" up to $175,000 plus 28% of such income over $175,000 over (ii) his/her
"regular" U.S. federal income tax. Alternative minimum taxable income is
determined by adding the optionee's Stock Option Preference and any other items
of tax preference to the optionee's adjusted gross income and then subtracting
certain allowable deductions and an exemption amount. The exemption amount is
$33,750 for single taxpayers, $45,000 for married taxpayers filing jointly and
$22,500 for married taxpayers filing separately. However, these exemption
amounts are phased out beginning at certain levels of alternative minimum
taxable income.

Change of Control.

If there is an acceleration of the vesting or payment of Benefits and/or an
acceleration of the exercisability of stock options upon a Change of Control,
all or a portion of the accelerated benefits may constitute "Excess Parachute
Payments" under Section 280G of the Code. The employee receiving an Excess
Parachute Payment incurs an excise tax of 20% of the amount of the payment in
excess of the employee's average annual compensation over the five calendar
years preceding the year of the Change of Control, and Atec is not entitled to a
deduction for such payment.

Limitation on Deduction.

Section 162(m) of the Code provides that no deduction will be allowed for
certain remuneration with respect to a covered employee to the extent such
remuneration exceeds $1,000,000. Under the regulations interpreting Code Section
162(m), an employee is a covered employee if his/her compensation is required to
be reported under the SEC's disclosure rules and he is employed as of the last
day of the taxable year. Code Section 162(m) does not apply to: (a) compensation
payable solely on account of the attainment of one or more performance goals if
(i) the goals are determined by a committee of two or more outside directors,
(ii) the material terms under which the remuneration will be paid, including the
goals, is disclosed to shareholders and approved by a majority of the
shareholders, and (iii) except in the case of SARs and certain stock options (as
described below), the committee certifies that the goals have been met; and (b)
compensation payable under a binding contract in effect on February 17, 1993
which is not thereafter modified in any material respect. Compensation arising
from SARs and stock options where the price from which appreciation is
calculated or exercise price, as the case may be, is no less than fair market
value on the date of grant constitute compensation on amount of attainment of a
performance goal as long as the shareholders approve the maximum number of
shares per participant over a specific time period. The $1,000,000 limitation is
reduced by any remuneration subject to such limitation for which a deduction is
disallowed under the Change of Control provisions set forth above.

<PAGE>

Summary Only.

The foregoing statement is only a summary of the U.S. federal income tax
consequences of the 2000 Plan and is based on Atec's understanding of present
U.S. federal tax laws and regulations.

2000 FLEXIBLE STOCK PLAN

NEW PLAN BENEFITS

The following table shows the stock option grants made, or to be made,
under our current plan (to the extent currently known), to:

o each of the executive officers named in the table on page 9;

o all current executive officers, as a group;

o all current directors who are not executive officers, as a group; and

o all employees, including all current officers who are not executive
officers, as a group.

Grants under the 2000 Plan are made at the discretion of our board of
directors or Compensation Committee. Accordingly, future grants under the 2000
Plan are not yet determinable.

Name and Position Dollar Value ($)(1) Number of Shares Subject
----------------- ------------------- ------------------------
to Options Granted
------------------
--------------------------------------------------------------------------------
-0- -0-
Surinder Rametra, CEO

Ashok Rametra, President, Treasurer -0- 1,000,000
and Director(2)

Executive Group(2 persons)(2) -0- 1,300,000

Non-Executive -0- 800,000
Director Group(4 persons)(2)

Non-Executive Officer -0- 750,000
Employee Group(5 persons)(3)
--------------------------------------------------------------------------------

(1) Amounts or benefits are not determinable. Reflects the benefits or amounts
which would have been received by or allocated for the last completed fiscal
year if the 2000 Plan had been in effect based on the closing price of $1.00 on
the American Stock Exchange on November 27, 2000, minus the exercise price.
Shares subject to an option with an option exercise price greater than $1.00 are
considered to have zero dollar value.

(2) Stock Options shall vest annually over a three year period in three equal
installments commencing on November 14, 2000 and ending on November 14, 2003.

(3) 150,000 Stock options granted to three employees shall vest annually over a
five year period in five equal installments commencing November 14, 2000 and
ending November 14, 2005. The balance of the options to two employees shall vest
annually over a three year period in three equal installments commencing
November 14, 2000 and ending on November 14, 2003.

THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST INTERESTS OF ATEC
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO.3.

PROPOSAL NO. 4

RATIFICATION OF AN AMENDMENT
TO OUR CERTIFICATE OF INCORPORATION

On November 14, 2000, resolutions were adopted at a special meeting of our
board of directors acting pursuant to the General Corporation Law of the State
of Delaware adopting resolutions subject to shareholder approval, amending our
certificate of incorporation to increase the number of authorized shares of
common stock $.01 par value per share, from 70 million to 100 million shares.
The full text of the proposed amendment to our certificate of incorporation is
attached to this proxy statement as Appendix C.

Proposal to Increase the Authorized Shares.

Authorized stock.

Our current certificate of incorporation establishes the maximum number of
shares of capital stock that we may issue without obtaining additional
stockholder approval. This is called authorized stock, which is currently
70,000,000 shares of common stock. What is the difference between authorized
stock and issued stock? Shares that have already been issued are referred to as
"issued" or "issued and outstanding." The difference between the total number of
authorized shares and the number of issued shares is the number of shares that
we may issue in the future without amending our certificate of incorporation.

Rights to the newly authorized and issued shares.

If approved, the shares will have the same rights and privileges as the
currently issued and outstanding shares of our common stock. The rights and
privileges of holders of our common stock are identical to the current issued
and outstanding common stock.

<PAGE>

Conditions to the increase in common stock.

The increase in our common stock is conditioned upon the approval of the
increase in common stock by the holders of a majority of the outstanding stock
entitled to vote. If the proposed amendment is approved, the additional
authorized shares would be available for issuance by the board of directors for
any proper corporate purpose at any time without further stockholder approval
except as otherwise required by applicable law or securities exchange listing
rules. Except to issue common stock issuable pursuant to our 2000 Plan there is
no other plan, proposal or arrangement at this time to issue additional shares
of our common stock.

THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 TO BE IN THE BEST INTERESTS OF ATEC
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO. 4.

PROPOSAL NO. 5

RATIFICATION OF COMPENSATION TO MEMBERS OF OUR
BOARD OF DIRECTORS AND EMPLOYEES PURSUANT TO
OUR RESOLUTIONS ADOPTED ON NOVEMBER 14, 2000

THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 5 TO BE IN THE BEST INTERESTS OF ATEC
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO. 5.

FORWARD-LOOKING STATEMENTS

This proxy statement contains "forward-looking" information, as that term
is defined by the Federal securities laws, about our financial condition,
results of operations and business. You can find many of these statements by
looking for words such as "may," "will," "expect," "anticipate," "believe,"
"estimate," and similar words used in this proxy statement. These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results to be materially different from
any future results expressed or implied by us in those statements. The risks and
uncertainties include those risks, uncertainties and risk factors identified,
among other places, under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our annual report on Form 10- K for the
year ended June 30, 2000. The most important factors that could prevent us from
achieving our stated goals include, but are not limited to, the following:

o operating and financial risks related to managing rapid growth,
o integrating acquired businesses and sustaining operating cash flow;
o potential fluctuation in quarterly results;
o volatility of stock price;
o rapid and significant changes in technology and markets;
o adverse changes in the regulatory or legislative environment affecting our
business; and
o failure to complete the transactions described in this proxy statement timely
or at all.

<PAGE>

Because the statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the forward-
looking statements. We caution you not to place undue reliance on the
statements, which speak only as of the date of this proxy statement. The
cautionary statements contained or referred to in this section should be
considered in connection with any subsequent written or oral forward-looking
statements that we or persons acting on our behalf may issue. We do not
undertake any obligation to review or confirm analysts' expectations or
estimates or to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date of this report or to reflect
the occurrence of unanticipated events.

WHERE YOU CAN FIND MORE INFORMATION

Government Filings.

We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission. You may read and copy any document that
we file: at the Commission's Public Reference Room, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; at the Commission's regional offices located
at 7 World Trade Center, 13th Floor, New York, New York 10048, and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and at the Commission's web site at http://www.sec.gov.

Some locations may charge prescribed or modest fees for copies. You may
obtain information on the operation of the Public Reference Room by calling
1-800-SEC-0330.

Atec is furnishing without charge to any stockholder entitled to vote at
the annual meeting of stockholders to be held December 19, 2000, a copy of its
annual report on form 10-K, including financial statements and schedules
thereto, required to be filed with the Securities and Exchange Commission for
the fiscal year 2000. A full text of our report on form 10K is attached to this
proxy statement as Appendix A.

OTHER MATTERS

Management does not intend to bring before the meeting any matters other
than those set forth herein, and has no present knowledge that any other matters
will or may be brought before the meeting by others. If any other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed Proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.

GENERAL

Unless contrary instructions are indicated on the proxy, all shares of
common stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted FOR Proposal Nos. 1, 2, 3,
4 and 5.

The board of directors knows of no business other than that set forth above
to be transacted at the meeting, but if other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the shares of
common stock represented by the proxies in accordance with their

<PAGE>

judgment on such matters. If a stockholder specifies a different choice on the
proxy, his or her shares of common stock will be voted in accordance with the
specification so made.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN
AND RETURN THE ATEC FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.

Commack, New York
December 4, 2000

<PAGE>

ATEC GROUP, INC.
Annual Meeting of Stockholders -- Tuesday, December 19, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

By signing below you appoint Ashok Rametra with power of substitution, as
proxy to represent you at the annual meeting of stockholders to be held at the
Huntington Hilton, Melville, New York, on Tuesday, December 19, 2000 at 10:00
a.m. local time and at any adjournment thereof, and to vote the shares of stock
you would be entitled to vote if personally present, as indicted on the reverse
side of this proxy card.

The shares represented by the proxy will be voted as directed. If no
contrary instruction is given, the shares will be voted FOR Proposal No. 1 for
the election of Ashok Rametra, James J. Charles, Richard J. Sullivan, David A.
Loppert, Scott Silverman and Kristen A. Sickorez as directors.

Please mark boxes in blue or black ink.

1. Proposal No. 1 - Election of Directors.

Nominees: Ashok Rametra, James J. Charles, Richard J. Sullivan, David A.
Loppert, Scott Silverman and Kristen A. Sickorez

AUTHORITY
FOR withheld
all as to all
nominees nominees
/ / / /

For, except authority withheld as to the following nominee(s):

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

2. Proposal No. 2 for ratification of the selection of Weinick Sanders
Leventhal & Co., LLP as the independent auditors of Atec.

FOR AGAINST ABSTAIN
/ / / / / /

<PAGE>

3. Proposal No. 3 to ratify and approve our 2000 Flexible Stock Plan.

FOR AGAINST ABSTAIN
/ / / / / /

4. Proposal No. 4 to ratify and approve an amendment to our certificate of
incorporation to increase the number of authorized shares of common stock
$.01 par value per share, from 70 million to 100 million shares.

FOR AGAINST ABSTAIN
/ / / / / /

5. Proposal No. 5 to ratify and approve compensation to members of the Board
of Directors of Atec pursuant to our resolutions adopted on November 14, 2000.

FOR AGAINST ABSTAIN
/ / / / / /

6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.

Please date, sign as name appears at left, and return promptly. If the
stock is registered in the name of two or more persons, each should sign. When
signing as Corporate Officer, Partner, Executor, Administrator, Trustee, or
Guardian, please give full title. Please note any change in your address
alongside the address as it appears in the Proxy.

Dated:
-------------------
---------------------------
(Signature)

---------------------------
(Print Name)

SIGN, DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE

<PAGE>

Appendix A

ATEC GROUP, INC.
ANNUAL REPORT

Form 10K filed with the Securities and Exchange Commission, dated September 28,
2000, incorporated by reference to this proxy and information statement.

<PAGE>

Appendix B

ATEC GROUP, INC.
2000 FLEXIBLE STOCK PLAN

<PAGE>

ATEC GROUP, INC.
2000 FLEXIBLE STOCK PLAN
------------------------

TABLE OF CONTENTS

Page
----

1. NAME AND PURPOSE 3
1.1. Name...................................................................3
1.2. Purpose................................................................3

2. DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION 3
2.1. General Definitions....................................................4
2.1.1. Affiliate......................................................4
2.1.2. Agreement......................................................4
2.1.3. Benefit........................................................4
2.1.4. Board of directors.............................................4
2.1.5. Cash Award.....................................................4
2.1.6. Change of Control..............................................4
2.1.7. Code...........................................................6
2.1.8. Atec...........................................................6
2.1.9. Committee......................................................6
2.1.10. common stock...................................................6
2.1.11. Effective Date.................................................6
2.1.12. Employee.......................................................6
2.1.13. Employer.......................................................6
2.1.14. Exchange Act...................................................6
2.1.15. Fair Market Value..............................................7
2.1.16. Fiscal Year....................................................7
2.1.17. ISO............................................................7
2.1.18. NQSO...........................................................7
2.1.19. Option.........................................................7
2.1.20. Other Stock Based Award........................................7
2.1.21. Parent.........................................................8
2.1.22. Participant....................................................8
2.1.23. Performance Based Compensation.................................8
2.1.24. Performance Share..............................................8
2.1.25. Plan...........................................................8
2.1.26. Reload Option..................................................8
2.1.27. Restricted Stock...............................................8
2.1.28. Rule 16b-3.....................................................8
2.1.29. SEC............................................................9
2.1.30. Share..........................................................9
2.1.31. SAR............................................................9
2.1.32. Subsidiary.....................................................9
2.2. Other Definitions......................................................9
2.3. Conflicts..............................................................9

<PAGE>

3. COMMON STOCK 9
3.1. Number of Shares.......................................................9
3.2. Reusage................................................................9
3.3. Adjustments...........................................................10

4. ELIGIBILITY 10
4.1. Determined By Committee...............................................10

5. ADMINISTRATION 10
5.1. Committee.............................................................10
5.2. Authority.............................................................10
5.3. Delegation............................................................11
5.4. Determination.........................................................11

6. AMENDMENT 11
6.1. Power of Board of directors...........................................11
6.2. Limitation............................................................11

7. TERM AND TERMINATION 12
7.1. Term..................................................................12
7.2. Termination...........................................................12

8. MODIFICATION OR TERMINATION OF BENEFITS 12
8.1. General...............................................................12
8.2. Committee's Right.....................................................12

9. CHANGE OF CONTROL 12
9.1. Vesting and Payment...................................................12
9.2. Other Action..........................................................12

10. AGREEMENTS AND CERTAIN BENEFITS 13
10.1. Grant Evidenced by Agreement........................................13
10.2. Provisions of Agreement.............................................13
10.3. Transferability.....................................................13

11. REPLACEMENT AND TANDEM AWARDS 13
11.1. Replacement.........................................................13
11.2. Tandem Awards.......................................................13

12. PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING 13
12.1. Payment.............................................................13
12.2. Dividend Equivalents................................................14
12.3. Deferral............................................................14
12.4. Withholding.........................................................14

13. OPTIONS 14
13.1. Types of Options....................................................14
13.2. Grant of ISOs and Option Price......................................14
13.3. Other Requirements for ISOs.........................................14
13.4. NQSOs...............................................................15
13.5. Determination by Committee..........................................15

<PAGE>

14. SARS 15
14.1. Grant and Payment...................................................15
14.2. Grant of Tandem Award...............................................15
14.3. ISO Tandem Award....................................................15
14.4. Payment of Award....................................................15

15. ANNUAL LIMITATIONS 15
15.1. Limitation on Options and SARs......................................15
15.2. Computations........................................................15

16. RESTRICTED STOCK AND PERFORMANCE SHARES 15
16.1. Restricted Stock....................................................15
16.2. Cost of Restricted Stock............................................16
16.3. Non-Transferability.................................................16
16.4. Performance Shares..................................................16
16.5. Grant...............................................................16

17. CASH AWARDS 16
17.1. Grant...............................................................16
17.2. Rule 16b-3..........................................................16
17.3. Restrictions........................................................16

18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS 16
18.1. Other Stock Based Awards............................................16
18.2. Other Benefits......................................................17

19. MISCELLANEOUS PROVISIONS 17
19.1. Underscored References..............................................17
19.2. Number and Gender...................................................17
19.3. Unfunded Status of Plan.............................................17
19.4. Termination of Employment...........................................17
19.5. Designation of Beneficiary..........................................17
19.6. Governing Law.......................................................17
19.7. Purchase for Investment.............................................18
19.8. No Employment Contract..............................................18
19.9. No Effect on Other Benefits.........................................18

ATEC GROUP, INC.
2000 FLEXIBLE STOCK PLAN
------------------------

NAME AND PURPOSE
----------------
Name.
-----
The name of this Plan is the "ATEC Group, Inc. 2000 Flexible Stock Plan."

Purpose.
--------
Atec has established this Plan to attract, retain, motivate and reward
Employees and other individuals, to encourage ownership of Atec's common stock
by Employees and other individuals, and to promote and further the best
interests of Atec by granting cash and other awards. This Plan is intended to be
"Broadly Based" (as such term is used for purposes of rules promulgated by The
National Association of Securities Dealers).

iii

<PAGE>

DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
----------------------------------------------

General Definitions.
--------------------
The following words and phrases, when used in the Plan, unless otherwise
specifically defined or unless the context clearly otherwise requires, shall
have the following respective meanings:

Affiliate.
----------
A Parent or Subsidiary of Atec.

Agreement.
----------
The document which evidences the grant of any Benefit under the Plan
and which sets forth the Benefit and the terms, conditions and provisions
of, and restrictions relating to, such Benefit.

Benefit.
--------
Any benefit granted to a Participant under the Plan.

Board of directors.
-------------------
The board of directors of Atec.

Cash Award.
-----------
A Benefit payable in the form of cash.

Change of Control.
------------------
The occurrence of any of the following:

(a) An acquisition of any common stock or other voting securities
of Atec entitled to vote generally for the election of directors (the
"Voting Securities") by any "Person" or "Group" (as each such term is
used for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person or Group, as the case may be, has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 20% of the then outstanding shares
of common stock or the combined voting power of Atec's then outstanding
Voting Securities; provided, however, that in determining whether a
Change of Control has occurred, shares of common stock or Voting
Securities that are acquired in a Non-Control Acquisition (as defined
below) shall not constitute an acquisition which would cause a Change
of Control. A "Non-Control Acquisition" shall mean an acquisition by
(i) Atec, (ii) any Subsidiary or (iii) any employee benefit plan
maintained by Atec or any Subsidiary, including a trust forming part of
any such plan (an "Employee Benefit Plan");

(b) When, during any 2-year period, individuals who, at the
beginning of the 2-year period, constitute the Board of directors (the
"Incumbent Board of directors"), cease for any reason to constitute at
least 50% of the members of the Board of directors; provided, however,
that (i) if the election or nomination for election by Atec's
shareholders of any new director was approved by a vote of at least
two-thirds of the Incumbent Board of directors, such new

<PAGE>

director shall, for purposes hereof, be deemed to be a member of the
Incumbent Board of directors; and (ii) no individual shall be deemed to
be a member of the Incumbent Board of directors if such individual
initially assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person or Group other than the Board of
directors (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest;

(i) a merger, consolidation or reorganization involving Atec
or any Subsidiary, unless the merger, consolidation or
reorganization is a Non-Control Transaction. A "Non-Control
Transaction" shall mean a merger, consolidation or reorganization
of Atec or any Subsidiary where:

(A) the shareholders of Atec immediately prior to the
merger, consolidation or reorganization own, directly or
indirectly, immediately following such merger, consolidation
or reorganization, at least 50% of the combined voting power
of the outstanding voting securities of the corporation
resulting from such merger, consolidation or reorganization
(the "Surviving Corporation") in substantially the same
proportion as their ownership of the common stock or Voting
Securities, as the case may be, immediately prior to the
merger, consolidation or reorganization,

(B) the individuals who were members of the Incumbent
Board of directors immediately prior to the execution of the
agreement providing for the merger, consolidation or
reorganization constitute at least two-thirds of the members
of the board of directors of the Surviving Corporation, or a
corporation beneficially owning, directly or indirectly, a
majority of the voting securities of the Surviving
Corporation, and

(C) no Person or Group, other than (1) Atec, (2) any
Subsidiary, (3) any Employee Benefit Plan or (4) any other
Person or Group who, immediately prior to the merger,
consolidation or reorganization, had Beneficial Ownership of
not less than 20% of the then outstanding Voting Securities
or common stock, has Beneficial Ownership of 20% or more of
the combined voting power of the Surviving Corporation's then
outstanding voting securities or common stock;

(d) A complete liquidation or dissolution of Atec; or

(e) The sale or other disposition of all or substantially all of
the assets of Atec to any Person (other than a transfer to a
Subsidiary).

<PAGE>

number of shares of Voting Securities or common stock then outstanding,
increases the proportional number of shares beneficially owned by the Subject
Person; provided, however, that if a Change of Control would have occurred (but
for the operation of this sentence) as a result of the acquisition of Voting
Securities or common stock by Atec, and after such acquisition by Atec, the
Subject Person becomes the beneficial owner of any additional shares of Voting
Securities or common stock, which increases the percentage of the then
outstanding shares of Voting Securities or common stock beneficially owned by
the Subject Person, then a Change of Control shall be deemed to have occurred.
In addition, notwithstanding the foregoing, the acquisition or ownership of any
common stock or Voting Securities by Applied Digital Solutions, Inc. and its
Affiliates (determined as if it was Atec) shall not cause or result in a Change
of Control.

Code.
-----
The Internal Revenue Code of 1986, as amended. Any reference to the
Code includes the regulations promulgated pursuant to the Code.

Atec.
-----
ATEC Group, Inc.

Committee.
----------
The Committee described in Section 0.

Common Stock.
-------------
Atec's common stock which presently has a par value of $.01 per Share.

Effective Date.
---------------
The date that the Plan is approved by the shareholders of Atec which
must occur within one year before or after approval by the Board of
directors. Any grants of Benefits prior to the approval by the shareholders
of Atec shall be void if such approval is not obtained.

Employee.
---------
Any person employed by the Employer.

Employer.
---------
Atec and all Affiliates.

Exchange Act.
-------------
The Securities Exchange Act of 1934, as amended.

<PAGE>

Fair Market Value.
------------------
The closing price of Shares on the Nasdaq National Market on a given
date, or, in the absence of sales on a given date, the closing price on the
Nasdaq National Market on the last day on which a sale occurred prior to
such date.

Fiscal Year.
------------
The taxable year of Atec which is the calendar year.

ISO.
----
An Incentive Stock Option as defined in Section 422 of the Code.

NQSO.
-----
A non-qualified stock Option, which is an Option that does not qualify
as an ISO.

Option.
-------
An option to purchase Shares granted under the Plan.

Other Stock Based Award.
------------------------
An award under Section 18 that is valued in whole or in part by
reference to, or otherwise based on, common stock.

<PAGE>

Parent.
-------
Any corporation (other than Atec or a Subsidiary) in an unbroken chain
of corporations ending with Atec, if, at the time of the grant of an Option
or other Benefit, each of the corporations (other than Atec) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

Participant.
------------
An individual who is granted a Benefit under the Plan. Benefits may be
granted only to Employees, members of the Board of directors, employees and
owners of entities which are not Affiliates but which have a direct or
indirect ownership interest in an Employer or in which an Employer has a
direct or indirect ownership interest, individuals who, and employees and
owners of entities which, are customers and suppliers of an Employer,
individuals who, and employees and owners of entities which, render
services to an Employer, and individuals who, and employees and owners of
entities, which have ownership or business affiliations with any individual
or entity previously described.

Performance Based Compensation.
-------------------------------
Compensation which meets the requirements of Section 162(m)(4)(C) of
the Code.

Performance Share.
------------------
A Share awarded to a Participant under Section 0 of the Plan.

Plan.
-----
ATEC Group, Inc. 2000 Flexible Stock Plan and all amendments and
supplements to it.

Reload Option.
--------------
An Option to purchase the number of Shares used by a Participant to
exercise an Option and to satisfy any withholding requirement incident to
the exercise of such Option.

Restricted Stock.
-----------------
Shares issued under Section 0 of the Plan.

Rule 16b-3.
-----------
Rule 16b-3 promulgated by the SEC, as amended, or any successor rule
in effect from time to time.

<PAGE>

SEC.
----
The Securities and Exchange Commission.

Share.
------
A share of common stock.

SAR.
----
A stock appreciation right, which is the right to receive an amount
equal to the appreciation, if any, in the Fair Market Value of a Share from
the date of the grant of the right to the date of its payment.

Subsidiary.
-----------
Any corporation, other than Atec, in an unbroken chain of corporations
beginning with Atec if, at the time of grant of an Option or other Benefit,
each of the corporations, other than the last corporation in the unbroken
chain, owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

Other Definitions.
------------------
In addition to the above definitions, certain words and phrases used in the
Plan and any Agreement may be defined in other portions of the Plan or in such
Agreement.

Conflicts.
----------
In the case of any conflict in the terms of the Plan relating to a Benefit,
the provisions in the section of the Plan which specifically grants such Benefit
shall control those in a different section. In the case of any conflict between
the terms of the Plan relating to a Benefit and the terms of an Agreement
relating to a Benefit, the terms of the Plan shall control.

COMMON STOCK
------------
Number of Shares.
-----------------
The number of Shares which may be issued or sold or for which Options, SARs
or Performance Shares may be granted under the Plan shall be 10,000,000 Shares,
plus an annual increase, effective as of the first day of each calendar year,
commencing with 2001, equal to 10% of the number of outstanding Shares as of the
first day of such calendar year, but in no event more than 20,000,000 Shares in
the aggregate. Such Shares may be authorized but unissued Shares, Shares held in
the treasury, or both. The full number of Shares available may be used for any
type of Option or other Benefit.

Reusage.
--------
If an Option or SAR expires or is terminated, surrendered, or canceled
without having been fully exercised, if Restricted Shares or Performance Shares
are forfeited, or if any other grant results in any Shares not being issued, the
Shares covered by such Option or SAR, grant of Restricted Shares, Performance
Shares or other grant, as the case may be, shall again be available for use
under the Plan. Any Shares which are used as full or partial payment to Atec
upon exercise of an Option or for any other Benefit that requires a payment to
Atec shall be available for purposes of the Plan.

<PAGE>

Adjustments.
------------
If there is any change in the common stock of Atec by reason of any stock
dividend, spin-off, split-up, spin-out, recapitalization, merger, consolidation,
reorganization, combination or exchange of shares, or otherwise, the number of
SARs and number and class of shares available for Options and grants of
Restricted Stock, Performance Shares and Other Stock Based Awards and the number
of Shares subject to outstanding Options, SARs, grants of Restricted Stock which
are not vested, grants of Performance Shares which are not vested, and Other
Stock Based Awards, and the price thereof, as applicable, shall be appropriately
adjusted by the Committee.

ELIGIBILITY
-----------
Determined By Committee.
------------------------
The Participants and the Benefits they receive under the Plan shall be
determined solely by the Committee. In making its determinations, the Committee
shall consider past, present and expected future contributions of Participants
and potential Participants to the Employer, including, without limitation, the
performance of, or the refraining from the performance of, services. Unless
specifically provided otherwise herein, all determinations of the Committee in
connection with the Plan or an Agreement shall be made in its sole discretion.

ADMINISTRATION
--------------
Committee.
----------
The Plan shall be administered by the Committee. The Committee shall
consist of the Board of directors, unless the Board of directors appoints a
Committee of two or more but less than all of the Board of directors. If the
Committee does not include the entire Board of directors, it shall serve at the
pleasure of the Board of directors, which may from time to time appoint members
in substitution for members previously appointed and fill vacancies, however
caused, in the Committee. The Committee may select one of its members as its
Chairman and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee made at a meeting at which a quorum is present
shall be made by a majority of its members present at the meeting. Any decision
or determination reduced to writing and signed by a majority of the members
shall be fully as effective as if it had been made by a majority vote at a
meeting duly called and held.

Authority.
----------
Subject to the terms of the Plan, the Committee shall have discretionary
authority to:

(a) determine the individuals to whom Benefits are granted, the type
and amounts of Benefits to be granted and the date of issuance and duration
of all such grants;

(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Benefit granted;

(d) prescribe, amend and rescind rules and regulations relating to the
Plan;

(e) determine the content and form of all Agreements;

(f) determine all questions relating to Benefits under the Plan;

<PAGE>

(g) maintain accounts, records and ledgers relating to Benefits;

(h) maintain records concerning its decisions and proceedings;

(i) employ agents, attorneys, accountants or other persons for such
purposes as the Committee considers necessary or desirable;

(j) take, at any time, any action described in Section 9.1 or
permitted by Section 9.2(a), irrespective of whether any Change of Control
has occurred or is imminent;

(k) determine, except to the extent otherwise provided in the Plan,
whether and the extent to which Benefits under the Plan will be structured
to conform to the requirements applicable to Performance-Based
Compensation, and to take such action, establish such procedures, and
impose such restrictions at the time such Benefits are granted as the
Committee determines to be necessary or appropriate to conform to such
requirements; and

(l) do and perform all acts which it may deem necessary or appropriate
for the administration of the Plan and carry out the purposes of the Plan.

Delegation.
-----------
Except as required by Rule 16b-3 with respect to grants of Options, Stock
Appreciation Awards, Performance Shares, Other Stock Based Awards, or other
Benefits to individuals who are subject to Section 0 of the Exchange Act or as
otherwise required for compliance with Rule 16b-3 or other applicable law, the
Committee may delegate all or any part of its authority under the Plan to any
Employee, Employees or committee.

Determination.
--------------
All determinations of the Committee shall be final.

AMENDMENT
---------
Power of Board of directors.
----------------------------
Except as hereinafter provided, the Board of directors shall have the sole
right and power to amend the Plan at any time and from time to time.

Limitation.
-----------
The Board of directors may not amend the Plan, without approval of the
shareholders of Atec:

(a) in a manner which would cause Options which are intended to
qualify as ISOs to fail to qualify;

(b) in a manner which would cause the Plan to fail to meet the
requirements of Rule 16b-3; or

<PAGE>

TERM AND TERMINATION
--------------------
Term.
-----
The Plan shall commence as of the Effective Date and, subject to the terms
of the Plan, including those requiring approval by the shareholders of Atec and
those limiting the period over which ISOs or any other Benefits may be granted,
shall continue in full force and effect until terminated.

Termination.
------------
The Plan may be terminated at any time by the Board of directors.

MODIFICATION OR TERMINATION OF BENEFITS
---------------------------------------
General.
--------
Subject to the provisions of Section 0, the amendment or termination of the
Plan shall not adversely affect a Participant's right to any Benefit granted
prior to such amendment or termination.

Committee's Right.
------------------
Any Benefit granted may be converted, modified, forfeited or canceled, in
whole or in part, by the Committee if and to the extent permitted in the Plan or
applicable Agreement or with the consent of the Participant to whom such Benefit
was granted. Except as may be provided in an Agreement, the Committee may, in
its sole discretion, in whole or in part, waive any restrictions or conditions
applicable to, or accelerate the vesting of, any Benefit.

CHANGE OF CONTROL
-----------------
Vesting and Payment.
--------------------
In the event of a Change of Control:

(a) all outstanding Options shall become fully exercisable, except to
the extent that the right to exercise the Option is subject to restrictions
established in connection with an SAR that is issued in tandem with the
Option;

(b) all outstanding SARs shall become immediately payable, except to
the extent that the right to exercise the SAR is subject to restrictions
established in connection with an Option that is issued in tandem with the
SAR;

(d) all Performance Shares shall be deemed to be fully earned and
shall be paid out in such manner as determined by the Committee; and

(e) all Cash Awards, Other Stock Based Awards and other Benefits shall
become fully vested and/or earned and paid out in such manner as determined
by the Committee.

Other Action.
-------------
In the event of a Change of Control, the Committee, in its sole discretion,
may, in addition to the provisions of Section 0 above and to the extent not
inconsistent therewith:

(a) provide for the purchase of any Benefit for an amount of cash
equal to the amount which could have been attained upon the exercise or
realization of such Benefit;

<PAGE>

(b) make such adjustment to the Benefits then outstanding as the
Committee deems appropriate to reflect such transaction or change; and/or

(c) cause the Benefits then outstanding to be assumed, or new Benefits
substituted therefor, by the surviving corporation in such change.

AGREEMENTS AND CERTAIN BENEFITS
-------------------------------
Grant Evidenced by Agreement.
-----------------------------
The grant of any Benefit under the Plan may be evidenced by an Agreement
which shall describe the specific Benefit granted and the terms and conditions
of the Benefit. The granting of any Benefit shall be subject to, and conditioned
upon, the recipient's execution of any Agreement required by the Committee.
Except as otherwise provided in an Agreement, all capitalized terms used in the
Agreement shall have the same meaning as in the Plan, and the Agreement shall be
subject to all of the terms of the Plan.

Provisions of Agreement.
------------------------
Each Agreement shall contain such provisions that the Committee shall
determine to be necessary, desirable and appropriate for the Benefit granted
which may include, but not necessarily be limited to, the following with respect
to any Benefit: description of the type of Benefit; the Benefit's duration; its
transferability; if an Option, the exercise price, the exercise period and the
person or persons who may exercise the Option; the effect upon such Benefit of
the Participant's death, disability, changes of duties or termination of
employment; the Benefit's conditions; when, if, and how any Benefit may be
forfeited, converted into another Benefit, modified, exchanged for another
Benefit, or replaced; and the restrictions on any Shares purchased or granted
under the Plan.

Transferability.
----------------
Unless otherwise specified in an Agreement or permitted by the Committee,
each Benefit granted shall be not transferable other than by will or the laws of
descent and distribution and shall be exercisable during a Participant's
lifetime only by him.

REPLACEMENT AND TANDEM AWARDS
-----------------------------
Replacement.
------------
The Committee may permit a Participant to elect to surrender a Benefit in
exchange for a new Benefit.

Tandem Awards.
--------------
Awards may be granted by the Committee in tandem. However, no Benefit may
be granted in tandem with an ISO except SARs.

PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING
--------------------------------------------
Payment.
--------
Upon the exercise of an Option or in the case of any other Benefit that
requires a payment by a Participant to Atec, the amount due Atec is to be paid:

(a) in cash, including by means of a so-called "cashless exercise" of
an Option;

(b) by the surrender of all or part of a Benefit (including the
Benefit being exercised);

<PAGE>

(c) by the tender to Atec of Shares owned by the optionee and
registered in his name having a Fair Market Value equal to the amount due
to Atec;

(d) in other property, rights and credits deemed acceptable by the
Committee, including the Participant's promissory note;

(e) by any combination of the payment methods specified in (a), (b),
(c) and (d) above.

Notwithstanding, the foregoing, any method of payment other than (a) may be
used only with the consent of the Committee or if and to the extent so provided
in an Agreement. The proceeds of the sale of Shares purchased pursuant to an
Option and any payment to Atec for other Benefits shall be added to the general
funds of Atec or to the Shares held in treasury, as the case may be, and used
for the corporate purposes of Atec as the Board of directors shall determine.

Dividend Equivalents.
---------------------
Grants of Benefits in Shares or Share equivalents may include dividend
equivalent payments or dividend credit rights.

Deferral.
---------
The right to receive any Benefit under the Plan may, at the request of the
Participant, be deferred for such period and upon such terms as the Committee
shall determine, which may include crediting of interest on deferrals of cash
and crediting of dividends on deferrals denominated in Shares.

Withholding.
------------
Atec may, at the time any distribution is made under the Plan, whether in
cash or in Shares, or at the time any Option is exercised, withhold from such
distribution or Shares issuable upon the exercise of an Option, any amount
necessary to satisfy federal, state and local income and/or other tax
withholding requirements with respect to such distribution or exercise of such
Options. The Committee or Atec may require a participant to tender to Atec cash
and/or Shares in the amount necessary to comply with any such withholding
requirements.

OPTIONS
-------
Types of Options.
-----------------
It is intended that both ISOs and NQSOs, which may be Reload Options, may
be granted by the Committee under the Plan.

Grant of ISOs and Option Price.
-------------------------------
Each ISO must be granted to an Employee and granted within ten years from
the earlier of the date of adoption by the Board of directors or the Effective
Date. The purchase price for Shares under any ISO shall be no less than the Fair
Market Value of the Shares at the time the Option is granted.

Other Requirements for ISOs.
----------------------------
The terms of each Option which is intended to qualify as an ISO shall meet
all requirements of Section 422 of the Code.

<PAGE>

NQSOs.
------
The terms of each NQSO shall provide that such Option will not be treated
as an ISO. The purchase price for Shares under any NQSO shall be no less than
85% of the Fair Market Value of the Shares at the time the Option is granted.

Determination by Committee.
---------------------------
Except as otherwise provided in Section 0 through Section 0, the terms of
all Options shall be determined by the Committee.

SARS
----
Grant and Payment.
------------------
The Committee may grant SARs. Upon electing to receive payment of a SAR, a
Participant shall receive payment in cash, in Shares, or in any combination of
cash and Shares, as the Committee shall determine.

Grant of Tandem Award.
----------------------
The Committee may grant SARs in tandem with an Option, in which case: the
exercise of the Option shall cause a correlative reduction in SARs standing to a
Participant's credit which were granted in tandem with the Option; and the
payment of SARs shall cause a correlative reduction of the Shares under such
Option.

ISO Tandem Award.
-----------------
When SARs are granted in tandem with an ISO, the SARs shall have such terms
and conditions as shall be required for the ISO to qualify as an ISO.

Payment of Award.
-----------------
SARs shall be paid by Atec to a Participant, to the extent payment is
elected by the Participant (and is otherwise due and payable), as soon as
practicable after the date on which such election is made.

ANNUAL LIMITATIONS
------------------
Limitation on Options and SARs.
-------------------------------
The number of (a) Shares covered by Options where the purchase price is no
less than the Fair Market Value of the Shares on the date of grant plus (b) SARs
which may be granted to any Participant in any Fiscal Year shall not exceed
5,000,000.

Computations.
-------------
For purposes of Section 0: Shares covered by an Option that is canceled
shall count against the maximum, and, if the exercise price under an Option is
reduced, the transaction shall be treated as a cancellation of the Option and a
grant of a new Option; and SARs covered by a grant of SARs that is canceled
shall count against the maximum, and, if the Fair Market Value of a Share on
which the appreciation under a grant of SARs will be calculated is reduced, the
transaction will be treated as a cancellation of the SARs and the grant of a new
grant of SARs.

RESTRICTED STOCK AND PERFORMANCE SHARES
---------------------------------------
Restricted Stock.
-----------------
The Committee may grant Benefits in Shares available under Section 0 of the
Plan as Restricted Stock. Shares of Restricted Stock shall be issued and

<PAGE>

delivered at the time of the grant or as otherwise determined by the Committee,
but shall be subject to forfeiture until provided otherwise in the applicable
Agreement or the Plan. Each certificate representing Shares of Restricted Stock
shall bear a legend referring to the Plan and the risk of forfeiture of the
Shares and stating that such Shares are nontransferable until all restrictions
have been satisfied and the legend has been removed. At the discretion of the
Committee, the grantee may or may not be entitled to full voting and dividend
rights with respect to all shares of Restricted Stock from the date of grant.

Cost of Restricted Stock.
-------------------------
Unless otherwise determined by the Committee, grants of Shares of
Restricted Stock shall be made at a per Share cost to the Participant equal to
par value.

Non-Transferability.
--------------------
Shares of Restricted Stock shall not be transferable until after the
removal of the legend with respect to such Shares.

Performance Shares.
-------------------
Performance Shares are the right of an individual to whom a grant of such
Shares is made to receive Shares or cash equal to the Fair Market Value of such
Shares at a future date in accordance with the terms and conditions of such
grant. The terms and conditions shall be determined by the Committee, in its
sole discretion, but generally are expected to be based substantially upon the
attainment of targeted profit and/or performance objectives.

Grant.
------
The Committee may grant an award of Performance Shares. The number of
Performance Shares and the terms and conditions of the grant shall be set forth
in the applicable Agreement.

CASH AWARDS
-----------
Grant.
------
The Committee may grant Cash Awards at such times and (subject to Section
0) in such amounts as it deems appropriate.

Rule 16b-3.
-----------
The amount of any Cash Award in any Fiscal Year to any Participant who is
subject to Section 0 of the Exchange Act shall not exceed the greater of
$100,000 or 100% of his cash compensation (excluding any Cash Award under this
Section 0) for such Fiscal Year.

Restrictions.
-------------
Cash Awards may be subject or not subject to conditions (such as an
investment requirement), restricted or nonrestricted, vested or subject to
forfeiture and may be payable currently or in the future or both.

OTHER STOCK BASED AWARDS AND OTHER BENEFITS
-------------------------------------------
Other Stock Based Awards.
-------------------------
The Committee shall have the right to grant Other Stock Based Awards which
may include, without limitation, the grant of Shares based on certain
conditions, the payment of cash based on the performance of the common stock,
and the grant of securities convertible into Shares.

<PAGE>

Other Benefits.
---------------
The Committee shall have the right to provide types of Benefits under the
Plan in addition to those specifically listed, if the Committee believes that
such Benefits would further the purposes for which the Plan was established.

MISCELLANEOUS PROVISIONS
------------------------
Underscored References.
-----------------------
The underscored references contained in the Plan are included only for
convenience, and they shall not be construed as a part of the Plan or in any
respect affecting or modifying its provisions.

Number and Gender.
------------------
The masculine and neuter, wherever used in the Plan, shall refer to either
the masculine, neuter or feminine; and, unless the context otherwise requires,
the singular shall include the plural and the plural the singular.

Unfunded Status of Plan.
------------------------
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments or deliveries of Shares not
yet made to a Participant by Atec, nothing contained herein shall give any
rights that are greater than those of a general creditor of Atec. The Committee
may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Shares or payments hereunder
consistent with the foregoing.

Termination of Employment.
--------------------------
If the employment of a Participant by Atec terminates for any reason,
except as otherwise provided in an Agreement, all unexercised, deferred, and
unpaid Benefits may be exercisable or paid only in accordance with rules
established by the Committee. These rules may provide, as the Committee may deem
appropriate, for the expiration, forfeiture, continuation, or acceleration of
the vesting of all or part of the Benefits.

Designation of Beneficiary.
---------------------------
A Participant may file with the Committee a written designation of a
beneficiary or beneficiaries (subject to such limitations as to the classes and
number of beneficiaries and contingent beneficiaries as the Committee may from
time to time prescribe) to exercise, in the event of the death of the
Participant, an Option, or to receive, in such event, any Benefits. The
Committee reserves the right to review and approve beneficiary designations. A
Participant may from time to time revoke or change any such designation of
beneficiary and any designation of beneficiary under the Plan shall be
controlling over any other disposition, testamentary or otherwise; provided,
however, that if the Committee shall be in doubt as to the right of any such
beneficiary to exercise any Option or to receive any Benefit, the Committee may
determine to recognize only an exercise by the legal representative of the
recipient, in which case Atec, the Committee and the members thereof shall not
be under any further liability to anyone.

Governing Law.
--------------
This Plan shall be construed and administered in accordance with the laws
of the State of Delaware.

<PAGE>

Purchase for Investment.
------------------------
The Committee may require each person purchasing Shares pursuant to an
Option or other award under the Plan to represent to and agree with Atec in
writing that such person is acquiring the Shares for investment and without a
view to distribution or resale. The certificates for such Shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for Shares delivered under the Plan shall be subject
to such stock-transfer orders and other restrictions as the Committee may deem
advisable under all applicable laws, rules and regulations, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate references to such restrictions.

No Employment Contract.
-----------------------
Neither the adoption of the Plan nor any Benefit granted hereunder shall
confer upon any Employee any right to continued employment nor shall the Plan or
any Benefit interfere in any way with the right of the Employer to terminate the
employment of any of its Employees at any time.

No Effect on Other Benefits.
----------------------------
The receipt of Benefits under the Plan shall have no effect on any benefits
to which a Participant may be entitled from the Employer, under another plan or
otherwise, or preclude a Participant from receiving any such benefits.

<PAGE>

Appendix C

ATEC GROUP, INC.
PROPOSED AMENDMENT TO ITS CERTIFICATE OF INCORPORATION

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ATEC GROUP, INC.

ATEC GROUP, INC. (the "Corporation"), a Corporation organized and existing
under and by virtue of the General Corporation law of the State of Delaware,
does hereby certify:

1. The name of the corporation is ATEC GROUP, INC.

2. The certificate of incorporation of the Corporation is hereby amended by
striking out Article Fourth thereof and by substituting in lieu of said Article
the following new Article:

FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is one hundred and ten million (110,000,000), which
shall consist of: (i) one hundred million (100,000,000) shares of common
stock, $.01 par value per share, and (ii) ten million (10,000,000) shares
of preferred stock, $.01 par value per share.

3. The remainder of Article Fourth shall remain intact.

4. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Sections 228 and 242 of
the General Corporation Law of the State of Delaware.

Executed on this day of ___________, 2000.

------------------------------------
Ashok Rametra, President

<PAGE>

Appendix D

ATEC GROUP, INC.
AUDIT COMMITTEE CHARTER
ATEC GROUP, INC
--------------------------------------------------------------------------------

AUDIT COMMITTEE CHARTER

Organization
------------
There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.

Statement of Policy

The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the corporation.

Responsibilities

In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.

In carrying out these responsibilities, the audit committee will:

o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and
its divisions and subsidiaries.

o Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the
current year and the audit procedures to be utilized, and at the
conclusion thereof review such audit, including any comments or
recommendations of the independent auditors.

<PAGE>

o Review with the independent auditors, and financial and accounting
personnel, the adequacy and effectiveness of the accounting and
financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed controls
or procedures are desirable.

Particular emphasis should be given to the adequacy of such internal
controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further, the
committee periodically should review company policy statements to
determine their adherence to the code of conduct.

o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented
to the shareholders. Any changes in accounting principles should be
reviewed.

o Provide sufficient opportunity for the independent auditors to meet
with the members of the audit committee without members of
management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the
corporation's financial and accounting personnel, and the
cooperation that the independent auditors received during the course
of the audit.

o Review accounting and financial human resources and succession
planning within the company.

o Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the
board of directors.

o Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this
purpose if, in its judgment, that is appropriate.