ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
MANAGEMENT
Directors and Officers
The following table sets forth the names and ages of all current
directors and officers and the position held by them:
Name Age Position
---- --- --------
Surinder Rametra 62 Chairman of the Board
Balwinder Singh Bathla 46 Chief Executive Officer and
Director
Ashok Rametra 50 President, Secretary,
Treasurer and Director
James J. Charles 59 Chief Financial Officer and
Director
Praveen Bhutani 55 Director
David C. Reback 60 Director
Stewart Benjamin 38 Director
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 elected and qualified.
Surinder Rametra was appointed the Chief Executive Officer and Chairman
of the Board in June 1994. He resigned as Chief Executive Officer in January
2002. Prior to June 1994 Mr. Rametra was president of one of our subsidiaries.
Mr. Rametra received a Bachelor's degree in Mechanical Engineering from the
Punjab Engineering College, India and a Master's degree in Industrial
Engineering from the Indian Institute of Technology in 1965 and 1969
respectively. In 1976, Mr. Rametra received a Masters of Business Administration
Degree in Finance from New York University.
Balwinder Singh Bathla was appointed as the Chief Executive Officer and
Director of the Company in January 2002. Prior to 2002 he was the Chief
Executive Officer of Advance Computer Management Group, Inc., a computer sales
company. Prior to 1998, he was the
16
President and a Director of the Company.
Ashok Rametra was appointed President in January 1999. He has been the
Company's Secretary, Treasurer and a Director since June 1994. From June 1994 to
March 1995, Mr. Rametra also served as our President. Prior to 1994, Mr. Rametra
was the president of one of the Company's subsidiaries. Mr. Rametra received a
Bachelor of Science Degree from St. Johns University in Accounting in 1980. Mr.
Rametra is the brother of Surinder Rametra.
James J. Charles was appointed Chief Financial Officer in January 1999.
Prior to his appointment, he was a financial consultant to several public
companies (1994-1998), Chief Financial Officer of Caribbean Printing Industries,
Inc., a printing company (1990-1994) and a partner in the firm of Ernst & Young
(1966-1990). He was appointed a Director in September 2000.
Praveen Bhutani was appointed a Director in May 2001. Mr. Bhutani was
the founder of Ultra Spec Cables, Inc., a cable manufacturing company and The
Options Group, Inc., a placement company. He serves both companies as the Chief
Executive Officer since 1992. Prior to 1992 he held various executive positions.
Mr. Bhutani has Bachelor and Master degrees in finance from the Delhi College,
Delhi, India.
Stewart Benjamin was appointed a Director in May 2001. Mr. Benjamin is
a certified public accountant in the State of New York. From January 1996 to the
present, Mr. Benjamin has been self-employed as a sole practitioner under the
name of Stewart H. Benjamin, CPA, P.C. From 1985 through December 1995, Mr.
Benjamin was employed as a staff accountant in both private industry and local
public accounting firms. Mr. Benjamin received a Bachelor of Business
Administration degree from Pace University in 1985.
David C. Reback was appointed a Director in November 1997. Since 1969,
Mr. Reback has been a partner with Reback & Potash, LLP, a law firm specializing
in litigation, appellate matters and real estate. Mr. Reback received a BA from
Syracuse University, and in 1965 he received a Juris Doctor's degree from
Syracuse University College of Law.
To our knowledge, based solely on a review of such materials as are
required by the Securities and Exchange Commission, none of our officers,
directors or beneficial holders of more than ten percent of our issued and
outstanding shares of Common Stock has failed to timely file with the Securities
and Exchange Commission any form or report required to be so filed pursuant to
Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year
ended June 30, 2002.
17
ITEM 11. EXECUTIVE COMPENSATION
The Summary Compensation Table for the years ended June 30, 2002, 2001
and 2000 is provided herein. This table provides compensation information on
behalf of the Chief Executive Officer and other officers 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, 2002, 2001
and/or 2000. 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, 2002, 2001 and 2000
Annual Compensation Awards Payouts
* Surinder Rametra was the Company's Chief Executive Officer during the fiscal
years ended June 30, 2000 and 2001 and part of 2002. Mr. Bathla became Chief
Executive Officer in January 2002.
(1) Major Medical $6,567, Leased Auto $7,800
(2) Major Medical $3,531, Leased Auto $4,933
(3) Major Medical $3,058, Leased Auto $7,708
(4) Major Medical $3,941, Leased Auto $8,790
(5) Major Medical $3,064, Leased Auto $7,708
(6) Major Medical $5,611, Leased Auto $7,168
(7) Leased auto $3,900
Year End Option Table. The following table sets forth certain
information regarding the stock options held as of June 30, 2002, by the
individuals named in the above Summary Compensation Table.
18
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money-Options
Fiscal Year End (#) at Fiscal Year End (4)
Shares Acquired Value ---------------------------- ----------------------------
Name on exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ---------- ----------- ------------- ----------- -------------
Surinder Rametra(1) 0 0 2,297,000 750,000 0 $ 0
Ashok Rametra(2) 0 0 1,345,000 750,000 0 0
Balwinder Singh Bathla(3) 0 0 100,000 -- 0 0
(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; (v) 150,000 shares at $1.993 per
share exercisable through November 7, 2009 and (vi) 1,250,000 shares at
$.56 per share exercisable through April 23, 2011 and 750,000 shares at
$.50 per share exercisable through November 16, 2011.
(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; (iv) 200,000 shares at $1.993
per share exercisable through November 7, 2009 and (v) 1,000,000 shares at
$.563 per share excisable through November 14, 2010 and 750,000 shares at
$.50 per share exercisable through November 16, 2011.
(3) Represents options to acquire 100,000 shares at $3.75 per share exercisable
through December 19, 2006.
(4) Computation based on $.40, which was the June 28, 2002, 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, 2002,
by us to the individuals named in the above Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
% of Total
Options
Granted to
Employees in Exercise Price Expiration
Name Granted (#) Fiscal Year $ / Share Date
---- ----------- ----------- --------- ----
Surinder Rametra 750,000 28% $.50 2011
Ashok Rametra 750,000 28% $.50 2011
Balwinder Singh Bathla
19
EMPLOYMENT AGREEMENTS
Surinder Rametra, Balwinder Singh Bathla, and Ashok Rametra our
executive officers, all have employment agreements that expire December 31,
2002, except for Mr. Balwinder Singh Bathla, whose agreement expires December
31, 2004. The agreements contain provisions for base compensation, termination
of employment and change-in-control arrangements. The agreements provide annual
compensation of $250,000 for Ashok Rametra and Balwinder Singh Bathla and
$200,000 for Surinder Rametra. Changes to the annual compensation are determined
each year by the compensation committee. In the event the Company is sold or a
change in control occurs the Company may terminate these agreements at any time
within 12 months following the transaction date provided that the employee
receives compensation up to 18 months (in the case of Mr. Bathla 12 months
compensation or the balance of the term of his agreement).
BOARD OF DIRECTORS COMPENSATION
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 January 9, 2001, our stockholders approved
that our non-employee directors receive up to $5,000 for attendance at each
quarterly meeting of the board of directors plus up to $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.
During the fiscal year ended June 30, 2002 no director received any fees
for attending meetings.
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 2002,Ashok Rametra, David C. Reback and Praveen Bhutani were
members of the compensation committee. . In the opinion of the board of
directors, Mr. Reback and Mr. Bhutani 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. See Item 13. "Certain Relationships and Related Transactions" for more
information about Mr. Rametra's relationship with the Company.
20
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 2002 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 stockholder 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 stockholder value.
Criteria Used for Making Compensation Decisions in Fiscal 2002.
This section describes the criteria used by the board of directors and
the compensation committee regarding compensation decisions in fiscal 2002
affecting the Chief Executive Officer and other executive officers named in the
summary compensation table above. Before the establishment of the compensation
committee, salaries were based on individual employment 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 2002, 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 the base salary for each of the
executive officers named in the summary compensation table effective July 1,
2001 and for Mr. B. Singh Bathla effective January 1, 2002.
Bonuses.
21
In fiscal 2002, no bonuses were awarded.
Stock Options.
In fiscal 2002, 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 above.
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.
Ashok Rametra
David Reback
Praveen Bhutani
22
PERFORMANCE GRAPH
Total Return To Shareholder's
(Dividends reinvested monthly)
ANNUAL RETURN PERCENTAGE
Years Ending
Company / Index Jun98 Jun99 Jun00 Jun01 Jun02
-----------------------------------------------------------------------------------------
ATEC GROUP INC 142.20 -47.46 -45.16 -61.88 -50.62
S&P SMALLCAP 600 19.46 -2.31 14.39 11.12 0.27
S&P 600 COMPUTER HARDWARE -43.51 22.12 -52.56 -31.04 3.55
INDEXED RETURNS
Base Years Ending
Period
Company / Index Jun97 Jun98 Jun99 Jun00 Jun01 Jun02
-----------------------------------------------------------------------------------------
ATEC GROUP INC 100 242.20 127.26 69.79 26.60 13.14
S&P SMALLCAP 600 100 119.46 116.70 133.49 148.32 148.73
S&P 600 COMPUTER HARDWARE 100 56.49 68.99 32.73 22.57 23.37
TOTAL SHAREHOLDER RETURNS
[GRAPHIC OMITTED]
23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth as of September 20, 2002, certain
information with respect to the beneficial ownership of the voting securities by
(i) any person (including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act known by ATEC to be the beneficial owner of more
than 5% of our voting securities, (ii) each director, (iii) each executive
officer named in the Summary Compensation table appearing herein, and (iv) all
executive officers and directors as a group. The table also sets forth the
respective general voting power of such persons taking into account the voting
power of our common stock and preferred stock combined.
Name and Address Amount and Nature
of Beneficial of Beneficial Percentage of
Owner Ownership of Voting Stock
Outstanding Common Stock Outstanding(1)
----------- ------------ --------------
Balwinder Singh Bathla(2) 425,000 3.0%
69 Mall Drive
Commack, NY 11725
Ashok Rametra(3) 2,272,242 16.5%
1762 Central Avenue
Albany, NY 12205
Surinder Rametra(4) 3,408,040 25%
69 Mall Drive
Commack, NY 11725
James Charles(5) 605,000 3%
69 Mall Drive
Commack, NY 11725
Praveen Bhutani(7) 254,910 2%
69 Mall Drive
Commack, NY 11725
David Reback(6) 36,000 **
69 Mall Drive
Commack, NY 11725
Stewart Benjamin(8) 10,000 **
69 Mall Drive
Commack, NY 11725
24
All directors and (2)(3)(4)(5)(6)(7)(8) 7,011,192 49%
executive/officers as a group (7 persons)
----------------
** Less than 1%
(1) Computed based upon a total of 8,347,689 shares of common stock, 8,371
shares of Series A preferred stock, 1,458 shares of Series B preferred
stock, 309,600 shares of Series C preferred stock and options to
acquire 5,192,000 shares of common stock. Each share of common stock
and preferred stock possesses one vote per share. Accordingly, the
foregoing represents an aggregate of 13,859,118 votes.
(2) The foregoing figure reflects the ownership of 325,000 shares of common
stock by Mr. Bathla and options to acquire 100,000 shares of common
stock.
(3) The foregoing figure reflects the ownership of 240,146 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 1,645,000 shares of the common stock.
Mr. Rametra disclaims beneficial ownership of shares of ATEC securities
owned by other members of the Rametra family. Excludes non-vested
options to purchase 750,000 shares of common stock.
(4) The foregoing figure reflects the ownership of 400,040 shares of common
stock by Mr. Rametra and 200,000 shares by Mr. Rametra's spouse and
11,000 shares jointly. In addition, the foregoing assumes the exercise
by Mr. Rametra of options to acquire 2,797,000 shares of ATEC common
stock. Mr. Rametra disclaims beneficial ownership of the shares of ATEC
securities owned by other members of the Rametra family, including
independent children. Excludes non-vested options to purchase 750,000
shares of common stock
(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 595,000 shares of common stock.
Excludes non-vested options to purchase 200,000 shares of common stock.
(6) The foregoing figure reflects ownership of 1,000 shares of common stock
and options for the purchase of 35,000 shares of common stock.
(7) The foregoing figure reflects ownership of 244,910 shares of common
stock by Mr. Bhutani. The foregoing also assumes the exercise of
options to acquire 10,000 shares of common stock.
(8) The foregoing figures reflect options for the purchase of 10,000 shares
of common stock.
25
The following table gives information about the Company's common stock
that may be issued upon the exercise of options, warrants and rights under all
of the Company's equity compensation plans as of June 30, 2002. The table
includes the following plans: 1997 Stock Option Plan; and 2001 Flexible Stock
Plan.
Number of Number of securities
Securities to be remaining available
issued upon Weighted-average for future issuance
exercise of exercise price of under equity
outstanding outstanding compensation plans
options, warrants options, warrants (excluding securities
Plan Category and rights and rights reflected in column (a))
=================================================== ======================= ================= ============================
(a) (b) (c)
======================= ================= ============================
Equity compensation plans approved by security
holders:
1997 Stock Option Plan 2,332,203 $ 3.687 -0-
2001 Flexible Stock Plan 6,311,200 $ 0.545 2,834,597
=========== ========= ============
Total 8,643,403 $ 4.232 2,834,597
=========== ========= ============
====================================================================================================================================
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our Albany facility is leased from a company controlled by Surinder and
Ashok Rametra, officers and directors of ATEC. 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. The Company
has not been a party to any significant transactions in the last fiscal year.
In April 2001, the Company entered the IT enabled services market. The
Company had no revenue from this division. In April 2002 we sold the division to
ITES, LLC, a company controlled by our Chairman, Surinder Rametra for 10% of its
pre-tax profits for a period of three years ending December 31, 2004 not to
exceed $100,000. At June 30, 2002 the company had revenues of $2,652 and a loss
of $37,000.
In March 2002, we paid $223,606 to Advance Computer Management Group
(ACM), a company owned and controlled by our Chief Executive Officer Balwinder
Singh Bathla. The payments were for the purchase of fixed assets and inventory
of $30,558, expenses paid by ACM for Mr. Bathla, $25,807 and $167,241 to
purchase notes and over advances on commissions for former ACM employees who
entered into sales consulting agreements with us. The notes of
26
$119,444 are guaranteed by ACM.
Our Chief Executive Officer, Balwinder Singh Bathla, President, Ashok
Rametra and two non-executive officers , Arvin Gulati and Rajnish Rametra,
invested $25,000 each in a company controlled by Mr. Sonu Sodhi who is a
stockholder of ATEC and has a sales consulting agreement with us. Rajnish
Rametra is the brother of Ashok Rametra and Surinder Rametra, our Chairman.
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