10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C.  20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

OR

 [    ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From __________ to __________

Commission File Number 1-9720

PAR TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	16-1434688
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
PAR Technology Park
8383 Seneca Turnpike
New Hartford, New York	13413-4991
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:  (315) 738-0600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer o Accelerated Filer x Non Accelerated Filer o Smaller Reporting Company x

 (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On November 1, 2010, 15,034,084 shares of Common Stock of $0.02 par value, were outstanding.

PAR TECHNOLOGY CORPORATION

TABLE OF CONTENTS

FORM 10-Q

PART I

FINANCIAL INFORMATION

Item Number		Page
Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Operations for	1
	the three and nine months ended September 30, 2010 and 2009
	Consolidated Statements of Comprehensive Income (loss)	2
	for the three and nine months ended September 30, 2010 and 2009
	Consolidated Balance Sheets at	3
	September 30, 2010 and December 31, 2009
	Consolidated Statements of Cash Flows	4
	for the nine months ended September 30, 2010 and 2009
	Notes to Unaudited Interim Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
	PART II
	OTHER INFORMATION
Item 1A.	Risk Factors	22
Item 4.	RESERVED	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
Signatures		24
Exhibit Index		25

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
Net revenues:	2010			2009			2010			2009
Product	$	27,850		$	15,222		$	72,185		$	52,637
Service		17,268			17,011			53,369			56,057
Contract		16,053			17,681			49,950			56,147
		61,171			49,914			175,504			164,841
Costs of sales:
Product		17,865			10,025			47,256			34,578
Service		12,192			11,886			36,141			39,747
Contract		15,041			16,598			46,854			53,062
		45,098			38,509			130,251			127,387
Gross margin		16,073			11,405			45,253			37,454
Operating expenses:
Selling, general and administrative		9,995			8,579			29,316			26,821
Research and development		4,826			3,771			12,592			10,127
Amortization of identifiable intangible assets		234			371			703			1,104
		15,055			12,721			42,611			38,052
Operating income (loss)		1,018			(1,316	)		2,642			(598	)
Other income, net		97			12			516			274
Interest expense		(157	)		(106	)		(299	)		(328	)
Income (loss) before provision for income taxes		958			(1,410	)		2,859			(652	)
(Provision) benefit for income taxes		(420	)		632			(890	)		359
Net income (loss)	$	538		$	(778	)	$	1,969		$	(293	)
Earnings (loss) per share
Basic	$	.04		$	(.05	)	$	.13		$	(.02	)
Diluted	$	.04		$	(.05	)	$	.13		$	(.02	)
Weighted average shares outstanding
Basic		14,879			14,544			14,794			14,506
Diluted		15,048			14,544			15,009			14,506

See notes to unaudited interim consolidated financial statements

1 

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2010			2009			2010			2009
Net income (loss)	$	538		$	(778	)	$	1,969		$	(293	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(5	)		677			(219	)		867
Comprehensive income (loss)	$	533		$	(101	)	$	1,750		$	574

See notes to unaudited interim consolidated financial statements

  2

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 (in thousands, except share amounts)

(unaudited)

	September 30,			December 31,
	2010			2009
Assets Current assets:
Cash and cash equivalents	$	4,088		$	3,907
Accounts receivable-net		42,951			46,107
Inventories-net		41,052			32,867
Income tax refunds		1,253			438
Deferred income taxes		5,242			6,362
Other current assets		3,664			3,235
Total current assets		98,250			92,916
Property, plant and equipment - net		5,936			6,332
Deferred income taxes		1,030			1,202
Goodwill		26,762			26,635
Intangible assets - net		9,347			7,243
Other assets		2,010			1,775
Total Assets	$	143,335		$	136,103
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	1,635		$	1,404
Borrowings under lines of credit		500			2,000
Accounts payable		23,652			12,942
Accrued salaries and benefits		8,609			7,607
Accrued expenses		3,133			3,868
Customer deposits		906			1,782
Deferred service revenue		13,701			16,598
Total current liabilities		52,136			46,201
Long-term debt		3,228			4,455
Other long-term liabilities		2,551			2,212
Shareholders’ Equity:
Preferred stock, $.02 par value,
1,000,000 shares authorized	─			─
Common stock, $.02 par value,
29,000,000 shares authorized;
16,741,368 and 16,449,695 shares issued;
15,034,084 and 14,796,940 outstanding		335			329
Capital in excess of par value		42,134			41,382
Retained earnings		49,451			47,482
Accumulated other comprehensive loss		(668	)		(449	)
Treasury stock, at cost, 1,707,284 and 1,652,755 shares		(5,832	)		(5,509	)
Total shareholders’ equity		85,420			83,235
Total Liabilities and Shareholders’ Equity	$	143,335		$	136,103

See notes to unaudited interim consolidated financial statements

3 

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the nine months ended September 30,
	2010			2009
Cash flows from operating activities:
Net income	$	1,969		$	(293	)
Adjustments to reconcile net income to net cashprovided by operating activities:
Depreciation and amortization		2,496			2,946
Provision for bad debts		966			1,237
Provision for obsolete inventory		1,057			1,584
Equity based compensation		212			505
Deferred income tax		1,140			(166	)
Changes in operating assets and liabilities:
Accounts receivable		2,165			15,478
Inventories		(9,202	)		(430	)
Income tax refunds		(815	)		(368	)
Other current assets		(393	)		343
Other assets		(220	)		(110	)
Accounts payable		10,719			(6,495	)
Accrued salaries and benefits		978			(587	)
Accrued expenses		(691	)		(752	)
Customer deposits		(876	)		(4,060	)
Deferred service revenue		(2,915	)		(2,810	)
Other long-term liabilities		339			182
Net cash provided by operating activities		6,929			6,204
Cash flows from investing activities:
Capital expenditures		(3,519	)		(1,045	)
Capitalization of software costs		(669	)		(553	)
Contingent purchase price paid on prior year acquisitions		(33	)		(54	)
Net cash used in investing activities		(4,221	)		(1,652	)
Cash flows from financing activities:
Net repayments under line-of-credit agreements		(1,500	)		(5,800	)
Payments of long-term debt		(996	)		(666	)
Proceeds from the exercise of stock options		546			300
Purchase of treasury stock		(323	)	─
Net cash used in financing activities		(2,273	)		(6,166	)
Effect of exchange rate changes on cash and cash equivalents		(254	)		246
Net increase in cash and cash equivalents		181			(1,368	)
Cash and cash equivalents at beginning of period		3,907			6,227
Cash and cash equivalents at end of period	$	4,088		$	4,859
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	387		$	443
Income taxes, net of refunds		714			449
See notes to unaudited interim consolidated financial statements

4 

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1. The accompanying unaudited interim consolidated financial statements have been prepared by PAR Technology Corporation (the “Company” or “PAR”) in accordance with U.S. generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements.  Accordingly, these interim financial statements do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of the Company, such unaudited statements include all adjustments (which comprise only normal recurring accruals) necessary for a fair presentation of the results for such periods.  The results of operations for the three and nine months ended September 30, 2010 are not necessarily indicative of the results of operations to be expected for any future period.  The consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2009 included in the Company’s December 31, 2009 Annual Report to the Securities and Exchange Commission on Form 10-K.

The preparation of consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period.  Significant items subject to such estimates and assumptions include:  the carrying amount of property, plant and equipment, identifiable intangible assets and goodwill, equity based compensation, and valuation allowances for receivables, inventories and deferred income taxes.  Actual results could differ from those estimates.

The current economic conditions and the continued volatility in the financial markets both in the U.S. and in many other countries where the Company operates, have contributed and may continue to contribute to higher unemployment levels, decreased consumer spending, reduced credit availability and/or declining business and consumer confidence. Such conditions could have an impact on consumer purchases and/or retail customer purchases of the Company’s products, which could result in a reduction of sales, operating income and cash flows. This could have a material adverse effect on the Company’s business, financial condition and/or results of operations.  Additionally, disruptions in the credit and other financial markets and economic conditions could, among other things, impair the financial condition of one or more of the Company’s customers or suppliers, thereby increasing the risk of customer bad debts or non-performance by suppliers.

5 

2.           The Company’s net accounts receivable consist of:

	(in thousands)
	September 30,			December 31,
	2010			2009
Government segment:
Billed	$	10,380		$	13,898
Advanced billings		(1,682	)		(572	)
		8,698			13,326
Hospitality segment:
Accounts receivable - net		32,517			31,730
Other		1,736			1,051
	$	42,951		$	46,107

At September 30, 2010 and December 31, 2009, the Company had recorded allowances for doubtful accounts of $1,657,000 and $1,621,000, respectively, primarily against Hospitality accounts receivable.

3. Inventories are primarily used in the manufacture and service of Hospitality products.  The components of inventory, net of related reserves, consist of the following:

	(in thousands)
	September 30,			December 31,
	2010			2009
Finished Goods		$	9,669		$	8,314
Work in process			1,482			1,462
Component parts			13,698			7,029
Service parts			16,203			16,062
		$	41,052		$	32,867

4. The Company applies the fair value recognition provisions of ASC Topic 718 Stock-Based Compensation.  Total stock-based compensation expense included within operating expenses for the three and nine months ended September 30, 2010 was $199,000 and $212,000, respectively.  These amounts were recorded net of benefits of $211,000 for the nine months ended September 30, 2010, as the result of forfeitures of unvested stock options prior to the completion of the requisite service period.  Total stock-based compensation expense included in operating expenses for the three and nine months ended September 30, 2009 was $135,000 and $505,000, respectively.  At September 30, 2010, the unrecognized compensation expense related to non-vested equity awards was $654,000 (net of estimated forfeitures) which is expected to be recognized as compensation expense in fiscal years 2010 through 2015.

5. Earnings per share is calculated in accordance with ASC Topic 260, which specifies the computation, presentation and disclosure requirements for earnings per share (EPS).  It requires the presentation of basic and diluted EPS.  Basic EPS excludes all dilution and is based upon the weighted average number of common shares outstanding during the period.  Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.  At September 30, 2010, there were 392,000 anti-dilutive stock options outstanding.

  6

The following is a reconciliation of the weighted average shares outstanding for the basic and diluted EPS computations (in thousands, except per share data):

	For the three months ended September 30,
	2010		2009
Net income (loss)	$	538	$	(778	)
Basic:
Shares outstanding at beginning of period		14,838		14,535
Weighted average shares issued during the period, net		41		9
Weighted average common shares, basic		14,879		14,544
Earnings (loss) per common share, basic	$	.04	$	(.05	)
Diluted:
Weighted average common shares, basic		14,879		14,544
Weighted average shares issued during the period, net		65	─
Dilutive impact of stock options and restricted stock awards		104	─
Weighted average common shares, diluted		15,048		14,544
Earnings (loss) per common share, diluted	$	.04	$	(.05	)

	For the nine months ended September 30,
	2010		2009
Net income (loss)	$	1,969	$	(293	)
Basic:
Shares outstanding at beginning of period		14,677		14,471
Weighted average shares issued during the period, net		117		35
Weighted average common shares, basic		14,794		14,506
Earnings (loss) per common share, basic	$	.13	$	(.02	)
Diluted:
Weighted average common shares, basic		14,794		14,506
Weighted average shares issued during the period, net		120	─
Dilutive impact of stock options and restricted stock awards		95	─
Weighted average common shares, diluted		15,009		14,506
Earnings (loss) per common share, diluted	$	.13	$	(.02	)

7 

6. The Company utilizes the fair value provisions of ASC Topic 820 Fair Value Measurements and Disclosures.  ASC Topic 820 describes a fair value hierarchy based upon three levels of input, which are:

Level 1 − quoted prices in active markets for identical assets or liabilities (observable)

Level 2 − inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable market data for essentially the full term of the asset or liability (observable)

Level 3 − unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable)

The Company’s interest rate swap agreement is valued at the amount the Company would have expected to pay to terminate the agreement.  The fair value determination is based upon the present value of expected future cash flows using the LIBOR rate, plus an applicable interest rate spread, a technique classified within Level 2 of the valuation hierarchy described above.  At September 30, 2010, the fair value of the Company’s interest rate swap included a realized loss of $165,000, and is included as a component of accrued expenses within the Consolidated Balance Sheet.  The associated fair value adjustments for the three and nine months ended September 30, 2010 and 2009 were  $27,000 and $78,000, respectively, and $18,000 and $105,000, respectively, and are included as decreases to intere st expense.

7. The Company’s reportable segments are strategic business units that have separate management teams and infrastructures that offer different products and services.

The Company has two reportable segments, Hospitality and Government.  The Hospitality segment offers integrated solutions to the hospitality industry.  These offerings include industry leading hardware and software applications utilized in point-of-sale, back of store and corporate office applications as well as in the hotel/resort/spa marketplace.  This segment also offers customer support including field service, installation, twenty-four hour telephone support and depot repair.  The Government segment provides technical expertise in the development of advanced technology prototype systems primarily for the Department of Defense and other Governmental agencies.  It provides services for operating and maintaining certain U.S. Government-owned communication and test sites, and for plann ing, executing and evaluating experiments involving new or advanced radar systems.  Intersegment sales and transfers are not significant.

  8

Information as to the Company’s segments is set forth below:

	For the three months						For the nine months
	Ended September 30,						Ended September 30,
	2010			2009			2010			2009
Net revenues:
Hospitality	$	44,174		$	31,305		$	122,115		$	103,695
Government		16,053			17,340			49,950			55,376
Other		944			1,269			3,439			5,770
Total	$	61,171		$	49,914		$	175,504		$	164,841
Operating income (loss):
Hospitality	$	1,335		$	(2,004	)	$	2,223		$	(2,980	)
Government		894			972			2,716			2,848
Other		(1,211	)		(284	)		(2,297	)		(466	)
		1,018			(1,316	)		2,642			(598	)
Other income, net		97			12			516			274
Interest expense		(157	)		(106	)		(299	)		(328	)
Income (loss) before provision
for income taxes	$	958		$	(1,410	)	$	2,859		$	(652	)
Depreciation and amortization:
Hospitality	$	652		$	753		$	2,108		$	2,592
Government		20			17			61			58
Other		128			103			327			296
Total	$	800		$	873		$	2,496		$	2,946
Capital expenditures:
Hospitality	$	1,146		$	256		$	3,330		$	765
Government	─			─				44			31
Other		38			20			145			249
Total	$	1,184		$	276		$	3,519		$	1,045
Revenues by geographic area:
United States	$	54,403		$	44,690		$	157,380		$	148,302
Other Countries		6,768			5,224			18,124			16,539
Total	$	61,171		$	49,914			175,504			164,841

9 

The following table represents identifiable assets by business segment:

	(in thousands)
	September 30,			December 31,
	2010			2009
Identifiable assets:
Hospitality		$	119,117		$	109,085
Government			10,548			15,097
Other			13,670			11,921
Total		$	143,335		$	136,103

The following table represents identifiable assets by geographic area based on the location of the assets:

	(in thousands)
	September 30,			December 31,
	2010			2009
United States		$	135,370		$	128,665
Other Countries			7,965			7,438
Total		$	143,335		$	136,103

The following table represents Goodwill by business segment:

	(in thousands)
	September 30,			December 31,
	2010			2009
Hospitality		$	26,026		$	25,899
Government			736			736
Total		$	26,762		$	26,635

Customers comprising 10% or more of the Company’s total revenues are summarized as follows:

	For the three months ended September 30,						For the nine months ended September 30,
	2010			2009			2010			2009
Hospitality segment:
McDonald’s Corporation		38	%		22	%		34	%		25	%
Yum! Brands, Inc.		10	%		14	%		10	%		12	%
Government segment:
U.S. Department of Defense		26	%		36	%		28	%		34	%
All Others		26	%		28	%		28	%		29	%
		100	%		100	%		100	%		100	%

10 

Item 2:  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statement

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934.  Any statements in this document that do not describe historical facts are forward-looking statements.  Forward-looking statements in this document (including forward-looking statements regarding the continued health of the Hospitality industry, future information technology outsourcing opportunities, changes in contract funding by the U.S. Government, the impact of current world events on our results of operations, the effects of inflation on our margins, and the effects of interest rate and foreign currency fluctuations on our results of operations) are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  When we use words such as “intend,” “anticipate,” “believe,” “estimate,” “plan,” “will,” or “expect”, we are making forward-looking statements.  We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we presently may be planning.  We have disclosed certain important factors that could cause our actual future results to differ materially from our current expectations, including a decline in the volume of purchases made by one or a group of our major customers; risks in technology development and commercialization; risks of downturns in economic conditions generally, and in the quick-service sector of the hospitality market s pecifically; risks associated with government contracts; risks associated with competition and competitive pricing pressures; and risks related to foreign operations.  Forward-looking statements made in connection with this report are necessarily qualified by these factors.  We are not undertaking to update or revise publicly any forward-looking statements if we obtain new information or upon the occurrence of future events or otherwise.

Overview

PAR Technology is a leading provider of hospitality technology solutions that includes software, hardware and professional/lifecycle support services to several industries including: restaurants, hotels/resorts/spas, cruise lines, movie theaters and specialty retailers.  In addition, the Company provides applied technology and technical outsourcing services primarily to the U.S. Department of Defense.  PAR also provides best of breed technical tracking systems that focus upon shipping and logistics for road, rail, and transit markets by providing advanced integrated solutions for all types of refrigerated and dry assets.

The Company’s hospitality technology products are used in a variety of applications by thousands of customers.  PAR faces competition in all of its markets (restaurants, hotels, spas, etc.) and competes primarily on the basis of product design, features, functions, product quality, reliability, price, customer service and deployment capability.  The most recent trend in the hospitality industry has been to reduce the number of approved vendors in a specific concept to companies that have global capabilities and reach in sales, service and deployment, can achieve quality and delivery standards, have multiple product offerings, R&D capability, and can be competitive with their pricing.  The Company’s international scope as a technology provider to hospitality customers is a strategic competitiv e advantage as the Company provides innovative solutions, with significant world-wide reach  to its multinational customers such as McDonald’s, Yum! Brands, Subway, CKE Restaurants and the Mandarin Oriental Hotel Group.  PAR’s focus is to provide completely integrated technology products and services with industry leading customer service in the market segments in which it competes.  The Company continually initiates new research and development efforts to create innovative technology to meet our customers’ requirements and also has high probability for broader market appeal and success.  PAR’s business focuses upon operating efficiencies and controlling costs.

11

The current economic conditions and the continued volatility in the financial markets both in the U.S. and in many other countries where the Company operates, have contributed and may continue to contribute to higher unemployment levels, decreased consumer spending, reduced credit availability and/or declining business and consumer confidence.  These factors could also have a material adverse impact on the Company's significant estimates, specifically the fair value of the Company's reporting units used in support of its annual goodwill impairment test.

The Company has consistently determined the fair value of its reporting units using primarily a discounted cash flow method, which is based on certain assumptions such as projected operating results, growth rates and discount rates.  The Company completed its annual impairment test in the fourth quarter of fiscal year 2009 and concluded that no impairment existed.  The Company reevaluated the assumptions utilized in its annual impairment test and determined them to remain appropriate based on the Company’s actual results achieved to date as well as communication it has received from its customers relative to their planned capital investments.  There were no indicators of impairment during the period ended September 30, 2010 so the Company did not perform an impairment review of goodwill during the quar ter.

In regards to the current economic conditions, the QSR market continues to perform well for the large international companies, however, the Company has seen an impact on the regional QSR organizations whose business is slowing because of higher unemployment and lack of consumer confidence in specific domestic regions.  These smaller businesses are also struggling to access affordable capital in the tight credit markets.  Such conditions have had and could continue to have an impact on the markets in which the Company's customers operate, which could result in a reduction of sales, operating income and cash flows.  The Company is currently assisting one of its large international customers as they execute an aggressive upgrade schedule to their in-store technology.  In addition the Company is observing an improvem ent in the pipeline of business with its second tier customers.

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The Company is currently focusing upon enhancing three distinct areas of its Hospitality segment.  First, PAR has been investing in its development of next generation software for both their restaurant and hotel/resort businesses.  Second, the Company is building a highly capable and further reaching distribution channel.  Third, PAR is creating a global infrastructure that will enhance our deployment and support globally as the Company’s customers continue their expansion into international markets.

Approximately 28% of the Company’s revenues are generated in our Government segment.  PAR provides IT and communications support services to the U.S. Navy, Air Force and Army.   In addition, the Company offers its services to several U.S. federal, state and local agencies by providing applied technology services including radar, image and signal processing and geospatial services and products.  The operational performance of PAR’s Government segment has translated into consistently winning add-on and renewal business.  PAR provides its clients the technical expertise necessary to operate and maintain complex technology systems utilized by government agencies.

PAR’s Logistics Management business continues to add new accounts.  Although the Company is experiencing the difficulties of an extended adoption phase of the transport industry, it continues to expand its customer base in the refrigerated and dry van markets.  As the market recognizes the value proposition associated with the real time use of location and environmental information in both asset management and cargo quality assurance, the Company believes it is well positioned in this emerging market.

The Company will continue to leverage its core technical capabilities and performance into related technical areas and an expanding customer base.  PAR will seek to accelerate this growth through strategic acquisitions of businesses that broaden the Company’s technology and/or business base.

Summary

The Company believes it is and can continue to be successful due to its capabilities and industry expertise.  The majority of the Company’s business is in the quick-serve restaurant sector of the hospitality market.  In regards to the current economic landscape, PAR believes that the quick-serve restaurant sector will remain strong, a direct reflection of the value and convenience PAR’s large quick-service customers provide the consuming public.  The Company continues to execute upon operational initiatives and certain organizational changes that it expects will deliver meaningful cost savings and believes that its fundamental long-term strategy remains intact.

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It has been the Company’s experience that their Government I/T business is resistant to economic cycles.  However, the Company has seen lower revenues for the first nine months of 2010 in comparison to the same period in 2009 due to the completion of certain contracts and funding cutbacks on existing contracts.   PAR’s I/T outsourcing business focuses on cost-effective operations of technology and telecommunication facilities which must function independent of economic cycles.

Results of Operations —

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009

The Company reported revenues of $61.2 million for the quarter ended September 30, 2010, an increase of 23% from the $49.9 million reported for the quarter ended September 30, 2009.  The Company’s net income for the quarter ended September 30, 2010 was $538,000, or $0.04 earnings per diluted share, compared to a net loss of $778,000 or $0.05 diluted loss per share for the same period in 2009.

Product revenues were $27.9 million for the quarter ended September 30, 2010, an increase of 83% from the $15.2 million recorded in 2009.  This growth was the result of increases in sales to two of the Company’s major restaurant customers as well as an increase in sales to its customers made through the Company’s channel partners.  Further contributing to this growth was a 50% increase in international product revenue during the quarter.

Customer service revenue primarily includes installation, software maintenance, training, twenty-four hour help desk support and various depot and on-site service options.  Customer service revenues were $17.3 million for the quarter September 30, 2010, an increase of 2% from the $17.0 million reported for the same period in 2009.  This change is the result of an increase in installation revenue, commensurate with the increase in new terminals installed in the field, partially offset by a decline in depot repair revenue.

Contract revenues were $16.1 million for the quarter ended September 30, 2010, a decrease of 9% when compared to the $17.7 million for the same period in 2009.  This decrease was due to the completion of certain contracts in 2010 as well as a reduction in pass through revenue that occurred in 2009 that did not recur in 2010 associated with a specific contract.

Product margins for the quarter ended September 30, 2010 were 35.9%, an increase from 34.1% for the same period in 2009.  This improvement was primarily the result of an improved product mix resulting from an increase in the volume of terminals sold relative to related peripherals as well as various cost reduction and efficiency improvement efforts implemented across the Company’s hospitality businesses.

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Customer service margins were 29.4 % for the quarter ended September 30, 2010, compared to 30.1% for the same period in 2009.  This decrease is mostly attributable to higher call volumes driven by the technology rollout initiative by a major restaurant customer, partially offset by an improvement in international service margins resulting from the execution of various cost reduction strategies.

Contract margins were 6.3% for the quarter ended September 30, 2010, compared to 6.1% for the same period in 2009.  This increase was due to a reduction in low margin pass through revenue that occurred in 2009 associated with specific contracts that did not recur in 2010 and improved margins associated with contract completions.  The most significant components of contract costs in 2010 and 2009 were labor and fringe benefits.  For 2010, labor and fringe benefits were $11.7 million or 78% of contract costs compared to $12.3 million or 74% of contract costs for the same period in 2009.

Selling, general and administrative expenses for the quarter ended September 30, 2010 were $10 million, an increase from the $8.6 million for the same period in 2009.  This change was the result of investments in sales and marketing initiatives associated with the Company’s Hospitality and Logistics Management businesses.

Research and development expenses were $4.8 million for the quarter ended September 30, 2010, an increase from the $3.8 million for the same period in 2009.  The increase was the result of increased research and development expenditures in support of the Company’s luxury hotel, resort and spa software business as well as the continued investment in its Logistics Management business.

Amortization of identifiable intangible assets was $234,000 for the quarter ended September 30, 2010, compared to $371,000 for the same period in 2009.  This decrease was due to certain intangible assets becoming fully amortized in 2009.

Other income, net, was $97,000 for the quarter ended September 30, 2010 compared to $12,000 for the same period in 2009.  Other income primarily includes rental income, income from the sale of certain assets, finance charges and foreign currency gains and losses.  The increase is primarily due to an increase in foreign currency gains during the period.

Interest expense primarily represents interest charged on the Company’s short-term borrowing requirements from banks and from long-term debt.  Interest expense was $157,000 for the quarter ended September 30, 2010 as compared to $106,000 for the same period in 2009.  The increase is due to a higher average borrowing rate in 2010 as compared to 2009 as well as non-recurring interest expense incurred relative to past due taxes for a specific foreign jurisdiction.

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For the quarters ended September 30, 2010 and 2009, the Company’s expected effective income tax rate based on projected pre-tax income was 43.8% and 44.8%, respectively.  The variance from the federal statutory rate was primarily due to state income taxes and various nondeductible expenses.

Results of Operations —

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

The Company reported revenues of $175.5 million for the nine months ended September 30, 2010, an increase of 6% from the $164.8 million for the same period in 2009.  The Company’s net income for the nine months ended September 30, 2010 was $2 million, or $0.13 earnings per diluted share, compared to a net loss of $293,000 or $.02 loss per diluted share in 2009.

Product revenues were $72.2 million for the nine months ended September 30, 2010, an increase of 37% from the $52.6 million recorded in 2009.  This growth was the result of increases in domestic sales to a major restaurant customer as well as an increase in sales to its customers made through the Company’s channel partners.  Further contributing to this growth was a 20% increase in international product revenue during the period.

Customer service revenue primarily includes installation, software maintenance, training, twenty-four hour help desk support and various depot and on-site service options.  Customer service revenues were $53.4 million for the nine months ended September 30, 2010, a 5% decrease from the $56.1 million reported for the same period in 2009.  This decrease is primarily due to a decline in installation and field service revenue as a result of the completion of a specific initiative with a major customer in 2009, partially offset by an increase in installation revenue commensurate with the increase in product sales, as well as an increase in service revenue associated with the Company’s Logistics Management business.

Contract revenues were $50 million for the nine months ended September 30, 2010, a decrease of 11% when compared to the $56.1 million for the same period in 2009.  This decrease was primarily due to a reduction in pass through revenue that occurred in 2009 that did not recur in 2010 associated with a specific contract, as well as decreases associated with the completion of certain contracts.

Product margins for the nine months ended September 30, 2010 were 34.5%, up slightly from the 34.3% for the same period in 2009.  This improvement was due to an increase in hardware margin as the result of various cost cutting initiatives, partially offset by a decline in software revenue when compared to 2009.

Customer service margins were 32.3% for the nine months ended September 30, 2010, compared to 29.1% for the same period in 2009.  Service margins increased primarily due to cost reductions executed across several service areas and an increase in software maintenance revenue.

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Contract margins were 6.2% for the nine months ended September 30, 2010, compared to 5.5% for the same period in 2009.  This increase was due to a reduction in low margin pass through revenue that occurred in 2009 associated with a specific contract that did not recur in 2010 and improved margins associated with contract completions.  The most significant components of contract costs in 2010 and 2009 were labor and fringe benefits.  For 2010, labor and fringe benefits were $36.7 million or 78% of contract costs compared to $38.7 million or 73% of contract costs for the same period in 2009.

Selling, general and administrative expenses for the nine months ended September 30, 2010 were $29.3 million, compared to $26.8 million for the same period in 2009.  This change was the result of investments in sales and marketing initiatives associated with the Company’s Hospitality and Logistics Management businesses.  This was partially offset by a decline in stock-based compensation expense.

Research and development expenses were $12.6 million for the nine months ended September 30, 2010, compared to $10.1 million for the same period in 2009.  The increase was the result of increased research and development expenditures in support of the Company’s luxury hotel, resort and spa software business as well as the continued investment in its Logistics Management business, partially offset by cost reductions achieved in outsourcing through strategic relationships.

Amortization of identifiable intangible assets was $703,000 for the nine months ended September 30, 2010, compared to $1.1 million for the same period in 2009.  This decrease was due to certain intangible assets becoming fully amortized in 2009.

Other income, net, was $516,000 for the nine months ended September 30, 2010 compared to $274,000 for the same period in 2009.  Other income primarily includes rental income, income from the sale of certain assets, finance charges and foreign currency gains and losses.  The increase is primarily due to an increase in finance charge income related to a specific outstanding receivable collected during the period as well as a gain on sale of certain assets.

Interest expense represents interest charged on the Company’s short-term borrowing requirements from banks and from long-term debt.  Interest expense was $299,000 for the nine months ended September 30, 2010 as compared to $328,000 for the same period in 2009.  The decrease is primarily due to lower borrowings in 2010 compared to 2009.

For the nine months ended September 30, 2010 and 2009, the Company’s expected effective income tax rate based on projected pre-tax income was 31.1% and 55.1%, respectively.  The variance from the federal statutory rate in 2010 is primarily due to the reversal of a valuation allowance of $230,000 on certain deferred tax assets as the result of the Company’s tax planning strategies.  The variance from the federal statutory rate in 2009 was primarily due to state income taxes and various nondeductible expenses partially offset by the research and experimental tax credit.

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Liquidity and Capital Resources

The Company’s primary sources of liquidity have been cash flow from operations and its bank line of credit.  Cash provided by operations was $6.9 million for the nine months ended September 30, 2010 compared to $6.2 million for the same period in 2009.  In 2010, cash was generated primarily through the collection of accounts receivable associated with a specific Hospitality customer as well as through the collection of amounts due from Hospitality customers resulting from the timing of support contract billing.  Further contributing to the Company’s positive operating cash flow was an increase in Hospitality accounts payable resulting from the timing of vendor payments, mostly related to the procurement of inventory.  These increases t o operating cash flow were partially offset by the increase in Hospitality inventory, commensurate with the Company’s near term production requirements.  In 2009, cash was generated by collection of Hospitality accounts receivable as a result of improved collection efforts, partially offset by a decrease in accounts payable due to the timing of vendor payments and a decrease in customer deposits resulting from the utilization of an advanced payment received by a significant restaurant customer at the end of fiscal year 2008.

Cash used in investing activities was $4.2 million for the nine months ended September 30, 2010 versus $1.7 million for the same period in 2009.  In 2010, capital expenditures were $3.5 million and were primarily related to the Company’s acquisition of certain technology components to compliment its next generation enterprise solution for its Restaurant business.  Capitalized software costs relating to software development of Hospitality segment products were $669,000.  In 2009, capital expenditures were $1 million and were primarily for manufacturing, office and computer equipment.  Capitalized software costs relating to software development of Hospitality segment products were $553,000 in 2009.

Cash used in financing activities was $2.3 million for the nine months ended September 30, 2010 versus $6.2 million in 2009.  In 2010, the Company decreased its short-term borrowings by $1.5 million, decreased its long-term debt by $996,000 and also benefited $546,000 from the exercise of employee stock options.  Lastly, the Company repurchased outstanding shares into treasury stock in the amount of $323,000.  In 2009, the Company decreased its short-term borrowings by $5.8 million and decreased its long-term debt by $666,000.  It also benefited $300,000 from the exercise of employee stock options.

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The Company has a credit agreement with a bank under which the Company has a borrowing availability up to $20 million in the form of a line of credit.  This agreement allows the Company, at its option, to borrow funds at the LIBOR rate plus the applicable interest rate spread (1.52% at September 30, 2010) or at the bank’s prime lending rate (3.25% at September 30, 2010).  This agreement expires in June 2011.  At September 30, 2010, the Company had $500,000 outstanding under this agreement.  The weighted average interest rate paid by the Company was 2.4% during the third quarter of 2010.  This agreement contains certain loan covenants including leverage and fixed charge coverage ratios.  The Company is in compl iance with these covenants at September 30, 2010.  This credit facility is secured by certain assets of the Company.

The Company borrowed $6 million under an unsecured term loan agreement, executed as an amendment to one of its then bank line of credit agreements, in connection with a prior business acquisition.  The loan provides for interest only payments in the first year and escalating principal payments through 2012. The loan bears interest at the LIBOR rate plus the applicable interest rate spread (1.52% at September 30, 2010) or at the bank’s prime lending rate (3.25% at September 30, 2010). The terms and conditions of the line of credit agreement described in the preceding paragraph also apply to the term loan.

The Company entered into an interest rate swap agreement associated with the above $6 million loan, with principal and interest payments due through August 2012.  At September 30, 2010, the notional principal amount totaled $3.3 million.  This instrument was utilized by the Company to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility.  The Company did not adopt hedge accounting, but rather records the fair market value adjustments through the consolidated statements of operations each period.  The associated fair value adjustment for the three and nine months ended September 30, 2010 was $27,000 and $78,000, respectively, and are included as a decreases to interest expense.

The Company has a $1.6 million mortgage, collateralized by certain real estate.  The annual mortgage payment including interest totals $222,000.  The mortgage bears interest at a fixed rate of 5.75% and matures in 2019.

For the remainder of fiscal year 2010, the Company anticipates that its capital requirements will be approximately $500,000 to $1 million.  The Company does not enter into long term contracts with its major Hospitality segment customers. The Company commits to purchasing inventory from its suppliers based on a combination of internal forecasts and the actual orders from customers.  This process, along with good relations with suppliers, minimizes the working capital investment required by the Company.  Although the Company lists two major customers, McDonald’s and Yum! Brands, it sells to hundreds of individual franchisees of these corporations, each of which is individually responsible for its own debts.  These broadly made sales substantially reduce the impact on the Company’s liquidity if one individual franchisee reduces the volume of its purchases from the Company in a given year.  The Company, based on internal forecasts, believes its existing cash, line of credit facilities and its anticipated operating cash flow will be sufficient to meet its cash requirements through at least the next twelve months.  However, the Company may be required, or could elect, to seek additional funding prior to that time.  The Company’s future capital requirements will depend on many factors including its rate of revenue growth, the timing and extent of spending to support product development efforts, expansion of sales and marketing, the timing of introductions of new products and enhancements to existing products, and market acceptance of its products.  The Company cannot assure that additional equity or debt financing will be available on acceptable terms or at all.  The Company’s sources of liquidity beyond twelve months, in management’s opinion, will be its cash balances on hand at that time, funds provided by operations, and through long-term credit facilities that it can arrange.Although the Company’s credit facility with its lenders will expire within the next 12 months, the Company believes that it will be able to successfully renew this facility with terms consistent with those under its current credit agreement previously disclosed.

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Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2010-6, “Improving Disclosures about Fair Value Measurements,” which requires interim disclosures regarding significant transfers in and out of Level 1 and Level 2 fair value measurements. Additionally, this ASU requires disclosure for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring fair value measurements. These disclosures are required for fair value measurements that fall in either Level 2 or Level 3. Further, the ASU requires separate presentation of Level 3 activity for the fair value measurements. The Company adopted the provisions of this standard on January 1, 2010, which did not have a materia l impact on its consolidated financial statements.

Critical Accounting Policies

In our Annual Report on Form 10-K for the year ended December 31, 2009, we disclose accounting policies, referred to as critical accounting policies, that require management to use significant judgment or that require significant estimates.  Management regularly reviews the selection and application of our critical accounting policies.  There have been no updates to the critical accounting policies contained in our Annual Report on Form 10-K for the year ended December 31, 2009.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

inflation

Inflation had little effect on revenues and related costs during the first nine months of 2010.  Management anticipates that margins will be maintained at acceptable levels to minimize the effects of inflation, if any.

interest rates

As of September 30, 2010, the Company has $3.8 million in variable interest rate debt.  The Company believes that an adverse change in interest rates of 100 basis points would not have a material impact on our business, financial condition, results of operations or cash flows.

foreign currency

The Company’s primary exposures relate to certain non-dollar denominated sales and operating expenses in Europe and Asia. These primary currencies are the Euro, the Australian dollar and the Singapore dollar.  Management believes that foreign currency fluctuations should not have a significant impact on our business, financial conditions, and results of operations or cash flows due to the low volume of business affected by foreign currencies.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of September 30, 2010, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), conducted under the supervision of and with the participation of the Company’s chief executive officer and chief financial officer, such officers have concluded that the Company’s disclosure controls and procedures, which are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and designed to ensure that information required to be disclosed by th e Company in the reports filed or submitted under the Exchange Act is accumulated and communicated to management including the chief executive and financial officers, as appropriate, to allow timely decisions regarding required disclosures, are effective as of the Evaluation Date.

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 (b) Changes in Internal Control over Financial Reporting.

There was no change in the Company’s internal controls over financial reporting, as defined in  Rule 13a-15(f) of the Exchange Act during the quarter ended September 30, 2010 that has materially affected, or is reasonably likely to materially affect, such internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1A.  Risk Factors

The Company is exposed to certain risk factors that may effect operations and/or financial results.  The significant factors known to the Company are described in the Company’s most recently filed Annual Report on Form 10-K.  There have been no material changes from the risk factors as previously disclosed in the Company’s Annual Report on Form 10-K.

Item 4.  Reserved

Item 5.  Other Information

On July 14, 2010, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item 7.01 (Regulation FD Disclosure) of that Form relating to a news release entitled “PAR Technology Corporation CEO Announces Intention to Retire”, as presented in the press release of July 14, 2010 and furnished thereto as an exhibit.

On July 27, 2010, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item 2.02 (Results of Operations and Financial Condition) of that Form relating to its financial information for the quarter ended June 30, 2010, as presented in the press release of July 27, 2010 and furnished thereto as an exhibit.

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Item 6.  Exhibits

List of Exhibits

Exhibit No.	Description of Instrument
10(iii)(A) 31.1	Employment Agreement Between PAR Technology Corporation and Gregory T. Cortese Certification of Chairman of the Board and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Vice President, Chief Financial Officer, Treasurer, and Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chairman of the Board and Chief Executive Officer and Vice President, Chief Financial Officer, Treasurer, and Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PAR TECHNOLOGY CORPORATION
	(Registrant)
Date:  November 10, 2010
	/s/RONALD J. CASCIANO
	Ronald J. Casciano
	Vice President, Chief Financial Officer, Treasurer, and Chief Accounting Officer

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Exhibit Index

Exhibit		Sequential Page Number
10(iii)(A) 31.1	Employment Agreement Between PAR Technology Corporation and Gregory T. Cortese Certification of Chairman of the Board and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-1 E-2
31.2	Certification of Vice President, Chief Financial Officer, Treasurer, and Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-3
32.1	Certification of Chairman of the Board and Chief Executive Officer and Vice President, Chief Financial Officer, Treasurer, and Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	E-4

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EX-10.(III)A

Exhibit 10(iii)(A)

Employment Agreement Between PAR Technology Corporation and Gregory T. Cortese

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) entered into as of this _____ day of December, 2008, (the “Execution Date”), by and between PAR Technology Corporation, a Delawarecorporation (the “Company”) and Gregory T. Cortese, (the “Executive”).

WHEREAS, the Company currently employs Executive on an “at will” basis as President and Chief Executive Officer of its wholly-owned subsidiary, ParTech, Inc., and now desires to change his duties and responsibilities and in consideration of additional consideration being offered desires to document the terms and conditions of Executive’s employment as an executive in the Company’s Office of the Chairman (“OOC”), specifically the position of Executive Vice President Office of the Chairman, effective as of January 1, 2009 (the “Effective Date”);

WHEREAS, Executive understands and accepts the conditions of employment as set forth herein and desires to be employed by the Company in such capacity.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereto, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Executive hereby agree as follows:

1. Employment and Duties.

           (a)           Employment. Subject to the terms and conditions of this Agreement, effective as of theEffective Date, the Company hereby employs Executive as an executive officer in theOOC with the title of “Executive Vice President Office of the Chairman”, to perform the duties described herein, and Executive hereby accepts such employment.

(b)           Term.

(i)           Unless terminated at an earlier date in accordance with Section 4 hereof,Executive’s employment with the Company shall be for the period commencingon the Effective Date and ending on December 31, 2009 (the “Initial Term”).

(ii)           At the sole discretion of the Company, Employment of Executive may beextended commencing January 1, 2010 through August 31, 2010 (the “FirstExtended Term”).  Should the Company determine to employ Executive for theFirst Extended Term, the Company shall provide written notice to Executive of its intent to extend Executive’s employment through the First Extended Term prior to December 31, 2009.

(iii)           At the sole discretion of the Company, Employment of Executive may be furtherextended on an “at will” basis commencing on September 1, 2010 (suchextension being referred to herein as the “Second Extended Term”).  Should theCompany determine to employ Executive for the Second Extended Term, the Company shall provide written notice to Executive of its intent to extend Executive’s employment into the Second Extended Term prior to August 31, 2010.

E-1

(c)           Duties. As the Executive Vice President Office of the Chairman, Executive shall be anexecutive officer of the Company reporting directly to the President and ChiefExecutive Officer of the Company. Executive’s duties shall include such duties andresponsibilities that may be assigned by the President and Chief Executive Officer of the Company from time to time and shall initially include the following:

(i) investor relations (including road shows, investor conferences, quarterly reporting, annual meeting)

(ii) business development activities

(iii) potential merger and acquisition analysis and related M&A activities

(iv) oversight of Legal Department and provision of business direction on major legal projects

(v) oversight and support of restaurant channel expansion

(vi) oversight of PAR Springer-Miller Systems, Inc.

(vii) executive leadership of the Company’s ERP project

(d)Resignation of Current Position.  Executive agrees to resign as the President and ChiefExecutive Officer of ParTech, Inc., effective as of the Effective Date.

(e)           No Conflict.  Executive shall serve the Company faithfully and to the best of his abilityand shall devote sufficient amounts of his time and efforts to the discharge of his dutiesand responsibilities to the Company during his employment with the Company.

(f)           Company Policies and Procedures. Executive agrees to comply with the Company’spolicies and procedures as they may be applicable to him (including without limitation, asan employee or executive officer) and subject to the terms set forth herein.

2.           Compensation.

(a) Base Salary.  While Executive is employed by the Company hereunder, Executive shall be paid an annual base salary of $250,000 (the “Base Salary”), subject to federal, state and local tax withholding where applicable. The Base Salary shall be paid in accordance with the Company’s standard payroll practices in effect from time to time.  Executive understands and agrees that any increase in Base Salary, if any, shall be in the sole discretion of the Company.

(b) Annual Bonus. While the Executive is employed by the Company hereunder, Executive shall be eligible to receive an annual bonus determined in accordance with the Company’s Incentive Compensation Plan applicable to the OOC Group (the “Bonus”), provided that Executive remains employed by the Company in accordance with the terms of such plan.  The recommendation to the Compensation Committee of the Board of Directors shall be that the Executive should participate at the 53% level for calendar year 2009.

(c) Equity Awards.  The Executive acknowledges and agrees that any outstanding stock options (“Equity Awards”) shall remain subject to and administered in accordance with the terms and conditions set forth in the governing agreement and the plan pursuant to which such Equity Awards were issued.  Nothing herein shall be deemed to modify such Equity Awards.

3.
Confidentiality.

(a) Confidentiality.  Except as permitted by the Company, or as otherwise required by law, during the term of Executive’s employment with the Company and at all times thereafter, Executive shall not divulge, furnish or make accessible to anyone or destroy or use in any way other than in the ordinary course of the business of the Company, any confidential, proprietary or secret knowledge or information of the Company, its current or past subsidiaries, directors, officers, managers, employees, business partners, agents, consultants or other affiliated entities (“Affiliated Entities”) that Executive has acquired or shall acquire during his employment with the Company, whether developed by himself or by others including but not limited to (i) any trade secrets, (ii) internal business information, including, without limitation, i nformation relating to strategic and staffing plans and practices, customer names and lists and other information, marketing, promotional and sales plans, practices or programs, training practices and programs, operation and product costs and pricing structure, accounting and business methods, and any financial data or plans respecting the Company and/or any Affiliated Entities; (iii) identities of and information about the Company’s past, current and prospective customers and their confidential information; (iv) compilations of data (whether in whole or in part) including but not limited to reliability and performance data and all analyses, processes, methods, techniques, systems, formulae, research, records, reports, manuals, documentation and models relating thereto; (v) forms, contracts, or similar documents; (vi) hardware specifications, computer software, documentation and databases (whether existing or in various stages of research and development); (vii) developments, methods, and processes (wh ether or not reduced to practice); (viii) all copyrightable works; and (ix) all information relating to the Company’s employees, including information contained in their personnel files (collectively the “Confidential Information”).  Information that is in the public domain at the time it is disclosed to Executive or after such disclosure becomes part of the public domain by publication or otherwise without violation of this Agreement by the Executive shall not constitute Confidential Information and shall not be subject to the obligations/benefits regarding Confidential Information as set forth in this Agreement.  The obligation of the Executive with respect to disclosure of Confidential Information as set forth in this Agreement is not applicable to any information that: (a) is reasonably required to be disclosed during the performance of Executive’s duties and, in accordance with the Company’s processes and procedures regarding the use of non-disclosure ag reements; or (b) is disclosed in compliance with a judicial or governmental order, provided the Executive shall give the Company reasonable notice prior to such disclosure and shall comply with any applicable protective order.

(b) Executive acknowledges the potential adverse impact, both internally and externally, that negative statements or remarks regarding the Company could have to the integrity, reputation and goodwill of the Company, and further acknowledges that the continuing success of Executive is, in part, dependent upon the positive perception of the Executive's transition to the OOC by employees, customers and the local community.  Executive therefore agrees to refrain from making any statements or remarks, verbally or in writing, to Company employees or customers (past, current or prospective), or to members of the Utica-Rome-New Hartford community that negatively characterize the Executive's transition to the OOC or otherwise are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Company.

4.           Termination

(a) Termination by Executive.  Executive may terminate this Agreement and his employment hereunder at any time upon thirty (30) days’ written notice to the Company (the “Termination Notice”).  Upon receipt of any Termination Notice from Executive, the Company may elect to terminate Executive’s employment effective immediately or on any date on or after the date of the receipt of said Termination Notice and prior to the termination date provided by Executive in his Termination Notice.  The election of the Company to accelerate the termination of Executive’s employment or reduce Executive’s responsibilities under this Section 4(a) shall not affect the characterization of the termination as a termination by Executive pursuant to Executive’s original Notice of Termination, provided tha t the Company shall pay to Executive all accrued entitlements up to the termination date set out in Executive’s original Notice of Termination.

(b) Termination For Cause. The Company may terminate this Agreement and the employment of Executive at any time for Cause by providing the Executive written notice of such termination.  If this Agreement is terminated for Cause, Executive shall not receive any notice or pay in lieu of notice or severance pay or any indemnity whatsoever in respect of such termination.  For the purposes of this Agreement, “Cause” shall mean any of the following which occurs after the Effective Date OR has occurred prior to the Effective Date and is the subject of a third party claim made against the Executive or the Company:

(i) willful negligence that results in substantial damage to the Company;

(ii) violation of the Company’s “Code of Business Conduct and Ethics” (Policy 708 and 708A); "Use of Company Resources and Security of Company Sensitive Information” (Policy 431); “Controlled Substances/Illegal Drugs and Alcoholic Beverages Prohibition” (Policy 421) or "Workplace Discrimination/Harassment/Non-Fraternization”  (Policy 419) policies as set forth in the Company’s Manager’s Manual;

(iii) indictment for, plea of guilty or nolo contendre, or conviction of Executive of a felony related to Company’s business, or a crime involving dishonesty, misappropriation of any funds or property, fraud or embezzlement or immoral conduct that adversely affects Company’s business; or;

(iv) breach of the confidentiality covenants set forth in this Agreement.

(c) Termination Due to Expiration of Initial Term.  Should the Company, in its sole discretion determine not to extend employment of Executive beyond the Initial Term, the last day of Executive’s employment will be December 31, 2009.  The Company agrees to provide Executive thirty (30) days prior written notice of its intent to allow Executive’s employment to terminate due to expiration of the Initial Term.

(d) Termination Due to Expiration of First Extended Term.  Should Executive’s employment with the Company be extended into the First Extended Term and, in Company’s sole discretion it determines not to extend employment of Executive beyond the First Extended Term, the last day of Executive’s employment will be August 31, 2010.  The Company agrees to provide Executive sixty (60) days prior written notice of its intent to allow Executive’s employment to terminate due to expiration of the First Extended Term.

(e) Termination of Second Extended Term Without Cause.  Should Executive’s employment with the Company be extended into the Second Extended Term, the Company may terminate Executive’s employment at any time after September 1, 2010 with or without Cause, subject to providing two (2) weeks written notice or payment in lieu thereof.

(f) Termination Due to Death or Disability.  Should Executive die at any time during the Initial Term or any Extended Term, the last day of Executive’s employment will be the date of death.  Should the Executive at any time during the Initial Term or any Extended Term become Disabled, the Company, at its option may terminate the Executive at any time following one hundred twenty days of Disability.   For purposes hereof the term “Disability” as used herein shall mean the inability, due to physical or mental cause, of Executive to perform his usual and regular duties for the Company, after reasonable accommodations (if applicable) by the Company for Executive’s disability.

5.           Effect of Termination.

(a) Accrued Rights.  Except as otherwise provided in Section 5(b), upon termination of the employment of Executive hereunder, the Company shall only be obligated to pay to Executive or his estate the accrued and unpaid Base Salary, unpaid business expenses and any other payments due under Section 2 hereof and any accrued and vested pension welfare and fringe benefits under the employee benefit plans in which Executive participated, including any unpaid accrued vacation pay (collectively, the “Accrued Rights”), if any, owing to Executive, in each case up to the date of termination of employment.

(b) Termination for Cause.  If Executive’s employment shall be terminated at any time by the Company for Cause, the Company shall only be obligated to pay to Executive his accrued and unpaid Base Salary, and other Accrued Rights, if any, owing to Executive hereunder (except to the extent that the benefit plans and/or policies permit the Company to withhold benefits to Executive by reason of termination for Cause) up to the date of termination.

(c) Termination Due to Expiration of Initial Term.  If Executive’s employment shall be terminated due to expiration of the Initial Term the Company shall only be obligated to pay the Executive his accrued and unpaid Base Salary, other Accrued Rights and, subject to Section 5(h) of this Agreement, salary continuation for twelve (12) months following the termination date.  For purposes of this Agreement, salary continuation shall be payments to Executive at the same rate of bi-weekly Base Salary that he was receiving at the time of termination (“Severance”).  Severance shall be subject to all applicable state, federal and local income tax withholdings.  In addition, the Company shall be responsible for payment of: i) Executive’s COBRA election during the Severance period so long as Executive continues to pay an amount equal to the required PAR employee contribution for the medical coverage selected by Executive; and ii) an amount up to $3,500 toward Executive’s cost for a life insurance policy.

(d) Termination Due to Expiration of First Extended Term.  If Executive’s employment shall be terminated due to expiration of the First Extended Term the Company shall only be obligated to pay the Executive his accrued and unpaid Base Salary, other Accrued Rights and, subject to Section 5(h) of this Agreement, salary continuation for six (6) months following the termination date.  For purposes of this Agreement, salary continuation shall be payments to Executive at the same rate of bi-weekly Base Salary that he was receiving at the time of termination (the “Severance”).  Severance shall be subject to all applicable state, federal and local income tax withholdings. In addition, the Company shall be responsible for payment of: i) Executive’s COBRA election during the Severance period so long as Execut ive continues to pay an amount equal to the required PAR employee contribution for the medical coverage selected by Executive; and ii) an amount up to $1,750 toward Executive’s cost for a life insurance policy.

(e) Termination During the Second Extended Term Without Cause.  If Executive’s employment shall be terminated during the Second Extended Term by the Company for any reason other than for Cause as defined in this Agreement, the Company shall only be obligated to pay the Executive his accrued and unpaid Base Salary, other Accrued Rights and, subject to Section 5(h) of this Agreement, salary continuation for six (6) months following the termination date.  For purposes of this Agreement, salary continuation shall be payments to Executive at the same rate of bi-weekly Base Salary that he was receiving at the time of termination (the “Severance”).  Severance shall be subject to all applicable state, federal and local income tax withholdings.  In addition, the Company shall be responsible for payment o f: i) Executive’s COBRA election during the Severance period so long as Executive continues to pay an amount equal to the required PAR employee contribution for the medical coverage selected by Executive; and ii) an amount up to $1,750 toward Executive’s cost for a life insurance policy.

(f) Termination Due to Disability or Death.  If Executive’s employment shall be terminated at any time due to Executive’s Disability or death, the Company shall only be obligated to pay to Executive or Executive’s estate, as the case may be, his accrued and unpaid Base Salary, and other Accrued Rights, if any, owing to Executive hereunder as of the last day of Executive’s employment.

(g) Sole Obligation of the Company. In the event of termination of Executive’s employment, the sole obligation of the Company hereunder shall be its obligation to make the payments called for by the applicable provisions of this Section 5, and the Company shall have no other obligation to Executive or to his beneficiary or his estate, except as otherwise provided by law or under the terms of any Equity Awards or any employee benefit plans or programs then maintained by the Company in which Executive participates.

(h) Condition Precedent to Severance Payments.  Any provision to the contrary in this Agreement notwithstanding, the Company shall not be obligated to make any Severance payments to Executive unless (i) Executive shall have executed and delivered to the Company, within thirty (30) days of the date of termination, a general release of all claims against the Company and any of its directors, officers, managers, agents, investors and other affiliates in form and substance reasonably satisfactory to the Company, which release shall include an agreement of Executive not to disparage the Company, (ii) all applicable consideration periods and rescission periods provided by law shall have expired, and (iii) Executive is in material compliance with the confidentiality provisions hereof as of the dates of the payments.

(i) Resignation.  Upon any termination of Executive’s employment hereunder for any reason, with or without Cause, whether by the Company or by Executive, Executive shall be deemed to have resigned from all positions as an officer, director, manager, employee and any other position within the Company and/or any subsidiaries and/or other affiliates thereof.

6.           Injunctive Relief.  Executive expressly acknowledges that, in the event that the confidentiality provisions hereof are breached, the Company will suffer damages incapable of ascertainment and will be irreparably damaged if any provision of such Sections is not enforced. Therefore, should any dispute arise with respect to the breach or threatened breach of any provision of said provisions, Executive agrees and consents that, in addition to any and all other remedies available to the Company, an injunction or restraining order or other equitable relief may be issued or ordered by a court of competent jurisdiction restraining any breach or threatened breach of any such provisions. Nothing herein sh all be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach.

7.           Miscellaneous.

(a) Company.  For purposes of this Agreement, unless the context otherwise requires, the term “Company” shall include the Company and each past and/or current subsidiary of the Company.

(b) Notices.  Any notice or other communication in connection with this Agreement shall be deemed to be delivered if in writing and delivered in person or to the last known address of the party to whom the notice is being given.  Notices may be delivered by hand, U.S. mail, recognized overnight courier such as Federal Express or UPS, by confirmed facsimile transmission to an operational fax number or by confirmed email transmission to an operational email address.  Notices to the Company shall be addressed to the President & CEO of the Company with a copy to the Legal Department.

(c) Severability.  The parties agree that each provision contained in this Agreement shall be treated as a separate and independent clause, and the unenforceability of any one clause shall in no way impair the enforceability of any of the other clauses herein.  Moreover, if one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to scope, activity or subject, such provisions shall be construed by the appropriate judicial body by limiting and reducing it or them, so as to be enforceable to the extent compatible with the applicable law.

(d) Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes and replaces any prior agreements, representations or understandings (written or oral) between or among Executive and the Company relating to Executive’s service to and/or employment by the Company and/or relating to any rights upon separation of the Executive from Company; provided, however, that nothing herein shall alter or otherwise modify the terms and conditions set forth in any Equity Awards.  All promises, representations, understandings, warranties and agreements with reference to the subject matter hereof and inducements to the making of this Agreement relied upon by any party hereto have been expressed in this Agreement.  This Agreement may not be amended except by a writ ing signed by the party against whom enforcement thereof is sought.

(e) No Waiver.  No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

(f) Survival.  The provisions of Sections 3, 5, 6 and 7 hereof shall survive the termination of this Agreement.

(g) Assignability; Binding Nature.  This Agreement shall be binding upon and inure to the benefit of the Company and Executive and their respective successors, heirs (in the case of Executive) and permitted assigns. Rights or obligations of the Company including, specifically, the rights of the Company under Section 3 of this Agreement, may be assigned or transferred by the Company, as applicable. No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his rights to compensation and benefits, which may be transferred only by will or operation of law.  In the event of a change of control of the Company, the Company shall require this Employment Agreement to be assumed by the Company’s successor.

(h) Waiver of Jury Trial.  Each party hereto hereby expressly waives any right to a trial by jury in any action or proceeding to enforce or defend any rights or remedies under or pursuant to this Agreement or under any agreement, document or instrument delivered or which may in the future be delivered in connection herewith or arising from or relating to any relationship existing in connection with this Agreement, and agrees that any such action or proceeding shall be tried before a court and not before a jury.  

(i) Governing Law.  This Agreement shall be deemed a contract made under the laws of the State of New York.

(j) Captions and Headings.  The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.

(k) Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  This Agreement shall become effective when each party shall have received counterparts signed by the other party.  Signatures provided by facsimile, “PDF” or other electronic means shall have the same effect as originals.

IN WITNESS WHEREOF, the parties hereto or their duly authorized representatives have signed, sealed and delivered this Agreement effective as of the day and year first above written.

THE COMPANY:	PAR TECHNOLOGY CORPORATION
	By:________________________
EXECUTIVE:	GREGORY T. CORTESE
	___________________________

EX-31.1

Exhibit 31.1

PAR TECHNOLOGY CORPORATION

STATEMENT OF EXECUTIVE OFFICER

I, John W. Sammon certify that:

1. I have reviewed this report on Form 10-Q of PAR Technology Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability  to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 10, 2010	/s/John W. Sammon
	John W. Sammon
	Chairman of the Board and Chief Executive Officer

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EX-31.2

Exhibit 31.2

PAR TECHNOLOGY CORPORATION

STATEMENT OF EXECUTIVE OFFICER

I, Ronald J. Casciano, certify that:

1. I have reviewed this report on Form 10-Q of PAR Technology Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)),for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability  to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November  10, 2010	/s/Ronald J. Casciano
	Ronald J. Casciano
	Vice President, Chief Financial Officer, Treasurer, and Chief Accounting Officer

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EX-32.1

Exhibit 32.1

PAR TECHNOLOGY CORPORATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PAR Technology Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, John W. Sammon and Ronald J. Casciano, Chairman of the Board & Chief Executive Officer and Vice President, Chief Financial Officer, Treasurer, and Chief Accounting Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1. The Report fully complies with the requirement of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/John W. Sammon

John W. Sammon

Chairman of the Board & Chief Executive Officer

November  10, 2010

/s/Ronald J. Casciano

Ronald J. Casciano

Vice President, Chief Financial Officer, Treasurer,

and Chief Accounting Officer

November  10 , 2010

  E-4