UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 30, 2019
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 1-09720
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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Common Stock
PAR
New York Stock Exchange
    
    
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  þ No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   þ   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer  ☐
Accelerated Filer  þ
Non Accelerated Filer  ☐
Smaller Reporting Company þ
 
Emerging Growth Company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



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

As of August 1, 2019 , 16,342,924 shares of the registrant’s common stock, $0.02 par value, were outstanding.



PAR TECHNOLOGY CORPORATION

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item
Number
 
Page
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
 
 
 
5
 
 
 
 
6
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II
OTHER INFORMATION
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
24
 
 
 
 


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
(unaudited)
 
(note 1)
Assets
June 30, 2019
 
December 31, 2018
Current assets:
 
 
 
Cash and cash equivalents
$
58,661

 
$
3,485

Accounts receivable – net
25,886

 
26,219

Inventories – net
20,433

 
22,737

Asset held for sale
2,477

 
—

Other current assets
6,657

 
3,251

Total current assets
114,114

 
55,692

Property, plant and equipment – net
13,641

 
12,575

Goodwill
11,051

 
11,051

Intangible assets – net
8,555

 
10,859

Operating lease right-of-use assets
3,323

 
—

Other assets
4,388

 
4,504

Total Assets
$
155,072

 
$
94,681

Liabilities and Shareholders’ Equity
 

 
 

Current liabilities:
 

 
 

Borrowings on line of credit
$
—

 
$
7,819

Accounts payable
10,434

 
12,644

Accrued salaries and benefits
5,700

 
5,940

Accrued expenses
2,257

 
2,113

Operating lease liabilities - current portion
1,206

 
—

Customer deposits and deferred service revenue
10,736

 
9,851

Other current liabilities
—

 
2,550

Total current liabilities
30,333

 
40,917

Operating lease liabilities - net of current portion
2,153

 
—

Deferred service revenue
4,343


4,407

Long-term debt
59,255

 
—

Other long-term liabilities
3,201

 
3,411

Total liabilities
99,285

 
48,735

Commitments and contingencies


 


Shareholders’ Equity:
 

 
 

Preferred stock, $.02 par value, 1,000,000 shares authorized
—

 
—

Common stock, $.02 par value, 29,000,000 shares authorized; 18,005,285 and 17,879,761 shares issued, 16,297,176 and 16,171,652 outstanding at June 30, 2019 and December 31, 2018, respectively
360

 
357

Capital in excess of par value
63,806

 
50,251

Retained earnings
1,589

 
5,427

Accumulated other comprehensive loss
(4,132
)
 
(4,253
)
Treasury stock, at cost, 1,708,109 shares
(5,836
)
 
(5,836
)
Total shareholders’ equity
55,787

 
45,946

Total Liabilities and Shareholders’ Equity
$
155,072

 
$
94,681

See accompanying notes to unaudited interim consolidated financial statements

1

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)

 
Three Months Ended
June 30,
Six Months Ended
June 30,
 
2019
 
2018
2019
 
2018
Net revenues:
 
 
 
 
 
 
Product
$
14,728

 
$
20,883

$
30,245

 
$
47,207

Service
13,534

 
13,944

27,577

 
27,140

Contract
15,985

 
17,744

31,107

 
33,885

 
44,247

 
52,571

88,929

 
108,232

Costs of sales:
 

 
 

 

 
 

Product
11,412

 
15,339

22,653

 
34,779

Service
9,876

 
10,205

19,903

 
19,752

Contract
14,386

 
15,667

28,036

 
30,494

 
35,674

 
41,211

70,592

 
85,025

Gross margin
8,573

 
11,360

18,337

 
23,207

Operating expenses:
 

 
 

 

 
 

 Selling, general and administrative
9,059

 
9,020

17,623

 
17,620

 Research and development
2,725

 
3,222

5,785

 
6,090

 Amortization of identifiable intangible assets
242

 
242

483

 
483

 
12,026

 
12,484

23,891

 
24,193

Operating loss
(3,453
)
 
(1,124
)
(5,554
)
 
(986
)
Other expense, net
(374
)
 
(384
)
(804
)
 
(335
)
Interest expense, net
(1,244
)
 
(78
)
(1,390
)
 
(119
)
Loss before benefit from income taxes
(5,071
)
 
(1,586
)
(7,748
)
 
(1,440
)
Benefit from income taxes
3,962

 
263

3,910

 
185

Net loss
$
(1,109
)
 
$
(1,323
)
$
(3,838
)
 
$
(1,255
)
Basic Loss per Share:
 

 
 

 
 
 
Net loss
$
(0.07
)
 
$
(0.08
)
$
(0.24
)
 
$
(0.08
)
Diluted Loss per Share:
 

 
 

 
 
 
Net loss
$
(0.07
)
 
$
(0.08
)
$
(0.24
)
 
$
(0.08
)
 Weighted average shares outstanding
 

 
 

 
 
 
Basic
16,290

 
16,330

16,085

 
15,993

Diluted
16,290

 
16,330

16,085

 
15,993


See accompanying notes to unaudited interim consolidated financial statements


2

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
(Unaudited)

 
Three Months Ended
June 30,
Six Months Ended
June 30,
 
2019
 
2018
2019
 
2018
Net loss
$
(1,109
)
 
$
(1,323
)
$
(3,838
)
 
$
(1,255
)
Other comprehensive  income (loss), net of applicable tax:
 

 
 

 

 
 

Foreign currency translation adjustments
131

 
(625
)
121

 
(202
)
Comprehensive loss
$
(978
)
 
$
(1,948
)
$
(3,717
)
 
$
(1,457
)

See accompanying notes to unaudited interim consolidated financial statements

3

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands)
(Unaudited)
(in thousands)
Common Stock
Capital in
excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury Stock
Total
Shareholders’
Equity
Shares
Amount
Shares
Amount
 
 
 
 
 
 
 
 
 
Balances at December 31, 2017
17,677

$
354

$
48,349

$
29,549

$
(3,430
)
(1,708
)
$
(5,836
)
$
68,986

 
 
 
 
 
 
 
 
 
Net income
—

—

—

68

—

—

—

68

Equity based compensation
—

—

181

—

—

—

—

181

Foreign currency translation adjustments
—

—

—

—

423

—

—

423

Balances at March 31, 2018
17,677

$
354

$
48,530

$
29,617

$
(3,007
)
(1,708
)
$
(5,836
)
$
69,658

Net loss
—

—

—

(1,323
)
—

—

—

(1,323
)
Issuance of common stock upon the exercise of stock options
208

3

728

—

—

—

—

731

Equity based compensation
—

—

250

—

—

—

—

250

Foreign currency translation adjustments
—

—

—

—

(625
)
—

—

(625
)
Balances at June 30, 2018
17,885

$
357

$
49,508

$
28,294

$
(3,632
)
(1,708
)
$
(5,836
)
$
68,691

 
 
 
 
 
 
 
 
 
Balances at December 31, 2018
17,878

$
357

$
50,251

$
5,427

$
(4,253
)
(1,708
)
$
(5,836
)
$
45,946

 
 
 
 
 
 
 
 
 
Net loss
—

—

—

(2,729
)
—

—

—

(2,729
)
Issuance of common stock upon the exercise of stock options
78

—

30

—

—

—

—

30

Equity based compensation
—

—

248

—

—

—

—

248

Foreign currency translation adjustments
—

—

—

—

(10
)
—

—

(10
)
Balances at March 31, 2019
17,956

$
357

$
50,529

$
2,698

$
(4,263
)
(1,708
)
$
(5,836
)
$
43,485

Net loss
—

—

—

(1,109
)
—

—

—

(1,109
)
Issuance of common stock upon the exercise of stock options
79

3

210

—

—

—

—

213

Equity based compensation
—

—

602

—

—

—

—

602

Foreign currency translation adjustments
—

—

—

—

131

—

—

131

Convertible notes conversion discount (net of taxes $4.1 million and issuance costs of $1.1 million)
—

—

12,465

—

—

—

—

12,465

Balances at June 30, 2019
18,035

$
360

$
63,806

$
1,589

$
(4,132
)
(1,708
)
$
(5,836
)
$
55,787


See accompanying notes to unaudited interim consolidated financial statements



4

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Six Months Ended
June 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net loss
$
(3,838
)
 
$
(1,255
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 

 
 

Depreciation, amortization and accretion
3,121

 
2,279

Provision for bad debts
397

 
314

Provision for obsolete inventory
(522
)
 
974

Equity based compensation
850

 
431

Deferred income tax
(4,065
)
 
(361
)
Changes in operating assets and liabilities:
 

 
 

Accounts receivable
(284
)
 
(3,655
)
Inventories
1,876

 
(5,976
)
Other current assets
(3,406
)
 
30

Other assets
150

 
(283
)
Accounts payable
(2,208
)
 
6,740

Accrued salaries and benefits
(240
)
 
(122
)
Accrued expenses
2,840

 
(1,151
)
Customer deposits and deferred service revenue
1,548

 
3,110

Other long-term liabilities
(2,760
)
 
(486
)
Net cash (used in) provided by operating activities
(6,541
)
 
589

Cash flows from investing activities:
 

 
 

Capital expenditures
(1,693
)
 
(1,737
)
Capitalization of software costs
(1,624
)
 
(2,098
)
Net cash used in investing activities
(3,317
)
 
(3,835
)
Cash flows from financing activities:
 

 
 

Payments of long-term debt
—

 
(96
)
Payment of contingent consideration for Brink Earn Out
(2,550
)
 
(10,059
)
Payments of bank borrowings
(17,459
)
 
14,950

Proceeds from bank borrowings
9,640

 
—

Proceeds from notes payable, net of issuance costs
75,039

 
—

Proceeds from stock options
243

 
731

Net cash provided by financing activities
64,913

 
5,526

Effect of exchange rate changes on cash and cash equivalents
121

 
(202
)
Net increase in cash and cash equivalents
55,176

 
2,078

Cash and cash equivalents at beginning of period
3,485

 
6,600

Cash and equivalents at end of period
$
58,661

 
$
8,678

 
 
 
 
Supplemental disclosures of cash flow information:
 
 
 
Cash paid during the period for:
 
 
 
Interest
$
153

 
$
78

Income taxes, net of refunds
125

 
83

Additions to right-of-use assets and deferred rent obtained from operating lease liabilities
3,359

 
—

See accompanying notes to unaudited interim consolidated financial statements

5

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of presentation

The accompanying unaudited interim consolidated financial statements of PAR Technology Corporation (the “Company” or “PAR”, "we","us") have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Article 8 of Regulation S-X pertaining to interim financial statements.  Accordingly, they do not include all information and footnotes required by GAAP for annual financial statements.  In the opinion of management, such unaudited interim consolidated financial statements include all normal and recurring adjustments necessary in order to make the unaudited interim consolidated financial statements not misleading and to provide a fair presentation of the results for the interim periods included in this Quarterly Report on Form 10-Q (“Quarterly Report”).  Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results of operations that may be expected for any future period. The balance sheet at December 31, 2018 has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the U.S. Securities and Exchange Commission (“SEC”).

The preparation of the unaudited interim consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the period.  Significant items subject to such estimates and assumptions include revenue recognition, stock based compensation, the recognition and measurement of assets acquired and liabilities assumed in business combinations at fair value, the carrying amount of property, plant and equipment, identifiable intangible assets and goodwill, valuation allowances for receivables, inventories and deferred income tax assets, and measurement of contingent consideration at fair value. Actual results could differ from those estimates.

The unaudited interim consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 ,  filed with the Securities and Exchange Commission (“SEC”) on March 18, 2019.

Note 2 - Revenue Recognition

Beginning on January 1, 2018, the Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the company expects to be entitled in exchange for those goods or services. The Company applies the five-step model, as described in ASU 2014-09 Revenue from Contracts with Customers, to contracts when it is probable the Company will collect the consideration it expects in exchange for the goods and services transferred to the customer. The following steps are applied to achieve that principle:
 
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the company satisfies a performance obligation
 
The Company's performance obligations are satisfied when services are received by the customer and when the customer takes title to the product and assumes the significant risks and rewards of ownership.
 
Performance Obligations Outstanding
Our performance obligations outstanding represent the transaction price of firm, non-cancellable orders, with expected delivery dates to customers subsequent to June 30, 2019 and December 31, 2018 , respectively, for work that has not been performed. The aggregate outstanding performance obligations attributable to our two reporting segments, Restaurant/Retail and

6

Government, is as follows (in thousands):
 
Balance at June 30, 2019
 
Current - under one year
Non-current - over one year
Restaurant/Retail
$
10,657

$
4,343

Government
79

—

TOTAL
$
10,736

$
4,343

 
Balance at December 31, 2018
 
Current - under one year
Non-current - over one year
Restaurant/Retail
$
9,320

$
4,407

Government
325

—

TOTAL
$
9,645

$
4,407

Most performance obligations over one year are related to service and support contracts, approximately 71% of which we expect to fulfill within the one-year period and 100% within 60 months.

During the three and six months ended June 30, 2019 , we recognized revenue of $3.4 million and $ 8.1 million , respectively, that was included in contract liabilities at the beginning of the period.

Disaggregated Revenue
We disaggregate revenue from contracts from customers by major product group for each of the reporting segments as we believe it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregation of revenue for the three and six months ended June 30, 2019 and June 30, 2018 is as follows (in thousands):
 
Three months ended June 30, 2019

Restaurant/Retail - Point in Time
Restaurant/Retail - Over Time
Government - Over Time
Restaurant/Retail
$
21,503

$
5,829

$
—

Grocery
283

647

—

Mission Systems
—

—

8,192

ISR Solutions
—

—

7,793

TOTAL
$
21,786

$
6,476

$
15,985

 
Three months ended June 30, 2018
 
Restaurant/Retail - Point in Time
Restaurant/Retail - Over Time
Government - Over Time
Restaurant/Retail
$
27,430

$
5,742

$
—

Grocery
873

782

—

Mission Systems
—

—

8,707

ISR Solutions
—

—

9,037

TOTAL
$
28,303

$
6,524

$
17,744


7


Six months ended June 30, 2019

Restaurant/Retail - Point in Time
Restaurant/Retail - Over Time
Government - Over Time
Restaurant/Retail
$
43,880

$
11,579

$
—

Grocery
732

1,631

—

Mission Systems
—

—

16,738

ISR Solutions
—

—

14,369

TOTAL
$
44,612

$
13,210

$
31,107


Six months ended June 30, 2018

Restaurant/Retail - Point in Time
Restaurant/Retail - Over Time
Government - Over Time
Restaurant/Retail
$
59,594

$
11,599

$
—

Grocery
1,626

1,528

—

Mission Systems
—

—

17,041

ISR Solutions
—

—

16,844

TOTAL
$
61,220

$
13,127

$
33,885


Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period is less than one year or the total amount of commissions is immaterial. We record these expenses in selling, general and administrative.

We elected to exclude from the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (for example, sales, use, value added, and some excise taxes).

Note 3 — Asset Held for Sale

During the quarter ended June 30, 2019 , the Company's subsidiary ParTech, Inc. entered into an asset purchase agreement to sell substantially all assets relating to the SureCheck product group within the Company's Restaurant/Retail segment; the closing of the sale transaction is subject to conditions precedent, some of which are not within the Company's control. The sale does not qualify for treatment as a discontinued operation, and therefore, the SureCheck product group is included in the Company’s continuing operations for all periods presented. During the three and six months ended June 30, 2019, the Company recorded $1,369,000 of expenses related to the expected sale of the SureCheck product group, this represents $581,000 related to reserve for inventory and $788,000 in costs of service related to impairment of intangible assets for the SureCheck product group. The Company classified the net book value of the SureCheck product group as asset held for sale for the quarter ended June 30, 2019, as presented in the following table (in thousands):
 
 
June 30, 2019
Accounts receivable - net
$
220

Intangible assets
2,180

Inventories - net
950

Total assets
3,350

Deferred revenue
726

Other liabilities
147

Total liabilities
873

Total net assets
$
2,477




8


Note 4 — Leases

Adoption

Effective January 1, 2019, the Company adopted the new lease accounting standard, ASC 842, Leases, using the modified retrospective method of applying the new standard at the adoption date. In addition, the Company elected to apply the package of practical expedients permitted under the transition guidance within the new standard. This allowed the Company to carry forward historical lease classification. Adoption of this standard resulted in the recording of operating lease right-of-use (ROU) assets and corresponding operating lease liabilities of approximately $4.0 million . The Company's financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance.

A significant portion of our operating and finance lease portfolio includes corporate offices, research and development, information technology (IT) equipment, and automobiles. The majority of our leases have remaining lease terms of  1 year to  5 years . Substantially all lease expense is presented within selling, general and administrative in the consolidated statements of operations.

 
Three Months Ended June 30,

Six Months Ended June 30,
 
2019
2018
2019
2018
Operating lease cost
$
302

$
251

$
848

$
708

Total lease cost
$
302

$
251

$
848

$
708


Supplemental cash flow information related to leases for the second quarter was as follows:
 
Three Months Ended
June 30, 2019
Six Months Ended
June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:

 
Operating cash flows from operating leases
$
569

$
1,115


Supplemental balance sheet information related to leases for the second quarter was as follows:

 
June 30, 2019
Operating leases
 
Operating lease right-of-use assets
$
3,323

Operating lease liabilities - current portion
1,206

Operating lease liabilities - net of current portion
2,153

Total operating lease liabilities
$
3,359

Weighted-average remaining lease term
 
Operating leases
3.9 years

Weighted-average discount rate
 
Operating leases
4
%


9

Future minimum lease payments are as follows:

 
Operating Leases
2019
$
833

2020
1,034

2021
762

2022
582

2023
578

Thereafter
75

Total lease payments
3,864

Less: interest
(505
)
Total
$
3,359







Note 5 — Accounts Receivable

The Company’s accounts receivable, net, consists of (in thousands):

 
June 30, 2019
 
December 31, 2018
Government reporting segment:
 
 
 
Billed
$
7,782

 
$
9,100

Advanced billings
(214
)
 
(563
)
 
7,568

 
8,537

 
 
 
 
Restaurant/Retail reporting segment:
18,318

 
17,682

Accounts receivable - net
$
25,886

 
$
26,219


At June 30, 2019 and December 31, 2018 , the Company recorded allowances for doubtful accounts of $1.7 million and $1.3 million , respectively, against accounts receivable for the Restaurant/Retail reporting segment.

Note 6 — Inventories

Inventories are primarily used in the manufacture, maintenance and service of products within the Restaurant/Retail reporting segment.  The components of inventories, net, consist of the following (in thousands):

 
June 30, 2019
 
December 31, 2018
Finished goods
$
7,533

 
$
12,472

Work in process
466

 
67

Component parts
6,903

 
4,716

Service parts
5,531

 
5,482

 
$
20,433

 
$
22,737



10

At June 30, 2019 and December 31, 2018 , the Company recorded inventory reserves of $9.9 million and $9.8 million , respectively, against inventories used in the Restaurant/Retail reporting segment, which relate primarily to service parts.

Note 7 — Identifiable Intangible Assets and Goodwill

Identifiable intangible assets represent intangible assets acquired by the Company in connection with its acquisition of Brink Software Inc. in 2014 ("Brink Acquisition") and software development costs.  The Company capitalizes certain software development costs for software used in its Restaurant/Retail reporting segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs.  The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the software product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20, Software – Costs of Software to be sold, Leased, or Marketed are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. Included in "Acquired and internally developed software costs" in the table below is approximately $3.1 million and $3.0 million of costs related to software products that have not satisfied the general release threshold as of June 30, 2019 and December 31, 2018 , respectively. These products are expected to satisfy the general release threshold within the next 12 months. Software development is also capitalized in accordance with ASC 350-40, “Intangibles - Goodwill and Other - Internal - Use Software,” and is amortized over the expected benefit period, which generally ranges from three to five years . Software development costs capitalized during the three and six months ended June 30, 2019 were $0.6 million and $1.6 million , respectively.  Software development costs capitalized during the three and six months ended June 30, 2018 were $0.9 million and $1.7 million , respectively. 

Annual amortization, charged to cost of sales is computed using the straight-line method over the remaining estimated economic life of the product, generally three to five years . Amortization of capitalized software development costs from continuing operations for the three and six months ended June 30, 2019 were $0.7 million and $1.5 million , respectively.  Amortization of capitalized software development costs from continuing operations for the three and six months ended June 30, 2018 were $1.1 million and $2.1 million , respectively. 

Amortization of intangible assets acquired in the Brink Acquisition amounted to $0.2 million and $0.5 million , respectively, for each of the three and six month periods ended June 30, 2019 and 2018 .

The components of identifiable intangible assets are (in thousands):

 
June 30, 2019
 
December 31, 2018
 
Estimated
Useful Life
Acquired and internally developed software costs
$
13,902

 
$
18,972

 
3 - 5 years
Customer relationships
160

 
160

 
7 years
Non-competition agreements
30

 
30

 
1 year
 
14,092

 
19,162

 
 
Less accumulated amortization
(9,059
)
 
(11,708
)
 
 
 
$
5,033

 
$
7,454

 
 
Internally developed software costs not meeting general release threshold
3,122

 
3,005

 
 
Trademarks, trade names (non-amortizable)
400

 
400

 
N/A
 
$
8,555

 
$
10,859

 
   

The expected future amortization of intangible assets, assuming straight-line amortization of capitalized software development costs and acquisition related intangibles, is as follows (in thousands):


11

2019, remaining
$
1,337

2020
2,132

2021
1,286

2022
278

2023
—

Thereafter
—

Total
$
5,033



The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment.  The Company operates in two reporting segments, Restaurant/Retail and Government.  Goodwill impairment testing is performed at the reporting unit level.  Goodwill is assigned to a specific reporting unit at the date the goodwill is initially recorded.  Once goodwill has been assigned to a specific reporting segment, it no longer retains its association with a particular acquisition, and all of the activities within the reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.  The amount of goodwill carried by the Restaurant/Retail and Government reporting segments was $10.3 million and $0.8 million , respectively, at June 30, 2019 and December 31, 2018 . No impairment charges were recorded for the period ended June 30, 2019 and year ended December 31, 2018 . Approximately $2.9 million in net software costs were reclassified on the Balance Sheet to "Asset held for sale" as indicated in Note 3.

Note 8 — Convertible Senior Notes

On April 15, 2019, the Company sold $80.0 million aggregate principal amount of 4.500% Convertible Senior Notes due 2024 (the "Notes"). The Notes were sold pursuant to an indenture, dated April 15, 2019, between the Company and The Bank of New York Mellon Trust Company, N.A. (“Trustee”), referred to herein as the “Indenture.” The Notes are senior, unsecured obligations of the Company. The Notes pay interest at a rate equal to 4.500% per year. Interest on the Notes is payable semiannually in arrears on April 15 and October 15 of each year, beginning October 15, 2019. Interest accrues on the Notes from the last date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from April 15, 2019. Unless earlier converted, redeemed or repurchased, the Notes mature on April 15, 2024.

The implied estimated effective rate of the liability component of the Notes is 10.24% .

The Notes are convertible into Company common stock at an initial conversion rate of 35.0217 shares per $1,000 principal amount of Notes, subject to adjustment upon certain events.

The Notes are convertible, in whole or in part, at the option of the holder, at any time prior to the close of business on the business day immediately preceding October 15, 2023, but only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on such trading day;

(2) during the five consecutive business day period immediately after any five consecutive trading day period (the five consecutive trading day period being referred to as the ‘‘measurement period’’) in which the trading price per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day;

(3) upon the occurrence of certain specified corporate events, including fundamental changes (as described in the Indenture); or

(4) if the Company calls the Notes for redemption.

In addition, regardless of the foregoing circumstances, holders may convert their Notes at any time on or after October 15, 2023 until the close of business on the second business day immediately preceding the maturity date of the Notes. Upon conversion, the Company may elect to settle by paying or delivering either solely cash, shares of Company common stock or a combination of cash and shares of common stock.


12

In accordance with ASC 470-20, the initial measurement of the Notes at fair value resulted in a liability of $62.4 million , as such, the calculated discount resulted in an implied value of the convertible feature recognized in Capital in excess of Par Value of $17.6 million . This resulted in a $0.6 million increase reflected in interest expense, in the Company's consolidated statements of operations for the three and six months ended June 30, 2019. Issuance costs for the transaction amounted to $4.9 million and were allocated to components on a ratable basis as follows; Capital in excess of Par Value, $1.1 million , and Long-term Debt, $3.8 million .

The Indenture contains covenants that, among other things, restricts the Company’s ability to merge, consolidate or sell, or otherwise dispose of, substantially all of its assets. These limitations are subject to a number of important qualifications and exceptions.

The Indenture contains customary Events of Default (as defined in the Indenture), including default in the event the Company fails to pay interest on the Notes when due, and such failure continues for 30 days, or the Company fails to pay the principal of the Notes when due, including at maturity, upon redemption or otherwise; failure to comply with covenants and other obligations under the Indenture, including delivery of required notices and obligations in connection with conversion, in certain cases subject to notice and grace periods; payment defaults and accelerations with respect to other indebtedness of the Company and its significant subsidiaries in the aggregate principal amount of $10.0 million or more; failure by the Company or its significant subsidiaries to pay certain final judgments aggregating in excess of $10.0 million within 60 consecutive days of such final judgment; and specified events involving bankruptcy, insolvency or reorganization of the Company or its significant subsidiaries.

Upon an Event of Default, the trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare all the Notes to be due and payable immediately. In the case of Events of Default relating to bankruptcy, insolvency or reorganization, all outstanding Notes will become due and payable immediately without further action or notice.

In connection with the sale of the Notes, the Company recorded an income tax benefit of $4.1 million as a discrete item for the three and six months ended June 30, 2019 as a result of the creation of a deferred tax liability associated with the portion of the Notes that was classified within stockholders' equity. While GAAP requires the offset of the deferred tax liability to be recorded in additional paid-in capital, consistent with the equity portion of the Notes, the creation of the deferred tax liability produced evidence of recoverability of deferred tax assets which resulted in the release of a valuation allowance, totaling $4.1 million , reflected as an income tax benefit in the current period.

The following table summarizes information about the equity and liability components of the Notes (in thousands): 
 
June 30, 2019
 
Principal amount of 2024 Notes outstanding
$
80,000
 
 
Unamortized discount (including unamortized debt issuance cost)
(20,745
)
 
Total long-term portion of notes payable
$
59,255
 
 
 
 
 
 
 
 
 
 
 
Equity component of notes
 
$
17,624

 
 
 
 
Less: Deferred tax liability
 
 
(4,065
)
 
 
 
 
Less: Issuance costs
 
 
(1,094
)
 
 
 
 
Capital in excess of Par Value
 
$
12,465

 
 
 
 


Note 9 — Stock Based Compensation

The Company applies the fair value recognition provisions of ASC Topic 718. The Company recorded stock based compensation of $0.6 million and $0.9 million for the three and six month periods ended June 30, 2019 , respectively. The Company recorded stock based compensation of $0.2 million and $0.4 million for the three and six month periods ended June 30, 2018, respectively. The amount recorded for the three and six months ended June 30, 2019 was, net of benefits of, $5,000 and $32,000 , respectively, as the result of forfeitures of unvested stock awards prior to completion of the requisite service period and/or failure to achieve performance criteria. There were no forfeitures for the three and six months ended June 30, 2018. At June 30, 2019 , the aggregate unrecognized compensation expense related to unvested equity awards was $1.9 million (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 2019 through 2021 .

Note 10 — Net loss per share

Earnings per share are 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 shares of common stock outstanding during the period.  Diluted EPS reflects

13

the potential dilution that would occur if convertible securities or other contracts to issue common stock were exercised. For the six months ended June 30, 2019 , there were 469,000 anti-dilutive stock options outstanding compared to zero as of June 30, 2018 . The potential effect of the conversion feature with respect to the Notes (See Note 8 - Convertible Senior Notes) was excluded from the diluted net loss per share as of June 30, 2019 as the Company's closing stock price on June 28, 2019 (the last trading day before June 30, 2019) did not exceed the initial conversion price of $28.55 per share. The potential shares from the Notes at the initial conversion rate was approximately 2,801,736 and they were considered anti-dilutive using the if-converted method.

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

 
Three Months Ended
June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net loss
$
(1,109
)
 
$
(1,323
)
 
$
(3,838
)
 
$
(1,255
)
 
 
 
 
 
 
 
 
Basic:
 

 
 

 
 

 
 

Shares outstanding at beginning of period
16,044

 
16,286

 
16,041

 
15,969

Weighted average shares issued/(repurchased) during the period, net
246

 
44

 
44

 
24

Weighted average common shares, basic
16,290

 
16,330

 
16,085

 
15,993

Net loss per common share, basic
$
(0.07
)
 
$
(0.08
)
 
$
(0.24
)
 
$
(0.08
)
Diluted:
 

 
 

 
 

 
 

Weighted average common shares, basic
16,290

 
16,330

 
16,085

 
15,993

Dilutive impact of stock options and restricted stock awards
—

 
—

 
—

 
—

Weighted average common shares, diluted
16,290

 
16,330

 
16,085

 
15,993

Net loss per common share, diluted
$
(0.07
)
 
$
(0.08
)
 
$
(0.24
)
 
$
(0.08
)


Note 11 — Contingencies

The Company is subject to legal proceedings, which arise in the ordinary course of business. Additionally, U.S. Government contract costs are subject to periodic audit and adjustment. In the third quarter of 2016, the Company's Audit Committee commenced an internal investigation into conduct at the Company's China and Singapore offices to determine whether certain import/export and sales documentation activities were improper and in violation of the U.S. Foreign Corrupt Practices Act ("FCPA") and other applicable laws and certain Company policies. In the fourth quarter of 2016, the Company voluntarily notified the SEC and the U.S. Department of Justice ("DOJ") of the internal investigation, and on May 1, 2017 the Company received a document subpoena from the SEC for documents relating to the internal investigation. Following the conclusion of the Audit Committee's internal investigation, the Company voluntarily reported the relevant findings of the investigation to the China and Singapore authorities and is fully cooperating with these authorities. During the three and six months ended June 30, 2019 , we recorded $0.1 million and $0.3 million of expenses relating to the internal investigation, including expenses of outside legal counsel and forensic accountants, compared to $0.3 million and $0.6 million for the three and six months ended June 30, 2018 .

In early April 2019, the SEC notified the Company that based on current information, it did not intend to recommend an enforcement action against the Company; shortly, thereafter, the DOJ advised that it did not intend to separately proceed. As stated above, we continue to cooperate with the China and Singapore authorities; we are currently not able to predict what actions these authorities might take, or what the likely outcome of any such actions might be, or estimate the range of reasonably possible fines or penalties, which may be material. The China and Singapore authorities have a broad range of civil and criminal sanctions, and the imposition of fines or penalties could have a material adverse effect on the Company’s business, prospects, reputation, financial condition, results of operations or cash flows.

Note 12 — Segment and Related Information

The Company operates in two distinct reporting segments, Restaurant/Retail and Government. The Company’s chief operating decision maker is the Company’s Chief Executive Officer. The Restaurant/Retail reporting segment offers point-of-sale ("POS") and management technology solutions to restaurants and retail, including in the quick serve/fast casual and table service restaurant categories. This segment also offers customer support including field service, installation, Advanced Exchange, and twenty-four-hour telephone support and depot repair. The Government reporting segment performs complex technical studies, analysis, and experiments, develops innovative solutions, and provides on-site engineering in support of advanced defense, security, and aerospace systems.  This segment also provides expert on-site services for operating and maintaining U.S. Government-owned communication assets.

Information noted as “Other” primarily relates to the Company’s corporate, home office operations.

Information as to the Company’s reporting segments is set forth below (in thousands).


14

 
Three Months
Ended June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Restaurant/Retail
$
28,262

 
$
34,827

 
$
57,822

 
$
74,347

Government
15,985

 
17,744

 
31,107

 
33,885

Total
$
44,247

 
$
52,571

 
$
88,929

 
$
108,232

 
 
 
 
 
 
 
 
Operating loss:
 

 
 

 
 

 
 

Restaurant/Retail
$
(4,615
)
 
$
(2,800
)
 
$
(7,597
)
 
$
(3,408
)
Government
1,518

 
2,012

 
2,881

 
3,278

Other
(356
)
 
(336
)
 
(838
)
 
(856
)
 
(3,453
)
 
(1,124
)
 
(5,554
)
 
(986
)
Other expense, net
(374
)
 
(384
)
 
(804
)
 
(335
)
Interest expense, net
(1,244
)
 
(78
)
 
(1,390
)
 
(119
)
Loss before provision for income taxes
$
(5,071
)
 
$
(1,586
)
 
$
(7,748
)
 
$
(1,440
)
 
 
 
 
 
 
 
 
Depreciation, amortization and accretion:
 

 
 

 
 

 
 

Restaurant/Retail
$
1,201

 
$
1,057

 
$
2,069

 
$
1,965

Government
18

 
6

 
37

 
11

Other
890

 
154

 
1,015

 
303

Total
$
2,109

 
$
1,217

 
$
3,121

 
$
2,279

 
 
 
 
 
 
 
 
Capital expenditures including software costs:
 

 
 

 
 

 
 

Restaurant/Retail
$
778

 
$
1,126

 
$
1,841

 
$
2,265

Government
—

 
37

 
176

 
37

Other
616

 
1,002

 
1,300

 
1,533

Total
$
1,394

 
$
2,165

 
$
3,317

 
$
3,835

 
 
 
 
 
 
 
 
Revenues by country:
 

 
 

 
 

 
 

United States
$
41,657

 
$
48,845

 
$
83,582

 
$
101,523

Other Countries
2,590

 
3,726

 
5,347

 
6,709

Total
$
44,247

 
$
52,571

 
$
88,929

 
$
108,232


The following table represents identifiable assets by reporting segment (in thousands).

 
June 30, 2019
 
December 31, 2018
Restaurant/Retail
$
70,275

 
$
68,004

Government
11,214

 
9,867

Other
73,583

 
16,810

Total
$
155,072

 
$
94,681


The following table represents assets by country based on the location of the assets (in thousands).


15

 
June 30, 2019
 
December 31, 2018
United States
$
145,430

 
$
84,652

Other Countries
9,642

 
10,029

Total
$
155,072

 
$
94,681


The following table represents goodwill by reporting unit (in thousands).

 
June 30, 2019
 
December 31, 2018
Restaurant/Retail
$
10,315

 
$
10,315

Government
736

 
736

Total
$
11,051

 
$
11,051


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

 
Three Months
Ended June 30,
 
Six Months
Ended June 30,
 
2019
 
2018
 
2019
 
2018
Restaurant/Retail reporting segment:
 
 
 
 
 
 
 
McDonald’s Corporation
10
%
 
22
%
 
10
%

25
%
Yum! Brands, Inc.
13
%
 
12
%
 
13
%

12
%
Government reporting segment:
 
 
 
 
 



U.S. Department of Defense
36
%
 
34
%
 
35
%

31
%
All Others
41
%
 
32
%
 
42
%

32
%
 
100
%
 
100
%
 
100
%

100
%

No other customer within All Others represented 10% of more of the Company’s total revenue for the three and six months ended June 30, 2019 and 2018 .

Note 13 Fair Value of Financial Instruments

The Company’s financial instruments have been recorded at fair value using available market information and valuation techniques.  The fair value hierarchy is 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 financial instruments primarily consist of cash and cash equivalents, trade receivables, trade payables, debt instruments and deferred compensation assets and liabilities. The carrying amounts of cash and cash equivalents, trade receivables and trade payables as of June 30, 2019 and December 31, 2018 were considered representative of their fair values.  The estimated fair value of the Company’s line of credit on June 30, 2019 and December 31, 2018 was based on variable and fixed interest rates on such respective dates and approximates their respective carrying values at June 30, 2019 and December 31, 2018 . The estimated fair value of the Notes was $97.8 million at June 30, 2019 based on secondary market prices at June 28, 2019 (the last day of trading prior to June 30, 2019).

The deferred compensation assets and liabilities primarily relate to the Company’s deferred compensation plan, which allows for pre-tax salary deferrals for certain key employees. Changes in the fair value of the deferred compensation liabilities are derived using quoted prices in active markets of the asset selections made by the participants. The deferred compensation liabilities are classified within Level 2, the fair value classification as defined under FASB ASC 820, "Fair Value Measurements" , because their

16

inputs are derived principally from observable market data by correlation to the hypothetical investments. The Company holds insurance investments to partially offset the Company’s liabilities under its deferred compensation plan, which are recorded at fair value each period using the cash surrender value of the insurance investments.

The amounts owed to employees participating in the Deferred Compensation Plan at June 30, 2019 was $3.7 million compared to $3.4 million at December 31, 2018 and is included in other long-term liabilities on the balance sheets.

Under the stock purchase agreement governing the Brink Acquisition, in the event certain defined revenues were determined to have been achieved in 2015, 2016, 2017 and 2018 ("contingent consideration period"), the Company would be obligated to pay additional purchase price consideration ("Brink Earn Out"). The fair value of the Brink Earn Out was estimated using a discounted cash flow method, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included the Company’s probability assessments of expected future cash flows related to the Company’s acquisition of Brink Software Inc. during the contingent consideration period, appropriately discounted considering the uncertainties associated with the obligation.  Any change in the fair value adjustment was recorded in the earnings of that contingent consideration period. For the $2.6 million of Brink Earn Out targets achieved during the 2018 period, the Company paid the amount in full in March 2019. No Brink Earn Out targets had been achieved for the 2015, 2016, or 2017 years.
.

The following table presents a summary of changes in fair value of the Company’s Level 3 assets and liabilities that are measured at fair value on a recurring basis, and are recorded as a component of other long-term liabilities on the consolidated balance sheet (in thousands):

 
Level 3 Inputs
 
Liabilities
Balance at December 31, 2018
$
2,550

New level 3 liability
—

Total gains (losses) reported in earnings
—

Settlement of Level 3 liabilities
(2,550
)
Balance at June 30, 2019
$
—


Note 14 — Related Party Transactions

The Company leased its corporate wellness facility to related parties at a rate of $9,775 per month during the period of the three and six months ended June 30, 2018. The Company received complimentary memberships to this facility which were provided to local employees. Expenses incurred by the Company relating to the facility amounted to $0 and $74,000 during the six months ended June 30, 2019 and 2018 , respectively. Expenses incurred by the Company relating to the facility amounted to $0 and $19,000 during the three months ended June 30, 2019 and 2018 , respectively. The Company did not recognize any rental income from the related party during the three and six months ended June 30, 2019 and recognized $9,775 and $39,100 for the three and six months ended June 30, 2018. Additionally, the Company did no t have any rent receivable from the related party for the periods ended June 30, 2019 or year ended December 31, 2018. This arrangement between the Company and the related party terminated on April 30, 2018.


17

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

When used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the terms “PAR”, “Company,” “we,” “us” and “our” mean PAR Technology Corporation and its consolidated subsidiaries, unless the context indicates otherwise. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim consolidated financial statements and the notes thereto included under Part I, Item 1 of this Quarterly Report.  See also, “Forward-Looking Statements” below.

Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of our future operations, financial condition, business strategies and prospects. Forward-looking statements are generally identified by words such as “anticipate”, “believe,” “belief,” “continue,” “could”, “expect,” “estimate,” “intend,” “may,” “opportunity,” “plan,” “should,” “will,” “would,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those expressed in, or implied by, the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K as filed on March 18, 2019 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2019 filed May 7, 2019. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

Overview

Our Restaurant/Retail reporting segment provides point-of-sale (“POS”) and management technology solutions; and our Government reporting segment provides intelligence, surveillance, and reconnaissance ("ISR") solutions and mission systems support.

We are a leading provider of POS technology solutions to restaurants and retail outlets and we expect our Brink line of business ("Brink"), including our Brink POS SaaS software solution, inclusive of related hardware, installation and technical support and other customer services, to be the primary focus and driver of growth in the Restaurant/Retail reporting segment. Our ability to grow and expand our presence as a cloud-based, software solutions leader requires that we strategically and effectively distribute and invest our capital in areas that will drive long-term growth, including product development, consisting primarily of expenses in research and development, software engineering and related personnel costs; strategic partnerships; customer support, consisting primarily of help-desk; and sales and marketing, consisting primarily of advertising, marketing, general promotional expenditures.

Our Government reporting segment provides technical expertise under contract in the development of advanced systems and software solutions for the U.S. Department of Defense and other federal agencies, as well as technology management and communications support services to the U.S. Department of Defense.

The strategy for our Government reporting segment is to build on our sustained performance on existing service contracts, coupled with investments in enhanced business development capabilities. We believe we are well positioned to realize continued renewals of expiring contracts and extensions of existing contracts, and secure service and solution contracts in expanded areas within the U.S. Department of Defense and other federal agencies. We believe our highly relevant technical competencies, intellectual property, and investments in new technologies provide opportunities to offer systems integration, products, and highly-specialized service solutions to the U.S. Department of Defense and other federal agencies.  The general uncertainty in U.S. defense total workforce policies (military, civilian, and contract), procurement cycles, and spending levels for the next several years are factors we monitor as we develop and implement our business strategy for the Government reporting segment.

Results of Operations —

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

We reported revenues of $44.2 million for the quarter ended June 30, 2019 , a decrease of 15.8% from $52.6 million reported for the quarter ended June 30, 2018 .  Our net loss from continuing operations was $1.1 million or $0.07 per diluted share for the second quarter of 2019 versus net loss of $1.3 million or $0.08 per diluted share for the same period in 2018 . The second quarter

18
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of 2019 results included a tax benefit of $4.0 million related to a reduction of the deferred tax valuation allowance that arose due to the recording of a deferred tax liability created as a result of the accounting for the sale of $80 million aggregate principal amount of 4.500% Convertible Senior Notes due 2024 ("Notes"). The current period tax benefit was recorded to deferred tax asset to properly offset the deferred tax liability created when accounting for the equity component of the bifurcated Notes.

Operating segment revenues for the quarter ended June 30, 2019 were $28.3 million for Restaurant/Retail reporting segment, a decrease of 18.9% from $34.8 million reported for the quarter ended June 30, 2018 and $16.0 million for the Government reporting segment, a decrease of 9.9% from $17.7 million reported for the quarter ended June 30, 2018. Restaurant/Retail reporting segment revenue for the quarter ended June 30, 2019 by business line consisted of $18.0 million for our line of business comprised of non-Brink customers, primarily focused on hardware and respective services ("CORE"), $9.3 million for Brink, and $0.9 million for SureCheck, compared to revenue for the quarter ended June 30, 2018 by business line of $27.0 million for CORE, $6.1 million for Brink, and $1.7 million for SureCheck. Government revenue for the quarter ended June 30, 2019 by business line consisted of $7.3 million for ISR, $8.2 million for Mission Systems, and $0.5 million for Product Sales, compared to revenue for the quarter end June 30, 2018 by business line of $8.4 million for ISR, $8.7 million for Mission Systems, and $0.7 million for Product Sales.

Product revenues were $14.7 million for the quarter ended June 30, 2019 , a decrease of 29.5% from $20.9 million recorded for the same period in 2018 , primarily due to reduced major hardware project activity at a tier 1 CORE customer compared to the second quarter of 2018. Product revenue related to Brink was $4.2 million, an increase of 65% from $2.6 million for the same period in 2018.

Service revenues were $13.5 million for the quarter ended June 30, 2019 , a decrease of 2.9% from $13.9 million reported for the same period in 2018 , primarily due to decreased installation services related to CORE hardware projects offset by increased SaaS revenue. Brink service revenue includes SaaS revenue of $3.2 million, an increase of 40% from $2.3 million for the same period in 2018.

Contract revenues were $16.0 million for the quarter ended June 30, 2019 , a decrease of 9.9% from $17.7 million reported for the same period in 2018 .  The decrease is primarily driven by a reduction in ISR solutions due to contract funding and ceiling limitations largely attributable to an ISR program that is currently undergoing an organizational funding transition.

Product margins for the quarter ended June 30, 2019 were 22.5% , compared to 26.6% for the same period in 2018 . Product margins for the quarter ended June 30, 2019 included a $0.6 million reserve for SureCheck inventory related to the expected sale which resulted in a 4.0% negative impact on margins (see Note 3 - Asset Held for Sale to unaudited interim consolidated financial statements).

Service margins for the quarter ended June 30, 2019 were 27.0% , compared to 26.8% recorded for the same period in 2018 . Service margins for the quarter ended June 30, 2019 included a $0.8 million charge of SureCheck intangible assets related to the expected sale; excluding this one time charge, service margins would have been 32.8% reflecting the increase in Brink SaaS revenue.

Contract margins for the quarter ended June 30, 2019 were 10.0% , compared to 11.7% for the same period in 2018 due primarily to lower margin in ISR solutions and a loss reserve adjustment in Mission Systems.

Selling, general and administrative (SG&A) expenses remained consistent for each of the quarters ended June 30, 2019 and 2018 at $9.1 million . The Company increased investment in Brink sales $0.3 million while offsetting G&A and cost of sales in other business lines.  SG&A expenses associated with the internal investigation for the quarter ended June 30, 2019 were $0.1 million as compared to $0.3 million for the quarter ended June 30, 2018 .
                                   
Research and development (R&D) expenses were $2.7 million for the quarter ended June 30, 2019 , a decease of 15.4% from $3.2 million for the same period in 2018 . A $0.3 million increase in Brink software development investment was more than offset by savings in other areas.

For each of the quarters ended June 30, 2019 and June 30, 2018 , we recorded $0.2 million of amortization expense associated with identifiable intangible assets acquired in the Brink Acquisition.

Other expense, net, was $374,000 for the quarter ended June 30, 2019 , compared to other expense, net, of $384,000 for the same period in 2018 .  Other expense, net, primarily includes, fair market value fluctuations of our deferred compensation plan, rental income, and foreign currency fair value adjustments.


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Interest expense, net, of $1.2 million for the quarter ended June 30, 2019 compared to $78,000 for the quarter ended June 30, 2018 . The increase reflects the sale of the Notes and includes $0.6 million of accretion of debt discount for the quarter ended June 30, 2019 (see Note 8 - Convertible Senior Notes, to unaudited interim consolidated financial statements).


Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

We reported revenues of $88.9 million for the six months ended June 30, 2019 , a decrease of 17.8% from $108.2 million reported for the six months ended June 30, 2018 .  Our net loss from continuing operations was $3.8 million or $0.24 per diluted share for the six months ended June 30, 2019 versus net loss of  $1.3 million or $0.08 per diluted share for the same period in 2018 . The results for the six months ended June 30, 2019, included a tax benefit of $4.0 million related to a reduction of the deferred tax valuation allowance that arose due to the recording of a deferred tax liability created as a result of the accounting for the sale of the Notes. The current period tax benefit was recorded to deferred tax asset to properly offset the deferred tax liability created when accounting for the equity component of the bifurcated Notes.

Operating segment revenues for the six months ended June 30, 2019 were $57.8 million for Restaurant/Retail reporting segment, a decrease of 22.2% from $74.3 million reported for the six months ended June 30, 2018 , and $31.1 million for the Government reporting segment, a decrease of 8.2% from $33.9 million reported for the six months ended June 30, 2018 . Restaurant/Retail revenue for the six months ended June 30, 2019 by business line consisted of $36.7 million for CORE, $18.8 million for Brink, and $2.4 million for SureCheck, compared to revenue for the six months ended June 30, 2018 by business line of $59.3 million for CORE, $11.9 million for Brink, and $3.2 million for SureCheck. Government revenue for the six months ended June 30, 2019 by business line consisted of $13.5 million for ISR, $16.8 million for Mission Systems, and $0.8 million for Product Sales, compared to revenue for the six months ended June 30, 2018 by business line of $16.1 million for ISR, $17.0 million for Mission Systems, and $0.7 million for Product Sales.

Product revenues were $30.2 million for the six months ended June 30, 2019 , a decrease of 35.9% from $47.2 million recorded for the same period in 2018 , primarily due to reduced major hardware project activity at a tier 1 CORE customer compared to the first 6 months of 2018. Product revenue related to Brink was $8.8 million, an increase of 68% from $5.2 million for the same period in 2018.

Service revenues were $27.6 million for the six months ended June 30, 2019 , an increase of 1.6% from $27.1 million reported for the same period in 2018 , primarily due to decreased installation services related to CORE hardware projects. Brink service revenue includes SaaS revenue of $6.2 million, an increase of 49% from $4.2 million for the same period in 2018.

Contract revenues were $31.1 million for the six months ended June 30, 2019 , a decrease of 8.2% from $33.9 million reported for the same period in 2018 .  The decrease is primarily driven by a reduction in ISR solutions due to contract funding and ceiling limitations largely attributable to ISR programs that is currently undergoing an organizational funding transition.

Product margins for the six months ended June 30, 2019 were 25.1%, compared to 26.3% for the same period in 2018 . Product margins for the six months ended June 30, 2019 included a $0.6 million reserve for SureCheck inventory related to the expected sale which resulted in a 1.9% negative impact on margins.

Service margins for the six months ended June 30, 2019 were 27.8%, compared to 27.2% recorded for the same period in 2018 . Service margins for the six months ended June 30, 2019 included a $0.8 million charge of SureCheck intangible assets related to the expected sale; excluding this one time charge, service margins would have been 30.7% reflecting the increase in Brink SaaS revenues.

Contract margins for the six months ended June 30, 2019 were 9.9%, consistent with the 10.0% for the same period in 2018 .

Selling, general and administrative (SG&A) expenses remained consistent for each of the six months ended June 30, 2019 and 2018 at $17.6 million. The Company increased investment in Brink sales $0.5 million while offsetting G&A and cost of sales in other business lines.  SG&A expenses associated with the internal investigation for the six months ended June 30, 2019 were $0.3 million as compared to $0.6 million for the six months ended June 30, 2018 .
                                   
Research and development (R&D) expenses were $5.8 million for the six months ended June 30, 2019 , a decease of 5.0% from $6.1 million for the six months ended June 30, 2018 . A $0.6 million increase in Brink software development investment was more than offset by savings in other areas.


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For each of the the six months ended June 30, 2019 and June 30, 2018 , we recorded $0.5 million of amortization expense associated with identifiable intangible assets acquired in the Brink Acquisition.

Other expense, net, was $804,000 for the six months ended June 30, 2019 , compared to other expense, net, of $335,000 for the same period in 2018 . Other expense, net, primarily includes, fair market value fluctuations of our deferred compensation plan, rental income, and foreign currency fair value adjustments. For the six months ended June 30, 2019 the Company recorded an extra $0.2 million expense relative to the final payment of the Brink Acquisition and a $0.2 million increase in facilities expense driven by reduced rental income.

Interest expense, net, of $1.4 million for the six months ended June 30, 2019 compared to $119,000 for the six months ended June 30, 2018 . The increase reflects the April 2019 sale of the Notes and includes $0.6 million of accretion of debt discount for the six months ended June 30, 2019.

 
Liquidity and Capital Resources

Our primary sources of liquidity are cash from operations and debt. Prior to April 15, 2019, we met our liquidity needs through borrowings under the Credit Agreement entered into between the Company, certain of its U.S. subsidiaries and Citizens Bank, N.A. (the “Credit Agreement”) on June 5, 2018, which provided us with a revolving line of credit up to an aggregate principal amount of $25.0 million or a variable borrowing base. On April 15, 2019, the Company sold the Notes and used a portion of the proceeds to repay in full all amounts outstanding under the Credit Agreement and, in connection therewith, terminated the Credit Agreement.

Cash used in operating activities was $6.5 million for the six months ended June 30, 2019 , compared to $0.6 million cash provided by operations for the same period in 2018 . The variance is driven by a decrease in net income and additional net working capital requirements.

Cash used in investing activities was $3.3 million for the six months ended June 30, 2019 versus $3.8 million for the six months ended June 30, 2018 .  In the six months ended June 30, 2019 , our capital expenditures of $1.7 million were primarily related to the implementation of our enterprise resource planning system compared to $1.7 million for the six months ended June 30, 2018 . We capitalized $1.6 million in costs associated with investments in our Restaurant/Retail reporting segment software platforms during the six months ended June 30, 2019 compared to $2.1 million for the six months ended June 30, 2018 . 

Cash provided by financing activities was $64.9 million for the six months ended June 30, 2019 versus cash provided by financing activities of $5.5 million for the six months ended June 30, 2018 .  The increase was driven by the proceeds of the Notes net of issuance costs and repayment in full of all amounts outstanding under the Credit Agreement.

We expect our operating cash flows and net proceeds from the Notes will be sufficient to meet our operating needs for the next 12 months. Our actual cash needs will depend on many factors, including our rate of revenue growth, including growth of our SaaS revenues, the timing and extent of spending to support our product development efforts, the timing of introductions of new products and enhancements to existing products, market acceptance of our products, and potential fines and penalties that may be imposed by the China and/or Singapore authorities that are not currently estimable, but could be material.

Critical Accounting Policies and Estimates

Our unaudited interim consolidated financial statements are based on the application of U.S. generally accepted accounting principles (“GAAP”).  GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported.  We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently applied.  Valuations based on estimates are reviewed for reasonableness and adequacy on a consistent basis.  Primary areas where financial information is subject to the use of estimates, assumptions and the application of judgment include revenue recognition, accounts receivable, inventories, accounting for business combinations, contingent consideration, equity compensation, goodwill and intangible assets, and taxes.  Our critical accounting policies have not changed materially from the discussion of those policies included under “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2018 except as it relates to leases as a result of the adoption of ASC 842 as discussed in Note 4 - Leases, to the unaudited interim consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date, based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendment is effective for the Company beginning with its fiscal year ending December 31, 2019, however early application is permitted for reporting periods beginning after December 15, 2018. The Company does not anticipate ASU 2016-13 will have a material impact to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test which required entities to compute the implied

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fair value of goodwill. Under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 will be effective for us on January 1, 2020, with earlier adoption permitted; it is not expected to have a material impact on the Company's unaudited interim consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the fair value measurements disclosures with the primary focus to improve effectiveness of disclosures in the notes to the financial statements that is most important to the users. The new guidance modifies the required disclosures related to the valuation techniques and inputs used, uncertainty in measurement, and changes in measurements applied. ASU 2018-13 is effective for the Company beginning with and including its fiscal year ending December 31, 2019 and each quarterly period thereafter. Early adoption is permitted. The Company is currently assessing the impact this new guidance may have on the Company’s unaudited interim consolidated financial statements and footnote disclosures.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other (Topic 350) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU 2018-15 provides guidance on the measurement of costs for internal-use software during the design, development and implementation stages for customers in a cloud based hosting arrangement. AU 2018-15 also requires the capitalized costs associated with the design, development and implementation of cloud based, hosted arrangements to be amortized over the term of the hosting arrangement. ASU 2018-15 will be effective for the Company on January 1, 2020, with earlier adoption permitted; it is not expected to have a material impact on the Company's unaudited interim consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, "Leases (Topic 842)" , impacting the accounting for leases intending to increase transparency and comparability of organizations by requiring balance sheet presentation of leased assets and increased financial statement disclosure of leasing arrangements. The revised standard will require entities to recognize a liability for its lease obligations and a corresponding asset representing the right to use the underlying asset over the lease term. Lease obligations are to be measured at the present value of lease payments and accounted for using the effective interest method. The accounting for the leased asset will differ slightly depending on whether the agreement is deemed to be a financing or operating lease. For finance leases, the leased asset is depreciated on a straight-line basis and recorded separately from the interest expense in the income statement resulting in higher expense in the earlier part of the lease term. For operating leases, the depreciation and interest expense components are combined, recognized evenly over the term of the lease, and presented as a reduction to operating income. The ASU requires that assets and liabilities be presented or disclosed separately and classified appropriately as current and noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related to lease agreements. The new standard was effective for the Company beginning January 1, 2019 (see Note 4 - Leases, to the unaudited interim consolidated financial statements).

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

Not Required.

Item 4 .
Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of June 30, 2019 . Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2019 .

Changes in Internal Controls Over Financial Reporting .

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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Part II - Other Information

Item 1.
Legal Proceedings

The information in Note 11 – Contingencies, to the unaudited interim consolidated financial statements, is responsive to this Item and is incorporated by reference herein.

Item 1A.
Risk Factors

Our financial condition and results of operations are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the SEC on March 18, 2019, as supplemented by the disclosure in Part II, Item 1A Risk Factors, in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019, filed May 7, 2019.
 
Item 2.
Unregistered Sales of Equity Securities and Use Of Proceeds

Under our equity incentive plans, employees may elect to have us withhold shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of their restricted stock. When we withhold these shares, we are required to remit to the appropriate taxing authorities the market price of the shares withheld, which could be deemed a purchase of shares by us on the date of withholding. For the six months ended June 30, 2019 , 42,682 shares were purchased at an average price of $24.61 per share.

Item 5.
Other Information
Not Applicable.



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Item 6 .
Exhibits
 
Exhibit
Number
 
Incorporated by reference into
this Quarterly Report on Form 10-Q  
Date
Filed or
Furnished
Exhibit Description
Form
Exhibit No.
 
 
 
 
 
4.1
8-K
4.1
4/15/2019
 
 
 
 
 
4.2
8-K
4.1 (Exhibit A to the Indenture filed as Exhibit 4.1)
4/15/2019
 
 
 
 
 
10.1
S-8 (File No. 333-232589)
99.1
7/9/2019
 
 
 
 
 
10.2
 
 
Filed herewith
 
 
 
 
 
10.3
 
 
Filed herewith
 
 
 
 
 
10.4
 
 
Filed herewith
 
 
 
 
 
31.1
 
 
Filed herewith
 
 
 
 
 
31.2
 
 
Filed herewith
 
 
 
 
 
32.1
 
 
Furnished herewith
 
 
 
 
 
32.2
 
 
Furnished herewith
 
 
 
 
 
101.INS
XBRL Instance Document
 
 
Filed herewith
 
 
 
 
 
101.SCH
XBRL Taxonomy Extension Schema Document
 
 
Filed herewith
 
 
 
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
Filed herewith
 
 
 
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
 
 
Filed herewith
 
 
 
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
 
Filed herewith
 
 
 
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
Filed herewith
†† Indicates management contract or compensatory plan or arrangement.

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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:
August 7, 2019
/s/ Bryan A. Menar
 
 
Bryan A. Menar
 
 
Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)


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EXHIBIT 10.2
FORM
(employees, officers, directors, consultants and advisors)
Amended and Restated
PAR Technology Corporation
2015 Equity Incentive Plan

GRANT NOTICE – OPTION AWARD
PAR Technology Corporation (the “Company”), hereby grants as of the Grant Date to the Participant an option (the “Option”) to purchase the number of shares (the “Shares”) of the Company’s common stock, par value $0.02 per share (the “Common Stock”) specified below (the “Award”). The Award is granted pursuant to the PAR Technology Corporation Amended and Restated 2015 Equity Incentive Plan (the “Plan”) and is subject to the terms and conditions of this Grant Notice, the Option Award Agreement attached to this Grant Notice as Appendix A (the “Award Agreement”), and the Plan (each as amended from time to time). The Plan is incorporated into and forms a part of this Grant Notice and the Option Award Agreement. In the event of any conflict between the Grant Notice or the Award Agreement on the one hand and the Plan on the other hand, the terms of the Plan shall control.

Name of the Participant:
 
Grant Date:
 
Total number of Shares subject to the Option:
 
Exercise Price per Share:
 
Total Exercise Price:
 
Expiration Date:
 
Type of Option:
☐ Incentive Stock Option
☐ Non-qualified Stock Option
Vesting Schedule:


Subject to the Participant’s continued employment or service with the Company or any of its subsidiaries or affiliates through the applicable Vesting Date, the Option shall vest and become exercisable in accordance with the following schedule:

Change of Control (as defined in the Plan):
 
    

1



By execution of this Grant Notice, the Participant acknowledges that he or she has received and read the Award Agreement, the Plan, and this Grant Notice, and agrees to be bound by the terms and conditions of the Plan, the Award Agreement, and this Grant Notice. The Participant further acknowledges and agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Grant Notice, or the Award Agreement, unless determined to be arbitrary or capricious or unlawful prior to a Change of Control. Upon or after the occurrence of a Change of Control, any decisions of the Committee or the Company with respect to this Grant Notice and Award Agreement shall be subject to de novo review and shall not be entitled to any special deference.
PAR Technology Corporation

By:_____________________________
                            
Title:____________________________

______________________________
Participation Signature                    

 


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Appendix A
Amended and Restated
PAR Technology Corporation
2015 Equity Incentive Plan

OPTION AWARD AGREEMENT
This Option Award Agreement applies to the Option Award evidenced by the Grant Notice to which this Award Agreement is attached. Capitalized terms not specifically defined in this Award Agreement shall have the meanings specified in the Plan and the Grant Notice.

1. Option Award . PAR Technology Corporation (the “Company”) has granted to the Participant the Option to purchase the number of Shares at the Exercise Price per Option Share set forth in the Grant Notice. If designated in the Grant Notice as an Incentive Stock Option and the Participant is an employee, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However, to the extent that the Option exceeds the $100,000 limit in Section 422, such excess Option shall be treated as a Non-Qualified Stock Option. Further, if for any reason the Option (or portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such non-qualification, the Option (or portion thereof) shall be regarded as a Non-Qualified Stock Option granted under the Plan. In no event shall the Company or any of its respective employees or directors have any liability to the Participant (or any other person) due to the failure of the Option (or portion thereof) to qualify for any reason as an Incentive Stock Option.
2. Vesting and Exercise of the Option .
(a)    After the Grant Date, subject to termination or acceleration as provided in the Grant Notice, the Plan and this Award Agreement, the Option shall vest and become exercisable in accordance with the Vesting Schedule set forth in the Grant Notice. There shall be no proportionate or partial vesting in the periods prior to the applicable Vesting Date and all vesting shall occur only on the appropriate Vesting Date if the Participant is then employed or providing services to the Company or to any of its subsidiaries or affiliates (“Affiliate” means collectively, the Company’s subsidiaries and affiliates). If application of the Vesting Schedule results in a fraction of a Share becoming exercisable, such fractional Share shall be deemed not to be exercisable.
(b)    The Option, or any exercisable portion thereof, may be exercised by delivery to the Secretary of the Company an exercise notice in the form attached to this Award Agreement as Exhibit A (the “Notice of Exercise”), along with payment of the Exercise Price set forth in the Grant Notice for the Shares being exercised.
(c)    Each election to exercise the Option shall be in writing, in the form of the Notice of Exercise attached hereto as Exhibit A , signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, or in such other form (which may be electronic) as is approved by the Company, together with payment in full in the manner provided in the Plan. The Participant may purchase less than the number of Shares covered the Option, provided that no partial exercise of the Option may be for any fractional Share.
3. Expiration of Option . Except as provided in this Section 3 , the Option shall expire and cease to be exercisable as of the Expiration Date set forth in the Grant Notice. For purposes of this Award Agreement, “Termination of the Participant’s Service” means ceasing to be an employee or service provider of the Company or any of its Affiliates, subject to the Committee’s discretion to determine that a transition from a full-time employee to a service provider constitutes a Termination of Service.
(a)    Upon the date of Termination of the Participant’s Service due to death or disability (as defined in Code Section 22(e)(3), (i) the unvested portion of the Option shall terminate as of the date of the Participant’s death or disability, and (ii) the portion of the Option vested as of the date of the Participant’s death or disability may be exercised at any time within twelve (12) months following such date (but in no event later than the

3


Expiration Date). To the extent the Option is not exercised within the time specified herein, the Option shall terminate.
(b)    Upon the date of Termination of the Participant’s Service for any reason other than for Cause (as defined in the Plan) or due to death or disability, (i) the unvested portion of the Option shall terminate as of the date of such termination, and (ii) the portion of the Option vested as of the date of such termination may be exercised during the three (3) month period immediately following such date (but in no event later than the Expiration Date). To the extent the Option is not exercised within the time specified herein, the Option shall terminate.
(c)    Upon the date of Termination of the Participant’s Service for Cause, both the vested and unvested portion of the Option shall be forfeited, and the Option shall terminate as of such date.
Except as otherwise provided herein, during the Participant’s lifetime, only the Participant may exercise the Option, unless it has been disposed of pursuant to a domestic relations order approved by the Company (as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder, a “DRO”). After the Participant’s death, any vested portion of the Option may, to the extent exercisable, be exercised by the deceased Participant’s personal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.
If the Option is an Incentive Stock Option, Termination of the Participant’s Service (or, to the extent applicable, change in relationship with the Company or with its Affiliates) may result in the Option no longer qualifying as an Incentive Stock Option, and therefore being taxed as a Non-Qualified Stock Option, pursuant to applicable law.
4.     Tax Obligations . The Participant agrees, the Participant is responsible for the payment of all Federal, state, local and foreign income and employment taxes related to the Option exercise or otherwise arising in connection with the Award and legally applicable to the Participant (“ tax obligations ”). The Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares to the Participant unless and until the Participant pays to the Company, or makes satisfactory arrangements (as determined by the Company) for payment of, the tax obligations.
5.     Rights as Stockholder . The holder of the Option shall not be, and shall not have any of the rights or privileges of, a stockholder of the Company, including, without limitation, voting rights and rights to dividends in respect of any Shares issuable upon the exercise of the Option unless and until such Shares shall have been issued by the Company and are held of record by such holder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). The Shares shall be issued to the Participant as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 3(d) of the Plan.
6.     General Provisions .
(a)     Injurious Conduct . If the Participant shall engage in Injurious Conduct as described in this Section 6(a) , both the vested and unvested portion of the Option shall be automatically forfeited and the Option shall terminate as of such date and, the Committee may, in its sole discretion, require the Participant to return to the Company any Shares acquired upon exercise of the Option. If the Shares acquired upon exercise have been disposed of by the Participant, then the Company may require the Participant to pay to the Company the gross pre-tax proceeds received by the Participant on such disposition. For purposes of this Award Agreement, “Injurious Conduct” means: (i) “for Cause” conduct; and (ii) during the Participant’s employment or service with the Company or an Affiliate and thereafter, the Participant breaches any written confidentiality, non-solicitation or non-competition covenant with the Company or an Affiliate.
(b)     Claw-Back . The Participant acknowledges and agrees that the Participant and the Award are subject to the terms and conditions of Section 7(i) (Clawback, Recovery and Recoupment) of the Plan.
(c)     Assignment . Subject to Section 3 hereof, the Option may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution and the Option shall be exercisable

4


only by the Participant during his or her lifetime. Notwithstanding any other provision in this Award Agreement, the Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to the Option upon the Participant's death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and this Award Agreement, except to the extent the Plan and this Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. Subject to the requirements of applicable law, a beneficiary designation may be changed or revoked by the Participant at any time provided the change or revocation is filed with the Committee prior to the Participant's death.
(d)     Successors and Assigns . The Company may assign any of its rights under this Award Agreement to single or multiple assignees, and this Award Agreement shall inure to the benefit of the successors and assigns of the Company.
(e)     No Rights to Continued Employment or Service or to Award . Nothing in the Plan or in this Award Agreement shall confer on the Participant any right to employment or continued service with the Company or its Affiliates, or interfere in any way with the right of the Company or its Affiliates to terminate or change the terms of the Participant's employment or service at any time.
(f)     Market “Stand-Off” Agreement . In the event the Company proposes to offer for sale to the public any of its equity securities and the Participant is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of the Shares or other securities of the Company, then the Participant will promptly sign such agreement and will not sell or otherwise transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by the Participant during such period as is determined by the Company and the underwriter, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Participant has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period. The market “stand-off” agreement established pursuant to this Section 8(f) shall survive termination or expiration of this Award Agreement.
(g)     Governing Law and Construction . This Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions.
(h)     Spousal Consent . The Participant’s spouse has signed the Consent of Spouse attached to this Award Agreement as Exhibit B .

(i)     Notices . Any notice to be given under the terms of this Award Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company's principal office, and any notice to be given to the Participant shall be addressed to the Participant at the Participant's last address reflected on the Company's records. By a notice given pursuant to this Section, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed to have been adequately given if delivered in person or if given by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.
(j)     Severability . Wherever possible, each provision of this Award Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under any such law, that provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of that provision or any other provisions of this Award Agreement.

5


(k)     Notification of Disqualifying Disposition . If the Option is designated as an Incentive Stock Option in the Grant Notice, the Participant shall notify the Company in writing immediately after the Participant makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the Option. Any sale or other disposition of such Shares that occurs (i) within two (2) years of the Option Grant Date or (2) within one (1) year of the date the Shares were acquired upon exercise of the Option is considered a Disqualifying Disposition. Such notice shall specify the date of such sale or other disposition and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Participant in such sale or other disposition.

6



Exhibit A

Notice of Exercise

PAR Technology Corporation
8383 Seneca Turnpike
New Hartford, NY 13413
Attention: Secretary
1.     Exercise of Option . Effective as of today, ______________, 20__, the undersigned ("Participant") hereby elects to exercise Participant's option to purchase _________ shares of the Common Stock (the "Shares") of PAR Technology Corporation (the "Company") under and pursuant to the Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan (the "Plan") and the Grant Notice and Option Award Agreement dated ____________, 20__ (the "Award Agreement"). Capitalized terms not specifically defined in this Notice shall have the meanings specified in the Plan, the Award Agreement, and the Grant Notice.

2.     Delivery of Payment . Purchaser herewith delivers to the Company the full purchase price of the Shares, in the amount of $________ (the “Exercise Price”), in the form of:

□    Cash or check.
□     By delivery of shares of Common Stock owned by the Participant                     having a Fair Market Value on the date of exercise equal to the                         aggregate Exercise Price.
□     Through a broker-assisted cashless exercise arrangement.

3.     Representations of Participant . Participant acknowledges that Participant has received, read, and understood the Plan, the Grant Notice and the Award Agreement and agrees to abide by and be bound by their respective terms and conditions.

4.     Rights as Stockholder . Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Option, notwithstanding the exercise of the Option. The Shares shall be issued to the Participant as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 3(d) of the Plan.

5.     Tax Consultation . Participant understands that Participant may suffer adverse tax consequences as a result of Participant's purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax consultant(s) Participant deems advisable regarding the purchase or disposition of the Shares and that Participant is not relying on the Company for any tax advice.

6.     Governing Law; Severability . This Notice shall be governed by the laws of the State of Delaware excluding its conflict of law provisions.










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Submitted by:
 
Accepted by:
Participant
 
PAR Technology Corporation
 
 
 
 
 
 
Signature
 
By
 
 
 
 
 
 
Print Name
 
Title
 
 
 
 
 
 


8



Exhibit B

Consent of Spouse

I, __________________________, spouse of _______________________, have read and approve the Grant Notice and Option Award Agreement (collectively, the “ Agreement ”) to which this Consent of Spouse is attached. 

In consideration of PAR Technology Corporation’s grant to my spouse of an Option to purchase shares of Common Stock of PAR Technology Corporation set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and I agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement, the Option or in any of the shares of Common Stock of PAR Technology Corporation acquired upon exercise of the Option pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Capitalized terms not specifically defined in this Agreement shall have the meanings specified in the Plan, the Option Award Agreement, and the Grant Notice.



Date:    

______________________________________
Signature of Spouse



9


EXHIBIT 10.3
FORM
(employees, officers, directors, consultants and advisors)
Amended and Restated
PAR Technology Corporation
2015 Equity Incentive Plan

GRANT NOTICE – RESTRICTED STOCK AWARD
PAR Technology Corporation (the “Company”), hereby grants as of the Grant Date to the Participant the number of restricted shares (the “Restricted Stock”) of the Company’s common stock, par value $0.02 (the “Common Stock”) specified below (the “Award”). The Award is granted pursuant to the Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan (the “Plan”) and is subject to the terms and conditions of this Grant Notice, the Restricted Stock Award Agreement attached to this Grant Notice as Appendix A (the “Award Agreement”), and the Plan (each as amended from time to time). The Plan is incorporated into and forms a part of this Grant Notice and the Option Award Agreement. In the event of any conflict between the Grant Notice or the Award Agreement on the one hand and the Plan on the other hand, the terms of the Plan shall control.
Name of the Participant:
 
Grant Date:
 
Number of shares of Restricted Stock:
 
Vesting Schedule:
Time-vesting . [●] shares of Restricted Stock shall vest in accordance with the following schedule, provided, the Participant is employed with or providing services to the Company or any of its subsidiaries or affiliates through the applicable Vesting Date:

Performance vesting . [●] shares of Restricted Stock shall vest in accordance with the following schedule, provided, (a) the performance target(s)* set forth in Schedule A  for the applicable performance year(s) is achieved and (b) the Participant is employed with or providing services to the Company or any of its subsidiaries or affiliates through the applicable Vesting Date:

[*performance targets selected by the Committee for a performance year(s) might include (without limitation) profits or net income before taxes, revenue or revenue growth, earnings before interest, tax, depreciation, and amortization, earnings per share, total shareholder return either alone or relative to one or more stock market or financial indices, budget objectives, working capital, market share, customer and market reputation, increases in customer base or construct, measures of customer satisfaction, cost reductions, mergers, acquisitions or divestitures, productivity measures, or operating efficiencies.]
Change of Control (as defined in the Plan):
 
Death:
[Except as otherwise set forth in the specific Award] As an exception to the Vesting Schedule, in the event the Participant’s employment or service with the Company or any of its subsidiaries or affiliates is terminated due to the Participant’s death, all unvested time vesting shares of Restricted Stock shall immediately vest.

1



By execution of this Grant Notice, the Participant acknowledges that he or she has received and read the Award Agreement, the Plan, and this Grant Notice, and agrees to be bound by the terms and conditions of the Plan, the Award Agreement, and this Grant Notice. The Participant further acknowledges and agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Grant Notice, or the Award Agreement, unless determined to be arbitrary or capricious or unlawful prior to a Change of Control. Upon or after the occurrence of a Change of Control, any decisions of the Committee or the Company with respect to this Grant Notice and Award Agreement shall be subject to de novo review and shall not be entitled to any special deference.
PAR Technology Corporation

By:_____________________________
                            
Title:____________________________

Participant’s Signature



______________________________
Participation Signature

2



Schedule A
to Grant Notice
(Grant Date: [●] )


3



Appendix A
Amended and Restated
PAR Technology Corporation
2015 Equity Incentive Plan

RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement applies to the Award of Restricted Stock evidenced by the Grant Notice to which this Award Agreement is attached, is incorporated into and forms a part thereof. Capitalized terms not specifically defined in this Award Agreement shall have the meanings specified in the Plan and the Grant Notice.

1. Award of Restricted Stock .

(a)     Award . PAR Technology Corporation (the “Company”) has granted to the Participant an Award of that number of shares of Restricted Stock (the “Shares”) specified in the Grant Notice.

(b)     Vesting Schedule . After the Grant Date, subject to termination or acceleration as provided in the Grant Notice, the Plan and this Award Agreement, the Shares shall vest in accordance with the Vesting Schedule set forth in the Grant Notice. There shall be no proportionate or partial vesting in the periods prior to the applicable Vesting Date and all vesting shall occur only on the appropriate Vesting Date if the Participant is then employed or providing services to the Company or to any of its subsidiaries or affiliates (“Affiliate” means collectively, the Company’s subsidiaries and affiliates). Shares of Restricted Stock that have vested are referred to herein as “vested Shares.” Shares of Restricted Stock that are not vested and remain subject to the Restrictions set forth and defined in Section 2(a) and Section 2(c) are referred to herein as “unvested Shares.”

(c)     Book Entry Form; Certificates . At the sole discretion of the Company, the Shares will be issued in either: (i) uncertificated form, with the Shares recorded in the name of the Participant in the books and records of the Company’s transfer agent with such notations regarding the Restrictions and vesting requirements as the Company shall deem appropriate; or (ii) certificated form pursuant to the terms of Section 1(d) .

(d)     Escrow . The Secretary of the Company or such other escrow holder as the Company may appoint shall retain physical custody of any certificates representing the Shares until the Restrictions lapse and the Shares become vested Shares; in such event, the Participant shall not retain physical custody of any certificates representing unvested Shares issued to the Participant. The Participant, by acceptance of the Award, shall be deemed to appoint, and does so appoint, the Company and each of its authorized representatives as the Participant’s attorney(s)-in-fact to affect any transfer of unvested forfeited Shares to the Company as may be required pursuant to the Plan or this Award Agreement and to execute such documents as the Company or such representatives deem necessary or advisable in connection with any such transfer.

(e)     Removal of Notations; Delivery of Certificates Upon Vesting . As soon as administratively practicable after vesting of any of the Shares pursuant to Section 1(b) and satisfaction of the conditions set forth in Section 2(d) , the Company shall (as applicable) remove the notations on the vested Shares issued in book entry form or deliver to the Participant a certificate or certificates evidencing the number of vested Shares (or, in either case, such lesser number of Shares as may be permitted pursuant to Section 8 of the Plan and Section 2(d) of this Agreement). The vested Shares so delivered shall no longer be subject to the Restrictions.

4


2. Restrictions .

(a)     Forfeiture . Notwithstanding anything to the contrary herein or in the Plan, and unless otherwise set forth in the Grant Notice, in the event the Participant’s employment or service is terminated for any reason, each unvested Share shall be automatically forfeited as of the effective date of such termination without payment of any consideration by the Company. For purposes of this Award Agreement, “ Restrictions ” shall mean the restrictions on sale or other transfer set forth in Section 2(c) and the exposure to forfeiture set forth in this Section 2(a) .

(b)     Lapse of Restrictions . The Restrictions shall lapse as to the Shares on each applicable Vesting Date.     

(c)     Unvested Shares Not Transferable . Except as otherwise expressly permitted in Section 7.a . of the Plan, until the Restrictions lapse (and the Shares become “vested Shares”), the Shares (including any shares of Common Stock of the Company received by the Participant with respect to the Shares as a result of stock dividends, stock splits or any other form of recapitalization) may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, by operation of law or otherwise (each of the forgoing individually or collectively, a “ Transfer ”).
(d)     Taxes . The Participant agrees, the Participant is responsible for the payment of all Federal, state, local and foreign income and employment taxes related to the vesting of the Shares or otherwise arising in connection with the Award and legally applicable to the Participant (“ tax obligations ”). The Participant acknowledges and agrees that the Company may refuse to deliver the vested Shares to Participant unless and until the Participant pays to the Company, or makes satisfactory arrangements (as determined by the Company) for payment of, the tax obligations, and that the Company has the right to deduct, retain or withhold from payments of any kind otherwise due or distributable to the Participant, including withholding otherwise deliverable Shares having an aggregate Fair Market Value sufficient to (but not exceeding) the tax obligations and, to the maximum extent permitted by law, to retain without notice from salary or other amounts payable to the Participant, cash having a value sufficient to satisfy any tax obligations that cannot be satisfied by the withholding of otherwise deliverable Shares.
3.     Rights as Stockholder; Dividends . The Participant shall have all voting rights as a stockholder of the Company with respect to the Shares as of the Grant Date. Notwithstanding the preceding sentence, the Participant shall be entitled to receive payment of any dividends declared and paid by the Company on its Common Stock on and after the Grant Date; provided that such dividends shall not be payable to the Participant with respect to any Shares unless and until the Restricted Stock with respect to which such dividends are payable become vested Shares (it being understood that no dividends will be paid with respect to Shares of Restricted Stock that do not vest).

4. General Provisions .

(a)     Section 83(b) Election . The Participant acknowledges that the Company has advised the Participant of the possibility of making an election under Section 83(b) of the Code with respect to the Award of the Shares and has recommended that the Participant consult a qualified tax advisor regarding the desirability of making such an election in light of the Participant’s individual circumstances. If the Participant makes an election under Section 83(b) of the Code (see Exhibit A ), the Participant hereby agrees to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

(b)     Successors and Assigns . The Company may assign any of its rights under this Award Agreement to single or multiple assignees, and this Award Agreement shall inure to the benefit of the successors and assigns of the Company.

5



(c)     No Rights to Continued Employment or Service or to Award . Nothing in the Plan or in this Award Agreement shall confer on the Participant any right to employment or continued service with the Company or its Affiliates, or interfere in any way with the right of the Company or its Affiliates to terminate or change the terms of the Participant's employment or service at any time.

(d)     Market “Stand-Off” Agreement . In the event the Company proposes to offer for sale to the public any of its equity securities and the Participant is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of the Shares or other securities of the Company, then the Participant will promptly sign such agreement and will not sell or otherwise transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by the Participant during such period as is determined by the Company and the underwriter, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “ Lock-Up Period ”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Participant has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period. The market “stand-off” agreement established pursuant to this Section 8(d) shall survive termination or expiration of this Award Agreement.

(e)     Claw-Back of Performance Vesting Shares . The Shares which are subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and claw-back as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).
(f)      Injurious Conduct . If the Participant shall engage in Injurious Conduct as described in this Section 4(f) , each unvested Share shall be automatically forfeited and the Award shall terminate as of such date and, the Committee may, in its sole discretion, require the Participant to return to the Company any vested Shares. If any vested Shares have been disposed of by the Participant, then the Company may require the Participant to pay to the Company the gross pre-tax proceeds received by the Participant on such disposition. For purposes of this Award Agreement, “Injurious Conduct” means: (i) “for Cause” conduct; and (ii) during the Participant’s employment or service with the Company or an Affiliate and thereafter, the Participant breaches any written confidentiality, non-solicitation, non-disparagement, or non-competition covenant with the Company or an Affiliate.
(g)      Governing Law and Construction . This Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions.

(h)     Spousal Consent . The Participant’s spouse has signed the Consent of Spouse attached to this Award Agreement as Exhibit B .

(i)     Notices . Any notice to be given under the terms of this Award Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company's principal office, and any notice to be given to the Participant shall be addressed to the Participant at the Participant's last address reflected on the Company's records. By a notice given pursuant to this Section 4(h) , either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed to have been

6


adequately given if delivered in person or if given by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

(j)     Severability . Wherever possible, each provision of this Award Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under any such law, that provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of that provision or any other provisions of this Award Agreement.

    

7


EXHIBIT A
83(b) Election Form
The undersigned Taxpayer hereby elects under Section 83(b) of the Internal Revenue Code of 1986, as amended, and Section 1.83-2(a) of the Income Tax Regulations, to include in his/her gross income the excess of the Fair Market Value of the property described below over the amount paid therefor by the Taxpayer. In compliance with Reg. § 1.83-2(e) the Taxpayer provides the following information:
1.
The Taxpayer’s name, address and taxpayer identification number are as follows:
Name:
Address:
Taxpayer identification number:
1.
The property with respect to which this election is being made is: _________________ shares of common stock of PAR Technology Corporation, a Delaware corporation (the “Company”), $0.02 par value per share (the “Shares”).
2.
The date of the transfer of the Shares is _________, 20___. This election is made for the taxable year of the Taxpayer ending December 31, 20____.
3.
The nature of the restrictions to which the Shares are subject is as follows: The Shares may be forfeited if Taxpayer’s continuous service with the Company terminates.
4.
The Fair Market Value of such Shares at the time of transfer to the Taxpayer, determined without regard to any lapse restrictions as defined in Reg. § 1.83-3(i), is ____________ per share.
5.
The amount paid for the Shares is $0 per share.
6.
A copy of this election has been furnished by personal delivery to the Company.

The date of this election is ___, 20__.

                    

Taxpayer


8



EXHIBIT B

Spousal Consent

I, __________________________, spouse of __________________, have read and approve the Grant Notice and Restricted Stock Award Agreement (collectively, the “Agreement”) to which this Consent of Spouse is attached.
    
In consideration of PAR Technology Corporation’s issuance to my spouse of the shares of Restricted Stock set forth in the Agreement, I hereby appoint my spouse, as my attorney-in-fact in respect to the exercise of any rights under the Agreement and I agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or in any of the shares of Restricted Stock or Common Stock of PAR Technology Corporation issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Capitalized terms not specifically defined in this Agreement shall have the meanings specified in the Plan, the Restricted Stock Award Agreement, and the Grant Notice.


Date:________________________________

________________________________
Signature of Spouse


    

9



EXHIBIT 10.4
PAR Technology Corporation
2015 Equity Incentive Plan

GRANT NOTICE – RESTRICTED STOCK AWARD
PAR Technology Corporation (the “Company”), hereby grants as of the Grant Date to the Participant the number of restricted shares (the “Restricted Stock”) of the Company’s common stock, par value $0.02 (the “Common Stock”) specified below (the “Award”). The Award is granted pursuant to the PAR Technology Corporation 2015 Equity Incentive Plan (the “Plan”) and is subject to the terms and conditions of this Grant Notice, the Restricted Stock Award Agreement attached to this Grant Notice as Appendix A (the “Award Agreement”), and the Plan (each as amended from time to time). The Plan is incorporated into and forms a part of this Grant Notice and the Award Agreement. In the event of any conflict between the Grant Notice or the Award Agreement on the one hand and the Plan on the other hand, the terms of the Plan shall control.
Name of the Participant:
Savneet Singh
Grant Date:
May 13, 2019
Number of shares of Restricted Stock:
80,000
Vesting Schedule:
The shares of Restricted Stock shall vest in accordance with the following schedule, provided (a) the Performance Target(s) linked to the shares of Restricted Stock are satisfied on or before March 31, 2020 and (b) the Participant’s continued employment as Chief Executive Officer (“CEO”) of the Company through and including the applicable Vesting Date. [Insert Performance Targets]

Distribution Schedule:
Vested shares of Restricted Stock shall be distributed to the Participant, without restriction, in equal installments in accordance with the following schedule, provided (a) (i) the Participant remains employed as CEO or is otherwise providing services to the Company continuously through and including the applicable Distribution Date or (ii) the Participant’s employment ends earlier other than on account of a “for cause”* termination by the Company, and (b) the Participant has complied with the restrictive covenants set forth in the Non-Disclosure; Non-Solicitation Agreement dated December 4, 2018 (“NDA”) and the Award Agreement through and including the applicable Distribution Date(s) (or if earlier, the end of the Participant’s employment).


Distribution Date:
Vested Shares of Restricted Stock to be Released
March 31, 2020
Up to 26,666 shares
March 31, 2021
Up to 26,667 shares
March 31, 2022
Up to 26,667 shares
(*as such term is defined in the Employment Letter dated March 22, 2019 between the Participant and the Company (“Letter”))

1



Change of Control (as defined in the Plan):
As exceptions to the Vesting and Distribution Schedules, the following provisions shall apply to this Award:
In the event of the occurrence of a Change of Control on or prior to March 31, 2020, the Participant’s achievement of the Performance Targets shall be evaluated as of immediately prior to the effective date of the Change of Control, and to the extent that any of the Performance Targets have been achieved, then the portion of the Award linked to the Performance Targets that have been achieved shall vest and be distributed to the Participant on the effective date of the Change of Control and the shares of Restricted Stock linked to Performance Targets that have not yet been satisfied solely due to the timing of the Change of Control shall be converted into a time-vesting award and shall (time) vest in equal installments on the Distribution Dates and be distributed to the Participant on such dates, so long as both (a) (i) the Participant remains employed as CEO or is otherwise providing services to the Company continuously through and including the applicable Distribution Date or (ii) the Participant’s employment ends other than on account of a “for cause” termination by the Company, and (b) the Participant has complied with the restrictive covenants set forth in the NDA and the Award Agreement through and including the applicable the Distribution Date(s) (or if earlier, the end of the Participant’s employment); provided, however, that if the Participant’s employment is terminated by the Company (or its successor) through an Involuntary Termination* or the Participant resigns his employment on account of a good reason*, in either case during the one year period beginning on the effective date of the Change of Control and ending on the first anniversary of the occurrence of the Change of Control, then the remaining undistributed portion of the Award shall become vested and be distributed to the Participant at such time. (*as each term is defined in the Letter)
If such Change of Control results in another entity becoming a direct or indirect parent of the Company (or if the Company does not survive, of its successor) (such entity being referred to as a “Subsequent Parent Entity”), then, with respect to the unearned portion of this Award, such Subsequent Parent Entity shall substitute its shares of common stock (the “Substitute Shares”) for the Restricted Stock; and provided further, that if on the applicable vesting date (x) such Subsequent Parent Entity’s common stock is not actively traded on a public securities market or (y) the Substitute Shares are not registered for trading on such public securities market in compliance with governing securities laws, the portion of the Award otherwise payable in Substitute Shares shall be paid in that amount of cash (in U.S. dollars) equal to the value of the vested Substitute Shares. Notwithstanding the foregoing, if the Substitute Shares are able to be sold into such public securities market immediately after their issuance without registration under the applicable governing securities laws (assuming that the Participant is not in possession of material nonpublic information or is otherwise unable to sell the Substitute Shares in compliance with applicable law at that time), then the Substitute Shares shall be issued to the Participant.
In the event of a Change of Control after March 31, 2020, then any earned Shares (as defined below in the Award Agreement) not yet distributed to the Participant shall be distributed to the Participant immediately prior to such Change of Control.

2



Involuntary Termination or termination for good reason (as each term is defined in the Letter) and not in connection with a Change of Control:
As exceptions to the Vesting and Distribution Schedules, in the event the Participant’s employment is terminated (a) by the Company on or prior to March 31, 2020 through an Involuntary Termination or (b) by the Participant on or prior to March 31, 2020 for a good reason, then, subject to the Participant’s continued compliance with the restrictive covenants set forth in the NDA and the Award Agreement and the Participant’s delivery of an effective general release (as contemplated by the Letter (“Release”)), (y) all shares of Restricted Stock that have vested, but have not been distributed to the Participant in accordance with the Distribution Schedule, as of the effective date of the Participant’s Involuntary Termination or termination for good reason, shall be distributed to the Participant and (z) all shares of Restricted Stock linked to Performance Targets that have not yet been satisfied solely due to the timing of the Participant’s Involuntary Termination or termination for good reason, shall convert into time vesting shares of Restricted Stock and such shares shall (time) vest in equal installments on the Distribution Dates and be distributed to the Participant on such dates as if the Participant had remained employed.

In the event that the Participant’s employment is terminated (a) by the Company through an Involuntary Termination after March 31, 2020 or (b) by the Participant after March 31, 2020 for a good reason, then any earned Shares (as defined below in the Award Agreement) not yet distributed to the Participant shall be distributed to the Participant, subject to the Participant’s continued compliance with the restrictive covenants set forth in the NDA and the Award Agreement and the Participant’s delivery of an effective Release.

For avoidance of doubt, in the event of the occurrence of a Change of Control, the provisions of this section shall be subject and subordinate to the section entitled “Change of Control” as set forth above to the extent of any conflict between the two sections.

Termination of employment due to death
As an exception to the Distribution Schedule, in the event the Participant's employment is terminated on or prior to March 31, 2020 due to the Participant's death, then all vested but undistributed shares of Restricted Stock shall be fully distributed.
Termination of employment due to any circumstance other than (1) death, (2) for cause, (3) Involuntary Termination, (4) good reason or (5) in connection with a Change of Control

As an exception to the Distribution Schedule, in the event the Participant's employment is terminated on or prior to March 31, 2020 for any reason other than on account of (1) death, (2) for cause, (3) Involuntary Termination, (4) termination for good reason, or (5) not in connection with a Change of Control, then, subject to the Participant’s continued compliance with the restrictive covenants set forth in the NDA and the Award Agreement, all shares of Restricted Stock that have vested as of the effective date of the Participant’s termination shall be distributed to the Participant ratably on March 31, 2020, March 31, 2021 and March 31, 2022.

By execution of this Grant Notice, the Participant acknowledges that he has received and read the Award Agreement, the Plan, and this Grant Notice, and agrees to be bound by the terms and conditions of the Plan, the Award Agreement, and this Grant Notice. The Participant further acknowledges and agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Grant Notice, or the Award Agreement unless determined to be arbitrary or capricious or unlawful prior to a Change of Control. Upon or after the occurrence of a Change of Control, any decisions of the Committee or the Company with respect to this Grant Notice and Award Agreement shall be subject to de novo review and shall not be entitled to any special deference.
[Signature Page to Grant Notice Immediately Follows]

3





PAR Technology Corporation

/s/ Savneet Singh
 
Savneet Singh
Participant & Signature
By
/s/ Bryan A. Menar
 

Title:

CFO
 


4



Appendix A
PAR Technology Corporation
2015 Equity Incentive Plan

RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement applies to the Award of Restricted Stock evidenced by the Grant Notice to which this Award Agreement is attached, is incorporated into and forms a part thereof. Capitalized terms not specifically defined in this Award Agreement shall have the meanings specified in the Plan and the Grant Notice.

1. Award of Restricted Stock .

(a)      Award . As contemplated by the Employment Letter dated March 22, 2019 between the Participant and the Company (the “Letter”), PAR Technology Corporation (the “Company”) has granted to the Participant an Award of that number of shares of Restricted Stock (the “Shares”) specified in the Grant Notice.

(b)      Vesting Schedule . After the Grant Date, subject to termination or acceleration as provided in the Grant Notice, the Plan and this Award Agreement, the Shares shall vest in accordance with the Vesting Schedule set forth in the Grant Notice. There shall be no proportionate or partial vesting in the periods prior to the applicable Vesting Date and all vesting shall occur only on the appropriate Vesting Date in accordance with the Grant Notice. Shares of Restricted Stock that have vested in accordance with the Grant Notice, the Plan and this Award Agreement, but have not been distributed in accordance with the Distribution Schedule set forth in the Grant Notice and remain subject to the Restrictions set forth and defined in Section 2(a) and Section 2(c) , are referred to herein as “vested Shares.” At any given point in time, Shares of Restricted Stock that are both (i) vested Shares and (ii) have satisfied the Restrictions set forth and defined in Section 2(b) and Section 2(c ), but have not yet been released from escrow, are referred to herein as “earned Shares”. Shares of Restricted Stock that have both vested in accordance with the Vesting Schedule and been distributed in accordance with the Distribution Schedule are referred to herein as “released Shares”. Shares of Restricted Stock that are not vested Shares are referred to herein as “unvested Shares.”

(c)      Book Entry Form; Certificates . At the sole discretion of the Committee, the Shares will be issued in either: (i) uncertificated form, with the Shares recorded in the name of the Participant in the books and records of the Company’s transfer agent with such notations regarding the Restrictions, vesting and distribution requirements as the Committee shall deem appropriate. Upon satisfaction of the conditions set forth in Section 2(d) , the Company shall remove such notations on any released Shares in accordance with Section 1(e) ; or (ii) certificated form pursuant to the terms of Section 1(d) and Section 1(e) .

(d) Escrow . The Secretary of the Company or such other escrow holder as the Committee may appoint shall retain physical custody of any certificates representing the Shares issued to the Participant until the Restrictions lapse and the Shares become released Shares. The Participant, by acceptance of the Award, shall be deemed to appoint, and does so appoint, the Company and each of its authorized representatives as the Participant’s attorney(s)-in-fact to affect any transfer of forfeited Shares to the Company as may be required pursuant to the Plan or this Award Agreement and to execute such documents as the Company or such representatives deem necessary or advisable in connection with any such transfer.

(e)     Removal of Notations; Delivery of Certificates Upon Vesting . As soon as administratively practicable, the Company shall (as applicable) remove the notations on the released Shares issued in book entry form or deliver to the Participant a certificate or certificates evidencing the number of released Shares (or, in either

5



case, such lesser number of Shares as may be permitted pursuant to Section 8 of the Plan). The released Shares so delivered shall no longer be subject to the Restrictions.

2. Restrictions .

(a)     Forfeiture . Notwithstanding anything to the contrary herein or in the Plan, and unless otherwise set forth in the Grant Notice, in the event the Participant’s employment as CEO of the Company is terminated for any reason, each unvested Share shall be automatically forfeited as of the effective date of such termination without payment of any consideration by the Company. For purposes of this Award Agreement, “ Restrictions ” shall mean the restrictions on sale or other transfer set forth in Section 2(c) and the exposure to forfeiture set forth in this Section 2(a) .

(b)     Lapse of Restrictions . The Restrictions shall lapse as to the Shares on each applicable Distribution Date and as otherwise provided in the Grant Notice.     

(c)     Shares Not Transferable . Except as otherwise expressly permitted in Section 7.a . of the Plan, until the Restrictions lapse (and the Shares become “released Shares”), the Shares (including any shares of Common Stock of the Company received by the Participant with respect to the Shares as a result of stock dividends, stock splits or any other form of recapitalization) may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, by operation of law or otherwise (each of the forgoing individually or collectively, a “ Transfer ”).
(d)     Tax Withholding . As set forth in Section 8 of the Plan, the Company shall have the authority and the right to withhold or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state, and local taxes required by law to be withheld with respect to any taxable event arising in connection with the Award. The Company shall not be obligated to deliver any new certificate representing released Shares to the Participant or enter such released Shares in book entry form until the Participant shall have paid or otherwise made arrangements satisfactory to the Committee to pay all applicable federal, state, and local withholding taxes attributable to the taxable income of the Participant resulting from the released Shares.
3.     Rights as Stockholder; Dividends . The Participant shall have all voting rights as a stockholder of the Company with respect to the Shares as of the Grant Date. Notwithstanding the preceding sentence, the Participant shall be entitled to receive payment of any dividends declared and paid by the Company on its Common Stock on and after the Grant Date; provided that such dividends shall not be payable to the Participant with respect to any Shares unless and until the Restricted Stock with respect to which such dividends are payable become released Shares (it being understood that no dividends will be paid with respect to Shares of Restricted Stock that are not released Shares).

4. General Provisions .

(a)     Section 83(b) Election . The Participant acknowledges that the Company has advised the Participant of the possibility of making an election under Section 83(b) of the Code with respect to the Award of the Shares and has recommended that the Participant consult a qualified tax advisor regarding the desirability of making such an election in light of the Participant’s individual circumstances. If the Participant makes an election under Section 83(b) of the Code (see Exhibit A ), the Participant hereby agrees to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.


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(b)     Successors and Assigns . The Company may assign any of its rights under this Award Agreement to single or multiple assignees, and this Award Agreement shall inure to the benefit of the successors and assigns of the Company.

(c)     No Rights to Continued Employment or Service or to Award . Nothing in the Plan or in this Award Agreement shall confer on the Participant any right to employment or continued service with the Company or interfere in any way with the right of the Company to terminate or change the terms of the Participant's employment or service at any time.

(d)     Market “Stand-Off” Agreement . In the event the Company proposes to offer for sale to the public any of its equity securities and the Participant is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of the Shares or other securities of the Company, then the Participant will promptly sign such agreement and will not sell or otherwise transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by the Participant during such period as is determined by the Company and the underwriter, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Participant has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period. The market “stand-off” agreement established pursuant to this Section 8(d) shall survive termination or expiration of this Award Agreement.

(e)     Claw-Back of Performance Vesting Shares . The Shares which are subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and claw-back as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).
(f)      Injurious Conduct . If the Participant shall engage in Injurious Conduct as described in this Section 4(f), each vested Share, earned Share and/or unvested Share shall be automatically forfeited and the Award shall terminate as of such date and, the Committee may, in its sole discretion, require the Participant to return to the Company any released Shares. If any released Shares have been disposed of by the Participant, then the Company may require the Participant to pay to the Company the gross pre-tax proceeds received by the Participant on such disposition. For purposes of this Award Agreement, “Injurious Conduct” means: (i) “for Cause” (as such term is defined in the Letter); and (ii) during the Participant’s employment with the Company and thereafter, the Participant breaches any written confidentiality, non-solicitation, non-disparagement, or non-competition covenant with the Company or a subsidiary or other affiliate of the Company.
(g)      Governing Law and Construction . This Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions.

(h)     Spousal Consent . The Participant’s spouse has signed the Consent of Spouse attached to this Award Agreement as Exhibit B .

(i)     Notices . Any notice to be given under the terms of this Award Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company's principal office, and

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any notice to be given to the Participant shall be addressed to the Participant at the Participant's last address reflected on the Company's records. By a notice given pursuant to this Section 4(h), either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed to have been adequately given if delivered in person or if given by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

(j)     Severability . Wherever possible, each provision of this Award Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under any such law, that provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of that provision or any other provisions of this Award Agreement.

    

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EXHIBIT A
83(b) Election Form
The undersigned Taxpayer hereby elects under Section 83(b) of the Internal Revenue Code of 1986, as amended, and Section 1.83-2(a) of the Income Tax Regulations, to include in his/her gross income the excess of the Fair Market Value of the property described below over the amount paid therefor by the Taxpayer. In compliance with Reg. § 1.83-2(e) the Taxpayer provides the following information:
1.
The Taxpayer’s name, address and taxpayer identification number are as follows:
Name:
Address:
Taxpayer identification number:
1.
The property with respect to which this election is being made is: _________________ shares of common stock of PAR Technology Corporation, a Delaware corporation (the “Company”), $0.02 par value per share (the “Shares”).
2.
The date of the transfer of the Shares is _________, 20___. This election is made for the taxable year of the Taxpayer ending December 31, 20____.
3.
The nature of the restrictions to which the Shares are subject is as follows: The Shares may be forfeited if Taxpayer’s continuous service with the Company terminates.
4.
The Fair Market Value of such Shares at the time of transfer to the Taxpayer, determined without regard to any lapse restrictions as defined in Reg. § 1.83-3(i), is ____________ per share.
5.
The amount paid for the Shares is $0 per share.
6.
A copy of this election has been furnished by personal delivery to the Company.

The date of this election is ___, 20__.

                    

Taxpayer


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EXHIBIT B

Spousal Consent

I, __________________________, spouse of __________________, have read and approve the Grant Notice and Restricted Stock Award Agreement (collectively, the “Agreement”) to which this Consent of Spouse is attached.
    
In consideration of PAR Technology Corporation’s issuance to my spouse of the shares of Restricted Stock set forth in the Agreement, I hereby appoint my spouse, as my attorney-in-fact in respect to the exercise of any rights under the Agreement and I agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or in any of the shares of Restricted Stock or Common Stock of PAR Technology Corporation issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Capitalized terms not specifically defined in this Agreement shall have the meanings specified in the Plan, the Restricted Stock Award Agreement, and the Grant Notice.


Date:________________________________

________________________________
Signature of Spouse



10

EXHIBIT 31.1
I, Savneet Singh, 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(s) 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 evaluation; 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(s) 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 the 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.
 
 
 
August 7, 2019
/s/ Savneet Singh
 
Savneet Singh
 
Chief Executive Officer & President
 
(Principal Executive Officer)

EXHIBIT 31.2
I, Bryan A. Menar, 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(s) 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 evaluation; 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(s) 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 the 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.
 
 
 
August 7, 2019
/s/ Bryan A. Menar
 
Bryan A. Menar
 
Chief Financial and Accounting Officer
 
(Principal Financial Officer)

EXHIBIT 32.1
Certification of Principal Executive Officer
pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended,
and 18 U.S.C. Section 1350
In connection with the Quarterly Report of PAR Technology Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Savneet Singh, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, that, to my knowledge:
 
 
(i)
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

 
 
(ii)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
August 7, 2019
 
 
/s/ Savneet Singh
Savneet Singh
Chief Executive Officer & President
(Principal Executive Officer)

EXHIBIT 32.2
Certification of Principal Financial Officer
pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended,
and 18 U.S.C. Section 1350
In connection with the Quarterly Report of PAR Technology Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryan A. Menar, Chief Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, that, to my knowledge:
 
 
(i)
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

 
 
(ii)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
August 7, 2019
 
 
/s/ Bryan A. Menar
Bryan A. Menar
Chief Financial and Accounting Officer
(Principal Financial Officer)