PAR TECHNOLOGY CORP, S-2, 1996-05-20

PAR TECHNOLOGY CORP
S-2, 1996-05-20
CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS)

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PAR TECHNOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 16-1434688
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)

PAR TECHNOLOGY PARK
8383 SENECA TURNPIKE
NEW HARTFORD, NEW YORK 13413-4991
(315) 738-0600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JOHN W. SAMMON, JR.
CHAIRMAN OF THE BOARD AND PRESIDENT
PAR TECHNOLOGY CORPORATION
PAR TECHNOLOGY PARK
NEW HARTFORD, NEW YORK 13413-4991
(315) 738-0600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
TIMOTHY C. MAGUIRE, ESQ. STEVEN R. FINLEY, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP GIBSON, DUNN & CRUTCHER LLP
HIGH STREET TOWER 200 PARK AVENUE
125 HIGH STREET NEW YORK, NY 10166
BOSTON, MASSACHUSETTS 02110 (212) 351-3920
(617) 248-7000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

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

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [_]
If the registrant elects to deliver its latest annual report to security-
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.02 par
value per share... 3,248,750 shares $15.625 $50,761,718 $17,504.04
</TABLE>
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(1) Includes 423,750 shares subject to an over-allotment option granted by the
Selling Stockholders to the Underwriters.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, based upon
the average of the high and low sales prices of such Common Stock as
reported by the New York Stock Exchange on May 13, 1996.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 20, 1996

2,825,000 SHARES

[LOGO]

PAR TECHNOLOGY CORPORATION
COMMON STOCK

Of the 2,825,000 shares of common stock, $0.02 par value per share (the
"Common Stock"), offered hereby, 1,450,000 shares are being offered by PAR
Technology Corporation ("PAR" or the "Company") and 1,375,000 shares are being
offered by Selling Stockholders. See "Principal and Selling Stockholders." The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders.

The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol "PTC." On May 17, 1996, the closing sales price of the Common Stock on
the NYSE was $19 per share. See "Price Range of Common Stock and Dividend
Policy."

FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 6-10.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

-----------

<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions* Company+ Stockholders
<S> <C> <C> <C> <C>
Per Share....................... $ $ $ $
Total++......................... $ $ $ $
</TABLE>
-----
* The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
+ Before deducting expenses of the offering payable by the Company estimated to
be $375,000.
++The Selling Stockholders have granted to the Underwriters a 30-day option to
purchase up to 423,750 additional shares of Common Stock on the same terms
per share solely to cover over-allotments, if any. If such option is
exercised in full, the total price to public will be $ , the total
underwriting discounts and commissions will be $ and the total proceeds to
the Selling Stockholders will be $ . See "Underwriting."

-----------

The Common Stock is being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the delivery of the certificates
therefor will be made at the offices of Dillon, Read & Co. Inc., New York, New
York on or about , 1996. The Underwriters include:
DILLON, READ & CO. INC.

THE ROBINSON-HUMPHREY COMPANY, INC.

VOLPE, WELTY & COMPANY

The date of this Prospectus is , 1996.
<PAGE>
Inside Front
------------

The picture at the lower left-hand side of the page illustrates a United States
Air Force captain viewing and analyzing image processing data captured by the
J/STARS phased ray antenna.

Front
-----

The picture at the upper right hand side of the page illustrates the Company's
open architecture POS III system, including the POS III touch screen
configuration as used by an employee of a quick service restaurant.

Front
-----

The picture at the upper right hand side of the page illustrates individual
products comprising the Company's POS III System, including the POS III touch
screen configuration in the right foreground of the picture, the POS III
keyboard in the left background of the picture, and a wireless hand-held
terminal in the upper left foreground of the picture. Food and beverage products
of some of the Company's quick service restaurant customers, including Taco
Bell, KFC, McDonald's and Chick-fil-A are featured among the POS III System
components.

Front
-----

The picture at the lower left hand side of the page illustrates a third party
pen-based data collection device networked through the Company's TPS software
application.

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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy and
information statements filed by the Company may be inspected and copied at the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, reports, proxy
statements and other information concerning the Company (symbol: PTC) can be
inspected and copied at the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.

The Company has filed with the Commission a Registration Statement on Form
S-2 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
does not contain all of the information set forth in the Registration
Statement certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Copies of the Registration Statement, including
all exhibits thereto, may be obtained from the Commission's principal office
in Washington D.C. upon payment of the fees prescribed by the Commission or
may be examined without charge at the offices of the Commission as described
above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, heretofore filed by the Company with the Commission
pursuant to the Exchange Act, are incorporated by reference in this
Prospectus:

(i) Annual Report on Form 10-K for the fiscal year ended December 31, 1995;

(ii) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1996; and

(iii) Proxy Statement of the Company dated May 13, 1996 for its Annual
Meeting of Stockholders to be held on June 4, 1996.

Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the
shares of Common Stock shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document (other than
exhibits). Requests for such copies should be directed to Karen E. Sammon,
Corporate Counsel, PAR Technology Corporation, PAR Technology Park, 8383
Seneca Turnpike, New Hartford, New York 13413-4991; telephone (315) 738-0600.

Any statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document that is incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

3
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless otherwise indicated, the information in this Prospectus assumes that the
Underwriters' over-allotment option will not be exercised. Investors should
carefully consider the information set forth under the heading "Risk Factors."
Certain of the information contained in this summary and elsewhere in this
Prospectus are forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed under "Risk
Factors."
THE COMPANY

PAR Technology Corporation ("PAR" or the "Company") provides sophisticated
integrated transaction information processing ("ITIP") solutions that enable
the reliable capture, preservation, processing and management of information
throughout a business enterprise. The Company is a leading supplier of ITIP
solutions to the quick service restaurant industry and also provides ITIP
solutions for manufacturing/warehousing enterprises. The Company's systems-
based solutions have been engineered to perform reliably under harsh operating
conditions and incorporate high levels of systems integration, in-depth
knowledge of the customers' workflow processes, and local and wide-area
networking capability.

The Company's POS III(TM) restaurant ITIP system solution combines flexible,
extendible systems software connecting its open-system architecture hardware
platform with ruggedized fixed and wireless order-entry terminals, video
monitors and PAR and third-party supplied peripherals networked via Ethernet
LAN and accessible to enterprise-wide network configurations. For manufacturing
and warehousing enterprises, the Company designs and implements complex ITIP
solutions incorporating its TPS(TM) data collection and management software
that provide real-time connectivity with multiple host computers, diverse
legacy applications software and "best-of-breed" software and data input
hardware technologies. PAR further provides extensive systems integration
capabilities to design, tailor and implement solutions that enable its
customers to manage, from a central location, all aspects of data collection
and processing for single or multiple site enterprises.
The Company also develops advanced computer-based systems and technologies
for government agencies. Through its government-sponsored development work, PAR
has generated significant technologies with commercial applications, from the
transaction information processing capability underlying its primary business,
to advanced vision technology currently being implemented in the Company's
proprietary Corneal Topography System ("CTS") for use in ophthalmic diagnoses
and surgical procedures.

The Company's growth strategies include enhancing its leadership position as
an ITIP solutions provider to the quick service restaurant ("QSR") market and
further penetrating the automated manufacturing/warehousing market by extending
its systems integration capabilities and increasing the software functionality
of its ITIP solutions. In addition, the Company seeks to leverage its
technology generated from government contracts by developing innovative
products serving targeted vertical markets, and then further penetrate that
market by providing its systems integration capabilities to address its
customers' total systems needs.

The Company's net revenues and net income have grown from $78.9 million and
$1.5 million, respectively, for the year ended December 31, 1991 to $107.4
million and $4.7 million, respectively, for the year ended December 31, 1995.
In 1995, 71.8% of the Company's net revenues were derived from sales to its
restaurant customers, 22.4% of net revenues were derived from government
contracting and 5.1% of net revenues were derived from the Company's
manufacturing/warehousing customers. The Company's significant customers
include Taco Bell Corp. ("Taco Bell"), KFC Corp. ( "KFC") and McDonald's
Corporation ("McDonald's") in the restaurant market, and Rhone-Poulenc Inc.
("Rhone-Poulenc") and The Goodyear Tire & Rubber Company ("Goodyear") in the
manufacturing/warehousing market.
The Company, which commenced doing business in 1968, is incorporated under
the laws of Delaware. Its principal executive offices are located at PAR
Technology Park, 8383 Seneca Turnpike, New Hartford, New York 13413-4991, and
its telephone number is (315) 738-0600.

4
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the Company................ 1,450,000 shares
Common Stock offered by the Selling Stockholders... 1,375,000 shares
Common Stock to be outstanding after the Offering.. 9,211,828 shares(1)
Use of proceeds.................................... To fund research and
development, marketing,
sales and administration
of new product lines under
development, acquisitions
of capital equipment,
working capital and
general corporate
purposes, as well as
potential acquisitions.
See "Use of Proceeds."
New York Stock Exchange symbol..................... PTC
</TABLE>
--------
(1) Based on the number of shares outstanding on May 17, 1996. Excludes an
aggregate of 794,220 shares of Common Stock reserved for issuance upon the
exercise of outstanding stock options.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net revenues:
Product...................... $ 43,835 $ 52,965 $ 58,306 $ 12,342 $ 10,880
Service...................... 19,213 20,823 25,059 5,607 7,677
Contract..................... 18,199 20,742 24,029 6,085 6,937
-------- -------- -------- --------- ---------
81,247 94,530 107,394 24,034 25,494
-------- -------- -------- --------- ---------
Costs of sales:
Product...................... 25,433 32,527 34,028 7,663 6,778
Service...................... 17,041 17,296 20,807 4,450 6,261
Contract..................... 17,534 19,740 22,492 5,770 6,513
-------- -------- -------- --------- ---------
60,008 69,563 77,327 17,883 19,552
-------- -------- -------- --------- ---------
Gross margin............... 21,239 24,967 30,067 6,151 5,942
-------- -------- -------- --------- ---------
Operating expenses:
Selling, general and
administrative expenses..... 13,009 14,211 17,721 4,179 3,744
Research and development..... 4,239 5,009 5,331 1,333 1,351
-------- -------- -------- --------- ---------
17,248 19,220 23,052 5,512 5,095
-------- -------- -------- --------- ---------
Income before provision for
income taxes.............. 3,991 5,747 7,015 639 847
Provision for income taxes..... 1,462 2,086 2,357 249 296
-------- -------- -------- --------- ---------
Net income................. $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
======== ======== ======== ========= =========
Earnings per common share...... $ 0.32 $ 0.46 $ 0.58 $ 0.05 $ 0.07
Weighted average number of
common shares outstanding..... 7,968 7,992 8,068 8,073 8,190
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------
ACTUAL AS ADJUSTED(1)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................... $44,498 $70,020
Total assets............................................. 66,364 91,886
Long-term debt........................................... -- --
Stockholders' equity..................................... 53,956 79,477
</TABLE>
--------
(1) Adjusted to reflect the sale by the Company of 1,450,000 shares of Common
Stock offered hereby, at an assumed offering price of $19.00 per share and
the application of the net proceeds therefrom, after deducting estimated
underwriting discounts and commissions and offering expenses. See "Use of
Proceeds" and "Capitalization."

5
<PAGE>

RISK FACTORS

In addition to the other information in this Prospectus, prospective
investors should consider carefully the following risk factors in evaluating
the Company and its business before purchasing shares of the Common Stock
offered hereby.

CONCENTRATION OF MAJOR CUSTOMERS

A small number of customers has historically accounted for a majority of the
Company's net revenues in any given fiscal period. For the years ended
December 31, 1993, 1994, and 1995, aggregate sales to the Company's top three
commercial segment customers amounted to 57.8%, 59.2% and 58.7%, respectively,
of net revenues. The Company's top three customers in 1995 and 1994 were Taco
Bell, McDonald's and KFC, which accounted for 32.8%, 20.9% and 5.0%,
respectively, of net revenues in 1995, and for 27.0%, 24.1% and 8.2%,
respectively, of net revenues in 1994. Taco Bell and KFC are both wholly-owned
subsidiaries of PepsiCo, Inc. With the exception of certain purchase
commitments by Taco Bell, no customer is obligated to make any minimum level
of future purchases from the Company or to provide the Company with binding
forecasts of product purchases for any future period. In addition, major
customers may elect to delay or otherwise change the timing of orders in a
manner that could adversely effect quarterly and annual results of operations.
There can be no assurance that the Company's current customers will continue
to place orders with the Company, or that the Company will be able to obtain
orders from new customers. The loss of, or reduced sales to, any one or more
of the Company's major customers could materially and adversely affect the
Company's business, operating results and financial condition. See
"Business -- Customers."

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

In the first quarter of 1996, the Company's sales to Taco Bell declined in
comparison to the 1995 first quarter. This decrease was the result of the
timing of Taco Bell's requirements under its sales contract with the Company.
In the first quarter of 1995, Taco Bell's demand for systems was high due to
the size of a replacement program during that period. The Company will
continue providing systems to Taco Bell under its current contract, which runs
through March 31, 1997; however, because the timing of replacement programs
and store openings is determined by Taco Bell based on its requirements, the
volume of systems sales to Taco Bell in any quarter may vary from the prior
comparable quarter. Because a high percentage of the Company's costs,
including personnel and facilities costs, are relatively fixed, variations in
the timing of orders and shipments can cause significant variations in
quarterly financial results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Quarterly Financial
Information."

NEW PRODUCT DEVELOPMENT AND RAPID TECHNOLOGICAL CHANGE

The products sold by the Company are subject to rapid and continual
technological change. Products available from the Company in its current
restaurant ITIP and manufacturing/warehousing ITIP markets, as well as from
its competitors, have increasingly offered a wider range of features and
capabilities. The Company believes that in order to compete effectively in
selected commercial segment markets, it must provide upwardly

6
<PAGE>

compatible systems incorporating new technologies at competitive prices. There
can be no assurance that the Company will be able to continue funding research
and development at levels sufficient to enhance its current product offerings
or will be able to develop and introduce on a timely basis new products that
keep pace with technological developments and emerging industry standards and
address the evolving needs of customers. There can also be no assurance that
the Company will not experience difficulties that will result in delaying or
preventing the successful development, introduction and marketing of new
products in its existing markets or that its new products and product
enhancements will adequately meet the requirements of the marketplace or
achieve any significant degree of market acceptance. Likewise, there can be no
assurance as to the acceptance of Company products in new markets, including
the Company's CTS and Qscan(R) products, nor can there be any assurance as to
the success of the Company's penetration of these markets, or to the revenue
or profit margins with respect to these products. The inability of the
Company, for any reason, to develop and introduce new products and product
enhancements in a timely manner in response to changing market conditions or
customer requirements could materially adversely affect the Company's
business, operating results and financial condition. See "Business -- Systems
and Services."

DEPENDENCE ON GOVERNMENT CONTRACTS

The Company derived 21.9% and 22.4% of its revenues in 1994 and 1995,
respectively, from contracts for the provision of technical products and
services to United States government agencies and defense contractors. The
Government contracting business is subject to various risks including: (1)
unpredictable contract or project termination, reductions in funds available
for the Company's projects due to government policy changes and contract
adjustments and penalties arising from post-award contract audits and incurred
cost audits in which the value of the contract may be reduced; (2) risks of
underestimating costs, particularly with respect to software and hardware
development, for work performed pursuant to "fixed-price" contracts, where the
Company commits to achieve specified deliveries for a predetermined fixed
price; (3) limited profitability from "cost-plus" contracts under which the
amount of profit attainable is limited to a specified negotiated amount,
usually in the range of six to ten percent of estimated costs, although no
assurance can be given that such levels will be obtainable on present or
future contracts; and (4) unpredictable timing of cash collections of certain
unbilled receivables as they may be subject to acceptance of contract
deliverables to the customer, and contract close-out procedures, including
government approval of final indirect rates. In addition, budgetary
constraints and changes in spending priorities in government agencies,
including the Department of Defense, have resulted in sudden program changes,
reductions or cancellations in the past and such conditions may be expected to
continue. As a result, the Company's revenues may fluctuate from year to year
and quarter to quarter depending on government procurement activity in the
Company's areas of business. In addition, the Company's government contracts
are subject to termination for the convenience of the government. If the
government terminates on this basis, the Company would be entitled to recover
its allowable costs incurred as well as a reasonable profit on the work
performed. See "Business -- Customers."

DEPENDENCE ON SUPPLIERS FOR KEY COMPONENTS

Certain key components used in the Company's products, such as base castings
and certain printers and electronic components, are currently being purchased
from single sources of supply. Although the Company believes that additional
sources are available to it, the inability to obtain sufficient components or
subassemblies as required, or to develop alternative sources of supply if and
as required in the future, could result in delays or reductions in product
shipments that could materially and adversely affect the Company's operating
results and damage customer relationships.

COMPETITION

The Company faces extensive competition in the markets in which it operates.
There are currently more than ten suppliers who offer restaurant ITIP systems
similar to the Company's. Some of these competitors are larger than the
Company and have access to substantially greater financial and other resources
than does the Company, and consequently may be able to obtain more favorable
terms than the Company for components and subassemblies incorporated into
their restaurant ITIP products. The rapid rate of technological change in the

7
<PAGE>

restaurant market makes it likely that the Company will face competition from
new products designed by companies not currently competing with the Company.
Such products may have features not currently available on PAR restaurant ITIP
products. The Company believes that its competitive ability depends on its
total solution offering, its product development and systems integration
capability, its direct sales force and its customer service organization.
There is no assurance that the Company will be able to compete effectively in
the restaurant ITIP systems market in the future. The Company's
manufacturing/warehousing ITIP business is also highly competitive. Some of
the Company's competitors in the manufacturing/warehousing ITIP market are
much larger than the Company and have access to substantially greater
financial and other resources than the Company. There is no assurance that the
Company will be able to compete effectively in the manufacturing/warehousing
ITIP business. The Company's government contracting businesses compete with a
large number of companies, large and small, for government contracts. The
Company's government contracting businesses have been focused on niche
offerings, primarily signal and image processing and engineering services.
There are no assurances that the Company will continue to win government
contracts as a prime contractor or subcontractor. Additionally, there are no
assurances that the Government will continue to contract for the provision of
services in the areas in which the Company has expertise. See "Business --
Competition."

INDUSTRY CONCENTRATION AND CYCLICALITY

Approximately 71.8% of the Company's net revenues are related to the
restaurant industry, particularly the QSR industry. The Company's restaurant
ITIP product sales are dependent in large part on the health of this industry,
which in turn is dependent on the domestic and international economy, as well
as factors such as consumer buying preferences and weather conditions.
Although the QSR industry has experienced profitability and growth recently,
there can be no assurance that profitability and growth will continue. The QSR
market is affected by a variety of factors, including war, global and regional
instability, natural disasters and general economic conditions. Adverse
developments in the restaurant industry could materially affect the Company's
restaurant ITIP business, operating results and financial condition. See
"Business -- Integrated Transaction Information Processing."

INTERNATIONAL SALES

In 1995, the Company's net revenues from sales outside the United States
were $17.7 million, accounting for approximately 16.5% of the Company's net
revenues. The Company anticipates that international sales will continue to
account for a significant portion of sales. The Company intends to continue to
expand its operations outside the United States and to enter additional
international markets, which will require significant management attention and
financial resources. The Company's operating results are subject to the risks
inherent in international sales, including, but not limited to, regulatory
requirements, political and economic changes and disruptions, transportation
delays, difficulties in staffing and managing foreign sales operations, and
potentially adverse tax consequences. In addition, fluctuations in exchange
rates may render the Company's products less competitive relative to local
product offerings, or could result in foreign exchange losses, depending upon
the currency in which the Company sells its products. There can be no
assurance that these factors will not have a material adverse effect on the
Company's future international sales and, consequently, on the Company's
operating results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes to Consolidated Financial
Statements.

DEPENDENCE ON PROPRIETARY TECHNOLOGY

PAR's success and ability to compete is dependent in part upon its ability
to protect its proprietary technology. The Company relies on a combination of
patent, copyright and trade secret laws and non-disclosure agreements to
protect its proprietary technology. The Company generally enters into
confidentiality or license agreements with its employees, distributors,
customers and potential customers and limits access to and distribution of its
software, documents and other proprietary information. There can be no
assurance that the steps taken by the Company to protect its proprietary
rights will be adequate to prevent misappropriation of its technology or that
the Company's competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technology. In addition,
the laws of some foreign countries do not

8
<PAGE>

protect the Company's proprietary rights to the same extent as do the laws of
the United States. The Company is also subject to the risk of adverse claims
and litigation alleging infringement of the proprietary rights of other
parties. Additionally, the Company periodically reviews recent patents that
have been issued to third parties. As a result of such reviews, the Company
has from time to time identified and investigated the validity and scope of
issued patents for technologies similar to, or related to, the Company's
technologies. Although the Company believes that it does not infringe the
valid patents of others, there can be no assurance that third parties will not
assert infringement claims in the future with respect to the Company's current
or future products or that any such claim will not require the Company to
enter into license arrangements or result in protracted and costly litigation,
regardless of the merits of such claims. No assurance can be given that any
necessary licenses will be available or that, if available, such licenses can
be obtained on commercially reasonable terms. The failure to obtain such
royalty or licensing agreements on a timely basis would have a material
adverse effect upon the Company's business, results of operations and
financial conditions. See "Business -- Intellectual Property."

RELIANCE ON KEY PERSONNEL

The Company's future success and potential growth depend in part on its
ability to retain its key management and technical and sales personnel and to
recruit, train and retain sufficient numbers of other highly qualified
managerial, technical and sales personnel on a continuing basis. There can be
no assurance that the Company will be able to retain its key management or
technical and sales personnel or that it will be able to attract and retain
sufficient numbers of other highly qualified managerial, technical and sales
personnel. The inability to retain or attract such personnel could materially
adversely affect the Company's business, operating results and financial
condition. In addition, the Company's ability to manage potential growth
successfully will require the Company to attract additional experienced
managerial, technical and sales personnel and to continue to improve its
operational, management and financial systems and controls. See "Management."

PREDOMINANT OWNERSHIP POSITION OF INSIDERS

Following this offering, the existing officers and directors of the Company
and related parties will control approximately 47.2% of the outstanding Common
Stock. As a result, they will be able to exert significant influence on the
Company. Dr. John W. Sammon, Jr., Chairman of the Board of Directors and
President of the Company, and members of his immediate family will control
approximately 41.9% of the outstanding Common Stock. Dr. Sammon will continue
to be the largest stockholder and will have significant influence with respect
to the election of directors and approval or disapproval of fundamental
corporate decisions, which could include a change in control of PAR. See
"Principal and Selling Stockholders."

ENVIRONMENTAL COMPLIANCE

The Company is subject to a variety of federal, state and local governmental
regulations relating to the use, storage, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in the manufacturing process.
The Company also leases space to Phoenix Systems and Technologies, Inc.
("Phoenix"), a corporation 43.9% owned by the Company that is engaged in
contract manufacturing, including printed circuit board assembly services that
may also involve the use of hazardous materials. Under applicable law, in the
event that Phoenix is found liable for failure to comply with applicable
environmental regulations, the Company may be found ultimately liable for
Phoenix's obligations. Any failure of the Company to control the use of, or
adequately restrict the discharge of, hazardous substances, or otherwise
comply with environmental regulations, could subject it to significant future
liabilities. In addition, although the Company believes that its past
operations, and, to the best of its knowledge, those of Phoenix, conformed
with then applicable environmental laws and regulations, there can be no
assurance that the Company or Phoenix has not in the past violated applicable
laws or regulations, which violations could result in remediation or other
liabilities.

9
<PAGE>

VOLATILITY OF STOCK PRICE

The price of the Common Stock historically has experienced significant
volatility due to fluctuations in revenues and earnings, other factors
relating to the Company's operations as well as the market's changing
expectations for the Company's growth, the limited number of shares available
for sale and purchase in the open market, overall equity market conditions and
the conditions relating to the market for technology stocks generally, and
other factors unrelated to the Company's operations. Such fluctuations are
expected to continue. In addition, stock markets have experienced extreme
price volatility in recent years. This volatility has had a substantial effect
on the market prices of securities issued by many technology companies, often
for reasons unrelated to the operating performance of the specific companies.
See "Price Range of Common Stock and Dividend Policy."

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Amended Certificate of Incorporation and
By-Laws could discourage potential acquisition proposals and could delay or
prevent a change in control of the Company. Such provisions could diminish the
opportunities for a stockholder to participate in tender offers, including
tender offers at a price above the then current market value of the Common
Stock. Such provisions may also inhibit fluctuations in the market price of
the Common Stock that could result from takeover attempts. In addition, the
Board of Directors, without further stockholder approval, may issue Preferred
Stock that could have the effect of delaying, deterring or preventing a change
in control of the Company. The issuance of Preferred Stock could also
adversely affect the voting power of the holders of Common Stock, including
the loss of voting control to others. The Company has no present plans to
issue any Preferred Stock. See "Description of Capital Stock -- Certain
Provisions of the Charter and By-Laws Affecting Stockholders."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the public market
following the Offering (pursuant to Rule 144 or otherwise), as well as the
issuance of shares upon exercise of employee stock options, could adversely
affect the prevailing market price of the Common Stock and impair the
Company's ability to raise additional capital through the sale of equity
securities. The Company and all of its executive officers and directors who
are not Selling Stockholders have agreed that they will not, without the prior
written consent of Dillon, Read & Co. Inc., offer, sell, contract to sell,
transfer or otherwise dispose of, directly or indirectly, any shares of the
Common Stock, or any securities convertible into, or exercisable or
exchangeable for, Common Stock or warrants or other rights to purchase Common
Stock, prior to the expiration of 90 days from the date of the consummation of
the offering, except, with respect to the Company, (i) shares of Common Stock
issued pursuant to the exercise of outstanding options and (ii) options
granted to its employees, officers and directors under its existing employee
stock option plans so long as none of such options become exercisable during
said 90 day period. Certain stockholders, including the Selling Stockholders,
who will hold in the aggregate 4,188,846 shares of Common Stock after the
offering, have agreed that they will not, without prior written consent of
Dillon, Read & Co. Inc., sell, contract to sell, transfer or otherwise dispose
of, directly or indirectly, any shares of Common Stock, or any securities
convertible into, or exercisable or exchangeable for, Common Stock or warrants
or other rights to purchase Common Stock, prior to the expiration of 180 days
from the date of the consummation of this offering. See "Shares Eligible for
Future Sale."

10
<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of 1,450,000
shares of Common Stock offered hereby (the "Offering") are estimated to be
approximately $25.5 million assuming a public offering price of $19.00 per
share and after deducting estimated underwriting discounts and commissions and
offering expenses. The net proceeds of the Offering, together with the
Company's existing funds and cash generated from operations are expected to be
used for the following purposes: research and development, marketing, sales
and administration of new product lines under development, acquisitions of
capital equipment, and working capital and general corporate purposes, as well
as possible acquisitions of products, technologies or businesses. While the
Company continually evaluates potential acquisitions, the Company has no
present agreements or commitments with respect to any acquisition, nor are any
negotiations regarding any acquisition currently ongoing. Pending such uses,
the net proceeds will be invested in investment grade, interest-bearing
securities.

The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders."

11
<PAGE>

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is listed on the New York Stock Exchange under the symbol
PTC. The following table sets forth for the periods indicated the high and low
sale prices for the Common Stock on the New York Stock Exchange.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1994
1st Quarter.................................................... 9 1/4 7
2nd Quarter.................................................... 7 7/8 6 5/8
3rd Quarter.................................................... 7 1/4 6 1/4
4th Quarter.................................................... 8 1/4 6 1/8
1995
1st Quarter.................................................... 9 3/4 5 7/8
2nd Quarter.................................................... 10 3/4 8
3rd Quarter.................................................... 10 3/4 8 1/4
4th Quarter.................................................... 10 1/4 8 5/8
1996
1st Quarter.................................................... 16 7/8 8 1/4
2nd Quarter (through May 17, 1996)............................. 19 7/8 14
</TABLE>

The last reported sale price of the Common Stock on the New York Stock
Exchange on May 17, 1996 was $19.00 per share. As of May 7, 1996, there were
approximately 881 holders of record of the Common Stock.

The Company has never declared or paid any dividends on the Common Stock and
does not intend to declare any dividends on its Common Stock in the
foreseeable future. The Company currently intends to retain future earnings to
fund the development and growth of its business.

12
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1996, and as adjusted to give effect to the Offering (assuming an offering
price of $19.00 per share and after deducting estimated underwriting discounts
and commissions and offering expenses payable by the Company). This table
should be read in conjunction with the Company's financial statements and
notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt............................................ $ -- $ --
Stockholders' equity (1):
Preferred Stock, $.02 par value per share; 250,000
shares authorized, none issued and outstanding......... -- --
Common Stock, $.02 par value per share; 12,000,000
shares authorized, 9,177,884 shares issued and
7,747,278 outstanding, 9,197,278 shares issued and
outstanding as adjusted (1)............................ 184 184
Additional paid-in-capital................................ 13,901 37,143
Retained earnings......................................... 42,283 42,283
Cumulative translation adjustment......................... (133) (133)
Treasury stock, at cost, 1,430,606 shares, 0 shares as ad-
justed................................................... (2,279) --
------- -------
Total stockholders' equity............................ 53,956 79,477
------- -------
Total capitalization................................ $53,956 $79,477
======= =======
</TABLE>
--------
(1) Excludes 914,770 shares of Common Stock issuable upon the exercise of
options outstanding at March 31, 1996, of which options to purchase
555,767 shares were then exercisable. See Note 6 of the Notes to
Consolidated Financial Statements appearing elsewhere in this Prospectus.

13
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following selected consolidated financial data for each of the five
years in the period ended December 31, 1995 have been derived from the
Company's consolidated financial statements, which have been audited by Price
Waterhouse LLP, independent accountants. The selected consolidated financial
data presented below for the three months ended March 31, 1995 and 1996 have
been derived from unaudited financial statements of the Company and, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the quarterly selected
financial information. The results for the three months ended March 31, 1996
are not necessarily indicative of the results of operations for the entire
fiscal year or any other period. The information set forth below should be
read in conjunction with the Company's consolidated financial statements and
notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Net revenues:
Product............... $ 38,803 $ 38,641 $ 43,835 $ 52,965 $ 58,306 $ 12,342 $ 10,880
Service............... 17,951 18,552 19,213 20,823 25,059 5,607 7,677
Contract.............. 22,143 16,078 18,199 20,742 24,029 6,085 6,937
-------- -------- -------- -------- -------- -------- --------
78,897 73,271 81,247 94,530 107,394 24,034 25,494
-------- -------- -------- -------- -------- -------- --------
Costs of sales:
Product............... 22,176 21,027 25,433 32,527 34,028 7,663 6,778
Service............... 16,784 16,108 17,041 17,296 20,807 4,450 6,261
Contract.............. 21,498 15,004 17,534 19,740 22,492 5,770 6,513
-------- -------- -------- -------- -------- -------- --------
60,458 52,139 60,008 69,563 77,327 17,883 19,552
-------- -------- -------- -------- -------- -------- --------
Gross margin........ 18,439 21,132 21,239 24,967 30,067 6,151 5,942
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Selling, general and
administrative
expenses............. 11,258 12,296 13,009 14,211 17,721 4,179 3,744
Research and
development.......... 4,742 5,253 4,239 5,009 5,331 1,333 1,351
-------- -------- -------- -------- -------- -------- --------
16,000 17,549 17,248 19,220 23,052 5,512 5,095
-------- -------- -------- -------- -------- -------- --------
Income before
provision for
income taxes....... 2,439 3,583 3,991 5,747 7,015 639 847
Provision for income
taxes.................. 978 1,250 1,462 2,086 2,357 249 296
-------- -------- -------- -------- -------- -------- --------
Net income.......... $ 1,461 $ 2,333 $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
======== ======== ======== ======== ======== ======== ========
Earnings per common
share.................. $ 0.20 $ 0.30 $ 0.32 $ 0.46 $ 0.58 $ 0.05 $ 0.07
Weighted average number
of common shares
outstanding............ 7,405 7,885 7,968 7,992 8,068 8,073 8,190
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------- MARCH 31,
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $28,609 $31,373 $34,489 $38,915 $42,976 $44,498
Total assets................. 49,019 53,433 60,449 60,642 68,073 66,364
Long-term debt............... -- -- -- -- -- --
Total shareholders' equity... 39,094 41,858 44,530 48,645 53,132 53,956
</TABLE>

14
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

PAR Technology Corporation provides sophisticated integrated transaction
information processing ("ITIP") solutions that enable the reliable capture,
preservation, processing and management of information throughout a business
enterprise. The Company is a leading supplier of ITIP solutions to the quick
service restaurant industry and also provides ITIP solutions for
manufacturing/warehousing enterprises. The Company's systems-based solutions
have been engineered to perform reliably under harsh operating conditions and
incorporate high levels of systems integration, in-depth knowledge of the
customers' workflow processes, and local and wide-area networking capability.

The Company also develops advanced computer based systems and technologies
for federal and state governmental agencies. Through its government sponsored
development work, PAR has generated significant technologies with commercial
applications, from the transaction processing capability underlying its
primary business, to advanced vision technology currently being implemented in
the Company's proprietary Corneal Topography System ("CTS") for use in
ophthalmic diagnoses and surgical procedures.

The Company's business is divided into two segments -- the commercial
segment, which represents all product and service revenues, and the government
segment, which represents all contract revenues. Product revenues principally
arise from sales of ITIP systems to the restaurant industry and, to a lesser
extent, to manufacturing/warehousing enterprises. Service revenues include
installation, repairs, help desk and other service integration activities
related to the restaurant ITIP business. Revenues from sales of commercial
products are generally recorded as the products are shipped, provided that no
significant vendor post-contract support obligations remain and the collection
of the related receivable is probable. The Company's service revenues are
recognized ratably over the related contract period or as the services are
performed.

Contract revenues include all prime and subcontract activities with the
Department of Defense and other governmental agencies. They are derived under
a variety of cost reimbursement, time and material and fixed price contracts.
Contract revenues, including fees and profits, are recorded as services are
performed using the percentage of completion method of accounting, primarily
based on contract costs incurred to date compared with estimated costs at
completion. Anticipated losses on all contracts and programs in process are
recorded in full when identified. Unbilled accounts receivable are stated at
estimated realizable value. Contract costs, including indirect expenses, are
subject to audit and adjustment through negotiations between the Company and
government representatives. Contract revenues have been recorded in amounts
that are expected to be realized on final settlement. Selling, general and
administrative expenses and research and development attributable to the
Company's government businesses are included in costs of contracts.

The Company capitalizes certain costs related to the development of computer
software under the requirements of Statement of Financial Accounting Standards
No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed. Software development costs incurred prior to establishing
technological feasibility are charged to operations and included in research
and development costs. Software development costs incurred after establishing
feasibility are capitalized and amortized on a product by product basis when
the product is available for general release to customers. Annual
amortization, charged to cost of sales, is the greater of the amount computed
using the ratio that current gross revenues for a product bear to the total of
current and anticipated future gross revenues for that product, or the
straight line method over the remaining estimated economic life of the
product.

In June 1992, the Company was approved under the Department of Defense
Mentor Protege Program as a mentor for a minority owned government contractor,
Phoenix Systems and Technologies, Inc. ("Phoenix"). Concurrent with this
approval, the Company acquired a 43.9% interest in Phoenix, which is accounted
for under the equity method. The Company is a subcontractor to Phoenix on
certain engineering service contracts with the United States Government.
Phoenix is also a vendor to PAR, providing manufacturing and certain contract
services.

15
<PAGE>

RESULTS OF OPERATIONS

Three Months Ended March 31, 1996 and 1995

The Company reported an increase in net income of 41.3% for the quarter
ended March 31, 1996 compared to the same quarter of 1995. Net income was
$551,000, or earnings per share of $0.07, on net revenues of $25.5 million for
the quarter ended March 31, 1996, compared to net income of $390,000, or
earnings per share of $0.05, on net revenues of $24.0 million for the same
quarter of 1995.

Product revenues decreased 11.8% to $10.9 million in 1996 versus $12.3
million in 1995. This decrease was the result of the timing of Taco Bell's
requirements under its sales contract with the Company. In the first quarter
of 1995, Taco Bell's demand for systems was high due to the size of a
replacement program during that period. The Company will continue providing
systems to Taco Bell under its current contract, which runs through March 31,
1997; however, because the timing of replacement programs and new store
openings is determined by Taco Bell based on its requirements, the volume of
systems sales to Taco Bell in any quarter may vary from the prior comparable
quarter. Partially offsetting this decrease was an increase in sales to KFC in
several international markets. During the current period, the Company sold 15
systems for use in China and 23 systems for use in Thailand to KFC.

Service revenues increased 36.9% to $7.7 million in the first quarter of
1996, compared to $5.6 million for the first quarter of 1995. This increase
was due to a greater volume of special integration projects requested by
customers in 1996 compared to 1995 and the ongoing activities with Taco Bell
under the exclusive service integration contract awarded in 1995. Under this
agreement, the Company is responsible for servicing of all restaurant ITIP
systems, back office systems and Help Desk and on-site support activities.

Contract revenues were $6.9 million in 1996, an increase of 14.0% from $6.1
million reported in 1995. The government segment's software development and
systems integration business increased due to its ongoing work in
environmental monitoring systems and hazardous materials tracking.
Additionally, the Company continues to perform as a subcontractor to Northrop
Grumman on the Joint Surveillance Target Attack Radar System Program
("J/STARS"). The Company's engineering services business increased primarily
due to the Griffiss Minimum Essential Airfield Contract awarded to Phoenix in
1995. The Company is a subcontractor to Phoenix to operate and maintain
Griffiss Air Force Base.

Gross margin on product revenues was 37.7% in the first quarter of 1996
virtually unchanged from the 37.9% for the first quarter of 1995. Although the
Company has experienced reductions in average selling prices to certain
customers during this period as compared to the first quarter of 1995, the
impact has been partially mitigated by favorable product mix and cost
reduction programs implemented by the Company.

Gross margin on service revenues was 18.4% for the three months ended March
1996, versus 20.6% for the same three months of 1995. This decline was
primarily the result of lower margins attributable to the special integration
projects discussed above.

Gross margin on contract revenues was 6.1% in 1996 versus 5.2% in 1995. The
improved margins were due to a favorable contract mix in 1996 versus 1995.

Selling, general and administrative expenses were $3.7 million in 1996, a
decline of 10.4% from the $4.2 million reported in 1995. This decrease was
mainly the result of non-recurring charges in 1995 relating to the Company's
accounts receivable from and equity interest in Phoenix. This was partially
offset by an increase in the restaurant ITIP sales force costs in 1996 over
1995.

Research and development expenses increased 1.4% to $1.4 million in 1996
compared to $1.3 million in 1995. Research and development costs attributable
to government contracts are included in cost of contract revenues.

The Company's effective tax rate was 34.9% in 1996 compared to 39.0% in
1995. This decrease was due to adjustments in prior years' accruals in 1995.

16
<PAGE>

Years ended December 31, 1995 and 1994

The Company reported earnings per share of $0.58 for the year ended December
31, 1995, an increase of 26.1% from the $0.46 per share recorded for the year
ended December 31, 1994. Net income increased 27.2% to $4.7 million in 1995
compared to $3.7 million for 1994. Net revenues for 1995 were $107.4 million
versus $94.5 million for 1994, an increase of 13.6%.

Product revenues were $58.3 million for 1995, a 10.1% increase from the
$53.0 million recorded in 1994. Most of this increase occurred in the fourth
quarter of 1995. This was primarily due to the Company's continuing successful
relationship with Taco Bell. In the fourth quarter of 1995, the Company
received a $23.0 million order from Taco Bell for restaurant ITIP products.
The Company began delivery of this order in 1995, with the majority to be
shipped in 1996. The increase is also due to new contract awards from the
Chick-fil-A, Inc. ("Chick-fil-A") restaurant chain. Product sales also
increased in 1995 due to the growth in the Company's manufacturing/warehousing
ITIP business. This business won several new contracts in 1995 and grew 34.0%
over 1994. Partially offsetting these increases was a decline in sales to KFC
International due to a greater number of new store openings and replacement
orders in 1994 than in 1995.

Service revenues increased 20.3% to $25.1 million in 1995, compared to $20.8
million for 1994. The growth in service revenues was primarily related to
higher installation revenue as a result of the increase in product sales
discussed above. Additionally, in the third quarter of 1995 the Company was
awarded a service integration contract with Taco Bell. Under this agreement,
the Company is responsible for servicing of all restaurant ITIP systems, back
office systems and Help Desk and on-site support activities. Certain product
enhancement programs for various customers also contributed to this increase
in 1995.

Contract revenues were $24.0 million for 1995, an increase of 15.8% from the
$20.7 million reported in 1994. The government segment's site maintenance and
testing activities and its software development business both contributed to
this increase. The Company was awarded new site contracts and expanded the
scope of other existing contracts during 1995. Additionally, the Company's
software development business continues to expand its work in environmental
monitoring systems.

RRC was awarded a $10.0 million, five-year contract as the prime
subcontractor for the Griffiss Minimum Essential Airfield Contract awarded to
Phoenix. Under this contract, Phoenix and RRC will provide engineering
services to Griffiss Air Force Base.

Gross margin on product revenues was 41.6% compared to 38.6% in 1994.
Restaurant ITIP margins improved primarily due to certain customer discounts
earned in 1994 that did not recur in 1995. Additionally, the Company was able
to achieve certain product cost reductions in 1995.

Gross margin on service revenues was 17.0% in 1995, versus 16.9% in 1994.
Margins benefited from increased revenues, including revenue from certain
product enhancement programs. However, this was offset by start-up costs
related to the service integration contract with Taco Bell discussed above.

Gross margin on contract revenues was 6.4% in 1995, compared to 4.8% in
1994. This margin improvement was the result of higher award fees earned on
certain contracts due to high performance ratings and to a favorable contract
mix.

Selling, general and administrative expenses were $17.7 million in 1995, an
increase of 24.7% from the $14.2 million recorded in 1994. This increase is
primarily due to the expansion of the Company's worldwide restaurant ITIP
sales force and growth in the manufacturing/warehousing ITIP sales force.
Also, 1995 expenses included $1.1 million for allowances related to the
Company's investment in and receivable from Phoenix. See Note 9 to the
Consolidated Financial Statements for further discussion.

Research and development expenses were $5.3 million in 1995, an increase of
6.4% from the $5.0 million reported a year ago. The Company is continuing its
investment in restaurant ITIP hardware and software products. Additionally,
the Company continues to improve the technological performance of its CTS
products.

17
<PAGE>

The Company's effective tax rate was 33.6% in 1995 compared to 36.3% in 1994.
The lower rate is primarily due to the utilization of foreign tax credits in
1995.

Years ended December 31, 1994 and 1993

The Company reported earnings per share of $0.46 for the year ended December
31, 1994, an increase of 43.7% from the $0.32 per share recorded for the year
ended December 31, 1993. Net income increased 44.8% to $3.7 million in 1994,
compared to $2.5 million for 1993. Net revenues for 1994 were $94.5 million
versus $81.2 million for 1993, an increase of 16.3%.

Product revenues were $53.0 million for 1994, a 20.8% increase from the $43.8
million recorded in 1993. This increase was due to sales to Taco Bell of the
Company's third generation point-of-sale system (POS III). Another major factor
was sales of the Company's POS II products to McDonald's, KFC and other fast
food chains in both domestic and international markets. During 1994, the
Company received follow-on purchase orders from Taco Bell totaling $20.0
million. The Company's system integration work related to its
manufacturing/warehousing ITIP business also contributed to the increase.

Customer service revenues increased 8.4% to $20.8 million in 1994, compared
to $19.2 million for 1993. The growth in service revenue was primarily related
to higher installation revenue as a result of the increase in product sales
discussed above.

Contract revenues were $20.7 million for 1994, an increase of 14.0% from the
$18.2 million reported in 1993. This growth was due to the success of the
Company's site maintenance and testing business. The Company currently has
several contracts at different government-owned sites across the country. The
government segment software development business also contributed to the
increase. In 1994, the Company announced it was successful in winning a $2.5
million, multi-year contract from the National Institute for Environmental
Renewal for the development and application of an environmental monitoring and
management system for the detection of ground and water contamination.

Gross margin on product revenues was 38.6% in 1994, compared to 42.0% in
1993. This decrease in margin was a result of volume discounts earned in 1994
by a major customer in accordance with the terms of its sales agreement with
the Company. Partially offsetting this was improved absorption of certain fixed
manufacturing costs as a result of increased production in 1994.

Gross margin on service revenues was 16.9% in 1994, versus 11.3% in 1993.
This increase was the result of increased installation and service contract
revenue directly related to the increased restaurant ITIP product revenue
discussed above.

Gross margin on contract revenues was 4.8% in 1994 compared to 3.7% in 1993.
During 1994, the Company controlled its overhead costs, which resulted in
improved margins on certain contracts.

Selling, general and administrative expenses were $14.2 million in 1994, an
increase of 9.2% from the $13.0 million recorded in 1993. This increase was
primarily due to the Company's expanded restaurant ITIP sales efforts and to
sales and marketing activities associated with the Company's CTS products.

Research and development expenses of the Commercial segment were $5.0 million
in 1994, an increase of 18.2% from the $4.2 million reported a year ago. The
Company's net investment in restaurant ITIP and CTS products increased in 1994
compared to the prior year.

18
<PAGE>

QUARTERLY FINANCIAL INFORMATION

The following table sets forth unaudited consolidated financial information
for the nine quarters ending March 31, 1996. The Company believes that this
information has been prepared on the same basis as the audited consolidated
financial statements appearing elsewhere in this Prospectus and all necessary
adjustments (consisting only of normal recurring adjustments) have been
included in the amounts stated below to present fairly the unaudited quarterly
results when read in conjunction with the audited consolidated financial
statements of the Company and notes thereto appearing elsewhere in this
Prospectus. The operating results for any quarter are not necessarily
indicative of the results for any future period. See "Risk Factors --
Fluctuations in Quarterly Operating Results."

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT 30, DEC. 31, MARCH 31,
1994 1994 1994 1994 1995 1995 1995 1995 1996
-------- -------- --------- -------- -------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Net revenues:
Product................ $10,722 $12,959 $13,889 $15,395 $12,342 $11,884 $11,428 $22,652 $10,880
Service................ 4,807 5,205 5,288 5,523 5,607 5,889 6,440 7,123 7,677
Contract............... 5,241 4,959 4,726 5,816 6,085 6,593 6,112 5,239 6,937
------- ------- ------- ------- ------- ------- ------- ------- -------
20,770 23,123 23,903 26,734 24,034 24,366 23,980 35,014 25,494
------- ------- ------- ------- ------- ------- ------- ------- -------
Costs of sales:
Product................ 6,690 8,485 8,611 8,741 7,663 6,782 6,539 13,044 6,778
Service................ 4,146 4,241 4,220 4,689 4,450 4,856 4,857 6,644 6,261
Contract............... 4,932 4,730 4,455 5,623 5,770 6,234 5,552 4,936 6,513
------- ------- ------- ------- ------- ------- ------- ------- -------
15,768 17,456 17,286 19,053 17,883 17,872 16,948 24,624 19,552
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross margin.......... 5,002 5,667 6,617 7,681 6,151 6,494 7,032 10,390 5,942
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating expenses:
Selling, general and
administrative
expenses.............. 3,509 3,635 3,419 3,648 4,179 4,144 3,668 5,730 3,744
Research and
development........... 1,121 1,227 1,209 1,452 1,333 1,302 1,187 1,509 1,351
------- ------- ------- ------- ------- ------- ------- ------- -------
4,630 4,862 4,628 5,100 5,512 5,446 4,855 7,239 5,095
------- ------- ------- ------- ------- ------- ------- ------- -------
Income before
provision for income
taxes................ 372 805 1,989 2,581 639 1,048 2,177 3,151 847
Provision for income
taxes................. 145 337 545 1,059 249 412 644 1,052 296
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income............ $ 227 $ 468 $ 1,444 $ 1,522 $ 390 $ 636 $ 1,533 $ 2,099 $ 551
======= ======= ======= ======= ======= ======= ======= ======= =======
Earnings per common
share................. $ 0.03 $ 0.06 $ 0.18 $ 0.19 $ 0.05 $ 0.08 $ 0.19 $ 0.26 $ 0.07
Weighted average number
of common shares
outstanding........... 8,022 7,994 7,970 7,976 8,073 8,110 8,082 8,063 8,190
</TABLE>

The Company has experienced and expects to continue to experience quarterly
fluctuations in its net revenues and net income. Due to the dynamics
associated with the year-end capital budget planning of many of PAR's
restaurant ITIP customers and the preference of some restaurant ITIP customers
to install new systems between the busy summer and Christmas seasons, the
Company has historically realized a higher amount of its restaurant ITIP
systems sales and overall net income during the second half of the year. In
1994 and 1995, the Company realized 81.0% and 78.0%, respectively, of its net
income in the final six months of those years. Major restaurant ITIP customers
may, however, elect to delay purchases of the Company's products. If for any
reason the Company's sales were below seasonal norms during its fourth fiscal
quarter, the Company's annual operating results could be adversely affected.
The Company's quarterly operating results may also vary as a result of factors
such as the timing or cancellation of customer orders, especially major
customers, including Taco Bell, delays in order placement on the part of major
customers in anticipation of the introduction of new products by the Company,
price reductions by competitors or by the Company, the market acceptance of
newly introduced products, significant fluctuation in the pricing of
components of the Company's products and introductions of new or enhanced
competing products. In the first quarter of 1996, the Company's sales to Taco
Bell declined in comparison to the 1995 first quarter. This decrease was the
result of the timing of Taco Bell's requirements under its sales contract with
the Company. In the first quarter of 1995, Taco Bell's demand for systems was
high due to the size of a replacement program during that period. The Company
will continue providing systems to Taco Bell under its current contract, which
runs through March 31, 1997; however, because the timing of replacement
programs and store openings is determined by Taco Bell based on its
requirements, the volume of systems sales to Taco Bell in any quarter may vary
from the prior comparable quarter.

19
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of liquidity has been from operations. Cash
provided by operating activities was $1.9 million in the first quarter of
1996, compared to $2.4 million in 1995. The Company historically has
experienced significant collections of accounts receivable in its first
quarter due to the volume of sales generated in the preceding quarter. This is
primarily due to the seasonal demands of the Company's restaurant ITIP
customers. However, this factor was offset by the build up of restaurant ITIP
and service inventory in anticipation of future sales orders and service
requirements and the timing of estimated income tax payments in 1996 versus
1995.

Cash used in investing activities was $198,000 for the first quarter of
1996, compared to $486,000 in 1995. In 1996, capital expenditures were for
internal use computers and other miscellaneous items. In 1995, capital
expenditures were primarily for upgrades to internal use software.

Cash provided from financing activities was $336,000 for the first quarter
of 1996 compared to $67,000 in 1995. This increase was due primarily to the
proceeds from the exercise of stock options.

Cash used by operating activities in 1995 was $767,000, compared to cash
provided by operations of $8.0 million in 1994. The Company's accounts
receivable balance grew substantially in 1995 as a result of record fourth-
quarter revenues, which increased $8.3 million over the fourth quarter of
1994. During 1994, the Company's net profit and a reduction in accounts
receivable were the primary reasons for the positive cash flow.

Cash used in investing activities in 1995 was $1.8 million, compared to $2.2
million in 1994. The Company used $1.3 million for capital expenditures in
1995, versus $1.7 million in 1994. In 1995, the Company purchased additional
internal use computer hardware and software and upgraded certain
communications equipment. Capital expenditures in 1994 were primarily for
continued improvements to the Company's headquarters' facility and computer
equipment upgrades.

Cash flow provided by financing activities in 1995 was $101,000, versus cash
used of $3.9 million in 1994. In 1995, cash flow benefited by the proceeds
from the exercise of employee stock options and short-term bank borrowings for
working capital requirements. This was partially offset by the acquisition of
treasury stock during the year. In 1994, the Company used cash provided by
operations to pay off all of its short term borrowings with banks.

The Company has line-of-credit agreements, which aggregate $27.2 million,
with certain banks, of which $383,000 was in use at March 31, 1996. The
Company believes that it has adequate financial resources to meet its future
liquidity and capital requirements.

20
<PAGE>

BUSINESS

THE COMPANY

PAR Technology Corporation provides sophisticated integrated transaction
information processing solutions that enable the reliable capture,
preservation, processing and management of information throughout a business
enterprise. The Company is a leading supplier of ITIP solutions to the quick
service restaurant industry and also provides ITIP solutions for
manufacturing/warehousing enterprises. The Company's systems-based solutions
have been engineered to perform reliably under harsh operating conditions, and
incorporate high levels of systems integration, in-depth knowledge of the
customers' workflow processes, and local and wide-area networking capability.

The Company also develops advanced computer-based systems and technologies
for government agencies. Through its government-sponsored development work,
PAR has generated significant technologies with commercial applications, from
the transaction information processing capability underlying its primary
business to the advanced vision technology currently being implemented in the
Company's proprietary Corneal Topography System ("CTS") for use in ophthalmic
diagnoses and surgical procedures.

INTEGRATED TRANSACTION INFORMATION PROCESSING

Businesses worldwide are increasingly focused on the means to more
effectively obtain, preserve, manage and utilize information related to the
processes by which their products are produced and sold. Automated capture and
analysis of certain information, including cost, price, volume, throughput and
other data, enable businesses to improve production efficiencies and gain
competitive advantages. Consequently, business managers increasingly require
ITIP solutions -- integrated computerized systems that enable the reliable
capture, preservation, integration, processing and management of business-
critical information throughout the enterprise. In complex systems
environments, ITIP solutions include the ability to communicate and share
information among disparate hardware and software platforms across local site
and enterprise-wide data networks. ITIP solutions are increasingly required by
managers to provide real-time access to operational data from local and remote
company sites for operational and strategic decision-making.

Many businesses have turned to third-party suppliers and systems integrators
to assist in the design, implementation and support of ITIP systems, as the
complexity of total systems solutions and rapid technological change require a
broad range of specialized capabilities. An ITIP solutions provider must
possess strong and diverse technical knowledge of open systems architectures,
multiple device and software interfaces, data formats, wireless communications
and local and wide-area networking. In addition, in order to effectively
design an ITIP solution that meets a particular customer's specific needs, the
ITIP provider must thoroughly understand the operational aspects and work
process flow requirements of its customer's business. Systems integration,
including the ability to design and implement reliable and extendible ITIP
solutions that enable data transmission and communication among disparate
hardware devices, multiple software applications, different host computers and
diverse operating systems, is a critical competency required of the solutions
provider. Finally, an ITIP solutions provider must commit to providing full
life-cycle support and service to meet the customer's needs for consistent,
reliable operation under rigorous conditions.

21
<PAGE>

The Company markets its ITIP solutions to two vertical markets -- the
restaurant industry and automated manufacturing/warehousing enterprises. The
Company's ITIP systems solutions incorporate its experience and competencies
in designing and integrating hardware and software into complex systems that
meet the rigorous operating requirements of its target markets.

Restaurant ITIP

Restaurants increasingly require real-time information access and management
that permit employees to increase the speed and accuracy of taking an order,
preparing the food, and filling the order, while simultaneously providing
real-time access to operational data for decision support in areas such as
inventory control, personnel management, cash management, menu modification
and market trend analysis. This need for information systems capable of
capturing, preserving, processing and managing data from a large number of
time-critical transactions for effective operational decision-making and
efficient revenue generation has created a significant opportunity for the
implementation of ITIP solutions.

Quick service restaurant chains were early adopters of ITIP solutions. Quick
service restaurant ITIP solutions must accommodate numerous concurrent
customer orders at multiple counter-top and drive-through locations. Multiple
order input devices, such as wireless, hand-held terminals and touch screen
monitors, may be required to handle high order volumes at peak busy periods.
Order information must be communicated to and shared with food preparers and
order assemblers by video monitors. Printers for customer receipts, change
machines and cash boxes, as well as other peripherals must be networked within
the system to enable efficient throughput of customers and orders, which is
critical to fast-food operations. Additionally, the captured transaction data
must be shared not only with store management for accurate and real-time
access to data for back-office decision-making, such as inventory management
and employee work scheduling, but also across wide area networks with the QSR
chain's regional and national headquarters for market information and trend
analysis.

The successful implementation of a quick service restaurant ITIP solution
poses significant technical, environmental and business challenges. The
solution must reflect an in-depth understanding of the business dynamics of
the QSR industry and the customer's specific needs. The system design must
meet the high-transaction rate workflow process of the business, yet be
flexible and extendible to accommodate market needs such as menu changes and
special promotions. A solution provider must have connectivity and open-
systems architecture expertise in order to solve the multiple interfacing and
data formatting complexities arising from the need to enable local and remote
interconnection and communication among multiple diverse hardware devices and
software applications, while maintaining high system reliability and
integrity. The ability to engineer ruggedized hardware to withstand the
hostile environment of spills, grease, heat and misuse common to QSR sites, as
well as to implement user interfaces that are understandable to a low-skill,
high-turnover employee base, is critical to system useability and reliability.
Additionally, the solutions provider must be able to commit to rapid global
service and support, as the ITIP system, once implemented, serves a critical
function in the restaurant as well as throughout the QSR chain.

Manufacturing/Warehousing ITIP

The manufacturing and warehousing industries are increasingly subjected to
competitive pressures to increase individual worker productivity, manage
inventory controls effectively and optimize the use of fixed assets. Over
time, companies have made significant investments in technology to improve
particular process inefficiencies, creating "islands of automation," such as
in the shipping or receiving department, rather than developing an integrated
solution that automates an entire workflow process. Managers increasingly
recognize that substantial cost savings and production efficiencies can be
obtained, both within the manufacturing or warehouse site and throughout a
multiple site enterprise, by implementing an integrated ITIP solution that
automates data collection, storage, retrieval and processing.

22
<PAGE>

A complex manufacturing operation typically includes multiple data
collection networks with efficient, paperless data capture devices at critical
points in the production line, including stationary, hard-wire input terminals
as well as wireless devices for flexible monitoring and data capture,
inventory control devices, including barcode printers and scanners for
inventory tracking, security and order management in a just-in-time structure,
and other tailored data input and collection devices. An ITIP solution for
such a complex manufacturing site must be designed to enable information
sharing, distributed data processing, and seamless integration into plant-wide
and enterprise-wide data networks to permit real-time access to events and
trends, so that managers can respond flexibly and quickly, both to problems
within the manufacturing process and to market opportunities that become
available.

Implementation of an effective ITIP solution for a complex, often multiple
site manufacturing/warehousing enterprise requires a systems provider to
understand the complexity of the customer's workflow processes, as well as to
be able to provide consultation on industry best practices. The ITIP system
must be designed to seamlessly and reliably integrate the enterprise's legacy
data collection hardware and applications software with new technology,
requiring sophisticated understanding of the multiple interfaces among
mainframe and mid-range host computers from a variety of vendors, incompatible
operating systems and applications software, as well as diverse peripheral
devices. Systems integration by the ITIP solutions provider requires in-depth
knowledge of data formatting to collect, process and share information among
the disparate hardware and software elements of the system, and the
engineering capability to implement a robust solution that is reliable,
flexible and extendible. An ITIP solutions provider must further possess the
competency to deliver, install and implement the system and to train the
customer's personnel on its use and the commitment to maintain and enhance the
ITIP system throughout its life cycle.

THE PAR SOLUTION

PAR currently offers fully integrated ITIP solutions that satisfy the
specific needs of its targeted vertical markets. The PAR solution incorporates
the following features:

. INDUSTRY KNOWLEDGE. PAR applies its in-depth industry knowledge and
understanding of the workflow and production process needs of its
restaurant and manufacturing/warehousing customers to integrate
software, hardware and services into a flexible, user friendly solution
to its customers. PAR's industry expertise has been developed over its
19 years of experience servicing the needs of the QSR restaurant market
and over its eight years of experience servicing
manufacturing/warehousing enterprises.

. SYSTEMS INTEGRATION EXPERTISE. PAR utilizes its systems integration
capabilities to design and implement open-systems architecture ITIP
solutions that solve the interfacing and data formatting challenges
inherent in systems incorporating a variety of hardware devices and both
legacy and new software applications, and which must communicate and
share data over local and enterprise-wide networks.

. OPERATING ENVIRONMENT EXPERTISE. PAR's software solution for the QSR
market is tailored for ease-of-use by a low-skill, high-turnover QSR
employee base, while its manufacturing/warehousing software is robustly
structured to address the rigorous demands of complex, transaction
intensive workflow processes. PAR manufactures ruggedized hardware that
can survive the harsh environmental conditions of a QSR restaurant,
while at the same time being cost-effective for the customer over the
life of the system.

. SERVICE COMMITMENT. PAR offers a complete solution to its customers'
ITIP systems service needs, including the ability to provide ongoing
services and support for ITIP systems on a global basis. PAR has offices
in eight countries and 19 cities in the U.S., and provides 24 hour a
day, seven day a week hotline support for domestic restaurant customers
through a call center in its Boulder, Colorado office.

For the restaurant market, PAR's POS III ITIP system combines flexible,
extendible systems software connecting PAR's open-system architecture hardware
platform with PAR's ruggedized order-entry terminals, video monitors, and
other PAR and third-party peripherals networked via an Ethernet LAN and
accessible to enterprise-wide network configurations. PAR's solution further
includes extensive systems integration capabilities to design, tailor and
implement its customer's total data collection, preservation, processing and
management requirements.

23
<PAGE>

For manufacturing/warehousing enterprises, PAR's solution entails extensive
systems integration services coupled with its TPS(TM) data collection and
management enabling software. PAR designs and implements complex integrated
ITIP solutions offering concurrent connectivity with multiple host computers,
diverse legacy applications software, and "best-of-breed" software and
hardware technologies, providing its customers the ability to manage, from a
central location, all aspects of data collection and processing for single and
multiple site enterprises.

GROWTH STRATEGY

The Company's business objective is to be a leading supplier of innovative
systems solutions for targeted ITIP applications and to provide value-added
systems integration capabilities for selected vertical markets. In addition,
the Company seeks out commercial applications for its advanced technologies
developed under sponsored government research projects. The Company pursues
this objective by following the growth strategies listed below.

MAINTAIN ITIP TECHNOLOGY LEADERSHIP. The Company intends to maintain its
leadership position by enhancing ease of use in its current ITIP solutions in
the automated manufacturing/warehousing market, as well as broadening the base
of platforms supported, and by developing modular, object-oriented software
for its restaurant ITIP solutions, thus providing customers with increased
maintainability, upgradeability, extendibility and configurability, while
improving price/performance and time-to-market. The Company believes that
migration to a technologically advanced object-oriented software platform will
enable it to penetrate new QSR accounts, as well as upgrade its installed base
of QSR customers by incorporating new features and functionality.

LEVERAGE SYSTEMS INTEGRATION CAPABILITIES. The Company seeks to expand its
business opportunities within its targeted vertical markets by leveraging its
complete systems integration capabilities for current and new end-user
customers. In addition to developing modular hardware and software ITIP
products for the restaurant industry, the Company has been able to add
significant value for its QSR customers by configuring and integrating its own
and third-party peripheral products, such as configurable touch screens,
wireless hand-held order-entry terminals, video display monitors and printers
into an integrated, networked system that meets particular customer
requirements based on restaurant configuration or operational demands. The
Company believes that it can address additional systems integration
opportunities in the restaurant ITIP market by extending the capabilities of
the ITIP network to provide real-time decision support for restaurant and
headquarters-based management. In the automated manufacturing/warehousing
market, the Company intends to enhance design, configuration and
implementation services to further develop integrated data collection and
management solutions.

EXPLOIT RESTAURANT ITIP OPPORTUNITIES. The Company intends to further
penetrate the major QSR chains and to expand into the pizza and full service
restaurant sectors. A substantial part of growth expected by QSR chains in the
near future is represented by international expansion and the introduction of
"satellite" facilities (such as those interspersed throughout an airport
terminal). In order to exploit this opportunity, the Company intends to
support additional country-specific versions of its ITIP systems, as well as
to increase its worldwide sales, systems integration and service capabilities.
In addition, the Company has introduced its pizza/full service software
platform to pursue opportunities in these sectors, which it has not serviced
in the past. This software enables custom configuration of ITIP solutions
which meet the different operational and data capture requirements of both
pizza and full-service restaurants.

ENHANCE AUTOMATED MANUFACTURING/WAREHOUSING MARKET PRESENCE. The Company
intends to expand and leverage strategic partnering relationships to further
penetrate the automated manufacturing/warehousing market, as well as to
develop relationships with value added resellers to increase its market
presence. In addition to its direct, consultative sales focus, the Company
teams with leading data collection hardware suppliers, including Intermec
Corporation and Telxon Corporation, to offer total systems solutions to its
customers, and with the management consulting division of Ernst and Young LLP,
which provides business consulting services through over 10,000 consultants to
a wide variety of industries, including manufacturing, consumer products and
others.

24
<PAGE>

LEVERAGE EXISTING CLIENT BASE. The Company believes it can sustain growth in
its existing ITIP markets by continuing to establish and maintain long-term
client relationships. In addition to providing upgrade opportunities within
its significant customer base, the access and goodwill offered by customer
relationships provide the Company with significant advantages over its
competitors in marketing additional services and solutions to its clients. The
Company also believes its long-term client relationships and ability to
address its clients' needs throughout the life cycle of their ITIP systems
distinguish the Company from many of its competitors, and provide the
opportunity to become a preferred provider of ITIP solutions for a broad range
of its existing and new clients.

EXPAND INTERNATIONAL SALES AND SUPPORT. The Company intends to leverage its
relationships with its customers and expand its sales and support capabilities
to enable it to increase international sales. The Company expects that
international sales will continue to be a significant portion of its total
revenues. In the restaurant ITIP market, the Company's QSR customers
anticipate international growth at rates higher than domestic growth over the
next several years. Currently, the Company's products are installed in
customer sites in 62 countries outside of the United States. The Company's
strategy has been to partner with high-quality local service and support
providers upon first entering a new geographic market, and to transition to
providing direct support as the market for its products and services evolves.
The Company currently intends to open offices in China and Latin America, in
addition to its current sales and service offices located in Australia,
Canada, France, the Netherlands, Singapore, South Africa, Spain and the United
Kingdom.

CONTINUE TO EXPAND SUPPORT AND SERVICE OFFERINGS. In addition to its systems
integration capabilities, the Company understands that full-service support to
customers' operations is critical to long-term success. The Company is able to
serve as a single service provider to customers in the restaurant market,
supporting and maintaining all the customer's computer-based products in its
restaurants. The Company believes that its capability to provide one-stop
shopping to its customers for all their systems service and support needs
maintains and strengthens long-term customer relationships, as well as
providing cross-selling opportunities for systems integration and other
product offerings. The Company has contracted with Taco Bell, the Company's
largest customer in fiscal 1995, to serve as the exclusive service integrator
for ITIP systems, back office computer systems, hand-held data entry devices
and other computer-based equipment, whether Company or third-party supplied,
in all company-owned Taco Bell, Taco Bell Express and Hot 'n Now restaurants
in the United States, Canada and Puerto Rico. The Company believes that its
ability to address all support and maintenance requirements for a customer's
ITIP network provides it with a competitive advantage.

COMMERCIALIZE PROPRIETARY TECHNOLOGY GENERATED FROM SPONSORED RESEARCH. The
Company focuses its product development and marketing efforts on identifying
commercial applications for implementing technologies generated by and
developed under the Company's sponsored research pursuant to contracts with
governmental agencies. The Company's competencies in ITIP, developed in
connection with government contract work, has led to the growth of its
restaurant and manufacturing/warehousing ITIP businesses. More recent work in
the area of computerized digital image processing has led to the Company's
development of its CTS ophthalmic diagnostic and surgical support product,
which measures the topography of the human cornea, including elevation, in
real-time in both clinical and surgical environments. The Company has also
used its telecommunications and signal processing expertise in the development
of its HAZMAT system, which enables computerized tracking of hazardous
materials in transit. Further, the Company has commenced development on
products targeting complex document management and full-text retrieval
applications, and intends to continue to exploit technology transfers from
ongoing government development projects.

SYSTEMS AND SERVICES

The Company has targeted two vertical markets for its transaction
information processing solutions--the restaurant market and the automated
manufacturing/warehousing market. Each of these markets requires equipment
that performs reliably under adverse environmental conditions and the stress
of numerous concurrent transactions, while being operated by an often
unsophisticated and inexperienced workforce. The Company's governmental
systems business focuses its efforts on governmental agencies, including the
U.S. Department of Defense, or prime contractors operating under government
contracts. In addition, the Company markets its CTS corneal topography system
to the ophthalmic diagnostic and surgical market.

25
<PAGE>

RESTAURANT ITIP SYSTEMS

The Company's primary focus in the restaurant market has been the QSR
segment of the top 100 chains. The demands of the major quick service chains
include rugged, reliable point of sale systems capable of recording,
transmitting and coordinating large numbers of orders for quick delivery. The
Company's modular, integrated solutions permit its QSR customers to configure
their restaurant ITIP systems to meet their order-entry, menu, food
preparation and delivery coordination requirements while recording all aspects
of the transaction at the site. The current offerings are the result of the
Company's 19 years of experience in and an in-depth understanding of the QSR
market. This knowledge and expertise is reflected in its product design,
manufacturing capability and systems integration skills. The Company's current
offerings include the POS III, McDonald's and Pizza and Full Service software
applications, the POS II system, the POS III hardware, and PAR and third-party
peripherals, as well as system customization and integration services.

Software. The Company's software was originally developed as a proprietary
application for the POS I and POS II systems. The Company's latest version,
POS III, has been written in the C programming language, operates under
Microsoft DOS, is compatible with QNX real-time operating systems and supports
a distributed processing environment across an Ethernet LAN. The features and
functions of the software are extensive and incorporate a high degree of
flexibility for the routing and displaying of orders in real-time and for the
design and configurability of the Company's display data-entry terminals.

In 1995, PAR introduced a new software application which enables the Company
to expand its offerings beyond QSR to the full service and pizza restaurant
markets. This software application incorporates custom features, including
automatic customer retrieval by phone number, automatic delivery-time
calculation, time-displayed order entry, printed condiment totals for
packaging, street grid database support, dispatch, delivery, coupon tracking
and the ability to record an historical record of customer buying habits, in
order to address the specific needs of pizza and full service restaurants. The
software also supports in-store communications between terminals, remote
printers and displays, and back office PCs through an Ethernet LAN.

In 1994, PAR, Olivetti and Panasonic assisted McDonald's in creating a PC-
based software application for use throughout all of McDonald's restaurants.
This development effort, referred to as the Alliance, resulted in a software
application which was released for sale in August 1995. The Company's domestic
McDonald's corporate and franchise customers use its open architecture POS III
hardware platform with this software. McDonald's licenses the Company,
Olivetti and Panasonic to market the software to its corporate and franchise
restaurants, in return for royalty payments.

The Company continually introduces new features and functions in its
software and generally introduces a major release once a year. The Company is
currently developing its next generation restaurant ITIP software
applications. This new software will use object-oriented design techniques and
will incorporate the expertise gained during nearly two decades of creating
and supporting restaurant computer systems. New features such as mirror
imaging of critical data, on-line graphical help, intelligent/interactive
diagnostics and extensive graphical user interfaces, will enhance the
reliability and ease of use for which the Company's software is known.

Hardware. PAR's restaurant ITIP systems have been designed to exceed the
requirements of the Company's customers. PAR's current systems have evolved
from its original proprietary systems, the POS I, and the POS II, which were
state of the art at the time of their release and surpassed the then-current
reliability and speed-of-service requirements of the large QSR chains.

The POS III system, first installed in 1994, is an open architecture
hardware platform with industry standard components. The POS III hardware
supports a distributed processing environment and incorporates an advanced
restaurant ITIP system, utilizing Intel microprocessors, standard PC expansion
slots, Ethernet LAN and standard Centronics printer ports. The system augments
its industry standard components with features for QSR applications such as
multiple video ports. The POS III system utilizes distributed processing
architecture to integrate a broad range of PAR and third-party peripherals and
is designed to withstand the harsh QSR environment. The system has a favorable
price-to-performance ratio over the life of the system as a result of its PC
compatibility, ease of expansion and use and high reliability design.

26
<PAGE>

Display terminals process and track customer orders, process employee
timekeeping records, and provide on-screen production and labor scheduling.
Registers may be configured with a touch screen rather than a fixed position
keyboard, allowing greater flexibility in menu design. The POS III touch
screen configuration allows a restaurant manager to easily reconfigure or
change the menu to add new food items or provide combination meals without
reprogramming the system. Wireless hand-held terminals permit restaurant
employees to take orders while customers are waiting or in drive-thru lines,
thus increasing the speed of service, as the customer's food order is complete
by the time he or she reaches the counter and pays for the order. Video
monitors display upcoming food orders in the food preparation areas. Multiple
monitors used in the kitchen, at drink stations and in the final assembly area
help assure that the order is properly completed. Printers are incorporated to
print customer receipts or to produce management reports, while various other
devices such as change dispensers and personal computers can be added to a
LAN, which permits the sharing of transaction information generated by the
restaurant ITIP system. The manager can use a standard microcomputer to
collect and report on store-generated data.

Systems Integration. The Company utilizes its systems integration and
engineering expertise in developing functions and interfaces for its
restaurant ITIP products to meet diverse customer requirements. The Company
works closely with its customers to identify and accommodate the latest
developments in restaurant technology by developing interfaces to equipment,
including innovations such as automated cooking and drink dispensing devices,
customer-activated terminals and order display units located inside and
outside of the restaurant. The Company provides systems integration to
interface specialized components, such as television monitors, coin dispensers
and non-volatile memory for journalizing transaction data, as may be required
in some international applications. The Company also integrates the restaurant
manager's back office computer, as well as corporate home office computers, as
management information requirements dictate.

MANUFACTURING/WAREHOUSING ITIP SYSTEMS

The Company's manufacturing/warehousing information processing systems
business provides enabling and applications software and systems integration
services to manufacturing and warehousing end users through distributed
enterprise networks. The Company's primary product offering to the
manufacturing/warehousing industry is its TPS data collection enabling
software package. TPS is an open platform, middleware application that
provides connectivity across multiple non-compatible host computers, including
those manufactured by International Business Machines Corporation, Hewlett-
Packard Company, and Digital Equipment Corporation. TPS also provides
connectivity among diverse MRP, MRP II and MES programs (such as Manman and
SAP) and fixed-base and hand-held RF data collection terminals on the factory
floor, including those sold by Intermec Corporation, Telxon Corporation, Burr-
Brown Corporation, and Zebra Technologies Corp. The Company is currently
developing support for Norand Corporation and Symbol Technologies data
collection devices. TPS offers simplified system use and operations while
maintaining system speed in complex transaction processing environments. TPS
provides a flexible and highly functional platform for on-line transaction
processing applications such as distribution time and attendance, inventory
control, warehousing, job status, scheduling and quality control. Data can be
directly read from and written to host databases, as well as forwarded to
managers, who can respond quickly to production deviations based on real-time
information.

The Company's additional data collection products include CIMport(TM) and
CIMprint(TM), a series of application software products used with Telxon
portable hand-held terminals to collect data without fixed-wire attachment.
TPS enables radio-frequency and store-and-forward portable terminals to be
used in data collection environments that previously could not support this
capability. CIMprint is a barcode document printing software package designed
for demanding client/server environments, which can be used for printing tags,
labels, employee badges and other documents with any combination of text
barcode, graphic images, and optical character reading fonts. CIMprint is
fully integrated into the TPS platform.

27
<PAGE>

The Company offers system integration services for implementing data
collection hardware and its TPS software for its clients. PAR's team of
systems engineers, application developers, and product support personnel have
experience in providing optimal system integration solutions, and work closely
with customer personnel to define requirements, identify solutions, and
implement solutions based on the customer's needs.

GOVERNMENT CONTRACTING

The Company's two wholly-owned subsidiaries in the government business
segment, PAR Government Systems Corporation ("PGSC") and Rome Research
Corporation ("RRC"), provide the Department of Defense ("DOD") and other
federal and state government organizations with a wide range of technical
products and services. PGSC is engaged in the design, development and
implementation of state-of-the-art data handling systems and advanced research
and development for high-technology projects. RRC provides engineering
services, software development and testing, and operation and maintenance for
government facilities.

PGSC provides high technology research and development to address problems
associated with large real- time data sets and to provide decision support
software systems. PGSC's principal focus involves the development of image and
signal processing systems that are able to collect and analyze complex and
massive sensor data associated with radar and infrared sensor systems. PGSC's
telecommunications programs address the movement of large data sets and the
adaptation of data to meet user needs for system control, mission planning and
decision support. These projects have been undertaken in order to improve
environmental and transportation safety, reduce record-keeping costs and
improve efficiency.

RRC provides professional and engineering services to operate and maintain
DOD laboratories, ranges and related facilities. At these sites, Company
personnel plan, execute, and evaluate experiments involving new or advanced
radar systems, electronic countermeasures systems and communications systems,
and operate training and operational communications equipment. RRC also offers
software engineering support.

OPHTHALMIC DIAGNOSTIC AND SURGICAL MARKET

PAR's Vision System Corporation's Corneal Topography System is a current
example of the Company's ability to develop a commercial product from
technology developed under contract for the U.S. Government. With the growth
of refractive surgery to change the shape of the cornea, the foreseeable
introduction of the excimer laser for photorefractive keratotomy ("PRK") and
the desire to develop customized contact lenses, PAR recognized a need for a
corneal topography system which could directly measure the true
elevation/shape of the cornea and created CTS. CTS uses PAR patented
technology and complex proprietary algorithms and software to provide the eye
care professional with true elevation, curvature and refractive power data
across the entire cornea.

PAR CTS makes no assumptions regarding the shape of the cornea and is able
to image irregular and damaged corneas. This represents a significant
advantage in measuring post-surgical corneas. PAR Vision Systems Corporation
currently offers eye care professionals two products, including a Clinical
Diagnostic System which is sold as a stand-alone unit or as an attachment to a
variety of manufacturers' slit lamps. PAR also offers an FDA-approved Intra-
Operative System which attaches to a number of different operating microscopes
and is the only corneal topographer currently available for usage during
surgical procedures.

The Company's focus market for its CTS products is the eye care industry,
including ophthalmologists, optometrists, excimer laser centers, refractive
surgery centers, hospitals, eye banks, custom contact lens labs, research
centers and university medical schools. Corneal topography has important
applications in diagnostics, inpatient screening, preoperative surgical
planning, postoperative evaluation, patient follow-up, patient co-management,
and contact lens fitting and design. In addition, corneal topography is an
effective patient education and marketing tool.

28
<PAGE>

With the recent U.S. FDA approvals of PRK in December 1995, industry sources
estimated that during the period 1996 through 1999, 2.8 million to 4.8 million
excimer refractive procedures will be performed in the U.S., virtually all of
which will include one or more corneal topography examinations.

CUSTOMER SERVICE

The Company offers a range of maintenance and support services as part of
its total solutions for its targeted transaction processing markets. In the
North American restaurant ITIP market, the Company provides comprehensive
maintenance and upgrade services for its own and third-party equipment and
systems through a 24-hour central telephone customer support and diagnostic
service in Boulder, Colorado and a field service network consisting of 60
locations offering factory, on-site, and depot maintenance and spare unit
rentals. When a restaurant ITIP system is installed, PAR employees train the
restaurant employees and managers to ensure efficient use of the system. If a
problem occurs, PAR's current software products allow a service technician to
diagnose the problem by telephone, greatly reducing the need for on-site
service calls. The Company has contracted with Taco Bell, the Company's
largest customer in fiscal 1995, to serve as the exclusive service integrator
for restaurant ITIP systems, back office computer systems, hand-held data
entry devices and other computer-based equipment in all company-owned Taco
Bell, Taco Bell Express and Hot 'n Now restaurants in the United States,
Canada and Puerto Rico. The Company will provide Taco Bell with telephone
diagnostic support, on-site service and parts depot capabilities for all such
equipment, whether Company- or third party-supplied. The Company believes that
its ability to address all support and maintenance requirements for a
customer's restaurant ITIP network provides it with a competitive advantage.
Restaurant ITIP services generated $25.0 million in revenue in fiscal 1995,
representing 32.4% of total restaurant ITIP revenues. As of March 31, 1996,
226 employees were engaged in providing restaurant ITIP services.

In the manufacturing/warehousing market, the Company offers technical
support through an experienced product support staff available in the field or
by telephone. The Company also provides training classes, led by experienced
and highly qualified personnel, on its products and implementations, including
both hands-on experience with use of software and operation of hardware. The
Company offers ongoing maintenance and enhancements.

RESEARCH AND DEVELOPMENT

The Company engages in the research and development ("R&D") of new
technologies under government contracts and through internally funded
projects. A total of 77 Company employees were engaged in internally funded
R&D as of March 31, 1996, and total expenditures on internally funded R&D
totaled $4.2, $5.0 and $5.3 million in fiscal 1993, 1994 and 1995,
respectively.

RESTAURANT ITIP. The Company is currently developing its next generation
restaurant ITIP software applications, based on an open architecture system
and object-oriented software technology, which will incorporate new features
including mirror imaging of critical data, on-line graphical help,
intelligent/interactive diagnostics and extensive graphical user interfaces.
The Company also focuses R&D for the restaurant ITIP market on enhancing its
ability to integrate third-party software and continuing development of
systems integration and software improvements to its flexible open
architecture POS III system. The Company believes that such improvements will
enable it to increase its penetration of the pizza and full service restaurant
markets.

MANUFACTURING/WAREHOUSING ITIP. The Company is currently developing a
Windows NT-based version of its TPS system. In addition, the Company continues
its improvement of its TPS software to enhance its ability to interface with
various host-based modular business packages and hardware.

CTS. The Company is developing an excimer laser-compatible system with an
application for planning, monitoring and simulating the topographic and
refractive changes that occur as a result of excimer surgical procedures such
as PRK, PTK and LASIK. In addition, the Company is currently testing a contact
lens fitting product that utilizes elevation-based data to create a contact
lens that provides an optimal fit on a patient's cornea.

29
<PAGE>

OTHER. The Company is engaged in R&D for commercial applications based on a
variety of other technologies. These include technologies in the fields of
data/text retrieval and environmental testing. The Company is developing two
systems in the field of document management, Insight, a desktop data manager
that allows an individual user to organize, categorize, search and review
large quantities of textual information, and Hawkeye, a real-time data
classifier that evaluates incoming documents and categorizes them according to
user-specified or automatically generated criteria. In the field of
environmental monitoring, the Company is developing a system to detect
underground contaminants, and a system of computerized links to track
hazardous materials in transit.

CUSTOMERS

The following are included among the customers of the Company:

<TABLE>
<CAPTION>
MANUFACTURING/
RESTAURANT ITIP WAREHOUSING ITIP GOVERNMENT
--------------- ------------------------------------ ----------
<S> <C> <C>
Arby's American Boa, Inc. Advanced Research Project Agency
Chick-fil-A, Inc. Goodyear National Institute for Environmental Renewal
Hungry Bunny Integrated Systems, Inc. Northrop-Grumman
KFC Mercedes Benz of North America, Inc. U.S. Air Force Rome Laboratory
McDonald's Nissan Motor Co. Ltd. U.S. Air Force Special Operations Command
MOS Burger Rhone-Poulenc U.S. Army Topographic Engineering
Pizza Hut Teepack, Inc. Center
Taco Bell Whirlpool Corporation
Taco Cabana
Wendy's
International, Inc.
</TABLE>

In the restaurant ITIP market, the Company has established long-term
relationships with several of the largest QSR corporations based on its
ability to provide a total system solution, including highly flexible and
functional software, worldwide service and support, ruggedized hardware and
systems integration of third-party products. Typically, the Company markets
its products at the corporate level to obtain approved vendor status for sales
to company-owned restaurants and then markets to both individual franchisees
and company-owned locations. Franchisees generally purchase from corporate-
approved vendors, but are not required to do so, and may purchase from other
suppliers. The Company is the sole approved vendor of restaurant ITIP
equipment to Taco Bell, KFC International and Chick-fil-A, and is one of three
approved vendors to McDonald's.

Taco Bell, KFC and Pizza Hut are wholly owned subsidiaries of PepsiCo, Inc.
Taco Bell accounted for 32.8% of the Company's revenue for fiscal 1995, and
KFC and its franchisees and Pizza Hut franchisees accounted for 5.0% and 0.6%,
respectively. Sales to McDonald's and its franchisees accounted for 20.9% of
net revenues in 1995. There can be no assurance that any of the Company's
current customers will continue to place orders with the Company. The loss of
any one or more of the Company's major customers could materially and
adversely affect its business, operating results and financial condition. See
"Risk Factors -- Concentration of Major Customers."

SALES AND MARKETING

RESTAURANT ITIP. Sales in the restaurant ITIP market are generally generated
by first gaining the approval of the restaurant chain as an approved vendor.
Upon approval, marketing efforts are then directed to franchisees of the
chain. Sales efforts are also directed toward franchisees of chains for which
the Company is not an approved vendor. The Company employs direct sales
personnel in five sales groups that together employed 73 persons as of March
31, 1996. The National Accounts Group (13 employees) works with major
restaurant chain customers. The North and South America Sales Group (24
employees) targets franchisees of the major restaurant chain customers, as
well as franchisees of other major chains, as well as smaller chains. The
International Sales Group (12 employees) seeks sales to major customers with
restaurants overseas and to international chains that do not have a presence
in the United States. The New Accounts Group seeks sales to major new
corporate accounts.

30
<PAGE>

MANUFACTURING/WAREHOUSING ITIP. The Company's direct sales efforts in the
manufacturing/warehousing ITIP market are generally focused on the highest
level of the customer's executive management. Substantial lead time is
required in sales efforts due to the fact that automation equipment is
normally fitted into the manufacturing or warehousing environment as a plant
is constructed. The Company has also entered into strategic marketing
relationships with several companies, including Intermec Corporation, Norand
Corporation and Telxon Corporation, and Ernst and Young LLP.

CTS. The Company currently utilizes a direct sales force of six employees to
market CTS. The Company intends to expand this sales force. The Company also
has created an international dealer network of 10 dealers in Europe, Asia,
South America, Australia and Canada in order to address the wide geographical
scope of the market.

COMPETITION

Competition in the restaurant ITIP and manufacturing/warehousing ITIP
markets is based primarily on functionality, reliability, quality, performance
and price of products, and service and support. The Company believes that its
principal competitive advantages include its focus on a total solution
offering, its advanced development capabilities, its industry knowledge and
experience, product reliability, its direct sales force, the quality of its
support and quick service response, and, to a lesser extent, price.
Competition in the ophthalmic imaging market is based primarily on
functionality, sales and marketing strength, and pricing. The Company believes
that its principal competitive advantages include the superior functionality
of its product and the quality of its service and support. Competition for
government contracts is based primarily on customer relationships, price and
technical capability. The Company believes that its principal competitive
advantages include the long-term strength of its customer relationships,
competitive pricing, and proven capability.

The markets in which the Company competes are highly competitive. There are
currently more than 10 suppliers who offer some form of sophisticated
restaurant ITIP system similar to the Company's. The Company competes with
other vendors of ITIP systems and the internal efforts of its current or
prospective customers. Major competitors include Panasonic, International
Business Machines Corporation, NCR and Micros Systems Inc. The Company
believes that the manufacturing/warehousing ITIP market is highly fragmented.
In the CTS market, competitors include EyeSys Technologies Inc., Tomey
Technology, Inc., Alcon Laboratories, Inc. and Humphrey Instruments (a
division of Carl Zeiss, Inc.). In its government contracting business, the
Company competes with many larger companies such as Lockheed Martin
Corporation, Science Applications International Corporation, and TRW Inc., as
well as many smaller companies that target particular segments of the
government contracting market. Many of the Company's competitors in each of
these markets have substantially greater financial resources than the Company.
There can be no assurance that the Company will be able to compete effectively
in any of its markets.

INTELLECTUAL PROPERTY

The Company principally relies on copyright and trademark protection, trade
secrets and proprietary know-how to protect its intellectual property. The
Company enters into confidentiality agreements with its key employees,
consultants and strategic partners, restricts access to the Company's
facilities, and identifies and secures confidential documents. The
confidentiality agreements between the Company and its employees restrict the
disclosure by such employees of any confidential information and assign to the
Company the rights to inventions made during their employment with the
Company.

While the Company relies on certain patents covering certain of its
products, it does not believe that patents are material to its business in its
entirety. To date, the Company has not experienced any material litigation or
been subjected to any material patent office interference proceedings with
respect to patents. There can be no assurance, however, that third parties
will not assert claims against the Company with respect to existing or future
products or technologies. In the event of litigation to determine the validity
of any third-party claims, such litigation, whether or not determined in favor
of the Company, could result in significant expense to the Company and divert
the efforts of the Company's technical and management personnel from
productive tasks. In the event of an adverse ruling in such litigation, the
Company might be required to discontinue the use of certain processes,

31
<PAGE>

cease the manufacture, use and sale of infringing products, expend significant
resources to develop non-infringing technology or obtain licenses to the
infringed technology. There can be no assurance that such licenses would be
available on commercially reasonable terms, or at all, with respect to any
disputed third-party technology. In the event of a successful claim against
the Company and the Company's failure to develop or license a substitute
technology at a reasonable cost, the Company's business, financial condition
and results of operations could be materially and adversely affected. See
"Risk Factors -- Dependence on Proprietary Technology."

BACKLOG

The Company's backlog of unfilled orders in the restaurant ITIP and
manufacturing/warehousing ITIP businesses at March 31, 1996 was approximately
$15.6 million as compared to $10.2 million the previous year. Orders in both
the restaurant ITIP and manufacturing/warehousing ITIP businesses are
generally of a short-term nature and are usually booked and shipped in the
same fiscal year. The dollar value of existing government contracts at March
31, 1996, net of work performed to that date, was approximately $29.1 million,
of which approximately $8.2 million was funded. At March 31, 1995, the
comparable amount was approximately $18.1 million, of which $9.3 million was
funded. Funded amounts reflect amounts committed under contract by Government
agencies and prime contractors. The March 31, 1996 government contract backlog
of $29.1 million represents firm, existing contracts. Approximately $15.1
million of this amount will be completed over the next twelve months.

EMPLOYEES

At March 31, 1996, the Company had 864 employees. Approximately 575
employees are engaged in its ITIP businesses. Approximately 208 persons are
employed by Rome Research Corporation and PAR Government Systems Corporation,
22 by PAR Vision Systems, and the remainder are corporate and administration
employees.

The Company is not a party to any collective bargaining agreements. The
Company considers its employee relations to be good.

FACILITIES

The Company's headquarters and principal business facility are located in a
148,000 square foot facility in New Hartford, New York, located in central New
York State. The Company also maintains a 17,500 square foot service center in
Boulder, Colorado and additional R&D, sales and service facilities totaling
33,300 square feet serving its ITIP businesses in Norcross, Georgia;
Arlington, Texas; San Antonio, Texas; Irvine, California; and Sydney,
Australia. The Company also maintains facilities totaling 23,400 square feet
in Rome, New York and La Jolla, California in connection with its work under
government contracts.

The Company owns its principal facility and adjacent space in New Hartford,
NY. All of the other facilities are leased for varying terms. Substantially
all of the Company's facilities are fully utilized, well maintained, and
suitable for use. The Company believes its present and planned facilities and
equipment are adequate to service its current and immediately foreseeable
business needs.

LEGAL PROCEEDINGS

The Company is not currently subject to any material legal proceedings.

32
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dr. John W. Sammon,
Jr.(1)(3)(4)........... 57 Chairman of the Board, President and Director
Charles A.
Constantino(1)(3)(4)... 56 Executive Vice President and Director
J. Whitney Haney........ 61 President, PAR Microsystems and Director
Sangwoo Ahn(1)(2)(3).... 57 Director
Dr. James C. Castle(2).. 59 Director
Albert Lane, Jr......... 54 President, Rome Research
Dr. John P. Retelle,
Jr..................... 50 President, PAR Government Systems
Ronald J. Casciano...... 42 Vice President, Chief Financial Officer and Treasurer
</TABLE>

--------
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
(4) Member of Stock Option Committee.

JOHN W. SAMMON, JR. is the founder of the Company and has been the President
and a director since its incorporation in 1968. Dr. Sammon graduated from the
United States Naval Academy in 1960 with a B.S.E.E. in Astronautics and
Aeronautics. He attended Massachusetts Institute of Technology, graduating with
a S.M. in 1962. Dr. Sammon received his Ph.D. in Electrical Engineering from
Syracuse University in 1966. He has written several papers in the field of
Artificial Intelligence and Pattern Recognition and is a Fellow of the
Institute of Electronic Engineers. Dr. Sammon's term as director will expire at
the 1998 Annual Meeting of Shareholders.

CHARLES A. CONSTANTINO has been a vice president and a director of the
Company since its inception in 1971 and has held the position of Executive Vice
President since 1974. Mr. Constantino received a B.S. in Mathematics from St.
John Fisher College in Rochester, New York and a M.S. in Applied Mathematics
from the University of Rochester. Mr. Constantino's term as director will
expire at the 1998 Annual Meeting of Shareholders.

J. WHITNEY HANEY has been a director of the Company and President of PAR
Microsystems Corporation since April 1988. Mr. Haney graduated from The Citadel
in 1956 with a B.S. in Electrical Engineering. He attended the University of
Maine and the University of Pennsylvania from 1957-1962 pursuing graduate
studies in Electrical Engineering. Prior to joining the Company, Mr. Haney was
employed by Xerox Corporation as the President Operations, Development &
Artificial Intelligence from 1985 to 1988. From 1973 until 1985, Mr. Haney was
employed by Harris Corporation where he held many positions, including the Vice
President of Development & MIS. Mr. Haney's term as director will expire at the
1997 Annual Meeting of the Shareholders.

SANGWOO AHN was appointed a director of the Company in March 1986. He has
been a partner of Morgan, Lewis, Githens and Ahn, L.P. (investment banking)
since 1982. Mr. Ahn also serves as a director of Haynes International, Inc.,
Kaneb Pipe Line Partners, LP Quaker Fabric Corporation, ITI Technologies, Inc.,
Kaneb Services, Inc. and Stuart Entertainment, Inc. Mr. Ahn's term as director
will expire at the 1997 Annual Meeting of the Shareholders.

DR. JAMES C. CASTLE was appointed a director of the Company in December 1989.
Dr. Castle has been the Chairman and the Chief Executive Officer of U.S.
Computer Services Corporation since August 1992. Prior to assuming that
position, he was the Chief Executive Officer of Teredata Corporation from
August 1991 to April 1992. He also held the position of Chairman of the Board,
President and Chief Executive Officer of Infotron Systems Corporation from
October 1987 to August 1991. Dr. Castle's term as director will expire at the
1996

33
<PAGE>

Annual Meeting of the Shareholders. Dr. Castle also serves as a director of
Leasing Solutions, Inc. and ADC Telecommunications, Inc.

ALBERT LANE, JR. has served as President of Rome Research Corporation since
1988. He received a B.S. in Economics and Business Administration and an M.S.
in Business Administration from Chapman College. Mr. Lane also received an
M.S. in Systems Management from the University of Southern California and a
Ph.D., Business Administration from the United States International
University.

DR. JOHN P. RETELLE, JR. has served as President of PAR Government Systems
Corporation since November 1993. From July 1993 until November 1993, Dr.
Retelle served as Vice President, Advanced Business Development of the
Company. From June 1990 until July 1993, Dr. Retelle served as the Program
Manager, Advanced Computing Laboratory, R&D Division, of the Lockheed Missiles
& Space Company. Dr. Retelle earned a B.S. in aeronautics from the U.S. Air
Force Academy in 1963 and a M.S. in 1969 and Ph.D. in 1978, both from the
University of Colorado in aerospace engineering sciences. He also completed a
Master of Business Administration from Golden Gate University in 1971. Dr.
Retelle is a registered Professional Engineer.

MR. RONALD J. CASCIANO, C.P.A. serves as the Company's Chief Financial
Officer, Vice President, and Treasurer. Mr. Casciano joined the Company in
1983 as Corporate Controller. Mr. Casciano joined PAR from Price Waterhouse
where he was an Audit Manager. He is a member of the Financial Executives
Institute and has served as President of the Syracuse chapter. Mr. Casciano
graduated from LeMoyne College in 1975 with a B.S. in Accounting.

CERTAIN TRANSACTIONS

In December 1991, PAR Microsystems granted Mr. J. Whitney Haney, President
of PAR Microsystems and a director of the Company, a loan for $60,000 with
interest at the prime rate, adjusted monthly, and which is due on January 2,
1997. In January 1992, PAR Microsystems granted Mr. Haney an additional loan
that totaled $540,000, with interest at the prime rate, adjusted monthly,
which is also due on January 2, 1997. The total principal amount of $600,000
of the loan was secured by a Deed to Secure Debt on real estate owned by Mr.
Haney and his wife. As of May 17, 1996, the total principal and interest
outstanding was $817,831.

Pursuant to an agreement approved by the Board of Directors of the Company
on April 17, 1996, Mr. Haney exercised options on May 17, 1996 to buy 106,000
shares of Common Stock at an exercise price of $3.00 per share. Mr. Haney
immediately surrendered such shares to the Company as payment in full of the
outstanding principal and interest of the loans and, in addition received
$491,269 in cash from the Company, substantially all of which was withheld for
the payment of taxes. Such shares were surrendered at a price of $15.35 per
share, which represented the average closing price of the Common Stock over
the prior one-month period.

34
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of May 17, 1996 and as adjusted to
reflect the offering, by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each
director of the Company, (iii) all officers and directors as a group and (iv)
the Selling Stockholders. Unless otherwise indicated below, to the knowledge
of the Company, all persons listed below have sole voting and investment power
with respect to their shares of Common Stock, except to the extent authority
is shared by spouses under applicable law.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES TO BE
OWNED PRIOR BENEFICIALLY OWNED
TO OFFERING(1) NUMBER OF AFTER OFFERING(1)(2)
---------------------- SHARES -----------------------
NUMBER PERCENT OFFERED(2) NUMBER PERCENT
----------- -------------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
DIRECTORS, OFFICERS AND
5% STOCKHOLDERS:
Dr. John W. Sammon, Jr.
and
Deanna D. Sammon(3).... 5,035,885 64.88% 1,175,000(11) 3,860,885 41.91%
Charles A.
Constantino(4)......... 527,961 6.80% 200,000 327,961 3.56%
J. Whitney Haney(5)..... 173,200 2.18% -- 173,200 1.85%
Sangwoo Ahn(6).......... 53,500 * -- 53,500 *
Albert Lane, Jr.(7)..... 14,845 * -- 14,845 *
Dr. John R. Retelle,
Jr.(8)................. 10,150 * -- 10,150 *
Dr. James C. Castle(9).. 12,500 * -- 12,500 *
All Directors and
Executive Officers
as a Group (8
persons)(10)........... 5,851,691 72.95% 1,375,000 4,476,691 47.27%
</TABLE>
--------
*Represents less than 1%
(1) Except as otherwise noted, each individual has sole voting and investment
power with respect to all shares.
(2) Assumes that the Underwriters' over-allotment option is not exercised.
(3) Of the shares held by Dr. and Mrs. Sammon, Dr. Sammon has sole voting and
investment power as to 4,100,200 shares and Mrs. Sammon has sole voting
and investment power as to 935,685 shares. Includes 77,700 held by Dr.
Sammon as trustee for the benefit of his daughter under a trust agreement
dated July 5, 1983. Includes 158,175 shares held by Mrs. Sammon as
custodian for her children. Also includes 600,000 shares currently held
by Mrs. Sammon and to be contributed prior to the commencement of the
offering to the John W. and Deanna D. Sammon Charitable Trust (the
"Charitable Trust"), of which Dr. and Mrs. Sammon are the sole trustees
and will share voting and dispositive power over such shares.
(4) Does not include 8,800 shares owned by Mr. Constantino's wife, Elaine
Constantino. Mr. Constantino disclaims beneficial ownership of such
shares.
(5) Includes 170,700 shares that Mr. Haney has or will have the right to
acquire within 60 days of May 17, 1996 pursuant to the Company's stock
option plans.
(6) Includes 32,500 shares that Mr. Ahn has the right to acquire within 60
days of May 17, 1996 pursuant to the Company's stock option plans.
(7) Represents shares Mr. Lane has or will have the right to acquire within
60 days of May 17, 1996 pursuant to the Company's stock option plans.
(8) Represents shares Dr. Retelle has or will have the right to acquire
within 60 days of May 17, 1996 pursuant to the Company's stock option
plans.
(9) Includes 7,500 shares which Dr. Castle has or will have the right to
acquire within 60 days of May 17, 1996 pursuant to the Company's stock
option plans.
(10) Includes 259,345 shares that such persons have the right to acquire
within 60 days of May 17, 1996 pursuant to the Company's stock option
plans.
(11) Of the shares offered, 600,000 will be sold by the Charitable Trust,
397,490 will be sold by Dr. Sammon and 177,510 will be sold by Mrs.
Sammon.

The address for Dr. John W. Sammon, Jr., Deanna D. Sammon and Charles A.
Constantino is c/o PAR Technology Corporation, PAR Technology Park, 8383
Seneca Turnpike, New Hartford, NY 13413-4991.

35
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 12,000,000 shares of
Common Stock and 250,000 shares of Preferred Stock, $0.02 par value per share
("Preferred Stock"). The Board of Directors has recommended for stockholder
approval at the Company's Annual Meeting of Stockholders to be held on June 4,
1996, a proposal to increase the Company's authorized capital stock to
20,000,000 shares of Common Stock and 500,000 shares of Preferred Stock.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on matters to be
voted upon by the stockholders. Holders of Common Stock do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of Common
Stock can elect all of the directors standing for election. Holders of Common
Stock are entitled to receive dividends when and as declared by the Board of
Directors and to share ratably in the assets of the Company legally available
for distribution to stockholders in the Company. Holders of Common Stock have
no preemptive, subscription, redemption or conversion rights. The rights,
preferences and privileges of holders of Common Stock are subject to, and may
be adversely affected by, the rights of holders of shares of any series of
Preferred Stock that the Company may designate and issue in the future. All
outstanding shares of Common Stock are, and the shares to be sold in the
Offering, upon issuance and payment therefor, will be, validly issued, fully
paid and nonassessable.

As of May 7, 1996, there were 7,752,178 shares of Common Stock outstanding,
held by 881 stockholders of record.

PREFERRED STOCK

The Board of Directors is authorized to issue the Preferred Stock in
different series and classes and to fix the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), liquidation preferences and other rights and
preferences of the Preferred Stock not in conflict with the Company's
Certificate of Incorporation or Delaware law. There are currently no shares of
Preferred Stock outstanding. The Board of Directors, without stockholder
approval, can issue Preferred Stock with voting and conversion rights that
could adversely affect the voting power of holders of Common Stock. The
issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company. The Company has no present
plans to issue any shares of Preferred Stock.

CERTAIN PROVISIONS OF THE CHARTER AND BY-LAWS AFFECTING STOCKHOLDERS

The Company's Amended and Restated Certificate of Incorporation (the
"Charter") provides for the division of the Board of Directors into three
classes as nearly equal in size as possible with staggered three-year terms.
Subject to the rights of holders of any series of Preferred Stock, any
director may be removed, with or without cause, by the affirmative vote of the
holders of a majority of the voting power of all shares of the Company
entitled to vote generally in the election of directors, voting together as a
single class. The By-Laws of the Company may be amended or repealed, and new
By-Laws adopted, at any time on either the vote of 66 2/3% of the stockholders
entitled to vote generally for the election of directors, or the vote of a
majority of directors present at a meeting of the Board of Directors, except
that amendments of certain By-Laws always requires the vote of 66 2/3% of the
stockholders. These By-Laws include provisions dealing with special meetings
of stockholders, notice and order of business of stockholder meetings,
nominations and elections of directors, and special meetings of the Board of
Directors. In addition, amendment of certain provisions of the Charter
concerning special meetings of stockholders, unanimous consents of
stockholders, number of directors and classification of the Board of
Directors, and indemnification of directors require the affirmative vote of
holders of at least 66 2/3% of all the shares entitled to vote generally in
the election of directors, voting as single class.

36
<PAGE>

The Charter contains certain provisions permitted under the Delaware General
Corporation Law relating to the liability of directors. These provisions
eliminate the directors' liability for monetary damages for a breach of
fiduciary duty, except in certain circumstances involving wrongful acts,
including the breach of a director's duty of loyalty or acts or omissions
which involve intentional misconduct or a knowing violation of a law. The
Company's Certificate of Incorporation also contains provisions to indemnify
its directors and officers to the fullest extent permitted by the Delaware
General Corporation Law.

CERTAIN PROVISIONS OF DELAWARE LAW

The Company is subject to the provisions of Section 203 of Delaware General
Corporation Law. That section generally provides, with certain exceptions,
that a Delaware corporation may not engage in any of a broad range of business
combinations with a person or affiliate, or associate of such person, who is
an "interested stockholder" for a period of three years from the date that
such person became an interested stockholder unless the transaction is
approved in a prescribed manner. An "interested stockholder" is defined as any
person that is (i) the owner of 15% or more of the outstanding voting stock of
the corporation or (ii) an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of the corporation at
any time within the three-year period immediately prior to the date on which
it is sought to be determined whether such person is an interested
stockholder.

TRANSFER AGENT

The Transfer Agent and the Registrar for shares of the Company's Common
Stock is Registrar and Transfer Company, 10 Commerce Drive, Cranford, New
Jersey 07016.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, the Company will have 9,211,828 shares of
Common Stock outstanding and, based on options outstanding at May 17, 1996,
approximately 794,220 shares will be issuable upon exercise of outstanding
employee stock options. The Company and all of its executive officers and
directors who are not Selling Stockholders have agreed that they will not,
without the prior written consent of Dillon, Read & Co. Inc., offer, sell,
contract to sell, transfer or otherwise dispose of, directly or indirectly,
any shares of the Common Stock, or any securities convertible into, or
exercisable or exchangeable for, Common Stock or warrants or other rights to
purchase Common Stock, prior to the expiration of 90 days from the date of the
consummation of the offering, except, with respect to the Company, (i) shares
of Common Stock issued pursuant to the exercise of outstanding options and
(ii) options granted to its employees, officers and directors under its
existing employee stock option plans so long as none of such options become
exercisable during said 90 day period. Certain stockholders, including the
Selling Stockholders, who will hold in the aggregate 4,188,846 shares of
Common Stock after the offering, have agreed that they will not, without prior
written consent of Dillon, Read & Co. Inc., sell, contract to sell, transfer
or otherwise dispose of, directly or indirectly, any shares of Common Stock,
or any securities convertible into, or exercisable or exchangeable for, Common
Stock or warrants or other rights to purchase Common Stock, prior to the
expiration of 180 days from the date of the consummation of this offering.

The Company can make no predictions as to the effect, if any, that sales of
shares or the availability of shares for sale will have on the market price
for the Common Stock prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock in the public market could adversely
affect prevailing market prices.

37
<PAGE>

UNDERWRITING

The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares that each has severally agreed to purchase
from the Company and the Selling Stockholders (subject to the terms and
conditions specified in the Underwriting Agreement) are as follows:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Dillon, Read & Co. Inc. ....................................
The Robinson-Humphrey Company, Inc. ........................
Volpe, Welty & Company......................................
---------
Total..................................................... 2,825,000
=========
</TABLE>

The Managing Underwriters are Dillon, Read & Co. Inc., The Robinson-Humphrey
Company, Inc. and Volpe, Welty & Company.

If any shares of Common Stock offered hereby are purchased by the
Underwriters, all such shares will be so purchased. The Underwriting Agreement
contains certain provisions whereby if any Underwriter defaults in its
obligation to purchase such shares and if the aggregate obligations of the
Underwriters so defaulting do not exceed 10% of the shares offered hereby,
some or all of the remaining Underwriters must assume such obligations.

The shares of Common Stock offered hereby are being offered severally by the
Underwriters for sale at the price set forth on the cover page hereof, or at
such price less a concession not to exceed $ per share on sales to certain
dealers. The Underwriters may allow, and such dealers may reallow, a
concession not to exceed $ per share on sales to certain other dealers.
The offering of the shares of Common Stock is made for delivery when, as, and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares. After
the shares are released for sale to the public, the public offering price, the
concession and the reallowance may be changed by the Managing Underwriters.

The Selling Shareholders have granted to the Underwriters an option, which
must be exercised within 30 days after the date of this Prospectus, to
purchase up to an additional 423,750 shares of Common Stock to cover over-
allotments, if any, on the same terms per share. To the extent the
Underwriters exercise this option, each Underwriter will be obliged, subject
to certain conditions, to purchase the number of additional shares
proportionate to such Underwriter's initial commitment.

The Company and all of its executive officers and directors who are not
Selling Stockholders have agreed that they will not, without the prior written
consent of Dillon, Read & Co. Inc., offer, sell, contract to sell, transfer or
otherwise dispose of, directly or indirectly, any shares of the Common Stock,
or any securities convertible into, or exercisable or exchangeable for, Common
Stock or warrants or other rights to purchase Common Stock, prior to the
expiration of 90 days from the date of the consummation of the offering,
except, with respect to the Company, (i) shares of Common Stock issued
pursuant to the exercise of outstanding options and (ii) options granted to
its employees, officers and directors under its existing employee stock option
plans so long as none of such options become exercisable during said 90 day
period. Certain stockholders, including the Selling Stockholders, who will
hold in the aggregate 4,188,846 shares of Common Stock after the offering have
agreed that they will not, without prior written consent of Dillon, Read & Co.
Inc., sell, contract to sell, transfer or otherwise dispose of, directly or
indirectly, any shares of Common Stock, or any securities convertible into, or
exercisable or exchangeable for, Common Stock or warrants or other rights to
purchase Common Stock, prior to the expiration of 180 days from the date of
the consummation of this offering.

38
<PAGE>

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under
the Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

Dillon, Read & Co. Inc. has provided financial advisory services to the
Company during the past 12 months for which Dillon, Read & Co. Inc. received
fees in the amount of $50,000.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Testa, Hurwitz & Thibeault, LLP, Boston,
Massachusetts. Certain legal matters in connection with this offering will be
passed upon for the Underwriters by Gibson, Dunn & Crutcher LLP, New York, New
York.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995
included in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

39
<PAGE>

PAR TECHNOLOGY CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheet as of December 31, 1994 and 1995, and March 31,
1996 (unaudited)......................................................... F-3
Consolidated Statement of Income for the Years Ended December 31, 1993,
1994 and 1995, and the Three Months Ended March 31, 1995 and 1996 (unau-
dited)................................................................... F-4
Consolidated Statement of Changes in Shareholders' Equity for the Years
Ended December 31, 1993, 1994, and 1995 and the Three Months Ended March
31, 1996 (unaudited)..................................................... F-5
Consolidated Statement of Cash Flows for the Years Ended December 31,
1993, 1994 and 1995, and the Three Months Ended March 31, 1995 and 1996
(unaudited).............................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of PAR Technology Corporation.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
PAR Technology Corporation and its subsidiaries at December 31, 1995 and 1994,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

Price Waterhouse LLP

Syracuse, New York
February 13, 1996

F-2
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------- -----------
1994 1995 1996
------- ------- -----------
(UNAUDITED)
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash....................................... $ 2,912 $ 458 $ 2,448
Accounts receivable -- net (Note 2)........ 28,103 36,474 29,151
Inventories (Note 3)....................... 16,467 17,801 20,921
Deferred income taxes (Note 7)............. 1,034 1,303 1,129
Other current assets....................... 1,460 1,090 2,470
------- ------- -------
Total current assets..................... 49,976 57,126 56,119
Property, plant and equipment -- net (Note
4)........................................ 7,716 7,580 7,281
Other assets............................... 2,950 3,367 2,964
------- ------- -------
$60,642 $68,073 $66,364
======= ======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Notes payable (Note 5)..................... $ -- $ 286 $ 383
Accounts payable........................... 3,632 4,925 4,051
Accrued salaries and benefits.............. 3,874 4,186 3,475
Accrued expenses........................... 1,237 1,534 766
Deferred service revenue................... 2,010 2,214 2,606
Income taxes payable (Note 7).............. 308 1,005 340
------- ------- -------
Total current liabilities................ 11,061 14,150 11,621
------- ------- -------
Deferred income taxes (Note 7)............... 936 791 787
------- ------- -------
Shareholders' Equity (Note 6):
Common stock, $.02 par value, 12,000,000
shares authorized; 9,030,787, 9,113,031
and 9,177,884 shares issued 7,656,320,
7,682,425 and 7,747,278 outstanding....... 181 182 184
Preferred stock, $.02 par value, 250,000
shares authorized......................... -- -- --
Capital in excess of par value............. 13,268 13,664 13,901
Retained earnings.......................... 37,074 41,732 42,283
Cumulative translation adjustment.......... (181) (167) (133)
Treasury stock, at cost, 1,374,467,
1,430,606 and 1,430,606 shares............ (1,697) (2,279) (2,279)
------- ------- -------
Total shareholders' equity................. 48,645 53,132 53,956
------- ------- -------
$60,642 $68,073 $66,364
======= ======= =======
Contingent liabilities (Note 10)
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-3
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ -------------------
1993 1994 1995 1995 1996
------- ------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues:
Product........................ $43,835 $52,965 $ 58,306 $ 12,342 $ 10,880
Service........................ 19,213 20,823 25,059 5,607 7,677
Contract....................... 18,199 20,742 24,029 6,085 6,937
------- ------- -------- --------- ---------
81,247 94,530 107,394 24,034 25,494
------- ------- -------- --------- ---------
Costs of sales:
Product........................ 25,433 32,527 34,028 7,663 6,778
Service........................ 17,041 17,296 20,807 4,450 6,261
Contract....................... 17,534 19,740 22,492 5,770 6,513
------- ------- -------- --------- ---------
60,008 69,563 77,327 17,883 19,552
------- ------- -------- --------- ---------
Gross margin................. 21,239 24,967 30,067 6,151 5,942
------- ------- -------- --------- ---------
Operating expenses:
Selling, general and adminis-
trative....................... 13,009 14,211 17,721 4,179 3,744
Research and development....... 4,239 5,009 5,331 1,333 1,351
------- ------- -------- --------- ---------
17,248 19,220 23,052 5,512 5,095
------- ------- -------- --------- ---------
Income before provision for in-
come taxes...................... 3,991 5,747 7,015 639 847
Provision for income taxes (Note
7).............................. 1,462 2,086 2,357 249 296
------- ------- -------- --------- ---------
Net income....................... $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
======= ======= ======== ========= =========
Earnings per common share........ $ .32 $ .46 $ .58 $ .05 $ .07
======= ======= ======== ========= =========
Weighted average number of common
shares outstanding.............. 7,968 7,992 8,068 8,073 8,190
======= ======= ======== ========= =========
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-4
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN CUMULATIVE TREASURY STOCK
------------- EXCESS OF RETAINED TRANSLATION ---------------
SHARES AMOUNT PAR VALUE EARNINGS ADJUSTMENT SHARES AMOUNT
------ ------ ---------- -------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992................... 8,907 $178 $12,727 $30,884 $(256) (1,371) $(1,675)
Net income.............. 2,529
Issuance of common stock
upon the exercise of
stock options (Note 6)
....................... 69 2 296
Translation adjust-
ments.................. (155)
----- ---- ------- ------- ----- ------ -------
Balance at December 31,
1993................... 8,976 180 13,023 33,413 (411) (1,371) (1,675)
Net income.............. 3,661
Issuance of common stock
upon the exercise of
stock options (Note
6)..................... 55 1 245
Translation adjust-
ments.................. 230
Acquisition of treasury
stock.................. (3) (22)
----- ---- ------- ------- ----- ------ -------
Balance at December 31,
1994................... 9,031 181 13,268 37,074 (181) (1,374) (1,697)
Net income.............. 4,658
Issuance of common stock
upon the exercise of
stock options (Note
6)..................... 82 1 396
Translation adjust-
ments.................. 14
Acquisition of treasury
stock.................. (57) (582)
----- ---- ------- ------- ----- ------ -------
Balance at December 31,
1995................... 9,113 182 13,664 41,732 (167) (1,431) (2,279)
Net income (unaudited).. 551
Issuance of common stock
upon the exercise of
stock options (Note 6)
(unaudited)............ 65 2 237
Translation adjustments
(unaudited)............ 34
----- ---- ------- ------- ----- ------ -------
Balance at March 31,
1996 (unaudited)....... 9,178 $184 $13,901 $42,283 $(133) (1,431) $(2,279)
===== ==== ======= ======= ===== ====== =======
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-5
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- --------------------
1993 1994 1995 1995 1996
------- ------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating ac-
tivities:
Net income................... $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortiza-
tion..................... 3,027 2,683 2,414 610 655
Provision for obsolete in-
ventory.................. 1,227 1,834 2,072 341 62
Translation adjustments... (155) 230 14 200 34
Increase (decrease) from
changes in:
Accounts receivable-net... (5,595) 1,337 (8,371) 3,012 7,323
Inventories............... (3,680) (1,994) (3,406) (1,491) (3,182)
Other current assets...... (103) (189) 370 (162) (1,380)
Other assets.............. (193) (57) (907) 328 245
Accounts payable.......... 496 267 1,293 (749) (874)
Accrued salaries and bene-
fits..................... 703 560 312 (403) (711)
Accrued expenses.......... 601 (874) 297 21 (768)
Deferred service revenue.. 20 325 204 259 392
Income taxes payable...... (459) 28 697 526 (665)
Deferred income taxes..... 48 231 (414) (448) 170
------- ------- ------- --------- ---------
Net cash provided (used) by
operating activities......... (1,534) 8,042 (767) 2,434 1,852
------- ------- ------- --------- ---------
Cash flows from investing ac-
tivities:
Capital expenditures......... (1,220) (1,726) (1,288) (346) (102)
Capitalization of software
costs....................... (1,047) (448) (500) (140) (96)
------- ------- ------- --------- ---------
Net cash used in investing ac-
tivities..................... (2,267) (2,174) (1,788) (486) (198)
------- ------- ------- --------- ---------
Cash flows from financing ac-
tivities:
Net borrowings (payments)
under line-of-credit
agreements.................. 3,106 (4,087) 286 -- 97
Proceeds from the exercise of
stock options............... 298 246 397 67 239
Acquisition of treasury
stock....................... -- (22) (582) -- --
------- ------- ------- --------- ---------
Net cash provided (used) by
financing activities......... 3,404 (3,863) 101 67 336
------- ------- ------- --------- ---------
Net increase (decrease) in
cash and cash equivalents.... (397) 2,005 (2,454) 2,015 1,990
Cash and cash equivalents at
beginning of period.......... 1,304 907 2,912 2,912 458
------- ------- ------- --------- ---------
Cash and cash equivalents at
end of period................ $ 907 $ 2,912 $ 458 $ 4,927 $ 2,448
======= ======= ======= ========= =========
Supplemental disclosures of
cash flow information:
Cash paid during the period
for:
Interest.................... $ 588 $ 69 $ 20 $ 9 $ 20
Income taxes, net of re-
funds...................... 1,418 1,759 1,940 131 764
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-6
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of PAR Technology
Corporation and its wholly owned subsidiaries (PAR Microsystems Corporation,
PAR Government Systems Corporation, Rome Research Corporation and PAR Vision
Systems Corporation), collectively referred to as the "Company." All
significant intercompany transactions have been eliminated in consolidation.

REVENUE RECOGNITION

Revenues from sales of commercial products are generally recorded as the
products are shipped, provided that no significant vendor and post-contract
support obligations remain and the collection of the related receivable is
probable. Costs relating to any remaining insignificant vendor and post-
contract obligations are accrued. The Company's service revenues are
recognized ratably over the related contract period or as the services are
performed. Billings in advance of the Company's performance of such work are
reflected as deferred service revenue in the accompanying consolidated balance
sheet.

The Company's contract revenues result primarily from contract services
performed for the United States Government under a variety of cost-
reimbursement, time-and-material and fixed-price contracts. Contract revenues,
including fees and profits, are recorded as services are performed using the
percentage-of-completion method of accounting, primarily based on contract
costs incurred to date compared with estimated costs at completion.
Anticipated losses on all contracts and programs in process are recorded in
full when identified. Unbilled accounts receivable are stated at estimated
realizable value. Contract costs, including indirect expenses, are subject to
audit and adjustment through negotiations between the Company and government
representatives. Contract revenues have been recorded in amounts that are
expected to be realized on final settlement. The Company follows accepted
industry practice and records amounts retained by the government on contracts
as a current asset.

STATEMENT OF CASH FLOWS

For purposes of reporting cash flows, the Company considers all highly
liquid investments, purchased with a remaining maturity of three months or
less, to be cash equivalents. The effect of changes in foreign-exchange rates
on cash balances is not material.

INVENTORIES

Inventories are valued at the lower of cost or market, cost being determined
on the basis of the first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost and depreciated using the
straight-line or an accelerated method over the estimated useful lives of the
assets, which range from three to twenty years. Expenditures for maintenance
and repairs are expensed as incurred.

WARRANTIES

A majority of the Company's products are under warranty for defects in
material and workmanship for various periods of time. The Company establishes
an accrual for estimated warranty costs at the time of sale.

F-7
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INCOME TAXES

The provision for income taxes is based upon pretax earnings with deferred
income taxes provided for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities.

FOREIGN CURRENCY

The assets and liabilities for the Company's international operations are
translated into U.S. dollars using year-end exchange rates. Income statement
items are translated at average exchange rates prevailing during the year. The
resulting translation adjustments are recorded as a separate component of
shareholders' equity. Exchange gains and losses on intercompany balances of a
long-term investment nature are also recorded as a translation adjustment.
Foreign currency transaction gains and losses, which historically have been
immaterial, are included in net income.

RESEARCH AND DEVELOPMENT COSTS

The Company capitalizes certain costs related to the development of computer
software under the requirements of Statement of Financial Accounting Standards
No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed. Software development costs incurred prior to establishing
technological feasibility are charged to operations and included in research
and development costs. Software development costs incurred after establishing
feasibility, are capitalized and amortized on a product-by-product basis when
the product is available for general release to customers. The unamortized
computer software costs included in other assets amounted to $1,801,000 and
$1,311,000 at December 31, 1994 and 1995, respectively. Annual amortization,
charged to cost of sales, is the greater of the amount computed using the
ratio that current gross revenues for a product bear to the total of current
and anticipated future gross revenues for that product, or the straight-line
method over the remaining estimated economic life of the product. Amortization
of capitalized software costs amounted to $1,231,000 $1,076,000, and $990,000,
in 1993, 1994, and 1995, respectively.

EARNINGS PER SHARE

Earnings per share are based upon the weighted average number of shares
outstanding plus common stock equivalents under the Company's stock option
plans.

RECLASSIFICATIONS

Certain revenues and related costs relating to systems integration activity
which previously were reflected as service revenues and costs have been
reclassified to product sales and costs.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates,
judgments and assumptions that affect the reported amounts of assets,
liabilities and revenues and expenses (as well as disclosures of contingent
liabilities) during the reporting period. Actual results could differ from
those estimates.

INTERIM FINANCIAL DATA

The interim financial data is unaudited; however, in the opinion of the
Company, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods.

F-8
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 -- ACCOUNTS RECEIVABLE

The Company's accounts receivable consist of:

<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
--------------- -------------------
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Government segment:
United States Government
Billed.................................... $ 2,673 $ 2,522 $ 2,414
Unbilled.................................. 2,009 1,474 1,438
------- ------- -------
4,682 3,996 3,852
------- ------- -------
Other --
Billed.................................... 2,898 2,947 3,343
Unbilled.................................. 1,148 681 839
------- ------- -------
4,046 3,628 4,182
------- ------- -------
Commercial segment:
Trade accounts receivable-net............... 19,375 28,850 21,117
------- ------- -------
$28,103 $36,474 $29,151
======= ======= =======
</TABLE>

Included in billed amounts at December 31, 1995 are retentions totaling
$95,000. Of these retentions, $39,000 is expected to be collected in 1996.
Retained amounts are collectible upon contract completion and the acceptance
of costs incurred. At December 31, 1994 and 1995, the Company had recorded a
reserve for doubtful accounts of $818,000 and $768,000, respectively, against
trade accounts receivable. Trade accounts receivable are primarily with major
fast-food corporations or their franchisees.

NOTE 3 -- INVENTORIES

Inventories are used primarily in the manufacture, maintenance, and service
of commercial systems. Inventories are net of related reserves. The components
of inventory are:

<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
--------------- -------------------
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Finished goods.............................. $ 3,891 $ 4,427 $ 5,904
Work in process............................. 1,697 3,337 2,575
Component parts............................. 5,411 3,979 5,459
Service parts............................... 5,468 6,058 6,983
------- ------- -------
$16,467 $17,801 $20,921
======= ======= =======
</TABLE>

F-9
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment are:

<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
--------------- -------------------
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Land...................................... $ 253 $ 253 $ 253
Building and improvements................. 8,356 8,371 8,371
Furniture and equipment................... 21,515 21,952 21,929
------- ------- -------
30,124 30,576 30,553
Less accumulated depreciation and
amortization............................. 22,408 22,996 23,272
------- ------- -------
$ 7,716 $ 7,580 $ 7,281
======= ======= =======
</TABLE>

The Company has constructed certain facilities at a cost of approximately
$216,000 on land it leases from an officer. The terms of the related lease
provide that title to the facility will pass to the officer at the end of the
lease in 1996.

The Company leases office space under various operating leases. Rental
expense on these operating leases was approximately $845,000, $817,000 and
$879,000 for the years ended December 31, 1993, 1994, and 1995, respectively.

Future minimum lease payments under all noncancelable operating leases are
(in thousands):

<TABLE>
<S> <C>
1996............................................................... $ 716
1997............................................................... 287
1998............................................................... 252
1999............................................................... 248
2000............................................................... 180
Thereafter......................................................... 308
------
$1,991
======
</TABLE>

NOTE 5 -- NOTES PAYABLE

The Company has an aggregate of $27,200,000 in bank lines of credit. Certain
lines totaling $23,000,000 allow the Company to choose among unsecured
borrowings which bear interest at the prime rate (8.5% at December 31, 1995),
banker's acceptance borrowings which bear interest at a rate below the prime
rate or other bank negotiated rates below prime. These lines are negotiated
annually. The remaining line of $4,200,000 is unsecured, bears interest at the
prime rate, requires a compensating balance and expires on June 30, 1996. At
December 31, 1995, $286,000 was outstanding under these lines at an interest
rate of 6.6%.

NOTE 6 -- COMMON STOCK

The Company had reserved 2,052,500 shares of common stock for issuance under
its Stock Option Plans. By November 30, 1994, these Plans had expired. In
1995, the Company reserved 500,000 shares under the 1995 Stock Option Plan.
Options under this Plan may be incentive stock options or nonqualified
options. Stock options are nontransferable other than upon death and are not
exercisable prior to six months from date of grant. A summary of the stock
options follows:

F-10
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
NO. OF SHARES OPTION PRICE TOTAL
(IN THOUSANDS) PER SHARE (IN THOUSANDS)
-------------- --------------- --------------
<S> <C> <C> <C>
Outstanding at December 31,
1992........................... 911 $2.00 -- $15.00 $2,987
Granted....................... 76 4.00 -- 6.06 372
Exercised..................... (69) 3.00 -- 5.00 (228)
Forfeited..................... (55) 3.00 -- 11.00 (249)
--- ------
Outstanding at December 31,
1993........................... 863 2.00 -- 15.00 2,882
Granted....................... 72 6.50 -- 7.25 476
Exercised..................... (55) 3.00 -- 5.00 (169)
Forfeited..................... (21) 3.00 -- 15.00 (110)
--- ------
Outstanding at December 31,
1994........................... 859 2.00 -- 13.00 3,079
Granted....................... 38 9.31 -- 10.19 372
Exercised..................... (82) 3.00 -- 5.81 (269)
Forfeited..................... (5) 5.25 -- 13.00 (56)
--- ------
Outstanding at December 31,
1995........................... 810 2.00 -- 11.25 3,126
Granted (unaudited)........... 181 9.25 -- 9.25 1,670
Exercised (unaudited)......... (65) 3.00 -- 11.25 (242)
Forfeited (unaudited)......... (11) 6.50 -- 9.31 (95)
--- ------
Outstanding at March 31, 1996
(unaudited).................... 915 $2.00 -- $11.25 $4,459
=== ======
Shares remaining available for
grant at
March 31, 1996 (unaudited)..... 291
===
Total shares vested and
exercisable as of
March 31, 1996 (unaudited)..... 556
===
</TABLE>

NOTE 7 -- INCOME TAXES

The provision for income taxes consists of:

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current tax expense:
Federal............................... $ 826 $ 1,219 $ 2,248 $ 53
State................................. 250 457 542 46
Foreign............................... 161 150 (11) 28
------- ------- ------- -----
1,237 1,826 2,779 127
------- ------- ------- -----
Deferred income tax:
Federal............................... 225 260 (422) 169
------- ------- ------- -----
Provision for income taxes.............. $ 1,462 $2,086 $2,357 $ 296
======= ======= ======= =====
</TABLE>

F-11
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred tax liabilities (assets) are comprised of the following at:

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Depreciation.......................... $ 712 $ 730 $ 744 $ 731
Software development expense.......... 826 612 446 392
Other................................. 79 136 -- --
------- ------- ------- -------
Gross deferred liabilities............ 1,617 1,478 1,190 1,123
------- ------- ------- -------
Reserves.............................. (1,444) (1,132) (1,250) (1,023)
Capitalized inventory costs........... (98) (90) (84) (89)
Wage and salary accruals.............. (311) (314) (342) (337)
Other................................. (93) (40) (26) (16)
------- ------- ------- -------
Gross deferred tax assets............. (1,946) (1,576) (1,702) (1,465)
------- ------- ------- -------
$ (329) $ (98) $ (512) $ (342)
======= ======= ======= =======
</TABLE>

Total income tax provision differed from total tax expense as computed by
applying the statutory U.S. federal income tax rate to income before taxes.
The reasons were:

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Statutory U.S. federal tax rate...... 34.0% 34.0% 34.0% 34.0%
State taxes net of federal benefit... 2.5 5.2 5.1 3.6
Foreign income taxes................. 4.0 2.6 0.8 --
FSC benefit.......................... (1.6) (1.4) (2.6) (2.0)
Adjustment to prior years' accrual... -- 2.5 1.8 --
Foreign tax credits.................. (2.1) (6.5) (7.7) --
Other................................ (0.2) (0.1) 2.2 (.7)
------- ------- ------- ----
36.6% 36.3% 33.6% 34.9%
======= ======= ======= ====
</TABLE>

The provision for income taxes is based on income before income taxes as
follows:

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Domestic operations..................... $ 3,953 $ 5,519 $ 7,697 $1,202
Foreign operations...................... 38 228 (682) (355)
------- ------- ------- ------
Total................................. $ 3,991 $ 5,747 $ 7,015 $ 847
======= ======= ======= ======
</TABLE>

NOTE 8 -- EMPLOYEE BENEFIT PLANS

The Company has a deferred profit-sharing retirement plan that covers
substantially all employees. The Company's annual contribution to the plan is
discretionary. The contributions to the plan in 1993, 1994 and 1995 were
approximately $626,000 $749,000 and $824,000, respectively. The plan also
contains a 401(K) provision that allows employees to contribute a percentage
of their salary.

The Company also maintains an incentive compensation plan. Participants in
the plan are key employees as determined by executive management. Compensation
under the plan is based on the achievement of predetermined financial
performance goals of the Company and its subsidiaries. Awards under the plan
are

F-12
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
payable in cash. For the years ended December 31, 1993, 1994 and 1995, the
Company expensed approximately $506,000, $764,000 and $628,000, respectively,
in cash awards under the plan.

NOTE 9 -- INVESTMENT IN AFFILIATE

In June 1992, the Company was approved under the Department of Defense
Mentor-Protege Program as a mentor for a minority-owned government contractor,
Phoenix Systems and Technologies, Inc. (Phoenix). Concurrent with this
approval, the Company acquired a 43.9% interest in Phoenix which is accounted
for under the equity method.

The Company is a subcontractor to Phoenix on certain engineering service
contracts with the United States Government. Additionally, Phoenix rents its
office space from the Company. Phoenix is also a vendor to PAR providing
manufacturing and some contract services. As a result of this business
relationship, PAR had a net receivable from Phoenix of $1,000,000 at December
31, 1994. During 1995, $450,000 of this amount was paid and the Company
recorded an allowance for the remainder. During 1995, PAR billed Phoenix
approximately $1.6 million and Phoenix billed PAR $1.1 million in connection
with the above activities. At December 31, 1995, the Company had recorded
$957,000 of receivables relating to 1995 activities. This amount is net of a
$282,000 allowance and is included in other assets in the consolidated balance
sheet. The Company determined that allowances were necessary as a result of
delays in new contract starts, Phoenix exiting certain unprofitable
manufacturing activities and the settlement of a contracting claim with the
federal government. Also during 1995, as a result of the Company's equity in
Phoenix's losses, the Company's remaining investment of $264,000 was written
off. During the three months ended March 31, 1996, the Company billed Phoenix
$1.0 million for work performed and was paid a total of $803,000. At March 31,
1996, the net receivable due the Company from Phoenix was $1.2 million.

In connection with the Mentor-Protege program discussed above, Company
management assisted Phoenix in the development of their business plan for 1996
and beyond. This plan, which Phoenix believes to be achievable, anticipates
the development of a profitable manufacturing business and continued
profitable services business. The plan provides for payment of the amount due
the Company over the next three years. The Company has also guaranteed a
$1,000,000 line-of-credit borrowing of Phoenix at December 31, 1995. As of
March 31, 1996, the guaranteed line of credit was reduced to $900,000. If
Phoenix is unable to successfully execute its business plan, the Company could
incur additional losses.

NOTE 10 -- CONTINGENCIES

The Company is subject to legal proceedings which arise in the ordinary
course of business. Additionally, Government contract costs are subject to
periodic audit and adjustment. In the opinion of Management, the ultimate
liability, if any, with respect to these actions will not materially affect
the financial position of the Company.

NOTE 11 -- INDUSTRY SEGMENTS

The Company, through its separate operating subsidiaries, operates in two
principal segments: a Commercial segment and a Government segment. The
Commercial segment designs, develops, manufactures, sells, installs and
services point-of-sale terminal systems for the restaurant industry,
industrial data collection systems for manufacturing industries, and image
processing systems for the ophthalmic and food-processing industries. The
Government segment designs and implements advanced technology computer
software systems primarily for military and intelligence agency applications,
and provides services for operating and maintaining certain U.S. Government-
owned test sites, and for planning, executing and evaluating experiments
involving new or advanced radar systems. Inter-segment sales and transfers are
not material.

F-13
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Information as to the Company's operations in these two segments is set forth
below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1994 1995
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Commercial segment
United States.................................. $57,636 $67,079 $ 76,984
Europe......................................... 4,352 5,579 6,335
Australia...................................... 3,372 4,299 2,654
Other Non U.S.................................. 1,869 3,190 3,432
Eliminations................................... (4,181) (6,359) (6,040)
Government segment.............................. 18,199 20,742 24,029
------- ------- --------
Total......................................... $81,247 $94,530 $107,394
======= ======= ========
Income before provision for income taxes:
Commercial segment
United States.................................. $ 2,104 $ 2,930 $ 4,880
Europe......................................... 395 783 1,047
Australia...................................... 549 840 260
Other Non U.S.................................. 331 215 164
Government segment.............................. 645 1,020 1,389
Corporate....................................... (33) (41) (725)
------- ------- --------
Total........................................ $ 3,991 $ 5,747 $ 7,015
======= ======= ========
Identifiable assets:
Commercial segment
United States.................................. $43,826 $39,574 $ 50,186
Europe......................................... 2,335 3,227 3,263
Australia...................................... 1,341 1,341 1,195
Other Non U.S.................................. 1,339 2,920 2,511
Government segment.............................. 9,935 9,834 10,730
Corporate....................................... 1,673 3,746 188
------- ------- --------
Total......................................... $60,449 $60,642 $ 68,073
======= ======= ========
Depreciation and amortization:
Commercial segment............................. $ 2,609 $ 2,304 $ 1,959
Government segment............................. 232 182 210
Corporate...................................... 186 197 245
------- ------- --------
Total......................................... $ 3,027 $ 2,683 $ 2,414
======= ======= ========
Capital expenditures:
Commercial segment............................. $ 895 $ 1,051 $ 1,063
Government segment............................. 119 295 137
Corporate...................................... 206 380 88
------- ------- --------
Total......................................... $ 1,220 $ 1,726 $ 1,288
======= ======= ========
</TABLE>

F-14
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Customers comprising 10% or more of the Company's Commercial segment sales
are summarized as follows:

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Taco Bell Corporation........................................ 34% 34% 42%
McDonald's Corporation....................................... 31 31 27
KFC.......................................................... 9 10 6
All Others................................................... 26 25 25
--- --- ---
100% 100% 100%
</TABLE>

Substantially all revenues derived by the Government segment arise from
Federal government contracts, or subcontracts related thereto, virtually all
of which are with the Department of Defense.

NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
--------------
CARRYING FAIR
VALUE VALUE
-------- -----
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents........................................ $458 $458
Long-term receivables and other investments...................... 957 957
Notes Payable.................................................... 286 286
</TABLE>

Fair value of financial instruments classified as current assets or
liabilities approximate carrying value due to the short-term maturity of the
instruments. Fair value of long-term receivables and other investments was
based on discounted cash flows.

NOTE 13--SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------
SEPT.
1994 MARCH 31 JUNE 30 30 DEC. 31
---- -------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Net revenues.................................. $20,770 $23,123 $23,903 $26,734
Gross margin.................................. 5,002 5,667 6,617 7,681
Net income.................................... 227 468 1,444 1,522
Earnings per common share..................... $ .03 $ .06 $ .18 $ .19
<CAPTION>
QUARTER ENDED
--------------------------------
SEPT.
1995 MARCH 31 JUNE 30 30 DEC. 31
---- -------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Net revenues.................................. $24,034 $24,366 $23,980 $35,014
Gross margin.................................. 6,151 6,494 7,032 10,390
Net income.................................... 390 636 1,533 2,099
Earnings per common share..................... $ .05 $ .08 $ .19 $ .26
</TABLE>

F-15
<PAGE>

Back
----

The picture at the upper portion of the page illustrates the Company's
manufacturing/warehousing information processing system by means of an Intermec
portable hand-held data collection terminal, which includes the Company's
CIMport/TM/ and CIMprint/TM/ appplication software products.

Back
----

The picture at the lower right hand side of the page illustrates two
ophthalmologists performing corneal surgery on a patient utilizing the Company's
intra-operative corneal topography system.

Back
----

The picture at the lower left hand side of the page illustrates the Company's
employees manufacturing open architecture POS III touch screen systems.
<PAGE>

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

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPEC-
TUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES OF COMMON STOCK
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 3
Prospectus Summary....................................................... 4
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 11
Price Range of Common Stock and Dividend Policy.......................... 12
Capitalization........................................................... 13
Selected Consolidated Financial Data..................................... 14
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 15
Business................................................................. 21
Management............................................................... 33
Certain Transactions..................................................... 34
Principal and Selling Stockholders....................................... 35
Description of Capital Stock............................................. 36
Shares Eligible for Future Sale.......................................... 37
Underwriting............................................................. 38
Legal Matters............................................................ 38
Experts.................................................................. 38
Index to Consolidated Financial Statements............................... F-1
</TABLE>

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

PAR TECHNOLOGY CORPORATION

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

2,825,000 SHARES

COMMON STOCK

PROSPECTUS

, 1996

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

DILLON, READ & CO. INC.

THE ROBINSON-HUMPHREY COMPANY, INC.

VOLPE, WELTY & COMPANY

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Estimated expenses (other than underwriting discounts and commissions), all
of which will be borne by the Registrant, payable in connection with the sale
of the Common Stock offered hereby are as follows:

<TABLE>
<S> <C>
Registration Fee................................................... $ 17,504
NASD Filing Fee.................................................... 5,576
Printing and Engraving Expenses.................................... 80,000
Legal Fees and Expenses............................................ 175,000
Accounting Fees and Expenses....................................... 25,000
Blue Sky Fees and Expenses (including legal fees).................. 15,000
Miscellaneous...................................................... 56,920
--------
Total............................................................ $375,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that the or she is or was a director, officer, employee or
agent of the corporation or another enterprise if serving at the request of
the corporation. Depending on the character of the proceeding, a corporation
may indemnify against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with such action, suit or proceeding if the person indemnified acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct
was unlawful. In the case of an action by or in the right of the corporation,
no indemnification may be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine that despite the adjudication
of liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses that the court
shall deem proper. Section 145 further provides that to the extent a director
or officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to above, or in defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him or her in connection
therewith.

The Registrant's Certificate of Incorporation provides that the Registrant
shall, to the fullest extent permitted by law, indemnify all directors,
officers, employees and agents of the company. The Certificate of
Incorporation also contains a provision eliminating the liability of directors
of the Registrant to the Registrant or its stockholders for monetary damage,
except under certain circumstances. The Certificate of Incorporation also
permits the Registrant to maintain insurance to protect itself and any
director, officer, employee or agent against any liability with respect to
which the Corporation would have the power to indemnify such persons under the
Delaware General Corporation Law. The Registrant maintains an insurance policy
insuring its directors and officers against certain liabilities.

II-1
<PAGE>

ITEM 16. EXHIBITS.

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation, as amended.
3.2 Form of Certificate of Amendment to the Certificate of Incorporation.
3.3 By-laws, as amended.
4 Specimen Certificate representing the Common Stock.
5* Opinion of Testa, Hurwitz & Thibeault, LLP.
10.1+ Agreement between Taco Bell Corporation and PAR Microsystems
Corporation, dated
December 18, 1995.
10.2+ Service Integration Agreement between Taco Bell and PAR Microsystems
Corporation, dated September 12, 1995.
11 Statement re: Computation of Earnings per Share.
23.1 Consent of Price Waterhouse LLP.
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5).
24 Power of Attorney (see page II-3).
</TABLE>
--------
* To be filed by amendment.
+ Confidential treatment requested as to certain portions.

ITEM 17. UNDERTAKINGS.

The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where appropriate, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-2
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-2 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN NEW HARTFORD, NEW YORK ON MAY 20, 1996.

PAR TECHNOLOGY CORPORATION:

/s/ John W. Sammon
By:__________________________________

POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and directors of PAR Technology Corporation
hereby severally constitute and appoint Dr. John W. Sammon, Jr., Gregory T.
Cortese and Ronald J. Casciano true and lawful attorneys with full power to
each of them singly, to sign for us and in our names in the capacities
indicated below, the Registration Statement on Form S-2 filed herewith and any
and all pre-effective and post-effective amendments to said Registration
Statement, and, in connection with any registration of additional securities
pursuant to Rule 462(b) under the Securities Act of 1933, to sign any
abbreviated registration statement and any and all amendments thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, in each case, with the securities and Exchange Commission, and
generally to do all such things in our names and on our behalf in our
capacities as officers and directors to enable PAR Technology Corporation to
comply with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any
of them, to said Registration Statement and any and all amendments thereto.

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.

SIGNATURE TITLE(S) DATE

/s/ John W. Sammon Chairman of the May 20, 1996
------------------------------------- Board of Directors
DR. JOHN W. SAMMON, JR. and President

/s/ Charles A. Constantino Executive Vice May 20, 1996
------------------------------------- President and
CHARLES A. CONSTANTINO Director

/s/ J. Whitney Haney President, PAR May 20, 1996
------------------------------------- Microsystems and
J. WHITNEY HANEY Director

/s/ Sangwoo Ahn Director May 20, 1996
-------------------------------------
SANGWOO AHN

/s/ James C. Castle Director May 20, 1996
-------------------------------------
DR. JAMES C. CASTLE

II-3
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS PAGE
-------- ----
<C> <S> <C>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation, as amended.
3.2 Form of Certificate of Amendment to the Certificate of
Incorporation.
3.3 By-laws, as amended.
4 Specimen Certificate representing the Common Stock.
5* Opinion of Testa, Hurwitz and Thibeault, LLP.
10.1+ Agreement between Taco Bell Corporation and PAR Microsystems
Corporation, dated December 18, 1995.
10.2+ Service Integration Agreement between Taco Bell and PAR
Microsystems Corporation, dated September 12, 1995.
11 Statement re: Computation of Earnings per Share.
23.1 Consent of Price Waterhouse LLP.
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5).
24 Power of Attorney (See page II-3).
</TABLE>
--------
* To be filed by amendment.
+ Confidential treatment requested as to certain parties.

<PAGE>

EXHIBIT 3.1

CERTIFICATE OF MERGER

MERGING

PAR TECHNOLOGY CORPORATION, a New York corporation

INTO

PAR TECHNOLOGY CORPORATION, a Delaware corporation

Pursuant to Section 252 of the General Corporation Law of the State of Delaware
-------------------------------------------------------------------------------

Pursuant to the provisions of Section 252 of the General Corporation Law of
the State of Delaware,

It is hereby certified that:

1. The constituent business corporations participating in the merger
herein certified are:

(i) PAR Technology Corporation ("Old PAR"), which is incorporated under
the laws of the State of New York; and,

(ii) PAR Technology Corporation ("PAR Technology Corporation"), which is
incorporation under the laws of the State of Delaware and is the surviving
corporation.

2. An Agreement and Plan of Merger has been approved, adopted,
certified, executed, and acknowledged by each of the aforesaid constituent
corporations in accordance with the provisions of subsection (c) of Section 252
of the General Corporation Law of the State of Delaware, to wit, by Old Par in
accordance with the laws of the State of its incorporation and by PAR Technology
Corporation in the same manner as provided in Section 252 of the General
Corporation Law of the State of Delaware.

3. The name of the surviving corporation in the merger herein certified
is PAR Technology Corporation, which will continue its existence as said
surviving corporation under its present name upon the effective date of said
merger pursuant to the provisions of the General Corporation Law of the State of
Delaware.

4. The Certificate of Incorporation of PAR Technology Corporation, as
now in force and effect, shall continue to be the Certificate of Incorporation
of said surviving corporation until amended and changed pursuant to the
provisions of the General Corporation Law of the State of Delaware.
<PAGE>

5. The executed Agreement and Plan of Merger between the aforesaid
constituent corporations is on file at the principal place of business of the
aforesaid surviving corporation, the address of which is as follows:

220 Seneca Turnpike
New Hartford, NY 13413

6. A copy of the aforesaid Agreement and Plan of Merger will be
furnished by the aforesaid surviving corporation, on request, and without cost,
to any stockholder of each of the aforesaid constituent corporations.

7. The authorized capital stock of Old PAR consists of (a) 25,000,000
shares of Common Stock, par value $.02 per share, of which (A) 7,547,037 shares
are issued and outstanding on the date hereof, and (B) 902,246 shares are
issuable from time to time upon exercise of outstanding stock options.

IN WITNESS WHEREOF, the undersigned have caused this Certificate of Merger
to be executed as of the 15th of April, 1993.

PAR TECHNOLOGY CORPORATION,
a Delaware corporation

Attest: /s/ Gregory T. Cortese By: /s/ John W. Sammon
---------------------- ------------------
Gregory T. Cortese, John W. Sammon
Secretary President and CEO
<PAGE>

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION

PAR Technology Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

FIRST: That the Board of Directors of said corporation, at a meeting duly held,
adopted a resolution proposing and declaring advisable the following amendment
to the Certificate of Incorporation of said corporation:

RESOLVED, that the Certificate of Incorporation of PAR Technology
Corporation be amended by changing Section 1. of the Fourth Article thereof
so that, as amended, said Section and Article shall be and read as follows:

The Corporation shall have authority to issue twelve million two hundred
fifty thousand (12,250,000) shares of stock, par value $.02 per share
consisting of twelve million (12,000,000) shares of Common Stock and two
hundred fifty thousand (250,000) shares of Preferred Stock, par value $.02
per share.

SECOND: That in lieu of a meeting and vote of stockholders, the stockholders
have given unanimous written consent to said amendment in accordance with the
provisions Section 228 of the General Corporation Law of the State of Delaware.

THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 and 228 of the General Corporation Law of
the State of Delaware.

IN WITNESS WHEREOF, said PAR Technology Corporation has caused this certificate
to be signed by John W. Sammon, Jr. its President and Chairman of the Board of
Directors and attested by Gregory T. Cortese, its Secretary, this 17 day of
--

March, 1993.
PAR Technology Corporation

By /s/ John W. Sammon
----------------------------------------------
President & Chairman of the Board of Directors
ATTEST:

By /s/ Gregory T. Cortese
--------------------------
Secretary
<PAGE>

CERTIFICATE OF INCORPORATION OF PAR TECHNOLOGY CORPORATION
----------------------------------------------------------

FIRST

The name of the Corporation is PAR Technology Corporation (the "Corporation").

SECOND

The address of the registered office of the Corporation in the State of Delaware
is The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington,
County of New Castle 19801. The name of its registered agent at that address is
The Corporation Trust Company.

THIRD

The purpose of the Corporation is to engage in any lawful act or activity for
which a Corporation may be organized under the General Corporation Law of the
State of Delaware.

FOURTH

1. The Corporation shall have authority to issue thirty-five million
(35,000,000) shares of stock, par value $.02 per share consisting of 30,000,000
shares of common stock and five million (5,000,000) shares of Preferred Stock,
par value $.02 per share.

2. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, prior to issuance of any
series of Preferred Stock, to fix by resolution or resolutions providing for the
issue of such series the number of shares included in such series and the voting
powers, designations, preferences, and relative, participating, optional and
other special rights, and the qualifications, limitations of restrictions
thereof. Pursuant to the foregoing general authority vested in the Board of
Directors, but not in limitation of the powers conferred on the Board of
Directors thereby and by Delaware Law, the Board of Directors is expressly
authorized to determine with respect to each series of Preferred Stock:

(a) the designation or designations of such series and the number
of shares (which number from time to time may be decreased by the Board of
Directors, but not below the number of such shares then outstanding, or may be
increased by the Board of Directors, but not in excess of the number of such
shares then authorized, unless otherwise provided in the resolution creating
such series) constituting such series;

(b) the rate or amount and times at which, and the preferences
and conditions under which, dividends shall be payable on shares of such series,
the status of such dividends as cumulative or noncumulative, the date or dates
from which dividends, if cumulative, shall accumulate, and the status of such
shares as participating or nonparticipating after the payment of dividends as to
which such shares are entitled to any preference.
<PAGE>

-2-

(c) the rights and preferences, if any, of the holders of shares
of such series upon the liquidation, dissolution or winding up of the affairs
of, or upon any distribution of the assets of, the Corporation, which amount may
vary depending upon whether such liquidation, dissolution or winding up is
voluntary or involuntary and, if voluntary, may vary at different dates, and the
status of the shares of such series as participating or nonparticipating after
the satisfaction of any such rights and preferences;

(d) the full or limited voting rights, if any, to be provided for
shares of such series, in addition to the voting rights provided by law;

(e) the times, terms and conditions, if any, upon which shares of
such series shall be subject to redemption, including the amount the holders of
shares of such series shall be entitled to receive upon redemption (which amount
may vary under different conditions or at different redemption dates) and the
amount, terms, conditions and manner of operation of any purchase, retirement or
sinking fund to be provided for the shares of such series;

(f) the rights, if any, of the Corporation or the holders of
shares of such series to convert such shares into, or to exchange such shares
for, shares of any other class or classes or of any other series of the same
class or other securities of the Corporation, the prices or rates of conversion
or exchange, and adjustments thereto, and any other items and conditions
applicable to such conversion or exchange;

(g) the limitations, if any, applicable while such series is
outstanding on the payment of dividends or making of distributions on, or the
acquisition or redemption of, Common Stock or any other class of shares ranking
junior, either as to dividends or upon liquidation, to the shares of such
series;

(h) the conditions or restrictions, if any, upon the issue of any
additional shares (including additional shares of such series or of any other
class) ranking on a parity with or prior to the shares of such series either as
to dividends or upon liquidation; and

(i) any other relative powers, preferences and relative,
participating, optional or other special rights, and qualification, limitations
or restrictions thereof, of shares of such series;

In each case, so far as not inconsistent with the provisions of this
Certificate of Incorporation or Delaware Law. All shares of Preferred Stock
shall be identical and of equal rank except in respect to the particulars that
may be fixed by the Board of Directors as provided above, and all shares of each
series of Preferred Stock shall be identical and of equal rank except as to the
times from which cumulative dividends, if any, thereon shall be cumulative.

3. Shares of any series of Preferred Stock which have been acquired
by the Corporation, whether by purchase or redemption or by their having been
converted into or exchanged for other shares of the Corporation, shall upon
their acquisition and without any other action by the Corporation resume the
status of authorized but unissued shares of Preferred Stock
<PAGE>

-3-

and may be reissued as shares of the series of which they were originally a part
or may be issued as shares of a new series or as shares of any other series.

4. Except as otherwise provided by Delaware Law or by any resolution
adopted by the Board of Directors fixing the powers, preferences and rights, the
qualifications, limitations or restrictions, of the Preferred Stock, the entire
voting power of the shares of the Corporation for the election of Directors and
for all other purposes, as well as all other rights pertaining to shares of the
Corporation, shall be vested exclusively in the Common Stock. Each share of
Common Stock shall have one vote upon all matters to be voted on by the holders
of the Common Stock and share ratably, subject to the rights and preferences of
the Preferred Stock, in all assets of the Corporation in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, or upon any distribution of the assets of the Corporation.

5. Shares of capital stock of the Corporation may be issued for such
consideration, not less than the par value thereof, as shall be fixed from time
to time by the Board of Directors, and shares issued for such consideration
shall be fully paid and non-assessable.

FIFTH

The duration of the Corporation is to be perpetual.

SIXTH

Except as required by law, and subject to the rights of holders of any series of
Preferred Stock, established pursuant to Article Fourth of this Certificate of
Incorporation, a special meeting of shareholders may be called at any time by
the Board of Directors, the Chairman or the President, and shall be called only
by the Board of Directors or the Chairman or the President pursuant to a
resolution approved by a majority of the then authorized number of Directors of
the Corporation. Any such call must specify the matter or matters to be acted
upon at such meeting and only such matter or matters shall be acted upon
thereat. Any such meeting shall be at such time and at such place, within or
without the State of Delaware, as shall be set forth in the Board of Directors'
resolution calling for such meeting.

SEVENTH

Any action required or permitted to be taken by the shareholders of the
Corporation must be effected at an annual or special meeting of shareholders of
the Corporation, and no action required to be taken or that may be taken at any
annual or special meeting of shareholders of the Corporation may be taken
without a meeting except by the unanimous written consent of all shareholders
entitled to vote on such action.
<PAGE>

-4-

EIGHTH

1. The number of directors of the Corporation shall be fixed in
accordance with the By-Laws of the Corporation, and may be increased or
decreased from time to time in such a manner as may be prescribed in the By-Laws
of the Corporation.

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

3. The directors, other than those who may be elected by the holders
of any series of preferred stock, voting as a separate class, shall be divided
into three classes, as nearly equal in number as possible. One class of
directors shall be initially elected for a term expiring at the annual meeting
of shareholders to be held in 1993, another class shall be initially elected for
a term expiring at the annual meeting of shareholders to be held in 1994, and
another class shall be initially elected for a term expiring at the annual
meeting of shareholders to be held in 1995. Members of each class shall hold
office until their successors are elected and qualified. At each succeeding
annual meeting of the shareholders of the Corporation, the successors of the
class of directors whose term expires at that meeting shall be elected, in
accordance with the By-Laws of the Corporation, to hold office for a term
expiring at the annual meeting of shareholders held in the third year following
the year of their election.

NINTH

No contract or other transaction of the Corporation shall be void, voidable,
fraudulent or otherwise invalidated, impaired or affected, in any respect, by
reason of the fact that any one or more of the officers, directors or
shareholders of the Corporation shall individually be a party or parties thereto
or otherwise interested therein or shall be officers, directors or shareholders
of any other Corporation or corporations which shall be a party or parties
thereto or otherwise interested therein; provided that such contract or other
transaction shall be duly authorized or ratified by the Board of Directors, with
the asserting vote of a majority of the disinterested directors then present,
or, if only one such is present, with his assenting vote.

TENTH

The By-Laws of the Corporation or any of them may be amended or repealed, in any
respect, and new By-laws may be adopted, at any time, either (i) by an
affirmative vote of 66 2/3% of the shareholders entitled to vote generally for
the election of directors or (ii) by an affirmative vote of a majority of the
directors present at a meeting of the Board of Directors, in each case, in
accordance with the terms of the By-Laws. Notwithstanding the foregoing and
anything contained in this Certificate of Incorporation to the contrary, Section
3 ("Special Meetings") or Section 7 ("Order of Business") of Article II
("Meeting of Stockholders") of the By-Laws Section 2, ("Number, Election and
Terms") or Section 3 ("Nominations of Directors, Elections") or Section 6
("Special Meetings") of Article III ("Directors") of the By-Laws, or the final
sentence of Article XII ("Amendments") of the By-Laws shall not be amended or
repealed and no provision, inconsistent with any thereof shall be adopted
without the affirmative vote of the
<PAGE>

-5-

66 2/3% of the shareholders entitled to vote generally for the election of
directors, voting together as a single class. Notwithstanding anything contained
in this Certificate of Incorporation to the contrary, the affirmative vote of
the 66 2/3% of the shareholders entitled to vote generally for the election of
directors, voting together as a single class, shall be required to amend or
repeal, or adopt any provision inconsistent with, any provision of this Article
TENTH.

ELEVENTH

1. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, Articles Sixth, Seventh, Eighth and Twelfth
hereof shall not be altered, amended or repealed and no provision inconsistent
therewith shall be adopted without the affirmative vote of the holders of at
least 66 2/3% of all of the shares of the corporation entitled to vote generally
in the election of directors, voting together as a single class.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 66 2/3% of all of the
shares of the corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to alter, amend
or repeal or adopt any provision inconsistent with this paragraph (1) of Article
Eleventh.

2. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in its Certificate of Incorporation, or any
amendment thereof, in the manner now or thereafter prescribed by the laws of the
State of Delaware of this Certificate of Incorporation, and all rights conferred
upon the shareholders of the corporation are granted subject to this
reservation.

TWELFTH

1. A Director of the Corporation shall not be personally liable to
the Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its shareholders, (ii) for acts or
omissions not in good faith or which involve international misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.

2. If, after approval of this Article by the shareholders of the
Corporation, the Delaware General Corporation Law is amended to authorize the
further elimination or limitation of the liability of directors, the liability
of a Director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.

3. Any repeal or modification of this Article by the shareholders of
the Corporation shall not adversely affect any right or protection of a Director
of the Corporation existing at the time of such repeal or modification.
<PAGE>

-6-

THIRTEENTH

The name and mailing address of the incorporator is as follows:

Gregory T. Cortese
Vice President, General Counsel & Secretary
PAR Technology Corporation
220 Seneca Turnpike
New Hartford, NY 13413

/s/ Gregory T. Cortese
-----------------------------
Gregory T. Cortese
Incorporator

<PAGE>

EXHIBIT 3.2

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION

PAR Technology Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

The Corporation shall have authority to issue twenty million five hundred
thousand (20,500,000) shares of stock, par value $.02 per share
consisting of twenty million (20,000,000) shares of Common Stock and five
hundred thousand (500,000) shares of Preferred Stock, par value $.02 per
share.

THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 and 228 of the General Corporation Law of
the State of Delaware.

PAR Technology Corporation

By
--------------------------------------------
President & Chairman of the Board of Directors

ATTEST:

By
----------------------
Secretary

<PAGE>

EXHIBIT 3.3

BY-LAWS

PAR TECHNOLOGY CORPORATION

ARTICLE I

OFFICES

Section 1. Delaware Office. The office of PAR Technology Corporation (the
"Corporation") within the State of Delaware shall be in the City of Wilmington,
County of New Castle.

Section 2. Other Offices. The Corporation may also have an office or offices
and keep the books and records of the Corporation, except as otherwise may be
required by law, in such other place or places, either within or without the
State of Delaware, as the Board of Directors of the Corporation may from time to
time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF SHAREHOLDERS

Section 1. Place of Meetings. All meetings of holders of shares of capital
stock of the Corporation shall be held at the office of the Corporation in the
State of Delaware or at such other place, within or without the State of
Delaware, as may from time to time be fixed by the Board.

Section 2. Annual Meetings. An annual meeting of shareholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting (an "Annual Meeting) shall be
held on such date and at such time as may be fixed by the Board. If the Annual
Meeting shall not be held on the day designated, the Board shall call a special
meeting of shareholders as soon as practicable for the election of directors.

Section 3. Special Meetings. Except as required by law, and subject to the
rights of holders of any series of Preferred Stock, established pursuant to
Article Fourth of the Certificate of Incorporation, a special meeting of
shareholders may be called at any time by the Board of Directors, the Chairman
or the President, and shall be called only by the Board of Directors or the
Chairman or the President pursuant to a resolution approved by a majority of the
then authorized number of Directors of the Corporation (as determined in
accordance with Section 2 of Article III of these By-Laws). Any such calls must
specify the matter or matters to be acted upon at such meeting and only such
matter or matters shall be acted upon thereat.

Section 4. Notice of Meetings. Except as otherwise may be required by law,
notice of each meeting of shareholders, whether an Annual Meeting or a special
meeting, shall be in writing, shall state the purpose or purposes of the
meeting, the place, date and hour of the meeting and, unless it is an Annual
Meeting, shall indicate that the notice is being issued by or at the direction
of the person or persons calling the meeting, and a copy thereof shall be
delivered or sent by mail, not less than 10 nor more than 60 days before the
date of said meeting, to each shareholder at his address as it appears on the
stock records of the Corporation, unless he shall have filed with the Secretary
a written request that notices to him be
<PAGE>

mailed to some other address, in which case it shall be directed to him at such
other address. Notice of an adjourned meeting need not be given if the time and
place to which the meeting is to be adjourned was announced at the meeting at
which the adjournment was taken, unless (i) the adjournment is for more than 30
days or (ii) the Board shall fix a new record date for such adjourned meeting
after the adjournment. Whenever any notice is required to be given under the
provisions of the General Corporation Law of the State of Delaware, the
Certificate of Incorporation or these By-laws, a waiver thereof, signed by the
shareholder entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Attendance of a shareholder at the
meeting shall be deemed equivalent to a written waiver of notice of such
meeting.

Section 5. Quorum. At each meeting of shareholders of the Corporation, the
holders of shares having a majority of the voting power of the capital stock of
the Corporation issued and outstanding and entitled to vote thereat shall be
present or represented by proxy to constitute a quorum for the transaction of
business, except as otherwise provided by law.

Section 6. Adjournments. In the absence of a quorum at any meeting of
shareholders or any adjournment or adjournments thereof, holders of shares
having a majority of the voting power of the capital stock present or
represented by proxy at the meeting may adjourn the meeting from time to time
until a quorum shall be present or represented by proxy, any business may be
transacted which might have been transacted at the meeting as originally called
if a quorum had been present or represented by proxy thereat.

Section 7. Order of Business.

(a) At the Annual Meeting, only such business shall be conducted as shall have
been brought before the Annual Meeting (i) by or at the direction of the Board
of Directors of (ii) by any shareholder who complies with the procedures set
forth in this Section 7. At any special meeting, only such business shall be
conducted as shall have been set forth in the notice of such meeting.

(b) For business properly to be brought before an Annual Meeting by a
shareholder, the shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation. To be timely, a shareholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 60 days nor more than 90 days prior to
the Annual Meeting; provided, however, that if the event that less than 70 days'
notice or prior public disclosure of the date of the Annual Meeting is given or
made to shareholders, notice by the shareholder to be timely must be received
not later than the close of business on the tenth day following the day on which
such notice of the date of the Annual Meeting was mailed or such public
disclosure was made. To be in proper written form, a shareholder's notice to
the Secretary shall be set forth in writing as to each matter the shareholder
proposes to bring before the Annual Meeting: (i) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting; (ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business; (iii) the
class and number of shares of the Corporation which are beneficially owned by
the shareholder; and (iv) any material interest of the shareholder in such
business. Notwithstanding anything in the By-Laws to the contrary, no business
shall be conducted at the Annual Meeting of shareholders except in accordance
with the procedures set forth in this Section 7. The chairman of an Annual
Meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the Annual Meeting in accordance with
the provisions of this Section 7 and, if he should so determine, he shall so
declare to the Annual Meeting and any such business not properly brought before
the Annual Meeting shall not be transacted.

Section 8. Voting. Except as otherwise provided in the Certificate of
Incorporation of the Corporation or in a resolution of the Board of Directors
adopted pursuant to the Certificate of Incorporation establishing a series of
Preferred Stock of the Corporation ("Preferred Stock"), at each meeting of
shareholders, every shareholder of the Corporation entitled to vote at a meeting
of shareholders shall be entitled to one vote for every share outstanding in his
name on the stock records of the Corporation (i) at the time fixed pursuant to
<PAGE>

Section 6 of Article Vll of these By-Laws as the record date for the
determination of shareholders entitled to vote at such meeting, or (ii) if no
such record date shall have been fixed, then at the close of business on the day
next preceding the day on which notice thereof shall be given. At each meeting
of shareholders, all matters (except as otherwise provided in Section 3 of
Article III of these By-Laws and except in cases where larger vote is required
by law or by the Certificate of Incorporation of the Corporation or these By-
Laws) shall be decided by a majority of the votes cast at such meeting by the
holders of shares of capital stock present or represented by proxy and entitled
to vote thereon, a quorum being present.

Section 9. Proxies. Any shareholder entitled to vote at any meeting of the
shareholders or to express consent to or dissent from corporate action without a
meeting may authorize another person or persons to vote at any such meeting and
express such consent or dissent for him by proxy. A shareholder may authorize a
valid proxy by executing a written instrument signed by such shareholder, or by
causing his or her signature to be affixed to such writing by any reasonable
means including, but not limited to, by facsimile signature, or by transmitting
or authorizing the transmission of a telegram, cablegram or other means of
electronic transmission to the person designated as the holder of the proxy, a
proxy solicitation firm or a like authorized agent. No such proxy shall be
voted or acted upon after the expiration of three years from the date of such
proxy, unless such proxy provides for a longer period. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except in those cases
where applicable law provides that a proxy shall be irrevocable. A shareholder
may revoke any proxy which is not irrevocable by attending the meeting and
voting in person or by filing an instrument in writing revoking the proxy or by
fling another duly executed proxy bearing a later date with the Secretary.
Proxies by telegram, cablegram or other electronic transmission must either set
forth or be submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by the
shareholder. Any copy, facsimile telecommunication or other reliable
reproduction of a writing or transmission created in lieu of the original
writing or transmission for any and all purposes for which the original writing
or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.

Section 10. Inspectors of Elections. Preceding any meeting of the
shareholders, the Board of Directors shall appoint one or more persons to act as
Inspectors of Elections, and may designate one or more alternate inspectors. In
the event no inspector or alternate is able to act, the person presiding at the
meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of the duties of an inspector,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspector shall:

(a) ascertain the number of shares outstanding and the voting power of
each;
(b) determine the shares represented at a meeting and the validity of
proxies and ballots;
(c) count all votes and ballots;
(d) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors; and
(e) certify his or her determination of the number of shares represented
at the meeting, and his or her count of all votes and ballots.

The inspector may appoint or retain other persons or entities to assist in the
performance of the duties of inspector.

When determining the shares represented and the validity of proxies and
ballots, the inspector shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in accordance
with Section 9 of these By-Laws, ballots and the regular books and records of
the Corporation. The inspector may consider other reliable information for the
limited purpose of reconciling proxies and ballots submitted by or on behalf of
banks, brokers or their nominees or a similar person which represent more votes
than the holder of a proxy is authorized by the record owner to cast or more
votes than the shareholder holds of record. If the inspector considers other
reliable information as outlined in this section, the inspector, at the time of
his or her certification pursuant to (e) of this section
<PAGE>

shall specify the precise information considered, the person or persons from
whom the information was obtained, when this information was obtained, the means
by which the information was obtained, and the basis for the inspector's belief
that such information is accurate and reliable.

Section 11. Opening and Closing of Polls. The date and time for the opening
and the closing of the polls for each matter to be voted upon at a shareholder
meeting shall be announced at the meeting. The inspector of the election shall
be prohibited from accepting any ballots, proxies or votes nor any revocations
thereof or changes thereto after the closing of the polls, unless the Court of
Chancery upon application by a shareholder shall determine otherwise.

ARTICLE III

DIRECTORS

Section 1. Powers. The business of the Corporation shall be managed under the
direction of the Board. The Board may exercise all such authority and powers of
the Corporation and do all such lawful acts and things as are not by law or
otherwise directed or required to be exercised or done by the shareholders.

Section 2. Number, Election and Terms. The authorized number of directors may
be determined from time to time by a vote of a majority of the then authorized
number of directors; provided, however, that such number shall not be less than
a minimum of three nor more than a maximum of fifteen; and provided, further,
that such number and such minimum and maximum may be increased or decreased
pursuant to resolution of the Board. Subject to Sections 9 and 10 of Article
lll of these By-Laws, the directors, other than those who may be elected by the
holders of any series of Preferred Stock, shall be divided, with respect to the
time for which they severally hold office, into three classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 1993 Annual Meeting of Shareholders, the term of office of the second class
to expire at the 1994 Annual Meeting of Shareholders and the term of office of
the third class to expire at the 1995 Annual Meeting of Shareholders. Each
director shall hold office until his respective successor has been duly elected
and qualified. At each Annual Meeting of Shareholders, commencing with the 1993
Annual Meeting, directors elected to succeed those directors whose terms then
expire shall be elected for a term of office to expire at the third succeeding
Annual Meeting of Shareholders after their election, with the directors to hold
office until their respective successor shall have been duly elected and
qualified. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors, and any vacancies on the Board
resulting from death, resignation, disqualification, removal or other cause
shall be filled by the affirmative vote of a majority of the remaining directors
then in office, even if less than a quorum of the Board, or by a sole remaining
directors, and the directors so chosen shall hold office, subject to Sections 9
and 10 of Article lll of these By-Laws until the next Annual Meeting of
shareholders and until their respective successors are elected and qualified.
No decrease in the number of directors constituting the Board shall shorten the
terms of any incumbent director.

Section 3. Nominations of Directors, Elections. Nominations for the election
of directors may be made by the Board or a committee appointed by the Board, or
by any shareholder entitled to vote generally in the election of directors who
complies with the procedures set forth in this Section 3. Directors shall be at
least 21 years of age. Directors need not be shareholders. At each meeting of
shareholders for the election of directors at which a quorum is present, the
persons receiving a plurality of the votes cast shall be elected directors. All
nominations by shareholders shall be made pursuant to timely notice in proper
written form to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 60 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than 70 days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made.
<PAGE>

To be in proper written form, such shareholder's notice shall set forth in
writing (i) as to each person whom the shareholder proposes to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitation of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, or any successor
regulation or law including, without limitation, such person's written consent
to being named in the proxy statement as a nominee and to serving as director if
elected; and (ii) as to the shareholder giving the notice, (x) the name and
address, as they appear on the Corporation's books, of such shareholder and (y)
the class and number of shares of the Corporation which are beneficially owned
by such shareholder. In the event that a shareholder seeks to nominate one or
more directors, the Secretary shall appoint two inspectors, who shall not be
affiliated with the Corporation, to determine whether a shareholder has complied
with this Section 3. If the Inspectors shall determine that a stockholder has
not complied with this Section 3, the inspectors shall direct the chairman of
the meeting to declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the By-Laws of the Corporation, and
the chairman shall so declare to the meeting and the defective nomination shall
be disregarded.

Section 4. Place of Meetings. Meetings of the Board shall be held at the
Corporation's office in the State of Delaware or at such other place, within or
without such State, as the Board may from time to time determine or as shall be
specified or fixed in the notice or waiver of notice of any such meeting.

Section 5. Regular Meetings. Regular meetings of the Board shall be held in
accordance with a yearly meeting schedule as determined by the Board; or such
meetings may be held on such other days and at such other times as the Board may
from time to time determine. Notice of regular meetings of the Board need not
be given except as otherwise required by these By-Laws.

Section 6. Special Meetings. Special meetings of the Board may be called by
the Chairman or the President and shall be called by the Secretary at the
request of any two of the other directors.

Section 7. Notice of Meetings. Notice of each special meeting of the Board
and of each regular meeting for which notice shall be required), stating the
time, place and purposes thereof, shall be mailed to each director, addressed to
him at his residence or usual place of business, or shall be mailed to each
director, addressed to him at his residence or usual place of business, or shall
be sent to him by telex, cable or telegram so addressed, or shall be given
personally or by telephone on 24 hours' notice.

Section 8. Quorum and Manner of Acting. The presence of at least a majority
of the authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business at any meeting of the Board.
If a quorum shall not be present at any meeting of the Board, a majority of the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Except where a different vote is required or permitted by law or these By-Laws
or otherwise, the act of a majority of the directors present at any meeting at
which a quorum shall be present shall be the act of the Board. Any action
required or permitted to be taken by the Board may be taken without a meeting if
all the directors consent in writing to the adoption of a resolution authorizing
the action. The resolution and the written consent thereto by the directors
shall be filed with the minutes of the proceedings of the board. Any one or
more directors may participate in any meeting of the Board by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall be deemed to constitute presence in person at a meeting of
the Board.

Section 9. Resignation. Any director may resign at any time by giving written
notice to the Corporation; provided, however, that written notice to the Board,
the Chairman of the Board, the President or the Secretary shall be deemed to
constitute notice to the Corporation. Such resignation shall take effect upon
receipt of such notice or at any later time specified therein and, unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective.
<PAGE>

Section 10. Removal of Directors. Subject to the rights of the holders of any
series of Preferred Stock any director may be removed from office, with or
without cause, by the affirmative vote of the holders of a majority of the
voting power of all shares of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.

Section 11. Compensation of Directors. The Board may provide for the payment
to any of the directors, other than officers or employees of the Corporation, of
a specified amount for services as director or member of a committee of the
Board, or of a specified amount for attendance at each regular or special Board
meeting or committee meeting, or of both, and all directors shall be reimbursed
for reasonable expenses of attendance at any such meeting; provided, however,
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.

Section 12. Waiver of Notice. Whenever any notice is required to be given
under the provisions of the General Corporation Law of the State of Delaware,
the Certificate of Incorporation or these By-laws, a waiver thereof, signed by
the director entitled to such notice, whether before or after the time stated
herein, shall be deemed equivalent thereto. Attendance of a director at a
meeting shall be deemed equivalent to a written waiver of notice of such
meeting.

ARTICLE IV

COMMITTEES OF THE BOARD

Section 1. Appointment and Powers of Executive Committee. The Board may, by
resolution adopted by the affirmative vote of majority of the authorized number
of directors, designate an Executive Committee of the Board which shall consist
of such number of members as the Board shall determine. Except as provided by
Delaware law, during the interval between the meetings of the Board, the
Executive Committee shall possess and may exercise all the power of the Board in
the management and direction of all the business and affairs of the Corporation
(except the matters hereinafter assigned to any other Committee of the board) in
such manner as the Executive Committee shall deem in the best interests of the
Corporation in all cases in which specific directions shall not have been given
by the Board. A majority of the members of the Executive Committee shall
constitute a quorum for the transaction of business by the committee and the act
of a majority of the members of the committee present at a meeting at which a
quorum shall be present shall be the act of the committee. Either the Chairman
or the Board or the Chairman of the Executive Committee may call the meetings of
the Executive Committee.

Section 2. Appointment and Powers of Audit Committee. The Board may, by
resolution adopted by the affirmative vote of a majority of the authorized
number of directors, designate an Audit Committee of the board, which shall
consist of such members as the Board shall determine. The Audit Committee shall
(i) make recommendations to the Board as to the independent accountants to be
appointed by the Board; (ii) review with the independent accountants the scope
of their examination; (iii) receive the reports of the independent accountants
and meet with representatives of such accountants for the purpose of reviewing
and considering questions relating to their examination and such reports; (iv)
review, either directly or through the independent accountants, the internal
accounting and auditing procedures of the Corporation; and (v) perform such
other functions as may be assigned to it from time to time by the Board. The
Audit Committee may determine its manner of acting and fix the time and place of
its meetings, unless the Board shall otherwise provide. A majority of the
members of the Audit Committee shall constitute a quorum for the transaction of
business by the committee and the act of a majority of the members of the
committee present at a meeting which a quorum shall be present shall be the act
of the committee.

Section 3. Other Committees. The Board may, by resolution adopted by the
affirmative vote of a majority of the authorized number of directors, designate
members of the Board to constitute such other committees of the Board as the
Board may determine. Such committees shall in each case consist of such number
of directors as the board may determine, and shall have and may exercise, to the
extent permitted
<PAGE>

by law, such powers as the Board may delegate to them, in the respective
resolutions appointing them. Each such committee may determine its manner of
acting and fix the time and place of its meeting, unless the Board shall
otherwise provide. A majority of the members of any such committee present at a
meeting at which a quorum shall be present shall be the act of the Committee.

Section 4. Action by Consent: Participation by Telephone or Similar
Equipment. Unless the Board shall otherwise provide, any action required or
permitted to be taken by any committee may be taken without a meeting if all
members of the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents thereto by the
members of the committee shall be filed with the minutes of the proceedings of
the committee. Unless the Board shall otherwise provide, any one or more
members of any such committee may participate in any meeting of the committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear one another.
Participation by such means shall constitute presence in person at a meeting of
the committee.

Section 5. Changes in Committees: Resignations, Removals. The Board shall
have power, by the affirmative vote of a majority of the authorized number of
directors, at any time to change the members of, to fill vacancies in, and to
discharge any committee of the Board. Any member of any such committee may
resign at any time by giving notice to the Corporation; provided, however, that
notice to the Board, the Chairman of the Board, the President, the chairman of
such committee or the Secretary shall be deemed to constitute notice to the
Corporation. Such resignation shall take effect upon receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective. Any
member of any such committee may be removed at any time, either with or without
cause, by the affirmative vote of a majority of the authorized number of
directors at any meeting of the Board called for that purpose.

ARTICLE V

OFFICERS

Section 1. Number and Qualification. The Corporation shall have such officers
as may be necessary or desirable for the business of the Corporation. There
shall be elected by the Board of Directors persons having the titles and
exercising the duties (as prescribed by the By-Laws or by the Board) of the
Chairman of the Board, President, one or more Vice President, any of whom, upon
his or her election, may be designated an Executive Vice President or Senior
Vice President, Treasurer and Secretary, and such other persons having such
other titles and such other duties as the Board may prescribe. The same person
may hold more than one office. The Chairman of the Board shall be elected from
among the directors. The Chairman of the Board may appoint one or more deputy,
associate or assistant officers, or such other agents as may be necessary or
desirable for the business of the corporation. In case one or more deputy,
associate or assistant officers shall be appointed, the officer such appointee
assists may delegate to him the authority to perform such of the officer's
duties as the officer may determine. Unless otherwise determined by the Board,
the officers of the Corporation shall be elected by the Board at the annual
meeting of the Board, and shall be elected to hold office until the next
succeeding meeting of the Board. In the event of the failure to elect officers
at such annual meeting, officers may be elected at any regular or special
meeting of the Board. Each officer shall hold office until his successor has
been elected and qualified, or until his earlier death, resignation or removal.

Section 2. Resignations. Any officer may resign at any time by giving written
notice to the Corporation; provided, however, that notice to the Board, the
Chairman of the Board, the President or the Secretary shall be deemed to
constitute notice to the Corporation. Such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.

Section 3. Removal. Any officer or agent may be removed, either with or
without cause, at any time,
<PAGE>

by the Board at any meeting called for that purpose; provided, however, that the
Chairman of the Board may remove any agent appointed by him.

Section 4. Vacancies. Any vacancy among the officers, whether caused by
death, resignation, removal or other cause, shall be filled in the manner
prescribed for election or appointment to such office.

Section 5. Chairman of the Board. The Chairman of the Board shall be the
Chief Executive Officer of the Corporation and shall, subject to the control of
the Board of Directors, have the direction and control of the business, affairs
and property of the Corporation and be responsible for the coordination of the
corporate and financial policies and the day-to-day operations of the
Corporation, and shall cause all orders and resolutions of the Board of
Directors to be carried into effect. The Chairman of the Board shall if
present, preside at all meetings of the Board and of the shareholders. He shall
perform the duties incident to the office of the Chairman of the Board and have
such other powers and perform all such other duties as are specified in these
By-Laws or as shall be assigned to him from time to time by the Board of
Directors. He shall perform the duties incident to the office of the President
and all such other duties as are specified in these By-Laws or as shall be
assigned to him from time to time by the Board.

Section 6. President. The President shall be the Chief Operating Officer of
the Corporation and shall, subject to the control of the Chairman of the Board,
be responsible for the day-to-day operations of the Corporation. In the absence
of the Chairman of the Board or if there shall be no such officer, the President
shall preside at all meetings of the shareholders and of the Board of Directors
at which he is present.

Section 7. Vice President. Each Vice President shall perform such duties and
exercise such powers as may be assigned to him from time to time by a resolution
of a majority of the Board of Directors, the Chairman of the Board or the
President. The Vice President designated by the Board of Directors (or, in the
absence of such designation, by the Chairman of the Board) shall, at the request
of the Chairman of the Board or the President, or in the event of the absence or
disability of both of such officers, perform all the duties of the Chairman of
the Board of Directors or the President. When so acting, such designated Vice
President shall have the powers of and be subject to all the restrictions upon
the Chairman of the Board of Directors or the President or both, as the case may
be.

Section 8. Treasurer. The Treasurer shall have charge and custody of, and be
responsible for, all funds and securities of the Corporation, shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
Corporation, shall deposit all moneys and other valuable to the credit of the
Corporation in such depositories as may be designated pursuant to these By-Laws,
shall receive, and give receipts for, moneys due and payable to the Corporation
from any source whatsoever, shall disburse the funds of the Corporation and
shall render to all regular meetings of the Board, or whenever the Board may
require, an account of all his transactions as Treasurer. He shall, in general,
perform all the duties incident to the office of Treasurer and all such other
duties as may be assigned to him from time to time by the Board of Directors,
Chairman of the Board, President or such other officer to whom the Treasurer
reports.

Section 9. Secretary. The Secretary shall, if present, act as secretary of,
and keep the minutes of all meetings of the Board, the Executive Committee and
other committees of the Board and the shareholders in one or more books provided
for that purpose, shall see that all notices are duly given in accordance with
these By-Laws and as required by law, shall be custodian of the seal of the
Corporation and shall affix and attest the seal to all documents to be executed
on behalf of the Corporation under its seal. He shall, in general, perform all
the duties incident to the office of Secretary and all such other duties as may
be assigned to him from time to time by the Board of Directors, Chairman of the
Board, President or such other officer to whom the Secretary reports.

Section 10. Additional Officers. The Board of Directors may by resolution
appoint such other officers and agents as it may deem appropriate, and such
other officers and agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as may be determined from time to
time by
<PAGE>

the Board of Directors. The Board of Directors from time to time may delegate to
any officer or agent the power to appoint subordinate officers or agents and to
prescribe their respective rights, terms of office, authorities and duties. Any
such officer or agent may remove any such subordinate officer or agent appointed
by him, with or without cause.

Section 11. Bonds of Officers. If required by the Board, any officer of the
Corporation shall give a bond for the faithful discharge of his duties in such
amount and with such surety or sureties as the Board may require.

ARTICLE VI

CONTRACTS, CHECKS, LOANS, DEPOSITS, ETC.

Section 1. Contracts. The Chairman of the Board or President may enter into
any contract or execute and deliver any instrument in the name and on behalf of
the Corporation. In addition, the Board may authorize any officer or officers,
agent or agents, in the name and on behalf of the Corporation, to enter into any
contract or to execute and deliver any instrument, which authorization may be
general or confined to specific instances; and, unless so authorized by the
Board, no officer, agent or employee shall have any power or authority to bind
the Corporation by any contract or engagement or to pledge its credit or to
render it liable pecuniarily for any purpose or for any amount.

Section 2. Checks, etc. All checks, drafts, bills of exchange or other orders
for the payment of money out of the funds of the Corporation, and all notes or
other evidences of indebtedness of the Corporation, shall be signed in the name
and on behalf of the Corporation in such manner as shall from time to time be
authorized by the Board, which authorization may be general or confined to
specific instances.

Section 3. Loans. No loan shall be obtained or contracted for by or on behalf
of the Corporation, and no negotiable paper shall be issued in its name, unless
authorized by the Board, which authorization may be general or confined to
specific instances. Any officer or agent of the Corporation thereunto so
authorized may obtain loans and advances for the Corporation, and for such loans
and advances may make, execute and deliver promissory notes, bonds, or other
evidences of indebtedness of the Corporation and may pledge, hypothecate or
transfer as security for the payment of any and all loans, advances,
indebtedness and liabilities of the Corporation, any and all stocks, bonds,
other personal property, securities or receivables at any time owned by the
Corporation or to which it is or will be at any time entitled, and to the end
may endorse, assign and deliver the same and do every act and thing necessary or
proper in connection therewith.

Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as may be selected by or in the
manner designated by the Board or as may be selected or in a manner designated
by any officer or officers authorized so to do by the Board. The Board or its
designees may make such special rules and regulations with respect so such bank
accounts, not inconsistent with the provisions of the Certificate of
Incorporation or these By-Laws, as they may deem advisable.

Section 5. Proxies. Proxies to vote with respect to shares of stock of other
corporations owned by or standing in the name of the Corporation may be executed
and delivered from time to time on behalf of the Corporation by the Chairman of
the Board or the President, or any Vice President or other person or persons
thereunto authorized by the Board of Directors.

ARTICLE VII

CAPITAL STOCK

Section 1. Stock Certificates. Each shareholder shall be entitled to have, in
such form as shall be
<PAGE>

approved by the Board, a certificate or certificates signed by the Chairman of
the Board or the President, and by either the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary (except that, when any such
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation or an employee of the Corporation, the signatures of
any such officers may be facsimiles, engraved or printed), which may be sealed
with the seal of the Corporation.(which seal may be a facsimile, engraved or
printed), certifying the number of shares of capital stock of the Corporation
owned by such shareholder. In the event any officer who has signed or whose
facsimile signature has been placed upon any such certificate shall have ceased
to be such officer before such certificate is issued, such certificate may be
issued by the Corporation with the same effect as if he were such officer at the
date of its issue.

Section 2. List of Shareholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make or cause to be prepared or made, at least 10 days before every meeting
of shareholders, a complete list of the shareholders entitled to vote at the
meeting arranged in alphabetical order, and showing the address of each
shareholder and the number of shares of capital stock registered in the name of
each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting for the duration thereof, and my be inspected by an
yshareholder of the Corporation who is present.

Section 3. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the shareholders entitled to examine the stock
ledger, the list required by Section 2 of this Article VII or the books of the
Corporation, or to vote in person or by proxy at any meeting of shareholders.

Section 4. Transfers of Capital Stock. Transfers of shares of capital stock
of the Corporation shall be made only on the stock ledger of the Corporation by
the holder of record thereof, by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, or by
the transfer agent of the Corporation, and only on surrender of the certificate
or certificates representing such shares, properly endorsed or accompanied by a
duly executed stock transfer power. The Board may make such additional rules
and regulations as it may deem advisable concerning the issue and transfer of
certificates representing shares of the capital stock of the Corporation.

Section 5. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.

Section 6. Fixing of Record Date. In order that the Corporation may determine
the shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or entitled to receive payment of any dividends or
other distributions or allotments of any rights, or entitled to exercise any
rights in respect to any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board may fix, in advance, a record
date, which shall not be more than 60 days nor less than 10 days before the date
of such meeting, nor more than 60 days prior to any other action. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.

Section 7. Beneficial Owners. The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of shares
to receive dividends and to vote as such owner, and
<PAGE>

to hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person, whether or
not the Corporation shall have express or other notice thereof, except as
otherwise provided by law

FISCAL YEAR

The Corporation's fiscal year shall coincide with the calendar year.

ARTICLE IX

INDEMNIFICATION

Section 1. Nature of Indemnity. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was or has
agreed to become a director or officer of the Corporation, or is or was serving
or has agreed to serve at the request of the Corporation as a director or
officer, of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
such capacity, and may indemnify any person who was or is a party or is
threatened to be made a party to such an action, suit or proceeding by reason of
the fact that he is or was or has agreed to become an employee or agent of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding had no
reasonable cause to believe his conduct was unlawful; except that in the case of
an action or suit by or in the right of the Corporation to procure a judgment in
its favor (1) such indemnification shall be limited to expenses (including
-
attorneys' fees) actually and reasonably incurred by such person in the defense
or settlement of such action or suit, and (2) no indemnification shall be made
-
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.

The termination of any action, suit or proceeding by judgment, order settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 2. Successful Defense. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section 1
hereof or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.

Section 3. Determination That Indemnification is Proper. Any indemnification
of a director or officer of the Corporation under Section 1 hereof (unless
ordered by a court) shall be made by the Corporation unless a determination is
made that indemnification of the director or officer is not proper in the
circumstances because he has not met the applicable standard of conduct set
forth in Section 1 hereof. Any indemnification of an employee or agent of the
corporation under Section 1 hereof (unless ordered by
<PAGE>

a court) may be made by the Corporation upon a determination that
indemnification of the employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in Section 1 hereof. Any
such determination shall be made (1) by the Board of Directors by a majority
-
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the shareholders.
-

Section 4. Advance Payment of Expenses. Expenses (including attorneys' fees)
incurred by a director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Board of Directors
deems appropriate. The Board of Directors may authorize the Corporation's
counsel to represent such director, officer, employee or agent in any action,
suit or proceeding, whether or not the Corporation is a party to such action,
suit or proceeding.

Section 5. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Section 1 and
2, or advance of costs, charges and expenses to a director or officer under
Section 4 of this Article, shall be made promptly, and in any event within 30
days, upon the written request of the director or officer. If a determination
by the Corporation that the director or officer is entitled to indemnification
pursuant to this Article is required, and the Corporation fails to respond
within sixty days to a written request for indemnity, the Corporation shall be
deemed to have approved such request. If the Corporation denies a written
request for indemnity or advancement of expenses, in whole or in part, or if
payment in full pursuant to such request is not made within 30 days, the right
to indemnification or advances as granted by this Article shall be enforceable
by the director or officer in any court of competent jurisdiction. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and to enforce a claim for the advance of costs, charges and
expenses under Section 4 of this Article where the required undertaking, if any,
has been received by the Corporation) that the claimant has not met the standard
of conduct set forth in Section 1 of this Article, but the burden of proving
such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal counsel,
and its shareholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 1 of
this Article, nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal counsel,
and its shareholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

Section 6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing with
respect to any state of facts then or previously existing or any action, suit or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.

The indemnification provided by this Article IX shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any by-law,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or
<PAGE>

agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.

Section 7. Insurance. The Corporation shall purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him or on his behalf in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of this Article, provided that
such insurance is available on acceptable terms, which determination shall be
made by a vote of a majority of the entire Board of Directors.

Section 8. Severability. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.

ARTICLE X

SEAL

The Corporate seal shall be circular in form and shall bear the name of the
Corporation and words and figures denoting Its organization under the laws of
the State of Delaware and the year thereof and otherwise shall be in such form
as shall be approved from time to time by the Board of Directors.

ARTICLE XI

WAIVER OF NOTICE

Whenever any notice is required by law, the Certificate of Incorporation or
these By-Laws to be given to any director, member of a committee or shareholder,
a waiver thereof in writing, signed by the person entitled to such notice,
whether signed before or after the time stated in such written waiver, shall be
deemed equivalent to such notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when such person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business on the grounds that the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any meeting of the shareholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.

ARTICLE XII

AMENDMENTS

These By-laws or any of them may be amended, repealed, in any respect, and new
By-laws adopted at any time, either (i) at any annual or special shareholders'
meeting, by an affirmative vote of 66 2/3% of the shareholders of the
Corporation entitled to vote generally in the election of directors provided
that any amendment, repeal or new By-Laws proposed to be acted upon at any such
meeting shall have been described or referred to in the notice of such meeting
or (ii) by an affirmative vote of a majority of the directors present at any
organizational, regular, or special meeting of the Board of Directors provided
that any amendment, repeal or new by-Law proposed to be acted upon at any such
meeting shall have been described or referenced to in the notice of such meeting
or an announcement with respect thereto shall have been made at the last
previous board meeting. Notwithstanding the foregoing and anything contained
<PAGE>

in these By-Laws to the contrary, Section 3 ("Special Meetings") or Section 7
("Order of Business") of Article II ("Meeting of Shareholders") of the By-Laws;
Section 2 ("Number, Election and Terms"), Section 3 ("Nominations of Directors,
Elections") or Section 6 ("Special Meetings") of Article III ("Directors") of
the By-Laws; or Article XII ("Amendments") of the By-Laws shall not be amended
or repealed and no provision inconsistent with any thereof shall be adopted
without the affirmative vote of the 66 2/3% of the shareholders entitled to vote
generally for the election of directors, voting together as a single class.
Notwithstanding anything contained in these By-Laws to the contrary, the
affirmative vote of the 66 2/3% of the shareholders entitled to vote generally
for the election of directors, voting together as a single class shall be
required to amend or repeal, or adopt any provision inconsistent with, any
provision or this Article XII.

ARTICLE XIII

CONSTRUCTION

In the event of any conflict between the provisions of these By-Laws as in
effect from time to time and the provisions of the Certificate of Incorporation
of the Corporation as in effect from time to time, the provisions of such
certificate of incorporation shall be controlling.

<PAGE>

EXHIBIT 4

-----------
NUMBER

-----------

COMMON STOCK COMMON STOCK

PAR VALUE $.02 PAR VALUE $.02

THIS CERTIFICATE IS TRANSFERABLE IN
NEW YORK, NY OR CRAWFORD, NJ.

[SYMBOL OF PAR TECHNOLOGY CORPORATION APPEARS HERE]

PAR Technology Corporation

INCOPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

This is to certify that

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF

PAR Technology Corporation transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
certificate properly endorsed.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrant.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

Countersigned and Registered: NY of New York
REGISTRAR AND TRANSFER COMPANY
New Jersey Transfer Agent
and Registrar

[SIGNATURES APPEAR HERE]
Authorized Signature Secretary President

-----------
SHARES

-----------

[SEAL OF PAR TECHNOLOGY APPEARS HERE]

<PAGE>

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM --as tenants in common UNIF GIFT MIN ACT--......Custodian......
(Cust) (Minor)
TEN ENT --as tenants by the entireties under Uniform Gifts to Minors

JT TEN --as joint tenants with right of
survivorship and not as tenants Act....................
in common (State)
Additional abbreviations may also used not in the above list.

For value received________hereby sell, assign, and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OR ASSIGNEE
---------------------------------------

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

--------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

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

--------------------------------------------------------------------------Shares
represented by the within Certificate and do hereby irrevocably constitute
and appoint
---------------------------------------------------------------------

--------------------------------------------------------------------------------
Attorney to transfer the said shares on the books of the within named
Corporation with full power of substitution in the provisions

Dated
----------------------

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

NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR REARRANGEMENT OR ANY CHANGE WHATEVER.

<PAGE>

EXHIBIT 10.1

[CONFIDENTIAL TREATMENT REQUESTED]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE
406.

AGREEMENT

BETWEEN

TACO BELL CORPORATION

PAR MICROSYSTEMS CORPORATION

DECEMBER 18, 1995
-----------------
<PAGE>

AGREEMENT

THIS AGREEMENT is made as of 18th day of December 1995 by and between
--
Taco Bell Corp., a California corporation, having a principal place of business
at 17901 Von Karman, Irvine, CA (hereinafter referred to as "Buyer") and PAR
Microsystems Corporation, having a principal place of business at PAR Technology
Park, 8383 Seneca Turnpike, New Hartford, New York 13413-1191 (hereinafter
referred to as "Vendor").

WITNESSETH:

WHEREAS, Vendor designs, develops and manufactures microprocessor
based computer restaurant point of sale ("POS") equipment,

WHEREAS, Buyer wishes to purchase certain Vendor POS equipment for use
in Buyer's Taco Bell and Hot'n Now restaurants and in any other restaurants,
where Vendor has designed the equipment to be used, which may be subsequently
purchased by Buyer (collectively hereinafter referred to as "Buyer's
restaurants"),

WHEREAS, Vendor desires to sell such POS equipment to Buyer for use in
Buyer's restaurants, and

WHEREAS, the Parties now wish to enter into an agreement for the
purchase of such POS equipment.

NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND OF THE MUTUAL
PROMISES HEREIN CONTAINED AND INTENDING TO BE LEGALLY BOUND HEREBY THE PARTIES
DO HEREBY AGREE AS FOLLOWS:

1. DEFINITIONS:
-----------

For purposes of this Agreement including all Exhibits attached
hereto, the following words shall have the following definitions:

A. Components - Means those individual units of POS
----------
equipment/hardware or accessories as set forth in Exhibit A including, but not
limited to, Counter and/or Drive-Thru POS Terminals, CRT Videos, Printers and
other POS peripherals as may be sold or purchased under this Agreement.

B. Programs - Means all computer programs and integrated groups
--------
of programs and microcode (including but not limited to those relating to
communications and operating systems) which Vendor integrates with its hardware
components to form Vendor's computerized POS III system. "Programs" shall not
include source code.

1 of 19
<PAGE>

C. Documentation - Means all listings, descriptions, manuals,
-------------
specifications, coding (including object code in machine readable format),
layouts, instructions, and like materials. "Documentation" shall not include
source code.

D. System(s) - Means all Components including those set forth in
---------
Exhibit A hereto, along with related Programs making up Vendor's keyboard or
touch LCD POS III System product. The parties understand that a System may be
comprised of a varying mix of different configurations of Components depending
upon the sales volume, sales mix and physical layout of each Taco Bell or Hot'n
Now Restaurant.

E. Days - Means calendar days unless otherwise noted.
----

F. Escrowed Material - means all necessary information, including but
-----------------
not limited to (i) the Programs and associated Documentation, (ii) the source
code, (iii) the Component parts list and supplier list, and (iv) any and all
other System/Component specifications which Vendor uses to maintain and support
the Systems/Components and/or Programs.

G. Delivery or Deliver - Means shipment by Vendor to either a
-------------------
segregated area within Vendor's facility or to another facility of Vendor's
choice (hereinafter collectively referred to as a "Vendor facility") or to a
location designated by Buyer, F.O.B. Vendor's facility, New Hartford, New York.

2. TERM OF AGREEMENT:
-----------------

This Agreement shall become effective as of the date first set forth
above and shall terminate [CONFIDENTIAL TREATMENT REQUESTED] (hereinafter
referred to as the "Term").

3. TERRITORY:
---------

During the Term and subject to Vendor's good faith determination that
it has the capability and that it is commercially practical, in any particular
country outside the United States, to obtain the necessary
approvals/certifications to deliver the Components/Systems, Programs and
associated Documentation into such country and to meet the governmental laws and
regulations of such country, Vendor agrees to provide Components/Systems and
license Programs and Documentation to Buyer worldwide (hereinafter the
"Territory"), which in any event shall include the United States, Canada and the
islands of the Caribbean.

4. AGREEMENT TO PURCHASE:
---------------------

A. (1) Subject to and in accordance with the terms and conditions
set forth in this Agreement, Buyer, through its designee or its purchasing agent
PFS, agrees to purchase and take Delivery from Vendor of a minimum of
[CONFIDENTIAL TREATMENT REQUESTED] for the restaurants in which the Systems are
to

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

2 of 19
<PAGE>

be installed (hereinafter collectively the "Minimum Purchase Commitment"). In
satisfying the Minimum Purchase Commitment obligation, Buyer, through its
designee or its purchasing agent PFS, agrees to purchase and take Delivery from
Vendor of a minimum of [CONFIDENTIAL TREATMENT REQUESTED].

(2) Taco Bell can, in satisfying its Minimum Purchase Commitment,
purchase such Systems through a purchasing agent other than PFS (i.e. a third
party leasing company) provided:

(i) such third party understands and agrees that it is
purchasing such Systems as an agent for Taco Bell, that such third party agrees
to be bound by all the terms and conditions of the Agreement, and that all sales
will be made in accordance with the specific terms and conditions set forth in
this Agreement, and

(ii) Taco Bell understands and agrees that it will not be
relieved of its obligations under this Agreement and will comply with all terms
and conditions of such.

B. Vendor's Programs and associated Documentation may, at Buyer's
discretion, be licensed by Buyer to be used in accordance with the license
provisions of this Agreement. There is no required minimum quantity of copies
of the Programs and associated Documentation which must be licensed by Buyer.

C. All Systems, Components, and/or Programs purchased/licensed by
Buyer under this Agreement shall be purchased or licensed for use only in
Buyer's or Buyer's franchisees' restaurants.

5. ORDERS, DELIVERY, AND INSTALLATION:
----------------------------------

A. (1.) Using its best efforts to issue such not later than
Sixty (60) Days prior to a requested installation date, Buyer shall issue
separate order releases (hereinafter "Order(s)") or "Release(s)") against this
Agreement, specifying to Vendor the Systems/Components it wishes to order and
the date and place each such item is requested to be installed.

(2.) If Buyer issues its Release for an order at least sixty
(60) Days prior to Buyer's requested installation date then such requested date
shall become the scheduled installation date. If Buyer fails to issue its
Release for an particular order at least sixty (60) Days prior to the requested
installation date for such order then Vendor shall promptly notify Buyer of the
date it has scheduled for installation. If the date differs from that requested
by Buyer in its Release and if Buyer objects to the date Vendor has scheduled
for installation the parties shall mutually agree upon a scheduled installation
date.

B. (1) At the time of signing this Agreement and again on the
same date of each month thereafter during the Term, Buyer should look forward a
minimum

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

3 of 19
<PAGE>

of six (6) months and provide Vendor with a schedule which reflects the total
number of Systems/Components which are projected by Buyer to be required for
installation in Buyer's or Buyer's franchisee's restaurants over such next six
months (hereinafter the "Total System Projection"). The parties agree that the
first three (3) months of each monthly Total System Projection shall be fixed
and once provided, absent Vendor's consent, shall not be subsequently modified
by Buyer.

(2) Parties agree that at any time during the Term, Vendor may rely
upon such total number of Systems/Components which are projected to be required
for installation in Buyer's or Buyer's franchisee's restaurants over the then
next three (3) months (hereinafter "Next 3 Month's Systems/Components") and
elect, in its good faith discretion, to the extent the Next 3 Month's
Systems/Components projections exceeds the quantity of Buyer's
Systems/Components which have been Delivered and are then stored in Vendor's
facility, to

(a.) batch produce the remainder of such Next 3 Month's
Systems/Components,

(b.) ship such Systems/Components to either the location designated
by Buyer on any outstanding Releases, or if no location is designated by Buyer
prior to the date Vendor is ready to ship such Systems/Components to a Vendor
facility, and

(c.) invoice Buyer for such shipped Systems/Components under payment
terms, net thirty (30) Days from Buyer's receipt of invoice and Buyer shall be
deemed to have taken Delivery of such Systems/Components with legal and
equitable title passing to Buyer upon such shipment;

provided however, the Next 3 Month's Systems/Components projection shall in no
event entitle Vendor to produce or Deliver any Systems in excess of the Minimum
Purchase Commitment, unless Buyer expressly orders additional
Systems/Components.

C. For all Systems/Components Delivered pursuant to this Agreement to
a Vendor facility then, notwithstanding the fact that legal and equitable title
to such Systems/Components shall have passed to Buyer upon Vendor's shipment to
such locations, Vendor, as bailee, will bear the cost of shipment to such
facility, cost of storage and risk of loss for those Systems/Components shipped
to such locations and shall provide appropriate proof of adequate insurance
(with an aggregate deductible no greater than $5,000) to Buyer's benefit until
such Systems are actually shipped to a location designated by Buyer. Vendor
shall use all of Buyer's stored Systems/Components to fulfill shipments to
locations designated Buyer in its Releases prior to using any Systems/Components
subsequently produced. Buyer shall incur a reasonable storage charge payable
monthly for all Systems/Components which continue to be stored at a Vendor
facility, due to causes outside Vendor's reasonable control, [CONFIDENTIAL
TREATMENT REQUESTED].

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

4 of 19
<PAGE>

D. Within seven (7) working Days after the end of each calendar month
during the Term hereof, Vendor shall send to Buyer a Shipment Report in the form
attached hereto as Exhibit C and incorporated herein by reference with respect
to shipments of Systems/Components and/or Programs made during such calendar
month. Such Shipment Report shall be sent via fax as follows:

Taco Bell Purchasing Department
Attn: Director of Equipment Purchasing
(714) 863-2274

E. (1) Throughout the United States, Canada, islands of the
Caribbean and all portions of the Territory where Vendor has determined pursuant
to Paragraph 3 of this Agreement to sell and install Systems/Components, Vendor,
or a third party contracted by Vendor, shall install all Systems/Components
hereunder in accordance with Exhibit D (hereinafter "Basic Installation"). At
the request of Buyer, Vendor shall also provide, at the time of installation,
basic training and monitoring as set forth in Exhibit D. In addition to the
Basic Installation, Vendor shall, at the request of Buyer and pursuant to terms
and conditions to be negotiated by the parties, offer non-basic/customized
installation, training and/or monitoring services (i.e. rollouts, deinstallation
of existing POS systems, etc.) in such portions of the Territory.

(2) Buyer shall designate on the applicable Release whether or
not it wants Vendor to perform training and/or monitoring at the time the
Systems/Components are installed in Buyer's restaurants.

(3) If Vendor plans to contract with a third party to perform the
installation, training and/or monitoring on Vendor's behalf, Vendor shall notify
Buyer of the name of the third party it intends to contract with.

F. Buyer shall be responsible for assuring that each restaurant has
completed all of the requirements set out in the Vendor "Pre-Installation
Guide/Instructions" as set out in Exhibit E to this Agreement. For those
situations where the Pre-Installation Guide/Instructions does not accurately
reflect all of the requirements (i.e. Hot'n Now) the parties will cooperate to
modify the Guide's requirements to accommodate such situations. Any reasonable,
additional costs incurred by Vendor as a result of Buyer's failure to complete
all of the requirements of this Pre-Installation Guide shall be borne by Buyer
if such cost would have been avoided by reasonable compliance with the
instructions set froth in the Pre-Installation Guide.

G. (1.) For Basic Installations as defined in Exhibit D attached
hereto, performed directly by Vendor or its designated agent, should Vendor or
its designated agent fail to complete an installation, due to causes within its
reasonable control, within five (5) Days of the date the parties mutually agreed
the installation was to be completed and such delay either causes a delay in the
planned opening of a restaurant or has a significant economic detrimental effect
on the operation of a restaurant, then Vendor will reduce the applicable Basic
Installation price for such late installation [CONFIDENTIAL TREATMENT
REQUESTED],

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

5 of 19
<PAGE>

and if the installation is not completed within ten (10) Days of the date the
parties mutually agreed the installation was to be completed, then Buyer may
either (i) revoke its acceptance of the Systems/Components and receive a full
refund of the monies paid for such Systems/Components and then go into the
marketplace and purchase substantially similar Systems/Components from a third
party with the difference between what Buyer actually pays and the applicable
purchase price stated in this Agreement, to the extent such difference does not
exceed [CONFIDENTIAL TREATMENT REQUESTED], to be paid by Vendor to Buyer; or
(ii) may obtain the services of a third party to install the Systems/Components
and Vendor will reimburse Buyer for the reasonable cost of such installation.
Even if Buyer chooses to revoke and purchase a third party's system/components
for such location the Systems/Components revoked shall count towards the
satisfaction of Buyer's applicable purchase commitment so as not to reduce the
discount to which Buyer would otherwise be entitled to.

(2.) Failure by Vendor or Vendor's designated agent on [CONFIDENTIAL
TREATMENT REQUESTED] of the date the parties mutually agreed the installation
was to be completed shall constitute a material breach of this Agreement.

H. (1.) If due to causes within Buyer's reasonable control, Buyer
causes a delay which results in the inability to complete an installation on the
date the parties mutually agreed the installation was to be completed or Buyer
shall reschedule an installation within two weeks of a Scheduled Installation
Date, then Vendor shall invoice Buyer for all reasonable additional travel,
lodging, meals and other related expenses incurred by Vendor as a result of such
delay.

(2.) Also, if on the date the installation was to be performed, Buyer
causes a delay which results in the inability of the installation personnel to
commence the installation within [CONFIDENTIAL TREATMENT REQUESTED] of the time
they arrive at the site, then in addition to any additional travel, lodging,
meals and other related expenses incurred by Vendor as a result of such delay,
[CONFIDENTIAL TREATMENT REQUESTED].

I. Unless shipping instructions are specifically set forth by Buyer on
its Release or communicated in writing to Vendor prior to Vendor making actual
shipment commitments, Vendor shall have the responsibility of selecting the
particular route and carrier for the shipment of the equipment to Buyer. Except
as otherwise provided herein, risk of loss shall pass to buyer upon shipment.

J. In the event Buyer intends to install Systems/Components in a country
other than the United States, Canada or the Islands of the Caribbean, Buyer will
provide Vendor within [CONFIDENTIAL TREATMENT REQUESTED] of the anticipated

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

installation date written notice of such intention. Upon receipt of such
notice, Vendor will within sixty (60) Days notify Buyer of whether or not in
Vendor's opinion i is possible and practical for vendor to perform such
installation.

K. Legal and equitable title to the Systems/Components free and clear of
all liens, security interests, or encumbrances shall automatically pass from
Vendor to Buyer upon Delivery. Parties agree that Vendor will receive a purchase
money security interest in the Components upon shipment which shall be
extinguished promptly upon payment by Buyer.

L. Vendor shall assist Buyer with the shipping of the purchases, filing
freight claims, finding and locating lost shipments, and in other actions with
respect to shipping customs work which are necessary and reasonable at the
request of Buyer. Vendor will utilize adequate shipping containers and
packaging.

6. PRICES:
------

A. Subject to Subparagraph 6B. below, the net purchase price to be
invoiced by Vendor and to be paid by Buyer for

(1.) the Minimum Purchase Commitment (excluding the Programs and
Documentation) shall be the price determined by [CONFIDENTIAL TREATMENT
REQUESTED] the List Prices set forth in Exhibit B hereto, and

(2.) the Programs and Documentation licenses purchased by Buyer shall
be the price determined by [CONFIDENTIAL TREATMENT REQUESTED] the List Prices
set forth in exhibit B hereto.

B. All prices stated hereunder are FOB New Hartford, New York and are
stated in United States dollars. Unless otherwise agreed to in writing by the
parties, Buyer is responsible for all applicable shipping charges and insurance
associated with shipment of the Systems/Components to the location designated by
Buyer, sales, use, or any similar tax or any import or export duties, tariffs or
other costs incurred to obtain the necessary approvals/certifications to deliver
the Systems/Components into a country outside the United States and to meet the
governmental laws and regulations of such country. Thus, in addition, to the
prices so specified in this Agreement, the amounts of any such present or future
taxes or other charges or fees applicable to the purchase, export and/or import
of the Systems/Components, Programs or services, to be provided under this
Agreement shall be paid by Buyer.

C. Subject to Subparagraph 6B. of this Agreement above, the
Systems/Components, basic Installation, training and monitoring prices set forth
in Exhibit B attached hereto shall be fixed for the Term of this Agreement.

[CONFIDENTIAL TREATMENT REQUESTED].

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

7. PAYMENT:
-------

A. Payment in full for the Minimum Purchase Commitment for all applicable
Program and Documentation licenses, and for all freight insurance, import and/or
export duties and any other applicable fees, taxes and/or charges directly
incurred therewith, is due and payable thirty (30) Days from the date of Buyer's
receipt of invoice.

B. Payment for, installation, monitoring, and training and any other
applicable fees and/or charges shall be invoiced by Vendor upon completion of
installation and shall be due and payable thirty (30) Days from the date of
Buyer's receipt of invoice.

C. Interest on overdue amounts shall be payable at the rate of twelve
percent (12%) per annum commencing thirty (30) Days after its due date. All
payments shall be made in United States dollars.

D. Vendor will invoice Buyer upon Delivery.

8. SOFTWARE DEVELOPMENT:
--------------------

A. From time to time during the Term of this Agreement, modifications
and/or enhancements to the Programs and Documentation may be requested by Buyer.
Buyer's requests shall define the exact functions, features, and/or requirements
of such modifications or enhancements. Vendor shall review such requests and if
not unreasonable shall submit a proposal to Buyer within thirty (30) Days of
receipt of the request setting forth the development time frames and pricing.
Upon mutual agreement to applicable terms and conditions for such software
development Vendor will use its best efforts to develop and provide such
modifications and/or enhancements to Buyer.

B. Subject to Subparagraph 8A. above, Vendor agrees to develop any
modifications and/or enhancements to the Programs and Documentation which may be
necessary in order to comply with local government financial, revenue and/or tax
reporting requirements of any country outside the United States where Vendor
determines that it has the capability and it is commercially practical to
deliver, install and service the Components/Systems within such country.

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<PAGE>

9. SYSTEM IMPROVEMENTS:
-------------------

Vendor agrees to make available and sell or license to Buyer such
improvements, releases, enhancements, extensions, options, upgrades and other
changes (collectively referred to as "improvements") to the Components and/or
Programs as they are made available for distribution to any other customers of
Vendor, except those improvements which are proprietary to such customers at a
price which shall be no greater than that given, in the normal course of
business to other customers of Vendor purchasing a like system in the same
volume and under substantially the same terms and conditions as Buyer has
hereunder. In addition, except as may be required by Subparagraph 15A.(2)d
below, Vendor agrees that it will provide Buyer with six (6) months prior
written notice of any plan to modify the Systems/Components and/or Programs
which will be sold to Buyer under this Agreement if such intended modification
will significantly affect either (i) the Buyer's operation of the Component
and/or Program, (ii) the operation of the restaurant or (iii) the functionality
of the Systems provided, however, this shall not impair Buyer's right to
purchase from Vendor during the Term and under the provisions of this
Agreement, the specific Systems/Components and/or Programs Buyer has contracted
for to the extent of Buyer's Minimum Purchase Commitment or any Optional
Purchase Commitment.

10. LICENSE OF PROGRAMS:
-------------------

A. Notwithstanding any provision herein to the contrary, title to any
Programs and Program Documentation (including any copies thereof) shall remain
vested in Vendor. Subject to the terms and conditions of this Agreement, Vendor
hereby grants to Buyer, its successors in interest and the franchisees and
licensees of its restaurant or food service formats, a nontransferable,
nonexclusive, royalty free limited License to use the Programs, in machine
readable form and associated Program Documentation in conjunction with the
Systems purchased from Vendor under the terms of this Agreement solely for the
processing of Buyer's internal business data in the operation of its restaurant
business and shall not be transferred to or in any manner or form used on any
other point of sale hardware equipment other than hardware equipment purchased
directly from Vendor. A separate copy of the Programs and Documentation must be
licensed/purchased from Vendor for each Vendor System which Buyer intends to use
the Programs on. This license and the rights granted hereunder shall terminate
with respect to each copy of the Programs which is licensed by Buyer for use
with a System/Component on the date Buyer permanently removes such
System/Component from installation in one of Buyer's or Buyer's franchisee's
restaurants.

B. Except for any portions of the Programs which are unique to
Buyer's restaurant operational procedures and which were integrated into the
Programs by Vendor in response to Buyer's written specification (e.g. certain
screen layouts and specific menu item key identification, etc.). Buyer
recognizes that the Programs and associated Program Documentation supplied to
Buyer are proprietary to Vendor and are a valuable asset of Vendor and that
their use and disclosure must

9 of 19
<PAGE>

be carefully and continuously controlled. The Programs and associated Program
Documentation supplied to Buyer under this Agreement or any authorized copies
made thereof shall be held in confidence and shall not be disclosed in any
manner or made available in any form to any persons or entities without the
express written consent of Vendor, provided however that Buyer shall be
permitted to disclose relevant aspects of the Programs and associated Program
Documentation to its employees to the extent such disclosure is reasonably
necessary to Buyer's use of the Programs and associated Program Documentation,
and provided that Buyer advises its employees of their confidential nature and
takes all reasonable steps to ensure that the Programs and/or associated Program
Documentation is not used, disclosed, and/or duplicated in contravention of the
provisions of this Subparagraph 10B.

C. Buyer agrees that it will not, except as is expressly authorized
in this Agreement (a) copy or duplicate, or permit anyone else to copy or
duplicate in whole or in part any physical or magnetic version of the Programs
or associated Program Documentation furnished by Vendor under this agreement, or
(b) create or attempt to create, or permit others to create or attempt to
create, by reverse engineering, assembly or otherwise, the source programs or
any part thereof from the object program or from other information made
available under this Agreement or otherwise (whether oral, written, tangible or
intangible) provided, however that Buyer shall be permitted to make one (1) copy
of the Programs for backup purposes for each System purchased.

D. If Buyer attempts to use, copy, license, disclose or convey the
Programs and/or associated Program Documentation supplied by Vendor hereunder,
in a manner contrary to the terms of this Agreement or in derogation of Vendor's
proprietary rights, whether those rights are explicitly stated herein,
determined by law or otherwise, Vendor shall have, in addition to any other
remedies available to it, the right to injunctive relief enjoining such wrongful
actions, Buyer hereby acknowledging that other remedies are inadequate.

11. CONFIDENTIAL INFORMATION:
------------------------

A. Buyer and Vendor agree that all confidential and proprietary
information concerning the parties and their respective operations and
procedures shall be maintained on a confidential basis for each other's benefit.
Buyer and Vendor shall not disclose to others any of the respective technical
data or proprietary information acquired from each other without the other
party's prior written consent. Buyer and Vendor agree further to execute and
abide by the Confidentiality Agreements which are attached hereto and
incorporated herein by reference as Exhibit F1 and F2. This section and Exhibits
F1 and F2 shall survive the termination of this Agreement.

B. Notwithstanding any provisions to the contrary in this
agreement or the Confidentiality Agreements, the obligations or confidentiality
of the parties hereto shall not apply with respect to any information which (i)
is known by the party receiving such information hereunder at the time of
disclosure (whether or not such

10 of 19
<PAGE>

disclosure was made prior to or after the date hereof), or (ii) is or becomes
known to the public generally through no fault or other action of the party
receiving such information hereunder, or (iii) is obtained lawfully from a third
party who is not believed or suspected by the party receiving such information
hereunder to have obtained such information under an obligation to hold such
information confidential, or (iv) is developed by the party receiving such
information, employees, agents or representatives as a result of their own
efforts and not as a direct or indirect result of the disclosure of the same
information by the party disclosing such information.

12. WARRANTIES & REPRESENTATIONS:
----------------------------

A. Vendor warrants to Buyer that:

(1.) each System/Component purchased by Buyer under this Agreement
(excluding the associated Programs and Documentation) hereinafter "Hardware"
shall be free from defects in material and workmanship under normal use and
service for a period commencing upon Delivery of the System/Components to Buyer
(i.e. the earlier of, the date the Systems/Components are shipped by Vendor to a
Vendor facility or to a location designated by Buyer) and terminating
[CONFIDENTIAL TREATMENT REQUESTED] from the date of completion of installation;

(2.) to the best of Vendor's knowledge, Vendor is the author of, and
has full and exclusive right, title and interest in and to the Programs and/or
has the right to grant to Buyer the licenses and other rights granted hereunder.

(3.) the Systems/Components and Programs do not infringe any United
States patent issued and existing as of the date of this Agreement is executed
by Vendor, or any United States copyright or trademark;

(4.) except as may be otherwise agreed to by the parties, the
Programs and Documentation to be licensed and provided to Buyer after the
effective date of this Agreement shall be substantially the same Programs and
Documentation as that which was licensed and provided by Vendor in association
with the last System Delivered to Buyer prior to the effective date of this
Agreement.

These Vendor warranties are in addition to and do not supersede Buyer's rights
under any on-site service agreement which may be in effect between the parties.
With the except of any implied warranty or merchantability the foregoing Vendor
warranties are in lieu of all other warranties, expressed or implied, including
but not limited to the implied warranty of fitness for a particular purpose.

B. Vendor and Buyer repent and warrant to each other that:

(1.) Each has full right and authority to enter into this Agreement
on the terms specified herein.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

11 of 19
<PAGE>

(2.) The execution, delivery, and performance of this Agreement is
not prohibited by and will not be in violation of any Agreement to which it is a
party, and will not be in violation of its certificate of incorporation or by-
laws.

(3.) There is no material litigation, proceeding or investigation
filed or pending or threatened in any Court or before any regulatory commission,
board or other administrative or governmental agency against it which may in any
way affect its full and complete performance under this Agreement.

C. Except as provided in Subparagraph 12A.(2.) and (3.) above, the
Programs are provided "as is" without warranty of any kind, either express or
implied, as to any matter whatsoever, including but not limited to, the implied
warranties of merchantability and fitness for a particular purpose.

13. LIMITATION OF LIABILITY:
-----------------------

Except as otherwise expressly provided elsewhere in this Agreement and
except due to the extent of fraud by a party, in no event shall either party be
-----------
liable to the other party for any damages arising from the interruption or loss
of: use, service, data, incorrect data, revenues or profits (except Vendor's
profits in the event Buyer breaches its purchase commitment obligations), or for
any indirect, special, consequential or incidental damages arising out of a
breach of any provision of this Agreement, or in any way related to the
performance or non-performance by the other party under said Agreement
regardless of the form in which any legal or equitable action may be brought
(i.e. breach of warranty, contract, strict liability or otherwise). The
foregoing shall apply without regard to whether the party sought to be held
accountable had knowledge of the possibility of such damages.

14. FORCE MAJEURE:
-------------

Neither party will be liable to the other for any delay or for failure to
perform its obligations hereunder resulting from any cause beyond that party's
reasonable control, including, but not limited to: fires; explosions; floods;
strikes; work stoppages or slowdowns; or other industrial disputes; accidents;
riots; or civil disturbances; acts of civil or military authorities; export or
import authorization; inability, for those portions of the Territory outside the
United States, to obtain any license or consent necessary; and any abnormal
delays or shortages by critical material suppliers. Provided that if Vendor
cannot perform under this Agreement due to such Force Majeure for more than
ninety (90) Days, Buyer shall have the option to terminate its obligation under
this Agreement.

15. BREACH & REMEDIES:
-----------------

A. Buyer's Remedies:

(1.) For breach of the express warranty set forth in Subparagraph
------------------------------------------------------------
12A.(1.) and for breach of any implied warranty of merchantability:
-------------------------------------------------------------------

12 of 19
<PAGE>

a. Subject to Subparagraph 5.G. of this Agreement, Vendor's
sole liability and Buyer's exclusive remedy shall be limited to Vendor, at
Vendor's sole option, promptly either (a) supplying at its expense a
replacement, or (b) repairing such defective hardware at its facility and at its
expense. Vendor shall not be responsible for malfunction, defects or damage to
the Hardware cause by negligence of Buyer's or Buyer's franchisee's
employees/agents; vandalism; adjustments, maintenance or repairs made by persons
other than Vendor's personnel or persons, firms or corporations authorized by
Vendor; operation and use not within specifications or in an unacceptable
environment; or other cause not arising out of defects in material or
workmanship. The notice of breach shall be by telephone with confirmation in
writing posted or faxed within five (5) Days and shall specify the facts
constituting the alleged breach of warranty. If the breach is not discovered
within the warranty period or if Vendor has not received written notification of
a breach within five (5) Days after termination of this warranty period the
claim for breach is waived by Buyer. The purpose of this exclusive remedy shall
be to provide Buyer with free repair and replacement of defective parts in the
manner provided for herein.

b. Notwithstanding Subparagraph 15A.(1.)a. above, if a defect
covered by said warranty is discovered within the warranty period in a
particular item of Hardware which significantly and detrimentally affects the
performance of the System and the operation of the restaurant in which it is
installed and Vendor is unable to repair or replace the defective item of
Hardware within fifteen (15) Days of Vendor's receipt of the defective Hardware
at its facility for those portions of the Territory which are not covered by a
Vendor on-site field service contract or Vendor's receipt of Buyer's notice for
those portions of the Territory which are covered by a Vendor on-site service
contract, then Vendor shall remove the defective System and shall provide Buyer
with a refund of the purchase price and installation price plus all associated
freight, duties and taxes paid by Buyer to Vendor for such System provided
however, the System will continue to be considered as a purchase for the purpose
of satisfying Buyer's Minimum or Optional Purchase Commitment.

c. Notwithstanding Subparagraph 15A.(1.)a. above, Buyer is
not required to return the defective Hardware to Vendor's facility for repair in
those portions of the Territory where Buyer and Vendor have an on-site field
service contract in effect at the time the warranty defect is discovered. For
those portions of the Territory where Buyer and Vendor do not have such on-site
field service contract, all Hardware required to be returned to Vendor pursuant
to Subparagraph 15A.(1.)a. above shall be shipped at Vendor's expense by the
most reasonable and practical means to the repair location designated by Vendor.
Upon repair or replacement, Vendor shall ship prepaid such repaired or
replacement Hardware to the address specified by Buyer. Unless otherwise agreed,
Buyer shall be responsible for obtaining governmental approvals and
documentation required for international shipment of returned Hardware. Buyer
shall be responsible for the proper packing of the defective Hardware in
accordance with instructions provided by Vendor.

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<PAGE>

d. In the event of a fire, explosion or other physical
consequence of such defect, Vendor shall compensate Buyer for any damage or
injury to property or persons proximately caused by such defect.

(2.) For breach of the express warranties set forth in Subparagraph
--------------------------------------------------------------
12A.(2.) and (3.) above:
-----------------------

a. Vendor's sole liability and Buyer's exclusive remedy shall
be limited to Vendor, at its sole expense, defending any action brought against
Buyer based on a claim that any Component and/or Program infringes any United
States patent issued and existing as of the date this Agreement is executed by
Vendor, or United States copyright or trademark and will pay all reasonable
costs and damages finally awarded against Buyer in any such action which are
attributable to such claim, provided that: (1) Buyer shall promptly notify
Vendor in writing of notice of any such claim or allegation of infringement; and
(2) Buyer allows Vendor to have sole control of the defense of any such claim,
including, without limitation, all communications with claimant, all settlement
negotiations, and the conduct of all litigation; and (3) Buyer will cooperate
with Vendor and will provide Vendor with such assistance in such defense as
Vendor may reasonably request. Except in the event Vendor has not assumed the
defense within a reasonable period of time after Vendor's receipt of Buyer's
notice of the alleged infringement or ceases to defend Buyer, Vendor shall not
be responsible for any litigation expenses (including attorney's fees) incurred
by Buyer or settlements entered into by Buyer unless Vendor agrees to them in
writing which agreement shall not be unreasonably withheld.

b. Vendor shall have no liability to Buyer hereunder, or otherwise,
with respect to any claims of infringement which are based on the use of any
Component or Program or combination of Components or Programs with equipment,
programs or supplies not supplied by Vendor where such infringement would not
occur in the absence of such combination, nor shall Vendor have any liability
with respect to any claim of infringement based on use of any Component and/or
Program in a manner other than in accordance with this Agreement and/or any
License granted to Buyer under this Agreement, nor shall Vendor have any
liability to Buyer hereunder, or otherwise with respect to any claims for
infringement due to the Components and/or Programs being made or modified either
(i) by Buyer or others without the prior written authorization from Vendor or
(ii) by Vendor at Buyer's specific directions or instructions.

c. This Subparagraph 15A.(2.) states Vendor's entire liability to
Buyer under this Agreement or otherwise with respect to infringement of third
parties' patents, copyrights, trademarks, designs, trade secrets or other
proprietary rights.

d. If Vendor should become aware of a potential infringement
problem, Vendor shall promptly notify Buyer of the situation, and to avoid a
potential infringement of patent, trademark, copyright, design, trade secret or
other proprietary right, even if not alleged. Vendor may, at its sole option and
at its own expense, procure for Buyer the right to continue using the alleged
infringing item, or

14 of 19
<PAGE>

modify or replace such item with a comparable item to Buyer and/or Buyer's
reasonable satisfaction so as to avoid the infringement or remove the infringing
item. If the infringing item is removed by Vendor, Vendor shall promptly
provide a refund to Buyer of the purchase price and installation price plus all
associated freight, duties and taxes paid by Buyer to Vendor for such item as
depreciated on a eight (8) year straight line basis.

(3.) For breach of the express warranties set forth in Subparagraph
--------------------------------------------------------------
12A.(4.) or if Program errors/bugs are discovered in a System/Component
-----------------------------------------------------------------------
installed by Vendor or its authorized representative:
----------------------------------------------------

a. Notwithstanding Subparagraph 12D. above, Vendor will, at its
sole expense, [CONFIDENTIAL TREATMENT REQUESTED]. Vendor shall commence its
efforts to correct such Errors upon its own discovery or upon receipt of notice
from Buyer of Errors, whichever is earlier. Both parties understand that
Vendor's ability to correct Errors in a reasonable amount of time is heavily
dependent upon the specific characteristics of the Errors. Therefore, if Buyer
reports Errors to Vendor, Buyer agrees that Vendor shall also be furnished, to
the extent reasonably possible, a general description of the Errors and a
detailed account of the context in which the Errors arise sufficient to allow
the Vendor to reproduce such Errors and to verify correction. For those Errors
which are: (i) critical (i.e. significantly affecting the operation of a
restaurant) and for which there is no alternative solution (as described in
Subparagraph 15A.(3.)(b.) below) Vendor will, upon correction of the Errors,
provide, at Vendor's expense, such correction to all restaurants which are using
the Program release in which the Errors appeared, and (ii) noncritical (i.e. not
significantly affecting the operation of the restaurant) and for which there is
no alternative solution (as described in Subparagraph 15A.(3.)(b.) below) Vendor
will, upon correction of the Errors, include, at Vendor's expense, such
correction in Vendor's next general Program release.

b. Notwithstanding any provision of this Agreement to the contrary,
whenever Vendor is obligated by this Agreement to provide corrections to Errors
or to use its best efforts to correct Errors in the microcode or Programs, if,
in Vendor's reasonable opinion, the Errors would require an inordinate amount of
programming effort on the part of Vendor to correct and the result of the
problem caused by the Errors is such that it can be avoided through reasonable
procedural or other means, Vendor may, in lieu of correcting the Errors, provide
Buyer with an alternative solution to the problem provided however that such
alternative solution is practical to implement and is reasonably acceptable to
Buyer.

c. This Subparagraph 15A.(3.) states Vendor's entire liability to
Buyer and Buyer's exclusive remedy under this Agreement for any Errors
discovered in the Programs.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

15 of 19
<PAGE>

(4.) If Vendor, repudiates this Agreement or commits any other
---------------------------------------------------------
material breach of this Agreement and fails to remedy such breach [CONFIDENTIAL
-------------------------------------------------------------------------------
TREATMENT REQUESTED] after receipt of written notice by Buyer specifying such
-----------------------------------------------------------------------------
alleged breach, then Buyer's sole and exclusive remedy and Vendor's sole
------------------------------------------------------------------------
liability shall be limited to the following:
-------------------------------------------

a. Buyer may cancel this Agreement, such cancellation to be
effective as of the date notice of such is received, via fax or personal
delivery, by Vendor. Cancellation shall cancel the remaining portion of Buyer's
Minimum Purchase Commitment or Optional Purchase Commitment, as applicable,
(i.e. that portion which had not been Delivered as of the date of cancellation)
and shall be without further liability to Vendor, provided however, that Buyer
shall fulfill all of its unsatisfied obligations or liabilities which arose
prior to said cancellation; and/or

b. Buyer may, upon written notice to Vendor, cancel any or all
of their outstanding Releases to the extent the Components, Systems and/or
Programs ordered hereby have not been shipped or are not ready for shipment on
the date of cancellation; and/or

c. Buyer may go into the marketplace and purchase the remaining
portion of Buyer's Minimum Purchase Commitment or Optional Purchase Commitment,
as applicable (i.e. that portion which had not been Delivered as of the date of
cancellation) from a third party and the difference between the purchase price
which Buyer actually pays and the applicable purchase price stated in this
Agreement, to the extent such difference does not [CONFIDENTIAL TREATMENT
REQUESTED] shall be paid by Vendor to Buyer; and/or

d. Any or all other remedies which are applicable and available
to the Buyer under the provisions of the New York Uniform Commercial Code.

e. In no event shall anything herein be construed in such a
manner as to effect a forfeiture of monies paid by Buyer to Vendor hereunder.

B. Vendor's Remedies:

(1.) If Buyer repudiates or materially breaches this Agreement at
any time prior to Vendor's Delivery of all of the Minimum Purchase Commitment
and does not timely cure such breach, then Buyer and Vendor hereby agree that
Vendor may manufacture and ship to a Vendor facility (which shall be deemed as
Buyer taking Delivery and title to such Systems/Components), [CONFIDENTIAL
TREATMENT REQUESTED] the remaining quantity of the Systems/Components of the
Minimum Purchase Commitment which Buyer is required to but has failed to take
Delivery of and title to prior to such required date in order to satisfy such
purchase commitment obligation, and require Buyer to pay for all such
Systems/Components, at the applicable purchase prices and in accordance with the
payment provisions stated in this Agreement.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

(2.) If Buyer repudiates or otherwise commits any material breach
(other than that which is covered by Subparagraph 15B.(1) above) of this
Agreement including but not limited to, the payment and license provisions of
this Agreement, in a material manner, and fails to cure such breach
[CONFIDENTIAL TREATMENT REQUESTED] after receipt of written notice by Vendor
specifying such alleged breach, then Buyer and Vendor hereby agree that Vendor's
sole and exclusive remedies and Buyer's sole liability shall be limited to the
following; Vendor may, in its sole discretion.

a. Cancel this Agreement without any further obligation or
liability to Buyer, (except for its obligations of confidentiality as specified
in Paragraph 11 of this Agreement and Exhibits F1 and F2 of this Agreement) such
cancellation to be effective as of the date notice of such is received, via fax
or personal delivery, by Buyer; provided, however, that Vendor shall fulfill all
of its unsatisfied obligations or liabilities which arose prior to such
cancellation;

b. Require Buyer to pay the price per System for all Systems
Delivered [CONFIDENTIAL TREATMENT REQUESTED] it may have been entitled to for
exercise of its option and with or without demand or notice to Buyer declare any
amount unpaid immediately due and payable;

c. Require Buyer to take tittle to and pay for, at the Minimum
Purchase Commitment price per System and in accordance with the payment
provisions stated in this Agreement.

(i) all remaining Systems/Components of the Minimum Purchase
Commitment or Optional Purchase Commitment, as applicable, and

(ii) all additional Systems/Components and/or Programs which
had been ordered by Buyer but had not been Delivered by Vendor on or before the
date of Vendor's cancellation; and

d. Any or all other remedies which are applicable and available
to the Seller under the provisions of the New York Uniform Commercial Code.

C. Vendor neither assumes nor authorizes any other person to assume
for Vendor any other liability in connection with the sale or use of the
Systems/Components sold under this Agreement

16. ESCROWED MATERIAL:
------------------

Buyer and Vendor agree to abide by the terms and conditions of the
Escrow Agreement as set forth in Exhibit G attached hereto and incorporated
herein by reference.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

17 of 19
<PAGE>

17. COMPLETE AGREEMENT:
-------------------

This Agreement is the complete Agreement between the parties with
respect to its subject matter. This Agreement is entered into after full
investigation, without either party relying on any statement or representation
made by the other party not embodied herein. their terms and conditions of this
Agreement may not be supplemented, changed, waived, discharged, terminated or
otherwise modified orally or by the terms of any Purchase Order or Release,
acknowledgment, invoice or other such instrument, but only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge, termination or modifications is sought. No waiver of any breach of
any obligation hereunder shall be deemed a waiver of such obligation or of any
subsequent breach of the same or any other obligation.

18. GOVERNING LAW:
--------------

This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York.

19. SEVERABILITY:
-------------

In the event that any one or more provisions contained in this Agreement
should, for any reason, be held to be unenforceable in any respect under the
laws of any State or of the United States, its unenforceability shall not affect
any other provisions of this Agreement, but shall be deemed replaced by an
enforceable provisions determined by the arbiter of the dispute to be most
closely reflective of the parties original intent.

20. ASSIGNMENT:
-----------

A. This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that neither party shall assign its rights nor delegate any of its duties or
obligations under this Agreement, including the Confidentiality Agreement and
Escrow Agreement, without the prior written consent of the other party, which
consent will not be unreasonably withheld.

B. Notwithstanding Subparagraph 20A. above, Buyer may assign its rights
under this Agreement to another subsidiary of its parent corporation, Pepsico,
provided Buyer is not released from its responsibilities and obligations set
forth in this Agreement and provided further that any System/Components
purchased or any Programs or associated Documentation licensed by an assignee
under this Agreement shall only be purchased or licensed for installation and
use in a Taco Bell or Hot'n Now restaurant.

18 of 19
<PAGE>

21. SURVIVAL:
---------

The applicable rights and obligations set forth in Paragraphs 1, 10, 11,
12, 13, 14, 15, 16, 17, 18, 19, 20 and 21 of this Agreement shall survive and
continue after any expiration, cancellation, or termination of this Agreement
and shall be binding upon the parties and their successors and assigns.

22. NOTICES:
--------

All communications and notices relating to this Agreement are to be sent
by fax, personal or reputable overnight delivery addressed as follows:

If to Vendor: If to Buyer:
------------ ------------

PAR Microsystems Corporation Taco Bell Corp.
220 Seneca Turnpike 17901 Von Karman
New Hartford, NY 13413 Irvine, CA 92714
Attention: President Attention: Vice President
(copy Attn: Legal Dept.) Information Technology Dept.
(copy Attn: Legal Dept.)

IN WITNESS WHEREOF, the parties have hereunto have executed this
Agreement effective as of the first date set forth above.

PAR MICROSYSTEMS CORPORATION TACO BELL CORP.

By [CONFIDENTIAL TREATMENT By /s/ Richard Goodman
------------------------
REQUESTED]
------------------------

Title National Account Mngr Title SUP & CFO
----------------------- ---------------------

Reviewed by:
--------------
Date: 12/8/95
---------------------

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

19 of 19

<PAGE>

EXHIBIT 10.2

TACO BELL SERVICE INTEGRATION AGREEMENT
---------------------------------------
INDEX
-----
<TABLE>
<CAPTION>

<S> <C>
DEFINITIONS................................................. 1
TERM AND TERMINATION........................................ 2
COVERAGE OF EQUIPMENT....................................... 3
HELP DESK SUPPORT........................................... 4
ON-SITE REMEDIAL MAINTENANCE................................ 6
PERFORMANCE EVALUATION, PENALTY & CUSTOMER'S REMEDY......... 10
CUSTOMER RESPONSIBILITIES................................... 15
EXCLUSIONS FROM COVERAGE.................................... 16
UPCHARGE ITEMS.............................................. 16
REPORTING REQUIREMENTS...................................... 18
PRICING, INVOICING AND PAYMENT.............................. 18
SITEBASE RETENTION.......................................... 21
WARRANTY DISCLAIMER......................................... 22
LIMITATION OF LIABILITY..................................... 22
GENERAL..................................................... 15
EXHIBIT A
EXHIBIT B................................................... 30
EXHIBIT C................................................... 31
EXHIBIT D................................................... 32
EXHIBIT E................................................... 35
EXHIBIT F................................................... 38
EXHIBIT Fl.................................................. 42
EXHIBIT F2.................................................. 47
EXHIBIT G................................................... 48
</TABLE>
<PAGE>

PAR SERVICE INTEGRATION AGREEMENT
---------------------------------

By and between PAR Microsystems Corporation ("PAR"), a New York corporation,
with its principal office located at 8383 Seneca Turnpike, New Hartford, New
York 13413 and Taco Bell Corp. ("Customer"), a California corporation, with its
principal offices located at 17901 Von Karman, Irvine, California 92714-6212.

PAR and Customer agree that the following terms and conditions apply to Help
Desk Support and On-Site Remedial Maintenance Service provided by PAR for all
PAR and certain Third Party Equipment currently installed and to be installed at
the Sites, defined below, during the term of this PAR Service Integration
Agreement ("Agreement").

1. DEFINITIONS

1.1 "Site(s)" covered under this Agreement shall include:
-------
(a) all Customer owned Taco Bell, Taco Bell Express and Hot 'n Now
restaurants located within the United States of America and Canada in which
any of the Equipment set forth in Exhibit A attached to and made a part of
this Agreement, is installed, and

(b) all Customer owned locations in Puerto Rico and all Customer
franchisee/ licensee restaurant locations within the United States of
America and Canada for the sole purpose of providing On-Site Remedial
Maintenance Service for the T.A.C.O. back-office personal computers.

1.2 "PAR Equipment" shall include all hardware and software distributed by PAR
-------------
installed at a Site(s) that is eligible for service under this Agreement. Such
software is included for the sole purpose of providing Customer with Help Desk
Support in the use of such software.

1.3 "Third Party Equipment" shall include the hardware and software running on
---------------------
such equipment set forth in Exhibit A (as may be subsequently amended by the
parties during the term of this Agreement) installed at a Site(s), that is
eligible for service under this Agreement. Such software is included for the
sole purpose of providing Customer with Help Desk Support in the use of such
software.

1.4 "Equipment" shall mean all PAR Equipment and Third Party Equipment, or a
---------
specified subgroup thereof.

1.5 [CONFIDENTIAL TREATMENT REQUESTED] shall mean the licensed PAR Service
Management system utilized by PAR.

1.6 "Call Priority" shall mean the priority assigned by the Customer Service
-------------
Communication Center ("CSCC") to an incoming Customer call.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.
<PAGE>

1.7 "Days" shall mean calendar days unless otherwise designated.
----

1.8 "PAR Holidays" shall mean those holidays established by PAR on a calendar
------------
year basis. PAR shall notify Customer of PAR's holiday schedule thirty (30)
Days prior to commencement of each calendar year within the term of this
Agreement. PAR Holidays from the Effective Date of this Agreement through the
end of calendar year 1995 are as follows: September 4, November 23, November 24
and December 25, 1995.

1.9 "Customer Help Desk Holidays" shall mean those Customer Help Desk holidays
---------------------------
established by Customer on a calendar year basis. Customer shall notify PAR of
Customers Help Desk holiday schedule thirty (30) Days prior to commencement of
each calendar year during the term of this Agreement. Customer Help Desk
Holidays from the Effective Date of this Agreement through the end of calendar
year 1995 are as follows: November 23 and December 25, 1995.

1.10 "FSO" is PAR's Domestic and Canadian Field Service Organization and
---
certain PAR selected independent subcontractors performing Remedial Maintenance
Service on PAR's behalf in the United States, Canada and Puerto Rico.

1.11 "On-Site Remedial Maintenance Service" ("RMS') is maintenance required due
------------------------------------
to malfunction(s) in Equipment which necessitates service on Site. RMS is
provided by the FSO and is only available for that Equipment set forth on
Exhibit A hereto, subject to the requirements of Section 3, below.

1.12 "Help Desk Support" is support provided remotely, by telephone, by PAR's
-----------------
CSCC for certain Equipment set forth on Exhibit A hereto, and user support of
the software, referenced in Sections 1.2 & 1.3 above, subject to the
requirements of Section 3, below.

1.13 [CONFIDENTIAL TREATMENT REQUESTED]

1.14 [CONFIDENTIAL TREATMENT REQUESTED]

1.15 [CONFIDENTIAL TREATMENT REQUESTED]

2. TERM AND TERMINATION

2.1 Unless extended pursuant to Section 2.2 below, the term of this Agreement
shall be [CONFIDENTIAL TREATMENT REQUESTED]. This Agreement shall become
effective on September 1, 1995 ("Effective Date") and shall terminate on
[CONFIDENTIAL TREATMENT REQUESTED].

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-2-
<PAGE>

2.2 Provided written notification of exercise is given to PAR by Customer not
later than [CONFIDENTIAL TREATMENT REQUESTED], Customer may extend this
Agreement for [CONFIDENTIAL TREATMENT REQUESTED]. If Customer does not exercise
this option to extend by such date [CONFIDENTIAL TREATMENT REQUESTED] as set
forth in Exhibit B hereto.

2.3 Notwithstanding Subsection 2.1 or 2.2 above, either party shall have the
right to terminate this Agreement without notice upon the occurrence of any of
the following events: (i) if the other party petitions for a reorganization
under the Bankruptcy Act, or is adjudicated bankrupt, or if a receiver, trustee
or liquidator is appointed for the other party's business, or if the other party
makes an assignment for the benefit of creditor's, or should the other party
admit in writing its inability to pay its debts as they become due; (ii) if the
other party defaults in the payment of any sum due hereunder, and fails to cure
said default within sixty (60) Days after receipt of written notice from the
other party; or (iii) if the other party attempts to assign this Agreement
without the other party's prior written consent. Such termination shall be
without prejudice to any other rights or remedies the terminating party may
have. Any such termination shall not relieve Customer of its obligation to pay
PAR for those service fees and/or charges that accrued prior to termination.

3. COVERAGE OF EQUIPMENT

3.1 For the term of this Agreement, Customer agrees that PAR will provide and
will be Customers exclusive service provider for:

(a) Help Desk support and RMS Support for all Equipment installed in all
Customer owned Taco Bell, Taco Bell Express and Hot 'n Now restaurants
located within the United States of America and Canada, and

(b) RMS Support for the T.A.C.O. back-office personal computers installed
in all Customer locations in Puerto Rico and all Customer
franchisee/licensee restaurant locations within the United States of
America and Canada.

3.1.1 Notwithstanding Section 3.1 above, and subject to the
requirements/restrictions set forth in Sections 11 & 12 of this Agreement
neither of which are waived or modified by -this provision, if Customer decides
not to extend the Agreement by [CONFIDENTIAL TREATMENT REQUESTED] then during
the [CONFIDENTIAL TREATMENT REQUESTED] of the Agreement Customer shall have the
right to remove a maximum of [CONFIDENTIAL TREATMENT REQUESTED] Sites from
coverage under this Agreement and to contract with another party for the service
of such Sites as a field trial. Should the Agreement be extended for a
[CONFIDENTIAL TREATMENT REQUESTED], Customer shall have the right to a field
trial on the same terms described above during the [CONFIDENTIAL TREATMENT
REQUESTED].

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-3-
<PAGE>

3.2 All PAR Equipment set forth in Exhibit A attached hereto and made part
hereof installed in Customer owned Taco Bell, Taco Bell Express and Hot 'n Now
restaurants -located within the United States of America and Canada prior to the
Effective Date, shall be eligible for service under this Agreement upon the
Effective Date.

3.2.1 All new Third Party Equipment set forth in Exhibit A installed in
---
Customer owned Taco Bell, Taco Bell Express and Hot 'n Now restaurants located
within the United States of America and Canada on or after the Effective Date,
shall be eligible for service under this Agreement upon the installation date.

3.3 All Third Party Equipment set forth in Exhibit A attached hereto installed
in Sites prior to the Effective Date shall be eligible for service under this
Agreement on the Effective Date. All Equipment set forth in Exhibit A which is
acquired by Customer after the Effective Date in conjunction with Customer's
acquisition of a restaurant(s) within which such Equipment is installed, shall
be eligible for service under this Agreement only upon PAR's acceptance of such
Equipment for service.

3.4 All new Third Party Equipment set forth in Exhibit A attached hereto
---
installed in Customer owned Sites located within the United States of America
and Canada and all new T.A.C.O. back-office personal computers installed in
Customer owned Sites in Puerto Rico and Customer franchise/licensee Sites within
the United States of America and Canada after the Effective Date shall be
eligible for service under this Agreement upon the installation date.

3.5 All new Equipment and all used Third Party Equipment installed at
---
Customer's Sites which was not set forth in Exhibit A as of the Effective Date
but is subsequently added thereto by mutual Agreement of the parties shall be
eligible for service.

3.6 PAR's acceptance shall be provided only after:

(a) PAR's inspection of the Equipment at PAR's then current time and
material rates, which shall not exceed [CONFIDENTIAL TREATMENT REQUESTED];
and

(b) completion, at PAR's then current time and material rates, of any
repairs or adjustments, which are deemed necessary by PAR to bring the
Equipment into proper, or operating condition and which are authorized by
Customer.

4. HELP DESK SUPPORT

4.1 For purposes of this Section 4, the following definitions shall apply:

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-4-
<PAGE>

4.1.1 "Call Text Update" is the date and time electronically generated by

4.1.2 "CSCC Response" is the duration of time from the assignment of a Call
Priority until Call Text Update.

4.1.3 "CSCC Response Percentage" is calculated for each CSCC Call Priority
Category by dividing the number of calls for such CSCC Call Priority Category in
which PAR has met or exceeded its CSCC Response by the total number of calls of
such Call Priority received by PAR.

4.2 The Principal Period of Maintenance ("PPM") for Help Desk Support
provided by the CSCC is [CONFIDENTIAL TREATMENT REQUESTED].

4.3 For purposes of this Section 4, the following Call Priority categories
are applicable to CSCC/Help Desk Support:

CSCC Call Priority Definition
------------------ ----------
<S> <C>
P1 [CONFIDENTIAL TREATMENT REQUESTED]

P2 [CONFIDENTIAL TREATMENT REQUESTED]

P3 [CONFIDENTIAL TREATMENT REQUESTED]

P4 [CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>

4.4 Help Desk Support requires PAR to meet the following CSCC Response times
in providing a Call Text Update:

CSCC Call Priority CSCC Response CSCC Response Percentage
------------------ ------------- ------------------------
<S> <C> <C>
P1 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]

P2 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]

P3 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]
</TABLE>

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-5-
<PAGE>

<TABLE>
<S> <C> <C>
P4 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]
</TABLE>

4.5 In cases where PAR's CSCC response to calls is restricted or impossible
due to circumstances beyond the reasonable control of the CSCC, including but
not necessarily limited to: acts of nature, acts of war, strikes, electrical
outages, support system failures or problems (i.e. [CONFIDENTIAL TREATMENT
REQUESTED], paging, phone systems), fire, etc., then such calls shall not be
used in the determination of the CSCC Response Percentages.

5. ON-SITE REMEDIAL MAINTENANCE

5.1 For purposes of this Section 5, the following definitions shall apply:

5.1.1 "Notify" is the first available "Contract Hour" date and time after which
it has been determined that an FSO technician needs to be sent to the Site.

5.1.2 "Arrival" is the actual date and time that the FSO technician arrives at
the Site.

5.1.3 "Contract Hour" is that or those hours falling within the applicable PPM.

5.1.4 "FSO RMS Response" is the duration of time from the electronically
generated [CONFIDENTIAL TREATMENT REQUESTED] system "Notify" date and time until
the date and time logged into the [CONFIDENTIAL TREATMENT REQUESTED] system for
"Arrival." Only "Contract Hours" will be applied to this calculation.

5.1.5 "FSO RMS Restoral" is the duration of time from the [CONFIDENTIAL
TREATMENT REQUESTED] calculated "Estimated Time of Arrival" date and time until
the [CONFIDENTIAL TREATMENT REQUESTED] "Complete" date and time. "Clock Hours"
will be applied to this calculation.

5.1.6 "Estimated Time of Arrival" ("ETA") is the [CONFIDENTIAL TREATMENT
REQUESTED] calculated latest possible "Arrival" date and time that will allow
the FSO to meet the referenced FSO RMS Response times.

5.1.7 "Complete" is the date and time entered into the [CONFIDENTIAL TREATMENT
REQUESTED] which is the date and time PAR determined the Equipment was restored
to its proper operating condition.

5.1.8 "Clock Hours" are all available time periods not affected by PPM but
excluding PAR Holidays and in the case of RMS PC calls, Customer Help Desk
Holidays.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-6-
<PAGE>

5.1.9 "FSO RMS Response Percentage" for an applicable period is calculated for
each Call Priority category by dividing the number of calls for such Call
Priority in which PAR has met or exceeded its FSO RMS Response by the total
number of calls of such Call Priority received by PAR, during such period.

5.1.10 "FSO RMS Restoral Percentage" for an applicable period is calculated for
each Call Priority category by dividing the number of calls for such Call
Priority in which PAR has met or exceeded its FSO RMS Restoral by the total
number of calls of such Call Priority received by PAR, during such period.

5.2 The following Call Priority categories are applicable to RMS:

RMS Call Priority Definition
----------------- ----------
<S> <C>
P0 [CONFIDENTIAL TREATMENT REQUESTED]

P1 [CONFIDENTIAL TREATMENT REQUESTED]

P2 [CONFIDENTIAL TREATMENT REQUESTED]

PC [CONFIDENTIAL TREATMENT REQUESTED]

ND [CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>

5.3 The PPMs for RMS are as follows:

RMSCall Priority PPM
---------------- ---
<S> <C>
P0 [CONFIDENTIAL TREATMENT REQUESTED]
P1 [CONFIDENTIAL TREATMENT REQUESTED]
P2 & ND [CONFIDENTIAL TREATMENT REQUESTED]
PC [CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>

5.4 RMS will be provided during the PPMs set forth above in Section 5.3.,
following a determination by the CSCC that the reported problem requires RMS.
The determination to provide RMS will be made subsequent to remote
troubleshooting and technical assistance, provided by the CSCC, which must be
first utilized by a Site requesting assistance. A Site that

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-7-
<PAGE>

refuses or fails to devote a reasonable amount of time and effort of trained
Site personnel to troubleshoot the problem via the CSCC will cause the call to
be automatically assigned either a [CONFIDENTIAL TREATMENT REQUESTED] Call
Priority status [CONFIDENTIAL TREATMENT REQUESTED]. Such Priority status shall
be in PAR's reasonable discretion based on the information obtained by PAR.
[CONFIDENTIAL TREATMENT REQUESTED].

5.5 During RMS, the FSO may install or replace parts as it determines necessary
in order to restore the inoperative or malfunctioning Equipment to good
operating condition. [CONFIDENTIAL TREATMENT REQUESTED]. All replaced parts
become the property of PAR.

5.6 The FSO may, at its sole option, as part of the provision of RMS, make any
engineering changes or modifications to the Equipment which, in its sole
discretion, is required or desirable, if such changes do not negatively and
substantially impact Customers ability to operate the Equipment. However, with
respect to Third Party Equipment, PAR must receive Customer's prior written
approval of any change or modification. Customer must be notified of any
changes or modifications to the PAR Equipment which may materially impact
Customer's operations.

5.7 RMS as provided under this Agreement does not ensure uninterrupted
operation of the Equipment.

5.8 The FSO reserves the right to refuse to provide RMS when, in its reasonable
judgment, conditions at the Site represent a hazard to the safety and/or health
of FSO employees.

5.9 The FSO representative will notify the Site, by telephone, of the
approximate arrival date and time, prior to making an RMS call.

5.10 At the conclusion of an RMS call, a Customer Site management
representative shall sign the Incident Report presented by the FSO
representative concurring that the RMS call has been completed and that the
Equipment is functioning.

5.11 The FSO is required to meet the following response times in responding to
an RMS call:

RMSCall Priority FSO RMS Response FSO RMS Response Percentage
---------------- --------------------- ---------------------------
<S> <C> <C>
P0 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]

P1 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]
</TABLE>

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-8-
<PAGE>

<TABLE>
<S> <C> <C>
P2 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]

PC & ND [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED]
</TABLE>

[CONFIDENTIAL TREATMENT REQUESTED].

In cases where PAR's FSO RMS response and/or Restoral to a call is restricted or
impossible due to circumstances beyond the reasonable control of the FSO,
including but not necessarily limited to: acts of nature, acts of war, strikes,
unusual traffic conditions, electrical outages, support system failures or
problems (i.e. [CONFIDENTIAL TREATMENT REQUESTED], paging, phone systems), etc.,
then such calls shall not be used in the determination of the FSO RMS Response
Percentages and FSO RMS Restoral Percentages.

Additional time shall be permitted for response to P0 and Pl calls based upon
the Site's geographical distance from a PAR FSO location, as follows:

Distance From PAR FSO Location Adder (Hours)
------------------------------ -------------
<S> <C>
[CONFIDENTIAL TREATMENT REQUESTED]miles [CONFIDENTIAL TREATMENT REQUESTED]
([CONFIDENTIAL TREATMENT REQUESTED]Km)

[CONFIDENTIAL TREATMENT REQUESTED]miles [CONFIDENTIAL TREATMENT REQUESTED]
([CONFIDENTIAL TREATMENT REQUESTED]Km)

[CONFIDENTIAL TREATMENT REQUESTED]miles [CONFIDENTIAL TREATMENT REQUESTED]
( [CONFIDENTIAL TREATMENT REQUESTED]Km)
</TABLE>

PAR FSO locations are set forth on Exhibit C hereto. FSO locations may be added
or deleted in PAR's sole's discretion provided PAR ensures that the total number
of Customer Sites (for which PAR provides RMS under the terms of this Agreement)
more than [CONFIDENTIAL TREATMENT REQUESTED] miles ([CONFIDENTIAL TREATMENT
REQUESTED] Km) from the closest FSO location does not exceed [CONFIDENTIAL
TREATMENT REQUESTED]. PAR shall notify Customer in writing of any changes in
FSO locations.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-9-
<PAGE>

5.12 The FSO is required to meet the following FSO RMS Restoral times and
Percentages in restoring the subject Equipment to proper operating condition:
<TABLE>
<CAPTION>

LEVEL 1 LEVEL 2
------- -------
FSO RMS Restoral FSO RMS Restoral
Percentage FSO RMS Restoral Percentage FSO RMS Restoral
---------- -------- ---------- --------
Call Priority
-------------
<S> <C> <C> <C> <C>
P0 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED] REQUESTED] REQUESTED]

P1 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED] REQUESTED] REQUESTED]

P2 [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED] REQUESTED] REQUESTED]

PC&ND [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT [CONFIDENTIAL TREATMENT
REQUESTED] REQUESTED] REQUESTED] REQUESTED]
</TABLE>

5.13 The following RMS Call Priority uplift options shall be available to the
Customer:

Option 1 - Uplift from any RMS Call Priority to "P0" RMS Call priority.
--------
Provided PAR meets the P0 FSO RMS Response and FSO RMS Level 1 Restoral set
forth in Sections 5.11 and 5.12 above, Customer shall be invoiced at the fee set
forth on Exhibit D attached hereto. For monthly reporting, calls uplifted to P0
RMS Call Priority will be measured against the initially assigned RMS Call
Priority FSO RMS Response and FSO RMS Level 1 Restoral commitments.

Option 2 - Uplift from P2, PC or ND RMS Call Priority to P1 RMS Call Priority.
--------
Provided PAR meets the P1 FSO RMS Response and FSO RMS Level 1 Restoral set
forth in Sections 5.11 and 5.12 above, Customer shall be invoiced at the fee set
forth on Exhibit D attached hereto. For monthly reporting, calls uplifted to a
P1 RMS Call Priority will be measured against the initially assigned RMS Call
Priority FSO RMS Response and FSO RMS Level 1 Restoral commitments.

5.14 Should the FSO render Equipment partially operational on a P1 or P2 call,
the RMS Call Priority shall not be changed and the call shall not be closed
until the Equipment is fully restored to proper operating condition.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-10-
<PAGE>

5.15 Should a Site representative request RMS for other Equipment installed in
such Site while an FSO representative is at the Site repairing another item of
Equipment, the original call will be completed and closed and a new RMS call
will thereafter be opened by such FSO representative before leaving the Site.

5.16 Should the RMS Call Priority for a call be changed by the CSCC subsequent
to dispatch, the [CONFIDENTIAL TREATMENT REQUESTED] shall be used to measure
performance.

5.17 Notwithstanding the RMS Call Priority assigned, FSO RMS P1 Response and
FSO RMS Level 1 P1 Restoral shall apply to all RMS calls [CONFIDENTIAL TREATMENT
REQUESTED] which are received by PAR within [CONFIDENTIAL TREATMENT REQUESTED].

6. PERFORMANCE EVALUATION, PENALTY & CUSTOMER'S REMEDY

6.1 For purposes of this Section 6 the Following definitions shall apply:

6.1.1 "POS Revenue" shall mean the revenue received by PAR under this Agreement
from Customer during the [CONFIDENTIAL TREATMENT REQUESTED] for providing RMS
for Customer's [CONFIDENTIAL TREATMENT REQUESTED]. POS Revenue excludes all
time and material revenue generated under this Agreement and all revenue which
may result from the performance by PAR of any of the items set forth in Sections
8 and/or 9 of this Agreement.

6.1.2 "PC Revenue" shall mean the revenue received by PAR under this Agreement
from Customer during the [CONFIDENTIAL TREATMENT REQUESTED] for providing RMS
for Customer's [CONFIDENTIAL TREATMENT REQUESTED]. PC Revenue excludes all time
and material revenue generated under this Agreement and all revenue which may
result from the performance by PAR of any of the items set forth in Sections 8
and/or 9 of this Agreement.

6.1.3 "CSCC Revenue" shall mean the revenue received by PAR under this Agreement
from Customer during the [CONFIDENTIAL TREATMENT REQUESTED] for providing
[CONFIDENTIAL TREATMENT REQUESTED]. CSCC Revenue excludes all time and material
revenue generated under this Agreement and all revenue which may result from the
performance by PAR of any of the items set forth in Sections 8 and/or 9 of this
Agreement.

6.1.4 [CONFIDENTIAL TREATMENT REQUESTED] shall commence
[CONFIDENTIAL TREATMENT REQUESTED] and terminate at midnight on
[CONFIDENTIAL TREATMENT REQUESTED].

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

6.1.5 [CONFIDENTIAL TREATMENT REQUESTED] if applicable, shall commence upon
termination of any applicable recovery period (described hereinafter) and shall
terminate with respect to a Performance Measurement Category, [CONFIDENTIAL
TREATMENT REQUESTED].

6.1.6 [CONFIDENTIAL TREATMENT REQUESTED] if applicable, shall commence upon
termination of any applicable recovery period (described hereinafter) and shall
terminate with respect to a Performance Measurement Category, [CONFIDENTIAL
TREATMENT REQUESTED].

6.1.7 [CONFIDENTIAL TREATMENT REQUESTED] shall commence [CONFIDENTIAL TREATMENT
REQUESTED] and terminate at midnight on [CONFIDENTIAL TREATMENT REQUESTED].

6.1.8 [CONFIDENTIAL TREATMENT REQUESTED] if applicable, shall commence
[CONFIDENTIAL TREATMENT REQUESTED] and terminate at midnight on [CONFIDENTIAL
TREATMENT REQUESTED].

6.1.9 "Penalty" shall mean the amount assessed pursuant to Sections 6.2 through
6.6 hereinafter which shall be payable to Customer by PAR and computed pursuant
to Exhibit "F," "Penalties" and which are more particularly described in the
accompanying examples set forth in" Exhibits "F.1" and "F.2."

6.2 Notwithstanding any other provisions of this Agreement which identify
various performance measurements, only the following [CONFIDENTIAL TREATMENT
REQUESTED] Performance Measurement Categories shall be used in the assessment of
penalties against PAR:

Performance Measurement
Categories:

[CONFIDENTIAL TREATMENT REQUESTED]

6.3 In the event,

(i) PAR's performance for the [CONFIDENTIAL TREATMENT REQUESTED]
does not result in the payment of a Penalty by PAR, and

(ii) the Customer has decided to extend this Agreement for
[CONFIDENTIAL TREATMENT REQUESTED],

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

then notwithstanding any provision herein to the contrary, Penalties will not be
applicable to the [CONFIDENTIAL TREATMENT REQUESTED] of this Agreement.

6.4 PAR shall, within [CONFIDENTIAL TREATMENT REQUESTED] Days after the end
of the [CONFIDENTIAL TREATMENT REQUESTED], provide Customer with a measurement
period report package which includes all reports the parties may agree to,
including a summary of PAR's performance for each of the [CONFIDENTIAL TREATMENT
REQUESTED] Performance Measurement Categories, over the entire applicable
measurement period (hereinafter "Measurement Period Report"). Based upon the
data contained in such Measurement Period Report package, Customer shall
evaluate PAR's performance with respect to each of the Performance Measurement
Categories against the applicable performance percentage commitments set forth
in Sections 4 & 5 above and the Penalty schedules set forth in Exhibit F of this
Agreement. Customer shall within (45) Days after the end of the applicable
[CONFIDENTIAL TREATMENT REQUESTED], notify PAR if writing of any Penalty (by
Performance Category).

6.5 For the [CONFIDENTIAL TREATMENT REQUESTED], if Customer notifies PAR of a
Penalty for PAR's failure to satisfy the performance percentage commitment for
one or more of the [CONFIDENTIAL TREATMENT REQUESTED] Performance Measurement
Categories (hereinafter such failed Measurement Categories shall be referred to
as the "Recovery Category(ies)"), then PAR shall have from PAR's receipt of such
Penalty notice through [CONFIDENTIAL TREATMENT REQUESTED] to improve its
performance in such Recovery Category(ies) (hereinafter "Recovery Period").

6.5.1 If during the [CONFIDENTIAL TREATMENT REQUESTED] of the Recovery Period,
PAR's performance for such [CONFIDENTIAL TREATMENT REQUESTED] satisfies the
performance percentage commitment for [CONFIDENTIAL TREATMENT REQUESTED] of the
Recovery Categories, then with respect to such satisfied Recovery Category(ies),
PAR shall commence the applicable Contract Year Probationary Period.
Hereinafter, during the Probationary Period such satisfied Recovery
Category(ies) shall be referred to as "Probationary Categories."

6.5.2 If during the [CONFIDENTIAL TREATMENT REQUESTED] of the Recovery Period,
PAR's performance for such [CONFIDENTIAL TREATMENT REQUESTED] fails to satisfy
the performance percentage commitment for [CONFIDENTIAL TREATMENT REQUESTED] of
the Recovery Categories, then with respect to such failed Recovery
Category(ies), PAR shall pay to Customer the Penalty associated with such failed
Recovery Category(ies), within [CONFIDENTIAL TREATMENT REQUESTED] Days after
termination of the Recovery Period.

6.5.3 If PAR's performance [CONFIDENTIAL TREATMENT REQUESTED] throughout the
entire Probationary Period satisfies the performance percentage commitment for

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

[CONFIDENTIAL TREATMENT REQUESTED] of the Probationary Categories then PAR shall
be relieved of its obligation to pay Customer the applicable [CONFIDENTIAL
TREATMENT REQUESTED] Penalty associated with such Probationary Category(ies)
satisfied.

6.5.4 If PAR's performance during [CONFIDENTIAL TREATMENT REQUESTED] of the
Probationary Period, should fail to satisfy the performance percentage
commitment for [CONFIDENTIAL TREATMENT REQUESTED] of the Probationary
Categories then PAR shall pay to Customer the Penalty associated with such
failed Probationary Category(ies), within [CONFIDENTIAL TREATMENT REQUESTED]
Days after termination of the Probationary Period for such failed Probationary
Category(ies).

6.6 Except as provided in Section 6.7 below, the imposition of Penalties in
accordance with this Section 6 and Exhibit F shall be Customer's sole and
exclusive remedy for PAR's failure to satisfy any response or restoral
performance commitments set forth in this Agreement. In no event,

(i) shall PAR be liable to Customer in other way (monetary or
nonmonetary), and/or

(ii) [CONFIDENTIAL TREATMENT REQUESTED]

for PAR's failure to satisfy any response or restoral performance commitments.

6.7 Notwithstanding any provision herein to the contrary, in the event that
PAR fails to respond to any RMS Pl service call more than [CONFIDENTIAL
TREATMENT REQUESTED] from ETA, and such failure is caused by the intentional
disregard or gross negligence of PAR, then Customer shall be entitled to receive
from PAR as reasonable liquidated damages and not as a penalty, the sum of
[CONFIDENTIAL TREATMENT REQUESTED] beyond such initial [CONFIDENTIAL TREATMENT
REQUESTED] period that PAR fails to respond and reasonably pursue RMS.

7 CUSTOMER RESPONSIBILITIES

7.1 Customer shall ensure that all appropriate Site personnel are trained in
the operation of the Equipment and shall inform all such personnel of the
significant terms and conditions of this Agreement. Customer shall provide a
sufficient number of trained, English speaking personnel at each Site such that
at least one (1) supervisory employee trained and qualified in the operation of
the Equipment is available to work with/assist a CSCC representative, by
telephone, during the Site's normal operating hours to troubleshoot any
Equipment problems and/or resolve any operational or procedural problems found.
Such trained Site supervisory assistance is necessary to ensure effective and
timely resolution of the problem by PAR.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

7.2 Customer shall be responsible for ordering, installing and using only those
consumable items which conform to the Equipment's specifications and which are
necessary for routine operation, such as paper rolls, printer ribbons, keys,
diskettes and filters.

7.3 Customer shall use best efforts to allow FSO representatives full, free and
ready access to the Equipment. In addition, Customer shall provide, free of
charge, on Site; working space, heat, light, ventilation, electrical power and
outlets for use by FSO representatives to perform RMS. Such facilities shall be
promptly provided to the FSO representative upon arrival and shall be within a
reasonable working distance from the Equipment to ensure effective and efficient
RMS. If the FSO representative is not provided full, free and ready access to
the Equipment upon arrival and the failure to provide such is determined in
PAR's reasonable judgment to have resulted in PAR's failure to meet its response
and restoral commitments for such call and any other calls scheduled for such
FSO that day then the applicable response times and the restoral times for such
calls shall not be used in the performance measurements of the response or
restoral percentages.

7.4 Customer shall, at its expense, property maintain the Site and provide the
operating environment and necessary utility services for the Equipment in
accordance with PAR's or the applicable Third Party Equipment/software
manufacturer's specifications.

7.5 Customer shall not permit any person other than an FSO representative to
perform maintenance or to attempt any repair to the Equipment without the prior
written authorization of PAR. In the event such unauthorized third party
service is permitted by Customer on any Equipment, such Equipment shall no
longer be eligible for service under this Agreement. Such Equipment may regain
eligibility for service under this Agreement only after PAR's acceptance of such
Equipment in accordance with the terms of Section 3.6 above.

7.6 Customer shall provide PAR with reasonable prior written notice of all
product rollouts or other changes in Customer's operations in order for PAR to
properly forecast and implement any support changes necessary to meet its
service commitments. If Customer fails to provide such notice and the failure
to do so is determined in PAR's reasonable judgment to be the cause of PAR's
failure to meet its response and restoral commitments for certain calls, then
the applicable response times and the restoral times for such calls shall not be
used in the performance measurements of the response or restoral percentages.

8. EXCLUSIONS FROM COVERAGE

8.1 The service items set forth in Sections 8.2 through 8.7 below are outside
the scope of the Help Desk Support and RMS Support PAR has agreed to provide
pursuant to Sections 4 and 5 of this Agreement and therefore are excluded from
coverage under the terms of this Agreement. Notwithstanding any provision
herein to the contrary, PAR neither promises to provide nor is

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<PAGE>

obligated to provide any of such excluded services. However, PAR would
entertain a request for proposal from Customer to perform such services under a
separate agreement if Customer so desired.

8.2 [CONFIDENTIAL TREATMENT REQUESTED]

8.3 [CONFIDENTIAL TREATMENT REQUESTED]

8.4 [CONFIDENTIAL TREATMENT REQUESTED]

8.5 [CONFIDENTIAL TREATMENT REQUESTED]

8.6 [CONFIDENTIAL TREATMENT REQUESTED]

8.7 [CONFIDENTIAL TREATMENT REQUESTED]

9. UPCHARGE ITEMS

9.1 The items set forth in Sections 9.2 through 9.10 below are items which were
not priced into the Help Desk Support and RMS Support fees set forth in Exhibit
D attached hereto. Customer shall be charged additional fees at either PAR's
then current time and material rates (including reasonable travel expenses) or,
if agreed to in advance, the additional fees negotiated by the parties hereto
for all time, material and reasonable expense PAR expends, at the request of, or
as a result of Customer, on such items. Notwithstanding any provision herein to
the contrary, PAR neither promises to provide nor is obligated to provide any of
such items.

9.2 All RMS and Help Desk Support labor, material and expenses to correct
problems with or resulting from and/or caused by the use of any other equipment
(not connected to the Equipment) not covered under this Agreement unless such
equipment has been previously approved in writing by PAR.

9.3 All RMS or Help Desk Support labor, material and expenses resulting from
and/or caused by Customer's failure to provide the operating environment
required by the Equipment specifications, including, but not limited to, the
failure to provide or the failure of adequate electrical power, air conditioning
or humidity control.

9.4 All RMS or Help Desk Support labor, material and expenses resulting from
and/or caused by operation of the Equipment connected to or in combination with:

(a) other equipment, peripherals, attachments or devices not covered
under this Agreement or otherwise approved in writing by PAR;
(b) any software which PAR as of the time of the service has not
accepted;
(c) operating supplies not meeting Equipment specifications;

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

(d) material changes to Site operations (including but not necessarily
limited to material roll-outs such as 'Border Lights" etc.); or

(e) material changes to the Equipment or software.

9.5 All RMS or Help Desk Support labor, material and expenses resulting from
and/or caused by use of the Equipment for other than the normal usage for which
the Equipment was designed. For purposes of this Agreement, the term "normal
usage" is defined as regular, ordinary and routine usage for that specific piece
of Equipment.

9.6 All RMS or Help Desk Support labor, material and expenses resulting from
and/or caused by accident, abuse, neglect, misuse, unauthorized maintenance,
negligence or deliberate act including but not limited to the following:

a. Foreign objects or substance falling on or leaking onto the Equipment;

b. Improper handling, shipping or storage of the Equipment prior to or
after installation;

c. Disaster, which shall include, but not be limited to, fire, water,
wind, flood, lightning, electrical disturbance, war, civil disturbance,
other catastrophes or similar causes;

d. Installing, repairing, maintaining, replacing parts or modifying the
Equipment or software by anyone other than a PAR FSO representative; or

e. Operation or use of the Equipment or software not in accordance with
applicable written operating instructions.

9.7 All RMS or Help Desk Support labor, material and expenses to repair a
problem reported by Customer in accord with this Agreement which is determined
by the FSO representative not to be a problem with the Equipment but actually a
problem with an item not covered under this Agreement (e.g. Customer steam line
- video jittering).

9.8 All RMS labor, material and expenses related to installations, changes or
modifications to Equipment, upgrades to Equipment, permanent removal of
Equipment or the relocation of Equipment within or between Sites.

9.9 All RMS labor, material and expenses to perform standard operational
functions, such as but not limited to the replacement of printer ribbons or
paper.

9.10 All RMS performed after the PPM or the next day (at increased costs to
PAR), caused when prompt access to the Equipment is not allowed or is materially
hampered by Customer.

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<PAGE>

10. REPORTING REQUIREMENTS

10.1 On a [CONFIDENTIAL TREATMENT REQUESTED] basis [CONFIDENTIAL TREATMENT
REQUESTED], PAR will deliver to Customer two (2) copies of a Contract Report
Package containing reports depicting PAR's performance under this Agreement for
the prior [CONFIDENTIAL TREATMENT REQUESTED]. The Contract Report Package will
be in the format as set forth in Exhibit G.

10.2 Field trial reports are outside the scope of this Agreement.

10.3 All information contained in the Contract Report Package or other reports
provided by PAR to Customer shall be deemed PAR Microsystems Company
Confidential Information and shall be covered by the Mutual Confidentiality
Agreement attached hereto as Exhibit E.

11. PRICING, INVOICING AND PAYMENT

11.1 Subject to Sections 2.2, 11.1, 11.10 and 11.11 herein, the prices to be
invoiced by PAR and paid by Customer for Help Desk Support and RMS are set forth
in Exhibit D attached hereto.

11.1.1 The prices set forth in Exhibit D for the [CONFIDENTIAL TREATMENT
REQUESTED] reflect a price reduction which is only applicable if:

(a) on the first day of the [CONFIDENTIAL TREATMENT REQUESTED], the
sum of the number of Customer owned and franchisee/licensee Sites for
which PAR provides both Help Desk Support and RMS Support for such
Sites point of sale Equipment (hereinafter in Sections 11.1 and 12
collectively the "POS Sites") pursuant to this Agreement is
[CONFIDENTIAL TREATMENT REQUESTED] the number of such Sites on the
Effective Date, [CONFIDENTIAL TREATMENT REQUESTED]

(b) Customer extends the Agreement for a [CONFIDENTIAL TREATMENT
REQUESTED] pursuant to Section 2.2 of this Agreement [CONFIDENTIAL
TREATMENT REQUESTED] PAR's performance over the [CONFIDENTIAL
TREATMENT REQUESTED] results in the payment of a Penalty by PAR to
Customer.

If Customer does not satisfy the requirements of Sections 11.1.1 (a) & (b)
above, then the [CONFIDENTIAL TREATMENT REQUESTED] pricing set forth in Exhibit
B shall become effective.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

11.1.2 The prices set forth in Exhibit D for the [CONFIDENTIAL TREATMENT
REQUESTED] reflect a price reduction which is only applicable if on the first
day of the [CONFIDENTIAL TREATMENT REQUESTED] the sum of the number of POS Sites
for which PAR provides both Help Desk Support and RMS Support pursuant to this
----
Agreement is [CONFIDENTIAL TREATMENT REQUESTED] the number of such Sites on the
Effective Date.

11.1.3 Notwithstanding Sections 11.1.1 (a) and 11.1.2 above, if Customer
satisfies the [CONFIDENTIAL TREATMENT REQUESTED] POS Site increase as of the
first day of the [CONFIDENTIAL TREATMENT REQUESTED] as set forth in Section
11.1.1 (a) above and the [CONFIDENTIAL TREATMENT REQUESTED] POS Site increase as
of the first day of the [CONFIDENTIAL TREATMENT REQUESTED] as set forth in
Section 11.1.2 above, above but Customer thereafter reduces the number of such
---
POS Sites then the [CONFIDENTIAL TREATMENT REQUESTED] and [CONFIDENTIAL
TREATMENT REQUESTED] prices set forth in Exhibit D shall be adjusted as follows:
(a) if at any time during the [CONFIDENTIAL TREATMENT REQUESTED] the number
of POS Sites described in Sections 11.1.1 (a) and 11.1.2 above should be
[CONFIDENTIAL TREATMENT REQUESTED] the number of such POS Sites on the Effective
Date then all prices shall revert back to [CONFIDENTIAL TREATMENT REQUESTED]
pricing as set forth in Exhibit D for as long as the number of such POS Sites
remains [CONFIDENTIAL TREATMENT REQUESTED] the number of such POS Sites on the
Effective Date;
(b) if at any time during the [CONFIDENTIAL TREATMENT REQUESTED] the number
of POS Sites described in Sections 11.1.1 (a) and 11.1.2 above should
[CONFIDENTIAL TREATMENT REQUESTED] the number of such POS Sites on the Effective
Date but [CONFIDENTIAL TREATMENT REQUESTED] the number of such POS Sites on the
Effective Date (hereinafter the "[CONFIDENTIAL TREATMENT REQUESTED] Pricing
Range") then all prices shall revert back to [CONFIDENTIAL TREATMENT REQUESTED]
pricing as set forth in Exhibit D for as long as the number of such POS Sites
remains within such [CONFIDENTIAL TREATMENT REQUESTED] Pricing Range; and
(c) if at any time during the [CONFIDENTIAL TREATMENT REQUESTED] the number
of POS Sites described in Sections 11.1.1(a) and 11.1.2 above should be
[CONFIDENTIAL TREATMENT REQUESTED] the number of such POS Sites on the Effective
Date then all prices shall revert back to [CONFIDENTIAL TREATMENT REQUESTED]
pricing as set forth in Exhibit D for as long as the number of such POS Sites
remains [CONFIDENTIAL TREATMENT REQUESTED] the number of such POS Sites on the
Effective Date.

11.2 PAR will invoice Customer, in advance, for [CONFIDENTIAL TREATMENT
REQUESTED] Help Desk Support [i.e. [CONFIDENTIAL TREATMENT REQUESTED] of the
annual Help Desk Support Site fees set forth in Exhibit D to this Agreement] and
every

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

[CONFIDENTIAL TREATMENT REQUESTED] thereafter throughout the term of this
Agreement for each [CONFIDENTIAL TREATMENT REQUESTED] period or portion thereof.

11.3 For all Equipment installed in a Site defined in Section l.l (a) and for a
T.A.C.O. back-office personal computers installed in a Site defined in Section
1.1 (b) as of the Effective Date, [CONFIDENTIAL TREATMENT REQUESTED] of the
annual RMS Support fees set forth in Exhibit D hereto will be invoiced
[CONFIDENTIAL TREATMENT REQUESTED], in advance, by PAR on the Effective Date and
[CONFIDENTIAL TREATMENT REQUESTED] will be invoiced by PAR every [CONFIDENTIAL
TREATMENT REQUESTED] thereafter throughout the term of this Agreement for each
[CONFIDENTIAL TREATMENT REQUESTED] or [CONFIDENTIAL TREATMENT REQUESTED] the
Equipment or a comparable, eligible replacement is installed at such Site.

11.4 If Equipment is replaced by a comparable and eligible piece of Equipment
during the period for which RMS has been paid, the new Equipment will be covered
under the remaining period of the payment made for the replaced Equipment.

11.5 If Equipment for which RMS has been paid is removed or replaced by
noncomparable or non-eligible Equipment or other equipment, [CONFIDENTIAL
TREATMENT REQUESTED].

11.6 Notwithstanding any provision of this Agreement to the contrary, there
will be no refund or transfer of Help Desk Support or RMS Support fees paid
unless agreed to by the parties.

11.7 For Equipment which is installed and/or becomes eligible for service under
this Agreement during a calendar month subsequent to the [CONFIDENTIAL TREATMENT
REQUESTED] Day of that month, RMS Support and Help Desk Support fees will
commence as of the first day of the next month. For Equipment which is
installed and/or becomes eligible for service under this Agreement during a
calendar month prior to the [CONFIDENTIAL TREATMENT REQUESTED] Day of that
month, RMS and Help Desk fees will commence as the first Day of such month in
which the Equipment is installed and/or becomes eligible for service.

11.8 Payment is due and payable in full thirty (30) Days after the receipt of
invoice. Any amount payable by Customer that remains unpaid thirty (30) Days
after the due date shall be subject to interest on the unpaid amount at the rate
of twelve percent (12%) per annum.

11.9 Where time and material and uplift billings apply for work performed by
PAR for items set forth in Sections 8 & 9 of this Agreement and for work
performed in accordance with Subsections 3.7, 5.4 and 5.13 above the billings
shall be forwarded separately to Customer or franchisee/licensee, whichever is
applicable. PAR shall use its best efforts to obtain a signature

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

from a Site managerial employee on the PAR Incident Report acknowledging that
PAR has informed such employee that the services/work have been performed at an
additional charge. PAR shall use its best efforts to include the PAR Incident
Report or electronic record of the incident with such billings. PAR's failure to
include the PAR Incident Report or electronic record of the incident with the
billing shall not preclude payment by Customer nor shall it result in an
extension of the payment due date. If not included with the billing, PAR will
subsequently provide the PAR Incident Report or other substantiating
documentation upon receipt of a written request from Customer specifying the
associated invoice number(s) requested. If such PAR Incident Report or other
substantiating documentation is not received by Customer within [CONFIDENTIAL
TREATMENT REQUESTED] Days from PAR's receipt of Customer's request, PAR shall
issue a credit for such billing against the associated invoice.

11.10 The prices contained in Exhibit D hereto were calculated assuming that
the CPI Index for All Urban Consumers, All Items from [CONFIDENTIAL TREATMENT
REQUESTED] (hereinafter "CPI Period") would not increase by more than
[CONFIDENTIAL TREATMENT REQUESTED]%. If Customer extends this Agreement for a
[CONFIDENTIAL TREATMENT REQUESTED] and the CPI Index over the CPI Period
increases by more than [CONFIDENTIAL TREATMENT REQUESTED] percent ([CONFIDENTIAL
TREATMENT REQUESTED]%) then the applicable [CONFIDENTIAL TREATMENT REQUESTED]
prices shall be increased by that percentage in excess of [CONFIDENTIAL
TREATMENT REQUESTED] percent ([CONFIDENTIAL TREATMENT REQUESTED]%).

11.11 The prices contained in Exhibit D hereto were also calculated assuming a
general availability of all replacement parts throughout the term of the
Agreement and an actual reduction in the cost to PAR of such parts over the
term. If during the term of this Agreement, there is a decrease in the
availability of any replacement parts causing the cost of such replacement parts
to be significantly higher than the cost as of the Effective Date hereof, PAR
shall provide Customer with written notice of such change and Customer will
assist PAR in either identifying a lower cost supplier or a suitable substitute
for such parts. If Customer and PAR cannot identify a lower cost supplier or
find a suitable substitute within [CONFIDENTIAL TREATMENT REQUESTED] then PAR
reserves the right to increase its pricing for such replacement parts by an
amount equal to the actual increase in costs to PAR.

11.12 Upon written notification from Customer that Customer has transferred
ownership of a Site to another party, PAR will discontinue invoicing with the
next invoicing period. Customer is responsible for all fees through the date
PAR's Taco Bell Account/Program Manager receives written or electronic notice of
such change from Taco Bell in accordance with the notice provision set forth in
Section 15.19 herein. No credit will be provided for failure to provide timely
notice.

12. SITEBASE RETENTION

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

12.1 Customer shall ensure that the total number of POS Sites for which PAR
provides both Help Desk and RMS support (counting both Company-owned and
franchisee/licensee) is at least [CONFIDENTIAL TREATMENT REQUESTED] Sites
throughout the term of this Agreement. If the total number of POS Sites shall
at any time drop below this [CONFIDENTIAL TREATMENT REQUESTED] level then
Customer shall pay PAR [CONFIDENTIAL TREATMENT REQUESTED]. Any monies due PAR
pursuant to this Section 12.1, shall be divided evenly across all Customer owned
POS Sites and shall be included, as a separate line item, on PAR's monthly
invoices for such Sites.

12.2 Customer shall ensure that the total number of T.A.C.O. back-office Sites
for which PAR provides RMS support ("PC Sites") (counting both Customer owned
and franchisee/licensee) is at least [CONFIDENTIAL TREATMENT REQUESTED] Sites
throughout the term of this Agreement. If the total number of PC Sites shall at
any time drop below this [CONFIDENTIAL TREATMENT REQUESTED] level then Customer
shall pay PAR [CONFIDENTIAL TREATMENT REQUESTED]. Any monies due PAR pursuant
to this Section 12.2, shall be divided evenly across all PC Sites and shall be
included, as a separate line item, on PAR's monthly invoices for such Sites.

13. WARRANTY DISCLAIMER

13.1 EXCEPT AS EXPRESSLY STATED HEREIN, PAR MAKES NO WARRANTY

WITH RESPECT TO SERVICES OR PARTS PROVIDED HEREUNDER, EITHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE OR OF MERCHANTABILITY.

13.2 IN ADDITION, PAR DOES NOT ENSURE UNINTERRUPTED OR ERROR-FREE OPERATION OF
THE EQUIPMENT COVERED UNDER THIS AGREEMENT.

14. LIMITATION OF LIABILITY

14.1 IN NO EVENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY, INDEMNITY, WARRANTY, OR OTHERWISE, SHALL EITHER PARTY BE LIABLE TO
THE OTHER FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING,
BUT NOT LIMITED TO, THE LOSS OF ACTUAL OR ANTICIPATED REVENUE OR PROFITS, THE
LOSS OR CONTAMINATION OF DATA, THE LOSS OF THE ABILITY TO TRANSMIT OR USE DATA
OR EQUIPMENT, BUSINESS INTERRUPTION, DOWNTIME COSTS, LOSS OF ACTUAL OR
ANTICIPATED VALUE OF THE BUSINESS OF EITHER PARTY, OR DAMAGE TO THE BUSINESS
REPUTATION OF EITHER PARTY.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-22-
<PAGE>

14.2 NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY AND EXCEPT FOR CLAIMS
FOR PERSONAL INJURY OR DEATH AND EXCEPT FOR CLAIMS RESULTING FROM THE WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF PAR, ITS EMPLOYEES, AGENTS OR SUBCONTRACTORS,
IN NO EVENT SHALL PAR'S LIABILITY ON ANY CLAIM OF ANY KIND (INCLUDING, BUT NOT
LIMITED TO, NEGLIGENCE, CONTRACT, STRICT LIABILITY ETC.) FOR ANY LOSS OR DAMAGE
ARISING OUT OF OR IN ANY WAY RESULTING FROM THIS AGREEMENT, OR FROM THE
PERFORMANCE OR BREACH THEREOF, OR FROM THE MATERIAL OR SERVICES FURNISHED
HEREUNDER, SHALL IN NO CASE EXCEED [CONFIDENTIAL TREATMENT REQUESTED].

14.3 IN NO EVENT WILL PAR BE LIABLE FOR ANY DAMAGES OR EXPENSES CAUSED BY
CUSTOMER'S FAILURE TO PERFORM ITS RESPONSIBILITIES. PAR IS NOT LIABLE FOR LOSS
OF FUNDS CONTAINED IN, DISPENSED BY, OR ASSOCIATED WITH, ANY ITEM OF EQUIPMENT
OR ANY SITE.

14.4 NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, NO
DEFAULT, DELAY OR FAILURE TO PERFORM ON THE PART OF PAR SHALL BE CHARGEABLE
HEREUNDER IF SUCH IS DUE TO CAUSES BEYOND PAR'S REASONABLE CONTROL. IN THE
EVENT OF SUCH DEFAULT, DELAY OR FAILURE TO PERFORM, ANY DATES OR TIMES BY WHICH
PAR IS OTHERWISE SCHEDULED TO PERFORM SHALL BE EXTENDED AUTOMATICALLY FOR A
PERIOD OF TIME EQUAL IN DURATION TO THE ADDITIONAL TIME REQUIRED TO PERFORM.

15. GENERAL

15.1 Confidentiality. Any confidential information identified as such and
---------------
disclosed by either party to the other in the course of this Agreement shall be
subject to the terms of the Mutual Confidentiality Agreement between PAR and
Customer, dated as of the Effective Date, a copy of which is attached hereto as
Exhibit E, which confidentiality obligations shall survive expiration or
termination of this Agreement for a period of [CONFIDENTIAL TREATMENT REQUESTED]
from the date of such expiration or termination.

15.2 Indemnification for Third Party Claims. PAR agrees to indemnify and hold
--------------------------------------
Customer, its officers, directors, employees, agents, affiliates, subsidiaries,
parent company, successors and assigns harmless against any and all third party
claims, counterclaims, suits, demands, actions, causes of actions, damages,
setoffs, liens, attachments, debts, expenses, judgments, or other liabilities of
whatsoever kind or nature, including reasonable attorney's fees and costs,
arising from any alleged or actual negligent, willful, reckless, or wrongful act
or omission of PAR, its officers, directors, employees and agents in PAR's
performance under this Agreement or from any breach of PAR's representations and
warranties specifically set forth herein which resulted in

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATRERIAL THAT HAS BEEN OMITED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

personal injury, death or property damage to a third party. These obligations
shall survive the termination or expiration of the Agreement.

15.3 Insurance,. During the term of this Agreement, PAR shall maintain in full
----------
force and effect the kinds of insurance, containing the limits of liability set
forth below:

a. Workers' Compensation - The worker's compensation policy shall comply
with the workers' compensation law of the state in which the Services are
rendered and shall include employer's liability coverage for not less than
$1,000,000 per occurrence. Such policy shall provide coverage for all persons
engaged in the activities described in this Agreement under the employ,
supervision or control of PAR.

b. General Liability - The policy shall contain a combined single limit
of liability of not less that $1,000,000 per occurrence and a separate limit of
liability for products and completed operations of not less that $1,000,000 per
occurrence.

c. Automobile Liability - If automotive vehicles are operated by PAR in
its performance of its obligations under this Agreement, PAR shall maintain an
automobile liability policy which shall include coverage on all owned, non-owned
and hired vehicles and shall have a minimum limit of liability of not less than
$1,000,000 per occurrence.

Coverage shall be placed with an insurer having a Best's Key Rating of "A"
or better. Upon execution of the Agreement by both parties, PAR shall furnish
Customer with a Certificate of Insurance evidencing such coverages.

If any of the foregoing coverage expires, changes, or is cancelled, PAR
shall notify Customer within thirty (30) Days prior to the effective date of
such expiration, change or cancellation.

Should PAR fail to maintain the insurance coverage required hereunder and
not cure such within [CONFIDENTIAL TREATMENT REQUESTED] Days of its receipt of
written notice from Customer, Customer may terminate the Agreement immediately
upon its receipt of notice thereof, or Customer shall have the right, but not
the obligation, to purchase such insurance on PAR's behalf, and to deduct the
cost thereof from any amounts owed to PAR under the Agreement.

15.4 Qualifications of Personnel. PAR represents that it will ensure that its
---------------------------
employees and subcontractors are reasonably trained to perform the Help Desk and
RMS support required under this Agreement and have the ability to communicate
clearly in English with Customer personnel and to follow reasonable directions.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

15.5 Relationship of Parties. PAR is an independent contractor with respect to
-----------------------
its performance of its support services hereunder. Nothing contained herein
shall be deemed to create the relationship of partner, principal and agent, or
joint venturer between the parties. PAR has no right or authority to incur
obligations of any kind in the name of or for the account of Customer nor to
commit or bind Customer to any contract or other obligation.

15.6 Audit. PAR's Help Desk Support and RMS Support response and restoral
-----
records shall be maintained in a reasonable manner. PAR agrees that Customer
shall have the right, with notice, to audit all such records for a period of
[CONFIDENTIAL TREATMENT REQUESTED] beyond the term of the Agreement. Customer
shall bear the costs of such audits which shall be conducted during normal
business hours at PAR's service headquarters. PAR agrees to make available
reasonable copying capability and work space for Customer's representatives and
agrees to cooperate fully in all such audits.

15.7 Assignment. Neither party may assign its rights or obligations under the
-----------
Agreement without the prior written consent of the other party which may not be
unreasonably withheld or delayed.

15.7.1 Notwithstanding Section 15.7 above, in no event shall Customer assign
its rights or obligations under this Agreement to another party if such
assignment: (i) would require PAR to provide support to Sites other than the
Customer Sites contemplated herein (e.g. Taco Bell and Hot n' Now restaurants)
or (ii) was to a competitor of PAR. If consent is granted by PAR, this
Agreement shall, absent agreement between the parties, apply only to those Sites
covered by this Agreement as of the day prior to the date of such assignment.
Any attempt to assign any of the rights or delegate any of the obligations or
duties of this Agreement without PAR's prior written consent shall be null and
void.

15.8 Compliance with Laws. PAR shall obtain at its sole cost and expense all
---------------------
governmental permits and authorizations of whatever nature required for PAR's
performance of its obligations under the Agreement, and shall not violate any
law, statute, ordinance or governmental rule or regulation applicable to such
performance. PAR shall at its sole cost and expense promptly comply with all
laws, statutes, ordinances and governmental rules, regulations and requirements
arising out of or relating to PAR's performance of its obligations under the
Agreement.

15.9 Consent. Whenever consent, approval, authorization or the like is
-------
required, the same shall not be unreasonably withheld or delayed.

15.10 Force Majeure. Neither party shall be liable for damages or Penalties
-------------
for its failure to perform due to contingencies beyond its reasonable control,
including, but not limited to, fire, storm, flood, earthquake, explosion,
accidents, public disorders, sabotage, lockouts, labor disputes, labor
shortages, strikes, riots, acts of God or if performance would necessitate the
violation of law or of a third party's intellectual property rights.

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

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<PAGE>

15.11 Governing Law. This Agreement, and all matters arising out of or
-------------
relating to this Agreement, shall be governed by the laws of the State of New
York, without regard to the conflict of laws provisions thereof.

15.12 Taxes. All charges due hereunder are exclusive of federal, state and
-----
local excise, sales, use and other taxes now or hereafter levied or imposed on
the services or replacement parts provided hereunder, or on this Agreement.
Except for taxes based on PAR's income, Customer shall be liable for and pay all
such taxes and other levies. Customer shall reimburse PAR in full for any and
all of the foregoing taxes or levies that are paid by PAR for which Customer is
responsible hereunder.

15.13 Subcontractors. The services to be provided by PAR under this Agreement
--------------
may be provided by the use of PAR selected independent subcontractors.

15.14 Modifications/Amendments. This Agreement may be modified or amended only
-------------------------
in a writing signed by a duly authorized representative of each party. No other
act, document, usage or custom shall be deemed to amend or modify this
Agreement.

15.15 Purchase Orders. The parties to this Agreement agree that any prior or
---------------
subsequent purchase order or other written notification from Customer shall be
of no effect to add to or vary the terms and conditions of this Agreement,
whether or not subsequently acknowledged by PAR.

15.16 Equipment Ownership. Customer warrants, with respect to the Equipment
-------------------
subject to or affected by this Agreement, that Customer is the owner of such
Equipment.

15.17 Personnel. Assignment of personnel to perform any services under this
---------
Agreement shall be within the sole discretion of PAR.

15.18 Limitation. Neither party may bring an action, regardless of form,
----------
arising out of this Agreement more than two (2) years after the cause of action
has accrued.

15.19 Notice. Notices required or allowed to be given hereunder shall be in
------
writing and shall be deemed to have been given when delivered by registered mail
or overnight courier to the following respective addresses:

If to PAR: PAR Microsystems Corporation
5757 Central Avenue
Boulder, CO 80301
Attention: Taco Bell Account/Program Manager

with a copy to:

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<PAGE>

PAR Microsystems Corporation
PAR Technology Park
8383 Seneca Turnpike
New Hartford, NY 13413-4991
Attention: Legal Department

If to Customer: Taco Bell Corp.
17901 Von Karman
Irvine, CA 92714-6212
Attention: Vice President Operations Services

with a copy to:

Taco Bell Corp.
17901 Von Karman
Irvine, CA 92714-6212
Attention: General Counsel

Addresses as such may be modified by like notice.

15.20 Unenforceable Provision. In the event any provision of this Agreement is
-----------------------
held to be invalid or unenforceable, the remaining provisions of this Agreement
will remain in full force and effect.

15.21 Waiver. No term or provision of this Agreement shall be deemed waived by
------
either party, and no breach excused by either party, unless such waiver or
consent shall be in writing signed by a duly authorized representative of the
other party. No consent by either party to, or waiver of, a breach by the other
party, whether express or implied, shall constitute a consent to, or waiver of,
or excuse for any other different or subsequent breach by the other party.

15.22 ADR: Disinterested Executives. In the event of a dispute (the "Issue"),
-----------------------------
PAR's VP Account Management and Customer's Vice President Operations Services
(hereinafter collectively referred to as "Project Manager(s)") will negotiate in
good faith on a regular basis to resolve the Issue. In the event such
negotiation extends more than thirty (30) Days and the Issue remains unresolved,
or a Project Manager states in writing to the other that he/she will not be able
to resolve the Issue through continued negotiation, the Project Managers will
refer the Issue to the Disinterested Executives (as hereinafter defined) of PAR
and Customer.

"Disinterested Executives" as used herein are senior level executives from a
separate business unit, division, subsidiary or affiliate of PAR and Customer,
respectively which are identified by the parties.

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<PAGE>

No later than thirty (30) Days from the date of such referral, the Project
Managers will each prepare in writing their own understanding of the Issue (the
"Issue Statement"). The Issue Statements will be submitted to both
Disinterested Executives no later than the expiration of the time period
referred to in the preceding sentence.

When the Issue Statements are received by the Disinterested Executives as
described above, they will negotiate in good faith on a regular basis to resolve
the issue(s) as expeditiously as feasible under the circumstances; provided,
however, such negotiation will extend no more than thirty (30) Days from the
date the Disinterested Executives receive the Issue Statements. Within thirty
(30) Days of the earlier of (i) the conclusion of the negotiation by the
Disinterested Executives or (ii) the expiration of the time period referred to
in the preceding sentence, the Disinterested Executives will submit a joint
written recommendation for any Issue the Disinterested Executives agreed upon
and separate written recommendations for any Issue the Disinterested Executives
disagreed upon or remain unresolved. PAR and Customer, agree to be bound by the
joint written recommendation.

15.23 ADR:Mediation. In the event that an Issue remains unresolved by the
-------------
Disinterested Executives as set forth in the preceding Section 15.22, it shall
be a condition precedent to either party's right to commence litigation that the
parties shall have participated in at least twenty (20) hours of mediation in
accordance with the Mediation Procedures of United States Arbitration &
Mediation, Inc. ("USA&M"). The parties agree to divide the costs of mediation
equally. The mediation will be administered by United States Arbitration &
Mediation of Upstate New York or such other appropriate office as may be
designated by USA&M's national office in Seattle, Washington.

15.24 Entire Agreement. This Agreement, including any agreements specifically
----------------
referenced herein or attachments and exhibits hereto, constitutes the complete
and entire agreement between the parties and supersedes all previous and
contemporaneous agreements, proposals, communications or representations,
written or oral, concerning the subject matter of this Agreement.

EACH PARTY WARRANTS THAT IT HAS FULL POWER AND AUTHORITY TO ENTER INTO AND
PERFORM THIS AGREEMENT, AND THE PERSON SIGNING THIS AGREEMENT ON SUCH PARTY'S
BEHALF HAS BEEN DULY AUTHORIZED AND EMPOWERED TO ENTER INTO THIS AGREEMENT.
EACH PARTY FURTHER ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT, UNDERSTANDS IT
AND AGREES TO BE BOUND BY IT.

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<PAGE>

Executed by Customer: Executed by PAR:

/s/ Fred Traverse [CONFIDENTIAL TREATMENT REQUESTED]
----------------------------- ----------------------------------
Signature Signature

Fred Traverse [CONFIDENTIAL TREATMENT REQUESTED
----------------------------- ----------------------------------
Printed Name Printed Name

Vice President - Operations Vice President
----------------------------- ----------------------------------
Title Title

Sept. 12, 1995 Sept. 12, 1995
----------------------------- ----------------------------------
Date

REVIEWED BY:
---------------------------

DATE: 9/2/95
-----------------------------

[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND
FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED WITH THE COMMISSION PURSUANT TO RULE 406.

-29-

<PAGE>

EXHIBIT 11

STATEMENT RE COMPUTATION OF PER-SHARE EARNINGS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
MARCH 31,
-------------------
1993 1994 1995 1995 1996
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
Weighted average shares of common stock
outstanding:
Balance outstanding--beginning of
period............................... 7,536 7,605 7,656 7,656 7,682
Weighted average shares issued during
the period........................... 28 39 51 16 18
Weighted average shares of treasury
stock acquired....................... -- (3) (23) -- --
Incremental shares of common stock
outstanding giving effect to stock
options.............................. 404 351 384 401 490
----- ----- ----- --------- ---------
Weighted balance--end of period....... 7,968 7,992 8,068 8,073 8,190
===== ===== ===== ========= =========
</TABLE>

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-2 of our report dated February 13, 1996,
relating to the financial statements of PAR Technology Corporation, which
appears in such Prospectus. We also consent to the application of such report
to the Financial Statement Schedules for the three years ended December 31,
1995 listed under Item 14(a) of PAR Technology Corporation's Annual Report on
Form 10-K for the year ended December 31, 1995 when such schedules are read in
conjunction with the financial statements referred to in our report. The
audits referred to in such report also included these Financial Statement
Schedules. We also consent to the references to us under the headings
"Experts" and "Selected Consolidated Financial Data" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Selected Consolidated Financial Data."

Price Waterhouse LLP

Syracuse, New York
May 20, 1996