SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PAR Technology Corporation
______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1)Title of each class of securities to which transaction applies:
_____________________.
2)Aggregate number of securities to which transaction applies:
____________________.
3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
_______________________________________________________.
4)Proposed maximum aggregate value of transaction:
__________________________.
5)Total fee paid:
______________________________________________________.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1)Amount Previously Paid: _________.
2)Form, Schedule or Registration Statement No.: _________.
3)Filing Party: _________.
4)Date Filed: __________.
Dr. John W. Sammon, Jr. PAR Technology Corporation
Chairman, President & 8383 Seneca Turnpike
Chief Executive Officer New Hartford, NY 13413
[GRAPHIC OMITTED]
April 11, 2006
Dear Shareholders:
It is my pleasure to invite you to PAR Technology Corporation's 2006 Annual
Meeting of Shareholders. This year, we are proud to hold the meeting at one of
our PAR Springer-Miller customer locations, The New York Palace Hotel; 455
Madison Avenue; New York, New York 10022. The meeting will be held on Thursday,
May 11, 2006 at 10:00 AM. During the Annual Meeting, we will discuss each item
of business described in the Notice of Annual Meeting and Proxy Statement and
give a report on the Company's business operations. There will also be time for
questions.
This booklet includes the Notice of Annual Meeting and Proxy Statement. The
Proxy Statement provides information about PAR in addition to describing the
business we will conduct at the meeting.
We hope you will be able to attend the Annual Meeting. Whether or not you expect
to attend, please vote your shares by signing, dating and returning the proxy
card in the prepaid envelope; taking advantage of telephone or Internet voting;
or voting in person at the meeting.
Sincerely,
John W. Sammon, Jr.
[GRAPHIC OMITTED]
PAR Technology Corporation
8383 Seneca Turnpike; New Hartford, NY 13413-4991
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MAY 11, 2006
Dear PAR Technology Shareholder:
The Annual Meeting of Shareholders (the "Meeting") of PAR Technology
Corporation, a Delaware corporation (the "Company") is scheduled to be held at
The New York Palace Hotel; 455 Madison Avenue; New York, New York 10022 (see map
on back cover) on Thursday, May 11, 2006, at 10:00 AM, local time, for the
following purposes:
1. To elect two Directors of the Company for a term of office to expire
at the third succeeding Annual Meeting of Shareholders;
2. To approve the PAR Technology Corporation 2005 Equity Incentive Plan;
3. To approve the amendment of the Certificate of Incorporation to
increase the authorized shares of voting Common Stock from 19,000,000
to 29,000,000.
4. To ratify the selection of KPMG LLP as the Company's independent
registered public accounting firm for the Company for the 2006 fiscal
year; and
5. To transact such other business as may properly come before the
Meeting or any adjournments or postponements of the Meeting.
The Board of Directors set March 22, 2006 as the record date for the Meeting.
This means that owners of the Company's Common Stock at the close of business on
March 22, 2006 are entitled to receive this notice and to vote at the Meeting or
any adjournments or postponements of the Meeting. We will make available a list
of shareholders as of the close of business on March 22, 2006, for inspection by
any shareholder, for any purpose relating to the Meeting, during normal business
hours at our principal executive offices, 8383 Seneca Turnpike; New Hartford,
New York 13413, for ten (10) days prior to the Meeting. This list will also be
available to shareholders at the Meeting.
Every shareholder's vote is important. Whether or not you plan to attend the
Meeting, we request you complete, sign, date and return the enclosed proxy card
promptly in the enclosed postage prepaid envelope as soon as possible. Most
shareholders also have the options of voting their shares on the Internet or by
telephone. If such methods are available to you, voting instructions are printed
on your proxy card or included with your proxy materials.
The proxy solicited hereby may be revoked at any time prior to its exercise by
executing and returning to the address set forth above a proxy bearing a later
date or later dated vote by telephone or on the Internet, by giving written
notice of revocation to the Secretary of the Company at the address set forth
above, or by attending the Meeting and voting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Gregory T. Cortese
Secretary
TABLE OF CONTENTS
General Information ..........................................................1
Purpose of Meeting............................................................1
Record Date, Voting Rights, Methods of Voting.................................1
Voting........................................................................2
Proxy Solicitation Costs......................................................3
Proposal 1: Election of Directors.............................................3
Biographies of Nominees and Directors Continuing in Office....................5
Board of Directors and Committees.............................................4
Director Compensation.........................................................7
Report of the Audit Committee.................................................8
Fees paid to Independent Registered Public Accountants........................9
Code of Business Conduct and Ethics..........................................10
Certain Transactions and Relationships.......................................10
Section 16(a) Beneficial Ownership Reporting Compliance......................11
Security Ownership of Certain Beneficial Owners and Management...............11
Executive Compensation.......................................................13
Compensation Committee Report................................................14
Performance Graph............................................................17
Proposal 2: Approval of the PAR Technology Corporation 2005
Equity Incentive Plan........................................................19
Proposal 3: Approval of the amendment of the Certificate of
Incorporation to increase the authorized shares of voting
Common Stock from 19,000,000 to 29,000,000................................23
Proposal 4: Ratification of the selection of Independent
Registered Public Accounting Firm ...........................................24
Other Matters................................................................25
Available Information........................................................25
Shareholder Proposals for 2007 Annual Meeting................................25
Appendix A: Audit Committee Charter........................................A-1
Appendix B: PAR Technology Corporation 2005 Equity Incentive Plan..........B-1
Appendix C: Amendment to Certificate of Incorporation......................C-1
[GRAPHIC OMITTED]
PAR Technology Corporation
8383 Seneca Turnpike; New Hartford, NY 13413-4991
April 11, 2006
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors of PAR Technology
Corporation (the "Board"), a Delaware corporation (the "Company") for use at the
Annual Meeting of Shareholders (the "Annual Meeting" or "Meeting") to be held at
10:00 AM, local time, on Thursday, May 11, 2006, at The New York Palace Hotel;
455 Madison Avenue; New York, New York 10022, and at any postponement or
adjournment of the Meeting.
Purpose of Meeting
At the Meeting the Shareholders will be asked to consider and vote on the
following matters:
1. To elect two Directors of the Company for a term of office to expire
at the third succeeding Annual Meeting of Shareholders;
2. To approve the PAR Technology Corporation 2005 Equity Incentive Plan;
3. To approve the amendment of the Certificate of Incorporation to
increase the authorized shares of voting Common Stock from 19,000,000
to 29,000,000.
4. To ratify the selection of KPMG LLP as the Company's independent
registered public accounting firm for the Company for the 2006 fiscal
year; and
5. To transact such other business as may properly come before the
Meeting or any adjournments or postponements of the Meeting.
Each proposal is described in more detail in this Proxy Statement.
Record Date, Voting Rights, Methods of Voting
Only shareholders of record at the close of business on March 22, 2006, will be
entitled to notice of and to vote at the Meeting or any postponements or
adjournments of the Meeting. As of that date, there were 14,157,620 shares of
the Company's Common Stock, par value $0.02 per share (the "Common Stock")
outstanding and entitled to vote. The holders of shares representing 7,078,811
votes, represented in person or by proxy, shall constitute a quorum to conduct
business.
Each share of Common Stock entitles the shareholder to one vote on all matters
to come before the Meeting including the election of the Directors. Shareholders
may vote in person or by proxy. Shareholders of record can vote by telephone, on
the Internet, by mail or by attending the Meeting and voting by ballot. If you
are a beneficial shareholder, please refer to your proxy card or the information
forwarded by your bank, broker or other holder of record to identify which
options are available to you. If you vote by telephone or on the Internet you do
not need to return your proxy card. Telephone and Internet voting facilities for
shareholders of record will be available 24 hours a day, and will close at 3:00
AM on May 11, 2006. The method by which a shareholder votes will not in any way
affect their right to attend the Meeting and vote in person. If shares are held
in the name of a bank, broker or other holder of record, the shareholder must
obtain a proxy, executed in their favor, from the holder of record to be able to
vote at the Meeting. All shares that have been properly voted and not revoked
will be voted at the Annual Meeting. When proxies in the form enclosed are
returned properly executed, the shares represented by the proxies will be voted
in accordance with the directions of the shareholder. If you sign and return
your proxy card but do not specify your voting instructions, the shares
represented by that proxy will be voted as recommended by the Board of
Directors. The proxy solicited hereby may be revoked at any time prior to its
exercise by executing and returning to the address set forth above a proxy
bearing a later date or later dated vote by telephone or on the Internet, by
giving written notice of revocation to the Secretary of the Company at the
address set forth above, or by attending the Meeting, withdrawing the proxy and
voting in person.
Voting
A shareholder may, with respect to the election of the Directors: (i) vote "FOR"
the nominees named herein, or (ii) "WITHHOLD AUTHORITY" to vote for any or all
such nominees. The election of the Directors requires a plurality of the votes
cast. Accordingly, withholding authority to vote for a Director nominee will not
prevent the nominee from being elected.
With respect to the approval of the PAR Technology Corporation 2005 Equity
Incentive Plan, a shareholder may: (i) vote "FOR"; (ii) vote "AGAINST"; or (iii)
"ABSTAIN" from voting. A "FOR" vote of a majority of votes cast by the holders
of capital stock present and represented by proxy and entitled to vote thereon
(a quorum being present) is required to approve the 2005 Equity Incentive Plan.
A vote to "ABSTAIN" from voting on this matter has the legal effect of a vote
"AGAINST" the matter. This is a "non-routine" proposal and therefore, banks and
brokers that have not received voting instructions from their clients cannot
vote on their clients' behalf in connection with this proposal. These "non-voted
shares" will be considered shares not present and entitled to vote on this
matter, although such shares may be considered present and entitled to vote for
other purposes and will count for purposes of determining the presence of a
quorum.
With respect to the approval the amendment of the Certificate of Incorporation
to increase the authorized shares of voting Common Stock from 19,000,000 to
29,000,000, a shareholder may: (i) vote "FOR"; (ii) vote "AGAINST"; or (iii)
"ABSTAIN" from voting. A "FOR" vote of a majority of all outstanding shares is
required to approve the amendment of the Certificate of Incorporation to
increase the authorized shares of voting Common Stock. A vote to "ABSTAIN" from
voting on this matter has the legal effect of a vote "AGAINST" the matter. This
is a "non-routine" proposal and therefore, banks and brokers that have not
received voting instructions from their clients cannot vote on their clients'
behalf in connection with this proposal. These "non-voted shares" will be
considered shares not present and entitled to vote on this matter, although such
shares may be considered present and entitled to vote for other purposes and
will count for purposes of determining the presence of a quorum.
A shareholder may, with respect to the ratification of the selection of KPMG LLP
("KPMG") as the Company's independent registered public accounting firm: (i)
vote "FOR"; (ii) vote "AGAINST"; or (iii) "ABSTAIN" from voting. A "FOR" vote of
a majority of votes cast by the holders of capital stock present and represented
by proxy and entitled to vote thereon (a quorum being present) is required to
ratify the selection of the Company's independent registered public accounting
firm. A vote to "ABSTAIN" from voting on this matter has the legal effect of a
vote "AGAINST" the matter.
Proxy Solicitation Costs
The Company will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others forwarding the solicitation
material to beneficial owners of shares of the Company's Common Stock. In
addition to the use of the mail, directors, officers, employees and certain
stockholders of the Company, none of whom will receive additional compensation
for doing so, may solicit proxies on behalf of the Company personally, by
telephone or by facsimile transmission.
The Company's Annual Report to its shareholders for the year ended December 31,
2005, including audited consolidated financial statements, accompanies this
Proxy Statement. Except as otherwise expressly provided herein, the Company's
Annual Report is not incorporated in this Proxy Statement by reference. The
approximate date on which this Proxy Statement and the accompanying form of
proxy are first being sent or given to shareholders is April 11, 2006.
Proposal 1: Election of Directors
Under the Company's Certificate of Incorporation, the members of the Board of
Directors are divided into three classes with approximately one-third of the
Directors standing for election at each Annual Meeting. The Directors are
elected for a three-year term of office, and will hold office until their
respective successors have been duly elected and qualified or until their
earlier resignation or removal. There were two Class II Directors elected in
2003 and one Class II Director elected by the Board in November 2005 to hold
office commencing January 1, 2006 until the 2006 Annual Meeting of Shareholders.
One of the Class II Directors, Mr. Haney, has notified the Company that he does
not intend to stand for re-election. Mr. Haney intends to serve on the Board of
Directors through the date of the Annual Meeting. The Company's By-Laws provides
for a Board of not less than three nor more than fifteen Directors and
authorizes the Board to determine the authorized number of Directors within that
range. The authorized number of Directors is seven, however, effective
immediately prior to the annual meeting, the authorized number of Directors will
be reduced to six. Therefore, at this Meeting, two Directors will be elected for
a three-year term expiring at the Annual Meeting held in 2009. The nominees of
the Board for the Class II Director positions, Mr. Sangwoo Ahn, and Dr. Paul D.
Nielsen are currently members of the Board and have been nominated for election
by the Board upon recommendation of the Nominating and Corporate Governance
Committee and each has decided to stand for re-election.
Each of the nominees for the Class II Director positions, have been determined
by the Board to be "independent" as this term is defined by the New York Stock
Exchange ("NYSE") in its listing standards and pursuant to the Company's
Corporate Governance Guidelines. There is no family relationship among any of
the nominees, Directors, or any of the Company's executive officers ("Executive
Officers"). The Executive Officers serve at the discretion of the Board.
The Board has no reason to believe that any of the nominees will be unable or
unwilling to serve if elected. In the event that any of the nominees shall
become unable or unwilling to accept nomination or election as a Director, it is
intended that such shares will be voted, by the persons named in the enclosed
proxy, for the election of a substitute nominee selected by the Board, unless
the Board should determine to reduce the number of Directors pursuant to the
By-Laws of the Company.
The names of the nominees and each of the Directors continuing in office, their
ages as of April 11, 2006, the year each first became a Director and the
expiration of their current term in office are set forth in the following table.
Director
Nominees for Director Age Since Term Expires
--------------------------------------------------------------------------------
Sangwoo Ahn ................. 67 1986 2006 Annual Meeting of Shareholders
Dr. Paul D. Nielsen ......... 55 2006 2006 Annual Meeting of Shareholders
Director
Continuing Directors Age Since Term Expires
--------------------------------------------------------------------------------
Dr. John W. Sammon, Jr....... 67 1968 2007 Annual Meeting of Shareholders
Charles A. Constantino....... 66 1970 2007 Annual Meeting of Shareholders
Kevin R. Jost ............... 51 2004 2008 Annual Meeting of Shareholders
James A. Simms .............. 46 2001 2008 Annual Meeting of Shareholders
The Board of Directors unanimously recommends a vote FOR the proposal to elect
Mr. Ahn and Dr. Nielsen. Unless a contrary direction is indicated, shares
represented by valid proxies and not so marked as to withhold authority to vote
for the nominees will be voted FOR the election of the nominees.
BIOGRAPHIES OF NOMINEES AND DIRECTORS CONTINUING IN OFFICE
Sangwoo Ahn. Mr. Ahn, age 67, has held the position of Chairman of the Board of
Quaker Fabric Corporation since 1993 and is also a member of the Board of
Directors of Xanser Corp. Mr. Ahn is a member of Class II of the Company's Board
and has been a Director of the Company since March 1986.
Charles A. Constantino. Mr. Constantino, age 66, has held the position of
Executive Vice President since 1974 and holds various positions with
subsidiaries of the Company. Mr. Constantino is also a member of the Board of
Directors of Veramark Technologies, Inc. Mr. Constantino is a member of Class
III of the Company's Board and has been a Director of the Company since 1970.
Kevin R. Jost. Mr. Jost, age 51, has been the President and Chief Executive
Officer of Hand Held Products, Inc. since its inception as a separate entity in
1999. From 1982 through 1999, Mr. Jost was Vice President and General Manager of
Welch Allyn Data Collection, a division of Welch Allyn, Inc. In 1999, Welch
Allyn Data Collection division became a separate entity and acquired Hand Held
Products, Inc. and continued business under the acquired company's name. Mr.
Jost is a member of Class I of the Company's Board and has been a Director of
the Company since May 2004.
Dr. Paul D. Nielsen. Dr. Nielsen, age 55, has been Director and CEO of the
Software Engineering Institute ("SEI") at Carnegie Mellon University since 2004.
Prior to joining SEI, Dr. Nielsen served as a major general in the U.S. Air
Force, where he was the commander of the Air Force Research Laboratory and
Technology Executive Officer for the Air Force. Dr. Nielsen is a member of Class
II of the Company's Board and has been a Director of the Company since January
1, 2006.
Dr. John W. Sammon, Jr. Dr. Sammon, age 67, is the founder of the Company and
has been the President, Chief Executive Officer and a Director since its
incorporation in 1968. He was elected Chairman of the Board in 1983. Dr. Sammon
is also a former President of the Company's subsidiary, ParTech, Inc., serving
in that capacity from 1978 to 1987 and again from December 1997 through June
2000 and also currently holds various positions with other subsidiaries of the
Company. Dr. Sammon is a member of Class III of the Company's Board.
James A. Simms. Mr. Simms, age 46, has been a Managing Director of Janney
Montgomery Scott LLC, a wholly owned subsidiary of The Penn Mutual Life
Insurance Company, since November 2004. For the prior seven years, he was a
senior executive with Adams, Harkness & Hill, Inc. Mr. Simms is a member of
Class I of the Company's Board and has been a Director of the Company since
October 2001.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is under the general direction of the Board as
provided by the By-Laws of the Company and the laws of the State of Delaware,
the state of incorporation. In 2005, the Board held six meetings and Committees
of the Board held a total of 18 meetings. Each member of the Board attended at
least 75% of the aggregate of all meetings of the Board and the committees on
which they served. It is the Company's policy to encourage Directors to attend
the Annual Meeting but such attendance is not required. Last year, one member of
the Board attended the Annual Meeting.
All members of the Board are non-management directors except for the Chairman
(Dr. Sammon) and Director Constantino, who are also Executive Officers of the
Company. The non-management directors have chosen Director Ahn to preside at the
regularly scheduled executive sessions of the non-management directors of the
Company. Interested parties may send written communication to the Board of
Directors as a group, the non-management directors as a group, the presiding
director of executive sessions of non-management directors, or to any individual
director by sending the communication c/o Gregory T. Cortese, Secretary, PAR
Technology Corporation; PAR Technology Park; 8383 Seneca Turnpike, New Hartford,
NY 13413. Upon receipt, the communication will be relayed to the Chairman, if it
is addressed to the Board as a whole, to Director Ahn, if it is addressed to the
presiding director of executive sessions of the non-management directors or to
the non-management directors as a group, or to the individual Director if the
communication is addressed to an individual Director. All communications
regarding accounting, internal controls and audits will be referred to the Audit
Committee. Interested parties may communicate anonymously if they so desire.
The Board has five standing committees: (i) Executive Committee, (ii) Audit
Committee, (iii) Compensation Committee, (iv) Stock Option Committee and (v)
Nominating and Corporate Governance Committee. The members of each committee and
the number of meetings held by each committee in 2005 are set forth in the
following table.
---------------------- ------------ -------- ----------------- ---------------- --------------
Nominating
and Corporate
Name Executive Audit Compensation Stock Option Governance
---- --------- ----- ------------ ------------ ----------
Mr. Ahn (F1) X Chair X
Mr. Constantino X X
Mr. Haney (F1) X X X
Mr. Jost (F1) Chair
Dr. Nielsen (F1)(F2) X X X
Dr. Sammon Chair Chair
Mr. Simms (1) X X Chair
---------------------- ------------ -------- ----------------- ---------------- --------------
2005 Meetings 2 9 3 2 2
---------------------- ------------ -------- ----------------- ---------------- --------------
(F1) Independent Directors
(F2) Member of the Board as of January 1, 2006
In its annual review of Director independence, the Board has determined all
Directors to be independent except Mr. Constantino and Dr. Sammon. For a
Director to be considered "independent", the Board must affirmatively determine
that the Director has no material relationship with the Company, either directly
or as a partner, shareholder or officer of an organization that has a
relationship with the Company. The Board observes all criteria for independence
established by the NYSE and other governing laws and regulations.
Executive Committee
The Executive Committee has the delegated authority to exercise all of the
powers of the Board in the management and direction of the business and affairs
of the Corporation in all cases in which specific directions shall not have been
given by the Board and subject to the limitations of the General Corporation Law
of the State of Delaware; the Company's Certificate of Incorporation; and the
Company's By-Laws. The Executive Committee meets when required on short notice
during intervals between meetings of the Board.
Audit Committee
In accordance with its Charter, the Audit Committee consists of at least three
members, each of whom has been determined by the Board to meet the independence
standards adopted by the Board. The standards adopted by the Board incorporate
the independence requirements of the NYSE Corporate Governance Standards and the
independence requirements set forth by the Securities and Exchange Commission
("SEC"). The Board has determined the members of the Audit Committee are
"independent" as this term is defined by the NYSE in its listing standards and
meet SEC standards for independence of audit committee members and that no
member of the Audit Committee has a material relationship with the Company that
would render that member not to be "independent". At least one member of the
Committee shall, in the assessment of the Board, qualify and be identified as an
audit committee financial expert as defined by the SEC. The Board has determined
that Sangwoo Ahn is an "audit committee financial expert". All members of the
Committee are financially literate at the time of their appointment to the
Committee or within a reasonable time thereafter. Pursuant to its charter, the
Audit Committee assists the Board in oversight of management's conduct and
representations of the Company's reporting processes, its systems of internal
control, the audit process, and its processes for monitoring compliance with
laws and regulations and the Company's code of ethics and conduct. There were 9
meetings of the Audit Committee during 2005 including meetings held separately
with management, and separate Executive Sessions with independent Directors, the
internal auditor and the independent registered public accounting firm
respectively. The Report of the Audit Committee begins on page 8 of this Proxy
Statement. The Audit Committee operates under a written charter adopted by the
Board. The Charter of the Audit Committee was updated during 2005 and a copy is
attached to this Proxy Statement as Appendix A.
Compensation Committee
The Compensation Committee, which meets as required (but no less than once per
year), reviews and makes recommendations to those identified in its charter
regarding the compensation, benefits, stock options and incentive plans for all
Executive Officers of the Company, and in connection with the compensation for
outside Directors for service on the Board and committees of the Board. The
Compensation Committee Report set forth below describes the responsibilities of
this committee, and discloses the basis for the compensation of the Chief
Executive Officer, including the factors and criteria upon which that
compensation was based; compensation policies applicable to the Company's
Executive Officers; and the specific relationship of corporate performance to
executive compensation for 2005. The Compensation Committee Report begins on
page 16 of this Proxy Statement.
Stock Option Committee
The Stock Option Committee, which meets as required, makes recommendations to
the Compensation Committee for stock option awards and otherwise serves as the
administrative body for the Company's 1995 Stock Option Plan and the 2005 Equity
Incentive Plan. Both members of the Stock Option Committee are "disinterested
persons" in compliance with the Company's 1995 Stock Option Plan.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee assists the Board in meeting
its responsibilities in connection with the identification and recommendation of
qualified nominees for election to the Board, developing, monitoring the
compliance with, and making recommendations to the Board regarding the Company's
governing principles and Code of Business Conduct and Ethics. The Board has
determined that each of the members of this committee has met the independence
standards adopted by the Board which incorporate the independence requirements
under the NYSE listing standards.
The Nominating and Corporate Governance Committee considers all shareholder
recommendations for candidates for the Board. Such shareholder recommendations
should be sent to: Nominating and Corporate Governance Committee; c/o Gregory T.
Cortese, Secretary; PAR Technology Corporation; PAR Technology Park; 8383 Seneca
Turnpike; New Hartford, NY 13413. The committee's minimum qualifications and
specific qualities and skills required for Directors are set forth in Company's
Corporate Governance Guidelines and Nominating and Corporate Governance
Committee Charter. The Company's Corporate Governance guidelines and the
committee's charter are posted on the Company's website and a printed copy of
both documents may be obtained without charge by written request. The website
and address to send such requests may be found under the heading "Available
Information" on page 25 of this Proxy Statement. In addition to considering
candidates suggested by shareholders, the committee considers potential
candidates recommended by current Directors, company officers, employees and
others. The committee may sometimes use the services of a third party executive
search firm to assist it in identifying and evaluating possible nominees for
Director. The committee screens all potential candidates in the same manner
regardless of the source of the recommendation. In identifying and considering
candidates for nomination to the Board, this committee considers, in addition to
the requirements set out in the Company's Corporate Governance Guidelines and
Nominating and Corporate Governance Committee Charter, quality of experience,
the needs of the Company and the range of talent and experience represented on
the Board. When considering a candidate, the committee will determine whether
requesting additional information or an interview is appropriate.
Director Nielsen is the only nominee for Director proposed to be elected for the
first time by the shareholders at the Annual Meeting. Director Nielsen was
appointed by the Board in 2005 with an effective date of January 1, 2006.
Director Nielsen's name was first recommended by the Chief Executive Officer.
Committee Charters
Each of the Audit, Compensation, and Nominating and Corporate Governance
Committees operate under a written charter approved by the Board that is
reviewed regularly by the respective committees which may recommend appropriate
changes for approval by the Board. Copies of the charters for the Audit,
Compensation, and Nominating and Corporate Governance Committees are posted on
the Company's website and a printed copy of these documents may be obtained
without charge by written request. Requests can be made via the internet or by
mail. The respective website and address for making such requests for printed
copies of these and other available documents may be found under the heading
"Available Information" on page 25 of this Proxy Statement.
DIRECTOR COMPENSATION
Directors who are employees of the Company are not separately compensated for
serving on the Board. In 2005, non-employee Directors received annual retainers
of $25,000 for membership on the Board and an attendance fee of $1,000 per day
for in person attendance at Board meetings and any committee meetings held on
the same day and $500 per day for any committee meetings held on days other than
Board meeting days. The attendance fee is $200 if attendance is via telephone.
All Directors are also reimbursed for all reasonable expenses incurred in
attending meetings. In addition, any non-employee Director elected or re-elected
to the Board of Directors will annually receive a number of Non-Qualified Stock
Options or grants of restricted stock based on a formula for so long as the
status of non-employee Director is maintained. The formula aims to provide that
number of stock options for the Company's Common Stock, which on the date of the
grant, have a fair market value ("FMV"), comparable to the FMV of stock options
and/or stock granted to non-employee directors of comparable companies as
reported in the most recent survey by The Conference Board, Inc. and/or any
other nationally recognized research firm(s) determined by the Board to be
appropriate(1). Such stock options shall vest on the first anniversary date of
the grant provided that, as of the anniversary date the Director's position had
not been vacated by reason of resignation or removal for cause. In addition,
from time to time, at the Board's discretion, non-employee Directors may be
granted additional Non-Qualified Stock Options under the then existing stock
option plan(s).
(1) The formula is expressed: A/B = C where A = FMV of grants by comparable
companies to their non-employee directors; B = per share FMV of PAR Common Stock
on the date of the grant; and C = the number of shares of PAR Common Stock
represented by Non-Qualified Stock Options to be granted. By way of example, if
the FMV of comparable companies is determined to be $20,000 and, on the day of
the grant, the FMV of PAR Common Stock is $20 per share, the Director would be
granted Non-Qualified Stock Options representing 1,000 shares of PAR Common
Stock.
REPORT OF THE AUDIT COMMITTEE
The information contained in the following report is subject to the disclaimer
regarding "soliciting material" and "filed" information immediately following
the Compensation Committee Report contained in this Proxy Statement.
For the fiscal year ending December 31, 2005, the Audit Committee consisted of
three members, Directors Ahn, Haney and Simms, and operated under a written
charter that was updated during the year. A copy of the current Audit Committee
Charter as approved by the Committee and the Board is set forth in Appendix A to
this Proxy Statement. Director Nielsen was appointed to the Committee in 2006.
The Audit Committee reports to, and acts on behalf of the Board by providing
oversight of the financial management, independent registered public accounting
firm and financial reporting process of the Company. The Company's management
has the primary responsibility for the preparation of the Company's consolidated
financial statements in accordance with generally accepted accounting principles
("U.S. GAAP"). The Company's management also has the primary responsibility for
the financial reporting process, including the system of internal controls and
procedures designed to ensure compliance with applicable laws, regulations and
accounting standards. The Company's independent registered public accounting
firm, KPMG LLP ("KPMG"), is responsible for auditing the Company's consolidated
financial statements and expressing an opinion as to whether those consolidated
financial statements fairly present, in all material respects, the consolidated
financial position, results of operations, cash flows of the Company in
conformity with U.S. GAAP and on management's assessment of the effectiveness of
the Company's internal control over financial reporting. In addition, KPMG will
express its own opinion on the effectiveness of the Company's internal control
over financial reporting.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and
discussed with management and KPMG the audited consolidated financial statements
in the Annual Report for the year ended December 31, 2005 (including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the consolidated financial statements); management's assessment
of the effectiveness of the Company's internal control over financial reporting;
and KPMG's evaluation of the Company's internal control over financial
reporting. In addition, the Audit Committee has reviewed and discussed with KPMG
such other matters as are required to be discussed with the Audit Committee by
Statement on Auditing Standards No. 61 (Communication with Audit Committee), as
amended. In addition, the Audit Committee has received from KPMG the written
disclosures required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and held discussions with KPMG
with respect to KPMG's independence from the Company's management and the
Company itself.
The Audit Committee fully considered any non-audit services provided by KPMG and
the fees and costs billed and expected to be billed by such firm for those
services (described in the next section). In addition, the Audit Committee
considered whether those non-audit services provided by KPMG are compatible with
maintaining auditor independence. In reliance on the reviews and discussions
with the Company's management and the independent registered public accounting
firm, the Committee is satisfied that non-audit services provided to the Company
by KPMG are compatible with and did not impair the independence of KPMG.
Access to the Audit Committee by the Company's internal auditors and by KPMG is
unrestricted. The Audit Committee met and discussed with the Company's internal
auditors and KPMG the overall scope and plans for their respective audits. The
Audit Committee met with the Company's internal auditors to discuss the results
of their examinations, their evaluations of the Company's internal controls, and
their assessment of the overall quality of the Company's financial reporting.
These meetings were held both within and outside the presence of Company
management.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board, and the Board has approved, the inclusion of
the audited consolidated financial statements in the Annual Report on Form 10-K
for the year ended December 31, 2005 for filing with the Securities and Exchange
Commission.
The Audit Committee has selected KPMG as the Company's independent registered
public accounting firm for fiscal 2006. One or more representatives of KPMG are
expected to be in attendance at the Annual Shareholder Meeting, where they will
have the opportunity to make a statement if they so desire, and will be
available to answer appropriate questions.
Members of the Audit Committee
Sangwoo Ahn J. Whitney Haney Paul D. Nielsen, Ph.D. James A. Simms
(Chairman)
Fees Paid to Independent Registered Public Accountants
The following table presents fees paid by the Company for professional services
by KPMG during the years ended December 31, 2005 and December 31, 2004.
------------------------- --------------- ---------------
Type of Fees 2005 2004
------------------------- --------------- ---------------
Audit Fees $ 731,000 $ 264,000
Audit-Related Fees 0 $ 17,000
Tax Fees $ 125,000 $ 89,000
All Other Fees 0 0
------------------------- --------------- ---------------
Total: $ 856,000 $ 370,000
------------------------- --------------- ---------------
The categories of fees in the preceding table, in accordance with the SEC's
rules and definitions, are defined as follows:
Audit Fees are fees for professional services rendered for the audit of the
Company's consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and
services that are normally provided by the auditor in connection with
statutory and regulatory filings or engagements.
Audit-Related Fees are fees principally for audits of consolidated
financial statements of employee benefit plans and due diligence services.
Tax Fees are fees for professional services for federal, state and
international tax compliance, tax advice and tax planning.
All Other Fees are for any services not included in the first three
categories.
The Audit Committee has concluded that the provision of the non-audit services
listed above is compatible with maintaining the independence of the Company's
independent registered public accounting firm. Consistent with SEC policies
regarding auditor independence, the Audit Committee has established a policy to
pre-approve all auditing services and permitted non-audit services, including
the fees and terms thereof, performed by the independent registered public
accounting firm.
CODE OF BUSINESS CONDUCT AND ETHICS
All of the Company's Directors and employees, including the Chief Executive
Officer and the Chief Financial Officer ("and all other Executive Officers") are
required to abide by the Company's Code of Business Conduct and Ethics (the
"Code") to ensure the Company's business is conducted in a consistently legal
and ethical manner. A printed copy of the Code may be obtained without charge by
making a written request to the Company. Information regarding where such
requests should be directed can be found in this Proxy Statement under the
heading "Available Information". The full text of the Company's Code is also
available on the Company's website at
http://www.partech.com/ptc/ptc-ir-front2.cfm. The Code is designed to deter
wrongdoing and to promote: (a) honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of interest between personal and
professional relationships; (b) full, fair, accurate timely and understandable
disclosure in reports and documents that the Company files with or submits to
the SEC and other public communications; (c) compliance with applicable
governmental laws, rules and regulations; (d) the prompt internal reporting of
violations of the Code to the appropriate person(s) identified in the Code; and
(e) accountability for adherence to the Code. The Company intends to disclose
future amendments to, or waivers from, provisions of the Code that apply to the
Executive Officers and Directors and relate to the above elements by posting
such information on our website within five calendar days following the date of
such amendment or waiver.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
John W. Sammon, III and Karen E. Sammon, members of the immediate family of Dr.
John W. Sammon, Jr., the Company's Chairman of the Board, President and Chief
Executive Officer, are principals in Sammon and Sammon, LLC, doing business as
Paragon Racquet Club. Paragon Racquet Club currently leases a portion of the
Company's facilities at New Hartford, New York at a monthly base rate of $9,775.
The Company provides membership to this facility to all local employees.
During the Company's 1996 secondary offering, Mr. Charles A. Constantino, a
Director and a named Executive Officer of the Company, desired to sell a
significant portion of his stock in the Company to generate liquid assets to be
used for a personal purchase of property. The Company, however, believed that
the sale of the quantity of shares Mr. Constantino desired to sell would have an
adverse impact on the market price of the Company's stock, and therefore
requested that Mr. Constantino not participate in the sale of shares during the
secondary offering at the level he had proposed. Instead, the Company offered to
extend Mr. Constantino loans which would allow him to go forward with his
personal purchase. Consequently, during 1999, the Company's subsidiary, Rome
Research Corporation, granted loans to Mr. Constantino for the purpose of
purchasing a home, with annual interest at the prime rate adjusted quarterly.
Mr. Constantino's home served as collateral for these loans. Subsequent to July
30, 2002 the Company has not made any material changes to these loans. The
largest aggregate amount outstanding (principal and interest) under these loans
to Mr. Constantino throughout 2005 was $250,902. The principal and interest of
these loans were due on demand from the Company. Mr. Constantino paid all
outstanding principal and interest on this note in May, 2005.
John Springer-Miller, the President and CEO of the Company's subsidiary, PAR
Springer-Miller Systems, Inc., is the owner of the building in Stowe, Vermont,
in which the subsidiary maintains its principal offices. The subsidiary
currently leases the majority of the building from Mr. Springer-Miller at a
monthly base rate of $30,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the NYSE. Such persons are
required by regulations of the SEC to furnish the Company with copies of all
such filings. Based solely on its review of the copies of such reports received
by the Company and written representations from reporting persons, the Company
believes that all ownership filing requirements were timely met during 2005
except that: a Form 4 in connection with a sale of stock was filed late by Mr.
J. Whitney Haney, a director; Mr. Albert Lane, Jr., an Executive Officer, was
late in filing two Form 4's in connection with two sales of stock; Mr. Gregory
T. Cortese, an Executive Officer, was late in filing a Form 4 in connection with
a cashless exercise of stock options and was late in filing a Form 4 in
connection with a gift of stock; and a Form 4 was filed late in connection with
a sale of stock by Mr. Ronald J. Casciano, an Executive Officer.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of
the Company's Common Stock as of February 28, 2006, by each Director, by each of
the named Executive Officers and by all Directors and Executive Officers as a
group.
Amount and Nature
of Beneficial Percent
Name of Beneficial Owner or Group(1) Ownership (2) of Class (3)
--------------------------------------------------------------------------------
Dr. John W. Sammon, Jr. 5,708,550 (4) 40.33%
Charles A. Constantino............................. 277,050 1.96%
Gregory T. Cortese ................................ 333,310 (5) 2.30%
J. Whitney Haney................................... 28,500 *
Sangwoo Ahn........................................ 84,000 (6) *
Ronald J. Casciano ................................ 116,850 (7) *
Albert Lane, Jr. 45,949 (8) *
James A. Simms..................................... 13,500 (9) *
Kevin R. Jost...................................... 3,534 (10) *
Dr. Paul D. Nielsen................................ 0 *
All Directors and Executive Officers
as a Group (10 persons)............................ 6,611,243 45.13%
-----------------------------
* Represents less than 1%
(1) Except as otherwise noted, the address for each beneficial owner listed
above is c/o PAR Technology Corporation; PAR Technology Park; 8383 Seneca
Turnpike; New Hartford, NY 13413-4991.
(2) Except as otherwise noted, each individual has sole voting and investment
power with respect to all shares.
(3) Percent of Class is calculated utilizing 14,650,504 which is the number of
the Company's outstanding shares as of February 28, 2006 and the number of
options held by the named beneficial owners, if any, which become
exercisable within 60 days thereafter.
(4) Includes 150 shares held jointly with Dr. Sammon's wife, Deanna D. Sammon.
Does not include 286,500 shares beneficially owned by Mrs. Sammon in which
Dr. Sammon disclaims beneficial ownership.
(5) Includes 333,250 shares which Mr. Cortese has or will have the right to
acquire pursuant to the Company's 1995 Stock Option Plan as of April 29,
2006.
(6) Includes 24,000 shares which Mr. Ahn has or will have the right to acquire
pursuant to the Company's 1995 Stock Option Plan as of April 29, 2006.
(7) Includes 116,850 shares which Mr. Casciano has or will have the right to
acquire pursuant to the Company's 1995 Stock Option Plan as of April 29,
2006.
(8) Does not include 1500 shares beneficially owned by Mr. Lane's wife, Linda,
in which Mr. Lane disclaims beneficial ownership.
(9) Includes 13,500 shares which Mr. Simms has or will have the right to
acquire pursuant to the Company's 1995 Stock Option Plan as of April 29,
2006.
(10) Includes 3,524 shares which Mr. Jost has or will have the right to acquire
pursuant to the Company's 1995 Stock Option Plan as of April 29, 2006.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for each of
the last three fiscal years awarded to, earned by, or paid to the Chief
Executive Officer and the four other most highly compensated Executive Officers
of the Company other than the Chief Executive Officer.
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
---------------------------------------------------------------------------------------------
Securities
Underlying
Name and Options/ All Other
Principal Position Year Salary Bonus(1) SAR's (#)(2) Compensation(3)
------------------ -----------------------------------------------------------------------
Dr. John W. Sammon, Jr. 2005 $337,886 $244,000 0 $14,384
Chairman of the Board, President 2004 $309,837 $124,035 0 $9,963
and Chief Executive Officer 2003 $300,500 $104,400 0 $7,691
Charles A. Constantino 2005 $207,987 $101,200 0 $14,036
Executive Vice President 2004 $245,864 $84,400 0 $9,916
and Director 2003 $236,408 $73,200 0 $7,691
Gregory T. Cortese 2005 $257,629 $135,000 0 $14,384
CEO & President, ParTech, Inc. 2004 $232,717 $75,413 0 $9,963
2003 $231,750 $56,400 0 $7,720
Albert Lane, Jr. 2005 $233,458 $216,434 0 $14,360
President, Rome Research 2004 $239,519 $160,900 20,000 $9,958
Corporation and PAR Government 2003 $224,014 $157,900 0 $7,691
Systems Corporation
Ronald J. Casciano 2005 $182,943 $86,100 0 $14,384
Vice President, C.F.O. & Treasurer 2004 $173,090 $49,483 40,000 $9,963
__________________ 2003 $161,952 $40,200 0 $7,024
(F1) Cash bonus awards earned in the respective fiscal year.
(F2) Represents stock options granted under the Company's 1995 Stock Option
Plan.
(F3) All Other Compensation column consists only of Company contributions to the
Company's Employee Retirement Plan and Trust and the Company's matching
contribution to the 401(k) savings plan.
The policies and practices of the Corporation pursuant to which the compensation
set forth in the Summary Compensation Table was paid or awarded is described
under "Compensation Committee Report" set forth elsewhere in this Proxy
Statement.
Aggregated Option Exercises in 2005 and Year-End Option Values
The table which follows sets forth information concerning exercises of stock
options during 2005 by each of the Executive Officers named in the Summary
Compensation Table and the value of his unexercised options as of December 31,
2005 based on a fair market value of $18.63 per share of the Company's Common
Stock on such date:
Number of Unexercised Value of Unexercised in the
Shares Options at 12/31/05 Money Options at 12/31/05(2)
Acquired on Value(1) --------------- -------------- -------------- --------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------------------------------- -------------- -------------- --------------- -------------- -------------- --------------
Ronald J. Casciano 22,500 $382,360 100,000 53,250 $1,649,003 $672,191
Charles A. Constantino ----- ----- ----- ----- ----- -----
Gregory T. Cortese 146,550 $2,349,467 335,250 ----- $5,435,771 -----
Albert Lane, Jr. 30,682 $294,100 12,267 17,733 $164,378 $237,622
Dr. John W. Sammon, Jr. ----- ----- ----- ----- ----- -----
----------------------------------- -------------- -------------- --------------- -------------- -------------- --------------
(F1) The Value Realized equals the aggregate amount of the excess of the fair
market value on the date of exercise (the average of the high and low
prices of the Company's Common Stock as reported in the Wall Street Journal
for the exercise date) over the relevant exercise price(s).
(F2) The value is calculated based on the aggregate amount of the excess of
$18.63 (the fair market value of the Company's Common Stock on 12/31/05)
over the relevant exercise price(s).
COMPENSATION COMMITTEE REPORT
The information contained in the following report is subject to the disclaimer
regarding "soliciting material" and "filed" information immediately following
this Compensation Committee Report.
Committee Membership and Process
For the fiscal year ending December 31, 2005, the Compensation Committee
consisted of three members, Directors Jost, Haney and Simms, all of whom have
been determined by the Board to be "independent". The responsibilities of the
Compensation Committee are set forth in the Committee's charter and include the
review and evaluation of the Chief Executive Officer's compensation; review and
approval of compensation packages, as recommended by the Chief Executive
Officer, for the Executive Officers of the Company; the review and discussion
with the Company's Chief Executive Officer, on at least an annual basis, of the
incentive compensation programs for the fiscal year as well as the corporate
goals and objectives related to such programs; oversight of the administration
of the Company's incentive, equity based and other compensatory plans; the
recommendation of changes and/or the adoption of new plans to the Board, as
appropriate; and the annual review of the Company's retirement and other
compensation programs that involve significant cost to the Company.
Executive Compensation Policy
In developing its compensation policies, the Committee has sought to further the
Company's objectives of attracting, motivating, retaining and rewarding the
management talent necessary to achieve the Company's performance goals and
maintaining its leadership position in the industries in which it competes.
Accordingly, the Committee has adopted the following overriding policies:
o Executive compensation must be tied to the Company's general
performance and achievement of financial and strategic goals;
o Executive compensation opportunities should be competitive with those
provided by other companies of comparable size engaged in similar
businesses; and
o Executive compensation should provide incentives that align the
long-term financial interests of the Company's Executive Officers with
those of its shareholders.
Compensation for the Company's Executive Officers in 2005 was consistent with
the above policies. The primary responsibility of the Company's Chief Executive
Officer and its other Executive Officers is the enhancement of shareholder value
through balancing the requirements of long term growth with the achievement of
short term performance. The contribution an Executive Officer has made to
achieve the Company's short term strategic performance objectives as well as
that Executive Officer's anticipated contribution toward long term objectives
provide the basis upon which the officer's individual compensation awards are
established.
Elements of Executive Compensation
To meet its policy objectives for Executive Officer compensation, the Company's
Executive Officers are compensated through a combination of Base Salary,
Bonuses, Stock Options, Deferred Compensation and various benefits, including
medical and 401(k) plans generally available to employees of the Company.
Base Salary. In setting the annual base salary of the Chief Executive Officer
and in reviewing and approving the annual base salaries of the other Executive
Officers, the Compensation Committee considered the salaries of relative
executives in similar positions, the level and scope of responsibility,
experience and performance of the Executive Officer, the financial performance
of the Company; and other overall general economic factors. The Compensation
Committee believes the companies with which the Company competes for
compensation purposes are not necessarily the same companies with which
shareholder cumulative returns are compared. The peer groups used in the
Performance Graph below include the Standard & Poor's 500 Stock Index and those
companies deemed most comparable to the Company's businesses for the purpose of
measuring stock performance. In contrast, the salary information utilized by the
Company and the Compensation Committee includes national third party survey data
for salaries in the high technology group within the durable goods industry
sector as reported in a nationally recognized report on executive compensation.
An objective of the Compensation Committee is to approve a salary for each
Executive Officer within a range with a midpoint near the average midpoint for
similar positions at comparable companies taking into account variables of the
comparable companies, such as the size and industry, geographic location, and
comparison of duties. Consideration is also given to the individual performance
of that Executive Officer, the performance of the organization over which the
Executive Officer has responsibility, the performance of the Company and general
economic conditions (with each factor being weighted as the Compensation
Committee deems appropriate).
Bonuses. The purpose of the Company's bonus program for Executive Officers is to
provide incentive based compensation to Executive Officers for meeting and
exceeding pre-established financial performance goals for the respective
business units under their control. In general, the financial performance goals
of the Executive Officers (other than the Chief Executive Officer) are approved
by the Chief Executive Officer. For 2005, for Executive Officers of all business
units, the financial performance measures taken into consideration to determine
an appropriate bonus included profit before tax, revenue and accounts receivable
collection cycle. Bonuses for Executive Officers overseeing the Company's
Hospitality business segment, ParTech, Inc., included the additional element of
inventory turns.
Stock Options. In furtherance of the objective of providing long-term financial
incentives that relate to improvement in long-term shareholder value, the
Company awards stock options to its key employees (including Executive Officers
other than Dr. Sammon and Mr. Constantino) under the Company's 1995 Stock Option
Plan (" 1995 Option Plan"). Stock options ("Options") granted under the 1995
Option Plan may be either Incentive Stock Options as defined by the Internal
Revenue Code ("Incentive Stock Options") or Options which are not Incentive
Stock Options ("Non-Qualified Stock Options"). Upon review of recommendations
from the Compensation Committee, the Stock Option Committee determines the key
employees of the Company and its subsidiaries who shall be granted Options, the
type of Options to be granted, the terms of the grant and the number of shares
to be subject thereto. Option grants become exercisable no less than six months
after the grant and typically expire ten (10) years after the date of the grant.
Option grants are discretionary and are reflective of the value of the
recipient's position, as well as the current performance and continuing
contribution of that individual to the Company.
Deferred Compensation. The Company sponsors an unfunded Deferred Compensation
Plan for a select group of highly compensated employees that includes the
Executive Officers. The Deferred Compensation Plan was adopted effective March
4, 2004. Participants may make voluntary deferrals of their salary to the plan
in excess of tax code limitations that apply to the Company's qualified plan.
The Company also has the sole discretion to make employer contributions to the
plan on behalf of the participants, though it did not make any employer
contributions in 2005. Contributions to the plan are held in a rabbi-trust
established by the Company and invested in a group variable universal life
insurance contract insuring the lives of the participants. The group variable
universal life insurance contract is owned by the Company and subject to the
claims of its creditors. Contributions to the plan are allocated to a separate
account established in each participant's name. Each separate account is
credited with the participant's elective deferrals and Company contributions, if
any. The value of each participant's account is credited or debited with deemed
earnings, gains or losses based on the cash surrender value of the group
variable universal life insurance contract. Distribution of a participant's
account balance is permitted upon that participant's termination of employment,
death, disability or financial hardship. Payment of a participant's account
balance will be made in a lump sum payment or in annual installments over a
period of two to 15 years, as selected by the participant. The plan also
provides that if a participant dies, a death benefit equal to $10,000 shall be
paid in addition to the account balance as of the time of the participant's
death.
Benefits and Perquisites. The Company makes available to its Executive Officers
the medical, dental, profit sharing plan, 401(k) plan and life insurance
benefits that are generally available to Company employees. Under the 401(k)
plan, all participants receive a matching contribution at the rate of 10% from
the Company. The amount of any perquisites received by the Company's Executive
Officers, as determined in accordance with the rules of the SEC relating to
executive compensation, did not exceed 10% of the respective Executive Officer's
salary for fiscal 2005.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code of 1986, as amended, provides that compensation in excess
of $1,000,000 paid to the Chief Executive Officer or to any of the other four
most highly compensated executive officers of a publicly held company will not
be deductible for federal income tax purposes unless such compensation is paid
pursuant to one of the enumerated exceptions set forth in Section 162(m). The
Company's primary objective in designing and administering its compensation
policies is to support and encourage the achievement of the Company's long-term
strategic goals and to enhance stockholder value. In general, stock options
granted under the Company's 2005 Equity Incentive Plan are intended to qualify
under and comply with the "performance based compensation" exemption provided
under Section 162(m), thus excluding from the Section 162(m) compensation
limitation any income recognized by executives at the time of exercise of such
stock options. Because salary and bonuses paid to our Chief Executive Officer
and four most highly compensated executive officers, have been below the
$1,000,000 threshold, the Committee has elected, at this time, to retain
discretion over bonus payments, rather than to ensure that payments of salary
and bonus in excess of $1,000,000 are deductible. The Committee intends to
review periodically the potential impacts of Section 162(m) in structuring and
administering the Company's compensation programs.
Chief Executive Officer Compensation for Fiscal 2005
The Compensation Committee reviews, on at least an annual basis, the goals and
objectives relevant to the compensation of the Company's Chief Executive Officer
and evaluates the Chief Executive Officer's performance in light of those goals
and objectives. Based on this evaluation, either as a committee or together with
the other independent Directors directed by the Board, the Compensation
Committee determines and approves the compensation of the Chief Executive
Officer. The Compensation Committee's recommendation to the Board for the 2005
compensation of the Chief Executive Officer was based on the policies and
practices described above for Executive Compensation in general. Dr. Sammon's
2005 base salary was established after review of his performance and the
comparative information from the third party salary survey data. Dr. Sammon's
base salary in 2005 was $337,886, which is below the midpoint of the
compensation peer group contained in the third party survey and reflects an
increase of 9% over Dr. Sammon's base salary for 2004.
In establishing Dr. Sammon's total compensation package, the Compensation
Committee also considered the financial performance of the Company in 2005 and
compared this performance to the 2005 goals the Compensation Committee had
established for Dr. Sammon a year earlier during the course of his 2004
performance review. The Compensation Committee noted the Company exceeded all of
the pre-established financial performance goals to the extent that would entitle
the Chief Executive Officer to payment of a 2005 bonus in the amount of
$244,000.
Dr. Sammon, the Company's founder, became a shareholder before the Company
became publicly-owned and has not, to date, been granted options under the
Option Plan or any of the Company's previous stock option plans in view of his
already existing substantial interest in maximizing the value of the Company's
Common Stock. In addition, as Chairman of the Stock Option Committee, Dr. Sammon
is considered a "disinterested person" and therefore was not eligible to receive
stock option grants under the 1995 Option Plan.
Members of the Compensation Committee
Kevin R. Jost J. Whitney Haney Dr. Paul D. Nielsen James A. Simms
(Chairman)
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended (the "1933 Act")
or the Securities Exchange Act of 1934 (the "1934 Act") that might incorporate
by reference this Proxy Statement, in whole or in part, the Report of the Audit
Committee found earlier in this Proxy Statement, the above Compensation
Committee Report and the Performance Graph set forth below shall not be deemed
to be incorporated by reference into any filing under the 1933 Act or the 1934
Act, except to the extent the Company specifically incorporates them by
reference into a filing under the 1933 Act or the 1934 Act, nor shall such
Report of the Audit Committee, Compensation Committee Report or Performance
Graph be deemed to be "soliciting material" or to be "filed" with the SEC or
subject to Regulation 14A or 14C under the 1934 Act or to the liabilities of
Section 18 of the 1934 Act, except to the extent the Company specifically
incorporates them by reference into a filing under the 1933 Act or the 1934 Act.
As of the date of this Proxy Statement, the Company has made no such
incorporation by reference or request.
PERFORMANCE GRAPH
The following performance graph compares the cumulative total shareholder return
on the Company's Common Stock with the Standard & Poor's 500 Index and the
common stock of a self constructed peer group made up of companies on an
industry basis, which companies' returns are weighted according to their
respective market capitalizations at the beginning of each year for which the
return is calculated. The graph is constructed on the assumption that $100 was
invested in each of the Company's Common Stock, the S&P 500 Stock Index, and the
peer group on December 31, 2000. The year-end values of each investment are
based on share price appreciation and the reinvestment of dividends.
Cumulative Total Return ($)
--------------------------------------------------------------------------------
12/00 12/01 12/02 12/03 12/04 12/05
--------------------------------------------------------------------------------
PAR TECHNOLOGY CORPORATION 100.00 138.67 368.00 426.13 603.73 1482.53
S & P 500 100.00 88.12 68.64 88.33 97.94 102.75
PEER GROUP 100.00 84.96 77.78 114.98 178.98 246.56
[GRAPH OMITTED]
* $100 invested on 12/31/00 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
Graph and Chart: Copyright (C) 2006, Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. All rights reserved.
www.researchdatagroup.com/S&P.htm
The following companies are included in the Company's self constructed Peer
Group: Aspeon, Inc. (formerly known as Javelin Systems, Inc.); Micros Systems,
Inc.; Radiant Systems, Inc. and PAR Technology Corporation.
Proposal 2: Approval of the PAR Technology Corporation 2005 Equity Incentive
Plan
At the Annual Meeting, the stockholders will be requested to consider and act
upon a proposal to approve the Corporation's 2005 Equity Incentive Plan, as
amended (the "Stock Plan"). On December 28, 2005, the Board of Directors
approved, subject to stockholder approval at the Annual Meeting, the adoption of
the Stock Plan, and further amended the Stock Plan on March 29, 2006 to increase
the number of shares subject to issuance there under to 1,000,000, all subject
to stockholder approval.
The stockholders will be requested at the Annual Meeting to consider and act
upon a proposal to approve the Stock Plan, as amended. The Board of Directors
believes that the Corporation's ability to continue to attract and retain
qualified employees is in large part dependent upon the Corporation's ability to
provide such employees long-term, equity-based incentives in the form of stock
options as part of their compensation. The Corporation's 1995 Stock Option Plan
terminated according to its terms in April 2005. The Board of Directors believes
that the approval of the Stock Plan, as amended, would allow for the
continuation of the Corporation's current equity compensation program for
employees, directors and other service providers to the Corporation. An
affirmative majority of the votes cast by the stockholders present or
represented by proxy and entitled to vote at the Annual Meeting is required to
approve the amendment.
The maximum aggregate number of shares of Common Stock available for issuance
under the Stock Plan is 1,000,000 shares. The shares of Common Stock available
for issuance under the Stock Plan are subject to adjustment for any stock
dividend, recapitalization, stock split, stock combination or certain other
corporate reorganizations. Shares issued may consist in whole or in part of
authorized but unissued shares or treasury shares. Shares subject to an award
that expires or is terminated unexercised or is forfeited for any reason or
settled in a manner that results in fewer shares outstanding than were initially
awarded will again be available for award under the Stock Plan. The maximum
number of shares which may be granted to an individual in a fiscal year is the
number of shares of Common Stock that are authorized for issuance pursuant to
the Stock Plan.
On the record date for the Annual Meeting, the market price, as reported by the
New York Stock Exchange, of Common Stock, the class of stock underlying all
options, awards and purchases subject to the Stock Plan was $17.91 per share. As
of the record date for the Annual Meeting, no options to purchase shares of
Common Stock under the Plan were issued to non-officer employees of the
Corporation.
As described under Director Compensation elsewhere in this Proxy Statement, it
is the Company's policy to annually grant non-employee Directors a number of
Non-Qualified Stock Options based on a formula. The formula aims to provide that
number of stock options for the Company's Common Stock, which on the date of the
grant, have a fair market value ("FMV"), comparable to the FMV of stock options
and/or stock granted to non-employee directors of comparable companies as
reported in the most recent survey by The Conference Board, Inc. and/or any
other nationally recognized research firm(s) determined by the Board to be
appropriate. Such stock options vest on the first anniversary date of the grant
provided that, as of the anniversary date the Director's position had not been
vacated by reason of resignation or removal for cause.
Other than the planned awards to non-employee Directors as described above,
there are currently no plans in place to make any specific awards under the
Stock Plan.
A summary of the Stock Plan is set forth below. The full text of the Stock Plan
is attached to this Proxy Statement as Appendix B.
The Stock Plan
The Stock Plan was adopted by the Board of Directors on December 28, 2005 and
was amended on March 29, 2006. The Stock Plan currently provides for the
issuance of a maximum of 1,000,000 shares of Common Stock pursuant to the grant
to employees of Incentive Stock Options ("ISOs") within the meaning of Section
422 of the Code and the grant of Non-Qualified Stock Options (the "NQSOs"),
stock awards ("Awards") or opportunities to make direct purchases of stock in
the Corporation ("Purchases") to employees, consultants, directors and executive
officers of the Corporation. As of March 1, 2006, 1,591 employees (including
directors who are also employees of the Corporation and executive officers) and
4 non-employee directors are eligible to participate in the Stock Plan.
The Stock Plan is administered by the Board of Directors. The Board may, to the
extent permitted by applicable law, delegate any or all of its powers under the
Stock Plan to the Corporation's Compensation Committee. Each grant of an ISO,
NQSO, Award or right to Purchase shall be evidenced by a written document
delivered to the participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Stock Plan as the Board of Directors considers necessary or advisable.
Each type of grant may be made alone, in addition to, or in relation to any
other type of grant. The terms of each type of award need not be identical and
the Board need not treat participants uniformly. The Board may amend, modify or
terminate any outstanding grant, including substituting therefor another award,
changing the date of exercise or realization and converting an Incentive Stock
Option to a Non-Qualified Stock Option, provided that the participant's consent
to such action shall be required unless the Board determines that the action
would not materially and adversely affect the participant.
The Board of Directors will determine whether grants pursuant to the Stock Plan
are settled in whole or in part in cash, Common Stock, other securities of the
Company, other property or such other methods as the Board of Directors may deem
appropriate. In the Board's discretion, tax obligations required to be withheld
in respect of an award may be paid in whole or in part in shares of Common
Stock, including shares retained from such award. The Board will determine the
effect on an award of the death, disability, retirement or other termination of
employment of a participant and the extent to which and period during which the
participant's legal representative, guardian or designated beneficiary may
receive payment of an award or exercise rights thereunder. Except as otherwise
provided by the Board, grants under the Stock Plan are not transferable other
than as designated by the participant by will or by the laws of descent and
distribution or, in the case of NQSOs and Purchase rights only, pursuant to a
valid domestic relations order or to certain trusts or other estate planning
vehicles.
The Board of Directors in its discretion may take certain actions in order to
preserve a participant's rights in the event of a change in control of the
Company, including (i) providing for the acceleration of any time period
relating to the exercise or realization of the grant, (ii) providing for the
purchase of the grant for an amount of cash or other property that could have
been received upon the exercise or realization of the grant had the award been
currently exercisable or payable, (iii) adjusting the terms of the award in
order to reflect the change in control, (iv) causing the award to be assumed, or
new rights substituted therefor, by another entity, or (v) making such other
provision as the Board may consider equitable and in the best interest of the
Corporation, provided that, in the case of an action taken with respect to an
outstanding award, the participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the participant.
The Board of Directors of the Corporation may amend, suspend or terminate the
Stock Plan or any portion thereof at any time; provided that no amendment shall
be made without stockholder approval if such approval is necessary to comply
with any applicable law, rules or regulations.
Options
Subject to the provisions of the Stock Plan, the Board of Directors has the
authority to select the optionees and determine the terms of the options
granted, including: (i) the number of shares subject to each option, (ii) when
the option becomes exercisable, (iii) the exercise price of the option, (iv) the
duration of the option and (v) the time, manner and form of payment upon
exercise of an option. The Board of Directors determines the exercise price per
share for NQSOs, Awards and Purchases under the Stock Plan, so long as such
exercise price is no less than the minimum legal consideration required therefor
under the laws of any jurisdiction in which the Corporation may be organized. As
provided under the Plan, the number of shares of Common Stock underlying a stock
option and the exercise price thereof will continue to adjust when the
Corporation effects a stock split, stock dividend, merger or similar event. The
exercise price per share for each ISO and NQSO to be granted under the Stock
Plan may not be less than the fair market value per share of Common Stock on the
date of such grant. In the case of an ISO to be granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation, the price per share for such ISO
shall not be less than one hundred ten percent (110%) of the fair market value
per share of Common Stock on the date of grant. Each option granted will expire
on the date specified by the Board of Directors, but not more than (i) ten years
from the date of grant in the case of options generally and (ii) five years from
the date of grant in the case of ISOs granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation. Generally, no ISO may be exercised more
than 90 days following termination of employment. However, in the event that
termination is due to death or disability, the option is exercisable for a
maximum of 180 days after such termination.
Purchases
Subject to provisions of the 2005 Stock Plan, the Board of Directors may grant
shares of restricted stock to participants, with such restricted periods and
other conditions as the Board may determine and for no cash consideration or
such other consideration as may be required by applicable law or the Board of
Directors. During the restricted period, unless otherwise determined by the
Board, stock certificates evidencing the restricted shares will be held by the
Company and may not be sold, assigned, transferred, pledged or otherwise
encumbered, except as permitted by the Board. At the expiration of the
restricted period, the Company will deliver such certificates to the participant
or, if the participant has died, to the beneficiary designed by the participant.
Awards
Subject to the provisions of the 2005 Plan, the Board of Directors may award
stock awards, which may be designated as award shares by the Board. Shares of
Common Stock or other rights awarded in connection with a stock award shall be
issued for no cash consideration.
United States Federal Income Tax Consequences
The following discussion of United States federal income tax consequences of the
issuance and exercise of options, Awards and Purchases granted under the Stock
Plan is based upon the provisions of the Code as in effect on the date of this
Proxy Statement, current regulations and existing administrative rulings of the
Internal Revenue Service, all of which are subject to change (perhaps with
retroactive effect). It is not intended to be a complete discussion of all of
the United States federal income tax consequences of these plans or of the
requirements that must be met in order to qualify for the described tax
treatment. In addition there may be foreign, state, and local tax consequences
that are not discussed herein.
Incentive Stock Options: The following general rules will be applicable under
current United States federal income tax law to ISOs granted under the Stock
Plan:
1. In general, no taxable income results to the optionee upon the grant
of an ISO or upon the issuance of shares to him or her upon the
exercise of the ISO, and the Corporation is not entitled to a federal
income tax deduction upon either the grant or exercise of an ISO.
However, under certain circumstances there may be alternative minimum
tax, as described above.
2. If shares acquired upon exercise of an ISO are not disposed of within
(i) two years following the date the ISO was granted or (ii) one year
following the date the shares are issued to the optionee pursuant to
the ISO exercise (the "Holding Periods"), the difference between the
amount realized on any subsequent disposition of the shares and the
exercise price will generally be treated as capital gain or loss to
the optionee.
3. If shares acquired upon exercise of an ISO are disposed of and the
optionee does not satisfy the requisite Holding Periods (a
"Disqualifying Disposition"), then in most cases the lesser of (i) any
excess of the fair market value of the shares at the time of exercise
of the ISO over the exercise price or (ii) the actual gain on
disposition, will be treated as compensation to the optionee and will
be taxed as ordinary income in the year of such disposition.
4. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the
Corporation generally will be entitled to a corresponding deduction
for federal income tax purposes, provided the Corporation reports the
income on a timely provided and filed Form W-2 or 1099, whichever is
applicable.
5. The difference between the amount realized by the optionee as the
result of a Disqualifying Disposition and the sum of (i) the exercise
price and (ii) the amount of ordinary income recognized under the
above rules will be treated as capital gain or loss.
6. Capital gain or loss recognized by an optionee on a disposition of
shares will be long-term capital gain or loss if the optionee's
holding period for the shares exceeds 12 months.
7. An optionee may be entitled to exercise an ISO by delivering shares of
the Corporation's Common Stock to the Corporation in payment of the
exercise price, if the optionee's ISO agreement so provides. If an
optionee exercises an ISO in such fashion, special rules will apply.
8. In addition to the tax consequences described above, the exercise of
ISOs may result in a further "alternative minimum tax" under the Code.
The Code provides that an "alternative minimum tax" (at a maximum rate
of 28%) will be applied against a taxable base which is equal to
"alternative minimum taxable income," reduced by a statutory
exemption. In general, the amount by which the value of the Common
Stock received upon exercise of the ISO exceeds the exercise price is
included in the optionee's alternative minimum taxable income. A
taxpayer is required to pay the higher of his regular tax liability or
the alternative minimum tax. A taxpayer who pays alternative minimum
tax attributable to the exercise of an ISO may be entitled to a tax
credit against his or her regular tax liability in later years.
9. Special rules apply if the Common Stock acquired through the exercise
of an ISO is subject to vesting, or is subject to certain restrictions
on resale under federal securities laws applicable to directors,
officers or 10% stockholders.
Non-Qualified Stock Options: The following general rules are applicable under
current federal income tax law to NQSOs to be granted under the Stock Plan.
1. The optionee generally does not recognize any taxable income upon the
grant of a NQSO, and the Corporation is not entitled to a federal
income tax deduction by reason of such grant.
2. The optionee generally will recognize ordinary compensation income at
the time of exercise of the NQSO in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise
over the exercise price. The Corporation may be required to withhold
income tax on this amount.
3. When the optionee sells the shares acquired through the exercise of a
NQSO, he or she generally will recognize a capital gain or loss in an
amount equal to the difference between the amount realized upon the
sale of the shares and his or her basis in the stock (generally, the
exercise price plus the amount taxed to the optionee as ordinary
income). If the optionee's holding period for the shares exceeds 12
months, such gain or loss will be a long-term capital gain or loss.
4. The Corporation generally should be entitled to a federal income tax
deduction when ordinary income is recognized by the optionee pursuant
to the exercise of a NQSO, provided the Corporation reports the income
on a timely provided and filed Form W-2 or 1099, whichever is
applicable.
5. An optionee may be entitled to exercise a NQSO by delivering shares of
the Corporation's Common Stock to the Corporation in payment of the
exercise price. If an optionee exercises a NQSO in such fashion,
special rules will apply.
6. Special rules apply if the Common Stock acquired through the exercise
of a NQSO is subject to vesting, or is subject to certain restrictions
on resale under federal securities laws applicable to directors,
officers or 10% stockholders.
Awards and Purchases: The following general rules are applicable under current
federal income tax law to the grant of Awards and Purchases under the Stock
Plan:
1. Persons receiving Common Stock pursuant to an award of Common Stock
("Award") or a grant of an opportunity to purchase Common Stock
("Purchase") generally recognize ordinary income equal to the fair
market value of the shares received, reduced by any purchase price
paid.
2. The Corporation generally will be entitled to a corresponding federal
income tax deduction. When such stock is sold, the seller generally
will recognize capital gain or loss.
Special rules apply if the stock acquired pursuant to an Award or Purchase is
subject to vesting, or is subject to certain restrictions on resale under
federal securities laws applicable to directors, officers or 10% stockholders.
The Board of Directors unanimously recommends a vote FOR the proposal to approve
the 2005 Equity Incentive Plan. Proxies solicited by the Board will be so voted
unless shareholders specify otherwise in their proxies.
Proposal 3: Approval of the amendment of the Certificate of Incorporation to
increase the authorized shares of voting Common Stock from 19,000,000 to
29,000,000.
The Corporation's Certificate of Incorporation (the "Certificate") presently
authorizes the issuance of 20,000,000 shares, consisting of 19,000,000 shares of
Common Stock, par value $.02 per share and 1,000,000 shares of Preferred Stock,
par value $.02 per share. The Board of Directors has determined that the
Certificate should be amended to increase the number of authorized shares of
Common Stock from 19,000,000 to 29,000,000, and has unanimously approved,
subject to stockholder approval, an amendment to the Certificate to effect this
increase.
As of March 22, 2006, there were 14,157,620 shares of Common Stock issued and
outstanding; 1,778,304 shares of Common Stock held in treasury; and 1,237,000
shares of Common Stock reserved for issuance upon the award of restricted stock
or the exercise of options or other equity awards under equity compensation
plans. This leaves a total of 1,827,076 shares of Common Stock available for
future issuance or reservation. There are no shares of Preferred Stock
outstanding.
The Board of Directors believes that an increase in the number of authorized
shares of Common Stock is necessary to provide the Corporation with additional
financial flexibility to meet its future business needs. If the proposed
amendment is approved by the stockholders, the Corporation will have additional
shares available for acquisitions, financings, stock option plans, stock
dividends or stock splits, and other corporate purposes. The additional shares
would be available for issuance without further stockholder approval, except as
may be required by applicable law or the rules of the New York Stock Exchange.
Other than as permitted or required under the Corporation's equity compensation
plans, there are no current plans or other existing or proposed agreements or
understandings to issue or reserve for further issuance the additional shares of
Common Stock.
If and when issued, the newly authorized shares of Common Stock would have the
same rights and privileges as the shares of Common Stock currently authorized.
The number of authorized shares of Preferred Stock would not be affected by the
proposed amendment.
The issuance of additional shares of Common Stock could have a dilutive effect
on earnings per Common Share and on the equity and voting power of those holding
shares of Common Stock at the time of issuance, as stockholders do not have
preemptive rights. In addition, the proposed amendment could have an
anti-takeover effect, as additional shares of Common Stock could be issued to
dilute the stock ownership and voting power of, or increase the cost to, a
person seeking to obtain control of the Corporation. However, the proposed
amendment is not being proposed for such purposes and is not in response to any
known effort to accumulate shares of Common Stock or obtain control of the
Corporation.
The text of the proposed amendment to the Certificate is attached as Appendix C.
Pursuant to Sections 242 and 245 of the Delaware General Corporations Law, the
amendments to the Certificate must be approved also by the holders of a majority
of the Corporation's issued and outstanding shares of Common Stock. If approved,
this proposed amendment will become effective upon the filing of the Certificate
with the Secretary of State of the State of Delaware.
The Board of Directors unanimously recommends a vote FOR the proposal to approve
the amendment of the Certificate of Incorporation to increase the authorized
shares of voting Common Stock from 19,000,000 to 29,000,000. Proxies solicited
by the Board will be so voted unless shareholders specify otherwise in their
proxies.
Proposal 4: Ratification of the selection of Independent Registered Public
Accounting Firm
On the recommendation of the Audit Committee, the Board has selected KPMG as the
independent registered public accounting firm to audit the consolidated
financial statements of the Company and its subsidiaries for the 2006 fiscal
year. KPMG has been employed to perform this function since October 9, 2003.
Although this appointment is not required to be submitted to a vote of the
shareholders, the Board generally requests the shareholders ratify the
appointment. If the shareholders do not ratify the appointment, the Audit
Committee will investigate the reasons for their rejection and the Board will
reconsider the appointment.
The Board of Directors unanimously recommends a vote FOR the proposal to ratify
the selection of KPMG. Proxies solicited by the Board will be so voted unless
shareholders specify otherwise in their proxies.
OTHER MATTERS
Other than the foregoing, the Board knows of no matters that will be presented
at the Annual Meeting for action by shareholders. However, if any other matters
properly come before the Meeting, or any postponement or adjournment thereof,
the persons acting by authorization of the proxies will vote thereon in
accordance with their judgment.
AVAILABLE INFORMATION
The Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and amendments to reports filed or furnished
pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as
amended, are available under the SEC Filings link on our website
http://www.partech.com/ptc/ptc-ir-front2.cfm as soon as reasonably practicable
after PAR electronically files such reports with, or furnishes those reports to,
the Securities and Exchange Commission. PAR's Corporate Governance Guidelines,
Board of Directors committee charters (including the charters of the Audit
Committee, Compensation Committee, and Nominating and Corporate Governance
Committee) and code of ethics entitled "Code of Business Conduct and Ethics"
also are available at that same location on our website. Stockholders can
receive free printed copies of these documents by directing a written or oral
request to: PAR Technology Corporation; Attention: Investor Relations; PAR
Technology Park; 8383 Seneca Turnpike; New Hartford, NY 13413-4991;
315-738-0600; http://www.partech.com/ptc/rfi-form.cfm.
SHAREHOLDER PROPOSALS FOR 2007 ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for shareholder action
at the Company's annual meetings consistent with the regulations adopted by the
SEC and the By-Laws of the Company. To be considered for inclusion in next
year's Proxy Statement and form of proxy relating to the 2007 Annual Meeting,
any shareholder proposals must be received at the Company's general offices no
later than the close of business on December 13, 2006. If a matter of business
is received by February 26, 2007, the Company may include it in the Proxy
Statement and form of proxy and, if it does, it may use its discretionary
authority to vote on the matter. For matters that are not received by February
26, 2007 the Company may use its discretionary voting authority when the matter
is raised at the Annual Meeting, without inclusion of the matter in its Proxy
Statement. Proposals should be addressed to Gregory T. Cortese, Secretary; PAR
Technology Corporation; PAR Technology Park; 8383 Seneca Turnpike; New Hartford,
New York 13413-4991. The Company recommends all such submissions be sent by
Certified Mail - Return Receipt Requested.
BY ORDER OF THE BOARD OF DIRECTORS
Gregory T. Cortese
Secretary
April 11, 2006
Appendix A
PAR TECHNOLOGY CORPORATION
AUDIT COMMITTEE CHARTER
Membership
The Audit Committee (the "Committee") of PAR Technology Corporation (the
"Company") shall consist of at least three members of the Board of Directors
(the "Board"). Members shall be appointed upon the recommendation of the
Nominating and Corporate Governance Committee and may be removed by the Board in
its discretion. All members of the Committee will meet the independence and
other requirements of the Audit Committee Policy of the New York Stock Exchange,
Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act")
and the rules and regulations of the Securities and Exchange Commission (the
"Commission"). At least one member of the Committee shall, in the assessment of
the Board, qualify and be identified as an audit committee financial expert as
defined by the Commission. All members of the Committee shall be financially
literate at the time of their appointment to the Committee or within a
reasonable time thereafter. Members of the Committee shall not simultaneously
serve on the audit committees of more than two other public companies unless the
Board determines that simultaneous service would not impair the ability of the
member to effectively serve on the Committee and the Board discloses this
determination in the Company's annual proxy statement.
Purpose
The Company's management is responsible for preparing the Company's financial
statements and the Company's independent auditor is responsible for auditing
those financial statements. The Audit Committee's purpose shall be to:
1. Prepare an audit committee report as required by the SEC to be
included in the Company's annual proxy statement.
2. Assist the Board in its oversight of:
a. the integrity of the Company's financial statements;
b. the Company's compliance with legal and regulatory requirements;
c. the Company's independent auditor's qualifications and
independence; and
d. the performance of the Company's internal audit function and
independent auditors
The financial management and the independent auditors of the Company have more
time, knowledge and more detailed information on the Company than do Committee
members. Therefore, in carrying out its responsibilities to assist the Board in
the above oversight functions, the Committee is not providing any expert or
special assurance as to the Company's financial statements or any certification
as to the work of the independent auditors.
Meetings
The Committee will meet at least four times a year, with authority to convene
additional meetings, as circumstances require. All Committee members are
expected to attend each meeting, in person or via teleconference or
video-conference. The Committee will invite members of management, auditors or
others to attend meetings and provide pertinent information, as necessary.
Meeting agendas will be prepared and provided to members in advance, along with
appropriate briefing materials. Minutes will be prepared.
In addition to meetings with Company officers and employees, the independent
auditor or outside counsel or other advisers as necessary to fulfill its
responsibilities, the Committee shall, on a regular basis, hold separate private
meetings with the following to discuss any matters either party believes should
be discussed privately:
o Company management;
o the Company's independent auditors; and
o the Company's internal auditor
Authority & Responsibilities
In carrying out its purpose, the Committee shall have the following authority
and responsibilities:
A. Oversight of Independent Auditor
1. The independent auditor is ultimately accountable to the Board and the
Committee. Therefore, the Committee, subject to any action that may be
taken by the full Board, has the ultimate authority and is directly
responsible for the appointment, compensation, evaluation, retention,
oversight of the work and when appropriate termination of any registered
public accounting firm engaged for the purpose of preparing or issuing an
audit report or performing other audit, review or attest services for the
Company. The oversight responsibility includes resolution of disagreements
between management and the independent auditor regarding financial
reporting. Each such registered public accounting firm shall report
directly to the Committee.
2. To assist the Board in its oversight of the independence, qualifications
and performance of the independent auditor the Committee shall:
a. assess the auditor's independence by at least annually obtaining and
reviewing a report from the independent auditor delineating all
relationships between the Company and the independent auditor,
including non-audit services, consistent with Independence Standards
Board Standard Number 1;
b. discuss with the independent auditor any such disclosed relationships
and their impact or potential impact on the auditor's independence and
objectivity, taking into account the opinions of management and the
internal auditors;
c. set clear policies for the hiring of employees or former employees of
the Company's independent auditors who participated in any capacity in
the audit of the Company taking into account the pressures that may
exist for auditors seeking a job with the company they audit;
d. at least annually obtain and review a report from the independent
auditor that describes:
i. the audit firm's internal quality-control procedures;
ii. any material issues raised by the firm's most recent internal
quality control review, or peer review, or by any inquiry or
investigation by governmental or professional authorities within
the most recent five years relating to one or more independent
audits carried out by the firm; and
iii. any steps taken to deal with any such issues;
e. (after reviewing the independent auditor's report and the independent
auditor's work throughout the year) review and evaluate the
qualifications, performance and independence of the independent
auditor and lead partner of the independent auditor team taking into
account the opinions of the Company's management and the internal
auditors;
f. discuss with management the timing and process for implementing the
rotation of the lead audit partner, and the concurring (review)
partner and any other active audit engagement team partner;
g. consider and discuss with management whether it is appropriate to
adopt a policy of rotating the independent audit firm on a regular
basis;
h. review and approve the independent auditor's proposed audit scope and
approach, including staffing of the audit and coordination of audit
effort with internal audit.
3. The Committee shall regularly report to the full Board about Committee
activities, issues and related recommendations and present the Committee's
conclusions with respect to the audit firm's quality controls,
independence, qualifications and performance and review any issues that
arise with respect to the performance and independence of the independent
auditors.
4. The Committee shall have the sole authority to approve all audit engagement
fees and terms and the Committee, or a member of the Committee, must
pre-approve any auditing services and permitted non-audit services,
including the fees and terms thereof provided by the Company's independent
auditor, subject to the de minimus exception for non-audit services
described in Section 10A(i)(1)(B) of the Exchange Act that are approved by
the Committee prior to the completion of the audit.
B. Oversight of Internal Audit Function
1. The Committee shall review and discuss with the independent auditor the
responsibilities, budget and staffing of the Company's internal audit
function.
2. The Committee shall review and discuss with management, the internal audit
director and the independent auditor:
a. the effectiveness of the internal audit function, including compliance
with established internal auditing practice standards;
b. the audit risk assessment process and the proposed scope of the
Internal Audit department for the upcoming year and coordination of
that scope with the independent auditor; and
c. the results of the internal auditors' examination of significant
internal audit department findings and management responses.
3. The Committee shall assess and confirm there are no restrictions or
limitations placed on the performance of internal audit.
4. The Committee shall review the appointment and, when appropriate, the
replacement of the senior internal auditing executive.
5. The Committee shall regularly report to the Board about Committee
activities, issues and related recommendations with respect to the
performance of the internal audit function.
C. Oversight of Management's Conduct of Financial Reporting Process
1. Financial Reporting Practices. The responsibility for the Company's
financial statements and disclosures rest with the Company's management. In
providing oversight of the Company's financial reporting practices, the
Committee shall:
a. regularly review with the independent auditor any audit problems or
difficulties and management's response. The review shall include any
restrictions on the scope of the independent auditor's activities or
on the access the independent auditor had to requested information and
any significant disagreements with management; any accounting
adjustments noted or proposed by the auditor that were "passed" (as
immaterial or otherwise); any communications between the audit team
and the audit firm's national office regarding auditing or accounting
issues presented by the engagement; and any "management" or "internal
control" letter or schedule of differences issued, or proposed to be
issued, by the audit firm to the Company;
b. review and discuss with the independent auditor, and with management,
major issues regarding accounting principals and financial statement
presentations, including any significant changes in the Company's
selection or application of accounting principles;
c. review and discuss with management and the independent auditor any
major issues as to the quality and adequacy of the Company's internal
controls and any special steps adopted in light of material control
deficiencies, if any;
d. review and discuss any analyses prepared by the Company's management
and/or independent auditor setting forth significant financial
reporting issues and judgments made in connection with the preparation
of the financial statements, including any analyses of the effects of
alternative GAAP methods on the financial statements; and
e. review the effect of recent accounting professional and regulatory
initiatives, complex or unusual transactions and highly judgmental
areas, material off-balance sheet transactions or structures and other
similar relationships on the financial statements of the Company.
2. Audited Financial Statements. With respect to the Company's annual audited
financial statements, the Committee shall:
a. meet with Company management and the independent auditor to review and
discuss the Company's annual audited financial statements to be
included in SEC Form 10-K (or in the Annual Report to Shareholders if
distributed prior to filing Form 10-K) and the Company's specific
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations";
b. review and discuss with the independent auditor the matters required
to be discussed by the applicable Statement of Auditing Standards
("SAS"); and
c. based on these discussions, the Committee will advise the Board
whether it recommends the audited financial statements to be included
in the Annual Report on Form 10-K (or in the Annual Report to
Shareholders if distributed prior to filing Form 10-K).
3. Interim Financial Statements. With respect to the Company's interim
financial statements the Committee shall:
a. meet with Company management and the independent auditor to review and
discuss the Company's quarterly financial statements to the SEC (e.g.
Form 10-Q) including the results of the independent auditor's review
of such financials, prior to the filing thereof and the Company's
specific disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations";
b. review and discuss with the independent auditor and management the
matters required to be discussed by the applicable SAS.
4. Disclosure of Financial Information. The Committee shall review and discuss
in a general manner (e.g. the type of information to be disclosed and the
type of presentation to be made) the Company's earnings press releases
(paying particular attention to any use of "pro forma" or "adjusted"
non-GAAP information) as well as the financial information and earning
guidance provided to analysts and rating agencies. The Committee is not
required to discuss in advance each earnings release or each instance in
which the Company provides earnings guidance.
5. Risk Assessment. It is the responsibility of the Company's CEO and senior
management to assess and manage the Company's exposure to risk. The
Committee shall discuss with the Company's management the guidelines and
policies to govern the process by which the Company's management undertakes
to assess and manage the Company's exposure to risk. Discussion should also
include the Company's major financial risk exposures and the steps
management has taken to monitor and control such exposures.
6. The Committee shall regularly report to the Board about Committee
activities, issues and related recommendations with respect to the quality
or integrity of the Company's financial statements.
D. Assist the Board in Oversight of the Company's Compliance with Policies and
Procedures Addressing Legal and Ethical Concerns.
1. The Committee shall establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and for the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
2. The Committee has authority to conduct or authorize investigations into any
matter brought to its attention. Within this scope of responsibility, the
Committee has full access to all books, records, facilities and personnel
of the Company and is empowered to:
a. engage independent counsel or other advisers as it determines
necessary to carry out its duties;
b. seek any information from any employees - all of whom are directed to
cooperate with the Committee's requests - or external parties; and
c. meet with Company officers, independent auditor or outside counsel, as
necessary to fulfill its responsibilities.
3. The Committee shall regularly report to the Board about Committee
activities, issues and related recommendations with respect to the quality
or integrity of the Company's compliance with legal or regulatory
requirements.
E. General
1. The Committee shall have the power to authorize Company funding necessary
and appropriate to carry out its duties, in particular it shall have the
power to authorize funding for:
a. the compensation of any registered public accounting firm engaged for
the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company;
b. the compensation of any independent counsel or other advisers as it
determines necessary to carry out its duties; and
c. the payment of the Committee's ordinary administrative expenses that
are necessary and appropriate in carrying out its duties.
2. The Committees functions are the sole responsibility of the Committee and
may not be allocated to a different committee of the Board.
3. Review and assess the adequacy of this charter annually, requesting Board
approval for proposed changes.
4. Confirm annually that all responsibilities outlined in this charter have
been carried out.
5. Evaluate the Committee's and individual members' performance on an annual
basis.
6. Perform other activities related to areas covered by this charter as
requested by the Board.
7. Institute and oversee special investigations as needed.
Appendix B
PAR TECHNOLOGY CORPORATION
2005 EQUITY INCENTIVE PLAN
(Effective Date: December 28, 2005)
PAR TECHNOLOGY CORPORATION
2005 EQUITY INCENTIVE PLAN
1. Purpose and Eligibility. The purpose of this 2005 Equity Incentive Plan (the
"Plan") of PAR Technology Corporation, a Delaware corporation (the "Company") is
to provide stock options, stock issuances and other equity interests in the
Company (each, an "Award") to (a) key employees, officers, directors,
consultants and advisors of the Company and its Subsidiaries, and (b) any other
Person who is determined by the Board to have made (or is expected to make)
contributions to the Company. Any person to whom an Award has been granted under
the Plan is called a "Participant". Additional definitions are contained in
Section 10.
2. Administration.
a. Administration by Board of Directors. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board, in its sole
discretion, shall have the authority to grant and amend Awards, to adopt, amend
and repeal rules relating to the Plan and to interpret and correct the
provisions of the Plan and any Award. The Board shall have authority, subject to
the express limitations of the Plan, (i) to construe and determine the
respective Stock Option Agreement, Awards and the Plan, (ii) to prescribe, amend
and rescind rules and regulations relating to the Plan and any Awards, (iii) to
determine the terms and provisions of the respective Stock Option Agreements and
Awards, which need not be identical, (iv) to initiate an Option Exchange
Program, and (v) to make all other determinations in the judgment of the Board
of Directors necessary or desirable for the administration and interpretation of
the Plan. The Board may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any Stock Option Agreement or Award in the
manner and to the extent it shall deem expedient to carry the Plan, any Stock
Option Agreement or Award into effect and it shall be the sole and final judge
of such expediency. All decisions by the Board shall be final and binding on all
interested persons. Neither the Company nor any member of the Board shall be
liable for any action or determination relating to the Plan.
b. Appointment of Committee. To the extent permitted by applicable law, the
Board may delegate any or all of its powers under the Plan to the Compensation
Committee (the "Committee"). All references in the Plan to the "Board" shall
mean such Committee or the Board. The Committee may consult with the Company's
Stock Option Committee, which shall make recommendations, with respect to
Participants eligible to receive Awards and the number of shares subject to the
Award, to the Committee for its review and final approval.
c. Delegation to Executive Officers. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company the
power to grant Awards and exercise such other powers under the Plan as the Board
may determine, provided that the Board shall fix the maximum number of Awards to
be granted and the maximum number of shares issuable to any one Participant
pursuant to Awards granted by such executive officers.
d. Applicability of Section Rule 16b-3. Anything to the contrary in the
foregoing notwithstanding if, or at such time as, the Common Stock is or becomes
registered under Section 12 of the Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor statute, the Plan shall be administered in a
manner consistent with Rule 16b-3 promulgated thereunder, as it may be amended
from time to time, or any successor rules ("Rule 16b-3"), such that all
subsequent grants of Awards hereunder to Reporting Persons, as hereinafter
defined, shall be exempt under such rule. Those provisions of the Plan which
make express reference to Rule 16b-3 or which are required in order for certain
option transactions to qualify for exemption under Rule 16b-3 shall apply only
to such persons as are required to file reports under Section 16 (a) of the
Exchange Act (a "Reporting Person").
e. Applicability of Section 162 (m). Any provisions in this Plan to the
contrary notwithstanding, whenever the Board is authorized to exercise its
discretion in the administration or amendment of this Plan or any Award
hereunder or otherwise, the Board may not exercise such discretion in a manner
that would cause any outstanding Award that would otherwise qualify as
performance-based compensation under Section 162 (m) of the Code to fail to so
qualify under Section 162 (m).
3. Stock Available for Awards.
a. Number of Shares. Subject to adjustment under Section 3(c), the
aggregate number of shares of Common Stock of the Company (the "Common Stock")
that may be issued pursuant to the Plan is 1,000,000. If any Award expires, or
is terminated, surrendered or forfeited, in whole or in part, the unissued
Common Stock covered by such Award shall again be available for the grant of
Awards under the Plan. If an Award granted under the Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject to such Award shall again be available for subsequent Awards
under the Plan, and if shares of Common Stock issued pursuant to the Plan are
repurchased by, or are surrendered or forfeited to, the Company at no more than
the price paid for such shares, such shares of Common Stock shall again be
available for the grant of Awards under the Plan. Shares issued under the Plan
may consist in whole or in part of authorized but unissued shares or treasury
shares.
b. Per-Participant Limit. Subject to adjustment under Section 3(c), no
Participant may be granted Awards during any one fiscal year to purchase more
than the number of shares of Common Stock that are authorized for issuance
pursuant to the Plan.
c. Adjustment to Common Stock. Subject to Section 7, in the event of any
stock split, reverse stock split stock dividend, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off, split-up, or other similar change in
capitalization or similar event, (i) the number and class of securities
available for Awards under the Plan and the per-Participant share limit, (ii)
the number and class of securities, vesting schedule and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to repurchase, and (iv) the terms of each other outstanding
Award shall be adjusted by the Company (or substituted Awards may be made if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is appropriate.
4. Stock Options.
a. General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option and the shares of Common
Stock issued upon the exercise of each Option, including, but not limited to,
vesting provisions, repurchase provisions and restrictions relating to
applicable federal or state securities laws. Each Option will be evidenced by a
Stock Option Agreement, consisting of a Notice of Stock Option Award and a Stock
Option Award Agreement (collectively, a "Stock Option Agreement").
b. Incentive Stock Options. An Option that the Board intends to be an
incentive stock option (an "Incentive Stock Option") as defined in Section 422
of the Code, as amended, or any successor statute ("Section 422"), shall be
granted only to an employee of the Company and shall be subject to and shall be
construed consistently with the requirements of Section 422 and regulations
thereunder. The Board and the Company shall have no liability if an Option or
any part thereof that is intended to be an Incentive Stock Option does not
qualify as such. An Option or any part thereof that does not qualify as an
Incentive Stock Option is referred to herein as a "Nonstatutory Stock Option" or
"Non-Qualified Stock Option".
c. Dollar Limitation. For so long as the Code shall so provide, Options granted
to any employee under the Plan (and any other incentive stock option plans of
the Company) which are intended to qualify as Incentive Stock Options shall not
qualify as Incentive Stock Options to the extent that such Options, in the
aggregate, become exercisable for the first time in any one calendar year for
shares of Common Stock with an aggregate fair market value (determined as of the
respective date or dates of grant) of more than $100,000. The amount of
Incentive Stock Options which exceed such $100,000 limitation shall be deemed to
be Non-Qualified Stock Options. For the purpose of this limitation, unless
otherwise required by the Code or regulations of the Internal Revenue Service or
determined by the Board, Options shall be taken into account in the order
granted, and the Board may designate that portion of any Incentive Stock Option
that shall be treated as Non-Qualified Option in the event that the provisions
of this paragraph apply to a portion of any Option. The designation described in
the preceding sentence may be made at such time as the Committee considers
appropriate, including after the issuance of the Option or at the time of its
exercise.
d. Exercise Price. The Board shall establish the exercise price (or
determine the method by which the exercise price shall be determined) at the
time each Option is granted and specify the exercise price in the applicable
Stock Option Agreement, provided, however, in no event may the per share
exercise price be less than the Fair Market Value (as defined below) of the
Common Stock. In the case of an Incentive Stock Option granted to a Participant
who, at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
parent or subsidiary, then the exercise price shall be no less than 110% of the
fair market value of the Common Stock on the date of grant. In the case of a
grant of an Incentive Stock Option to any other Participant, the exercise price
shall be no less than 100% of the fair market value of the Common Stock on the
date of grant.
e. Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
Stock Option Agreement; provided, that the term of any Incentive Stock Option
may not be more than ten (10) years from the date of grant. In the case of an
Incentive Stock Option granted to a Participant who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any parent or subsidiary, the
term of the Option shall be no longer than five (5) years from the date of
grant.
f. Exercise of Option. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 4(g) and the Stock Option Agreement
for the number of shares for which the Option is exercised.
g. Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option shall be paid for by one or any combination of the following forms of
payment as permitted by the Board in its sole and absolute discretion:
i. by check payable to the order of the Company;
ii. only if the Common Stock is then publicly traded, by delivery of
an irrevocable and unconditional undertaking by a creditworthy
broker to deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the Participant to the Company
of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a
check sufficient to pay the exercise price;
iii. to the extent explicitly provided in the applicable Stock Option
Agreement, by delivery of shares of Common Stock owned by the
Participant valued at fair market value (as determined by the
Board or as determined pursuant to the applicable Stock Option
Agreement); or
iv. payment of such other lawful consideration as the Board may
determine.
The Board shall determine in its sole and absolute discretion and subject to
securities laws and its Insider Trading Policy whether to accept consideration
other than cash. The fair market value of any shares of the Company's Common
Stock or other non-cash consideration which may be delivered upon exercise of an
Option shall be determined in such manner as may be prescribed by the Board.
h. Acceleration, Extension, Etc. The Board may, in its sole discretion, and
in all instances subject to any relevant tax and accounting considerations which
may adversely impact or impair the Company, (i) accelerate the date or dates on
which all or any particular Options or Awards granted under the Plan may be
exercised, or (ii) extend the dates during which all or any particular Options
or Awards granted under the Plan may be exercised; provided, however, in no
event may any extension exceed the lesser of the option term permitted under
Section 4(e) herein or the term set forth in the governing Stock Option
Agreement.
i. Determination of Fair Market Value. If, at the time an Option is granted
under the Plan, the Company's Common Stock is publicly traded under the Exchange
Act, "fair market value" shall mean (i) if the Common Stock is listed on any
established stock exchange, its fair market value shall be the last reported
sales price for such stock (on that date) or the closing bid, if no sales were
reported as quoted on such exchange or system as reported in The Wall Street
Journal or such other source as the Board deems reliable; or (ii) the average of
the closing bid and asked prices last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on a national market system. In the absence of an established market
for the Common Stock, the fair market value thereof shall be determined in good
faith by the Board after taking into consideration all factors which it deems
appropriate.
5. Restricted Stock.
a. Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to (i) delivery to the Company by the
Participant of a check in an amount at least equal to the par value of the
shares purchased, and (ii) the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price from the
Participant in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").
b. Terms and Conditions. The Board shall determine the terms and conditions
of any such Restricted Stock Award. Any stock certificates issued in respect of
a Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). After
the expiration of the applicable restriction periods, the Company (or such
designee) shall deliver the certificates no longer subject to such restrictions
to the Participant or, if the Participant has died, to the beneficiary
designated by a Participant, in a manner determined by the Board, to receive
amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
6. Other Stock-Based Awards. The Board shall have the right to grant other
Awards based upon the Common Stock having such terms and conditions as the Board
may determine, including, without limitation, the grant of shares based upon
certain conditions, the grant of securities convertible into Common Stock and
the grant of stock appreciation rights, phantom stock awards or stock units.
7. General Provisions Applicable to Awards.
a. Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant; provided, however, except as the Board may otherwise
determine or provide in an Award, that Nonstatutory Options and Restricted Stock
Awards may be transferred pursuant to a qualified domestic relations order (as
defined in Employee Retirement Income Security Act of 1974, as amended) or to a
grantor-retained annuity trust or a similar estate-planning vehicle in which the
trust is bound by all provisions of the Stock Option Agreement and Restricted
Stock Award, which are applicable to the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.
b. Documentation. Each Award under the Plan shall be evidenced by a written
instrument in such form as the Board shall determine or as executed by an
officer of the Company pursuant to authority delegated by the Board. Each Award
may contain terms and conditions in addition to those set forth in the Plan,
provided that such terms and conditions do not contravene the provisions of the
Plan or applicable law.
c. Board Discretion. The terms of each type of Award need not be identical,
and the Board need not treat Participants uniformly.
d. Additional Award Provisions. The Board may, in its sole discretion,
include additional provisions in any Stock Option Agreement, Restricted Stock
Award or other Award granted under the Plan, including without limitation
restrictions on transfer, repurchase rights, commitments to pay cash bonuses, to
make, arrange for or guaranty loans or to transfer other property to
Participants upon exercise of Awards, or transfer other property to Participants
upon exercise of Awards, or such other provisions as shall be determined by the
Board; provided that such additional provisions shall not be inconsistent with
any other term or condition of the Plan or applicable law.
e. Termination of Status. The Board shall determine the effect on an Award
of the disability (as defined in Code Section 22(e)(3)), death, retirement,
authorized leave of absence or other change in the employment or other status of
a Participant and the extent to which, and the period during which, the
Participant, or the Participant's legal representative, conservator, guardian or
Designated Beneficiary, may exercise rights under the Award, subject to
applicable law and the provisions of the Code related to Incentive Stock
Options.
f. Change of Control of the Company.
i. Unless otherwise expressly provided in the applicable Stock
Option Agreement or Restricted Stock Award or other Award, in
connection with the occurrence of a Change in Control (as defined
below), the Board shall, in its sole discretion as to any
outstanding Award (including any portion thereof; on the same
basis or on different bases, as the Board shall specify), take
one or any combination of the following actions:
A. make appropriate provision for the continuation of such
Award by the Company or the assumption of such Award by the
surviving or acquiring entity and by substituting on an
equitable basis for the shares then subject to such Award
either (x) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the
Change of Control, (y) shares of stock of the surviving or
acquiring corporation or (z) such other securities as the
Board deems appropriate, the fair market value of which (as
determined by the Board in its sole discretion) shall not
materially differ from the fair market value of the shares
of Common Stock subject to such Award immediately preceding
the Change of Control;
B. accelerate the date of exercise or vesting of such Award; or
C. permit the exchange of such Award for the right to
participate in any stock option or other employee benefit
plan of any successor corporation.
D. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange
Act) of 50% or more of the then outstanding shares of
voting stock of the Company (the "Outstanding Voting
Stock"); provided, however, that any acquisition by the
Company or its subsidiaries, or any employee benefit
plan (or related trust) of the Company or its
subsidiaries of 50% or more of Outstanding Voting Stock
shall not constitute a Change in Control; and provided,
further, that any acquisition by a corporation with
respect to which, following such acquisition, more than
50% of the then outstanding shares of common stock of
such corporation, is then beneficially owned, directly
or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners
of the Outstanding Voting Stock immediately prior to
such acquisition in substantially the same proportion
as their ownership, immediately prior to such
acquisition, of the Outstanding Voting Stock, shall not
constitute a Change in Control; or
(b) Individuals who, as of the Effective Date, constitute
the Board (the "Incumbent Directors") cease for any
reason to constitute a majority of the members of this
Board; provided that any individual who becomes a
director after the Effective Date whose election or
nomination for election by the Company's Shareholders
was approved by a majority of the members of the
Incumbent Directors (other than an election or
nomination of an individual whose initial assumption of
office is in connection with an actual or threatened
"election contest" relating to the election of the
Directors of the Company (as such terms are used in
Rule 14a-11 under the Exchange Act), "tender offer" (as
such term is used in Section 14(d) of the Exchange Act)
or a proposed Merger (as defined below) shall be deemed
to be members of the Incumbent Directors; or
(c) The consummation of (i) a reorganization, merger or
consolidation (any of the foregoing, a "Merger"), in
each case, with respect to which all or substantially
all of the individuals and entities who were the
beneficial owners of the Outstanding Voting Stock
immediately prior to such Merger do not, following such
Merger, beneficially own, directly or indirectly, more
than 50% of the then outstanding shares of common stock
of the corporation resulting from Merger, (ii) a
complete liquidation or dissolution of the Company or
(iii) the sale or other disposition of all or
substantially all of the assets of the Company,
excluding a sale or other disposition of assets to a
subsidiary of the Company.
g. Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Board shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. The Board
in its sole discretion may provide for a Participant to have the right to
exercise his or her Award until fifteen (15) days prior to such transaction as
to all of the shares of Common Stock covered by the Option or Award, including
shares as to which the Option or Award would not otherwise be exercisable, which
exercise may in the sole discretion of the Board, be made subject to and
conditioned upon the consummation of such proposed transaction. In addition, the
Board may provide that any Company repurchase option applicable to any shares of
Common Stock purchased upon exercise of an Option or Award shall lapse as to all
such shares of Common Stock, provided the proposed dissolution and liquidation
takes place at the time and in the manner contemplated. To the extent it has not
been previously exercised, an Award will terminate upon the consummation of such
proposed action.
h. Assumption of Options Upon Certain Events. In connection with a merger
or consolidation of an entity with the Company or the acquisition by the Company
of property or stock of an entity, the Board may grant Awards under the Plan in
substitution for stock and stock-based awards issued by such entity or an
affiliate thereof.
i. The substitute Awards shall be granted on such terms and conditions as
the Board considers appropriate in the circumstances.
j. Parachute Payments and Parachute Awards. Notwithstanding the provisions
of Section 7(f), if, in connection with a Change of Control described therein, a
tax under Section 4999 of the Code would be imposed on the Participant (after
taking into account the exceptions set forth in Sections 280G(b)(4) and
280G(b)(5) of the Code, if applicable), then the number of Awards which shall
become exercisable, realizable or vested as provided in such Section shall be
reduced (or delayed), to the minimum extent necessary, so that no such tax would
be imposed on the Participant (the Awards not becoming so accelerated,
realizable or vested, the "Parachute Awards"); provided, however, that if the
"aggregate present value" of the Parachute Awards would exceed the tax that, but
for this sentence, would be imposed on the Participant under Section 4999 of the
Code in connection with the Change of Control, then the Awards shall become
immediately exercisable, realizable and vested without regard to the provisions
of this sentence. For purposes of the preceding sentence, the "aggregate present
value" of an Award shall be calculated on an after-tax basis (other than taxes
imposed by Section 4999 of the Code) and shall be based on economic principles
rather than the principles set forth under Section 280G of the Code and the
regulations promulgated thereunder. All determinations required to be made under
this Section 7(j) shall be made by the Company.
k. Amendment of Awards. The Board may amend, modify or terminate any
outstanding Award including, but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
l. Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
m. Acceleration. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of some or all restrictions, or that any other stock-based
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be, despite the fact that the foregoing actions may (i) cause the
application of Sections 280G and 4999 of the Code if a change in control of the
Company occurs, or (ii) disqualify all or part of the Option as an Incentive
Stock Option.
8. Withholding. The Company shall have the right to deduct from payments of any
kind otherwise due to the optionee or recipient of an Award any federal, state
or local taxes of any kind required by law to be withheld with respect to any
shares issued upon exercise of Options under the Plan or the purchase of shares
subject to the Award. Subject to the prior approval of the Company, including
without limitation, its determination that such withholding complies with
applicable tax and securities laws, which may be withheld by the Company in its
sole discretion, the optionee or recipient of an Award may elect to satisfy such
obligation, in whole or in part, (a) by causing the Company to withhold shares
of Common Stock otherwise issuable pursuant to the exercise of an Option or the
purchase of shares subject to an Award or (b) by delivering to the Company
shares of Common Stock already owned by the optionee or Award recipient of an
Award. The shares so delivered or withheld shall have a fair market value of the
shares used to satisfy such withholding obligation as shall be determined by the
Company as of the date that the amount of tax to be withheld is to be
determined. An optionee or recipient of an Award who has made an election
pursuant to this Section may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.
9. No Exercise of Option if Engagement or Employment Terminated for Cause. If
the employment or engagement of any Participant is terminated "for Cause," the
Award may terminate, upon a determination of the Board, on the date of such
termination and the Option shall thereupon not be exercisable to any extent
whatsoever and the Company shall have the right to repurchase any shares of
Common Stock subject to a Restricted Stock Award whether or not such shares have
vested. For purposes of this Section 9, "for Cause" shall be defined as follows:
(i) if the Participant has executed an employment agreement, the definition of
"Cause" contained therein, if any, shall govern, or (ii) conduct, as determined
by the Board of Directors, involving one or more of the following: (a) gross
misconduct; or (b) the commission of an act of embezzlement, fraud or theft,
which results in economic loss, damage or injury to the Company; or (c) the
unauthorized disclosure of any trade secret or confidential information of the
Company (or any client, customer, supplier or other third party who has a
business relationship with the Company) or the violation of any noncompetition
or nonsolicitation covenant or assignment of inventions obligation with the
Company; or (d) the commission of an act which constitutes unfair competition
with the Company or which induces any customer or prospective customer of the
Company to breach a contract with the Company or to decline to do business with
the Company; or (e) the indictment of the Participant for a felony or serious
misdemeanor offense, either in connection with the performance of his or her
obligations to the Company or which shall adversely affect the Participant's
ability to perform such obligations; or (f) the commission of an act of fraud or
breach of fiduciary duty which results in loss, damage or injury to the Company;
or (g) the failure of the Participant to perform in a material respect his or
her employment, consulting or advisory obligations without proper cause; or (h)
intentional violation of securities laws or the Company's Insider Trading
Policy. In making such determination, the Board shall act fairly and in utmost
good faith. The Board may in its discretion waive or modify the provisions of
this Section at a meeting of the Board with respect to any individual
Participant with regard to the facts and circumstances of any particular
situation involving a determination under this Section.
10. Miscellaneous.
a. Definitions.
i. "Company", for purposes of eligibility under the Plan, shall include
any present or future subsidiary corporations of PAR Technology
Corporation, as defined in Section 424(f) of the Code (a
"Subsidiary"), and any present or future parent corporation of the
Company, as defined in Section 424(e) of the Code. For purposes of
Awards other than Incentive Stock Options, the term "Company" shall
include any other business venture in which the Company has a direct
or indirect significant interest, as determined by the Board in its
sole discretion.
ii. "Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
iii."Employee" for purposes of eligibility under the Plan shall include a
person to whom an offer of employment has been extended by the
Company.
iv. "Option Exchange Program" means a program whereby outstanding options
are exchanged for options with a lower exercise price.
b. No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan.
c. No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder thereof.
d. Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board (the "Effective Date". No Awards shall
be granted under the Plan after the completion of ten years from the date on
which the Plan was adopted by the Board, but Awards previously granted may
extend beyond that date.
e. Amendment of Plan. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time.
f. Settlement of Awards. Any other provision of the Plan to the contrary
notwithstanding, if any provisions of the Plan permits a Participant, at his or
her election, to receive a cash settlement of Options or other Awards under the
Plan, or requires the Company to pay a cash settlement of Options or Awards
under the Plan, the Participant shall be entitled to receive the cash
settlement, and the Company shall be obligated to pay the cash settlement, only
if the Company determines, in its sole and absolute discretion, to make such
payment.
g. Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the state of
incorporation of the Company Delaware, without regard to any applicable
conflicts of law.
Approvals
Original Plan:
Adopted by the Board of Directors on:
December 28, 2005
Modified Plan:
Adopted by the Board of Directors on:
March 29, 2006
Approved by the stockholders on:
Appendix C
AMENDMENT TO CERTIFICATE OF INCORPORATION
PAR Technology Corporation (the "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 at a meeting of the Board of Directors of the Corporation,
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and subject to consideration at a meeting of the stockholders of said
corporation for consideration thereof. The proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by changing Section 1 of Article FOURTH thereof so that, as amended said
Section 1 shall be and read as follows:
The total number of shares of capital stock which the Corporation shall
have the authority to issue is thirty million (30,000,000) shares of stock,
par value $0.02 per share, consisting of twenty-nine million (29,000,000)
shares of Common Stock, and one million (1,000,000) shares of Preferred
Stock.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
an annual meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Gregory T. Cortese, its Secretary, this ___ day of May, 2006.
By: Gregory T. Cortese
------------------
Its: Secretary
---------
New Hartford, New York
April 11, 2006
Directions to The New York Palace Hotel
455 Madison Avenue; New York, NY 10022
212-888-7000
From Westchester: Take the Saw Mill River Parkway South. Follow the signs to the
Henry Hudson Parkway South. Follow the Henry Hudson Parkway South to 50th Street
(Manhattan). Exit onto 50th Street and follow across town to Madison Avenue. The
New York Palace is located on 50th Street between Madison and Park Avenues.
From New Jersey Turnpike (Lincoln Tunnel):
Go North on the New Jersey Turnpike (Interstate 95 North) to Exit 16 E for the
Lincoln Tunnel (pay toll). Follow directions into the Lincoln Tunnel (pay toll).
Upon exiting the tunnel bear left for "Uptown" and proceed two blocks to 42nd
Street. Turn left onto 42nd Street. Turn right on 10th Avenue. Continue North to
50th Street; turn right onto 50th Street. Follow 50th Street across town
traveling East to Madison Avenue. The New York Palace is located on 50th Street
between Madison and Park Avenues.
From New England Via Triboro Bridge/95 South/Hutchinson River Parkway:
Follow signs to the Triboro Bridge. Follow all signs for Manhattan/FDR South
(pay toll). Take the FDR South. Exit onto 49th Street. Follow 49th Street to 6th
Avenue. Turn right on 6th Avenue. Turn right onto 50th Street. The New York
Palace is located on 50th Street between Madison and Park Avenues.
From Midtown Tunnel / Long Island Expressway:
Enter the Queens Midtown Tunnel (pay toll). Upon exiting the tunnel bear right
to 37th Street (Uptown sign). Upon exiting the tunnel bear right to 37th Street
(Uptown sign). Follow 37th Street to 3rd Ave. Turn right onto 3rd Avenue to 51st
Street and turn left onto 51st Street. The New York Palace is located on 51st
Street between Park and Madison Avenues.
[GRAPHIC OMITTED]
REVOCABLE PROXY
PAR TECHNOLOGY CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
May 11, 2006
10:00 AM
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of PAR TECHNOLOGY CORPORATION hereby appoints
JOHN W. SAMMON, JR., CHARLES A. CONSTANTINO and JAMES A. SIMMS or any one of
them, jointly or severally, proxies with full power of substitution, to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the 2006 Annual Meeting of Shareholders to be held on Thursday, May 11, 2006
at 10:00 AM, Local Time, at The New York Palace Hotel; 455 Madison Avenue, New
York, NY 10022, and at any adjournment thereof, for the election of Directors
and upon the proposals set forth and more particularly described in the
accompanying Notice of Annual Meeting and Proxy Statement and upon such other
matters that may properly come before the meeting.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS INSTRUCTION CARD PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR PROVIDE YOUR INSTRUCTIONS TO VOTE VIA THE
INTERNET OR BY TELEPHONE.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
PAR TECHNOLOGY CORPORATION - ANNUAL MEETING, MAY 11, 2006:
YOUR VOTE IS IMPORTANT!
Proxy Materials are available on-line at:
http://www.partech.com/ir-front.cfm
You can vote in one of three ways:
1. Call toll free 1-866-213-1445 on a Touch-Tone Phone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
or
2. Via the Internet at https://www.proxyvotenow.com/ptc and follow the
instructions.
or
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE SEE REVERSE SIDE FOR VOTING INSTRUCTIONS
REVOCABLE PROXY
PAR TECHNOLOGY CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
May 11, 2006
Please mark as
indicated in this
example [ X ]
1. ELECTION OF DIRECTORS
[ ] For
[ ] Withhold All
[ ] For All Except
Nominees for a 3 year term:
(01) Mr. Sangwoo Ahn
(02) Dr. Paul Nielsen
INSTRUCTION: To withhold authority to vote for any nominee(s), mark "For All
Except" and write that nominee(s') name(s) or number(s) in the space provided
below.
___________________________________________________________________
2. To approve the PAR Technology Corporation 2005 Equity Incentive Plan.
[ ] For
[ ] Against
[ ] Abstain
3. To approve the amendment of the Certificate of Incorporation to increase
the authorized shares of voting Common Stock from 19,000,000 to 29,000,000.
[ ] For
[ ] Against
[ ] Abstain
4. To ratify the appointment of KPMG LLP as the Company's independent
registered public accounting firm for the Company for the 2006 fiscal year.
[ ] For
[ ] Against
[ ] Abstain
The Board of Directors recommends a vote "FOR" proposals 1,2,3 and 4 listed
above.
Mark here if you plan to attend the meeting [ ]
Mark here for address change and note change [ ]
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
UNLESS OTHERWISE INSTRUCTED ABOVE, THE SHARES REPRESENTED HEREBY WILL BE VOTED
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS SET FORTH
ABOVE.
ELECTRONIC DELIVERY OF PROXY MATERIALS: If you wish to receive future annual
reports and proxy materials via the internet, please send an email with "On-Line
Proxy Materials" in the subject line to: investor_relations@partech.com.
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such and if signing for a corporation, please give your
title.
Please be sure to date and sign this instruction card in the box below.
--------------------------------------------------------------------------------
Sign above Date
x x x IF YOU WISH TO PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR INTERNET,
PLEASE READ THE INSTRUCTIONS BELOW x x x
FOLD AND DETACH HERE IF YOU ARE VOTING BY MAIL
--------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
Shareholders of record have three ways to vote:
1. By Mail; or
2. By Telephone (using a Touch-Tone Phone); or
3. By Internet.
A telephone or Internet vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed, dated and returned this proxy. Please
note telephone and Internet votes must be cast prior to 3 a.m., May 11, 2006. It
is not necessary to return this proxy if you vote by telephone or Internet.
Vote by Telephone
Call Toll-Free on a Touch-Tone Phone anytime prior to 3 a.m., May 11, 2006.
1-866-213-1445
Vote by Internet
anytime prior to 3 a.m., May 11, 2006 go to https://www.proxyvotenow.com/ptc
Please note that the last vote received, whether by telephone, Internet or by
mail, will be the vote counted.
ON-LINE PROXY MATERIALS : http://www.partech.com/ir-front.cfm
Your vote is important!