8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)October 19, 2007

Datawatch Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdictionof Incorporation)

000-19960	02-0405716
(Commission File Number)	(IRS Employer Identification No.)

Quorum Office Park 271 Mill Road Chelmsford, Massachusetts	01824
(Address of Principal Executive Offices)	(Zip Code)

(978) 441-2200

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of New Chief Executive Officer and Resignation of Current Chief Executive Officer

On October 19, 2007, the Board of Directors of Datawatch Corporation (the “Company”) approved the appointment of Kenneth P. Bero as the Company’s new Chief Executive Officer, effective as of January 1, 2008.  Effective as of October 19, 2007, Mr. Bero was also appointed as an additional member of the Company’s Board of Directors.  Upon assuming his role as the Company’s Chief Executive Officer,  Mr. Bero’s annual base salary will be increased from $200,000 per year to $250,000 per year.  In connection with his appointment, Mr. Bero was also granted options to purchase 50,000 shares of the Company’s stock.  The options were granted under the Company’s 2006 Equity Compensation and Incentive Plan, and entitle Mr. Bero to purchase 50,000 shares of common stock at $5.025 per share, which was the fair market value of a share of the Company’s stock on October 19, 2007, the date of the option grant.

Simultaneous with the above appointment, on October 19, 2007, the Board of Directors the Company also approved Robert W. Hagger’s resignation as Chief Executive Officer, effective December 31, 2007.  In connection with his resignation, Mr. Hagger entered into a Management Consulting Agreement with the Company, dated October 22, 2007 (the “Consulting Agreement”).  Under the Consulting Agreement, Mr. Hagger agreed to continue to serve as the Company’s Chief Executive Officer until December 31, 2007, and will provide consulting services for twelve months after his resignation.  The Company will pay Mr. Hagger $25,000 per month for his consulting services and $30,000 for relocation expenses in accordance with the Company’s relocation policy under the Consulting Agreement.  Mr. Hagger will remain on the Company’s Board of Directors for at least twelve months after his resignation.

Mr. Bero, age 53, currently is serving as the Company’s Chief Operating Officer and Senior Vice President of Sales.  Since Mr. Bero joined the Company in June 2006, he has also served as the Senior Vice President Enterprise Solutions and as Vice President of Enterprise Sales for North America.  Prior to joining Datawatch, Mr. Bero served as Vice President, North American Channel Sales at Business Objects.  Mr. Bero also held the position of Chief Operating Officer and Executive Vice President of Sales and Marketing at NAVIDEC, a NASDAQ listed software development and services company.

On October 22, 2007, the Company issued a press release regarding Mr. Bero’s appointment as Chief Executive Officer and Mr. Hagger’s retirement and resignation.  The press release is attached as Exhibit 99.1 to this report and is incorporated herein by reference.  A copy of the Consulting Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.  The description of the Consulting Agreement contained in this Current Report on Form 8-K is qualified in its entirety by reference to such document.

Item 9.01 Financial Statements and Exhibits.

(d)           Exhibits

The following Exhibits are filed as part of this report:

Exhibit No. Description

10.1 Management Consulting Agreement by and between Robert W. Hagger and the Company, dated October 22, 2007

99.1 Press Release dated October 22, 2007

SIGNATURES

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

	DATAWATCH CORPORATION
Date:               October 23, 2007
	By: /s/ Robert W. Hagger
	Name: Robert W. Hagger
	Title:   President and Chief Executive Officer

EX-10.1

EXHIBIT 10.1

MANAGEMENT CONSULTING AGREEMENT

This Management Consulting Agreement (the “Agreement”) is made as of October 22, 2007, by and between Robert W. Hagger (“Hagger”) and Datawatch Corporation (the “Company”).

WHEREAS, Hagger is the President and Chief Executive Officer (the “CEO”) of the Company; and

WHEREAS, the Company and Hagger desire to provide for consulting services relating to the transition from Hagger to the Company’s newly elected President and CEO (the “New CEO”) effective January 1, 2008;

NOW, THEREFORE, in consideration of the foregoing and the agreements herein contained, and intending to be legally bound, the parties hereby agree as follows:

1.Continuation as CEO.  Hagger agrees to continue to serve as the CEO of the Company from the date of this Agreement until December 31, 2007 (the “Interim Period”), unless earlier terminated as specified in Section 5.  During this period, Hagger shall devote substantially all of his business time, attention and energies to the Company’s business and shall not engage in any other business activity without the Board of Directors’ approval.  As of January 1, 2008, or earlier, upon either the termination of Hagger’s employment by the Company without Cause (as defined herein) or by Hagger for Good Reason (as defined herein), the Company will reimburse Hagger for relocation expenses in connection with his relocation to Europe in accordance with the Company’s relocation policy, in an amount not to exceed $30,000.  The date of January 1, 2008 is referred to herein as the “Transition Date.”

2.Consulting Services.  Unless the relationship is earlier terminated as provided in Section 6 hereof, for a period of 12 months after the Transition Date (the “Consulting Period”), Hagger or, at his option, a corporation or other entity of which Hagger is an employee or principal (the “Consulting Company”) (Hagger or the Consulting Company, as the case may be, in their role as consultant each are hereinafter referred to as the “Consultant”), will provide consulting services to the Company as provided herein.  Consultant will be available as reasonably requested by the Company, to provide such services and duties as the Company reasonably requests, with respect to training, advice and assistance to the Company and the New CEO in the transition to the position of Chief Executive Officer for the Company.  The issues on which Consultant may be requested to provide training, advice and assistance include SEC rules, regulations, filings and compliance, investor relations, banking facilities, the status of customer contracts and general business advice.  Consultant will determine his own hours and method of performing the consulting services; he may perform the services from any location; he will generally use his own tools and equipment; and he will not be supervised or controlled in the performance of his tasks by the Company.  Consultant agrees to perform his consulting services well and faithfully and to the best of his ability.  Consultant agrees to take no action prejudicial to the interests of the Company during the Consulting Period.

3.Consulting Fee.  As compensation for the provision of consulting services hereunder, the Company shall pay a consulting fee to Consultant during the Consulting Period on a monthly basis at the rate of $25,000 per month.  In addition, Consultant will be reimbursed by the Company for all reasonable and properly documented expenses incurred in connection with providing the consulting services, subject to the approval of the New CEO and in accordance with the Company’s expense reimbursement policies.  Other than as set forth in this Agreement or as otherwise required by law, neither Hagger nor the Consultant will be entitled to any other benefit or compensation in connection with the termination of Hagger’s employment by the Company or the performance of the consulting services hereunder.

4.Independent Contractor Relationship.  The parties expressly understand and agree that, during the Consulting Period, Consultant’s status in relation to the Company will be that of an independent contractor, and that neither this Agreement nor the services to be rendered hereunder by Consultant will for any purpose whatsoever create an employment relationship between the parties.  Consultant will have exclusive responsibility for payment of all federal, state, and local income taxes, as well as all unemployment and disability insurance, social security, and other taxes, applicable to the compensation to be provided to him hereunder by the Company.  Consultant acknowledges that he will not receive any employee benefits from the Company, and that, as an independent contractor, Consultant will have exclusive responsibility to obtain and make payment for health insurance, life insurance, and any other benefits that he wishes to receive.  Further, Consultant agrees that, except as specifically authorized by the Company, he will not seek to bind the Company under any contract or other obligation.

5.Termination of Employment. During the Interim Period, Hagger’s employment may be terminated at any time by the Company, either with or without Cause (as defined herein), or by Hagger, either with or without Good Reason (as defined herein).  In the event of the termination of Hagger’s employment by the Company for Cause, Hagger’s resignation from employment without Good Reason, or his death or Disability (as defined herein), in each case prior to the commencement of the Consulting Period, this Agreement shall immediately and automatically terminate and the Company shall have no further obligations to Hagger hereunder.  For purposes of this Agreement, “Cause” shall mean Hagger (i) engaging in willful and repeated gross negligence or gross misconduct, (ii) breaching a material fiduciary duty to the Company or (iii) being convicted of a felony, in any such case, to the demonstrable and material injury to the Company.  For purposes hereof, no act, or failure to act, on Hagger’s part, shall be deemed “willful” unless done, or omitted to be done, by Hagger not in good faith and without reasonable belief that any act or omission was in the best interest of the Company.  For purposes of this Agreement, Hagger’s termination of his employment by the Company will be considered for “Good Reason” if he terminates upon the occurrence of any one or more of the following events:  (i) a reduction in his base salary; (ii) a substantial reduction in his benefits without a similar reduction of the benefits of the other executive officers of the Company; or (iii) without his express written consent, his assignment to duties substantially inconsistent with his current position with the Company or a substantial reduction in his duties other than in connection with the employment of the New CEO.  For the purposes of this Agreement, “Disability” shall mean any physical incapacity or mental incompetence (i) as a result of which Hagger is unable to perform the essential functions of his position as CEO for an aggregate of 90 days, whether or not consecutive, during any calendar year, and (ii) which cannot be reasonably accommodated by the Company without undue hardship.

6.Termination of Consulting Arrangement.  In the event, after the commencement of the Consulting Period, of the Consultant’s material breach of any term of this Agreement, or Hagger’s death or Disability (as defined herein), this Agreement shall immediately and automatically terminate and the Company shall have no further obligations to the Consultant.

7.Other Agreements.  Hagger understands and agrees that he remains subject to the Proprietary Information and Inventions Agreement, dated August 21, 2001, which remains in full force and effect.  The parties agree that the Employment Agreement between the Company and Hagger dated as of July 9, 2001 has expired by its terms and that all provisions of the Employment Agreement, including without limitation the provisions relating to the payment of severance to Hagger in the event of the termination of his employment after the termination of the Employment Agreement, are terminated and are of no further force and effect.

8.Conflicting Agreements.  Hagger hereby warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which or by which Hagger is a party or is bound and that Hagger is not now subject to and will not enter into any agreement, including, without limitation, any covenants against competition or similar covenants that would affect the performance of his obligations hereunder.

9.Withholding; Taxes.  All payments made by the Company under this Agreement shall be subject to and reduced by any federal, state and/or local taxes or other amounts required to be withheld by the Company under any applicable law.

10.Miscellaneous.

10.1.           Assignment.  Except as provided in Section 2 hereof with respect to the Consulting Company, Hagger shall not assign this Agreement or any interest herein.  The Company may assign this Agreement in connection with the sale of the Company or the sale of substantially all of the Company’s assets.  This Agreement shall inure to the benefit of the Company and shall be binding upon the Company and Hagger and their respective successors, executors, administrators, heirs and permitted assigns.

10.2.           Severability.  If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the application of such provision in such circumstances shall be modified to permit its enforcement to the maximum extent permitted by law, and both the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable and the remainder of this Agreement shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

10.3.           Waiver; Amendment.  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of the Company to require the performance of any term or obligation of this Agreement, or the waiver by the Company of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.  This Agreement may be amended or modified only by a written instrument signed by Hagger and another officer of the Company authorized by the Board of Directors.

10.4.           Notices.  All notices, requests and other communications provided for by this Agreement shall be in writing and shall be effective when delivered in person or three (3) business days after being deposited in the mail of the United States, postage prepaid, registered or certified, and addressed (a) in the case of Hagger, to the address set forth underneath his signature to this Agreement, or (b) in the case of the Company, to the attention of the Chairman of the Board at 271 Mill Road, Quorum Office Park, Chelmsford, MA 01824, and/or to such other address as either party may specify by notice to the other.

10.5.           Entire Agreement.  This Agreement and the Proprietary Information and Inventions Agreement constitute the entire agreement between the Company and Hagger with respect to the terms and conditions of Hagger's employment with the Company and supersede all prior communications, agreements and understandings, written or oral, between them.

10.6.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be original and all of which together shall constitute one and the same instrument.

10.7.           Governing Law.  This Agreement, the relationships contemplated herein and any claim arising from such relationships, whether or not arising under this Agreement, shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts without giving effect to any choice or conflict of laws provision or rule thereof.

10.8.           Consent to Jurisdiction.  Each of the Company and Hagger, by its or his execution hereof, hereby irrevocably submits to the exclusive jurisdiction of the state or federal courts of the Commonwealth of Massachusetts for the purpose of any claim or action arising out of or based upon this Agreement, Hagger’s employment with the Company and/or the termination thereof, the consulting relationship contemplated herein and/or the termination thereof, or relating in any other manner to the subject matter hereof, and agrees not to commence any such claim or action other than in the above-named courts.

IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its duly authorized representative, and by Hagger, as of the date first above written.

DATAWATCH CORPORATION

By:

Name:

Title:

ROBERT W. HAGGER

By:

Address:

EX-99.1

EXHIBIT 99.1

DATAWATCH CORPORATION ANNOUNCES THE APPOINTMENT OF KEN BERO AS PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR FOLLOWING THE RETIREMENT OF ROBERT W. HAGGER

Chelmsford, MA—October 22, 2007—Datawatch Corporation (NASDAQ-CM: DWCH), a leader in Enterprise Information Management (EIM), today announced that President & CEO Robert W. Hagger will retire effective December 31, 2007. Kenneth P. Bero, chief operating officer of the company, has been appointed to succeed Hagger as president and chief executive officer and has also been appointed to the Board of Directors.  Hagger has agreed to provide consulting advice to the new CEO for twelve months following his retirement and will remain a director of the company for the same period.

Prior to joining Datawatch, Bero was vice president for North American Channel Sales for Business Objects, Inc. where he nearly tripled that group’s sales in the four years he was associated with the company.  During the previous ten years, he held a number of increasingly responsible sales and marketing management positions with Tektronix, Inc., Access Graphics and Navidec Inc.

Richard de J. Osborne, chairman of the board said, “Robert Hagger joined Datawatch nearly eleven years ago to run its international operations, based in London, and was appointed CEO in June 2001.  Mr. Hagger has done a wonderful job.  He has recently expressed an interest in returning to Europe with his family, and the Board of Directors has been working with him to provide an orderly transition to a new management team.”

Since joining Datawatch, Bero has restructured and revitalized the company’s sales organization.  After being named COO in March of this year, he has taken on an increasingly broad role in the executive management of the company.

“The Board of Directors is very pleased to have someone of Ken Bero’s experience and demonstrated abilities ready to move into the position of CEO and lead the company forward,” continued Osborne.  “We are confident in the ability and strategic vision that Ken has demonstrated.”

“I am proud of what we have achieved over the last six years and particularly excited by our recent accomplishments,” said Hagger.  “Over the last year, we have clearly positioned Datawatch as a leader in the Enterprise Information Management (EIM) space specializing in Business Intelligence (BI) and Enterprise Content Management (ECM).  This includes integrating our various technologies to produce new product combinations that add value to the businesses of our 20,000 corporate customers.”

“We’ve also built a strong management team that has the skills and knowledge necessary to leverage our competitive advantage in helping companies turn static data into actionable information,” continued Hagger.  “As COO, Ken and his team have done a fine job, and they are now positioned to grow the company even further. It’s clear that the new organizational structure is having a positive impact on results.”

“The new management team at Datawatch has been assembled with the future growth of the company in mind,” said Bero.  “I feel very comfortable taking over the reins from Bob as we continue to reposition and grow the company.”

As previously announced, Datawatch will host a live webcast to discuss its fourth quarter fiscal 2007 results on Tuesday, November 27, 2007 at 2:00 p.m. (EDT). The webcast can be accessed at: http://www.vcall.com/IC/CEPage.asp?ID=122251. Please register at least 15 minutes early to download any necessary audio software. An archive of the broadcast will be available for 30 days at the same location.

ABOUT DATAWATCH CORPORATION

Datawatch Corporation, a leader in Enterprise Information Management, helps companies make better decisions and solve business problems by simplifying access to information. Unique among EIM vendors, Datawatch transforms the massive amounts of data and documents generated inside or outside a company into actionable insight, without any changes needed to existing systems. Datawatch customers benefit from the right information, in the right context, at the right time. More than 20,000 organizations worldwide rely on Datawatch products including its market-leading Monarch report and data mining solutions. Founded in 1985, Datawatch is based in Chelmsford, Mass. with offices in London, Sydney and Manila. For more information, visit www.datawatch.com.

Datawatch, the Datawatch logo and Monarch are trademarks or registered trademarks of Datawatch Corporation in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual future results to differ materially from current expectations include the following: risks associated with the uncertainty of the current economic climate; risks associated with fluctuations in quarterly operating results; Datawatch's dependence on its principal products; risks associated with international sales; risks associated with distributor sales; risks associated with acquisitions; an unfavorable result in any litigation; market acceptance of new products; dependence on the introduction of new products and possible delays in those introductions. Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly-available documents, which include, but are not limited to, filings made by Datawatch from time to time with the Securities and Exchange Commission, including but not limited to, those appearing in the Company's Form 10-K for the year ended September 30, 2006 and Form 10-Q for the quarters ended December 31, 2006, March 31, 2007 and June 30, 2007. Any forward-looking statements should be considered in light of those factors.

# # #

Investor Contact:

Datawatch Investor Relations

978-441-2200 ext. 8323

investor@datawatch.com

Media Contacts:

Susan Willson

Greenough Communications

smann@greenoughcom.com

Direct: (617) 275-6529

Mobile: (617) 767-6901

Lisa G. Kilpatrick

Marketing Communications Manager

lisa_kilpatrick@datawatch.com

Phone: (978) 441-2200, ext. 8240

Fax: (978) 453-4443