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)     March 4, 2011

Datawatch Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of 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

(e)

On March 4, 2011, Datawatch Corporation (the “Company”) entered into an executive severance agreement with Michael A. Morrison, the Company’s President and Chief Executive Officer (the “Agreement”).  The Agreement provides that in the event the Company terminates Mr. Morrison’s employment for reasons other than for “Cause” or Mr. Morrison elects to terminate his employment with the Company for “Good Reason,” Mr. Morrison is entitled to severance payments equal in the aggregate to his then current annual base salary, payable on a monthly basis for twelve months following his termination date.  Mr. Morrison’s current annual base salary is $285,000.

“Cause” is defined in the Agreement as (i) the willful and continuing failure or refusal to render services in accordance with his obligations, (ii) gross negligence, dishonesty, or breach of fiduciary duty, (iii) fraud, embezzlement or substantial disregard of the rules or policies of the Company, (iv) acts which would tend to generate significant adverse publicity toward the Company, (v) the commission of a felony, or (vi) breach of the terms of the Proprietary Information and Inventions Agreement between the Company and Mr. Morrison. “Good Reason” is defined in the Agreement as including a material diminution in the nature or scope of such officer’s responsibilities, duties or authority.  As a condition to the receipt by Mr. Morrison of any payment or benefit under the Agreement, Mr. Morrison must first execute a valid, binding and irrevocable general release in favor of the Company and in a form reasonably acceptable to the Company, and must be in compliance with the terms of his Proprietary Information, Inventions and Non-Competition Agreement with the Company.

A copy of the Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.  The description of the 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 Exhibit is furnished as part of this report:

Exhibit No.             Description

10.1 Letter Agreement by and between the Company and Michael A. Morrison, dated March 4, 2011.

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:  March 10, 2011	By:	/s/ Murray P. Fish
		Name: Murray P. Fish
		Title:   Chief Financial Officer

EXHIBIT INDEX

Exhibit No.            Description

10.1 Letter Agreement by and between the Company and Michael A. Morrison, dated March 4, 2011.

EX-10.1

Exhibit 10.1

March 4, 2011

Mr. Michael A. Morrison

7 Overlook Drive

Groton, MA  01450

Dear Michael:

The purpose of this letter is to memorialize the terms of your eligibility for severance with Datawatch Corporation (“the Company”) in the event that you are involuntarily terminated by the Company without Cause (as defined in Paragraph 3) or if you terminate your employment for Good Reason (as defined in Paragraph 2).

1. As an at-will employee, either you or the Company may terminate your employment at any time for any or no reason with or without notice.  Neither this letter nor its terms constitute a contract for continued employment or a contract for a specific term of employment.  Instead, this letter sets forth the terms of our agreement with respect to your eligibility for severance.

2. In the event that you voluntarily terminate your employment with the Company at your own election and without Good Reason, you shall be entitled to no severance.  For the purpose of this Agreement, “Good Reason” is defined as a material diminution in the nature or scope of your responsibilities, duties or authority; provided, however, that the transfer of certain job responsibilities, or the assignment to others of your duties and responsibilities while you are out of work due to a disability or on a leave of absence for any reason, shall not constitute a material diminution in the nature or scope of the your responsibilities, duties or authority as set forth in this Section.

3.           In the event that the Company terminates your employment for “Cause,” you shall be entitled to no severance.  Termination by the Company shall constitute a termination for Cause under this Paragraph 3 if such termination is for one or more of the following reasons:

(a)           the willful and continuing failure or refusal by you to render services to the Company in accordance with your obligations to the Company;

(b)           gross negligence, dishonesty, breach of fiduciary duty or breach of the terms of any other agreements executed in connection herewith;

(c)           the commission by you of an act of fraud, embezzlement or substantial disregard of the rules or policies of the Company;

(d)           acts which, in the judgment of the Board of Directors, would tend to generate significant adverse publicity toward the Company;

(e)           the commission, or plea of nolo contendere, by you of a felony; or

(f)           a breach by you of the terms of the Proprietary Information, Inventions and Non-Competition Agreement executed by you.

4.           In the event that the Company terminates your employment for any reason other than those stated in Paragraph 3 above or if you terminate your employment for Good Reason as defined in Paragraph 2, and you sign a comprehensive release in the form, and of a scope, acceptable to the Company (the “Release”), the Company will pay you severance payments in equal monthly installments at your then monthly base salary for twelve months following your termination (the “Severance Period”).  Such payments shall be made in accordance with the Company’s customary payroll practices and shall be subject to all applicable federal and state withholding, payroll and other taxes.

If you breach your post-employment obligations under your Proprietary Information Inventions and Non-Competition Agreement, the Company may immediately cease payment of all severance and/or benefits described in this Agreement.  This cessation of severance and/or benefits shall be in addition to, and not as an alternative to, any other remedies in law or in equity available to the Company, including the right to seek specific performance or an injunction.

5.           The terms of this agreement constitute the entire understanding relating to your employment and supersede and cancel all agreements, written or oral, made prior to the date hereof between you and the Company relating to your employment with the Company; provided, however, that nothing herein shall be deemed to limit or terminate the provisions of Proprietary Information, Inventions and Non-Competition Agreement executed by you or in any manner alter the terms of any stock option entered into between you and the Company.

6.           This Agreement, the employment relationship contemplated herein and any claim arising from such relationship, whether or not arising under this Agreement, shall be governed by and construed in accordance with the internal laws of Massachusetts, without giving effect to the principles of choice of law or conflicts of law of Massachusetts and this Agreement shall be deemed to be performable in Massachusetts.  Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) shall be commenced or maintained in any state or federal court located in Massachusetts, and Executive hereby submits to the jurisdiction and venue of any such court.

7.           No waiver by either party of any breach by the other or any provision hereof shall be deemed to be a waiver of any later or other breach thereof or as a waiver of any other provision of this Agreement.  This Agreement and its terms may not be waived, changed, discharged or terminated orally or by any course of dealing between the parties, but only by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.  No modification or waiver by the Company shall be effective without the consent of the Board of Directors then in office at the time of such modification or waiver.

8.           You acknowledge that the services to be rendered by you to the Company are unique and personal in nature.  Accordingly, you may not assign any of your rights or delegate any of your duties or obligations under this Agreement.  The rights and obligations of the Company under this Agreement may be assigned by the Company and shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.

If this letter correctly states the understanding we have reached, please indicate your acceptance by countersigning the enclosed copy and returning it to me.

Very truly yours,

DATAWATCH CORPORATION

/s/ Murray P. Fish

Murray P. Fish

Chief Financial Officer

YOU REPRESENT THAT YOU HAVE READ THE FOREGOING AGREEMENT, THAT YOU FULLY UNDERSTAND THE TERMS AND CONDITIONS OF SUCH AGREEMENT AND THAT YOU ARE VOLUNTARILY EXECUTING THE SAME.

ACCEPTED:

/s/ Michael A. Morrison                                    3/4/2011

Michael A. Morrison                                           Date