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)     July 20, 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; Compensatory Arrangements of Certain Officers

(e)           Compensatory Plans and Arrangements

Executive Severance Agreement

On July 25, 2011, Datawatch Corporation (the “Company”) entered into an executive severance agreement with Harvey Gross, the Company’s Vice President Product Management and CTO (the “Agreement”).  The Agreement provides that in the event the Company terminates Mr. Gross’s employment for reasons other than for “Cause” (as defined in the Agreement) or Mr. Gross elects to terminate his employment with the Company for “Good Reason,” Mr. Gross is entitled to severance payments equal in the aggregate to his then current annual base salary, payable on a monthly basis for six months following his termination date.  Mr. Gross’s current annual base salary is $183,500.

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.

2011 Corporate Officers Compensation Plan

On July 20, 2011, the Company’s Compensation and Stock Committee approved amendments to the cash bonus structure under the fiscal 2011 Corporate Officers Compensation Plan (the “Plan”), under which Murray Fish, Harvey Gross and Dan Incropera are eligible to receive cash bonuses.  Under the revised structure, each executive’s cash bonus will be calculated based on whether the Company meets certain goals for profitability, consolidated revenue growth and enterprise license sales for fiscal year 2011.  In order for an executive to receive 100% of the target cash bonus, each goal must be met, and no cash bonuses will be paid under the revised structure if the Company is not profitable during the fiscal year or if payment of a bonus would result in a loss to the Company.  Achievement of one of the goals but not others may result in a proportionately lower bonus.  If the goals under the revised structure are met, the executives participating in the Plan would be eligible to receive aggregate cash bonuses in the following maximum amounts:  Mr. Fish, $79,550; Mr. Gross, $57,875; and Mr. Incropera, $20,500.  The Compensation and Stock Committee retains discretion as to whether cash bonuses are ultimately paid under the Plan and in what amounts.

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 Harvey Gross, dated July 25, 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:  July 26, 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 Harvey Gross, dated July 25, 2011.

EX-10.1

EXHIBIT 10.1

July 25, 2011

Mr. Harvey C. Gross

3 Holbrook Lane

Westford, MA  01886

Dear Harvey:

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 six 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/ Michael A. Morrison                                     

Michael A. Morrison

Chief Executive 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/ Harvey C. Gross                                                                   July 25, 2011

Harvey C. Gross                                                                                Date