UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-19960
Datawatch Corporation
(Exact name of registrant as specified in its charter)
Delaware 02-0405716
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
234 Ballardvale Street, Wilmington Massachusetts 01887
(Address of principal executive offices) (Zip Code)
(508) 988-9700
(Registrant's telephone number, including area code)
None
(Former name, former address, former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date:
Class Outstanding at August 9, 1996
Common stock, $.01 par value 8,816,307
DATAWATCH CORPORATION
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
a) Consolidated Condensed Balance Sheets:
June 30, 1996 and September 30, 1995 3
b) Consolidated Condensed Statements of Operations:
Three Months Ended June 30, 1996 and 1995
Nine Months Ended June 30, 1996 and 1995 4
c) Consolidated Condensed Statements of Cash Flows:
Nine Months Ended June 30, 1996 and 1995 5
d) Notes to Unaudited Consolidated Condensed Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Default upon Senior Securities *
Item 4. Submission of Matters to a Vote of
Security Holders *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
* No information provided due to inapplicability of item.
PART I.
Item 1. Financial Statements
DATAWATCH CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
June 30, September 30,
1996 1995
(Restated)
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 923,518 $76,802
Short-term investments 642,183 885,659
Accounts receivable, net 7,069,244 5,230,685
Inventories 317,262 262,528
Prepaid advertising and other expenses 1,577,754 1,508,179
Total current assets 10,529,961 8,763,853
PROPERTY PLANT & EQUIPMENT
Property and equipment 3,126,363 2,724,220
Less accumulated depreciation
and amortization (1,459,288) (1,184,370)
Net property and equipment 1,667,075 1,539,850
OTHER ASSETS 573,445 596,690
EXCESS OF COST OVER NET ASSETS OF
ACQUIRED COMPANIES 1,146,589 1,457,742
TOTAL ASSETS $13,917,070 $12,358,135
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loan payable $ 619,270 $ -
Accounts payable 3,547,081 3,662,116
Accrued expenses 441,114 819,069
Deferred revenue 1,345,774 1,314,655
Current portion of long-term debt 98,700 336,255
Total current liabilities 6,051,939 6,132,095
LONG-TERM DEBT 213,435 163,868
TOTAL LIABILITIES 6,265,374 6,295,963
SHAREHOLDERS' EQUITY:
Common stock. 88,127 86,291
Additional paid-in capital 18,522,934 17,614,360
Accumulated deficit (10,880,146) (11,663,477)
Cumulative translation adjustment (79,219) 24,998
Total stockholders' equity 7,651,696 6,062,172
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $13,917,070 $12,358,135
See notes to unaudited consolidated financial statements.
Item 1. Financial Statements (continued)
DATAWATCH CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
(Restated) (Restated)
NET SALES $8,026,996 $5,867,738 $22,323,962 $16,634,140
COSTS AND EXPENSES:
Cost of sales 1,291,616 895,876 3,446,532 2,690,607
Engineering & product
development 645,095 559,564 1,716,817 1,642,074
Selling, general and
administrative 5,378,981 4,469,330 16,344,533 12,429,194
INCOME (LOSS)
from operations 711,304 (57,032) 816,080 (127,735)
OTHER INCOME,
primarily interest 2,592 17,429 38,034 41,740
INTEREST EXPENSE (21,849) (22,240) (64,332) (52,563)
FOREIGN CURRENCY TRANSACTION
GAIN (LOSS) (1,051) (4,197) 7,109 9,075
OPERATING INCOME (LOSS) BEFORE
PROVISION FOR TAX 690,996 (66,040) 796,891 (129,483)
PROVISION FOR TA 10,407 (51) 13,560 2,141
NET INCOME (LOSS) $ 680,589 $ (65,989) $ 783,331 $ (131,624)
NET INCOME (LOSS) PER COMMON
SHARE $ .08 $ (.01) $ .09 $ (.02)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES AND COMMON
EQUIVALENT SHARES
OUTSTANDING 8,963,598 8,622,715 8,891,748 8,061,601
See notes to unaudited consolidated financial statements.
Item 1. Financial Statements (continued)
DATAWATCH CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
June 30,
1996 1995
(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 783,331 $ (131,624)
Adjustments to reconcile net income (loss)
to net cash:
Depreciation and amortization 679,345 559,810
Changes in current assets and liabilities:
Inventories (54,734) (46,507)
Prepaid expenses (69,575) (398,277)
Accounts receivable (1,838,559) (1,544,348)
Accounts payable and accrued expenses (604,218) 479,170
Loans payable 619,270 -
Deferred revenue 31,119 335,351
Net cash used in operating activities (454,021) (746,425)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to equipment and fixtures (384,719) (186,678)
Proceeds from maturity of short-term
investments 1,870,730 200,000
Purchase of short-term investments (1,627,254) (1,182,728)
Other assets (21,962) 2,888
Net cash used in investing activities (163,205) (1,166,518)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 910,410 1,307,983
Principal payments on long-term obligations (246,468) (92,030)
Net cash provided by financing activities 663,942 1,215,953
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 46,716 (696,990)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 876,802 1,625,592
CASH AND EQUIVALENTS, END OF PERIOD $ 923,518 $ 928,602
See notes to unaudited consolidated financial statements.
Item 1. Financial Statements (continued)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation: The consolidated condensed balance
sheets as of June 30, 1996 and September 30, 1995, the
consolidated condensed statements of operations for the
three months and nine months ended June 30, 1996 and 1995,
and the consolidated condensed statements of cash flows for
the nine months ended June 30, 1996 and 1995 are unaudited.
In the opinion of management, these statements include all
adjustments necessary for the fair presentation of the
financial data for such periods. The notes to the
consolidated financial statements which are contained in the
1995 Form 10-K should be read in conjunction with the
financial statements included herein. The results of
operations for the interim periods are not necessarily
indicative of the results to be expected for the full year.
2. Acquisitions: On October 13, 1995, the Company acquired all
of the outstanding shares of the capital stock of Pole
Position Software GmbH ("Pole Position") in exchange for
300,000 shares of the Company's common stock. On March 12,
1996, the Company acquired all of the outstanding capital
stock of WorkGroup Systems Limited ("WorkGroup"), a United
Kingdom based provider of help-desk and asset management
software, in exchange for 1,437,000 shares of the Company's
common stock. Both acquisitions have been accounted for as
pooling of interests. As a result, DATAWATCH's operating
results for both the three and nine month periods ended June
30, 1996 and 1995, as discussed herein, have been adjusted
to include both WorkGroup's and Pole Position's operating
results.
3. Warrants: The Company had warrants outstanding to purchase
approximately 170,000 shares of common stock for a price of
$7.50 per share. These warrants expired on May 28, 1996 and
approximately 119,000 shares were exercised which provided
the Company with approximately $849,000 net of expenses.
4. Inventories: The Company accounts for its inventories using
a standard cost methodology. Inventories were comprised of
the following:
June 30, September 30,
1996 1995
Raw materials $ 235,172 $ 198,917
Work in process 15,767 2,974
Finished goods 66,323 60,637
TOTAL $ 317,262 $ 262,528
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
GENERAL
DATAWATCH CORPORATION (the "Company" or "DATAWATCH"), is engaged
in the design, development, manufacture, marketing and support of
personal computer software.
On October 13, 1995, the Company acquired all of the outstanding
shares of the capital stock of Pole Position Software GmbH ("Pole
Position") in exchange for 300,000 shares of the Company's common
stock. On March 12, 1996, the Company acquired all of the
outstanding capital stock of WorkGroup Systems Limited
("WorkGroup"), a United Kingdom based provider of help-desk and
asset management software, in exchange for 1,437,000 shares of
the Company's common stock. Both acquisitions have been accounted
for as pooling of interests. As a result, DATAWATCH's operating
results for both the three and nine month periods ended June 30,
1996 and 1995, as discussed herein have been adjusted to include
both WorkGroup's and Pole Position's operating results.
DATAWATCH's principal products are: Monarch for Windows, which
provides data access, translation, and reporting capability to
users of networked PCs; VIREX and VET for the PC, which detect,
repair and monitor for virus infections for both the Apple
Macintosh and IBM compatible PCs, respectively; Quetzal
(internationally) or Q-Support for Windows (in the United
States), a complete help desk and asset management system; and
netOctopus, a network management and administration system.
From time to time, information provided by the Company,
statements made by its employees or information in its filings
with the Securities and Exchange Commission (including statements
in this Form 10-Q) may contain statements which are not
historical facts, so called "forward-looking statements", and are
made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995 and releases of the
Securities and Exchange Commission. In that regard, the
discussion in this Item 2 contains forward looking statements
which involve certain risks and uncertainties, including
statements related to liquidity and capital resources. The
Company's operating results may continue to vary significantly
from quarter to quarter or from year to year depending on a
number of factors, including technological changes, competition
and general market trends. The Company's current planned expense
levels are based in part upon expectations as to future revenue.
Consequently, operating results may vary significantly from
quarter to quarter or year to year based on timing of revenue.
Revenue or net income in any period will not necessarily be
indicative of results of subsequent periods and there can be no
assurance that the Company will maintain profitability or that
revenue growth can be sustained in the future.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 and 1995.
Net sales for the three months ended June 30, 1996 were
$8,027,000, which represents an increase of $2,159,000 or 37%
from the net sales of $5,868,000 for the three months ended June
30, 1995. This increase results from growth in sales for all of
DATAWATCH's products. Monarch, which amounted to approximately
41% of sales, increased by 4%; Quetzal and Q-Support, which
amounted to approximately 41% of sales, increased by 104%; Virex,
which amounted to approximately 13% of sales, increased by 27%;
and netOctopus, which amounted to approximately 5% of sales,
increased by 187%. For the three months ended June 30, 1996, the
Company's products for the IBM compatible PC accounted for
approximately 82% of sales while the Company's products for the
Apple PC accounted for approximately 18%.
The Company's cost of sales for the three months ended June 30,
1996 was $1,292,000 or approximately 16% of net sales. Cost of
sales for the three months ended June 30, 1995 was $896,000 or
approximately 15% of net sales. These costs remained reasonably
constant as a percentage of net sales for the two periods.
Engineering and product development expenses were $645,000 for
the three months ended June 30, 1996, which increased by $85,000
or approximately 15% from $560,000 for the three months ended
June 30, 1995. This increase is primarily attributable to
additions in personnel for the continued development of
netOctopus and quality assurance for Monarch.
Selling, general and administrative expenses were $5,379,000 for
the three months ended June 30, 1996, an increase of $910,000 or
approximately 20% from $4,469,000 for the three months ended June
30, 1995. This increase is primarily attributable to increases
in personnel within the sales and marketing organizations
principally for Quetzal and Q-Support and to increases in
promotional costs, principally for Monarch.
As a result of the foregoing, the net income for the three months
ended June 30, 1996 was $681,000, an increase of $747,000 when
compared to the net loss of $66,000 for the three months ended
June 30, 1995. The Company recorded only a de minimis tax
provision for both domestic and international operations during
the period because of its ability to utilize net operating loss
carryforwards.
Nine Months Ended June 30, 1996 and 1995.
Net sales for the nine months ended June 30, 1996 were
$22,324,000, which represents an increase of $5,690,000 or 34%
from the net sales of $16,634,000 for the nine months ended June
30, 1995. This increase results from growth in sales for all of
DATAWATCH's products. Monarch, which amounted to approximately
41% of sales, increased by 14%; Quetzal and Q-Support, which
amounted to approximately 39% of sales, increased by 74%; Virex,
which amounted to approximately 15% of sales, increased by 18%;
and netOctopus, which amounted to approximately 4% of sales,
increased by 237%.
The Company's cost of sales for the nine months ended June 30,
1996 was $3,447,000 or approximately 15% of net sales. Cost of
sales for the nine months ended June 30, 1995 was $2,691,000 or
approximately 16% of net sales. These costs remained reasonably
constant as a percentage of net sales for the two periods.
Engineering and product development expenses were $1,717,000 for
the nine months ended June 30, 1996, compared to $1,642,000 for
the nine months ended June 30, 1995. The increase of $75,000 or
5% is primarily attributable to additions in personnel for the
development of netOctopus and the quality assurance for Monarch.
Selling, general and administrative expenses were $16,345,000 for
the nine months ended June 30, 1996. Included in these expenses
were non-recurring expenses associated with the acquisition of
WorkGroup amounting to approximately $450,000. Excluding the non-
recurring expenses, selling, general and administrative expenses
increased by $3,466,000 or approximately 28% from $12,429,000 for
the nine months ended June 30, 1995. This increase is primarily
attributable to increases in personnel within the sales and
marketing organizations principally for Quetzal/Q-Support and
netOctopus, and to increases in promotional costs, principally
for Monarch.
As a result of the foregoing, the net income for the nine months
ended June 30, 1996 was $783,000, an increase of $915,000 when
compared to the net loss of $132,000 for the nine months ended
June 30, 1995. The Company recorded only a de minimis tax
provision for both domestic and international operations during
the period because of its net operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's management believes that its currently anticipated
capital needs for future operations of the Company will be
satisfied through at least June 30, 1997 by funds currently
available and its unused $1,500,000 bank line of credit.
WorkGroup has an overdraft facility in place which allows it to
draw up to approximately $500,000. The Company had warrants
outstanding to purchase approximately 170,000 shares of common
stock for a price of $7.50 per share. These warrants expired on
May 28, 1996 and approximately 119,000 shares were exercised
which provided the Company with approximately $849,000 net of
expenses. For the nine months ended June 30, 1996, working
capital increased by approximately $1,846,000. Management
believes that the Company's current operations are not materially
impacted by the effects of inflation.
PART II.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
10.1 Executive Agreement between Datawatch
Corporation and Andrew W. Mathews dated April 11,
1996.
10.2 Executive Agreement between Datawatch
Corporation and Marco D. Peterson dated April 11,
1996.
10.3 Executive Agreement between Datawatch
Corporation and Bruce R. Gardner dated April 11,
1996.
10.4 Executive Agreement between Datawatch
Corporation and Thomas R. Foley dated April 11,
1996.
10.5 1996 Non-Employee Director Stock Option Plan of the Company.
11.1 Computation of Net Income (Loss) per Common Share.
27 Financial Data Schedule (filed with SEC Edgar version only).
B. Reports on Form 8-K
Amendment No. 1 to Current Report on Form 8-K, dated March
12, 1996, reported on Form 8-K/A and filed with the
Securities and Exchange Commission on April 30, 1996 to
disclose, under Item 7 - Financial Statements and Exhibits,
certain financial information relating to the Company's
acquisition of all the outstanding shares of capital stock
of WorkGroup Systems Limited.
Amendment No. 2 to Current Report on Form 8-K, dated March
12, 1996, reported on Form 8-K/A and filed with the
Securities and Exchange Commission on May 3, 1996 to
disclose, under Item 7 - Financial Statements and Exhibits,
certain financial information relating to the Company's
acquisition of all the outstanding shares of capital stock
of WorkGroup Systems Limited.
Amendment No. 3 to Current Report on Form 8-K, dated March
12, 1996, reported on Form 8-K/A and filed with the
Securities and Exchange Commission on May 23, 1996 to
disclose, under Item 7 - Financial Statements and Exhibits,
certain financial information relating to the Company's
acquisition of all the outstanding shares of capital stock
of WorkGroup Systems Limited.
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 thereunto duly authorized on August
13, 1996.
DATAWATCH CORPORATION
/s/Bruce R. Gardner
Bruce R. Gardner
Executive Vice President,
Treasurer, and Director
(Principal Financial and
duly authorized officer)
EXHIBIT 10.1
EXECUTIVE AGREEMENT
THIS AGREEMENT dated as of April 11, 1996 by and between
Datawatch Corporation, a Delaware corporation (the "Corporation")
and Andrew W. Mathews (the "Executive").
WITNESSETH:
A. The Corporation considers it essential to the best
interests of the Corporation and its stockholders that its
management be encouraged to remain with the Corporation and to
continue to devote full attention to the Corporation's business
in the event that there is a likelihood of a change of control of
the Corporation. In this connection, the Corporation recognizes
that the possibility of a change in control and the uncertainty
and questions which it may raise among management may result in
the departure or distraction of management personnel to the
detriment of the Corporation and its stockholders. Accordingly,
the Corporation's Board of Directors (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the
Corporation's management to their assigned duties without
distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control
of the Corporation.
B. The Executive is a key executive of the Corporation,
and the Corporation believes that the Executive has made valuable
contributions to the productivity and profitability of the
Corporation.
C. In the event that the Corporation enters into a written
letter of intent or other written agreement (each, a "Business
Combination Agreement") with a third party (including such
party's affiliates, an "Acquiring Party") concerning a possible
business combination by such Acquiring Party with, or acquisition
by such Acquiring Party of equity securities of, the Corporation,
the Board believes it imperative that the Corporation and the
Board be able to rely upon the Executive to continue in his
position and that the Corporation be able to receive and rely
upon his advice, if so requested, as to the best interests of the
Corporation and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by the
Corporation entering into a Business Combination Agreement.
D. Should the Corporation enter into a Business
Combination Agreement, in addition to the Executive's regular
duties, he may be called upon to assist in the assessment of such
Business Combination Agreement, advise management and the Board
as to whether such Business Combination Agreement is in the best
interests of the Corporation and its stockholders, and to take
such other actions as the Board might determine to be
appropriate.
NOW, THEREFORE, to assure the Corporation that it will have
the continued undivided attention and services of the Executive
and the availability of his advice and counsel notwithstanding
the possibility or threat of a change of control of the
Corporation, and to induce the Executive to remain in the employ
of the Corporation, and for other good and valuable
consideration, the Corporation and the Executive agree as
follows:
1. Operation of Agreement. This Agreement shall commence
on the date hereof (the "Effective Date") and shall continue in
effect through September 30, 1997; provided, however, that (i)
commencing on October 1, 1997 and each October 1 thereafter, the
term of this Agreement shall automatically be extended for one
additional year, without further action on the part of the
parties hereto, unless either party gives written notice of
termination to the other party not later than the immediately
preceding June 30, and (ii) if a "Change in Control" (as defined
in Section 4) of the Corporation occurs during the original or
extended term of this Agreement, this Agreement shall continue in
effect for a period of eighteen (18) months beyond the month in
which such Change in Control occurs, provided, however, so long
as the Executive continues to be employed by the Corporation,
this Agreement shall be automatically extended from year to year,
without further action on the part of the parties hereto..
2. Employment. Subject to Section 3 hereof, the
Corporation and the Executive agree that so long as the Executive
is employed by the Corporation, the Executive shall perform such
executive duties and responsibilities as were being performed by
the Executive immediately prior to the Effective Date or
appropriate comparable duties and responsibilities, as may be
determined by the Board in response to changing business
requirements. The Executive agrees that so long as he is
employed by the Corporation he shall devote his full business
time and efforts to his executive duties and responsibilities.
In the event that the Corporation enters into a Business
Combination Agreement which, if effected, will result in a Change
of Control (as defined in Section 4), the Executive agrees that
he will not voluntarily leave the employ of the Corporation, and
will render the services contemplated in the recitals to this
Agreement, and the Corporation agrees that it will not terminate
the employment of the Executive for any reason [other than for
Cause (as such term is defined in Section 6)] until the earlier
of (i) in the opinion of the Board (which shall be binding and
conclusive on the Executive), the Business Combination Agreement
has been abandoned or terminated, or (ii) until after such a
Change of Control has been effected, or (iii) 120 calendar days
from the date of the execution of a Business Combination
Agreement.
3. Termination of Employment. Except with respect to the
specific undertakings herein upon a Qualified Termination, the
Executive shall be an at-will employee of the Corporation.
Subject to the last sentence of Section 2, either party shall
have the right to terminate Executive's employment upon notice to
the other party, and, in the case of termination by the
Corporation, such termination shall be in accordance with the
Corporation's normal and customary termination practices for
executive employees. If the Executive shall terminate his
employment under circumstances constituting a Qualifying
Termination (as defined in Section 6) the obligations and rights
of the Corporation as set forth in Sections 6, 7 and the
following Sections shall apply. In the event of any termination,
the Corporation's benefit obligations under Section 5 hereof, and
applicable laws, shall apply.
4. Change of Control. For purposes of this Agreement, a
"Change in Control" means the occurrence of any of the following
events:
(a) The Corporation is merged or consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding securities of such surviving,
resulting or reorganized corporation or person immediately
after such transaction is held in the aggregate by the
holders of the then-outstanding securities entitled to vote
generally in the election of directors of the Corporation
("Voting Stock") immediately prior to such transaction;
(b) The Corporation sells or otherwise transfers all or
substantially all of its assets to any other corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale or transfer;
(c) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), disclosing that any
"person" (as such term is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
"beneficial owner" (as such term is used in Rule 13d-3 under
the Exchange Act) of securities representing 35% or more of
the Voting Stock of the Corporation;
(d) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein) that a change in control of the Corporation has
occurred; or
(e) If during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of
each director of the Corporation first elected during such
period was approved by a vote of at least a majority of the
directors then still in office who were directors of the
Corporation at the beginning of any such period;
provided, however, that a "Change in Control" shall not be deemed
to have occurred for purposes of this Agreement solely because
(i) the Corporation, (ii) an entity in which the Corporation
directly or indirectly beneficially owns 50% or more of the
voting securities, or (iii) any Corporation-sponsored employee
stock ownership plan or any other employee benefit plan of the
Corporation, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report) under the Exchange Act, disclosing
beneficial ownership by it of shares of Voting Stock or because
the Corporation reports that a change in control of the
Corporation has occurred by reason of such beneficial ownership.
5. Compensation, Compensation Plans, Perquisites. So long
as the Executive is employed by the Corporation, the Executive
shall be compensated as follows:
(a) He shall receive an annual base salary at a rate
which is not less than his rate of annual base salary
immediately prior to the Effective Date, with the opportunity
for increases from time to time thereafter which are in
accordance with the Corporation's regular practices.
(b) He shall be eligible to participate on a reasonable
basis in any incentive compensation plans, the nature and
terms of such plan(s) shall be determined in the sole
discretion of the Board and the Compensation Committee.
(c) He shall be entitled to receive employee benefits
and perquisites provided by the Corporation equivalent to the
benefits and perquisites to which he was entitled immediately
prior to the Effective Date. Such benefits and perquisites
shall include, but not be limited to, the benefits and
perquisites provided under the Corporation's Section 401(k)
profit sharing plan; its life, accident, health and dental
insurance and medical reimbursement plans; and various fringe
benefits.
6. Termination. The term "Qualifying Termination" shall
mean (A) termination by the Corporation of the employment of the
Executive with the Corporation following a Change of Control or
deemed to be following a Change of Control as set forth in
Section 18 for any reason [other than for Cause, as hereinafter
defined,] (B) termination as a result of resignation by the
Executive, for any or no reason, at any time after eighteen (18)
months following a Change in Control, or (BC) termination as the
result of resignation by the Executive upon the occurrence of any
of the following events following a Change of Control or deemed
to be following a Change of Control as set forth in Section 18:
(a) A reduction in the Executive's annual base salary
referred to in Section 5(a) or a termination of, or
significant reduction in, the Executive's employee benefits
and perquisites referred to in Section 5(c), in each case, as
in effect immediately prior to the Change of Control;
(b) Any failure by the Corporation to pay compensation
and benefits to the Executive within seven (7) calendar days
of the date on which such payments are due, or any breach of
any other provision of this Agreement by the Corporation
which is not remedied within twenty (20) calendar days
following written notice of such breach to the Corporation by
the Executive;
(c) A move of the location of the Executive's office to
a location more than fifty (50) miles from the area in which
it was located immediately prior to the Change of Control;
(d) A requirement that the Executive travel
significantly more than the Executive was required to travel
immediately prior to the Change of Control (it being
understood that the resignation of the Executive based on a
requirement of travel to or from an Acquiring Party's
regional or central office or headquarters shall not be a
Qualifying Termination);
(e) Without the express written consent of the
Executive, the assignment of the Executive to duties
substantially inconsistent with his duties with the
Corporation immediately prior to the Change in Control, or a
substantial reduction of his duties (it being understood,
however, that the Executive may, without his consent, be
assigned to a position with relatively lower status or
authority than the position of the Executive with the
Corporation immediately prior to the Change in Control); and
(f) Failure of the Corporation to obtain the written
agreement of any successor to the Corporation to be bound by
the provisions of this Agreement as if such successor were
the Corporation.
[For purposes of this Agreement, "Cause" means: (a) the
Executive's conviction of any crime (whether or not involving the
Corporation) which constitutes a felony in the jurisdiction
involved (other than unintentional motor vehicle felonies);
(ba) any intentional act of theft, fraud or embezzlement by the
Executive in connection with his work with the Corporation; or
(cb) the Executive's continuing, repeated and willful failure or
refusal to perform his duties and services under this Agreement
(other than due to his incapacity due to illness or injury),
provided that such failure or refusal continues uncorrected for a
period of thirty (30) calendar days after the Executive shall
have received written notice from the Board stating with
specificity the nature of such failure or refusal.
Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire Board
at a meeting of the Board called and held for (but not
necessarily exclusively for) that purpose (after reasonable
notice to Executive and an opportunity for Executive, together
with counsel of his choice, to be heard by the Board) finding
that Executive has, in the good faith opinion of the Board,
engaged in conduct constituting Cause and specifying the
particulars thereof in reasonable detail.]
7. Termination Payment. In the event of a Qualifying
Termination, and subject to reduction as provided in Section 8 of
this Agreement, the Corporation shall pay to the Executive (or in
the event of the Executive's death after a Qualifying
Termination, to his beneficiaries, heirs or estate) a lump sum
amount (the "Termination Payment") equal to (A) three times the
sum of (i) the Executive's annual base salary as in effect
immediately prior to the Change in Control and (ii) the highest
annual bonus paid to the Executive by the Corporation during the
five most recently completed fiscal years of the Corporation
ending immediately prior to the Change in Control, decreased by
(B) the product of (i) the quotient obtained by dividing (x) the
amount determined in (A) by (y) thirty-six and (ii) the number
equal to (but in no event greater than eighteen) the number of
full months between the date of the Change in Control and the
date of the Qualifying Termination. Such Termination Payment
shall be paid to the Executive within [ten (10) calendar days]
after the date of the Qualifying Termination.
8. Certain Reduction of Payments by the Corporation. If,
in connection with a Change in Control, (a) the Termination
Payment, or (b) any payment or benefit received or to be received
by the Executive pursuant to any other plan, arrangement or
agreement (such payments or benefits together with the
Termination Payments, the "Total Payments") would constitute (in
whole or in part) an "excess parachute payment" within the
meaning of Section 280G(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), then the amount of the Termination
Payment shall be reduced until the aggregate "present value" (as
that term is defined in section 28OG(d)(4) of the Code using the
applicable federal rate in effect on the date of this Agreement)
of the Total Payments is such that no part of the Total Payments
constitutes an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.
9. No Mitigation Obligation. The parties hereto expressly
agree that the payment of the Termination Payments by the
Corporation to the Executive in accordance with the terms of this
Agreement will be liquidated damages, and that the Executive
shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the
Executive.
10. Confidentiality. The Executive agrees that during and
after his employment with the Corporation, the Executive shall
continue to comply with the provisions of the Proprietary
Information and Inventions Agreement between the Executive and
the Corporation.
11. Legal Fees and Expenses. It is the intent of the
Corporation that the Executive not be required to incur the
expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly,
if it should appear to the Executive that the Corporation has
failed to comply with any of its obligations under this Agreement
or in the event that the Corporation or any other person takes
any action to declare this Agreement void or unenforceable, or
institutes any litigation designed to deny, or to recover from,
the Executive the benefits intended to be provided to the
Executive hereunder, the Corporation irrevocably authorizes the
Executive from time to time to retain counsel of his choice, at
the expense of the Corporation as hereinafter provided, to
represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or
against the Corporation or any director, officer, stockholder or
other person affiliated with the Corporation, in any
jurisdiction. The Corporation shall pay or cause to be paid and
shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by the Executive as a result
of the Corporation's failure to perform this Agreement or any
provision hereof or as a result of the Corporation or any person
contesting the validity or enforceability of this Agreement or
any provision hereof as aforesaid.
12. Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient
if in writing and if sent by personal delivery or by facsimile,
such facsimile to be followed by a copy sent by regular mail, in
the case of Executive to the last address he has filed in writing
with the Corporation or, in the case of the Corporation, to the
Board of Directors with a copy to the Secretary of the
Corporation at its principal executive offices.
13. Non-Alienation. The Executive shall not have any right
to pledge, hypothecate, anticipate or in any way create a lien or
security interest upon any amounts provided under this Agreement;
and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts,
or by operation of law, except by will or the laws of descent and
distribution.
14. No Set-off. In the event of a Qualifying Termination
of the Executive's employment hereunder, the Corporation may not
set-off or withhold against any termination payments due to the
Executive the amount of any claims it may have against the
Executive except any amounts for borrowed money or advances owing
to the Corporation by the Executive as of the date of such
Qualifying Termination.
15. Amendment. This Agreement may be amended or cancelled
by mutual agreement of the parties in writing without the consent
of any other person and, so long as the Executive lives, no
person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
16. Successor to the Corporation. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the Corporation and any successor of the
Corporation; provided, however, that the Corporation shall obtain
the written agreement of any successor of the Corporation to be
bound by the provisions of this Agreement as if the successor
were the Corporation and for purposes of this Agreement, any
successor of the Corporation shall be deemed to be the
"Corporation" for all purposes. In the event of the death of the
Executive after a Qualifying Termination, the beneficiaries,
heirs or estate of the Executive, as appropriate, shall be
entitled to enforce the provisions of Section 7 hereof.
17. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason in any jurisdiction, the remaining
provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect and any such invalid or
unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
18. Employment Rights. Nothing expressed or implied in
this Agreement shall create any right or duty on the part of the
Corporation or the Executive to have the Executive remain in the
employment of the Corporation prior to any Change in Control the
Corporation entering into a Business Combination Agreement;
provided, however, that if there is any termination of the
Executive's employment which would constitute a Qualifying
Termination if it occurred after a Change of Control and such
termination follows the commencement of a substantive discussion
with a third person that ultimately results in a Change in
Control, such termination shall be deemed to be following a
Change in Control for purposes of this Agreement.
19. Termination of Agreement. This Agreement shall
terminate if the Executive's employment by the Corporation is
terminated in any manner other than a Qualifying Termination.
20. Miscellaneous. As used throughout this Agreement, the
masculine pronoun has been used for convenience only. It is
intended to refer equally to men and women. Moreover the use of
the singular term throughout with respect to individuals or
persons is intended to include the plural form. This Agreement
shall be construed by the laws of the United States of America
and the Commonwealth of Massachusetts.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors,
the Corporation has caused these presents to be executed in its
name on its behalf, and its corporate seal to be hereunto affixed
and attested by its Secretary, or Assistant Secretary, all as of
the day and year first above written.
(SEAL)
DATAWATCH CORPORATION
ATTEST:
By: /s/ Bruce R. Gardner By:/s/Thomas R. Foley
Title: Assistant Secretary Name: Thomas R. Foley
Title: President and Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ Julie Caruso /s/Andrew W. Mathews
Andrew W. Mathews
EXHIBIT 10.2
EXECUTIVE AGREEMENT
THIS AGREEMENT dated as of April 11, 1996 by and between
Datawatch Corporation, a Delaware corporation (the "Corporation")
and Marco D. Peterson (the "Executive").
WITNESSETH:
A. The Corporation considers it essential to the best
interests of the Corporation and its stockholders that its
management be encouraged to remain with the Corporation and to
continue to devote full attention to the Corporation's business
in the event that there is a likelihood of a change of control of
the Corporation. In this connection, the Corporation recognizes
that the possibility of a change in control and the uncertainty
and questions which it may raise among management may result in
the departure or distraction of management personnel to the
detriment of the Corporation and its stockholders. Accordingly,
the Corporation's Board of Directors (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the
Corporation's management to their assigned duties without
distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control
of the Corporation.
B. The Executive is a key executive of the Corporation,
and the Corporation believes that the Executive has made valuable
contributions to the productivity and profitability of the
Corporation.
C. In the event that the Corporation enters into a written
letter of intent or other written agreement (each, a "Business
Combination Agreement") with a third party (including such
party's affiliates, an "Acquiring Party") concerning a possible
business combination by such Acquiring Party with, or acquisition
by such Acquiring Party of equity securities of, the Corporation,
the Board believes it imperative that the Corporation and the
Board be able to rely upon the Executive to continue in his
position and that the Corporation be able to receive and rely
upon his advice, if so requested, as to the best interests of the
Corporation and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by the
Corporation entering into a Business Combination Agreement.
D. Should the Corporation enter into a Business
Combination Agreement, in addition to the Executive's regular
duties, he may be called upon to assist in the assessment of such
Business Combination Agreement, advise management and the Board
as to whether such Business Combination Agreement is in the best
interests of the Corporation and its stockholders, and to take
such other actions as the Board might determine to be
appropriate.
NOW, THEREFORE, to assure the Corporation that it will have
the continued undivided attention and services of the Executive
and the availability of his advice and counsel notwithstanding
the possibility or threat of a change of control of the
Corporation, and to induce the Executive to remain in the employ
of the Corporation, and for other good and valuable
consideration, the Corporation and the Executive agree as
follows:
1. Operation of Agreement. This Agreement shall commence
on the date hereof (the "Effective Date") and shall continue in
effect through September 30, 1997; provided, however, that (i)
commencing on October 1, 1997 and each October 1 thereafter, the
term of this Agreement shall automatically be extended for one
additional year, without further action on the part of the
parties hereto, unless either party gives written notice of
termination to the other party not later than the immediately
preceding June 30, and (ii) if a "Change in Control" (as defined
in Section 4) of the Corporation occurs during the original or
extended term of this Agreement, this Agreement shall continue in
effect for a period of eighteen (18) months beyond the month in
which such Change in Control occurs, provided, however, so long
as the Executive continues to be employed by the Corporation,
this Agreement shall be automatically extended from year to year,
without further action on the part of the parties hereto..
2. Employment. Subject to Section 3 hereof, the
Corporation and the Executive agree that so long as the Executive
is employed by the Corporation, the Executive shall perform such
executive duties and responsibilities as were being performed by
the Executive immediately prior to the Effective Date or
appropriate comparable duties and responsibilities, as may be
determined by the Board in response to changing business
requirements. The Executive agrees that so long as he is
employed by the Corporation he shall devote his full business
time and efforts to his executive duties and responsibilities.
In the event that the Corporation enters into a Business
Combination Agreement which, if effected, will result in a Change
of Control (as defined in Section 4), the Executive agrees that
he will not voluntarily leave the employ of the Corporation, and
will render the services contemplated in the recitals to this
Agreement, and the Corporation agrees that it will not terminate
the employment of the Executive for any reason [other than for
Cause (as such term is defined in Section 6)] until the earlier
of (i) in the opinion of the Board (which shall be binding and
conclusive on the Executive), the Business Combination Agreement
has been abandoned or terminated, or (ii) until after such a
Change of Control has been effected, or (iii) 120 calendar days
from the date of the execution of a Business Combination
Agreement.
3. Termination of Employment. Except with respect to the
specific undertakings herein upon a Qualified Termination, the
Executive shall be an at-will employee of the Corporation.
Subject to the last sentence of Section 2, either party shall
have the right to terminate Executive's employment upon notice to
the other party, and, in the case of termination by the
Corporation, such termination shall be in accordance with the
Corporation's normal and customary termination practices for
executive employees. If the Executive shall terminate his
employment under circumstances constituting a Qualifying
Termination (as defined in Section 6) the obligations and rights
of the Corporation as set forth in Sections 6, 7 and the
following Sections shall apply. In the event of any termination,
the Corporation's benefit obligations under Section 5 hereof, and
applicable laws, shall apply.
4. Change of Control. For purposes of this Agreement, a
"Change in Control" means the occurrence of any of the following
events:
(a) The Corporation is merged or consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding securities of such surviving,
resulting or reorganized corporation or person immediately
after such transaction is held in the aggregate by the
holders of the then-outstanding securities entitled to vote
generally in the election of directors of the Corporation
("Voting Stock") immediately prior to such transaction;
(b) The Corporation sells or otherwise transfers all or
substantially all of its assets to any other corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale or transfer;
(c) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), disclosing that any
"person" (as such term is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
"beneficial owner" (as such term is used in Rule 13d-3 under
the Exchange Act) of securities representing 35% or more of
the Voting Stock of the Corporation;
(d) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein) that a change in control of the Corporation has
occurred; or
(e) If during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of
each director of the Corporation first elected during such
period was approved by a vote of at least a majority of the
directors then still in office who were directors of the
Corporation at the beginning of any such period;
provided, however, that a "Change in Control" shall not be deemed
to have occurred for purposes of this Agreement solely because
(i) the Corporation, (ii) an entity in which the Corporation
directly or indirectly beneficially owns 50% or more of the
voting securities, or (iii) any Corporation-sponsored employee
stock ownership plan or any other employee benefit plan of the
Corporation, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report) under the Exchange Act, disclosing
beneficial ownership by it of shares of Voting Stock or because
the Corporation reports that a change in control of the
Corporation has occurred by reason of such beneficial ownership.
5. Compensation, Compensation Plans, Perquisites. So long
as the Executive is employed by the Corporation, the Executive
shall be compensated as follows:
(a) He shall receive an annual base salary at a rate
which is not less than his rate of annual base salary
immediately prior to the Effective Date, with the opportunity
for increases from time to time thereafter which are in
accordance with the Corporation's regular practices.
(b) He shall be eligible to participate on a reasonable
basis in any incentive compensation plans, the nature and
terms of such plan(s) shall be determined in the sole
discretion of the Board and the Compensation Committee.
(c) He shall be entitled to receive employee benefits
and perquisites provided by the Corporation equivalent to the
benefits and perquisites to which he was entitled immediately
prior to the Effective Date. Such benefits and perquisites
shall include, but not be limited to, the benefits and
perquisites provided under the Corporation's Section 401(k)
profit sharing plan; its life, accident, health and dental
insurance and medical reimbursement plans; and various fringe
benefits.
6. Termination. The term "Qualifying Termination" shall
mean (A) termination by the Corporation of the employment of the
Executive with the Corporation following a Change of Control or
deemed to be following a Change of Control as set forth in
Section 18 for any reason [other than for Cause, as hereinafter
defined,] (B) termination as a result of resignation by the
Executive, for any or no reason, at any time after eighteen (18)
months following a Change in Control, or (BC) termination as the
result of resignation by the Executive upon the occurrence of any
of the following events following a Change of Control or deemed
to be following a Change of Control as set forth in Section 18:
(a) A reduction in the Executive's annual base salary
referred to in Section 5(a) or a termination of, or
significant reduction in, the Executive's employee benefits
and perquisites referred to in Section 5(c), in each case, as
in effect immediately prior to the Change of Control;
(b) Any failure by the Corporation to pay compensation
and benefits to the Executive within seven (7) calendar days
of the date on which such payments are due, or any breach of
any other provision of this Agreement by the Corporation
which is not remedied within twenty (20) calendar days
following written notice of such breach to the Corporation by
the Executive;
(c) A move of the location of the Executive's office to
a location more than fifty (50) miles from the area in which
it was located immediately prior to the Change of Control;
(d) A requirement that the Executive travel
significantly more than the Executive was required to travel
immediately prior to the Change of Control (it being
understood that the resignation of the Executive based on a
requirement of travel to or from an Acquiring Party's
regional or central office or headquarters shall not be a
Qualifying Termination);
(e) Without the express written consent of the
Executive, the assignment of the Executive to duties
substantially inconsistent with his duties with the
Corporation immediately prior to the Change in Control, or a
substantial reduction of his duties (it being understood,
however, that the Executive may, without his consent, be
assigned to a position with relatively lower status or
authority than the position of the Executive with the
Corporation immediately prior to the Change in Control); and
(f) Failure of the Corporation to obtain the written
agreement of any successor to the Corporation to be bound by
the provisions of this Agreement as if such successor were
the Corporation.
[For purposes of this Agreement, "Cause" means: (a) the
Executive's conviction of any crime (whether or not involving the
Corporation) which constitutes a felony in the jurisdiction
involved (other than unintentional motor vehicle felonies);
(ba) any intentional act of theft, fraud or embezzlement by the
Executive in connection with his work with the Corporation; or
(cb) the Executive's continuing, repeated and willful failure or
refusal to perform his duties and services under this Agreement
(other than due to his incapacity due to illness or injury),
provided that such failure or refusal continues uncorrected for a
period of thirty (30) calendar days after the Executive shall
have received written notice from the Board stating with
specificity the nature of such failure or refusal.
Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire Board
at a meeting of the Board called and held for (but not
necessarily exclusively for) that purpose (after reasonable
notice to Executive and an opportunity for Executive, together
with counsel of his choice, to be heard by the Board) finding
that Executive has, in the good faith opinion of the Board,
engaged in conduct constituting Cause and specifying the
particulars thereof in reasonable detail.]
7. Termination Payment. In the event of a Qualifying
Termination, and subject to reduction as provided in Section 8 of
this Agreement, the Corporation shall pay to the Executive (or in
the event of the Executive's death after a Qualifying
Termination, to his beneficiaries, heirs or estate) a lump sum
amount (the "Termination Payment") equal to (A) three times the
sum of (i) the Executive's annual base salary as in effect
immediately prior to the Change in Control and (ii) the highest
annual bonus paid to the Executive by the Corporation during the
five most recently completed fiscal years of the Corporation
ending immediately prior to the Change in Control, decreased by
(B) the product of (i) the quotient obtained by dividing (x) the
amount determined in (A) by (y) thirty-six and (ii) the number
equal to (but in no event greater than eighteen) the number of
full months between the date of the Change in Control and the
date of the Qualifying Termination. Such Termination Payment
shall be paid to the Executive within [ten (10) calendar days]
after the date of the Qualifying Termination.
8. Certain Reduction of Payments by the Corporation. If,
in connection with a Change in Control, (a) the Termination
Payment, or (b) any payment or benefit received or to be received
by the Executive pursuant to any other plan, arrangement or
agreement (such payments or benefits together with the
Termination Payments, the "Total Payments") would constitute (in
whole or in part) an "excess parachute payment" within the
meaning of Section 280G(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), then the amount of the Termination
Payment shall be reduced until the aggregate "present value" (as
that term is defined in section 28OG(d)(4) of the Code using the
applicable federal rate in effect on the date of this Agreement)
of the Total Payments is such that no part of the Total Payments
constitutes an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.
9. No Mitigation Obligation. The parties hereto expressly
agree that the payment of the Termination Payments by the
Corporation to the Executive in accordance with the terms of this
Agreement will be liquidated damages, and that the Executive
shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the
Executive.
10. Confidentiality. The Executive agrees that during and
after his employment with the Corporation, the Executive shall
continue to comply with the provisions of the Proprietary
Information and Inventions Agreement between the Executive and
the Corporation.
11. Legal Fees and Expenses. It is the intent of the
Corporation that the Executive not be required to incur the
expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly,
if it should appear to the Executive that the Corporation has
failed to comply with any of its obligations under this Agreement
or in the event that the Corporation or any other person takes
any action to declare this Agreement void or unenforceable, or
institutes any litigation designed to deny, or to recover from,
the Executive the benefits intended to be provided to the
Executive hereunder, the Corporation irrevocably authorizes the
Executive from time to time to retain counsel of his choice, at
the expense of the Corporation as hereinafter provided, to
represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or
against the Corporation or any director, officer, stockholder or
other person affiliated with the Corporation, in any
jurisdiction. The Corporation shall pay or cause to be paid and
shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by the Executive as a result
of the Corporation's failure to perform this Agreement or any
provision hereof or as a result of the Corporation or any person
contesting the validity or enforceability of this Agreement or
any provision hereof as aforesaid.
12. Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient
if in writing and if sent by personal delivery or by facsimile,
such facsimile to be followed by a copy sent by regular mail, in
the case of Executive to the last address he has filed in writing
with the Corporation or, in the case of the Corporation, to the
Board of Directors with a copy to the Secretary of the
Corporation at its principal executive offices.
13. Non-Alienation. The Executive shall not have any right
to pledge, hypothecate, anticipate or in any way create a lien or
security interest upon any amounts provided under this Agreement;
and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts,
or by operation of law, except by will or the laws of descent and
distribution.
14. No Set-off. In the event of a Qualifying Termination
of the Executive's employment hereunder, the Corporation may not
set-off or withhold against any termination payments due to the
Executive the amount of any claims it may have against the
Executive except any amounts for borrowed money or advances owing
to the Corporation by the Executive as of the date of such
Qualifying Termination.
15. Amendment. This Agreement may be amended or cancelled
by mutual agreement of the parties in writing without the consent
of any other person and, so long as the Executive lives, no
person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
16. Successor to the Corporation. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the Corporation and any successor of the
Corporation; provided, however, that the Corporation shall obtain
the written agreement of any successor of the Corporation to be
bound by the provisions of this Agreement as if the successor
were the Corporation and for purposes of this Agreement, any
successor of the Corporation shall be deemed to be the
"Corporation" for all purposes. In the event of the death of the
Executive after a Qualifying Termination, the beneficiaries,
heirs or estate of the Executive, as appropriate, shall be
entitled to enforce the provisions of Section 7 hereof.
17. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason in any jurisdiction, the remaining
provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect and any such invalid or
unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
18. Employment Rights. Nothing expressed or implied in
this Agreement shall create any right or duty on the part of the
Corporation or the Executive to have the Executive remain in the
employment of the Corporation prior to any Change in Control the
Corporation entering into a Business Combination Agreement;
provided, however, that if there is any termination of the
Executive's employment which would constitute a Qualifying
Termination if it occurred after a Change of Control and such
termination follows the commencement of a substantive discussion
with a third person that ultimately results in a Change in
Control, such termination shall be deemed to be following a
Change in Control for purposes of this Agreement.
19. Termination of Agreement. This Agreement shall
terminate if the Executive's employment by the Corporation is
terminated in any manner other than a Qualifying Termination.
20. Miscellaneous. As used throughout this Agreement, the
masculine pronoun has been used for convenience only. It is
intended to refer equally to men and women. Moreover the use of
the singular term throughout with respect to individuals or
persons is intended to include the plural form. This Agreement
shall be construed by the laws of the United States of America
and the Commonwealth of Massachusetts.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors,
the Corporation has caused these presents to be executed in its
name on its behalf, and its corporate seal to be hereunto affixed
and attested by its Secretary, or Assistant Secretary, all as of
the day and year first above written.
(SEAL)
DATAWATCH CORPORATION
ATTEST:
By: /s/ Bruce R. Gardner By: /s/ Thomas R. Foley
Title: Assistant Secretary Name: Thomas R. Foley
Title: President and Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ Julie Caruso /s/ Marco D. Peterson
Marco D. Peterson
EXHIBIT 10.3
EXECUTIVE AGREEMENT
THIS AGREEMENT dated as of April 11, 1996 by and between
Datawatch Corporation, a Delaware corporation (the "Corporation")
and Bruce R. Gardner (the "Executive").
WITNESSETH:
A. The Corporation considers it essential to the best
interests of the Corporation and its stockholders that its
management be encouraged to remain with the Corporation and to
continue to devote full attention to the Corporation's business
in the event that there is a likelihood of a change of control of
the Corporation. In this connection, the Corporation recognizes
that the possibility of a change in control and the uncertainty
and questions which it may raise among management may result in
the departure or distraction of management personnel to the
detriment of the Corporation and its stockholders. Accordingly,
the Corporation's Board of Directors (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the
Corporation's management to their assigned duties without
distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control
of the Corporation.
B. The Executive is a key executive of the Corporation,
and the Corporation believes that the Executive has made valuable
contributions to the productivity and profitability of the
Corporation.
C. In the event that the Corporation enters into a written
letter of intent or other written agreement (each, a "Business
Combination Agreement") with a third party (including such
party's affiliates, an "Acquiring Party") concerning a possible
business combination by such Acquiring Party with, or acquisition
by such Acquiring Party of equity securities of, the Corporation,
the Board believes it imperative that the Corporation and the
Board be able to rely upon the Executive to continue in his
position and that the Corporation be able to receive and rely
upon his advice, if so requested, as to the best interests of the
Corporation and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by the
Corporation entering into a Business Combination Agreement.
D. Should the Corporation enter into a Business
Combination Agreement, in addition to the Executive's regular
duties, he may be called upon to assist in the assessment of such
Business Combination Agreement, advise management and the Board
as to whether such Business Combination Agreement is in the best
interests of the Corporation and its stockholders, and to take
such other actions as the Board might determine to be
appropriate.
NOW, THEREFORE, to assure the Corporation that it will have
the continued undivided attention and services of the Executive
and the availability of his advice and counsel notwithstanding
the possibility or threat of a change of control of the
Corporation, and to induce the Executive to remain in the employ
of the Corporation, and for other good and valuable
consideration, the Corporation and the Executive agree as
follows:
1. Operation of Agreement. This Agreement shall commence
on the date hereof (the "Effective Date") and shall continue in
effect through September 30, 1997; provided, however, that (i)
commencing on October 1, 1997 and each October 1 thereafter, the
term of this Agreement shall automatically be extended for one
additional year, without further action on the part of the
parties hereto, unless either party gives written notice of
termination to the other party not later than the immediately
preceding June 30, and (ii) if a "Change in Control" (as defined
in Section 4) of the Corporation occurs during the original or
extended term of this Agreement, this Agreement shall continue in
effect for a period of thirty-six (36) months beyond the month in
which such Change in Control occurs, provided, however, that so
long as the Executive continues to be employed by the
Corporation, this Agreement shall be automatically extended from
year to year, without further action on the part of the parties
hereto.
2. Employment. Subject to Section 3 hereof, the
Corporation and the Executive agree that so long as the Executive
is employed by the Corporation, the Executive shall perform such
executive duties and responsibilities as were being performed by
the Executive immediately prior to the Effective Date or
appropriate comparable duties and responsibilities, as may be
determined by the Board in response to changing business
requirements. The Executive agrees that so long as he is
employed by the Corporation he shall devote substantially all of
his business time and efforts to his executive duties and
responsibilities. In the event that the Corporation enters into
a Business Combination Agreement which, if effected, will result
in a Change of Control (as defined in Section 4), the Executive
agrees that he will not voluntarily leave the employ of the
Corporation, and will render the services contemplated in the
recitals to this Agreement, and the Corporation agrees that it
will not terminate the employment of the Executive for any reason
[other than for Cause (as such term is defined in Section 6)]
until the earlier of (i) in the opinion of the Board (which shall
be binding and conclusive on the Executive), the Business
Combination Agreement has been abandoned or terminated, or
(ii) until after such a Change of Control has been effected, or
(iii) 120 calendar days from the date of the execution of a
Business Combination Agreement.
3. Termination of Employment. Except with respect to the
specific undertakings herein upon a Qualified Termination, the
Executive shall be an at-will employee of the Corporation.
Subject to the last sentence of Section 2, either party shall
have the right to terminate Executive's employment upon notice to
the other party, and, in the case of termination by the
Corporation, such termination shall be in accordance with the
Corporation's normal and customary termination practices for
executive employees. If the Executive shall terminate his
employment under circumstances constituting a Qualifying
Termination (as defined in Section 6) the obligations and rights
of the Corporation as set forth in Sections 6, 7 and the
following Sections shall apply. In the event of any termination,
the Corporation's benefit obligations under Section 5 hereof, and
applicable laws, shall apply.
4. Change of Control. For purposes of this Agreement, a
"Change in Control" means the occurrence of any of the following
events:
(a) The Corporation is merged or consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding securities of such surviving,
resulting or reorganized corporation or person immediately
after such transaction is held in the aggregate by the
holders of the then-outstanding securities entitled to vote
generally in the election of directors of the Corporation
("Voting Stock") immediately prior to such transaction;
(b) The Corporation sells or otherwise transfers all or
substantially all of its assets to any other corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale or transfer;
(c) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), disclosing that any
"person" (as such term is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
"beneficial owner" (as such term is used in Rule 13d-3 under
the Exchange Act) of securities representing 35% or more of
the Voting Stock of the Corporation;
(d) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein) that a change in control of the Corporation has
occurred; or
(e) If during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of
each director of the Corporation first elected during such
period was approved by a vote of at least a majority of the
directors then still in office who were directors of the
Corporation at the beginning of any such period;
provided, however, that a "Change in Control" shall not be deemed
to have occurred for purposes of this Agreement solely because
(i) the Corporation, (ii) an entity in which the Corporation
directly or indirectly beneficially owns 50% or more of the
voting securities, or (iii) any Corporation-sponsored employee
stock ownership plan or any other employee benefit plan of the
Corporation, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report) under the Exchange Act, disclosing
beneficial ownership by it of shares of Voting Stock or because
the Corporation reports that a change in control of the
Corporation has occurred by reason of such beneficial ownership.
5. Compensation, Compensation Plans, Perquisites. So long
as the Executive is employed by the Corporation, the Executive
shall be compensated as follows:
(a) He shall receive an annual base salary at a rate
which is not less than his rate of annual base salary
immediately prior to the Effective Date, with the opportunity
for increases from time to time thereafter which are in
accordance with the Corporation's regular practices.
(b) He shall be eligible to participate on a reasonable
basis in any incentive compensation plans, the nature and
terms of such plan(s) shall be determined in the sole
discretion of the Board and the Compensation Committee.
(c) He shall be entitled to receive employee benefits
and perquisites provided by the Corporation equivalent to the
benefits and perquisites to which he was entitled immediately
prior to the Effective Date. Such benefits and perquisites
shall include, but not be limited to, the benefits and
perquisites provided under the Corporation's Section 401(k)
profit sharing plan; its life, accident, health and dental
insurance and medical reimbursement plans; and various fringe
benefits.
6. Termination. The term "Qualifying Termination" shall
mean (A) termination by the Corporation of the employment of
the Executive with the Corporation following a Change of
Control or deemed to be following a Change of Control as set
forth in Section 18 for any reason [other than for Cause, as
hereinafter defined,] or (B) termination as a result of
resignation by the Executive, for any or no reason, at any
time following a Change in Control or deemed to be following
a Change of Control as set forth in Section 18.
[For purposes of this Agreement, "Cause" means: (a) the
Executive's conviction of any crime (whether or not involving the
Corporation) which constitutes a felony in the jurisdiction
involved (other than unintentional motor vehicle felonies);
(ba) any intentional act of theft, fraud or embezzlement by the
Executive in connection with his work with the Corporation; or
(cb) the Executive's continuing, repeated and willful failure or
refusal to perform his duties and services under this Agreement
(other than due to his incapacity due to illness or injury),
provided that such failure or refusal continues uncorrected for a
period of thirty (30) calendar days after the Executive shall
have received written notice from the Board stating with
specificity the nature of such failure or refusal.
Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire Board
at a meeting of the Board called and held for (but not
necessarily exclusively for) that purpose (after reasonable
notice to Executive and an opportunity for Executive, together
with counsel of his choice, to be heard by the Board) finding
that Executive has, in the good faith opinion of the Board,
engaged in conduct constituting Cause and specifying the
particulars thereof in reasonable detail.]
7. Termination Payment. In the event of a Qualifying
Termination, and subject to reduction as provided in Section 8 of
this Agreement, the Corporation shall pay to the Executive (or in
the event of the Executive's death after a Qualifying
Termination, to his beneficiaries, heirs or estate) a lump sum
amount equal to three times the sum of (i) the Executive's annual
base salary as in effect immediately prior to the Change in
Control and (ii) the highest annual bonus paid to the Executive
by the Corporation during the five most recently completed fiscal
years of the Corporation ending immediately prior to the Change
in Control (collectively, the "Termination Payment"). Such
Termination Payment shall be paid to the Executive within [ten
(10) calendar days] after the date of a Qualifying Termination.
8. Certain Reduction of Payments by the Corporation. If,
in connection with a Change in Control, (a) the Termination
Payment, or (b) any payment or benefit received or to be received
by the Executive pursuant to any other plan, arrangement or
agreement (such payments or benefits together with the
Termination Payments, the "Total Payments") would constitute (in
whole or in part) an "excess parachute payment" within the
meaning of Section 280G(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), then the amount of the Termination
Payment shall be reduced until the aggregate "present value" (as
that term is defined in section 28OG(d)(4) of the Code using the
applicable federal rate in effect on the date of this Agreement)
of the Total Payments is such that no part of the Total Payments
constitutes an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.
9. No Mitigation Obligation. The parties hereto expressly
agree that the payment of the Termination Payments by the
Corporation to the Executive in accordance with the terms of this
Agreement will be liquidated damages, and that the Executive
shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the
Executive.
10. Confidentiality. The Executive agrees that during and
after his employment with the Corporation, the Executive shall
continue to comply with the provisions of the Proprietary
Information and Inventions Agreement between the Executive and
the Corporation.
11. Legal Fees and Expenses. It is the intent of the
Corporation that the Executive not be required to incur the
expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly,
if it should appear to the Executive that the Corporation has
failed to comply with any of its obligations under this Agreement
or in the event that the Corporation or any other person takes
any action to declare this Agreement void or unenforceable, or
institutes any litigation designed to deny, or to recover from,
the Executive the benefits intended to be provided to the
Executive hereunder, the Corporation irrevocably authorizes the
Executive from time to time to retain counsel of his choice, at
the expense of the Corporation as hereinafter provided, to
represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or
against the Corporation or any director, officer, stockholder or
other person affiliated with the Corporation, in any
jurisdiction. The Corporation shall pay or cause to be paid and
shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by the Executive as a result
of the Corporation's failure to perform this Agreement or any
provision hereof or as a result of the Corporation or any person
contesting the validity or enforceability of this Agreement or
any provision hereof as aforesaid.
12. Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient
if in writing and if sent by personal delivery or by facsimile,
such facsimile to be followed by a copy sent by regular mail, in
the case of Executive to the last address he has filed in writing
with the Corporation or, in the case of the Corporation, to the
Board of Directors with a copy to the Secretary of the
Corporation at its principal executive offices.
13. Non-Alienation. The Executive shall not have any right
to pledge, hypothecate, anticipate or in any way create a lien or
security interest upon any amounts provided under this Agreement;
and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts,
or by operation of law, except by will or the laws of descent and
distribution.
14. No Set-off. In the event of a Qualifying Termination
of the Executive's employment hereunder, the Corporation may not
set-off or withhold against any termination payments due to the
Executive the amount of any claims it may have against the
Executive except any amounts for borrowed money or advances owing
to the Corporation by the Executive as of the date of such
Qualifying Termination.
15. Amendment. This Agreement may be amended or cancelled
by mutual agreement of the parties in writing without the consent
of any other person and, so long as the Executive lives, no
person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
16. Successor to the Corporation. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the Corporation and any successor of the
Corporation; provided, however, that the Corporation shall obtain
the written agreement of any successor of the Corporation to be
bound by the provisions of this Agreement as if the successor
were the Corporation and for purposes of this Agreement, any
successor of the Corporation shall be deemed to be the
"Corporation" for all purposes. In the event of the death of the
Executive after a Qualifying Termination, the beneficiaries,
heirs or estate of the Executive, as appropriate, shall be
entitled to enforce the provisions of Section 7 hereof.
17. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason in any jurisdiction, the remaining
provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect and any such invalid or
unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
18. Employment Rights. Nothing expressed or implied in
this Agreement shall create any right or duty on the part of the
Corporation or the Executive to have the Executive remain in the
employment of the Corporation prior to any Change in Control the
Corporation entering into a Business Combination Agreement;
provided, however, that if there is any termination of the
Executive's employment which would constitute a Qualifying
Termination if it occurred after a Change of Control and such
termination follows the commencement of a substantive discussion
with a third person that ultimately results in a Change in
Control, such termination shall be deemed to be following a
Change in Control for purposes of this Agreement.
19. Termination of Agreement. This Agreement shall
terminate if the Executive's employment by the Corporation is
terminated in any manner other than a Qualifying Termination.
20. Miscellaneous. As used throughout this Agreement, the
masculine pronoun has been used for convenience only. It is
intended to refer equally to men and women. Moreover the use of
the singular term throughout with respect to individuals or
persons is intended to include the plural form. This Agreement
shall be construed by the laws of the United States of America
and the Commonwealth of Massachusetts.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors,
the Corporation has caused these presents to be executed in its
name on its behalf, and its corporate seal to be hereunto affixed
and attested by its Secretary, or Assistant Secretary, all as of
the day and year first above written.
(SEAL)
DATAWATCH CORPORATION
ATTEST:
By: /s/ Bruce R. Gardner By: /s/ Thomas R. Foley
Title: Assistant Secretary Name: Thomas R. Foley
Title: President and Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ Julie Caruso /s/ Bruce R. Gardner
Bruce R. Gardner
EXHIBIT 10.4
EXECUTIVE AGREEMENT
THIS AGREEMENT dated as of April 11, 1996 by and between
Datawatch Corporation, a Delaware corporation (the "Corporation")
and Thomas R. Foley (the "Executive").
WITNESSETH:
A. The Corporation considers it essential to the best
interests of the Corporation and its stockholders that its
management be encouraged to remain with the Corporation and to
continue to devote full attention to the Corporation's business
in the event that there is a likelihood of a change of control of
the Corporation. In this connection, the Corporation recognizes
that the possibility of a change in control and the uncertainty
and questions which it may raise among management may result in
the departure or distraction of management personnel to the
detriment of the Corporation and its stockholders. Accordingly,
the Corporation's Board of Directors (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the
Corporation's management to their assigned duties without
distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control
of the Corporation.
B. The Executive is a key executive of the Corporation,
and the Corporation believes that the Executive has made valuable
contributions to the productivity and profitability of the
Corporation.
C. In the event that the Corporation enters into a written
letter of intent or other written agreement (each, a "Business
Combination Agreement") with a third party (including such
party's affiliates, an "Acquiring Party") concerning a possible
business combination by such Acquiring Party with, or acquisition
by such Acquiring Party of equity securities of, the Corporation,
the Board believes it imperative that the Corporation and the
Board be able to rely upon the Executive to continue in his
position and that the Corporation be able to receive and rely
upon his advice, if so requested, as to the best interests of the
Corporation and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by the
Corporation entering into a Business Combination Agreement.
D. Should the Corporation enter into a Business
Combination Agreement, in addition to the Executive's regular
duties, he may be called upon to assist in the assessment of such
Business Combination Agreement, advise management and the Board
as to whether such Business Combination Agreement is in the best
interests of the Corporation and its stockholders, and to take
such other actions as the Board might determine to be
appropriate.
NOW, THEREFORE, to assure the Corporation that it will have
the continued undivided attention and services of the Executive
and the availability of his advice and counsel notwithstanding
the possibility or threat of a change of control of the
Corporation, and to induce the Executive to remain in the employ
of the Corporation, and for other good and valuable
consideration, the Corporation and the Executive agree as
follows:
1. Operation of Agreement. This Agreement shall commence
on the date hereof (the "Effective Date") and shall continue in
effect through September 30, 1997; provided, however, that (i)
commencing on October 1, 1997 and each October 1 thereafter, the
term of this Agreement shall automatically be extended for one
additional year, without further action on the part of the
parties hereto, unless either party gives written notice of
termination to the other party not later than the immediately
preceding June 30, and (ii) if a "Change in Control" (as defined
in Section 4) of the Corporation occurs during the original or
extended term of this Agreement, this Agreement shall continue in
effect for a period of thirty-six (36) months beyond the month in
which such Change in Control occurs, provided, however, that so
long as the Executive continues to be employed by the
Corporation, this Agreement shall be automatically extended from
year to year, without further action on the part of the parties
hereto.
2. Employment. Subject to Section 3 hereof, the
Corporation and the Executive agree that so long as the Executive
is employed by the Corporation, the Executive shall perform such
executive duties and responsibilities as were being performed by
the Executive immediately prior to the Effective Date or
appropriate comparable duties and responsibilities, as may be
determined by the Board in response to changing business
requirements. The Executive agrees that so long as he is
employed by the Corporation he shall devote substantially all of
his business time and efforts to his executive duties and
responsibilities. In the event that the Corporation enters into
a Business Combination Agreement which, if effected, will result
in a Change of Control (as defined in Section 4), the Executive
agrees that he will not voluntarily leave the employ of the
Corporation, and will render the services contemplated in the
recitals to this Agreement, and the Corporation agrees that it
will not terminate the employment of the Executive for any reason
[other than for Cause (as such term is defined in Section 6)]
until the earlier of (i) in the opinion of the Board (which shall
be binding and conclusive on the Executive), the Business
Combination Agreement has been abandoned or terminated, or
(ii) until after such a Change of Control has been effected, or
(iii) 120 calendar days from the date of the execution of a
Business Combination Agreement.
3. Termination of Employment. Except with respect to the
specific undertakings herein upon a Qualified Termination, the
Executive shall be an at-will employee of the Corporation.
Subject to the last sentence of Section 2, either party shall
have the right to terminate Executive's employment upon notice to
the other party, and, in the case of termination by the
Corporation, such termination shall be in accordance with the
Corporation's normal and customary termination practices for
executive employees. If the Executive shall terminate his
employment under circumstances constituting a Qualifying
Termination (as defined in Section 6) the obligations and rights
of the Corporation as set forth in Sections 6, 7 and the
following Sections shall apply. In the event of any termination,
the Corporation's benefit obligations under Section 5 hereof, and
applicable laws, shall apply.
4. Change of Control. For purposes of this Agreement, a
"Change in Control" means the occurrence of any of the following
events:
(a) The Corporation is merged or consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding securities of such surviving,
resulting or reorganized corporation or person immediately
after such transaction is held in the aggregate by the
holders of the then-outstanding securities entitled to vote
generally in the election of directors of the Corporation
("Voting Stock") immediately prior to such transaction;
(b) The Corporation sells or otherwise transfers all or
substantially all of its assets to any other corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale or transfer;
(c) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), disclosing that any
"person" (as such term is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
"beneficial owner" (as such term is used in Rule 13d-3 under
the Exchange Act) of securities representing 35% or more of
the Voting Stock of the Corporation;
(d) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein) that a change in control of the Corporation has
occurred; or
(e) If during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of
each director of the Corporation first elected during such
period was approved by a vote of at least a majority of the
directors then still in office who were directors of the
Corporation at the beginning of any such period;
provided, however, that a "Change in Control" shall not be deemed
to have occurred for purposes of this Agreement solely because
(i) the Corporation, (ii) an entity in which the Corporation
directly or indirectly beneficially owns 50% or more of the
voting securities, or (iii) any Corporation-sponsored employee
stock ownership plan or any other employee benefit plan of the
Corporation, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report) under the Exchange Act, disclosing
beneficial ownership by it of shares of Voting Stock or because
the Corporation reports that a change in control of the
Corporation has occurred by reason of such beneficial ownership.
5. Compensation, Compensation Plans, Perquisites. So long
as the Executive is employed by the Corporation, the Executive
shall be compensated as follows:
(a) He shall receive an annual base salary at a rate
which is not less than his rate of annual base salary
immediately prior to the Effective Date, with the opportunity
for increases from time to time thereafter which are in
accordance with the Corporation's regular practices.
(b) He shall be eligible to participate on a reasonable
basis in any incentive compensation plans, the nature and
terms of such plan(s) shall be determined in the sole
discretion of the Board and the Compensation Committee.
(c) He shall be entitled to receive employee benefits
and perquisites provided by the Corporation equivalent to the
benefits and perquisites to which he was entitled immediately
prior to the Effective Date. Such benefits and perquisites
shall include, but not be limited to, the benefits and
perquisites provided under the Corporation's Section 401(k)
profit sharing plan; its life, accident, health and dental
insurance and medical reimbursement plans; and various fringe
benefits.
6. Termination. The term "Qualifying Termination" shall
mean (A) termination by the Corporation of the employment of
the Executive with the Corporation following a Change of
Control or deemed to be following a Change of Control as set
forth in Section 18 for any reason [other than for Cause, as
hereinafter defined,] or (B) termination as a result of
resignation by the Executive, for any or no reason, at any
time following a Change in Control or deemed to be following
a Change of Control as set forth in Section 18.
[For purposes of this Agreement, "Cause" means: (a) the
Executive's conviction of any crime (whether or not involving the
Corporation) which constitutes a felony in the jurisdiction
involved (other than unintentional motor vehicle felonies);
(ba) any intentional act of theft, fraud or embezzlement by the
Executive in connection with his work with the Corporation; or
(cb) the Executive's continuing, repeated and willful failure or
refusal to perform his duties and services under this Agreement
(other than due to his incapacity due to illness or injury),
provided that such failure or refusal continues uncorrected for a
period of thirty (30) calendar days after the Executive shall
have received written notice from the Board stating with
specificity the nature of such failure or refusal.
Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire Board
at a meeting of the Board called and held for (but not
necessarily exclusively for) that purpose (after reasonable
notice to Executive and an opportunity for Executive, together
with counsel of his choice, to be heard by the Board) finding
that Executive has, in the good faith opinion of the Board,
engaged in conduct constituting Cause and specifying the
particulars thereof in reasonable detail.]
7. Termination Payment. In the event of a Qualifying
Termination, and subject to reduction as provided in Section 8 of
this Agreement, the Corporation shall pay to the Executive (or in
the event of the Executive's death after a Qualifying
Termination, to his beneficiaries, heirs or estate) a lump sum
amount equal to three times the sum of (i) the Executive's annual
base salary as in effect immediately prior to the Change in
Control and (ii) the highest annual bonus paid to the Executive
by the Corporation during the five most recently completed fiscal
years of the Corporation ending immediately prior to the Change
in Control (collectively, the "Termination Payment"). Such
Termination Payment shall be paid to the Executive within [ten
(10) calendar days] after the date of a Qualifying Termination.
8. Certain Reduction of Payments by the Corporation. If,
in connection with a Change in Control, (a) the Termination
Payment, or (b) any payment or benefit received or to be received
by the Executive pursuant to any other plan, arrangement or
agreement (such payments or benefits together with the
Termination Payments, the "Total Payments") would constitute (in
whole or in part) an "excess parachute payment" within the
meaning of Section 280G(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), then the amount of the Termination
Payment shall be reduced until the aggregate "present value" (as
that term is defined in section 28OG(d)(4) of the Code using the
applicable federal rate in effect on the date of this Agreement)
of the Total Payments is such that no part of the Total Payments
constitutes an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.
9. No Mitigation Obligation. The parties hereto expressly
agree that the payment of the Termination Payments by the
Corporation to the Executive in accordance with the terms of this
Agreement will be liquidated damages, and that the Executive
shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the
Executive.
10. Confidentiality. The Executive agrees that during and
after his employment with the Corporation, the Executive shall
continue to comply with the provisions of the Proprietary
Information and Inventions Agreement between the Executive and
the Corporation.
11. Legal Fees and Expenses. It is the intent of the
Corporation that the Executive not be required to incur the
expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly,
if it should appear to the Executive that the Corporation has
failed to comply with any of its obligations under this Agreement
or in the event that the Corporation or any other person takes
any action to declare this Agreement void or unenforceable, or
institutes any litigation designed to deny, or to recover from,
the Executive the benefits intended to be provided to the
Executive hereunder, the Corporation irrevocably authorizes the
Executive from time to time to retain counsel of his choice, at
the expense of the Corporation as hereinafter provided, to
represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether by or
against the Corporation or any director, officer, stockholder or
other person affiliated with the Corporation, in any
jurisdiction. The Corporation shall pay or cause to be paid and
shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by the Executive as a result
of the Corporation's failure to perform this Agreement or any
provision hereof or as a result of the Corporation or any person
contesting the validity or enforceability of this Agreement or
any provision hereof as aforesaid.
12. Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient
if in writing and if sent by personal delivery or by facsimile,
such facsimile to be followed by a copy sent by regular mail, in
the case of Executive to the last address he has filed in writing
with the Corporation or, in the case of the Corporation, to the
Board of Directors with a copy to the Secretary of the
Corporation at its principal executive offices.
13. Non-Alienation. The Executive shall not have any right
to pledge, hypothecate, anticipate or in any way create a lien or
security interest upon any amounts provided under this Agreement;
and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts,
or by operation of law, except by will or the laws of descent and
distribution.
14. No Set-off. In the event of a Qualifying Termination
of the Executive's employment hereunder, the Corporation may not
set-off or withhold against any termination payments due to the
Executive the amount of any claims it may have against the
Executive except any amounts for borrowed money or advances owing
to the Corporation by the Executive as of the date of such
Qualifying Termination.
15. Amendment. This Agreement may be amended or cancelled
by mutual agreement of the parties in writing without the consent
of any other person and, so long as the Executive lives, no
person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
16. Successor to the Corporation. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the Corporation and any successor of the
Corporation; provided, however, that the Corporation shall obtain
the written agreement of any successor of the Corporation to be
bound by the provisions of this Agreement as if the successor
were the Corporation and for purposes of this Agreement, any
successor of the Corporation shall be deemed to be the
"Corporation" for all purposes. In the event of the death of the
Executive after a Qualifying Termination, the beneficiaries,
heirs or estate of the Executive, as appropriate, shall be
entitled to enforce the provisions of Section 7 hereof.
17. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason in any jurisdiction, the remaining
provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect and any such invalid or
unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
18. Employment Rights. Nothing expressed or implied in
this Agreement shall create any right or duty on the part of the
Corporation or the Executive to have the Executive remain in the
employment of the Corporation prior to any Change in Control the
Corporation entering into a Business Combination Agreement;
provided, however, that if there is any termination of the
Executive's employment which would constitute a Qualifying
Termination if it occurred after a Change of Control and such
termination follows the commencement of a substantive discussion
with a third person that ultimately results in a Change in
Control, such termination shall be deemed to be following a
Change in Control for purposes of this Agreement.
19. Termination of Agreement. This Agreement shall
terminate if the Executive's employment by the Corporation is
terminated in any manner other than a Qualifying Termination.
20. Miscellaneous. As used throughout this Agreement, the
masculine pronoun has been used for convenience only. It is
intended to refer equally to men and women. Moreover the use of
the singular term throughout with respect to individuals or
persons is intended to include the plural form. This Agreement
shall be construed by the laws of the United States of America
and the Commonwealth of Massachusetts.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors,
the Corporation has caused these presents to be executed in its
name on its behalf, and its corporate seal to be hereunto affixed
and attested by its Secretary, or Assistant Secretary, all as of
the day and year first above written.
(SEAL)
DATAWATCH CORPORATION
ATTEST:
By: /s/ William B. Simmons, Jr. By: /s/ Bruce R. Gardner
Title: Assistant Secretary Name: Bruce R. Gardner
Title: Executive Vice President
WITNESS: EXECUTIVE:
/s/ Julie Caruso /s/ Thomas R. Foley
Thomas R. Foley
EXHIBIT 10.5
DATAWATCH CORPORATION
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This Non-Qualified Stock Option Plan, to be
known as the 1996 Non-Employee Director Stock Option Plan
(hereinafter, this "Plan"), is intended to promote the interests
of Datawatch Corporation (hereinafter, the "Company") by
providing an inducement to obtain and retain the services of
qualified persons who are not employees or officers of the
Company to serve as members of its Board of Directors (the
"Board").
2. Available Shares. The total number of shares of Common
Stock, par value $.01 per share, of the Company (the "Common
Stock") for which options may be granted under this Plan shall
not exceed 72,000 shares, subject to adjustment in accordance
with paragraph 11 of this Plan; provided, however, that
notwithstanding anything to the contrary set forth herein,
options to purchase more than an aggregate of 24,000 shares of
Common Stock shall not be granted under this Plan unless and
until this Plan has been approved by a majority of the
stockholders of the Company no later than June 1, 1997. Shares
subject to this Plan are authorized but unissued shares or shares
that were once issued and subsequently reacquired by the Company.
If any options granted under this Plan are surrendered before
exercise or lapse without exercise, in whole or in part, the
shares reserved therefor shall continue to be available under
this Plan.
3. Administration. This Plan shall be administered by the
Board or by a committee appointed by the Board (the "Committee").
In the event the Board fails to appoint or refrains from
appointing a Committee, the Board shall have all power and
authority to administer this Plan. In such event, the word
"Committee" wherever used herein shall be deemed to mean the
Board. The Committee shall, subject to the provisions of the
Plan, have the power to construe this Plan, to determine all
questions hereunder, and to adopt and amend such rules and
regulations for the administration of this Plan as it may deem
desirable. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with
respect to this Plan or any option granted under it.
4. Eligibility and Limitations. Options to purchase shares
of Common Stock may be granted under this Plan only to members of
the Board who are not employees or officers of the Company and
who may hold and beneficially own such options, and the shares of
Common Stock issuable upon exercise thereof, individually, in
their own names.
5. Automatic Grant of Options. Subject to the availability
of shares under this Plan, (a) each person who is or becomes a
member of the Board and who satisfies the requirements of
paragraph 4 of this Plan (a "Non-Employee Director") shall be
automatically granted on the later of (i) June 1, 1996, (ii) the
date such person is first elected to the Board or (iii) the date
such person first meets the requirements of paragraph 4 of this
Plan (such later date being referred to herein as the "Grant
Date"), without further action by the Board, an option to
purchase 12,000 shares of the Common Stock, and (b) each person
receiving an option pursuant to clause (a) hereof who is a Non-
Employee Director on each successive third anniversary of such
person's Grant Date during the term of this Plan shall be
automatically granted on each such date an option to purchase
12,000 shares of the Common Stock. The number of shares covered
by options granted under this paragraph 5 shall be subject to
adjustment in accordance with the provisions of paragraph 11 of
this Plan.
6. Option Price. The purchase price of the stock covered by
an option granted pursuant to this Plan shall be 100% of the fair
market value of such shares on the day the option is granted.
The option price will be subject to adjustment in accordance with
the provisions of paragraph 11 of this Plan. For purposes of
this Plan, if, at the time an option is granted under the Plan,
the Company's Common Stock is publicly traded, "fair market
value" shall be determined as of the last business day for which
the prices or quotes discussed in this sentence are available
prior to the date such option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the Nasdaq National
Market, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average
of bid prices) last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common
Stock is not reported on the Nasdaq National Market. However, if
the Common Stock is not publicly traded at the time an option is
granted under the Plan, "fair market value" shall be deemed to be
the fair value of the Common Stock as determined by the Committee
after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer
prices of the Common Stock in private transactions negotiated at
arm's length.
7. Period of Option. Unless sooner terminated in accordance
with the provisions of paragraph 9 of this Plan, an option
granted hereunder shall expire on the date which is ten (10)
years after the date of grant of the option.
8. (a) Vesting of Shares and Non-Transferability of Options.
Options granted under this Plan shall not be exercisable until
they become vested. Options granted under this Plan shall vest
in the optionee and thus become exercisable, in accordance with
the following schedule, provided that the optionee has
continuously served as a member of the Board through such vesting
date:
Number of Option
Shares for which
Option will be Exercisable Date of Vesting
0 Less than three months from the date of grant
an additional 1,000 shares Three months from the date of grant and at
the end of each three month period.
The number of shares as to which options may be exercised shall
be cumulative, so that once the option shall become exercisable
as to any shares it shall continue to be exercisable as to said
shares, until expiration or termination of the option as provided
in this Plan. Notwithstanding the foregoing, each option granted
under this Plan that is outstanding but unvested shall become
exercisable in full 10 days prior to the date of any Change in
Control of the Company, as set forth below. For purposes of this
Plan, a "Change in Control" means the occurrence of any of the
following events:
(A) The Company is merged or consolidated or reorganized
into or with another corporation or other legal person, and
as a result of such merger, consolidation or reorganization
less than a majority of the combined voting power of the then-
outstanding securities of such surviving, resulting or
reorganized corporation or person immediately after such
transaction is held in the aggregate by the holders of the
then-outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock")
immediately prior to such transaction;
(B) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(C) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), disclosing that any
"person" (as such term is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
"beneficial owner" (as such term is used in Rule 13d-3 under
the Exchange Act) of securities representing 35% or more of
the Voting Stock of the Company;
(D) The Company files a report or proxy statement with
the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein) that a change in control of the Company has
occurred; or
(E) If during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election by the Company's stockholders, of
each director of the Company first elected during such period
was approved by a vote of at least a majority of the
directors then still in office who were directors of the
Company at the beginning of any such period;
provided, however, that a "Change in Control" shall not be deemed
to have occurred for purposes of this Plan solely because (x) the
Company, (y) an entity in which the Company directly or
indirectly beneficially owns 50% or more of the voting
securities, or (z) any Company-sponsored employee stock ownership
plan or any other employee benefit plan of the Company, either
files or becomes obligated to file a report or a proxy statement
under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report) under
the Exchange Act, disclosing beneficial ownership by it of shares
of Voting Stock or because the Company reports that a change in
control of the Company has occurred by reason of such beneficial
ownership.
(b) Non-transferability. Any option granted pursuant to
this Plan shall not be assignable or transferable other than by
will or the laws of descent and distribution or pursuant to a
domestic relations order and shall be exercisable during the
optionee's lifetime only by him or her.
9. Termination of Option Rights.
(a) In the event an optionee ceases to be a member of the
Board for any reason other than death or permanent disability,
any then unexercised portion of options granted to such optionee
shall, to the extent not then vested, immediately terminate and
become void; any portion of an option which is then vested but
has not been exercised at the time the optionee so ceases to be a
member of the Board may be exercised, to the extent it is then
vested, by the optionee within 90 days of the date the optionee
ceased to be a member of the Board; and all options shall
terminate after such 90 days have expired.
(b) In the event that an optionee ceases to be a member of
the Board by reason of his or her death or permanent disability,
any option granted to such optionee shall be immediately and
automatically accelerated and become fully vested and all
unexercised options shall be exercisable by the optionee (or by
the optionee's personal representative, heir or legatee, in the
event of death) until the scheduled expiration date of the
option.
10. Exercise of Option. Subject to the terms and conditions
of this Plan and the option agreements, an option granted
hereunder shall, to the extent then exercisable, be exercisable
in whole or in part by giving written notice to the Company by
mail or in person addressed to Datawatch Corporation, 234
Ballardvale Street, Wilmington, Massachusetts 01887, at its
principal executive offices, stating the number of shares with
respect to which the option is being exercised, accompanied by
payment in full for such shares. Payment may be (a) in United
States dollars in cash or by check, (b) in whole or in part in
shares of the Common Stock of the Company already owned by the
person or persons exercising the option or shares subject to the
option being exercised (subject to such restrictions and
guidelines as the Board may adopt from time to time), valued at
fair market value determined in accordance with the provisions of
paragraph 6 or (c) consistent with applicable law, through the
delivery of an assignment to the Company of a sufficient amount
of the proceeds from the sale of the Common Stock acquired upon
exercise of the option and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise. There
shall be no such exercise at any one time as to fewer than one
hundred (100) shares or all of the remaining shares then
purchasable by the person or persons exercising the option, if
fewer than one hundred (100) shares. The Company's transfer
agent shall, on behalf of the Company, prepare a certificate or
certificates representing such shares acquired pursuant to
exercise of the option, shall register the optionee as the owner
of such shares on the books of the Company and shall cause the
fully executed certificate(s) representing such shares to be
delivered to the optionee as soon as practicable after payment of
the option price in full. The holder of an option shall not have
any rights of a stockholder with respect to the shares covered by
the option, except to the extent that one or more certificates
for such shares shall be delivered to him or her upon the due
exercise of the option.
11. Adjustments Upon Changes in Capitalization and Other
Events. Upon the occurrence of any of the following events, an
optionee's rights with respect to options granted to him or her
hereunder shall be adjusted as hereinafter provided:
(a) Stock Dividends and Stock Splits. If the shares of
Common Stock shall be subdivided or combined into a greater
or smaller number of shares or if the Company shall issue any
shares of Common Stock as a stock dividend on its outstanding
Common Stock, the number of shares of Common Stock
deliverable upon the exercise of options shall be
appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock
dividend.
(b) Issuances of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for
dividends paid in cash or in property other than securities
of the Company.
(c) Adjustments. Upon the happening of any of the
foregoing events, the class and aggregate number of shares
set forth in paragraphs 2 and 5 of this Plan that are subject
to options which previously have been or subsequently may be
granted under this Plan shall also be appropriately adjusted
to reflect such events. The Board shall determine the
specific adjustments to be made under this paragraph 11 and
its determination shall be conclusive.
12. Restrictions on Issuance of Shares. Notwithstanding the
provisions of paragraphs 5 and 10 of this Plan, the Company shall
have no obligation to deliver any certificate or certificates
upon exercise of an option until one of the following conditions
shall be satisfied:
(i) The issuance of shares with respect to which the
option has been exercised is at the time of the issue of such
shares effectively registered under applicable Federal and
state securities laws as now in force or hereafter amended;
or
(ii) Counsel for the Company shall have given an opinion
that the issuance of such shares is exempt from registration
under Federal and state securities laws as now in force or
hereafter amended; and the Company has complied with all
applicable laws and regulations with respect thereto,
including without limitation all regulations required by any
stock exchange upon which the Company's outstanding Common
Stock is then listed.
13. Legend on Certificates. The certificates representing
shares issued pursuant to the exercise of an option granted
hereunder shall carry such appropriate legend, and such written
instructions shall be given to the Company's transfer agent, as
may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of the Securities Act of
1933 or any state securities laws.
14. Representation of Optionee. If requested by the Company,
the optionee shall deliver to the Company written representations
and warranties upon exercise of the option that are necessary to
show compliance with Federal and state securities laws, including
representations and warranties to the effect that a purchase of
shares under the option is made for investment and not with a
view to their distribution (as that term is used in the
Securities Act of 1933).
15. Option Agreement. Each option granted under the
provisions of this Plan shall be evidenced by an option
agreement, which agreement shall be duly executed and delivered
on behalf of the Company and by the optionee to whom such option
is granted. The option agreement shall contain such terms,
provisions and conditions not inconsistent with this Plan as may
be determined by the officer executing it.
16. Termination and Amendment of Plan. Options may no longer
be granted under this Plan after June 1, 2006, and this Plan
shall terminate when all options granted or to be granted
hereunder are no longer outstanding. The Board may at any time
terminate this Plan or make such modification or amendment
thereof as it deems advisable; provided, however, that the Board
may not, without approval of the stockholders, (a) increase the
maximum number of shares for which options may be granted under
this Plan (except by adjustment pursuant to Section 11),
(b) materially modify the requirements as to eligibility to
participate in this Plan, (c) materially increase benefits
accruing to option holders under this Plan or (d) amend this Plan
in any manner which would cause Rule 16b-3 under the Exchange Act
(or any successor or amended provision thereof) to become
inapplicable to this Plan; and provided further that the
provisions of this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or
any successor or amended provision thereof) under the Exchange
Act (including without limitation, provisions as to eligibility,
amount, price and timing of awards) may not be amended more than
once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder. Termination or any modification or
amendment of this Plan shall not, without consent of a
participant, affect his or her rights under an option previously
granted to him or her.
17. Withholding of Income Taxes. Upon the exercise of an
option, the Company, in accordance with Section 3402(a) of the
Internal Revenue Code, may require the optionee to pay
withholding taxes in respect of amounts considered to be
compensation includible in the optionee's gross income.
18. Governing Law. The validity and construction of this Plan
and the instruments evidencing options shall be governed by the
laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
Date approved by Board of Directors of the Company:
Date approved by Stockholders of the Company:
Exhibit 11.1
DATAWATCH CORPORATION AND SUBSIDIARY
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
Computation of weighted average number of shares outstanding used
in determining income (loss) per share was as follows:
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
(Restated) (Restated)
COMMON STOCK AND COMMON STOCK EQUIVALENTS:
Weighted shares outstanding
of common stock 8,696,089 8,622,715 8,653,488 8,061,601
Common stock equivalent shares
resulting from assumed conversion
of warrants and assumed exercise
of stock options. 267,509 (a) 238,260 (a)
Weighted average of common and common
equivalent shares-primary 8,963,598 8,622,715 8,891,748 8,061,601
Assumed conversion of warrants and
exercise of stock options based
on higher of average or closing
market price 7,532 (a) 5,787 (a)
Weighted average of common and
common equivalent shares-fully
diluted 8,971,130 8,622,715 8,897,535 8,061,601
NET INCOME (LOSS) $680,589 $(65,989) $783,331 $(131,624)
NET INCOME (LOSS) PER COMMON SHARE:
Primary $.08 $(.01) $.09 $(.02)
Fully-diluted $.08 $(.01) $.09 $(.02)
(a) Common stock equivalent shares were excluded from the
calculation for the three and six months ended June 30, 1995 due
to the antidulitive effect the inclusion of such would have had
on loss per share.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1996
<CASH> 923,518
<SECURITIES> 642,183
<RECEIVABLES> 7,069,244
<ALLOWANCES> 0
<INVENTORY> 317,262
<CURRENT-ASSETS> 10,529,961
<PP&E> 3,126,363
<DEPRECIATION> 1,459,288
<TOTAL-ASSETS> 13,917,070
<CURRENT-LIABILITIES> 6,051,939
<BONDS> 0
0
0
<COMMON> 88,127
<OTHER-SE> 7,563,569
<TOTAL-LIABILITY-AND-EQUITY> 13,917,070
<SALES> 8,026,996
<TOTAL-REVENUES> 8,026,996
<CGS> 1,291,616
<TOTAL-COSTS> 6,024,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,849
<INCOME-PRETAX> 690,996
<INCOME-TAX> 10,407
<INCOME-CONTINUING> 680,589
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 680,589
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
