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Employment Agreement - Workgroup Systems Ltd. and Robert Hagger

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                             DATED 24 February 1997




                             CONTRACT OF EMPLOYMENT
                                   relating to













               WORKGROUP SYSTEMS LIMITED                       (1)

               ROBERT HAGGER                                   (2)


                                 S J BERWIN & CO
                       Ref: 22/504/LT:160367.2/D9803.17/fm

<PAGE>



           DATE 24 FEBRUARY 1997

           PARTIES

(1)        WORKGROUP SYSTEMS LIMITED (NO. 2515018) WHOSE REGISTERED OFFICE IS AT
           MAPLE HOUSE, POTTERS BAR, HERTFORDSHIRE, EN6 5BS INCLUDING ANY AND
           ALL SUBSIDIARIES OF WORKGROUP SYSTEMS LIMITED, ("THE COMPANY")

(2)        ROBERT HAGGER OF 16 DOMAINE DE LA BRAGUE, 06560 VALBONNE, FRANCE
           ("THE EMPLOYEE")

           OPERATIVE PROVISIONS

1          JOB TITLE

1.1        The Company shall initially employ the Employee and the Employee
           shall initially serve the Company as Managing Director and Chief
           Operating Officer, reporting to the Chairman and Chief Executive
           Officer of the Company.

1.2        After a period of three months from the Commencement Date, if in the
           opinion of the Chairman and Chief Executive Officer, the Employee has
           performed to a satisfactory standard (and his decision shall be
           final), the job title of the Employee shall change. From that date
           the Company shall employ the Employee and the Employee shall serve
           the Company as Managing Director and Chief Executive Officer
           reporting to the Executive Vice President of Datawatch Corporation.

2          PERIOD OF EMPLOYMENT

2.1        The Appointment shall commence on 4 March 1997 (the "Commencement
           Date"). The Appointment is subject to a probationary period of three
           months' duration. During this period the Appointment may be
           terminated by two weeks' notice by either party.

2.2        Unless terminated earlier under Clause 2.1 or 10, the Appointment
           will continue until terminated by either Party giving to the other
           not less than two months' notice to expire on the last day of any
           calendar month.

3          PAY AND EXPENSES

<PAGE>

3.1(b)     The Employee shall be granted on signing the Agreement, an Option
           under the Datawatch Corporation 1987 Stock Plan ("the Plan") to
           purchase such number of Datawatch Corporation Common Stock $0.01 par
           value shares at the market price, in Sterling, at the close of
           trading on the Commencement Date, or the closest business day
           thereto, if the Commencement Date is on a non-business day, divided
           by (pound)25,000. The Option may be exercised in accordance with the
           Plan, a copy of which is attached hereto as Schedule 7.

3.1(b)     Clause 3.1(a) is subject to satisfactory completion of the
           probationary period as set out in Clause 2.1 above. If the
           probationary period is not completed, the Datawatch Corporation shall
           cancel the Option as set out above with immediate effect and no
           rights will arise in respect of the Option.

3.2        The Company shall pay to the Employee for the proper performance of
           his duties under this Agreement:

           (a)  a fixed salary at the rate of (pound)115,000 per annum; and

           (b)  a bonus payable in accordance with and subject to the terms of
                Schedule 6.

3.3        The fixed salary of the Employee will:

           (a)  accrue from day to day and be payable by equal monthly
                instalments in arrears by not later than the last day of each
                month;

           (b)  be paid by credit transfer to the account nominated by the
                Employee from time to time; and

           (c)  be capable of set off by the Company from time to time against
                any liability of the Employee to the Company.

3.3        The Employee undertakes not to divulge details of his salary to any
           other employee of the Company or any Group Company.

3.4        The Employee hereby authorises the Company to deduct from any
           remuneration accrued and due to him under the terms of this Agreement
           or from any pay in lieu of notice:

           (a)  any overpayment of salary or expenses or payment made to the
                Employee by mistake or through any misrepresentation;
<PAGE>

           (b)  any debt owed by the Employee to the Company or any Group
                Company;

           (c)  any other sum or sums which may from time to time be deductible
                pursuant to Section 13(1)(a) of the Employment Rights Act 1996;
                and

           (d)  any tax or social security contributions due in respect of
                remuneration or any other monies received or receivable by the
                Employee from the Company.

3.5        The Company shall repay to the Employee all reasonable travelling,
           hotel and other expenses properly incurred by him in or about the
           performance of his duties, subject to the Employee having delivered
           to the Company such form(s) and vouchers or other evidence of actual
           payment of such expenses as the Company may from time to time
           require. The decision of the Company as to what constitutes
           reasonable expenses shall be conclusive.

4          OTHER BENEFITS

4.1        Until notice of termination of the Appointment is given and subject
           to the Employee holding and continuing to hold a full driving
           licence, the Company shall provide to the Employee a mid-size motor
           car or car allowance for use by him in the proper performance of his
           duties in accordance with the Company's car policy in force from time
           to time.

4.2        The Employee shall be entitled to participate, at the Company's
           expense, in a recognised medical health scheme for himself on terms
           acceptable to the Company.

4.3        The Employee shall be entitled to participate, at the Company's
           expense, in a recognised life insurance scheme for himself, with a
           policy value not to exceed four times the Employee's fixed salary as
           identified in Clause 32.(a), on terms acceptable to the Company.

5          HOLIDAY

5.1        In addition to the usual public and bank holidays, the Employee shall
           be entitled to twenty (20) days' paid holiday in each complete
           holiday year worked (and pro rata for part of each holiday year
           worked) to be taken at such time or times as shall be agreed by the
           Board.

5.2        The holiday year runs from 1 January each year to the following 31
           December. Holiday entitlement may only be carried forward from one
           holiday year to the next with the prior
<PAGE>

           written permission of the Board. No money will be paid in lieu of any
           untaken holiday entitlement.

5.3        Upon termination of the Appointment, other than pursuant to Clause
           10.1, the Employee's entitlement to holiday will be calculated on the
           basis of 1.5 calendar days for each calendar month of service
           completed during the holiday year in which termination occurs and any
           payment in lieu of untaken holiday entitlement will be made rounded
           down to the next whole number of days' holiday. If the Employee has
           exceeded the holiday entitlement there will be a deduction from
           salary.

6          DUTIES

6.1        During the term of the Appointment, the Employee shall:

           (a)  undertake the duties and obligations agreed with the Company
                from time to time and reporting to the individual as specified
                in Clause 1;

           (b)  at all times use all reasonable endeavours to promote the
                interests and welfare and maintain the goodwill of the Company
                and any other Group Company and not to do and to exercise all
                reasonable endeavours to prevent there being done anything with
                may be prejudicial or detrimental to the Company or any Group
                Company;

           (c)  faithfully and diligently perform his duties;

           (d)  devote the whole of his working time and attention and the full
                benefit of his knowledge, expertise and skills in the proper
                performance of his duties;

           (e)  comply with all lawful directions from time to time given to him
                by the Board, and the individuals specified in Clause 1, and all
                applicable rules and regulations from time to time laid down by
                the Company;

           (f)  comply with the provisions of Schedule 2 with regard to
                Copyright and Inventions;

           (g)  comply with the provisions of the Company's Policy regarding
                Insider Trading; and
<PAGE>

           (h)  comply with, save as is inconsistent with the express terms of
                this Agreement, all applicable rules and regulations from time
                to time laid down by the Company concerning its employees in the
                Staff Handbook.

6.2        The Employee shall attend and work at any of the places of business
           of the Company and/or the Group and/or any client of the Company or
           Group as determined from time to time by the Company and shall travel
           to and work at such places (whether within or outside the United
           Kingdom) in the manner and on the occasions required from time to
           time by the Company. The Company shall not, without the Employee's
           consent, require him to reside or work (other than temporarily)
           outside the United Kingdom.

6.3        The Company may require the Employee to perform services for any
           Group Company wherever situated and without further fees or
           remuneration and any duties that he may have under this Agreement
           will be deemed to extend to such Group Company.

6.4        The hours of the Employee are not fixed but are the usual working
           hours of the Company and such additional hours as may be necessary to
           enable him to properly discharge his duties. For the avoidance of
           doubt, the Employee consents to working in excess of 48 hours when
           required.

7          CONFIDENTIALITY

           The Employee shall comply with the provisions of Schedule 3 with
           regard to Confidentiality.

8          RESTRICTIONS DURING AND AFTER EMPLOYMENT

           The Employee shall comply with the provisions of Schedule 4 with
           regard to restrictions during and after employment.

9          ABSENCE, ILLNESS AND INCAPACITY

9.1        If at any time the Employee is prevented by reason of ill-health,
           accident or other incapacity from properly performing his duties he
           shall comply with the reporting and certification provisions set out
           in the Staff Handbook.
<PAGE>

9.2        Any payment of remuneration made by the Company to the Employee
           during period of absence due to sickness will be in accordance with
           the Company's Sick Pay Policy as set out in the Staff Handbook from
           time to time. Such payment is subject to deductions equivalent to any
           amounts of state benefit that the Employee is entitled to claim. It
           is the responsibility of the Employee to claim from the appropriate
           authority such entitlement.

10         TERMINATION

10.1       The Company may at any time terminate the Appointment with immediate
           effect (or by such longer period of notice as the Company shall see
           fit) by giving the Employee written notice in any of the following
           events:

           (a)  if the Employee at the time the notice is given is prevented by
                reason of ill-health or accident or other incapacity from
                properly performing his duties and has been so prevented
                (whether by the same or another reason):

                (i)   where the Employee has been employed by the Company, for a
                      period of less than 2 complete years for an aggregate
                      period of at least 30 days (whether or not, in either
                      case, working days) in the preceding 12 months; and

                (ii)  where the Employee has been employed by the Company, for a
                      period of more than 2 complete years for an aggregate
                      period of at least 13 weeks (whether or not, in either
                      case, working days) in the preceding 12 months;

           (b)  if the Employee shall have:

                (i)   neglected or failed or refused to carry out any of his
                      duties or committed any material breach or non-observance
                      or, after having been given warning in writing, any
                      repeated or continued breach or non-observance of any of
                      his duties or any of his express or implied obligations
                      arising from the Appointment including refusing to comply
                      with any reasonable/lawful instructions given to him by
                      the Company;
<PAGE>

                (ii)  been guilty of conduct or permitted or suffered events
                      tending in the reasonable opinion of the Board to bring
                      himself/herself, the Company or any Group Company into
                      disrepute;

                (iii) committed any act of fraud or dishonesty (whether or not
                      connected with the Appointment) or committed any act
                      which, in the reasonable opinion of the Company, adversely
                      affects his ability properly to carry out his duties;

                (iv)  been convicted of a criminal offence or been banned from
                      driving (drink/speed), before or after the Appointment,
                      and the Employee shall promptly notify the Company of any
                      such conviction; or

                (v)   become of unsound mind or a patient as defined in the
                      Mental Health Act 1983 or been admitted to hospital in
                      pursuance of an application made under Part 11 of that
                      Act.

10.2       For the avoidance of doubt, poor performance by the Employee will be
           a disciplinary issue and will be dealt with under the company's
           disciplinary rules and grievance procedure as contained in the Staff
           Handbook.

10.3       The Company (and any relevant Group Company) shall not be obliged to
           provide work to the Employee at any time after notice of termination
           of the Appointment shall have been given by either party under any of
           the provisions of this Agreement and the Company may, in its
           discretion, take any one or more of the following steps in respect of
           all or part of any unexpired period of notice:

           (a)  require the Employee to comply with such conditions as it may
                specify in relation to attending at, or remaining away from, the
                place(s) of business of the Company, the Group Companies and any
                of the clients of the Company or Group Companies;

           (b)  assign the Employee to other duties; or

           (c)  withdraw duties assigned to the Employee.
<PAGE>

10.4       The Appointment shall automatically terminate without notice at the
           end of the month in which the Employee attains the age of 60 years.

10.5       On the giving of notice to terminate the Appointment by either party
           the Employee shall forthwith deliver up to the Company in accordance
           with the directions of the Company the Company car, mobile telephone
           and all computer equipment (including but not limited to any
           computer, modem, printer, software and accessories) which may be in
           his possession or control.

10.6       Upon termination of the Appointment however arising the Employee
           shall deliver up to the Company in accordance with the directions of
           the Company all keys, security passes, credit cards, Documents and
           other property belonging to or relating to the business or affairs of
           the Company or any Group Company, including all copies of all
           Documents containing or referring to Confidential Information which
           may be in his possession or under his control and shall not retain
           copies, extracts or notes of any of the same.

10.7       The Company, if it has reason to suspect that any one or more of the
           events set out in Clause 10.1(b) has or may have occurred, may
           suspend the Employee pending the making and completion of such
           investigation(s) as the Board thinks fit. While the suspension
           continues, the Company shall pay to the Employee his fixed salary and
           provide to him the other benefits set out in this Agreement. During
           the period of suspension the Company and relevant Group Companies
           shall not be obliged to provide work to the Employee and may require
           the Employee to comply with such conditions as the Company may
           specify in relation to attending at or remaining away from the places
           of business of the Company and/or the Group Companies during the
           period of the suspension. The Company may later terminate the
           Appointment, pursuant to the terms of this Agreement, on the grounds
           of the same or any other event.

11         THE EMPLOYMENT RIGHTS ACT 1996

           This Agreement and Schedule 5 contain the employment particulars
           required to be given under Sections 1 to 3 of the ERA.

12         NOTICES

           Notices by either party must be sent by recorded delivery:
<PAGE>

           (i)   to the Company at its principal trading office for the time
                 being; and

           (ii)  to the Employee at his place of work or at the address set out
                 in this Agreement or such other address as the Employee may
                 from time to time have notified to the Company for the purpose
                 of this Clause.

13         GENERAL

13.1       This Agreement, which contains all the terms of employment of the
           Employee, is in substitution for all existing contract(s) of
           employment between the Company and any Group Company and the Employee
           (whether written, oral or governed by a course of dealings) which
           shall terminate with effect from the Commencement Date.

13.2       The waiver, express or implied, by either Party of any right under
           this Agreement or any failure to perform or breach by the other shall
           not constitute or be deemed a waiver of any other right under this
           Agreement or of the same right on another occasion.

13.3       No amendment, change or addition to the terms of this Agreement shall
           be effective or binding on either Party unless reduced to writing and
           signed by each party adversely affected by such amendment, change or
           addition. The Company reserves the right to amend or vary the terms
           and/or conditions of the Employee's employment. Written notice will
           be given to the Employee of any such changes. Acceptance of changes
           of terms and conditions so made will be assumed unless the Employee
           notifies the Company in writing of his objection within one calendar
           month of notification of any changes.

13.4       The Employee represents and warrants that he is not a party to any
           agreement, contract (whether of employment or otherwise) or
           understanding which would in any way restrict or prohibit him from
           undertaking or performing any of the duties of the Appointment in
           accordance with this Agreement.

13.5       This Agreement is governed by and is to be construed in accordance
           with the laws of England and the Parties hereby submit to the
           non-exclusive jurisdiction of the High Court of Justice of England
           and Wales.
<PAGE>


                                   SCHEDULE 1

(1)        In this Agreement, unless the context otherwise requires, the
           following expressions have the meanings set out below:

           Agreement               this contract of employment;

           Appointment             the employment of the Employee pursuant to
                                   this Agreement;

           Board                   the board of directors of the Company for the
                                   time being (including any committee of the
                                   Board);

           Combined Year-To-Date
           Revenue and Profit
           Percentage Achievement  if, at the end of any Quarterly Accounting
                                   Period, either the year-to-date revenue or
                                   profit achievement is less than 100% of the
                                   Company's Pre-determined Consolidated
                                   Budgeted Year-to-Date Revenue or Profit
                                   Objectives at the end of the same quarter,
                                   the Combined Year-to-Date Revenue and Profit
                                   Percentage Achievement at the end of that
                                   quarter is computed by averaging the
                                   year-to-date profit achievement and the
                                   year-to-date revenue achievement at the end
                                   of that quarter. If both the year -to-date
                                   revenue and profit achievements at the end of
                                   a quarter are 100% of the Company's
                                   Pre-determined Consolidated Budgeted year-to
                                   -Date Objectives at the end of the same
                                   quarter, or higher, the Combined Year-to-Date
                                   Revenue and Profit Percentage Achievement at
                                   the end of that quarter is computed by
                                   multiplying the year-to-date revenue
                                   achievement at the end of the quarter by the
                                   year-to-date profit achievement at the end of
                                   the same quarter.

           Commencement Date       4 March 1997;

           Confidential
           Information             all information which may be imparted in
                                   confidence or be of a confidential nature
                                   relating to the business or prospective
                                   business, current or projected plans or
                                   internal affairs of the Company or any Group
                                   Company and, in particular, but not limited
                                   to
<PAGE>

                                   all Know-how, Marketing Information, trade
                                   secrets, unpublished information relating to
                                   the Company's or any Group Company's
                                   intellectual property and any other
                                   commercial, financial or technical
                                   information relating to the business or
                                   prospective business of the Company or any
                                   Group Company or to any client or potential
                                   client, licensee, officer, supplier or
                                   potential supplier or employee of the Company
                                   or any Group Company;

           Datawatch Corporation   the parent company of the Company;

           Documents               documents, disks, memory, notebooks, tapes or
                                   any other medium, whether or not
                                   eye-readable, on which information (whether
                                   confidential or otherwise) may from time to
                                   time be referred to, written or recorded;

           ERA                     the Employment Rights Act 1996;

           Group                   all companies being any of a subsidiary of
                                   the Company, or of its parent company, or a
                                   holding company of the Company or a
                                   subsidiary of any such holding company or any
                                   other Company of which the Company's holding
                                   company or any of its subsidiaries holds at
                                   least 10% of the share capital or an
                                   associate of the Company within the meaning
                                   of Section 435 of the Insolvency Act 1986;

           Group Company           any company within the Group;

           Key Employee            any employee who is or was (in the period of
                                   12 months prior to the Termination Date)
                                   employed to the knowledge of the Employee in
                                   a capacity in which he has access to or
                                   obtained Confidential Information;

           Know-how                information (including without limitation
                                   that comprised in formulae, specifications,
                                   designs, drawings, component lists, software
                                   (or pre-cursor documents), databases,
                                   manuals, instructions and catalogues) held in
                                   whatever form relating to the creation,
                                   production or supply of any products or
                                   services by the Company or any Group Company
                                   or by or to any of the suppliers and
<PAGE>

                                   customers of such company and in particular
                                   the Staff Handbook;

           Marketing Information   information relating to the current or
                                   prospective marketing or sales of any
                                   products or services of the Company or any
                                   Group Company, including any contact details
                                   of any clients or prospective clients, and
                                   the Company's electronic database of clients'
                                   and prospective clients' names, addresses and
                                   contacts, sales targets and statistics,
                                   market share and pricing statistics,
                                   marketing surveys, research and reports and
                                   advertising and promotional material;

           Permitted Interest      an interest in any class of shares or other
                                   securities of any company which are traded on
                                   a recognised investment exchange which amount
                                   to not more than 3% of such class of issued
                                   shares or securities and an interest in any
                                   units of any authorised unit trust;

           Percent of
           Year-To-Date Profit     Achievement the actual year-to-date profit
                                   achieved at the end of any Quarterly
                                   Accounting Period divided by the
                                   Pre-determined company's Year-To-Date
                                   Consolidated Budgeted Profit Objective at the
                                   end of the same quarter.

           Percent of Year-To-Date
           Revenue Achievement     the actual year-to-date revenue achieved at
                                   the end of any Quarterly Accounting Period
                                   divided by the Pre-determined Company's
                                   Year-To-Date Consolidated Budgeted Revenue
                                   Objective at the end of the same quarter.

           Pre-determined
           Consolidated Budgeted
           Year-To-Date Revenue
           and Profit Objectives   Year-to-date revenue and profit objectives
                                   for each of the Company's Quarterly
                                   Accounting Periods, consolidated to include
                                   all of the Company's subsidiaries, said
                                   objectives having been approved, prior to the
                                   start of the Company's fiscal year, by the
                                   President or the Executive Vice President of
                                   Datawatch Corporation.

           Quarterly Accounting
           Periods                 three month periods, which, collectively,
                                   from the Company's fiscal year, and
<PAGE>

                                   individually, end of 30 September, 31
                                   December, 31 March, and 30 June.

           Staff Handbook          the staff handbook containing all applicable
                                   rules and regulations from time to time laid
                                   down by the Company covering its employees;

           Termination Date        the date of termination or expiration of the
                                   Appointment.

(2)        The expressions "subsidiary" and "holding company" have the meanings
           given to them by Sections 736 and 736A of the Companies Act 1985.

(3)        References to Clauses, Parties, and the Schedules are respectively to
           Clauses of and the Parties and the Schedules to this Agreement.

(4)        References to any enactment are to be construed as referring also to
           any enactment or re-enactment thereof (whether before or after the
           date hereof), and to any previous enactment which such enactment has
           replaced (with or without amendment provided that the amendment does
           not change the law as at the date hereof) and to any regulation or
           order made thereunder.
<PAGE>


                                   SCHEDULE 2

                            COPYRIGHT AND INVENTIONS

1          In this Schedule "Intellectual Property" shall mean patents, trade
           marks and service marks, rights in inventions, design rights,
           registered designs, trade names and copyrights (whether or not any of
           these is registered and including applications for registration of
           any such thing) and all forms of protection of a similar nature which
           may subsist anywhere in the world.

2          The Employee acknowledges, having regard to the nature of the
           business of the Company and other Group Companies and the nature of
           the Employee 's expertise, that:

           (a)  the normal duties of the Employee under the Appointment may
                include the making of inventions;

           (b)  inventions may reasonably be expected to result from the
                carrying out by the Employee of such duties; and

           (c)  due to the nature of the Employee's duties and the particular
                responsibilities arising from the nature of his duties, the
                Employee has a special obligation to further the interests of
                the Company's undertaking.

3          The Employee shall disclose to the Company any invention made or
           discovered or produced by the Employee in the course of the
           Appointment (whether or not during office hours or using office
           stationery and equipment) in connection with or in any way affecting
           or relating to or capable of being used or adapted for use in the
           business of the Company or any other Group Company.

4          The Employee shall do all things and execute all documents that may
           be necessary to enable the Company or its nominee to obtain the
           benefit of every invention made by the Employee in the course of his
           duties and to secure patent or other appropriate protection for it.

5          Without prejudice to the provisions of paragraph 2 of this Schedule
           2, the Employee shall disclose to the Company full details of any
           Intellectual Property or copyright work made or created by the
           Employee during the continuance of the Appointment (whether or not
<PAGE>

           during office hours or using office stationery and equipment) and the
           Employee hereby assigns to the Company, by way of assignment of
           future copyright or other Intellectual Property rights, all rights of
           copyright or other Intellectual Property rights throughout the world
           in that copyright work or Intellectual Property.

6          The Employee shall, before working, assigning or granting rights in
           relation to any invention or copyright work or other Intellectual
           Property rights to which the Company is not entitled under this
           Agreement and/or at law, allow the Company or any Group Company
           nominated by it a reasonable opportunity to evaluate the same and the
           Employee shall not dispose of any rights to any third party unless he
           shall first have given written notice to the Company with full,
           complete and bona fide details of the price and terms offered by the
           third party offering the Company, or any Group Company, an
           opportunity to purchase the rights concerned at the same price and on
           the same terms within 28 days of the date of the notice.


<PAGE>


                                   SCHEDULE 3

1          CONFIDENTIALITY

1.1        Neither during the continuance of the Appointment, other than in the
           proper course of his duties and for the benefit of the Company, nor
           after the Termination Date for any reason whatsoever, shall the
           Employee:

           (a)  use, disclose or communicate to any person any Confidential
                Information which he shall have come to know or have received or
                obtained at any time (before or after the date of this
                Agreement) by reason of or in connection with his service with
                the Company; or

           (b)  copy or reproduce in any form or by or on any media or device or
                allow others access to or to copy or reproduce Documents
                containing or referring to Confidential Information.

1.2        The Employee acknowledges that all Documents containing or referring
           to Confidential Information at any time in his control or possession
           are and shall at all times remain the absolute property of the
           Company and the Employee undertakes, both during the Appointment and
           after the Termination Date:

           (a)  to exercise due care and diligence to avoid any unauthorised
                publication, disclosure or use of Confidential Information and
                any Documents containing or referring to it;

           (b)  at the direction of the Company, to deliver up any Confidential
                Information (including all copies of all Documents whether or
                not lawfully made or obtained) or to delete Confidential
                Information from any re-usable medium; and

           (c)  to do such things and sign such documents at the expense of the
                Company as shall be reasonably necessary to give effect to this
                Clause and/or to provide evidence that it has been complied
                with.

1.3        The restrictions in paragraph 1.1:

           (a)  will not restrict the Employee from disclosing to the proper
                recipient any Confidential Information which the Employee is
                required to disclose by law or
<PAGE>

                any order of the court or any relevant regulatory body provided
                that the Employee shall have given prior written notice to the
                Company of the requirements of the information to be disclosed
                and allowed the Company an opportunity to comment on the
                requirement before making the disclosure; and

           (b)  will not apply to Confidential Information which is or which
                comes into the public domain otherwise than as a result of an
                unauthorised disclosure by the Employee or any other person who
                owes the Company an obligation of confidentiality in relation to
                the information disclosed.

1.4        The Employee agrees that the restrictions set out in this Schedule 3
           are without prejudice to any other duties of confidentiality owed to
           the Company whether express or implied and are to survive the
           termination of the Appointment.

2          RELEVANT DEFINITIONS

           For the purposes of the restrictions set out in Schedule 3 and
           Schedule 4:

           (a)  the expression "Company" shall include any former owner or
                transferor of a business acquired by the Company by which the
                Employee shall have been employed under a contract of employment
                in respect of which his service is included for the purposes of
                calculating continuous employment with the Company;

           (b)  any reference to the Company and to the Company's trade or
                business shall be deemed to include any Group Company and its
                trade or business and/or to apply to them as if the words were
                repeated by reference to such company insofar as the Employee
                shall have been performing services to any material extent for a
                period of not less than three (3) months for such Group Company
                at any time during the period of one year prior to the
                Termination Date and the Employee hereby undertakes to execute
                any further documents which the Company may require to confirm
                this; and

           (c)  where references to the Company and Company's trade or business
                are deemed to include and/or apply to a Group Company and to a
                Group Company's business pursuant to paragraph 2(b) of this
                Schedule, the Employee covenants with the
<PAGE>

                Company for itself and in the same terms in relation to each
                such Group Company and each Group Company's business as he does
                with the Company and in respect of the Company's business.


<PAGE>


                                   SCHEDULE 4

1          RESTRICTIONS DURING EMPLOYMENT

1.1        Save as permitted under paragraph 2 of this Schedule 4, the Employee
           shall not during the Appointment carry on or be concerned, engaged or
           interested directly or indirectly (whether as principal, shareholder,
           partner, employee, officer, agent or otherwise) in any trade or
           business other than that of the Company.

1.2        The Employee may:

           (a)  hold a Permitted Interest; and/or

           (b)  carry on or be concerned, engaged or interested in any other
                trade or business if he shall have:

                (i)   provided, on the basis of the utmost good faith, full
                      particulars of its nature and of the likely demands it
                      will make on his time and abilities; and

                (ii)  obtained the prior written consent of the Company, which
                      consent may be given subject to such terms or conditions
                      as it may decide (each of which shall be considered to be
                      a term of this Agreement) and the Company shall have the
                      right to reconsider the consent or the terms if it
                      reasonably considers that it is in the interests of the
                      Company to do so.

           (c)  retain a directorship in Insight Strategy Management Limited
                during the probationary period identified in Clause 2.1.

1.3        The Employee shall not during the Appointment either on his own
           behalf or on behalf of any person, firm or company:

           (a)  solicit or endeavour to entice away from the Company an actual
                employee, or discourage from being employed by the Company any
                person who, to the knowledge of the Employee, is a prospective
                employee of the Company; or

           (b)  employ or procure another person to employ any such person.
<PAGE>

1.4        The Employee shall not, other than in the proper cause of his duties
           and for the benefit of the Company, directly or indirectly, to any
           member of the press or broadcasting media or via electronic bulletin
           board make any statements (whether written or oral) on matters
           concerning the Company's business or affairs or those of any client
           of the Company, or in any way referring to his position in the
           Company, or using the Company's address, without the prior written
           permission of the Company.

1.5        The Employee undertakes to promptly inform the Company if his spouse,
           partner or a close relative with whom he is living is engaged or
           employed by any competitor of the Company.

2          RESTRICTIONS AFTER EMPLOYMENT

2.11       The Employee shall not, save in respect of a Permitted Interest or
           with the prior written consent of the Company (which shall not be
           unreasonably withheld), for a period of four (4) months from the
           Termination Date carry on or be concerned or engaged or interested
           directly or indirectly (whether as principal, shareholder, partner,
           employee, officer, agent or otherwise) in any part of any trade or
           business which competes with any part of any trade or business
           carried on by the Company in which the Employee (or any other
           employee on his behalf or under his instructions) shall have been
           actively engaged or involved at any time during the period of six (6)
           months prior to the Termination Date.

2.22       The Employee shall not for a period of four (4) months from the
           Termination Date either on his own behalf or on behalf of any person,
           firm or company in relation to the business activities of the Company
           in which the Employee has been engaged or involved directly or
           indirectly:

           (a)  solicit, approach or offer services to or entice away from the
                Company; or

           (b)  deal with or accept custom from; or

           (c)  carry on or be concerned or engaged or interested directly or
                indirectly (whether as principal, shareholder, partner,
                employee, officer, agent or otherwise) in;

           any person, firm or company who at the Termination Date (or at any
           time during 6 months prior to the Termination Date) was a client of
           the Company and in each case with whom
<PAGE>

           the Employee (or any other employee on his behalf or under his direct
           instruction) has been actively engaged or involved by virtue of his
           duties hereunder;

           PROVIDED THAT nothing contained in paragraph 2(a), (b) or (c) shall
           prohibit the Employee from carrying out any activities which are not
           in competition with any part of the business of the Company with
           which the Employee was involved during six (6) months prior to the
           Termination Date.

2.3        The Employee shall not for a period of four (4) months from the
           Termination Date either on his own behalf or on behalf of any person,
           firm or company in relation to the business activities of the Company
           in which the Employee has been engaged or involved directly or
           indirectly approach, solicit, endeavour to entice away, employ, offer
           employment to or procure the employment of any person who, at the
           Termination Date (or at any time during the six (6) months prior to
           the Termination Date), is or was a Key Employee, (in each case being
           a person which the Employee or any other employee on his behalf or
           under his direct instruction has had dealings within a period of six
           (6) months prior to the Termination Date) whether or not such person
           would commit any breach of his contract of employment or engagement
           by reason of so leaving the service of the Company or otherwise.

2.4        The Employee shall not, at any time after the Termination Date,
           either on his own behalf or on behalf of any other person, firm or
           company directly or indirectly represent himself as being in any way
           connected with or interested in the business of the Company (other
           than as a Employee or a member if such be the case) or use any name
           which is identical or similar to or likely to be confused with the
           name of the Company or any product or service produced or provided by
           the Company or which might suggest a connection with the Company.

2.5        The Employee (who acknowledges that, in the course of the
           Appointment, he is likely to have dealings with the clients, and Key
           Employees of the Company) agrees that each of the restrictions in
           paragraphs 2.2, 2.2(a), (b) and (c), 2.3 and 2.4 is separate and
           distinct, is to be construed separately from the other restrictions,
           and is reasonable as regards its duration, extent and application for
           the protection of the legitimate business interests of the Company.
           However, in the event that any such restriction shall be found to be
           void or unenforceable but would be valid or enforceable if some part
           or parts of it were deleted,
<PAGE>

           the Employee agrees that such restriction shall apply with such
           deletions as may be necessary to make it valid and effective.



<PAGE>


                                   SCHEDULE 5

1          The Company's disciplinary rules and grievance procedure are
           contained in the Staff Handbook which will be issued to the Employee
           on the first day of his employment.

2          If the Employee is dissatisfied with any disciplinary decision
           relating to him then the Employee may apply in writing within three
           working days to the Personnel Manager.

3          A contracting-out certificate under the Pension Schemes Act 1993 is
           not in force in respect of the Appointment.

           The Company shall be at liberty at any time and at its own discretion
           to vary the rules and procedures referred to in this Schedule.


<PAGE>


                                   SCHEDULE 6

                 BONUSES WHICH THE EMPLOYEE IS ELIGIBLE TO EARN

The rules as set out below regarding cash bonuses and stock option bonuses which
the Employee is eligible to earn are flexible and may, at the absolute
discretion of the Company, be varied from time to time. The Employee will be
notified by the Company in writing prior to any such variation of any changes to
the rules.

A.         CASH BONUS

1          Bonus Eligibility

           The Employee is eligible to earn cash bonuses for each of the
           Company's Quarterly Accounting Periods in which the Company's revenue
           and profit results for the Company's fiscal year-to-date do not fall
           below acceptable limits as set out below.

1.1        For the third quarter of the Company's 1997 fiscal year, which is the
           period from 1 April 1997 to 30 June 1997, and which is the first
           Quarterly Accounting Period in which the Employee is eligible to earn
           a bonus, the minimum acceptable limit which must be achieved before
           the Employee is eligible to earn a cash bonus is a 75% combined
           Quarterly Revenue and Profit Percentage Achievement for that quarter
           predicated solely on the Company's consolidated performance in the
           third quarter, and ignoring prior year-to-date performance of the
           Company.

1.2        For the fourth quarter of the Company's 1997 fiscal year, which is
           the period from 1 July 1997 to 30 September 1997, and for each of the
           Company's Quarterly Accounting Periods thereafter, the minimum
           acceptable limit, which must be achieved before the Employee is
           eligible to earn a cash bonus, is a Combined Year-To-Date Revenue and
           Profit Percentage Achievement at the end of the relevant quarter of
           at least 80%. In the Company's 1997 fiscal year, the year in which
           the Employee begins his participation in this bonus plan, for the
           purposes of bonus computation only, the fiscal year will consist
           solely of the third and fourth quarters of the Company's 1997 fiscal
           year. In fiscal year 1998, and each year thereafter, the bonus
           computation will be based upon all of the Quarterly Accounting
           Periods of the Company's fiscal year.

2.         Bonus Computation
<PAGE>

           Bonus is calculated by multiplying the Combined Year-To-Date Revenue
           and Profit Percentage Achievement at the end of a Quarterly
           Accounting Period by the aggregate year-to-date Cash Bonus for the
           same Quarterly Accounting period, and subtracting from that total any
           bonuses previously paid in the same year.

2.1        The Cash Bonus is presently established at(pound)10,000 for each of
           the Company's Quarterly Accounting periods.

3.         Bonus Payments

           Subject to paragraph 3.1 below, any cash bonus payments payable to
           the Employee under paragraphs 1 and 3 above, shall be paid not later
           than the last day of the month following the end of the Quarterly
           Accounting Period to which the bonus relates.

3.1        A bonus shall not be paid to the Employee for any Quarterly
           Accounting period if during that period the company has given the
           Employee notice to terminate the Appointment for any reason specified
           in Clauses 2.1 or 10.1, or notice to terminate has been served under
           Clause 2.2.

4.         Reimbursement of Unearned Bonus Payments

           Combined Year-To-Date Revenue and Profit Percentage Achievement,
           during the course of the fiscal year, may require the repayment of
           earlier quarterly bonuses, or options thereof, paid in the same
           fiscal year. For example, if the Combined Year-To-Date Revenue and
           profit Percentage Achievement in the first two quarters of a fiscal
           year were 105% the Employee would have been paid a bonus of
           (pound)30,000. If, at the end of the third Quarterly Accounting
           Period, in the same fiscal year, the Combined Year-To-Date Revenue
           and Profit Percentage Achievement for the Company were to drop to
           80%, this figure, when multiplied by the aggregate of the
           year-to-date quarterly cash bonuses for that quarter, in this
           instance (pound)30,000, would produce an amount, in this instance,
           (pound)24,000, which falls below the total value of previously paid
           bonuses, (pound)30,000 in this example, thus, generating a
           requirement for a payback of a portion of the earlier bonus payments,
           in this instance (pound)6,000 ((pound)30,000-(pound)24,000=(pound)
           6,000).

4.1        Subject to paragraph 4.2 below, reimbursement of any unearned bonus
           payments shall normally be effected by deducting the repayment amount
           from future bonuses earned.
<PAGE>

           Special alternative arrangements for the repayment of unearned
           bonuses can be made only upon the written authorizaiton of the
           President or Executive Vice President of Datawatch Corporation.

4.2        If the Company has given the Employee notice to terminate the
           Appointment for any reason specified in Clause 10.1, or notice to
           terminate has been served under Clause 2.2, any unearned bonuses owed
           by the Employee to the Company shall become immediately due and
           payable, and the Company is specifically authorized to collect the
           same in accordance with Clause 3.3(c), and such other means as may be
           at its disposal.

B.         STOCK OPTION BONUS

1.         Bonus Eligibility

           The Employee is eligible to earn stock option bonuses for each of the
           Company's Quarterly Accounting Periods in which the Company's revenue
           and profit results for the Company's fiscal year-to-date do not fall
           below acceptable limits as set out below.

1.1        For the third quarter of the Company's 1997 fiscal year, which is the
           period from 1 April 1997 to 30 June 1997, and which is the first
           Quarterly Accounting Period in which the Employee is eligible to earn
           a bonus, the minimum acceptable limit which must be achieved before
           the Employee becomes eligible to earn a stock option bonus is a 75%
           Combined Revenue and Profit Percentage Achievement for that quarter
           predicated solely on the Company's consolidated performance in the
           third quarter, and ignoring the prior year-to-date performance of the
           Company.

1.2        For the fourth quarter of the Company's 1997 fiscal year, which is
           the period from 1 July 1997 to 30 September 1997, and for each of the
           Company's Quarterly Accounting Periods thereafter, the minimum
           acceptable limit, which must be achieved before the Employee becomes
           eligible to earn a stock option bonus is a Combined Year-To-Date
           Revenue and Profit Percentage Achievement at the end of the relevant
           quarter of at least 80%. In the Company's 1997 fiscal year, the year
           in which the Employee begins his participation in this bonus plan,
           for the purposes of bonus computation only, the fiscal year will
           consist solely of the third and fourth quarters of the Company's 1997
           fiscal year. In fiscal year
<PAGE>

           1998, and each year thereafter, the bonus computation will be based
           upon al of the Quarterly Accounting Periods of the Company's fiscal
           year.

2.         Bonus Computation

           Bonus is calculated by multiplying the Combined Year-To-Date Revenue
           and Profit Percentage Achievement at the end of a Quarterly
           Accounting Period by the aggregate year-to-date Stock Option Bonus
           for same Quarterly Accounting Period, and subtracting from that total
           nay stock option bonuses previously paid in the same year. The total
           value of the stock option earned in that quarter when divided by the
           market price, in Sterling, of Datawatch Corporation Common Stock
           $0.01 par value shares, at the close of trading on the day of
           issuance, shall determine the number of shares for which the Employee
           is granted an option.

2.1        The Stock Option Bonus is presently established at(pound)6,250 for
           each of the Company's Quarterly Account Periods.

3.         Bonus Payments

           Subject to paragraph 3.1 below, any stock option bonus payments
           payable to the Employee under paragraph 2 above, shall be paid not
           later than the last day of the month following the end of the
           Quarterly Accounting period to which the bonus relates.

3.1        A bonus shall not be paid to the Employee for any Quarterly
           Accounting Period if during that period the Company has given the
           Employee notice to terminate the Appointment for any reason specified
           in Clauses 2.1 or 10.1, or notice to terminate has been served under
           Clause 2.2.

4.         Reimbursement of Unearned Stock Option Grants

           Combined Year-To-Date Revenue and Profit Percentage Achievement,
           during the course of the fiscal year, may require the repayment of
           earlier quarterly bonuses paid in the same fiscal year. For example,
           if the Combined Year-To-Date Revenue and Profit Percentage
           Achievement in the first two quarters of fiscal year were 150%, the
           Employee would have been paid a stock option bonus with a value of
           (pound)18,750. If at the end of the third Quarterly
<PAGE>

           Accounting period, in the same fiscal year, the Combined Year-To-Date
           Revenue and Profit Percentage Achievement for the Company were to
           drop to 80%, this figure, when multiplied by the aggregate value of
           the year-to-date quarterly stock option bonus for that quarter, in
           this instance (pound)18,750, would produce an amount, in this
           instance a stock option bonus value of (pound)15,000, which falls
           below the total value of previously paid stock option bonuses,
           (pound)18,750 in this example, thus, generating a requirement for a
           payback of a portion of the earlier stock option bonus payments, in
           this instance (pound)3,750
           ((pound)18,750-(pound)15,000=(pound)3,750).

4.1        Subject to paragraph 4.2 below, reimbursement of any unearned stock
           option grants shall normally be effected by deducting any unearned
           grants in full from future stock option bonuses earned, until
           complete repayment has been accomplished.

4.2        If the Company has given the Employee notice to terminate the
           Appointment for any reason specified in Clause 10.1, or notice to
           terminate has been served under Clause 2.2, any unearned stock option
           grants owed by the Employee to the Company shall be cancelled by
           Datawatch Corporation on the date of the termination.

5.         Stock Option Grants Under 1987 Stock Plan

           Stock options provided under paragraph 3, above, are granted pursuant
           to and are governed by Datawatch Corporation's 1987 Stock Plan, a
           copy of which is attached hereto as Schedule 7. This Plan also
           governs the exercise of such options.

<PAGE>





ATTESTATIONS




           Signed on behalf of
           WORKGROUP SYSTEMS LIMITED        ) /s/ Clifford G. Zimmer, Jr.
           by its duly authorised officers: ) Chairman & Chief Executive Officer






           Signed by ROBERT HAGGER:         ) /s/ Robert Hagger