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Sample Business Contracts

Severance Agreement - Datawatch. Corp. and Calvin MacKay

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December 1, 2001

Calvin MacKay
                
North Andover, MA  01845

Dear Calvin:

            The purpose of this letter is to memorialize the terms of your
eligibility for severance with Datawatch Corporation ("the Company") in the
event that you are involuntarily terminated by the Company without Cause (as
defined in Paragraph 3) or if you terminate your employment for Good Reason (as
defined in Paragraph 2) prior to July 31, 2004.

            1. Your at-will employment with the Company began on December 1,
2001, as Senior Vice President of Enterprise Software. As an at-will employee,
either you or the Company may terminate your employment at any time for any or
no reason with or without notice. Neither this letter nor its terms constitute a
contract for continued employment or a contract for a specific term of
employment. Instead, this letter sets forth the terms of our agreement with
respect to your eligibility for severance.

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

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

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

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

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

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

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

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

            4. In the event that the Company terminates your employment prior to
July 31, 2004 for any reason other than those stated in Paragraph 3 above or if
you terminate your employment prior to July 31, 2004 for Good Reason as defined
in Paragraph 2, and you sign a comprehensive release in the form, and of a
scope, acceptable to the Company (the "Release"), the Company will pay you
severance payments in equal monthly installments at your then monthly base
salary for six months following your termination (the "Severance Period"). Such
payments shall be made in accordance with the Company's customary payroll
practices and shall be subject to all applicable federal and state withholding,
payroll and other taxes.

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

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

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


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

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

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


                                           Very truly yours,

                                           DATAWATCH CORPORATION

                                           /s/ Robert Hagger
                                           -------------------------------------
                                           Robert Hagger
                                           President and Chief Executive Officer


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

ACCEPTED:


/s/ Calvin Mackay
-------------------------------------
Calvin Mackay