UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported) September
26, 2005
(Exact
Name of Registrant as Specified in Its Charter)
(State
or
Other Jurisdiction of
Incorporation)
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000-19960
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02-0405716
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(Commission
File Number)
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(IRS
Employer Identification No.)
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175
Cabot Street, Suite 503
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Lowell,
Massachusetts
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01854
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(Registrant’s
Telephone Number, Including Area Code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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Item
1.01 Entry
into a Material Definitive Agreement.
(1)
Acceleration of Vesting of Unvested Stock Options.
On
September 26, 2005, the Compensation and Stock Committee (the “Committee”) of
the Board of Directors of Datawatch Corporation (the “Registrant”) approved the
immediate and full acceleration of the vesting of each otherwise unvested
stock
option granted under the Registrant's 1996 Stock Plan and the Registrant's
1996
International Employee Non-Qualified Stock Option Plan (collectively, the
“1996
Plans”). Stock options granted from 2002 through 2005 with respect to 169,040
shares of the Registrant's Common Stock (“Common Shares”), including an
aggregate of approximately 98,120 options held by executive officers and
directors, are subject to this acceleration, which was effective as of September
26, 2005. Based on the closing price of the Registrant's common stock of
$3.55
per share on September 26, 2005, approximately 105,000 of the accelerated
options were in-the-money (i.e., the option exercise price was less than
$3.55 per share) including an aggregate of 63,165 options held by
directors
and executive officers. Each director and executive officer has agreed pursuant
to a lock-up agreement (a “Lock-up Agreement”) to refrain from selling Common
Shares acquired upon the exercise of accelerated options (other than shares
needed to cover the exercise price and satisfy withholding taxes) until the
date
on which the exercise would have been permitted under the option's
pre-acceleration vesting terms or, if earlier, the officer's last day of
service
or upon an “Acquisition” as defined in the 1996 Plans.
The
decision to accelerate the vesting of these options was made primarily to
reduce
non-cash compensation expense that would have been recorded in future periods
following the Registrant's application of Financial Accounting Standards
Board
Statement No. 123, “Share Based Payment (revised 2004)” (“FAS 123R”). The
Registrant will be required to apply the expense recognition provisions of
FAS
123R beginning in the first quarter of fiscal 2006. The Registrant’s current
estimate for the aggregate future expense that will be eliminated as a result
of
the acceleration of the vesting of these options is approximately $400,000
over
the next three years, based on all outstanding options continuing to vest
under
their original, pre-acceleration vesting terms. The Registrant will incur
a
one-time charge related to the acceleration of approximately $111,000. This
charge will be reflected in the statements of operations and in a pro forma
footnote disclosure in the Registrant's fiscal year 2005 financial statements,
as permitted under the transition guidance provided by the FASB.
The
form
of the Lock-Up Agreement is attached hereto as Exhibit 99.1.
(2) Execution
of Sublease.
On
September 28, 2005, Datawatch Corporation (the “Registrant”) entered into a
sublease agreement (the “Sublease”) as sublessee with Tellabs Operations, Inc.,
a Delaware corporation (“Tellabs”). The Sublease is conditioned on Tellabs
receiving the consent of Boston Properties Limited Partnership (“Landlord”) on
or before October 28, 2005. Under the terms of the Sublease, the Registrant’s
headquarters will move from its present location at 175 Cabot Street, Lowell,
Massachusetts to 271 Mill Road, Chelmsford, Massachusetts. The new headquarters
will consist of approximately 14,683 square feet. The Sublease is for a period
of sixty-six (66) months. The aggregate rent for the term of the Sublease
is approximately $735,985. In addition to rent, the Sublease requires the
Registrant to pay certain taxes, insurance and operating
costs
related to the leased building, in amounts yet to be determined. The Registrant
is also responsible for the costs of certain tenant improvements associated
with
the new facility but will be entitled to reimbursement for certain costs
from
Tellabs.
The
Sublease is attached hereto as Exhibit 99.2
The
information set forth in Item 1.01 above is incorporated herein by
reference.
Item
9.01 Financial
Statements and Exhibits.
99.1 Lock-Up
Agreement
99.2 Sublease
Agreement dated as of September 28, 2005 by and between the Registrant
and
Tellabs Operations, Inc.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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DATAWATCH
CORPORATION
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Date: September
30, 2005
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By:
/s/
Robert W. Hagger
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Name:
Robert W. Hagger
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Title:
President and Chief Executive Officer
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