(e) Compensatory Plans and Arrangements

On January 17, 2013, Datawatch's Compensation and Stock Committee (the "Compensation Committee") approved the fiscal 2013 Corporate Officers Compensation Plan, which provides for fiscal 2013 compensation consisting of base salary, target cash bonuses and awards of restricted stock units for shares of Datawatch's common stock ("RSUs") for the executive officers of Datawatch, including the following named executive officers:

                                                               Target Cash
Executive (Title)                           Base Salary           Bonus           RSU Award

Michael A. Morrison (CEO)                  $     335,000                  -            50,000
Harvey C. Gross (CTO and VP, Product

Mr. Morrison's award of RSUs will be granted at a subsequent meeting of the Compensation Committee and will be subject to a restricted stock unit agreement in the form previously filed with the Securities and Exchange Commission as Exhibit 10.29 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

These executives will be eligible to receive their target cash bonus, as applicable, based on whether certain Datawatch fiscal 2013 financial plan goals are met, as follows:

          Executive           Bonus Allocation(1)
          Michael A. Morrison 75% on Plan Revenue(2)
                              25% on Plan Net Income(3)
          Harvey C. Gross     100% on Plan Revenue(2)
                              (provided Net Income is positive after
                              payout of cash bonuses)

(1) The aggregate bonus pay outs as calculated above cannot exceed 50% of the Net Income otherwise earned by Datawatch (as calculated prior to applying the bonuses). If the aggregate bonus calculations exceed this 50% threshold, the individual bonuses will be reduced either proportionally or otherwise, at the discretion of the Compensation Committee, to reach the 50% threshold.

(2) The Plan Revenue related bonus is eligible for pay out beginning at performance of 80% of Plan Revenue. The payout eligibility at 80% of Plan Revenue will be at 60% of the allocated bonus amount and the payout eligibility will scale up to 100% linearly. (For instance, performance at 90% of Plan Revenue will be eligible for pay out at 80% of the allocated bonus amount.) Performance over 100% of Plan Revenue will be eligible for pay out at a 2 to 1 rate up to 120% of Plan Revenue. (For instance, performance at 115% of Plan Revenue will be eligible for pay out at 130% of the allocated bonus amount.) Performance over 120% of Plan Revenue will be eligible for pay out at a 1 to 1 rate, up to a maximum of 175% of the allocated bonus amount.

(3) The Plan Net Income related bonus will be eligible for pay out beginning at performance of 50% of Plan Net Income. The payout eligibility at 50% of Plan Net Income will be at 25% of the allocated bonus amount and the payout eligibility will scale up to 100% linearly. (For instance, performance at 80% of Plan Net Income will be eligible for pay out at 70% of the allocated bonus amount.) Performance over 100% of Plan Net Income will be eligible for pay out at a 1.5 to 1 rate up to a maximum of 120% of Plan Net Income. (For instance, performance at 105% of Plan Net Income will be eligible for pay out at 107.5% of the allocated bonus amount, and the maximum bonus at 120% performance will be eligible for pay out at 130% of the allocated bonus amount.)

The Compensation Committee retained the discretion at any time to change the above bonus criteria (including bonus amounts and targets), including in the event any operating changes are approved during the fiscal year that materially impact Datawatch's fiscal 2013 financial plan.