The Pacers said Monday that they will not match the offer sheet Toronto issued to Jack, a restricted free agent.
The Pacers acquired Jack in a five-player trade a year ago. In his one season with Indiana, Jack played in all 82 games, averaging a career-high 13.1 points.
Oklahoma City waived Watson last week. His agent, Todd Ramasar, said Watson will be sign a one-year deal and join Indiana by the end of this week. He would not disclose terms.
Watson, an eight-year NBA veteran, appeared in 68 games last season and averaged 6.6 points and 5.8 assists. Ramasar said the Pacers made the decision to sign Watson, knowing they wouldn't re-sign Jack.
"It's something that I think was orchestrated even before Earl was waived," Ramasar said.