diff --git a/che-theia-terminal/src/browser/server-definition/base-terminal-protocol.ts b/che-theia-terminal/src/browser/server-definition/remote-terminal-protocol.ts
similarity index 56%
rename from che-theia-terminal/src/browser/server-definition/base-terminal-protocol.ts
rename to che-theia-terminal/src/browser/server-definition/remote-terminal-protocol.ts
index a4e0a0a..45e9d54 100644
--- a/che-theia-terminal/src/browser/server-definition/base-terminal-protocol.ts
+++ b/che-theia-terminal/src/browser/server-definition/remote-terminal-protocol.ts
@@ -9,9 +9,8 @@
  **********************************************************************/
 
 import { injectable } from 'inversify';
-import { TerminalWatcher } from '@theia/terminal/lib/common/terminal-watcher';
-import { IBaseTerminalClient, IBaseTerminalExitEvent, IBaseTerminalErrorEvent } from '@theia/terminal/lib/common/base-terminal-protocol';
 import { JsonRpcProxy } from '@theia/core';
+import { Emitter, Event } from '@theia/core/lib/common/event';
 
 export const TERMINAL_SERVER_TYPE = 'terminal';
 export const CONNECT_TERMINAL_SEGMENT = 'connect';
@@ -50,18 +49,49 @@ export interface RemoteTerminalServer {
 export const RemoteTerminalServerProxy = Symbol('RemoteTerminalServerProxy');
 export type RemoteTerminalServerProxy = JsonRpcProxy<RemoteTerminalServer>;
 
-/**
- * For now this class it's a stub. Real implementation depends on
- * https://github.com/eclipse/che-machine-exec/issues/5
- */
+// Terminal exec exit event
+export class ExecExitEvent {
+    id: number;
+}
+
+// Terminal exec error event
+export class ExecErrorEvent {
+    id: number;
+    stack: string;
+}
+
+// Terminal exec client
+export interface TerminalExecClient {
+    onExecExit(event: ExecExitEvent): void;
+    onExecError(event: ExecErrorEvent): void;
+}
+
 @injectable()
-export class RemoteTerminaWatcher extends TerminalWatcher {
-    getTerminalClient(): IBaseTerminalClient {
+export class RemoteTerminalWatcher {
+
+    private onRemoteTerminalExitEmitter = new Emitter<ExecExitEvent>();
+    private onRemoteTerminalErrorEmitter = new Emitter<ExecErrorEvent>();
+
+    getTerminalExecClient(): TerminalExecClient {
+
+        const exitEmitter = this.onRemoteTerminalExitEmitter;
+        const errorEmitter = this.onRemoteTerminalErrorEmitter;
+
         return {
-            onTerminalExitChanged(event: IBaseTerminalExitEvent) {
+            onExecExit(event: ExecExitEvent) {
+                exitEmitter.fire(event);
             },
-            onTerminalError(event: IBaseTerminalErrorEvent) {
+            onExecError(event: ExecErrorEvent) {
+                errorEmitter.fire(event);
             }
         };
     }
+
+    get onTerminalExecExit(): Event<ExecExitEvent> {
+        return this.onRemoteTerminalExitEmitter.event;
+    }
+
+    get onTerminalExecError(): Event<ExecErrorEvent> {
+        return this.onRemoteTerminalErrorEmitter.event;
+    }
 }
diff --git a/che-theia-terminal/src/browser/server-definition/terminal-proxy-creator.ts b/che-theia-terminal/src/browser/server-definition/terminal-proxy-creator.ts
index 006e2b5..ccac519 100644
--- a/che-theia-terminal/src/browser/server-definition/terminal-proxy-creator.ts
+++ b/che-theia-terminal/src/browser/server-definition/terminal-proxy-creator.ts
@@ -10,7 +10,7 @@
 
 import { injectable, inject } from 'inversify';
 import { RemoteWebSocketConnectionProvider, } from './remote-connection';
-import { CONNECT_TERMINAL_SEGMENT, RemoteTerminalServerProxy, RemoteTerminalServer } from './base-terminal-protocol';
+import { CONNECT_TERMINAL_SEGMENT, RemoteTerminalServerProxy, RemoteTerminalServer, RemoteTerminalWatcher } from './remote-terminal-protocol';
 import URI from '@theia/core/lib/common/uri';
 
 export type TerminalApiEndPointProvider = () => Promise<string | undefined>;
@@ -20,13 +20,19 @@ export type TerminalProxyCreatorProvider = () => Promise<TerminalProxyCreator>;
 @injectable()
 export class TerminalProxyCreator {
 
+    private remoteTermServer: RemoteTerminalServerProxy;
+
     constructor(@inject(RemoteWebSocketConnectionProvider) protected readonly connProvider: RemoteWebSocketConnectionProvider,
                 @inject('term-api-end-point') protected readonly apiEndPoint: string,
+                @inject(RemoteTerminalWatcher) protected readonly terminalWatcher: RemoteTerminalWatcher,
             ) {
     }
 
     create(): RemoteTerminalServerProxy {
-        const url = new URI(this.apiEndPoint).resolve(CONNECT_TERMINAL_SEGMENT);
-        return this.connProvider.createProxy<RemoteTerminalServer>(url.toString());
+        if (!this.remoteTermServer) {
+            const url = new URI(this.apiEndPoint).resolve(CONNECT_TERMINAL_SEGMENT);
+            this.remoteTermServer = this.connProvider.createProxy<RemoteTerminalServer>(url.toString(), this.terminalWatcher.getTerminalExecClient());
+        }
+        return this.remoteTermServer;
     }
 }
diff --git a/che-theia-terminal/src/browser/terminal-frontend-module.ts b/che-theia-terminal/src/browser/terminal-frontend-module.ts
index cd8c061..79a67ba 100755
--- a/che-theia-terminal/src/browser/terminal-frontend-module.ts
+++ b/che-theia-terminal/src/browser/terminal-frontend-module.ts
@@ -24,7 +24,7 @@ import { TerminalService } from '@theia/terminal/lib/browser/base/terminal-servi
 import { TerminalWidget, TerminalWidgetOptions } from '@theia/terminal/lib/browser/base/terminal-widget';
 import { RemoteTerminalWidget } from './terminal-widget/remote-terminal-widget';
 import { RemoteTerminaActiveKeybingContext } from './contribution/keybinding-context';
-import { RemoteTerminalServerProxy, RemoteTerminalServer } from './server-definition/base-terminal-protocol';
+import { RemoteTerminalServerProxy, RemoteTerminalServer, RemoteTerminalWatcher } from './server-definition/remote-terminal-protocol';
 
 export default new ContainerModule((bind: interfaces.Bind, unbind: interfaces.Unbind, isBound: interfaces.IsBound, rebind: interfaces.Rebind)  => {
     bind(KeybindingContext).to(RemoteTerminaActiveKeybingContext).inSingletonScope();
@@ -42,6 +42,8 @@ export default new ContainerModule((bind: interfaces.Bind, unbind: interfaces.Un
 
     bind(RemoteTerminalServer).toService(RemoteTerminalServerProxy);
 
+    bind(RemoteTerminalWatcher).toSelf().inSingletonScope();
+
     let terminalNum = 0;
     bind(WidgetFactory).toDynamicValue(ctx => ({
         id: REMOTE_TERMINAL_WIDGET_FACTORY_ID,
@@ -102,7 +104,7 @@ export default new ContainerModule((bind: interfaces.Bind, unbind: interfaces.Un
                     }
                     return reject('Unabel to find che-machine-exec server.');
                 }).catch(err => {
-                    console.log('Failed get terminal proxy. Cause: ', err);
+                    console.log('Failed to get terminal proxy. Cause: ', err);
                     return reject(err);
                 });
             });
diff --git a/che-theia-terminal/src/browser/terminal-widget/remote-terminal-widget.ts b/che-theia-terminal/src/browser/terminal-widget/remote-terminal-widget.ts
index 1b5fe94..d759cfb 100644
--- a/che-theia-terminal/src/browser/terminal-widget/remote-terminal-widget.ts
+++ b/che-theia-terminal/src/browser/terminal-widget/remote-terminal-widget.ts
@@ -8,11 +8,11 @@
 // Copied from 'terminal-widget.ts' with some modifications, CQ: https://dev.eclipse.org/ipzilla/show_bug.cgi?id=16269
 /* tslint:enable */
 
-import { injectable, inject } from 'inversify';
+import { injectable, inject, postConstruct } from 'inversify';
 import { TerminalWidgetImpl } from '@theia/terminal/lib/browser/terminal-widget-impl';
 import { IBaseTerminalServer } from '@theia/terminal/lib/common/base-terminal-protocol';
 import { TerminalProxyCreator, TerminalProxyCreatorProvider } from '../server-definition/terminal-proxy-creator';
-import { ATTACH_TERMINAL_SEGMENT, RemoteTerminalServerProxy } from '../server-definition/base-terminal-protocol';
+import { ATTACH_TERMINAL_SEGMENT, RemoteTerminalServerProxy, RemoteTerminalWatcher } from '../server-definition/remote-terminal-protocol';
 import { RemoteWebSocketConnectionProvider } from '../server-definition/remote-connection';
 import { Deferred } from '@theia/core/lib/common/promise-util';
 import { Disposable } from 'vscode-jsonrpc';
@@ -43,9 +43,30 @@ export class RemoteTerminalWidget extends TerminalWidgetImpl {
     @inject(RemoteWebSocketConnectionProvider)
     protected readonly remoteWebSocketConnectionProvider: RemoteWebSocketConnectionProvider;
 
+    @inject(RemoteTerminalWatcher)
+    protected readonly remoteTerminalWatcher: RemoteTerminalWatcher;
+
     @inject(RemoteTerminalWidgetOptions)
     options: RemoteTerminalWidgetOptions;
 
+    @postConstruct()
+    protected init(): void {
+        super.init();
+
+        this.toDispose.push(this.remoteTerminalWatcher.onTerminalExecExit(exitEvent => {
+            if (this.terminalId  === exitEvent.id) {
+                this.dispose();
+            }
+        }));
+
+        this.toDispose.push(this.remoteTerminalWatcher.onTerminalExecError(errEvent => {
+            if (this.terminalId === errEvent.id) {
+                this.dispose();
+                this.logger.error(`Terminal error: ${errEvent.stack}`);
+            }
+        }));
+    }
+
     async start(id?: number): Promise<number> {
         try {
             if (!this.termServer) {
diff --git a/che-theia-terminal/src/node/workspace-service-impl.ts b/che-theia-terminal/src/node/workspace-service-impl.ts
index 9b15717..c2adf06 100755
--- a/che-theia-terminal/src/node/workspace-service-impl.ts
+++ b/che-theia-terminal/src/node/workspace-service-impl.ts
@@ -12,7 +12,7 @@ import { injectable, inject } from 'inversify';
 import WorkspaceClient, { IRemoteAPI, IWorkspace, IServer, IMachine, IRequestError, IRestAPIConfig } from '@eclipse-che/workspace-client';
 import { EnvVariablesServer } from '@theia/core/lib/common/env-variables';
 import { CHEWorkspaceService } from '../common/workspace-service';
-import { TERMINAL_SERVER_TYPE } from '../browser/server-definition/base-terminal-protocol';
+import { TERMINAL_SERVER_TYPE } from '../browser/server-definition/remote-terminal-protocol';
 
 const TYPE: string = 'type';
 const EDITOR_SERVER_TYPE: string = 'ide';