EXHIBIT 10.27
                                                                   -------------


                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

         This Intellectual Property Security Agreement (this "IP Agreement") is
made as of the 30th day of October, 2001 by and between DATAWATCH CORPORATION, a
Delaware corporation with its principal place of business at 175 Cabot Street,
Suite 503, Lowell, Massachusetts 01854-3633 ("Grantor"), and SILICON VALLEY
BANK, a California-chartered bank, with its principal place of business at 3003
Tasman Drive, Santa Clara, California 95054 and with a loan production office
located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462, doing business under the name "Silicon Valley East"
("Lender").

                                    RECITALS

         A. Lender has agreed to make advances of money and to extend certain
financial accommodations to Grantor (the "Loan"), pursuant to a certain Loan and
Security Agreement of even date herewith between Grantor and Lender, as amended
from time to time (as amended, the "Loan Agreement"). The Loan is secured
pursuant to the terms of the Loan Agreement. Lender is willing to enter into
certain financial accommodations with Grantor, but only upon the condition,
among others, that Grantor shall grant to Lender a security interest in certain
Copyrights, Trademarks, Patents, and Mask Works, and other assets, to secure the
obligations of Grantor under the Loan Agreement. Defined terms used but not
defined herein shall have the same meanings as in the Loan Agreement.

         B. Pursuant to the terms of the Loan Agreement, Grantor has granted to
Lender a security interest in all of Grantor's right title and interest, whether
presently existing or hereafter acquired in, to and under all of the Collateral
(as defined therein).

         NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged and intending to be legally bound, as collateral security
for the prompt and complete payment when due of Grantor's Indebtedness (as
defined below), Grantor hereby represents, warrants, covenants and agrees as
follows:

         1.   Grant of Security Interest. As collateral security for the prompt
and complete payment and performance of all of Grantor's present or future
indebtedness, obligations and liabilities to Lender (hereinafter, the
"Indebtedness"), including, without limitation, under the Loan Agreement,
Grantor hereby grants a security interest in all of Grantor's right, title and
interest in, to and under its registered and unregistered intellectual property
collateral (all of which shall collectively be called the "Intellectual Property
Collateral"), including, without limitation, the following:

              (a)   Any and all copyright rights, copyright applications,
         copyright registrations and like protections in each work or authorship
         and derivative work thereof, whether published or unpublished and
         whether or not the same also constitutes a trade secret, now or
         hereafter existing, created, acquired or held, including without
         limitation those set forth on EXHIBIT A attached hereto (collectively,
         the "Copyrights");

              (b)   Any and all trade secrets, and any and all intellectual
         property rights in computer software and computer software products now
         or hereafter existing, created, acquired or held;

              (c)   Any and all design rights which may be available to Grantor
         now or hereafter existing, created, acquired or held;

              (d)   All patents, patent applications and like protections
         including, without limitation, improvements, divisions, continuations,
         renewals, reissues, extensions and continuations-in-part of the same,
         including without limitation the patents and patent applications set
         forth on EXHIBIT B attached hereto (collectively, the "Patents");
<PAGE>

              (e)   Any trademark and service mark rights, slogans, trade dress,
         and tradenames, whether registered or not, applications to register and
         registrations of the same and like protections, and the entire goodwill
         of the business of Grantor connected with and symbolized by such
         trademarks, including without limitation those set forth on EXHIBIT C
         attached hereto (collectively, the "Trademarks");

              (f)   All mask works or similar rights available for the
         protection of semiconductor chips, now owned or hereafter acquired,
         including, without limitation those set forth on EXHIBIT D attached
         hereto (collectively, the "Mask Works");

              (g)   Any and all claims for damages by way of past, present and
         future infringements of any of the rights included above, with the
         right, but not the obligation, to sue for and collect such damages for
         said use or infringement of the intellectual property rights identified
         above;

              (h)   All licenses or other rights to use any of the Copyrights,
         Patents, Trademarks, or Mask Works and all license fees and royalties
         arising from such use to the extent permitted by such license or
         rights;

              (i)   All amendments, extensions, renewals and extensions of any
         of the Copyrights, Trademarks, Patents, or Mask Works; and

              (j)   All proceeds and products of the foregoing, including
         without limitation all payments under insurance or any indemnity or
         warranty payable in respect of any of the foregoing.

         2.   Authorization and Request. Grantor authorizes and requests that
the Register of Copyrights and the Commissioner of Patents and Trademarks record
this IP Agreement.

         3.   Covenants and Warranties. Grantor represents, warrants, covenants
and agrees as follows:

              (a)   Grantor is now the sole owner of the Intellectual Property
         Collateral, except for non-exclusive licenses granted by Grantor to its
         customers in the ordinary course of business or exclusive licenses
         granted to distributors in the ordinary course of business to market
         certain Intellectual Property Collateral.

              (b)   Performance of this IP Agreement does not conflict with or
         result in a breach of any material agreement to which Grantor is bound.

              (c)   During the term of this IP Agreement, Grantor will not
         transfer or otherwise encumber any interest in the Intellectual
         Property Collateral, except for non-exclusive licenses granted by
         Grantor in the ordinary course of business, exclusive licenses granted
         to distributors in the ordinary course of business to market certain
         Intellectual Property Collateral, or as set forth in this IP Agreement;

              (d)   To its knowledge, each of the Patents is valid and
         enforceable, and no part of the Intellectual Property Collateral has
         been judged invalid or unenforceable, in whole or in part, and no claim
         has been made that any part of the Intellectual Property Collateral
         violates the rights of any third party;

              (e)   Grantor shall promptly advise Lender of any material adverse
         change in the composition of the Collateral, including but not limited
         to any subsequent ownership right of the Grantor in or to any
         Trademark, Patent, Copyright, or Mask Work specified in this IP
         Agreement;

              (f)   Grantor shall (i) protect, defend and maintain the validity
         and enforceability of the Trademarks, Patents, Copyrights, and Mask
         Works, (ii) use its best efforts to detect infringements of the
         Trademarks, Patents, Copyrights, and Mask Works and promptly advise
         Lender in writing of material infringements detected and (iii) not
         allow any Trademarks, Patents, Copyrights, or Mask Works to be

                                       -2-
<PAGE>
         abandoned, forfeited or dedicated to the public without the written
         consent of Lender, which shall not be unreasonably withheld, unless
         Grantor determines that reasonable business practices suggest that
         abandonment is appropriate.

              (g)   Grantor shall, in its reasonable business discretion,
         register the most recent version of any of Grantor's Copyrights, if not
         so already registered, and shall, from time to time, execute and file
         such other instruments, and take such further actions as Lender may
         reasonably request from time to time to perfect or continue the
         perfection of Lender's interest in the Intellectual Property
         Collateral;

              (h)   This IP Agreement creates, and in the case of after acquired
         Intellectual Property Collateral, this IP Agreement will create at the
         time Grantor first has rights in such after acquired Intellectual
         Property Collateral, in favor of Lender a valid and perfected first
         priority security interest and collateral assignment in the
         Intellectual Property Collateral in the United States securing the
         payment and performance of the obligations evidenced by the Loan
         Agreement upon making the filings referred to in clause (i) below;

              (i)   To its knowledge, except for, and upon, the filing of UCC
         financing statements in the appropriate filing office and with the
         United States Patent and Trademark office with respect to the Patents
         and Trademarks and the Register of Copyrights with respect to the
         Copyrights and Mask Works necessary to perfect the security interests
         created hereunder and except as has been already made or obtained, no
         authorization, approval or other action by, and no notice to or filing
         with, any U.S. governmental authority or U.S. regulatory body is
         required either (i) for the grant by Grantor of the security interest
         granted hereby, or for the execution, delivery or performance of this
         IP Agreement by Grantor in the U.S. or (ii) for the perfection in the
         United States or the exercise by Lender of its rights and remedies
         thereunder;

              (j)   All information heretofore, herein or hereafter supplied to
         Lender by or on behalf of Grantor with respect to the Intellectual
         Property Collateral is accurate and complete in all material respects.

              (k)   Grantor shall not enter into any agreement that would
         materially impair or conflict with Grantor's obligations hereunder
         without Lender's prior written consent, which consent shall not be
         unreasonably withheld. Grantor shall not permit the inclusion in any
         material contract to which it becomes a party of any provisions that
         could or might in any way prevent the creation of a security interest
         in Grantor's rights and interest in any property included within the
         definition of the Intellectual property Collateral acquired under such
         contracts.

              (l)   Upon any executive officer of Grantor obtaining actual
         knowledge thereof, Grantor will promptly notify Lender in writing of
         any event that materially adversely affects the value of any material
         Intellectual Property Collateral, the ability of Grantor to dispose of
         any material Intellectual Property Collateral of the rights and
         remedies of Lender in relation thereto, including the levy of any legal
         process against any of the Intellectual Property Collateral.

         4.   Lender's Rights. Lender shall have the right, but not the
obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this IP Agreement to take but which Grantor fails to take, after
fifteen (15) days' notice to Grantor. Grantor shall reimburse and indemnify
Lender for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 4.

         5.   Inspection Rights. Grantor hereby grants to Lender and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, any of Grantor's plants
and facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Intellectual Property Collateral, and to inspect the products and quality
control records relating thereto upon reasonable written notice to Grantor and
as often as may be reasonably requested, but not more than once in every six (6)
months; provided, however, nothing herein shall entitle Lender access to
Grantor's trade secrets and other proprietary information.

                                       -3-
<PAGE>

         6.   Further Assurances; Attorney in Fact.

              (a)   On a continuing basis, Grantor will, subject to any prior
         licenses, encumbrances and restrictions and prospective licenses, make,
         execute, acknowledge and deliver, and file and record in the proper
         filing and recording places in the United States, all such instruments,
         including appropriate financing and continuation statements and
         collateral agreements and filings with the United States Patent and
         Trademarks Office and the Register of Copyrights, and take all such
         action as may reasonably be deemed necessary or advisable, or as
         requested by Lender, to perfect Lender's security interest in all
         Copyrights, Patents, Trademarks, and Mask Works and otherwise to carry
         out the intent and purposes of this IP Agreement, or for assuring and
         confirming to Lender the grant or perfection of a security interest in
         all Intellectual Property Collateral.

              (b)   Grantor hereby irrevocably appoints Lender as Grantor's
         attorney-in-fact, with full authority in the place and stead of Grantor
         and in the name of Grantor, Lender or otherwise, from time to time in
         Lender's discretion, upon Grantor's failure or inability to do so, to
         take any action and to execute any instrument which Lender may deem
         necessary or advisable to accomplish the purposes of this IP Agreement,
         including:

                    (i)   To modify, in its sole discretion, this IP Agreement
              without first obtaining Grantor's approval of or signature to such
              modification by amending Exhibit A, Exhibit B, Exhibit C, and
              Exhibit D hereof, as appropriate, to include reference to any
              right, title or interest in any Copyrights, Patents, Trademarks or
              Mask Works acquired by Grantor after the execution hereof or to
              delete any reference to any right, title or interest in any
              Copyrights, Patents, Trademarks, or Mask Works in which Grantor no
              longer has or claims any right, title or interest; provided, that
              written notice of any such modifications is promptly provided to
              Grantor; and

                    (ii)  To file, in its sole discretion, one or more financing
              or continuation statements and amendments thereto, relative to any
              of the Intellectual Property Collateral without the signature of
              Grantor where permitted by law.

                    (iii) Grantor hereby authorizes Lender to file financing
              statements without notice to Grantor with all appropriate
              jurisdictions, as Lender deems appropriate, in order to further
              perfect or protect Lender's interest in the Intellectual Property
              Collateral.

         7.   Events of Default. The occurrence of any of the following shall
constitute an Event of Default under this IP Agreement:

              (a)   An Event of Default occurs under the Loan Agreement; or any
         document from Grantor to Lender; or

              (b)   Grantor breaches any warranty or agreement made by Grantor
         in this IP Agreement.

         8.   Remedies. Upon the occurrence and continuance of an Event of
Default, Lender shall have the right to exercise all the remedies of a secured
party under the Massachusetts Uniform Commercial Code, including without
limitation the right to require Grantor to assemble the Intellectual Property
Collateral and any tangible property in which Lender has a security interest and
to make it available to Lender at a place designated by Lender. Lender shall
have a nonexclusive, royalty free license to use the Copyrights, Patents,
Trademarks, and Mask Works to the extent reasonably necessary to permit Lender
to exercise its rights and remedies upon the occurrence of an Event of Default.
Grantor will pay any expenses (including reasonable attorney's fees) incurred by
Lender in connection with the exercise of any of Lender's rights hereunder,
including without limitation any expense incurred in disposing of the
Intellectual Property Collateral. All of Lender's rights and remedies with
respect to the Intellectual Property Collateral shall be cumulative.

         9.   Indemnity. Grantor agrees to defend, indemnify and hold harmless
Lender and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this IP Agreement, and (b) all
<PAGE>
losses or expenses in any way suffered, incurred, or paid by Lender as a result
of or in any way arising out of, following or consequential to transactions
between Lender and Grantor, whether under this IP Agreement or otherwise
(including without limitation, reasonable attorneys fees and reasonable
expenses), except for losses arising from or out of Lender's gross negligence or
willful misconduct.

         10.  Reassignment. At such time as Grantor shall completely satisfy all
of the obligations secured hereunder, Lender shall execute and deliver to
Grantor all deeds, assignments, and other instruments as may be necessary or
proper to reinvest in Grantor full title to the property assigned hereunder,
subject to any disposition thereof which may have been made by Lender pursuant
hereto.

         11.  Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.

         12.  Amendments. This IP Agreement may be amended only by a written
instrument signed by both parties hereto.

         13.  Counterparts. This IP Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.

         14.  Law and Jurisdiction. This IP Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT,
OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON LENDER CANNOT AVAIL ITSELF
OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, GRANTOR ACCEPTS JURISDICTION
OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA. NOTWITHSTANDING THE
FOREGOING, THE LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
WHICH THE LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR TO OTHERWISE ENFORCE THE LENDER'S RIGHTS AGAINST THE GRANTOR OR
ITS PROPERTY.

         GRANTOR AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

         15.  Confidentiality. In handling any confidential information, Lender
shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Lender's
subsidiaries or affiliates in connection with their present or prospective
business relations with Grantor; (ii) to prospective transferees or purchasers
of any interest in the Loans; (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Lender's examination or audit;
and (v) as Lender considers appropriate in exercising remedies under this
Agreement. Confidential information does not include information that either:
(a) is in the public domain or in Lender's possession when disclosed to Lender,
or becomes part of the public domain after disclosure to Lender (through no act
or omission of Lender); or (b) is disclosed to Lender by a third party, which
third party is not under any non-disclosure obligation.

                                       -5-
<PAGE>

         EXECUTED as a sealed instrument under the laws of the Commonwealth of
Massachusetts on the day and year first written above.

ADDRESS OF GRANTOR:                   GRANTOR:


175 Cabot Street, Suite 503           DATAWATCH CORPORATION
Lowell, Massachusetts 01854-3633

                                      By: /s/ Robert Hagger
                                          --------------------------------------

                                      Name: Robert Hagger
                                            ------------------------------------

                                      Title: President & Chief Executive Officer
                                             -----------------------------------


                                      SILICON VALLEY BANK

                                      By: /s/ David Rodriquez
                                          --------------------------------------

                                      Name: David Rodriquez
                                            ------------------------------------

                                      Title: Vice President
                                             -----------------------------------


















                                       -6-
<PAGE>

         Exhibit "A" attached to that certain Intellectual Property Security
Agreement dated October 30, 2001.


                                   EXHIBIT "A"

                                   COPYRIGHTS

                         SCHEDULE A - ISSUED COPYRIGHTS
                         ------------------------------

COPYRIGHT                         REGISTRATION                        DATE OF
DESCRIPTION                          NUMBER                           ISSUANCE
-----------                         ---------                         --------





                   SCHEDULE B - PENDING COPYRIGHT APPLICATIONS
                   -------------------------------------------
                                                                    FIRST DATE
COPYRIGHT         APPLICATION        DATE OF         DATE OF        OF PUBLIC
DESCRIPTION          NUMBER          FILING          CREATION       DISTRIBUTION
-----------       -----------        -------         --------       ------------






SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)
--------------------------------------------------------------------------------

                                             DATE AND
                                             RECORDATION
                                             NUMBER OF IP
                                             AGREEMENT WITH
                                             OWNER OR ORIGINAL
                                             GRANTOR IF          ORIGINAL AUTHOR
                                             AUTHOR OR OWNER     OR OWNER OF
                             FIRST DATE      OF COPYRIGHT        COPYRIGHT
COPYRIGHT      DATE OF           OF          IS DIFFERENT        IS DIFFERENT
DESCRIPTION    CREATION     DISTRIBUTION     FROM GRANTOR        FROM GRANTOR
-----------    --------     ------------     ------------        ------------











                                       -7-
<PAGE>


Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated October 30, 2001.



                                   EXHIBIT "B"

                                     PATENTS

PATENT
DESCRIPTION     DOCKET NO.     COUNTRY     SERIAL NO.     FILING DATE     STATUS
-----------     ----------     -------     ----------     -----------     ------











































                                       -8-
<PAGE>

Exhibit "C" attached to that certain Intellectual Property Security Agreement
dated October 30, 2001.

                                   EXHIBIT "C"

                                   TRADEMARKS


TRADEMARK
DESCRIPTION       COUNTRY          SERIAL NO.        REG. NO           STATUS
-----------       -------          ----------        -------           ------

DESCRIPTION          COUNTRY              APPLICATION NO.  REG. NO    STATUS
-----------          -------              ---------------  -------    ------
Datawatch            Canada               1,013,488                   Pending
Datawatch            European Community   210,476          210,476    Registered
Datawatch            USA                  74/553,269       1,963,783  Registered
Q-Browser            Australia            752,268          752,268    Registered
Q-Browser            European Community   547,323          547,323    Registered
Q-Browser            USA                  75/315,418       2,255,961  Registered
Q-Flow               Australia            744,567          744,567    Registered
Q-Flow               Canada               873,647          528,267    Registered
Q-Flow               European Community   633,834          633,834    Registered
Q-Flow               USA                  75/364,269       2,256,046  Registered
Q-Support            European Community   210,682          210,682    Registered
Quetzal              Australia            634,675          A634,675   Registered
Quetzal              European Community   210,831          210,831    Registered
Quetzal/SC           Australia            821,537                     Published
Quetzal/SC           Canada               1,045,423                   Pending
Quetzal/SC           USA                  75/580,763       2,471,994  Registered
VorteXML and Design  Australia            873,785                     Pending
VorteXML and Design  Canada               1,100,922                   Pending
VorteXML and Design  European Community   2,192,961                   Pending
VorteXML and Design  USA                  76/209,512                  Pending






















                                       -9-
<PAGE>


Exhibit "D" attached to that certain Intellectual Property Security Agreement
dated October 30, 2001.

                                   EXHIBIT "D"

                                   MASK WORKS

MASK WORK
DESCRIPTION       COUNTRY          SERIAL NO.        REG. NO           STATUS
-----------       -------          ----------        -------           ------
















































                                      -10-