EXHIBIT 10.1
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                          REGISTRATION RIGHTS AGREEMENT

         THIS  REGISTRATION  RIGHTS  AGREEMENT is entered into as of January 17,
2001,  by  and  between   Silicon  Valley  Bank   ("Purchaser")   and  Datawatch
Corporation, a Delaware corporation (the "Company").

                                    RECITALS

         A.  Concurrently  with the  execution of this  Agreement,  Purchaser is
acquiring from the Company a Warrant to Purchase Stock (the "Warrant")  pursuant
to which Purchaser has rights to acquire from the Company the Shares (as defined
in the  Warrant),  which  Shares  when issued  shall be shares of the  Company's
common stock, $.01 par value per share ("Common Stock").

         B.  By this  Agreement, Purchaser and the Company  desire to set forth
the registration rights of  the Shares as provided herein.

             NOW,  THEREFORE,  in  consideration  of the premises and the mutual
promises,  covenants and conditions  hereinafter  set forth,  the parties hereto
mutually agree as follows:

     1.  Registration Rights.  The Company covenants and agrees as follows:

        1.1 Definitions. For purposes of this Section 1:

                  (1) The  term  "register,"  "registered,"  and  "registration"
refer  to a  registration  effected  by  preparing  and  filing  a  registration
statement or similar  document in compliance with the Securities Act of 1933, as
amended,  and the rules and regulations  thereunder (the "Securities  Act"), and
the declaration or ordering of effectiveness of such  registration  statement or
document;

                  (2) The term  "Registrable  Securities" means the Common Stock
issuable upon the exercise of the Warrant or other security which is issued as a
dividend  or other  distribution  with  respect  to,  or in  exchange  for or in
replacement of the shares of Common Stock.

                  (3) The terms  "Holder" or "Holders"  means  Purchaser and its
qualifying   transferees  under  subsection  1.9  hereof  who  hold  Registrable
Securities.

                  (4)  The  term  "SEC"  means  the   Securities   and  Exchange
Commission.

                  (5) The terms  "Form  S-1,"  "Form S-3" etc.  shall mean those
forms with such  designations  as are  required by the SEC and any  successor or
replacement forms adopted by the SEC.

        1.2 Company Registration.

                  (1)  Registration.  If at any time or from  time to time,  the
Company shall determine to register any of its  securities,  for its own account
other than a registration  on Form S-8 relating  solely to employee stock option
or purchase plans or on Form S-4 relating solely to an acquisition,  the Company
will:

                           (1)  promptly  give to  each  Holder  written  notice
thereof  (which shall include a list of the  jurisdictions  in which the Company
intends to attempt to qualify such  securities  under the applicable blue sky or
other state securities laws); and

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                           (2)    include    in    such     registration    (and
qualifications),  and in any underwriting  involved therein, all the Registrable
Securities specified in a written request or requests, made within 30 days after
receipt of such  written  notice  from the  Company,  by any Holder or  Holders,
except as set forth in subsection 1.2(c) below.

                  (2)  Underwriting.  If the  registration  of which the Company
gives notice is for a registered  public  offering  involving a  firm-commitment
underwriting,  the Company  shall so advise the Holders as a part of the written
notice given  pursuant to subsection  1.2(a)(i).  In such event the right of any
Holder to registration pursuant to this subsection 1.2 shall be conditioned upon
such  Holder's  participation  in such  underwriting  and the  inclusion of such
Holder's  Registrable  Securities  in the  underwriting  to the extent  provided
herein.  All Holders  proposing  to  distribute  their  securities  through such
underwriting  shall  (together  with  the  Company  and the  other  shareholders
distributing  their  securities   through  such  underwriting)   enter  into  an
underwriting  agreement in customary form (and not  inconsistent  with the terms
hereof) with the underwriter or underwriters  selected for such  underwriting by
the Company.

                  (3) In the case of any  registration  of  Common  Stock by the
Company in a  firm-commitment  underwriting,  if the managing  underwriters give
written advice to the Company that marketing factors require a limitation on the
number  of shares of Common  Stock  (or  other  securities  convertible  into or
exercisable  or  exchangeable  for  Common  Stock)  to be  offered  and  sold by
stockholders  of  Company  in such  offering,  there  shall be  included  in the
offering:  (i)  first,  all  securities  proposed  by Company to be sold for its
account;  and (ii)  second,  that  number of shares  of  Common  Stock,  if any,
requested to be included in such registration  statement by Holders and by other
stockholders of the Company having  contractual rights to include shares in such
registration,  on a pro rata  basis  based  upon the  number of shares of Common
Stock each Holder and each such other stockholder beneficially owns.

        1.3  Registration  on  Form  S-3.  If at any  time  (i)  the  Holder  of
Registrable  Securities requests in writing that the Company file a registration
statement on Form S-3 or any successor  thereto for a public  offering of all or
any  portion  of the shares of  Registrable  Securities  held by the  requesting
Holder, (ii) the aggregate price to the public of such offering would reasonably
be expected to exceed $200,000,  and (iii) the Company is a registrant  entitled
to use Form S-3 or any  successor  thereto to  register  such  shares,  then the
Company shall use its best efforts to register  under the Securities Act on Form
S-3 or any successor  thereto,  for public sale in accordance with the method of
disposition  specified  in such  notice,  the  number of  shares of  Registrable
Securities  specified in such  notice.  Whenever the Company is required by this
Section 1.3 to use its best efforts to effect the  registration  of  Registrable
Securities,  each of the  procedures  and  requirements  of Section 1.5(d) shall
apply to such  registration;  provided,  however,  that the Company shall not be
obligated to register Registrable Securities under this Section 1.3 on more than
one occasion in any six-month period.

        1.4 Expenses of Registration.  All expenses  incurred in connection with
any  registration,  qualification  or  compliance  pursuant  to this  Section  1
including without limitation,  all registration,  filing and qualification fees,
printing  expenses,  underwriting  fees,  discounts  and  commissions,  fees and
disbursements  of counsel  for the Company  and  expenses of any special  audits
incidental to or required by such  registration,  shall be borne by the Company.
All expenses of any registered  offering not otherwise borne by the Company will
be borne pro rata  among the  Holders,  any other  shareholders  of the  Company
participating in such offering and the Company.

        1.5  Registration   Procedures.   In  the  case  of  each  registration,
qualification   or  compliance   effected  by  the  Company   pursuant  to  this
Registration Rights Agreement,  the Company will keep each Holder  participating
therein  advised  in  writing  as  to  the  initiation  of  each   registration,
qualification  and compliance and as to the completion  thereof.  At its expense
the Company will:

                  (1)  Prepare  and file with the SEC a  registration  statement
with respect to such  Registrable  Securities  and use its best efforts to cause
such registration  statement to become  effective,  and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,  keep
such  registration  statement  effective  for up to  120  days  (the  "Effective
Period").

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                  (2)  Prepare  and  file  with  the  SEC  such  amendments  and
supplements to such registration statement and the prospectus used in connection
with  such  registration  statement  as may be  necessary  to  comply  with  the
provisions  of  the  Securities  Act  with  respect  to the  disposition  of all
securities covered by such registration statement.

                  (3)  Furnish  to the  Holders  such  numbers  of  copies  of a
prospectus,   including  a  preliminary  prospectus,   in  conformity  with  the
requirements  of the  Securities  Act,  and  such  other  documents  as they may
reasonably  request  in order  to  facilitate  the  disposition  of  Registrable
Securities owned by them.

                  (4)  Use  its  best   efforts  to  register  and  qualify  the
securities covered by such registration statement under such other securities or
Blue Sky laws of such  jurisdictions  as shall be  reasonably  requested  by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

                  (5) In the event of any underwritten  public  offering,  enter
into and perform its obligations under an underwriting  agreement,  in usual and
customary  form,  with the managing  underwriter of such  offering.  Each Holder
participating  in such  underwriting  shall  also  enter  into and  perform  its
obligations under such an agreement  provided that all other shareholders of the
Company participating in such offering do the same.

                  (6) Notify each Holder of  Registrable  Securities  covered by
such  registration  statement at any time when a prospectus  relating thereto is
required to be delivered  under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration  statement, as
then in effect,  includes  an untrue  statement  of a material  fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein  not  misleading  in the  light  of the  circumstances  then
existing.

        1.6 Indemnification.

                  (1) The Company  will  indemnify  each  Holder of  Registrable
Securities  and each of its officers,  directors  and partners,  and each person
controlling  such Holder within the meaning of Section 15 of the  Securities Act
("controlling  person"),  and each  underwriter,  if any,  and each  controlling
person of such underwriter, with respect to which registration, qualification or
compliance  of  Registrable  Securities  has  been  effected  pursuant  to  this
Registration Rights Agreement, against all claims, losses, expenses, damages and
liabilities  (or  actions in  respect  thereto)  arising  out of or based on any
untrue  statement (or alleged untrue  statement) of a material fact contained in
any  prospectus,  offering  circular or other  document  (including  any related
registration  statement,   notification  or  the  like)  incident  to  any  such
registration,  qualification or compliance, or based on any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary to make the  statement  therein not  misleading,  or any  violation or
alleged violation by the Company of the Securities Act, the Securities  Exchange
Act of 1934, as amended,  and the rules and  regulations  thereunder  ("Exchange
Act") or any state  securities  law  applicable  to the  Company  or any rule or
regulation  promulgated  any such state law and  relating  to action or inaction
required of the Company in connection with any such registration,  qualification
or  compliance,  and will  reimburse  each such  Holder,  each of its  officers,
directors  and  partners,  and each person  controlling  such Holder,  each such
underwriter  and  each  person  who  controls  any  such  underwriter,  within a
reasonable  amount of time after incurred for any reasonable legal and any other
expenses  incurred in connection with  investigating,  defending or settling any
such claim,  loss,  damage,  liability or action;  provided,  however,  that the
indemnity  agreement  contained  in this  subsection  1.6(a)  shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably  withheld or delayed);  and provided further, that the
Company  will not be liable in any such case

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to the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue  statement or omission made in reliance upon and  conformity
with written information furnished to the Company by an instrument duly executed
by such Holder specifically for use therein.

                  (2) Each Holder will,  if  Registrable  Securities  held by or
issuable  to such  Holder  are  included  in the  securities  as to  which  such
registration,  qualification  or  compliance  is being  effected,  indemnify the
Company,  each  of  its  directors,   officers  and  controlling  persons,  each
underwriter,  if any, of the Company's securities covered by such a registration
statement,  and each  controlling  person of such  underwriter,  and each  other
Holder,  each of its  officers,  directors,  partners and  controlling  persons,
against all claims,  losses,  expenses,  damages and  liabilities (or actions in
respect  thereof)  arising out of or based on any untrue  statement  (or alleged
untrue  statement)  of a  material  fact  contained  in  any  such  registration
statement,  prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements  therein not misleading,  and will reimburse
the Company,  such  Holders,  such  directors,  officers,  partners,  persons or
underwriters  for  any  reasonable  legal  or any  other  expenses  incurred  in
connection  with  investigating,  defending  or settling  any such claim,  loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement,  prospectus, offering circular
or other  document in reliance upon and in conformity  with written  information
furnished  to  the  Company  by an  instrument  duly  executed  by  such  Holder
specifically for use therein;  provided,  however,  that the indemnity agreement
contained  in  this  subsection  1.6(b)  shall  not  apply  to  amounts  paid in
settlement  of any  such  claim,  loss,  damage,  liability  or  action  if such
settlement is effected  without the consent of the Holder,  (which consent shall
not be unreasonably  withheld or delayed);  and provided further, that the total
amount for which any Holder shall be liable under this  subsection  1.6(b) shall
not in any event exceed the aggregate net proceeds  received by such Holder from
the sale of Registrable Securities held by such Holder in such registration.

                  (3)  Each  party  entitled  to   indemnification   under  this
subsection 1.6 (the "Indemnified Party") shall give notice to the party required
to  provide  indemnification  (the  "Indemnifying  Party")  promptly  after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought,  and shall  permit the  Indemnifying  Party to assume the defense of any
such claim or any litigation resulting therefrom;  provided that counsel for the
Indemnifying  Party,  who shall conduct the defense of such claim or litigation,
shall  be  approved  by the  Indemnified  Party  (whose  approval  shall  not be
unreasonably  withheld),  and the  Indemnified  Party  may  participate  in such
defense at such party's expense;  and provided further,  that the failure of any
Indemnified  Party to give  notice as  provided  herein  shall not  relieve  the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
prejudice to the Indemnifying  Party; and provided further,  that an Indemnified
Party  (together  with all other  Indemnified  Parties which may be  represented
without  conflict by one  counsel)  shall have the right to retain one  separate
counsel,  with the fees and expenses to be paid by the  Indemnifying  Party,  if
representation  of  such  Indemnified  Party  by  the  counsel  retained  by the
Indemnifying  Party would be inappropriate due to actual or potential  differing
interests between such Indemnified Party and any other party represented by such
counsel in such  proceeding.  No Indemnifying  Party, in the defense of any such
claim or litigation,  shall,  except with the consent of each Indemnified Party,
consent to entry of any  judgment  or enter into any  settlement  which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such  Indemnified  Party of a release  from all  liability in respect to such
claim or litigation.

                  (4) In order to provide for just and equitable contribution in
circumstances in which the  indemnification  provided for in this Section 1.6 is
due in accordance with its terms but for any reason is judicially  determined to
be unenforceable  against the Indemnifying Party or otherwise unavailable to the
Indemnified  Party in respect to any losses,  claims,  damages  and  liabilities
referred to herein,  then the Indemnifying  Party shall, in lieu of indemnifying
such  Indemnified  Party,  contribute  to the  amount  paid or  payable  by such
Indemnified party as a result of such losses,  claims, damages or liabilities to
which such party may be subject in such  proportion as is appropriate to reflect
the relative fault of the Company,  on the one

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hand,  and the  selling  Holders,  on the other  hand,  in  connection  with the
statements  or  omissions  which  resulted in such  losses,  claims,  damages or
liabilities,  as  well  as any  other  relevant  equitable  considerations.  The
relative  fault of the Company and such selling  Holders  shall be determined by
reference  to,  among  other  things,  whether  the  untrue  or  alleged  untrue
statement,  or omission or alleged  omission,  of material  fact  related to the
information  supplied by the Company or such  selling  Holders and the  parties'
relative intent, knowledge,  access to information and opportunity to correct or
prevent such statement or omission.  The Company and Holders agree that it would
not be just and equitable if  contribution  pursuant to this Section 1.6(d) were
determined by pro rata  allocation or any other method of allocation  which does
not  take   account  of  the   equitable   considerations   referred  to  above.
Notwithstanding  the provisions of this Section 1.6(d), (i) in no case shall any
Holder be liable or  responsible  for any  amount in excess of the net  proceeds
received by such Holder from the sale of Registrable Securities pursuant to such
registration; and (ii) no person adjudged guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution  from any person  who was not  adjudged  guilty of such  fraudulent
misrepresentation.  Any party  entitled to  contribution  shall,  promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for  contribution  may be made against another
party or parties  under this Section  1.6(d),  notify such party or parties from
whom  contribution  may be sought,  but the  omission so to notify such party or
parties from whom contribution may be sought shall not, in the absence of actual
prejudice  to such party or parties,  relieve it or them from such  contribution
obligation.  No party  shall be liable  for  contribution  with  respect  to any
action, suit, proceeding or claim settled without its written consent.

        1.7  Information  by  Holder.  Any  Holder  or  Holders  of  Registrable
Securities  included in any  registration  shall promptly furnish to the Company
such information  regarding such Holder or Holders and the distribution proposed
by such  Holder or Holders as the Company may request in writing and as shall be
required  in  connection  with any  registration,  qualification  or  compliance
referred to herein.

        1.8 Rule 144 Reporting and Form S-3. With a view to making  available to
Holders  the  benefits  of certain  rules and  regulations  of the SEC which may
permit the sale of the Registrable Securities to the public without registration
or pursuant to a registration on Form S-3, the Company agrees at all times to:

                  (1) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;

                  (2) take such action,  including the voluntary registration of
its Common Stock under Section 12 of the Exchange Act, as is necessary to enable
the Holders to utilize  Form S-3 for the sale of their  Registrable  Securities,
such action to be taken as soon as practicable  after the end of the fiscal year
in which the first registration  statement filed by the Company for the offering
of its securities to the general public is declared effective;

                  (3) file with the SEC in a timely manner all reports and other
documents  required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and


                  (4) so long as a Holder owns any  Registrable  Securities,  to
furnish to such Holder forthwith upon request a written statement by the Company
as to its compliance  with the reporting  requirements  of said Rule 144, and of
the  Securities  Act and the  Exchange  Act, or that it qualify as a  registrant
whose  securities  may be  resold  pursuant  to S-3 (at  any  time  after  it so
qualifies), a copy of the most recent annual or quarterly report of the Company,
and such other  reports and  documents so filed by the Company as the Holder may
reasonably  request in complying with any rule or regulation of the SEC allowing
the Holder to sell any such securities without  registration or pursuant to such
form.

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        1.9  Transfer  of  Registration  Rights.  Holders'  rights  to cause the
Company to register their securities and keep information available,  granted to
them by the  Company  under  subsections  1.2,  1.3 and 1.8 may be assigned to a
transferee  or assignee  of a Holder's  Registrable  Securities  not sold to the
public, provided, that the Company is given written notice by such Holder at the
time of or within a reasonable  time after said  transfer,  stating the name and
address of said  transferee  or assignee and  identifying  the  securities  with
respect to which such registration rights are being assigned.

     2. General.

        2.1 Waivers and  Amendments.  With the written  consent of the record or
beneficial  holders of at least a majority of the  Registrable  Securities,  the
obligations  of the  Company  and the rights of the  Holders of the  Registrable
Securities  under  this  agreement  may  be  waived  (either  generally  or in a
particular  instance,  either  retroactively or prospectively,  and either for a
specified  period  of time or  indefinitely),  and  with the  same  consent  the
Company, when authorized by resolution of its Board of Directors, may enter into
a  supplementary  agreement  for the  purpose  of adding  any  provisions  to or
changing in any manner or eliminating  any of the provisions of this  Agreement;
provided,  however, that no such modification,  amendment or waiver shall reduce
the aforesaid percentage of Registrable Securities without the consent of all of
the Holders of the Registrable  Securities.  Upon the  effectuation of each such
waiver,  consent,  agreement  of amendment or  modification,  the Company  shall
promptly give written notice  thereof to the record  holders of the  Registrable
Securities who have not previously consented thereto in writing.  This Agreement
or any provision hereof may be changed, waived, discharged or terminated only by
a statement in writing  signed by the party  against  which  enforcement  of the
change,  waiver,  discharge  or  termination  is  sought,  except to the  extent
provided in this subsection 2.1.

        2.2 Governing Law. This  Agreement  shall be governed in all respects by
the laws of the  Commonwealth  of  Massachusetts  as such  laws are  applied  to
agreements  between  Massachusetts  residents  entered  into and to be performed
entirely within Massachusetts.

        2.3  Successors  and  Assigns.  Except as otherwise  expressly  provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon,  the  successors,  assigns,  heirs,  executors and  administrators  of the
parties hereto.

        2.4 Entire Agreement.  Except as set forth below, this Agreement and the
other  documents  delivered  pursuant  hereto  constitute  the full  and  entire
understanding  and  agreement  between the parties  with regard to the  subjects
hereof and thereof.

        2.5  Notices,  etc.  All  notices and other  communications  required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage  prepaid,  certified  or  registered  mail,  return  receipt  requested,
addressed (a) if to Holder, at such Holder's  address(es) as set forth below, or
at such other  address(es) as such Holder shall have furnished to the Company in
writing,  or (b) if to the Company, at the Company's address set forth below, or
at such other  address as the  Company  shall  have  furnished  to the Holder in
writing.

        2.6  Severability.  In case any  provision  of this  Agreement  shall be
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the  remaining  provisions  of this  Agreement  or any  provision  of the  other
Agreement s shall not in any way be affected or impaired thereby.

        2.7 Titles and Subtitles.  The titles of the sections and subsections of
this  Agreement  are  for  convenience  of  reference  only  and  are  not to be
considered in construing this Agreement. 1.1

        2.8  Counterparts.  This  Agreement  may be  executed  in any  number of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.

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         IN WITNESS WHEREOF,  the parties have caused this  Registration  Rights
Agreement to be executed by their duly authorized representatives as of the date
first above written.

PURCHASER                                 COMPANY

SILICON VALLEY BANK                       DATAWATCH CORPORATION

By: /s/  Jonathan L. Gray               By: /s/  Bruce R. Gardner
   ------------------------------          -------------------------------
Name:  Jonathan L. Gray                 Name:   Bruce R. Gardner
     ----------------------------            -----------------------------
Title:   SVP                            Title:  President
      ---------------------------             ----------------------------

Address:                                Address:
        -------------------------

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copy to:  Silicon Valley Bank
          Treasury Department
          3003 Tasman Drive, HA-200
          Santa Clara, CA 95054