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                                                                   EXHIBIT 10.49


                        SEVERANCE COMPENSATION AGREEMENT
                          DATED AS OF OCTOBER 29, 1999
                                     BETWEEN
               DATUM INC., A DELAWARE CORPORATION, (THE "COMPANY")
                                       AND
                         PAUL E. BAIA (THE "EXECUTIVE")



         The Company's Board of Directors (the "Board") has determined that it
is appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a change in control of the Company.

         This Agreement sets forth the severance compensation which the Company
agrees it will pay to the Executive if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
"Change in Control" of the Company (as defined in Section 2).

         1. Term. The term ("Term") of this Agreement shall commence on the date
hereof and, subject to earlier termination pursuant to Section 3(b), 3(c) or
3(d) hereof, shall end three (3) years following the date on which notice of
non-renewal or termination of this Agreement is given by either the Company or
Executive to the other. Thus, this Agreement shall be renewable automatically on
a daily basis so that the outstanding Term is always three (3) years following
any effective notice of non-renewal or of termination given by the Company or
Executive.

         2. Change in Control. No compensation shall be payable under this
Agreement unless and until (a) there has been a Change in Control of the Company
while the Executive is still an employee of the Company and (b) the Executive's
employment by the Company terminates in the circumstances specified in Section
3(a). For purposes of this Agreement, a "Change in Control" of the Company shall
be deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a consolidation or merger of the Company in which the holders of the
Company's Common Stock immediately prior to the consolidation or merger have
substantially the same proportionate ownership of at least 65% of common stock
of the surviving corporation immediately after the consolidation or merger, or
(y) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all, or substantially all, of the assets of the
Company other than to a corporation in which the holders of the Company's Common
Stock immediately prior to such transaction have substantially the same
proportionate ownership of at least 65% of the common stock of such corporation,
or (ii) the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, or (iii) any person (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of more than 35% of the Company's
outstanding shares of Common Stock, or (iv) during any period of two consecutive
years during the term of this Agreement, individuals who at the beginning of the
two year period constituted the entire Board do not for any reason constitute a
majority thereof unless the election, or the nomination for election by the
Company's stockholders,

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of each new director was approved by a vote of at least five-eighths of the
directors then still in office who were directors at the beginning of the
period.

         3. Termination Following Change in Control.

               (a) Termination. If a Change in Control of the Company shall have
occurred while the Executive is still an employee of the Company, the Executive
shall be entitled to the compensation provided in Section 4 upon the subsequent
termination of the Executive's employment with the Company within twenty four
(24) months of such Change in Control, whether requested by the Executive or by
the Company, unless such termination is as a result of (i) the Executive's
death; (ii) the Executive's Disability (as defined in Section (3)(b) below);
(iii) the Executive's Retirement (as defined in Section 3(c) below); (iv) the
Executive's termination by the Company for Cause (as defined in Section 3(d)
below); or (v) the Executive's decision to terminate employment other than for
Good Reason (as defined in Section 3(e) below).

               (b) Death or Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive is absent from his
duties with the Company on a full-time basis for six months, the Company may
elect to terminate the Executive for "Disability" by written notice to Executive
and without liability to Executive pursuant to this Agreement; provided,
however, that any such termination shall be effective only at the end of thirty
(30) days following the delivery of such notice and only if Executive fails to
return to the full-time performance of duties by the end of such 30-day notice
period. In addition, this Agreement shall terminate immediately in the event of
the death of the Executive occurring at any time during the Term hereof, and in
such event the Company shall have no liability by reason of such termination.

               (c) Retirement. The Executive shall be deemed terminated
automatically, without liability to Executive pursuant to this Agreement, upon
Retirement (as hereinafter defined) of Executive without liability to the
Company pursuant to this Agreement. "Retirement" as used in this Agreement shall
be deemed to occur upon the Executive's having reached such age as shall have
been fixed in any arrangement mutually established by the Company and the
Executive.

               (d) Cause. The Company may terminate the Executive, without
liability to the Executive pursuant to this Agreement, if the Executive's
employment with the Company is terminated for Cause. For purposes solely of
determining whether the Company may terminate the Executive pursuant to this
Section 3(d) without liability to the Executive, the Executive shall be deemed
to have been terminated for "Cause" only if Executive had engaged in fraud,
misappropriation or embezzlement, or any conviction or admission of a felony or
other offense involving dishonest or moral turpitude. Notwithstanding the
foregoing, the Executive shall not be deemed, for purposes of this Agreement, to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than five-eighths of the entire membership of the Company's Board at a
meeting of the Board called and held for that purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Executive was guilty of conduct set forth in the
second sentence of this Section 3(d) and specifying the particulars thereof in
detail.

               (e) Good Reason. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control during the
Term. For purposes of this Agreement, "Good Reason" shall mean any of the
following:

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                  (i) The Company has materially changed the Executive's
position, duties, responsibilities, status, or offices as in effect immediately
prior to a Change in Control of the Company, or has removed the Executive from
or failed to reelect the Executive to any of such positions;

                  (ii) A reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from time to
time during the Term.

                  (iii) Any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the Company's life
insurance, accident, disability and health insurance plans, 401(k) and bonus
plans, stock options, and all other similar plans which are from time to time
made generally available to senior executives/officers of the Company) and in
which the Executive is participating at the time of a Change in Control of the
Company, unless there are substituted therefore plans or arrangements providing
the Executive with essentially equivalent and no less favorable benefits
(hereinafter referred to as "Benefit Plans"), or the taking of any action by the
Company which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan or
deprive the Executive of any material fringe benefit enjoyed by the Executive at
the time of a Change in Control of the Company;

                  (iv) Any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the Company's
plans enumerated in subparagraph (iii) above and similar incentive compensation
benefits) in which the Executive is participating at the time of a Change in
Control of the Company, unless there are substituted therefore plans or
arrangements providing the Executive with essentially equivalent and no less
favorable benefits (hereinafter referred to as "Incentive Plans"), or the taking
of any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's potential
benefits under any such Incentive Plan, expressed as a percentage of his base
salary, by more than 10 percentage points in any fiscal year as compared to the
immediately preceding fiscal year;

                  (v) Any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's stock option and purchase plans and any other plan or
arrangement to receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof) in which the Executive is participating at
the time of a Change in Control of the Company, unless there are substituted
therefor plans or arrangements providing the Executive with essentially
equivalent and no less favorable (hereinafter referred to as "Securities
Plans"), or the taking of any action by the Company which would adversely affect
the Executive's participation in or materially reduce the Executive's benefits
under any such Securities Plan;

                  (vi) The Executive's relocation to any place other than the
location at which the Executive performed the Executive's duties prior to a
Change in Control of the Company, except for required travel by the Executive on
the Company's business to an extent substantially consistent with the
Executive's business travel obligations during the 12 months immediately
preceding a Change of Control of the Company;

                  (vii) Any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at the time
of a Change of Control of the Company;


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                  (viii) Any material breach by the Company of any provision of
this Agreement;

                  (ix) Any failure by the Company to obtain the assumption of
this Agreement by any successor or assignee of the Company; or

                  (x) Any purported termination of the Executive's employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f), and for purposes of this Agreement, no such
purported termination shall be effective.

               (f) Notice of Termination. Any termination of the Executive by
the Company for Disability pursuant to Section 3(b) or for Cause pursuant to
Section 3(d) shall be communicated by a Notice of Termination. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate those specific termination provisions in this Agreement relied
upon and which set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provisions so indicated. For purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of
Termination.

               (g) Date of Termination. "Date of Termination" shall mean (i) if
the Executive is terminated by the Company for Disability, 30 days after Notice
of Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period) or (ii) if the Executive is terminated by the Company
for any other reason, the date on which a Notice of Termination is given;
provided that if within 30 days after any Notice of Termination is given to the
Executive by the Company the Executive notifies the Company that a dispute
exists concerning the termination, the Date of Termination shall be the date the
dispute is finally determined, whether by mutual agreement by the parties or
upon final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected).

         4. Severance Compensation upon Termination of Employment. Subject to
Section 4(e) below, if, within twenty-four (24) months following a Change in
Control, the Company shall terminate the Executive's employment other than
pursuant to Section 3(b), 3(c) or 3(d), or if the Executive terminates his
employment for Good Reason pursuant to Section 3(e), then:

               (a) Severance Payment. The Company shall pay to the Executive as
severance pay a lump sum, in cash, in full on the fifth day following the Date
of Termination an amount equal to (i) the Executive's highest annual base salary
in effect during the 12-month period immediately preceding the Date of
Termination, and (ii) a lump sum payment of the Executive's incentive
compensation bonus that would otherwise be payable to Executive under the
Company's Bonus Plan then in effect for the year in which the Date of
Termination occurred assuming one hundred percent (100%) satisfaction of all
performance goals established under such Bonus Plan for the Executive,
multiplied by 1.0. The foregoing payment shall be in addition to any payments or
other compensation that would otherwise be payable to executives under any other
then existing Severance Plan of the Company. All payments hereunder shall be
made net of withholdings required by applicable federal, state or local laws.

               (b) Stock Options. All stock options not currently exercisable
held by the Executive will accelerate and become exercisable as of the Date of
Termination.


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               (c) Restricted Stock. All restrictions on any restricted stock,
including without limitation any vesting requirements on any unvested stock,
held by the Executive as of the Date of Termination shall be removed.

               (d) Continuation of Benefits. The Company shall continue for a
period of one year from the Date of Termination to provide the following
benefits to the Executive on the same terms as provided to the Executive on the
Date of Termination:

                  (i) Participation in the Company's medical, dental and vision
plans;

                  (ii) Long-term disability insurance;

                  (iii) Life Insurance.

Notwithstanding the foregoing, any benefits payable under this subsection 4(d)
shall terminate at such time as the Executive becomes eligible for similar
benefits from any subsequent employer; provided, however ,that at the end of the
period of coverage hereinabove provided for, the Executive shall have the option
to have assigned to the Executive at no cost and with no apportionment of
prepaid premiums, any assignable insurance owned by the Company and relating
specifically to the Executive.

               (e) Limitation. To the extent that any or all of the payments and
benefits provided for in this Agreement constitute "parachute payments" within
the meaning of Section 280G of the Internal Revenue Code (the "Code") and, but
for this Section 4(e), would be subject to the excise tax imposed by Section
4999 of the Code, then the aggregate amount of such payments and benefits shall
be reduced such that the present value thereof (as determined under the Code and
applicable regulations) is equal to 2.99 times the Executive's "base amount" (as
defined in the Code).

The determination of any reduction or increase of any payment or benefits under
this Section 4 pursuant to the foregoing provision shall be made by a nationally
recognized public accounting firm chosen by the Company in good faith, and such
determination shall be conclusive and binding on the Company and the Executive.

         5. No Obligation to Mitigate Damages: No Effect on Other Contractual
Rights.

               (a) No Obligation to Mitigate. The Executive shall not be
required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor, except as set
forth in Section 4(d), shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.

               (b) No Effect on Other Contractual Rights. The provisions of this
Agreement, and any payment provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish the Executive's existing rights, or
rights which would accrue solely as a result of the passage of time, under any
Benefit Plan, Incentive Plan or Securities Plan, employment agreement or other
contract, plan or arrangement.


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         6. Successors and Assigns.

               (a) The Company. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor or assignee to its
business and/or assets as aforesaid which assumes the obligations of the Company
under this Agreement or which otherwise becomes bound by all of the terms and
provisions of this Agreement by operation of law. If at any time during the term
of this Agreement the Executive is employed by any corporation a majority of the
voting securities of which is then owned by the Company, such indirect
employment of the Executive by the Company shall not excuse the Company from
performing its obligations under this Agreement as if the Executive were
directly employed by the Company, and the Company agrees that it shall pay or
shall cause such employer to pay any amounts owed to the Executive pursuant to
Section 4 hereof, notwithstanding any such indirect employment relationship.

               (b) The Executive. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee,
or other designee or, if there be no such designee, to the Executive's estate.

         7. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered, one business day after being sent
for overnight delivery by a nationally recognized overnight courier or three
business days after being mailed by United States registered mail,
return-receipt requested, postage-prepaid, addressed as follows:

               If to the Company:

                           Vice President
                           Datum Inc.
                           Datum-Beverly
                           34 Tozer Road
                           Beverly, MA 01915

               If to the Executive:

                           19 Pearson Drive
                           Byfield, MA 01915

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

         8. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which


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are not set forth expressly in this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of California.

         9. Validity. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

         10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         11. Arbitration, Legal Fees and Expenses. In the event of any
controversy, claim or dispute between the parties hereto arising out of or
relating to this Agreement, the matter shall be determined by arbitration, which
shall take place in Orange County, California, under the rules of the American
Arbitration Association; and a judgment upon such award may be entered in any
court having jurisdiction thereof. Any decision or award of such arbitrator
shall be final and binding upon the parties and shall not be appealable. The
parties hereby consent to the jurisdiction of such arbitrator and of any court
having jurisdiction to enter judgment upon and enforce any action taken by such
arbitrator. The Company shall pay all legal fees and expenses that the Executive
may incur as a result of the Company's contesting the validity, enforceability
or the executive's interpretation of, or determinations under, this Agreement.

         12. Confidentiality. The Executive shall retain in confidence any and
all confidential information known to the Executive concerning the Company and
its business so long as such information is not otherwise publicly disclosed.

         13. Entire Agreement. This Agreement contains all of the terms agreed
upon between the Executive and the Company with respect to the subject matter
hereof and replaces and supersedes all prior severance agreements between the
Executive and the Company. The Executive and the Company agree that no term,
provision or condition of this Agreement shall be held to be altered, amended,
changed or waived in any respect except as evidenced by written agreement of the
Executive and the Company.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.

"COMPANY"                                    "EXECUTIVE"

DATUM, INC.


By: /s/ Dan L. McGurk                        By: /s/ Paul E. Baia
   --------------------------------             --------------------------------
Name:    Dan L. McGurk                       Name:    Paul E. Baia
Title:   Chairman of the Compensation        Title:   Vice President
         Committee


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