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                                                                   EXHIBIT 10.54


                     VASCO DATA SECURITY INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                           CODE OF CONDUCT AND ETHICS

INTRODUCTION

     In this ever-changing business world, your Company is required to adhere to
     many new rules, regulations, and laws. An example of this is the
     Sarbanes-Oxley Act of 2002. This legislation requires that each public
     company achieve and maintain a certain level of control over its business,
     its officers, its employees and its Board of Directors. In VASCO's case,
     this requires the commitment of its people to maintain the highest level of
     integrity and ethics. Accordingly, your Company has established this VASCO
     Code of Conduct and Ethics (the "Code") in order that we are all clear as
     to what is required of each one of us.

     This Code sets forth written standards that the Company's Board of
     Directors believes are reasonably designed to deter wrongdoing and to
     promote:

     o    Honest and ethical conduct, including the ethical handling of actual
          or apparent conflicts of interests between personal and professional
          relationships;

     o    Full, fair, accurate, timely and understandable disclosure in reports
          and documents that the Company files with, or submits to the
          Securities and Exchange Commission and in other public communications
          made by the Company;

     o    Compliance with applicable governmental laws, rules and regulations;

     o    The prompt internal reporting of violations of the Code to an
          appropriate person or persons identified in the Code; and

     o    Accountability for adherence to the Code.

     The Code begins with the principle that all of the Company's directors,
     executive officers and employees (collectively, "Employees and Directors")
     will abide by and obey all laws and regulations that are applicable to our
     business in whatever country we conduct business. We will not depart from
     the letter and spirit of the law under any circumstances: not to make a
     profit; not to make a customer happy; not to protect a fellow employee. If
     the law conflicts with this Code, comply with the law. If the local custom
     conflicts with this Code, comply with the Code.

     This Code should serve as a framework for our Employees and Directors to
     exercise their best efforts to conduct themselves at the highest possible
     level of integrity and honesty. IF YOU ARE IN A SITUATION THAT YOU BELIEVE
     MAY LEAD TO A VIOLATION OF THIS CODE, YOU SHOULD FOLLOW THE PROCEDURES
     DESCRIBED IN SECTIONS 15-17 OF THIS CODE.

     FOR PURPOSES OF THIS CODE, THE "CONTACT PERSON" WILL BE DIFFERENT FOR
     EMPLOYEES, EXECUTIVE OFFICERS AND DIRECTORS. EMPLOYEES SHOULD CONTACT THE
     CHIEF FINANCIAL OFFICER

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     (MR. CLIFF BOWN - 630 932 8844 EXTENSION 304 OR CBOWN@VASCO.COM), EXECUTIVE
     OFFICERS SHOULD CONTACT THE CHAIRMAN OF THE BOARD'S GOVERNANCE COMMITTEE
     (MR. JOHN WALTER) AND DIRECTORS SHOULD CONTACT EITHER THE CHIEF EXECUTIVE
     OFFICER (MR. KEN HUNT) OR CHIEF FINANCIAL OFFICER.

     From time to time, the Company may waive some provisions of this Code. Any
     waiver or amendment of this Code for executive officers or directors of the
     Company may only be made by the Board of Directors and must be promptly
     disclosed as required by the Securities and Exchange Commission ("SEC") or
     the rules of The Nasdaq Stock Market, Inc. ("Nasdaq"). Any waiver for other
     persons may only be made by the appropriate Contact Person, the Governance
     Committee or the Board.

     We begin with ethical and moral objectives for "Which We Stand".

1.   COMPLIANCE WITH LAWS

     Obeying the law, both in letter and spirit, is the foundation on which this
     Company's ethical standards are built. All Employees and Directors must
     obey the laws of the cities, states, and countries in which we operate.
     Although not every Employee and Director can be expected to know the
     details of these laws, it is important to know enough to determine when to
     seek advice from supervisors, managers or other appropriate personnel.

2.   ETHICAL CONDUCT

     Beyond compliance with laws, the Company requires that all Employees and
     Directors act in a manner that meets the highest of ethical behavior. This
     includes the obligation to avoid any actual or apparent conflicts of
     interest in personal and professional relationships. The honesty and
     integrity of the Company's business conduct must not be compromised. The
     Company will not condone ethical violations for the sake of personal gain,
     personal advantage, expediency or perceived business advantage.

3.   RESPECT FOR PEOPLE

     Every Employee and Director is important to the success of the Company and
     so each is to be treated fairly and with respect. Being treated fairly
     means that each such person is judged according to his or her own merit and
     not according to arbitrary factors such as race, religion, color, sex, age,
     national origin, or handicap. We are firmly committed to providing equal
     opportunity in all aspects of employment and will not tolerate
     discrimination, harassment or retaliation.

     Because we value every Employee and Director, we encourage all to share
     their ideas and express their concerns. Supervisors, managers and officers
     should be especially careful to maintain open lines of communication and to
     listen to all employees.

     No Employee or Director will be discriminated against, in any way, for
     having brought his or her concerns to the attention of VASCO's management
     or to its Board of Directors.

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4.   NO TOLERANCE FOR DRUGS AND ALCOHOL

     Our Company and our customers expect all of our Employees and Directors to
     report to work fit for duty, drug and alcohol free. Fit for duty means
     being mentally and physically able to perform our jobs in a safe, efficient
     and reliable manner.

     Not only do we have responsibility for our own behavior, but we also have a
     responsibility for each other and for public safety. Therefore, when any
     person recognizes a fitness for duty problem, he or she has an obligation
     to report the condition to management.

     Any Employee or Director who engages in the use, distribution, sale or
     possession of illegal drugs or other controlled substances or who is
     working while under the influence of illegal drugs, controlled substances
     or alcohol is subject to disciplinary action, including dismissal.

5.   A COMPANY FREE OF CONFLICTS OF INTEREST

     In order to maintain the highest degree of integrity in the conduct of the
     Company's business, no Employee or Director should engage in any activity
     or advance any personal interest that conflicts, or appears to conflict,
     with the interests of the Company. A "conflict of interest" occurs when an
     individual's private interest interferes or appears to interfere with the
     interests of the Company. A conflict of interest can arise when an Employee
     or Director takes actions or has interests that may make it difficult to
     perform his or her Company work objectively and effectively. Some of the
     more common types of conflicts of interest are addressed here to provide
     guidance.

     Employees and Directors or members of their immediate families shall not
     own a significant financial interest in, or be employed by, any business
     organization that does or seeks to do business with the Company unless such
     interest or employment has been disclosed in writing to and approved by the
     appropriate Contact Person.

     A general exception to this policy is the employment of a member of a
     Employee's or Director's immediate family by a public utility, bank, or
     other business enterprise that furnishes products or services to the
     Company at prices, rates, or charges generally applicable to all customers
     of such utility, bank, or other business enterprise. A "significant
     financial interest" is an aggregate interest of an Employee or Director and
     his or her immediate family members of more than 5% of the stock of a
     corporation or more than 5% of the profits or assets of a partnership or
     other venture.

     A "member of your immediate family" means your spouse and your or your
     spouse's parents, children, brothers and sisters, aunts and uncles and
     nephews and nieces.

     Questions regarding conflicts of interest should be addressed to your
     respective Contact Person.


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6.   NO GRATUITIES IN THE FORM OF GIFTS AND ENTERTAINMENT

     No Employee or Director nor any member of his or her immediate family may
     accept from a vendor or customer money or a gift that is, or could
     reasonably be considered to be, intended to influence your behavior toward
     that vendor or customer. However, you may accept a gift of nominal value
     when the vendor or customer customarily offers it to others.

     If you are offered money or a gift, or if either arrives at your office or
     home, inform your Contact Person immediately. Appropriate arrangements will
     be made to return or dispose of what has been received, and the vendor or
     customer will be reminded of the Company's policy on gifts.

     Entertainment should be viewed in the same way as gifts. An occasional meal
     or outing with a vendor or customer at their expense is permissible if
     there is a valid business purpose involved and the expense is not
     extravagant. Travel or lodging should not be accepted unless previously
     approved by your Contact Person.

7.   SAFEGUARDING OF COMPANY ASSETS

     We each have a duty to safeguard the Company assets that are entrusted to
     our care and to ensure that transactions are only executed in accordance
     with managements' authorization. Company assets include our records,
     product designs, strategic business plans, customer information, and
     people. Company assets should be used for Company business only; they are
     not to be used for any Employee's or Director's personal benefit and are
     not to be sold, loaned, or given away except with proper authorization. Any
     suspected incident of fraud or theft should be immediately reported to the
     appropriate Contact Person for investigation.

     Other Company assets are our Company names and our trademarks. Others may
     not use these without proper written authorization. As a general rule, we
     do not endorse other companies, products, or services.

8.   CONFIDENTIAL INFORMATION

     Confidential information includes all non-public information that might be
     of use to competitors or harmful to the Company or its customers, if
     disclosed. Much of the information the Company uses is confidential or
     proprietary. Sometimes confidential information has been developed by the
     Company; other times it belongs to others and we have contracted to keep it
     confidential. In both instances we must be careful to guard against
     disclosure of the information to people outside the Company.

     In particular, computer software may only be used for Company business. It
     may not be copied without our specific approval. Our investment in computer
     software is substantial and contributes to our ability to conduct our
     business in a cost-efficient manner. As such, it is extremely valuable and
     should never be treated casually or left unprotected.

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     Almost every department has software and information that the Company
     considers to be confidential. All Employees and Directors must maintain the
     confidentiality of the information entrusted to them by the Company or its
     customers, except when disclosure is authorized by the Chief Executive
     Officer, the President and Chief Operating Officer, the Chief Financial
     Officer, the Company's counsel, or required by law. The obligation to
     preserve confidential information continues even after employment ends.

9.   EXCELLENT TREATMENT OF OUR VALUED CUSTOMERS

     Our customers are extremely important to us. They are the reason the
     Company exists and our success depends upon their satisfaction. Customers
     are always to be treated with the utmost respect and courtesy. They are
     also to be treated fairly. No customer should be given preferential
     treatment.

     Information that we have regarding our customers is to be kept confidential
     and used only for Company purposes. Customer satisfaction is the job of
     every employee.

10.  PROVIDING SHAREHOLDER VALUE THROUGH ACCURATE AND RELIABLE FINANCIAL
     STATEMENTS

     We are in business to create value for our shareholders. Our shareholders
     have chosen to invest with us because they are encouraged by the Company's
     past financial performance and their perceptions of its prospects for the
     future. They want a fair return on their investment. Many of us own shares
     in the Company as well, and we have the same concerns as our other
     investors.

     It is very important to our investors that the information they receive is
     accurate and properly reflects the financial condition and results of
     operations of the Company. The books and records of the Company are to be
     kept according to generally accepted accounting principles and in a manner
     whereby an accurate and auditable record of all financial transactions is
     maintained. The Accounting Departments, as well as our independent public
     accountants, help to ensure that all of the Company's books and records are
     accurate. Employees are to cooperate fully with these groups and provide
     complete and accurate information to them. It is prohibited under U.S.
     Federal law and the Company policy to fraudulently influence, coerce,
     manipulate or mislead the Company's independent public accountants for the
     purpose of rendering the Company's financial statements materially
     misleading.

     The Company's requirement that all Employees and Directors follow the
     highest ethical standards applies directly to all actions that involve
     business accounting, financial reporting, internal accounting controls,
     auditing matters and public disclosure obligations. Full, fair, accurate,
     timely and understandable disclosure is required in all reports and
     documents that the company files with, or submits to, the SEC and in any
     other public communications.

     The Audit Committee of the Board of Directors has adopted special
     procedures for the receipt, retention and treatment of complaints regarding
     accounting, internal accounting controls or auditing matters. These
     procedures are set out in Sections 16 and 17 of this Code.



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     Business records and communications often become public and all Employees
     and Directors should avoid exaggeration, derogatory remarks, guesswork or
     inappropriate characterizations of people and companies that can be
     misunderstood. This applies equally to email, internal memos and formal
     reports. Records should always be retained or destroyed according to the
     Company's policies. In accordance with those policies, in the event of
     litigation or governmental investigation, please consult the Company's
     counsel.

11.  INTOLERANCE TO QUESTIONABLE PAYMENTS

     It is the responsibility of all Employee and Directors to keep accurate
     books and records regarding Company assets and funds. All receipts and
     disbursements are to be fully and accurately described. No Employee or
     Director may participate in any way in unethical receipts or payments of
     Company funds or the maintenance of any unrecorded cash or non-cash funds
     for the purpose of any such receipts or payments.

     The U.S. Foreign Corrupt Practices Act prohibits giving anything of value,
     directly or indirectly, to officials of foreign governments or foreign
     political candidates in order to obtain or retain business. It is strictly
     prohibited to make illegal payments to government officials of any country.
     We will not take part in any improper payments to government officials,
     bribes or kickbacks, or influence payments to any party. Any information
     regarding potential improper payments to foreign officials should be
     reported to the appropriate Contact Person immediately.

12.  INSIDER INFORMATION

     From time to time you may receive information that could be valuable to an
     investor if it were made public. This information could be about the
     Company, one of its affiliates, or about another company we do business
     with. Using this information to make money for yourself or for someone you
     know is not only against the Company policy but it also may be a violation
     of securities laws. Examples of types of information that could be
     considered "insider" information include revenue or profit achievements not
     generally known to the public; dividend declarations; financing plans;
     acquisitions, mergers, or sales; major contracts and developments in major
     litigation. If you have any questions regarding this type of information,
     call your respective Contact Person for advice.

13.  CORPORATE CITIZENSHIP

     We all understand the importance of being good citizens of our respective
     communities, states, provinces, and nations. When we become involved in the
     charitable affairs of the communities in which we live and work, we
     increase the quality of life for everyone. Employees are encouraged to
     participate in the United Way, Red Cross Blood Drives, and in other
     charitable organizations, activities and fund-raisers.

     As individuals, we may have community or charitable interests that are
     important to each one of us. This is not only desirable, but also necessary
     if we are to be responsible, contributing



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     citizens. Any leadership position, however, should be carefully examined to
     be sure that it does not cause or appear to cause any conflict of interest
     or embarrassment to the Company.

     From time to time we may also receive requests for money or other Company
     resources to benefit a particular charity or civic group. These should be
     referred the appropriate supervisor within your business unit or to one of
     the Company's executive officers.

14.  POLITICAL ACTIVITIES

     As a good corporate citizen, the Company supports the political process.
     However, we have decided that, even if allowed by law, no corporate funds,
     assets, materials, or services may be used to support a particular
     candidate or political party.

     All Employees and Directors are encouraged to exercise their rights as
     citizens by voting.

15.  PERSONAL RESPONSIBILITY

     It is essential that the Company ensure prompt and consistent action
     against violations of this Code. However, in some situations it is
     difficult to know right from wrong. Since Employees and Directors cannot
     anticipate every situation that will arise, it is important to have
     guidelines on how to approach a new question or problem. These are the
     steps to keep in mind:

     o    Make sure you have all the facts. In order to reach the right
          solutions, we must be as fully informed as possible.

     o    Ask yourself: What specifically am I being asked to do? Does it seem
          unethical or improper? This will enable you to focus on the specific
          question you are faced with and the alternatives you have. Use your
          judgment and common sense; if something seems unethical or improper,
          it probably is.

     o    Clarify your responsibility and role. In most situations, there is
          shared responsibility. Are your colleagues informed? It may help to
          get others involved and discuss the problem.

     o    Discuss the problem with your supervisor. This is the basic guidance
          for all situations. In many cases, your supervisor will be more
          knowledgeable about the question and will appreciate being brought
          into the decision-making process. Remember that it is your
          supervisor's responsibility to help solve problems.

     o    Seek help from Company resources. If you believe that it is not
          appropriate to discuss an issue with your supervisor, or you do not
          feel comfortable approaching your supervisor with your question,
          discuss it locally with your office manager or with the Director of
          Human Resources. If that also is not appropriate, call your respective
          Contact Person.

     o    You may report ethical violations in confidence and without fear of
          retaliation. If your situation requires that your identity be kept
          secret, your anonymity will be protected. The Company does not permit
          retaliation of any kind against any Employee or Director for good
          faith reports of ethical violations.

     o    Always ask first, act later. If you are unsure of what to do in any
          situation, seek guidance before you act.
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16.  REPORTING/INVESTIGATION PROCEDURES

     The Governance Committee is responsible for applying this Code to specific
     situations in which questions are presented to it and has the authority to
     interpret the Code in any particular situation. Any Employee or Director
     who reasonably believes that there has been a violation or potential
     violation of this Code should report it immediately to his or her
     respective Contact Person. If the violation or potential violation is
     related to questionable accounting or auditing matters, the Employee or
     Director may submit an anonymous complaint as discussed in Section 17. Upon
     receipt of a complaint, the particular Contact Person or other designee
     shall promptly investigate the matter and will treat the matter as
     confidential to the fullest extent possible consistent with the need to
     investigate. Absolute confidentiality of the complaint, however, cannot be
     guaranteed because the very fact of conducting an investigation may lead
     employees or other persons to reach conclusions of their own. Anyone
     involved in an investigation under these procedures, whether as witnesses,
     participants in the performance of the investigation or otherwise, will be
     informed of their obligation to maintain confidentiality and will be asked
     to sign an acknowledgment of this obligation. There shall be no
     discrimination or retaliation against any Employee or Director for bringing
     a complaint under these procedures or against any person for participating
     in the investigation. If the investigation leads to a conclusion that a
     material violation of the Code has occurred, the Governance Committee will
     inform the Company's Board of Directors who will take such disciplinary or
     preventative action as it deems appropriate, up to and including dismissal
     or, in the event of criminal or other serious violations of law,
     notification of appropriate governmental authorities.

     The Company recognizes the potentially serious impact of a false
     accusation. All Employees and Directors are expected as part of the ethical
     standards required by this Code to act responsibly in making complaints.
     Making a complaint in bad faith will be subject to appropriate corrective
     action, including dismissal.

17.  PROCEDURES FOR SUBMITTING CONFIDENTIAL, ANONYMOUS COMPLAINTS REGARDING
     ACCOUNTING AND AUDITING MATTERS

     Beginning after the Company's 2004 Annual Meeting of Stockholders, any
     Employee or Director who reasonably believes that there has been a material
     violation of this Code caused by questionable accounting or auditing
     matters may submit confidential, anonymous complaints via a toll-free
     telephone hotline (specific telephone numbers may vary by office location -
     please refer to the information distributed for your location) or via the
     Internet (please refer to the information distributed with the telephone
     information).